Smith Micro Software(SMSI) - 2022 Q4 - Annual Report

Financial Performance - In 2022, revenues declined by 17% to $48.5 million, primarily due to an $8.9 million decrease in the CommSuite product line [125]. - Gross profit for 2022 was $34.3 million, representing 70.7% of revenues, down from $45.7 million or 78.3% in 2021 [138]. - The net loss for 2022 was $29.3 million, resulting in a net loss per diluted share of $0.53 [125]. Operating Expenses - Operating expenses increased to 134.5% of revenues in 2022, compared to 131.2% in 2021, with significant increases in selling and marketing expenses [128]. - Research and development expenses rose to $29.9 million in 2022, an increase of $3.7 million from 2021, driven by contractor costs for SafePath development [140]. - Net cash used in operating activities was $19.3 million for 2022, primarily due to a net loss of $29.3 million [148]. Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2022, were approximately $14.0 million, indicating liquidity to meet financial obligations [147]. - Net cash provided by financing activities was $17.1 million in 2022, mainly from a Notes and Warrant Offering of $15.0 million [151]. Research and Development - Research and development costs decreased by approximately $1.5 million, or 18%, in Q4 2022 compared to Q2 2022 as migration efforts neared completion [126]. - The company anticipates that certain costs of sales related to acquired platforms will be eliminated post-migration, potentially increasing gross margins [126]. Corporate Structure and Locations - The corporate headquarters is located in Pittsburgh, Pennsylvania, leasing approximately 35,621 square feet, with the lease expiring on April 30, 2026 [154]. - The company leases an additional 8,513 square feet in Aliso Viejo, California, expiring on October 31, 2024, and 12,728 square feet in Belgrade, Serbia, expiring on July 31, 2026 [154]. Accounting Policies - As of December 31, 2022, there were no off-balance sheet arrangements reported [157]. - The company applies FASB ASC Topic No. 805 for business combinations, recognizing assets and liabilities at fair value on the acquisition date [159]. - Goodwill is assessed for impairment at least annually, with any excess of carrying value over fair value recorded as an impairment loss [167]. - Revenue is recognized based on FASB ASC Topic No. 606, reflecting the transfer of promised goods or services to customers [169]. - Usage-based revenue is generated based on active subscribers' access and usage of software licenses, recognized upon completion of performance obligations [170]. - Stock-based compensation is recognized as an expense over the vesting period using the straight-line method as per FASB ASC Topic No. 718 [173].