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Restatement | 6 Months Ended
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Mar. 31, 2022
Accounting Changes and Error Corrections [Abstract] |
RESTATEMENT | 2. RESTATEMENT The Company concluded it should restate its previously issued financial statements by amending its Quarterly Report on Form 10- Q for the quarterly period ended March 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on May 9, 2022, to record certain adjustments associated with its acquisition of HooYu Ltd (the “HooYu Acquisition”). The Company previously did not accrue for approximately $0.7 million of representations and warranty insurance, which should have been accrued for and fully expensed upon the effective date of the HooYu Acquisition, which was March 23, 2022. The Company also did not accrue for and expense $0.6 million of stamp duty tax related to the HooYu Acquisition during the quarterly period ended March 31, 2022. These two additional expenses during the quarter ended March 31, 2022 have a combined tax benefit of $0.4 million, which offsets these expenses and increases the Company’s deferred income tax asset by the same amount. Lastly, the Company incorrectly calculated the acquired deferred income tax liability and did not separately record $0.9 million of the acquired deferred income tax asset balance, which when netted with related deferred taxes resulted in an overstatement of deferred income tax liabilities by $1.4 million, which was previously improperly included in goodwill. In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form 10-Q for the quarterly period ended March 31, 2022 (the “Affected Quarterly Period”). Therefore, the Company, in consultation with the Audit Committee of the Company’s Board of Directors, concluded that the Affected Quarterly Period should be restated to present the identified adjustments discussed above. As such, the Company is reporting these restatements to the period in this Form 10-Q/A. The impact of the restatement on the Company’s financial statements is reflected in the following tables (in thousands, except share and per share amounts): MITEK SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (amounts in thousands except share data)
| As of March 31, 2022
| As Previously Reported |  | Total Adjustments | As Restated
ASSETS |  |  |  |
Current assets: |  |  |  |
Cash and cash equivalents | $ | 23,984 |  |  | $ | — |  | $ | 23,984 |
Short-term investments | 37,910 |  |  | — |  | 37,910 |
Accounts receivable, net | 23,858 |  |  | — |  | 23,858 |
Contract assets | 4,503 |  |  | — |  | 4,503 |
Prepaid expenses | 2,409 |  |  | — |  | 2,409 |
Other current assets | 1,849 |  |  | — |  | 1,849 |
Total current assets | 94,513 |  |  | — |  | 94,513 |
Long-term investments | 31,493 |  |  | — |  | 31,493 |
Property and equipment, net | 3,938 |  |  | — |  | 3,938 |
Right-of-use assets | 6,098 |  |  | — |  | 6,098 |
Intangible assets, net | 96,364 |  |  | — |  | 96,364 |
Goodwill | 136,889 |  |  | (1,370) |  | 135,519 |
Deferred income tax assets | 10,572 |  |  | 431 |  | 11,003 |
Other non-current assets | 5,292 |  |  | — |  | 5,292 |
Total assets | $ | 385,159 |  |  | $ | (939) |  | $ | 384,220 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |
Current liabilities: |  |  |  |
Accounts payable | $ | 5,359 |  |  | $ | 1,329 |  | $ | 6,688 |
Accrued payroll and related taxes | 8,271 |  |  | — |  | 8,271 |
Deferred revenue, current portion | 9,700 |  |  | — |  | 9,700 |
Lease liabilities, current portion | 1,944 |  |  | — |  | 1,944 |
Acquisition-related contingent consideration | 10,790 |  |  | — |  | 10,790 |
Other current liabilities | 3,469 |  |  | — |  | 3,469 |
Total current liabilities | 39,533 |  |  | 1,329 |  | 40,862 |
Convertible senior notes | 124,370 |  |  | — |  | 124,370 |
Deferred revenue, non-current portion | 1,053 |  |  | — |  | 1,053 |
