ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 33-0029027 | |||||
(State or other jurisdiction of | (I.R.S. Employer | |||||
5800 Corporate Drive, Pittsburgh, PA | 15237 | |||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||
Common Stock, par value $0.001 per share | SMSI |
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Yes Yeso☐ No Nox
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 Yesx☒ No Noo
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 Yesx☒ No Noo☐
Large accelerated filer |
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Emerging growth company |
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Portions
2021
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Item 1B. | |||||||||||
Item 1C. | |||||||||||
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Item 14. |
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Item 16. |
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•our customer concentration, given that the majority of our sales currently depend on a few large client relationships; |
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•our ability to establish and maintain strategic relationships with our customers and mobile device manufacturers, their ability to attract customers, and their willingness to promote our products; |
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•our ability and/or customers’ ability to distribute our mobile software applications to their end users through third party mobile software application stores, which we do not control; |
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•our dependency upon effective operation with operating systems, devices, networks and standards that we do not control and on our continued relationships with mobile operating system providers, device manufacturers and mobile software application stores on commercially reasonable terms or at all; |
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•our ability to hire and retain key personnel; |
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•the possibility of security and privacy breaches in our systems and in the third-party software and/or systems that we use, damaging client relations and inhibiting our ability to grow; |
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•interruptions or delays in the services we provide from our data center hosting facilities that could harm our business; |
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• | the existence of undetected software defects in our products and our failure to resolve detected defects in a timely manner; |
•our ability to remain a going concern; |
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•our ability to raise additional capital and the risk of such capital not being available to us at commercially reasonable terms or at all; |
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•our ability to be profitable; |
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•changes in our operating income due to shifts in our sales mix and variability in our operating expenses; |
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•our current client concentration within the vertical wireless carrier market, and the potential impact to our business resulting from changes within this vertical market, or failure to penetrate new markets; |
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•rapid technological evolution and resulting changes in demand for our products from our key customers and their end users; |
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•intense competition in our industry and the core vertical markets in which we operate, and our ability to successfully compete; |
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•the risks inherent with international operations; |
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•the risk of being delisted from Nasdaq if we fail to meet any of its applicable listing requirements; |
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•our ability to assimilate acquisitions without diverting management attention and impacting current operations; |
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•failure to realize the expected benefits of prior acquisitions; |
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•the availability of third-party intellectual property and licenses needed for our operations on commercially reasonable terms, or at all; |
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•the difficulty of predicting our quarterly revenues and operating results and the chance of such revenues and results falling below analyst or investor expectations, which could cause the price of our common stock to fall; and |
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•those additional factors which are listed under Item 1A of Part I of this Report under the caption “RISK FACTORS.” |
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The forward-looking statements contained in this Report are made on the basis of the views and assumptions of management regarding future events and business performance as of the date this Report is filed with the Securities and Exchange Commission (the “SEC”). In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. We do not undertake any obligation to update these statements to reflect events or circumstances occurring after the date this Report is filed.
For 40 years, Smith Micro has provided software solutions for global businesses, evolving with the telecom industry, the internet and largely wireless environment. Today the Company develops wireless standards-based software that is extensible, interoperable, scalable, and proven to meet the most dynamic and demanding mobile environments.
performance analytics on any product set.
2021 was a historic year
2024.
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•The average age by which most children use smartphones and other connected devices continues to decrease. As such, parents and guardians must be proactive in managing and combating digital lifestyle issues such as excessive screen time, cyberbullying, and online safety; |
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•As IoT use cases continue to proliferate and scale, management complexity, security and interoperability must be addressed efficiently and correctly; |
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•Mobile network operators (“MNO”) are being marginalized by messaging applications, and face growing competitive pressure from cable multiple system operators (“MSO”) and others deploying Wi-Fi networks to attract mobile users; |
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•Enterprises face increasing pressure to mobilize workforces, operations, and customer engagement, but lack the expertise and technologies needed to leverage mobile technology securely and cost-effectively; |
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•The ubiquity and convenience of e-commerce has created the need for consumer-facing brands to reimagine brick-and-mortar retail experiences; and |
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solutions:
ViewSpot®– Our retail display management platform provides wireless carriers and retailers with a way to bring powerful on-screen, interactive demos to life. These engaging demo experiences deliver consistent, secure, and targeted content that can be centrally managed and updated via ViewSpot Studio. With the feature set provided by ViewSpot, wireless carriers and other smartphone retailers can easily customize and optimize the content loops displayed on demo devices so that it resonates with in-store shoppers. Building on the touchless functionality added to ViewSpot in 2020, we enhanced the product on several fronts in 2021. Interactive demos created in ViewSpot can now be experienced on iOS devices as well as Android smart devices, which greatly increases the total addressable market for the platform. In addition, our engineering team continued to extend the functionality of the platform’s backend management dashboard during 2021 adding several in-demand features that enhance the utility and usability of ViewSpot as well as giving MNO greater control and autonomy over their content with Studio improvements.
Legacy Graphics Business
During fiscal 2021, we concluded the process that was started in 2019 of winding down our non-core product lines. This included the termination of e-commerce outlets and arrangements where consumers acquired animation software products.
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software as a service ("SaaS").
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immaterial may also affect our business operations. If any of these risks actually occur, our business, financial condition or results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.
As a result of the termination of our family safety contract with our largest customer in 2023, the percentage of our revenues that will be attributable to our other two largest customers is likely to grow in future years if we are not successful in attracting new customers.
On April 1, 2020, SprintThe reduction in sales or termination of relationships with any of these customers would also increase the customer concentration and T-Mobile completed their previously announced merger transaction, with the combined company continuingrisk as to operate as T-Mobile. In the event that the combined company elects to discontinue using the solutions that we currently deliver, or our sales to the combined company materially decrease as compared with our sales to Sprint pre-merger, our revenues and profitability would be materially and adversely affected. In addition, and in connection with the Sprint/T-Mobile merger, on July 1, 2020, the combined company divested certain assets to DISH Network Corporation, including Sprint’s Boost business. A portion of our solutions sales to Sprint/T-Mobile has historically included sales to Boost. In the event that Boost elects to discontinue using the solutions that we currently deliver to it, or our sales to the divested business materially decrease as compared with our sales to Boost pre-divestiture, our revenues and profitability may be materially and adversely affected.
remaining large customers.
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•cause our customers to lose confidence in our solutions; |
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•cause our mobile device manufacturer partners to cease doing business with us; |
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•harm our reputation; |
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•expose us to material liability; and |
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be costly to remedy and could cause interruptions, delays, or cessation of our product sales, which could cause us to lose existing or prospective customers and could negatively affect our results of operations.
Implement additional restructuring and cost reductions,
Our results of operations and financial condition may be adversely affected by public health epidemics, including the ongoing COVID-19 global health pandemic.
The current COVID-19 pandemic has significantly impacted economic activity and markets around the world. The circumstances relating to the pandemic are complex and evolving, with a broad number of governmental and commercial efforts to combat and contain the spread of the virus globally. We have implemented and may in the future implement measures in an effort to protect our employees’ health and well-being, including having office employees work remotely, suspending or reducing employee travel, and withdrawing from or limiting or modifying our participation in certain industry events. The duration and extent of the impact of the coronavirus pandemic on our business, operations and financial results depends on factors that cannot be accurately predicted at this time, such as the ongoing transmission rate and mutation of the virus, emergence of new variants and strains with different characteristics, the extent and effectiveness of containment and mitigation actions, including distribution and effectiveness of vaccines, the impact on economic activity, including the possibility of recession or financial market instability, and the impact of these and other factors on our employees, customers, industry partners, and suppliers.
Many of our customers and suppliers have temporarily modified their business operations as a result of the coronavirus pandemic and related government restrictions. Our customers have experienced and may continue to experience decreased demand for the value-added products and services that we provide to them and may seek to terminate, suspend, or delay existing or new initiatives involving our products and services. A decrease in demand for our products and services or the termination, suspension, or delay of existing or new initiatives by our customers could materially adversely affect our business, financial condition, and results of operations. To the extent the pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks set forth herein.
In the event of illnesses to key employees or a significant portion of our workforce resulting from COVID-19, we may experience inefficiencies, delays, and/or disruptions in research and development activities and increased costs resulting from our efforts to mitigate the impact of COVID-19, all of which may adversely affect our business, operations, and financial results.
Additionally, government intervention with respect to the pandemic, continued widespread growth in infections, travel restrictions, quarantines, or other business and industry closures as a result of the pandemic could, among other things, impact the ability of our employees and contractors to perform their duties, cause increased technology and security risk due to extended and company-wide telecommuting, lead to disruptions with our suppliers, hamper our ability to integrate recent technology acquisitions and cause disruption in our relationship with our customers or prospective customers.
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We also may face competition from our existing customers that choose to internally develop and operate a competing product.
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•general political, social and economic instability; |
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•trade restrictions; |
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•the imposition of governmental controls; |
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•exposure to different legal standards, particularly with respect to intellectual property; |
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•burdens of complying with a variety of foreign laws, including without limitation data privacy laws, such as the General Data Protection Regulation (“GDPR”) in Europe; |
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•import and export license requirements and restrictions of the United States and any other country in which we operate; |
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•unexpected changes in regulatory requirements; |
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•foreign technical standards; |
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•changes in tariffs; |
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•difficulties in staffing and managing international operations; |
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•difficulties in securing and servicing international customers; |
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•difficulties in collecting receivables from foreign entities; |
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Evolving
Becausepenalties and liability.
Further, foreign
oversight, bans on processing personal information, and orders to destroy or not use personal information. Any of these events could have a material adverse effect on our reputation, business, or financial condition.
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business.
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Financial, Investment and Indebtedness Risks
stock.
We believemay only be available to us on unfavorable terms.
It is possible that our future capital requirements, may vary materially from those currently anticipated. The amount of capital that we will need in the future will depend on many factors, including but not limited to:
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In addition, we may raise additional capital to accommodate planned growth, hiring, and infrastructure needs or to consummate acquisitions of other businesses, products, or technologies.
The Company has a history of net losses and may incur substantial net losses in the future.
During 2021, we have been in a net loss position, partially driven by the Family Safety Mobile Business acquisition and the elevated level of expenses at which we are currently operating as we continue to serve some of our carrier customers from the family safety platform that we acquired, and we continue to incur the expenses associated with operating the acquired platform. Although we plan to migrate all of our wireless carrier customers to a single family safety platform over the next year, we will continue to operate with this elevated level of expenses until such migration has been completed. Once we have migrated each of our carrier customers to a consolidated family safety platform, we will focus our efforts on growing subscribers to the family safety product deployed at each of our carrier customers, which we expect will increase our revenues. We also intend to undertake efforts to align our expenses with our projected revenue subsequent to these migrations, however such efforts may not be sufficient to mitigate our losses or may harm our business. In addition, if we do not achieve certain revenue targets subsequent to these migrations, we may need to undertake further cost reduction actions such as restructurings, which couldraise additional funds through debt or equity financings or curtail our growth. We cannot be harmful to our business, we may incur additional operating losses, and we may not be able to achieve profitability.
If we are unable to meet our obligations as they become due over the next twelve months, the Company may not be able to continue as a going concern.
We believesure that we will be able to meetraise equity or debt financing on terms favorable to us and our financial obligations as they become due overstockholders in the next twelve months, primarily basedamounts that we require, or at all. Our inability in the future to obtain additional equity or debt capital on our current working capital levels, our current financial projections, andacceptable terms, or at all, could adversely impact our ability to secure short-term loansexecute our business strategy, which could adversely affect our growth prospects and raise capital when necessary.
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Our ability to continue as a going concern is substantially dependent upon multiple factors, which primarily include those factors set forth above. If our actual financial performance is unfavorable in comparison to our internal plans and projections, we may need to consider additional actions to mitigate conditions or events that would raise substantial doubt about our ability to continue as a going concern, including the following:
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Should our going concern assumption not be appropriate, or should we become unable to continue in the normal course of operations, adjustments would be required to the amounts and classifications of assets and liabilities within our consolidated financial statements, and these adjustments could be significant. Our consolidated financial statements do not reflect the adjustments or reclassifications of assets and liabilities that would be necessary if we were to become unable to continue as a going concern.
Our operating income or loss may continue to change due to shifts in our sales mix and variability in our operating expenses.
Our operating income or loss can change quarter to quarter and year to year due to a change in our sales mix and the timing of our continued investments in research and development and infrastructure. We continue to invest in research and development, which is vital to maintaining and enhancing our technology portfolio. The timing of these additional expenses can significantly vary quarter to quarter and even from year to year.
Other General Risks
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our relationships with our existing employees, customers, and strategic partners. Acquisitions may also subject us to liabilities and risks that are not known or identifiable at the time of the acquisition.
