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Datakey Announces First Quarter 2004

Friday 30 April 2004 15:48 CET | News

Datakey has reported results for the first quarter ended March 31, 2004. Revenue for the first quarter grew to $1,501,000, an increase of 89 percent from $794,000 for the year-earlier period, and up 47 percent from $1,018,000 from the fourth quarter of 2003.

The first quarter net loss narrowed to $1,149,000, or $0.10 per share, compared to a net loss of $1,549,000, or $0.15 per share, in the year-earlier period, and a net loss of $988,000, or $0.09 per share, in the fourth quarter of 2003. The net loss in the first quarter of 2004 included a non cash interest and warrant amortization expense of $199,000 related to the $2.0 million convertible debt financing completed in October 2003 and approximately $110,000 in one-time costs related to the replacement of an officer. Highlights of the Quarter Include: -- We signed a multi-year sales agreement with a U.S. financial services organization for delivery of Datakey CIP and Datakey CMS authentication solutions, which contributed to revenue in the first quarter of 2004 and is expected to contribute approximately $2.6 million in revenue through 2006. -- We won a program to add biometric authentication to a smart ID badge deployment for the U.S. State Department, which contributed to revenue in the first quarter of 2004 and is expected to contribute to revenue during the second half of 2004. -- We invoiced our customers approximately $2.0 million during the quarter, which is our best bookings quarter since the third quarter of 2001. -- We delivered Datakey Axis to 49 customers, including evaluation sites, and we announced our first reference account for Datakey Axis this week. Financial Review Net sales of products and services for the first quarter of 2004 were $1,501,000, compared to $794,000 for the same period of 2003. The increase of $707,000 in net sales for the first quarter of 2004 resulted from (1) a substantial increase in spending by certain financial and governmental customers of Datakey CIP and CMS products, (2) service revenues earned from completing a task order as part of a system integration analysis project for the U.S. State Department and (3) licensing revenue from an original equipment manufacturer. Gross margins increased to 64% of revenue in the first quarter of 2004 from 24% of revenue in the same period of 2003 principally due to a more favorable product sales mix, which consisted of a greater percentage of higher gross margin software products, as well as high margin service and licensing revenues earned during the quarter. In addition, gross margins in the first quarter of 2003 were negatively affected by an $84,000 impairment expense related to a revaluation of certain prepaid licenses. Net interest expense incurred during the first quarter of 2004 came to $194,000, or 13% of revenue, compared to net interest income of $5,000 in the same period of 2003. Net interest expense increased by $199,000 in the first quarter of 2004 due to the $2,000,000 convertible promissory notes payable, which were issued on October 17, 2003. In subsequent quarters, net interest expense, including warrant amortization expense, related to the convertible promissory notes will accrue at approximately $200,000 per quarter and is payable on the October 17, 2004 maturity date. Cash decreased by $1,107,000 from $2,702,000 at December 31, 2003 to $1,595,000 at March 31, 2004. Approximately $1,109,000 of cash was used to fund operating activities, which closely approximates the net loss for the quarter.


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Categories: Payments & Commerce | Payments General
Countries: World
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