SMITH MICRO SOFTWARE, INC.

(Unaudited)

1. The Company

Smith Micro Software, Inc. (“Smith Micro” or “the Company”) develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless service providers around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, the Company strives to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer Internet of Things (“IoT”) devices. Smith Micro’s portfolio includes family safety software solutions to support families in the digital age and visual voice messaging.

Smith Micro’s solution portfolio is comprised of proven products that enable its customers to provide:

On* June 3, 2025,the Company sold its ViewSpot product for total consideration of $1.3 million, of which $1.0 million was paid on the closing date, with the remaining amounts to be paid intwo* installments, thefirst of which was collected on* July 1, 2025,and the final balance is due October 1, 2025.*

On* April 3, 2024,the Company filed a certificate of amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect aone*-for-eight (1:8) reverse stock split of the shares of the Company's common stock, par value $0.001 per share (the "Common Stock"), with an effective time of11:59 p.m., Eastern Time on* April 10, 2024 (the "Reverse Stock Split"). At the effective time, everyeight* shares of Common Stock, whether issued and outstanding or held by the Company as treasury stock were automatically combined and converted (without any further act) intoone share of fully paid and nonassessable Common Stock, with any fractional shares resulting from the Reverse Stock Split rounded up to the nearest whole share. At the effective time, the number of shares of Common Stock then outstanding was reduced from approximately 76.8 million shares to approximately 9.6 million shares due to the Reverse Stock Split.

The Reverse Stock Split didnot change the Company's authorized shares of Common Stock from 100,000,000 shares or the par value of the Common Stock. Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise of stock options and the settlement of restricted stock awards and the number of shares authorized and reserved for issuance pursuant to the Company's equity incentive plans (see Note9). Additionally, there were adjustments to the per share exercise price and the number of shares issuable upon exercise of warrants (see Note5).

All share and per share amounts for Common Stock (including share amounts underlying convertible securities and the applicable exercise prices of such convertible securities) in these consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in the number of shares of Common Stock at par value to additional paid-in capital.

2. Accounting Policies

Basis of Presentation

The accompanying interim consolidated balance sheet as of* June 30, 2025*, and the related consolidated statements of operations and stockholders’ equity for thethree andsix months ended* June 30, 2025and2024*, and the consolidated statements of cash flows for thesix months ended* June 30, 2025and2024*, are unaudited. The unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted.

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In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments which are normal and recurring, and necessary to fairly state the financial position, results of operations, and cash flows of the Company. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form10-K for the fiscal year ended* December 31, 2024* filed with the SEC on* March 12, 2025* (the "2024 Form10-K").

Intercompany balances and transactions have been eliminated in consolidation.

Operating results for thethree andsix months ended* June 30, 2025* arenot necessarily indicative of the results that* maybe expected for any other interim period or for the fiscal year ending December 31, 2025*.

Recently Adopted Accounting Pronouncements

In* November 2023,the Financial Accounting Standards Board, ("FASB") issued Accounting Standards Update ("ASU")2023-07, Segment Reporting (Topic280)– Improvements to Reportable Segment Disclosures.The amendments in this update are intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The improved disclosure requirements apply to all public entities that are required to report segment information, including those with only reportable segment. In addition to the current requirements, the amendments require all segment profit or loss and asset disclosures to be provided on an annual and interim basis. The amendments are effective for fiscal years beginning after December 15, 2023and will be effective for interim reporting periods beginning after December 15, 2024.The Company adopted ASU2023*-07 withno material effect on its consolidated financial statements other than the additional disclosure requirements, which are included in Note11.

Recently Issued Accounting Pronouncements

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*, which provides for improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This guidance is effective for fiscal years beginning after* December 15, 2024,and the adoption of this standard isnot* anticipated to have a significant impact on the Company's consolidated financial statements other than adding new disclosures, which the Company is currently evaluating.

In* November 2024,the FASB issued ASU2024*-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40), which is intended to improve the decision-usefulness of expense information on public companies' income through disaggregation of relevant expense captions in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2026and interim periods beginning after December 15, 2027,*with early adoption permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements and related disclosures.