Lease liabilities, non-current portion | 5,485 |  |  | — |  | 5,485 |
Deferred income tax liabilities | 22,100 |  |  | (1,370) |  | 20,730 |
Other non-current liabilities | 6,250 |  |  | — |  | 6,250 |
Total liabilities | 198,791 |  |  | (41) |  | 198,750 |
Stockholders’ equity: |  |  |  |
Preferred stock, $0.001 par value, 1,000,000 shares authorized, none issued and outstanding | — |  |  | — |  | — |
Common stock, $0.001 par value, 120,000,000 and 60,000,000 shares authorized, 44,344,361 and 44,168,745 issued and outstanding, as of March 31, 2022 and September 30, 2021, respectively | 44 |  |  | — |  | 44 |
Additional paid-in capital | 207,491 |  |  | — |  | 207,491 |
Accumulated other comprehensive loss | (5,170) |  |  | — |  | (5,170) |
Accumulated deficit | (15,997) |  |  | (898) |  | (16,895) |
Treasury stock, at cost, no shares and 7,773 shares as of March 31, 2022 and September 30, 2021, respectively | — |  |  | — |  | — |
Total stockholders’ equity | 186,368 |  |  | (898) |  | 185,470 |
Total liabilities and stockholders’ equity | $ | 385,159 |  |  | $ | (939) |  | $ | 384,220 |
MITEK SYSTEMS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) (amounts in thousands except per share data)
| Three Months Ended March 31, 2022
| As Previously Reported |  | Total Adjustments |  | As Restated
Revenue |  |  |  |  |
Software and hardware | $ | 19,280 |  |  | $ | — |  |  | $ | 19,280
Services and other | 15,434 |  |  | — |  |  | 15,434
Total revenue | 34,714 |  |  | — |  |  | 34,714
Operating costs and expenses |  |  |  |  |
Cost of revenue—software and hardware | 310 |  |  | — |  |  | 310
Cost of revenue—services and other | 3,000 |  |  | — |  |  | 3,000
Selling and marketing | 9,206 |  |  | — |  |  | 9,206
Research and development | 8,236 |  |  | — |  |  | 8,236
General and administrative | 6,073 |  |  | — |  |  | 6,073
Acquisition-related costs and expenses | 3,056 |  |  | 1,329 |  |  | 4,385
Total operating costs and expenses | 29,881 |  |  | 1,329 |  |  | 31,210
Operating income | 4,833 |  |  | (1,329) |  |  | 3,504
Interest expense | 2,040 |  |  | — |  |  | 2,040
Other income, net | (231) |  |  | — |  |  | (231)
Income before income taxes | 2,562 |  |  | (1,329) |  |  | 1,233
Income tax provision | (651) |  |  | 431 |  |  | (220)
Net income | $ | 1,911 |  |  | $ | (898) |  |  | $ | 1,013
Net income per share—basic | $ | 0.04 |  |  | $ | (0.02) |  |  | $ | 0.02
Net income per share—diluted | $ | 0.04 |  |  | $ | (0.02) |  |  | $ | 0.02
Shares used in calculating net income per share—basic | 44,775 |  |  | — |  |  | 44,775
Shares used in calculating net income per share—diluted | 46,097 |  |  | — |  |  | 46,097
Comprehensive loss |  |  |  |  |
Net income | $ | 1,911 |  | $ | (898) |  | $ | 1,013
Foreign currency translation adjustment | (1,862) |  | — |  | (1,862)
Unrealized loss on investments | (828) |  | — |  | (828)
Comprehensive loss | $ | (779) |  | $ | (898) |  | $ | (1,677)
| Six Months Ended March 31, 2022
| As Previously Reported |  | Total Adjustments |  | As Restated
Revenue |  |  |  |  |
Software and hardware | $ | 34,725 |  |  | $ | — |  |  | $ | 34,725
Services and other | 32,461 |  |  | — |  |  | 32,461
Total revenue | 67,186 |  |  | — |  |  | 67,186
Operating costs and expenses |  |  |  |  |
Cost of revenue—software and hardware | 688 |  |  | — |  |  | 688
Cost of revenue—services and other | 5,978 |  |  | — |  |  | 5,978
Selling and marketing | 17,644 |  |  | — |  |  | 17,644
Research and development | 15,842 |  |  | — |  |  | 15,842
General and administrative | 12,037 |  |  | — |  |  | 12,037
Acquisition-related costs and expenses | 5,335 |  |  | 1,329 |  |  | 6,664
Total operating costs and expenses | 57,524 |  |  | 1,329 |  |  | 58,853
Operating income | 9,662 |  |  | (1,329) |  |  | 8,333
Interest expense | 4,048 |  |  | — |  |  | 4,048 |
Other income, net | (96) |  |  | — |  |  | (96)
