Datakey Announces First Quarter Results; First Quarter Revenues From Continuing Operations Increase 183 Percent Over Last Year

Apr 23, 2001, 01:00 ET from Datakey, Inc.

    MINNEAPOLIS, April 23 /PRNewswire Interactive News Release/ --
     Datakey Inc. (Nasdaq:   DKEY) ( http://www.datakey.com ), a leading
 international provider of smart card-based information security solutions for
 Public Key Infrastructure (PKI), today reported revenue from continuing
 operations for the first quarter ended March 31, 2001 of $1,297,000, an
 increase of 183 percent over revenue of $459,000 for the first quarter of last
 year.  The net loss from continuing operations for the first quarter was
 $997,000, or 11 cents per share, compared to a net loss from continuing
 operations of $751,000, or 10 cents per share, in last year's first quarter.
 The net loss in the first quarter was less than projected in the Company's
 2001 Plan.
     "In light of the anticipated rapid worldwide growth of our marketplace, we
 have maintained an aggressive posture toward further development of our
 leading edge technology, and on increasing Datakey's visibility and global
 sales coverage," said Carl P. Boecher, president and chief executive officer.
 "This resulted in significant increases in research & development and sales
 and marketing expense -- which we view as an important investment in Datakey's
 future and directly supporting our planned growth in revenue.  A portion of
 the increase in marketing expense and all of the increase in general and
 administrative expense is due to the information security solutions business
 absorbing all of the expenses that were previously shared with our
 discontinued EP business unit.  We expect that expenses will not increase
 significantly for the balance of the year.
     "During the first quarter, we added 21 new pilot installations, compared
 with the addition of 7 new pilots in the first quarter of last year, bringing
 our total base of active pilots to approximately 140.  6 pilots were converted
 to production status in the quarter versus 3 in last year's first quarter,
 giving us a total of 38 enterprises now in production.  Our order pipeline
 today is the largest it has ever been.  In the first quarter we also added
 88 new enterprises that are evaluating our products, compared to the addition
 of 53 in the first quarter of last year," Boecher said.
     Gross profit for the first quarter increased to 53 percent of revenue from
 37 percent in last year's first quarter reflecting increased revenue and
 favorable product pricing.
 
     First Quarter Highlights
     -- We finalized a business relationship and reseller agreement with
        Mainstay, a provider of information and physical security products and
        services;
     -- We announced a 33,000-seat initial order for our client software from a
        major European bank;
     -- We released CIP Thin -- Datakey's smart card-based information security
        solution for ASP environments;
     -- We completed a $4.8 million private placement of Datakey's common
        stock;
     -- We announced the divestiture of our Electronics Products operations,
        enabling us to focus our resources on the growth of our Information
        Security Solutions (ISS) business;
     -- We announced that Society for Worldwide Interbank Financial
        Telecommunication (SWIFT) has selected Datakey's PKI smart card
        technology to bundle with its product offering for 7,000 banks in
        192 countries;
     -- We opened two additional sales offices during the quarter;
     -- We announced a substantial order from a major UK bank for our PKI smart
        cards, readers and client software;
     -- We were awarded an order from an international government agency for
        PKI smart cards, readers and software to serve 10,000 users; and
     -- We were awarded a major production order from an international law
        enforcement agency.
 
     "With nearly $4.4 million in cash on our balance sheet and a $1 million
 bank line of credit at the end of the quarter, we believe we have the
 financial resources to continue to develop our technology and expand Datakey's
 share of the information security market for at least the next year," Boecher
 said.
 
     Outlook
     The Company believes losses will continue at least through the first half
 of 2001, and that even if the Company attains profitability in the second half
 of 2001, the Company projects a loss for the year 2001.
 
     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).
 
     Forward-Looking Statements
     Statements in this press release related to the sufficiency of the
 Company's cash resources to expand Datakey's market share and its projection
 of profitability in the second half of 2001 are forward-looking statements and
 subject to certain risks and uncertainties which could cause actual results to
 differ materially from those projected.  The Company's ability to achieve
 profitability in the second half and reduce its loss in the second half of
 2001 is directly dependent upon continuing to significantly increase revenue
 from the sale and licensing of its information security products through 2001.
     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
 http://www.datakey.com .  You can view all Datakey press releases on the Web
 site at http://www.prnewswire.com or via fax by calling Company News On-Call
 at 800-758-5804, ext. 231950.
 