3. Going Concern

The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. In connection with preparing consolidated financial statements for thethree andsix months ended* June 30, 2025*, certain conditions in the Company's evaluation, considered in the aggregate, have raised substantial doubt about the Company's ability to continue as a going concern withinone year from the date that the financial statements are issued, which hasnot been alleviated. The evaluation considered the Company's financial condition, including its liquidity sources, funds necessary to maintain the Company's operations considering the current financial condition, obligations, and other expected cash flows, and negative financial trends of recurring operating losses and negative cash flows.

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The Company hasno outstanding debt and is continuing operations and generating revenues in the normal course, however the Company is dependent, to an extent, on the timing of subscriber and revenue growth for its products and the related cash generation from that growth and/or the ability to obtain the necessary capital to meet its obligations and fund its working capital requirements to maintain normal business operations. Management believes that the actions presently being taken to implement the Company's business plan to expand subscriber growth, to acquire new customers, and to expand its offerings to existing customers to generate increased revenues, and, as necessary, to raise additional capital will support the Company's operations; as such the financial statements donot include any adjustments that* maybe necessary if the Company is unable to continue as a going concern. The Company believes, based on its history of being able to complete debt and equity financings, that it would be able to raise additional funds as necessary, through public or private equity offerings, including by filingone* or more registration statements, through debt financings, or from a combination of these funding sources. However, it* may**not* be able to secure such incremental capital in a timely manner or on favorable terms, if at all. To preserve liquidity, the Company* mayalso takeone* or more of the following additional actions:

While management believes that the Company’s plans for growing revenue and the other potential actions available to it would alleviate the conditions that raise substantial doubt, these strategies arenot entirely within the Company’s control and cannot be assessed as being probable of occurring.

4. Common Stock

Minimum Bid Price Requirement and Reverse Stock Split

On* December 27, 2023,the Company received a notice from the Nasdaq Stock Market ("Nasdaq") that the Company wasnot* in compliance with the*$1.00* minimum bid price requirement for continued listing, as set forth in Nasdaq Listing Rule5550(a)(2) (the "Minimum Bid Price Requirement"), as the closing bid price of the Company’s Common Stock had been below*$1.00* per share for more thanthirty (30) consecutive business days as of the date of that notice. The Company undertook the Reverse Stock Split to enable the Company to regain compliance with the Minimum Bid Price Requirement. On* April 29, 2024,*the Company received notice from Nasdaq that it had regained compliance with the Minimum Bid Price Requirement, and the matter is now closed.

On* November 26, 2024,the Company received a notice from Nasdaq that the Company’s Common Stock didnot* meet the*$1.00* minimum bid price requirement pursuant to the Minimum Bid Price Requirement, and in accordance with Nasdaq Listing Rule5810(c)(3)(A), the Company was provided an initial compliance period of180 calendar days, or until* May 26, 2025,to regain compliance with the Minimum Bid Price Requirement. On January 8, 2025,the Company received written notification from Nasdaq indicating that the Company’s Common Stock had a closing price at or greater than$1.00* per share for the last10 consecutive business days, from* December 23, 2024to January 7, 2025,*and that, as a result, the Company has regained compliance with the Minimum Bid Price Requirement and the matter is now closed.

On* June23,* 2025, the Company received a notice from Nasdaq that the Company’s Common Stock didnot meet the*$1.00* minimum bid price requirement pursuant to the Minimum Bid Price Requirement, and in accordance with Nasdaq Listing Rule5810(c)(3)(A), the Company was provided an initial compliance period of180 calendar days, or until* December22,* 2025, to regain compliance with the Minimum Bid Price Requirement.

**** May 2024Registered Direct Offering & Private Placement**

On* May 10, 2024,the Company entered into a securities purchase agreement (the “May 2024Purchase Agreement”) with certain institutional and accredited investors (the “May 2024Purchasers”) relating to the registered direct offering and sale of an aggregate of 1,065,000 shares of the Company’s Common Stock at an offering price of $2.15 per share of Common Stock and pre-funded warrants ( “May 2024Pre-Funded Warrants”) to purchase up to 845,000 shares of Common Stock (the “May 2024Registered Direct Offering”). The May 2024Pre-Funded Warrants were purchased at a price of $2.149 per underlying share and had an exercise price of $0.001 per share and could be exercised at any time after their original issuance until such May 2024Pre-Funded Warrants were exercised in full. The shares of Common Stock and May 2024Pre-Funded Warrants (including the shares of Common Stock underlying the warrants) were offered by the Company pursuant to a prospectus supplement dated May 10, 2024,and accompanying prospectus dated May 12, 2022,in connection with a takedown from the Company’s shelf registration statement on Form S-3 (FileNo.* 333-264667), which was declared effective by the SEC on* May 12, 2022.*

