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Stockholders' Equity
 3 Months Ended
Dec. 31, 2013
Equity [Abstract]  
Stockholders' Equity

3. STOCKHOLDERS’ EQUITY

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
December 31,		  
     2013      2012  

Sales and marketing

    $ 201,524       $ 76,653   

Research and development

      184,888         123,578   

General and administrative

      442,659         456,303   
  

 

 

     

 

 

  

Stock-based compensation expense included in operating expenses

    $ 829,071       $ 656,534   
  

 

 

     

 

 

  

The fair value calculations for stock-based compensation awards were based on the following assumptions:

 

    

Three months ended

December 31,
     2013   2012

Risk-free interest rate

    0.12% - 0.63%   0.18% - 0.71%

Expected life (years)

    2.52   4.91

Expected volatility

    96%   165%

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 December 31, 2013, the Company had $9,381,314 of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted-average period of approximately 2.9 years.

 

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 Company’s 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 its 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”). As of December 31, 2013, (i) stock options to purchase 1,208,750 shares of the Company’s common stock and 614,513 RSUs were outstanding under the 2012 Plan, and 375,507 shares of the Company’s common stock were reserved for future grants under the 2012 Plan and (ii) stock options to purchase an aggregate of 1,545,280 shares of the Company’s common stock were outstanding under the Prior Plans.

Stock Options

The following table summarizes stock option activity under the Company’s equity plans during the three months ended December 31, 2013:

 

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

Outstanding, September 30, 2013

      2,824,964      $ 4.09         7.29   

Granted

      —          —        

Exercised

      (67,226 )    $ 1.03      

Cancelled

      (3,708 )    $ 4.44      
  

 

 

       

Outstanding, December 31, 2013

      2,754,030      $ 4.16         7.05   
  

 

 

       

The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 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

      353,436         6.00       $ 0.73         353,436       $ 0.73         —     

$0.80 to $1.95

      355,695         2.11       $ 0.94         355,695       $ 0.94         —     

$2.34 to $2.60

      789,624         7.58       $ 2.51         382,549       $ 2.55         407,075   

$3.33 to $9.97

      951,586         8.51       $ 5.81         334,625       $ 6.86         616,961   

$11.05 to $11.68

      303,689         8.13       $ 11.08         146,881       $ 11.08         156,808   
  

 

 

           

 

 

        

 

 

  
     2,754,030         7.05       $ 4.16         1,573,186       $ 3.49         1,180,844   
  

 

 

           

 

 

        

 

 

  

The Company recognized $564,322 and $480,376 in stock-based compensation expense related to outstanding stock options in the three months ended December 31, 2013 and 2012, respectively. As of December 31, 2013, the Company had $4,775,401 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 2.5 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 three months ended December 31, 2013 and 2012 was $336,340 and $84,510, respectively. As of December 31, 2013, there were 2,754,030 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 7.05 years, $4.16 and $7,313,083, respectively. As of December 31, 2012, there were 3,780,471 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 6.5 years, $3.23 and $4,862,479, respectively.

 

Restricted Stock Units

The following table summarizes RSU activity under the Company’s equity plans during the three months ended December 31, 2013:

 

     Number of
Shares		     Weighted-Average
Fair Market Value
Per Share		  

Outstanding, September 30, 2013

      692,504      $ 4.85   

Granted

      495,139      $ 5.25   

Settled

      (7,500 )    $ 3.17   

Cancelled

      (630 )    $ 5.25   
  

 

 

    

Outstanding, December 31, 2013

      1,179,513      $ 5.03   
  

 

 

    

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 $264,749 and $176,158 in stock-based compensation expense related to the outstanding RSUs in the three months ended December 31, 2013 and 2012, respectively. As of December 31, 2013, the Company had $4,605,913 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.5 years. As of December 31, 2012, the Company had $2,815,737 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.4 years.