 
                                 DATAKEY, INC.
                         CONDENSED STATEMENTS OF INCOME
                               (000's except EPS)
 
                                                   Three Months Ended
                                                 March  31,     April 1,
                                                    2001          2000
     Total Revenue                                $1,297          $459
     Costs and expenses
       Cost of sales                                 609           291
       Research and development                      600           451
       Sales and marketing                           877           351
       General and administrative                    210           154
         Total Costs and Expenses                  2,296         1,247
 
       Operating Loss                               (999)         (788)
 
     Interest Income                                   2            37
     Net Income Before Taxes                        (997)         (751)
 
     Income Tax Expense                                0             0
     Net Loss From Continuing Operations           $(997)        $(751)
     Loss Per Share-Continuing Operations         $(0.11)       $(0.10)
 
     Income (Loss) From Discontinued Operations        0            43
     Loss On Disposal of Segment                       0             0
         Total Income (Loss) From Discontinued
          Operations                                  $0           $43
     Income (Loss) per Share From Discontinued
      Operations                                   $0.00         $0.01
 
     Net Loss                                      $(997)        $(708)
     Loss Per Share                               $(0.11)       $(0.10)
 
     Weighted Average Common Shares                9,066         7,304
 
 
                          SELECTED BALANCE SHEET DATA
                                    ($000s)
 
                                                  March  31,      Dec.  31,
                                                     2001           2000
     Assets
       Cash                                         $4,377         $1,533
       Net assets of discontinued operations         1,438          1,562
       Other current assets                          2,567          1,616
       Non current assets                              674            725
         Total Assets                               $9,056         $5,436
 
     Liabilities and Equity
       Current liabilities-continuing operations      $965           $751
       Current liabilities-discontinued operations     264            481
       Equity                                        7,827          4,204
         Total Liabilities and Equity               $9,056         $5,436
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X36353613
 
 

SOURCE Datakey, Inc.
    MINNEAPOLIS, April 23 /PRNewswire Interactive News Release/ --
     Datakey Inc. (Nasdaq:   DKEY) ( http://www.datakey.com ), a leading
 international provider of smart card-based information security solutions for
 Public Key Infrastructure (PKI), today reported revenue from continuing
 operations for the first quarter ended March 31, 2001 of $1,297,000, an
 increase of 183 percent over revenue of $459,000 for the first quarter of last
 year.  The net loss from continuing operations for the first quarter was
 $997,000, or 11 cents per share, compared to a net loss from continuing
 operations of $751,000, or 10 cents per share, in last year's first quarter.
 The net loss in the first quarter was less than projected in the Company's
 2001 Plan.
     "In light of the anticipated rapid worldwide growth of our marketplace, we
 have maintained an aggressive posture toward further development of our
 leading edge technology, and on increasing Datakey's visibility and global
 sales coverage," said Carl P. Boecher, president and chief executive officer.
 "This resulted in significant increases in research & development and sales
 and marketing expense -- which we view as an important investment in Datakey's
 future and directly supporting our planned growth in revenue.  A portion of
 the increase in marketing expense and all of the increase in general and
 administrative expense is due to the information security solutions business
 absorbing all of the expenses that were previously shared with our
 discontinued EP business unit.  We expect that expenses will not increase
 significantly for the balance of the year.
     "During the first quarter, we added 21 new pilot installations, compared
 with the addition of 7 new pilots in the first quarter of last year, bringing
 our total base of active pilots to approximately 140.  6 pilots were converted
 to production status in the quarter versus 3 in last year's first quarter,
 giving us a total of 38 enterprises now in production.  Our order pipeline
 today is the largest it has ever been.  In the first quarter we also added
 88 new enterprises that are evaluating our products, compared to the addition
 of 53 in the first quarter of last year," Boecher said.
     Gross profit for the first quarter increased to 53 percent of revenue from
 37 percent in last year's first quarter reflecting increased revenue and
 favorable product pricing.
 
