What changed in this filing

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Item 9A. Controls and Procedures

2025-04-01 compared with 2024-03-27 · 54 added, 33 removed, 190 unchanged (31% of the section changed)

2 unchanged sentences

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this report (the “Evaluation Date”).

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level.

Disclosure controls are controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls are also designed to ensure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective due to a material weakness in our internal control over financial reporting as described below.

(b) Management’s Report on Internal Control Over Financial Reporting.

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(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

All internal controls, no matter how well designed, have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statements preparation and presentation.

Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Also, any evaluation of the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.

In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013).

Based on this assessment our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2023, our internal control over financial reporting was effective.

Based on this assessment our Chief Executive Officer and Chief Financial Officer have concluded that, as of December 31, 2024, our internal control over financial reporting was not effective as of December 31, 2024 because of an identified material weakness in our internal control over financial reporting as described below:

Material Weakness Identified by Management

Management determined the following material weakness in internal control over financial reporting as of December 31, 2024.

In the areas of user access and segregation of duties related to the information technology system that support the Company’s financial reporting processes.

As set forth below, management has taken and will continue to take steps to remediate the material weakness identified as of December 31, 2024.

Notwithstanding this material weakness, we have performed additional analyses and procedures to enable management to conclude that our consolidated financial statements included in this 2024 Form 10-K fairly present in all material respects our financial condition and results of operations as of and for the year ended December 31, 2024.

Management’s Remediation Plan

In response to the material weakness discussed above, we plan to continue and expand efforts already underway to remediate internal control over financial reporting, which include the following:

We are enhancing our processes around reviewing and provisioning access to key financial systems and ensuring appropriate segregation of duties;

We continue to enhance governance and reporting over the execution of these remediation action items, including expansion of mitigating controls where appropriate.

Management and our Audit Committee will monitor these specific remedial measures and the effectiveness of our overall control environment.

A material weakness will not be considered remediated;

however, until the applicable controls operate for a sufficient period of time and Management has concluded, through testing, that these controls are operating effectively.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting.

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Other Information

During the quarter ended December 31, 2023, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

During the year ended December 31, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Information regarding the Registrant’s directors is set forth under “Election of Directors” in our Proxy Statement relating to our annual meeting of shareholders to be held on May 15, 2025, and is incorporated herein by reference.

Such Proxy Statement will be filed within 120 days of our year-end.

Proxy Statement will be filed within 120 days of our year-end.

Information regarding the Registrant’s executive officers is set forth in Item 1 of Part I herein under the caption “Executive Officers of the Registrant.”

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Information called for by Part III, Item 11, is included in our Proxy Statement relating to our annual meeting of shareholders to be held on May 15, 2025 and is incorporated herein by reference.

The information appears in the Proxy Statement under the caption “Executive Compensation.” Such Proxy Statement will be filed within 120 days of our year-end.

The information appears in the Proxy Statement under the caption “Executive Compensation.” Proxy Statement will be filed within 120 days of our year-end.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information called for by Part III, Item 12, is included in our Proxy Statement relating to our annual meeting of shareholders to be held on May 15, 2025 and is incorporated herein by reference.

The information appears in the Proxy Statement under the caption “Voting Securities and Principal Holders.” Such Proxy Statement will be filed within 120 days of our year end.

The information appears in the Proxy Statement under the caption “Voting Securities and Principal Holders.” Proxy Statement will be filed within 120 days of our year end.

Equity Compensation Plan Information

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While the plan has been approved by the security holders, no amounts are included in columns (a), (b), or (c) relating to the SAR.

Inducement grant remaining to Michael Tidwell of non-qualified stock options, fully vested, with 12,500 remaining unexercised.

Table excludes unvested inducement grants to Gerald Ng of 56,250 RSU and 5,000 PSU awards.

1 unchanged sentence

The information required by this Item is incorporated by reference to the section captioned “Certain Relationships and Related Transactions” in the Proxy Statement relating to our annual meeting of shareholders to be held on May 15, 2025.

Such Proxy Statement will be filed within 120 days of our year-end.

Proxy Statement will be filed within 120 days of our year-end.

Principal Accounting Fees and Services

The information required by this Item with respect to principal accountant fees and services is incorporated by reference to the section captioned “Principal Accountant’s Fees and Services” in the Proxy Statement relating to our annual meeting of shareholders to be held on May 15, 2025.

Such Proxy Statement will be filed within 120 days of our year-end.

Proxy Statement will be filed within 120 days of our year-end.

Exhibits, Financial Statement Schedules

23 unchanged sentences

See Exhibit 10.17.

Letter Agreement with Joel S.

See Exhibit 10.21.

Form of Executive Agreement.

