<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q/A
(Mark One)
/x/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended JUNE 30, 2000 or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-15235
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MITEK SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 87-0418827
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10070 CARROLL CANYON ROAD, SAN DIEGO, CALIFORNIA 92131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (858) 635-5900
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(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 11,103,525 shares outstanding of the registrant's Common Stock
as of August 10, 2000.
<PAGE>
EXPLANATORY NOTE
The Company hereby amends Part 1 of its quarterly report on Form 10Q for the
period ended June 30, 2000 to reflect the restatement of its financial
statements as of June 30, 2000 and for the three-month and nine-month periods
then ended.
<PAGE>
PART 1: FINANCIAL INFORMATION
MITEK SYSTEMS, INC
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
2000 1999
AS RESTATED
SEE NOTE 2
------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 492,328 $ 1,398,589
Accounts receivable-net 7,054,377 5,006,081
Inventories-net 160,394 58,082
Prepaid expenses and other assets 170,270 69,232
------------------------------------------------
Total current assets 7,877,369 6,531,984
PROPERTY AND EQUIPMENT-net 374,946 281,571
OTHER ASSETS 613,662 575,298
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TOTAL ASSETS $ 8,865,977 $ 7,388,853
================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,175,136 $ 738,195
Accrued payroll and related taxes 675,197 720,300
Unearned income 337,670 203,408
Other accrued liabilities 359,676 53,885
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Total current liabilities 2,547,679 1,715,788
LONG-TERM LIABILITIES 44,834 51,040
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TOTAL LIABILITIES 2,592,513 1,766,828
COMMITMENTS AND CONTINGENCIES (Note 5)
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 20,000,000
shares authorized, 10,314,138 and
11,573,152 issued and outstanding, respectively 11,069 10,439
Additional paid-in capital 9,141,639 8,507,613
Accumulated deficit (2,879,244) (2,896,027)
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Total stockholders' equity 6,273,464 5,622,025
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,865,977 $ 7,388,853
================================================
</TABLE>
See notes to consolidated financial statements
<PAGE>
MITEK SYSTEMS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
AS RESTATED AS RESTATED
SEE NOTE 2 SEE NOTE 2
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<S> <C> <C> <C> <C>
NET SALES $ 2,135,734 $ 2,428,501 $ 7,455,026 $ 6,709,487
COST OF SALES 656,084 329,836 1,369,793 1,081,956
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GROSS MARGIN 1,479,650 2,098,665 6,085,233 5,627,531
COSTS AND EXPENSES:
Operations 390,487 157,195 898,410 425,995
General and administrative 563,255 366,315 1,457,905 1,263,130
Research and development 704,358 385,295 1,676,959 958,344
Selling and marketing 768,020 696,813 2,065,527 1,785,974
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Total costs and expenses 2,426,120 1,605,618 6,098,801 4,433,443
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OPERATING INCOME (LOSS) (946,470) 493,047 (13,568) 1,194,088
Interest and other income - net 21,627 8,651 30,350 26,036
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INCOME (LOSS) BEFORE INCOME TAXES (924,843) 501,698 16,782 1,220,124
PROVISION FOR INCOME TAXES (19,000) 0 0 10,000
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NET INCOME (LOSS) $ (905,843) $ 501,698 $ 16,782 $ 1,210,124
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EARNINGS (LOSS) PER SHARE - BASIC $ (0.08) $ 0.05 $ -- $ 0.11
==============================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 11,068,167 10,321,012 10,775,319 10,788,694
==============================================================================
EARNINGS (LOSS) PER SHARE - DILUTED $ (0.08) $ 0.05 $ -- $ 0.11
==============================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES AND COMMON
SHARE EQUIVALENTS OUTSTANDING - DILUTED 11,068,167 10,747,063 11,212,848 11,033,560
==============================================================================
</TABLE>
See notes to consolidated financial statements
<PAGE>
MITEK SYSTEMS, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
2000 1999
AS RESTATED
SEE NOTE 2
------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 16,782 $ 1,210,124