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In a private placement on* May 14, 2024,concurrent with the May 2024Registered Direct Offering, the Company also sold to the May 2024Purchasers unregistered warrants (the “May 2024Common Warrants”) to purchase up to an aggregate of 1,910,000 shares of Common Stock (the “May 2024Private Placement”). Each unregistered May 2024Common Warrant has an exercise price of $2.34 per share, is exercisable at any time beginning November 14, 2024and will expire November 14, 2029.Both the May 2024Registered Direct Offering and the May 2024Private Placement closed on May 14, 2024.*

Roth Capital Partners, LLC (“Roth”) acted as the exclusive placement agent for the* May 2024Registered Direct Offering and the May 2024Private Placement pursuant to a placement agency agreement (the “Placement Agency Agreement”) dated May 10, 2024,by and between the Company and Roth, and a related engagement letter with Roth. Pursuant to the Placement Agency Agreement, on May 14, 2024the Company issued to Roth warrants to purchase up to 133,700 shares of Common Stock (the “May 2024Placement Agent Warrants”), which represented 7.0% of the aggregate number of shares of Common Stock and May 2024Pre-Funded Warrants sold in the May 2024Registered Direct Offering. The May 2024Placement Agent Warrants are exercisable at any time beginning November 14, 2024,have an exercise price equal to $2.86, and expire November 16, 2026.*

The shares of Common Stock underlying the* May 2024Common Warrants and the May 2024Placement Agent Warrants (collectively referred to herein as the “May 2024Warrants”) were registered on a registration statement on Form S-1 (FileNo.* 333-280542) filed with the SEC on* June 27, 2024,which was declared effective by the SEC on July 10, 2024.Shares of Common Stock issued by the Company upon exercise of the May 2024Warrants maybe resold by the holders pursuant to the prospectus dated July 11, 2024.The filings made by the Company in connection with the potential resale of the Common Stock underlying the May 2024*Warrants were filed within the time period agreed by the parties in the Purchase Agreement.

The net cash proceeds to the Company, after deducting offering related expenses was $3.4 million. The* May 2024Pre-Funded Warrants, May 2024Common Warrants, and May 2024*Placement Agent Warrants were all assessed and recorded as equity instruments.

During thethird quarter of2024, all 845,000 * May 2024Pre-Funded Warrants from the May 2024Registered Direct Offering and May 2024*Private Placement were exercised on a cashless basis resulting in the issuance of 844,061 shares of Common Stock.

**** October 2024Registered Direct Offering and Private Placement**

On* October 3, 2024,the Company announced its completion oftwo* securities offerings raising aggregate gross proceeds of $6.9 million: a registered direct offering of 3,321,881 registered shares of Common Stock and concurrent private placement of unregistered warrants exercisable for an equal number of shares of Common Stock (collectively, the* “October 2024RDO”) for gross proceeds of approximately $3.9 million, including $0.2 million from a related party, and an unregistered private placement transaction of 2,575,107 shares of Common Stock and warrants exercisable for an equal number of shares of Common Stock with William W. Smith Jr., the Company's Chief Executive Officer, a related party, who participated in the private placement through a trust for which he serves as co-trustee (the “October 2024Private Placement”), for gross proceeds of approximately $3.0 million. Both offerings were approved by an independent special committee of the Company's Board of Directors and were priced based on the market value of the offered securities, at a purchase price of $1.165 per share of Common Stock with a warrant exercise price of $1.04 per share of Common Stock. Each of the warrants issued in the October 2024offerings was initially exercisable at any time beginningsix* months following its original issuance and expiresfive andone-half years from the initial issuance of the warrant. In* January 2025,at the request of certain holders of the warrants issued in the October 2024RDO, the Company provided all of the October 2024RDO warrant holders the opportunity to amend their warrants to adjust the start of the warrant exercise period to January 9, 2025,and as a result a portion of the warrants issued in connection with the October 2024*RDO were so amended.No other terms were changed as a result of that amendment to certain of the warrants.

