<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Mitek Systems, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
MITEK SYSTEMS, INC.
10070 CARROLL CANYON ROAD
SAN DIEGO, CALIFORNIA 92131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 10, 1999
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 10, 1999,
at the DoubleTree Carmel Highland Resort, 14455 Penasquitos Dr., San Diego,
California 92129 for the following purposes:
1. To elect a board of five directors to hold the office during the
ensuing year and until their respective successors are elected and
qualified. The Board of Directors intends to nominate as directors the
five persons identified in the accompanying proxy statement.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
1999 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 6,
1999 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 the executive offices
of the Company, 10070 Carroll Canyon Road, San Diego, California 92131.
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 IN ORDER TO ASSURE THE PRESENCE OF A QUORUM. ANY SHAREHOLDER WHO SIGNS
AND SENDS IN A PROXY 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
Date: January 15, 1999
<PAGE>
MITEK SYSTEMS, INC.
10070 CARROLL CANYON ROAD
SAN DIEGO, CALIFORNIA 92131
- --------------------------------------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 10, 1999
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 10, 1999, at the DoubleTree Carmel
Highland Resort, 14455 Penasquitos Drive, San Diego, California, 92129 and at
any adjournments thereof.
At the close of business on January 6, 1999, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding an aggregate of 11,573,142
shares of Common Stock.
The Company 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 regularly employed officers and employees of the
Company who will not be additionally compensated therefor. The Company 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
for execution of the proxy, and the Company will reimburse them for their
expenses in connection therewith.
The Company's 1998 Annual Report to Stockholders is included herewith,
but is not incorporated in, and is not part of, this Proxy Statement and does
not constitute proxy-soliciting material. The Company intends to mail this Proxy
Statement and the accompanying material to stockholders of record on or about
January 15, 1999.
VOTING
Each shareholder of record on January 6, 1999 is entitled to one vote
for each share held on all matters to come before the meeting. All proxies which
are returned will be counted by the Inspector of Elections in determining the
presence of a quorum and on each issue to be voted on. An abstention from voting
or a broker non-vote will be used for the purpose of establishing a quorum, but
will not be counted in the voting process. The shares represented by proxies
which are returned properly signed will be voted in accordance with the
shareholders directions. If the proxy card is signed and returned without
direction as to how they 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.
PROPOSALS OF SHAREHOLDERS
For proposals of shareholders to be included at the 1999 annual meeting
of shareholders, anticipated to be held in February 2000, such proposals must be
received by the Company not later than September 11, 1999. The acceptance of
such proposals is subject to Securities and Exchange Commission guidelines.
1
<PAGE>
PROPOSAL NO. 1
TO ELECT FIVE DIRECTORS
ELECTION OF DIRECTORS
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
the number of authorized directors at five. All five directors are to be elected
at the Annual Meeting, to hold office until the next annual meeting or until
their successors are duly elected. The five 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. In the event, not presently anticipated, that any of the nominees
should become unavailable for election prior to 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 sets forth the names and certain information
concerning the directors and executive officer of the Company. Each of the
directors are also nominees for election to the Board of Directors. All of the
nominees named below have consented to being named herein and to serve, if
elected.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John M. Thornton (2)........................ 66 Chairman of the Board, President, Chief Financial Officer
Gerald I. Farmer, Ph. D....................... 64 Director
James B. DeBello (1)(2)...................... 40 Director
Daniel E. Steimle (1) (2)...................... 50 Director
Sally B. Thornton (1).......................... 64 Director
</TABLE>
- ----------
(1) Compensation Committee
(2) Audit Committee
DIRECTORS
JOHN M. THORNTON-Mr. Thornton, 66, a director of the Company since
March 1986, was appointed Chairman of the Board as of October 1, 1987.
Additionally, he has served as President, Chief Executive Officer and Chief
Financial Officer since September 1998. 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 1986, Mr. Thornton was the
principal shareholder and served as Chairman of the Board at Micom, Inc. Mr.
Thornton was President of Wavetek Corporation for 18 years. Mr. Thornton is also
Chairman of the Board of Thornton Winery Corporation. Mr. Thornton is the spouse
of Sally B. Thornton, a director.
GERALD I. FARMER, Ph.D.-Dr. Farmer, 64, a director of the Company since
May 1994, was Executive Vice President of the Company from November 1992 until
June, 1997. Prior to joining the Company, Dr. Farmer worked as 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, 40, a director of the Company since
November 1994, has been Chief Operating Officer of WirelessKnowledge, Inc., a
joint venture company between Microsoft and Qualcomm, Inc., since November 1998.