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 311,397 241,805
Loss on sale of property and equipment 1,010 3,907
Value of stock options granted to non-employee 31,115 9,181
Changes in assets and liabilities:
Accounts receivable (2,048,296) (1,471,067)
Inventories, prepaid expenses, and other assets (442,150) 169,083
Accounts payable, accrued payroll and related taxes,
unearned income, and other accrued liabilities 825,685 (372,730)
------------------------------------
Net cash used in operating activities (1,304,457) (209,697)
INVESTING ACTIVITIES
Proceeds from note receivable 0 56,478
Purchases of property and equipment (205,347) (165,704)
------------------------------------
Net cash used in investing activities (205,347) (109,226)
FINANCING ACTIVITIES
Repurchase of common stock 0 (14,150)
Proceeds from exercise of stock options and warrants 603,543 36,744
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Net cash provided by financing activities 603,543 22,594
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NET DECREASE IN CASH (906,261) (296,329)
CASH AT BEGINNING OF PERIOD 1,398,589 1,740,760
------------------------------------
CASH AT END OF PERIOD $ 492,328 $ 1,444,431
====================================
Significant non-cash investing and financing activities:
591,114 shares of unregistered common stock reacquired
pursuant to settlement agreement $ -- $ 369,446
763,922 shares of unregistered common stock reacquired pursuant to revised
cross investment and licensing
agreements $ -- $ 477,451
Cash paid for income taxes $ 70,800 $ --
</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.
In December 1999, the SEC issued Staff Accounting Bulletin (SAB) No.
101, "Revenue Recognition in Financial Statements". SAB 101 provides the SEC
staff's views in applying generally accepted accounting principles to selected
revenue recognition issues including software revenue recognition. We will be
required to adopt SAB 101 in the fourth quarter of the 2001 fiscal year. We have
not completed the process of evaluating the impact that the adoption of SAB 101
will have on the Company's Financial position or results of operations.
Results for the three and nine months ended June 30, 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. Restatement of Financial Statements
Subsequent to the issuance of its unaudited consolidated financial
statements for the three-month and nine-month periods ended June 30, 2000, the
Company determined that its revenues and operating results required revision.
In the course of reviewing the Company's compliance with the American
Institute of Certified Public Accountants' Statement of Position 97-2 ("SOP
97-2"), Software Revenue Recognition, the Company concluded that a particular
contract recorded as a sale in the quarter ended June 30, 2000 did not meet the
requirements in SOP 97-2 for revenue recognition. Accordingly, the Company has
restated its financial statements as of June 30, 2000 and for the three-month
and nine-month periods then ended. A summary of the significant effects of the
restatement follows:
<TABLE>
<CAPTION>
AS PREVIOUSLY AS
REPORTED RESTATED
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000
Accounts Receivable-net $8,454,377 $7,054,377
Accounts Payable 1,305,525 1,175,136
Accrued Payroll and related taxes 767,577 675,197
Other accrued liabilities 378,078 359,876
Accumulated Deficit (1,721,013) (2,679,244)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, 2000 JUNE 30, 2000
------------- -------------
AS PREVIOUSLY AS AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
Revenue $3,535,734 $2,135,734 $8,855,026 $7,455,026
Gross Margin 2,749,261 1,479,650 7,354,844 6,085,233
Selling and Marketing Expenses 860,400 768,020 2,157,907 2,065,527
Provision for Income Taxes 0 (19,000) 19,000 0
Net Income (Loss) 252,388 (924,843) 1,175,013 16,782
Net Income (Loss) per share:
Basic .02 (.08) .11 .00
Diluted .02 (.08) .10 .00
</TABLE>
3. Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 SEPTEMBER 30, 1999
-------------- ------------------
<S> <C> <C>
Raw materials $ 29,622 $29,703
Work in process 0 0
Finished goods 130,772 28,379
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Total $160,394 $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.
4. Earnings Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, Earnings Per Share. Basic earnings per share is computed by
dividing net income available to common shareholders by the weighted average
number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution of securities by including other common stock
equivalents, including stock options, in the weighted average number of common
shares outstanding for a period, if dilutive.
