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. )
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Mitek Systems, Inc.
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(Name of Registrant as Specified In Its Charter)
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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 23, 2005
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 23, 2005, 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 Stonefield Josephson, Inc. as our 2005
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 3, 2005
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
John M. Thornton
Chairman of the Board
Poway, California
January 26, 2005
MITEK SYSTEMS, INC.
14145 Danielson St., Suite B
Poway, California 92064
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 23, 2005
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 23, 2005, 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 3, 2005, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, we had a total of 11,389,481 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 2004 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 31,
2005. 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 holders of at least a majority of the voting power of the Common Stock
outstanding on the record date must be present in person or by proxy at the
Annual Meeting for the Annual Meeting to be held. Abstentions and broker
non-votes are counted in determining whether at least a majority of the voting
power of the common stock outstanding on the Record Date are present at the
Meeting. The election of directors is decided by a plurality of the votes cast
by holders of all shares represented and entitled to vote at the Annual Meeting.
Each stockholder of record on January 3, 2005, 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 Stonefield Josephson, Inc. as our 2005 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.
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.
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PROPOSALS OF STOCKHOLDERS
For proposals of stockholders to be included in our proxy materials to be
distributed in connection with the 2006 annual meeting of stockholders,
anticipated to be held in February 2006, we must receive such proposals in
writing no later than September 16, 2005. The acceptance of such proposals is
subject to Securities and Exchange Commission (the "Commission") guidelines. Any
stockholder proposal submitted with respect to our 2006 annual meeting of
stockholders which is received by us after November 30, 2005 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..........................72 Chairman of the Board and Chief Financial Officer
Gerald I. Farmer, Ph. D (2)(3)............70 Director
James B. DeBello..........................46 Director, President and Chief Executive Officer
Sally B. Thornton.........................70 Director
William P. Tudor (1)......................59 Director
Michael Bealmear (1)(2)(3)................57 Director
(1) Compensation Committee
(2) Audit Committee
(3) Nominating & Corporate Governance Committee
Directors
John M. Thornton - Mr. Thornton, 72, 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, when he resigned from his positions as
President and Chief Executive Officer. He continues to serve as Chairman of the
Board and Chief Financial Officer. 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 in Temecula, California.
Mr. Thornton is the spouse of Sally B. Thornton, a director.
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Gerald I. Farmer, Ph.D. - Dr. Farmer, 70, 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.
James B. DeBello - Mr. DeBello, 46, 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, 70, 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, California. 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.
William P. Tudor - Mr. Tudor, 59 has been a director of the Company since
September 2004. He has been Executive Vice President of Scantron Corporation
since 1992. He was Chief Executive Officer of EdVision from June 1990 to July
1992.
Michael Bealmear - Mr. Bealmear, 57, has been a director of the Company
since April 2004. He has been President and Chief Executive Officer of Hyperroll
since 2004. He was EVP and President of Worldwide Operations at Sybase, Inc.
from 2002 to 2004. From 2001 to 2000 he was CEO at Convansys, Inc., from 1999 to
2000 he was CEO at Spear Technologies, and from 1997 to 1998 he was EVP at
Cadence Design Systems.
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 2004 fiscal
year, there were twenty 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 2004
fiscal year.
Board Committees
The Board of Directors has appointed from among its members three
committees, the Audit Committee, the Nominating and Corporate Governance
Committee and the Compensation Committee, to advise it on matters of special
importance to the Company.
Audit Committee
The Audit Committee currently consists of two directors, Gerald I. Farmer
and Michael Bealmear. David Holvey served as a member of the Audit Committee
until December 2004, when he resigned from the Board of Directors. Each of
directors Farmer and Bealmear is an "independent" director under the rules of
the NASDAQ and meets the other qualifications under the regulations adopted by
the SEC pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act").
The Company currently does not have a director who has been designated as a
"financial expert" under federal securities laws; however, the Company is
actively engaged in recruiting a "financial
4
expert" to act as Chairman of the Audit Committee. 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.miteksystems.com by selecting "About Us" and "Investor Relations."
