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Stockholders' Equity
 9 Months Ended
Jun. 30, 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
June 30,		      Nine Months Ended
June 30,		  
     2014      2013      2014      2013  

Sales and marketing

    $ 221,323       $ 102,672       $ 657,014       $ 277,976   

Research and development

      201,690         161,431         579,517         447,491   

General and administrative

      499,835         421,530         1,431,438         1,320,300   
  

 

 

     

 

 

     

 

 

     

 

 

  

Stock-based compensation expense included in operating expenses

    $ 922,848       $ 685,633       $ 2,667,969       $ 2,045,767   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

No stock options were granted to employees during the nine months ended June 30, 2014. The fair value calculations for stock-based compensation awards to employees for the nine months ended June 30, 2013 were based on the following assumptions:

 

     Nine Months Ended
June 30, 2013

Risk-free interest rate

    0.18 – 0.84%

Expected life (years)

    5.05

Expected volatility

    169%

Expected dividends

    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, 2014, the Company had $7,211,726 of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted-average period of approximately 2.3 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 June 30, 2014, (i) stock options to purchase 1,109,961 shares of the Company’s common stock and 647,292 RSUs were outstanding under the 2012 Plan, and 2,423,806 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 1,506,160 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 June 30, 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 nine months ended June 30, 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

      (105,620 )    $ 4.33      
  

 

 

       

Outstanding, June 30, 2014

      2,616,121      $ 4.19         6.34   
  

 

 

       

 

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 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         5.50       $ 0.73         336,762       $ 0.73         —     

$0.80 to $1.10

      350,000         1.64       $ 0.93         350,000       $ 0.93         —     

$2.34 to $2.60

      757,057         6.95       $ 2.51         455,700       $ 2.54         301,357   

$3.33 to $9.97

      873,178         7.63       $ 5.93         447,973       $ 6.64         425,205   

$11.05 to $11.68

      299,124         7.50       $ 11.08         185,682       $ 11.08         113,442   
  

 

 

           

 

 

        

 

 

  
     2,616,121         6.34       $ 4.19         1,776,117       $ 3.81         840,004   
  

 

 

           

 

 

        

 

 

  

The Company recognized $542,929 and $1,662,245, respectively, in stock-based compensation expense related to outstanding stock options in the three and nine months ended June 30, 2014. During the three and nine months ended June 30, 2013, the Company recognized $494,608 and $1,478,226, respectively, in stock-based compensation expense related to outstanding stock options. As of June 30, 2014, the Company had $3,265,815 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 2.0 years. 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 2.8 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 nine months ended June 30, 2014 and 2013 was $468,489 and $3,832,374, respectively. As of June 30, 2014, there were 2,616,121 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 6.3 years, $4.19 and $2,331,604, 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 7.4 years, $4.01 and $7,282,518, respectively.

Restricted Stock Units

The following table summarizes RSU activity under the Company’s equity plans during the nine months ended June 30, 2014:

 

     Number of
Shares		     Weighted-
Average
Fair Market Value
Per Share		  

Outstanding, September 30, 2013

      692,504      $ 4.85   

Granted

      612,639      $ 4.86   

Settled

      (28,334 )    $ 8.96   

Cancelled

      (64,517 )    $ 4.66   
  

 

 

    

Outstanding, June 30, 2014

      1,212,292      $ 4.77   
  

 

 

    

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 $379,919 and $1,005,724, respectively, in stock-based compensation expense related to outstanding RSUs in the three and nine months ended June 30, 2014. 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. As of June 30, 2014, the Company had $3,945,911 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 3.1 years. 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 3.3 years.