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In addition, concurrent with the offerings, the Company issued to Roth a warrant to purchase up to 20,000 shares of the Company’s Common Stock (the “Roth Warrant”), which has substantially the same terms as the warrants issued in the registered offering, except that the Roth Warrant has an exercise price of $1.46 per share of Common Stock and will expiretwo-and-a-half years from the effective date of the* October*registered offering.

On* October 21, 2024,the Company filed a definitive proxy statement for a Special Meeting of Stockholders to approve the issuance of the number of shares of the Company’s Common Stock that would cause William W. Smith, Jr. to beneficially owntwenty* percent or more of the Company, through the exercise of the warrants purchased in the unregistered private placement transaction. The shareholders approved this proposal on* December 10, 2024.*

On* October 28, 2024,the Company filed a registration statement with the SEC (FileNo.* 333-282858) registering the resale of the shares of stock issued in the* October 2024Private Placement and the shares of common stock issuable upon exercise of the warrants issued in the October 2024RDO and the October 2024Private Placement. This registration statement was declared effective by the SEC on November 8, 2024.*

The net cash proceeds to the Company from both offerings, after deducting offering related expenses was $6.6 million. All warrants associated with these transactions were assessed and recorded as equity instruments.

5. Warrant Liabilities

On* August 11, 2022,the Company issued warrants (the "Notes Warrants") to purchase Common Stock in conjunction with a senior secured convertibles notes (the "Notes") and warrants offering (the "Notes and Warrants Offering"), at an initial fair value of $3.8 million. The Notes sold by the Company in the Notes and Warrants Offering were subsequently retired upon maturity at December 31, 2023.The exercise price of and number of shares underlying the Notes Warrants were immediately proportionately adjusted pursuant to the Reverse Stock Split to $26.80 and 279,851 shares, respectively, and on May 2, 2024,*the exercise price for each of the Notes Warrants was further adjusted to $2.06 in accordance with their terms.

The Company issued additional warrants (the "Additional Warrants") to purchase Common Stock on* August 12, 2022in conjunction with a registered direct offering for the sale of shares of the Company's Common Stock and the Additional Warrants. The Additional Warrants donot* reprice further beyond the immediate proportionate adjustments to the per share exercise price and number of shares issuable of $21.20 and 141,509 shares, respectively, that occurred upon and as a result of the Reverse Stock Split.

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All changes in the fair value of the Notes Warrants and Additional Warrants liabilities are recognized in the Company's consolidated statements of operations until they are either exercised or expire. Since their issuance,none of the Notes Warrants or Additional Warrants have been exercised. The Notes Warrants and Additional Warrants arenot traded in an active securities market and, as such, the estimated fair value is determined by using a Black-Scholes option pricing model which considers the likelihood of repricing adjustments and utilizes assumptions noted in the following table. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of valuation. Expected volatility is based on the historical volatility over the expected remaining term of the warrants. The Company hasno reason to believe future volatility over the expected remaining life of the Notes Warrants and Additional Warrants is likely to differ materially from historical volatility. Expected life is based on the term of the applicable warrants. Below are the specific assumptions utilized (unaudited, except for* December 31, 2024*):

6. Fair Value of Financial Instruments

The Company measures and discloses fair value measurements as required by FASB Accounting Standards Codification ("ASC") TopicNo. 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 athree-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.

The following table presents information about the financial liabilities that are measured at fair value on a recurring basis at* June 30, 2025* and* December 31, 2024* (unaudited except for* December 31, 2024*, in thousands):

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The following tables present the changes in the fair value (unaudited, except for* December 31, 2024*, in thousands):

7. Goodwill and Intangible Assets

In accordance with FASB ASC TopicNo. 350, Intangibles-Goodwill and Other, Smith Micro reviews the recoverability of the carrying value of the Company's single reporting unit goodwill at least annually or whenever events or circumstances indicate a potential impairment. The annual impairment testing date is* December 31*of each year. Recoverability of goodwill is determined by comparing the estimated fair value of the reporting unit to the carrying value of the underlying net assets in the reporting unit. If the estimated fair value of a reporting unit is determined to be less than the carrying value, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the fair value.

