<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 0-15235
-------
Mitek Systems, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 87-0418827
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10070 Carroll Canyon Road, San Diego, California 92131
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (619) 635-5900
--------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
--- ---
There were 11,067,221 shares outstanding of the registrant's Common Stock
as of May 5, 2000.
<PAGE>
PART 1: FINANCIAL INFORMATION
MITEK SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
2000 1999
----------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,356,424 $ 1,398,589
Accounts receivable-net 6,275,859 5,006,081
Inventories-net 121,381 58,082
Prepaid expenses and other assets 112,099 69,232
-----------------------------------------------------
Total current assets 7,865,763 6,531,984
PROPERTY AND EQUIPMENT-net 312,009 281,571
OTHER ASSETS 688,599 575,298
-----------------------------------------------------
TOTAL ASSETS $ 8,866,371 $ 7,388,853
=====================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 825,782 $ 738,195
Accrued payroll and related taxes 519,446 720,300
Unearned maintenance income 213,777 203,408
Other accrued liabilities 113,440 53,885
-----------------------------------------------------
Total current liabilities 1,672,445 1,715,788
LONG-TERM LIABILITIES 46,708 51,040
-----------------------------------------------------
Total liabilities 1,719,153 1,766,828
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 20,000,000
shares authorized, 11,066,751 and
10,438,854 issued and outstanding, respectively 11,067 10,439
Additional paid-in capital 9,109,553 8,507,613
Accumulated deficit (1,973,402) (2,896,027)
-----------------------------------------------------
Total stockholders' equity 7,147,218 5,622,025
-----------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,866,371 $ 7,388,853
=====================================================
</TABLE>
See notes to consolidated financial statements
<PAGE>
MITEK SYSTEMS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 2,594,208 $ 2,070,509 $ 5,319,292 $ 4,280,986
COST OF SALES 332,724 329,468 713,709 752,121
----------------------------------------------------------------------------
GROSS MARGIN 2,261,484 1,741,041 4,605,583 3,528,865
COSTS AND EXPENSES:
Operations 289,775 142,754 507,924 268,799
General and administrative 457,506 390,246 894,649 896,815
Research and development 472,410 277,917 972,601 573,051
Selling and marketing 704,631 593,604 1,297,507 1,089,160
Other charges
Interest (income) - net (2,477) (7,589) (8,723) (17,385)
----------------------------------------------------------------------------
Total costs and expenses 1,921,845 1,396,932 3,663,958 2,810,440
----------------------------------------------------------------------------
OPERATING INCOME 339,639 344,109 941,625 718,425
OTHER INCOME (EXPENSE) - NET 0 0 0 0
----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 339,639 344,109 941,625 718,425
PROVISION FOR INCOME TAXES 7,000 10,000 19,000 10,000
----------------------------------------------------------------------------
NET INCOME $ 332,639 $ 334,109 $ 922,625 $ 708,425
EARNINGS PER SHARE - BASIC $ 0.03 $ 0.03 $ 0.09 $ 0.06
============================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 10,775,290 10,291,623 10,629,695 11,022,535
============================================================================
EARNINGS PER SHARE - DILUTED $ 0.03 $ 0.03 $ 0.08 $ 0.06
============================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON
SHARE EQUIVALENTS OUTSTANDING - DILUTED 11,562,309 10,575,733 11,474,672 11,188,712
============================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE>
MITEK SYSTEMS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
2000 1999
----------------------------------------------
<S> <C> <C>
Net income $ 922,625 $ 708,425
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 197,124 159,885
Loss on sale of property and equipment 1,010 3,442
Value of stock options granted to non-employee 2,670 7,846
Changes in assets and liabilities:
Accounts and notes receivable (1,269,778) (366,679)
Inventories, prepaid expenses, and other assets (344,966) 80,906
Accounts payable, accrued payroll and related taxes,
unearned maintenance income, and other accrued liabilities (47,675) (454,212)
----------------------------------------------
Net cash provided by (used in) operating activities (538,990) 139,613
INVESTING ACTIVITIES
Proceeds from note receivable 0 56,478
Purchases of property and equipment (103,073) (93,044)
----------------------------------------------
Net cash used in investing activities (103,073) (36,566)
FINANCING ACTIVITIES
Repurchase of common stock 0 (14,150)
Proceeds from exercise of stock options and warrants 599,998 20,726
----------------------------------------------
Net cash provided by financing activities 599,998 6,576
----------------------------------------------
NET INCREASE (DECREASE) IN CASH (42,065) 109,623
CASH AT BEGINNING OF PERIOD 1,398,589 1,740,760
----------------------------------------------
CASH AT END OF PERIOD $ 1,356,524 $ 1,850,383
==============================================
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes $ 70,802 $ -
</TABLE>
See notes to consolidated financial statements
<PAGE>
MITEK SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnote disclosures that are otherwise required by
Regulation S-X and that will normally be made in the Company's Annual Report on
Form 10-K. The financial statements do, however, reflect all adjustments (solely
of a normal recurring nature) which are, in the opinion of management, necessary
for a fair statement of the results of the interim periods presented.
