##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number 001-33368
 Glu Mobile Inc.
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    91-2143667
(I.R.S. Employer
Identification No.)
 45 Fremont Street, Suite 2800
San Francisco, California 94105
 (415) 800-6100
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




---



##### 



GLU MOBILE INC.
 FORM 10-Q
 Quarterly Period Ended March 31, 2011
 TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2011 and 2010
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    6ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    20ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    30ITEM 4. CONTROLS AND PROCEDURES
    
    
    31PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    32ITEM 1A. RISK FACTORS
    
    
    32ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    50ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    50ITEM 4. RESERVED
    
    
    50ITEM 5. OTHER INFORMATION
    
    
    50ITEM 6. EXHIBITS
    
    
    50SIGNATURES
    
    
    51Exhibit 31.01Exhibit 31.02Exhibit 32.01Exhibit 32.02
   2




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 GLU MOBILE INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
 (in thousands, except per share data)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    24,388
    
    
    $
    12,863Accounts receivable, net
    
    
    11,968
    
    
    
    10,660Prepaid royalties
    
    
    1,083
    
    
    
    2,468Prepaid expenses and other
    
    
    1,687
    
    
    
    2,557Total current assets
    
    
    39,126
    
    
    
    28,548Property and equipment, net
    
    
    2,645
    
    
    
    2,134Other long-term assets
    
    
    634
    
    
    
    574Intangible assets, net
    
    
    8,006
    
    
    
    8,794Goodwill
    
    
    4,796
    
    
    
    4,766Total assets
    
    $
    55,207
    
    
    $
    44,816LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    6,370
    
    
    $
    5,666Accrued liabilities
    
    
    923
    
    
    
    939Accrued compensation
    
    
    3,219
    
    
    
    4,414Accrued royalties
    
    
    6,015
    
    
    
    7,234Accrued restructuring
    
    
    1,384
    
    
    
    1,689Deferred revenues
    
    
    1,577
    
    
    
    842Current portion of long-term debt
    
    
    
    
    
    
    2,288Total current liabilities
    
    
    19,488
    
    
    
    23,072Other long-term liabilities
    
    
    7,847
    
    
    
    7,859Total liabilities
    
    
    27,335
    
    
    
    30,931Commitments and contingencies (Note 5)Stockholders equity:Preferred stock, $0.0001 par value; 5,000 shares authorized at March 31, 2011 and December 31, 2010;
no shares issued and outstanding at March 31, 2011 and December 31, 2010
    
    
    
    
    
    
    Common stock, $0.0001 par value: 250,000 shares authorized at March 31, 2011 and December 31, 2010;
53,817 and 44,585 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively
    
    
    5
    
    
    
    4Additional paid-in capital
    
    
    220,643
    
    
    
    203,464Accumulated other comprehensive income
    
    
    1,138
    
    
    
    1,159Accumulated deficit
    
    
    (193,914
    )
    
    
    (190,742
    )Total stockholders equity
    
    
    27,872
    
    
    
    13,885Total liabilities and stockholders equity
    
    $
    55,207
    
    
    $
    44,816
   3




---



##### Table of Contents



GLU MOBILE INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 (in thousands, except per share data)
 Three Months EndedMarch 31,2011
    
    
    2010Revenues
    
    $
    16,426
    
    
    $
    17,289Cost of revenues:Royalties and impairment of prepaid royalties and guarantees
    
    
    3,840
    
    
    
    4,691Amortization of intangible assets
    
    
    817
    
    
    
    1,228Total cost of revenues
    
    
    4,657
    
    
    
    5,919Gross profit
    
    
    11,769
    
    
    
    11,370Operating expenses:Research and development
    
    
    7,166
    
    
    
    6,661Sales and marketing
    
    
    3,757
    
    
    
    2,971General and administrative
    
    
    2,934
    
    
    
    3,813Amortization of intangible assets
    
    
    
    
    
    
    55Restructuring charge
    
    
    490
    
    
    
    594Total operating expenses
    
    
    14,347
    
    
    
    14,094Loss from operations
    
    
    (2,578
    )
    
    
    (2,724
    )Interest and other income/(expense), net:Interest income
    
    
    22
    
    
    
    7Interest expense
    
    
    (40
    )
    
    
    (304
    )Other income/(expense), net
    
    
    198
    
    
    
    (334
    )Interest and other income/(expense), net
    
    
    180
    
    
    
    (631
    )Loss before income taxes
    
    
    (2,398
    )
    
    
    (3,355
    )Income tax provision
    
    
    (774
    )
    
    
    (301
    )Net loss
    
    $
    (3,172
    )
    
    $
    (3,656
    )Net loss per common share  basic and diluted:
    
    $
    (0.06
    )
    
    $
    (0.12
    )Weighted average common shares outstanding  basic and diluted
    
    
    52,048
    
    
    
    30,458Stock-based compensation expense included in:Research and development
    
    $
    100
    
    
    $
    164Sales and marketing
    
    
    66
    
    
    
    73General and administrative
    
    
    231
    
    
    
    287
   4




---



##### Table of Contents



GLU MOBILE INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
 (in thousands)
 Three Months Ended March 31,2011
    
    
    2010Cash flows from operating activities:Net loss
    
    $
    (3,172
    )
    
    $
    (3,656
    )Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:Depreciation and accretion
    
    
    427
    
    
    
    563Amortization of intangible assets
    
    
    817
    
    
    
    1,283Stock-based compensation
    
    
    397
    
    
    
    524Interest expense on debt
    
    
    2
    
    
    
    265Amortization of loan agreement costs
    
    
    38
    
    
    
    39Non-cash foreign currency remeasurement loss/(gain)
    
    
    (198
    )
    
    
    332Impairment of prepaid royalties and guarantees
    
    
    371
    
    
    
    Changes in allowance for doubtful accounts
    
    
    101
    
    
    
    212Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,324
    )
    
    
    2,286Prepaid royalties
    
    
    928
    
    
    
    1,409Prepaid expenses and other assets
    
    
    886
    
    
    
    265Accounts payable
    
    
    243
    
    
    
    (370
    )Other accrued liabilities
    
    
    (15
    )
    
    
    72Accrued compensation
    
    
    (493
    )
    
    
    708Accrued royalties
    
    
    (1,308
    )
    
