x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Delaware
(State
of Incorporation)
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87-0418827
(I.R.S.
Employer Identification No.)
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8911
Balboa Ave., Suite B
San Diego,
California
(Address
of principal executive offices)
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92123
(Zip
Code)
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Large Accelerated Filer o
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Accelerated
Filer o
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Non-Accelerated
Filer o
(Do
not tech if a smaller
reporting
company)
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Smaller
Reporting Company x
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Special
Note About Forward–Looking Statements
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(ii)
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Part
I - Financial Information
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||
ITEM
1.
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Financial
Statements
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1
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||
ITEM
2.
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Management's
Discussion and Analysis of Financial Condition and Results of
Operations
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11
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ITEM
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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16
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ITEM
4.
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Controls
and Procedures
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16
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Part
I I - Other Information
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||
ITEM
1.
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Legal
Proceedings
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16
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ITEM
1A.
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Risk
Factors.
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16
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ITEM
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds.
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18
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ITEM
3.
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Defaults
Upon Senior Securities.
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18
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ITEM
4.
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Submission
of Matters to a Vote of Security Holders.
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18
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ITEM
5.
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Other
Information.
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18
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ITEM
6.
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Exhibits
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18
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Signatures
|
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19
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|
·
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adverse
economic conditions;
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·
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general
decreases in demand for Mitek products and
services;
|
|
·
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competition
(including entry of new competitors) with competitors with substantially
greater resources than Mitek;
|
|
·
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loss
of key customers or contracts;
|
|
·
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increased
or adverse federal, state and local government
regulation;
|
|
·
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inadequate
capital;
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|
·
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unexpected
costs;
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|
·
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lower
revenues or lower net income than
forecast;
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|
·
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inability
to raise prices;
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|
·
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the
risk of litigation and administrative
proceedings;
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·
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higher
than anticipated labor costs;
|
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·
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the
possible fluctuation and volatility of operating results and financial
condition;
|
|
·
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adverse
publicity and news coverage;
|
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·
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inability
to carry out marketing and sales
plans;
|
|
·
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loss
of key employees and executives;
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|
·
|
changes
in interest rates; and
|
|
·
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inflationary
factors.
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ITEM
1.
|
FINANCIAL
STATEMENTS
|
March 31,