During thethree months ended* March 31, 2024,the Company performed an interim quantitative impairment test on its goodwill as of February**29,* 2024 and as a result of this interim assessment, including the impact of the projections of revenue growth, earnings before interest taxes depreciation and amortization (“EBITDA”), and discount rates along with market multiples, the Company recorded a goodwill impairment charge totaling $24.0 million.

In connection with the preparation of its quarterly financial statements for thesecond quarter of2025, the Company assessed changes in circumstances to determine whether it was more likely thannot that the fair value of its single reporting unit was below its carrying amount. While there wasno single determinative event or factor, considerations including recent financial performance compared to expected forecasts, trends in stock valuation, pricing of the most recent equity raise, and the receipt of the Nasdaq minimum bid price requirement notice on* June 24, 2025led the Company to conclude that when considering the events and factors in totality it was necessary to perform an interim quantitative valuation assessment. The fair value of the reporting unit was determined based on a combination of the income approach using estimated discounted cash flows and a market-based valuation methodology utilizing market multiples. The assessment utilized Level3* inputs including estimates of revenue growth, EBITDA contribution and discount rates. Based on the results of the assessment, a full goodwill impairment charge of $11.1 million was recorded.

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The components of the Company’s intangible assets were as follows for the periods presented (unaudited, except for* December 31, 2024*, in thousands, except for useful life data):

The Company amortizes intangible assets over the pattern of economic benefit expected to be generated from the use of the assets, with a total weighted average amortization period of approximately seven years as of* June 30, 2025* andeight years as of* December 31, 2024*. During thethree months ended* June 30, 2025and2024*, intangible asset amortization expense was $1.3 million and $1.5 million, respectively. During thesix months ended* June 30, 2025and2024*, intangible asset amortization expense was $2.6 million and $3.3 million, respectively.

As of* June 30, 2025*, estimated amortization expense for the remainder of2025 and thereafter was as follows (unaudited, in thousands):

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8. Earnings Per Share

The Company calculates earnings per share (“EPS”) as required by FASB ASC TopicNo. 260, Earnings Per Share. Basic EPS is calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding common stock equivalents. Diluted EPS is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding for the period, plus the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method.

The 845,000 shares of the Company's Common Stock issuable upon exercise of the Pre-Funded Warrants, described in Note4 to these consolidated financial statements, were included in the weighted average outstanding Common Stock in the calculation of basic and diluted net loss per share from* May 2024through their exercise in August 2024,*as the exercise price was non-substantive at $0.001 per share.

For periods with a net loss, the dilutive common stock equivalents are excluded from the diluted EPS calculation. For purposes of this calculation, Common Stock subject to repurchase by the Company, options, warrants (other than the Pre-Funded Warrants), and convertible notes are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive.

The following table sets forth the details of basic and diluted earnings per share (unaudited, in thousands, except per share amounts):

The following weighted average shares were excluded from the computation of diluted net loss per share as the impact of including those shares would be anti-dilutive (unaudited, in thousands):

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9. Stock-Based Compensation

Stock Plans

On* June 18, 2024,the Company's stockholders approved the Company's Amended and Restated Omnibus Equity Incentive Plan (as currently amended, the "OEIP") which amended and restated (and renamed) the Company's2015* Omnibus Equity Incentive Plan (as previously amended, the*"2015* Plan") and increased the number of shares reserved thereunder by 3.0 million shares, and on* June 3, 2025,the Company's stockholders approved an increase to the number of shares reserved thereunder by an additional 3.0 million shares. As of June 30, 2025*, there were approximately 3.2 million shares available for future grants under the Company’s OEIP. References to the OEIP herein include the2015 Plan prior to its amendment and restatement. The maximum number of shares available for issuance over the term of the OEIP* may**not* exceed 7.2 million shares.

During thesix months ended* June 30, 2025*, the Company granted 2.0 million shares of restricted stock and 25,000 stock options under the OEIP.