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•the gain or loss of a key customer; |
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•the timing and extent of our customers’ efforts to market and promote such products and services to their users; |
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•the timing of user acceptance of our customers’ branded versions of our products and services and the growth or decline in the subscriber base for such products and services; |
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•our ability to maintain or increase gross margins; |
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•variations in our sales channels or the mix of our product sales; |
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•our ability to anticipate market needs and to identify, develop, complete, introduce, market and produce new products and technologies in a timely manner to address those needs; |
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•the availability and pricing of competing products and technologies and the resulting effect on sales and pricing of our products; |
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•acquisitions; |
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•the effect of new and emerging technologies; |
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•deferrals of orders by our customers in anticipation of new products, applications, product enhancements or operating systems; and |
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ISSUER PURCHASES OF EQUITY SECURITIES |
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Period |
| Total Number of Shares (or Units) Purchased |
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| Average Price Paid per Share (or Unit) |
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| Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
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| Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs |
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October 1 - 31, 2021 |
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| 26,716 |
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| $ | 5.45 |
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| — |
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November 1 - 30, 2021 |
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| 33,473 |
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| $ | 6.07 |
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December 1 - 31, 2021 |
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| 26,782 |
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| $ | 5.08 |
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Total |
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| 86,971 |
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| $ | 5.57 |
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ISSUER PURCHASES OF EQUITY SECURITIES | |||||||||||||||||||||||||||||
Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||||||||
October 1 - 31, 2023 | 20,371 | $ | 1.15 | 0.00 | 0.00 | ||||||||||||||||||||||||
November 1 - 30, 2023 | 20,358 | 0.82 | 0.00 | 0.00 | |||||||||||||||||||||||||
December 1 - 31, 2023 | 88,228 | 0.76 | 0.00 | 0.00 | |||||||||||||||||||||||||
Total | 128,957 | $ | 0.91 |
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In 2021,
With the acquisition of the Family Safety Mobile Business, we now providehave provided white label Family Safety applications to all three Tier 1 wireless carriers in the United States. We have been focused on migrating the customers acquired throughStates; however, our Family Safety Mobile Business acquisitioncontract with one of our Tier 1 customers terminated effective June 30, 2023, with post-termination services ending in November 2023. The revenues associated with that customer contract were approximately 36% of our total revenues for 2023. In 2024, we expect no further revenues related to that contract. To address the impact of the contract termination, starting in the first quarter of 2023, we undertook restructuring efforts that resulted in the elimination of approximately 26% of the Company's global workforce. These actions, coupled with other cost reduction measures taken, have resulted in a 26% reduction in operating expenses in 2023 as compared 2022.
In future quarters, we expect our overall family safety platform revenue to increase because of our competitive positioning with U.S. Tier 1 carrier customers, as we believe that we are nowremain strategically positioned to offer our market-leading family safety platform to the majority ofmost U.S. mobile subscribers. Since our acquisitions of Circle's operator business in 2020 and the Family Safety Mobile Business from Avast in April 2021, we have been focused on migrating those customers from the acquired software platforms to our flagship SafePath platform, with the first such migration being completed during the first quarter of 2022 at one of our U.S. Tier 1 carrier customers. Another U.S. Tier 1 carrier customer was successfully launched on the SafePath platform during the third quarter of 2023. We believe that with these transitions to the SafePath platform now complete, we have an opportunity to increase the respective subscriber bases, and in turn, grow the revenues associated with these Tier 1 carriers. Further, we executed a new, multi-year Family Safety agreement with a major Tier 1 carrier in Europe in the fourth quarter of 2023, which is anticipated to launch in 2024.
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Revenues | |||||||||||||||||||||||
Revenues |
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Cost of revenues |
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| 21.7 |
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| 10.1 |
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Gross profit |
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| 78.3 |
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| 89.9 |
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Gross profit | |||||||||||||||||||||||
Gross profit | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Operating expenses: |
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Selling and marketing |
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| 19.8 |
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| 17.7 |
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Selling and marketing | |||||||||||||||||||||||
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Research and development | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Research and development |
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| 44.8 |
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| 34.6 |
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General and administrative |
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| 30.7 |
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| 25.0 |
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Change in fair value of contingent consideration |
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| 22.0 |
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Amortization of intangible assets |
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| 13.9 |
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| 5.7 |
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General and administrative | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
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Total operating expenses |
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| 131.2 |
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| 83.0 |
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Operating (loss) income |
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| 6.9 |
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Gain on sale of software products |
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Interest income |
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| 0.1 |
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Other income |
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| 0.1 |
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(Loss) income before provision for income taxes |
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| (52.7 | ) |
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| 8.4 |
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Total operating expenses | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Operating loss | |||||||||||||||||||||||
Operating loss | |||||||||||||||||||||||
Operating loss | |||||||||||||||||||||||
Change in fair value of warrant and derivative liabilities | |||||||||||||||||||||||
Change in fair value of warrant and derivative liabilities | |||||||||||||||||||||||
Change in fair value of warrant and derivative liabilities | |||||||||||||||||||||||
Loss on derecognition of debt | |||||||||||||||||||||||
Loss on derecognition of debt | |||||||||||||||||||||||
Loss on derecognition of debt | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Interest expense, net | |||||||||||||||||||||||
Other expense, net | |||||||||||||||||||||||
Other expense, net | |||||||||||||||||||||||
Other expense, net | |||||||||||||||||||||||
Loss before provision for income taxes | |||||||||||||||||||||||
Loss before provision for income taxes | |||||||||||||||||||||||
Loss before provision for income taxes | |||||||||||||||||||||||
Provision for income tax expense |
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| 0.4 |
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| 0.3 |
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Net (loss) income |
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| (53.1 | ) | % |
| 8.1 |
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Provision for income tax expense | |||||||||||||||||||||||
Provision for income tax expense | |||||||||||||||||||||||
Net loss | |||||||||||||||||||||||
Net loss | |||||||||||||||||||||||
Net loss | (59.7) | % | (70.1) | % |
Change in fair value of contingent consideration.
Amortization of intangible assets.fixed asset as it is used to reflect its anticipated deterioration. Amortization of intangible assets consists of the amortization expense based on the pattern of economic benefit generated from the use of the related assets.
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Interest income (expense), net.discount. Interest income is primarily related to interest earned on cash equivalents.
Revenues.2022
Gross profit.
the year-over-year decline in revenue volume.
General and administrative.
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shares, and the purchase agreement forrequired derecognition of the Family Safety Mobile Business acquisition, resulting in an increasenet debt position related to that principal balance, including the derivative, and discounts. There was nothing commensurate in the contingent consideration due and paidyear ended December 31, 2022 as the Notes did not begin to Avast in 2021. amortize until 2023.
AmortizationTable of intangible assets. Contents
Gain on sale of software products. The gain on sale of software products of $0.7 million in 2020 resulted from the sale of the Company’s Moho and Motion Artist animation software in December 2020. There was no gain on sale of software products for 2021.
Interest expense, net. Interest incomeexpense was $0$6.4 million and $0.1$2.7 million for the years ended December 31, 2023 and 2022, respectively. The increase in 2021interest expense of $3.7 million was primarily related to the amortization of the discount and 2020, respectively, resulting fromdebt issuance costs and stated interest earned on cash equivalentsexpense related to the August 2022 Notes and Warrants Offering, with the Notes issued thereunder being outstanding for the full year in 2023 versus less than five months during the respective years.2022.
At December 31, 2021, we had $16.1 million in
capital requirements to maintain normal business operations. However, if we begin to trend unfavorably with respect to our current internal profitability and cash flow projections, the Company may determine to take additional actions, as noted in the our Risk Factor "
If we are unable to meet our obligations as they become due over the next twelve months, the Company may not be able to continue as a going concern." There can be no assurance that any such potential actions will be available or will be available on satisfactory terms. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. As a result of these uncertainties, and notwithstanding management's plans and efforts to date, we have been unable to alleviate substantial doubt about our ability to continue as a going concern within one year from the date that the financial statements are issued.In 2021, netactivities
In 2020, net
Investing Activities
In 2021, cash used in investing activities was $57.5$0.1 million relating primarily to a $56.9for both the years ended December 31, 2023 and 2022.
In 2020, cash used in investing activitiesyear ended December 31, 2023 was $14.7 million, due to $13.5 million in payments relatedprimarily attributable to the Circle acquisition in February 2020, $1.3 million in capital expenditures,timing of borrowings and a $0.2 million equity investment, offset by proceeds of $0.4 millionrepayments from the sale of the Moho and Motion Artist animation software.
Financing Activities
In 2021,short-term insurance premium financing arrangements.
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In 2020,in transaction fees. Also impacting net cash provided by financing activities was $4.2 million, primarily due towere proceeds from the exerciseinsurance premium financing agreements and revolver draws of common stock warrants during the year.
$1.5 million, offset by repayments on those arrangements of $1.3 million.
Each of the above properties is used by our sole reportable operating segment: Wireless.
and Exit or Restructuring Costs
26
and subject to refinement. As a result, during the measurement period that exists up to twelve months from the acquisition date, we may record adjustments to the tangible and specifically identifiable intangible assets acquired and liabilities assumed with a corresponding adjustment to goodwill in the reporting period in which the adjusted amounts are determined. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations.
topics.
|
|
•Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
|
•Level 2 - Include other inputs that are directly or indirectly observable in the marketplace. |
|
As required by FASB ASC Topic No. 820, we
As required by FASB ASC Topic No. 825, Financial Instruments, an entity can choose to measure at
As required by FASB ASC Topic No. 350, Intangibles-Goodwill and Other, for
27
As required by FASB ASC Topic No. 805, we measure acquisition-related contingent consideration at fair value on a recurring basis and may include the use of significant unobservable inputs, and therefore, these instruments represent Level 3 measurements within the fair value hierarchy.
occurred as per ASC Topic No. 360,
Property, Plant, and Equipment.impaired in accordance with ASC Topic No. 350,
Intangibles- Goodwill and Other and ASC 360, Property, Plant and Equipment.On February 12, 2020, we acquired certain assets from Circle Media Labs, Inc., including a source code license to Circle’s parental control software solution and two customer contracts. Pursuant to these contracts, the customer parties thereto license the parental control software solution for distribution to their respective subscribers in designated markets. In each case, the contracts allow the customer to take possession of the software solution and to host it on their platform or with an independent third-party hosting service provider without significant cost. We also provide significant services that are required by the customer to ensure they have the utility of the license. As the license to the software solution and the services we provide are highly interrelated, we have concluded that the license and our services are a single performance obligation. The license fee is earned and recognized on a pro-rata basis over the contract term based on our customer’s continued use of the license and our services.
In April 2021, we acquired certain assets and liabilities from Avast plc and certain of its affiliates and all of the outstanding membership interests of its then subsidiary, Location Labs, LLC. Acquired assets include the source code to Avast’s family safety mobile software solution and cloud-based services (a portion of which was acquired through a perpetual license grant), and the acquired subsidiary’s existing contracts for the solution with five customers. Each contract involves the grant of software licenses and provision of cloud-based services. We do not allow our customers to take possession of the software solution, and since the utility of the license comes from the cloud-based services
28
that we provide, we consider the software license and the cloud-based services to be a single performance obligation.
platform or upon certification of the new device.
