SMSI

Smith Micro is a shrinking, chronically unprofitable software vendor whose revenue has collapsed from $58.4M in FY2021 to $17.4M in FY2025 — down another 15.5% this year, with the MD&A attributing the drop to a $2.3M decline in Family Safety (legacy Sprint Safe & Found subscribers migrating off, plus a 'one-time event' with an existing deployment) and a $1.0M ViewSpot decline. The software gross margin is genuinely good at 74.1%, but that is the only healthy number here: operating margin is -167.1%, net margin -168.9%, and ROE -159.5%. Every year on record (FY2021–FY2025) has been a loss, and the accumulated deficit stands at -$355M. This is a business contracting faster than management can cut costs.

The balance sheet is the disqualifier. Cash is down to $1.49M (-46.8% YoY) against negative operating cash flow of -$7.19M — roughly two-plus months of runway on operations alone before financing. Total assets fell 48% to $25.0M and equity 55% to $18.4M as goodwill was written down (an $11.1M impairment in Q2 2025, on top of $24.0M in 2024, meaning the bulk of prior 'value' was acquisition air). Current assets of $4.53M sit below current liabilities of $6.12M — negative working capital. The company is surviving on serial equity raises: the MD&A discloses a ~$1.5M registered direct offering, ~$1.2M in short-term notes and warrants, and a further ~$2.7M raise, all in 2025 — and share count is up 44.9% YoY even AFTER a 1-for-8 reverse split. Existing holders are being diluted continuously just to keep the lights on.