    
    (2,364
    )Deferred revenues
    
    
    735
    
    
    
    258Accrued restructuring charge
    
    
    (500
    )
    
    
    (582
    )Other long-term liabilities
    
    
    (56
    )
    
    
    326Net cash (used in)/provided by operating activities
    
    
    (2,121
    )
    
    
    1,570Cash flows from investing activities:Purchase of property and equipment
    
    
    (478
    )
    
    
    (108
    )Net cash used in investing activities
    
    
    (478
    )
    
    
    (108
    )Cash flows from financing activities:Proceeds from line of credit
    
    
    
    
    
    
    11,797Payments on line of credit
    
    
    (2,288
    )
    
    
    (13,341
    )Net proceeds from Public Offering
    
    
    15,872
    
    
    
    MIG loan payments
    
    
    (698
    )
    
    
    Proceeds from exercise of warrants
    
    
    750
    
    
    
    Proceeds from exercise of stock options and ESPP
    
    
    306
    
    
    
    156Net cash provided by/(used in) in financing activities
    
    
    13,942
    
    
    
    (1,388
    )Effect of exchange rate changes on cash
    
    
    182
    
    
    
    (110
    )Net increase/(decrease) in cash and cash equivalents
    
    
    11,525
    
    
    
    (36
    )Cash and cash equivalents at beginning of period
    
    
    12,863
    
    
    
    10,510Cash and cash equivalents at end of period
    
    $
    24,388
    
    
    $
    10,474
   5




---



##### Table of Contents



GLU MOBILE INC.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except per share data)
 Note 1  The Company, Basis of Presentation and Summary of Significant Accounting Policies
   Basis of Presentation
  Basis of Consolidation
  Concentration of Credit Risk
    Three Months EndedMarch 31,2011
    
    
    2010Verizon Wireless
    
    
    *
    %
    
    
    18.0
    %Apple
    
    
    15.7
    
    
    
    *
 
 *
    
    Revenues from the customer were less than 10% during the period.  6




---



##### Table of Contents



Net Loss Per Share
  Three Months EndedMarch 31,2011
    
    
    2010Net loss
    
    $
    (3,172
    )
    
    $
    (3,656
    )Basic and diluted shares:Weighted average common shares outstanding
    
    
    52,048
    
    
    
    30,459Weighted average unvested common shares subject to repurchase
    
    
    
    
    
    
    (1
    )Weighted average shares used to compute basic and diluted net loss per share
    
    
    52,048
    
    
    
    30,458Net loss per share  basic and diluted
    
    $
    (0.06
    )
    
    $
    (0.12
    )
  Three Months EndedMarch 31,2011
    
    
    2010Warrants to purchase common stock
    
    
    6,693
    
    
    
    106Unvested common shares subject to repurchase
    
    
    
    
    
    
    1Options to purchase common stock
    
    
    6,996
    
    
    
    5,73413,689
    
    
    
    5,841
 Recent Accounting Pronouncements
 When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative
Carrying Amounts (Topic 350)  Intangibles  Goodwill and Other
 Note 2  Fair Value Measurements
 Fair Value Measurements
 Fair Value Measurements and Disclosures
  7




---



##### Table of Contents



Level 1
 Level 2
 Level 3
  Note 3  Balance Sheet Components
 Accounts Receivable
 March 31,
    
    
    December 31,2011
    
    
    2010Accounts receivable
    
    $
    12,573
    
    
    $
    11,164Less: Allowance for doubtful accounts
    
    
    (605
    )
    
    
    (504
    )$
    11,968
    
    
    $
    10,660
  Property and Equipment
 March 31,
    
    
    December 31,2011
    
    
    2010Computer equipment
    
    $
    5,282
    
    
    $
    4,974Furniture and fixtures
    
    
    501
    
    
    
    487Software
    
    
    3,498
    
    
    
    2,919Leasehold improvements
    
    
    2,489
    
    
    
    2,39211,770
    
    
    
    10,772Less: Accumulated depreciation and amortization
    
    
    (9,125
    )
    
    
    (8,638
    )$
    2,645
    
    
    $
    2,134
  Other Long-Term Liabilities
 March 31,
    
    
    December 31,2011
    
    
    2010Uncertain tax position obligations
    
    
    5,028
    
    
    
    4,991Deferred income tax liability
    
    
    1,178
    
    
    
    1,170Restructuring
    
    
    578
    
    
    
    773Other
    
    
    1,063
    
    
    
    925$
    7,847
    
    
    
    7,859
  8




---



##### Table of Contents



Note 4  Goodwill and Intangible Assets
  March 31, 2011
    
    
    December 31, 2010Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedAmortization
    
    
    
    
    
    
    
    
    
    
    AmortizationExpense
    
    
    
    
    
    
    
    
    
    
    Expense(Including
    
    
    
    
    
    
    
    
    
    
    (IncludingEstimated
    
    
    Gross
    
    
    Impact of
    
    
    Net
    
    
    Gross
    
    
    Impact of
    
    
    NetUseful
    
    
    Carrying
    
    
    Foreign
    
    
    Carrying
    
    
    Carrying
    
    
    Foreign
    
    
    CarryingLife
    
    
    Value
    
    
    Exchange)
    
    
    Value
    
    
    Value
    
    
    Exchange)
    
    
    ValueIntangible assets amortized
to cost of revenues:Titles, content and technology
    
    2.5 yrs
    
    $
    13,638
    
    
    $
    (13,638
    )
    
    $
    
    
    
    $
    13,545
    
    
    $
    (13,545
    )
    
    $
    Catalogs
    
    1 yr
    
    
    1,247
    
    
    
    (1,247
    )
    
    
    
    
    
    
    1,203
    
    
    
    (1,203
    )
    
    
    ProvisionX Technology
    
    6 yrs
    
    
    205
    
    
    
    (205
    )
    
    
    
    
    
    
    198
    
    
    
    (198
    )
    
    
    Carrier contract and related
relationships
    
    5 yrs
    
    
    18,940
    
    
    
    (11,218
    )
    
    
    7,722
    
    
    
    18,832
    
    
    
    (10,352
    )
    
    
    8,480Licensed content
    
    5 yrs
    
    
    2,851
    
    
    
    (2,851
    )
    
