Mitek Systems(MITK) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Mitek Systems, Inc.'s unaudited consolidated financial statements and related notes for the quarter and nine months ended June 30, 2020 Item 1. Financial Statements This section presents Mitek Systems, Inc.'s unaudited consolidated financial statements for the quarter and nine months ended June 30, 2020, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes on accounting policies, revenue recognition, investments, and other financial disclosures Consolidated Balance Sheets This statement provides a snapshot of Mitek's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2020, and September 30, 2019 | Metric | June 30, 2020 (Unaudited) (in thousands) | September 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------------------- | :------------------------------------ | | ASSETS | | | | Total current assets | $69,042 | $54,130 | | Total assets | $157,227 | $135,897 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $24,267 | $20,048 | | Total liabilities | $37,844 | $28,564 | | Total stockholders' equity | $119,383 | $107,333 | | Total liabilities and stockholders' equity | $157,227 | $135,897 | - Total assets increased by $21.33 million (15.7%) from September 30, 2019, to June 30, 2020, driven by increases in current assets, particularly cash and cash equivalents and short-term investments[11] - Total stockholders' equity increased by $12.05 million (11.2%) from September 30, 2019, to June 30, 2020[11] Consolidated Statements of Operations and Other Comprehensive Income (Loss) This statement outlines Mitek's financial performance, including revenue, operating income, net income, and comprehensive income for the three and nine months ended June 30, 2020 and 2019 | Metric | Three Months Ended June 30, 2020 (in thousands) | Three Months Ended June 30, 2019 (in thousands) | Nine Months Ended June 30, 2020 (in thousands) | Nine Months Ended June 30, 2019 (in thousands) | | :--------------------------------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Total revenue | $25,413 | $21,906 | $70,672 | $59,572 | | Operating income (loss) | $1,434 | $(2,909) | $2,796 | $(9,119) | | Net income (loss) | $1,348 | $(99) | $2,816 | $(4,006) | | Net income (loss) per share—basic | $0.03 | $(0.00) | $0.07 | $(0.10) | | Net income (loss) per share—diluted | $0.03 | $(0.00) | $0.07 | $(0.10) | | Other comprehensive income (loss) | $2,581 | $722 | $4,296 | $(5,193) | - Total revenue increased by 16% for the three months ended June 30, 2020, and by 19% for the nine months ended June 30, 2020, compared to the respective prior periods[13] - The company reported net income of $1.3 million for the three months ended June 30, 2020, a significant improvement from a net loss of $0.1 million in the prior year period; for the nine months, net income was $2.8 million, up from a $4.0 million net loss[13] Consolidated Statements of Stockholders' Equity This statement details changes in Mitek's stockholders' equity, including net income, stock-based compensation, and other comprehensive income, for the periods presented | Metric | June 30, 2020 (in thousands) | June 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Total Stockholders' Equity (3 months) | $119,383 | $103,324 | | Total Stockholders' Equity (9 months) | $119,383 | $103,324 | | Additional Paid-In Capital (9 months) | $140,915 | $129,145 | | Accumulated Deficit (9 months) | $(18,992) | $(24,088) | | Accumulated Other Comprehensive Income (Loss) (9 months) | $(2,581) | $(1,773) | - Total stockholders' equity increased from $107.3 million at September 30, 2019, to $119.4 million at June 30, 2020, primarily due to net income and stock-based compensation expense[18] - The accumulated deficit improved from $(20.8) million at September 30, 2019, to $(19.0) million at June 30, 2020, reflecting the net income reported[18] Consolidated Statements of Cash Flows This statement summarizes Mitek's cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2020 and 2019 | Metric | Nine Months Ended June 30, 2020 (in thousands) | Nine Months Ended June 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net cash provided by operating activities | $17,375 | $7,888 | | Net cash used in investing activities | $(15,530) | $(4,320) | | Net cash provided by financing activities | $260 | $3,632 | | Net increase in cash and cash equivalents | $2,190 | $7,064 | | Cash and cash equivalents at end of period | $18,938 | $16,092 | - Net cash provided by operating activities significantly increased to $17.4 million for the nine months ended June 30, 2020, from $7.9 million in the prior year, primarily due to net income and non-cash adjustments[21] - Net cash used in investing activities increased to $15.5 million, mainly due to higher purchases of investments[21] Notes to Consolidated Financial Statements These notes provide detailed explanations and additional information supporting the consolidated financial statements, covering