The Company accounts
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13,
29
30
Director | Age | Position on Board Committee Memberships, and Other Offices | ||||||||||||
Andrew Arno | 64 | Director; Governance and Nominating, Mergers and Acquisitions | ||||||||||||
Thomas G. Campbell | 73 | Director; Audit, Compensation, Governance and Nominating | ||||||||||||
Steven L. Elfman | 68 | Director; Compensation, Governance and Nominating, Mergers and Acquisitions | ||||||||||||
Samuel Gulko | 92 | Director; Audit, Compensation | ||||||||||||
Asha Keddy | 50 | Director; Audit | ||||||||||||
Chetan Sharma | 54 | Director; Mergers and Acquisitions | ||||||||||||
William W. Smith, Jr. | 76 | Chairman of the Board, President and Chief Executive Officer | ||||||||||||
Gregory Szabo | 76 | Director; Audit, Mergers and Acquisitions |
Name | Age | Position | ||||||||||||
William W. Smith, Jr. | 76 | Chairman of the Board, President and Chief Executive Officer | ||||||||||||
David Blakeney | 63 | Senior Vice President, Engineering | ||||||||||||
Von Cameron | 61 | Chief Revenue Officer | ||||||||||||
Anup Kaneri | 45 | Vice President, Worldwide Products | ||||||||||||
James M. Kempton | 49 | Vice President, Chief Financial Officer and Treasurer | ||||||||||||
Charles B. Messman | 53 | Vice President, Marketing | ||||||||||||
Jennifer M. Reinke | 51 | General Counsel and Secretary | ||||||||||||
Kenneth Shebek | 61 | Vice President, Chief Information Officer | ||||||||||||
David P. Sperling | 55 | Vice President, Chief Technology Officer | ||||||||||||
Stephen W. Stroud | 62 | Vice President, Program Management |
Board Diversity Matrix | ||||||||
Total number of directors | 8 | |||||||
Female | Male | |||||||
Part I: Gender Identity | ||||||||
Directors | 1 | 7 | ||||||
Part II: Demographic Background | ||||||||
Asian | 1 | 1 | ||||||
White | 0 | 6 |
(in thousands) | Q4 2022 | Q1 2023 | Q2 2023(2) | Q3 2023(3) | |||||||||||||||||||||||||
Revenue – target | $ | 20,544 | $ | 10,983 | – | $ | 12,584 | ||||||||||||||||||||||
Revenue – actual | $ | 11,405 | $ | 10,930 | – | $ | 11,001 | ||||||||||||||||||||||
Operating Expenses(1) - target | $ | 12,848 | $ | 11,093 | – | $ | 8,182 | ||||||||||||||||||||||
Operating Expenses(1) - actual | $ | 12,041 | $ | 11,261 | – | $ | 7,748 |
(in thousands) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | ||||||||||||||||||||||
Revenue – target | $ | 20,544 | $ | 13,564 | $ | 16,453 | $ | 16,691 | ||||||||||||||||||
Revenue – actual | $ | 11,405 | $ | 10,930 | $ | 10,338 | $ | 11,001 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | ||||||||||||||||||||||
William W. Smith, Jr. | 2023 | 460,417 | 50,000 | 393,017 | 90,056 | 9,500 | (4) | 1,002,989 | |||||||||||||||||||||
Chairman, President and Chief Executive Officer | 2022 | 506,945 | 50,000 | 675,500 | 182,475 | 9,074 | (5) | 1,423,994 | |||||||||||||||||||||
James M. Kempton | 2023 | 253,229 | 20,000 | 209,076 | 45,028 | 4,500 | (6) | 531,834 | |||||||||||||||||||||
Vice President, CFO and Treasurer | 2022 | 278,820 | 20,000 | 386,000 | 83,416 | 4,100 | (6) | 772,336 | |||||||||||||||||||||
Von Cameron | 2023 | 207,188 | 20,000 | 209,076 | 131,518 | 4,500 | (6) | 572,282 | |||||||||||||||||||||
Chief Revenue Officer | 2022 | (7) | 148,077 | 10,000 | 259,169 | 95,172 | 4,100 | (6) | 516,518 |
Option Awards | Stock Awards | |||||||||||||||||||||||||
Named Executive Officer | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option exercise price ($) | Option expiration date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) (1) | |||||||||||||||||||
William W. Smith, Jr. | 0 | 0 | 0 | — | — | 7,038 | (2) | 5,842 | ||||||||||||||||||
51,500 | (3) | 42,745 | ||||||||||||||||||||||||
92,768 | (4) | 76,997 | ||||||||||||||||||||||||
158,594 | (5) | 131,633 | ||||||||||||||||||||||||
49,670 | (6) | 41,226 | ||||||||||||||||||||||||
James M. Kempton | 0 | 0 | 0 | — | — | 53,010 | (4) | 43,998 | ||||||||||||||||||
90,625 | (5) | 75,219 | ||||||||||||||||||||||||
23,180 | (6) | 19,239 | ||||||||||||||||||||||||
Von Cameron | 0 | 0 | 0 | — | — | 45,044 | (4) | 37,387 | ||||||||||||||||||
90,625 | (5) | 75,219 | ||||||||||||||||||||||||
23,180 | (6) | 19,239 |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | ||||||||||||||
Year (1) | Summary Compensation Table Total for PEO ($) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) (2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) | Net Income ($) (In thousands) | ||||||||||||||
2023 | 1,002,989 | 557,197 | 552,058 | 385,004 | 37.05 | (24,396) | ||||||||||||||
2022 | 1,423,994 | 378,843 | 771,427 | 381,318 | 43.21 | (29,279) | ||||||||||||||
2021 | 2,129,543 | 1,616,387 | 753,088 | 356,820 | 97.43 | (31,043) |
2023 | 2022 | 2021 | |||||||||
Summary Compensation Table Total for PEO (column (b) above) | $ | 1,002,989 | $ | 1,423,994 | $ | 2,129,543 | |||||
Deduction for amounts reported under the “Stock Awards” column the SCT | $ | (393,017) | $ | (675,500) | $ | (1,324,750) | |||||
Increase for fair value at year end of awards granted during year and remain unvested at year end | $ | 202,635 | $ | 333,047 | $ | 771,313 | |||||
Increase for fair value at vesting date of awards granted during year that vested during year | $ | 51,787 | $ | 41,342 | $ | 98,891 | |||||
Change in fair value from prior year end to current year end of awards granted prior to year that were outstanding and unvested at year end | $ | (192,159) | $ | (427,952) | $ | (79,340) | |||||
Change in fair value from prior year end to vesting date of awards granted prior to year that vested during year | $ | (93,870) | $ | (294,593) | $ | 53,808 | |||||
Deduction for fair value from prior year of awards granted prior to year that were forfeited during year | $ | (21,170) | $ | (21,495) | $ | (33,078) | |||||
Compensation Actually Paid to PEO (column (c) above) | $ | 557,197 | $ | 378,843 | $ | 1,616,387 |
2023 | 2022 | 2021 | |||||||||
Average Summary Compensation Table Total for Non-PEO NEOs (column (d) above) | $ | 552,058 | $ | 771,427 | $ | 753,088 | |||||
Deduction for the average of amounts reported under the “Stock Awards” column the SCT | $ | (209,076) | $ | (386,000) | $ | (478,320) | |||||
Increase for average of fair value at year end of awards granted during year and remain unvested at year end | $ | 110,990 | $ | 190,313 | $ | 176,301 | |||||
Increase for average of fair value at vesting date of awards granted during year that vested during year | $ | 28,549 | $ | 23,624 | $ | 53,575 | |||||
Change in average of fair value from prior year end to current year end of awards granted prior to year that were outstanding and unvested at year end | $ | (62,264) | $ | (122,914) | $ | (19,522) | |||||
Change in average of fair value from prior year end to vesting date of awards granted prior to year that vested during year | $ | (24,164) | $ | (88,989) | $ | 21,468 | |||||
Deduction for average of fair value from prior year of awards granted prior to year that were forfeited during year | $ | (11,089) | $ | (6,143) | $ | (149,771) | |||||
Average Compensation Actually Paid to Non-PEO NEOs (column (e) above) (1) | $ | 385,004 | $ | 381,318 | $ | 356,819 |
Name | Fees earned or paid in cash ($) | Stock Awards ($) (1), (2) | Total ($) | |||||||||||||||||
Andrew Arno | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Thomas G. Campbell | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Steven L. Elfman | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Samuel Gulko | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Asha Keddy | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Chetan Sharma | 27,750 | 77,500 | 105,250 | |||||||||||||||||
Gregory J. Szabo | 27,750 | 77,500 | 105,250 |
Common Stock | |||||||||||
Name or Group of Beneficial Owners | Number of Shares | Percent (1) | |||||||||
Directors and Named Executive Officers: | |||||||||||
William W. Smith, Jr. | 5,365,500 | (2) | 7.16% | ||||||||
Andrew Arno | 386,355 | (3) | * | ||||||||
Thomas G. Campbell | 113,700 | (4) | * | ||||||||
Steven L. Elfman | 188,750 | (5) | * | ||||||||
Samuel Gulko | 199,500 | (6) | * | ||||||||
Asha Keddy | 73,082 | (7) | * | ||||||||
Chetan Sharma | 69,082 | (8) | * | ||||||||
Gregory J. Szabo | 225,250 | (9) | * | ||||||||
James M. Kempton | 234,664 | (10) | * | ||||||||
Von Cameron | 195,700 | (11) | * | ||||||||
All current NEOs, executive officers and directors as a group (10 persons) | 7,051,583 | (12) | 9.41% | ||||||||
5% Stockholders | |||||||||||
Iroquois Capital Management L.L.C. | 3,965,186 | (13) | 5.09 | % |
|
| Number of shares to be issued upon exercise of outstanding options |
|
| Weighted average exercise price of outstanding options |
|
| Number of shares remaining available for future issuance |
| |||
2015 Omnibus Equity Incentive Plan (1) |
|
| 110 |
|
| $ | 3.48 |
|
|
| 3,849 |
|
2005 Stock Option / Stock Issuance Plan (2) |
|
| 70 |
|
|
| 4.84 |
|
|
| — |
|
Total |
|
| 180 |
|
| $ | 4.03 |
|
|
| 3,849 |
|
|
|
|
|
Number of shares to be issued upon exercise of outstanding options or other rights | Weighted average exercise price of outstanding options or other rights | Number of shares remaining available for future issuance | |||||||||||||||
2015 Omnibus Equity Incentive Plan (1) | 57 | $ | 3.09 | 3,287 | |||||||||||||
2005 Stock Option / Stock Issuance Plan (2) | 23 | 3.84 | — | ||||||||||||||
Total | 80 | $ | 3.31 | 3,287 |
The information required by this Item is set forth under the heading “Proposal 1: Election of Directors” and under the subheadings “Board Member Independence,” “Audit Committee,” “Compensation Committee,” “Governance and Nominating Committee,” and “Certain
Fee Category | Fiscal 2022 Fees | Fiscal 2023 Fees | |||||||||
Audit Fees | $ | 360,253 | $ | 374,816 | |||||||
Audit-Related Fees | — | — | |||||||||
Tax Fees | — | — | |||||||||
All Other Fees | — | — |
Page | ||||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:367) |
F-1 | |||||||
F-4 | ||||||||
F-5 | ||||||||
F-6 | ||||||||
F-7 | ||||||||
F-8 |
Exhibit No. | Title | Method of Filing | |||||||||||||
2.1 | Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on February 19, 2020 | ||||||||||||||
2.2 | Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K/A filed on March 9, 2021 | ||||||||||||||
3.1 | Amended and Restated Certificate of Incorporation | Incorporated by reference to Exhibit 3.1 to the Registrant's Registration Statement No. 33-95096 (P) | |||||||||||||
3.1.1 | Incorporated by reference to Exhibit 3.1.1 to the Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2000, filed on August 14, 2000 | ||||||||||||||
3.1.2 | Incorporated by reference to Exhibit 3.1.2 to the Registrant’s Annual Report on Form 10-K for the period ended December 31, 2005, filed on March 31, 2006 | ||||||||||||||
3.1.3 | Incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 27, 2012 | ||||||||||||||
3.1.4 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2015 | ||||||||||||||
3.1.5 | Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on October 16, 2015 | ||||||||||||||
32
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3.1.6 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 17, 2016 | |||||||||||||
Exhibit No. | Title | Method of Filing | |||||||||||||
3.1.7 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 4, 2017 | ||||||||||||||
3.2 | Incorporated by reference to Exhibit | ||||||||||||||
|
| ||||||||||||||
4.1 | Incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on March 13, 2020 | ||||||||||||||
4.2 | Specimen certificate representing shares of Common Stock | Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement No. 33-95096 (P) | |||||||||||||
4.3 | Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2015 | ||||||||||||||
4.4 | Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 6, 2018 | ||||||||||||||
4.5 | Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on May 4, 2018 | ||||||||||||||
4.6 | Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on November 7, 2018 | ||||||||||||||
4.7 | Incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on April 19, 2021 | ||||||||||||||
4.8 | Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | ||||||||||||||
4.9 | Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | ||||||||||||||
10.1 | Form of Indemnification Agreement | Incorporated by reference to Exhibit 10.1 to the Registrant's Registration Statement No. 33-95096 (P) | |||||||||||||
10.2* | Incorporated by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 | ||||||||||||||
10.3* | Incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 30, 2015 | ||||||||||||||
33
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10.3.1* | Incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed on June 15, 2018 | |||||||||||||
Exhibit No. | Title | Method of Filing | ||||||||||||||
10.3.2* | Incorporated by reference to Exhibit 10.6.3 to the Registrant’s Annual Report on Form 10-K filed on March 8, 2021 | |||||||||||||||
10.3.3* | Incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 | |||||||||||||||
10.3.4* | Incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 | |||||||||||||||
10.3.5* | Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 12, 2021 | |||||||||||||||
10.3.6* | Incorporated by reference to Exhibit 10.6.1 to the Registrant’s Annual Report on Form 10-K filed on March 30, 2018 | |||||||||||||||
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| Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 6, 2021 | |||||||||||||||
10.12 | Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | |||||||||||||||
10.13 |
| |||||||||||||||
10.14 | Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | |||||||||||||||
10.15 | Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | |||||||||||||||
10.16 | Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on August 11, 2022 | |||||||||||||||
21.1 | Filed herewith | |||||||||||||||
23.1 | Filed herewith | |||||||||||||||
31.1 | Filed herewith | |||||||||||||||
31.2 | Filed herewith | |||||||||||||||
32.1 | Furnished herewith | |||||||||||||||
97.1 | Filed herewith |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document | Filed herewith | ||||||||||||
Exhibit No. | Title | Method of Filing | |||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | |||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | |||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith |
34
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | ||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | Filed herewith | ||||||||||||
(b)Exhibits |
|
35
SMITH MICRO SOFTWARE, INC. | ||||||
Date: | By: /s/ William W. Smith, Jr. | |||||
William W. Smith, Jr. | ||||||
Chairman of the Board, | ||||||
President and Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: | By: /s/ James M. Kempton | |||||
James M. Kempton | ||||||
Vice President and Chief Financial Officer | ||||||
(Principal Financial and Accounting Officer) |
Signature | Title | Date | |||||||||||||
/s/ William W. Smith, Jr. | Chairman of the Board,
|
| |||||||||||||
William W. Smith, Jr. | |||||||||||||||
/s/ James M. Kempton | Vice President and Chief Financial Officer
|
| |||||||||||||
James M. Kempton | |||||||||||||||
/s/ Andrew Arno | Director |
| |||||||||||||
Andrew Arno | |||||||||||||||
/s/ Thomas G. Campbell | Director |
| |||||||||||||
Thomas G. Campbell | |||||||||||||||
/s/ Steven L. Elfman | Director |
| |||||||||||||
Steven L. Elfman | |||||||||||||||
/s/ Samuel Gulko | Director |
| |||||||||||||
Samuel Gulko | |||||||||||||||
/s/ Gregory J. Szabo | Director |
| |||||||||||||
Gregory J. Szabo | |||||||||||||||
/s/ Asha Keddy | Director | February 26, 2024 | |||||||||||||
Asha Keddy | |||||||||||||||
/s/ Chetan Sharma | Director | February 26, 2024 | |||||||||||||
Chetan Sharma |
36
F-1
•Determination of whether promised services are capable of being distinct and are distinct in the context of the Company’s customer contracts which leads to whether they should be accounted for as individual or combined performance obligations. |
|
•Determination of prices for each distinct performance obligation, including for products and services sold separately. |
|
•Determination of the timing of when revenue is recognized for each distinct performance obligation either over time or at a point in time. |
|
•We selected a sample of recorded revenue transactions and performed the following procedures: |
|
|
|
|
|
|
|
F-2
Business combination
Auditing the Company’s accounting for its acquisition of Avast was complex and involved auditor judgement and specialized skills due to the significant management estimation required in determiningFebruary 28, 2023 by estimating the fair value of the reporting unit and the related asset group, respectively. The Company determined the respective fair values by utilizing a combination of a discounted cash flow analysis and market-based valuation methodologies that included significant assumptions such as discount rate, forecasted revenue, gross margin and operating expense projections, and comparable entity industry data. Based on the quantitative assessment performed, the Company concluded that goodwill and definite-lived intangible assets which were valuednot impaired as of February 28, 2023. The Company further performed its annual goodwill impairment test as of December 31, 2023 using a qualitative assessment.
a valuation professional with specialized skills and knowledge.
