Business description of SMITH-MICRO-SOFTWARE-INC


	Year Ended December 31,
	2011			2010			2009

Revenues		100.0	%		100.0	%		100.0	%
Cost of revenues		23.8	%		11.9	%		14.4	%

Gross profit		76.2	%		88.1	%		85.6	%
Operating expenses:
Selling and marketing		46.0	%		22.8	%		23.3	%
Research and development		72.2	%		32.8	%		34.0	%
General and administrative		43.8	%		18.4	%		17.9	%
Restructuring expenses		5.5	%		-			-
Goodwill and long-lived asset impairment		195.5	%		-			-

Total operating expenses		363.0	%		74.0	%		75.2	%

Operating income (loss)		(286.8	)%		14.1	%		10.4	%
Interest and other income		0.2	%		0.1	%		0.3	%

Income (loss) before taxes		(286.6	)%		14.2	%		10.7	%
Income tax expense (benefit)		(10.3	)%		4.7	%		6.3	%

Net income (loss)		(276.3	)%		9.5	%		4.4	%

The following table shows the revenues generated by each business segment (in thousands):


		Payments due by period
Contractual obligations:	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Operating lease obligations	$	20,802	$	2,840	$	5,354	$	4,507	$	8,101
Purchase obligations		502		502		-		-		-

Total	$	21,304	$	3,342	$	5,354	$	4,507	$	8,101


	Year Ended December 31,
	2011			2010			2009
Current:
Federal	$	(6,844	)	$	3,071		$	3,662
State		190			652			1,215
Foreign		311			54			65

Total current		(6,343	)		3,777			4,942

Deferred:
Federal		(873	)		943			2,734
State		1,713			(82	)		22
Foreign		-			-			-
Excess tax benefits related to stock based compensation		-			1,543			871
Tax deficiencies related to restricted stock expense		(426	)		(15	)		(66	)
Purchase accounting adjustment - Core Mobility		-			-			(1,765	)
Other adjustments		-			(1	)		-

Total deferred		414			2,388			1,796

Total provision	$	(5,929	)	$	6,165		$	6,738


	Year Ended December 31,
	2011			2010			2009
Federal statutory rate		35	%		35	%		35	%
State tax, net of federal benefit		4			5			7
Equity compensation		-			3			13
R&D tax credit		-			(5	)		(4	)
Goodwill impairment		(5	)		-			-
Other		-			(5	)		8
Change in valuation allowance		(30	)		-			-

		4	%		33	%		59	%


	Year Ended December 31,
	2011			2010
Current
Various reserves	$	369		$	366
Nondeductible accruals		1,661			1,208
Deferred state taxes		-			228
Prepaid expenses		(96	)		(127	)
Other		25			(27	)
Equity compensation		-			917
Valuation allowance		(1,951	)		-
Total Current	$	8		$	2,565
Non- current
Credit carryforwards		4,223			1,201
Net operating loss carryforwards		11,286			659
State tax		-			(591	)
Fixed assets		1,695			(850	)
Amortization		35,252			(53	)
Identifiable intangibles acquired		(2,288	)		(2,258	)
Equity based compensation		978			165
Other		83			-
Valuation allowance		(51,239	)		-
Total Non-current	$	(10	)	$	(1,727	)


	Number of shares			Weighted average grant date fair value
Unvested at December 31, 2008		998		$	7.82

Granted		1,031		$	5.06
Vested		(472	)	$	7.17
Cancelled		(142	)	$	5.26

Unvested at December 31, 2009		1,415		$	6.28

Granted		933		$	8.27
Vested		(679	)	$	6.50
Cancelled and forfeited		(65	)	$	9.25

Unvested at December 31, 2010		1,604		$	7.23

Granted		1,000		$	8.86
Vested		(823	)	$	7.40
Cancelled and forfeited		(426	)	$	7.81

Unvested at December 31, 2011		1,355		$	3.21


	Year Ended December 31,
	2011			2010			2009
Net income (loss)	$	(159,606	)	$	12,346		$	4,752
Change in unrealized gain (loss) on investments, after tax		(25	)		(8	)		(71	)

Total comprehensive income (loss)	$	(159,631	)	$	12,338		$	4,681

Business description of SMITH-MICRO-SOFTWARE-INC from last 10-k form