What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-12 · 53 added, 27 removed, 249 unchanged (24% of the section changed)

27 unchanged sentences

Authorized, 30,000,000 shares

Issued and outstanding, 8,622,369 shares as of March 31,

Issued and outstanding, 8,814,279 shares as of June 30,

2022 and 8,621,007 shares as of December 31, 2021

8 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

4 unchanged sentences

Operating income (loss)

Non-operating income:

Non-operating income (loss):

Interest income

14 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss)

8 unchanged sentences

Stockholders’

Income (Loss)

Balance at December 31, 2020

5 unchanged sentences

Balance at March 31, 2021

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance at June 30, 2021

Balance at December 31, 2021

5 unchanged sentences

Balance at March 31, 2022

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance at June 30, 2022

See notes to consolidated financial statements

2 unchanged sentences

(in thousands)

For the Three Months Ended

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

29 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - FINANCIAL STATEMENT PREPARATION

Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) prepared the financial statements as of March 31, 2022 and March 31, 2021 according to the rules and regulations of the Securities and Exchange Commission ("SEC").

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) is a global market leader for advanced programming, security deployment, security provisioning and associated Intellectual Property (“IP”) protection and management solutions used in electronics manufacturing with flash memory, microcontrollers, and flash memory-based intelligent devices as well as secure element devices, authentication devices and secure microcontrollers.

Customers for our programming system products are located around the world, primarily in Asia, Europe and the Americas.

Our manufacturing operations are currently located in Redmond, Washington, United States and Shanghai, China.

We prepared the financial statements as of June 30, 2022 and June 30, 2021 according to the rules and regulations of the Securities and Exchange Commission (“SEC”).

These statements are unaudited but, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented.

1 unchanged sentence

We have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America according to such SEC rules and regulations.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Significant Accounting Policies

These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in our Form 10-K for the year ended December 31, 2021.

There have been no changes to our significant accounting policies described in the Annual Report that have had a material impact on our unaudited condensed consolidated financial statements and related notes.

Revenue Recognition

Topic 606 provides a single, principles-based five-step model to be applied to all contracts with customers.

Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (ASC 606) provides a single, principles-based, five-step model to be applied to all contracts with customers.

It generally provides for the recognition of revenue in an amount that reflects the consideration to which the Company expects to be entitled, net of allowances for estimated returns, discounts or sales incentives, as well as taxes collected from customers when control over the promised goods or services are transferred to the customer.

8 unchanged sentences

Installation that is considered perfunctory includes any installation that is expected to be performed by other parties, such as distributors, other vendors, or the customers themselves.

This considers the complexity, skill and training needed as well as customer expectations regarding installation.

This analysis considers the complexity, skill and training needed, as well as customer expectations regarding installation.

We enter into arrangements with multiple performance obligations that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component.

19 unchanged sentences

Three Months Ended

Six Months Ended

Net sales by type

8 unchanged sentences

A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

During the quarter ended March 31, 2022, as a result of a dividend paid from our China subsidiary to the USA parent company, $ 442,000 of income tax was withheld and paid.

Recently Adopted Accounting Pronouncements

On January 1, 2021 the Company adopted ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes.

This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates.

The adoption of this ASU did not have a material impact on our financial statements.

For the six months ended June 30, 2022, there were no recently issued accounting pronouncements that had, or are expected to have, a material impact to Data I/O Corporation’s consolidated financial statements.

NOTE 2 – INVENTORIES

17 unchanged sentences

Other accrued liabilities

The changes in our product warranty liability for the three months ending March 31, 2022 are as follows:

The changes in our product warranty liability for the six months ending June 30, 2022 are as follows:

(in thousands)

5 unchanged sentences

Our leasing arrangements are primarily for facility leases we use to conduct our operations.

The following table presents our future lease payments for long-term operating leases as of March 31, 2022:

The following table presents our future lease payments for long-term operating leases as of June 30, 2022:

Lease Commitments

3 unchanged sentences

Total operating lease liabilities

Cash paid for operating lease liabilities for the three months ended March 31, 2022 and 2021 were $ 212,000 and $ 201,000 , respectively.