Nominating and Corporate Governance Committee
The Company's directors have a critical role in guiding the Company's
strategic direction and overseeing the management of the Company. Board
candidates are considered based upon various criteria, such as their broad-based
business and professional skills and experiences, a global business and social
perspective, concern for the long-term interests of the stockholders, and
personal integrity and judgment. In addition, directors must have time available
to devote to Board activities and to enhance their knowledge of Mitek's
business.
Accordingly, we seek to attract and retain highly qualified directors who
have sufficient time to attend to their substantial duties and responsibilities
to the Company. Developments in corporate governance and financial reporting
have resulted in an increased demand for such highly qualified and productive
public company directors. The Nominating and Corporate Governance Committee will
consider suggestions by stockholders for names of possible future nominees
delivered in writing and received one hundred and twenty (120) days in advance
of the Annual Meeting of Stockholders. 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.
Compensation Committee
The Compensation Committee, which acts as the Administrative Committee for
the 1986, 1988, 1996, 1999, 2000 and 2002 Stock Option Plans, during fiscal 2004
was composed of Michael Bealmear and Robert David Holvey. William Tudor was
appointed to the Compensation Committee in September, 2004. 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 2004, the Compensation Committee held one meeting.
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.
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 three meetings during fiscal 2004.
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 2004.
o The Audit Committee has discussed with Stonefield Josephson, Inc,
the Company's independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61, as modified and
supplemented.
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o The Audit Committee has received the written disclosures and the
letter from Stonefield Josephson, Inc., required by Independence
Standards Board Standard No. 1 ("Independence Discussions with Audit
Committees"), as modified and supplemented, and has discussed with
the independent auditors, its 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, 2004, for filing with the Commission.
Audit Committee
Gerald I. Farmer
Michael Bealmear
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.
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
2004 and received annual compensation over $100,000.
Principal Position Year Annual Salary Common Stock
($) Underlying
Options
John M. Thornton 2004 187,500
Chairman, 2003 262,500
Chief Executive Officer, 2002 250,000
Chief Financial Officer
James B. DeBello 2004 275,000 425,000
President & Chief 2003 98,000
Executive Officer
Murali Narayanan 2004 165,000 135,000
V.P., Marketing 2003 36,000
Emmanuel DeBoucaud (1) 2004 37,500 200,000
V.P., Sales
(1) Mr. DeBoucaud joined the Company during 2004 and has an annualized
salary of $150,000.
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Stock Options
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock options granted during the
fiscal year ended September 30, 2004.
Option Grants in Last Fiscal Year
Number of Potential Realizable
Securities Value at Assumed
Underlying Exercise or Annual Rates of Stock
Options Total Options Price Appreciation
Granted Granted to Employees Base Price Expiration for Option Term (2)
(#)(1) in FY 2004 (%) ($/Share) Date 5%($) 10%($)
John M. Thornton -0- N/A N/A N/A N/A N/A
James B. DeBello -0- N/A N/A N/A N/A N/A
Murali Narayanan 35,000 5.56% 0.69 7/13/04 15,193 38,506
Emanuel DeBoucaud 200,000 31.76% 0.69 7/13/04 86,816 220,027
(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 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, 2004.
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 -- -- -- --
James B. DeBello 202,778 222,222 -- --
Murali Narayanan 40,833 94,167 -- --
Emmanuel DeBoucaud 11,111 188,889 -- --
(1) Based on a closing bid price of $.50 on September 30, 2004 as reported on
the OTC BB.
7
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.
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.
Bonus achievement is dependent upon meeting or exceeding the company's
minimum goals for pre-tax, pre-bonus and net revenue. For fiscal 2004, no bonus
award for any participant was payable as the Company did not achieve its goals.
Stock Option Plans
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, 2004, 5,617
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, 2004, 335,896 shares were subject to outstanding
options and 583,700 were available for future grants under the 1999 Plan. The
Company's 2000 Stock Option Plan (the "2000 Plan")
8
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, 2004, 465,502 shares were subject to outstanding options
and 390,586 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, 2004, 627,250
shares were subject to outstanding options and 372,750 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).
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 2004 the Compensation 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 2004. Benefits under these broad-based plans are not
directly or indirectly tied to Company performance.