    
    
    
    
    
    2,829
    
    
    
    (2,810
    )
    
    
    19Service provider license
    
    9 yrs
    
    
    449
    
    
    
    (165
    )
    
    
    284
    
    
    
    446
    
    
    
    (151
    )
    
    
    295Trademarks
    
    3 yrs
    
    
    549
    
    
    
    (549
    )
    
    
    
    
    
    
    547
    
    
    
    (547
    )
    
    
    37,879
    
    
    
    (29,873
    )
    
    
    8,006
    
    
    
    37,600
    
    
    
    (28,806
    )
    
    
    8,794Other intangible assets amortized
to operating expenses:Emux Technology
    
    6 yrs
    
    
    1,330
    
    
    
    (1,330
    )
    
    
    
    
    
    
    1,283
    
    
    
    (1,283
    )
    
    
    Noncompete agreement
    
    2 yrs
    
    
    582
    
    
    
    (582
    )
    
    
    
    
    
    
    562
    
    
    
    (562
    )
    
    
    1,912
    
    
    
    (1,912
    )
    
    
    
    
    
    
    1,845
    
    
    
    (1,845
    )
    
    
    Total intangibles assets
    
    
    
    
    
    $
    39,791
    
    
    $
    (31,785
    )
    
    $
    8,006
    
    
    $
    39,445
    
    
    $
    (30,651
    )
    
    $
    8,794
   AmortizationIncluded inCost ofYear Ending December 31,
    
    Revenues2011 (remaining nine months)
    
    $
    2,1022012
    
    
    2,8022013
    
    
    2,7322014
    
    
    2722015 and thereafter
    
    
    98$
    8,006
  9




---



##### Table of Contents



Goodwill
   March 31, 2011
    
    
    December 31, 2010Americas
    
    
    EMEA
    
    
    APAC
    
    
    Total
    
    
    Americas
    
    
    EMEA
    
    
    APAC
    
    
    TotalBalance as of January 1Goodwill
    
    $
    24,871
    
    
    $
    25,354
    
    
    $
    24,039
    
    
    $
    74,264
    
    
    $
    24,871
    
    
    $
    25,354
    
    
    $
    23,881
    
    
    $
    74,106Accumulated Impairment Losses
    
    
    (24,871
    )
    
    
    (25,354
    )
    
    
    (19,273
    )
    
    
    (69,498
    )
    
    
    (24,871
    )
    
    
    (25,354
    )
    
    
    (19,273
    )
    
    
    (69,498
    )
    
    
    
    
    
    
    
    4,766
    
    
    
    4,766
    
    
    
    
    
    
    
    
    
    
    
    4,608
    
    
    
    4,608Goodwill Acquired during the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Effects of Foreign Currency Exchange
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    158Balance as of period ended:
    
    
    
    
    
    
    
    
    
    
    4,796
    
    
    
    4,796
    
    
    
    
    
    
    
    
    
    
    
    4,766
    
    
    
    4,766Goodwill
    
    
    24,871
    
    
    
    25,354
    
    
    
    24,069
    
    
    
    74,294
    
    
    
    24,871
    
    
    
    25,354
    
    
    
    24,039
    
    
    
    74,264Accumulated Impairment Losses
    
    
    (24,871
    )
    
    
    (25,354
    )
    
    
    (19,273
    )
    
    
    (69,498
    )
    
    
    (24,871
    )
    
    
    (25,354
    )
    
    
    (19,273
    )
    
    
    (69,498
    )$
    
    
    
    $
    
    
    
    $
    4,796
    
    
    $
    4,796
    
    
    $
    
    
    
    $
    
    
    
    $
    4,766
    
    
    $
    4,766
 Intangibles  Goodwill and Other
   Note 5  Commitments and Contingencies
 Leases
   10




---



##### Table of Contents



MinimumOperating
    
    
    
    
    
    
    NetLease
    
    
    Sub-lease
    
    
    LeaseYear Ending December 31,
    
    Payments
    
    
    Income
    
    
    Payments2011 (remaining nine months)
    
    $
    2,850
    
    
    $
    554
    
    
    $
    2,2962012
    
    
    2,725
    
    
    
    391
    
    
    
    2,3342013
    
    
    1,052
    
    
    
    
    
    
    
    1,052$
    6,627
    
    
    $
    945
    
    
    $
    5,682
 Minimum Guaranteed Royalties and Developer Commitments
  MinimumGuaranteed
    
    
    DeveloperYear Ending December 31,
    
    Royalties
    
    
    Commitments
    
    
    Total2011 (remaining nine months)
    
    $
    159
    
    
    $
    1,646
    
    
    $
    1,8052012 and thereafter
    
    
    361
    
    
    
    
    
    
    
    361$
    520
    
    
    $
    1,646
    
    
    $
    2,166
  Income Taxes
  Indemnification Agreements
    11




---



##### Table of Contents



Contingencies
  Note 6  Debt
 MIG Notes
  Credit Facility
      12




---



##### Table of Contents



Note 7  Stockholders Equity
 Public Offering
  Shelf Registration Statement
  Private Placement
  Warrants to Purchase Common Stock
   13




---



##### Table of Contents



NumberExercise
    
    
    of SharesPrice
    
    
    OutstandingTerm
    
    
    per
    
    
    UnderIssue Date
    
    (Years)
    
    
    Share
    
    
    WarrantMay 2006
    
    
    7
    
    
    
    9.03
    
    
    
    106August 2010
    
    
    5
    
    
    $
    1.50
    
    
    
    6,2486,354
 Comprehensive Loss
  Note 8  Stock Option and Other Benefit Plans
 2007 Equity Incentive Plan
    2007 Employee Stock Purchase Plan
   14




---



##### Table of Contents



2008 Equity Inducement Plan
   Stock Option Activity
  Options OutstandingWeighted
    
    
    WeightedNumber
    
    
    Average
    
    
    Average
    
    
    AggregateShares
    
    
    of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicAvailable
    
    
    Shares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueBalances at December 31, 2010
    
    
    4,148
    
    
    
    6,928
    
    
    $
    2.02Increase in authorized shares
    
    
    1,338Options granted
    
    
    (464
    )
    
    
    464
    
    
    
    2.47Options canceled
    
    
    281
    
    
    