From November 1996 to November 1998 he held positions as Assistant General
Manager and Vice President and General Manager of Qualcomm Eudora Internet
E-Mail Software Division of Qualcomm, Inc. From 1990 to 1996, he was President
and Chief Executive Officer of Solectek Corporation in San Diego, California. He
held various positions in the John M. Thornton & Associates group of companies
from July 1986 to April 1990. Prior to that, he was employed by the Los Angeles
Olympic Organizing Committee as Assistant Director of Marketing.
2
<PAGE>
DANIEL E. STEIMLE-Mr. Steimle, 50, a director of the Company since
February 1987, has been Chief Financial Officer of Transmeta Corporation, a
startup technology company, from November 1998. From July 1997 to November 1998
he was Vice President, Finance and Administration and Chief Financial Officer of
Hybrid Networks, Inc., a broadband access network company. From December 1993 to
July 1997, Mr. Steimle was Vice President and Chief Financial Officer of
Advanced Fibre Communications. Mr. Steimle was Senior Vice President, Operations
and Chief Financial Officer of The Santa Cruz Operation from September 1991 to
December 1993 and served as Director of Business Development for Mentor
Graphics, a software development company, from August 1989 to September 1991.
Prior to that time, Mr. Steimle was the Corporate Vice President, Chief
Financial Officer and Treasurer of Cipher Data Products, Inc., a manufacturer of
data storage equipment.
SALLY B. THORNTON-Ms. Thornton, 64, a director of the Company since
April 1988, has been a private investor for more than six years. She served as
Chairman of Medical Materials, Inc. from 1987 until 1996 and from 1977 to 1988
she served as a director of Micom, Inc. Ms. Thornton is on the Board of
Directors of Thornton Winery Corporation in Temecula. She has also served as a
Trustee of the Sjogren's Syndrome Foundation in Port Washington, New York and
Chairman and President of the Arthritis Foundation - San Diego Chapter. Ms.
Thornton is a Life Trustee of the San Diego Museum of Art. Ms. Thornton is the
spouse of John M. Thornton, Chairman of the Board.
MEETINGS
The Board of Directors has one regularly scheduled meeting annually,
immediately following and at the same place as the Annual Meeting of
Stockholders. Additional meetings may be called as the need arises. During the
1998 fiscal year, there were seven meetings of the Board of Directors. All
directors attended at least 75% of all Board meetings during the year and of
each committee meetings of which they were members.
COMMITTEES
The Board of Directors has appointed from among its members two
committees to advise it on matters of special importance to the Company.
The Compensation Committee, which acts as the Administrative
Committee for the 1986, 1988 and 1996 Stock Option Plans, during fiscal 1998 was
composed of Sally B. Thornton, Daniel E. Steimle and James B. DeBello. 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 1998, the Compensation Committee meetings were held concurrently
with Board of Directors meetings.
The Audit Committee, during fiscal 1998, was composed of John M.
Thornton, Daniel E. Steimle and James B. DeBello. The Audit Committee meets with
the independent auditors and officers or other personnel of the Company
responsible for its financial reports. The Audit Committee is charged with
responsibility 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. Among other matters, the Audit
Committee is also responsible for considering and recommending to the Board a
certified public accounting firm for selection by it as the Company's
independent auditor. The Audit Committee held one meeting during fiscal 1998.
REMUNERATION OF DIRECTORS
The Company does not pay compensation for service as a director to
persons employed by the Company. Outside directors are paid $1,000 for each
meeting they attend.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION OF EACH NOMINEE AS A DIRECTOR OF THE COMPANY.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid by the Company to all
individuals serving as Chief Executive Officer during fiscal 1998 and other
executive officers who served as such at the end of fiscal 1998 and received
annual compensation in excess of $100,000.
<TABLE>
<CAPTION>
Number All
Principal Annual of Other
Position Year Salary Bonus Options Comp.
- -------- ---- ------ ----- ------- -----
<S> <C> <C> <C> <C> <C>
John M. Thornton 1998 100,000
Chairman of the Board 1997 150,000
1996 150,000
John F. Kessler 1998 56,248(1) 400,000(2) 67,308(3)
President & CEO 1997 150,000 100,000
1996 140,000 42,375 100,000 1,095(4)
Elliot Wassarman 1998 165,000(5) 75,224 800,000 119,167(6)
President & CEO
</TABLE>
- ----------
(1) Mr. Kessler served as Chief Executive Officer until December 31, 1997, and
as Chief Financial Officer until February 12, 1998, at which time Mr.