The following table sets forth the reconciliation of the denominator of
the earnings per share calculation for the three-month and nine-month periods
ended June 30, 2000.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30 JUNE 30
------- -------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Shares used in computing basic
net income (loss) per share 11,068,167 10,321,012 10,775,319 10,788,694
Dilutive effect of stock options 0 426,051 437,529 244,866
---------- ---------- ---------- ----------
Shares used in computing
diluted net income (loss) per share 11,068,167 10,747,063 11,212,848 11,033,560
========== ========== ========== ==========
</TABLE>
5. 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 legal matters outstanding from fiscal 1998
were resolved in the first month of fiscal year 1999, 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.
As discussed in Note 2 to the financial statements, subsequent to the issuance
of its financial statements for the three-month and nine-month periods ended
June 30, 2000, management concluded that a contract recorded as a sale in the
quarter ended June 30, 2000 did not meet the requirements for revenue
recognition under generally accepted accounting principles. The terms of the
contract were amended in the fourth fiscal quarter and the Company will
recognize the revenue and related costs in its results of operations for the
quarter ended September 30, 2000. The accompanying MD&A has been revised to
reflect the effects of the restatement of the Company's interim financial
statements for the three-month and nine-month periods ended June 30, 2000.
In the three months ending June 30, 2000, revenues were $2,136,000, a decrease
of $293,000 or 12% over the $2,429,000 revenues in the same period last year.
Gross margin for the quarter ended June 30, 2000 was $1,480,000, a decrease of
$619,000 or 29% over the $2,099,000 gross margin in the same period last year.
The Company suffered a net loss of $925,000 or $0.08 per share, basic and
diluted, for the third quarter of fiscal 2000, compared with net income of
$502,000 or $0.05 per share, basic and diluted, for the third quarter of fiscal
1999. In the nine months ending June 30, 2000, revenues were $7,455,000, an
increase of $746,000 or 11% over the $6,709,000 revenues in the same period last
year. Gross margin for the nine months ended June 30, 2000 was $6,085,000, an
increase of $458,000 or 8% over the $5,627,000 gross margin in the same period
last year. The Company earned net income of $17,000 or $0.00 per share, basic
and diluted, for the nine month period ending June 30, 2000, compared with net
income of $1,210,000 or $0.11 per share, basic and diluted, for the same period
last year.
The Company's cash position declined in the third quarter of fiscal 2000. At
June 30, 2000 the Company had $.5 million in cash and cash equivalents as
compared to $1.4 million on September 30, 1999. The Company renewed its $750,000
revolving and $250,000 equipment lines of credit. The Company was advised by its
bank on August 9, 2000, that its revolving line of credit has been increased to
$2,500,000. There were no borrowings under the lines of credit as of June 30,
2000 or September 30, 1999.
<PAGE>
During the third quarter of fiscal 2000, Mitek announced the release of
version 2.7 of its QuickStrokes-Registered Trademark- intelligent character
recognition engine. This latest version features high-speed neural networks
that improves throughput speeds and increases accuracy rates. These
improvements will allow faster and more accurate processing of a wider
variety of documents. The Company announced the signing of original equipment
manufacturer (OEM) agreements with J & B Software and Docubase for its
Doctus-TM- product, a data capture and forms processing system. Also
announced were the licensing of its check processing application,
CheckQuest-TM-, to Rancho Bernardo Bank in San Diego, CA and Bank of Mulberry
in Mulberry, Arkansas.
The Company announced approval from the Nasdaq Stock market for listing on its
National Market System, effective May 9, 2000. Mitek stock previously traded on
the Nasdaq SmallCap market.
The Company demonstrated an alpha version of its Internet data capture product,
WEBrowz-TM-, to potential customers and strategic partners at AIIM 2000 in New
York City, April 10-12. WEBrowz-TM- was later awarded a Best of AIIM 2000 honor
by Imaging & Document Solutions magazine.
Following the quarter end, Mitek announced a free 30-day license of its
WEBrowz-TM- beta application. Users can download the software from the Company's
new Web site at www.webrowz.com.