accounting policies, revenue, investments, and other disclosures 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details Mitek's core business as a mobile image capture and digital identity verification solutions provider, leveraging AI and machine learning for financial services and other sectors; it also outlines the company's significant accounting policies, including revenue recognition, foreign currency translation, use of estimates, and recent accounting pronouncement adoptions and issuances - Mitek is a software development company specializing in computer vision, AI, and machine learning, serving over 7,500 financial services organizations and fintech brands globally[23] - Key products include Mobile Deposit® (over four billion check deposits processed), Mobile Verify® (digital identity verification with face comparison), MiSnap™ (image capture technology), and CheckReader™ (automated check data extraction)[24][25][26][27] - The company adopted ASC 842 (Leases) on October 1, 2019, recognizing $8.2 million in lease liabilities and $6.8 million in right-of-use assets, which materially impacted the balance sheet but not the income statement or cash flows[63] 2. REVENUE RECOGNITION This note describes Mitek's revenue recognition policies under ASC 606, detailing how revenue is generated from software, hardware, and services, and the significant judgments involved in identifying performance obligations, determining transaction price, assessing variable consideration, and allocating transaction price; it also provides a disaggregation of revenue by major product category and information on contract balances and costs - Revenue is primarily generated from on-premise software licenses, transactional SaaS products, hardware sales, maintenance, and professional services[76][77] Major Product Category Revenue (in thousands) | Major Product Category | Three Months Ended June 30, 2020 (in thousands) | Three Months Ended June 30, 2019 (in thousands) | Nine Months Ended June 30, 2020 (in thousands) | Nine Months Ended June 30, 2019 (in thousands) | | :--------------------------------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Deposits revenue | $16,948 | $15,049 | $46,221 | $39,827 | | Identity verification revenue | $8,465 | $6,857 | $24,451 | $19,745 | | Total revenue | $25,413 | $21,906 | $70,672 | $59,572 | - Identity verification revenue showed strong growth, increasing by 23.4% for the three months and 23.8% for the nine months ended June 30, 2020, compared to the prior year periods[83] Contract Balances (in thousands) | Contract Balances | June 30, 2020 (in thousands) | September 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------- | :-------------------------------- | | Contract assets, current | $3,410 | $2,350 | | Contract assets, non-current | $4,338 | $581 | | Contract liabilities (deferred revenue), current | $9,089 | $5,612 | | Contract liabilities (deferred revenue), non-current | $1,240 | $736 | 3. RESTRUCTURING This note details the strategic restructuring of A2iA's Paris operations initiated in June 2019, which involved ceasing sales of certain unprofitable products and a workforce reduction; the restructuring accrual decreased significantly during the nine months ended June 30, 2020, due to payments and reversals - Mitek undertook a strategic restructuring of A2iA's Paris operations in June 2019, ceasing sales of certain unprofitable products and reducing the workforce[86] Restructuring Accrual (in thousands) | Restructuring Accrual | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Balance at September 30, 2019 | $1,526 | | Accrual reversed | $(114) | | Payments | $(1,165) | | Foreign currency effect | $(27) | | Balance at June 30, 2020 | $220 | 4. INVESTMENTS This note provides a summary of Mitek's investment portfolio, primarily consisting of available-for-sale debt securities like U.S. Treasury, asset-backed, and corporate debt securities; it details their fair market values, unrealized gains/losses, and classification as short-term or long-term; the note also explains the fair value measurement hierarchy (Level 1, 2, 3) and the valuation of acquisition-related contingent consideration Investment Fair Value (in thousands) | Investment Type | June 30, 2020 Fair Value (in thousands) | September 30, 2019 Fair Value (in thousands) | | :--------------------------------- | :-------------------------------------- | :--------------------------------------- | | Total Available-for-sale securities | $33,223 | $18,054 | | Short-term investments | $30,281 | $16,502 | | Long-term investments | $2,942 | $1,552 | - The fair value of available-for-sale securities increased by $15.17 million (84%) from September 30, 2019, to June 30, 2020[88] Acquisition-related contingent consideration (Level 3) (in thousands) | Acquisition-related contingent consideration (Level 3) | Amount (in thousands) | | :--------------------------------------------------- | :-------------------- | | Balance