-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I4q0oqYv915JXvjO7tOLIhh7Tk7QnnFUF4kpNqsxMsG4Vw0wvuhmUzoBxZo4Zlxo CiobukwseHP9UOVJ+Eccxg== 0000914190-01-000042.txt : 20010308 0000914190-01-000042.hdr.sgml : 20010308 ACCESSION NUMBER: 0000914190-01-000042 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010220 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010306 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATAKEY INC CENTRAL INDEX KEY: 0000704914 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 411291472 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-11447 FILM NUMBER: 1562161 BUSINESS ADDRESS: STREET 1: 407 W TRAVELERS TRAIL CITY: BURNSVILLE STATE: MN ZIP: 55337 BUSINESS PHONE: 6128906850 MAIL ADDRESS: STREET 1: 407 WEST TRAVELERS TRAIL CITY: BURNSVILLE STATE: MN ZIP: 55337 8-K 1 0001.txt FORM 8-K, PRESS RELEASES 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): February 20, 2001 Datakey, Inc. (Exact Name of Registrant as Specified in Its Charter) Minnesota (State or Other Jurisdiction of Incorporation) 000-11447 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) 952-890-6850 (Registrant's Telephone Number, Including Area Code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. Private Placement On February 20, 2001, the Company completed a $4,800,000 financing with accredited investors. In connection with the financing, the Company issued 1,600,000 shares of Common Stock (the "Common Stock") and five-year warrants to purchase an aggregate of 1,600,000 shares of the Company's Common Stock with an exercise price of $3.02 per share (the "Warrants"). As part of the financing, the parties also entered into a Registration Rights Agreement, pursuant to which the Company agreed to file a registration statement on Form S-1 or Form S-3 by March 22, 2001 covering the resale of shares of the Company's Common Stock issued on February 20, 2001 and issuable upon exercise of the Warrants. The Company also paid a placement agent $240,000 in commissions, including $50,000 previously paid as a retainer, and issued to such agent a warrant to purchase 80,268 shares of Company Common Stock at an exercise price of $3.44 per share. Strategic Focus on ISS/ Divestiture of EP On February 22, 2001, the Company announced that it will strategically focus its business on market opportunities for smart card systems that enable information and transaction security for e-commerce, its Information Security Solutions business. As a result of this strategic decision, the Company plans to divest its Electronic Products (EP) business. EP supplies portable memory devices packaged in key and other token-shaped plastic for a variety of OEM customer's applications. The Company is therefore reporting EP as a discontinued operation for the fiscal year ended December 31, 2000, and has recorded a $1,300,000 charge to its fiscal 2000 financial statements. The Company also eliminated 11 positions in its EP business unit, including the Vice President and General Manager. See Press Release No. 1 dated February 22, 2001 included as Exhibit 99.1 under Item 7(c) hereof for further information. Fourth Quarter and Year 2000 Results Also on February 22, 2001, the Company reported results for the fourth quarter and year ended December 31, 2000. The results reflect the EP business unit as a discontinued operation and the prior year results have been restated for comparative purposes. For such results, see Press Release No. 2 dated February 22, 2001, included as Exhibit 99.2 under Item 7(c) hereof. Item 7. Financial Statements and Exhibits. (a) Financial statements: None. (b) Pro forma financial information: None. (c) Exhibits: 99.1 Press Release No. 1 dated February 22, 2001 (Concentration on ISS; Divestiture of EP) 99.2 Press Release No. 2 dated February 22, 2001 (Fourth Quarter and Year 2000 Results) 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: March 6, 2001 DATAKEY, INC. By /s/ Alan G. Shuler Alan G. Shuler Vice President and Chief Financial Officer EX-99.1 2 0002.txt PRESS RELEASE Datakey Announces Strategic Concentration on Information Security Solutions Business Company Plans to Divest Its Electronic Products Business Unit MINNEAPOLIS, Feb. 22, 2001 - Datakey, Inc. (Nasdaq: DKEY) today announced that it will strategically focus its business on market opportunities for smart card systems that enable information and transaction security for e-commerce. Carl Boecher, President and CEO of Datakey, said, "Our Information Security Solutions (ISS) business unit began to yield meaningful revenues in 1998, and has now reached critical mass, with substantial opportunity for future growth worldwide. We have therefore made the strategic decision to focus all of our resources on the aggressive further development of this business unit to provide smart card-based information security technology for OEM's and enterprises. As a result of this strategic decision, we plan to divest our Electronics Products business." Electronic Products (EP) is the original business that Datakey started in 1976. Since inception, this business has had periods of strong profitablity and positive cash flow, but in recent years the earnings and cash flow of this mature business have declined. EP supplies portable memory devices packaged in key and other token-shaped plastic for a variety of OEM customers' applications. The Company said it is reporting EP as a discontinued operation for the fiscal year ended Dec. 31, 2000, and has recorded a $1,300,000 charge to its fiscal 2000 financial statements. "Our decision to concentrate our resources on the Information Security Solutions business unit is supported by three important factors," Boecher said. "First, we have proven and established products and systems in our ISS business unit, and a growing pipeline of pilot installations to support strong future revenue growth; second, we have a talented management team that is highly experienced in developing and marketing our technology; and third, the global market for information and data security solutions is large and is growing rapidly. Our momentum in this high-growth smart card-based information security business is evidenced by its recent growth in revenues, which have now exceeded our EP revenues for the past two quarters. This strategic decision makes Datakey a pure play in the high growth information security business," said Boecher. "Our plan is to operate the EP business in a scaled-back mode, to improve cash flow during the next 12 months, while we entertain offers for the sale of the business. As this process unfolds, we will be dedicating more of our resources to the growth of the ISS unit. As a result, we are eliminating 11 positions in our EP business unit, including the Vice President and General Manager, and reassigning a few others to the ISS unit. We will be working with the 11 people affected to aid them in securing new positions outside the Company," Boecher said. Datakey employs approximately 60 people. About Datakey, Inc. Datakey, Inc., is a leading international provider of smart card solutions for PKI. Headquartered in Minneapolis, Minn., the company offers a family of smart card-based information security and digital signature products . Using state-of-the-art cryptographic technology, these products fill growing market needs for secure, smart card-based user authentication and data privacy for business-to-business e-commerce. Datakey's smart card-based information security products play an integral role in any PKI system by providing two-factor security something that is owned (a smart card) and something that is known (a password). Shares of Datakey's common stock are traded on Nasdaq under the symbol DKEY. You can find more information on the Datakey Web site at www.datakey.com. You can view all Datakey press releases on the Web site, at www.prnewswire.com or via fax by calling Company News On-Call at 1-800-758-5804, ext. 231950. ### EX-99.2 3 0003.txt PRESS RELEASE Datakey, Inc. Announces Fourth Quarter and Year 2000 Results MINNEAPOLIS, February 22, 2001 - Datakey, Inc. (Nasdaq: DKEY) today reported results for the fourth quarter and year ended December 31, 2000. Datakey recently announced that, unless a purchaser could be found for its Electronic Products business unit that the business unit would be discontinued, allowing the Company to focus on its information security (ISS) business. The results, therefore, reflect the EP business unit as a discontinued operation and the prior year results have been restated for comparative purposes. Revenue from continuing operations for the fourth quarter of 2000 was $1,368,000, up 54 percent from $885,000 for the same period last year and up 62% from the third quarter of 2000. Net loss from continuing operations for the quarter was $539,000, or $.07 per share, compared to a net loss of $474,000, or $.09 per share, in the year-earlier period. Revenue from continuing operations for 2000 increased by 174% to $3,608,000 from $1,316,000 in 1999. Net loss from continuing operations for the year was $2,953,000, or $.37 per share, compared to $2,891,000, or $.80 per share, in 1999. Revenue in the EP business unit, which is being discontinued, was $3,800,000 for 2000, a decline of 16% from $4,550,000 in 1999. "Orders for our PKI products and licenses are accelerating at triple digit rates," said Carl P. Boecher, president & CEO of Datakey, Inc. "In the fourth quarter, we booked orders for 99,000 "seats" and added 19 new pilots versus 9 new pilots in the fourth quarter of 1999. We also converted 4 pilot programs to production status during the quarter bringing the total to 32. Included in our new production customers are two major European banks." "Our fourth quarter gross profit margin percentage increased over the third quarter due to the addition of licensing revenue which carries a higher profit margin than product sales. While we believe it is necessary to balance new expenses with growth in revenue and gross margin, our