UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
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|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
MITEK SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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MITEK SYSTEMS, INC.
14145 Danielson St., Suite B
Poway, California 92064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 4, 2004
TO ALL STOCKHOLDERS OF
MITEK SYSTEMS, INC.
The Annual Meeting of Stockholders of Mitek Systems, Inc. (the "Company")
will be held at 1:00 p.m., local time, Wednesday, February 4, 2004, at the
Company's executive offices located at 14145 Danielson St., Suite B, Poway,
California 92064, for the following purposes:
1. To elect a board of six directors to hold the office during the ensuing
year or until their respective successors are elected and qualified. The
Board of Directors intends to nominate as directors the six persons
identified in the accompanying proxy statement.
2. To ratify the appointment of Deloitte & Touche LLP as our 2004 Auditors.
3. To transact such business as may properly come before the meeting and any
adjournments thereof.
The Board of Directors has fixed the close of business on January 2, 2004
as the record date for determination of stockholders entitled to notice of and
to vote at the Annual Meeting and all adjournments thereof. A list of these
stockholders will be open to examination by any stockholder at the meeting and
for ten days prior thereto during normal business hours at our executive
offices, 14145 Danielson St., Suite B, Poway, California 92064.
Enclosed for your convenience is a form of proxy which may be used at the
Annual Meeting and which, unless otherwise marked, authorizes the holders of the
proxy to vote for the proposed slate of directors and as the proxy holder deems
appropriate on any other matter brought before the Annual Meeting.
You are invited to attend the meeting in person. Even if you expect to
attend, it is important that you sign, date and return the attached proxy
promptly in the business reply envelope which requires no postage if mailed in
the United States. It is important that your shares be represented at the
meeting to assure the presence of a quorum. If you sign and send in a proxy, you
may revoke it by executing a new proxy with a later date, by written notice of
revocation to the secretary of the company at any time before it is voted, or by
attendance at the meeting and voting in person.
By Order of the Board of Directors
/s/ John M. Thornton
Poway, California John M. Thornton
January 14, 2004 Chairman of the Board
MITEK SYSTEMS, INC.
14145 Danielson St., Suite B
Poway, California 92064
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 4, 2004
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mitek Systems, Inc. (the "Company") for use
at its Annual Meeting of Stockholders (the "Annual Meeting") to be held at 1:00
p.m., local time, Wednesday, February 4, 2004, at the company's executive
offices at 14145 Danielson St., Suite B, Poway, CA 92064, and at any
adjournments thereof.
As of the close of business on January 2, 2004, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, we had a total of 11,314,593 shares of Common Stock issued and
outstanding.
We will pay the expenses of soliciting proxies for the Annual Meeting
including the cost of preparing, assembling and mailing the proxy materials.
Proxies may be solicited personally, by mail, by telephone, by facsimile, or by
telegram, by our regularly employed officers and employees of the Company. Our
officers and employees will not receive additional compensation for soliciting
proxies. We may request persons holding stock in their names for others, such as
brokers and nominees, to forward proxy materials to their principals and request
authority to execute the proxy. We will reimburse any such brokers and nominees
for their expenses in connection therewith.
Our 2003 Annual Report to Stockholders is included in this Proxy
Statement, but is not incorporated in, and is not part of, this Proxy Statement
and is not proxy-soliciting material. We intend to mail this Proxy Statement and
the accompanying material to stockholders of record on or about January 14,
2004. The Company's Annual Report will be provided free of charge to any
stockholder upon written request to the Company at 14145 Danielson St., Suite B,
Poway, CA 92064.
VOTING
The election of directors is decided by a plurality of the votes cast by
holders of all shares entitled to vote in the election. Each stockholder of
record on January 2, 2004, is entitled to one vote for each share held on all
matters to come before the meeting. The enclosed form of proxy provides a method
for stockholders to withhold authority to vote for any one or more of the
nominees for director while granting authority to vote for the remaining
nominees. The names of all nominees are listed on the proxy card. If you wish to
grant authority to vote for all nominees, check the box marked "FOR." If you
wish to withhold authority to vote for all nominees, check the box marked
"WITHHOLD." If you wish your shares to be voted for some nominees and not for
one or more of the others, check the box marked "FOR" and indicate the
nominee(s) for whom you are withholding the authority to vote by listing such
nominee(s) in the space provided. If you check the box marked "WITHHOLD" your
vote will be treated as an abstention and accordingly, your shares will neither
be voted for nor against a director but will be counted for quorum purposes.
