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DATAKEY REPORTS THIRD-QUARTER AND NINE-MONTH RESULTS

 MINNEAPOLIS, Nov. 15 /PRNewswire/ -- Datakey, Inc. (NASDAQ-NMS: DKEY) today reported total revenue for the third quarter ended Oct. 1, 1993, of $1,416,096, compared with $1,067,877 in the third quarter of 1992. Net income for the quarter was $3,576, or 0 cents per share, versus a loss of $127,003, or 4 cents per share, last year.
 Revenue for the first nine months of 1993 was $4,585,858 compared with $4,169,847 for the 1992 period. Net income for the nine-month period was $151,844, or 5 cents per share, versus $156,791, or 5 cents per share last year.
 John Underwood, chairman and chief executive officer, said, "We are encouraged by our third-quarter performance. Datakey's revenue gains were modest but consistent with our projections. We expect further improvement in the fourth quarter and continue to project profitability for both the quarter and year. Earnings will be lower than previously anticipated, however, due to several factors including expenses related to the pending merger with Sheldahl. Earnings also will continue to be affected by costs from new product development and by lower margins on new, commercial products."
 Datakey President, Michael Carenzo, added, "1993 was a year of repositioning. In 1994, we anticipate continuing expansion of our commercial customer base based on plans we put into place recently. The custom development programs Datakey announced earlier this year now are entering the production phase and will fuel further revenue growth beginning early next year. The company's newly expanded sales coverage also should strengthen performance in the months ahead, as will emerging commercial opportunities for our line of SignaSURE(TM) products, a line of information security products with advanced encryption and digital signature capabilities. Our challenge moving forward will be to develop the operational efficiencies needed to respond effectively to the requirements of the larger and more diverse customer base that we now are beginning to build."
 Datakey, Inc. designs, manufactures and markets portable-memory- based systems, subsystems and custom-designed components for security- driven markets. The company's proprietary memory keys, cards and other- shaped tokens serve as a convenient way to carry electronic information and are packaged to survive in portable environments. These products enhance security and simplify equipment use for a wide range of applications by automating critical identification, data collection and control functions. Shares of Datakey's common stock are traded on the NASDAQ-NMS under the symbol DKEY.
 DATAKEY, INC.
 CONDENSED STATEMENTS OF INCOME
 (Unaudited)
 ($000's)
 Third Quarter Ended Nine Months Ended
 10/1/93 9/25/92 10/1/93 9/25/92
 Total revenue $1,416 $1,068 $4,586 $4,170
 Cost and Expenses:
 Cost of sales 790 672 2,476 2,274
 Research & development 245 131 669 635
 Sales & marketing 251 325 794 771
 General & administrative 180 206 603 519
 Total costs & expenses 1,466 1,334 4,542 4,199
 Operating income (loss) (50) (266) 44 (29)
 Interest income & other 55 74 183 267
 Net income before taxes 5 (192) 227 238
 Provision for taxes 1 (65) 75 81
 Net income (loss) $4 $(127) $152 $157
 Earnings (loss) per share -- $(.04) $.05 $.05
 Weighted average common
 shares 2,965,476 2,970,525 2,970,383 3,074,857
 SELECTED BALANCE SHEET DATA
 (Unaudited)
 $(000's)
 10/1/93 12/31/92
 Assets
 Cash & marketable securities $7,803 $8,150
 Other current assets 1,803 1,720
 Non-current assets 1,591 1,160
 Total assets $11,197 $11,030
 Liabilities & equity
 Current liabilities 667 662
 Other liabilities 70 60
 Equity 10,460 10,308
 Total liabilities & equity $11,197 $11,030
 -0- 11/15/93
 /CONTACT: Marian Briggs of Padilla Speer Beardsley, 612-871-8877, for Datakey; or Alan Shuler of Datakey, 612-890-6850/
 (DKEY)


CO: Datakey, Inc. ST: Minnesota IN: CPR SU: ERN

DB-DS -- MN011 -- 4394 11/15/93 12:01 EST
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Publication:PR Newswire
Date:Nov 15, 1993
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