"On September 25, 2012, TIS America Inc. and Top Image Systems, Ltd. were named as defendants in Case Number 1:12-cv-01208-UNA, filed by Mitek Systems, Inc. for alleged infringement on five United States patents in the United States District Court for the District of Delaware. Mitek filed a First Amended Complaint on January 11, 2013. An answer to the First Amended Complaint was filed on January 28, 2013. A scheduling order was entered on February 21, 2013 and the lawsuit is still in its early state. No discovery has been taken and a trial is scheduled for December 8, 2014.
The lawsuit relates to technology used in our MobiCHECK software. Mitek is seeking a declaration of infringement, damages, and other amounts.
While we believe that Mitek’s claim is without merit, we cannot assure you that the suit will be dismissed or that we will prevail. If Mitek is successful, or if we agree to settle the lawsuit, we might be unable to pursue, or severely limited in, our marketing and sale of MobiCHECK and possibly other products might restricted or be subject to significant obligations to pay royalties. Further, even if we prevail in the lawsuit, intellectual property litigation is expensive and tends to divert management attention from our business. Accordingly, if any of the foregoing risks are realized, the lawsuit could have a material adverse effect on our business, prospects, financial condition, and results of operations."