<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>v011091_ex10-3.txt
<TEXT>

                               MITEK SYSTEMS, INC.
                               SECURITY AGREEMENT

To:   Laurus Master Fund, Ltd.
      c/o Ironshore Corporate Services, Ltd.
      P.O. Box 1234 G.T
      Queensgate House
      South Church Street
      Grand Cayman, Cayman Islands

Date: June  11, 2004

To Whom It May Concern:

         To secure the payment of all Obligations (as hereafter defined),  Mitek
Systems,  Inc., a Delaware  corporation  (the  "Assignor"),  hereby  assigns and
grants to Laurus  Master  Fund,  Ltd.,  Cayman  Islands  company,  a  continuing
security  interest  in all of the  following  property  now owned or at any time
hereafter  acquired by the Assignor,  or in which the Assignor now has or at any
time in the future may acquire any right, title or interest (the  "Collateral"):
all cash, cash  equivalents,  accounts,  deposit  accounts  (including,  without
limitation,  the Restricted  Account (the  "Restricted  Account")  maintained at
Commerce Bank (Account Name: Mitek Systems,  Inc.,  Account Number:  7915474816)
referred  to  in  the  Restricted  Account  Agreement),   accounts   receivable,
inventory,   equipment,  goods,  documents,   instruments  (including,   without
limitation,  promissory notes), contract rights, general intangibles (including,
without  limitation,  payment  intangibles  and an absolute  right to license on
terms no less  favorable than those  currently in effect among our  affiliates),
chattel paper, supporting obligations,  investment property (including,  without
limitation,  all  equity  interests  owned  by the  Assignor),  letter-of-credit
rights,  trademarks,  trademark  applications,   tradestyles,   patents,  patent
applications,  copyrights and copyright  applications  in which the Assignor now
has or  hereafter  may acquire any right,  title or  interest,  all proceeds and
products thereof (including, without limitation,  proceeds of insurance) and all
additions,  accessions and substitutions thereto or therefore.  In the event the
Assignor wishes to finance the acquisition of any hereafter  acquired  equipment
and have obtained a commitment from a financing source to finance such equipment
from an unrelated third party, Laurus agrees to release its security interest on
such  hereafter  acquired  equipment  so financed by such third party  financing
source.  Except as otherwise  defined herein,  all capitalized terms used herein
shall have the meaning  provided such terms the  Securities  Purchase  Agreement
referred to below.

         The term "Obligations" as used herein shall mean and include all debts,
liabilities and obligations  owing by the Assignor to Laurus arising under,  out
of, or in connection with: (i) that certain Securities  Purchase Agreement dated
as of the date hereof by and  between  the  Company and Laurus (the  "Securities
Purchase  Agreement")  and  (ii)  the  Related  Agreements  referred  to in  the

<PAGE>

Securities Purchase Agreement the Securities Purchase Agreement and each Related
Agreement as each may be amended,  modified,  restated or supplemented from time
to time,  are  collectively  referred  to  herein  as the  "Documents"),  or any
documents,  instruments or agreements relating to or executed in connection with
the Documents or any documents, instruments or agreements referred to therein or
otherwise, or any other indebtedness, obligations or liabilities of the Assignor
to Laurus,  whether  now  existing or  hereafter  arising,  direct or  indirect,
liquidated or unliquidated,  absolute or contingent,  due or not due and whether
under,  pursuant to or evidenced by a note, agreement,  guaranty,  instrument or
otherwise, in each case, irrespective of the genuineness,  validity,  regularity
or enforceability of such  Obligations,  or of any instrument  evidencing any of
the  Obligations or of any collateral  therefor or of the existence or extent of
such collateral, and irrespective of the allowability, allowance or disallowance
of any or all of the  Obligations  in  any  case  commenced  by or  against  the
Assignor  under Title 11, United  States Code,  including,  without  limitation,
obligations or indebtedness of the Assignor for  post-petition  interest,  fees,
costs and charges that would have accrued or been added to the  Obligations  but
for the commencement of such case.

