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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number: 0-10394

DATA I/O CORPORATION

(Exact name of registrant as specified in its charter)

Washington		91-0864123
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

6645 185^th Ave NE, Suite 100, Redmond, Washington, 98052

(425) 881-6444

(Address, including zip code, of registrant’s principle executive offices and telephone number, including area code) ~~Securities registered pursuant to Section 12(b) of the Act~~

Securities registered pursuant to Section 12(b) of the Act

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DAIO	NASDAQ

Securities registered pursuant to Section 12(g) of the Act

None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐

~~Large~~Accelerated ~~accelerated~~ filer ☐ ~~Accelerated~~Large accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Aggregate market value of voting and non-voting common equity held by non-affiliates on the registrant as of June 30, ~~2024~~2025: $26,901,555

~~$23~~Shares of Common Stock,~~523~~ no par value,~~648~~ outstanding as of April 14, 2026: 9,394,422

Shares of Common Stock, no par value, outstanding as of March 18, 2025:

9,239,731

DOCUMENTS INCORPORATED BY REFERENCE

~~Indicate~~Portions ~~by check mark whether any~~ of ~~those~~the ~~error~~registrant’s ~~corrections~~Proxy ~~are~~Statement ~~restatements~~relating ~~that~~to ~~required~~the aannual ~~recovery~~meeting ~~analysis~~ of ~~incentive-based~~shareholders ~~compensation~~to ~~received~~be byheld ~~any~~on ofJune ~~the~~11, ~~registrant's~~2026 ~~executive~~are ~~officers~~incorporated ~~during~~by ~~the~~reference ~~relevant~~into ~~recovery~~Part ~~period~~III ~~pursuant to §240~~hereof.~~10D-1(b) ☐~~

DATA I/O CORPORATION

FORM 10-K

For the Fiscal Year Ended December 31, ~~2024~~2025

INDEX

Part I
PART I		3
	Item 1.	Business	3
Item 1. Business		3
	Item 1A.	Risk Factors	11
Item 1A. Risk Factors		13
	Item 1B.	Unresolved Staff Comments	18
Item 1B. Unresolved Staff Comments		22
	Item 1C.	Cybersecurity	18
Item 1C. Cybersecurity		22
	Item 2.	Properties	19
Item 2. Properties		23
	Item 3.	Legal Proceedings	19
Item 3. Legal Proceedings		23
	Item 4.	Mine Safety Disclosures	19
Item 4. Mine Safety Disclosures		23
Part II
PART II		24
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		24
	Item 6.	Selected Financial Data	20
Item 6. Selected Financial Data		24
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 7A. Quantitative and Qualitative Disclosures About Market Risk		32
	Item 8.	Financial Statements and Supplementary Data	27
Item 8. Financial Statements and Supplementary Data		32
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	48
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.		58
	Item 9A.	Controls and Procedures	48
Item 9A. Controls and Procedures		58
	Item 9B.	Other Information	48
Item 9B. Other Information		59
	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	48
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		59
Part III
PART III		60
	Item 10.	Directors, Executive Officers and Corporate Governance	49
Item 10. Directors, Executive Officers and Corporate Governance		60
	Item 11.	Executive Compensation	49
Item 11. Executive Compensation		60
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	49
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		60
	Item 13.	Certain Relationships and Related Transactions and Director Independence	50
Item 13. Certain Relationships and Related Transactions, and Director Independence		60
	Item 14.	Principal Accounting Fees and Services	50
Item 14. Principal Accounting Fees and Services		60
Part IV
PART IV		61
	Item 15.	Exhibits, Financial Statement Schedules	51
Item 16. Form 10-K Summary		66
	Item 16.	Form 10-K Summary	55
SIGNATURES		67
	Signatures		56

Table of Contents

PART I

Item 1. Business

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements based on current expectations, estimates and projections about Data I/O Corporation’s industry, management’s beliefs and certain assumptions made by management. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Forward Looking Statements.”

General

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. We collectively refer to IP protection, security provisioning of devices, provisioning of security into devices, and related services such as cloud onboarding and device and provisioning documentation management as “security deployment”. Data I/O® designs, manufactures and sells programming and security deployment systems and services for electronic device manufacturers, specifically targeting high-growth areas such as high-volume users of flash memory and flash memory-based microcontrollers. Most electronic products today incorporate a number of programmable semiconductor devices that contain data, operating instructions and security credentials essential for the proper operation of the product and more and more products require security deployment.

Our mission is to bring the world’s electronic devices to life. Programmable devices are used in products such as automobile electronics, smartphones, ~~HDTV~~HDTVs, smart meters, gaming systems and a broad category called Internet of Things (“IoT”). ~~IoT~~ ~~is a broad term that addresses the interconnectivity of devices and other electronic or smart products.~~ Our solutions, some of which include security deployment and process control capabilities, enable us to address the demanding requirements of the electronic device market, where applications security and IP protection are essential to our customer’s success. Our largest customers are heavy users of programmable semiconductor devices and include original equipment manufacturers (“OEMs”) and tier 1 suppliers in automotive electronics, industrial electronics, consumer electronics and IoT markets as well as their programming center partners and electronic manufacturing service (“EMS”) contract manufacturers.

Data I/O was incorporated in the State of Washington in 1969 and its business was founded in 1972. Our website address is www.dataio.com.

Major Impacts on ~~2024~~2025

~~Due~~The toyear ~~economic~~ended ~~and~~December ~~automotive~~31, ~~electronics~~2025 ~~uncertainties~~was ~~and~~defined ~~slower~~by ~~customer capacity expansion, shipments of~~ the Company’s ~~automated~~strategic ~~systems~~transformation, indirected ~~the~~by ~~Americas~~President and ~~Europe~~CEO ~~were~~William ~~lower~~Wentworth, ~~which~~who ~~was~~assumed ~~partially~~the ~~offset~~role byin ~~revenue~~the ~~growth~~fourth inquarter ~~Asia~~of 2024. ~~COVID-19~~ ~~impacts~~The inCompany’s ~~past~~strategic ~~years~~plan ~~were~~was nodesigned ~~longer~~around ansix ~~operational~~priorities: ~~challenge~~modernizing ~~with~~our ~~personnel~~go-to-market ~~staffing~~strategy, ~~inventory~~investing ~~levels,~~in ~~supply~~our ~~chain~~core ~~and~~technology ~~operational~~platform, ~~activities~~strengthening ~~returning~~customer ~~to normal levels. However~~relationships, ~~late~~optimizing inbusiness ~~2024~~operations ~~with~~and ~~the~~IT ~~new~~infrastructure, ~~incoming~~improving ~~United~~operational ~~States Administration~~processes, ~~geo-political,~~and ~~economic~~deploying ~~and~~artificial ~~trade~~intelligence ~~uncertainties~~across ~~have~~the ~~increased~~organization. ~~The~~ ~~resulting~~As ~~future~~we ~~impact~~enter ~~on the Company’s markets~~2026, ~~customers,~~management ~~supply~~believes ~~chain~~the ~~and~~transformation ~~operations~~is ~~are~~approximately ~~uncertain. We~~one ~~will~~year ~~leverage~~ahead of the ~~experience~~original ~~gained~~execution ~~from~~timeline ~~the~~projected ~~impacts~~by ofmanagement ~~COVID-19,~~and ~~along~~that ~~with~~ the ~~expertise~~Company ofbelieves ~~our~~it ~~leadership~~is ~~and~~well ~~operational~~positioned ~~teams,~~to return to ~~effectively~~revenue ~~navigate~~growth and ~~mitigate~~a ~~these~~path ~~potential~~to ~~challenges~~positive operating cash flow.

~~After~~A acentral ~~period~~element of ~~stability~~the ~~which~~strategy ~~lasted~~was ~~over~~the arapid ~~decade~~refresh of the Company’s core technology platform, ainitiated ~~key~~and ~~organizational~~completed ~~leadership~~through ~~transition~~the ~~occurred~~course inof 2025. The Company launched the ~~fourth~~next-generation ~~quarter~~LumenX2 ofprogramming ~~2024~~platform ~~with~~and LumenX2-M4 manual programmer at the ~~planned~~productronica ~~retirement~~2025 oftradeshow ~~Anthony~~in ~~Ambrose~~Munich, Germany in November 2025. The LumenX2 platform, with higher pin counts and increased power, significantly expands the ~~appointment~~breadth of adevice ~~new~~technologies ~~CEO~~supported ~~and~~on ~~President~~the LumenX architecture, ~~William~~including ~~Wentworth~~microcontrollers, eMMC, UFS, SPI NOR flash, Secure Elements, and other device types. ~~Subsequent~~ ~~changes~~The ~~have~~LumenX2-M4 ~~also~~features ~~occurred~~VerifyBoost technology delivering verify speeds of up to 750 megabytes per second. The LumenX2 platform received the 2025 Global Technology Award in the ~~leadership~~Programming ofcategory, and the ~~Sales~~refreshed LumenX-M8 manual programmer received both the 2025 Mexico Technology Award and the 2025 Step-by-Step Excellence Award. These products support the Company’s Unified Programming Platform strategy, ~~Marketing~~which provides a single, scalable programming architecture from design and ~~Engineering~~new ~~functions~~product introduction through high-volume production, creating a seamless transition across the preprogrammed parts supply chain.

~~Industry~~With ~~Background~~the updated programming platform, the Company has turned its attention to broadening and stabilizing its business model. Historically, Data I/O’s revenues have been overwhelmingly tied to capital expenditure cycles in programming equipment, making the business highly cyclical and dependent on customers’ capacity expansion decisions. The Company is now focusing its efforts on progressing toward a more balanced revenue model that incorporates recurring services and consumables revenues, including adapter sales, software services, and programming-at-test service offerings. For the full year, consumable adapters and services revenue represented approximately 58% of total revenue, helping to moderate the impact of continued softness in capital equipment demand. This diversification is expected to continue as the Company expands its addressable market from traditional programming capex into the broader data provisioning ecosystem.

We3 ~~enable~~Table companies to improve productivity, increase supply-chain security and reduce costs by providing device data programming and security deployment solutions that allow our customers to take IP (large design and data files) and protect and program it into memory, microcontroller, security and logic devices quickly and cost-effectively. We also provide services related to hardware support, system installation and repair, and device programming. Companies that design and manufacture products utilizing programmable electronic devices, ranging from automobiles to cell phones, purchase programming solutions from us. Trends of increasing device densities, shrinking device packages, increased demands for security, and customers increasing their software content file sizes, combined with the increasing numbers of intelligent devices such as automotive electronics and IoT applications, are driving demand for our solutions. Contents

3During ~~Table~~2025, the Company underwent a significant transition in its financial leadership. Gerald Ng, who had served as Vice President, Chief Financial Officer, Secretary and Treasurer since August 2023, departed the Company in July 2025. Todd Henne served as interim CFO during the transition period. Effective August 11, 2025, the Company appointed Charles DiBona as Vice President of ~~Contents~~Finance, and as an Executive Officer of the Company and the Company’s Vice President, Chief Financial Officer, Secretary and Treasurer, effective August 15, 2025. Mr. DiBona brings extensive experience in financial leadership across public and private companies, including prior roles at Microsoft Corporation, Unify Square, Inc., and LabVantage Solutions, Inc. The leadership transition was part of a broader deliberate strengthening of the executive suite to ensure the Company has the right team in place to execute its growth strategy.

~~Traditionally~~On August 16, ~~our~~2025, ~~programming~~the ~~market~~Company ~~opportunity~~experienced ~~focused~~a onransomware incident affecting certain internal IT systems. Upon discovery, the ~~number~~Company ofpromptly ~~semiconductor~~activated ~~devices~~its toresponse beprotocols, ~~programmed~~secured its global IT systems and implemented containment measures, ~~but~~including ~~because~~proactively oftaking certain platforms offline. The Company engaged leading cybersecurity experts to support system recovery and conduct a comprehensive investigation. It was determined that the ~~rapid~~attack ~~increase~~was not specifically targeted at Data I/O but originated through a vulnerability in ~~the~~a ~~density~~commercially ofavailable ~~devices~~third-party firewall service provider. By September 2025, the incident had been completely contained and ~~increasing~~remediated, ~~demands~~all ~~for~~global ~~supply-chain~~systems ~~security~~were restored, and the ~~focus~~Company does not believe it has ~~shifted~~any inremaining ~~many~~risk ~~cases,~~exposure from the ~~number~~incident. ~~and~~The ~~type~~remediation ofand ~~devices~~associated toprofessional ~~the~~fees ~~number~~resulted ~~and~~in ~~type~~approximately $388,000 of ~~bits~~one-time ~~per~~costs, ~~device~~primarily torecorded bein ~~programmed~~the orthird ~~securely~~quarter ~~provisioned~~of 2025. ~~With~~ ~~expected~~As ~~growth~~an inoutcome ~~IoT~~of ~~applications~~the incident, the ~~business~~Company’s ~~opportunity~~IT ~~for~~systems ~~this~~and ~~market~~cybersecurity ~~differs~~posture ~~depending~~were ~~on quality~~strengthened, ~~security~~with improved corporate processes and ~~automation~~enhanced security infrastructure.

~~Some~~In the latter part of ~~our~~2025, ~~automated~~the ~~programming~~Company ~~systems~~began ~~integrate~~the ~~data~~implementation ~~programming,~~process ~~automated~~of ~~handling~~a ~~functions~~new ~~and/or~~enterprise ~~security~~resource ~~deployment~~planning ~~into~~(“ERP”) asystem, ~~single~~Acumatica, ~~product~~to ~~solution~~replace the legacy IFS system. ~~Quality~~This initiative is part of the broader effort to optimize business operations and ~~security~~IT infrastructure. The Company is leveraging AI-~~conscious~~driven ~~customers,~~tools ~~particularly~~to ~~those~~accelerate intraditionally ~~high~~time-~~volume~~consuming ~~manufacturing~~aspects of the ERP implementation, including chart of accounts mapping, data migration planning, and ~~programming~~intercompany policy documentation. The ERP transition is expected to improve operational efficiency, ~~drive~~enhance ~~this~~financial ~~portion~~reporting ofcapabilities, ~~our~~and ~~business~~support the Company’s growth objectives. The Acumatica implementation project remains on schedule with a target switchover date of July 1, 2026.

~~Products~~Geopolitical, economic and trade uncertainties continued to impact the Company’s markets in 2025. Tariff policies affecting goods manufactured in the United States and China created additional cost pressures and business uncertainty for the Company and its customers. As a company that produces products in both the United States and China and sells into global markets, the evolving tariff environment required ongoing evaluation of manufacturing strategies, supply chain resilience, and pricing. Some customers continued to shift production locations in response to trade tensions, affecting demand patterns. The Company’s dual-sourced manufacturing strategy in Redmond, Washington and Shanghai, China provides flexibility to navigate these challenges and optimize tariff exposure and to support customers to the extent they shift manufacturing to the Americas. While oil price increases and conflicts in the Middle East have limited direct effect on our input factors, their broader impacts on general price levels and economic activity could affect our customers and end markets as well as our material, labor, and shipping costs.

ToThe ~~accommodate~~broader ~~the~~semiconductor ~~expanding~~market ~~variety~~has ~~and~~experienced ~~quantities~~a ofmulti-year ~~programmable~~cyclical ~~devices~~downturn ~~being~~continuing ~~manufactured~~into ~~today~~2025, wewith ~~offer~~notable ~~multiple~~softness ~~solutions~~in ~~for~~automotive electronics, historically the ~~numerous~~Company’s ~~types~~largest end market, as a reassessment of ~~device~~electric ~~mix~~vehicle capacity and ~~volume~~manufacturing ~~usage~~plans byaffecting ~~our~~customer ~~customers~~ordering patterns. Automotive electronics represented approximately 64% of 2025 bookings, compared to 59% in ~~the~~2024. ~~various~~Demand ~~market~~for ~~segments~~capital equipment was further impacted by a reallocation of technology spending, with AI and ~~applications~~AI datacenter-related investments taking priority. We ~~work~~In ~~closely~~response, ~~with~~the ~~leading~~Company ~~manufacturers~~has ofshifted ~~programmable~~its ~~devices~~strategic focus to ~~develop~~diversify ~~our~~its ~~products~~market reach, expanding into the broader data provisioning market and positioning to ~~meet~~capitalize on the ~~requirements~~emerging buildout of Edge AI. The shift toward servicing the overall data provisioning market represents a ~~particular~~significantly ~~device~~larger opportunity than the traditional programming equipment market. ~~Our~~ ~~newer~~Early ~~products~~evidence ~~are~~of ~~positioned~~customer alignment and ~~recognized~~interest asin ~~some~~this ofexpanded value proposition was encouraging in the ~~most~~fourth ~~advanced~~quarter ~~programming~~2025 and ~~security~~into ~~deployment~~early ~~solutions~~2026.