at September 30, 2019 | $1,601 | | Expenses recorded due to changes in fair value | $98 | | Payment of contingent consideration | $(1,049) | | Foreign currency effect | $36 | | Balance at June 30, 2020 | $686 | 5. GOODWILL AND INTANGIBLE ASSETS This note details Mitek's goodwill and intangible assets, which primarily resulted from prior acquisitions; goodwill is tested for impairment annually, and intangible assets are amortized over their useful lives, ranging from two to seven years; the note provides a breakdown of intangible assets by type and their estimated future amortization expense Goodwill and Intangible Assets (in thousands) | Metric | June 30, 2020 (in thousands) | September 30, 2019 (in thousands) | | :--------------------------------- | :--------------------------- | :-------------------------------- | | Goodwill balance | $34,249 | $32,636 | | Total intangible assets (Net) | $20,151 | $24,405 | | Amortization expense (9 months) | $4,800 | $5,300 | - Goodwill increased by $1.61 million (4.9%) from September 30, 2019, to June 30, 2020, due to other adjustments and foreign currency effects[95] Estimated Future Amortization Expense (in thousands) | Estimated Future Amortization Expense | Amount (in thousands) | | :------------------------------------ | :-------------------- | | 2020—remaining | $1,585 | | 2021 | $6,134 | | 2022 | $5,738 | | 2023 | $3,766 | | 2024 | $1,779 | | 2025 | $1,149 | | Total | $20,151 | 6. STOCKHOLDERS' EQUITY This note details Mitek's stock-based compensation programs, including RSUs, stock options, performance options, and the Employee Stock Purchase Plan (ESPP); it provides a breakdown of compensation expense by functional area, key assumptions for fair value calculations, and activity summaries for stock options, RSUs, and performance RSUs; the note also covers the 2020 Incentive Plan, Director Restricted Stock Unit Plan, share repurchase program, and the Section 382 Rights Agreement Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense | Three Months Ended June 30, 2020 (in thousands) | Three Months Ended June 30, 2019 (in thousands) | Nine Months Ended June 30, 2020 (in thousands) | Nine Months Ended June 30, 2019 (in thousands) | | :--------------------------------- | :-------------------------------------- | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Total stock-based compensation expense | $2,501 | $2,268 | $7,112 | $7,291 | - As of June 30, 2020, Mitek had $19.8 million of unrecognized compensation expense related to outstanding stock options and RSUs, expected to be recognized over approximately 2.5 years[100] - The company repurchased approximately 137,000 shares for $1.0 million during the nine months ended June 30, 2020, under a $10 million share repurchase program expiring December 16, 2020[113] 7. INCOME TAXES This note explains Mitek's accounting for income taxes, including the determination of the interim tax provision using an estimated annual effective tax rate and the factors causing differences from the U.S. statutory rate; it provides the income tax provision and effective tax rates for the three and nine months ended June 30, 2020 and 2019 Income Tax Benefit (Provision) and Effective Tax Rate | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Nine Months Ended June 30, 2020 | Nine Months Ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax benefit (provision) | $(0.2) million | $2.7 million | $(0.5) million | $4.9 million | | Effective tax rate | 15% | 96% | 14% | 55% | - The effective tax rate for the nine months ended June 30, 2020, was 14%, compared to 55% in the prior year, primarily due to excess tax benefits from stock option exercises and RSU vesting, foreign/state taxes, and R&D credits[120][188] 8. COMMITMENTS AND CONTINGENCIES This note outlines Mitek's commitments and contingencies, including lease obligations, various legal proceedings, and its revolving credit facility; it details the company's operating lease liabilities and future payments, ongoing lawsuits related to acquisitions and patent infringement, and the terms of its $10.0 million secured revolving credit facility Operating Lease Liabilities (in thousands) | Operating Lease Liabilities | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Total operating lease liabilities (June 30, 2020) | $7,325 | | Current lease liabilities | $1,651 | | Non-current lease liabilities | $5,674 | | Weighted-average remaining lease term | 4.5 years | | Weighted-average discount rate | 4.7% | - Mitek is involved in several legal proceedings, including a claim against its subsidiary ICAR, third-party patent infringement claims against its customers (notably USAA vs. Wells Fargo), and a lawsuit against UrbanFT, Inc. for delinquent payments and patent non-infringement[127][130][131][138] - The company has a $10.0 million secured revolving credit facility with Silicon Valley Bank, maturing September 30, 2020, with no outstanding borrowings as of June 30, 2020[140] 