SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 25, 1999
Datakey, Inc.
(Exact Name of Registrant as Specified in its Charter)
Minnesota
(State or Other Jurisdiction of Incorporation)
0-11447 41-1291472
(Commission File Number) (I.R.S. Employer Identification Number)
407 West Travelers Trail
Burnsville, Minnesota 55337
(Address of Principal Executive Offices) (Zip Code)
612-890-6850
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. Other Events.
On October 25, 1999, Datakey, Inc. issued a press release announcing
its financial results for the quarter ended October 2, 1999. The full text of
the press release is set forth in Exhibit 99 attached hereto and is incorporated
in this Report as if fully set forth herein.
Item 7. Financial Statements and Exhibits.
(a) Financial statements: None.
(b) Pro forma financial information: None.
(c) Exhibits:
Exhibit 99. Press release dated October 25, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 26, 1999
DATAKEY, INC.
By /s/ Carl P. Boecher
Carl P. Boecher
President and Chief Executive Officer
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
DATAKEY, INC.
EXHIBIT INDEX TO FORM 8-K
Date of Report: Commission File No.:
October 25, 1999 0-11447
DATAKEY, INC.
EXHIBIT NO. ITEM
99 Press Release dated October 25, 1999
Date: October 25, 1999
From:
Datakey, Inc.
407 West Travelers Trail
Burnsville, MN 55337
Alan Shuler, CFO
(612) 808-2349
[email protected]
FOR IMMEDIATE RELEASE
DATAKEY, INC. ANNOUNCES
THIRD QUARTER RESULTS
MINNEAPOLIS, October 25, 1999 - Datakey, Inc. (Nasdaq:DKEY) today reported
results for the quarter ended October 2, 1999. Revenue for the third quarter
increased eight percent to $1,487,000 from $1,374,000 for the same period last
year. Net loss for the quarter was $662,000, or nineteen cents per share, versus
$577,000, or twenty-one cents per share, in the year-earlier period.
Revenue for the nine-month period declined thirteen percent to $4,001,000 from
$4,600,000, in the year earlier period. Net loss increased to $2,295,000, or
seventy-one cents per share, from $1,479,000, or sixty-six cents per share, in
the year-earlier period. The prior year nine-month period included a one-time
adjustment of fourteen cents per share for an assumed preferred stock dividend
related to a "beneficial conversion" feature in the series A preferred stock
sold in May 1998.
"Third quarter revenue increased by 29% over last quarter due to an increase in
activity in our electronic products business segment and an increase in revenue
from the information security business," said Carl P. Boecher, CEO of Datakey.
Mr. Boecher continued, "There is no question that our information security
business has developed much slower than we had anticipated. However, there were
indications in the third quarter that Datakey's information security products
were generating increasing interest. Bookings of new information security
product orders in the third quarter exceeded $500,000 for the first time in
corporate history. It is too early to determine if this trend will continue on a
quarter to quarter basis, but it does mean that we are making progress. If
bookings continue to increase in the quarters ahead, we believe that information
security product revenue in the year 2000 may increase significantly over 1999
revenues."
(More)
<PAGE>
Mr. Boecher said, "The slower-than-anticipated development of our information
business has resulted in the continuation of substantial losses in 1999. Those
losses have resulted in significant liquidity issues for Datakey. Datakey has a
bank line of credit based upon 80 percent of the Company's domestic accounts
receivable which can be terminated by the bank on demand at its discretion.
Borrowing availability under this line, based upon the level of domestic
accounts receivable and current borrowing outstanding, was $155,000 as of
October 22, 1999. Despite a private placement which generated net proceeds of
$1,220,000 in June 1999, management believes that Datakey will require at least
$600,000 in additional capital to ensure that it will be able to fund its
operations over the next six months. The Company is currently in the process of
seeking additional private capital and, based on preliminary discussions with
investors, believes it will be successful."
Datakey, Inc. is an international supplier of electronic products and services.
The Company provides product, system and subsystem solutions to record, store,
and transmit electronic information. Datakey also provides products and systems
directed to the information security market which enable user identification and
authentication, secure data exchange, and information validation. It also
provides OEM products, consisting of proprietary memory keys, cards, and other
custom-shaped tokens, that serve as a convenient way to carry electronic
information and are packaged to survive in portable environments.
Shares of Datakey's common stock are traded on the Nasdaq/NNM under the symbol
DKEY. Web address is http://www.datakey.com. Datakey press releases are
available by fax through Company News On-Call at 800-758-5804, ext. 231950, or
at http://www.prnewswire.com.
This press release contains forward-looking statements relating to an increase
in EP revenue, continuing progress in sales of ISS products, and ability to
raise additional working capital to fund the Company's operations for six
months. Such statements involve a number of risks and uncertainties. Among the
important factors that could cause actual results to differ materially from
those indicated by such forward-looking statements are delays in product
development, introduction of new products by competitors, technical
difficulties, the inability of the Company to meet information security product
sales projections in the fourth quarter of 1999 and the year 2000 resulting in
continued material losses and cash flow deficiencies, lack of sufficient
investor interest in the Company's current private placement offering and the
risk factors detailed from time to time in Datakey's periodic reports and
registration statements filed with the Securities and Exchange Commission.
(More)
<PAGE>
DATAKEY, INC.
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
($000s)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCT. 2, 1999 OCT. 3, 1998 OCT. 2, 1999 OCT. 3, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
TOTAL REVENUE $ 1,487 $ 1,374 $ 4,001 $ 4,600
COSTS AND EXPENSES :
COST OF SALES 949 859 2,451 2,799
RESEARCH & DEVELOPMENT 501 402 1,542 1,214
SALES & MARKETING 482 500 1,618 1,479
GENERAL & ADMINISTRATIVE 218 210 687 632
----------- ----------- ----------- -----------
TOTAL COSTS & EXPENSES 2,150 1,971 6,298 6,124
----------- ----------- ----------- -----------
OPERATING (LOSS) (663) (597) (2,297) (1,524)
INTEREST INCOME 1 20 2 45
----------- ----------- ----------- -----------
NET INCOME BEFORE TAXES (662) (577) (2,295) (1,479)
INCOME TAX EXPENSE 0 0 0 0
----------- ----------- ----------- -----------
NET LOSS $ (662) $ (577) $ (2,295) $ (1,479)
=========== =========== =========== ===========
LOSS PER SHARE BEFORE $ (0.18) $ (0.20) $ (0.69) $ (0.51)
=========== =========== =========== ===========
PREFERRED DIVIDENDS
LOSS PER SHARE $ (0.19) $ (0.21) $ (0.71) $ (0.66)
=========== =========== =========== ===========
WEIGHTED AVERAGE 3,651,772 2,949,066 3,308,103 2,918,782
COMMON SHARES
</TABLE>
SELECTED BALANCE SHEET DATA
(UNAUDITED)
($000s)
OCT. 2, 1999 DECEMBER 31, 1998
------------ -------------
ASSETS
CASH & MARKETABLE $ 20 $ 854
SECURITIES
OTHER CURRENT ASSETS 2,364 1,924
NON CURRENT ASSETS 1,485 1,758
----------- -----------
TOTAL ASSETS $ 3,869 $ 4,536
=========== ===========
LIABILITIES & EQUITY
CURRENT LIABILITIES $ 1,185 $ 732
OTHER LIABILITIES 0 0
EQUITY 2,684 3,804
----------- -----------
TOTAL LIABILITIES & EQUITY $ 3,869 $ 4,536
=========== ===========
