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
|
Delaware
|
87-0418827
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
8911
Balboa Ave., Suite B, San Diego, California 92123
|
||
(Address
of principal executive offices)
|
(Zip
Code)
|
Page
|
|||
Part
1. Financial Information
|
|||
Item
1.
|
Financial
Statements
|
||
a)
|
Balance
Sheets
|
1
|
|
As
of June 30, 2008 (Unaudited) and September 30, 2007
|
|||
b)
|
Statements
of Operations
|
2
|
|
For
the Three and Nine Months Ended June 30, 2008 and 2007 (Unaudited)
|
|||
c)
|
Statements
of Cash Flows
|
3
|
|
For
the Nine Months Ended June 30, 2008 and 2007 (Unaudited)
|
|||
d)
|
Notes
to Unaudited Financial Statements
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis or Plan of Operation
|
11
|
|
Item
3(A)T.
|
Controls
and Procedures
|
21
|
|
Part
II. Other Information
|
|||
Item
1.
|
Legal
Proceedings
|
21
|
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
21
|
|
Signature
|
22
|
June 30,
|
September 30,
|
||||||
2008
|
2007
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
1,369,571
|
$
|
2,096,282
|
|||
Accounts
receivable including related party of $37 and $203,466, respectively,
net
of allowance of $57,646 and $18,977, respectively
|
1,451,866
|
542,009
|
|||||
Inventory,
prepaid expenses and other current assets
|
79,663
|
99,476
|
|||||
Total
current assets
|
2,901,100
|
2,737,767
|
|||||
PROPERTY
AND EQUIPMENT-net
|
78,635
|
77,827
|
|||||
SOFTWARE
DEVELOPMENT COSTS
|
124,160
|
-
|
|||||
OTHER
ASSETS
|
29,465
|
29,465
|
|||||
TOTAL
ASSETS
|
$
|
3,133,360
|
$
|
2,845,059
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
519,910
|
$
|
120,519
|
|||
Accrued
payroll and related taxes
|
323,104
|
249,036
|
|||||
Deferred
revenue
|
640,029
|
541,010
|
|||||
Other
accrued liabilities
|
18,205
|
31,510
|
|||||
Total
current liabilities
|
1,501,248
|
942,075
|
|||||
Deferred
rent
|
53,355
|
44,596
|
|||||
TOTAL
LIABILITIES
|
1,554,603
|
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
|
14,764,775
|
14,582,894
|
|||||
Accumulated
deficit
|
(13,202,769
|
)
|
(12,741,257
|
)
|
|||
Total
stockholders' equity
|
1,578,757
|
1,858,388
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
3,133,360
|
$
|
2,845,059
|
THREE MONTHS ENDED
|
NINE MONTHS ENDED
|
||||||||||||
June 30,
|
June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
SALES
|
|||||||||||||
Software
including sales to a related party of $0 and $16,890 for the three
months
ended June 30, 2008 and 2007, respectively, and $227,712 and $52,051
for
the nine months ended June 30, 2008 and 2007, respectively
|
$
|
1,279,070
|
$
|
842,617
|
$
|
2,861,346
|
$
|
2,481,816
|
|||||
Professional
services including sales to a related party of $15,998 and $203,402
for
the three months ended June 30, 2008 and 2007, respectively, and
$40,961
and $451,761 for the nine months ended June 30, 2008 and 2007,
respectively
|
402,420
|
615,961
|
1,344,259
|
1,717,035
|
|||||||||
1,681,490
|
1,458,578
|
4,205,605
|
4,198,851
|
||||||||||
COSTS
AND EXPENSES:
|
|||||||||||||
Cost
of sales-software
|
316,302
|
102,210
|
550,678
|
299,242
|
|||||||||
Cost
of sales-professional services, education and other
|
41,750
|
91,488
|
124,887