Results for the three months ended March 31, 2000 and September 30, 1999
are not necessarily indicative of results which may be reported for any other
interim period or for the year as a whole.
2. Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
March 31, 2000 September 30, 1999
--------------- ------------------
<S> <C> <C>
Raw materials $ 29,622 $29,703
Work in process 0 0
Finished goods 91,759 28,379
-------- -------
Total $121,381 $58,082
========= =======
</TABLE>
Inventories are recorded at the lower of cost (on the first-in, first-out
basis) or market and are net of a $47,504 and $144,638 reserve for inventory
obsolescence for the respective periods.
3. Commitments and contingencies
In the general course of business the Company, at various times, has been
named in lawsuits. During fiscal 1998 the Company was involved in a number of
legal proceedings. All of these proceedings were resolved in October 1998 and
the costs of these settlements were included in the fiscal year ended September
30, 1998 financial statements.
<PAGE>
MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following cautionary statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 in order for the Company to avail
itself of the "safe harbor" provisions of that Act. The discussion and
information in Management's' Discussion and Analysis of Financial Condition and
Result of Operations (the "MD&A") may contain both historical and
forward-looking statements. To the extent that MD&A contains forward-looking
statements regarding the financial condition, operating results, business
prospects or any other aspect of the Company, please be advised that the
Company's actual financial condition, operating results and business performance
may differ materially from that projected or estimated by the Company in
forward-looking statements. The Company has attempted to identify, in context,
certain of the factors that it currently believes may cause actual future
experience and results to differ from the Company's current expectations. The
difference may be caused by a variety of factors, including but not limited to
adverse economic conditions, general decreases in demand for Company products
and services, intense competition, including entry of new competitors, increased
or adverse federal, state and local government regulation, inadequate capital,
unexpected costs, lower revenues and net income than forecast, price increases
for supplies, inability to raise prices, the risk of litigation and
administrative proceedings involving the Company and its employees, higher than
anticipated labor costs, the possible fluctuation and volatility of the
Company's operating results and financial condition, adverse publicity and news
coverage, inability to carry out marketing and sales plans, loss of key
executives, changes in interest rates, inflationary factors, and other specific
risks that may be alluded to in this MD&A.
The Company's strategy for fiscal 2000 continues its focus on the
Company's core strengths, and increased sales and marketing efforts to bring the
Company's products to new applications and markets. In particular, Mitek is
determined to expand into new markets by addressing the needs of new and
different types of customers with a variety of application specific solutions.
Mitek also sought to broaden the use of its products with current customers by
identifying new and innovative applications of its existing technology.
The Company believes that its results for the second quarter of fiscal
2000 ended March 31, 2000 are a result of the successful implementation of that
growth strategy. In the three months ending March 31, 2000, revenues were
$2,594,000, an increase of $523,000 or 25% over the $2,071,000 revenues in the
same period last year. Gross margin for the quarter ended March 31, 2000 was
$2,262,000, an increase of $521,000 or 30% over the $1,741,000 gross margin in
the same period last year. The Company earned net income of $333,000 or $0.03
per share for the second quarter of fiscal 2000, compared with net income of
$334,000 or $0.03 per share for the second quarter of fiscal 1999. In the six
months ending March 31, 2000, revenues were $5,319,000, an increase of
$1,038,000 or 24% over the $4,281,000 revenues in the same period last year.