Kessler resigned his employment.
(2) Consists solely of re-pricing of options that were issued in prior fiscal
years.
(3) Consists of payment for consulting fees and vacation accrual.
(4) Consists solely of matching contributions to the Company's 401(k) Plan.
(5) Mr. Wassarman served as Chief Executive Officer from January 5, 1998 to
September 22, 1998, at which time Mr. Wassarman resigned his employment.
(6) Consists of payments made in connection with resignation of employment per
employment agreement.
STOCK OPTIONS
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock options granted during the
fiscal year ended September 30, 1998.
4
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
OPTIONS % OF TOTAL OPTIONS EXERCISE OR APPRECIATION FOR
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION OPTION TERM
(#) IN FY 1998 (%) ($/SHARE) DATE 5%($) 10%($)
------- -------------------- ----------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
John M. Thornton -0- N/A N/A N/A N/A N/A
John F. Kessler 100,000(1) $0.89 10/1/03(2) 95,786 102,795(3)
100,000(1) $0.89 10/1/03(2) 97,743 106,058(3)
100,000(1) $0.89 10/1/03(2) 119,269 157,669(3)
100,000(1) 22.24% $0.89 10/1/03(2) 119,269 157,669(3)
Elliot Wassarman 250,000(4) $1.125 1/4/04(6) 376,901 498,252(8)
550,000(5) 47.25% $1.125 1/4/04(7) 829,189 1,096,153(8)
</TABLE>
- ----------
(1) Consists solely of options held by Mr. Kessler which were cancelled and
reissued pursuant to an option re-pricing approved on October 1, 1997. The
number of options issued to Mr. Kessler was subsequently reduced to 200,000
options in connection with an agreement reached upon his resignation of
employment on February 12, 1998.
(2) In connection with the agreement reached upon Mr. Kessler's resignation of
employment, subsequent to fiscal year end, vesting was accelerated on each
of the options and the expiration date was amended to February 12, 1999.
(3) Numbers reflect the values at the end of the original option term. Potential
realizable value for the 200,000 options currently outstanding calculated on
the basis of a 5% and 10% increase in market value from October 1, 1998
through February 12, 1999 is $94,618 and $100,548 respectively.
(4) Options were to vest subject to achieving certain performance targets which
were not met during the term of Mr. Wassarman's employment.
(5) Options were to vest monthly over a three year period during employment.
152,778 of the options vested during Mr. Wassarman's employment. The balance
were subsequently terminated.
(6) Options expired November 8, 1998, 30 days after resignation of employment.
(7) Options expired January 8, 1999, 90 days after resignation of employment.
(8) Numbers reflect the values at the end of the original option term. Options
have all terminated prior to the date hereof with no potential realizable
value.
The following table shows, as to the individuals named in the Summary
Compensation Table, information concerning stock options values at the fiscal
year end September 30, 1998:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FY-END IN-THE-MONEY OPTIONS
NUMBER AT FY-END ($)(1)
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John M. Thornton 0 0 0 0
John F. Kessler 188,750 0 0 0
Elliot Wassarman 152,778(2) 647,222(3) 0 0
</TABLE>
- ----------
(1) Based on closing bid price of $.469 as of September 30, 1998 as reported on
the NASDAQ SmallCap Market.
(2) These options subsequently terminated on January 8, 1999.
(3) These options subsequently terminated on November 8, 1998 and January 8,
1999.
5
<PAGE>
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 shareholder
value in a competitive environment. The 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
objectives 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 shareholder value through meeting longer-term financial and strategic
goals.
In designing and administering its executive compensation program, the
Company attempts 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 utilizes 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 upon 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
objectives. Corporate objectives are established as part of the annual operating
plan process. Overall corporate objectives include target levels of pre-tax,
pre-bonus profit and net revenue.
Each eligible employee's award is expressed as a percentage of the
participant's October 1, 1997 base salary. Bonus achievement was dependent upon
meeting or exceeding the company's minimum goals for pre-tax, pre-bonus and net
revenue. For fiscal 1998, no bonus award for any participant was payable as the
Company's goals were not reached.