Income before income taxes | 5,518 |  |  | (1,329) |  |  | 4,189
Income tax provision | (483) |  |  | 431 |  |  | (52)
Net income | $ | 5,035 |  |  | $ | (898) |  |  | $ | 4,137
Net income per share—basic | $ | 0.11 |  |  | $ | (0.02) |  |  | $ | 0.09
Net income per share—diluted | $ | 0.11 |  |  | $ | (0.02) |  |  | $ | 0.09
Shares used in calculating net income per share—basic | 44,795 |  |  | — |  |  | 44,795
Shares used in calculating net income per share—diluted | 46,206 |  |  | — |  |  | 46,206
Comprehensive income (loss) |  |  |  |  |
Net income | $ | 5,035 |  | $ | (898) |  | $ | 4,137
Foreign currency translation adjustment | (3,129) |  | — |  | (3,129)
Unrealized loss on investments | (1,098) |  | — |  | (1,098)
Comprehensive income (loss) | $ | 808 |  | $ | (898) |  | $ | (90)
MITEK SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (amounts in thousands)
| Six Months Ended March 31,
| As Previously Reported |  | Total Adjustments |  | 2022 As Restated
Operating activities: |  |  |  |  |
Net income | $ | 5,035 |  |  | $ | (898) |  |  | $ | 4,137 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  | — |  |  |
Stock-based compensation expense | 6,429 |  |  | — |  |  | 6,429 |
Amortization of intangible assets | 4,525 |  |  | — |  |  | 4,525 |
Depreciation and amortization | 555 |  |  | — |  |  | 555 |
Amortization of investment premiums & other | 1,109 |  |  | — |  |  | 1,109 |
Accretion and amortization on debt securities | 3,453 |  |  | — |  |  | 3,453 |
Net changes in estimated fair value of acquisition-related contingent consideration | (780) |  |  | — |  |  | (780) |
Deferred taxes | (92) |  |  | (431) |  |  | (523) |
Changes in assets and liabilities: |  |  | — |  |  |
Accounts receivable | (6,171) |  |  | — |  |  | (6,171) |
Contract assets | 345 |  |  | — |  |  | 345 |
Other assets | 498 |  |  | — |  |  | 498 |
Accounts payable | 2,440 |  |  | 1,329 |  |  | 3,769 |
Accrued payroll and related taxes | (4,693) |  |  | — |  |  | (4,693) |
Deferred revenue | (3,126) |  |  | — |  |  | (3,126) |
Other liabilities | 159 |  |  | — |  |  | 159 |
Net cash provided by operating activities | 9,686 |  |  | — |  |  | 9,686 |
Investing activities: |  |  |  |  |
Purchases of investments | (47,818) |  |  | — |  |  | (47,818) |
Sales and maturities of investments | 173,316 |  |  | — |  |  | 173,316 |
Acquisitions, net of cash acquired | (126,607) |  |  | — |  |  | (126,607) |
Purchases of property and equipment | (634) |  |  | — |  |  | (634) |
Net cash used in investing activities | (1,743) |  |  | — |  |  | (1,743) |
Financing activities: |  |  |  |  |
Proceeds from the issuance of equity plan common stock | 1,128 |  |  | — |  |  | 1,128 |
Repurchases and retirements of common stock | (14,828) |  |  | — |  |  | (14,828) |
Principal payments on other borrowings | (36) |  |  | — |  |  | (36) |
Net cash provided by (used in) financing activities | (13,736) |  |  | — |  |  | (13,736) |
Foreign currency effect on cash and cash equivalents | (535) |  |  | — |  |  | (535) |
Net increase (decrease) in cash and cash equivalents | (6,328) |  |  | — |  |  | (6,328) |
Cash and cash equivalents at beginning of period | 30,312 |  |  | — |  |  | 30,312 |
Cash and cash equivalents at end of period | $ | 23,984 |  |  | $ | — |  |  | $ | 23,984 |
Supplemental disclosures of cash flow information: |  |  |  |  |
Cash paid for interest | $ | 582 |  |  | $ | — |  |  | $ | 582 |
Cash paid for income taxes | $ | 597 |  |  | $ | — |  |  | $ | 597 |
Supplemental disclosures of non-cash investing and financing activities: |  |  |  |  |
Reclassification of convertible senior notes hedge and embedded conversion derivative to additional paid-in capital | $ | 42,821 |  |  | $ | — |  |  | $ | 42,821 |
Unrealized holding gain (loss) on available-for-sale investments | $ | (1,098) |  |  | $ | — |  |  | $ | (1,098) |

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