Gross margin for the six months ended March 31, 2000 was $4,605,000, an increase
of $1,076,000 or 30% over the $3,529,000 gross margin in the same period last
year. The Company earned net income of $923,000 or $0.09 per share for the six
month period ending March 31, 2000, compared with net income of $708,000 or
$0.06 per share for the same period last year.
The Company continued to maintain its cash position in the second quarter
of fiscal 2000. At March 31, 2000 the Company had $1,356,000 in cash and cash
equivalents as compared to $1,399,000 on September 30, 1999. The Company
retained its $750,000 revolving and $250,000 equipment lines of credit. There
were no borrowings under the lines of credit as of March 31, 2000 or September
30, 1999.
During the second quarter of fiscal 2000 Mitek announced the installation
of its CheckQuest-TM- check imaging solution at Cuyamaca Bank in Santee,
California and Two River Community Bank in Middletown, New Jersey. Both
installations are expected to improve labor efficiencies and customer service.
A new product strategy was also announced that will transition the
Company into a provider of powerful, Internet-enabled image processing and
recognition solutions that will support the new e-commerce needs of the
Company's business partners and end-users. As businesses across all industries
deploy more Internet-related solutions, in addition to traditional paper-based
solutions, Mitek and its partners are enhancing product lines to support the
unique requirements of business-to-business (B2B) software solutions. The
<PAGE>
Company's revised market strategy, designed to complement and support these new
products, is expected to drive a significant percentage of future revenues.
The Company is satisfied with the level of growth in revenue and earnings
in the second quarter of fiscal 2000 while maintaining a positive cash position
with no borrowings against its lines of credit. The Company will continue to
work very closely with its customers to meet their needs and the needs of their
customers. The Company is looking for a continued upward trend in the third
quarter of fiscal 2000, with growth in most areas of the Company.
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
Comparison of Three Months and Six Months Ended March 31, 2000 and 1999
NET SALES. Net sales for the three-month period ended March 31, 2000
were$2,594,000, compared to $2,071,000 for the same period in 1999, an increase
of $523,000, or 25%. Net sales for the sixth month period ended March 31, 2000
were $5,319,000, compared to $4,281,000 for the same period in 1999, an increase
of $1,038,000 or 24%. The increase was primarily attributable to penetrating
target markets and successfully executing the Company's growth plan.
GROSS MARGIN. Gross margin for the three-month period ended March 31,2000
was $2,262,000, compared to $1,741,000 for the same period in 1999, an increase
of $521,000 or 30%. Stated as a percentage of net sales, gross margin increased
to 87% for the three-month period ended March 31, 2000 compared to 84% for the
same period in 1999. Gross margin for the six-month period ended March 31, 2000
was $4,605,000, compared to $3,529,000 for the same period in 1999, an increase
of $1,076,000 or 30%. Stated as a percentage of net sales, gross margins
increased to 87% for the sixth month period ended March 31, 2000, compared to
82% for the same period in 1999. Goodwill and license amortization charged to
cost of sales was $75,000 (3% of net sales) for the three months ended March 31,
2000 and $51,000 (2% of net sales) for the same period in 1999. Goodwill and
license amortization charged to cost of sales was $125,000 (2% of net sales) for
the six months ended March 31, 2000 and $101,000 (2% of net sales) for the same
period in 1999. The increase in both gross margin and as a percentage of net
sales resulted primarily from increased sales and product mix.
OPERATIONS. Operations expenses for the three-month period ended March
31, 2000 were $290,000, compared to $143,000 for the same period in 1999, an
increase of $147,000 or 103%. Stated as a percentage of net sales, operations
expenses was 11% for the three-month period ended March 31, 2000, as compared
with 7% for the same period in 1999. The increase in both expenses and
percentage of net sales is primarily attributable to staff additions. Operations
expenses for the six-month period ended March 31, 2000 were $508,000, compared
to $269,000 for the same period in 1999, an increase of $239,000 or 89%. Stated
as a percentage of net sales, operations expenses increased to 10% for the
six-month period ended March 31, 2000, compared to 6% for the same period in
1999. The increase in expenses and as a percentage of net revenue is primarily
attributable to staff additions.
GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
three-month period ended March 31, 2000 were $457,000, compared to $390,000 for
the same period in 1999, an increase of $67,000 or 17%. Stated as a percentage
of net sales, general and administrative expenses decreased to 18% for the three
month period ended March 31, 2000, compared to 19% for the same period in 1999.
The increases in expenses for the three months were primarily attributable to
costs associated with outside professional services, while the decrease in the
percentage of net sales is primarily attributable to increased sales. General
and administrative expenses for the six-month period ended March 31, 2000 were
$894,000, compared to $897,000 for the same period in 1999, a decrease of $3,000
or .3%. Stated as a percentage of net sales, general and administrative expenses
decreased to 17% for the six-month period ended March 31, 2000, compared to 21%
for the same period in 1999. The decrease in expenses for the six months were
primarily attributable to costs associated with outside professional services,
while the decrease in the percentage of net sales is primarily attributable to
increased sales.
<PAGE>
RESEARCH AND DEVELOPMENT. Research and development expenses for the
three-month period ended March 31, 2000 were $472,000, compared to $278,000 for
the same period in 1999, an increase of $194,000 or 70%. The amounts for the
three months ended March 31, 2000 and 1999 do not include $110,000 and $32,000,
respectively, that was spent on research and development related contract
development and charged to cost of sales. Research and development expenses
before charges to cost of sales were $582,000 and $310,000 for the three months
ended March 31, 2000 and 1999, respectively. The increase in expenses is the
result of engineering staff additions and the implementation of certain
engineering projects. Stated as a percentage of net sales, research and
development expenses before charges to cost of goods sold increased to 22% for
the three-month period ended March 31, 2000, compared to 15% for the same period
in 1999. The increase as a percentage of net sales for the three-month period is
primarily attributable to the increase in absolute dollar expenditures. Research
and development expenses for the six-month period ended March 31, 2000 were
$973,000, compared to $573,000 for the same period in 1999, an increase of
$400,000 or 70%. The amounts for the six months ended March 31, 2000 and 1999 do
not include $110,000 and $56,000, respectively, that was spent on research and
development related contract development and charged to cost of sales. Research
and development expenses before charges to cost of sales were $1,083,000 and
$629,000. The increase in expenses is the result of engineering staff additions
and the implementation of certain engineering projects. Stated as a percentage
of net sales, research and development expenses before charges to cost of goods
sold increased to 20% for the six-month period ended March 31, 2000, compared to
15% for the same period in 1999. The increase as a percentage of net sales for
the six-month period is primarily attributable to the increase in absolute
dollar expenditures.
SELLING AND MARKETING. Selling and marketing expenses for the three-month
period ended March 31, 2000 were $705,000, compared to $594,000 for the same
period in 1999, an increase of $111,000 or 19%. Stated as a percentage of net
sales, selling and marketing expenses decreased to 27% from 29% for the same
period in 1999. The increase in expenses is primarily attributable to the
addition of personnel and increased marketing efforts on certain products. The
decrease as a percentage of net sales is primarily attributable to the increase
in revenues. Selling and marketing expenses for the six-month period ended March
31, 2000 were $1,297,000, compared to $1,089,000 for the same period in 1999, an
increase of $208,000 or 19%. Stated as a percentage of net sales, selling and
marketing expenses decreased to 24% from 25% for the same period in 1999. The
increase in expenses is primarily attributable to the addition of personnel and
increased marketing efforts on certain products. The decrease as a percentage of
net sales is primarily attributable to the increase in revenues.