         The Assignor hereby represents, warrants and covenants to Laurus that:

                  it is a corporation, partnership or limited liability company,
         as the case may be,  validly  existing,  in good standing and organized
         under the laws of the State of  Delaware , and it will  provide  Laurus
         thirty  (30)  days'  prior   written   notice  of  any  change  in  its
         jurisdiction of organization;

                  its  legal  name,   as  set  forth  in  its   Certificate   of
         Incorporation  (or  equivalent   organizational  document)  as  amended
         through the date  hereof,  is Mitek  Systems,  Inc. and it will provide
         Laurus  thirty  (30) days'  prior  written  notice of any change in its
         legal name;

                  its Internal  Revenue Service Employer  Identification  Number
         (if  applicable) is 87-0418827 , and it will provide Laurus thirty (30)
         days'  prior  written  notice  of  any  change  in  its  organizational
         identification number;

                  it is the lawful owner of the  Collateral  and it has the sole
         right  to  grant a  security  interest  therein  and  will  defend  the
         Collateral against all claims and demands of all persons and entities;

                  it will keep the Collateral  owned by it free and clear of all
         attachments,  levies, taxes, liens, security interests and encumbrances
         of every kind and  nature  ("Encumbrances"),  except  (i)  Encumbrances
         securing the Obligations and (ii) to the extent said  Encumbrance  does
         not secure  indebtedness  in excess of $50,000 and such  Encumbrance is
         removed or  otherwise  released  within  ten (10) days of the  creation
         thereof;

                  it will at its own cost and  expense  keep the  Collateral  in
         good state of repair  (ordinary  wear and tear  excepted)  and will not
         waste or  destroy  the same or any part  thereof  other  than  ordinary
         course discarding of items no longer used or useful in its business;

                  it will not  without  Laurus'  prior  written  consent,  sell,
         exchange,  lease or  otherwise  dispose of the  Collateral,  whether by
         sale,  lease or  otherwise,  except  for the sale of  inventory  in the
         ordinary  course of business and for the disposition or transfer in the
         ordinary  course of business  during any fiscal  year of  obsolete  and
         worn-out  equipment or equipment  no longer  necessary  for its ongoing
         needs,  having an aggregate  fair market value of not more than $25,000
         and only to the extent that:

                           THE  PROCEEDS  OF ANY  SUCH  DISPOSITION  ARE USED TO
                  ACQUIRE  REPLACEMENT  COLLATERAL  WHICH IS  SUBJECT TO LAURUS'
                  FIRST  PRIORITY  PERFECTED  SECURITY  INTEREST  OR ARE USED TO
                  REPAY OBLIGATIONS OR TO PAY GENERAL CORPORATE EXPENSES; AND

<PAGE>

                           FOLLOWING THE OCCURRENCE OF AN EVENT OF DEFAULT WHICH
                  CONTINUES  TO EXIST  THE  PROCEEDS  OF WHICH ARE  REMITTED  TO
                  LAURUS TO BE HELD AS CASH COLLATERAL FOR THE OBLIGATIONS;

                  it will insure the  Collateral in Laurus' name against loss or
         damage by fire, theft,  burglary,  pilferage,  loss in transit and such
         other hazards as Laurus shall specify in amounts and under  policies by
         insurers acceptable to Laurus and all premiums thereon shall be paid by
         the  Assignor and the  policies  delivered  to Laurus.  If the Assignor
         fails to do so, Laurus may procure such  insurance and the cost thereof
         shall be  promptly  reimbursed  by the  Assignor  and shall  constitute
         Obligations;

                  it  will at all  reasonable  times  allow  Laurus  or  Laurus'
         representatives  free  access  to and the  right of  inspection  of the
         Collateral;

                  the Assignor hereby indemnifies and saves Laurus harmless from
         all loss, costs, damage, liability and/or expense, including reasonable
         attorneys'  fees, that Laurus may sustain or incur to enforce  payment,
         performance  or  fulfillment  of any of the  Obligations  and/or in the
         enforcement of this Security Agreement or in the prosecution or defense
         of any action or  proceeding  either  against  the  Assignor  or Laurus
         concerning  any  matter  growing  out  of or in  connection  with  this
         Security  Agreement,  and/or any of the  Obligations  and/or any of the
         Collateral  except to the extent caused by Laurus' own gross negligence
         or  willful   misconduct   (as  determined  by  a  court  of  competent
         jurisdiction in a final and nonappealable decision).