Accordingly, withheld votes will not affect the outcome of the election of
directors.
The enclosed form of proxy also provides a method for stockholders to vote
for or against or to abstain from voting with respect to the ratification of the
selection of Deloitte & Touche LLP as our 2004 auditors. By abstaining from
voting for such, shares would not be voted either for or against, but would be
counted for quorum purposes. While there may be instances in which a stockholder
will wish to abstain, the Board of Directors encourages all stockholders to vote
their shares in their best judgment and to participate in the voting process to
the fullest extent possible.
1
Brokers who hold shares in street name for customers who are beneficial
owners of such shares are prohibited from giving a proxy to vote such customers'
shares on "non-routine" matters in the absence of specific instructions from
such customers. This is commonly referred to as a "broker non-vote." Broker
non-votes will be treated in the same manner as abstentions for voting and
quorum purposes. Accordingly, broker non-votes will not affect the outcome of
the election of directors.
The shares represented by proxies that are returned properly signed will
be voted in accordance with the stockholder's directions. If the proxy card is
signed and returned without direction as to how the shares are to be voted, the
shares will be voted as recommended by the Board of Directors. A stockholder
giving a proxy may revoke it at any time before it is exercised by filing with
the Secretary of the Company an instrument revoking it or a duly executed proxy
bearing a later date, or by written notice to the Company of the death or
incapacity of the stockholder who executed the proxy.
The proxy will also be revoked if the person executing the proxy is
present at the Annual Meeting and elects to vote in person. Unless revoked, the
proxy will be voted as specified. The persons named as proxies were selected by
the Board of Directors.
2
PROPOSALS OF STOCKHOLDERS
For proposals of stockholders to be included in our proxy materials to be
distributed in connection with the 2005 annual meeting of stockholders,
anticipated to be held in February 2005, we must receive such proposals in
writing no later than September 16, 2004. The acceptance of such proposals is
subject to Securities and Exchange Commission (the "Commission") guidelines. Any
stockholder proposal submitted with respect to our 2005 annual meeting of
stockholders which is received by us after November 30, 2004 will be considered
untimely for purposes of Rule 14a-4 and Rule 14a-5 under the Exchange Act and
the Board of Directors may vote against such proposal using its discretionary
voting authority as authorized by proxy.
PROPOSAL NO. 1
TO ELECT SIX DIRECTORS
ELECTION OF DIRECTORS
Pursuant to our Bylaws, the Board of Directors has fixed the number of
authorized directors at six. All six directors are to be elected at the Annual
Meeting, to hold office until the next annual meeting or until their successors
are duly elected and qualified. The six nominees receiving the highest number of
votes will be elected.
Unless authorization to do so is withheld, it is intended that the persons
named in the enclosed proxy will vote for the election of the nominees proposed
by the Board of Directors, all of whom are presently directors of the Company.
If any of the nominees should become unavailable for election before the Annual
Meeting, the proxy will be voted for a substitute nominee or nominees, if any,
designated by the Board of Directors.
The following table includes the names and certain information about the
directors and executive officer of the Company. Each of the directors is also a
nominee for election to the Board of Directors. All of the nominees named below
have consented to being named herein and to serve, if elected.