     First Quarter Highlights
     -- We finalized a business relationship and reseller agreement with
        Mainstay, a provider of information and physical security products and
        services;
     -- We announced a 33,000-seat initial order for our client software from a
        major European bank;
     -- We released CIP Thin -- Datakey's smart card-based information security
        solution for ASP environments;
     -- We completed a $4.8 million private placement of Datakey's common
        stock;
     -- We announced the divestiture of our Electronics Products operations,
        enabling us to focus our resources on the growth of our Information
        Security Solutions (ISS) business;
     -- We announced that Society for Worldwide Interbank Financial
        Telecommunication (SWIFT) has selected Datakey's PKI smart card
        technology to bundle with its product offering for 7,000 banks in
        192 countries;
     -- We opened two additional sales offices during the quarter;
     -- We announced a substantial order from a major UK bank for our PKI smart
        cards, readers and client software;
     -- We were awarded an order from an international government agency for
        PKI smart cards, readers and software to serve 10,000 users; and
     -- We were awarded a major production order from an international law
        enforcement agency.
 
     "With nearly $4.4 million in cash on our balance sheet and a $1 million
 bank line of credit at the end of the quarter, we believe we have the
 financial resources to continue to develop our technology and expand Datakey's
 share of the information security market for at least the next year," Boecher
 said.
 
     Outlook
     The Company believes losses will continue at least through the first half
 of 2001, and that even if the Company attains profitability in the second half
 of 2001, the Company projects a loss for the year 2001.
 
     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).
 
     Forward-Looking Statements
     Statements in this press release related to the sufficiency of the
 Company's cash resources to expand Datakey's market share and its projection
 of profitability in the second half of 2001 are forward-looking statements and
 subject to certain risks and uncertainties which could cause actual results to
 differ materially from those projected.  The Company's ability to achieve
 profitability in the second half and reduce its loss in the second half of
 2001 is directly dependent upon continuing to significantly increase revenue
 from the sale and licensing of its information security products through 2001.
     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
 http://www.datakey.com .  You can view all Datakey press releases on the Web
 site at http://www.prnewswire.com or via fax by calling Company News On-Call
 at 800-758-5804, ext. 231950.
 
 
                                 DATAKEY, INC.
                         CONDENSED STATEMENTS OF INCOME
                               (000's except EPS)
 
                                                   Three Months Ended
                                                 March  31,     April 1,
                                                    2001          2000
     Total Revenue                                $1,297          $459
     Costs and expenses
       Cost of sales                                 609           291
       Research and development                      600           451
       Sales and marketing                           877           351
       General and administrative                    210           154
         Total Costs and Expenses                  2,296         1,247
 
       Operating Loss                               (999)         (788)
 
     Interest Income                                   2            37
     Net Income Before Taxes                        (997)         (751)
 
     Income Tax Expense                                0             0
     Net Loss From Continuing Operations           $(997)        $(751)
     Loss Per Share-Continuing Operations         $(0.11)       $(0.10)
 
     Income (Loss) From Discontinued Operations        0            43
     Loss On Disposal of Segment                       0             0
         Total Income (Loss) From Discontinued
          Operations                                  $0           $43
     Income (Loss) per Share From Discontinued
      Operations                                   $0.00         $0.01
 
     Net Loss                                      $(997)        $(708)
     Loss Per Share                               $(0.11)       $(0.10)
 
     Weighted Average Common Shares                9,066         7,304
 
 
                          SELECTED BALANCE SHEET DATA
                                    ($000s)
 
                                                  March  31,      Dec.  31,
                                                     2001           2000
     Assets
       Cash                                         $4,377         $1,533
       Net assets of discontinued operations         1,438          1,562
       Other current assets                          2,567          1,616
       Non current assets                              674            725
         Total Assets                               $9,056         $5,436
 
     Liabilities and Equity
       Current liabilities-continuing operations      $965           $751
       Current liabilities-discontinued operations     264            481
       Equity                                        7,827          4,204
         Total Liabilities and Equity               $9,056         $5,436
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X36353613
 
 SOURCE  Datakey, Inc.

RELATED LINKS

http://www.datakey.com