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Stockholders' Equity
 9 Months Ended
Jun. 30, 2013
Equity [Abstract]  
Stockholders' Equity

4. STOCKHOLDERS’ EQUITY

Underwritten Public Offering

On June 25, 2013, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with William Blair & Company, L.L.C (the “Underwriter”), pursuant to which the Company agreed to offer and sell 2,857,142 shares of its common stock at a price of $5.25 per share in a public offering (the “Offering”). The Offering closed on June 28, 2013 and the Company received $13,877,447 in net proceeds, after deducting underwriting discounts and commissions and other offering expenses of $1,122,549. Under the terms of the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase an additional 428,571 shares of the Company’s common stock to cover overallotments. The Underwriter exercised its overallotment option on June 28, 2013 and the closing of the sale of shares of Company common stock pursuant to such option occurred on July 3, 2013, resulting in approximately $2,100,000 in additional net proceeds to the Company.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense related to stock options and RSUs, which was allocated as follows:

 

     Three Months Ended
June 30,		      Nine Months Ended
June 30,		  
     2013      2012      2013      2012  

Sales and marketing

    $ 102,672       $ 214,140       $ 277,976       $ 394,881   

Research and development

      161,431         187,132         447,491         470,958   

General and administrative

      421,530         429,714         1,320,300         1,118,031   
  

 

 

     

 

 

     

 

 

     

 

 

  

Stock-based compensation expense included in operating expenses

    $ 685,633       $ 830,986       $ 2,045,767       $ 1,983,870   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

The fair value calculations for stock-based compensation awards to employees for the nine months ended June 30, 2013 and 2012 were based on the following assumptions:

 

     Nine Months Ended
June 30, 2013		    Nine Months Ended
June 30, 2012

Risk-free interest rate

    0.18% - 0.84%    0.35% - 1.06%

Expected life (years)

    5.05    4.79

Expected volatility

    169%    90%

Expected dividends

    None    None

The expected life of options granted is derived using assumed exercise rates based on historical exercise patterns and vesting terms and represents the period of time that options granted are expected to be outstanding. Expected stock price volatility is based upon implied volatility and other factors, including historical volatility. After assessing all available information on either historical volatility, implied volatility, or both, the Company concluded that a combination of both historical and implied volatility provides the best estimate of expected volatility.

As of June 30, 2013, the Company had $7,256,141 of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted average period of approximately 3.0 years.

Stock Options

The following table summarizes stock option activity under the Company’s stock option plans for the nine months ended June 30, 2013:

 

     Number of
Shares		     Weighted Average
Exercise Price		      Weighted Average
Remaining
Contractual Term
(in Years)		  

Outstanding, September 30, 2012

      3,512,286      $ 3.39         6.46   

Granted

      489,063      $ 2.96      

Exercised

      (1,103,582 )    $ 0.90      

Cancelled

      (227,024 )    $ 7.25      
  

 

 

       

Outstanding, June 30, 2013

      2,670,743      $ 4.01         7.40   
  

 

 

       

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2013:

 

Range of Exercise Prices

    Number of
Options
Outstanding		      Weighted
Average
Remaining
Contractual Life
(in Years)		      Weighted
Average
Exercise Price		      Number of
Exercisable
Options		      Weighted
Average
Exercise Price of
Exercisable
Options		      Number of
Unvested
Options		  

$0.09 to $0.79

      405,841         6.52       $ 0.74         405,841       $ 0.74         —     

$0.80 to $1.95

      360,695         2.68       $ 0.94         360,695       $ 0.94         —     

$2.34 to $2.60

      803,252         8.08       $ 2.51         263,234       $ 2.60         540,018   

$3.33 to $9.97

      792,997         8.81       $ 5.84         188,657       $ 7.96         604,340   

$11.05 to $11.68

      307,958         8.63       $ 11.08         110,252       $ 11.08         197,706   
  

 

 

           

 

 

        

 

 

  
     2,670,743         7.40       $ 4.01         1,328,679       $ 3.04         1,342,064   
  

 

 

           

 

 

        

 

 

  

The Company recognized $494,608 and $1,478,226, respectively, in stock-based compensation expense related to outstanding stock options in the three and nine months ended June 30, 2013. During the three and nine months ended June 30, 2012, the Company recognized $662,148 and $1,600,317, respectively, in stock-based compensation related to outstanding stock options. As of June 30, 2013, the Company had $5,006,752 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted average period of approximately 2.82 years.