Name Age Position
- ---- --- --------
John M. Thornton..................................71 Chairman of the Board and Chief Financial Officer
Gerald I. Farmer, Ph. D (1)(2)....................69 Director
James B. DeBello..................................45 Director, President and Chief Executive Officer
Sally B. Thornton.................................69 Director
John G. Rebelo, Jr. (1)(2)........................63 Director
Robert David Holvey (1)(2)........................52 Director
(1) Compensation Committee
(2) Audit Committee
Directors
John M. Thornton - Mr. Thornton, 71, has been a director of the Company
since March 1986. He was appointed Chairman of the Board as of October 1, 1987
and served as President, Chief Executive Officer and Chief Financial Officer
from September 1998 to May 2003. Previously, he served as President of the
Company from May 1991 through July 1991 and Chief Executive Officer from May
1991 through February 1992. From 1976 through 1988, Mr. Thornton served as
Chairman and Vice Chairman of the Board at Micom Systems, Inc. Mr. Thornton was
Chairman and President of Wavetek Corporation for 18 years. Mr. Thornton is also
Chairman of the Board of Thornton Winery Corporation. Mr. Thornton is the spouse
of Sally B. Thornton, a director.
Gerald I. Farmer, Ph.D. - Dr. Farmer, 69, has been a director of the
Company since May 1994. He was Executive Vice President of the Company from
November 1992 until June 1997. Before joining the Company, Dr. Farmer was
Executive Vice President of HNC Software, Inc. from January 1987 to November
1992. He has held senior management positions with IBM Corporation, Xerox, SAIC
and Gould Imaging and Graphics.
3
James B. DeBello - Mr. DeBello, 45, has been a director of the Company
since November 1994. He has been President and Chief Executive Officer of the
Company since May 2003. Previously he was Chief Executive Officer of AsiaCorp
Communications, Inc., a wireless data infrastructure and software company, from
July 2001 to May 2003. He was Venture Chief Executive Officer for IdeaEdge
Ventures, Inc., a venture capital company, from June 2000 to June 2001. From May
1999 to May 2000 he was President, Chief Operating Officer and a member of the
Board of Directors of CollegeClub.com, an internet company. From November 1998
to April 1999 he was Chief Operating Officer of WirelessKnowledge, Inc.; a joint
venture company formed between Microsoft and Qualcomm, Inc. Before that, from
November 1996 to November 1998, Mr. DeBello held positions as Vice President,
Assistant General Manager and General Manager of Qualcomm Inc.'s Eudora Internet
Software Division, and Vice President of Product Management of Qualcomm Inc.'s
Subscriber Equipment Division.
Sally B. Thornton - Ms. Thornton, 69, has been a director of the Company
since April 1988. She has been a private investor for more than forty years. She
served as a director of Micom Systems, Inc. from 1976 to 1988. From 1987 until
1996 she served as Chairman of Medical Materials, Inc, a composite plastics
manufacturer. Ms. Thornton is on the Board of Directors of Thornton Winery
Corporation in Temecula, CA. She has been a Trustee of the Sjorgren's Syndrome
Foundation in New York and Stephens College in Missouri. Ms. Thornton is also a
Life Trustee of the San Diego Museum of Art. Ms. Thornton is the spouse of John
M. Thornton, Chairman of the Board.
John G. Rebelo, Jr. - Mr. Rebelo, 63, has been a director of the Company
since July 2002. He was Market Chairman of U.S. Bank San Diego, from 2000 to
2001. From 1974 to 2000 he was Chairman of the Board and Chief Executive Officer
of Peninsula Bank of San Diego.
Robert David Holvey - Mr. Holvey, 52, has been a director of the Company
since July 2003. Since November 1996 he has been Senior Vice President, Business
Modeling Division at Wells Fargo and Company. He has also held senior level
management positions at major banks and companies, including Bank of America and
EPIC Homes. He has nearly 20 years of experience in the financial services
industry.
Meetings
The Board of Directors has one regularly scheduled meeting each year,
immediately after and at the same place as the Annual Meeting of Stockholders.
Additional meetings may be called as the need arises. During the 2003 fiscal
year, there were six meetings of the Board of Directors. No director attended
fewer than 75 percent of the aggregate number of meetings held by the Board of
Directors and the committees on which such director served during the 2003
fiscal year.
Committees
The Board of Directors does not have a standing nominating committee;
however, all nominations are approved by a majority of independent directors.
The Board of Directors intends to create an independent Nominating Committee in
February 2004. The Board of Directors will consider suggestions by shareholders
for names of possible future nominees delivered in writing and received one
hundred and twenty (120) days in advance of the Annual Meeting of Shareholders.