The Company, while disappointed by the decline in revenue and earnings and its
operating loss in the third quarter of fiscal 2000, will continue to implement
its growth strategy. The Company believes it is poised for growth, and its
positive cash position and increased line of credit will in assist in financing
such growth. The Company will continue to work very closely with its customers
to meet their needs and the needs of their customers.
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:
Comparison of Three Months and Nine Months Ended June 30, 2000 and 1999
NET SALES. Net sales for the three-month period ended June 30, 2000 were
$2,136,000, compared to $2,429,000 for the same period in 1999, a decrease of
$293,000, or 12%. Net sales for the nine-month period ended June 30, 2000 were
$7,455,000, compared to $6,709,000 for the same period in 1999, an increase of
$746,000 or 32%. The decrease for the quarter ended June 30, 2000 reflects
slower than anticipated market penetration for the Company's products. The
increase for the nine-month period ended June 30, 2000 was primarily
attributable to an overall success in penetrating target markets and executing
the Company's growth plan.
GROSS MARGIN. Gross margin for the three-month period ended June 30,2000 was
$1,480,000, compared to $2,099,000 for the same period in 1999, a decrease of
$619,000 or 29%. Stated as a percentage of net sales, gross margin decreased to
69% for the three-month period ended June 30, 2000 compared to 86% for the same
period in 1999. Gross margins for the nine-month period ended June 30, 2000 were
$6,085,000, compared to $5,627,000 for the same period in 1999, an increase of
$458,000 or 8%. Stated as a percentage of net sales, gross margins decreased to
82% for the nine-month period ended June 30, 2000, compared to 84% for the same
period in 1999. Goodwill and license amortization charged to cost of sales were
$75,000 (3% of net sales) for the three months ended June 30, 2000 and $51,000
(2% of net sales) for the same period in 1999. Goodwill and license amortization
charged to cost of sales were $200,000 (3% of net sales) for the nine months
ended June 30, 2000 and $152,000 (2% of net sales) for the same period in 1999.
The decrease in gross margin for the three-month period ended June 30, 2000
resulted primarily from decreased sales, while the increase in gross margin for
the nine-month period ended June 30, 2000 resulted primarily from increased
sales and changes in product mix in prior fiscal quarters. The decrease in gross
margin stated as a percentage of sales resulted primarily from product mix.
OPERATIONS. Operations expenses for the three-month period ended June 30, 2000
were $390,000, compared to $157,000 for the same period in 1999, an increase of
$233,000 or 148%. Stated as a
<PAGE>
percentage of net sales, operations expenses increased to 18% for the
three-month period ended June 30, 2000, as compared to 6% for the three-month
period ended June 30, 1999. Operations expenses for the nine-month period ended
June 30, 2000 were $898,000, compared to $426,000 for the same period in 1999,
an increase of $472,000 or 111%. Stated as a percentage of net sales, operations
expenses increased to 12% for the nine-month period ended June 30, 2000,
compared to 6% for the same period in 1999. This increase in both periods is
primarily attributable to staff additions.
GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
three-month period ended June 30, 2000 were $563,000, compared to $366,000 for
the same period in 1999, an increase of $197,000 or 54%. Stated as a percentage
of net sales, general and administrative expenses increased to 26% for the three
month period ended June 30, 2000, compared to 15% for the same period in 1999.
The increase in expenses for the three months were primarily attributable to
costs associated with outside professional services, legal fees and costs
associated with the Company's listing on the Nasdaq's National Market System.
The increase as a percentage of sales is primarily due to the decrease in
revenues. General and administrative expenses for the nine-month period ended
June 30, 2000 were $1,458,000, compared to $1,263,000 for the same period in
1999, an increase of $195,000 or 15%. Stated as a percentage of net sales,
general and administrative expenses increased to 20% for the nine-month period
ended June 30, 2000, compared to 19% for the same period in 1999. The increases
in expenses for the nine months were primarily attributable to costs associated
with outside professional services and legal fees. The increase as a percentage
of net sales is also primarily attributable to the increase in absolute dollar
expenditures.
