948708--3/30/2007--SMITH_MICRO_SOFTWARE

related topics

{product, market, service}

{customer, product, revenue}

{control, financial, internal}

{operation, international, foreign}

{property, intellectual, protect}

{personnel, key, retain}

{debt, indebtedness, cash}

{acquisition, growth, future}

{system, service, information}

{stock, price, share}

{competitive, industry, competition}

{regulation, government, change}

{stock, price, operating}

Our total net revenues currently depend on a small number of products, so our operating results are vulnerable to unexpected shifts in demand. Competition within our target markets is intense and includes numerous established competitors, which could negatively affect our revenues and results of operations. Acquisitions of companies or technologies may disrupt our business and divert management attention and cause our current operations to suffer. We have recently entered new, emerging markets in which we have limited experience; if these markets do not develop or we are unable to otherwise succeed in them, our revenues will suffer and the price of our common stock will likely decline. If the adoption of and investments in new technologies and services grows more slowly than anticipated in our product planning and development, our operating results, financial condition and prospects may be negatively affected. Our growth depends in part on our carrier customers ability and willingness to promote services and attract and retain new customers or achieve other goals outside of our control. Our gross margins may continue to decline due to shifts in our sales mix. Our products may contain undetected software defects, which could negatively affect our revenues. Technology and customer needs change rapidly in our market, which could render our products obsolete and negatively affect our business, financial condition and results of operations. Delays or failure in deliveries from our third-party suppliers could cause our net revenue to decline and harm our results of operations. A shortage in the supply of wireless communication devices such as PC cards could adversely affect our revenues. If our products are not designed into customer products, our products may not be adopted by our target markets and customers, either of which could negatively impact our results of operations. Regulations affecting our customers and us and future regulations to which they or we may become subject may harm our business. We may be unable to adequately protect our intellectual property and other proprietary rights, which could negatively impact our revenues. Our ability to predict our revenues and operating results is extremely limited. If we are unable to retain key personnel, the loss of their services could materially and adversely affect our business, financial condition and results of operations. If we fail to continue to establish and maintain strategic relationships with mobile device manufacturers, market acceptance of our products, and our profitability, may suffer. Certain individuals to whom we have granted stock options may have a right of rescission as to the options. We may raise additional capital through the issuance of additional equity or convertible debt securities or by borrowing money, in order to meet our capital needs. Additional funds may not be available on terms acceptable to us to allow us to meet our capital needs. Our business, financial condition and operating results could be adversely affected as a result of legal, business and economic risks specific to international operations. We may be subject to regulatory scrutiny and may sustain a loss of public confidence if we are unable to satisfy regulatory requirements relating to internal controls over financial reporting. Existing efforts to improve our disclosure controls and internal control over financial reporting, combined with new challenges of integrating the internal control environment of newly acquired companies with ours, underscores the risk that our internal controls may not be adequate. Competition within our target markets is intense and includes numerous established competitors, which could negatively affect our revenues and results of operations. Acquisitions of companies or technologies may disrupt our business and divert management attention and cause our current operations to suffer. We have recently entered new, emerging markets in which we have limited experience; if these markets do not develop or we are unable to otherwise succeed in them, our revenues will suffer and the price of our common stock will likely decline. If the adoption of and investments in new technologies and services grows more slowly than anticipated in our product planning and development, our operating results, financial condition and prospects may be negatively affected. Our growth depends in part on our carrier customers ability and willingness to promote services and attract and retain new customers or achieve other goals outside of our control. Our gross margins may continue to decline due to shifts in our sales mix. Our products may contain undetected software defects, which could negatively affect our revenues. Technology and customer needs change rapidly in our market, which could render our products obsolete and negatively affect our business, financial condition and results of operations. Delays or failure in deliveries from our third-party suppliers could cause our net revenue to decline and harm our results of operations. A shortage in the supply of wireless communication devices such as PC cards could adversely affect our revenues. If our products are not designed into customer products, our products may not be adopted by our target markets and customers, either of which could negatively impact our results of operations. Regulations affecting our customers and us and future regulations to which they or we may become subject may harm our business. We may be unable to adequately protect our intellectual property and other proprietary rights, which could negatively impact our revenues. Our ability to predict our revenues and operating results is extremely limited. If we are unable to retain key personnel, the loss of their services could materially and adversely affect our business, financial condition and results of operations. If we fail to continue to establish and maintain strategic relationships with mobile device manufacturers, market acceptance of our products, and our profitability, may suffer. Certain individuals to whom we have granted stock options may have a right of rescission as to the options. We may raise additional capital through the issuance of additional equity or convertible debt securities or by borrowing money, in order to meet our capital needs. Additional funds may not be available on terms acceptable to us to allow us to meet our capital needs. Our business, financial condition and operating results could be adversely affected as a result of legal, business and economic risks specific to international operations. We may be subject to regulatory scrutiny and may sustain a loss of public confidence if we are unable to satisfy regulatory requirements relating to internal controls over financial reporting. Existing efforts to improve our disclosure controls and internal control over financial reporting, combined with new challenges of integrating the internal control environment of newly acquired companies with ours, underscores the risk that our internal controls may not be adequate.

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948708--3/30/2007--SMITH_MICRO_SOFTWARE_INC