x |
Quarterly
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
o |
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
Commission
file number 0-15235
|
Mitek
Systems, Inc.
|
Delaware
|
87-0418827
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
8911
Balboa Ave., Suite B, San Diego, California
|
92123
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Issuer's
telephone number (858)
503-7810
|
Page
|
|||
Part
1. Financial Information
|
|||
Item
1.
|
Financial
Statements
|
|
|
a)
|
Balance
Sheets
|
1
|
|
As
of March 31, 2008 (Unaudited) and September 30, 2007
|
|||
b)
|
Statements
of Operations
|
2
|
|
For
the Three and Six Months Ended March 31, 2008 and 2007 (Unaudited)
|
|||
c)
|
Statements
of Cash Flows
|
3
|
|
For
the Six Months Ended March 31, 2008 and 2007 (Unaudited)
|
|||
d)
|
Notes
to Unaudited Financial Statements
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis or Plan of Operation
|
10
|
|
Item
3.
|
Controls
and Procedures
|
19
|
|
Part
II. Other Information
|
|||
Item
1.
|
Legal
Proceedings
|
20
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
20
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
21
|
|
Signature
|
22
|
March
31,
2008
(Unaudited)
|
September 30,
2007
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
1,506,590
|
$
|
2,096,282
|
|||
Accounts
receivable including related party of $3,776 and $203,466, respectively,
net of allowance of $18,977 in both periods
|
1,183,463
|
542,009
|
|||||
Inventory,
prepaid expenses and other current assets
|
83,055
|
99,476
|
|||||
Total
current assets
|
2,773,108
|
2,737,767
|
|||||
PROPERTY
AND EQUIPMENT-net
|
84,130
|
77,827
|
|||||
OTHER
ASSETS
|
29,465
|
29,465
|
|||||
TOTAL
ASSETS
|
$
|
2,886,703
|
$
|
2,845,059
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
272,870
|
$
|
120,519
|
|||
Accrued
payroll and related taxes
|
306,658
|
249,036
|
|||||
Deferred
revenue
|
723,603
|
541,010
|
|||||
Other
accrued liabilities
|
59,054
|
31,510
|
|||||
Total
current liabilities
|
1,362,185
|
942,075
|
|||||
Deferred
rent
|
50,966
|
44,596
|
|||||
TOTAL
LIABILITIES
|
1,413,151
|
986,671
|
|||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Preferred
stock, $0.001 par value, 1,000,000 shares authorized, none issued
and
outstanding
|
-
|
-
|
|||||
Common
stock, $.001 par value; 40,000,000 shares authorized, 16,751,137
issued
and outstanding
|
16,751
|
16,751
|
|||||
Additional
paid-in capital
|
14,701,434
|
14,582,894
|
|||||
Accumulated
deficit
|
(13,244,633
|
)
|
(12,741,257
|
)
|
|||
Total
stockholders' equity
|
1,473,552
|
1,858,388
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
2,886,703
|
$
|
2,845,059
|
THREE
MONTHS ENDED
March
31,
|
SIX
MONTHS ENDED
March
31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
SALES
|
|||||||||||||
Software
including sales to a related party of $600 and $11,220 for the three
months ended March 31, 2008 and 2007, respectively, and $227,712
and
$35,161 for the six months ended March 31, 2008 and 2007, respectively
|
$
|
797,015
|
$
|
718,743
|
$
|
1,582,276
|
$
|
1,639,199
|
|||||
Professional
services including sales to a related party of $15,394 and $162,370
for
the three months ended March 31, 2008 and 2007, respectively, and
$24,963
and $248,359 for the six months ended March 31, 2008 and 2007,
respectively
|
463,501
|
582,698
|
941,839
|
1,101,074
|
|||||||||
1,260,516
|
1,301,441
|
2,524,115
|
2,740,273
|
||||||||||
COSTS
AND EXPENSES:
|
|||||||||||||
Cost
of sales-software
|
101,289
|
62,376
|
234,376
|
197,032
|
|||||||||
Cost
of sales-professional services, education and other
|
41,359
|
45,942
|
83,136
|
68,048
|
|||||||||
Operations
|
24,131
|
21,924
|
48,530
|
43,906
|
|||||||||
Selling
and marketing
|
334,501
|
295,278
|
680,007
|
550,298
|
|||||||||
Research
and development
|
500,957
|
495,384
|
1,031,844
|
997,290
|
|||||||||
General
and administrative
