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
|
Mitek
Systems, Inc.
|
(Exact
name of registrant as specified in its
charter)
|
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)
|
14145
Danielson St., Suite B, Poway, CA
92064
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Item
1.
|
Financial
Statements
|
Page
|
a)
|
Balance
Sheet (unaudited)
|
||
As
of December 31, 2005
|
1
|
||
b)
|
Statements
of Operations
|
||
for
the Three Months Ended December 31, 2005 and 2004
(Unaudited)
|
2
|
||
c)
|
Statements
of Cash Flows
|
||
for
the Three Months Ended December 31, 2005 and 2004
(Unaudited)
|
3
|
||
d)
|
Notes
to Unaudited Financial Statements
|
4
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial
|
|
Condition
and Results of Operations
|
7
|
Item
4.
|
Controls
and Procedures
|
10
|
Item
1.
|
Legal
Proceedings
|
10
|
Item
6.
|
Exhibits
and Reports on Form 8-K
|
11
|
Signature
|
12
|
December
31,
|
||||
2005
|
||||
ASSETS
|
||||
CURRENT
ASSETS:
|
||||
Cash
and cash equivalents
|
$
|
1,762,829
|
||
Accounts
receivable-net of allowances of $71,631
|
892,449
|
|||
Inventory,
prepaid expenses and other current assets
|
132,137
|
|||
Total
current assets
|
2,787,415
|
|||
PROPERTY
AND EQUIPMENT-net
|
108,877
|
|||
OTHER
ASSETS
|
137,782
|
|||
TOTAL
ASSETS
|
$
|
3,034,074
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES:
|
||||
Accounts
payable
|
$
|
213,568
|
||
Accrued
payroll, vacation and related taxes
|
276,097
|
|||
Deferred
revenue
|
311,445
|
|||
Other
accrued liabilities
|
144,090
|
|||
Current
portion of Convertible Debt, net of unamortized
|
||||
financing
costs of $130,000
|
659,318
|
|||
TOTAL
LIABILITIES
|
1,604,518
|
|||
STOCKHOLDERS'
EQUITY:
|
||||
Common
stock - $.001 par value; 40,000,000 shares
authorized,
|
||||
15,556,345
issued and outstanding
|
15,556
|
|||
Additional
paid-in capital
|
13,526,564
|
|||
Accumulated
deficit
|
(12,112,564
|
)
|
||
Total
stockholders' equity
|
1,429,556
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
3,034,074
|
THREE
MONTHS ENDED
|
|||||||
December
31,
|
|||||||
2005
|
2004
|
||||||
SALES
|
|||||||
Software
including $17,000 and $34,000
|
$
|
785,583
|
$
|
818,938
|
|||
to
a related party, respectively
|
|||||||
Professional
Services, education and other including
|
735,079
|
481,484
|
|||||
$350,000
and $25,000 to a related party, respectively
|
|||||||
NET
SALES
|
1,520,662
|
1,300,422
|
|||||
COSTS
AND EXPENSES:
|
|||||||
Cost
of sales-Software
|
40,073
|
81,199
|
|||||
Cost
of sales-Professional Services, education and other
|
369,738
|
102,119
|
|||||
Operations
|
21,464
|
40,838
|
|||||
Selling
and marketing
|
398,557
|
579,880
|
|||||
Research
and development
|
326,675
|
370,028
|
|||||
General
and administrative
|
531,875
|
926,815
|
|||||
Total
costs and expenses
|
1,688,382
|
2,100,879
|
|||||
OPERATING
LOSS
|
(167,720
|
)
|
(800,457
|
)
|
|||
OTHER
INCOME (EXPENSE):
|
|||||||
Interest
expense
|
(311,648
|
)
|
(133,660
|
)
|
|||
Change
in fair value of warrant liability
|
0
|
(3,475
|
)
|
||||
Interest
and other income
|
6,936
|
20,078
|
|||||
Total
other income (expense) - net
|
(304,712
|
)
|
(117,057
|
)
|
|||
LOSS
BEFORE INCOME TAXES
|
(472,432
|
)
|
(917,514
|
)
|
|||
PROVISION
FOR INCOME TAXES
|
0
|
0
|
|||||
NET
LOSS
|
$
|
(472,432
|
)
|
$
|
(917,514
|
)
|
|
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$
|
(0.03
|
)
|
$
|
(0.08
|
)
|
|
WEIGHTED
AVERAGE NUMBER OF
|
|||||||
COMMON
SHARES OUTSTANDING - BASIC AND DILUTED
|
15,018,703
|
11,389,481
|
THREE
MONTHS ENDED
|
|||||||
December
31,
|
|||||||
2005
|
2004
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(472,432
|
)
|
$
|
(917,514
|
)
|
|
Adjustments
to reconcile net loss to net cash
|
|||||||
used
in operating activities:
|
|||||||
Depreciation
and amortization
|
13,339
|
23,077
|
|||||
Provision
for bad debts
|
0
|
24,000
|
|||||
Gain
on disposal of property and equipment
|
(2,551
|
)
|
0
|
||||
Change
in fair value of warrant liability
|
0
|
3,476
|
|||||
Amortization
of debt discount
|
288,085
|
86,771
|
|||||
Provision
for sales returns & allowances
|
0
|
5,000
|
|||||
Fair
value of stock options issued to non-employees
|
0
|
2,580
|
|||||
Gain
on sale of equity investment
|
0
|
(16,159
|
)
|
||||
Changes
in assets and liabilities:
|
|||||||
Accounts
receivable
|
(119,239
|
)
|
(406,791
