0000914190-95-000027.txt : 19950817 0000914190-95-000027.hdr.sgml : 19950817 ACCESSION NUMBER: 0000914190-95-000027 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950701 FILED AS OF DATE: 19950816 SROS: NASD 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: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-11447 FILM NUMBER: 95564700 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 10QSB/A 1 AMENDMENT 1 TO FORM 10-QSB FOR QTR ENDED 7/1/95 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A-1 (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 1995 Commission File Number 0-11447 DATAKEY, INC. (Exact name of small business issuer as specified in its charter) MINNESOTA 41-1291472 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 407 WEST TRAVELERS TRAIL, BURNSVILLE, MN 55337 Issuer's telephone number: (612) 890-6850 (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No APPLICABLE ONLY TO CORPORATE ISSUERS The number of shares outstanding of the issuer's common equity, as of August 11, 1995, is 2,829,570. Transitional Small Business Disclosure Format (check one): Yes No x The registrant hereby amends Item 1 of Part I of its Form 10-QSB for the quarter ended July 1, 1995 as set forth on the following pages. PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS DATAKEY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
July 1, December 31 1995 1994 (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,306,721 $ 255,039 Investment in held-to-maturity securities 5,273,379 6,110,576 Trade receivables, less allowance for doubtful accounts of $31,986 and $53,700 995,766 1,190,893 Inventories 1,261,007 1,348,985 Prepaid and other 68,556 26,242 Deferred tax assets 166,000 166,000 Refundable income taxes 0 101,680 Total current assets 9,071,429 9,199,415 INTANGIBLES Patent and license at cost, less amortization of $127,065 and $101,811 163,196 153,491 Non-compete agreement, less amortization of $82,500 and $41,250 82,500 123,750 245,696 277,241 EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost Production tools 1,081,089 1,027,206 Equipment 2,312,827 2,211,216 Furniture and fixtures 211,822 211,822 Leasehold improvements 211,612 210,562 3,817,350 3,660,806 Less accumulated depreciation (2,173,344) (1,936,935) 1,644,006 1,723,871 $ 10,961,131 $ 11,200,527 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 429,306 $ 758,876 Accrued expenses 244,761 192,726 Non-compete obligation 0 82,500 Income taxes payable 42,097 0 Warranty costs 29,150 50,000 Total current liabilities 745,314 1,084,102 DEFFERRED TAX LIABILITY 101,000 101,000 SHAREHOLDERS' EQUITY Convertible preferred stock, voting, stated value $2.50 per share; authorized 400,000 shares; issued and outstanding 150,000 375,000 375,000 Common stock, par value $.05 per share; authorized 10,000,000 shares; outstanding 2,829,570 141,479 141,479 Additional paid-in capital 3,865,631 3,865,631 Retained earnings 5,732,707 5,633,315 10,114,817 10,015,425 $ 10,961,131 $ 11,200,527
See Notes to Consolidated Financial Statements DATAKEY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 1995 1994 1995 1994 Net Sales $ 1,696,136 $ 1,085,510 $ 3,604,374 $ 2,458,984 Cost of goods sold 1,124,898 803,833 2,397,216 1,773,175 Gross Profit 571,238 281,677 1,207,158 685,809 Other operating revenue 5,927 14,814 10,277 33,705 Total gross profit and other operating revenue 577,165 296,491 1,217,435 719,514 Operating expenses: Research, development and engineering 169,865 188,536 340,062 421,746 Selling 301,084 241,239 583,398 463,719 General and administrative 174,742 156,626 329,608 320,489 Total operating expenses 645,691 586,401 1,253,068 1,205,954 Operating income (loss) (68,526) (289,910) (35,633) (486,440) Nonoperating income(expense): Interest income 95,953 50,416 187,499 110,862 Other income (expense) (264) 4 (74) (821) 95,689 50,420 187,425 110,041 Income (loss) before income taxes 27,163 (239,490) 151,792 (376,399) Income tax expense (benefit) 9,400 (81,000) 52,400 (126,000) Net income (loss) $ 17,763 ($ 158,490) $ 99,392 ($ 250,399) Net income (loss) per common and common equivalent share (Primary and fully diluted) $ 0.01 ($ 0.06) $ 0.03 ($ 0.09) Weighted average number of common and common equivalent shares outstanding 2,982,314 2,829,070 2,980,630 2,829,070