    (281
    )
    
    
    1.57Options exercised
    
    
    
    
    
    
    (149
    )
    
    
    0.94Balances at March 31, 2011
    
    
    5,303
    
    
    
    6,962
    
    
    $
    2.10
    
    
    
    4.68
    
    
    $
    17,645Options vested and expected to vest at March 31, 2011
    
    
    
    
    
    
    5,646
    
    
    $
    2.24
    
    
    
    4.56
    
    
    $
    13,887Options exercisable at March 31, 2011
    
    
    
    
    
    
    2,155
    
    
    $
    3.54
    
    
    
    3.70
    
    
    $
    3,795
   15




---



##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010Dividend yield
    
    
    
    %
    
    
    
    %Risk-free interest rate
    
    
    1.62
    %
    
    
    1.35
    %Expected volatility
    
    
    63.5
    %
    
    
    75.7
    %Expected term (years)
    
    
    4.00
    
    
    
    3.22
    Three Months EndedMarch 31,2011
    
    
    2010Research and development
    
    $
    100
    
    
    $
    164Sales and marketing
    
    
    66
    
    
    
    73General and administrative
    
    
    231
    
    
    
    287Total stock-based compensation expense
    
    $
    397
    
    
    $
    524
  Note 9  Income Taxes
   Income Taxes
  16




---



##### Table of Contents



Note 10  Segment Reporting
 Segment Reporting
   Three Months EndedMarch 31,2011
    
    
    2010(in thousands)Feature phone
    
    $
    10,478
    
    
    $
    15,106Smartphone
    
    
    5,948
    
    
    
    2,183Revenues
    
    $
    16,426
    
    
    $
    17,289
  17




---



##### Table of Contents



Three Months EndedMarch 31,2011
    
    
    2010United States of America
    
    $
    7,275
    
    
    $
    8,249China
    
    
    1,427
    
    
    
    1,600Americas, excluding the USA
    
    
    1,916
    
    
    
    2,176EMEA
    
    
    5,071
    
    
    
    4,662Other
    
    
    737
    
    
    
    602$
    16,426
    
    
    $
    17,289
  March 31,
    
    
    December 31,2011
    
    
    2010Americas
    
    $
    1,624
    
    
    $
    1,013EMEA
    
    
    592
    
    
    
    714Other
    
    
    429
    
    
    
    407$
    2,645
    
    
    $
    2,134
 Note 11  Restructuring
  Restructuring2011
    
    
    2010
    
    
    2009Facilities
    
    
    
    
    
    
    Facilities
    
    
    
    
    
    
    Facilities
    
    
    SuperscapeWorkforce
    
    
    Related
    
    
    Workforce
    
    
    Related
    
    
    Workforce
    
    
    Related
    
    
    Plan
    
    
    TotalBalance as of January 1, 2010
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    629
    
    
    $
    737
    
    
    $
    40
    
    
    $
    1,406Charges to operations
    
    
    
    
    
    
    
    
    
    
    1,540
    
    
    
    1,854
    
    
    
    
    
    
    
    235
    
    
    
    
    
    
    
    3,629Non Cash Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (269
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (272
    )Charges settled in cash
    
    
    
    
    
    
    
    
    
    
    (1,244
    )
    
    
    
    
    
    
    (629
    )
    
    
    (414
    )
    
    
    (14
    )
    
    
    (2,301
    )Balance as of December 31, 2010
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    1,585
    
    
    
    
    
    
    
    558
    
    
    
    23
    
    
    
    2,462Charges to operations
    
    
    369
    
    
    
    93
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    490Non Cash Adjustments
    
    
    
    
    
    
    (86
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    (82
    )Charges settled in cash
    
    
    (318
    )
    
    
    (7
    )
    
    
    (175
    )
    
    
    (313
    )
    
    
    
    
    
    
    (95
    )
    
    
    
    
    
    
    (908
    )Balance as of March 31, 2011
    
    $
    51
    
    
    $
    
    
    
    $
    149
    
    
    $
    1,272
    
    
    $
    
    
    
    $
    463
    
    
    $
    27
    
    
    $
    1,962
   18




---



##### Table of Contents



Note 12  Subsequent Events
      19




---



##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The information in this discussion and elsewhere in this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current
expectations that involve risks and uncertainties. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. For example, the
words may, will, believe, anticipate, plan, expect, intend, could, estimate,
continue and similar expressions or variations are intended to identify forward-looking
statements. In this report, forward-looking statements include, without limitation, the following:
  our expectations and beliefs regarding the future conduct and growth of our
business;
  our expectations regarding competition and our ability to compete effectively;
  our expectations regarding the development of future products, including those for
smartphones and tablets;
  our expectation that we will release 15 to 20 additional social, freemium games
during 2011, of which approximately one-third will be developed by third parties pursuant to our Glu
Partners program;
  our intention to focus our development efforts on social, freemium games and
increase our use of in-game advertising, offers, micro-transactions and other monetization
techniques with respect to the games we develop for smartphones and tablets;
  our expectation that the substantial majority of the social, freemium games that
we are developing for smartphones will be based on our own intellectual property, which we
believe will significantly enhance our margins and long-term value;
  our expectations regarding our revenues, including the expected decline in revenues
from games we develop for feature phones in our traditional carrier-based business and our
expectation that our smartphone revenues will surpass our feature phone revenues on a monthly
run rate basis by the end of 2011 and that this transition will position us to return to overall
revenue growth in the longer term;
  our expectations regarding our operating expenses, including anticipated increased
spending on sales and marketing and research and development initiatives during 2011 compared to 2010;
  our intention to utilize a significant portion of the net proceeds from our underwritten public offering that we completed in January 2011 to further the development of our global social gaming
community, including with respect to our Glu Games Network and Glu Partners initiatives;
  our assumptions regarding the impact of Recent Accounting Pronouncements applicable
to us;
  our assessments and estimates that determine our effective tax rate and valuation
allowance; and
  our belief that our cash and cash equivalents, borrowings under our revolving
credit facility and cash flows from operations, if any, will be sufficient to meet our cash
needs for at least the next 12 months.
 Our actual results and the timing of certain events may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such a discrepancy include,
but are not limited to, those discussed in Risk Factors elsewhere in this report. All
forward-looking statements in this document are based on information available to us as of the date
hereof, and we assume no obligation to update any such forward-looking statements to reflect future
events or circumstances.
  
