Mitek Systems (MITK)

Risks

• We currently derive substantially all of our revenue from a few types of technologies. If these technologies and the related products do not achieve or continue to achieve market acceptance, our business, financial condition, and results of operations would be adversely affected.
• We cannot predict the impact that the decline of the use of checks, changes in consumer behavior facilitated by advances in technologies, and the development of check alternatives, or the plateau of the penetration of active mobile banking users may have on our business.
• Claims that our products infringe upon the rights, or have otherwise utilized proprietary information, of third parties may give rise to costly litigation against us or our customers who we may be obligated to indemnify, and we could be prevented from selling those products, required to pay damages, and obligated to defend against litigation or indemnify our customers.
• If the patents we own or license, or our other intellectual property rights, do not adequately protect our technologies, we may lose market share to our competitors and be unable to operate our business profitably.
• We face competition from several companies that may have greater resources than we do, which could result in price reductions, reduced margins, or loss of market share.
• We must continue to engage in extensive research and development in order to remain competitive.
• Defects or malfunctions in our products could hurt our reputation, sales and profitability.
• Our lengthy sales cycles and the difficulty in predicting timing of sales or delays may impair our operating results.
• Our historical order flow patterns, which we expect to continue, have caused forecasting difficulties for us. If we do not meet our forecasts or analysts’ forecasts for us, the price of our common stock may decline.
• Entry into new lines of business, and our offering of new products and services, resulting from our acquisitions may result in exposure to new risks.
• Adverse economic conditions or reduced spending on information technology solutions may adversely impact our revenue and profitability.
• We expect to incur additional expenses related to the integration of ID R&D, Inc.
• We may be unable to successfully integrate our business with the respective businesses of ICAR, A2iA, and ID R&D and realize the anticipated benefits of the acquisitions.
• Our actual financial and operating results following the acquisitions of ICAR, A2iA, and ID R&D could differ materially from any expectations or guidance provided by us concerning our future financial and operating results.
• Our annual and quarterly results have fluctuated greatly in the past and will likely continue to do so, which may cause substantial fluctuations in our common stock price.
• We face risks related to the storage of our customers’ and their end users’ confidential and proprietary information. Our products may not provide absolute security. We may incur increasing costs in an effort to minimize those risks and to respond to cyber incidents.
• Due to our operations in non-U.S. markets, we are subject to certain risks that could adversely affect our business, results of operations or financial condition.
• Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax, and other laws and regulations.
• Fluctuations in foreign currency exchange and interest rates could adversely affect our results of operations.
• We have a history of losses and we may not be able to maintain profitability in the future.
• An “ownership change” could limit our ability to utilize our net operating loss and tax credit carryforwards, which could result in our payment of income taxes earlier than if we were able to fully utilize our net operating loss and tax credit carryforwards.
• From time-to-time our Board explores and considers strategic alternatives, including financings, strategic alliances, acquisitions, or the possible sale of the Company. Our Board may not be able to identify or complete any suitable strategic alternatives, and announcements regarding any such strategic alternatives could have an impact on our operations or stock price.
• Concentration of ownership among our current and former directors and executive officers may limit our other stockholder’s ability to influence significant corporate decisions.
• Future sales of our common stock by our insiders may cause our stock price to decline.
• A potential proxy contest for the election of directors at our annual meeting could result in potential operational disruption, divert our resources, and could potentially result in adverse consequences under certain of our agreements.
• Our corporate documents and the DGCL contain provisions that could discourage, delay, or prevent a change in control of our company, prevent attempts to replace or remove current management, and reduce the market price of our stock.
• Our restated certificate of incorporation and second amended and restated bylaws provide for indemnification of officers and directors at our expense and limits their liability, which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers and/or directors.
• The Company has entered into a Section 382 Rights Agreement, and if the share purchase rights issued pursuant to such agreement are exercised, it could materially and adversely affect the market price of our common stock.
• The market price of our common stock has been volatile and your investment in our stock could suffer a decline in value.
• Because we do not intend to pay cash dividends, our stockholders will benefit from an investment in our common stock only if our stock price appreciates in value.
• The COVID-19 outbreak could adversely impact our business.
• If we are unable to retain and recruit qualified personnel, or if any of our key executives or key employees discontinues his or her employment with us, it may have a material adverse effect on our business.
• Legislation and governmental regulations enacted in the U.S. and other countries that apply to us or to our customers may require us to change our current products and services and/or result in additional expenses, which could adversely affect our business and results of operations.
• Future sales of our common stock could cause the market price of our common stock to decline.
• If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline.
• We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over
• financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.