Such recommendations should provide all information relating to such person that
the stockholder desires to nominate that is required to be disclosed in
solicitation of proxies pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended.
The Board of Directors has appointed from among its members two
committees, the Compensation Committee and the Audit Committee, to advise it on
matters of special importance to the Company.
The Compensation Committee, which acts as the Administrative Committee for
the 1986, 1988, 1996, 1999, 2000 and 2002 Stock Option Plans, during fiscal 2003
was composed of Gerald I. Farmer, John G. Rebelo, Jr. and Robert David Holvey.
The Compensation Committee reviews, analyzes and recommends compensation
programs to the Board of Directors. It also decides to which key employees of
the Company either incentive stock options or non-qualified stock options should
be granted. During fiscal 2003, the Compensation Committee held six meetings,
concurrently with Board of Directors meetings.
4
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors (the "Audit Committee") has
furnished the following report to stockholders of the Company in accordance with
rules adopted by the Commission.
The Audit Committee, which is appointed annually by the Board of
Directors, currently consists of three directors, Gerald I. Farmer, John G.
Rebelo, Jr. and Robert David Holvey. Directors Farmer, Rebelo and Holvey are
independent and meet the other qualifications requirements under the applicable
rules of the NASDAQ and under the regulations adopted by the SEC pursuant to the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"). The Audit Committee acts
under a written charter. Copies of the Audit Committee Charter, Compensation
Committee Charter, and Code of Conduct are available on the Company's website at
www.miteksys.com by selecting "About Us" and "Investor Relations". As described
in its charter, the Audit Committee meets with the independent auditors and
officers or other personnel of the Company responsible for the Company's
financial reports. The Audit Committee is responsible for reviewing the scope of
the auditors' examination of the Company and the audited results of the
examination. The Audit Committee is also responsible for discussing with the
auditors the scope, reasonableness and adequacy of internal accounting controls.
The Audit Committee is not responsible for the planning or conduct of the audits
or the determination that the Company's financial statements are complete and
accurate and in accordance with generally accepted accounting principles. Among
other matters, the Audit Committee considers and selects a certified public
accounting firm as the Company's independent auditor. The Audit Committee held
six meetings during fiscal 2003.
In accordance with rules adopted by the Commission, the Audit Committee of
the Company states that:
o The Audit Committee has reviewed and discussed with management the
Company's audited financial statements for the fiscal year 2003.
o The Audit Committee has discussed with Deloitte & Touche LLP, the
Company's independent auditors, the matters required to be discussed
by Statement on Auditing Standards No. 61, as modified and
supplemented.
o The Audit Committee has received the written disclosures and the
letter from Deloitte & Touche LLP, required by Independence
Standards Board Standard No. 1 ("Independence Discussions with Audit
Committees"), as modified and supplemented, and has discussed with
Deloitte & Touche LLP, the independent accountant's independence.
Based upon the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 2003, for filing with the Commission.
Audit Committee
Gerald I. Farmer
John G. Rebelo, Jr.
Robert David Holvey
Director Compensation
The Company does not pay compensation for service as a director to persons
employed by the Company (John M. Thornton and James B. DeBello). Outside
directors are paid $1,500 for each board meeting and $500 for each committee
meeting they attend.
The Board of Directors recommends that you vote "FOR" the election of each
nominee as a director of the Company.
5
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation we paid to our Chief Executive
Officer and other executive officers who served as such at the end of fiscal
2003 and received annual compensation over $100,000.
Principal Position Year Annual Salary Bonus ($) Common Stock All Other Comp.
($) Underlying ($)
Options
John M. Thornton Chairman, 2003 262,500
Chief Executive Officer, 2002 250,000
Chief Financial Officer 2001 225,000
James B. DeBello (1) 2003 98,000 400,000
President & Chief
Executive Officer
Noel Flynn 2003 168,000
V.P., Operations 2002 160,000 50,000
2001 130,000
Murali Narayanan (2) 2003 36,000 100,000
V.P., Marketing
(1) Mr. DeBello joined the Company during 2003 and has an annualized salary of
$275,000.