         The  occurrence  of any of the  following  events or  conditions  shall
constitute an "Event of Default" under this Security Agreement:

                  any covenant,  warranty,  representation  or statement made or
         furnished  to Laurus by the  Assignor or on the  Assignor's  behalf was
         false in any material respect when made or furnished, and if subject to
         cure, shall not be cured for a period of fifteen (15) days;

                  the loss,  theft,  substantial  damage,  destruction,  sale or
         encumbrance  to or of any of the  Collateral or the making of any levy,
         seizure or attachment thereof or thereon except to the extent:

                           SUCH LOSS IS COVERED BY INSURANCE  PROCEEDS WHICH ARE
                  USED TO REPLACE THE ITEM OR REPAY LAURUS; OR

                           SAID  LEVY,  SEIZURE  OR  ATTACHMENT  DOES NOT SECURE
                  INDEBTEDNESS  IN EXCESS OF $100,000 AND SUCH LEVY,  SEIZURE OR
                  ATTACHMENT HAS NOT BEEN REMOVED OR OTHERWISE  RELEASED  WITHIN
                  TEN (10) DAYS OF THE CREATION OR THE ASSERTION THEREOF;

                  the  Assignor  shall  become   insolvent,   cease  operations,
         dissolve,  terminate our business existence, make an assignment for the
         benefit of creditors,  suffer the  appointment of a receiver,  trustee,
         liquidator or custodian of all or any part of the Assignor's property;

                  any  proceedings  under any bankruptcy or insolvency law shall
         be commenced  by or against the  Assignor and if commenced  against the
         Assignor shall not be dismissed within thirty (30) days;

                  the  Assignor  shall  repudiate,  purport to revoke or fail to
         perform  any of its  obligations  under  the  Note  (after  passage  of
         applicable cure period, if any); or

                  an Event of Default  (or  similar  term)  shall have  occurred
         under and as defined in the Securities  Purchase Agreement or any other
         Document.

         Upon the occurrence of any Event of Default and at any time thereafter,
Laurus may declare all Obligations  immediately due and payable and Laurus shall
have the remedies of a secured party provided in the Uniform  Commercial Code as
in effect in the State of New York,  this Master  Security  Agreement  and other

<PAGE>

applicable  law.  Upon the  occurrence  of any Event of Default  and at any time
thereafter,  Laurus will have the right to take possession of the Collateral and
to  maintain  such  possession  on the  Assignor's  premises  or to  remove  the
Collateral or any part thereof to such other premises as Laurus may desire. Upon
Laurus'  request,  the  Assignor  shall  assemble  the  Collateral  and  make it
available to Laurus at a place  designated  by Laurus.  If any  notification  of
intended disposition of any Collateral is required by law, such notification, if
mailed,  shall be deemed  properly and  reasonably  given if mailed at least ten
(10) days before such  disposition,  postage prepaid,  addressed to the Assignor
either at the  Assignor's  address  shown herein or at any address  appearing on
Laurus' records for the Assignor.  Any proceeds of any disposition of any of the
Collateral  shall be  applied  by  Laurus  to the  payment  of all  expenses  in
connection with the sale of the Collateral, including reasonable attorneys' fees
and other  legal  expenses  and  disbursements  and the  reasonable  expense  of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Laurus toward the payment of the  Obligations in
such order of application as Laurus may elect,  and the Assignor shall be liable
for any  deficiency.  For the avoidance of doubt,  following the  occurrence and
during the  continuance of an Event of Default,  Laurus shall have the immediate
right to withdraw  any and all monies  contained in the  Restricted  Account and
apply same to the repayment of the  Obligations (in such order of application as
Laurus may elect).

         If the Assignor  defaults in the  performance  or fulfillment of any of
the terms,  conditions,  promises,  covenants,  provisions  or warranties on the
Assignor's  part to be performed or fulfilled under or pursuant to this Security
Agreement,  Laurus may, at its option without  waiving its right to enforce this
Security Agreement according to its terms, immediately or at any time thereafter
and  without  notice to the  Assignor,  perform or fulfill the same or cause the
performance or  fulfillment  of the same for the  Assignor's  account and at the
Assignor's  cost  and  expense,  and the  cost and  expense  thereof  (including
reasonable  attorneys'  fees)  shall be added to the  Obligations  and  shall be
payable on demand with  interest  thereon at the highest rate  permitted by law,
or, at Laurus' option, debited by Laurus from the Restricted Account referred to
in the Restricted Account Agreement.