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September 30,
|
|||||||
2009
|
2008
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
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||||||||
Cash
and cash equivalents
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$ | 775,314 | $ | 1,300,281 | ||||
Accounts
receivable including related party of $1,956 and
$4,591, respectively, net of allowance of $43,648 and $45,877,
respectively
|
782,034 | 912,831 | ||||||
Inventory,
prepaid expenses and other current assets
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132,460 | 100,000 | ||||||
Total
current assets
|
1,689,808 | 2,313,112 | ||||||
PROPERTY
AND EQUIPMENT-net
|
79,017 | 91,066 | ||||||
SOFTWARE
DEVELOPMENT COSTS
|
411,473 | 347,738 | ||||||
OTHER
ASSETS
|
29,465 | 29,465 | ||||||
TOTAL
ASSETS
|
$ | 2,209,763 | $ | 2,781,381 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$ | 563,914 | $ | 403,925 | ||||
Accrued
payroll and related taxes
|
186,080 | 289,300 | ||||||
Deferred
revenue
|
833,194 | 676,085 | ||||||
Other
accrued liabilities
|
80,086 | 24,712 | ||||||
Total
current liabilities
|
1,663,274 | 1,394,022 | ||||||
Deferred
rent, long-term portion
|
54,152 | 55,745 | ||||||
TOTAL
LIABILITIES
|
1,717,426 | 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
|
14,873,634 | 14,804,884 | ||||||
Accumulated
deficit
|
(14,398,048 | ) | (13,490,021 | ) | ||||
Total
stockholders' equity
|
492,337 | 1,331,614 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 2,209,763 | $ | 2,781,381 |
For the three months ended
|
For the six months ended
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|||||||||||||||
March 31,
|
March 31,
|
|||||||||||||||
2009
|
2008
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2009
|
2008
|
|||||||||||||
SALES
|
||||||||||||||||
Software
including sales to a related party of $0 and $600 for the three months
ended March 31, 2009 and 2008, respectively, and $0 and $227,712 for the
six months ended March 31, 2009 and 2008, respectively
|
$ | 431,433 | $ | 797,015 | $ | 928,091 | $ | 1,582,276 | ||||||||
Professional
services including sales to a related party of $14,733 and $15,394 for the
three months ended March 31, 2009 and 2008, respectively and $30,512 and
$24,963 for the six months ended March 31, 2009 and 2008,
respectively
|
456,850 | 463,501 | 971,640 | 941,839 | ||||||||||||
888,283 | 1,260,516 | 1,899,731 | 2,524,115 | |||||||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Cost
of sales-software
|
82,951 | 101,289 | 220,800 | 234,376 | ||||||||||||
Cost
of sales-professional services, education and other
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52,106 | 41,359 | 109,836 | 83,136 | ||||||||||||
Operations
|
6,516 | 24,131 | 29,840 | 48,530 | ||||||||||||
Selling
and marketing
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190,017 | 334,501 | 551,057 | 680,007 | ||||||||||||
Research
and development
|
431,192 | 500,957 | 1,003,685 | 1,031,844 | ||||||||||||
General
and administrative
|
362,230 | 479,374 | 892,105 | 951,837 | ||||||||||||
Total
costs and expenses
|
1,125,012 | 1,481,611 | 2,807,323 | 3,029,730 | ||||||||||||
OPERATING
LOSS
|
(236,729 | ) | (221,095 | ) | (907,592 | ) | (505,615 | ) | ||||||||
OTHER
(EXPENSE) INCOME:
|
||||||||||||||||
Interest
and other expense
|
(2,154 | ) | - | (2,434 | ) | - | ||||||||||
Interest
income
|
772 | 2,119 | 3,799 | 5,039 | ||||||||||||
Total
other (expense) income - net
|
(1,382 | ) | 2,119 | 1,365 | 5,039 | |||||||||||
LOSS
BEFORE INCOME TAXES
|
(238,111 | ) | (218,976 | ) | (906,227 | ) | (500,576 | ) | ||||||||
PROVISION
FOR INCOME TAXES
|
(1,800 | ) | (2,800 | ) | (1,800 | ) | (2,800 | ) | ||||||||
NET
LOSS
|
$ | (239,911 | ) | $ | (221,776 | ) | $ | (908,027 | ) | $ | (503,376 | ) | ||||
NET
LOSS PER SHARE - BASIC AND DILUTED
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | (0.03 | ) | ||||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND
DILUTED
|
16,751,137 | 16,751,137 | 16,751,137 | 16,751,137 |
For
the six months ended
|
||||||||
March
31,
|
||||||||
2009
|
2008
|
|||||||
OPERATING
ACTIVITIES
|
||||||||
Net
loss
|
$ | (908,027 | ) | $ | (503,376 | ) | ||
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||
Stock-based
compensation expense
|
68,750 | 118,540 | ||||||
Depreciation
and amortization
|
19,262 | 19,375 | ||||||
Provision
for bad debts
|
2,229 | - | ||||||
Loss
on disposal of property and equipment
|
1,767 | - | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
128,568 | (641,454 | ) | |||||
Inventory,
prepaid expenses, and other current assets
|
(32,460 | ) | 16,421 | |||||
Accounts
payable
|
159,989 | 152,351 | ||||||
Accrued
payroll and related taxes
|
(103,220 | ) | 57,622 | |||||
Deferred
revenue
|
157,109 | 182,593 | ||||||
Other
accrued liabilities
|
55,374 | 27,544 | ||||||
Deferred
rent
|
(1,593 | ) | 6,370 | |||||
Net
cash used in operating activities
|
(452,252 | ) | (564,014 | ) | ||||
INVESTING
ACTIVITIES
|
||||||||
Investment
in software development costs
|
(63,735 | ) | - | |||||
Purchases
of property and equipment
|
(9,050 | ) | (25,678 | ) | ||||
Proceeds
from sale of property and equipment
|
70 | - | ||||||
Net
cash used in investing activities
|
(72,715 | ) | (25,678 | ) | ||||
FINANCING
ACTIVITIES
|
- | - | ||||||
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
(524,967 | ) | (589,692 | ) | ||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,300,281 | 2,096,282 | ||||||
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 775,314 | $ | 1,506,590 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash
paid for interest
|
$ | 667 | $ | - | ||||
Cash
paid for income taxes
|
$ | 1,800 | $ | 2,800 |
1.