(2) Mr. Narayanan joined the Company during 2003 and has an annualized salary of
$165,000.
Stock Options
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock options granted during the
fiscal year ended September 30, 2003.
Option Grants in Last Fiscal Year
Potential Realizable
Number of Value at Assumed Annual
Securities Rates of Stock Price
Underlying Total Options Exercise or Appreciation for Option
Options Granted Granted to Employees in Base Price Expiration Term (2)
(#)(1) FY 2003 (%) ($/Share) Date 5%($) 10%($)
John M. Thornton -0- N/A N/A N/A N/A N/A
James B. DeBello 400,000 46.73% 1.06 5/18/13 266,823 676,322
Noel Flynn -0-
Murali Narayanan 100,000 11.68% 1.39 7/15/13 87,473 221,719
(1) Options vest monthly over a three-year period and have terms of ten years,
subject to earlier termination on the occurrence of certain events related
to termination of employment. In addition, the full vesting of the option
is accelerated if there is a change in control of the Company.
(2) The potential realizable value at assumed annual rates of stock price
appreciation for the option term represents hypothetical gains that could
be achieved for the respective options if exercised at the end of the
option term. The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated
6
by the rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
These amounts represent assumed rates of appreciation in the value of our
common stock from the fair market value on the date of the grant. The
amounts reflected in the table may not necessarily be achieved.
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock option values at the fiscal
year end September 30, 2003.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised In-the Money
Unexercised Options at FY End Options at FY-End ($)(1)
Exercisable Unexercisable Exercisable Unexercisable
John M. Thornton 0 -- -- --
James B. DeBello 74,444 355,556 $60,761 $376,889
Noel Flynn 130,399 141,099 $24,024 $ 45,554
Murali Narayanan 5,556 94,444 -0- -0-
(1) Based on a closing bid price of $1.02 on September 30, 2003 as reported on
the NASDAQ National Market.
REPORT OF THE COMPENSATION COMMITTEE
As members of the Compensation Committee it is our duty to monitor the
performance and compensation of executive officers and other key employees, to
review compensation plans and to administer the Company's Stock Option Plans.
The Company's executive and key employee compensation programs are designed to
attract, motivate and retain the executive talent needed to enhance stockholder
value in a competitive environment. Our fundamental philosophy is to relate the
amount of compensation "at risk" for an executive directly to his or her
contribution to the Company's success in achieving superior performance goals
and to the overall success of the Company. The Company's executive and key
employee compensation program consists of a base salary component, a component
providing the potential for an annual bonus based on overall Company performance
as well as individual performance, and a component providing the opportunity to
earn stock options that focus the executives and key employees on building
stockholder value through meeting longer-term financial and strategic goals.
In designing and administering its executive compensation program, the
Company tries to strike an appropriate balance among these various elements,
each of which is discussed in greater detail below.
In applying these elements to arrive at specific amounts or awards, the
members of the Compensation Committee apply their subjective evaluation of these
various factors and arrive at consensus through discussion. While specific
numerical criteria may be used in evaluating achievement of individual or
Company goals, the extent of achieving such goals is then factored in with other
more subjective criteria to arrive at the final compensation or award decision.
Base Salary
Base salary is targeted at the fiftieth percentile, consistent with
comparable high technology companies in the same general stage of development
and in the same general industry and geographic area. For this purpose, this
Committee uses the wage and salary surveys of the American Electronics
Association and industry and area trade groups of which the Company is a member.
This group of companies is not the same as the peer group chosen for the Stock
Performance Graph.
7
The Company's salary increase program is designed to reflect individual
performance related to the Company's overall financial performance as well as
competitive practice. Salary reviews are typically performed annually in
conjunction with a performance review. Salary increases are dependent on the
achievement of individual and corporate performance goals.
The Executive and Key Employee Bonus Plan
The Executive and Key Employee Bonus Plan is designed to reward Company
executives and other key employees for their contributions to corporate goals.
Corporate goals are established as part of the annual operating plan process.
Overall corporate goals include target levels of pre-tax, pre-bonus profit and
net revenue.