STOCK OPTION PLANS
The Company's 1986 Stock Option Plan (the "1986 Plan") authorized the
issuance of options for up to an aggregate of 630,000 shares of the Company's
Common Stock. At September 30, 1998, 51,750 shares of Common Stock were subject
to outstanding options issued pursuant to the 1986 Plan. The 1986 Plan
terminated on September 30, 1996 and no additional options may be granted under
that plan. The Company's 1988 Stock Option Plan (the "1988 Plan") authorized the
issuance of options for up to 650,000 shares of the Company's Common Stock. At
September 30, 1998, 266,723 shares were subject to outstanding options issued
pursuant to
6
<PAGE>
the 1988 Plan. The 1988 Plan terminated on September 13, 1998 and no additional
options may be granted under that plan. The Company's 1996 Stock Option Plan
(the "1996 Plan") authorizes the Company to grant its directors, officers and
key employees non-qualified stock options to purchase up to 2,372,547 shares of
the Company's Common Stock. At September 30, 1998, 1,234,943 shares were subject
to outstanding options and 1,137,604 remained available for future grants under
the 1996 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 Plan).
The Committee authorized several stock option grants during fiscal
1998, including one to Executive Officers and Key Employees, as well as grants
for new employees. The Company experienced operational setbacks and significant
employee turnover during the course of fiscal 1998, and the Committee determined
it would be in the best interests of the Company to provide employees with an
economic interest in the long-term prospects of the Company. In addition, the
Committee determined that the decline in the market value of the stock had
reduced the incentive value of outstanding stock options. Accordingly, the
Committee approved a re-pricing of all outstanding stock options on October 1,
1997 based on the then current market price of the Company's Common Stock.
STOCK OPTION REPRICING
The following table shows the amendment to the exercise price of stock
options that were previously awarded to any individual named in the Summary
Compensation Table and re-priced during fiscal 1998.
<TABLE>
<CAPTION>
TEN YEAR OPTION/SAR RE-PRICINGS
LENGTH OF
ORIGINAL
OPTION
MARKET TERM
PRICE OF EXERCISE REMAINING
NUMBER OF STOCK AT PRICE AT NEW AT DATE OF
OPTIONS RE- TIME OF RE- TIME OF RE- EXERCISE RE-
NAME DATE PRICED(1) PRICING PRICING PRICE PRICING(2)
- ---- ---- --------- ------- ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
John Kessler 10/1/97 100,000 $.89 $1.1870 $.89 18 months
John Kessler 10/1/97 100,000 $.89 $1.2187 $.89 20 months
John Kessler 10/1/97 100,000 $.89 $1.3800 $.89 48 months
John Kessler 10/1/97 100,000 $.89 $2.1250 $.89 66 months
</TABLE>
- ----------
(1) The number of options issued to Mr. Kessler was subsequently reduced to an
aggregate of 200,000 on resignation of employment on February 12, 1998.
(2) In connection with the agreement reached upon Mr. Kessler's termination of
employment, the expiration date for the options was subsequently amended to
February 12, 1999.
7
<PAGE>
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,
which is available to all employees who satisfy the age and service requirements
under the Savings Plan. 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 1998 the Committee
determined that participants would not receive a matching contribution.
OTHER COMPENSATION PLANS
The Company has adopted certain broad-based employee benefit plans in
which executive officers have been permitted to participate. The incremental
cost to the Company of benefits provided to executive officers under these life
and health insurance plans is less than 10% of the base salaries for executive
officers for fiscal 1998. Benefits under these broad-based plans are not
directly or indirectly tied to Company performance.
EMPLOYMENT AGREEMENTS
The Company had entered into an Employment Agreement with Mr. Wassarman
effective January 5, 1998. The Agreement provided for a base salary of $220,000
plus a performance based bonus under the Executive and Key Employee Bonus Plan.
That agreement also provided for a severance payment equal to six months base
salary for termination of employment under certain conditions. That Agreement
was terminated effective September 22, 1998. The Company does not presently have
employment agreements with any executive officers.
COMPENSATION COMMITTEE
SALLY B. THORNTON
DANIEL E. STEIMLE
JAMES B. DEBELLO
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows, as of January 6, 1999, 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 the Company 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 shareholders is c/o Mitek Systems, Inc., 10070 Carroll Canyon Road, San
Diego, California 92131.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME OF BENEFICIAL OWNER OR IDENTITY OF GROUP BENEFICIALLY OWNED OF CLASS
- --------------------------------------------- ------------------ --------
<S> <C> <C>
John M. and Sally B. Thornton..................... 2,749,959 (1) 23.76%
Gerald I. Farmer.................................. 91,889 (2) .79%
James B. DeBello.................................. 7,083 (3) .06%
Daniel E. Steimle................................. 19,243 (4) .17%
Directors and Officers as a Group................. 2,868,174 (5) 24.78%
</TABLE>
- ----------
(1) John M. Thornton and Sally B. Thornton, husband and wife, are trustees of a
family trust, and are each directors of the Company.
