Stockholders' Equity

6 Months Ended

Mar. 31, 2015

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,
	2015		2014		2015		2014
Sales and marketing	$	191,962	$	234,167	$	367,080	$	435,690
Research and development		159,563		192,939		296,970		377,827
General and administrative		519,595		488,944		1,021,131		931,604
Stock-based compensation expense included in operating    expenses	$	871,120	$	916,050	$	1,685,181	$	1,745,121

No stock options were granted to employees during the six months ended March 31, 2014. The fair value calculations for stock-based compensation awards to employees for the six months ended March 31, 2015 were based on the following assumptions:

	SixMonths Ended March 31, 2015
Risk-free interest rate	1.29 – 1.66%
Expected life (years)		5.25
Expected volatility		98%
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 March 31, 2015, the Company had $6,270,849 of unrecognized compensation expense related to outstanding stock options and RSUs expected to be recognized over a weighted-average period of approximately 2.8 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. On February 19, 2014, the Company’s stockholders approved an amendment to the 2012 Plan that increased the total number of shares of the Company’s common stock reserved for issuance thereunder from 2,000,000 shares to 4,000,000 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 March 31, 2015, (i) stock options to purchase 2,232,477 shares of the Company’s common stock and 541,091 RSUs were outstanding under the 2012 Plan, and 1,292,117 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 1,478,244 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”), reserving up to 1,000,000 shares of the Company’s common stock  for the issuance of RSUs that may be granted to both employee and non-employee members of the Company’s board of directors. As of March 31, 2015, (i) 384,998 RSUs were outstanding under the Director Plan and (ii) 510,171 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, 2015:

	Number of Shares			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in Years)
Outstanding, September 30, 2014		2,334,326		$	4.11		5.46
Granted		1,565,500		$	2.74
Exercised		(4,166	)	$	2.34
Cancelled		(184,939	)	$	4.66
Outstanding, March 31, 2015		3,710,721		$	3.51		7.08

The Company recognized $568,751 and $1,042,842 in stock-based compensation expense related to outstanding stock options in the three and six months ended March 31, 2015, respectively. The Company recognized $554,994 and $1,119,316 in stock-based compensation expense related to outstanding stock options in the three and six months ended March 31, 2014, respectively. As of March 31, 2015, the Company had $3,730,874 of unrecognized compensation expense related to outstanding stock options expected to be recognized over a weighted-average period of approximately 2.8 years. 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.

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, 2015 and 2014 was $4,083 and $468,462, respectively. The per-share weighted average fair value of options granted during the six months ended March 31, 2015 was $2.04. No stock options were granted to employees during the six months ended March 31, 2014. As of March 31, 2015, there were 3,710,721 options outstanding with a weighted-average remaining contractual term, weighted-average exercise price and aggregate intrinsic value of 7.1 years, $3.51 and $2,725,294 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.

Restricted Stock Units

The following table summarizes RSU activity under the Company’s equity plans during the six months ended March 31, 2015:

	Number of Shares			Weighted-Average FairMarket Value Per Share
Outstanding, September 30, 2014		1,101,303		$	4.71
Granted		104,000		$	2.29
Settled		(204,041	)	$	2.91
Cancelled		(75,171	)	$	4.30
Outstanding, March 31, 2015		926,091		$	4.32

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 $302,369 and $642,339 in stock-based compensation expense related to outstanding RSUs in the three and six months ended March 31, 2015, respectively. The Company recognized $361,056 and $625,805 in stock-based compensation expense related to outstanding RSUs in the three and six months ended March 31, 2014, respectively. As of March 31, 2015, the Company had $2,539,975 of unrecognized compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of approximately 2.7 years. 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.