Delaware
(State
of Incorporation)
|
87-0418827
(I.R.S.
Employer Identification No.)
|
|
8911
Balboa Ave., Suite B
San Diego,
California
(Address
of principal executive offices)
|
92123
(Zip
Code)
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Large
Accelerated Filer ¨
|
Accelerated
Filer ¨
|
|||
Non-Accelerated
Filer ¨
|
Smaller
Reporting Company x
|
Special
Note About Forward–Looking Statements
|
(ii)
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Part
I - Financial Information
|
||
ITEM
1.
|
Financial
Statements
|
1
|
ITEM
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
11
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
15
|
ITEM
4.
|
Controls
and Procedures
|
15
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Part
II - Other Information
|
||
ITEM
1.
|
Legal
Proceedings
|
16
|
ITEM
1A.
|
Risk
Factors.
|
16
|
ITEM
2
|
Unregistered
Sales of Equity Securites and Use of Proceeds
|
17
|
ITEM
3
|
Defaults
Upon Senior Securities
|
17
|
ITEM
4
|
Submission
of Matters to a Vote of Security Holders
|
17
|
ITEM
5
|
Other
Information
|
17
|
ITEM
6.
|
Exhibits
|
17
|
Signatures
|
18
|
|
·
|
adverse
economic conditions;
|
|
·
|
general
decreases in demand for Mitek products and
services;
|
|
·
|
intense
competition (including entry of new competitors), including among
competitors with substantially greater resources than
Mitek;
|
|
·
|
loss
of key customers or contracts;
|
|
·
|
increased
or adverse federal, state and local government
regulation;
|
|
·
|
inadequate
capital;
|
|
·
|
unexpected
costs;
|
|
·
|
lower
revenues and net income than
forecast;
|
|
·
|
inability
to raise prices;
|
|
·
|
the
risk of litigation and administrative
proceedings;
|
|
·
|
higher
than anticipated labor costs;
|
|
·
|
the
possible fluctuation and volatility of operating results and financial
condition;
|
|
·
|
adverse
publicity and news coverage;
|
|
·
|
inability
to carry out marketing and sales
plans;
|
|
·
|
loss
of key employees and executives;
|
|
·
|
changes
in interest rates; and
|
|
·
|
inflationary
factors.
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
December 31,
|
September 30,
|
|||||||
2008
|
2008
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 868,698 | $ | 1,300,281 | ||||
Accounts
receivable including related party of $4,980 and $203,466, respectively,
net of allowance of $43,648 and $47,877, respectively
|
646,316 | 912,831 | ||||||
Inventory,
prepaid expenses and other current assets
|
43,468 | 100,000 | ||||||
Total
current assets
|
1,558,482 | 2,313,112 | ||||||
PROPERTY
AND EQUIPMENT-net
|
90,422 | 91,066 | ||||||
SOFTWARE
DEVELOPMENT COSTS
|
411,473 | 347,738 | ||||||
OTHER
ASSETS
|
29,465 | 29,465 | ||||||
TOTAL
ASSETS
|
$ | 2,089,842 | $ | 2,781,381 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 548,327 | $ | 403,925 | ||||
Accrued
payroll and related taxes
|
290,265 | 289,300 | ||||||
Deferred
revenue
|
446,611 | 676,085 | ||||||
Other
accrued liabilities
|
53,378 | 24,712 | ||||||
Total
current liabilities
|
1,338,581 | 1,394,022 | ||||||
Deferred
rent, long-term portion
|
56,541 | 55,745 | ||||||
TOTAL
LIABILITIES
|
1,395,122 | 1,449,767 | ||||||
STOCKHOLDERS'
EQUITY:
|
||||||||
Preferred
stock, $0.001 par value, 1,000,000 shares authorized, none issued and
outstanding
|
- | - | ||||||
Common
stock, $.001 par value; 40,000,000 shares authorized, 16,751,137 issued
and outstanding
|
16,751 | 16,751 | ||||||
Additional
paid-in capital
|
14,836,105 | 14,804,884 | ||||||
Accumulated
deficit
|
(14,158,136 | ) | (13,490,021 | ) | ||||
Total
stockholders' equity
|
694,720 | 1,331,614 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 2,089,842 | $ | 2,781,381 |
For the three months ended
|
||||||||
December 31,
|
||||||||
2008
|
2007
|
|||||||
SALES
|
||||||||
Software
including sales to a related party of $0 and $227,112 for the three months
ended December 31, 2008 and 2007, respectively
|
$ | 496,658 | $ | 785,261 | ||||
Professional
services including sales to a related party of $15,779 and $9,569 for the
three months ended December 31, 2008 and 2007,
respectively
|
514,790 | 478,338 | ||||||
1,011,448 | 1,263,599 | |||||||
COSTS
AND EXPENSES:
|
||||||||
Cost
of sales-software
|
137,848 | 133,087 | ||||||
Cost
of sales-professional services, education and other
|
57,730 | 41,777 | ||||||
Operations
|
23,324 | 24,399 | ||||||
Selling
and marketing
|
361,041 | 345,506 | ||||||
Research
and development
|
572,492 | 530,887 | ||||||