    
    An Overview that discusses at a high level our operating results and some of the trends
that affect our business;
 
    
    Critical Accounting Policies and Estimates that we believe are important to understanding
the assumptions and judgments underlying our financial statements;
  20




---



##### Table of Contents




    
    Recent Accounting Pronouncements;
 
    
    Results of Operations, including a more detailed discussion of our revenues and expenses;
and
 
    
    Liquidity and Capital Resources, which discusses key aspects of our statements of cash
flows, changes in our balance sheets and our financial commitments.
 Overview
  Financial Results and Trends
     21




---



##### Table of Contents



22




---



##### Table of Contents



Significant Transactions
    Critical Accounting Policies and Estimates
  Recent Accounting Pronouncements
  Results of Operations
 Comparison of the Three Months Ended March 31, 2011 and 2010
 Revenues
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands)Feature phone
    
    $
    10,478
    
    
    $
    15,106Smartphone
    
    
    5,948
    
    
    
    2,183Revenues
    
    $
    16,426
    
    
    $
    17,289
   23




---



##### Table of Contents



Cost of Revenues
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands)Cost of revenues:Royalties and impairment of prepaid royalties and guarantees
    
    $
    3,840
    
    
    $
    4,691Amortization of intangible assets
    
    
    817
    
    
    
    1,228Total cost of revenues
    
    $
    4,657
    
    
    $
    5,919Revenues
    
    $
    16,426
    
    
    $
    17,289Gross margin
    
    
    71.6
    %
    
    
    65.8
    %
  Research and Development Expenses
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands)Research and development expenses
    
    $
    7,166
    
    
    $
    6,661Percentage of revenues
    
    
    43.6
    %
    
    
    38.5
    %
   24




---



##### Table of Contents



Sales and Marketing Expenses
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands)Sales and marketing expenses
    
    $
    3,757
    
    
    $
    2,971Percentage of revenues
    
    
    22.9
    %
    
    
    17.2
    %
  General and Administrative Expenses
 Three Months EndedMarch 31,2011
    
    
    2010(in thousands)General and administrative expenses
    
    $
    2,934
    
    
    $
    3,813Percentage of revenues
    
    
    17.9
    %
    
    
    22.1
    %
  Restructuring
   25




---



##### Table of Contents



Interest and Other Income/(Expense), Net
  Income Tax Provision
   26




---



##### Table of Contents



Liquidity and Capital Resources
 Three Months Ended March 31,2011
    
    
    2010(in thousands)Consolidated Statement of Cash Flows Data:Capital expenditures
    
    $
    478
    
    
    $
    108Depreciation and amortization
    
    
    1,244
    
    
    
    1,846Cash flows (used in)/provided by operating activities
    
    
    (2,121
    )
    
    
    1,570Cash flows used in investing activities
    
    
    (478
    )
    
    
    (108
    )Cash flows provided by/(used in) in financing activities
    
    
    13,942
    
    
    
    (1,388
    )
  Operating Activities
   Investing Activities
   Financing Activities
    27




---



##### Table of Contents



Sufficiency of Current Cash and Cash Equivalents
   EBITDA and Net Cash.
     28




---



##### Table of Contents



Contractual Obligations
  Payments Due by PeriodTotal
    
    
    1 Year*
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    Thereafter(in thousands)Operating lease obligations, net of sublease income
    
    $
    5,682
    
    
    $
    2,296
    
    
    $
    3,386
    
    
    $
    
    
    
    $
    Guaranteed royalties(1)
    
    
    520
    
    
    
    159
    
    
    
    361
    
    
    
    
    
    
    
    Developer commitments(2)
    
    
    1,646
    
    
    
    1,646
    
    
    
    
    
    
    
    
    
    
    
    Uncertain tax position obligations, including interest and penalties(3)
    
    
    5,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,028
 
 *
    
    Represents the remaining nine months of 2011(1)
    
    We have entered into license and development arrangements with various
owners of brands and other intellectual property so that we can create
and publish games for mobile handsets based on that intellectual
property. A significant portion of these agreements require us to pay
guaranteed royalties over the term of the contracts regardless of
actual game sales.(2)
    
    We have contracts with various third-party developers to design and
develop games as part of our Glu Partners initiative. These
contracts require us to advance funds to these third-party developers,
in installments, payable upon the completion of specified development
milestones.(3)
    
    As of March 31, 2011, unrecognized tax benefits and potential interest
and penalties were classified within Other long-term liabilities on
our consolidated balance sheets. As of March 31, 2011, the settlement
of our income tax liabilities cannot be determined; however, the
liabilities are not expected to become due within the next 12 months.  29




---



##### Table of Contents



Off-Balance Sheet Arrangements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate and Credit Risk
       Foreign Currency Exchange Risk
    30




---



##### Table of Contents



Inflation
  
 ITEM 4.  CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   31




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 ITEM 1.  LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  We have a history of net losses, may incur substantial net losses in the future and may not achieve
profitability.
  Our financial results could vary significantly from quarter to quarter and are difficult to
predict, particularly in light of the current economic environment, which in turn could cause
volatility in our stock price.
   32




---



##### Table of Contents




    
    the number of new games released by us and our competitors;
 
    
    the timing of release of new games by us and our competitors, particularly those that
may represent a significant portion of revenues in a period;
 
    
    the popularity of new games and games released in prior periods;
 
    
    changes in the prominence of deck placement or storefront featuring for our leading
games and those of our competitors;
 
    
    fluctuations in the size and rate of growth of overall consumer demand for mobile
handsets, games and related content;
 
    
    the rate at which consumers continue to migrate from traditional feature phones to
smartphones, as well as the rate of adoption of tablet devices;
 
    
    our success in developing and monetizing social, freemium games for smartphones and
tablets;
 
    
    our ability to increase the daily and monthly active users of our social, freemium
games that we develop for smartphones and tablets, as well as the number of minutes
these users play such games;
 
    
    our ability to include certain types of offers in our games sold through the Apple
App Store;
 
    
    changes in accounting rules, such as those governing recognition of revenue,
including the period of time over which we recognize revenue for in-app purchases of
virtual currency and goods within certain of our games;
 
    
    the expiration of existing content licenses for particular games;
 
    
    the timing of charges related to impairments of goodwill, intangible assets, prepaid
royalties and guarantees;
 
    
    changes in pricing policies by us, our competitors or our carriers and other
distributors, including to the extent that smartphone digital storefront owners impose a
platform tax on our revenues derived from offers;
 
    
    changes in pricing policies by our carriers related to downloading content, such as
our games, which pricing policies could be influenced by the lower average prices for
content on smartphones;
 
    
    changes in the mix of original and licensed games, which have varying gross margins;
  33