The OEIP provides for the issuance of full value awards (restricted stock, performance stock, dividend equivalent right or restricted stock units) and partial value awards (stock options or stock appreciation rights) to employees, non-employee members of the Company's Board of Directors and consultants. Any full value award settled in shares will be debited as 1.2 shares, and partial value awards settled in shares will be debited as 1.0 shares against the share reserve. The exercise price per share for stock option grants isnot to be less than the fair market value per share of the Company’s Common Stock on the date of grant. The Compensation Committee of the Board of Directors administers the OEIP and determines the vesting schedule at the time of grant. Stock options* maybe exercisable immediately or in installments but generally vest over aone-year orfour-year period from the date of grant. In the event the holder ceases to be employed by the Company, all unvested stock awards terminate, and all vested stock options maybe exercised within a period of90* days following termination of employment. In general, stock options expireten years from the date of grant. Restricted stock is valued using the closing stock price on the grant date. The total value is expensed over the vesting period, which is typically up to48 months.

Employee Stock Purchase Plan

The Company has a stockholder approved employee stock purchase plan (as amended, the “ESPP”), under which substantially all employees* maypurchase the Company’s Common Stock through payroll deductions at a price equal to 85% of the lower of the fair market value of the stock as of the beginning and end ofsix*-month offering periods. Payroll deductions under the ESPP are limited to 10% of the employee’s compensation and in any calendar year employees* may**not* purchase more than the lesser of $25,000 of stock or 250 shares, as set by the Compensation Committee of the Board of Directors in accordance with the terms of the ESPP. On* June 3, 2025,the Company's stockholders approved an amendment to the ESPP to increase the aggregate number of shares of Common Stock authorized for issuance under the ESPP by 250,000 shares, thereforeno* more than 281,250 shares in the aggregate* may*be purchased under the ESPP.

Stock Compensation Expense

The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognizes compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC TopicNo. 718, Compensation-Stock Compensation.

Non-cash stock-based compensation expenses related to stock options, restricted stock grants and the ESPP are recorded in the consolidated financial statements as follows (unaudited, in thousands):

As of* June 30, 2025*, there was approximately $2.9 million in unrecognized compensation costs related to unvested stock options and restricted stock awards granted under the OEIP.

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Stock Options

For thesix months ended* June 30, 2025*, there were 25,000 stock option awards granted. A summary of the Company’s stock options outstanding under the OEIP as of* June 30, 2025* and related activity during2025 is as follows (unaudited, in thousands except weighted average exercise price and weighted average remaining contractual life):

Restricted Stock Awards

A summary of the Company’s restricted stock awards outstanding under the OEIP for thesix months ended* June 30, 2025* and the activity during the period therein are as follows (unaudited, in thousands, except weighted average grant date fair value):

10. Revenues

Revenue Recognition

In accordance with FASB ASC TopicNo. 606, Revenue from Contracts with Customers, the Company recognizes the sale of goods and services based on thefive-step analysis of transactions as provided in Topic606, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods and services. For all contracts with customers, the Companyfirst 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 price in the arrangement and allocates the transaction price, if necessary, to each performance obligation identified in the contract. The allocation of the transaction price to the performance obligations are based on the relative standalone selling prices for the goods and services contained in a particular performance obligation. The transaction price is adjusted for the Company’s estimate of variable consideration which* mayinclude certain incentives and discounts, product returns, distributor fees, and storage fees. The Company evaluates the total amount of variable consideration expected to be earned by using the expected value method, as the Company believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations, and its best judgment at the time. The Company includes estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized willnot* occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company generates the majority of its revenue on usage-based fees which are variable and depend entirely on customers’ use of perpetual licenses, transactions processed on the Company’s hosted environment and activity on the Company’s cloud-based service platform.

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The Company’s contracts with mobile network operator (“MNO”) customers include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together* mayrequire significant judgment. Smith Micro’s cloud-based services include a software solution license integrated with cloud-based services. Since the Company doesnot* allow its customers to take possession of the cloud-based elements of its software solutions, and since the utility of the license comes from the cloud-based services that the Company provides, Smith Micro considers the software license and the cloud services to be a single performance obligation. The Company recognizes revenue associated with its MNO customers based upon their active subscribers’ access and usage of Smith Micro’s software licenses and cloud-based services on Smith Micro’s platforms or satisfaction of the performance obligations as indicated in the contracts.