•Obtained an understanding of management's process and controls related to the Company's impairment analysis and determination of the fair value estimates. |
|
•Evaluated the reasonableness of management's significant assumptions and underlying data used in the valuation models such as forecasted revenues, gross margin and operating expense projections by comparing management's forecasts to current and historical results. |
|
•Performed a sensitivity analysis on the quantitative amounts utilized by management to assess impairment to evaluate the potential impact on the qualitative impairment assessment performed at year end. |
|
March 11, 2022
|
| December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Current assets: |
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|
|
|
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|
|
| ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents |
| $ | 16,078 |
|
| $ | 25,754 |
| ||||||||||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $2 and $10 at December 31, 2021 and 2020, respectively |
|
| 10,590 |
|
|
| 12,347 |
| ||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||
Accounts receivable, net of related allowances of $3 and $3 at December 31, 2023 and 2022, respectively | ||||||||||||||||||||||||||||||
Prepaid expenses and other current assets |
|
| 1,988 |
|
|
| 1,189 |
| ||||||||||||||||||||||
Total current assets |
|
| 28,656 |
|
|
| 39,290 |
| ||||||||||||||||||||||
Equipment and improvements, net |
|
| 2,698 |
|
|
| 2,170 |
| ||||||||||||||||||||||
Right-of-use assets |
|
| 5,710 |
|
|
| 5,785 |
| ||||||||||||||||||||||
Other assets |
|
| 620 |
|
|
| 694 |
| ||||||||||||||||||||||
Intangible assets, net |
|
| 42,631 |
|
|
| 12,698 |
| ||||||||||||||||||||||
Goodwill |
|
| 35,041 |
|
|
| 12,266 |
| ||||||||||||||||||||||
Total assets |
| $ | 115,356 |
|
| $ | 72,903 |
| ||||||||||||||||||||||
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Current liabilities: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Accounts payable | ||||||||||||||||||||||||||||||
Accounts payable | ||||||||||||||||||||||||||||||
Accounts payable |
| $ | 3,301 |
|
| $ | 2,282 |
| ||||||||||||||||||||||
Accrued payroll and benefits |
|
| 4,055 |
|
|
| 2,867 |
| ||||||||||||||||||||||
Current operating lease liabilities |
|
| 1,400 |
|
|
| 1,433 |
| ||||||||||||||||||||||
Other accrued liabilities |
|
| 436 |
|
|
| 216 |
| ||||||||||||||||||||||
Deferred revenue |
|
| 176 |
|
|
| 1,572 |
| ||||||||||||||||||||||
Other current liabilities | ||||||||||||||||||||||||||||||
Current portion of convertible notes payable | ||||||||||||||||||||||||||||||
Derivative liabilities | ||||||||||||||||||||||||||||||
Total current liabilities |
|
| 9,368 |
|
|
| 8,370 |
| ||||||||||||||||||||||
Non-current liabilities: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Warrant liabilities | ||||||||||||||||||||||||||||||
Warrant liabilities | ||||||||||||||||||||||||||||||
Warrant liabilities | ||||||||||||||||||||||||||||||
Operating lease liabilities |
|
| 4,467 |
|
|
| 4,805 |
| ||||||||||||||||||||||
Deferred rent and other long-term liabilities |
|
| 844 |
|
|
| 953 |
| ||||||||||||||||||||||
Deferred tax liability, net |
|
| 117 |
|
|
| 59 |
| ||||||||||||||||||||||
Deferred tax liabilities, net | ||||||||||||||||||||||||||||||
Deferred tax liabilities, net | ||||||||||||||||||||||||||||||
Deferred tax liabilities, net | ||||||||||||||||||||||||||||||
Total non-current liabilities |
|
| 5,428 |
|
|
| 5,817 |
| ||||||||||||||||||||||
Commitments and contingencies (Note 11) |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Commitments and contingencies | Commitments and contingencies | |||||||||||||||||||||||||||||
Stockholders' equity: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 54,259,390 and 41,232,804 shares issued and outstanding at December 31, 2021 and 2020, respectively |
|
| 54 |
|
|
| 41 |
| ||||||||||||||||||||||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 74,783,834 and 56,197,910 shares issued and outstanding at December 31, 2023 and 2022, respectively | ||||||||||||||||||||||||||||||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 74,783,834 and 56,197,910 shares issued and outstanding at December 31, 2023 and 2022, respectively | ||||||||||||||||||||||||||||||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 74,783,834 and 56,197,910 shares issued and outstanding at December 31, 2023 and 2022, respectively | ||||||||||||||||||||||||||||||
Additional paid-in capital |
|
| 352,779 |
|
|
| 279,905 |
| ||||||||||||||||||||||
Accumulated comprehensive deficit |
|
| (252,273 | ) |
|
| (221,230 | ) | ||||||||||||||||||||||
Total stockholders’ equity |
|
| 100,560 |
|
|
| 58,716 |
| ||||||||||||||||||||||
Total liabilities and stockholders' equity |
| $ | 115,356 |
|
| $ | 72,903 |
|
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Revenues |
| $ | 58,422 |
|
| $ | 51,300 |
|
Cost of revenues |
|
| 12,698 |
|
|
| 5,190 |
|
Gross profit |
|
| 45,724 |
|
|
| 46,110 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling and marketing |
|
| 11,581 |
|
|
| 9,096 |
|
Research and development |
|
| 26,197 |
|
|
| 17,772 |
|
General and administrative |
|
| 17,920 |
|
|
| 12,801 |
|
Change in fair value of contingent consideration |
|
| 12,864 |
|
|
| - |
|
Amortization of intangible assets |
|
| 8,100 |
|
|
| 2,920 |
|
Total operating expenses |
|
| 76,662 |
|
|
| 42,589 |
|
Operating (loss) income |
|
| (30,938 | ) |
|
| 3,521 |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
Gain on sale of software products |
|
| — |
|
|
| 711 |
|
Interest income, net |
|
| 34 |
|
|
| 96 |
|
Other income (expense), net |
|
| 76 |
|
|
| (3 | ) |
(Loss) income before provision for income taxes |
|
| (30,828 | ) |
|
| 4,325 |
|
Provision for income tax expense |
|
| 215 |
|
|
| 160 |
|
Net (loss) income |
| $ | (31,043 | ) |
| $ | 4,165 |
|
|
|
|
|
|
|
|
|
|
Net (loss) earnings per share: |
|
|
|
|
|
|
|
|
Basic and diluted |
| $ | (0.61 | ) |
| $ | 0.10 |
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
| 51,232 |
|
|
| 40,808 |
|
Diluted |
|
| 51,232 |
|
|
| 42,764 |
|
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Revenues | $ | 40,862 | $ | 48,513 | |||||||
Cost of revenues (including depreciation of $50 and $105 in the years ended December 31, 2023 and 2022, respectively) | 10,559 | 14,210 | |||||||||
Gross profit | 30,303 | 34,303 | |||||||||
Operating expenses: | |||||||||||
Selling and marketing | 11,089 | 12,883 | |||||||||
Research and development | 17,145 | 29,388 | |||||||||
General and administrative | 12,779 | 15,507 | |||||||||
Depreciation and amortization | 7,345 | 7,452 | |||||||||
Total operating expenses | 48,358 | 65,230 | |||||||||
Operating loss | (18,055) | (30,927) | |||||||||
Other income (expense): | |||||||||||
Change in fair value of warrant and derivative liabilities | 4,214 | 4,669 | |||||||||
Loss on derecognition of debt | (3,991) | — | |||||||||
Interest expense, net | (6,354) | (2,680) | |||||||||
Other expense, net | (52) | (115) | |||||||||
Loss before provision for income taxes | (24,238) | (29,053) | |||||||||
Provision for income tax expense | 158 | 226 | |||||||||
Net loss | $ | (24,396) | $ | (29,279) | |||||||
Loss per share: | |||||||||||
Basic and diluted | $ | (0.38) | $ | (0.53) | |||||||
Weighted average shares outstanding: | |||||||||||
Basic and diluted | 64,916 | 55,422 |
|
|
|
|
|
|
|
|
|
| Additional |
|
| Accumulated |
|
|
|
|
| ||
|
| Common stock |
|
| paid-in |
|
| comprehensive |
|
|
|
|
| |||||||
|
| Shares |
|
| Amount |
|
| capital |
|
| deficit |
|
| Total |
| |||||
BALANCE, December 31, 2019 |
|
| 38,476 |
|
| $ | 38 |
|
| $ | 274,041 |
|
| $ | (225,395 | ) |
| $ | 48,684 |
|
Non-cash compensation recognized on stock options and ESPP |
|
| — |
|
|
| — |
|
|
| 65 |
|
|
| — |
|
|
| 65 |
|
Restricted stock grants, net of cancellations |
|
| 1,000 |
|
|
| 1 |
|
|
| 2,998 |
|
|
| — |
|
|
| 2,999 |
|
Cancellation of shares for payment of withholding tax |
|
| (309 | ) |
|
| — |
|
|
| (1,440 | ) |
|
| — |
|
|
| (1,440 | ) |
Employee stock purchase plan |
|
| 6 |
|
|
| — |
|
|
| 19 |
|
|
| — |
|
|
| 19 |
|
Exercise of common stock warrants |
|
| 2,047 |
|
|
| 2 |
|
|
| 4,194 |
|
|
| — |
|
|
| 4,196 |
|
Exercise of stock options |
|
| 13 |
|
|
| — |
|
|
| 28 |
|
|
| — |
|
|
| 28 |
|
Net income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,165 |
|
|
| 4,165 |
|
BALANCE, December 31, 2020 |
|
| 41,233 |
|
| $ | 41 |
|
| $ | 279,905 |
|
| $ | (221,230 | ) |
| $ | 58,716 |
|
Non-cash compensation recognized on stock options and ESPP |
|
| — |
|
|
| — |
|
|
| 83 |
|
|
| — |
|
|
| 83 |
|
Restricted stock grants, net of cancellations |
|
| 991 |
|
|
| 1 |
|
|
| 4,764 |
|
|
| — |
|
|
| 4,765 |
|
Cancellation of shares for payment of withholding tax |
|
| (385 | ) |
|
| — |
|
|
| (2,220 | ) |
|
| — |
|
|
| (2,220 | ) |
Employee stock purchase plan |
|
| 10 |
|
|
| — |
|
|
| 37 |
|
|
| — |
|
|
| 37 |
|
Common shares issued in stock offering, net of offering costs |
|
| 9,521 |
|
|
| 10 |
|
|
| 59,701 |
|
|
| — |
|
|
| 59,711 |
|
Common shares issued in connection with Avast acquisition, net |
|
| 1,460 |
|
|
| 1 |
|
|
| 8,380 |
|
|
| — |
|
|
| 8,381 |
|
Exercise of common stock warrants |
|
| 1,408 |
|
|
| 1 |
|
|
| 2,064 |
|
|
| — |
|
|
| 2,065 |
|
Exercise of stock options |
|
| 21 |
|
|
| — |
|
|
| 65 |
|
|
| — |
|
|
| 65 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (31,043 | ) |
|
| (31,043 | ) |
BALANCE, December 31, 2021 |
|
| 54,259 |
|
| $ | 54 |
|
| $ | 352,779 |
|
| $ | (252,273 | ) |
| $ | 100,560 |
|
Common Stock | Additional Paid-in Capital | Accumulated Comprehensive Deficit | Total | ||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||
BALANCE, December 31, 2021 | 54,259 | $ | 54 | $ | 352,779 | $ | (252,273) | $ | 100,560 | ||||||||||||||||||||
Non-cash compensation recognized on stock options and employee stock purchase plan ("ESPP") | — | — | 86 | — | 86 | ||||||||||||||||||||||||
Restricted stock grants, net of cancellations | 1,187 | 1 | 4,861 | — | 4,862 | ||||||||||||||||||||||||
Cancellation of shares for payment of withholding tax | (406) | — | (1,218) | — | (1,218) | ||||||||||||||||||||||||
ESPP shares issued | 17 | — | 40 | — | 40 | ||||||||||||||||||||||||
Exercise of stock options | 9 | — | 19 | — | 19 | ||||||||||||||||||||||||
Common shares issued in stock offering, net of offering costs | 1,132 | 1 | 1,308 | — | 1,309 | ||||||||||||||||||||||||
Net loss | — | — | — | (29,279) | (29,279) | ||||||||||||||||||||||||
BALANCE, December 31, 2022 | 56,198 | 56 | 357,875 | (281,552) | 76,379 | ||||||||||||||||||||||||
Non-cash compensation recognized on stock options and ESPP | — | — | 30 | — | 30 | ||||||||||||||||||||||||
Restricted stock grants, net of cancellations | 1,819 | 2 | 4,804 | — | 4,806 | ||||||||||||||||||||||||
ESPP shares issued | 15 | — | 15 | — | 15 | ||||||||||||||||||||||||
Cancellation of shares for payment of withholding tax | (374) | — | (496) | — | (496) | ||||||||||||||||||||||||
Common shares issued in settlement and prepayment of notes payable | 17,126 | 17 | 19,035 | — | 19,052 | ||||||||||||||||||||||||
Net loss | — | — | — | (24,396) | (24,396) | ||||||||||||||||||||||||
BALANCE, December 31, 2023 | 74,784 | 75 | 381,263 | (305,948) | 75,390 | ||||||||||||||||||||||||
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Operating activities: |
|
|
|
|
|
|
|
|
Net (loss) income |
| $ | (31,043 | ) |
| $ | 4,165 |
|
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 9,338 |
|
|
| 3,582 |
|
Non-cash rent expense |
|
| 1,160 |
|
|
| 1,110 |
|
Change in fair value of contingent consideration |
|
| 12,864 |
|
|
| — |
|
Gain on sale of software products |
|
| — |
|
|
| (711 | ) |
Provision for adjustments to accounts receivable and doubtful accounts |
|
| 5 |
|
|
| (60 | ) |
Provision for excess and obsolete inventory |
|
| (97 | ) |
|
| — |
|
Gain on disposal of fixed assets |
|
| (14 | ) |
|
| — |
|
Non-cash compensation related to stock options and restricted stock |
|
| 4,848 |
|
|
| 3,064 |
|
Deferred income taxes |
|
| 58 |
|
|
| 153 |
|
Change in operating accounts: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 7,938 |
|
|
| (1,269 | ) |
Prepaid expenses and other assets |
|
| (268 | ) |
|
| (388 | ) |
Accounts payable and accrued liabilities |
|
| (16,309 | ) |
|
| (1,906 | ) |
Deferred revenue |
|
| (1,396 | ) |
|
| 184 |
|
Net cash (used in) provided by operating activities |
|
| (12,916 | ) |
|
| 7,924 |
|
Investing activities: |
|
|
|
|
|
|
|
|
Acquisitions, net |
|
| (56,865 | ) |
|
| (13,500 | ) |
Proceeds from sale of software products |
|
| 192 |
|
|
| 367 |
|
Capital expenditures |
|
| (830 | ) |
|
| (1,323 | ) |
Purchase of equity instrument |
|
| — |
|
|
| (225 | ) |
Net cash used in investing activities |
|
| (57,503 | ) |
|
| (14,681 | ) |
Financing activities: |
|
|
|
|
|
|
|
|
Proceeds from exercise of common stock warrants |
|
| 2,066 |
|
|
| 4,196 |
|
Payments related to contingent consideration |