|
Basis
of Presentation
|
2.
|
Accounting
for Stock-Based Compensation
|
2009
|
2008
|
|||||||
Risk-free
interst rate
|
0.44% - 2.29 | % | 3.50% - 3.67 | % | ||||
Expected
life (years)
|
5.29 | 5.30 | ||||||
Expected
volatility
|
192 | % | 94 | % | ||||
Expected
dividends
|
None
|
None
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
March
31,
|
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Research
and development
|
$ | 8,828 | $ | 7,911 | $ | 17,569 | $ | 17,839 | ||||||||
Sales
and marketing
|
2,503 | 12,286 | 8,723 | 23,925 | ||||||||||||
General
and administrative
|
26,198 | 28,043 | 42,458 | 76,776 | ||||||||||||
Stock-based
compensation expense related to employee stock options included in
operating expenses
|
$ | 37,529 | $ | 48,240 | $ | 68,750 | $ | 118,540 |
Number of Shares
|
Weighted Average
Grant Date Fair
Value Per Share
|
Weighted Average
Remaining
Contractual
Life (in
Years)
|
Aggregate Intrinsic
Value
|
|||||||||||||
Vested
|
2,954,667 | 0.44 | 5.55 | $ | 1,997 | |||||||||||
Unvested
|
1,126,903 | 0.16 | 9.44 | 9,893 | ||||||||||||
Total
|
4,081,570 | 0.36 | 6.62 | $ | 11,890 |
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
|
150,000 | $ | 0.09 | 2.91 | ||||||||
Executive
Officers
|
249,000 | $ | 0.09 | 9.91 | ||||||||
Employees
|
490,000 | $ | 0.08 | 9.85 | ||||||||
Forfeited
|
(547,588 | ) | $ | 0.52 | 6.02 | |||||||
Outstanding,
March 31, 2009
|
4,081,570 | $ | 0.59 | 6.62 |
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 Eercisable
Options
|
Number of
Unvested
Options
|
||||||||||||||||||
$
0.07 - $ 0.69
|
2,463,467 | 7.51 | $ | 0.29 | 1,344,214 | $ | 0.37 | 1,119,253 | ||||||||||||||||
$
0.70 - $ 0.92
|
705,832 | 5.47 | $ | 0.78 | 698,182 | $ | 0.78 | 7,650 | ||||||||||||||||
$
1.06 - $ 1.68
|
847,500 | 5.33 | $ | 1.12 | 847,500 | $ | 1.12 | - | ||||||||||||||||
$
2.13 - $ 2.68
|
49,000 | 2.93 | $ | 2.29 | 49,000 | $ | 2.29 | - | ||||||||||||||||
$
3.25 - $12.37
|
15,771 | 0.97 | $ | 6.63 | 15,771 | $ | 6.63 | - | ||||||||||||||||
4,081,570 | 6.62 | $ | 0.59 | 2,954,667 | $ | 0.75 | 1,126,903 |
3.
|
Income
Taxes
|
4.
|
Commitments
and Contingencies
|
5.
|
Related
Party Transactions
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
March
31,
|
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Related
party revenue
|
||||||||||||||||
Software
|
- | 600 | - | 227,712 | ||||||||||||
Professional
services
|
14,733 | 15,394 | 30,512 | 24,963 | ||||||||||||
Total
related party revenue
|
14,733 | 15,994 | 30,512 | 252,675 |
6.
|
Product
Revenues and Sales Concentrations
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
March
31,
|
March
31,
|
|||||||||||||||
Revenue
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Recognition
toolkits
|
$ | 431,433 | $ | 797,015 | $ | 928,091 | $ | 1,582,276 | ||||||||
Professional
services, maintenance and other
|
456,850 | 463,501 | 971,640 | 941,839 | ||||||||||||
Total
revenue
|
$ | 888,283 | $ | 1,260,516 | $ | 1,899,731 | $ | 2,524,115 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
March
31,
|
March
31,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Customers
to which sales were in excess of 10% of otal sales:
|
||||||||||||||||
Number
of customers
|
2 | 2 | 2 | 3 | ||||||||||||
Aggregate
percentage of sales
|
31.3 | % | 24.8 | % | 27.9 | % | 32.3 | % |
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
|
May
15, 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
|