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Stockholders' Equity
 6 Months Ended
Mar. 31, 2014
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
March 31,		      Six Months Ended
March 31,		  
     2014      2013      2014      2013  

Sales and marketing

    $ 234,167       $ 98,651       $ 435,691       $ 175,303   

Research and development

      192,939         162,481         377,827         286,060   

General and administrative

      488,944         442,467         931,603         898,770   
  

 

 

     

 

 

     

 

 

     

 

 

  

Stock-based compensation expense included in operating expenses

    $ 916,050       $ 703,599       $ 1,745,121       $ 1,360,133   
  

 

 

     

 

 

     

 

 

     

 

 

  

The fair value calculations for stock-based compensation awards to employees for the six months ended March 31, 2014 and 2013 were based on the following assumptions:

 

     Six Months Ended
March 31, 2014		     Six Months Ended
March 31, 2013		  

Risk-free interest rate

      0.12 – 0.63 %      0.18 – 0.81 % 

Expected life (years)

      2.52        4.98   

Expected volatility

      96 %      167 % 

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 March 31, 2014, the Company had $8,398,419 of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted-average period of approximately 2.7 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”). At the Company’s annual meeting of stockholders held on February 19, 2014, the Company’s stockholders approved an amendment to the 2012 Plan to increase the number of shares of the Company’s common stock available for future grant under the 2012 Plan from 2,000,000 to 4,000,000. As of March 31, 2014, (i) stock options to purchase 1,196,260 shares of the Company’s common stock and 590,472 RSUs were outstanding under the 2012 Plan, and 2,388,684 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 1,511,803 shares of the Company’s common stock were outstanding under the Prior Plans.

Director Restricted Stock Unit Plan

In January 2011, the Company’s board of directors adopted the Mitek Systems, Inc. Director Restricted Stock Unit Plan, as amended and restated (the “Director Plan”). The total number of shares of the Company’s common stock reserved for issuance under the Director Plan is 1,000,000 shares. Under the Director Plan, RSUs may be granted to both employee and non-employee members of the board of directors of the Company. As of March 31, 2014, (i) 565,000 RSUs were outstanding under the Director Plan and (ii) 435,000 shares of the Company’s common stock were reserved for future grants under the Director Plan.

Stock Options

The following table summarizes stock option activity under the Company’s equity plans during the six months ended March 31, 2014:

 

     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

      (103,223 )    $ 1.22      

Cancelled

      (13,678 )    $ 5.33      
  

 

 

       

Outstanding, March 31, 2014

      2,708,063      $ 4.19         6.82   
  

 

 

       

The following table summarizes significant ranges of outstanding and exercisable options as of March 31, 2014:

 

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

      336,762         5.75       $ 0.73         336,762       $ 0.73         —     

$0.80 to $1.95

      350,000         1.89       $ 0.93         350,000       $ 0.93         —     

$2.34 to $2.60

      775,684         7.33       $ 2.51         412,717       $ 2.55         362,967   

$3.33 to $9.97

      942,367         8.26       $ 5.81         391,383       $ 6.72         550,984   

$11.05 to $11.68

      303,250         7.88       $ 11.08         166,225       $ 11.08         137,025   
  

 

 

           

 

 

        

 

 

  
     2,708,063         6.82       $ 4.19         1,657,087       $ 3.68         1,050,976   
  

 

 

           

 

 

        

 

 

  

 

The Company recognized $554,994 and $1,119,316, respectively, in stock-based compensation expense related to outstanding stock options in the three and six months ended March 31, 2014. During the three and six months ended March 31, 2013, the Company recognized $503,242 and $983,618, respectively, in stock-based compensation expense related to outstanding stock options. As of March 31, 2014, the Company had $4,170,399 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 2.3 years. As of March 31, 2013, the Company had $5,358,264 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 3.0 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 and exercisable. The total intrinsic value of options exercised during the six months ended March 31, 2014 and 2013 was $468,462 and $3,769,654, respectively. As of March 31, 2014, there were 2,708,063 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 6.8 years, $4.19 and $3,176,655, respectively. As of March 31, 2013, there were 2,672,758 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 7.6 years, $4.03 and $5,087,198, respectively.

Restricted Stock Units

The following table summarizes RSU activity under the Company’s equity plans during the six months ended March 31, 2014:

 

     Number of
Shares		     Weighted-Average
Fair Market Value
Per Share		  

Outstanding, September 30, 2013

      692,504      $ 4.85   

Granted

      495,139      $ 5.25   

Settled

      (28,334 )    $ 8.96   

Cancelled

      (3,837 )    $ 5.25   
  

 

 

    

Outstanding, March 31, 2014

      1,155,472      $ 4.92   
  

 

 

    

The cost of 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 $361,056 and $625,805, respectively, in stock-based compensation expense related to outstanding RSUs in the three and six months ended March 31, 2014. The Company recognized $200,357 and $376,515, respectively, in stock-based compensation expense related to outstanding RSUs in the three and six months ended March 31, 2013. As of March 31, 2014, the Company had $4,228,020 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.3 years. As of March 31, 2013, the Company had $2,468,039 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.5 years.