|
| (1,136 | ) |
|
| — |
|
Proceeds from exercise of stock options |
|
| 65 |
|
|
| 29 |
|
Proceeds from stock sale for employee stock purchase plan |
|
| 37 |
|
|
| 18 |
|
Proceeds from common stock offering |
|
| 59,711 |
|
|
| — |
|
Net cash provided by financing activities |
|
| 60,743 |
|
|
| 4,243 |
|
Net decrease in cash and cash equivalents |
|
| (9,676 | ) |
|
| (2,514 | ) |
Cash and cash equivalents, beginning of year |
|
| 25,754 |
|
|
| 28,268 |
|
Cash and cash equivalents, end of year |
| $ | 16,078 |
|
| $ | 25,754 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid (received) for income taxes |
| $ | 84 |
|
| $ | (173 | ) |
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Issuance of common stock in connection with acquisition |
| $ | 8,381 |
|
| $ | — |
|
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Operating activities: | |||||||||||
Net loss | $ | (24,396) | $ | (29,279) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 7,395 | 7,556 | |||||||||
Non-cash lease expense | (191) | (306) | |||||||||
Non-cash transaction costs including amortization of debt discount and issuance costs | 5,993 | 3,324 | |||||||||
Change in fair value of warrant and derivative liabilities | (4,214) | (4,669) | |||||||||
Loss on derecognition of debt | 3,991 | — | |||||||||
Stock based compensation | 4,835 | 4,948 | |||||||||
Deferred income taxes | (10) | 61 | |||||||||
Loss on disposal of assets | 12 | 4 | |||||||||
Changes in operating accounts: | |||||||||||
Accounts receivable | 2,589 | 85 | |||||||||
Prepaid expenses and other assets | 12 | (25) | |||||||||
Accounts payable and accrued liabilities | (2,825) | (1,120) | |||||||||
Other liabilities | (164) | 160 | |||||||||
Net cash used in operating activities | (6,973) | (19,261) | |||||||||
Investing activities: | |||||||||||
Capital expenditures, net | (4) | (49) | |||||||||
Other investing activities | 136 | 164 | |||||||||
Net cash provided by investing activities | 132 | 115 | |||||||||
Financing activities: | |||||||||||
Proceeds from notes and warrants offering | — | 15,000 | |||||||||
Proceeds from stock and warrants offering | — | 3,000 | |||||||||
Stock, notes, and warrants offering costs | — | (1,227) | |||||||||
Proceeds from financing arrangements | 981 | 1,541 | |||||||||
Repayments of financing arrangements | (1,036) | (1,278) | |||||||||
Other financing activities | (5) | 58 | |||||||||
Net cash (used in) provided by financing activities | (60) | 17,094 | |||||||||
Net decrease in cash and cash equivalents | (6,901) | (2,052) | |||||||||
Cash and cash equivalents, beginning of period | 14,026 | 16,078 | |||||||||
Cash and cash equivalents, end of period | $ | 7,125 | $ | 14,026 | |||||||
Supplemental disclosures of cash flow information: | |||||||||||
Cash paid for income taxes | 187 | 253 | |||||||||
Non-cash investing and financing activities: | |||||||||||
Issuance of common stock in settlement and prepayment of notes payable | $ | 15,000 | $ | — | |||||||
Derivative and warrants in connection with notes and stock offerings | $ | — | $ | 9,561 |
analytics.
|
|
•In-demand digital services that connect today’s digital lifestyle, including family location services, parental controls, and consumer IoT devices to mobile consumers worldwide; |
|
•Easy visual access to voice messages on mobile devices through visual voicemail and voice-to-text transcription functionality; and |
|
The Company has international operations resulting from current
F-8
and Exit or Restructuring Costs
Fair Value of Financial Instruments
The Company measures and discloses fair value measurements as required by FASB ASC Topic No. 820, Fair Value Measurements and Disclosures.
Fair value is an exit price, representing the amount that would be received upon the sale of an asset or the amount that would be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
|
|
|
|
|
|
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
As required by FASB ASC Topic No. 820, the Company measures its cash equivalents and short-term investments at fair value. The Company’s cash equivalents and short-term investments are classified within Level 1 by using quoted market prices utilizing market observable inputs.
F-9
As required by FASB ASC Topic No. 825, Financial Instruments, an entity can choose to measure at fair value many financial instruments and certain other items that are not currently required to be measured at fair value. Subsequent changes in fair value for designated items are required to be reported in earnings in the current period. This Topic also establishes presentation and disclosure requirements for similar types of assets and liabilities measured at fair value.
As required by FASB ASC Topic No. 350, Intangibles – Goodwill and Other, for goodwill and other intangibles impairment analysis, Smith Micro may utilize fair value measurements which are categorized within Level 3 of the fair value hierarchy.
As required by FASB ASC Topic No. 805, Business Combinations, the Company measures acquisition-related contingent consideration at fair value on a recurring basis and may include the use of significant unobservable inputs, and therefore, these liabilities represent Level 3 measurements within the fair value hierarchy.
The following table presents a reconciliation of the Company’s Level 3 financial liabilities related to contingent consideration that are measured at fair value on a recurring basis (in thousands):
|
|
| ||
|
| |||
|
| |||
|
|
| ||
|
|
|
During the year ended December 31, 2021, the Company recorded an increase in the fair value of the contingent consideration of $12.9 million and reported such increase in operating expenses. See Note 2 for additional information.
Cash and Cash Equivalents
Credit Losses
F-10
Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. After technological feasibility is established, any additional costs are capitalized. Through December 31, 2021,2023, software has been substantially completed concurrently with the establishment of technological feasibility; accordingly, 0no costs have been capitalized to date.
The
2022.
In the first quarter of 2023, as a result of the triggering event indicated above, the Company performed an interim quantitative analysis of certain customer relationship intangibles assets in which did not result in any impairment. Further, in the fourth quarter of 2023 certain other customer relationship intangible assets were assessed for impairment, and that did not result in any impairment.
Smith Micro transfers software licenses to its customers on a royalty free, non-exclusive, non-transferrable, limited use basis during the term of the agreement. In some instances, the Company performs customization services to ensure the software operates within its customer’s operating platforms as well as the operating platforms of the mobile devices used by their end customers, before transferring the license. Revenue related to these services is recognized at a point in time upon acceptance of the software license by the customer. The Company also earns usage-based revenue on its platforms. Usage based revenue is generated based on active licenses used by Smith Micro’s customer’s end customers, the provision of hosting services, revenue share based on media placements on Smith Micro’s platform and use of the Company’s cloud-based services. Smith Micro recognizes usage-based revenue when the Company has completed its performance obligation and has the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, the Company ratably recognizes revenue over the contract period when customers pay in advance of service delivery.
On February 12, 2020, the Company acquired certain assets from Circle Media Labs Inc. (“Circle”) (as further described in Note 2 below), including a source code license to Circle’s parental control software solution and 2 customer contracts. Pursuant to these contracts, the customer parties thereto license the parental control
F-11
software solution for distribution to their respective subscribers in designated markets. In each case, the contracts allow the customer to take possession of the software solution and to host it on their platform or with an independent third-party hosting service provider without significant cost. The Company also provides significant services that are required by the customer to ensure they have the utility of the license. As the license to the software solution and the services the Company provides are highly interrelated, the Company has concluded that the license and services are a single performance obligation. The license fee is earned and recognized on a pro-rata basis over the contract term based on the customer’s continued use of the license and the services.
In April 2021, Smith Micro acquired certain assets and liabilities from Avast plc and certain of its affiliates (“Avast”) and all of the outstanding membership interests of its then subsidiary, Location Labs LLC all related to its family safety mobile software business (“Family Safety Mobile Business”). Acquired assets included the source code to Avast’s family safety mobile software solution and cloud-based services (a portion of which was acquired through a perpetual license grant), and the acquired subsidiary’s existing contracts for the solution with five customers. Each contract involves the grant of software licenses and provision of cloud-based services. Smith Micro does not allow its customers to take possession of the software solution, and since the utility of the license comes from the cloud-based services that are provided, the Company considers the software license and the cloud-based services to be a single performance obligation.
Smith Micro also provides consulting services to develop customer-specified functionality that are generally not on its software development roadmap. The Company recognizes revenue from its consulting services upon delivery and acceptance by the customer of its software enhancements and upgrades. For certain customers the Company provides maintenance and technology support services for which the customer either pays upfront or as the Company provides the services. When the customer pays upfront, the payments are recorded as contract liabilities and revenue is recognized ratably over the contract period as this is the Company’s stand ready performance obligation that is satisfied ratably over the maintenance and technology services period.
The Company receives upfront payments from customers from services to be provided under its ViewSpot® contracts. The advance receipts are deferred and subsequently recognized ratably over the contract period. Smith Micro also provides consulting services to configure ad hoc targeted promotional content for its customers upon request. These requests are driven by customers’ marketing initiatives and tend to be short term “bursts” of activity. These revenues are recognized upon delivery of the configured promotional content to the cloud platform.
The Company recognize sales of goods and services based on the five-step analysis of transactions as provided in Topic 606. For all contracts with customers, the Company first identifies the contract which usually is established when a contract is fully executed by each party and consideration is expected to be received. Next, the Company identifies the performance obligations in the contract. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company then determines the transaction
F-12
platforms, the provision of hosting services, and revenue share based on media placements on Smith Micro’s platform. Smith Micro recognizes usage-based revenue when the Company has completed its performance obligation and has the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, the Company ratably recognizes usage-based revenue over the contract period when customers pay in advance of service delivery.
F-13
Impact of COVID-19
During the past seven quarters, the Company saw a reduction ininstrument, which increases the number of SafePath® platform subscribers comparedpotentially dilutive securities used to March 2020calculate diluted EPS. This ASU also adds several new disclosure requirements. The Company adopted this ASU in 2022 with disclosures included in Note 6.
As the impactassessed as being probable of the COVID-19 pandemic on the economy and the Company’s operations continues to evolve, the Company will continue to monitor the impact on the Company’s operations and, if needed, postpone non-essential capital expenditures, reduce operating costs, and substantially reduce discretionary spending.
2. Acquisitions
Avast Family Safety Mobile Business
On April 16, 2021, the Company acquired substantially all the assets and assumed certain specified liabilities related to Avast and its subsidiaries’ family safety mobile software business (the “Family Safety Mobile Business”), including all of the outstanding membership interests of Location Labs, LLC, pursuant to a Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”).