9. REVENUE CONCENTRATION This note discusses Mitek's revenue concentration, highlighting that a significant portion of revenue is derived from a few customers and channel partners; it clarifies that while certain customers may exceed 10% of total revenue in a given period, this is often due to the timing of license renewals and does not indicate dependence on any single partner, as the company believes it could transition end-users to other channels Revenue Concentration | Revenue Concentration | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | Nine Months Ended June 30, 2020 | Nine Months Ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue from two customers | $6.4 million (15% & 11%) | $6.1 million (16% & 11%) | N/A (one customer 15%) | N/A (one customer 18%) | | Accounts receivable from >10% customers | $4.2 million | $5.5 million | N/A | N/A | - International sales accounted for approximately 25% of total revenue for the three and nine months ended June 30, 2020[145] - The company believes it is not dependent on any single channel partner, as the loss of one could be mitigated by direct sales or other partners[144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Mitek's financial performance, operational highlights, market opportunities, challenges, and risks for the periods ended June 30, 2020; it includes a detailed comparison of financial results, analysis of liquidity and capital resources, and discussion of critical accounting policies, emphasizing the impact of the COVID-19 pandemic Overview This overview introduces Mitek's core business as a leader in mobile image capture and digital identity verification, highlighting its key products and global market presence - Mitek is a leading innovator in mobile image capture and digital identity verification, utilizing computer vision, AI, and machine learning to serve over 7,500 financial services and fintech organizations globally[150] - Key products include Mobile Deposit® (mobile check deposit), Mobile Verify® (online identity verification), MiSnap™ (image capture technology), and CheckReader™ (automated check data extraction)[151][152][153][154] - The company markets its products and services worldwide through direct sales teams and channel partners in the U.S., Europe, and Latin America[155] Third Quarter Fiscal 2020 Highlights This section summarizes Mitek's key financial and operational achievements for the third quarter of fiscal year 2020, including revenue growth and patent portfolio expansion Third Quarter Fiscal 2020 Highlights | Metric | Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | | :--------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $25.4 million (16% increase) | $21.9 million | | Net income (loss) | $1.3 million | $(0.1) million | | Net income (loss) per diluted share | $0.03 | $(0.00) | | Cash provided by operating activities (9 months) | $17.4 million | $7.9 million | - Mitek increased its patent portfolio to 64 issued patents as of June 30, 2020, with an additional 19 patent applications pending[162] Market Opportunities, Challenges & Risks This section discusses Mitek's growth drivers, operational challenges, and potential risks, including the impact of digital transformation, competition, and the COVID-19 pandemic - Mitek sees growth opportunities in digital transformation, driven by consumer demand for online trust and convenience, regulatory requirements (AML, KYC), and increasing fraud/cyber-attacks[158] - Challenges include lengthy sales and implementation cycles, product concentration vulnerability to market demand and competition, and potential adverse impacts from the COVID-19 pandemic[159][160][165] - The company aims to maintain competitiveness by strengthening product performance through R&D and partnerships, and anticipates accelerated adoption of digital technologies due to COVID-19[164][167] Results of Operations This section provides a detailed comparative analysis of Mitek's financial performance, including revenue and expense trends, for the three and nine months ended June 30, 2020 and 2019 Comparison of the Three Months Ended June 30, 2020 and 2019 For the three months ended June 30, 2020, Mitek experienced a 16% increase in total revenue, driven by growth in both software/hardware and services; operating income improved significantly, moving from a loss to a profit, while restructuring costs were eliminated; expenses generally increased in line with revenue or due to specific factors like litigation costs Three Months Ended June 30, 2020 vs 2019 (in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total revenue | $25,413 | $21,906 | $3,507 | 16% | | Software and hardware revenue | $13,212 | $11,888 | $1,324 | 11% | | Services and other revenue | $12,201 | $10,018 | $2,183 | 22% | | Cost of revenue | $3,496 | $3,168 | $328 | 10% | | Selling and marketing expenses | $7,791 | $6,935 | $856 | 12% | | Research and development expenses | $5,111 | $4,663 | $448 | 10% | | General and administrative