---



##### Table of Contents




    
    the timing of successful mobile handset launches;
 
    
    the timeliness and accuracy of reporting from carriers;
 
    
    the seasonality of our industry;
 
    
    strategic decisions by us or our competitors, such as acquisitions, divestitures,
spin-offs, joint ventures, strategic investments or changes in business strategy;
 
    
    the timing of compensation expense associated with equity compensation grants; and
 
    
    decisions by us to incur additional expenses, such as increases in marketing or
research and development.
 Our strategy to grow our business includes developing a significant number of new titles for
smartphones and tablets rather than for feature phones, which currently comprises the substantial
majority of our revenues. If we do not succeed in generating considerable revenues and gross
margins from smartphones and tablets, our revenues, financial position and operating results may
suffer.
  
    
    it is uncertain whether Apple will continue to allow us to include certain types of
offers in our games sold through the Apple App Store, and, if Apple were to prohibit
such offers, we may be unable to replace the significant revenues that we currently
derive from these offers;
 
    
    the open nature of many of these digital storefronts increases substantially the
number of our competitors and competitive products and makes it more difficult for us to
achieve prominent placement or featuring for our games;
 
    
    the billing and provisioning capabilities of some smartphones are currently not
optimized to enable users to purchase games or make in-app purchases, which could make
it difficult for users of these smartphones to purchase our games or make in-app
purchases and could reduce our addressable market, at least in the short term;
 
    
    competitors may have substantially greater resources available to invest in
development and publishing of products for smartphones and tablets;
 
    
    these digital storefronts are relatively new markets, for which we are less able to
forecast with accuracy revenue levels, required marketing and developments expenses, and
net income or loss;
 
    
    we have less experience with open storefront distribution channels than with
carrier-based distribution;
 
    
    the pricing and revenue models for titles on these digital storefronts are rapidly
evolving (for example, the introduction of in-app purchasing capabilities and the
potential introduction of usage-based pricing for games), and has resulted, and may
continue to result, in significantly lower average selling prices for our premium games
developed for smartphones as compared to games developed for feature phones, and a lower
than expected return on investment for these games;
 
    
    the competitive advantage of our porting capabilities may be reduced as smartphones
become more widely adopted;
 
    
    many of our key licenses do not grant us the rights to develop games for the iPhone
and certain other smartphones and tablets; and
 
    
    many OEMs and carriers are developing their own storefronts and it may be difficult
for us to predict which ones will be successful, and we may expend time and resources
developing games for storefronts that ultimately do not succeed.
  34




---



##### Table of Contents



If we do not achieve a sufficient return on our investment with respect to our efforts to develop
social, freemium games for smartphones and tablets, it could negatively affect our operating
results.
  
    
    we have limited experience in successfully developing and marketing social, freemium
games;
 
    
    our relatively limited experience with respect to creating games that include
micro-transaction capabilities, advertizing and offers may cause us to have difficulty
optimizing the monetization of our freemium games;
 
    
    it is uncertain whether Apple will continue to allow us to include certain types of
offers in our games sold through the Apple App Store, and, if Apple were to prohibit
such offers, we may be unable to replace the significant revenues that we currently
derive from these offers;
 
    
    some of our competitors have released a significant number of social, freemium games
on smartphones, and this competition will make it more difficult for us to differentiate
our games and derive significant revenues from them;
 
    
    some of our competitors have substantially greater resources available to invest in
the development and publishing of social, freemium games;
 
    
    we intend to have the significant majority of our social, freemium games be based
upon our own intellectual property rather than well-known licensed brands, and, as a
result, we may encounter difficulties in generating sufficient consumer interest in our
games, particularly since we historically have had limited success in generating
significant revenues from games based on our own intellectual property;
 
    
    social, freemium games currently represent a minority of the games available on
smartphones and tablets and have a limited history, and it is unclear how popular this
style of game will become or their revenue potential;
 
    
    our strategy with respect to developing social, freemium games for smartphones
assumes that a large number of consumers will download our games because they are free
and that we will subsequently be able to effectively monetize these games via in-app
purchases. offers and advertisements; however, some smartphones charge users a fee for
downloading content, and users of these smartphones may be reluctant to download our
freemium games because of these fees, which would reduce the effectiveness of our
product strategy;
 
    
    our social, freemium games may otherwise not be widely downloaded by consumers for a
variety of reasons, including poor consumer reviews or other negative publicity,
ineffective or insufficient marketing efforts or a failure to achieve prominent
storefront featuring for such games;
  35




---



##### Table of Contents




    
    even if our social, freemium games are widely downloaded, we may fail to retain users
of these games or optimize the monetization of these games for a variety of reasons,
including poor game design or quality, gameplay issues such as game unavailability, long
load times or an unexpected termination of the game due to data server or other
technical issues or our failure to effectively respond and adapt to changing user
preferences through updates to our games;
 
    
    we have encountered difficulties in keeping users engaged in our
social, freemium games for a significant amount of time subsequent to their initial
download of the games, in large part due to the
limited social features currently contained in our
games, and we may have difficulty increasing
consumer retention in our games;
 
    
    we expect that approximately
one-third of the social, freemium games that we intend to
release during 2011 will be produced by third parties with which we have a strategic
relationship, which will reduce our control over the development process and may result
in product delays and games that do not meet our and consumer expectations regarding
quality;
 
    
    the Federal Trade Commission has recently indicated that it intends to review issues
related to in-app purchases, particularly with respect to games that are marketed
primarily to minors (a recent class action lawsuit has been filed relating to this
issue; Glu has not been named as a party to this lawsuit) and the Federal Trade Commission might issue rules significantly restricting or
even prohibiting in-app purchases or we could potentially be named as a defendant in a
future class action lawsuit; and
 
    
    because these are effectively new products for us, we are less able to forecast with
accuracy revenue levels, required marketing and development expenses, and net income or
loss.
  If sales of feature phones in our carrier-based
business  or  the
average selling prices of our games sold through wireless carriers
decline more rapidly than we currently expect, it could have a material adverse
impact on our revenues, financial position and results of operations.
  The markets in which we operate are highly competitive, and many of our competitors have
significantly greater resources than we do.
   36