The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands):
Fair value of assets acquired |
| $ | 74,818 |
|
Fair value of liabilities assumed |
|
| 2,085 |
|
Total purchase price |
| $ | 72,733 |
|
|
|
|
|
|
Components of purchase price: |
|
|
|
|
Cash |
| $ | 63,216 |
|
Common stock |
|
| 8,381 |
|
Contingent consideration |
|
| 1,136 |
|
Total purchase price |
| $ | 72,733 |
|
F-14
The Company’s allocation of the purchase price is summarized as follows (in thousands):
Assets: |
|
|
|
|
Cash |
| $ | 6,351 |
|
Accounts receivable |
|
| 6,225 |
|
Prepaid expenses |
|
| 513 |
|
Fixed assets |
|
| 921 |
|
Intangible assets |
|
| 38,033 |
|
Goodwill |
|
| 22,775 |
|
Total assets |
| $ | 74,818 |
|
Liabilities: |
|
|
|
|
Accounts payable |
| $ | 392 |
|
Accrued payroll and benefits |
|
| 1,662 |
|
Accrued expenses |
|
| 31 |
|
Total liabilities |
| $ | 2,085 |
|
Total purchase price |
| $ | 72,733 |
|
The Purchase Agreement included an earn-out provision that provided for additional future payments to Avast aggregating up to $14.0 million. Approximately $1.1 million of the earn-out consideration was included in the original purchase price allocation and valued based upon a percentage of the projected revenue stream from a specified contract utilizing a discounted cash flow method. During the third quarter of 2021, the Company recorded the remaining $12.9 million as a charge to operating expenses due to a contract extension becoming probable with a given customer designated in the earn-out provision, resulting in an increase in the contingent consideration due to Avast. Approximately $13.7 million in contingent consideration was included within “other accrued liabilities” in the consolidated balance sheet as of September 30, 2021. In November 2021, the remainder of the earn-out was paid in full and no further earn-out payments will be due in the future.
The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of the Family Safety Mobile Business. The goodwill is expected to be deductible for income tax purposes.
Approximately $19.7 million in revenues and $6.2 million in cost of revenues from the Family Safety Mobile Business are included in the consolidated statement of operations for the period from April 16, 2021, through December 31, 2021.
Unaudited pro forma results of operations for the years ended December 31, 2021 and 2020 are included below as if the acquisition of the Family Safety Mobile business occurred on January 1, 2020. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had the Family Safety Mobile Business been acquired at the beginning of 2020, nor does it purport to represent results of operations for any future periods.
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands, except per share amounts) |
| |||||
Revenues |
| $ | 67,654 |
|
| $ | 87,908 |
|
Net (loss) income |
|
| (16,304 | ) |
|
| 4,046 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
Basic |
| $ | (0.30 | ) |
| $ | 0.08 |
|
Diluted |
| $ | (0.30 | ) |
| $ | 0.08 |
|
F-15
The purpose of the Family Safety Mobile Business acquisition was to acquire a portfolio of mobile family safety services including location features, content filtering and screen time management, cementing Smith Micro as a leader in delivering mobile family safety software solutions to wireless carriers and to further expand Smith Micro’s white-label digital safety solutions, positioning the Company as a leading family safety software-as-a-service provider globally while adding critical headcount in the U.S. and Europe.
Circle Operator Business
On February 12, 2020, the Company acquired the operator business of Circle Media Labs Inc. (“Circle”) pursuant to a certain Asset Purchase Agreement by and between the Company and Circle.
The following table summarizes the consideration paid for the Circle acquisition in 2020 (in thousands):
Fair value of assets acquired |
| $ | 14,966 |
|
Fair value of liabilities assumed |
|
| 1,466 |
|
Total purchase price |
| $ | 13,500 |
|
|
|
|
|
|
Components of purchase price: |
|
|
|
|
Cash |
| $ | 13,500 |
|
Total purchase price |
| $ | 13,500 |
|
The Company’s allocation of the purchase price is summarized as follows (in thousands):
Assets: |
|
|
|
|
Inventory, net |
| $ | 14 |
|
Intangible assets |
|
| 10,483 |
|
Goodwill |
|
| 4,469 |
|
Total assets |
| $ | 14,966 |
|
Liabilities: |
|
|
|
|
Deferred revenue |
| $ | 1,290 |
|
Amounts due to seller |
|
| 176 |
|
Total liabilities |
| $ | 1,466 |
|
Total purchase price |
| $ | 13,500 |
|
The purpose of the transaction was to acquire certain assets related to the Circle operator business, including 2 new customer contracts and a source code license to Circle’s then deployed parental control software and related technology. All of the goodwill acquired as a part of this transaction is deductible for tax purposes.
3. Equipment and Improvements
|
| December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Computer hardware, software, and equipment |
| $ | 10,531 |
|
| $ | 9,814 |
| ||||||||||||||||||||||
Leasehold improvements |
|
| 3,378 |
|
|
| 2,959 |
| ||||||||||||||||||||||
Office furniture and fixtures |
|
| 803 |
|
|
| 714 |
| ||||||||||||||||||||||
Construction in progress |
|
| 13 |
|
|
| 24 |
| ||||||||||||||||||||||
|
|
| 14,725 |
|
|
| 13,511 |
| ||||||||||||||||||||||
8,896 | ||||||||||||||||||||||||||||||
Less accumulated depreciation and amortization |
|
| (12,027 | ) |
|
| (11,341 | ) | ||||||||||||||||||||||
Equipment and improvements, net |
| $ | 2,698 |
|
| $ | 2,170 |
|
F-16
|
|
|
| December 31, 2021 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Useful life (years) |
| Gross |
|
| Additions |
|
| Accumulated amortization |
|
| Net book value before impairment |
|
| Impairment charges |
|
| Net book value |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Remaining Useful Life (in Years) | Weighted Average Remaining Useful Life (in Years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchased technology |
| 4-10 |
| $ | 5,400 |
|
| $ | 8,129 |
|
| $ | (3,764 | ) |
| $ | 9,765 |
|
| $ | — |
|
| $ | 9,765 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Customer relationships |
| 3-14 |
|
| 3,975 |
|
|
| 23,985 |
|
|
| (2,816 | ) |
|
| 25,144 |
|
|
|
|
|
|
| 25,144 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Customer contracts |
| 6 |
|
| 7,000 |
|
|
| — |
|
|
| (2,976 | ) |
|
| 4,024 |
|
| $ | (1,465 | ) |
|
| 2,559 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Software License |
| 10 |
|
| — |
|
|
| 5,419 |
|
|
| (793 | ) |
|
| 4,626 |
|
| $ | — |
|
|
| 4,626 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Trademarks/trade names |
| 2 |
|
| 38 |
|
|
| — |
|
|
| (38 | ) |
|
| — |
|
| $ | — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
Non-compete |
| 3 |
|
| 283 |
|
|
| — |
|
|
| (196 | ) |
|
| 87 |
|
| $ | — |
|
|
| 87 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Support agreement |
| 0.5-1 |
|
| 369 |
|
|
| 500 |
|
|
| (869 | ) |
|
| — |
|
| $ | — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
Software license | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patents | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patents | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patents |
| 7 |
|
| 600 |
|
|
| — |
|
|
| (150 | ) |
|
| 450 |
|
| $ | — |
|
|
| 450 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Total |
|
|
| $ | 17,665 |
|
| $ | 38,033 |
|
| $ | (11,602 | ) |
| $ | 44,096 |
|
| $ | (1,465 | ) |
| $ | 42,631 |
| ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
| December 31, 2020 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Useful life (years) |
| Gross |
|
| Additions |
|
| Accumulated amortization |
|
| Net book value before impairment |
|
| Impairment charges |
|
| Net book value |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchased technology |
| 4-8 |
| $ | 2,518 |
|
| $ | 2,882 |
|
| $ | (1,612 | ) |
| $ | 3,788 |
|
| $ | — |
|
| $ | 3,788 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Customer relationships |
| 3-10 |
|
| 3,975 |
|
|
| — |
|
|
| (1,158 | ) |
|
| 2,817 |
|
|
| (411 | ) |
|
| 2,406 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Customer contracts |
| 6 |
|
| — |
|
|
| 7,000 |
|
|
| (1,242 | ) |
|
| 5,758 |
|
|
| — |
|
|
| 5,758 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Trademarks/trade names |
| 2 |
|
| 38 |
|
|
| — |
|
|
| (38 | ) |
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||
Non-compete |
| 3 |
|
| 51 |
|
|
| 232 |
|
|
| (119 | ) |
|
| 164 |
|
|
| — |
|
|
| 164 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Support agreement |
| 1 |
|
| — |
|
|
| 369 |
|
|
| (323 | ) |
|
| 46 |
|
|
| — |
|
|
| 46 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Patents |
| 7 |
|
| — |
|
|
| 600 |
|
|
| (64 | ) |
|
| 536 |
|
|
| — |
|
|
| 536 |
| ||||||||||||||||||||||||||||||||||||||||||||||
Total |
|
|
| $ | 6,582 |
|
| $ | 11,083 |
|
| $ | (4,556 | ) |
| $ | 13,109 |
|
| $ | (411 | ) |
| $ | 12,698 |
|
December 31, 2022 | |||||||||||||||||||||||
Weighted Average Remaining Useful Life (in Years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
Purchased technology | 7 | $ | 13,529 | $ | (5,835) | $ | 7,694 | ||||||||||||||||
Customer relationships | 12 | 27,548 | (4,490) | 23,058 | |||||||||||||||||||
Customer contracts | 1 | 7,000 | (5,673) | 1,327 | |||||||||||||||||||
Software license | 7 | 5,419 | (1,552) | 3,867 | |||||||||||||||||||
Non-compete | 0 | 283 | (273) | 10 | |||||||||||||||||||
Patents | 4 | 600 | (236) | 364 | |||||||||||||||||||
Total | $ | 54,379 | $ | (18,059) | $ | 36,320 |
Year Ending December 31, |
|
|
|
| ||
2022 |
| $ | 6,311 |
| ||
2023 |
|
| 5,874 |
| ||
2024 | ||||||
2024 | ||||||
2024 |
|
| 5,635 |
| ||
2025 |
|
| 5,402 |
| ||
2026 |
|
| 5,007 |
| ||
thereafter |
|
| 14,402 |
| ||
2027 | ||||||
2028 and thereafter | ||||||
Total |
| $ | 42,631 |
| ||
Total | ||||||
Total |
F-17
During the first quarter of 2021, the Company received a customer contract termination notice related to a customer contract acquired in the acquisition of Circle’s operator business in February 2020, which was otherwise set to expire in the second quarter of 2024. The contract was terminated effective April 15, 2021; however, in accordance with its terms, Smith Micro continues to deliver wind-down services under the contract. While the terms of the contract allow for a wind-down period of up to two years post termination, the Company expects to continue services under this contract through 2022. The Company determined the customer contract should be accounted for under the contract modification guidance in Topic 606. As a result, the Company recognized deferred revenue of $0.6 million, which was being amortized over the customer contract term and is amortizing the remaining $0.3 million over the remaining service period. Additionally, the Company reviewed its customer contract intangible asset associated with this customer contract and determined that the carrying value was in excess of its fair value. Accordingly, the Company recorded a $1.5 million impairment charge within “amortization of intangible assets” in the consolidated statements of operations during the year ended December 31, 2021 and is amortizing the remaining $0.4 million over the remaining service period.
2023. There also was not any impairment of the Company's goodwill at December 31,
2022.On March 15, 2021,
Convertible Notes Derivative | Common stock market price | Risk-free interest rate | Expected dividend yield | Expected term (in years) | Expected volatility | ||||||||||||||||||||||||
August 11, 2022 at Issuance | $ | 3.04 | 3.28 | % | — | 1.39 | 56.3 | % | |||||||||||||||||||||
December 31, 2022 | $ | 2.10 | 4.68 | % | — | 1.00 | 61.6 | % | |||||||||||||||||||||
March 31, 2023 for April 1, 2023 Installment date | $ | 1.16 | 4.68 | % | — | 0.75 | 84.3 | % | |||||||||||||||||||||
May 1, 2023 for May 1, 2023 Installment date | $ | 1.22 | 4.68 | % | — | 0.67 | 81.6 | % | |||||||||||||||||||||
May 31, 2023 for June 1, 2023 Installment date | $ | 1.21 | 4.91 | % | — | 0.59 | 86.2 | % | |||||||||||||||||||||
June 30, 2023 for July 1, 2023 Installment date | $ | 1.11 | 5.42 | % | — | 0.50 | 90.7 | % | |||||||||||||||||||||
July 31, 2023 for August 1, 2023 Installment date | $ | 1.14 | 5.53 | % | — | 0.42 | 59.9 | % | |||||||||||||||||||||
August 31, 2023 for September 1, 2023 Installment date | $ | 1.71 | 5.54 | % | — | 0.33 | 69.9 | % | |||||||||||||||||||||
September 30, 2023 for October 1, 2023 Installment date | $ | 1.21 | 5.56 | % | — | 0.25 | 78.2 | % | |||||||||||||||||||||
November 1, 2023 for November 1, 2023 Installment date | $ | 1.03 | 5.60 | % | — | 0.17 | 52.4 | % | |||||||||||||||||||||
December 1, 2023 for December 1, 2023 Installment date | $ | 0.68 | 5.53 | % | — | 0.08 | 147.5 | % | |||||||||||||||||||||
December 31, 2023 for December 31, 2023 Installment date | $ | 0.83 | 5.53 | % | — | 0.00 | — | % |
Warrants
The Company issued warrants to purchase shares of Common Stock in connection with registered direct offerings completed in 2017 and 2018. AsNotes as of December 31, 20212023 and 2020, there2022 is as follows (in thousands):
December 31, 2023 | December 31, 2022 | ||||||||||
Gross Current Balance | $ | — | $ | 15,000 | |||||||
Unamortized Discount | — | (5,656) | |||||||||
Unamortized Issuance Costs | — | (337) | |||||||||
Net Balance | $ | — | $ | 9,007 |
Warrants | Additional Warrants | ||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||
Common stock market price | 0.83 | $ | 2.10 | $ | 0.83 | $ | 2.10 | ||||||||||||||||
Risk-free interest rate | 4.10 | % | 3.76 | % | 4.10 | % | 3.76 | % | |||||||||||||||
Expected dividend yield | — | — | — | — | |||||||||||||||||||
Expected term (in years) | 3.61 | 4.61 | 4.12 | 5.12 | |||||||||||||||||||
Expected volatility | 66.8 | % | 64.2 | % | 68.7 | % | 65.5 | % |
Level 3 | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||
Notes and Warrants Offering Derivative | $ | — | $ | 1,575 | |||||||||||||||||||||||||
Warrants | 334 | 2,052 | |||||||||||||||||||||||||||
Additional Warrants | 263 | 1,265 | |||||||||||||||||||||||||||
Total | $ | 597 | $ | 4,892 |
6.