General
and administrative
|
529,875 | 472,463 | ||||||
Total
costs and expenses
|
1,682,310 | 1,548,119 | ||||||
OPERATING
LOSS
|
(670,862 | ) | (284,520 | ) | ||||
OTHER
INCOME (EXPENSE):
|
||||||||
Interest
and other expense
|
(280 | ) | - | |||||
Interest
income
|
3,027 | 2,920 | ||||||
Total
other income - net
|
2,747 | 2,920 | ||||||
LOSS
BEFORE INCOME TAXES
|
(668,115 | ) | (281,600 | ) | ||||
PROVISION
FOR INCOME TAXES
|
- | - | ||||||
NET
LOSS
|
$ | (668,115 | ) | $ | (281,600 | ) | ||
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$ | (0.04 | ) | $ | (0.02 | ) | ||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND
DILUTED
|
16,751,137 | 16,751,137 |
For the three months ended
|
||||||||
December 31,
|
||||||||
2008
|
2007
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
loss
|
$ | (668,115 | ) | $ | (281,600 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Depreciation
and amortization
|
9,694 | 10,348 | ||||||
Provision
for bad debts
|
6,771 | - | ||||||
Stock-based
compensation expense
|
31,221 | 70,300 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
259,744 | (337,484 | ) | |||||
Inventory,
prepaid expenses, and other current assets
|
56,532 | 33,134 | ||||||
Accounts
payable
|
144,402 | 75,795 | ||||||
Accrued
payroll and related taxes
|
965 | 42,873 | ||||||
Deferred
revenue
|
(229,474 | ) | (208,823 | ) | ||||
Other
accrued liabilities
|
28,666 | 12,031 | ||||||
Deferred
rent
|
796 | 3,981 | ||||||
Net
cash used in operating activities
|
(358,798 | ) | (579,445 | ) | ||||
INVESTING
ACTIVITIES
|
||||||||
Purchases
of property and equipment
|
(9,050 | ) | (18,146 | ) | ||||
Investment
in software development costs
|
(63,735 | ) | - | |||||
Net
cash used in investing activities
|
(72,785 | ) | (18,146 | ) | ||||
FINANCING
ACTIVITIES
|
- | - | ||||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(431,583 | ) | (597,591 | ) | ||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,300,281 | 2,096,282 | ||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 868,698 | $ | 1,498,691 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash
paid for interest
|
$ | 280 | $ | - |
2008
|
2007
|
|||||||
Risk-free
interest rate
|
2.29 | % | 3.50% - 3.67 | % | ||||
Expected
life (years)
|
6.0 | 5.3 | ||||||
Expected
volatility
|
166 | % | 94 | % | ||||
Expected
dividends
|
None
|
None
|
Three Months Ended
|
||||||||
December 31,
|
||||||||
2008
|
2007
|
|||||||
Research
and development
|
$ | 8,741 | $ | 12,225 | ||||
Sales
and marketing
|
6,221 | 9,342 | ||||||
General
and administrative
|
16,259 | 48,733 | ||||||
Stock-based
compensation expense related to employee stock options included in
operating expenses
|
$ | 31,221 | $ | 70,300 |
Number of Shares
|
Weighted Average
Grant Date Fair
Value Per Share
|
Weighted Average
Remaining
Contractual Life (in
Years)
|
Aggregate Intrinsic
Value
|
|||||||||||||
Vested
|
2,704,261 | 0.46 | 5.81 | $ | - | |||||||||||
Unvested
|
966,883 | 0.26 | 9.18 | - | ||||||||||||
Total
|
3,671,144 | 0.41 | 6.70 | $ | - |
Number of
Shares
|
Weighted Average
Exercise Price Per
Share
|
Weighted Average
Remaining
Contractual Term
(in Years)
|
||||||||||
Outstanding,
September 30, 2008
|
3,740,158 | $ | 0.71 | 6.52 | ||||||||
Granted:
|
||||||||||||
Board
of Directors
|
- | - | - | |||||||||
Executive
Officers
|
- | - | - | |||||||||
Employees
|
125,000 | $ | 0.07 | 9.92 | ||||||||
Forfeited
|
(194,014 | ) | $ | 0.84 | 0.60 | |||||||
Outstanding,
December 31, 2008
|
3,671,144 | $ | 0.70 | 6.70 |
Range of
Exercise Prices
|
Number of
Options
Outstanding
|
Weighted
Average
Remaining
Contractual Life
(in Years)
|
Weighted
Average
Exercise Price
|
Number of
Exercisable
Options
|
Weighted
Average
Exercise Price
of Exercisable
Options
|
Number of
Unvested
Options |
||||||||||||||||||
$
0.07 - $ 0.69
|
2,051,216 | 7.63 | $ | 0.37 | 1,096,166 | $ | 0.42 | 955,050 | ||||||||||||||||
$
0.70 - $ 0.92
|
707,657 | 5.72 | $ | 0.78 | 695,824 | $ | 0.78 | 11,833 | ||||||||||||||||
$
1.06 - $ 1.68
|
847,500 | 5.57 | $ | 1.12 | 847,500 | $ | 1.12 | - | ||||||||||||||||
$
2.13 - $ 2.68
|
49,000 | 3.18 | $ | 2.29 | 49,000 | $ | 2.29 | - | ||||||||||||||||
$
3.25 - $12.37
|
15,771 | 1.22 | $ | 6.63 | 15,771 | $ | 6.63 | - | ||||||||||||||||
3,671,144 | 6.70 | $ | 0.68 | 2,704,261 | $ | 0.80 | 966,883 |
The
per-share weighted average fair value of options granted during the three
months ended December 31, 2008 was
$0.07.