expenses | $5,884 | $5,074 | $810 | 16% | | Acquisition-related costs and expenses | $1,697 | $1,761 | $(64) | (4)% | | Restructuring costs | $0 | $3,214 | $(3,214) | (100)% | | Net income (loss) | $1,348 | $(99) | $1,447 | * | * Not meaningful - Services and other revenue saw a 22% increase, primarily due to a 42% growth in Mobile Verify® transactional SaaS revenue[169] - General and administrative expenses increased by 16% due to higher intellectual property litigation costs ($0.7 million) and personnel-related costs[173] Comparison of the Nine Months Ended June 30, 2020 and 2019 For the nine months ended June 30, 2020, Mitek achieved a 19% increase in total revenue, driven by strong growth in both software/hardware and services; the company transitioned from a net loss to a net income, with significant reductions in restructuring costs and improved operating efficiency across several expense categories as a percentage of revenue Nine Months Ended June 30, 2020 vs 2019 (in thousands) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Total revenue | $70,672 | $59,572 | $11,100 | 19% | | Software and hardware revenue | $36,180 | $32,468 | $3,712 | 11% | | Services and other revenue | $34,492 | $27,104 | $7,388 | 27% | | Cost of revenue | $9,615 | $9,037 | $578 | 6% | | Selling and marketing expenses | $22,569 | $20,895 | $1,674 | 8% | | Research and development expenses | $14,540 | $14,441 | $99 | 1% | | General and administrative expenses | $16,382 | $15,743 | $639 | 4% | | Acquisition-related costs and expenses | $4,884 | $5,361 | $(477) | (9)% | | Restructuring costs | $(114) | $3,214 | $(3,328) | (104)% | | Net income (loss) | $2,816 | $(4,006) | $6,822 | 170% | - Services and other revenue increased by 27%, primarily due to $6.0 million growth in Mobile Verify® transactional SaaS revenue and increased maintenance revenue from CheckReader™ and Mobile Deposit®[179] - Restructuring costs were a negative $0.1 million in 2020 due to a reversal of previously accrued costs, compared to $3.2 million in 2019[185] Liquidity and Capital Resources This section analyzes Mitek's liquidity and capital resources, highlighting a significant increase in cash and investments; it details cash flows from operating, investing, and financing activities, discusses the revolving credit facility, share repurchase program, and the potential impact of the CARES Act; the company believes its current cash and operational cash generation are sufficient for the next twelve months - Cash and cash equivalents and investments increased by $17.4 million (50%) to $52.2 million at June 30, 2020, from $34.8 million at September 30, 2019[189] Cash Flow Activity (Nine Months Ended June 30, in thousands) | Cash Flow Activity (Nine Months Ended June 30) | 2020 (in thousands) | 2019 (in thousands) | | :--------------------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $17,375 | $7,888 | | Net cash used in investing activities | $(15,530) | $(4,320) | | Net cash provided by financing activities | $260 | $3,632 | - The company has a $10.0 million secured revolving credit facility with no outstanding borrowings as of June 30, 2020, and a share repurchase program authorized for up to $10 million, with $1.0 million repurchased as of June 30, 2020[195][200][201] Changes in Critical Accounting Policies This section discusses any significant changes or new adoptions in Mitek's critical accounting policies and estimates, particularly the impact of ASC 842 on leases - Mitek adopted ASC 842 (Leases) effective October 1, 2019, using the optional transition method, which materially impacted the consolidated balance sheet by recognizing ROU assets and lease liabilities[207] - No other material changes to critical accounting policies and estimates were reported from those disclosed in the Annual Report on Form 10-K for the year ended September 30, 2019[207] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses Mitek's exposure to market risks, primarily related to interest rates and foreign currency fluctuations; the company's investment portfolio is managed to preserve principal with short maturities, limiting interest rate sensitivity; foreign currency risk arises from international operations in Euro-denominated regions Interest Rates This section assesses Mitek's exposure to interest rate risk, primarily concerning its investment portfolio, and the potential impact of rate fluctuations on fair value - Mitek's investment portfolio, primarily cash equivalents and marketable debt securities, aims to preserve principal and maximize after-tax yields without significant risk[208] - As of June 30, 2020, marketable securities had a fair market value of $33.2 million, representing 21% of total assets, with remaining maturities between approximately one and 15 months[208] - A hypothetical 100 basis point change in market interest rates would not materially impact the fair value of the investment portfolio due to the short maturities of these