|
479,374
|
591,183
|
951,837
|
1,386,997
|
|||||||||
Total
costs and expenses
|
1,481,611
|
1,512,087
|
3,029,730
|
3,243,571
|
|||||||||
OPERATING
LOSS
|
(221,095
|
)
|
(210,646
|
)
|
(505,615
|
)
|
(503,298
|
)
|
|||||
OTHER
INCOME (EXPENSE):
|
|||||||||||||
Interest
expense
|
-
|
(3,439
|
)
|
-
|
(9,355
|
)
|
|||||||
Interest
and other income
|
2,119
|
3,856
|
5,039
|
8,279
|
|||||||||
Total
other income (expense) - net
|
2,119
|
417
|
5,039
|
(1,076
|
)
|
||||||||
LOSS
BEFORE INCOME TAXES
|
(218,976
|
)
|
(210,229
|
)
|
(500,576
|
)
|
(504,374
|
)
|
|||||
PROVISION
FOR INCOME TAXES
|
(2,800
|
)
|
(800
|
)
|
(2,800
|
)
|
(800
|
)
|
|||||
NET
LOSS
|
$
|
(221,776
|
)
|
$
|
(211,029
|
)
|
$
|
(503,376
|
)
|
$
|
(505,174
|
)
|
|
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.03
|
)
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND
DILUTED
|
16,751,137
|
16,751,137
|
16,751,137
|
16,750,044
|
SIX
MONTHS ENDED
March
31,
|
|||||||
2008
|
2007
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(503,376
|
)
|
$
|
(505,174
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|||||||
Depreciation
and amortization
|
19,375
|
21,753
|
|||||
Provision
(recoveries) for bad debts
|
-
|
(20,654
|
)
|
||||
Stock-based
compensation expense
|
118,540
|
140,703
|
|||||
Changes
in assets and liabilities:
|
|||||||
Accounts
receivable
|
(641,454
|
)
|
(86,054
|
)
|
|||
Inventory,
prepaid expenses, and other assets
|
16,421
|
108,461
|
|||||
Accounts
payable
|
152,351
|
(47,152
|
)
|
||||
Accrued
payroll and related taxes
|
57,622
|
24,303
|
|||||
Deferred
revenue
|
182,593
|
227,562
|
|||||
Other
accrued liabilities
|
27,544
|
(10,306
|
)
|
||||
Deferred
rent
|
6,370
|
11,149
|
|||||
Net
cash used in operating activities
|
(564,014
|
)
|
(135,409
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(25,678
|
)
|
(5,947
|
)
|
|||
Proceeds
from sale of property and equipment
|
-
|
1,044
|
|||||
Net
cash used in investing activities
|
(25,678
|
)
|
(4,903
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Proceeds
from exercise of stock options
|
-
|
4,636
|
|||||
Net
cash provided by financing activities
|
- |
4,636
|
|||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(589,692
|
)
|
(135,676
|
)
|
|||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,096,282
|
2,331,011
|
|||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,506,590
|
$
|
2,195,335
|
|||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
|||||||
Cash
paid for interest
|
$
|
-
|
$
|
9,355
|
|||
Cash
paid for income taxes
|
$
|
2,800
|
$
|
800
|
1. |
Basis
of Presentation
|
2. |
Recently
Issued Accounting
Pronouncements
|
3. |
Accounting
for Stock-Based
Compensation
|
|
Three
and Six Months
Ended
March
31, 2008
|
Three
and Six Months
Ended
March
31, 2007
|
||
Risk-free
interest rate
|
3.50%
- 3.67%
|
4.49%
- 4.71%
|
||
Expected
life (years)
|
5.3
|
4.5 –
6.1
|
||
Expected
volatility
|
94.19%
|
90%
|
||
Expected
dividends
|
None
|
None
|
Three
Months Ended
March
31,
|
Six
Months Ended
March
31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Research
and development
|
$
|
7,911
|
$
|
2,882
|
$ |
17,839
|
$ |
14,211
|
|||||
Sales
and marketing
|
12,286
|
11,893
|
23,925
|
20,897
|
|||||||||
General
and administrative
|
28,043
|
81,579
|
76,776
|
105,595
|
|||||||||
Stock-based
compensation expense related to employee stock options included
in
operating expenses
|
$
|
48,240
|
$
|
96,354
|
$
|
118,540
|
$
|
140,703
|
Number
of
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
Weighted
Average
Remaining
Contractual Life
(in Years)
|
Aggregate
Intrinsic
Value
|
||||||||||
Vested
|
2,521,671
|
0.56
|
5.67
|
$
|
-
|
||||||||
Unvested
|
1,065,105
|
0.32
|
9.45
|
-
|
|||||||||
Total
|
3,586,776
|
0.56
|
6.80
|
$
|
-
|
Number of
Shares
|
Weighted Average
Exercise Price Per
Share
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