INTEREST INCOME. Interest income for the three-month period ended March
31,2000 was $2,000, compared to interest income of $8,000 for the same period in
1999, a decrease of $6,000 or 75%. Interest income for the six-month period
ended March 31, 2000 was $9,000, compared to interest income of $17,000 for the
same period in 1999, a decrease of $8,000 or 47%. Interest income was generated
from invested funds received from the secondary public offering in the quarter
ended December 31, 1996, combined with no bank borrowings in the quarters ended
March 31, 1999 and 1998. The decline in interest income reflects the use of
invested funds.
LIQUIDITY AND CAPITAL
The Company has financed its cash needs primarily from increased profits
in the fourth quarter of fiscal 1999 and the first and second quarters of fiscal
2000, collection of accounts and notes receivable, and execution of operations
within budget.
Net cash used by operating activities during the year ended March 31,
2000 was $539,000. The primary use of cash from operating activities was an
increase in accounts receivable of $1,270,000 and a decrease in accounts payable
and accrued expenses of $48,000. The primary source of cash from operating
activities was net income of $923,000 plus depreciation and amortization of
$197,000. Higher receivables resulted primarily from increased sales.
The Company's working capital and current ratio was $6,193,000 and 4.70
at March 31, 2000, and $4,816,000 and 3.81 at September 30, 1999. At March 31,
2000, total liabilities to equity ratio was .24 to 1
<PAGE>
compared to .31 to 1 at September 30, 1999. As of March 31, 2000, total
liabilities were less by $48,000 than on September 30, 1999.
In June 1999, the Company renewed its working capital line of credit of
$750,000. The line of credit expires on June 8, 2000 and interest is payable at
prime plus 1.5 percentage points. In addition, the Company renewed its equipment
credit line in the amount of $250,000 under similar terms and conditions. There
were no borrowings under the working capital or equipment lines of credit as of
March 31, 2000 or September 30, 1999. The Company believes that together with
existing cash, credit available under the credit lines, and cash generated from
operations, funds will be sufficient to finance its operations for the next
twelve months. All cash in excess of working capital requirements will be kept
in short term, investment grade securities.
YEAR 2000
Historically, most computer databases, as well as embedded
microprocessors in computer systems and industrial equipment, were designed with
date data fields which used only two digits of the year. Most computer programs,
computers, and embedded microprocessors controlling equipment were programmed to
assume that all two digit dates were preceded by "19", causing "00" to be
interpreted as the year 1900. This formerly common practice now could result in
a computer system or embedded microprocessor which fails to recognize properly a
year that begins with "20", rather than "19". This in turn could result in
computer system miscalculations or failures, as well as failures of equipment
controlled by date-sensitive microprocessors, and is generally referred to as
the "Year 2000 problem."
1. The Company's State of Year 2000 Readiness. In 1997 the Company began
to formulate a plan to address its year 2000 issues. The Company's Year 2000
plan now contemplates five phases: AWARENESS, ASSESSMENT, REMEDIATION, TESTING,
AND IMPLEMENTATION.
AWARENESS involves ensuring that employees who deal with the Company's
computer assets, and all managers, executives and directors, understand the
nature of the Year 2000 problem and the adverse effects on the business
operations of the Company that would result from the failure to become and
remain Year 2000 ready. Assessment involves the identification and inventorying
of all computer assets of the Company (both information technology systems and
embedded microprocessors) and the determination as to whether such assets will
properly recognize a year that begins with "20", rather than "19". Computer
hardware, software and firmware, and embedded microprocessors, that, among other
things, properly recognize a year beginning with "20" are said to be "Year 2000
ready". REMEDIATION involves the repair or replacement of computer assets that
are not Year 2000 ready. Testing involves the validation of the actions taken in
the remediation phase. IMPLEMENTATION is the installation and integration of
remediated and tested computer assets into an overall information technology and
embedded microprocessor system that is Year 2000 ready.
These phases have substantial overlap. The Company has completed
Awareness phases (4th Quarter 1998) Assessment phases (4th Quarter 1998)
Remediation phases (4th Quarter 1998) Testing (2nd Quarter 1999) and
Implementation (3rd Quarter 1999) phases. The Company has assigned Noel Flynn,
Vice President of Operations/Customer Support, the responsibility for overseeing
the timely completion of each phase of the Company's Year 2000 plan.
