UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)*
Datakey Inc.
______________________________________________________
(Name of Issuer)
Common Stock, $ .05 Par Value
______________________________________________________
(Title of Class of Securities)
237909106
____________________________________
(CUSIP Number)
Austin W. Marxe, 153 East 53rd Street, New York, NY 10022
(212) 832-5300
______________________________________________________
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 15, 1998
_________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
I(b)(3) or (4), check the following box ___.
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of the cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
SCHEDULE 13D
CUSIP No.237909106 Page 2 of 7 Pages
- ----------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Special Situations Private Equity Fund, L.P.
F13-3916551
MG Advisers, L.L.C. F13-3916549
- ----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | |
(b) |X|
- ----------------------------------------------------------------
(3) SEC USE ONLY
- ----------------------------------------------------------------
(4) SOURCE OF FUNDS* 00
________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e) ____
_________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ----------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER See Marxe/Greenhouse
SHARES -------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER See Marxe/Greenhouse
REPORTING -------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ----------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
295,118 (Includes shares of common stock issuable upon
conversion of Series A Preferred Stock and upon the exercise
of warrants.)
- ----------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1
- ----------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IV/IA
- ----------------------------------------------------------------
SCHEDULE 13D
CUSIP No.237909106 Page 3 of 7 Pages
- ----------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Special Situations Technology Fund, L.P.
13-3937585
SST Advisers LLC 13-3937583
- ----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | |
(b) |X|
- ----------------------------------------------------------------
(3) SEC USE ONLY
- ----------------------------------------------------------------
(4) SOURCE OF FUNDS* 00
________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e) ____
_________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER See Marxe\Greenhouse
SHARES -------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER See Marxe\Greenhouse
REPORTING -------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ----------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
79,764 (Includes shares of common stock issuable upon
conversion of Series A Preferred Stock and upon the exercise
of warrants.)
- -----------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.7
- ----------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ----------------------------------------------------------------
SCHEDULE 13D
CUSIP No.237909106 Page 4 of 7 Pages
- ----------------------------------------------------------------
(1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Austin W. Marxe
David M. Greenhouse
- ----------------------------------------------------------------
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) | |
(b) |X|
- ----------------------------------------------------------------
(3) SEC USE ONLY
- ----------------------------------------------------------------
(4) SOURCE OF FUNDS* 00
________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED
PURSUANT TO 2(d) OR 2(e) ____
_________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- ----------------------------------------------------------------
NUMBER OF (7) SOLE VOTING POWER 374,882
SHARES -------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER None
OWNED BY -------------------------------------------------
EACH (9) SOLE DISPOSITIVE POWER 374,882
REPORTING -------------------------------------------------
PERSON WITH (10) SHARED DISPOSITIVE POWER None
- ----------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICALLY OWNED BY EACH REPORTING PERSON
374,882 (Includes shares of common stock issuable upon
conversion of Series A Preferred Stock and upon the exercise
of warrants.)
- -----------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
- ----------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.9
- ----------------------------------------------------------------
(14) TYPE OF REPORTING PERSON*
IN
- ----------------------------------------------------------------
Page 5 of 7 Pages
Item 1. Security and Issuer. This Schedule relates to the
common stock, and the Series A Preferred Stock and
warrants convertible and exercisable therefor, of
Datakey, Inc. (the "Issuer"). The Issuer's principal
executive offices are located at 407 West Travelers
Trail, Burnsville, MN 55337-2554.
Item 2. Identity and Background. This Schedule is filed on
behalf of (i) Special Situations Private Equity Fund,
L.P., a Delaware limited partnership (the "Private
Equity Fund"); (ii) Special Situation Technology Fund,
L.P., a Delaware limited partnership ("SST"); (iii) MG
Advisers. L.L.C., a New York limited liability company
("MG"); (iv) SST Advisers L.L.C., a Delaware limited
liability company ("SSA"); (v) Austin W. Marxe and (vi)
David Greenhouse. Each of the foregoing is hereinafter
referred to, individually, as a "Reporting Person" and,
collectively, as the "Reporting Persons."
The principal office and business address of the
Reporting Persons is 153 East 53rd Street, 51st floor,
New York, NY 10022.
The principal business of the Private Equity Fund, and
SST (individually, a "Fund" and, collectively, the
"Funds") is to invest in equity and equity related
securities. The principal business of MG is to act as
general partner of and the investment adviser to the
Private Equity Fund. The principal business of SSA is
to act as the general partner of SST. MG and SST are
referred to herein, individually, as an "Adviser" and,
collectively, as the "Advisers." The principal
occupation of Austin W. Marxe and David Greenhouse,
both of whom are United States citizens, is to serve as
officers, directors and members or principal
shareholders of the Advisers.
Neither any Fund, any Adviser, Austin W. Marxe nor
David Greenhouse, during the last 5 years, has been
convicted in any criminal proceeding or was or is
subject to a judgement, decree or final order enjoining
future violations of, or prohibiting or mandating
activities subject to, Federal or state securities laws
or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Each Fund utilized available cash assets to purchase
the Securities.
Item 4. Purpose of the Transaction. Each of the Reporting
Persons has acquired and is holding the Securities
solely for investment purposes and not with the purpose
Page 6 of 7 Pages
or the effect of changing or influencing control of the
Issuer. Each Fund acquired the Securities in the
ordinary course of business and is holding such
Securities for the benefit of its third party
investors.
Item 5. Interest in Securities of the Issuer. See pps. 2-5 of
this Schedule, setting forth the aggregate number and
percentage of the Securities beneficially owned by each
Reporting Person, the number of shares as to which
there is sole or shared power to vote, or to direct the
vote, and sole or shared power to dispose or to direct
the disposition.
On May 15, 1998, the following funds acquired Series A
convertible preferred stock and warrants in a private
placement transaction directly from the issuer at a
price of 15.80 per share:
1. Private Equity Fund -- 58,544 preferred shares and
110,119 warrants.
2. SST -- 15,823 preferred shares and 29,763 warrants.
No other transactions have occurred within the last 60
days.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
See Item 2 and Item 4 of this Schedule. Based on such
Items. Messrs. Marxe and Greenhouse maintain sole
voting power and sole dispositive power with respect to
the Securities.
Item 7. Material to be Filed as Exhibits.
None
Page 7 of 7 Pages
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information
set forth in this statement is true, complete and
correct.
May 22, 1998
/s/ Austin W. Marxe
_________________________________
Special Situaitons Private Equity Fund, L.P.
by: Austin W. Marxe, Managing Director
/s/ Austin W. Marxe
_____________________________
Special Situations Technology Fund,L.P.
by: Austin Marxe, Managing Director
/s/ Austin W. Marxe
_____________________________
MG Advisers, L.L.C.
by: Austin Marxe, President and CEO
/s/ Austin W. Marxe
_____________________________
SST Advisers, L.L.C.
by: Austin Marxe, President and CEO
/s/ Austin W. Marxe
_____________________________
Austin W. Marxe
/s/ David Greenhouse
_____________________________
David Greenhouse