Compensation Committee
William Tudor
Michael Bealmear
Robert David Holvey
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The table below shows, as of January 3, 2005, 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 Percent
Name of beneficial Owner or Identify of Group Beneficially Owned of Class
John M. and Sally B. Thornton(1)........................ 2,699,959 23.71%
Gerald I. Farmer........................................ 50,000 (2) .44%
James B. DeBello........................................ 425,000 (3) 3.60%
Michael Bealmear........................................ 15,000 (4) .13%
Robert David Holvey(5).................................. -0- -0-
William Tudor........................................... 10,000 (6) .09%
Murali Narayanan........................................ 135,000 (7) 1.17%
Emmanuel DeBoucard...................................... 200,000 (8) 1.73%
Directors and Officers as a Group....................... 3,534,959 (9) 28.92%
(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 50,000 shares of Common Stock subject to options exercisable
within 60 days of January 3, 2005.
(3) Represents 425,000 shares of Common Stock subject to options exercisable
within 60 days of January 3, 2005.
(4) Represents 15,000 shares of Common Stock Stock subject to options
exercisable within 60 days of January 3, 2005.
(5) Mr. Holvey was a director of the Company until his resignation in December
2004.
(6) Represents 10,000 shares of Common Stock held by Mr. Tudor.
(7) Represents 135,000 shares of Common Stock subject to options exercisable
within in 60 days of January 3, 2005.
(8) Represents 200,000 shares of Common Stock subject to options exercisable
within 60 days of January 3, 2005.
(9) Includes 825,000 shares of Common Stock subject to options exercisable
within 60 days of January 3, 2005.
Information with respect to beneficial ownership is based on information
furnished to the Company by each person identified above.
10
Equity Compensation Plan Information
The following table sets forth information, as of September 30, 2004, with
respect to the Company's compensation plans under which common stock is
authorized for issuance.
---------------------------------------------------------------------------------------
Plan category Number of Weighted- Number of
securities to average securities
be issued exercise remaining
upon price of available for
exercise of outstanding future issuance
outstanding options, under equity
options, warrants compensation
warrants and and rights plans
rights (excluding
securities
reflected in
column (a)
---------------------------------------------------------------------------------------
(a) (b) (c)
---------------------------------------------------------------------------------------
Equity compensation plans approved 1,834,238 1.58 1,347,036
by security holders
---------------------------------------------------------------------------------------
Equity compensation -0- -0- -0-
plans not approved by
security holders
---------------------------------------------------------------------------------------
Total 1,834,238 1.58 1,347,036
---------------------------------------------------------------------------------------
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 2004, except that Mr. Tudor filed a late Form 3
upon his becoming a director and filed a late Form 4 regarding an acquisition of
10,000 shares in September.
11
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MITEK SYSTEMS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP - NASDAQ STOCKS (SIC 3570-3579 US COS.)
[GRAPH OMITTED]
Cumulative Total Return
-----------------------------------------------------
9/99 9/00 9/01 9/02 9/03 9/04
MITEK SYSTEMS, INC 100.00 95.73 40.23 21.71 24.46 11.43
NASDAQ STOCK MARKET (U.S.) 100.00 161.85 55.96 48.56 57.64 62.12
NASDAQ STOCKS (SIC 3570-3579 US COS.) 100.00 159.10 36.88 33.88 50.32 55.01
* $100 invested on 9/30/99 in stock or index-
including reinvestment of dividends.
Fiscal year ending September 30.
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, 1999 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
Stonefield Josephson, Inc., independent certified public accountants, to serve
as auditors for the fiscal year ending September 30, 2005. A representative of
Stonefield Josephson, Inc. ("Stonefield Josephson") will be present at the
Annual Meeting and will have the opportunity to make a statement and respond to
appropriate questions.
The Audit Committee considers and selects the Company's independent
auditor. As approved and directed by the Audit Committee, on October 4, 2004, we
dismissed Deloitte & Touche LLP ("Deloitte & Touche") as the Company's
independent auditor. As approved and directed by our Audit Committee, on October
4, 2004, Mitek engaged Stonefield Josephson as the Company's independent auditor
to audit the Company's financial statements for the year ended September 30,
2004.