RESEARCH AND DEVELOPMENT. Research and development expenses for the three-month
period ended June 30, 2000 were $704,000, compared to $385,000 for the same
period in 1999, an increase of $319,000 or 83%. The increase in expenses is the
result of engineering staff additions and the commencement of certain
engineering projects. Stated as a percentage of net sales, research and
development expenses increased to 33% for the three-month period ended June 30,
2000, compared to 16% 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 and the decline of revenues for the
quarter. Research and development expenses for the nine-month period ended June
30, 2000 were $1,677,000, compared to $958,000 for the same period in 1999, an
increase of $719,000 or 75%. The amounts for the nine months ended June 30, 2000
and 1999 do not include $110,000 and $67,000, 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
$1,787,000 and $1,025,000 for the nine months ended June 30, 2000 and 1999,
respectively. The increase in expenses is the result of engineering staff
additions and the commencement of certain engineering projects. Stated as a
percentage of net sales, research and development expenses before charges to
cost of goods sold increased to 24% for the nine-month period ended June 30,
2000, compared to 15% for the same period in 1999. The increase as a percentage
of net sales for the nine-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 June 30, 2000 were $768,000, compared to $697,000 for the same period in
1999, an increase of $71,000 or 10%. Stated as a percentage of net sales,
selling and marketing expenses increased to 36% 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 increase as a
percentage of net sales is attributable to absolute dollar expenditures and
decreased revenues. Selling and marketing expenses for the nine-month period
ended June 30, 2000 were $2,066,000, compared to $1,786,000 for the same period
in 1999, an increase of $280,000 or 16%. Stated as a percentage of net sales,
selling and marketing expenses increased to 28% from 27% 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 increase as a
percentage of net sales is primarily attributable to the increase in revenues. .
The increase as a percentage of net sales is primarily attributable to absolute
dollar expenditures.
INTEREST INCOME. Interest income for the three-month period ended June 30,2000
was $22,000, compared to interest income of $9,000 for the same period in 1999,
an increase of $13,000 or 144%. Interest income for the nine-month period ended
June 30, 2000 was $30,000, compared to interest income
<PAGE>
of $26,000 for the same period in 1999, an increase of $4,000 or 15%. 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 June 30, 2000 and 1999. The increase in
interest income reflects the earnings from invested funds.
LIQUIDITY AND CAPITAL
The Company has financed its fiscal year 2000 cash needs primarily from cash on
hand at December 31, 1999, and exercise of stock options and warrants.
Net cash used by operating activities during the nine months ended June 30, 2000
was $1,304,000. The primary use of cash from operating activities was an
increase in accounts receivable of $2,048,000 and an increase in inventory,
prepaid expenses and other assets of $442,000. The primary source of cash from
operating activities was net income of $17,000, an increase in accounts payable,
accrued payroll and other liabilities and unearned income of $825,000, and
depreciation and amortization of $311,000. Increased receivables resulted from
increased sales and from the Company's decision to offer extended terms to
certain key customers.
The Company's working capital and current ratio was $5,330,000 and 3.09 at June
30, 2000, and $4,816,000 and 3.81 at September 30, 1999. At June 30, 2000, total
liabilities to equity ratio was .41 to 1 compared to .31 to 1 at September 30,
1999. As of June 30, 2000, total liabilities were greater by $826,000 than on
September 30, 1999.
During the third quarter of 2000, the Company renewed its line of credit from
its bank, in the amount of $750,000, which now expires on June 8, 2001. 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. The Company was advised by its bank on August 9, 2000, that its
revolving line of credit has been increased to $2,500,000. There were no
borrowings under the working capital or equipment lines of credit as of June 30,
2000 or September 30, 1999. The Company believes that existing cash, credit
available under the credit lines, and cash generated from operations, 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.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: None
b. Reports on Form 8-K: None
<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: October 18, 2000 /s/ John Thornton
--------------------------------------
John Thornton, Chairman, President and
Chief Executive Officer