---



##### Table of Contents




    
    significantly greater revenues and financial resources;
 
    
    stronger brand and consumer recognition regionally or worldwide;
 
    
    the capacity to leverage their marketing expenditures across a broader portfolio of
mobile and non-mobile products;
 
    
    larger installed customer bases from related platforms such as console gaming or
social networking websites to which they can market and sell mobile games;
 
    
    more substantial intellectual property of their own from which they can develop games
without having to pay royalties;
 
    
    lower labor and development costs and better overall economies of scale;
 
    
    greater resources to make acquisitions;
 
    
    greater platform specific focus, experience and expertise; and
 
    
    broader global distribution and presence.
  End user tastes are continually changing and are often unpredictable; if we fail to develop and
publish new mobile games that achieve market acceptance, our sales would suffer.
  If we are unsuccessful in establishing and increasing awareness of our brand and recognition of our
games or if we incur excessive expenses promoting and maintaining our brand or our games, our
potential revenues could be limited, our costs could increase and our operating results and
financial condition could be harmed.
   37




---



##### Table of Contents



Inferior storefront featuring or deck placement would likely adversely impact our revenues and thus
our operating results and financial condition.
    
    
    the perceived attractiveness of the title or brand;
 
    
    the past critical or commercial success of the game or of other games previously
introduced by a publisher;
 
    
    the publishers relationship with the applicable digital storefront owner and future
pipeline of quality titles for it; and
 
    
    the current market share of the publisher.
   38




---



##### Table of Contents



Third parties will be developing some of our social, freemium games, and to the extent that they do
not timely deliver high-quality games that meet our and consumer expectations, our business will
suffer.
   Changes in foreign exchange rates and limitations on the convertibility of foreign currencies could
adversely affect our business and operating results.
   We have depended on a small number of games for a significant portion of our revenues in recent
fiscal periods. If these games do not continue to succeed or we do not release highly successful
new games, our revenues would decline.
   39




---



##### Table of Contents



We might elect not to renew our existing brand and content licenses when they expire and might not
choose to obtain additional licenses, which would negatively impact our feature phone revenues and
might negatively impact our smartphone revenues to the extent that we do not create successful
games based on our own intellectual property.
  System or network failures could reduce our sales, increase costs or result in a loss of revenues
or end users of our games.
 Gun Bros
 We currently rely primarily on wireless carriers to market and distribute our games for feature
phones and thus to generate a significant portion of our revenues. The loss of or a change in any
significant carrier relationship, including their credit worthiness, could materially reduce our
revenues and adversely impact our cash position.
   40




---



##### Table of Contents



Changes made by wireless carriers and other distributors to their policies regarding pricing,
revenue sharing, supplier status, billing and collections could adversely affect our business and
operating results.
     A shift of technology platform by wireless carriers and mobile handset manufacturers could lengthen
the development period for our games, increase our costs and cause our games to be of lower quality
or to be published later than anticipated.
  We face added business, political, regulatory, operational, financial and economic risks as a
result of our international operations and distribution, any of which could increase our costs and
adversely affect our operating results.
  
    
    challenges caused by distance, language and cultural differences;
 
    
    multiple and conflicting laws and regulations, including complications due to
unexpected changes in these laws and regulations;
  41




---



##### Table of Contents




    
    foreign currency exchange rate fluctuations;
 
    
    difficulties in staffing and managing international operations;
 
    
    potential violations of the Foreign Corrupt Practices Act, particularly in certain
emerging countries in East Asia, Eastern Europe and Latin America;
 
    
    greater fluctuations in sales to end users and through carriers in developing
countries, including longer payment cycles and greater difficulty collecting accounts
receivable;
 
    
    protectionist laws and business practices that favor local businesses in some
countries;
 
    
    regulations that could potentially affect the content of our products and their
distribution, particularly in China;
 
    
    potential adverse foreign tax consequences;
 
    
    foreign exchange controls that might prevent us from repatriating income earned in
countries outside the United States, particularly China;
 
    
    price controls;
 
    
    the servicing of regions by many different carriers;
 
    
    imposition of public sector controls;
 
    
    political, economic and social instability;
 
    
    restrictions on the export or import of technology;
 
    
    trade and tariff restrictions and variations in tariffs, quotas, taxes and other
market barriers; and
 
    
    difficulties in enforcing intellectual property rights in certain countries.
    42




---



##### Table of Contents



If we fail to deliver our games at the same time as new mobile handset models and tablets are
commercially introduced, our sales may suffer.
  If a substantial number of the end users that purchase our games by subscription change mobile
handsets or if wireless carriers switch to subscription plans that require active monthly renewal
by subscribers or change or cease offering subscription plans, our sales could suffer.
  If we fail to maintain and enhance our capabilities for porting games to a broad array of mobile
handsets, our attractiveness to wireless carriers and branded content owners will be impaired, and
our sales and financial results could suffer.
   Our industry is subject to risks generally associated with the entertainment industry, any of which
could significantly harm our operating results.
   43




---



##### Table of Contents



If one or more of our games were found to contain hidden, objectionable content, our reputation and
operating results could suffer.
  Our business and growth may suffer if we are unable to hire and retain key personnel.
  Acquisitions could result in operating difficulties, dilution and other harmful consequences.
  
    
    diversion of management time and a shift of focus from operating the businesses to
issues related to integration and administration;
 
    
    declining employee morale and retention issues resulting from changes in
compensation, management, reporting relationships, future prospects or the direction of
the business;
 
    
    the need to integrate each acquired companys accounting, management, information,
human resource and other administrative systems to permit effective management, and the
lack of control if such integration is delayed or not implemented;
 
    
    the need to implement controls, procedures and policies appropriate for a larger
public company that the acquired companies lacked prior to acquisition;
 
    
    in the case of foreign acquisitions, the need to integrate operations across
different cultures and languages and to address the particular economic, currency,
political and regulatory risks associated with specific countries; and
 
    
    liability for activities of the acquired companies before the acquisition, including
violations of laws, rules and regulations, commercial disputes, tax liabilities and
other known and unknown liabilities.
  44