|
Three Months Ended
December 31, |
||||||||
|
2008
|
2007
|
||||||
Revenue
|
||||||||
Recognition
toolkits
|
$ | 496 | $ | 785 | ||||
Professional
services, maintenance and other
|
515 | 479 | ||||||
Total
revenue
|
$ | 1,011 | $ | 1,264 |
Three Months Ended
December 31, |
||||||||
|
2008
|
2007
|
||||||
Customers
to which sales were in excess of 10% of total
sales:
|
||||||||
Number
of customers
|
3 | 2 | ||||||
Aggregate
percentage of sales
|
45.7 | % | 39.0 | % |
7.
|
Capitalized
Software Development Costs
|
8.
|
Recently
Issued Accounting
Pronouncements
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
·
|
The
actual contractual terms, such as payment terms, delivery dates, and
pricing of the various product and service elements of a
contract;
|
|
·
|
Time
period over which services are to be
performed;
|
|
·
|
Creditworthiness
of the customer;
|
|
·
|
The
complexity of customizations to our software required by service
contracts;
|
|
·
|
The
sales channel through which the sale is made (direct, VAR, distributor,
etc.);
|
|
·
|
Discounts
given for each element of a contract;
and
|
|
·
|
Any
commitments made as to installation or implementation “go live”
dates.
|
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM
1A.
|
RISK
FACTORS.
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
|
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES.
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
ITEM
5.
|
OTHER
INFORMATION.
|
ITEM
6.
|
EXHIBITS
|
February
17, 2009
|
MITEK
SYSTEMS, INC.
|
|
By:
|
/s/ James B. De Bello
|
|
James
B. DeBello
|
||
President,
Chief Executive Officer, and
|
||
Chief
Financial Officer
|
Exhibit
No.
|
Exhibit
Title
|
|
31.1
|
Certification
of Periodic Report by the Chief Executive Officer Pursuant to Rules
13a-14(a) of the Securities Exchange Act of 1934
|
|
31.2
|
Certification
of Periodic Report by the Chief Financial Officer Pursuant to Rules
13a-14(a) of the Securities Exchange Act of 1934
|
|
32.1
|
Certification
of Periodic Report by the Chief Executive Officer Pursuant to Section 906
of the Sarbanes Oxley Act of 2002
|
|
32.2
|
Certification
of Periodic Report by the Chief Financial Officer Pursuant to Section 906
of the Sarbanes Oxley Act of 2002
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Mitek Systems,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or cause such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date:
February 17, 2009
|
/s/
James B. DeBello
|
James
B. DeBello, Chief Executive Officer
(Principal
Executive Officer)
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Mitek Systems,
Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or cause such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date:
February 17, 2009
|
/s/
James B. DeBello
|
James
B. DeBello, Chief Financial Officer
(Principal
Financial Officer)
|
(1)
|
the
Registrant's Quarterly Report on Form 10-Q of the Registrant for the
period ended December 31, 2008 (the "Report"), to which this statement is
filed as an exhibit, fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant.
|
Date:
February 17, 2009
|
/s/
James B. DeBello
|
James
B. DeBello
Chief
Executive Officer
|
(1)
|
the
Registrant's Quarterly Report on Form 10-Q of the Registrant for the
period ended December 31, 2008 (the "Report"), to which this statement is
filed as an exhibit, fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934, as
amended; and
|
(2)
|
the
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Registrant.
|
Date:
February 17, 2009
|
/s/
James B. DeBello
|
James
B. DeBello
Chief
Financial Officer
|