Smith Micro has made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price, and since the Company’s standard payment terms are less thanone year, the Company has elected the practical expedientnot to assess whether a contract has a significant financing component.

Disaggregation of Revenues

Revenues on a disaggregated basis are as follows (unaudited, in thousands):

11. Segment, Customer Concentration and Geographical Information

Segment Information

Public companies are required to report financial and descriptive information about their reportable operating segments as required by FASB ASC TopicNo. 280, Segment Reporting. The Company hasone primary business unit based on how management internally evaluates separate financial information, business activities and management responsibility: Wireless. The Wireless segment includes the Family Safety (which includes SafePath®), CommSuite®, and ViewSpot® families of products.

The Company doesnot separately allocate operating expenses to these product lines, nor does it allocate specific assets. Therefore, product line information reported includes only revenues.

The accounting policies of the Company's single operating segment are the same as those described in the summary of significant accounting policies appearing in Note1. Although the Company's Chief Operating Decision Maker ("CODM") uses other measures of operating performance, the Company concluded that consolidated net loss is the measure required to be disclosed as the segment measure of profit or loss. Adjusted operating loss and net loss are used to evaluate the effectiveness of Smith Micro's performance and to monitor budget versus actual results. The measure of segment assets is reflected as "total assets" in the accompanying consolidated balance sheet.

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Revenue and expenses regularly provided to the CODM are included in the following reconciliation of the Company's net adjusted operating loss and net loss. It includes the significant expense categories computed under US GAAP, reconciled to the Company's total net loss as presented in the consolidated statement of operations (unaudited, in thousands).

(1) Adjusted amounts exclude depreciation expense.

(2) Adjusted amounts exclude stock-based compensation expense and other adjustments as further described in footnote3 to this table.

(3) Other segment expenses include personnel severance and reorganization activities and other corporate non-recurring expenditures.

The following table presents the disaggregation of Wireless revenues by product line (unaudited, in thousands):

Customer Concentration Information

The Company has certain customers whose revenues individually represented greater than10% of the Company’s total revenues, or whose accounts receivable balances individually represented greater than10% of the Company’s total accounts receivable, for thethree andsix months ended* June 30, 2025and2024*.

During thethree months ended* June 30, 2025*, three customers made up 61%,21% and 18% of revenues. For thethree months ended* June 30, 2024*, two customers made up 59% and 20% of revenues.

During thesix months ended* June 30, 2025*, three customers made up 61%,20% and 17% of revenues. For thesix months ended* June 30, 2024*, three customers made up 56%,19% and 11% of revenues.

As of* June 30, 2025*, two customers accounted for 39% and 33% of accounts receivable. As of* June 30, 2024*, two customers accounted for 52% and 15% of accounts receivable.

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Geographical Information

During thethree andsix months ended* June 30, 2025and2024*, the Company operated intwo geographic locations: the Americas and Europe, Middle East and Africa ("EMEA"). Revenues attributed to the geographic location of the customers’ bill-to address were as follows (unaudited, in thousands):

The Company doesnot separately allocate specific assets to these geographic locations.

12. Commitments and Contingencies

Litigation

The Company* maybecome involved in various legal proceedings arising from its business activities. While management doesnot* believe the ultimate disposition of these matters will have a material adverse impact on the Company’s consolidated results of operations, cash flows, or financial position, litigation is inherently unpredictable, and depending on the nature and timing of these proceedings, an unfavorable resolution could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period.

Other Contingent Contractual Obligations

During its normal course of business, the Company has made certain indemnities, commitments, and guarantees under which it* maybe required to make payments in connection with certain transactions. These include: indemnities to the Company’s customers pursuant to contracts for the Company’s products and services, including indemnities with respect to intellectual property, confidentiality and data privacy; indemnities to various lessors in connection with facility leases for certain claims arising from use of such facility or under such lease; indemnities to vendors and service providers pertaining to claims based on the negligence or willful misconduct of the Company; indemnities involving the accuracy of representations and warranties in certain contracts; and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. In addition, the Company has made or maymake contractual commitments to employees providing for severance payments upon the occurrence of certain prescribed events. The Company mayalso issue a guarantee in the form of a standby letter of credit as security for contingent liabilities under certain customer contracts. The duration of these indemnities, commitments, and guarantees varies, and in certain cases maybe indefinite. The majority of these indemnities, commitments, and guarantees may**not* provide for any limitation of the maximum potential for future payments the Company could be obligated to make. The Company hasnot recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets.