Notes and Warrants Offering Derivative | Warrants | Additional Warrants | Total | ||||||||||||||||||||
Measurement at December 31, 2021 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Additions | 4,178 | 3,793 | 1,590 | 9,561 | |||||||||||||||||||
Change in fair value | (2,603) | (1,741) | (325) | (4,669) | |||||||||||||||||||
Measurement at December 31, 2022 | 1,575 | 2,052 | 1,265 | 4,892 | |||||||||||||||||||
Additions | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Change in fair value | (1,494) | (1,718) | (1,002) | (4,214) | |||||||||||||||||||
Derecognition of debt | (81) | — | — | (81) | |||||||||||||||||||
Measurement at December 31, 2023 | $ | — | $ | 334 | $ | 263 | $ | 597 |
(Loss) income
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Domestic |
| $ | (31,301 | ) |
| $ | 4,213 |
| ||||||||||||||||||||||
Foreign |
|
| 473 |
|
|
| 112 |
| ||||||||||||||||||||||
Total (loss) income before provision for income taxes |
| $ | (30,828 | ) |
| $ | 4,325 |
| ||||||||||||||||||||||
Total loss before provision for income taxes |
F-18
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Current: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Federal | ||||||||||||||||||||||||||||||
Federal | ||||||||||||||||||||||||||||||
Federal |
| $ | — |
|
| $ | (133 | ) | ||||||||||||||||||||||
State |
|
| 5 |
|
|
| 6 |
| ||||||||||||||||||||||
Foreign |
|
| 152 |
|
|
| 134 |
| ||||||||||||||||||||||
Total current |
|
| 157 |
|
|
| 7 |
| ||||||||||||||||||||||
Deferred: |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Federal |
|
| 24 |
|
|
| 155 |
| ||||||||||||||||||||||
Federal | ||||||||||||||||||||||||||||||
Federal | ||||||||||||||||||||||||||||||
State |
|
| 35 |
|
|
| 24 |
| ||||||||||||||||||||||
Foreign |
|
| (1 | ) |
|
| (26 | ) | ||||||||||||||||||||||
Total deferred |
|
| 58 |
|
|
| 153 |
| ||||||||||||||||||||||
Total income tax expense |
| $ | 215 |
|
| $ | 160 |
|
|
| Year Ended December 31, |
|
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||
2023 | 2023 | 2022 | |||||||||||||||||||||||||||||
Federal statutory rate |
|
| 21.0 |
| % |
| 21.0 |
| % | Federal statutory rate | 21.0 | % | 21.0 | % | |||||||||||||||||
State tax, net of federal benefit |
|
| 4.3 |
|
|
| 2.7 |
|
| ||||||||||||||||||||||
Equity compensation |
|
| 0.4 |
|
|
| (1.8 | ) |
| ||||||||||||||||||||||
International tax items |
|
| 0.1 |
|
|
| (0.1 | ) |
| ||||||||||||||||||||||
Foreign taxes |
|
| (0.5 | ) |
|
| 2.5 |
|
| ||||||||||||||||||||||
State NOL true-up |
|
| 1.2 |
|
|
| 2.5 |
|
| ||||||||||||||||||||||
Debt extinguishment loss | |||||||||||||||||||||||||||||||
State Net Operating Loss true-up | |||||||||||||||||||||||||||||||
Miscellaneous |
|
| (0.4 | ) |
|
| 1.3 |
|
| ||||||||||||||||||||||
Effect of change in rate |
|
| 0.8 |
|
|
| 3.5 |
|
| ||||||||||||||||||||||
Change in valuation allowance |
|
| (27.6 | ) |
|
| (27.9 | ) |
| ||||||||||||||||||||||
|
|
| (0.7 | ) | % |
| 3.7 |
| % | ||||||||||||||||||||||
(0.7) | (0.7) | % | (0.8) | % |
F-19
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Deferred income tax assets |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net operating loss carry forwards |
| $ | 47,204 |
|
| $ | 42,127 |
| ||||||||||||||||||||||
Net operating loss carry forwards | ||||||||||||||||||||||||||||||
Net operating loss carry forwards | ||||||||||||||||||||||||||||||
Research and development expenses | ||||||||||||||||||||||||||||||
Intangibles | ||||||||||||||||||||||||||||||
Credit carry forwards |
|
| 3,027 |
|
|
| 3,027 |
| ||||||||||||||||||||||
Nondeductible accruals | ||||||||||||||||||||||||||||||
163j limitation | ||||||||||||||||||||||||||||||
Fixed assets |
|
| 84 |
|
|
| 116 | �� | ||||||||||||||||||||||
Intangibles |
|
| 6,259 |
|
|
| 3,346 |
| ||||||||||||||||||||||
Equity-based compensation |
|
| 208 |
|
|
| 343 |
| ||||||||||||||||||||||
Nondeductible accruals |
|
| 532 |
|
|
| 365 |
| ||||||||||||||||||||||
Various reserves |
|
| - |
|
|
| 23 |
| ||||||||||||||||||||||
Deferred rent |
|
| 33 |
|
|
| 94 |
| ||||||||||||||||||||||
Other |
|
| 7 |
|
|
| 2 |
| ||||||||||||||||||||||
State taxes | ||||||||||||||||||||||||||||||
Total deferred income tax assets - net | ||||||||||||||||||||||||||||||
Deferred income tax liabilities | ||||||||||||||||||||||||||||||
Prepaid expenses | ||||||||||||||||||||||||||||||
Prepaid expenses | ||||||||||||||||||||||||||||||
Prepaid expenses | ||||||||||||||||||||||||||||||
Unrealized translation gain/loss | ||||||||||||||||||||||||||||||
Total deferred income tax liabilities - net | ||||||||||||||||||||||||||||||
Valuation allowance |
|
| (57,346 | ) |
|
| (49,405 | ) | ||||||||||||||||||||||
Total deferred income taxes - net |
|
| 8 |
|
|
| 38 |
| ||||||||||||||||||||||
Deferred income tax liabilities |
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Foreign intangibles |
|
| - |
|
|
| (1 | ) | ||||||||||||||||||||||
Unrealized translation gain/loss |
|
| (45 | ) |
|
| 3 |
| ||||||||||||||||||||||
Prepaid expenses |
|
| (80 | ) |
|
| (99 | ) | ||||||||||||||||||||||
Total deferred income liabilities |
|
| (125 | ) |
|
| (97 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Net deferred income tax (liabilities) |
| $ | (117 | ) |
| $ | (59 | ) | ||||||||||||||||||||||
Net deferred income tax liabilities |
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Beginning balance |
| $ | 428 |
|
| $ | 428 |
| ||||||||||||||||||||||
Other |
|
| (16 | ) |
|
| — |
| ||||||||||||||||||||||
Gross unrecognized tax benefits, ending balance |
| $ | 412 |
|
| $ | 428 |
|
In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. A significant factor in the Company’s assessment is that the Company was in a
F-20
After a review of the four sources of taxable income as of December 31, 2021 (as described above), and after consideration of the Company’s continuing cumulative loss position as of December 31, 2021, the Company recorded a valuation allowance related to its U.S.-based deferred tax assets of $57.3 million at December 31, 2021. The valuation allowance on deferred tax assets decreased by $7.9 million and $1.0 million in 2021 and 2020, respectively.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense, however during 20212023 and 2020,2022, the Company did 0tnot recognize any interest or penalties. TheThere were no cumulative interest and penalties at December 31, 20212023 and 2020 were $0.2022. The Company does not anticipate any material changes to unrecognized tax benefits within the next twelve months that will affect the effective tax rate.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset taxable income for years beginning before 2021. The CARES Act also made modifications to IRC Sec. 163(j) to increase the allowable interest from 30%
F-21
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
| (in thousands, except per share amounts) |
| |||||
Numerator: |
|
|
|
|
|
|
|
|
Net (loss) income |
| $ | (31,043 | ) |
| $ | 4,165 |
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic |
|
| 51,232 |
|
|
| 40,808 |
|
Potential common shares - options (treasury stock method) |
|
| — |
|
|
| 1,956 |
|
Weighted average shares outstanding - diluted |
|
| 51,232 |
|
|
| 42,764 |
|
Shares excluded (anti-dilutive) |
|
| 1,324 |
|
|
| 98 |
|
Net (loss) earnings per common share: |
|
|
|
|
|
|
|
|
Basic and diluted |
| $ | (0.61 | ) |
| $ | 0.10 |
|
8.
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands, except per share amounts) | |||||||||||
Numerator: | |||||||||||
Net loss | $ | (24,396) | $ | (29,279) | |||||||
Denominator: | |||||||||||
Weighted average shares outstanding – basic | 64,916 | 55,422 | |||||||||
Potential common shares – options / warrants (treasury stock method) and convertible notes (as if converted method) | — | — | |||||||||
Weighted average shares outstanding – diluted | 64,916 | 55,422 | |||||||||
Shares excluded (anti-dilutive) | 7,622 | 3,661 | |||||||||
Net loss per common share: | |||||||||||
Basic | $ | (0.38) | $ | (0.53) | |||||||
Diluted | $ | (0.38) | $ | (0.53) |
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Convertible notes, as if converted | 2,752 | 1,754 | |||||||||
Outstanding stock options | 102 | 101 | |||||||||
Outstanding warrants | 4,768 | 1,806 | |||||||||
Total anti-dilutive shares | 7,622 | 3,661 |
9.
On June 18, 2015, Smith Micro’s stockholders approved
In the third quarter of 2023, there were new grants issued with tranched vesting periods of two to seven months.
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Cost of sales | $ | — | $ | 2 | |||||||
Sales and marketing | 955 | 1,100 | |||||||||
Research and development | 1,056 | 1,082 | |||||||||
General and administrative | 2,824 | 2,764 | |||||||||
Total non-cash stock compensation expense | $ | 4,835 | $ | 4,948 |
Shares | Weighted Avg. Exercise Price | Wtd. Avg. Remaining Contractual Life (Yrs) | Aggregate Intrinsic Value | |||||||||||||||||||||||
Outstanding as of December 31, 2022 | 139 | $ | 3.75 | 5.10 | $ | 6 | ||||||||||||||||||||
Exercised | — | — | — | $ | — | |||||||||||||||||||||
Forfeited | (54) | $ | 4.26 | — | $ | 7 | ||||||||||||||||||||
Expired | (5) | $ | 5.24 | — | $ | — | ||||||||||||||||||||
Outstanding as of December 31, 2023 | 80 | $ | 3.30 | 3.85 | $ | — | ||||||||||||||||||||
Vested and expected to vest at December 31, 2023 | 80 | $ | 3.30 | 3.83 | $ | — | ||||||||||||||||||||
Exercisable as of December 31, 2023 | 75 | $ | 3.21 | 3.64 | $ | — |
F-22
Stock Compensation Expense
The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognized as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation.
Valuation of Stock Option and Restricted Stock Awards
The assumptions used to compute the share-based compensation costs for the stock options granted during the years ended December 31, 2021 and 2020, using the Black-Scholes option pricing model, were as follows:
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Weighted average grant date fair value of stock options |
| $ | 5.94 |
|
| $ | 2.93 |
|
Assumptions |
|
|
|
|
|
|
|
|
Risk-free interest rate (weighted average) |
|
| 0.87 | % |
|
| 0.44 | % |
Expected dividend yield |
|
| — |
|
|
| — |
|
Weighted average expected life (years) |
|
| 6.2 |
|
|
| 6.2 |
|
Volatility (weighted average) |
|
| 74.5 | % |
|
| 80.8 | % |
Forfeiture rate |
|
| 12.0 | % |
|
| 12.0 | % |
The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The Company assumed no dividend yield because it does not expect to pay dividends for the foreseeable future. The weighted average expected life is the vesting period for those options granted during that period. The average volatility is based on the actual historical volatility of the Company’s common stock. The forfeiture rate was based on modified employee turnover.