(2) Represents 10,000 shares of Common Stock held by Dr. Farmer and includes
81,889 shares of Common Stock subject to options exercisable within 60 days
of January 6, 1999.
(3) Represents 7,083 shares of Common Stock subject to options exercisable
within 60 days of January 6, 1999.
(4) Represents 14,521 shares of Common Stock held by Mr. Steimle and includes
4,722 shares of Common Stock subject to options exercisable within 60 days
of January 6, 1999.
(5) Includes an additional 93,694 shares of common stock issuable upon exercise
of options exercisable within 60 days of January 6, 1999.
Information with respect to beneficial ownership is based on
information furnished to the Company by each person identified above. Each named
person currently has shared voting and investment power with such person's
spouse with respect to the shares beneficially owned, except that Mr. Steimle
has sole voting and investment power with respect to his shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors and persons who own more than 10% of a
registered class of the Company's 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 the Company, the Company is not aware of any
director, officer or beneficial owner of 10% of the Company's 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 during the most
recent fiscal year.
9
<PAGE>
STOCK PERFORMANCE GRAPH
[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Mitek Systems, Inc. 100.00 88.90 105.10 306.00 64.00 34.30
NASDAQ Stock Market (US Companies) 100.00 100.80 139.30 165.20 226.80 231.70
NASDAQ Stocks (SIC 3570-3579 US Companies) 100.00 113.40 209.10 282.60 402.40 581.10
</TABLE>
ASSUMES $100 INVESTED ON OCTOBER 1, 1993
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1998
The above graph compares the performance of the Company with that of
the NASDAQ Market Index and Peer Group based on SIC Code 3570 - Computer and
Office Equipment.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of
Directors has authorized the firm of Deloitte & Touche, LLP, independent
certified public accountants, to serve as auditors for the fiscal year ending
September 30, 1999. A representative of Deloitte & Touche, LLP will be present
at the shareholders' meeting and will have the opportunity to make a statement
if he or she desires to do so. Further, the representative of Deloitte & Touche,
LLP will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
10
<PAGE>
OTHER BUSINESS
The Annual Meeting is called for the purposes set forth in the attached
Notice of Annual Meeting of Stockholders. Management is unaware of any matters
for action by stockholders at this meeting other than those described in such
Notice. The enclosed proxy, however, will confer discretionary authority with
respect to matters which are not known to management at the date of printing
hereof and which may properly come before the Annual Meeting or any adjournment
thereof. It is the intention of the Company's proxy holders to vote in
accordance with their best judgment on any such matters.
ALL STOCKHOLDERS ARE URGED TO 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 15, 1998
11
<PAGE>
PROXY
MITEK SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 10, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John M. Thornton and Noel Flynn 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 10,
1999 or any adjournment thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
ANNUAL
MEETING OF
STOCKHOLDERS
FEBRUARY 10, 1999
DoubleTree Carmel Highland Resort
14455 Penasquitos Dr.
San Diego, CA 92129
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE PLEASE MARK
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. YOUR VOTE AS /X/
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR INDICATED IN
PROPOSAL 1. THIS EXAMPLE
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD NOMINEES: John M. Thornton, Sally B.
listed to the right AUTHORITY Thornton, Gerald I. Farmer,
except as marked To vote for all James B. DeBello, Daniel E.
(to the contrary) nominees listed Steimle
to the right (INSTRUCTION: To withhold authority to
/ / / / vote for any individual
nominee, write that
2. Ratify the appointment of Deloitte & nominee's name in the
Touche LLP as auditors. space provided below.)
FOR AGAINST ABSTAIN ---------------------------------------
/ / / / / /
3. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
Please sign exactly as name
appears below. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee, or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
Date: ,1999
-------------------
-----------------------------
(Signature)
-----------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
ADMISSION TICKET
ANNUAL MEETING
OF
MITEK SYSTEMS, INC.
STOCKHOLDERS
WEDNESDAY, FEBRUARY 10, 1999
1:00 P.M.
DOUBLETREE CARMEL HIGHLAND RESORT
14455 PENASQUITOS DR.
SAN DIEGO, CA 92129
--------------------------------------------------------------
--------------------------------------------------------------
AGENDA
- Election of Directors
- Ratify the appointment of Deloitte & Touche LLP as auditors
- Report on the progress of the corporation
- Informal discussion among stockholders in attendance
--------------------------------------------------------------
--------------------------------------------------------------