13. Leases

The Company leases office space and equipment. The Company determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised.

Leases with an initial term of greater thantwelve months are recorded on the consolidated balance sheet. Lease expense is recognized on a straight-line basis over the lease term.

The Company’s lease contracts generally donot provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease.

Operating lease costs were $0.4 million for each of thethree months ended* June 30, 2025and2024*. Operating lease costs were $0.8 million for each of thesix months ended* June 30, 2025and2024*.

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The maturity of operating lease liabilities is presented in the following table (unaudited, in thousands):

Additional information relating to the Company’s operating leases follows (unaudited):

14. Income Taxes

The Company accounts for income taxes as required by FASB ASC TopicNo. 740, Income Taxes. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely thannot” realization standard. Thefour sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards.

In assessing whether a valuation allowance is required, significant weight is given to evidence that can be objectively verified. Realization of deferred tax assets is dependent upon the generation of future taxable income. As required by ASC740, Smith Micro has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets and determined that it was more likely thannot that the Company wouldnot realize the deferred tax assets due to the Company's cumulative losses and uncertain near-term market and economic conditions, which reduce the Company’s ability to rely on projections of future taxable income in assessing the realizability of its deferred tax assets.

After a review of thefour sources of taxable income as of* June 30, 2025*, and after consideration of the Company’s cumulative loss position as of* December 31, 2024*, the Company will continue to reserve its U.S.-based deferred tax amounts, which total $70.2 million as of* June 30, 2025*.

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. As of* June 30, 2025*, there areno audits in process or pending from Federal or state tax authorities. The outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a mannernot consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. Smith Micro* may*from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to the consolidated financial results of the Company. It is the Company’s policy to classify any interest and/or penalties in the consolidated financial statements as a component of income tax expense.

15. Subsequent Events

The Company evaluates and discloses subsequent events as required by FASB ASC TopicNo. 855, Subsequent Events. The Topic establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before the financial statements are issued or are available to be issued. Subsequent events have been evaluated as of the date of this filing andno further disclosures are required.

On* July 18, 2025,the Company announced the closing of a registered direct offering of 1,612,903 of Common Stock for $0.93 per share and concurrent private placement of unregistered warrants to purchase an equal number of shares of the Company's Common Stock with certain institutional and accredited investors, which resulted in gross proceeds to the Company of approximately $1.5 million, prior to offering fees and transaction expenses. The registered offering and concurrent private placement were approved by the Company's Board of Directors and a special Pricing Committee thereof. The warrants issued to the investors in the concurrent private placement have an exercise price of $1.20 per share (subject to certain downward pricing adjustments, including anti-dilution protection), are immediately exercisable and will expire five years after issuance. However, pursuant to the securities purchase agreement between the company and the investors relating to the registered offering and concurrent private placement dated July 17, 2025,an investor’s right to exercise the warrants, and the Company’s ability to issue shares upon exercise, is subject to certain limitations set forth in the purchase agreement pursuant to which the warrants were issued, including a limit on the number of shares that maybe issued until the time, if any, that the Company’s stockholders have approved the issuance of more than 19.9% of the Company’s outstanding shares of common stock pursuant to the registered offering and concurrent private placement in accordance with Nasdaq listing standards. The Company has agreed to seek stockholder approval of these matters at a meeting to be heldno* later than* October 17, 2025.The Company has agreed to file a registration statement with the SEC registering the resale of the shares of common stock issuable upon exercise of the unregistered warrants issued in connection with the private placement concurrent with the registered offering. Pursuant to the terms of an engagement letter previously entered into on June 19, 2025*by the Company with Chardan Capital Markets LLC (“Chardan”), the Company paid Chardan a cash fee equal to 6.5% of the total gross proceeds from the registered offering and concurrent private placement in connection with its service as a financial advisor to the Company for the offerings.

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