During the Company's two most recent fiscal years and any subsequent
interim period prior to the dismissal of Deloitte & Touche, there were no
disagreements on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Deloitte & Touche, would have caused it to
make reference to the subject matter of the disagreements in connection with its
report and there occurred no reportable events as defined in Item 304(a)(1)(v)
of Regulation S-K as promulgated by the SEC.
12
Deloitte & Touche's reports on the Company's consolidated financial
statements for the years ended September 30, 2003 and September 30, 2002, did
not contain an adverse opinion or disclaimer of opinion, nor were such audit
reports qualified or modified as to uncertainty, audit scope or accounting
principles.
During the Company's two most recent fiscal years and any subsequent
interim period prior to the engagement of Stonefield Josephson the Company did
not consult with Stonefield Josephson with respect to any of the matters
enumerated in Item 304(a)(2)(i) or Item 304(a)(2)(ii) of Regulation S-K.
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, 2004 and
September 30, 2003, 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 $103,000 and $108,000 respectively.
Audit Related Fees
There were no audit related fees for the fiscal years ended September 30,
2004 or September 30, 2003.
Tax Fees
There were no fees for tax compliance, tax advice or tax planning billed
or expected to be billed by the Company's independent auditors for the fiscal
years ended September 30, 2004 or September 30, 2003.
All Other Fees
Other than described above, there were no other fees paid to the Company's
independent auditors. The Audit Committee believes there were no services
provided by the Company's independent auditors which would effect their
independence.
Pre-Approval Policies
In accordance with the Audit Committee Charter, the Audit Committee has
established policies and procedures by which it approves in advance any audit
and permissible non-audit services to be provided by the Company's independent
auditors. Under these procedures, prior to the engagement of the independent
auditor for pre-approved services, requests or applications for the auditors to
provide services must be submitted to the Audit Committee and must include a
detailed description of the services to be rendered. The chief financial officer
and the independent auditors must ensure that the independent auditors are not
engaged to perform the proposed services unless those services are within the
list of services that have received the Audit Committee's pre-approval and must
cause the Audit Committee to be informed in a timely manner of all services
rendered by the independent auditors and the related fees.
Each request or application must include:
o a recommendation by the chief financial officer as to whether the Audit
Committee should approve the request or application; and
o a joint statement of the chief financial officer and the auditors as to
whether, in their view, the request or application is consistent with the
Securities and Exchange Commission's and the requirements for auditor
independence of the Public Company Accounting Oversight Board ("PCAOB").
13
The Audit Committee also will not permit the independent auditors to be
engaged to provide any services to the extent that the Securities and Exchange
Commission has prohibited the provision of those services by independent
auditors, which generally include:
o bookkeeping or other services related to accounting records or
financial statements;
o financial information systems design and implementation;
o appraisal or valuation services, fairness opinions or
contribution-in-kind reports;
o actuarial services;
o internal audit outsourcing services;
o management functions;
o human resources;
o broker-dealer, investment adviser or investment banking services;
o legal services;
o expert services unrelated to the audit; and
o any service that the PCAOB determines is not permissible.
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 26, 2005
14
(THIS PAGE INTENTIONALLY LEFT BLANK)
(THIS PAGE INTENTIONALLY LEFT BLANK)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE Please
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. Mark Here
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR for Address |_|
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 to vote for all nominees
the contrary) listed to the right
|_| |_|
NOMINEES: 01 John M. Thornton, 02 Sally B. Thornton, 03 James B. DeBello,
04 Gerald I. Farmer, 05 Michael Bealmear, 06 William P. Tudor
INSTRUCTION: Withheld for the nominees you list below: (Write that nominee's
name in the space provided below.)
________________________________________________________________________________
2. Ratify the appointment of Stonefield Josephson, Inc. as the Company's 2005
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.
Dated:____________________________________________________________________, 2005
________________________________________________________________________________
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 23, 2005
Mitek Systems, Inc.
14145 Danielson Street
Suite B
Poway, CA 92064
PROXY
MITEK SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 23, 2005
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
23, 2005 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 23, 2005
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 Stonefield Josephson, Inc. as auditors
o Report on the progress of the corporation
o Informal discussion among stockholders in attendance
================================================================================