loss from continuing operations is approximately the same as 1999 because we are continuing to invest in R&D and sales expansion as reflected by recent announcements of new products and planned new sales office locations. We expect to continue to increase future growth potential through the expansion of our direct sales, reseller and OEM channels," Boecher said. (More) The Company believes losses will continue at least through the first half of 2001, with a current projected annual loss for 2001 ranging from $1,000,000 to $2,000,000. The Company's ability to achieve profitability depends on significantly increasing revenue from the sale and/or licensing of its information security products. Although the Company is striving for profitability in the third and fourth quarter of 2001 there is no assurance that revenue from the sale and/or licensing of its information security products will be sufficient to achieve profitability. Highlights for the fourth quarter: o We joined with our partners to provide an E-Sign law technology demonstration to members of the U.S. House Commerce Committee o We announced FDIC will deploy Datakey smart card systems to their employees for trusted on-line communications and building access o We announced the U.S. Department of Energy will deploy Datakey smart card systems for secure network authentication and communications o We announced the U.S. Bureau of Labor Statistics will deploy Datakey smart card systems for strong authentication to the Agency's network o We partnered with WiseKey to supply our smart key technology for their Global PKI Initiative About Datakey, Inc. Datakey, Inc., is a leading international provider of smart card solutions for PKI. Headquartered in Minneapolis, Minn., the company offers a family of smart card-based information security and digital signature products. Using state-of-the-art cryptographic technology, these products fill growing market needs for secure, smart card-based user authentication and data privacy for business-to-business e-commerce. Datakey's smart card-based information security products play an integral role in any PKI system by providing two-factor security - something that is owned (a smart card) and something that is known (a password). Statements in this press release to the effect that Datakey expects to attain profitability in the second half of 2001 are forward-looking statements subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Those risks and uncertainties include, but are not limited to, the ability of Datakey to generate in 2001 revenues substantially in excess of ISS product revenues in 2000 while maintaining current profit margins. There is no assurance that sales of ISS products will ever be sufficient for the Company to attain profitability or that pricing pressures from competitors will not materially impact profit margins. Shares of Datakey's common stock are traded on Nasdaq 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. (More) DATAKEY, INC. CONDENSED STATEMENTS OF INCOME (000's except EPS)
Three Months Ended Twelve Months Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 2000 1999 2000 1999 ------- ------- ------- ------- Total Revenue $ 1,368 $ 885 $ 3,608 $ 1,316 Costs and expenses Cost of sales 573 351 1,904 689 Research and development 604 582 2,003 1,632 Sales and marketing 671 348 2,216 1,418 General and administrative 65 79 582 471 Total Costs and Expenses 1,913 1,360 6,705 4,210 ------- ------- ------- ------- Operating Loss (545) (475) (3,097) (2,894) Interest Income 6 1 144 3 ------- ------- ------- ------- Net Income Before Taxes (539) (474) (2,953) (2,891) Income Tax Expense 0 0 0 0 ------- ------- ------- ------- Net Loss From Continuing Operations $ (539) $ (474) $(2,953) $(2,891) ------- ------- ------- ------- Loss Per Share-Coninuing Operations $ (0.07) $ (0.09) $ (0.37) $ (0.80) ------- ------- ------- ------- Loss From Discontinued Operations (201) (140) (565) (18) Loss On Disposal of Segment (1,281) 0 (1,281) 0 ------- ------- ------- ------- Total Loss From Discontinued Operations $ (1,482) $ (140) $(1,846) $ (18) ------- ------- ------- ------- Loss per Share From Discontinued Operations $ (0.18) $ (0.03) $ (0.23) $ (0.00) ------- ------- ------- ------- Net Loss $(2,021) $ (614) $(4,799) $(2,909) ------- ------- ------- ------- Loss Per Share $ (0.24) $ (0.12) $ (0.60) $ (0.80) ------- ------- ------- ------- Weighted Average Common Shares 8,269 5,021 7,977 3,730
SELECTED BALANCE SHEET DATA ($000s) Dec. 31, Dec. 31, 2000 1999 ------- ------- Assets Cash $ 1,533 $ 345 Net assets of discontinued operations 1,562 0 Other current assets 1,616 2,833 Non current assets 725 1,420 ------- ------- Total Assets $ 5,436 $ 4,598 ======= ======= Liabilities and Equity Current liabilities-continuing operations $ 751 $ 1,098 Current liabilities-discontinued operations 481 0 Equity 4,204 3,500 ------- ------- Total Liabilities and Equity $ 5,436 $ 4,598 ======= ======= ### -----END PRIVACY-ENHANCED MESSAGE-----