~~Our~~During ~~programming solutions include a broad range of products~~2025, ~~systems,~~the ~~modules~~Company ~~and~~deployed ~~accessories,~~artificial ~~grouped~~intelligence ~~into~~internally ~~two~~across ~~general~~all ~~categories:~~functional ~~automated~~departments ~~programming~~to ~~systems~~accelerate operations and ~~manual~~reduce ~~programming systems~~costs. ~~Our~~ ~~PSV~~AI-enabled ~~family~~efficiencies ofcontributed ~~automated~~to ~~programming systems delivers~~ a ~~broad~~7% ~~range~~reduction ofin ~~programming~~normalized ~~capacity~~operating ~~and~~expense ~~capability~~run-rate, tofrom ~~the~~an ~~marketplace~~annualized $26. ~~Our~~7 ~~PSV2800~~million ~~Automated~~at ~~Programming~~the ~~System~~time ~~focuses~~of onthe ~~dedicated~~CEO ~~high-volume~~transition ~~manufacturing~~ in aNovember ~~lower~~2024 ~~cost~~to ~~platform~~$24. ~~Our~~8 ~~PSV7000~~million ~~Automated~~by ~~Programming~~year ~~System~~end ~~continues~~2025, towith beplans ~~well~~for ~~adopted~~at inleast ~~the~~an ~~marketplace,~~additional in$1 ~~particular~~million ~~for~~of ~~automotive~~annual ~~electronics~~run ~~customers~~rate ~~and~~savings aswithin athe ~~base~~first ~~for~~half ~~security~~of ~~deployment upgrades~~2026. ~~Our~~ ~~PSV5000~~AI ~~Automated~~tools ~~Programming~~were ~~System~~applied ~~combines~~to ~~mid-range~~software ~~capacity~~engineering ~~and~~to ~~flexibility~~accelerate ~~with~~programming ~~competitive~~algorithm ~~pricing~~development and ~~also~~device ~~supports~~support, ~~security~~ERP ~~deployment. Our~~implementation ~~PSV3500~~planning ~~Automated~~and ~~Programming~~data ~~System~~migration, iscustomer asupport ~~lower~~processes, ~~cost~~legal ~~platform~~documentation, ~~for~~and ~~basic~~internal ~~programming~~business ~~needs~~operations. ~~Our~~ ~~PSV~~These ~~family~~capabilities ofenabled ~~handlers~~the ~~has~~Company ~~won~~to ~~multiple~~accomplish ~~industry~~its ~~awards~~transformation ~~for~~objectives ~~technical~~faster ~~excellence~~than ~~and~~originally ~~innovation and has a large global installed base~~planned.

~~Our~~4 ~~automated~~Table ~~systems~~of have list selling prices ranging from approximately $62,000 to $690,000 and our manual systems have list selling prices ranging from approximately $10,000 to $20,000. Our security deployment system, SentriX®, is offered as a software license added to existing programming systems or on a pay per part use basis along with related fees.Contents

~~Data~~Additionally, ~~I/O~~in ~~programming~~January ~~technology~~2026, ~~is integrated with~~ the ~~PSV~~Company ~~family~~filed toa ~~create~~shelf ~~highly-flexible~~registration ~~systems~~statement ~~that~~on ~~deliver~~Form ~~outstanding~~S-3 ~~performance~~providing ~~with~~the ~~low~~ability ~~total~~to ~~cost~~issue ofup ~~ownership. The Lumen®X programming engine is our highest performance programming engine, designed~~ to ~~support~~$20 ~~eMMC~~million ~~and~~dollars ~~UFS programming~~ of ~~large~~equity ~~NAND FLASH~~securities, asproviding ~~well~~financial asflexibility ~~microcontrollers, serial FLASH and other devices. Increasing memory densities and the need~~ for ~~faster~~potential ~~data~~strategic ~~interfaces~~initiatives, ~~are~~including ~~resulting~~acquisitions inaligned anwith ~~expected transition to~~ the ~~use~~Company’s ofgrowth ~~UFS devices~~strategy. ~~LumenX~~ isThe ~~available~~Company onalso ~~our~~engaged ~~PSV7000 and PSV5000 and as~~ a ~~standalone~~leading ~~manual~~boutique programmer. FlashCORE™, and our universal job setup tool, Tasklink™ for Windows®, are available in each family of our automated programming systems and in FlashPAK™, our manual programming system. The SentriX security system adds security capability to our data programming system. SentriX allows customers of any size and demandmiddle-~~profile~~market toinvestment ~~securely~~bank ~~add~~during ~~keys,~~2025 ~~certificates, and other security information~~ to ~~specialized regions of authentication integrated circuits ("ICs”), secure elements and secure microcontrollers. We provide device~~ support ~~and~~inorganic ~~service~~growth ~~on all of our products~~initiatives. ~~Device~~ ~~support is a critical aspect of our business and consists of writing software algorithms for devices and developing socket adapters to hold and connect to the device for programming.~~

4Subsequent ~~Table~~to year end, in February 2026, the Company announced a collaboration with IAR, a leader in embedded development tools and security solutions, to combine IAR’s security expertise with Data I/O’s provisioning expertise to create a frictionless solution that reduces the complexity that exists with current device provisioning approaches. This collaboration is intended to simplify the process of ~~Contents~~securely programming and provisioning devices across global manufacturing supply chains.

Sales Percentage of Total Sales Breakdown by Type
Sales Type	2024	2023	Drivers
Equipment Sales	51%	58%	Capacity, Process improvement, Technology
Adapter Sales	33%	29%	Capacity utilization, New customer products
Software and Maintenance Sales	16%	13%	Installed base, Added capabilities
Total	100%	100%

Industry Background

~~The~~Data ~~table~~I/O ~~below~~enables ~~presents~~companies to improve productivity, increase supply-chain security and reduce costs by providing device data programming and security deployment solutions that allow our ~~main~~customers to take IP (large design and data files) and protect and program it into memory, microcontroller, security and logic devices quickly and cost-effectively. We also provide services related to hardware support, system and repair, and device programming. Companies that design and manufacture products utilizing programmable electronic devices, ranging from automobiles to industrial controls to edge AI, purchase programming solutions from us. Trends of increasing device densities, shrinking device packages, increased demands for security, and customers increasing their software content file sizes, combined with the ~~key~~increasing ~~features~~numbers ~~that~~of ~~benefit~~intelligent devices such as automotive electronics and IoT applications, are driving demand for our ~~customers:~~solutions.

Products	Key Features		Customer Benefits
PSV Systems: Off-line	·	Fast program and verify speeds	·	Managed and secure programming
(Automated)	··	Up to 112 programming sitesUp to 3000 devices per hour throughput	·	High throughput for high-density flash memory programming
	··	UFS SupportSupports LumenX and FlashCORE III programmers	·	Flexible I/O options (tray, tape, tube), marking/labeling and vision for coplanarity inspection
	··	Supports multiple media typesSupports quality options – fiber laser marking, ink dot marking, 2D inspection, 3D coplanarity	··	Scalable solutions for low to high-volume manufacturingAccess to system data for connected factory and traceability
	·	ConneX Service Software enables connected factory integration and automation
LumenX Programmer(Non-automated)	·	Extensible architecture for fast programming, verify and download speeds	··	Managed and secure programmingFast setup and job changeover
	·	Supports UFS memory, microcontrollers, serial flash, secure elements and other device types	··	Highest yield and low total cost of programmingHigh performance
	··	Large file size supportSecure job creation	·	Create and validate designs before moving down the firmware supply chain
	·	Eight sockets with tool-less changeover with single-socket adapters
FlashPAK III programmer: (Non-automated)	··	ScalabilityNetwork control via Ethernet	·	Create and validate designs before moving down the firmware supply chain
	·	Stand-alone operation or PC compatible	·	Unmatched ease of use in manual production systems
	·	Parallel programming
	·	Four sockets
	·	Universal device support
SentriX Security DeploymentSystem	·	Unique ability to securely provision keys and certificates one device at a time	··	Create secure IoT devices across a global networkMaintain IP control over their product’s lifecycle
	·	Broad set of secure devices supported with wide range of silicon partners	·	Secure supply chain and flexible key management architecture
	·	Software license model allows easy upgrades from deployed PSV data programming systems
	·	Pay per use model

Geopolitical, economic and trade uncertainties continued to impact the Company’s markets in 2025. Tariff policies created additional cost pressures and business uncertainty in the market with some players shifting production locations in response to trade tensions and thereby affecting demand patterns.

5In ~~Table~~line with the multi-year cyclical downturn in the broader semiconductor market, automotive electronics, historically the Company’s largest end market, has exhibited notable weakness continuing into 2025 as a reassessment of ~~Contents~~electric vehicle capacity and manufacturing plans affected customer ordering patterns. Automotive electronics represented approximately 64% of 2025 bookings, compared to 59% in 2024. More generally, overall capital equipment spending has seen a reallocation of technology spending towards AI and AI datacenter-related investments. Responding to and taking advantage of these long-term trends, the Company has shifted its strategic focus towards expanding into the greater data provisioning market and positioning to capitalize on the nascent buildout of Edge AI. Semiconductors in general, but especially within the emerging Edge AI sector, have exhibited an increasing need for security provisioning.

~~Customers/Markets~~The data provisioning market has also continued to diversify such that adjacent segments such as programming services and programming at test now exceed the company’s traditional market segment of capital equipment.

~~We sell our solutions to customers worldwide, many of whom are world-class manufacturers of electronic devices used in a broad range of industries, as described in the following table:~~ Products

~~OEMs~~To ~~EMS~~accommodate ~~Programming~~the ~~Centers~~expanding ~~Automotive~~variety ~~Electronics~~and ~~IoT,~~quantities ~~Industrial,~~of ~~Consumer~~programmable ~~Electronics,~~devices ~~including~~being ~~Wireless~~manufactured ~~Contract Manufacturers Notable end customers Borg Warner~~today, ~~Bosch,~~we ~~Alps~~offer ~~Alpine,~~multiple ~~Visteon,~~solutions ~~Kostal,~~for ~~JVCKenwood,~~the ~~Harman,~~numerous ~~Hitachi,~~types ~~Denso~~of ~~Ten,~~device ~~Continental,~~mix Aptiv Panasonic, Magna, Marelli, Tesla, Desay, BYD LG, TCL, Siemens, Danfoss, Philips, Schneider, Endress+Hauser, Insta, Sony, UTEC, Nokia Pegatron, Flex, Jabil, Wistron, Sanmina SCI, Foxconn, Salcomp, Calcomp, Plexus Arrow, Avnet, BTV, CPS, Semitron, NOA Leading Business drivers Infotainment, Advanced Driver Assist (ADAS), electrification, connectivity, and ~~security~~volume ~~Higher~~usage ~~functionality driven~~ by ~~increasing~~our ~~electronic~~customers ~~content.~~in ~~Shift~~the ~~from~~various ~~analog~~market tosegments connected intelligent devices, security Production contract wins Value-added services, logistics, security Programming equipment drivers Growing electronic content, global support, resilient supply chains, new product rollouts, growing file sizes, quality control, traceability, and ~~security Growing electronic content and need for IP protection~~applications. ~~Process~~We ~~improvement~~work ~~and~~closely ~~simplification~~with asleading ~~well~~manufacturers as new product rollouts, memory and new technology, security New contracts from OEMs, programming solutions specified by OEMs Large algorithm device support library, contract wins, capacity utilization of ~~their~~programmable ~~installed~~devices ~~base~~to ofdevelop ~~equipment,~~our ~~small~~products ~~parts~~to ~~handling,~~meet ~~security~~the ~~Buying~~requirements criteria Quality, throughput, reliability, configuration control, traceability, global support, IP protection, security Quality, reliability, configuration control, traceability, global support, IP protection, security Lowest equipment procurement cost, throughput, global support Flexibility, lowest lifecycle cost per programmed part, low changeover time; use of ~~multiple~~a ~~vendors~~particular ~~provides negotiating leverage,~~ device ~~support~~and ~~availability~~invested ~~Security~~in ~~Deployment~~2025 ~~End-customer~~in ~~focus~~updating ~~End-customer~~our ~~focus~~programming ~~End-customer~~platform ~~and~~to ~~partner~~meet ~~focus~~customers’ ~~Partner~~evolving ~~focus of our SentriX deployments~~needs.

~~Our~~The ~~solutions~~Company ~~address~~launched the ~~data~~next-generation LumenX2 programming platform and ~~security~~LumenX2-M4 ~~deployment~~manual ~~needs~~programmer ofat ~~programmable~~the ~~semiconductor~~productronica ~~devices. Semiconductor~~2025 ~~devices~~tradeshow ~~are~~in aMunich, ~~large~~Germany in November 2025. The LumenX2 platform, ~~growing~~with ~~market~~higher pin counts and increased power, insignificantly ~~terms~~expands the breadth of ~~units~~device technologies supported on the LumenX architecture, ~~bits~~including ~~programmed~~microcontrollers, eMMC, UFS, SPI NOR flash, Secure Elements, and ~~need~~other ~~for~~device ~~security~~types. We ~~believe~~The ~~that~~LumenX2-M4 ~~our~~features ~~sales~~VerifyBoost ~~are~~technology ~~driven~~delivering byverify ~~many~~speeds of ~~the~~up ~~same~~to ~~forces~~750 ~~that~~megabytes ~~propel~~per second. The platform received the ~~semiconductor~~2025 ~~industry~~Global asTechnology ~~well~~Award asin the ~~automotive~~Programming ~~electronics~~category, ~~industry. We~~and ~~sell~~the torefreshed LumenX-M8 manual programmer received both the ~~manufacturers~~2025 ~~who~~Mexico ~~are~~Technology ~~consumers~~Award ofand ~~certain~~the ~~semiconductors~~2025 Step-by-Step Excellence Award. ~~When~~ ~~their~~These ~~business~~products ~~grows,~~support ~~they~~the ~~buy~~Company’s ~~more~~Unified ~~semiconductors~~Programming ~~which~~Platform strategy, inwhich ~~turn,~~provides ~~require~~a ~~additional~~single, scalable programming ~~equipment~~architecture tofrom ~~maintain~~design and new product introduction through high-volume production, ~~speeds~~creating ora ~~program~~seamless ~~new~~transition ~~device~~across ~~technologies~~the preprogrammed parts supply chain.

Our ~~device~~automated ~~programming~~systems ~~solutions~~have ~~currently~~list ~~target~~selling ~~two~~prices ~~high~~ranging ~~volume~~from ~~growing~~approximately ~~markets:~~$150,000 ~~automotive~~to ~~electronics~~$210,000 and ~~IoT~~our manual systems, ~~including~~have ~~industrial~~list ~~and~~selling ~~consumer~~prices ~~devices.~~ranging from approximately $8,000 to $11,000.

65 Table of Contents

~~Growth~~Sales ~~drivers~~Percentage ~~for~~of ~~automotive~~Total ~~electronics~~Sales Breakdown by Type

· Consumers desire advanced car features requiring higher levels of sophistication, including autonomous cars, infotainment options (audio, radio, dashboard displays, navigation), ADAS, wireless connectivity and electrification · Proliferation of programmable microcontrollers to support the next-generation electronic car systems · Increasing use of high-density flash to provide memory for advanced applications · Increasing complexity to support autonomous vehicles · Increasing need for security solutions for a secure supply chain and lifecycle firmware integrity · Growing software size

Sales Type	2025	2024	Drivers
Platform Sales	42%	51%	Capacity, Process improvement, Technology
Adapter Sales	37%	33%	Capacity utilization, New customer products
Software and Maintenance Sales	21%	16%	Installed base, Added capabilities
Total	100%	100%

~~Growth~~The ~~drivers~~table ~~for~~below ~~IoT,~~presents ~~including~~our ~~industrial,~~main ~~consumer~~products ~~electronics~~ and ~~wireless~~the key features that benefit our customers:

· Securely controlling groups of connected devices through a secure supply chain and lifecycle firmware integrity management · Adding intelligence and processing into devices · Connecting previously unconnected devices to networks and the internet (such as smart home, including intelligent thermostats and lighting) · Emergence of new devices and applications (such as health and wellness wearable devices and applications)

Products

Key Features

Customer Benefits

PSV Systems:

Off-line

(Automated)

• Fast program and verify speeds

• Up to 112 programming sites

• Up to 2000 devices per hour throughput

• UFS Support

• Supports LumenX and FlashCORE III programmers

• Supports multiple media types

• Supports quality options – fiber laser marking, ink dot marking, 2D inspection, 3D coplanarity

• ConneX Service Software enables connected factory integration and automation and system monitoring dashboards

• Managed and secure programming

• High throughput for high-density flash memory programming

• Flexible I/O options (tray, tape, tube), marking/labeling and vision for coplanarity inspection

• Scalable solutions for low to high-volume manufacturing

• Access to system data for connected factory and traceability

Lumen®X

Programmer

(Non-automated)

• Extensible architecture for fast programming, verify and download speeds

• Supports UFS memory, microcontrollers, serial flash, secure elements and other device types

• Large file size support

• Secure job creation

• Four or eight sockets configuration with tool-less changeover with single-socket adapters

• Managed and secure programming

• Fast setup and job changeover

• Highest yield and low total cost of programming

• High performance

• Create and validate designs before moving down the firmware supply chain

FlashPAK III

programmer:

(Non-automated)

• Scalability

• Network control via Ethernet

• Stand-alone operation or PC compatible

• Parallel programming

• Four sockets

• Universal device support

• Create and validate designs before moving down the firmware supply chain

• Unmatched ease of use in manual production systems

~~Diversification~~6 Table of ~~accounts receivable and net sales~~Contents

~~During 2024, we sold products to approximately 197 customers throughout the world.~~Customers/Markets

~~The~~We ~~following~~sell ~~represented~~our ~~greater~~solutions ~~than~~to ~~10%~~customers worldwide, many of ~~net~~whom ~~sales~~are ~~for~~world-class ~~the~~manufacturers ~~applicable~~of ~~year:~~electronic devices used in a broad range of industries.