---



##### Table of Contents



We may need to raise additional capital or borrow funds to grow our business, and we may not be
able to raise capital or borrow funds on terms acceptable to us or at all.
    45




---



##### Table of Contents



Our business is subject to increasing regulation of content, consumer privacy, distribution and
online hosting and delivery in the key territories in which we conduct business. If we do not
successfully respond to these regulations, our business may suffer.
  If we do not adequately protect our intellectual property rights, it may be possible for third
parties to obtain and improperly use our intellectual property and our business and operating
results may be harmed.
   Third parties may sue us, including for intellectual property infringement, which, if successful,
may disrupt our business and could require us to pay significant damage awards.
   46




---



##### Table of Contents



Our reported financial results could be adversely affected by changes in financial accounting
standards or by the application of existing or future accounting standards to our business as it
evolves.
  If we fail to maintain an effective system of internal controls, we might not be able to report our
financial results accurately or prevent fraud; in that case, our stockholders could lose confidence
in our financial reporting, which could negatively impact the price of our stock.
  Maintaining and improving our financial controls and the requirements of being a public company may
strain our resources, divert managements attention and affect our ability to attract and retain
qualified members for our board of directors.
     47




---



##### Table of Contents



Changes in our tax rates or exposure to additional tax liabilities could adversely affect our
earnings and financial condition.
      Our stock price has fluctuated and declined significantly since our initial public offering in
March 2007, and may continue to fluctuate, may not rise and may decline further
  
    
    price and volume fluctuations in the overall stock market, including as a result of
trends in the economy as a whole, such as the continuing unprecedented volatility in the
financial markets;
 
    
    changes in the operating performance and stock market valuations of other technology
companies generally, or those in our industry in particular;
 
    
    actual or anticipated fluctuations in our operating results;
  48




---



##### Table of Contents




    
    the financial projections we may provide to the public, any changes in these
projections or our failure to meet these projections;
 
    
    failure of securities analysts to initiate or maintain coverage of us, changes in
financial estimates by any securities analysts who follow our company or our industry,
our failure to meet these estimates or failure of those analysts to initiate or maintain
coverage of our stock;
 
    
    ratings or other changes by any securities analysts who follow our company or our
industry;
 
    
    announcements by us or our competitors of significant technical innovations,
acquisitions, strategic partnerships, joint ventures, capital raising activities or
capital commitments;
 
    
    the publics response to our press releases or other public announcements, including
our filings with the SEC;
 
    
    any significant sales of our stock by our directors, executive officers or large
stockholders, including the investors in the 2010 Private Placement whose shares have been
registered for resale under the Securities Act and may be freely sold at any time;
 
    
    lawsuits threatened or filed against us; and
 
    
    market conditions or trends in our industry or the economy as a whole.
  Our principal stockholders, executive officers and directors have substantial control over our
company, which may prevent you or other stockholders from influencing significant corporate
decisions.
  Some provisions in our certificate of incorporation, bylaws and the terms of some of our licensing
and distribution agreements and our credit facility may deter third parties from seeking to acquire
us.
  
    
    our board of directors is classified into three classes of directors with staggered
three-year terms;
 
    
    only our chairman of the board, our lead independent director, our chief executive
officer, our president or a majority of our board of directors is authorized to call a
special meeting of stockholders;
  49




---



##### Table of Contents




    
    our stockholders are able to take action only at a meeting of stockholders and not by
written consent;
 
    
    only our board of directors and not our stockholders is able to fill vacancies on our
board of directors;
 
    
    our certificate of incorporation authorizes undesignated preferred stock, the terms
of which may be established and shares of which may be issued without stockholder
approval; and
 
    
    advance notice procedures apply for stockholders to nominate candidates for election
as directors or to bring matters before a meeting of stockholders.
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    RESERVED
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
   50




---



##### Table of Contents



SIGNATURES
  GLU MOBILE INC.Date: May 5, 2011
    By:
    /s/ Niccolo M. de MasiNiccolo M. de MasiPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 5, 2011
    By:
    /s/ Eric R. LudwigEric R. LudwigSenior Vice President, Chief Financial Officer
and Chief Administrative Officer
(Principal Financial Officer)  51




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    
    
    Incorporated by Reference
    
    Filing
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Date
    
    Herewith10.01
    
    
    Amendment No. 4 and Limited Waiver to Amended and
Restated Loan and Security Agreement, dated as of
February 2, 2011, by and among Glu Mobile Inc., Glu
Games Inc. and Silicon Valley Bank.
    
    8-K
    
    001-33368
    
    
    99.01
    
    
    02/07/1110.02
    
    
    Glu Mobile Inc. 2011 Executive Bonus Plan.
    
    8-K
    
    001-33368
    
    
    99.04
    
    
    02/07/1131.01
    
    
    Certification of Principal Executive Officer
Pursuant to Securities Exchange Act Rule
13a-14(a)/15d-14(a).
    
    
    
    
    
    
    
    
    
    
    
    X31.02
    
    
    Certification of Principal Financial Officer
Pursuant to Securities Exchange Act Rule 13a-14(a)
/15d-14(a).
    
    
    
    
    
    
    
    
    
    
    
    X32.01
    
    
    Certification of Principal Executive Officer
Pursuant to 18 U.S.C. Section 1350 and Securities
Exchange Act Rule 13a-14(b).*
    
    
    
    
    
    
    
    
    
    
    
    X32.02
    
    
    Certification of Principal Financial Officer
Pursuant to 18 U.S.C. Section 1350 and Securities
Exchange Act Rule 13a-14(b).*
    
    
    
    
    
    
    
    
    
    
    
    X
 
 *
    
    This certification is not deemed filed for purposes of Section 18 of the Securities
Exchange Act, or otherwise subject to the liability of that section. Such certification will
not be deemed to be incorporated by reference into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that Glu Mobile Inc. specifically
incorporates it by reference.  52