Mitek Systems, Inc. (NasdaqCM:MITK) acquired ID R&D, INC for $49 million on May 28, 2021. Total consideration consists of (i) 0.867 million shares of Company common stock, par value $0.001 per share (“Common Stock”), (ii) $13 million in cash, subject to adjustments for transaction expenses, escrow amounts, indebtedness and working capital adjustments (the “Initial Cash Payment”), and (iii) certain deferred payments in connection with the earnout described below and funds to be released from escrow upon the satisfaction of the conditions set forth in the Merger Agreement. Pursuant to the terms of the Merger Agreement, the equityholders of ID R&D may become entitled to receive additional consideration upon achievement of certain milestones as follows (collectively, the “Earnout Payments”), subject to ID R&D's achievement of target revenue for the period commencing on the Closing Date and ending on the one year anniversary thereof, and the period commencing on the one year anniversary of the Closing Date and ending on the one year anniversary thereof (each such period, an “Earnout Period”), the Company will pay the ID R&D equityholders an aggregate maximum amount of approximately $12.25 million with respect to the first Earnout Period and approximately $9.8 million with respect to the second Earnout Period, with 15% of the first Earnout Period's Earnout Payment to be deposited (as additional funds) into an escrow fund described below. The Company shall make the Earnout Payments in the form of cash and Common Stock as set forth in the Merger Agreement. The Company has granted the Representative an option to shift the Earnout Period(s) out by one year, pursuant to the terms of the Merger Agreement. Moreover, in the event actual revenue for an Earnout Period exceeds the target revenue for such period, the amount of such excess will be credited towards the achievement of the subsequent Earnout Period's Earnout Payment.
At the closing of the Merger, the Company deposited a portion of the Initial Cash Payment and a number of shares of the Company's common stock having a collective value of approximately $4.0 million into an escrow fund to serve as collateral and partial security for working capital adjustments and certain indemnification rights of the Company. As indicated above, 15% of the Earnout Payment with respect to first Earnout Period, if and when earned, will also be deposited into the escrow fund. The escrow fund will be maintained for up to 24 months following the completion of the Merger or until such earlier time as the escrow fund is exhausted. In addition to integrating into the Mitek solution, ID R&D will continue to offer its core biometric components directly to the market. ID R&D will also continue to operate under its brand.

Mitek Systems, Inc. (NasdaqCM:MITK) completed the acquisition of ID R&D, INC on May 28, 2021.