Percentage of Net Sales	2024			2023			2022
Number of customers		2			2			1
Approximate percentage of net sales		34	%		24	%		23	%
Percentage of each		19	%		13	%		23	%
Percentage of each		15	%		11	%		n/a

	OEMs		EMS	Programming Centers
	Automotive Electronics	IoT, Industrial, Consumer Electronics	Contract Manufacturers
Notable end customers	Borg Warner, Bosch, Alps Alpine, Visteon, Kostal, JVCKenwood, Harman, Hitachi, Denso Ten, Continental, Aptiv Panasonic, Magna, Marelli, Tesla, Desay, BYD	LG, TCL, Siemens, Danfoss, Philips, Schneider, Endress+Hauser, Insta, Sony, UTEC	Pegatron, Flex, Jabil, Wistron, Sanmina SCI, Foxconn, Salcomp, Calcomp, Plexus	Arrow, Avnet, BTV, CPS, Semitron, NOA Leading
Business drivers	Infotainment, Advanced Driver Assist (ADAS), electrification, connectivity, and security	Higher functionality driven by increasing electronic content. Shift from analog to connected intelligent devices, security. Initial buildout of Edge AI impacting investment decisions.	Production contract wins	Value-added services, logistics, security
Programming equipment drivers	Growing electronic content, global support, resilient supply chains, new product rollouts, growing file sizes, quality control, traceability, and security	Growing electronic content and need for IP protection. Process improvement and simplification as well as new product rollouts, memory and new technology security	New contracts from OEMs, programming solutions specified by OEMs	Large algorithm device support library, contract wins, capacity utilization of their installed base of equipment, small parts handling, security
Buying criteria	Quality, throughput, reliability, configuration control, traceability, global support, IP protection, security	Quality, reliability, configuration control, traceability, global support, IP protection, security	Lowest equipment procurement cost, throughput, global support	Flexibility, lowest lifecycle cost per programmed part, low changeover time; use of multiple vendors provides negotiating leverage, device support availability
Security Deployment	End-customer focus	End-customer focus	End-customer and partner focus	Partner focus of our SentriX deployments

~~The~~Our ~~following~~solutions ~~represented~~address ~~greater~~the ~~than~~data ~~10%~~programming and security deployment needs of ~~our~~programmable ~~consolidated~~semiconductors ~~accounts~~(flash ~~receivable~~memory, ~~for~~microcontrollers and secure elements) at high volumes, with security, quality and traceability requirements. We provide our programming solutions in the ~~applicable~~factory ~~years:~~and through service, programming centers and programming at test to support our customers’ manufacturing requirements.

Percentage of Consolidated Accounts Receivable	2024			2023			2022
Number of customers		2			3			3
Approximate percentage of consolidated accounts receivable balance		43	%		47	%		39	%
Percentage of each		30	%		18	%		15	%
Percentage of each		13	%		16	%		13	%
Percentage of each		-			13	%		11	%

Our device programming solutions currently target two high volume growing markets: automotive electronics and IoT, including industrial, consumer electronics and wireless.

~~Geographic~~7 ~~Markets~~Table ~~and~~of ~~Distribution~~Contents

WeGrowth ~~market~~drivers ~~and~~for ~~sell~~automotive our products through a combination of direct sales, indirect sales representatives and distributors, as well as services through programming centers. We continually evaluate our sales channels against our evolving markets and customers and realign them as necessary to ensure that we reach our existing and potential customers in the most effective and efficient manner possible.electronics

U· Consumers desire advanced car features requiring higher levels of sophistication, including autonomous vehicle capabilities and safety assistance.S · Proliferation of programmable microcontrollers to support the next-generation electronic car systems. ~~Sales~~· Increasing use of high-density flash to provide memory for advanced applications. · Increasing complexity to support autonomous vehicles. · Increasing need for security solutions for a secure supply chain and lifecycle firmware integrity. · Growing software size.

WeGrowth ~~market~~drivers ~~our~~for ~~products throughout the U.S. using a variety of sales channels~~IoT, including ~~our own field sales management personnel~~industrial, ~~independent~~consumer ~~sales~~electronics ~~representatives~~ and direct sales. Our U.S. independent sales representatives obtain orders on an agency basis, with shipments made directly to the customer by us. Net sales in the U.S. for 2024, 2023 and 2022 were (in millions) $1.4, $2.8 and $1.8, respectively. Some of our customers’ orders delivered internationally are heavily influenced by U.S. sales-based efforts.wireless

7· ~~Table~~Securely controlling groups of ~~Contents~~connected devices through a secure supply chain and lifecycle firmware integrity. · Adding intelligence and processing into devices. · Connecting previously unconnected devices to networks and the internet (such as smart home, including security, appliances, wearables and other devices). · Emergence of new devices and applications (such as health and wellness wearable devices and applications).

~~International~~Diversification ~~Sales~~of net sales and accounts receivable

~~International~~During ~~sales represented approximately 94%~~2025, ~~90%~~we ~~and~~sold 93% of net sales in 2024, 2023 and 2022, respectively. We make foreign sales through our wholly-owned subsidiaries in Germany and China, as well as through independent distributors and sales representatives operating in 32 countries. Our independent foreign distributors purchase our products ~~for resale and we generally recognize the sale at the time of shipment~~ to ~~the~~approximately ~~distributor. As~~170 ~~with~~customers ~~U.S.~~throughout ~~sales representatives, sales made by international sales representatives are on an agency basis, with sales made directly to~~ the ~~customer by us~~world.

~~Net~~The ~~international~~following ~~sales~~represented ~~for~~greater ~~2024,~~than ~~2023~~10% ~~and~~of ~~2022~~net ~~were (in millions) $20.4, $25.3 and $22.4, respectively. We determine international~~ sales byfor the ~~international~~applicable geographic destination into which the products are sold and delivered and include not only sales by foreign subsidiaries but also export sales from the U.S. to our foreign distributors and to our representatives’ customers. International sales do not include transfers between Data I/O and our foreign subsidiaries. Export sales are subject to U.S. Department of Commerce regulations. We have not, however, experienced difficulties to date as a result of these requirements. Our products typically do not require export licenses. We have not made sales to Iran or any Iranian governmental entities or any other blacklisted companies or countries.year:

Fluctuating exchange rates and other factors beyond our control, such as the coronavirus, international monetary stability, tariff and trade policies and U.S. and foreign tax and economic policies, may affect the level and profitability of international sales. We cannot predict the effect of such factors on our business, but we try to consider and respond to changes in these factors, particularly as the majority of our costs are U.S. based while the vast majority of our sales are international.

Percentage of Net Sales	2025			2024			2023
Number of customers		3			2			2
Approximate percentage of net sales		41	%		34	%		24	%
Percentage of Customer 1		18	%		19	%		13	%
Percentage of Customer 2		12	%		15	%		11	%
Percentage of Customer 3		11	%		-			-

~~Competition~~The following represented greater than 10% of our accounts receivable:

The competition in the programming systems market is fragmented with several companies selling directly competitive solutions. Our direct competition competes primarily based on price. Many of these competitors compete on a regional basis. Although competition in the security deployment market is developing, we expect competition in the market to increase as security deployment becomes more important. There are alternative security deployment solutions such as software-based security, rather than the hardware-based security of our SentriX equipment.

Percentage of Accounts Receivable	2025			2024			2023
Number of customers		3			2			3
Approximate percentage of AR balance		49	%		43	%		47	%
Percentage of Customer 1		19	%		30	%		18	%
Percentage of Customer 2		16	%		13	%		16	%
Percentage of Customer 3		14	%		-			13	%

InGeographic ~~addition,~~Markets we compete with multiple substitute forms of device programming including “home grown” solutions. Programming after device placement may be done with In Circuit Test (“ICT”), In System Programming (“ISP”), and End of Line Downloading (“EOL”). Some automotive products may also be programmed over the air (“OTA”). IoT devices may also be programmed with ICT, ISP, EOL or OTA. In addition, new security devices may be required to be programmed using device-specific programmers developed by the semiconductor manufacturer. Distribution

~~While~~We wemarket ~~are~~and ~~not~~sell ~~aware~~our products through a combination of ~~any~~direct ~~published~~sales, ~~industry~~indirect ~~market~~sales ~~information~~representatives ~~covering~~and ~~the~~distributors, as well as services through programming ~~systems~~centers. We orcontinually ~~security~~evaluate ~~deployment~~our ~~market,~~sales ~~according~~channels toagainst our ~~internal~~evolving ~~analysis~~markets ofand ~~competitors’~~customers ~~revenues,~~and werealign ~~believe~~them weas ~~continue~~necessary to beensure ~~the~~that ~~largest~~we ~~supplier~~reach our existing and potential customers in the ~~programming~~most ~~systems~~effective ~~market~~and efficient manner possible.

~~Manufacturing,~~U.S. ~~Raw Materials and Backlog~~Sales

We ~~strive~~market ~~to manufacture and provide the best solutions for advanced programming. We primarily assemble and test~~ our products atthroughout ~~our~~the ~~principal facilities in Redmond, Washington and Shanghai, China~~U. ~~Both of these locations are ISO 9001:2015 certified~~S. We ~~outsource~~using ~~our circuit board manufacturing and fabrication. As~~ a ~~resilient~~variety ~~supply~~of ~~chain~~sales ~~strategy~~channels, weincluding ~~manufacture various products in both of~~ our ~~production~~own ~~facilities.~~field ~~This~~sales ~~strategy~~management ~~allows opportunity to mitigate some of the risks of having only one location~~personnel, asindependent ~~well~~sales asrepresentatives ~~enabling tariff~~ and ~~tax~~direct ~~optimization strategies~~sales. Our ~~We use a combination of standard components and fabricated parts manufactured to our specifications~~U. ~~Most~~S. ~~components~~independent ~~used~~sales ~~are~~representatives ~~available~~obtain ~~from~~orders aon ~~number~~an ofagency ~~different suppliers and subcontractors but certain items~~basis, ~~such~~with asshipments ~~some~~made ~~handler~~directly ~~and~~to ~~programmer~~the ~~and~~customer ~~security~~by ~~deployment subassemblies, custom integrated circuits, hybrid circuits and connectors, are purchased from single sources~~us. We Net ~~believe~~sales ~~that~~in ~~additional~~the ~~sources can be developed for most present single-source components without significant difficulties~~U. ~~Single-source components may not always continue to be readily available or may be subject to part shortage delays~~S. If ~~we cannot develop alternative sources~~ for ~~these components~~2025, or2024 ifand we2023 ~~experience~~were ~~deterioration~~ (in ~~relationships~~millions) ~~with these suppliers~~$1.3, ~~there may be price increases~~$1.4, ~~minimum~~and ~~order quantities~~$2.8, ~~end~~respectively. Some of ~~life~~our ~~purchase~~customers’ ~~requirements,~~orders ~~costs~~delivered ~~associated~~internationally ~~with~~are ~~integrating~~heavily ~~alternatively~~influenced ~~sourced~~by ~~parts,~~U.S. ~~and~~sales-based ~~delays or reductions in product introductions or shipments, which may materially adversely affect our operating results~~efforts.

In accordance with industry practices, generally all orders are subject to cancellation prior to shipment without penalty, except for contracts calling for custom configuration. To date, such cancellations have not had a material effect on our sales volume. To meet customers’ delivery requirements, we manufacture certain products based upon a combination of backlog and anticipated orders. Most orders are scheduled for delivery within 1 to 90 days after receipt of the order. Our backlog of pending orders was approximately (in millions) $3.5, $2.8 ~~and~~Table ~~$4.8 as~~ of ~~December 31, 2024, 2023 and 2022, respectively. The size of backlog at any date is not necessarily a meaningful indicator of the trend of our business.~~Contents

8International ~~Table of Contents~~Sales

~~Research~~International sales represented approximately 94%, 94%, and ~~Development~~90% of net sales in 2025, 2024 and 2023, respectively. We make foreign sales through our wholly-owned subsidiaries in Germany and China, as well as through independent distributors and sales representatives operating in 39 countries. Our independent foreign distributors purchase our products for resale and we generally recognize the sale at the time of shipment to the distributor. As with U.S. sales representatives, sales made by international sales representatives are on an agency basis, with sales made directly to the customer by us.

WeNet ~~believe~~international ~~that~~sales ~~continued~~for ~~investment~~2025, in2024 ~~research~~ and ~~development~~2023 iswere ~~critical~~(in tomillions) ~~our~~$20.2, ~~future success~~$20. We4, ~~continue to develop new technologies~~ and ~~products~~$25.3, ~~and enhance existing products~~respectively. ~~Future~~ We ~~growth~~determine isinternational ~~largely~~sales ~~dependent~~by ~~upon~~ the ~~timely~~international ~~development~~geographic ~~and~~destination ~~introduction~~into ofwhich ~~new~~the products, asare ~~well~~sold asand ~~the~~delivered ~~development of technology~~ and ~~algorithms~~include tonot ~~support~~only ~~the~~sales ~~latest~~by ~~programmable~~foreign ~~devices. Where~~subsidiaries ~~possible,~~but wealso ~~may~~export ~~pursue~~sales ~~partnerships~~from ~~and~~the ~~other~~U.S. ~~strategic relationships~~ to ~~add~~our ~~new~~foreign ~~products,~~distributors ~~capabilities~~ and ~~services,~~to ~~particularly~~our inrepresentatives’ ~~security deployment~~customers. We International ~~are~~sales ~~currently~~do ~~focusing~~not ~~our~~include ~~research~~transfers ~~and~~between ~~development~~Data ~~efforts~~I/O ~~on strategic growth markets, including automotive electronics, IoT~~ and ~~security~~our ~~deployment~~foreign subsidiaries. Export Wesales are ~~continuing~~subject to ~~develop~~U.S. ~~technology~~Department ~~for manual and automated systems to program new categories~~ of ~~semiconductors,~~Commerce ~~including Secure Elements, TPMs, Authentication Chips, and Secure Microcontrollers~~regulations. We ~~plan~~have ~~to deliver new programming technology~~not, ~~automated handling systems~~however, ~~factory~~experienced ~~automation~~difficulties ~~communications~~to ~~software,~~date ~~and~~as ~~enhancements~~a ~~for~~result ~~security~~of ~~deployment~~these ~~in the manufacturing environment~~requirements. We Our ~~also~~products ~~continue~~typically todo ~~focus~~not onrequire ~~increasing~~export ~~our capacity and responsiveness for new device support requests from customers and programmable integrated circuit manufacturers by revising and enhancing our internal processes and tools~~licenses. ~~Our~~ We ~~research and development efforts~~ have ~~resulted~~not inmade ~~the~~sales ~~release~~to ofIran ~~significant~~or ~~new~~any ~~products~~Iranian ~~and~~governmental ~~product~~entities ~~enhancements~~or ~~over~~any ~~the~~other ~~past~~blacklisted ~~several~~companies ~~years~~or countries.

~~During~~Fluctuating ~~2024,~~exchange ~~2023~~rates and ~~2022,~~other wefactors ~~made~~beyond ~~expenditures~~our ~~for~~control, ~~research~~such ~~and~~as ~~development~~the ofcoronavirus, ~~(in~~international ~~millions)~~monetary ~~$6.2~~stability, ~~$6.5~~tariff and $6trade policies and U.1,S. ~~respectively,~~and ~~representing~~foreign ~~29%~~tax and economic policies, ~~23%~~may affect the level and ~~25%~~profitability of ~~net~~international sales. We cannot predict the effect of such factors on our business, ~~respectively. Research~~but we try to consider and ~~development~~respond to changes in these factors, particularly as the majority of our costs are ~~generally~~U.S. ~~expensed~~based aswhile ~~incurred~~the vast majority of our sales are international.

~~Patents, Copyrights, Trademarks and Licenses~~Competition

WeThe ~~rely~~competition onin athe ~~combination~~programming ofsystems ~~patents,~~market ~~copyrights,~~is ~~trade~~fragmented ~~secrets~~with ~~and~~several ~~trademarks~~companies toselling ~~protect~~directly ~~our~~competitive ~~IP,~~solutions. asOur ~~well~~direct ascompetition ~~product~~competes ~~development~~primarily ~~and~~based ~~marketing~~on ~~skills~~price. toMany ~~establish~~of ~~and~~these ~~protect~~competitors ~~our~~compete on a regional basis. Although competition in the security deployment market ~~position~~is ~~and~~developing, ~~will~~we ~~continue~~expect competition in the market to ~~apply~~increase ~~for~~as ~~and~~security ~~add~~deployment ~~new~~becomes ~~patents~~more toimportant. There ~~our~~are ~~patent~~alternative ~~portfolio~~security deployment solutions such as wesoftware-based ~~develop~~security, ~~strategic~~rather ~~new~~than ~~technologies.~~the hardware-based security of our SentriX equipment.