investments[209] Foreign Currency Risk This section describes Mitek's exposure to foreign currency exchange rate fluctuations arising from its international operations in Euro-denominated regions - Mitek is exposed to foreign currency exchange risks due to operations in France, the Netherlands, and Spain, where the functional currency is the Euro[210] - Fluctuations in the Euro exchange rate can impact the company's results of operations and cash flows, with translation adjustments reported in accumulated other comprehensive income (loss)[210] Item 4. Controls and Procedures This section confirms the effectiveness of Mitek's disclosure controls and procedures as of June 30, 2020, based on management's evaluation; it also states that there have been no material changes in internal control over financial reporting, despite the transition to a remote work environment due to the COVID-19 pandemic Disclosure Controls and Procedures This section confirms the effectiveness of Mitek's disclosure controls and procedures, ensuring timely and accurate reporting of financial information - Mitek maintains disclosure controls and procedures designed to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[211] - As of June 30, 2020, management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective[212] Changes in Internal Control over Financial Reporting This section reports on any material changes to Mitek's internal control over financial reporting, considering the impact of the COVID-19 pandemic - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2020[213] - The company has not experienced any material impact on its internal controls despite most employees working remotely due to the COVID-19 pandemic and continues to monitor the situation[213] PART II. OTHER INFORMATION This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section refers to Note 8 of the consolidated financial statements for detailed information on Mitek's legal proceedings; it reiterates that while the company is subject to various claims in the ordinary course of business, the aggregate disposition of these matters is not expected to materially affect its financial condition or results of operations - For detailed information on legal proceedings, refer to Note 8 of the consolidated financial statements[216] - The company believes that the aggregate disposition of its legal matters will not have a material effect on its financial condition or results of operations[216] Item 1A. Risk Factors This section highlights that there have been no material changes to Mitek's risk factors from those disclosed in its Form 10-K, except for the significant and uncertain impact of the COVID-19 pandemic; it details how the pandemic could adversely affect business operations, customer willingness to contract, financial markets, and overall financial condition - No material changes in risk factors from the Form 10-K, except for the adverse impact of the COVID-19 outbreak[217][218] - The COVID-19 pandemic's impact on Mitek's business, operations, and financial results is uncertain and difficult to predict, depending on factors like duration and severity of the outbreak[218] - Measures to contain COVID-19 (e.g., remote work, travel restrictions) could delay sales, harm productivity, reduce customer spending, and disrupt global financial markets, potentially affecting liquidity and stock value[219][220] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of Mitek's equity securities during the quarter ended June 30, 2020, that had not been previously disclosed in a Current Report on Form 8-K - No unregistered sales of equity securities occurred during the quarter ended June 30, 2020, that were not previously disclosed[221] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[222] Item 4. Mine Safety Disclosures This section states that there are no mine safety disclosures to report - No mine safety disclosures are applicable or reported[224] Item 5. Other Information This section indicates that there is no other information to report - No other information is reported in this section[225] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, certifications, and XBRL-related documents; it specifies which exhibits are filed herewith and which are incorporated by reference from previous SEC filings - The exhibits include Share Purchase Agreements, Restated Certificate of Incorporation, Bylaws, Certificate of Designation, CEO/CFO Certifications (31.1, 31.2, 32.1), and Inline XBRL documents[226] - Several exhibits are incorporated by reference from previous Form 8-K and 10-K filings[227][228] Signatures This section contains the required signatures for the Form 10-Q, confirming that the report has been duly caused to be signed on behalf of Mitek Systems, Inc. by its Chief Executive Officer and Chief Financial Officer - The report is signed by Scipio Maximus Carnecchia, Chief Executive Officer, and Jeffrey C. Davison, Chief Financial Officer, on August 5, 2020[231][232]