DAIO

Business Context and Reporting Period

Company: Data I/O Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: June 16, 2026 (Event Date: June 17, 2026)
Context: The Company closed a previously announced private placement of securities to raise capital.

Key Financial Metrics and Transaction Details

Capital Raised: $9,000,000 aggregate purchase price.
Securities Issued:

• Common Stock: 869,840 shares.
• Convertible Debentures (Note): Principal amount of $6,825,400.
• Warrants: To purchase 1,080,000 shares of common stock.

Note Terms:

• Maturity: Five years (June 16, 2031).
• Interest Rate: 4.0% per annum (payable semiannually); increases to 18% per annum upon default.
• Payment Method: Cash or, at Company option, Series B Convertible Preferred Stock.
• Conversion: Convertible to Preferred Stock at $1,000 per share; automatic conversion possible upon shareholder approval of specific proposals.

Preferred Stock Terms:

• Dividends: 4% per annum on Stated Value ($1,000), cumulative and compounded annually.
• Conversion to Common: Initial conversion price of $2.50 per share.
• Non-voting: Except as required by law.

Warrant Terms:

• Exercise Price: $3.00 per share.
• Term: Five years.

Liquidity and Debt: The filing creates a direct financial obligation of $6,825,400. The filing text does not provide current cash flow, revenue, or existing debt levels outside of this new obligation.

Material Changes and Issuance Caps

Ownership Limitations: Conversion or exercise of Convertible Securities is limited if it results in the investor holding more than 9.99% of outstanding Common Stock.
Issuance Cap: Absent shareholder approval, aggregate shares issued cannot exceed 1,869,470 shares of Common Stock.
Regulatory Status: Securities issued under Section 4(a)(2) and Regulation D exemptions (unregistered sales). A Registration Rights Agreement requires the Company to file a registration statement within 30 days for resale of these securities.

Outlook, Risks, and Management Commentary

Management Action: The Company filed a Certificate of Designation with the Washington Secretary of State to create the Series B Convertible Preferred Stock.
Risks and Contingencies:

• Default Risk: Interest rate escalates to 18% upon an event of default.
• Dilution Risk: Potential issuance of approximately 2.73 million shares of common stock if the Note principal is converted to Preferred Stock and subsequently converted to Common Stock (subject to caps).
• Shareholder Approval: Automatic conversion of the Note to Preferred Stock is contingent on shareholder approval of a proposal regarding potential issuance of 20% or more of stock at prices below the Nasdaq Minimum Price.

Guidance: The filing text does not provide specific financial guidance or revenue outlook beyond the closing of this investment.

Investor Verification Checklist

• Verify the Company's current cash position and ability to service the 4% interest payments on the $6.8M Note.
• Confirm the status of the shareholder proposal required for automatic Note conversion and potential issuance below Nasdaq Minimum Price.
• Review the "Investor Issuance Cap" (1,869,470 shares) to understand the maximum immediate dilution without further shareholder approval.
• Examine the Registration Rights Agreement (Exhibit 10.3) for specific timelines and conditions regarding the resale registration statement.
• Assess the impact of the 9.99% beneficial ownership limitation on the liquidity of the issued securities.