WeIn ~~attempt~~addition, towe ~~protect~~compete ~~our~~with ~~rights~~multiple insubstitute ~~proprietary~~forms ~~systems~~of ~~(architecture,~~device ~~implementations,~~programming ~~software)~~ including ~~Lumen®X,~~“home ~~FlashCORE,~~grown” ~~TaskLink,~~solutions. Programming ~~ConneX,~~after ~~SentriX~~device ~~and~~placement ~~other~~may ~~software~~be ~~products,~~done bywith ~~retaining~~In ~~the~~Circuit ~~title~~Test ~~to and copyright of the software and documentation~~(“ICT”), byIn ~~including~~System ~~appropriate~~Programming ~~contractual restrictions on use and disclosure in our licenses~~(“ISP”), and byEnd ~~requiring~~of ~~our~~Line ~~employees~~Downloading ~~to execute non-disclosure agreements~~(“EOL”). ~~Our~~ Some ~~software~~automotive products ~~are~~may ~~not~~also ~~typically~~be ~~sold~~programmed orover ~~licensed~~the ~~separately~~air ~~from~~(“OTA”). IoT ~~sales~~devices ofmay ~~programming~~also ~~systems. However,~~be ~~when~~programmed wewith ~~license software separately~~ICT, ~~we recognize revenue upon the transfer of control of the software~~ISP, ~~which~~EOL isor ~~generally~~OTA. In ~~upon shipment~~addition, ~~provided~~new ~~that~~security ~~only~~devices ~~inconsequential~~may ~~performance~~be ~~obligations~~required ~~remain~~to onbe ~~our~~programmed ~~part~~using ~~and~~device-specific ~~substantive~~programmers ~~acceptance~~developed ~~conditions,~~by ifthe ~~any,~~semiconductor ~~have been met~~manufacturer.

~~Because~~While ~~of the rapidly changing technology in the semiconductor, electronic equipment and software industries, portions of our products might infringe upon existing patents or copyrights, and~~ we ~~may~~are benot ~~required~~aware ~~to obtain licenses or discontinue the use~~ of ~~infringing technology. We believe that~~ any ~~exposure~~published weindustry ~~may~~market ~~have~~reports ~~regarding~~covering ~~possible infringement claims is a reasonable business risk similar to that assumed by other companies in~~ the ~~electronic~~programming ~~equipment~~systems ~~and~~or ~~software~~security ~~industries. However,~~deployment ~~any claim of infringement~~market, ~~with~~according orto ~~without~~our ~~merit,~~internal ~~could~~analysis ~~be costly and a diversion~~ of ~~management~~competitors’s ~~attention~~revenues, ~~and~~we bebelieve anwe ~~adverse~~continue ~~determination could adversely affect our reputation, potentially preclude us from offering certain products, and subject us~~ to ~~substantial~~be ~~liability. As~~one of ~~December~~the ~~31,~~largest ~~2024,~~suppliers wein ~~were~~the ~~not~~programming ~~subject~~systems ~~to any pending actions regarding infringement claims~~market.

~~Employees~~Manufacturing, -Raw ~~Human~~Materials ~~Capital~~and Backlog

AsWe ofstrive ~~December~~to ~~31,~~manufacture ~~2024,~~and weprovide ~~had~~the abest ~~total~~solutions offor 95advanced ~~employees,~~programming. ofWe ~~which~~primarily 45assemble ~~were~~and ~~located~~test ~~outside~~our ~~the~~products ~~U.S.~~at ~~and~~our 7principal offacilities ~~which~~in ~~were~~Redmond, ~~part~~Washington ~~time~~and Shanghai, China. We ~~also~~Both ~~utilize~~of ~~independent~~these ~~contractors~~locations ~~for~~are ~~specialty~~ISO ~~work,~~9001:2015 ~~primarily~~certified. We inoutsource ~~research~~our ~~and~~circuit ~~development,~~board manufacturing and ~~utilize~~fabrication. As ~~temporary~~a ~~workers~~resilient tosupply ~~adjust~~chain ~~capacity~~strategy, towe ~~fluctuating~~manufacture ~~demand~~various ~~and~~products ~~for~~in ~~special~~both ~~projects. Many~~ of our ~~employees~~production ~~are~~facilities. ~~highly~~This ~~skilled,~~strategy ~~trained~~allows ~~and~~opportunity ~~experienced~~to inmitigate ~~specialized~~some ~~areas~~of ~~and~~the ~~our~~risks ~~continued~~of ~~success~~having ~~will~~only ~~depend~~one inlocation, ~~part~~as ~~upon~~well ~~our~~as ~~ability~~enabling totariff ~~attract~~ and ~~retain~~tax ~~employees~~optimization ~~who~~strategies. ~~can~~We beuse ina ~~great~~combination ~~demand~~of ~~within~~standard ~~the~~components ~~industry. None~~and offabricated parts manufactured to our ~~employees~~specifications. Most components used are ~~represented~~available byfrom a ~~collective~~number ~~bargaining~~of ~~unit~~different suppliers and wesubcontractors ~~believe~~but ~~relations~~certain ~~with~~items, ~~our~~such ~~employees~~as ~~are~~some ~~favorable. In~~handler ~~foreign~~and ~~countries~~programmer weand ~~have~~security ~~employment~~deployment ~~agreements or~~subassemblies, incustom ~~China~~integrated circuits, ~~the~~hybrid ~~Shanghai~~circuits ~~Foreign~~and ~~Services Co.~~connectors, ~~Ltd.~~are ~~(“FSCO”)~~purchased ~~labor~~from ~~agreement~~single sources. We ~~Because~~believe ofthat ~~the~~additional ~~creation~~sources ofcan ~~specialized~~be ~~knowledge~~developed ~~and~~for ~~skills~~most inpresent ~~our~~single-source ~~business,~~components ~~there~~without ~~are~~significant ~~extra short~~difficulties. Single-~~term~~source ~~challenges~~components may not always continue to ~~hiring~~be ~~and~~readily ~~training~~available ~~replacements.~~or ~~Our~~may ~~hiring~~be ~~and~~subject ~~retention~~to ~~strategies~~part ~~and~~shortage ~~efforts~~delays. If ~~include~~we ~~emphasis~~cannot ondevelop ~~the~~alternative ~~advantages~~sources offor ~~working~~these components, or if we experience deterioration in arelationships ~~technology~~with ~~oriented,~~these ~~smaller~~suppliers, ~~international,~~there ~~public~~may ~~company~~be price increases, ~~and~~minimum ~~the~~order ~~culture~~quantities, end of ~~our~~life ~~organization.~~purchase Werequirements, ~~utilize~~costs ~~competitive~~associated ~~pay~~with ~~practices,~~integrating ~~incentive~~alternatively ~~compensation,~~sourced ~~equity awards~~parts, and ~~benefits~~delays ~~such~~or asreductions ~~health~~in ~~care,~~product ~~life~~introductions ~~and~~or ~~disability~~shipments, ~~insurance;~~which ~~paid~~may ~~time~~materially ~~off;~~adversely ~~education~~affect ~~and~~our ~~volunteer~~operating ~~time~~results.

~~Environmental~~In accordance with industry practices, ~~Social~~generally all orders are subject to cancellation prior to shipment without penalty, except for contracts calling for custom configuration. To date, such cancellations have not had a material effect on our sales volume. To meet customers’ delivery requirements, we manufacture certain products based upon a combination of backlog and ~~Governance~~anticipated ~~(“ESG”)~~orders. Most orders are scheduled for delivery within 1 to 90 days after receipt of the order.

~~Data~~Our ~~I/O~~backlog isof ~~committed~~pending toorders ~~the~~was ~~responsibilities~~approximately ~~associated~~(in ~~with~~millions) ~~modern age ESG~~$1. ~~The Company’s key pillars for ESG support a framework for sustainable growth and include Leadership & Governance~~6, ~~Environment~~$3.5, ~~Innovation, Human Capital, Social Capital,~~ and ~~Financial Excellence~~$2. ~~Initiatives~~8 ~~within these areas apply to the Company’s daily global operations~~ as ~~well~~of asDecember ~~within~~31, ~~its~~2025, ~~supply~~2024 ~~chains. Our facilities are subject to numerous laws~~ and ~~regulations~~2023, ~~concerning~~respectively. The ~~the~~size ~~discharge~~ of ~~materials~~backlog orat ~~otherwise~~any ~~relating~~date tois ~~the~~not ~~environment.~~necessarily Ina ~~addition~~meaningful toindicator ~~this~~of ~~commitment,~~ the ~~Company~~trend ~~has a track record~~ of ~~meeting~~our its ESG regulatory obligations, being a solid corporate citizen, delivering superior value to its customers and partners, and demonstrating corporate stewardship including returning capital to shareholders through past share buybacksbusiness.

Table of Contents

AsResearch ~~the largest~~ and only publicly traded company in its sector, according to our internal analysis, Data I/O has led its industry in disclosing significant operational and financial information. The Company's Board currently includes Data I/O's CEO and four Independent Directors. It is diverse in gender, education, professional experience and differences in viewpoints and skills. Through its continuous improvement practices and our operations’ focus on assembly and test with no fabrication, the Company consumes relatively little energy, has minimal or no emissions or pollutants to air and wastewater, and complies with workplace labor, safety and business practices on three continents. Additionally, the Company started to purchase only sustainable (green) electric power (in our China & U.S. facilities in 2023; German facility in prior years) and started to purchase offsets for its carbon emissions from natural gas use in the U.S. facility. For our vehicles, we have been replacing company-owned cars with hybrid or electric vehicles where feasible. None of these actions have had a material financial impact. Recent developments to climate regulations and guidelines have increased customer demands for climate disclosures on their timelines as opposed to regulations applicability to the Company.Development

~~Data~~We ~~I/O~~believe that continued investment in research and development is ~~also~~critical ~~committed~~to our future success. We continue to ~~giving~~develop ~~back~~new technologies and products and enhance existing products. Future growth is largely dependent upon the timely development and introduction of new products, as well as the development of technology and algorithms to support the latest programmable devices. Where possible, we may pursue partnerships and other strategic relationships to add new products, capabilities and services, particularly in security deployment. We are currently focusing our ~~local~~research ~~communities~~and ~~through~~development ~~volunteer~~efforts on strategic growth markets, including automotive electronics, IoT and ~~internship~~security ~~programs~~deployment. ~~The~~ ~~Company~~We ~~provide~~are ~~employees~~continuing ~~time-off~~to develop technology for manual and automated systems to ~~volunteer~~program new categories of semiconductors, including Secure Elements, TPMs, Authentication Chips, and Secure Microcontrollers. In ~~addition~~We plan to deliver new programming technology, automated handling systems, factory automation communications software, and enhancements for security deployment in the ~~Company~~manufacturing ~~provides~~environment. We ~~internships~~also continue to ~~local~~focus ~~high~~on ~~school~~increasing our capacity and ~~college~~responsiveness ~~students~~for ~~through~~new ~~STEM~~device support requests from customers and ~~technical~~programmable ~~colleges~~integrated circuit manufacturers by revising and enhancing our internal processes and tools. Our research and development efforts have resulted in the release of significant new products and product enhancements over the past several years.

~~Compliance~~During ~~with~~2025, ~~environmental~~the ~~laws~~Company’s ~~has~~R&D ~~not~~efforts ~~had,~~focused ~~nor~~on isthe itdevelopment ~~currently~~and ~~expected~~launch toof ~~have~~the next-generation LumenX2 programming platform and LumenX2-M4 manual programmer, awhich ~~material~~were ~~effect~~introduced onat ~~our~~the ~~capital~~productronica ~~expenditures~~2025 tradeshow in November 2025. The LumenX2 programming platform, ~~financial~~with ~~position~~higher pin counts and increased power, ~~results~~significantly expands the breadth of ~~operations~~device ortechnologies ~~competitive~~supported, ~~position.~~including ~~Potential~~microcontrollers, ~~regulations~~eMMC, ~~regarding~~UFS, ~~climate~~SPI ~~change~~NOR ~~measurements~~flash, Secure Elements, and ~~disclosures~~other ~~could~~device ~~require~~types. ~~significant~~The ~~effort~~R&D team has begun the systematic integration of artificial intelligence tools to accelerate programming algorithm development and ~~costs~~device support.

~~Executive~~During ~~Officers~~2025, 2024 and 2023, we made expenditures for research and development of ~~the~~(in ~~Registrant~~millions) $6.5, $6.2 and $6.5, respectively, representing 30%, 29% and 23% of net sales, respectively. Research and development costs are generally expensed as incurred.

~~Set~~Finance ~~forth~~and ~~below is certain information concerning the executive officers of Data I/O as of March 18, 2025:~~Administration

Name	Age	Position
William Wentworth	59	President and Chief Executive Officer
Gerald Y. Ng	63	Vice President, Chief Financial Officer, Secretary and Treasurer

The Company began the implementation process of a new enterprise resource planning system, Acumatica, to replace the legacy IFS system. This initiative is part of the broader effort to optimize business operations and IT infrastructure. The Company is leveraging AI-driven tools to accelerate traditionally time-consuming aspects of the ERP implementation, including chart of accounts mapping, data migration planning, and intercompany policy documentation. The ERP transition is expected to improve operational efficiency, enhance financial reporting capabilities, and support the Company’s growth objectives. The Acumatica implementation project remains on schedule with a target switchover date of July 1, 2026.

~~William~~During ~~Wentworth~~2025, ~~joined Data I/O as a member of~~ the ~~Board~~Company ofdeployed ~~Directors~~artificial onintelligence ~~May~~internally ~~2023~~across ~~and~~all ~~assumed~~functional ~~the~~departments ~~President~~to ~~position~~accelerate onoperations ~~September 1,2024~~ and ~~Chief~~reduce ~~Executive Officer (“CEO”) position on October 1, 2024~~costs. ~~Bill~~ ~~Wentworth~~AI ~~brings~~tools awere ~~wealth~~applied ofto ~~industry~~software ~~experience~~engineering ~~spanning~~to ~~over~~accelerate 35programming ~~years,~~algorithm ~~including~~development ~~private equity~~ and ~~M&A~~device ~~exposure. As the CEO of Source Electronics~~support, ~~the~~ERP ~~global~~implementation ~~market~~planning ~~share leader in programming~~ and ~~test~~data ~~services~~migration, ~~he was a Data I/O~~ customer ~~and~~support ~~led~~processes, ~~the~~legal ~~sale of controlling interest of Source Electronics to HIG Capital in 2001 and the company’s subsequent sale to Avnet in 2008 with significant investor return. Under Bill's leadership~~documentation, ~~Source developed compelling programming solutions for the automotive~~ and ~~consumer~~internal ~~industries, expanding the~~ business ~~and~~operations. ~~limiting~~These ~~its~~capabilities ~~industry~~enabled ~~and customer concentration. For~~ the ~~years~~Company ~~prior~~ to ~~joining~~accomplish ~~Data~~its ~~I/O,~~transformation asobjectives ~~President~~faster ~~and~~than ~~owner~~originally ~~of Wentworth Advisors, he has consulted in the programming, IT, and private equity markets, focusing on expanding deal flow, performing due diligence and Board service~~planned.

~~Gerald~~On Y.August Ng16, ~~joined~~2025, ~~Data~~the ~~I/O~~Company inexperienced ~~July~~a ~~2023~~ransomware asincident ~~Data~~affecting ~~I/O's~~certain ~~Vice~~internal ~~President~~IT ofsystems. ~~Finance~~Upon ~~and~~discovery, ~~effective~~the ~~August~~Company ~~16,~~promptly ~~2023~~activated its response protocols, ~~became~~secured ~~Data~~its ~~I/O's~~global ~~Vice~~IT ~~President~~systems and ~~Chief~~implemented ~~Financial~~containment ~~Officer~~measures, including proactively taking certain platforms offline. ~~Gerry~~The ~~brings~~Company aengaged ~~wealth~~leading ofcybersecurity ~~experience~~experts into ~~finance~~support system recovery and ~~treasury~~conduct ~~functions,~~a ~~business~~comprehensive ~~development,~~investigation. ~~financial~~It ~~planning~~was &determined ~~forecasting,~~that ~~monthly~~the ~~reporting~~attack ~~and~~was ~~business~~not ~~compliance.~~specifically Hetargeted ~~was~~at ~~previously~~Data ~~CFO~~I/O ~~for~~but ~~Kymeta~~originated ~~Corporation,~~through a ~~broadband~~vulnerability ~~satellite~~in ~~and~~a ~~cellular~~commercially ~~networks~~available ~~communication~~third-party ~~company~~firewall service provider. By September 2025, the incident had been completely contained and ~~prior~~remediated, toall ~~that~~global systems were restored, ~~held~~and ~~CFO~~the ~~titles~~Company atdoes ~~FUJIFILM~~not ~~SonoSite,~~believe ~~Inc~~it has any remaining risk exposure from the incident. The remediation and ~~Fluke~~associated ~~Networks. Gerry~~professional ~~holds~~fees aresulted ~~Masters~~in approximately $388,000 of ~~Business~~one-time ~~Administration~~costs, ~~from~~primarily ~~Northwestern~~recorded ~~University~~in –the ~~Kellogg~~third ~~School~~quarter. As an outcome of ~~Management~~the incident, the Company’s IT systems and acybersecurity ~~Bachelor~~posture ofwere ~~Arts~~strengthened, ~~Finance~~with ~~and~~improved ~~Accounting~~corporate ~~from~~processes ~~the~~and ~~University~~enhanced ofsecurity ~~Washington~~infrastructure.

10Patents, ~~Table~~Copyrights, ofTrademarks ~~Contents~~and Licenses

We rely on a combination of patents, copyrights, trade secrets and trademarks to protect our IP, as well as product development and marketing skills to establish and protect our market position and will continue to apply for and add new patents to our patent portfolio as we develop strategic new technologies.

We attempt to protect our rights in proprietary systems (architecture, implementations, software) including Lumen®X, FlashCORE, TaskLink, ConneX, SentriX and other software products, by retaining the title to and copyright of the software and documentation, by including appropriate contractual restrictions on use and disclosure in our licenses, and by requiring our employees to execute non-disclosure agreements. Our software products are not typically sold or licensed separately from sales of programming systems. However, 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.