|
)
|
|||
Inventory,
prepaid expenses, and other assets
|
40,998
|
(62,226
|
)
|
||||
Other
long term assets
|
0
|
(20,927
|
)
|
||||
Accounts
payable
|
6,632
|
73,284
|
|||||
Accrued
payroll and related taxes
|
(75,008
|
)
|
(3,943
|
)
|
|||
Deferred
revenue
|
(116,062
|
)
|
(162,142
|
)
|
|||
Other
accrued liabilities
|
(156,251
|
)
|
82,990
|
||||
Net
cash used in operating activities
|
(592,489
|
)
|
(1,288,524
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Purchases
of property and equipment
|
(41,189
|
)
|
(13,235
|
)
|
|||
Proceeds
from sale of property and equipment
|
4,150
|
569
|
|||||
Proceeds
(advances) on related party note receivable-net
|
0
|
150,000
|
|||||
Net
cash provided by (used in) investing activities
|
(37,039
|
)
|
137,334
|
||||
FINANCING
ACTIVITIES
|
|||||||
Repayment
of borrowings
|
0
|
(90,909
|
)
|
||||
Proceeds
from exercise of stock options
|
5,153
|
0
|
|||||
Net
cash provided by (used in) financing activities
|
5,153
|
(90,909
|
)
|
||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(624,375
|
)
|
(1,242,099
|
)
|
|||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,387,204
|
2,607,173
|
|||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
1,762,829
|
$
|
1,365,074
|
|||
SUPPLEMENTAL
DISCLOSURE OF
|
|||||||
CASH
FLOW INFORMATION
|
|||||||
Cash
paid for interest
|
$
|
23,563
|
$
|
46,888
|
|||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
|||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH FINANCING
|
|||||||
ACTIVITIES
|
|||||||
Warrants
issued in connection with settlement
|
$
|
-
|
$
|
73,159
|
|||
Conversion
of debt to equity
|
$
|
850,000
|
$
|
-
|
1. |
Basis
of Presentation
|
2. |
Accounting
for Stock-Based
Compensation
|
2005
|
2004
|
||
Risk
free interest rates
|
4.43%
|
3.09%
|
|
Dividend
yields
|
0%
|
0%
|
|
Volatility
|
79%
|
77%
|
|
Weighted
average expected life
|
3
years
|
3
years
|
Three
months ended
December
31
|
|||||||
2005
|
2004
|
||||||
Net
income (loss) as reported
|
$
|
(472
|
)
|
$
|
(917
|
)
|
|
Net
income (loss) pro forma
|
(574
|
)
|
(1,009
|
)
|
|||
Net
income (loss) per share as reported
|
(.03
|
)
|
(.09
|
)
|
|||
Net
income (loss) per share pro forma
|
(.04
|
)
|
(.09
|
)
|
3. |
Issuance
of Convertible Debt
|
Convertible
Debt
|
$
|
789,318
|
||
Deferred
financing costs
|
(130,000
|
)
|
||
659,318
|
Year
ended 9/30/06
|
$
|
789,318
|
4. |
Commitments
and Contingencies
|
Operating
Leases
|
||||
Year
Ending September 30:
|
||||
2006
|
$
|
271,555
|
||
2007
|
305,002
|
|||
2008
|
314,558
|
|||
2009
|
324,814
|
|||
2010
|
333,671
|
|||
Thereafter
|
724,775
|
|||
Total
|
$
|
2,274,375
|
5. |
Related
Party Transactions
|
6. |
Product
Revenues
-
Below is a summary of the revenues by product
lines.
|
Three
Months Ended
December
31
|
|||||||
Revenue
|
2005
|
2004
|
|||||
(000’s)
|
|||||||
Recognition
Toolkits
|
$
|
1,126
|
$
|
911
|
|||
Document
and Image Processing
Solutions
|
10
|
64
|
|||||
Maintenance
and other
|
385
|
325
|
|||||
Total
Revenue
|
$
|
1,521
|
$
|
1,300
|
7. |
Subsequent
Events
|
·
|
The
actual contractual terms, such as payment terms, delivery dates,
and
pricing of the various product and service elements of a
contract
|
·
|
Availability
of products to be delivered
|
·
|
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
|
·
|
Any
commitments made as to installation or implementation “go live”
dates
|
Item 1. |
Legal
Proceedings
|
Item 6. |
Exhibits
and Reports on Form 8-K
|
a. |
Exhibits:
|
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
|
b. |
The
company filed a Form 8-K during the first quarter of fiscal 2006:
|
MITEK SYSTEMS, INC. | ||
|
|
|
Date: February 14, 2006 | /s/ James B. Debello | |
James B. DeBello, President and |
||
Chief Executive Officer |
|
|
|
Date: February 14, 2006 | /s/ Tesfaye Hailemichael | |
Tesfaye Hailemichael |
||
Chief Financial Officer |
|
|
|
Date: February 14, 2006 | By: | /s/ James B. DeBello |
James B. DeBello |
||
President
and
Chief
Executive Officer
|
|
|
|
Date: February 14, 2006 | By: | /s/ Tesfaye Hailemichael |
Tesfaye Hailemichael |
||
Chief
Financial Officer
|
|
|
|
Date: February 14, 2006 | By: | /s/ James B. DeBello |
James B. DeBello |
||
President
and
Chief
Executive Officer
|
|
|
|
Date: February 14, 2006 | By: | /s/ Tesfaye Hailemichael |
Tesfaye Hailemichael |
||
Chief
Financial Officer
|