See Notes to Consolidated Financial Statements DATAKEY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended Six Months Ended July 1, July 2, July 1, July 2, 1995 1994 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net Income (loss) $ 17,763 ($ 158,490) $ 99,392 ($ 250,399) Adjustments to reconcile net income (loss) to net cash provided by(used in) operating activities: Depreciation 118,058 88,980 236,409 176,626 Amortization 35,789 9,734 66,504 18,927 Change in assets and liabilites (Increase) decrease: Trade receivables (48,570) 377,851 195,127 797,013 Inventories 138,441 (4,746) 87,978 (256,603) Prepaid expenses and other 1,732 (6,947) (42,314) (24,333) Refundable income taxes 59,702 56,273 101,680 11,023 Increase (decrease) in: Accounts payable (34,241) (149,234) (329,570) (375,397) Accrued expenses 13,966 (78,643) 52,035 (209,684) Accrued warranty costs (24,516) 3,594 (20,850) 66 Income taxes payable 42,097 0 42,097 0 Net cash provided by (used in) operating activities 320,221 138,372 488,488 (112,761) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of tooling and equipment (92,437) (64,757) (156,544) (207,573) Purchase of held-to-maturity securities (1,270,456) (5,052,804) (2,462,803) (5,052,804) Proceeds from maturity of held-to-maturity securities 2,280,000 2,517,486 3,300,000 4,410,702 Patent and license costs (28,032) (13,512) (34,959) (46,725) Net cash provided by (used in) investing activities 889,075 (2,613,587) 645,694 (896,400) CASH FLOWS FROM FINANCING ACTIVITIES Payments on non-compete obligation (41,250) 0 (82,500) 0 Net proceeds from sale of common stock 0 0 0 0 Net cash (used in) financing activities (41,250) 0 (82,500) 0 Increase (decrease) in cash and cash equivalents 1,168,046 (2,475,215) 1,051,682 (1,009,161) CASH AND CASH EQUIVALENTS Beginning 138,675 4,293,854 255,039 2,827,800 Ending $ 1,306,721 $ 1,818,639 $ 1,306,721 $ 1,818,639
See Notes to Consolidated Financial Statements DATAKEY, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS GENERAL In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly Datakey's financial position as of July 1, 1995 and December 31, 1994 and results of its operations and cash flows for the three-month and six-month periods ended July 1, 1995 and July 2, 1994. The adjustments that have been made are of a normal recurring nature. The accounting policies followed by the Company are set forth in Note 1 to the Company's financial statements in the 1994 Datakey, Inc. Annual Report and in Form 10-KSB for the year ended December 31, 1994. INVESTMENT IN HELD-TO-MATURITY SECURITIES The Company held marketable debt securities with an amortized cost of $5,273,379 as of July 1, 1995. As it is the intention of the Company to hold these securities to maturity, they are accounted for as "Held-to-Maturity Securities" as defined in FASB Statement No. 115. The market value of these U.S. Treasury Bill securities is $5,285,066. The unrealized gain, therefore, is $11,687. All of the Securities have a maturity date of less than twelve months. The Company has no marketable debt securities which are classified as Available-For-Sale Securities or Trading Securities. SIGNATURES Pursuant to the requirements of Section 13 and 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated August 15, 1995 DATAKEY, INC. BY: /s/ John H. Underwood John H. Underwood Chairman & Chief Executive Officer (Principal Executive Officer) BY: /s/ Alan G. Shuler Alan G. Shuler Vice President & Chief Financial Officer (Principal Financial and Accounting Officer)