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Because of the rapidly changing technology in the semiconductor, electronic equipment and software industries, portions of our products might infringe upon existing patents or copyrights, and we may be required to obtain licenses or discontinue the use of infringing technology. We believe that any exposure we may have regarding possible infringement claims is a reasonable business risk similar to that assumed by other companies in the electronic equipment and software industries. However, any claim of infringement, with or without merit, could be costly and a diversion of management’s attention, and be an adverse determination could adversely affect our reputation, potentially preclude us from offering certain products, and subject us to substantial liability. As of December 31, 2025, we were not subject to any pending actions regarding infringement claims.

Employees - Human Capital

As of December 31, 2025, we had a total of 97 employees, of which 44 were located outside the U.S. and 7 of which were part time. We also utilize independent contractors for specialty work, primarily in research and development, and utilize temporary workers to adjust capacity to fluctuating demand and for special projects. Many of our employees are highly skilled, trained and experienced in specialized areas and our continued success will depend in part upon our ability to attract and retain employees who can be in great demand within the industry. None of our employees are represented by a collective bargaining unit and we believe relations with our employees are favorable. In foreign countries we have employment agreements or, in China, the Shanghai Foreign Services Co., Ltd. (“FSCO”) labor agreement. Because of the creation of specialized knowledge and skills in our business, there are extra short-term challenges to hiring and training replacements. Our hiring and retention strategies and efforts include emphasis on the advantages of working in a technology oriented, smaller, international, public company, and the culture of our organization. We utilize competitive pay practices, incentive compensation, equity awards, and benefits such as health care, life and disability insurance, paid time off, education and volunteer time.

Through the course of 2025 and early 2026, the Company has undertaken organizational changes to centralize the direction and management of business functions in its Redmond, Washington headquarters. The Company believes that this structure will enable a more consistent strategic focus, especially as the Company seeks to expand into adjacent segments of the data provisioning market and generally extend market reach.

Environmental, Social and Governance (“ESG”)

Data I/O is committed to the responsibilities associated with modern age ESG. The Company’s key pillars for ESG support a framework for sustainable growth and include Leadership & Governance, Environment, Innovation, Human Capital, Social Capital, and Financial Excellence. Initiatives within these areas apply to the Company’s daily global operations as well as within its supply chains. Our facilities are subject to numerous laws and regulations concerning the discharge of materials or otherwise relating to the environment. In addition to this commitment, the Company has a track record of meeting its ESG regulatory obligations, being a solid corporate citizen, delivering superior value to its customers and partners, and demonstrating corporate stewardship including returning capital to shareholders through past share buybacks.

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Executive Officers of the Registrant

During 2025, the Company underwent a significant transition in its financial leadership. Gerry Ng, who had served as Vice President and Chief Financial Officer since August 2023, departed the Company. Todd Henne served as interim CFO during the transition period. Effective August 11, 2025 as Vice President of Finance, and effective August 15, 2025 as an Executive Officer of the Company and the Company’s Vice President, Chief Financial Officer, Secretary and Treasurer. The leadership transition was part of a broader deliberate strengthening of the Board and executive suite to ensure the Company has the right team in place to execute its growth strategy.

Set forth below is certain information concerning the executive officers of Data I/O as of April 16, 2026:

Name	Age	Position
William Wentworth	60	President and Chief Executive Officer
Charles DiBona	61	Vice President, Chief Financial Officer, Secretary and Treasurer

William Wentworth joined Data I/O as a member of the Board of Directors on May 2023 and assumed the President position on September 1, 2024 and Chief Executive Officer (“CEO”) position on October 1, 2024. Bill Wentworth brings a wealth of industry experience spanning over 35 years, including private equity and M&A exposure. In 1988 he cofounded Source Electronics, the global market share leader in programming and test services, and a Data I/O customer. He led the sale of controlling interest of Source Electronics to HIG Capital in 2001 and the company’s subsequent sale to Avnet in 2008 with significant investor return. Under Bill’s leadership, Source developed compelling programming solutions for the automotive and consumer industries, expanding the business and limiting its industry and customer concentration. For the years prior to joining Data I/O, as President and owner of Wentworth Advisors, he has consulted in the programming, IT, and private equity markets, focusing on expanding deal flow, performing due diligence and Board service.

Charles DiBona joined Data I/O on August 11, 2025 as Vice President of Finance, and effective August 15, 2025 as an Executive Officer of the Company and the Company’s Vice President, Chief Financial Officer (“CFO”), Secretary and Treasurer . Mr. DiBona brings extensive experience in financial leadership across public and private companies and equity research. He previously served as the Senior Equity Analyst covering Enterprise Software at Sanford C. Bernstein & Co., LLC. He then served as GM of Strategy and M&A in Microsoft’s Server and Tools Business (which subsequently became Microsoft’s Cloud + Enterprise division). Subsequently, he was CFO of Unify Square, Inc., a purveyor of unified communications monitoring and management solutions which was successfully sold to Unisys Corporation in 2021, and of LabVantage Solutions, Inc., a closely-held leader in the Laboratory Information Management space.

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Item 1A. Risk Factors

Cautionary Factors That May Affect Future Results

Our disclosure and analysis in this Annual Report contains some forward-looking statements. Forward-looking statements include our current expectations or forecasts of future events. The reader can identify these statements by the fact that they do not relate strictly to historical or current facts. In particular, these include statements relating to future action, supply chain expectations, semiconductor chip availability, Russia-Ukraine war impacts, prospective products, expected market growth, new technologies and trends, industry partnerships, foreign operations, economic expectations, future performance or results of current and anticipated products, sales efforts, expenses, outcome of contingencies, impact of regulatory requirements, tariffs and financial results.

Any or all of the forward-looking statements in this Annual Report or in any other public statement made may turn out to be wrong. They can be affected by inaccurate assumptions we might make or known or unknown risks and uncertainties can affect these forward-looking statements. Many factors --– for example, product competition and product development --– will be important in determining future results. Moreover, neither Data I/O nor anyone else assumes responsibility for the accuracy and completeness of these forward-looking statements. Actual future results may materially vary.

We undertake no obligation to publicly update any forward-looking statements after the date of this Annual Report, whether as a result of new information, future events or otherwise. The reader should not unduly rely on our forward-looking statements. The reader is advised, however, to consult any future disclosures we make on related subjects in our 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission (“SEC”) and press releases. Also, note that we provide the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business. These are factors that we think could cause our actual results to differ materially from expected and historical results. Other factors besides those listed here could also adversely affect us. This discussion is permitted by the Private Securities Litigation Reform Act of 1995.

RISK FACTORS:

TARIFFS AND TRADE ISSUES

Changes in tariffs and issues of trade ~~issues~~and global conflict may adversely affect our business, including revenues and/or gross margins.

The tariff environment continued to evolve in 2025, with new tariff actions and ongoing trade tensions between the United States and China among others affecting the Company’s costs and competitive position. The Company produces products in both the United States and China and sells into global markets. Ongoing supply chain planning and other actions have been mitigating the impact of new tariffs, trade and inflationary pressures, including shifting material sourcing and product manufacturing. The Company’s dual-sourced manufacturing strategy in Redmond, Washington and Shanghai, China provided flexibility to navigate tariff challenges, optimize tariff exposure and support customers to the extent they shift manufacturing to the Americas. However, further increases in tariff rates, additional items subject to tariffs, or retaliatory trade actions could increase costs and adversely affect revenues and gross margins and on-going uncertainty surrounding tariffs may continue to affect customer investment decisions and timelines, adversely affect demand for the Company’s offerings.

We produce products in the United States and China. Currently, certain of our products are subject to tariffs imposed by one country on goods manufactured in the other country. There is uncertainty regarding the tariffs expected to be imposed, and any increase in tariff rates and subjecting additional items to tariffs could increase our costs, revenues and the competitiveness of our products due to our manufacturing locations. Trade and tariff issues are creating business uncertainty and may spread to and impact other jurisdictions.

Additionally, ongoing trade tensions between the United States and China are impacting our ability to seamlessly design, build, market and sell our products. These tensions may increase suddenly at any time due to government policies or actions. Some customers have moved production away from China, further from our facilities and engineers. We endeavor to have multi-sourced manufacturing, but this is not currently practical for all products in all locations.

War based restrictions, embargos, and supply chain disruptions have and are occurring because of the Russian invasion of Ukraine, which could have economic and other indirect impacts to our business. We do not have any operations in Russia or Ukraine, nor do we rely on any software or hardware components sourced from these two countries. The ~~Israel~~escalation -of ~~Hamas~~military conflict involving Iran and other actors in the Middle East, including risks of broader regional war, cyberattacks, and disruption to critical shipping routes and energy infrastructure, could ~~have~~materially ~~similar~~impact ~~issues~~global economic conditions and adversely affect our business, ~~although~~including wethrough ~~have~~increased ~~not~~costs, ~~experienced~~supply ~~any~~chain ~~material~~disruptions, ~~impacts~~and demand volatility.

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NEW PRODUCTS OR SERVICES

We are pursuing new product or service initiatives, and business models that may develop more slowly and/or to a lesser extent than expected.

In order to lead in new and potentially lucrative market opportunities, ~~for example in security deployment of programmable devices, circuit boards and electronic systems,~~ we are making significant investments in people, technology and business development while the market is developing and uncertain. Due to the length of time to market from design to production in security provisioning, if these markets develop more slowly than planned, or if our ~~security deployment~~ solutions are not widely accepted, then we may not achieve our expected return on investment in new technologies, which may significantly affect the results of our existing business.

In the security deployment area, we have introduced a pay per use business model and service fees that may not be accepted by our customers who are accustomed to paying for capital equipment upfront, rather than paying per use charges.

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Failure to adapt to new technological trends in our industry may impact our competitiveness and financial results.

Product and service technology in our industry evolves rapidly, making timely product innovation essential to success in the marketplace. Introducing products and services with improved technologies or features may render our existing products obsolete and unmarketable. Technological advances and trends that may negatively impact our business include:

· new device package types, densities, chip interfaces and technologies requiring hardware and software changes in order to be programmed by our products, particularly certain segments of the high-density flash memory markets where after placement programming is recommended by certain semiconductor manufacturers;. · reduction in semiconductor process geometries for certain 3 Dimensional (3D), Multi Level Cell (MLC) and Triple Level Cell (TLC) NAND and eMMC FLASH memories impact the product data retention through Surface Mount Technology (SMT) reflow or X-ray inspection. Improper SMT process control can negatively impact the end customer’s ability to successfully program devices. This can cause them to change their ~~programing~~programming methods away from pre-programming to post placement programming techniques, including ISP, ICT. Data I/O has, and continues to work with several semiconductor manufacturers to develop best practices to minimize the impact of reflow and potential concerns about X-ray induced data loss so that preprogramming remains a supported alternative; · changes in Flash technology speeds will eventually require us to change the architecture of our programming engines; · electronics equipment manufacturing practices, such as widespread use of in-circuit programming or downloading; · adoption of proprietary security and programming protocols and additional security capabilities and requirements; · customer software platform preferences different from those on which our products operate; · customer adoption of newer unsupported semiconductor device technologies such as NVMe memory or device interface methods, particularly if these technologies are adopted by automotive electronics, IoT or wireless customers; and/or · more rigid industry standards, which would decrease the value-added element of our products and support services.

If we cannot develop products or services in a timely manner in response to industry changes, or if our products or services do not perform well, our business and financial condition may be adversely affected. Also, our new products or services may contain defects or errors that give rise to product liability claims against us or cause our products to fail to gain market acceptance. Our future success depends on our ability to successfully compete with other technology firms in attracting and retaining key technical personnel.

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Failure to adapt to increasing automotive electronics customer requirements and a rapidly changing global automotive electronics ecosystem may impact our competitiveness and result in a decline in sales or increased costs.

Concentration in automotive electronics ~~and~~represented ~~our~~approximately ~~orders~~64% ~~related~~of to2025 ~~automotive~~bookings, ~~electronics~~compared ~~customers~~to ~~has been dominant in recent years at~~ 59% in 2024, ~~63% in 2023~~ and 6163% in ~~2022. As we have been concentrated on automotive electronics customers~~2023, ~~any decrease in demand from these customers may materially impact our results,~~ as itthe ~~will~~broader ~~take~~slowdown ~~some~~in ~~time~~the tosemiconductor ~~transition~~industry ~~our~~caught ~~product~~up ~~line~~with tothe ~~other~~automotive ~~markets~~sector. ~~Quality~~ ~~standards~~Demand ~~and~~was ~~business~~further ~~requirements~~impacted by ~~our~~a ~~automotive~~broad-based ~~electronics~~reallocation ~~customers,~~of ~~driven~~technology inspending ~~turn~~toward byAI-related ~~their~~investments ~~automotive manufacturer customers, may demand processes~~ and ~~certifications at~~ a ~~higher~~reassessment ~~level~~of ~~than~~electric wevehicle ~~currently~~manufacturing ~~are~~capacity ~~structured to provide. For example, although we currently meet the ISO 9001:2015 standard, new quality standards,~~ and ~~environmental~~plans ~~standards may be demanded~~ by ~~our~~major ~~customers~~automotive ~~with~~OEMs ~~even~~and ~~more~~their ~~rigorous~~supply ~~requirements~~chains. In ~~addition,~~The ~~contractual~~emerging ~~provisions~~buildout ~~may~~of ~~expose~~Edge usAI torepresents ~~greater~~a potential ~~liability~~growth ~~and~~driver ~~costs~~as ~~and~~autonomous wesystems ~~may~~and beconnected ~~required~~vehicles torequire ~~provide~~increasing ~~higher~~volumes ~~service~~of ~~levels~~data ~~than we currently provide. If we cannot adapt~~ to ~~these~~be ~~industry~~securely ~~requirements~~provisioned orinto ~~manage~~semiconductor ~~these~~devices ~~contractual~~at ~~provisions,~~the ~~our~~point ~~business~~of ~~may be adversely affected~~manufacture.

As we have been concentrated on automotive electronics customers, any decrease in demand from these customers may materially impact our results, as it will take some time to transition our product line to other markets. Quality standards and business requirements by our automotive electronics customers, driven in turn by their automotive manufacturer customers, may demand processes and certifications at a higher level than we currently are structured to provide. For example, although we currently meet the ISO 9001:2015 standard, new quality standards, and environmental standards may be demanded by our customers with even more rigorous requirements. In addition, contractual provisions may expose us to greater potential liability and costs and we may be required to provide higher service levels than we currently provide. If we cannot adapt to these industry requirements or manage these contractual provisions, our business may be adversely affected.

We are also seeing a shift in the global automotive industry towards new entrants touting new methods, especially for all electric vehicles. These new entrants may not develop solutions through the traditional value chain. If Data I/O is not able to market and sell effectively to these new entrants, we risk losing market share in our largest market.

Delays in development, introduction and shipment of new products or services may result in a decline in sales or increased costs.

We develop new engineering and automated programming systems and services. Significant technological, supplier, manufacturing or other problems may delay the development, introduction or production of these products or services.

For example, we may encounter these problems:

· technical problems in the development of a new programming ~~and/~~or ~~security~~provisioning ~~deployment~~ systems ~~or the robotics for new automated handing systems~~; · inability to hire qualified personnel or turnover in existing personnel or inability to engage or retain key technology partners; · delays or failures to perform by us or third parties, including some smaller early stage or recently acquired companies, involved in our development projects; · dependence on large semiconductor companies for cooperation and support to securely provision their devices. These companies must enable us with specific technical information and support Data I/O as a qualified solution to their customers and channel partners; · delays or failure to develop and utilize Artificial Intelligence (“AI”) for our offerings or services, potentially falling behind competitors exploiting the use of AI; · development of new products or services that are not accepted by the market; and/or · delays in supply chain for parts needed for new products.

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· dependence on large semiconductor companies for cooperation and support to securely provision their devices. These companies must enable us with specific technical information and support Data I/O as a qualified solution to their customers and channel partners; · delays or failure to develop and utilize Artificial Intelligence (“AI”) for our offerings or services, potentially falling behind competitors exploiting the use of AI; · development of new products or services that are not accepted by the market; and/or · delays in supply chain for parts needed for new products.

These problems may result in a delay or decline in sales or increased costs.

We may pursue business acquisitions that could impair our financial position and profitability.

During 2025, the Company engaged a leading boutique middle-market investment bank to evaluate inorganic growth opportunities. Management has expressed a preference for non-equity funding sources when pursuing acquisitions. The active pursuit of acquisitions increases the risks described below.

We may pursue acquisitions of complementary technologies, product lines or businesses. Acquisitions may include risks, such as:

	·	burdening management and our operating teams during the integration of the acquisition;
	·	diverting management’s attention from other business concerns;
	·	failing to successfully integrate, scale or monetize the acquired products or technologies;
	·	lack of acceptance of the acquired products by our sales channels or customers;
	·	entering markets where we have no or limited prior experience;
	·	potential loss of key employees of the acquired company; and/or
	·	additional burden of support for an acquired programmer architecture.

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Future acquisitions may also affect our financial position. For example, we may use significant cash or incur debt, which would weaken our balance sheet, or issue additional shares, potentially diluting existing shareholders. We may also capitalize goodwill and intangible assets acquired, the amortization or impairment of which would reduce our profitability. We cannot guarantee that future acquisitions will improve our business or operating results.

If we are unable to protect our IP, we may not be able to compete effectively or operate profitably.