Aggregate intrinsic value represents the value of the Company’s closing stock price on the last trading day of the fiscal period in excess of the weighted average exercise price, multiplied by the number of options outstanding or exercisable. The total intrinsic value of options exercised during the nine months ended June 30, 2013 and 2012 was $3,832,374 and $14,028,720, respectively. As of June 30, 2013, there were 2,670,743 options outstanding with a weighted average remaining contractual term, weighted average exercise price and aggregate intrinsic value of 7.40 years, $4.01 and $7,282,518, respectively. As of June 30, 2012, there were 3,600,865 options outstanding with a weighted average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 6.68 years, $3.42 and $6,732,813, respectively.

 

2012 Incentive Plan

In January 2012, the Company’s board of directors adopted the Mitek Systems, Inc. 2012 Incentive Plan (the “2012 Plan”), upon the recommendation of the compensation committee of the board of directors. The total number of shares of the Company’s common stock reserved for issuance under the 2012 Plan is 2,000,000 shares, plus that number of shares of the Company’s common stock that would otherwise return to the available pool of unissued shares reserved for awards under the Company’s 1999 Stock Option Plan, 2000 Stock Option Plan, 2002 Stock Option Plan, 2006 Stock Option Plan and 2010 Stock Option Plan (collectively, the “Prior Plans”). There were no awards granted under the Prior Plans after the approval of the 2012 Plan by the Company’s stockholders on February 22, 2012. Stock options granted under the Prior Plans that were outstanding at such date remain in effect until such options are exercised or expire.

The 2012 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, RSUs and cash awards. Stock options granted under the 2012 Plan may be either options intended to constitute incentive stock options or nonqualified stock options, in each case as determined by the compensation committee of the board of directors in accordance with the terms of the 2012 Plan. As of June 30, 2013, stock options to purchase 1,058,521 shares of the Company’s common stock and 196,254 RSUs were outstanding under the 2012 Plan, and 970,529 shares of the Company’s common stock were reserved for future grants.

The following table summarizes the number of stock options outstanding under the Prior Plans as of June 30, 2013:

 

2000 Stock Option Plan

      215,412   

2002 Stock Option Plan

      226,100   

2006 Stock Option Plan

      49,000   

2010 Stock Option Plan

      1,121,710   
  

 

 

  

Total stock options outstanding under the Prior Plans

      1,612,222   
  

 

 

  

In May 2003, the President and Chief Executive Officer of the Company was granted an option to purchase up to 400,000 shares of the Company’s common stock in connection with his appointment as President and Chief Executive Officer. This grant was made without stockholder approval as an inducement award pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules. The Company filed a registration statement on Form S-8 with the SEC registering the shares subject to the grant on December 15, 2011.

Restricted Stock Units

The following table summarizes RSU activity under the Company’s equity plans during the nine months ended June 30, 2013:

 

     Number of
Shares		     Weighted Average
Fair Market Value
Per Share		  

Outstanding, September 30, 2012

      515,834      $ 6.30   

Granted

      215,000      $ 2.69   

Settled

      (32,079 )    $ 9.66   

Cancelled

      (27,501 )    $ 11.05   
  

 

 

    

Outstanding, June 30, 2013

      671,254      $ 4.79   
  

 

 

    

The cost of the RSUs is determined using the fair value of the Company’s common stock on the award date, and the compensation expense is recognized ratably over the vesting period. The Company recognized $191,025 and $567,541, respectively, in stock-based compensation expense related to the outstanding RSUs in the three and nine months ended June 30, 2013. The Company recognized $168,838 and $383,553, respectively, in stock-based compensation related to outstanding RSUs in the three and nine months ended June 30, 2012. As of June 30, 2013, the Company had $2,249,388 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.27 years.