||||||||
Outstanding,
September 30, 2007
|
2,510,879
|
$
|
0.96
|
6.39
|
||||||
Granted:
|
||||||||||
Board
of Directors
|
175,000
|
$
|
0.37
|
2.18
|
||||||
Executive
Officers
|
600,000
|
$
|
0.35
|
9.18
|
||||||
Employees
|
412,000
|
$
|
0.35
|
8.76
|
||||||
Forfeited
|
(111,103
|
)
|
$
|
0.83
|
||||||
Outstanding,
March 31, 2008
|
3,586,776
|
$
|
0.56
|
6.80
|
Range
of
Exercise Prices
|
Number of
Options
Outstanding
|
Weighted
Average
Remaining
Contractual Life
(in Years)
|
Weighted
Average
Exercise Price
|
Number of
Exercisable
Options
|
Weighted
Average
Exercise Price
of Exercisable
Options
|
Number of
Unvested
Options
|
|||||||||||||
$
0.35 - $ 0.69
|
1,629,748
|
7.96
|
$
|
0.40
|
765,696
|
$
|
0.45
|
864,052
|
|||||||||||
$
0.72 - $ 0.92
|
1,024,757
|
5.59
|
$
|
0.79
|
823,704
|
$
|
0.80
|
201,053
|
|||||||||||
$
1.06 - $ 1.68
|
857,500
|
6.32
|
$
|
1.13
|
857,500
|
$
|
1.13
|
-
|
|||||||||||
$
2.13 - $ 2.68
|
54,000
|
3.94
|
$
|
2.29
|
54,000
|
$
|
2.29
|
-
|
|||||||||||
$
3.25 - $12.37
|
20,771
|
2.00
|
$
|
6.78
|
20,771
|
$
|
6.78
|
-
|
|||||||||||
3,586,776
|
6.80
|
$
|
0.75
|
2,521,671
|
$
|
0.89
|
1,065,105
|
4. |
Income
Taxes
|
5. |
Commitments
and Contingencies
|
6. |
Related
Party Transactions
|
7. |
Product
Revenues and Sales
Concentrations
|
Three Months Ended
March
31,
|
Six Months Ended
March
31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Revenue
(000's)
|
|||||||||||||
Recognition
toolkits
|
$ |
797
|
$
|
682
|
$
|
1,582
|
$
|
1,590
|
|||||
Document
and imaging processing solutions
|
-
|
37
|
-
|
49
|
|||||||||
Professional
services, maintenance and other
|
464
|
582
|
942
|
1,101
|
|||||||||
Total
revenue
|
$ |
1,261
|
$
|
1,301
|
$
|
2,524
|
$
|
2,740
|
Three Months Ended
March
31,
|
Six Months Ended
March
31,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Customers
to which sales were in excess of 10% of total sales:
|
|||||||||||||
Number
of customers
|
2
|
4
|
3
|
2
|
|||||||||
Aggregate
percentage of sales
|
24.8
|
%
|
50.0
|
%
|
32.3
|
%
|
25.4
|
%
|
·
|
The
actual contractual terms, such as payment terms, delivery dates,
and
pricing of the various product and service elements of a
contract;
|
·
|
Time
period over which services are to be
performed;
|
·
|
Creditworthiness
of the customer;
|
·
|
The
complexity of customizations to our software required by service
contracts;
|
·
|
The
sales channel through which the sale is made (direct, VAR, distributor,
etc.);
|
·
|
Discounts
given for each element of a contract;
and
|
·
|
Any
commitments made as to installation or implementation “go live”
dates.
|
Director
|
For
|
Against or Withheld
|
|||||
John
M. Thornton
|
12,544,465
|
1,211,311
|
|||||
Sally
B. Thornton
|
12,254,639
|
1,501,137
|
|||||
James
B. DeBello
|
12,543,255
|
1,212,521
|
|||||
Gerald
I Farmer, PhD
|
12,404,297
|
1,351,479
|
|||||
Michael
Bealmear
|
13,658,243
|
97,533
|
|||||
William
P. Tudor
|
13,657,843
|
97,933
|
|||||
Vinton
Cunningham
|
13,657,843
|
97,933
|
For
|
Against or Withheld
|
Abstain or Broker Non-Vote
|
||
13,729,010
|
19,829
|
6,937
|
Exhibit
Number
|
Exhibit
Title
|
|
31.1
|
Certification
of Periodic Report by the Chief Executive Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934
|
|
31.2
|
Certification
of Periodic Report by the Chief Financial Officer Pursuant to Rule
13a-14(a) of the Securities Exchange Act of 1934
|
|
32.1
|
Certification
of Periodic Report by the Chief Executive Officer Pursuant to Section
906
of the Sarbanes Oxley Act of 2002
|
|
32.2
|
Certification
of Periodic Report by the Chief Financial Officer Pursuant to Section
906
of the Sarbanes Oxley Act of
2002
|
|
MITEK
SYSTEMS, INC.
|
|
Date:
May 13, 2008
|
/s/
James B. DeBello
|
|
|
James
B. DeBello, President and
|
|
|
Chief
Executive Officer
|
|
Date:
May 13, 2008
|
/s/
Tesfaye Hailemichael
|
|
|
Tesfaye
Hailemichael
|
|
|
Chief
Financial Officer
|