The Company believes that all employees who deal with the Company's
computer assets, and all levels of the Company's management appreciate the
importance of Year 2000 readiness, and understand that achieving such readiness
is primarily a business problem, not merely a technology problem. The Company
has also communicated directly with its vendors of goods and services in an
attempt to assure that its key vendors are aware of the importance the Company
places on Year 2000 readiness.
The Company began its assessment of its internal computer systems in
1997. Computers and applications were identified, assessed and ranked for
critical importance to the operations of the Company. Since then, the Company
has modified and tested such applications and replaced the one system that was
not Year
<PAGE>
2000 compliant. The Company has addressed all computer systems that are critical
to its operations as of September 1999.
The Company has completed its assessment of the potential for Year 2000
problems with embedded microprocessors in its equipment, and has remedied all
non-compliant equipment as of September 1999.
The Company has mailed information concerning Year 2000 readiness to
vendors of goods and services. The Company is not presently dependent upon any
single source and supply for critical components or services for its products,
and believes it can acquire such products from a number of suppliers. The
Company had on-going discussions with all of its vendors of goods and services
during 1999 to ensure the uninterrupted supply of such goods and services and to
develop contingency plans in the event of the failure of any vendors to become
and remain Year 2000 ready.
The total cost of completing all five phases of its Year 2000 plan did
not exceed $50,000.
2. The Risks of the Company's Year 2000 Issues. If any computer hardware,
software applications, or embedded microprocessors critical to the Company's
operations have been overlooked in the assessment or remediation phases, if any
of the Company's remediated or replaced internal computer systems fail the
testing phase, there could be a material adverse effect on the Company's results
of operations, liquidity and financial condition of a magnitude which the
Company has not yet fully analyzed.
In addition, the Company has not yet been assured that (1) the computer
systems of all of its "key" or "mission critical" vendors of goods and services
will be Year 2000 ready in a timely manner or that (2) the computer systems of
third parties with which the Company's computer systems exchange data will be
Year 2000 ready both in a timely manner and in a manner compatible with
continued data exchange with the Company's computer systems.
If the vendors of the Company's most important goods and services, or the
suppliers of the Company's necessary energy, telecommunications and
transportation needs, fail to provide the Company with (1) the materials and
services which are necessary to produce, distribute and sell its product, (2)
the electrical power and other utilities necessary to sustain its operations, or
(3) reliable means of transporting supplies to its customers, such failure could
have a material adverse effect on the results of operations, liquidity and
financial condition of the Company.
The Company's customers are primarily banks and financial institutions or
entities that provide financial services to those industries. The banking
industry has indicated it may experience severe problems associated with the
Year 2000 problem. Banks and other financial institutions are spending
significant capital resources to remedy their own Year 2000 issues. These
expenditures may reduce budgeted funds that would otherwise be available to
acquire new technologies and systems from the Company and other suppliers. To
the extent that those customers experience or continue to experience significant
capital costs for Year 2000 compliance, the demand for the Company's products
may be reduced because of budgetary constraints.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None
b. Reports on Form 8-K:
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MITEK SYSTEMS, INC.
Date: May 12, 2000 /s/ JOHN THORNTON
--------------------------------------
John Thornton, Chairman, President and
Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,356,424
<SECURITIES> 0
<RECEIVABLES> 6,599,771
<ALLOWANCES> 323,912
<INVENTORY> 121,381
<CURRENT-ASSETS> 7,865,763
<PP&E> 1,335,336
<DEPRECIATION> 1,023,327
<TOTAL-ASSETS> 8,866,371
<CURRENT-LIABILITIES> 1,672,445
<BONDS> 46,708
0
0
<COMMON> 11,067
<OTHER-SE> 9,109,553
<TOTAL-LIABILITY-AND-EQUITY> 8,866,371
<SALES> 2,594,208
<TOTAL-REVENUES> 2,594,208
<CGS> 332,724
<TOTAL-COSTS> 1,924,322
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,477
<INCOME-PRETAX> 339,639
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 332,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 332,639
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