Each eligible employee's award is expressed as a percentage of the
participant's October 1, 2002 base salary. Bonus achievement is dependent upon
meeting or exceeding the company's minimum goals for pre-tax, pre-bonus and net
revenue. For fiscal 2003, no bonus award for any participant was payable as the
Company did not achieve its goals.
Stock Option Plans
The Company's 1986 Stock Option Plan (the "1986 Plan") authorized the
issuance of options to buy up to a total of 630,000 shares of the Company's
Common Stock. At September 30, 2002, zero shares of Common Stock were subject to
outstanding options issued under the 1986 Plan. The 1986 Plan ended on September
30, 1996 and no additional options may be granted under the plan. The Company's
1988 Stock Option Plan (the "1988 Plan") authorized the issuance of options to
buy up to 650,000 shares of the Company's Common Stock. At September 30, 2003,
5,000 shares were subject to outstanding options issued under the 1988 Plan. The
1988 Plan ended on September 13, 1998 and no additional options may be granted
under that plan. The Company's 1996 Stock Option Plan (the "1996 Plan")
authorizes the Company to grant its directors, officers and key employees
options to buy up to 1,000,000 shares of the Company's Common Stock. At
September 30, 2003, 209,252 shares were subject to outstanding options and none
remained available for future grants under the 1996 Plan. The Company's 1999
Stock Option Plan (the "1999 Plan") authorizes the Company to grant its
directors, officers, employees and consultants options to purchase up to
1,000,000 shares of the Company's Common Stock. At September 30, 2003, 774,376
shares were subject to outstanding options and 165,193 were available for future
grants under the 1999 Plan. The Company's 2000 Stock Option Plan (the "2000
Plan") authorizes the Company to grant its directors, officers, employees and
consultants options to purchase up to 1,000,000 shares of the Company's Common
Stock. At September 30, 2003, 962,335 shares were subject to outstanding options
and 34,917 were available for future grants under the 2000 Plan. The Company's
2002 Stock Option Plan (the "2002 Plan") authorizes the Company to grant its
directors, officers, employees and consultants options to purchase up to
1,000,000 shares of the Company's Common Stock. At September 30, 2003, 1,000,000
shares were available for future grants under the 2002 Plan.
The Company's stock option plans are designed to:
1. Encourage and create ownership and retention of the Company's stock;
2. Balance long-term with short-term decision making;
3. Link the officers' or key employees' financial success to that of
the stockholders;
4. Focus attention on building stockholder value through meeting
longer-term financial and strategic goals; and
5. Ensure broad-based participation of key employees (all employees
currently participate in the Stock Option Plans).
8
401(k) Savings Plan
In 1990 the Company established an Employee Savings Plan (the "Savings
Plan") intended to qualify under Section 401(k) of the Internal Revenue Code of
1986 as amended (the "Code"), which is available to all employees who satisfy
the Plan's age and service requirement. The Savings Plan allows an employee to
defer up to 15% of the employee's compensation for the pay period elected in his
or her salary deferral agreement on a pre-tax basis pursuant to a cash or
deferred arrangement under Section 401(k) of the Code (subject to maximums
permitted under federal law). This contribution will generally not be subject to
federal tax until it is distributed from the Savings Plan. In addition these
contributions are fully vested and non-forfeitable. Contributions to the Savings
Plan are deposited in a trust fund established in connection with the Savings
Plan. The Company may make discretionary contributions to the Savings Plan at
the end of each fiscal year as deemed appropriate by the Board of Directors.
Vested amounts allocated to each participating employee are distributed in the
event of retirement, death, disability or other termination of employment. For
fiscal 2003 the Committee determined that participants would not receive a
matching contribution.
Other Compensation Plans
The Company has adopted certain broad-based employee benefit plans in
which executive officers have been permitted to participate. The incremental
cost to the Company of benefits provided to executive officers under these life
and health insurance plans is less than 10% of the base salaries for executive
officers for fiscal 2003. Benefits under these broad-based plans are not
directly or indirectly tied to Company performance.
Compensation Committee
Gerald I. Farmer
John G. Rebelo, Jr.
