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Mitek’s Nasdaq suspension stayed, ‘final’ delisting hearing next month

Mitek’s Nasdaq suspension stayed, ‘final’ delisting hearing next month
 

The suspension of digital ID vendor Mitek Systems from the Nasdaq exchange has been stayed, according to Mitek.

The company says Nasdaq officials have granted a request by Mitek executives to extend an earlier automatic stay of extension. An August 10 hearing has been scheduled for the firm at which point a final decision will be made.

Mitek has said staff could not comply with filing deadlines on time without unreasonable effort or expense, the common response when company has problems hitting these deadlines.

Executives had blamed a delay in reporting financial results on their switching independent registered public accounting firms. Its previous contractor had resigned more than a year ago.

The quarterly news, when it finally came out June 30, wasn’t all bad.

Revenue for the year, ended September 30, rose 20 percent compared to fiscal 2021 thanks to new revenue from the buyout of HooYu. The company also is reporting that demand has increased for its ID verification and deposits software.

For the fiscal year 2022, Mitek reported a profit of $3 million, or $0.07 per basic and diluted share, on revenue of $143.9 million. That compares with a fiscal 2021 profit of $7.9 million, or $0.18 per share, on revenue of $119 million.

It reported a fourth-quarter net loss of $311,000, or a basic and diluted loss of $0.01 per share, on revenue of $38.7 million. That compares with a profit of $1.8 million, or $0.04 per share, on revenue of $33.2 million during the same period in 2021.

Mitek recently joined a consortium to pilot a network of selfie biometrics providers sharing real-time fraud intelligence.

In June, officials with the Nasdaq, the exchange on which Mitek is traded, had “initiated a process to delist” the company’s securities.

Mitek executives at that time announced the move, saying they intended to request a hearing before Nasdaq to explain themselves. The request automatically gave the company a stay to comply – an active and current process, the announcement stated.

The company had not filed a 10-K financials statement with the U.S. Securities and Exchange Commission for the fiscal year ended September 2022. Nor had it filed quarter reports – 10-Qs – since December 2022.

Government filings also hint at larger problems, however.

The company “is also in the process of evaluating deficiencies identified in connection with its assessment of the effectiveness of its internal control over financial reporting,” according to its SEC form 12b-25.

Companies traded on any exchange must meet many and sometimes stringent requirements. The regulation in this instance is designed to make sure investors have information on which to base buy and sell decisions.

The uncertainty around Mitek could also affect ID R&D and Hooyu, as both biometrics firms were acquired by Mitek in the last two years.

It is not the first time that Mitek has faced delisting. It has faced the threat multiple times, notably in 1988 and 2004. In both of those incidents, Mitek could not meet Nasdaq capital requirements. Its shares were delisted temporarily in 2004, according to business trade publication Finextra.

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