We rely on patents, copyrights, trade secrets and trademarks to protect our IP, as well as product development and marketing skill to establish and protect our market position. In particular, patents are a key part of our security deployment strategy, and if we are not able to successfully enforce these patents, we might lose our competitive advantage in the security deployment market. We attempt to protect our rights in proprietary software products, including our user interface, product firmware, software module options and other software products by retaining the title to and copyright of the software and documentation, by including appropriate contractual restrictions on use and disclosure in our licenses, and by requiring our employees to execute non-disclosure agreements.

Because of the rapidly changing technology in the semiconductor, electronic equipment and software industries, portions of our products might possibly infringe upon existing patents or copyrights, and we might be required to obtain licenses or discontinue the use of infringing technology. We believe that any exposure we may have regarding possible infringement claims is a reasonable business risk similar to that assumed by other companies in the electronic equipment and software industries. However, any claim of infringement, with or without merit, could be costly and a diversion of management’s attention, and an adverse determination could adversely affect our reputation, preclude us from offering certain products, and subject us to substantial liability.

We might face increased competition and might not be able to compete successfully with current and future competitors.

Technological advances have reduced the barriers of entry into the capital equipment segment of the data provisioning market in which we compete. We expect competition to increase from both established and emerging companies. If we fail to compete successfully against current and future sources of competition, our profitability and financial performance will be adversely impacted.

13The ~~Table~~Company is expanding into adjacent segments of ~~Contents~~the data provisioning market, which has developing competition and may bring exposure to new competitors and competitive forces.

THIRD PARTY RELATIONSHIPS

If we do not develop and enhance our relationships with semiconductor manufacturers, our business may be adversely affected.

We work closely with most semiconductor manufacturers to ensure that our data programming and security deployment systems comply with their requirements. In addition, many semiconductor manufacturers recommend our managed and secure programming systems for use by users of their programmable devices. These working relationships enable us to keep our programming systems product lines up to date and provide end-users with broad and current programmable device support. As technology changes occur, that could limit the effectiveness of pre-placement programming, particularly for very small high-density NAND, eMMC and UFS devices, certain semiconductor manufacturers may not recommend or may not continue recommending our programming systems for these devices. Our business may be adversely affected if our relationships with semiconductor manufacturers deteriorate or if semiconductor manufacturers are not willing to closely work with us on security deployment. Consolidation within the semiconductor industry may also impact us. As we develop more security deployment solutions, we will need to partner more closely with semiconductor manufacturers.

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Our reliance on a small number of suppliers may result in a shortage of key components, which may adversely affect our business, and our suppliers may experience financial difficulties which could impact their ability to service our needs.

Certain parts or software used in our products are currently available from either a single supplier or from a limited number of suppliers. Our small relative level of business means we frequently lack influence and significant purchasing power. If we cannot develop alternative sources of these components, if sales of parts or software are discontinued by the supplier, if we experience deterioration in our relationship with these suppliers, or if these suppliers require financing which is not available, there may be delays or reductions in product introductions or shipments, which may materially and adversely affect our operating results.

Because we rely on a small number of suppliers for certain parts, we are subject to possible price increases by these suppliers. Also, we may be unable to accurately forecast our production schedule. If we underestimate our production schedule, suppliers may be unable to meet our demand for components. This delay in the supply of key components may have a materially adverse effect on our business. For suppliers who discontinue parts, we may be required to make lifetime purchases covering future requirements. Over estimation of demand or excessive minimum order quantities may lead to excess inventories that may become obsolete. Part shortages impact availability, lead times and pricing that may be disruptive to our production plans, lead times, margins and may result in lost sales.

Some of our sockets, parts, subassemblies and boards are currently manufactured to our specifications by third-party foreign contract manufacturers and we are sourcing certain parts or options from foreign manufacturers, particularly in China. For example, due to geopolitical considerations, we may not be able to obtain sufficient quantity of these products if and when needed or the quality of these parts or options may not meet our standards, which may result in lost sales.

If we are unable to attract and retain qualified third-party distributors and representatives, our business may be adversely affected.

We utilize an internal sales force and third-party distributors and representatives. Therefore, the financial stability of these distributors and representatives is important. Their ability to operate, timely pay us, and to acquire any necessary financing may be affected by the current economic climate. Highly skilled professional engineers use most of our products. To be effective, third-party distributors and representatives must possess significant technical, security, marketing, customer relationships and sales resources and must devote their resources to sales efforts, customer education, training and support. These required qualities limit the number of potential third-party distributors and representatives. Our business will suffer if we cannot attract and retain a sufficient number of qualified third-party distributors and representatives to market our products.

MARKET CONDITIONS

A decline in economic and market conditions may result in delayed or decreased capital spending and delayed or defaulted payments from our customers.

~~Current~~The ~~and~~broader ~~future~~semiconductor ~~public~~market ~~health~~has ~~crise,~~experienced ~~geo~~a multi-~~political~~year ~~conflicts,~~cyclical ~~and~~downturn ~~economic~~which ~~barriers,~~continued ~~tariffs~~into ~~and~~2025, ~~constraints~~with ~~can~~notable ~~adversely~~softness ~~impact~~in ~~the~~automotive ~~Company’s~~electronics ~~financial~~as ~~performance. Our~~a ~~business~~reassessment isof ~~highly~~electric ~~impacted~~vehicle bycapacity ~~capital~~and ~~spending~~manufacturing plans ~~and~~affected ~~other~~ordering ~~economic cycles that affect the users and manufacturers of integrated circuits~~patterns. ~~The~~ ~~industries~~Demand ~~are~~for ~~highly~~capital ~~cyclical~~equipment ~~and~~was ~~are~~further ~~characterized~~impacted by ~~rapid technological change, short product life cycles and fluctuations in manufacturing capacity and pricing and gross margin pressures. In~~ a ~~difficult~~reallocation ~~economic climate, it may take us longer to receive payments from our customers and some~~ of ~~our~~technology ~~customers’ business may fail~~spending, ~~resulting~~with inAI ~~non-payment. Our market growth outlook~~ and AI datacenter-related ~~business~~investments ~~decisions~~taking ~~may be wrong~~priority. ~~These factors could have a material adverse effect on our business and financial condition.~~

14The ~~Table~~overall data provisioning market represents a significantly larger opportunity than the traditional programming equipment market. While it has been impacted by many of ~~Contents~~the same macroeconomic forces as the capital equipment segment, the impact has been somewhat more muted, and the cyclical effects are much less pronounced. Furthermore, the entire market is showing early signs of a recovery led by use cases such as the emerging buildout of Edge AI.

Current and future public health crises, geo-political conflicts, and economic barriers, tariffs and constraints can adversely impact the Company’s financial performance. Our business is highly impacted by capital spending plans and other economic cycles that affect the users and manufacturers of integrated circuits. The industries are highly cyclical and are characterized by rapid technological change, short product life cycles and fluctuations in manufacturing capacity and pricing and gross margin pressures. In a difficult economic climate, it may take us longer to receive payments from our customers and some of our customers’ business may fail, resulting in non-payment. Our market growth outlook and related business decisions may be wrong. These factors could have a material adverse effect on our business and financial condition.

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Our international operations may expose us to additional risks that may adversely affect our business.

International sales represented approximately 94%, 9094%, and 9390% of net sales in ~~2024~~2025, ~~2023~~2024 and ~~2022~~2023, respectively. We expect that international sales will continue to be a significant portion of our net revenue. International sales may fluctuate due to various factors, including:

	·	current and future global health crisis, similar to COVID-19;
	·	economic trade barriers and constraints such as tariffs and taxes;
	·	economic challenges in China, Europe and Latin America, as these are major markets for our products, with China being a significant production location;
	·	foreign currency exchange rate fluctuations in our major international markets as volatile exchange rates may impact our competitiveness and margins, especially where we have subsidiary operations;
	·	unexpected changes in regulatory requirements;
	·	difficulties in staffing and managing foreign operations;
	·	longer average payment cycles and difficulty in collecting accounts receivable;
	·	compliance with applicable export licensing requirements and the Foreign Corrupt Practices Act;
	·	product safety and other certification requirements;
	·	ability to protect our intellectual property in multiple patent jurisdictions; and/or
	·	ability to move cash freely from subsidiaries.

Because we have customers located throughout the world, we have significant foreign receivables, although none are based in Russia or Ukraine. We may experience difficulties in collecting these amounts as a result of payment practices of certain foreign customers, economic uncertainty and regulations in foreign countries, the availability and reliability of foreign credit information, and potential difficulties in enforcing collection terms.

The European Union and European Free Trade Association (“EU”) has established certain electronic emission and product safety requirements (“CE”). As applicable, our products currently meet these requirements; however, failure to obtain either CE certification or a waiver for any product may prevent us from marketing that product in Europe. The EU also has directives concerning the Reduction of Hazardous Substances (“RoHS”) and we believe we are classified within the EU RoHS Directive category list as Industrial Monitoring and Control Equipment (category 9). We believe all current products meet the RoHS directives. Failure to meet applicable directives or qualifying exemptions may prevent us from marketing certain products in Europe or other territories with similar requirements.

We have subsidiaries in Germany and China and large balances of cash are in our foreign subsidiaries. Our business and financial condition is sensitive to currency exchange rates and any restrictions imposed on their currencies including restrictions on repatriation of cash. A repatriation of cash has, and could in the future, result in tax costs and corresponding deferred tax assets with related tax valuation allowances.

OPERATIONS

Fluctuations in our quarterly operating results may adversely affect our stock price.

Our operating results tend to vary from quarter to quarter. Our revenue in each quarter substantially depends upon orders received within that quarter. Conversely, our expenditures are based on investment plans and estimates of future revenues. We may, therefore, be unable to quickly reduce our spending if our revenues decline in a given quarter. As a result, operating results for that quarter will suffer. Our operating results for any one quarter are not necessarily indicative of results for any future periods. Other factors, which may cause our quarterly operating results to fluctuate, include:

~~Other~~· ~~factors~~increased competition; · timing of new product announcements and timing of development expenditures; · product or service releases and pricing changes by us or our competitors; · market acceptance or delays in the introduction of new products or services; · production constraints, ~~which~~including ~~may~~part ~~cause~~shortages impact on us and our ~~quarterly~~supply ~~operating~~chains; ~~results~~· toquality ~~fluctuate~~issues; · labor or material constraints; · timing of significant orders; · sales channel mix of direct vs. indirect distribution; · civil unrest, ~~include:~~war or terrorism; · health issues such as the outbreak of the coronavirus or other viruses impacting workers, suppliers, customers, travel, or our facilities; · customers’ budgets; · changes in accounting rules, tax or other legislation; · adverse movements in exchange rates, interest rates, inflation or tax rates; · cyclical and seasonal nature of demand for our customers’ products; · general economic conditions in the countries where we sell products; · expenses and delays obtaining authorizations in setting up new operations or locations; and/or · facilities relocations.

·18 ~~increased~~Table ~~competition; · timing~~ of ~~new product announcements and timing of development expenditures; · product or service releases and pricing changes by us or our competitors;~~Contents

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· market acceptance or delays in the introduction of new products or services; · production constraints, including part shortages impact on us and our supply chains; · quality issues; · labor or material constraints; · timing of significant orders; · timing of installation or customer acceptance requirements; · sales channel mix of direct vs. indirect distribution; · civil unrest, war or terrorism; · health issues such as the outbreak of the coronavirus or other viruses impacting workers, suppliers, customers, travel, or our facilities; · customers’ budgets; · changes in accounting rules, tax or other legislation; · adverse movements in exchange rates, interest rates, inflation or tax rates; · cyclical and seasonal nature of demand for our customers’ products; · general economic conditions in the countries where we sell products; · expenses and delays obtaining authorizations in setting up new operations or locations; and/or · facilities relocations.

Due to any of the foregoing factors, it is possible that in some future quarters, our operating results will be below the expectations of analysts and investors.

We have a history of operating losses and may be unable to generate enough revenue to achieve and maintain profitability.

We have incurred operating losses in ~~five~~8 of the last ten years. We operate in a cyclical industry. We will continue to examine our level of operating expense based upon our projected revenues. Any planned increases in operating expenses may result in losses in future periods if projected revenues are not achieved or the investment level required is too large. As a result, we may need to generate greater revenues than we have recently in order to maintain profitability. However, we cannot provide assurance that our revenues will increase and our business strategies will be successful, resulting in future losses.

The loss of key employees may adversely affect our operations.

During 2025, the Company underwent significant leadership transitions, including the appointment of Charles DiBona as Chief Financial Officer in August 2025, replacing Gerald Ng. Additional changes were made in sales, marketing, and engineering leadership as part of the Company’s strategic transformation. While management believes these changes strengthen the Company’s capabilities, leadership transitions carry inherent risks including potential disruption to ongoing operations and loss of institutional knowledge.

We have employees located in the U.S., Germany and China. We also utilize independent contractors for specialty work, primarily in research and development, and utilize temporary workers to adjust capacity to fluctuating demand. Many of our employees are highly skilled, and our continued success will depend in part upon our ability to attract and retain employees who can be in great demand within the industry. None of our employees are represented by a collective bargaining unit, and we believe relations with our employees are favorable, though no assurance can be made that this will be the case in the future. In China, our workers have benefits and similar arrangements provided under a “FSCO” labor agreement, and we could be adversely affected if we were unable to continue that arrangement.

We may need to raise additional capital and our future access to capital is uncertain.

Cash at December 31, 2025 was $7.9 million.

Our past revenues have sometimes been, and our future revenues may again be, insufficient to support the expense of our operations and any expansion of our business. We may therefore need additional equity or debt capital to finance our operations. If we are unable to generate sufficient cash flows from operations or to obtain funds through additional debt, lease or equity financing, we may have to reduce some or all of our development and sales and marketing efforts and limit the expansion of our business.

We believe that we have sufficient cash or working capital available under our operating plan to fund our operations and capital requirements through at least the next one-year period. In the event we require additional cash for U.S. operations or other needs, we may choose to repatriate some, or all, of the cash held in our foreign subsidiaries. There may be tax, legal and other impediments to any repatriation actions. Our working capital may be used to fund possible losses, business growth, project initiatives, share repurchases, and business development initiatives including acquisitions, which could reduce our liquidity and result in a requirement for additional cash before that time. Any substantial inability to achieve our current business plan could have an adverse impact on our financial position, liquidity, or results of operations and may require us to reduce expenditures and/or seek additional financing.

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Therefore, we may seek additional funding through public or private debt or equity financing or from other sources. We have no commitments for additional financing and given a potential future unfavorable economic climate and our financial results, we may experience difficulties in obtaining funding on favorable terms, if at all. Any financing we obtain may contain covenants that restrict our freedom to operate our business or may require us to issue securities that have rights, preferences or privileges senior to our Common Stock and may dilute your ownership interest.

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Our stock price may be volatile and, as a result, our shareholders may lose some or all their investment.

The stock prices of technology companies tend to fluctuate significantly. We believe factors such as announcements of new products or services by us or our competitors and quarterly variations in financial results and outlook may cause the market price of our Common Stock to fluctuate substantially. In addition, overall volatility in the stock market, particularly in the technology sector, is often unrelated to the operating performance of companies. If these market fluctuations continue in the future, they may adversely affect the price of our Common Stock.

CYBERSECURITY RISKS

Cybersecurity incidents could result in loss of revenue, business disruptions, remediation costs, legal claims and proceedings, regulatory actions, reporting delays, increased insurance costs, or damage to the Company’s reputation which could adversely impact or operations and financial results.

In August 2025, the Company experienced a ransomware incident that resulted in the shutdown of most global operating systems, business disruptions including the inability to timely process certain shipments, and significant remediation costs of approximately $388,000 in the third quarter of 2025. While the incident was contained and remediated by September 2025 and the Company does not believe any customer data was compromised, the incident demonstrated the Company’s vulnerability to cyber attacks and the potential for material operational and financial impacts. The Company has implemented significant enhancements to its cybersecurity infrastructure and processes; however, no assurance can be given that these measures will prevent future incidents. A future cybersecurity incident could result in loss of revenue, business disruptions, remediation costs, legal claims and proceedings, regulatory actions, reporting delays, increased insurance costs, or damage to the Company’s reputation. The costs of preventing, responding to and recovering from cybersecurity incidents may be material.

Cybersecurity breaches or terrorism could result in liabilities or costs as well as damage to or loss of our data or customer access to our website and information systems. The collection, storage, transmission, use and disclosure of user data and personal information, if accessed improperly, could give rise to liabilities or additional costs as a result of laws, government regulations and evolving views of personal privacy rights.

Cybersecurity attacks may increase due to geo-political disagreements with countries and regions such as Russia, China, Korea and the Middle East. Cybersecurity breaches or terrorism could result in the exposure or theft of private or confidential information as well as interrupt our business, including denying customer access to our website and information systems. We transmit, and in some cases store, end-user data, including personal information. In jurisdictions around the world, personal information is becoming increasingly subject to legislation and regulations intended to protect consumers’ privacy and security. The interpretation of privacy and data protection laws and regulations regarding collection, storage, transmission, use and disclosure of such information in some jurisdictions are unclear and evolving. These laws may be interpreted and applied in conflicting ways from country to country and in a manner that is not consistent with our current data protection practices. Complying with these varying international requirements could cause us to incur additional costs and change our business practices. Because our services are accessible in many foreign jurisdictions, some of these jurisdictions may claim that we are required to comply with their laws, even if we have no local entity, employees or infrastructure. We could be forced to incur significant expenses if we were required to modify our products, our services or our existing security and privacy procedures to comply with new or expanded regulations.

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REGULATORY REQUIREMENTS

Failure to comply with increasing regulatory requirements may adversely affect our stock price and business.