         The Assignor hereby appoints Laurus, any of Laurus' officers, employees
or any other person or entity whom Laurus may  designate as our  attorney,  with
power to  execute  such  documents  in our  behalf  and to  supply  any  omitted
information and correct patent errors in any documents  executed by the Assignor
or on our behalf; to file financing statements against the Assignor covering the
Collateral (and, in connection with the filing of any such financing statements,
describe the  Collateral as "all assets and all personal  property,  whether now
owned  and/or  hereafter  acquired"  (or  any  substantially  similar  variation
thereof));  to sign the Assignor's name on public  records;  and to do all other
things Laurus deems necessary to carry out this Security Agreement. The Assignor
hereby  ratifies and approve all acts of the attorney and neither Laurus nor the
attorney  will be liable for any acts of  commission  or  omission,  nor for any
error of judgment or mistake of fact or law other than their gross negligence or
willful  misconduct  (as  determined by a court of competent  jurisdiction  in a
final and non-appealable  decision).  This power being coupled with an interest,
is irrevocable so long as any Obligations remains unpaid.

         No delay or failure on Laurus' part in exercising any right,  privilege
or option  hereunder  shall  operate as a waiver of such or of any other  right,
privilege,  remedy or option,  and no waiver  whatever  shall be valid unless in

<PAGE>

writing,  signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default  shall  operate as a waiver of any other default
or of  the  same  default  on a  future  occasion.  Laurus'  books  and  records
containing  entries  with  respect to the  Obligations  shall be  admissible  in
evidence in any action or proceeding, shall be binding upon the Assignor for the
purpose of establishing  the items therein set forth and shall  constitute prima
facie proof  thereof.  Laurus shall have the right to enforce any one or more of
the remedies available to Laurus, successively, alternately or concurrently. The
Assignor agrees to join with Laurus in executing  financing  statements or other
instruments  to the  extent  required  by the  Uniform  Commercial  Code in form
satisfactory  to Laurus and in executing such other  documents or instruments as
may be required or deemed  necessary  by Laurus for  purposes  of  affecting  or
continuing Laurus' security interest in the Collateral.

         This  Security   Agreement  shall  be  governed  by  and  construed  in
accordance  with the laws of the  State of New  York and  cannot  be  terminated
orally. All of the rights, remedies,  options, privileges and elections given to
Laurus  hereunder shall inure to the benefit of Laurus'  successors and assigns.
The term "Laurus" as herein used shall include Laurus, any parent of Laurus, any
of Laurus'  subsidiaries and any co-subsidiaries of Laurus' parent,  whether now
existing or  hereafter  created or acquired,  and all of the terms,  conditions,
promises, covenants,  provisions and warranties of this Security Agreement shall
inure  to  the   benefit  of  each  of  the   foregoing,   and  shall  bind  the
representatives,  successors and assigns of the Assignor. Each of Laurus and the
Assignor  hereby  (a)  waives  any and all right to trial by jury in  litigation
relating to this Security Agreement and the transactions contemplated hereby and
the Assignor hereby agrees not to assert any  counterclaim  in such  litigation,
(b) submit to the nonexclusive  jurisdiction of any New York State court sitting
in the borough of  Manhattan,  the city of New York and (c) waive any  objection
the Assignor or Laurus may have as to the bringing or maintaining of such action
with any such court.

         All notices from Laurus to the Assignor shall be sufficiently  given if
mailed or delivered  to the Assignor at its address set forth in the  Securities
Purchase Agreement and the Security Agreement.

                                          Very truly yours,

                                          MITEK SYSTEMS, INC.

                                          By:
                                             ----------------------------------
                                          Name:
                                               --------------------------------
                                          Title:
                                                -------------------------------

ACKNOWLEDGED:

LAURUS MASTER FUND, LTD.

By:
   ----------------------------------
Name:
     --------------------------------
Title:
      -------------------------------


</TEXT>
</DOCUMENT>