|
159,536
|
|||||||||
Operations
|
23,377
|
21,470
|
71,906
|
65,376
|
|||||||||
Selling
and marketing
|
413,239
|
311,646
|
1,093,246
|
861,944
|
|||||||||
Research
and development
|
432,443
|
436,776
|
1,464,287
|
1,434,066
|
|||||||||
General
and administrative
|
414,572
|
410,276
|
1,366,409
|
1,797,273
|
|||||||||
Total
costs and expenses
|
1,641,683
|
1,373,866
|
4,671,413
|
4,617,437
|
|||||||||
OPERATING
INCOME (LOSS)
|
39,807
|
84,712
|
(465,808
|
)
|
(418,586
|
)
|
|||||||
OTHER
INCOME (EXPENSE):
|
|||||||||||||
Interest
expense
|
-
|
-
|
-
|
(9,355
|
)
|
||||||||
Interest
and other income
|
2,057
|
2,989
|
7,096
|
11,268
|
|||||||||
Total
other income expense - net
|
2,057
|
2,989
|
7,096
|
1,913
|
|||||||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
41,864
|
87,701
|
(458,712
|
)
|
(416,673
|
)
|
|||||||
PROVISION
FOR INCOME TAXES
|
-
|
-
|
(2,800
|
)
|
(800
|
)
|
|||||||
NET
INCOME (LOSS)
|
$
|
41,864
|
$
|
87,701
|
$
|
(461,512
|
)
|
$
|
(417,473
|
)
|
|||
NET
INCOME (LOSS) PER SHARE - BASIC
|
$
|
0.00
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
|||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC
|
16,751,137
|
16,751,137
|
16,751,137
|
16,750,408
|
|||||||||
NET
INCOME (LOSS) PER SHARE - DILUTED
|
$
|
0.00
|
$
|
0.01
|
$
|
(0.03
|
)
|
$
|
(0.02
|
)
|
|||
WEIGHTED
AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE EQUIVALENTS OUTSTANDING -
DILUTED
|
16,751,137
|
16,809,426
|
16,751,137
|
16,750,408
|
NINE MONTHS ENDED
|
|||||||
June 30,
|
|||||||
2008
|
2007
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(461,512
|
)
|
$
|
(417,473
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
and amortization
|
27,150
|
30,906
|
|||||
Provision
(recoveries) for bad debts
|
38,669
|
(20,654
|
)
|
||||
Stock-based
compensation expense
|
181,881
|
183,885
|
|||||
Changes
in assets and liabilities:
|
|||||||
Accounts
receivable
|
(948,526
|
)
|
(37,514
|
)
|
|||
Inventory,
prepaid expenses, and other assets
|
19,813
|
100,456
|
|||||
Accounts
payable
|
399,391
|
(577,002
|
)
|
||||
Accrued
payroll and related taxes
|
74,068
|
(36,106
|
)
|
||||
Deferred
revenue
|
99,019
|
274,940
|
|||||
Other
accrued liabilities
|
(13,305
|
)
|
16,660
|
||||
Deferred
rent
|
8,759
|
15,927
|
|||||
Net
cash used in operating activities
|
(574,593
|
)
|
(465,975
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(27,958
|
)
|
(10,747
|
)
|
|||
Proceeds
from sale of property and equipment
|
-
|
1,044
|
|||||
Investment
in software development costs
|
(124,160
|
)
|
-
|
||||
Net
cash used in investing activities
|
(152,118
|
)
|
(9,703
|
)
|
|||
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
|
(726,711
|
)
|
(471,042
|
)
|
|||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,096,282
|
2,331,011
|
|||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,369,571
|
$
|
1,859,969
|
|||
SUPPLEMENTAL
DISCLOSURE OF
|
|||||||
CASH
FLOW INFORMATION
|
|||||||
Cash
paid for interest
|
$
|
-
|
$
|
9,355
|
|||
Cash
paid for income taxes
|
$
|
2,800
|
$
|
800
|
|
Three and Nine Months
Ended
June 30, 2008
|
Three and Nine Months
Ended
June 30, 2007
|
|||||
Risk-free interest
rate
|
1.74%
- 3.67%
|
|
4.49%
- 4.71%
|
|
|||