As a public company, we are subject to numerous governmental and stock exchange requirements with which we believe, we are in compliance ~~with~~. Our failure to meet regulatory requirements and exchange listing standards may result in actions such as: the delisting of our stock, impacting our stock’s liquidity; SEC enforcement actions; and securities claims and litigation. ~~Unfortunately,~~Increased ~~increased~~ regulations pushed onto public companies may have a disproportionate impact to smaller public companies.

The Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission (SEC)SEC have requirements that we may fail to meet or we may fall out of compliance with, such as the internal controls auditor attestation required under Section 404 of the Sarbanes-Oxley Act of 2002, with which we are not currently required to comply as we are a smaller reporting company. We assume that we will continue to have the status of a smaller reporting company based on the aggregate market value of the voting and non-voting shares held as of June 30, ~~2024~~2025. If we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

17As ~~Table~~previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, the Company identified a material weakness in internal control over financial reporting related to user access and segregation of ~~Contents~~duties within certain IT systems. During 2025, the Company implemented remediation actions including enhancements to system access controls, improved segregation of duties, and expanded monitoring and review procedures. Meanwhile, the Company has identified an additional instance of material weakness, and while management has taken steps to remediate these internal control issues related to reviews and reporting, these weaknesses did persist during the reporting period of this Form 10-K for the year ended December 31, 2025. See item 9A.

While we have policies and procedures in place designed to prevent corruption and bribery, because our business is significantly international, violations of the Foreign Corrupt Practices Act (FCPA) could have a significant adverse effect on our business due to the disruption and distraction of an investigation, financial penalties and criminal penalties.

Government regulations regarding the use of “conflict” minerals and potential climate and ESG requirements could adversely affect our prospects and results of operations.

Regulatory requirements regarding disclosure of our use of “conflict” minerals mined from the Democratic Republic of Congo and adjoining countries could affect the sourcing and availability of minerals used in the manufacture of certain products. Although we do not buy raw materials, manufacture, or produce any electronic equipment using conflict minerals directly, some components provided by our suppliers and contained in our products contain conflict minerals. Our goal is for our products to be conflict free. As a result, there may only be a limited pool of suppliers who provide conflict-free metals, and we cannot assure you that we will be able to obtain products in sufficient quantities or at competitive prices. Single source suppliers may not respond or respond negatively regarding conflict mineral sourcing, and we may be unable to find alternative sources to replace them. Also, because our supply chain is complex, we may face reputational challenges with our customers and other stakeholders if we are unable to sufficiently verify the origins for all metals used in the products that we sell. Further, if we are unable to comply with the new laws or regulations or if our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us. We may need to incur additional costs and invest additional resources, including management’s time, to comply with the new regulations and additional reporting and disclosure obligations.

Climate focused regulations and related disclosures are a similar evolving regulatory area, and we may be required to invest in systems, processes and personnel to address new requirements in the ESG area. These will require significant costs, work and reputational risk for failing to meet requirements, with miniscule impact to the global environment.

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Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

The following discussion of our cybersecurity program reflects conditions as of December 31, 2025, including significant enhancements implemented in response to the August 2025 cybersecurity incident described below.

On August 16, 2025, the Company was the subject of a targeted ransomware incident affecting certain internal IT systems. Upon discovering the incident, the Company promptly activated its response protocols and implemented containment measures, including proactively shutting down most operating systems globally to manage the safety of the overall global systems environment. The Company engaged leading cybersecurity experts to support system recovery and conduct a comprehensive forensic investigation. The investigation determined that the attack originated through a vulnerability in a commercially available third-party firewall service provider and was not specifically targeted at Data I/O. By September 2025, the incident had been completely contained and remediated, all global systems were restored, and the Company does not believe it has any remaining risk exposure from the incident. The remediation and associated professional fees resulted in approximately $388,000 of one-time costs, primarily recorded in the third quarter of 2025. The incident was reported on Form 8-K filed with the SEC on August 21, 2025.

As an outcome of the incident, the Company’s IT systems and cybersecurity posture were strengthened, with improved corporate processes and enhanced security infrastructure. Remediation actions included enhancements to system access controls, improved network segmentation, migration of critical systems to cloud-based solutions, and expanded monitoring and review procedures. See “Risk Factors - Cybersecurity incidents could result in loss of revenue, business disruptions, remediation costs, legal claims and proceedings, regulatory actions, reporting delays, increased insurance costs, or damage to the Company’s reputation which could adversely impact or operations and financial results.”

CYBERSECURITY GOVERNANCE

The Company’s Board of Directors has oversight responsibility for our strategic and operational risks. The Audit Committee of the Board of Directors is responsible for board-level oversight of cybersecurity risk~~; however, the full Board is typically present for Information Technology (IT) and Cybersecurity briefings~~. As ~~part of its oversight role, the Audit Committee receives reporting about the Company’s cybersecurity program, activities, threats and incidents (if any) through periodic updates.~~ The cybersecurity program is managed by our outsourced IT infrastructure team with oversight and coordination by our CFO, Charles DiBona, who reports directly to our CEO. Utilization of an outsourced IT infrastructure team allows Data I/O to access the necessary breadth and depth of leading cybersecurity programs, staff, expertise, and tools. The IT infrastructure team monitors the prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of the cybersecurity function, including the operation of the Company’s incident response plans, which include appropriate escalation to the CFO, CEO and the Audit Committee.

During the third quarter of 2025, in connection with the appointment of Charles DiBona as Chief Financial Officer, the Company formalized CFO oversight of the cybersecurity program. Following the August 2025 ransomware incident, the Audit Committee increased the frequency of cybersecurity reporting and the Company enhanced its incident response protocols. The cybersecurity program is managed by the Company’s new outsourced IT infrastructure team, which provides 24/7 monitoring and response capabilities, with oversight and coordination by the CFO, who reports directly to the CEO. The Audit Committee receives regular updates on cybersecurity matters, including threat assessments, incident response activities, and the status of remediation efforts.

CYBERSECURITY RISK MANAGEMENT AND STRATEGY

The Company’s ~~has~~cybersecurity ~~processes~~risk inmanagement ~~place~~program tois ~~identify,~~integrated ~~assess,~~into ~~and~~its ~~monitor~~overall ~~material~~enterprise ~~risks~~risk ~~from~~management ~~cybersecurity~~framework. ~~threats,~~Following ~~which~~the ~~are~~August ~~part~~2025 ofransomware incident, the Company’s ~~overall~~significantly enhanced its cybersecurity risk management ~~and~~processes. ~~have~~These ~~been~~enhancements ~~embedded~~included: inpatching the ~~information~~third-party ~~systems~~firewall ~~operating~~service ~~procedures~~provider through which the attack originated and ~~internal~~evaluating ~~controls. Our~~replacement ITproviders; ~~function~~implementing ~~manages~~improved ITnetwork ~~operations~~segmentation and ~~continually~~access ~~evolves~~controls; expanding endpoint detection and ~~enhances~~response ~~our~~capabilities; enhancing backup and disaster recovery procedures; conducting comprehensive vulnerability assessments across all IT systems; toand ~~meet~~providing ~~the~~additional ~~constantly~~cybersecurity ~~changing~~awareness ~~digital~~training ~~environment~~to all employees. ~~Periodic~~ ~~cybersecurity~~The ~~risk~~Company ~~assessments~~also ~~are~~engaged ~~performed~~independent tocybersecurity ~~identify,~~consultants ~~assess,~~to review and ~~prioritize~~validate ~~potential~~the ~~risks~~effectiveness toof ~~information,~~its ~~data~~enhanced ~~assets~~security posture. As of September 30, ~~infrastructure~~2025, all remediation activities had been completed and ~~third-party~~all ~~vendors~~global systems had been restored to full operational status. The Company ~~addresses~~continues ~~significant~~to ~~risks~~assess ~~through~~and ~~corrective~~adapt orits ~~mitigating~~cybersecurity ~~actions~~risk asmanagement ~~necessary~~practices to address evolving threats.

~~The~~22 ~~Company~~Table has also established cybersecurity and information security awareness training programs. Employees with access to the Company’s network receive annual training on topics such as phishing, malware, and other cybersecurity risks. Training is administered and tracked through online learning modules with ongoing follow-up testing. All employees and contractors enter into non-disclosure confidentiality agreements. We work to continually evolve our systems to meet the constantly changing digital environment and continue to invest in the cybersecurity and resiliency of ~~our networks and to enhance our internal controls and processes, which are designed to help protect our systems and infrastructure, and the information they contain.~~Contents

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There have been no risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition. The nature of potential cybersecurity risks and threats are uncertain, and any future incidents, outages or breaches could have a material adverse effect on the Company’s business, financial conditions or results of operations. For more information about the cybersecurity risks we face, refer to the Risk Factors in section “Cybersecurity Risks” in Part I, Item 1A, "Risk Factors".

Item 2. Properties

The Company has three facilities with our headquarters and primary engineering and operational functions located in Redmond, Washington. Our two subsidiary facilities in Munich, Germany and Shanghai, China provide extended worldwide sales, service, engineering and operations services. The total annual gross or base lease payments during ~~2024~~2025 and ~~2023~~2024 were approximately $~~795~~735,000 and $~~823~~795,000, respectively. The lease payment decrease in 2024 was due primarily to a reduction in lease rates for our Redmond, Washington and Shanghai, China facilities. The lower rates reflect the real estate market conditions as part of the lease extensions which occurred in the fourth quarter of 2024. The Redmond lease was renewed and extended by 3.75 years and the Shanghai, China lease was renewed and extended by 3 years.

The Redmond, Washington headquarters facility lease runs to October 31, 2029, at approximately 20,460 square feet. The lease for the facility located in Shanghai, China runs to October 31, 2027, at approximately 19,400 square feet. The lease for the facility located near Munich, Germany runs to August 2027, at approximately 4,895 square feet.

Item 3. Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, ~~2024~~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.

Item 4. Mine Safety Disclosures

Not Applicable.

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PART II

Our Common Stock is listed on the NASDAQ Capital Market (NASDAQ symbol is DAIO). ~~The closing price was $2.77 on December 31, 2024.~~

The ~~approximate~~closing ~~number~~price ofwas ~~shareholders~~$3.17 ofon ~~record~~December ~~as of March 18~~31, 2025 ~~was 350~~.

~~Except~~The ~~for~~approximate ~~special~~number ~~cash~~of ~~dividend~~shareholders of ~~$4.15~~record ~~per~~as ~~share~~of ~~paid~~April ~~on March 8~~14, ~~1989,~~2026 wewas ~~have not paid cash dividends on our Common Stock and do not anticipate paying regular cash dividends in the foreseeable future~~337.

NoExcept ~~sales~~for special cash dividend of ~~unregistered~~$4.15 ~~securities~~per ~~were~~share ~~made~~paid byon usMarch ~~during~~8, ~~the~~1989, ~~periods~~we ~~ended~~have ~~December~~not ~~31,~~paid ~~2024,~~cash ~~2023~~dividends oron ~~2022~~our Common Stock and do not anticipate paying regular cash dividends in the foreseeable future.

~~See~~No ~~Item~~sales 12of ~~for~~unregistered securities were made by us during the ~~Equity~~periods ~~Compensation~~ended ~~Plan~~December ~~Information~~31, 2025, 2024 or 2023.

See Item 12 for the Equity Compensation Plan Information.

Item 6. Selected Financial Data

Not applicable.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves as long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this Annual Report on Form 10-K are forward-looking. In particular, statements herein regarding industry prospects and trends; expected business recovery; industry partnerships; future results of operations or financial position; future spending; expected expenses, breakeven revenue point; expected market decline, bottom or growth; market acceptance of our newly introduced or upgraded products or services; the sufficiency of our cash to fund future operations and capital requirements; development, introduction and shipment of new products or services; changing foreign operations; taxes, trade issues and tariffs; expected inventory levels; expectations for unsupported platform or product versions and related inventory and other charges; Russian invasion of Ukraine impacts; Israel – Hamas war impacts; supply chain expectations; semiconductor chip shortages and recovery; and any other guidance on future periods are forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or other future events. Moreover, neither Data I/O nor anyone else assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Annual Report. The Reader should not place undue reliance on these forward-looking statements. The following discussions and the section entitled “Risk Factors - Cautionary Factors That May Affect Future Results” describes some, but not all, of the factors that could cause these differences.

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OVERVIEW

The automotive and industrial electronics industry is cyclical. With increased market uncertainty and customer capacity expansion slowing in 2024, automated systems shipments declined in the Americas and Europe which was partially offset by revenue growth in Asia. Automotive electronics represented 59% of 2024 bookings compared to 63% for 2023. While automotive system sales were below expectations, the Company continues to expand its sales to service providers (franchise distribution, contract manufacturers and independent providers) and reoccurring revenue offerings. For the full year, consumable adapters and services revenue remained steady, representing 50% of total revenue and helping mitigate the decline in system sales.

COVID-19 impacts in past years were no longer an operational challenge with personnel staffing, inventory levels and supply chain and operational activities returning to normal levels. However late in 2024 with the new incoming United States Administration, geo-political, economic and trade uncertainties have increased. The resulting future impact on the Company’s markets, customers, supply chain and operations are uncertain. However, the operational and manufacturing resiliencies gained from the COVID-19 impact and the experience of leadership and operational teams can be leveraged to navigate and mitigate these potential future challenges. As our customers shift their supply chain and manufacturing locations to address changing economic and trade constraints, we will have the capacity and ability to adjust accordingly.

After a period of stability which lasted over a decade, key organizational leadership transition occurred in the fourth quarter of 2024 with the appointment of a new CEO and President, William Wentworth. Subsequent changes have also occurred in the leadership of the Sales, Marketing and Engineering functions and corresponding changes in the strategic and operational direction of these groups. We believe these changes will drive improved revenue growth, higher product innovation, greater operational efficiency and improved financial performance.

We continue to make investments in technologies, products and services to maintain market leadership in our Unified Programming Strategy. This strategy supports our customers’ preprogramming supply chain needs, from design to manufacturing and beyond. Our manual programmer offerings, such as LumenX and FlashCore, provide preprogramming solutions for our customers’ design, engineering, new product introduction, low-to-medium production, and test needs while our PSV system of products support medium-to-high volume production needs. Our strong cash position and balance sheet, combined with our long-term view of the market, gives us financial flexibility to make these investments.

CRITICAL ACCOUNTING POLICY JUDGMENTS AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires that we make estimates and judgments, which affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, sales returns, credit losses, inventories, income taxes, warranty obligations, restructuring charges, contingencies such as litigation and contract terms that have multiple elements and other complexities typical in the capital equipment industry. We base our estimates on historical experience and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements:

Revenue Recognition: 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.

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We expense contract acquisition costs, primarily sales commissions, for contracts with terms of one year or less and will capitalize and amortize incremental costs with terms that exceed one year. During 2024 and 2023, the impact of capitalization of incremental costs for obtaining contracts was immaterial. We exclude sales, use, value added, some excise taxes and other similar taxes from the measurement of the transaction price.

We recognize revenue upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment and that the installation meets the criteria to be a separate performance obligation. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based.

The revenue related to products requiring installation, that is perfunctory, is recognized upon transfer of control of the product to customers, which generally is at the time of shipment. 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 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 could include hardware, software, installation, service and support, and extended maintenance components. We allocate the transaction price of each element based on the relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support performance obligations, we use the value of the discount given to distributors who perform these components. For software maintenance performance obligations, we use what we charge for annual software maintenance renewals after the initial year the system is sold. 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.

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.

We recognize revenue when there is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of substantially all the consideration is probable, the transaction price has been determined and allocated over the performance obligations, the performance obligations, including substantive acceptance conditions, if any, in the contract have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us, and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Payment terms are generally 30 to 60 days from shipment.

We transfer certain products out of service from their internal use and make them available for sale. The products transferred are typically our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing with standard equipment warranty provided and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value, and the sale transaction is accounted for as revenue and cost of goods sold.

Allowance for Credit Losses: Allowance for credit losses is based on our assessment of the losses collectively expected for the future, as well as collectability of specific customer accounts and the aging of accounts receivable. If there is deterioration of a major customer’s credit worthiness or actual defaults are higher than historical experience, or events forecast that collectively indicate some impairment is expected, our estimates of the recoverability of amounts due to us could be adversely affected.

Inventory: 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.

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Warranty Accruals: We accrue for warranty costs based on the expected material and labor costs to fulfill our warranty obligations. If we experience an increase in warranty claims, which are higher than our historical experience, our gross margin could be adversely affected.

Tax Valuation Allowances: Given the uncertainty created by our loss history capital and geographic spending, as well as income and current net deferred tax assets by entity and country, we expect to continue to limit the recognition of net deferred tax assets and accounting for uncertain tax positions and maintain the tax valuation allowances. At the current time, we expect, therefore, that reversals of the tax valuation allowance will take place as we are able to take advantage of the underlying tax loss or other attributes in carry forward or their use by future income or circumstances allow us to realize these attributes. The transfer pricing and expense or cost sharing arrangements are complex areas where judgments, such as the determination of arms-length arrangements, can be subject to challenges by different tax jurisdictions.

Share-based Compensation: We account for share-based awards provided to our employees and directors, including employee stock option awards, performance stock unit awards and restricted stock unit awards, using the estimated grant date fair value method of accounting. For options, we estimate the fair value using the Black-Scholes valuation model and an estimated forfeiture rate. Restricted stock unit awards and performance stock unit awards are valued based on the average of the high and low price on the date of the grant and an estimated forfeiture rate. For options, performance and restricted stock unit awards, expense is recognized as compensation expense on the straight-line basis. Employee Stock Purchase Plan (“ESPP”) shares were issued under provisions that do not require us to record any equity compensation expense.