10 unchanged sentences

See Exhibit 10.37.

Executive Employment Agreement with William Wentworth.

See Exhibit 10.38.

Transition Agreement with Anthony Ambrose.

See Exhibit 10.39.

List of Documents Filed as a Part of This Report:

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Instruments Defining the Rights of Security Holders, Including Indentures:

Rights Agreement dated as of April 4, 1998, between Data I/O Corporation and ChaseMellon Shareholder Services, L.L.C.

Rights Agreement dated as of April 4, 1998, between Data I/O Corporation and Chase Mellon Shareholder Services, L.L.C.

as Rights Agent, which includes:

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Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan dated May 24, 2006 (Incorporated by reference to Data I/O’s 2006 Proxy Statement dated April 6, 2006).

Form of Option Agreement (Incorporated by reference to Data I/O’s 2004 Annual Report on Form 10-K (File No.

Lease, Redmond East Business Campus between Data I/O Corporation and Carr Redmond PLLC dated February 28, 2006 (Incorporated by reference to Data I/O’s 2005 Annual Report on Form 10K (File No.

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Letter Agreement with Rajeev Gulati (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed on July 31, 2013).

Form of Restricted Stock Unit Award Agreement (Incorporated by reference to Exhibit 10.29 of Data I/O’s March 31, 2014 Quarterly Report on Form 10-Q (File No.

Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved April 30, 2014 (Incorporated by reference to Exhibit 10.30 of Data I/O’s March 31, 2014 Quarterly Report on Form 10-Q (File No.

Form of Executive Agreement (Incorporated by reference to Exhibit 10.31 of Data I/O’s June 30, 2014 Quarterly Report on Form 10-Q (File No.

Letter Agreement with Joel S.

Hatlen (Incorporated by reference to Exhibit 10.32 of Data I/O’s June 30, 2014 Quarterly Report on Form 10-Q (File No.

Third Amendment to Lease, (Redmond East) between Data I/O Corporation and Arden Realty Limited Partnership, made as of June 1, 2015 (Incorporated by reference to Exhibit 10.29 of Data I/O’s June 30, 2015 Quarterly Report on Form 10-Q (File No.

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Data I/O Corporation 2023 Omnibus Incentive Compensation Incentive Plan approved May 18, 2023 (Incorporated by reference to Data I/O’s 2023 Proxy Statement dated April 3, 2023).

Form of Performance Stock Unit Award Agreement.

Form of Restricted Stock Unit Award Agreement.

Form of Performance Stock Unit Award Agreement (Incorporated by reference to Data I/O’s 2023 Annual Report on Form 10-K (File No.

Form of Restricted Stock Unit Award Agreement (Incorporated by reference to Data I/O’s 2023 Annual Report on Form 10-K (File No.

Letter Agreement with Gerald Y.

Ng (Incorporated by reference to Form 8-K filed on June 30, 2023).

Executive Employment Agreement with William Wentworth (Incorporated by reference to Form 10-Q filed on November 12, 2024).

Transition Agreement with Anthony Ambrose (Incorporated by reference to Form 10-Q filed on November 12, 2024).

Seventh Amendment to Lease, between Data I/O Corporation and Alco Redmond East, LLC, made as of October 17, 2024.

Insider Trading Policy

Subsidiaries of the Registrant

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Chief Financial Officer Certification

Data I/O Corporation INCENTIVE COMPENSATION RECOVERY POLICY.

Data I/O Corporation INCENTIVE COMPENSATION RECOVERY POLICY (Incorporated by reference to Data I/O's Annual Report on Form 10-K (File No.

Interactive Data Files Pursuant to Rule 405 of Regulation S-T

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DATA I/O CORPORATION

March 31, 2025

/s/Anthony Ambrose

Anthony Ambrose

/s/ William Wentworth

William Wentworth

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/Anthony Ambrose

/s/ William Wentworth

March 31, 2025

President and Chief Executive Officer

Anthony Ambrose

William Wentworth

(Principal Executive Officer), Director

/s/ Gerald Y.

March 31, 2025

Chief Financial Officer

Vice President Secretary, Treasurer

Vice President

Secretary, Treasurer

(Principal Financial and Accounting Officer)

/s/ Douglas W.

Brown March 27, 2024

Washlow March 27, 2024

Smith March 27, 2024

/s/William Wentworth March 27, 2024

William Wentworth

March 31, 2025

/s/ Edward J.

March 31, 2025

/s/ Garrett Larson

March 31, 2025

Garrett Larson

DATA I/O CORPORATION

SCHEDULE II – CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

Balance at Beginning of Period

Charged/ (Credited) to Costs and Expenses

8 unchanged sentences

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-K

Item 9A. Controls and Procedures