Expected
life (years)
|
5.4
|
4.5 –
6.1
|
|||||
Expected
volatility
|
97.19%
|
|
90.0%
|
|
|||
Expected
dividends
|
None
|
None
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
June 30,
|
June 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Research
and development
|
$
|
8,676
|
$
|
4,489
|
$
|
26,516
|
$
|
18,700
|
|||||
Sales
and marketing
|
14,561
|
16,735
|
38,486
|
37,632
|
|||||||||
General
and administrative
|
40,104
|
21,958
|
116,879
|
127,553
|
|||||||||
Stock-based
compensation expense related to employee stock options included in
operating expenses
|
$
|
63,341
|
$
|
43,182
|
$
|
181,881
|
$
|
183,885
|
Number of
Shares
|
Weighted
Average Grant
Date Fair Value
Per Share
|
Weighted
Average
Remaining
Contractual Life
(in Years)
|
Aggregate
Intrinsic Value
|
||||||||||
Vested
|
2,655,280
|
0.54
|
5.66
|
$
|
83
|
||||||||
Unvested
|
1,080,864
|
0.29
|
9.47
|
4,917
|
|||||||||
Total
|
3,736,144
|
0.54
|
6.76
|
$
|
5,000
|
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
|
2.43
|
||||||
Executive
Officers
|
600,000
|
$
|
0.35
|
9.44
|
||||||
Employees
|
737,000
|
$
|
0.35
|
9.17
|
||||||
Forfeited
|
(286,735
|
)
|
$
|
1.09
|
||||||
Outstanding,
June 30, 2008
|
3,736,144
|
$
|
0.71
|
6.76
|
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
|
|||||||||||||
$ 0.33 - $ 0.69
|
1,913,216
|
7.96
|
$
|
0.39
|
899,575
|
$
|
0.44
|
1,013,641
|
|||||||||||
$
0.70 - $ 0.92
|
910,657
|
5.13
|
$
|
0.79
|
843,434
|
$
|
0.79
|
67,223
|
|||||||||||
$
1.06 - $ 1.68
|
847,500
|
6.08
|
$
|
1.12
|
847,500
|
$
|
1.12
|
-
|
|||||||||||
$
2.13 - $ 2.68
|
49,000
|
3.68
|
$
|
2.29
|
49,000
|
$
|
2.29
|
-
|
|||||||||||
$
3.25 - $12.37
|
15,771
|
1.72
|
$
|
6.63
|
15,771
|
$
|
6.63
|
-
|
|||||||||||
3,736,144
|
6.76
|
$
|
0.71
|
2,655,280
|
$
|
0.84
|
1,080,864
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
||||||||||||
Revenue
|
2008
|
2007
|
2008
|
2007
|
|||||||||
(000's)
|
|||||||||||||
Recognition
toolkits
|
$
|
1,279
|
$
|
843
|
$
|
2,862
|
$
|
2,433
|
|||||
Document
and imaging processing solutions
|
-
|
-
|
-
|
49
|
|||||||||
Professional
services, maintenance and other
|
402
|
616
|
1,344
|
1,717
|
|||||||||
Total
revenue
|
$
|
1,681
|
$
|
1,459
|
$
|
4,206
|
$
|
4,199
|
Three Months Ended
June 30,
|
Nine Months Ended
June 30,
|
||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||
Customers to which sales were in excess of
10% of total sales:
|
|||||||||||||
Number
of customers
|
1
|
4
|
1
|
2
|
|||||||||
Aggregate
percentage of sales
|
57.6
|
%
|
63.0
|
%
|
23.9
|
%
|
25.1
|
%
|
·
|
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.
|
a.
|
Exhibits:
|
Exhibit Number
|
Exhibit
Title
|
|
31.1
|
Certification
of Periodic Report by the Chief Executive Officer Pursuant to Rules
13a-14(a) of the Securities Exchange Act of 1934
|
|
31.2
|
Certification
of Periodic Report by the Chief Financial Officer Pursuant to Rules
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
|
b.
|
Reports
on Form 8-K:
|
MITEK
SYSTEMS, INC.
|
|
Date:
August 5, 2008
|
/s/
James B. DeBello
|
James
B. DeBello, President and
|
|
Chief
Executive Officer
|
|
Date:
August 5, 2008
|
/s/
Tesfaye Hailemichael
|
Tesfaye
Hailemichael
|
|
Chief
Financial Officer
|