The following table presents supplemental balance sheet information related to leases:

Cash paid for operating lease liabilities for the three and six months ended June 30, 2022 were $ 410,000 and $ 199,000 , respectively.

The following table presents supplemental balance sheet information related to leases as of June 30, 2022:

(in thousands)

2 unchanged sentences

Lease liability-long term (Operating lease liabilities)

At March 31, 2022, the weighted average remaining lease term is 3.67 and the weighted average discount rate used is 5 %.

The components of our lease expense for the three months ended March 31, 2022 and 2021 include operating lease costs of $ 220,000 and $ 171,000 , respectively, and short-term lease costs of $ 20,000 and $ 7,000 , respectively.

Our real estate facility leases are described below:

At June 30, 2022, the weighted average remaining lease term is 3.42 years and the weighted average discount rate used is 5 %.

The components of our lease expense for the three and six months ended June 30, 2022 include operating lease costs of $ 213,000 and $ 434,000 , respectively, and short-term lease costs of $ 8,000 and $ 27,000 , respectively.

During the fourth quarter of 2021, we amended our lease agreement for the Redmond, Washington headquarters facility, extending the lease to January 31, 2026 .

8 unchanged sentences

Most arrangements are cancelable without a significant penalty, and with short notice, typically less than 90 days.

At March 31, 2022, the purchase commitments and other obligations totaled $ 2.0 million of which all but $ 590,000 are expected to be paid over the next twelve months.

At June 30, 2022, the purchase commitments and other obligations totaled $ 3 .0 million of which all but $ 540,000 are expected to be paid over the next twelve months.

NOTE 7 – CONTINGENCIES

As of March 31, 2022, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial position.

As of June 30, 2022, we were not a party to any legal proceedings or aware of any indemnification agreement claims, the adverse outcome of which in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations or financial position.

NOTE 8 – INCOME TAXES

Income tax benefit (expense) primarily relates to foreign and state taxes.

The first quarter of 2022 included dividend withholding taxes on a dividend repatriation.

NOTE 9 – EARNINGS PER SHARE

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands except per share data)

14 unchanged sentences

Diluted earnings (loss) per share

Options to purchase 12,500 and 25,000 shares respectively were outstanding as of March 31, 2022 and 2021, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive.

Options to purchase 12,500 and 24,448 shares, respectively, were outstanding as of June 30, 2022 and 2021, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive.

NOTE 10 – SHARE-BASED COMPENSATION

1 unchanged sentence

For these awards, we have recognized compensation expense using a straight-line amortization method reduced for estimated forfeitures.

The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three months ended March 31, 2022 and 2021 were as follows:

The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three and six months ended June 30, 2022 and 2021, respectively, were as follows:

Three Months Ended

Six Months Ended

(in thousands)

3 unchanged sentences

Total share-based compensation

Equity awards granted during the three months ended March 31, 2022 and 2021 were as follows:

Equity awards granted during the three and six months ended June 30, 2022 and 2021 were as follows:

Three Months Ended

Six Months Ended

Restricted Stock Units

Stock Options

The weighted average number of shares outstanding used to compute earnings (loss) per share included the following:

Three Months Ended

Six Months Ended

Restricted Stock Units

Stock Options

Non-employee directors Restricted Stock Units (“RSUs”) typically vest over the earlier of one year or the next annual meeting of shareholders and Non-Qualified stock options vest over three years and have a six-year exercise period.

Employee RSUs typically vest over four years and employee Non-Qualified stock options typically vest quarterly over 4 years and have a six-year exercise period.

The remaining unamortized expected future equity compensation expense and remaining amortization period associated with unvested option grants, restricted stock awards and restricted stock unit awards at March 31, 2022 are:

Unamortized future equity compensation expense (in thousands)

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements