What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-12 compared with 2025-08-12 · 116 added, 69 removed, 277 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

CURRENT ASSETS:

Cash and cash equivalents

Trade accounts receivable, net of allowance for

credit losses of $ 31 and $ 22 , respectively

Trade accounts receivable, net of allowance for credit losses of $ 29 and $ 22 , respectively

Other current assets

13 unchanged sentences

Preferred stock -

Authorized, 5,000,000 shares, including

200,000 shares of Series A Junior Participating

Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating

Issued and outstanding, none

1 unchanged sentence

Authorized, 30,000,000 shares

Issued and outstanding, 9,374,698 shares as of June 30,

2025 and 9,236,040 shares as of December 31, 2024

Accumulated earnings (deficit)

Accumulated other comprehensive income

Issued and outstanding, 9,390,730 shares as of September 30, 2025 and 9,236,040 shares as of December 31, 2024

Accumulated deficit

Accumulated other comprehensive income (loss)

TOTAL STOCKHOLDERS’ EQUITY

5 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Cost of goods sold

20 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

3 unchanged sentences

See notes to consolidated financial statements

DATA I/O CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

1 unchanged sentence

Comprehensive

Stockholders’

Income (Loss)

12 unchanged sentences

Balance at June 30, 2024

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance at September 30, 2024

Balance at December 31, 2024

11 unchanged sentences

Balance at June 30, 2025

Stock awards issued, net of tax withholding

Issuance of stock through:

Share-based compensation

Net income (loss)

Other comprehensive income (loss)

Balance at September 30, 2025

See notes to consolidated financial statements

2 unchanged sentences

(in thousands)

For the Six Months Ended

For the Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

29 unchanged sentences

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.

Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) is the leading global provider of advanced security and data deployment solutions for microcontrollers, security ICs and memory devices.

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, 2025 and June 30, 2024 according to the rules and regulations of the Securities and Exchange Commission ("SEC").

We prepared the financial statements as of September 30, 2025, and September 30, 2024, 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 six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Operating results for the nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Significant Accounting Policies

20 unchanged sentences

Revenue is recognized on the system based on shipping terms, software based on delivery, installation and services based on completion of work, and software maintenance and extended warranty support ratably over the term of the agreement, typically one year.

Total deferred revenue which represents undelivered performance obligations for installation, service, support and extended contracts were $ 1.3 million and $ 1.5 million for June 30, 2025 and 2024, respectively.

The portion expected to be recognized within one year was $ 1.3 million and $ 1.3 million for June 30, 2025 and 2024, respectively.

Total deferred revenue, which represents undelivered performance obligations for installation, service, support and extended contracts, was $ 1.4 million and $ 1.5 million for September 30, 2025 and 2024, respectively.

The portion expected to be recognized within one year was $ 1.4 million and $ 1.3 million for September 30, 2025 and 2024, respectively.

When we license software separately, we recognize revenue upon the transfer of control of the software, which is generally upon shipment, provided that only inconsequential performance obligations remain on our part and substantive acceptance conditions, if any, have been met.

12 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Net sales by type

September 30,

(in thousands)

1 unchanged sentence

Share-Based Compensation

All stock-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line method.

All share-based compensation awards are measured based on estimated fair values on the date of grant and recognized as compensation expense on the straight-line method.

Our share-based compensation is reduced for estimated forfeitures at the time of grant and revised as necessary in subsequent periods if actual forfeitures differ from those estimates.

4 unchanged sentences

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

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law.

The Act includes changes to U.S.

tax law, including provisions to accelerate tax deductions for qualified property and research expenditures.

The legislation did not affect the Company’s income tax balances as of June 30, 2025.

We are in the process of evaluating the impact of the Act on our consolidated financial statements.

On July 4, 2025, the One Big Beautiful Bill Act (“OB3”) was enacted, which includes provisions allowing for the immediate expensing of domestic research and experimental (“R&E”) expenditures under Section 174A, effective for tax years beginning after December 31, 2021.

The Company has elected not to accelerate the amortization of unamortized R&E costs incurred in prior years.

As a result, no discrete tax adjustment was recorded in Q3 2025, and the Company continues to amortize R&E expenditures over the five-year period as previously required under Section 174.

However, the Company will continue to evaluate the impact of OB3 on future periods.

New Accounting Pronouncements – Standards Issued and Not Yet Implemented

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topics 740):

Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted.

We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

Improvements to Income Tax Disclosures” which expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for the Company’s annual periods beginning January 1, 2025, and will apply on a prospective basis starting with the Company’s consolidated financial statements included in the annual report on Form 10-K for the fiscal year ending December 31, 2025.

Retrospective application in all prior periods presented is permitted.

The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its annual income tax disclosures in its consolidated financial statements, however it is not expected to have any impact on the Company’s results of operations, cash flows, or financial condition.

In November 2024, FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation (Subtopic 220-40), which requires disclosure of specific information about costs and expenses within relevant expense captions on the face of the income statement, qualitative descriptions for expense captions not specifically disaggregated quantitatively, and the total amount and definition of selling expenses for interim and annual reporting periods.

3 unchanged sentences

NOTE 2 – INVENTORIES

Inventories are stated at the lower of cost or net realizable value.

Adjustments are made to standard cost, which approximates actual cost on a first-in, first-out basis.

We estimate reductions to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted product demand.

We evaluate our inventories on an item-by-item basis and record inventory adjustments accordingly.

If there is a significant decrease in demand for our products, uncertainty during product line transitions, or a higher risk of inventory obsolescence because of rapidly changing technology and customer requirements, we may be required to increase our inventory adjustments and our gross margin could be adversely affected.

Inventories consisted of the following components:

September 30,

(in thousands)

3 unchanged sentences

Property and equipment consisted of the following components:

September 30,

(in thousands)

5 unchanged sentences

Other accrued liabilities consisted of the following components:

September 30,

(in thousands)

3 unchanged sentences

Other accrued liabilities

The changes in our product warranty liability at June 30, 2025 and year ended December 31, 2024 are as follows:

The changes in our product warranty liability at September 30, 2025 and year ended December 31, 2024 are as follows:

September 30,

(in thousands)

4 unchanged sentences

NOTE 5 – OPERATING LEASE COMMITMENTS

We have commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as of June 30, 2025, are as follows:

Lease Commitments

We have commitments under non-cancellable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as of September 30, 2025, are as follows:

September 30,

(in thousands)

2025 (remaining)

2029 & Thereafter

Less imputed interest

2 unchanged sentences

Our two subsidiary facilities in Munich, Germany and Shanghai, China provide extended worldwide sales, service, engineering and operation services.

The components of our lease expense for the three months and six months ended June 30, 2025, include facility related operating lease costs of $ 184,000 and $ 366,000 , respectively, and short-term lease costs of $ 10,000 and $ 19,000 , respectively.

In the prior year, components of our lease expense for the three months and six months ended June 30, 2024, include facility related operating lease costs of $ 207,000 and $ 415,000 , respectively, and short-term lease costs of $ 9,000 and $ 19,000 , respectively.

There were no new operating leases during the six months ended June 30, 2025.

The components of our lease expense for the three months and nine months ended September 30, 2025, include facility related operating lease costs of $ 185,000 and $ 550,000 , respectively, and short-term lease costs of $ 9,800 and $ 29,000 , respectively.

In the prior year, components of our lease expense for the three months and nine months ended September 30, 2024, include facility related operating lease costs of $ 214,000 and $ 629,000 , respectively, and short-term lease costs of $ 10,000 and $ 9,000 , respectively.

There were no new operating leases during the nine months ended September 30, 2025.

The Redmond, Washington headquarters facility lease runs to October 31, 2029, at approximately 20,460 square feet.

1 unchanged sentence

The lease for the facility located near Munich, Germany runs to August 2027, at approximately 4,895 square feet.

The following table presents supplemental balance sheet information related to leases as of June 30, 2025, and December 31, 2024:

June 30, 2025

December 31, 2024

The following table presents supplemental balance sheet information related to leases as of September 30, 2025, and December 31, 2024:

September 30,

(in thousands)

2 unchanged sentences

Lease liability-long term (Operating lease liabilities)

At June 30, 2025, the weighted average remaining lease term is 3.7 years and the weighted average discount rate used is 5 %.

At September 30, 2025, the weighted average remaining lease term is 3.4 years and the weighted average discount rate used is 5 %.

NOTE 6 – OTHER COMMITMENTS

2 unchanged sentences

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

As of June 30, 2025, we had confirmed contracts with a commitment of approximately $ 782,000 to be paid within one year and $ 480,000 to be paid beyond one year.

As of September 30, 2025, we had confirmed contracts with a commitment of approximately $ 554,000 to be paid within one year and $ 480,000 to be paid beyond one year.

NOTE 7 – CONTINGENCIES

As of June 30, 2025, 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 aggregate, would have a material adverse effect on our results of operations or financial position.

As of September 30, 2025, 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 aggregate, would have a material adverse effect on our results of operations or financial position.

NOTE 8 – INCOME TAXES

Income tax expense for the second quarter of 2025 and 2024 primarily related to foreign and minor state taxes.

Income tax expense for the third quarter of 2025 and 2024 primarily related to foreign and minor state taxes.

The effective tax rate differed from the statutory tax rate primarily due to the effect of valuation allowance, as well as foreign taxes.

We have a valuation allowance of $ 9.1 million as of June 30, 2025.

As of June 30, 2025 and 2024, our deferred tax assets and valuation allowance have been reduced by approximately $ 447,000 and $ 437,000 , respectively.

We have a valuation allowance of $ 9.3 million as of September 30, 2025.

As of September 30, 2025 and 2024, our deferred tax assets and valuation allowance have been reduced by approximately $ 449,000 and $ 441,000 , respectively.

Given the uncertainty created by our loss history, as well as the volatile and uncertain economic outlook for our industry and capital spending, we have limited the recognition of net deferred tax assets including our net operating losses and credit carryforwards and continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance.

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands except per share data)

Numerator for basic and diluted

earnings (loss) per share:

Numerator for basic and diluted earnings (loss) per share:

Net income (loss)

Denominator for basic

earnings (loss) per share:

Denominator for basic earnings (loss) per share:

Weighted-average shares

Employee stock options and awards

Denominator for diluted

earnings (loss) per share:

Adjusted weighted-average shares &

assumed conversions of stock options

Basic and diluted

earnings (loss) per share:

Denominator for diluted earnings (loss) per share:

Adjusted weighted-average shares & assumed conversions of stock options

Basic and diluted earnings (loss) per share:

Basic earnings (loss) per share

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Restricted Stock Units

1 unchanged sentence

Stock Options

Options to purchase 200,000 and 12,500 shares were outstanding as of June 30, 2025 and 2024, respectively, 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 200,000 and 34,398 shares were outstanding as of September 30, 2025 and 2024, respectively, 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 and reduced for estimated forfeitures.

Second quarter 2025 shared-based compensation of $ 250,000 , was $ 132,000 lower compared to the prior year period due to staff reductions which occurred in the fourth quarter of 2024.

The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three and six months ended June 30, 2025 and 2024, were as follows:

The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three and nine months ended September 30, 2025 and 2024, were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

3 unchanged sentences

Total share-based compensation

Equity awards granted during the three and six months ended June 30, 2025 and 2024 were as follows:

Equity awards granted during the three and nine months ended September 30, 2025 and 2024 were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Restricted Stock Units

Performance Stock Units

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

Non-employee director 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.

Stock Option Units

Employee Restricted Stock Units (“RSUs”) typically vest annually over three or four years and employee Non-Qualified stock options typically vest quarterly over four years and have a six-year exercise period.

Non-employee director 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.

Performance Stock Units (“PSUs”) typically cliff vest at the end of the performance period and the performance metric for 2023 awards is cumulative revenue growth over the three-year period ending December 31, 2025, with a cumulative revenue threshold, target, and maximum performance measure.

1 unchanged sentence

There have been no Performance Stock awards granted in 2025.

The remaining unamortized expected future equity compensation expense and remaining amortization period associated with award grants of RSUs, PSUs and unvested options at June 30, 2025 and 2024 are:

Unamortized future equity compensation expense (in thousands)

The remaining unamortized expected future share-based compensation expense and remaining amortization period associated with award grants of RSUs, PSUs and unvested options at September 30, 2025 and 2024 are:

September 30,

Unamortized future share-based compensation expense

(in thousands)

Remaining weighted average amortization period (in years)

6 unchanged sentences

The measure of segment assets is reported on the balance sheet as total consolidated assets.

Our Chief Operating Decision Maker (CODM) is the President/CEO who reviews the company’s financial performance on a consolidated basis without distinguishing between different business lines or geographic areas for the purpose of making operating decisions, allocating resources and evaluating financial performance.

Our Chief Operating Decision Maker (“CODM”) is the President/Chief Executive Officer who reviews the company’s financial performance on a consolidated basis without distinguishing between different business lines or geographic areas for the purpose of making operating decisions, allocating resources and evaluating financial performance.

Financial performance is assessed using operating results, actual net income vs.

plan, balance sheet fluctuations, and other key performance indicators.

Significant single segment expense categories that are provided to the chief operating decision maker and included in the reported segment operating profits are outlined in the following table:

Significant single segment expense categories that are provided to the CODM and included in the reported segment operating profits are outlined in the following table:

Three Months Ended

Six Months Ended

Nine Months Ended

(in thousands)

September 30,

Cost of goods sold

3 unchanged sentences

Professional and outside services

Occupancy costs (OPEX portion)

Occupancy costs

Depreciation & amortization

Total operating expense

Other expense (income)

Total operating expenses

Operating income (loss)

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