Robert David Holvey
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The table below shows, as of January 2, 2004, the amount and class of the
Company's voting stock owned beneficially (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) by (i) each director of
the Company, (ii) the executive officers named in the Summary Compensation
Table, (iii) all directors and executive officers as a group and (iv) each
person known by us to own beneficially 5% or more of any class of the Company's
voting stock (except as noted below). The business address for each of these
stockholders is c/o Mitek Systems, Inc., 14145 Danielson St., Suite B, Poway, CA
92064.
Number of shares of
Common Stock Beneficially Percent of
Name of beneficial Owner or Identify of Group Owned Class
John M. and Sally B. Thornton..................................... 2,699,959 (1) 23.86%
Gerald I. Farmer.................................................. 55,000 (2) .48%
James B. DeBello.................................................. 425,000 (3) 3.62%
John G. Rebelo, Jr................................................ 16,000 (4) .14%
Robert David Holvey............................................... -0- -0-
Noel Flynn........................................................ 249,802 (5) 2.16%
Murali Narayanan.................................................. 100,000 (6) .88%
Directors and Officers as a Group................................. 3,545,761(7) 29.12%
(1) John M. Thornton and Sally B. Thornton, husband and wife, are trustees of
a family trust, and are each directors of the Company.
(2) Represents 10,000 shares of Common Stock held by Dr. Farmer and includes
45,000 shares of Common Stock subject to options exercisable within 60
days of January 2, 2004.
9
(3) Represents 425,000 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2004.
(4) Represents 1,000 shares of Common Stock held by Mr. Rebelo and includes
15,000 shares of Common Stock subject to options exercisable within 60
days of January 2, 2004.
(5) Represents 16,178 shares of Common Stock held by Mr. Flynn and includes
233,624 shares of Common Stock subject to options exercisable within 60
days of January 2, 2004.
(6) Represents 100,000 shares of Common Stock subject to options exercisable
within in 60 days of January 2, 2004.
(7) Includes 848,624 shares of Common Stock subject to options exercisable
within 60 days of January 2, 2004.
Information with respect to beneficial ownership is based on information
furnished to the Company by each person identified above.
Equity Compensation Plan Information
The following table sets forth information, as of September 30, 2003, with
respect to the Company's compensation plans under which common stock is
authorized for issuance.
-------------------------------------------------------------------------------------------------------
Plan category Number of Weighted-average Number of securities
securities to exercise price remaining
be issued of available for
upon outstanding future issuance
exercise of options, under equity
outstanding warrants compensation
options, and rights plans
warrants and (excluding
rights securities
reflected in
column (a)
-------------------------------------------------------------------------------------------------------
(a) (b) (c)
-------------------------------------------------------------------------------------------------------
Equity compensation plans approved by 2,350,963 2.03 1,200,110
security holders
-------------------------------------------------------------------------------------------------------
Equity compensation -0- -0- -0-
plans not approved by
security holders
-------------------------------------------------------------------------------------------------------
Total 2,350,963 2.03 1,200,110
-------------------------------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors and persons who own more than 10% of a registered class of our
equity securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than 10%
stockholders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of Forms, 3, 4, and 5 and amendments thereto furnished to us,
we are not aware of any director, officer or beneficial owner of 10% of our
common stock that failed to file on a timely basis as disclosed on the above
forms, reports required by Section 16(a) of the Securities Exchange Act of 1934,
as amended, during fiscal year 2003.
10
STOCK PERFORMANCE GRAPH
[GRAPH OMITTED]
9/98 9/99 9/00 9/01 9/02 9/03
- ----------------------------------------------------------------------------------------------------------------------
Mitek Systems, Inc. 100.00 933.43 893.54 375.51 202.69 228.29
- ----------------------------------------------------------------------------------------------------------------------
NASDAQ Stock Market (US) 100.00 163.12 217.03 88.74 69.90 106.49
- ----------------------------------------------------------------------------------------------------------------------
NASDAQ Stocks (SIC 3570-3579 US Cos.) 100.00 190.53 297.78 67.88 60.48 101.83
- ----------------------------------------------------------------------------------------------------------------------
ASSUMES $100 INVESTED ON SEPT. 30, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPT. 30, 2003
The above graph compares our performance with that of the NASDAQ Market Index
and Peer Group based on SIC Code 3570 - Computer and Office Equipment. The graph
assumes an investment of $100 on October 1, 1998 and the reinvestment of
dividends.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee of the Board of Directors has selected the firm of
Deloitte & Touche, LLP, independent certified public accountants, to serve as
auditors for the fiscal year ending September 30, 2004. A representative of
Deloitte & Touche, LLP will be present at the Annual Meeting and will have the
opportunity to make a statement and respond to appropriate questions.
Audit Fees
The fees for professional services rendered for the audit of the Company's
financial statements for each of the fiscal years ended September 30, 2003 and
September 30, 2002, and the reviews of the financial statements included in the
Company's Form 10-Q or services normally provided by the independent auditor in
connection with statutory or regulatory filings or engagements for each of these
fiscal years, were $108,000 and $95,095 respectively.
11
Audit Related Fees
There were no audit related fees for the fiscal years ended September 30,
2002 or September 30, 2002.
Tax Fees
There were no fees for tax compliance, tax advice or tax planning billed
or expected to be billed by Deloitte & Touche LLP for the fiscal years ended
September 30, 2002 or September 30, 2003.
All Other Fees
There was $5,000 in other fees paid to Deloitte & Touche, LLP for services
rendered for the Company during the 2003 fiscal year, including tax services,
other than as disclosed herein.
The Audit Committee believes there were no services provided by Deloitte &
Touche, LLP which would effect its independence.
The Board of Directors recommends that you vote "FOR" this proposal.
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the attached
Notice of Annual Meeting of Stockholders. We are not aware of any matters for
action by stockholders at this meeting other than those described in the Notice.
The enclosed proxy, however, will confer discretionary authority with respect to
matters that are not known at the date of printing hereof and which may properly
come before the Annual Meeting or any adjournment thereof. The proxy holders
intend to vote in accordance with their best judgment on any such matters.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ John M. Thornton
John M. Thornton
Chairman of the Board
San Diego, California
January 14, 2004
12
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN Please
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED Mark Here
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY for Address |_|
WILL BE VOTED FOR PROPOSAL 1 AND 2. Change or
Comments
SEE REVERSE SIDE
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
|_| |_|
NOMINEES: 01 John M. Thornton, 02 Sally B. Thornton, 03 James B. DeBello,
04 Gerald I. Farmer, 05 John G. Rebelo Jr., 06 Robert David Holvey
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
________________________________________________________________________________
2. Ratify the appointment of Deloitte & Touche LLP as the Company's 2004
Auditors.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Date: ____________________________________________________________________, 2004
________________________________________________________________________________
(Signature)
________________________________________________________________________________
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
Annual
Meeting of
Stockholders
February 4, 2004
Mitek Systems, Inc.
14145 Danielson Street
Suite B
Poway, CA 92064
PROXY
MITEK SYSTEMS, INC.
Annual Meeting of Stockholders
February 4, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John M. Thornton and James B. DeBello as
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated on
the other side, all the shares of stock of Mitek Systems, Inc. standing in the
name of the undersigned with all power which the undersigned would possess if
present at the Annual Meeting of Stockholders of the Company to be held February
4, 2004 or any adjournment thereof.
(Continued, and to be marked, dated and signed, on the other side)
________________________________________________________________________________
Address Change/Comments (Mark the corresponding box on the reverse side)
________________________________________________________________________________
________________________________________________________________________________
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
----------------
Admission Ticket
----------------
Annual Meeting
of
Mitek Systems, Inc.
Stockholders
Wednesday, February 4, 2004
1:00 p.m.
Mitek Systems, Inc.
14145 Danielson Street
Suite B
Poway, CA 92064
================================================================================
Agenda
o Election of Directors
o Ratify the appointment of Delloite & Touche LLP as auditors
o Report on the progress of the corporation
o Informal discussion among stockholders in attendance
================================================================================