Valuation of ESPP
The fair values are estimated at the beginning of each offering period using a Black-Scholes valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. Expected volatility was based on the historical volatility on the day of grant. Following is a schedule of the shares purchased, the fair value per share, and the Black-Scholes model assumptions for each offering period:
Offering Period Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Offering Period Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| September 30, |
|
| March 31, |
|
| September 30, |
|
| March 31, |
| ||||||||||||||||||||||||||||||||||||||||
Offering Period Ended |
| 2021 |
|
| 2021 |
|
| 2020 |
|
| 2020 |
| September 30, 2023 | March 31, 2023 | September 30, 2022 | March 31, 2022 | ||||||||||||||||||||||||||||||||||||
Shares purchased for offering period |
|
| 5,360 |
|
|
| 4,668 |
|
|
| 4,184 |
|
|
| 1,536 |
| Shares purchased for offering period | 7,000 | 8,250 | 8,250 | 10,901 | 10,901 | 6,019 | 6,019 | ||||||||||||||||||||||||||||
Fair value per share |
| $ | 1.90 |
|
| $ | 1.25 |
|
| $ | 1.75 |
|
| $ | 2.28 |
| ||||||||||||||||||||||||||||||||||||
Fair value per share as of the beginning of the offering period | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Assumptions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||
Risk-free interest rate (average) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rate (average) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Risk-free interest rate (average) |
|
| 0.05 | % |
|
| 0.12 | % |
|
| 0.29 | % |
|
| 1.84 | % | 4.99 | % | 3.92 | % | 0.86 | % | 0.05 | % | ||||||||||||||||||||||||||||
Expected dividend yield |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||||||||||||
Weighted average expected life (years) |
|
| 0.5 |
|
|
| 0.5 |
|
|
| 0.5 |
|
|
| 0.5 |
| Weighted average expected life (years) | 0.5 | 0.5 | |||||||||||||||||||||||||||||||||
Volatility (average) |
|
| 44.6 | % |
|
| 47.1 | % |
|
| 86.8 | % |
|
| 86.3 | % | Volatility (average) | 88.0 | % | 27.8 | % | 32.5 | % | 43.1 | % |
F-23
Compensation Costs
Non-cash stock-based compensation expenses related to stock options, restricted stock grants and the ESPP were recorded in the financial statements as follows (in thousands):
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cost of sales |
| $ | 1 |
|
| $ | — |
|
Sales and marketing |
|
| 901 |
|
|
| 549 |
|
Research and development |
|
| 965 |
|
|
| 559 |
|
General and administrative |
|
| 2,981 |
|
|
| 1,956 |
|
Total non-cash stock compensation expense |
| $ | 4,848 |
|
| $ | 3,064 |
|
As
Stock Options
A summary of the Company’s stock options outstanding under the 2015 OEIP and 2005 Plan as of December 31, 2021 and 2020 and the activity during the years ended herein are as follows (in thousands except per share amounts):
|
| Shares |
|
| Weighted Avg. Exercise Price |
|
| Wtd. Avg. Remaining Contractual Life (Yrs) |
|
| Aggregate Intrinsic Value |
| ||||
Outstanding as of December 31, 2020 |
|
| 205 |
|
| $ | 3.95 |
|
|
|
|
|
|
|
|
|
Granted |
|
| 20 |
|
| $ | 5.94 |
|
|
|
|
|
| $ | - |
|
Exercised |
|
| (21 | ) |
| $ | 3.12 |
|
|
|
|
|
| $ | 55 |
|
Forfeited |
|
| (8 | ) |
| $ | 2.99 |
|
|
|
|
|
| $ | 20 |
|
Expired |
|
| (2 | ) |
| $ | 16.28 |
|
|
|
|
|
| $ | - |
|
Outstanding as of December 31, 2021 |
|
| 194 |
|
| $ | 3.95 |
|
|
| 4.9 |
|
| $ | 218 |
|
Vested and expected to vest at December 31, 2021 |
|
| 181 |
|
| $ | 4.03 |
|
|
| 4.9 |
|
| $ | 211 |
|
Exercisable as of December 31, 2021 |
|
| 140 |
|
| $ | 4.04 |
|
|
| 3.6 |
|
| $ | 163 |
|
F-24
Restricted Stock Awards
|
|
|
|
|
| Weighted average |
| ||||||||||||||||||||||||||||
|
| Number |
|
| grant date |
| |||||||||||||||||||||||||||||
|
| of shares |
|
| fair value |
| |||||||||||||||||||||||||||||
Unvested at December 31, 2019 |
|
| 1,559 |
|
| $ | 1.98 |
| |||||||||||||||||||||||||||
Number of shares | Number of shares | Weighted average grant date fair value | |||||||||||||||||||||||||||||||||
Unvested at December 31, 2021 | |||||||||||||||||||||||||||||||||||
Granted |
|
| 1,000 |
|
| $ | 6.40 |
| |||||||||||||||||||||||||||
Vested |
|
| (857 | ) |
| $ | 2.99 |
| |||||||||||||||||||||||||||
Canceled and forfeited |
|
| — |
|
| $ | - |
| |||||||||||||||||||||||||||
Unvested at December 31, 2020 |
|
| 1,702 |
|
| $ | 4.07 |
| |||||||||||||||||||||||||||
Unvested at December 31, 2022 | |||||||||||||||||||||||||||||||||||
Granted |
|
| 1,287 |
|
| $ | 7.02 |
| |||||||||||||||||||||||||||
Vested |
|
| (1,027 | ) |
| $ | 4.47 |
| |||||||||||||||||||||||||||
Canceled and forfeited |
|
| (295 | ) |
| $ | 5.60 |
| |||||||||||||||||||||||||||
Unvested at December 31, 2021 |
|
| 1,667 |
|
| $ | 5.83 |
| |||||||||||||||||||||||||||
Unvested at December 31, 2023 |
10.
CommSuite®
the cloud-based platform as a single performance obligation. The Company provides the perpetual license on a royalty free basis and earns revenue based either on a fixed fee for usage of its cloud-based services or on a revenue share arrangement. Smith Micro recognizes the usage-based and revenue share fees when it is entitled to the consideration earned for the distinct service period based on its customer’s usage of its cloud-based services.
F-25
SafePath Cloud Based Services
Smith Micro’s SafePath solution is a hybrid Software as a Service (“SaaS”) offering. The Company considers the provision of the perpetual license and the cloud-based platform as a single performance obligation. The Company provides the perpetual license on a royalty free basis and earns revenue based on a fixed fee usage of its cloud-based services. Smith Micro recognizes the usage-based fees when it is entitled to the consideration earned for the distinct service period based on its customer’s usage of its cloud-based services.
Smith Micro acquired certain assets from Circle, including a source code license to Circle’s parental control software solution and 2 customer contracts. Pursuant to these contracts, the customer parties thereto license the parental control software solution for distribution to their respective subscribers in designated markets. In each case, the contracts allow the customer to take possession of the software solution and to host it on their platform or with an independent third-party hosting service provider without significant cost. Smith Micro also provide significant services that are required by the customer to ensure they have the utility of the software license. As the license to the software solution and the services the Company provides are highly interrelated, Smith Micro has concluded that the license and its services are a single performance obligation. The license fee is earned and recognized on a pro-rata basis over the contract term based on the customer’s continued use of the license and the Company’s services
ViewSpot Cloud Based Services
ViewSpot product is a cloud-based platform that its MNO customers use to display its promotional content to mobile devices being sold in its retail outlets. Using this solution, the MNOs have the ability to promote specific mobile devices in targeted geographic retail locations and monitor the efficacy of the promotions and the mobile device user’s behavior to the targeted advertising. Smith Micro sells a royalty free license, consulting services to configure the advertising content so that it can be displayed on targeted mobile devices, and cloud-based services to serve the advertising content and capture end consumer’s behavior on the mobile device. ViewSpot services depend on a significant level of integration, interdependency, and interrelation between the on-premise applications, consulting services and the cloud services, and are accounted for together as a single performance obligation. The ViewSpot services are sold on a fixed fee basis to Smith Micro’s customers based on pre-defined purchase order. Since Smith Micro is obligated to provide the required services over the contract period, the revenue is recognized over time.
From time to time, the Company also provides consulting services to configure ad hoc targeted promotional content for Smith Micro’s customers upon request. These requests are driven by the customers’ marketing initiatives and tend to be short term “bursts” of activity. Smith Micro recognizes revenues from these ad hoc services at a point in time which is upon delivery of the configured promotional content to the cloud platform.
In 2020 and prior, Smith Micro sold off-the-shelf Graphics software products directly to end users as well as through its distribution and reseller channel partners. These products required no customization and minimal post-sale technology support services. The Company recognized revenue from software sales at the time it
F-26
transferred control of the product to the customer. This occurred upon shipment of the product or when the customer downloaded the software from the Company’s website or website of Smith Micro’s distributor and resellers partners. In some instances, Smith Micro consigned its software products to a distributor or reseller. In those instances, Smith Micro recognized revenue when the end consumer takes control of the product. Smith Micro offered a 30 day return policy to its customers and a return reserve was established at the time revenue was recorded. The Company reviewed available retail channel information and made a determination of a return provision for sales made to distributors and retailers based on current channel inventory levels and historical return patterns. The return reserve was monitored and adjusted based on actual experience. Historically, returns were insignificant.
As discussed in Note 4, during the first quarter of 2021, Smith Micro received a customer contract termination notice related to a customer contract acquired in the acquisition of Circle’s operator business, which was otherwise set to expire in the second quarter of 2024. The contract was terminated effective April 15, 2021; however, in accordance with its terms, Smith Micro continues to deliver wind-down services under the contract. While the terms of the contract allow for a wind-down period of up to two years post termination, the Company expects to continue services under this contract through 2022. The Company determined the customer contract should be accounted for under the contract modification guidance in Topic 606. As a result, the Company recognized deferred revenue of $0.6 million which was being amortized over the customer contract term with the remaining $0.3 million, being amortized over the remaining service period. Additionally, the Company reviewed its customer contract intangible asset associated with this customer contract and determined that the carrying value was in excess of its fair value. Accordingly, the Company recorded a $1.5 million impairment charge within “amortization of intangible assets” in the consolidated statements of operations during the year ended December 31, 2021 with the remaining $0.4 million being amortized over the remaining service period.
respectively.
F-27
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
License and service fees |
| $ | 3,730 |
|
| $ | 3,575 |
| ||||||||||||||||||||||
Hosted environment usage fees |
|
| 13,770 |
|
|
| 18,209 |
| ||||||||||||||||||||||
Cloud based usage fees |
|
| 38,415 |
|
|
| 25,973 |
| ||||||||||||||||||||||
Consulting services and other |
|
| 2,507 |
|
|
| 3,543 |
| ||||||||||||||||||||||
Total revenues |
| $ | 58,422 |
|
| $ | 51,300 |
|
11.
12.
F-28
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Lease cost, gross |
| $ | 2,297 |
|
| $ | 2,254 |
|
Sublease income |
|
| (603 | ) |
|
| (603 | ) |
Total lease cost, net |
| $ | 1,694 |
|
| $ | 1,651 |
|
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Lease cost | $ | 1,674 | $ | 1,654 | |||||||
Sublease income | — | (18) | |||||||||
Total lease cost | $ | 1,674 | $ | 1,636 |
|
| As of December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Right-of-use assets |
| $ | 5,710 |
|
| $ | 5,785 |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||
Current lease liabilities |
| $ | 1,400 |
|
| $ | 1,433 |
| ||||||||||||||||||||||
Current lease liabilities | ||||||||||||||||||||||||||||||
Current lease liabilities | ||||||||||||||||||||||||||||||
Long-term lease liabilities |
|
| 4,467 |
|
|
| 4,805 |
| ||||||||||||||||||||||
Total lease liabilities |
| $ | 5,867 |
|
| $ | 6,238 |
|
|
| As of December 31, 2021 |
| |||||||||||
2022 |
| $ | 1,710 |
| ||||||||||
2023 |
|
| 1,697 |
| ||||||||||
As of December 31, 2023 | As of December 31, 2023 | |||||||||||||
2024 |
|
| 1,533 |
| ||||||||||
2025 |
|
| 1,175 |
| ||||||||||
2026 |
|
| 487 |
| ||||||||||
Total lease payments | ||||||||||||||
Total lease payments | ||||||||||||||
Total lease payments |
|
| 6,602 |
| ||||||||||
Less imputed interest |
|
| (735 | ) | ||||||||||
Present value of lease liabilities |
| $ | 5,867 |
|
13.
As of December 31, 2023 | As of December 31, 2022 | |||||||
Weighted average remaining lease term (years) | 2.31 | 3.08 | ||||||
Weighted average discount rate | 6.47% | 6.22% |
|
| Year Ended December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
CommSuite |
| $ | 13,717 |
|
| $ | 18,163 |
|
SafePath |
|
| 40,981 |
|
|
| 28,027 |
|
ViewSpot |
|
| 3,558 |
|
|
| 4,239 |
|
Netwise |
|
| 117 |
|
|
| 151 |
|
Other |
|
| 49 |
|
|
| 91 |
|
Total wireless revenues |
| $ | 58,422 |
|
| $ | 50,671 |
|
Year Ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
Family Safety | $ | 34,513 | $ | 39,798 | |||||||
CommSuite | 2,834 | 4,846 | |||||||||
ViewSpot | 3,515 | 3,869 | |||||||||
Total Wireless revenues | $ | 40,862 | $ | 48,513 |
F-29
trade payables as of December 31, 2022.
|
| Year Ended December 31, |
| |||||||||||||||||||||||||||
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||
2023 | 2023 | 2022 | ||||||||||||||||||||||||||||
Americas |
| $ | 55,322 |
|
| $ | 49,349 |
| ||||||||||||||||||||||
EMEA |
|
| 3,024 |
|
|
| 1,930 |
| ||||||||||||||||||||||
Asia Pacific |
|
| 76 |
|
|
| 21 |
| ||||||||||||||||||||||
Total revenues |
| $ | 58,422 |
|
| $ | 51,300 |
|
14. Gain on Sale of Software Products
In December 2020, pursuant
15.these geographic locations.