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RESULTS OF OPERATIONS:

NET SALES

Net sales by product line	2024		Change	2023
(in thousands)
Automated programming systems	$	16,940	(25.7%)	$	22,806
Non-automated programming systems		4,829	(8.2%)		5,258
Total programming systems	$	21,769	(22.4%)	$	28,064

Net sales by location	2024			Change	2023
(in thousands)
United States	$	1,377		(50.8%)	$	2,799
% of total		6.3	%			10.0	%
International	$	20,392		(19.3%)	$	25,265
% of total		93.7	%			90.0	%

Net sales by type	2024		Change	2023
(in thousands)
Equipment Sales	$	10,985	(32.8%)	$	16,343
Adapter Sales		7,250	(11.1%)		8,154
Software and Maintenance Sales *		3,534	(0.9%)		3,567
Total	$	21,769	(22.4%)	$	28,064
* includes an insignificant amount of service and parts sales

Net sales for the year ended December 31, 2024 decreased approximately 22%, to $21.8 million, compared to 2023. In 2024, automotive electronics uncertainty persisted and customer capacity expansion slowed, resulting in lower system shipments in the Americas and Europe which were partially offset by growth in Asia. Automotive electronics represented 59% of 2024 bookings compared to 63% for 2023. While automotive system sales were below expectations, the Company continues to expand its sales to service providers (franchise distribution, contract manufacturers and independent providers) and reoccurring revenue offerings. For the full year, consumable adapters and services revenue remained steady, representing 50% of total revenue and helping mitigate the decline in system sales.

Order bookings were $22.5 million in 2024, down approximately 12.6% compared to $25.8 million in 2023 due to similar market challenges noted for revenue. The order backlog on December 31, 2024, was $3.5 million, up $0.7 million from the fourth quarter of 2023, which will benefit revenue recognition in the first half of 2025 as systems are shipped. Additionally, deferred revenue was approximately $1.6 million on December 31, 2024.

GROSS MARGIN	2024			Change	2023
(in thousands)
Gross margin	$	11,606		(28.3%)	$	16,186
Percentage of net sales		53.3	%			57.7	%

Gross margin as a percentage of sales for the year ended December 31, 2024, was 53.3%, compared to 57.7% in 2023. The decrease in gross margin as a percentage of sales primarily reflects lower sales volume and lower related absorption of fixed manufacturing and service operating costs. Actual 2024 production and service spending decreased by $250,000 or 4% from the prior year.

RESEARCH AND DEVELOPMENT

	2024			Change	2023
(in thousands)
Research and development	$	6,240		(4.4%)	$	6,524
Percentage of net sales		28.7	%			23.2	%

Research and development (“R&D”) expense decreased $284,000 for the year ended December 31, 2024 compared to 2023. The decrease was primarily related to contracted services and incentive compensation.

Table of Contents

WeItem ~~believe it is essential to invest in R&D to significantly enhance our existing solutions and create new products as markets develop and technologies change~~7. ~~During~~ ~~2024,~~Management’s weDiscussion ~~continued to invest in the creation of new~~ and ~~enhancement~~Analysis of ~~existing~~Financial ~~capabilities~~Condition ~~for our PSV family of automated systems, LumenX~~ and ~~FlashPAK~~Results ~~family~~ of non-automated programmers and related software. In addition to product development, a significant part of R&D spending is on creating algorithm software and support for new devices introduced by the semiconductor companies. Our R&D spending fluctuates based on the number, type, and the development stage of our product initiatives and projects. Operations

~~SELLING,~~FORWARD-LOOKING ~~GENERAL AND ADMINISTRATIVE~~ STATEMENTS

	2024			Change	2023
(in thousands)
Selling, general & administrative	$	8,404		(8.8%)	$	9,214
Percentage of net sales		38.6	%			32.8	%

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about themselves as long as they identify these statements as forward-looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than statements of historical fact made in this Annual Report on Form 10-K are forward-looking. In particular, statements herein regarding industry prospects and trends; expected business recovery; industry partnerships; future results of operations or financial position; future spending; expected expenses, breakeven revenue point; cybersecurity risk management and costs; expected market decline, bottom or growth; the development of the Edge AI market; market acceptance of our newly introduced or upgraded products or services; the sufficiency of our cash to fund future operations and capital requirements; development, introduction and shipment of new products or services; changing foreign operations; strategic transformation progress and timeline; ERP implementation timeline; potential acquisitions; and the 2026 organic growth framework; taxes, trade issues and tariffs; expected inventory levels; expectations for unsupported platform or product versions and related inventory and other charges; Russian invasion of Ukraine impacts; Israel – Hamas war impacts; supply chain expectations; semiconductor chip shortages and recovery; and any other guidance on future periods are forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or other future events. Moreover, neither Data I/O nor anyone else assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any of these forward-looking statements after the date of this Annual Report. The Reader should not place undue reliance on these forward-looking statements. The following discussions and the section entitled “Risk Factors - Cautionary Factors That May Affect Future Results” describes some, but not all, of the factors that could cause these differences.

Selling, General and Administrative (“SG&A”) expenses decreased approximately $810,000 thousand for the year ended December 31, 2024 compared to 2023. The decrease was primarily related to lower sales commissions on lower revenue and lower outside services from efficiency improvements and cost controls. Cost control measures remain in effect. Salary and wages remained flat with lower headcount savings offset by staff separation charges of approximately $430,000 in the fourth quarter of 2024.OVERVIEW

~~INTEREST~~Data I/O Corporation is a global leader in data programming and provisioning solutions for flash memory, microcontrollers and security integrated circuits. The Company designs, manufactures and sells programming and security deployment systems used by electronics manufacturers in automotive, Internet-of-Things, industrial, medical, wireless and consumer electronics applications. Since 1972, the Company has enabled the design and manufacture of electronic products through innovative programming solutions, and today its customers use Data I/O’s security deployment and programming systems to reliably, securely and cost-effectively bring innovative new products to life. The Company’s global operations include manufacturing and engineering facilities in Redmond, Washington and Shanghai, China, with additional sales and support operations in Munich, Germany.

	2024		Change			2023
(in thousands)
Interest income	$	273		43.7	%	$	190

The year ended December 31, 2025 was a pivotal period for the Company, defined by a comprehensive strategic transformation executed under the leadership of President and CEO William Wentworth, who assumed the role in the fourth quarter of 2024. The transformation was designed around six strategic priorities: modernizing the Company’s go-to-market strategy, investing in the core technology platform, strengthening customer relationships, optimizing business operations and IT infrastructure, improving operational processes, and deploying artificial intelligence across the organization. As the Company enters 2026, management believes the transformation is approximately one year ahead of schedule relative to its original multi-year plan.

~~Interest~~A ~~income~~central ~~was~~element ~~higher~~of ~~for~~the transformation has been expanding the ~~year~~Company’s ~~ended~~addressable ~~December~~market. 31Historically, ~~2024~~Data ~~compared~~I/O served the relatively narrow market for offline semiconductor programming equipment, where demand is predominantly tied to ~~2023~~customers’ ~~primarily~~capital ~~due~~expenditure budgets and capacity expansion decisions. The Company is now repositioning itself to ~~higher~~serve ~~average~~the ~~interest~~significantly ~~rates~~larger data provisioning market, which encompasses the programming, configuration, and ~~higher~~testing ~~invested~~of ~~balances~~connected devices across the full manufacturing lifecycle. This expanded market opportunity includes services and solutions for programming at test and support for the growing Edge AI ecosystem. Management believes the broader data provisioning market represents a meaningfully larger opportunity than the traditional programming equipment market segment the Company has historically served.

~~INCOME~~25 ~~TAXES~~Table of Contents

	2024			Change				2023
(in thousands)
Income tax (expense) benefit	$	(386	)		99.0	%	$	(194	)

Subsequent to year end, in February 2026, the Company announced a collaboration with IAR, a global leader in embedded development tools and security solutions, to combine IAR’s security expertise with Data I/O’s provisioning expertise. The collaboration is intended to create a frictionless solution that reduces the complexity inherent in current device provisioning approaches, simplifying the process of securely programming and provisioning devices across global manufacturing supply chains. This collaboration is an early example of the Company’s strategy to build partnerships that extend its platform into adjacent areas of the data provisioning value chain.

~~Income~~The ~~tax~~buildout ~~(expense)~~of ~~increased~~Edge byAI ~~$192,000~~represents a significant emerging growth driver for the ~~year~~Company. ~~ended~~Autonomous ~~December~~systems, 31connected vehicles, ~~2024~~industrial ~~compared~~IoT todevices ~~2023. The~~and ~~increase~~smart ~~was~~infrastructure ~~primarily~~all arequire ~~result~~increasing volumes of data to be economically and securely provisioned into semiconductor devices at the ~~withholding~~various ~~tax~~points ofin ~~$337,000~~the onmanufacturing process. As the ~~repatriation~~proliferation of ~~cash~~AI-enabled ~~from~~devices ~~China~~at ~~subsidiary~~the innetwork ~~2024. Income~~edge ~~tax~~accelerates, ~~(expense)~~the indemand ~~2024~~for high-throughput, secure programming and ~~2023~~provisioning solutions is ~~primarily~~expected ~~the~~to ~~result~~grow substantially. The Company observed encouraging early indicators of ~~foreign~~this ~~subsidiary~~trend ~~income~~during ~~tax~~the fourth quarter of 2025 and ~~minimal~~into Uearly 2026, with new customer logos engaging on definitive production timelines for Edge AI applications.S. ~~state~~Management ~~income~~believes ~~tax~~the convergence of Edge AI buildout and increasing device complexity positions the Company favorably for sustainable long-term growth.

~~The~~During ~~effective~~2025, ~~tax~~the ~~rate~~Company ~~for~~deployed ~~2024~~artificial ofintelligence ~~(14.3%)~~across ~~and~~all ~~2023~~functional ofdepartments ~~28.6%~~to ~~differed~~accelerate ~~from~~operations ~~the~~and ~~statutory~~reduce ~~tax~~costs. ~~rates~~AI-enabled inefficiencies ~~our~~were ~~tax~~a ~~reporting~~key ~~jurisdictions~~contributor ~~primarily~~to ~~due~~a to7% ~~subsidiary~~reduction ~~income~~in ~~with~~recurring ~~consolidated~~operating ~~losses~~expenses, ~~and~~from ~~the~~an ~~effect~~annualized run rate of ~~valuation~~approximately ~~allowances~~$26. We7 ~~have~~million aat ~~valuation~~the ~~allowance~~time of ~~$8.2~~the ~~million~~CEO ~~and~~transition in November 2024 to approximately $824.78 million asby ofyear ~~December~~end ~~31,~~2025. ~~2024~~The ~~and~~Company ~~2023,~~has ~~respectively. Our~~identified ~~deferred~~plans ~~tax~~for ~~assets~~an ~~and~~additional ~~valuation~~$1.0 ~~allowance~~million ~~have~~of ~~increased~~annual byrun ~~approximately~~rate ~~$442,000~~savings ~~and~~to ~~$430,000~~be ~~associated~~realized ~~with~~within the ~~requirements~~first half of ~~accounting~~2026. ~~for~~AI ~~uncertain~~tools ~~tax~~were ~~positions~~applied asto ofsoftware ~~December~~engineering ~~31,~~to ~~2024~~accelerate ~~and~~programming ~~2023,~~algorithm ~~respectively. Given~~development ~~the~~and ~~uncertainty~~device ~~created~~support, byERP ~~our~~implementation ~~loss~~planning ~~history,~~and ~~particularly~~data ~~in the U.S.~~migration, ~~which~~customer issupport ~~where~~and ~~most~~service ofprocesses, ~~our~~and ~~net~~internal ~~deferred~~business ~~tax~~operations ~~assets~~including ~~are~~financial ~~located,~~reporting and ~~the~~analysis. ~~ongoing~~Management ~~uncertain~~believes ~~economic~~these ~~outlook~~AI ~~for~~capabilities ~~our~~enabled ~~industry,~~the asCompany ~~well~~to asaccomplish ~~capital~~its ~~and~~transformation ~~geographic~~objectives ~~spending,~~significantly wefaster ~~currently~~than ~~expect~~would tohave ~~continue~~been toachievable ~~limit~~through ~~the~~traditional ~~recognition~~approaches, ofand ~~net~~that ~~deferred~~ongoing ~~tax~~AI ~~assets~~deployment ~~and~~will ~~maintain~~continue ~~the~~to ~~tax~~yield ~~valuation~~productivity ~~allowances~~gains and competitive advantages.

~~INFLATION~~The ~~AND~~Company ~~CHANGES~~has INturned ~~FOREIGN~~its ~~CURRENCY~~strategic ~~EXCHANGE~~attention ~~RATES~~to broadening and stabilizing its business model. Historically, Data I/O’s revenues have been overwhelmingly tied to capital expenditure cycles in programming equipment, making the business highly cyclical and dependent on customers’ capacity expansion decisions. The Company is making concerted efforts to reduce its dependence on the automotive electronics sector, historically the Company’s largest end market. Automotive electronics represented approximately 64% of 2025 bookings, compared to 59% in 2024. More broadly, the Company is focused on developing a more balanced revenue model that incorporates recurring services and consumables revenues, including adapter sales, software services, and programming-at-test service offerings. For the full year 2025, consumable adapters and services represented 58% of total revenue, providing a more stable and recurring base, while platform sales represented 42% of total revenue. Deferred revenue decreased to approximately $1.5 million at December 31, 2025 from $1.6 million at December 31, 2024.

~~Sales~~For ~~and expenses incurred by foreign subsidiaries are denominated in~~ the ~~subsidiary’s~~full ~~local~~year ~~currency~~ended ~~and~~December ~~translated~~31, ~~into~~2025, ~~U.S. Dollar amounts at average rates of exchange during~~ the ~~year. We~~Company ~~recognized~~reported ~~foreign~~net ~~currency~~sales ~~transaction gains~~ of $~~58,000 in 2024 and $42,000 in 2023~~21. ~~The~~5 transaction gains resulted primarily from translation adjustments to foreign inter-company accounts and U.S. Dollar accounts held by foreign subsidiaries and sales by our German subsidiary to certain customersmillion, ~~which~~compared ~~were invoiced in U.S. Dollars. Because approximately 94% of sales are~~ to ~~international markets, volatile exchange rates may also impact our competitiveness and margins~~$21. ~~Product~~8 ~~and~~million ~~service price increases have been increased~~ in ~~response to cost increases caused by inflation, tariffs and part shortages~~2024.

25Bookings ~~Table~~for the full year 2025 were $18.6 million, a decrease of ~~Contents~~17% from $22.5 million in 2024, with backlog at December 31, 2025 of $1.6 million. Regionally, 2025 bookings were strongest from customers throughout Asia, while North America demand for bookings was consistent with the prior year though tailing off in the fourth quarter and Europe declined more generally, reflecting both the ongoing automotive downturn and the Company’s deliberate efforts to diversify its customer base into adjacent markets. Despite the near-term booking softness, the Company observed very encouraging customer activity in the fourth quarter 2025 and into early 2026, with new customer engagements and definitive production timelines providing increased confidence in the demand environment heading into the new year.

~~FINANCIAL~~Looking ~~CONDITION:~~ahead, the Company has established a 2026 business framework that encompasses organic revenue growth only, from which management sees a path to positive operating cash flows. Inorganic growth opportunities, while actively being evaluated, are not incorporated into this framework and would be incremental to the organic plan. The framework is supported by the convergence of the Company’s platform investments, expanding market opportunities in data provisioning and Edge AI, the strategic transformation progress realized in 2025, improved operational capabilities and a strengthened leadership team. The Company’s balance sheet provides a solid foundation, with $7.9 million in cash and no debt as of December 31, 2025. Management made deliberate changes to the Board of Directors and executive suite over the past 18 months to ensure the right team is in place to execute this growth plan, and the Company engaged a leading boutique middle-market investment bank to evaluate inorganic growth opportunities aligned with its strategic direction. Based on the progress achieved in 2025 and the early indicators observed in the demand environment, management is confident that 2026 will be a year of growth for Data I/O.

~~LIQUIDITY~~26 ~~AND~~Table ~~CAPITAL~~of ~~RESOURCES~~Contents

	2024		Change	2023
(in thousands)
Working capital	$	16,085	($2,340)	$	18,425

CRITICAL ACCOUNTING POLICY JUDGMENTS AND ESTIMATES

AtThe ~~December~~preparation ~~31,~~of ~~2024,~~financial ~~our~~statements ~~principal~~in ~~sources~~accordance ofwith ~~liquidity~~accounting ~~consisted~~principles ofgenerally ~~existing~~accepted ~~cash~~in ~~and~~the ~~cash~~United ~~equivalents. Cash~~States atof ~~December~~America ~~31,~~requires ~~2024~~that ~~and~~we ~~2023~~make ~~was~~estimates ~~$10.3 million~~ and ~~$12.3 million~~judgments, ~~respectively. Working~~which ~~capital~~affect ~~decreased by $2.3 million during 2024 due primarily to~~ the ~~revenue~~reported ~~decline~~amounts ~~and~~of ~~resulting~~assets, ~~operating~~liabilities, ~~loss.~~revenues ~~Our current ratio improved~~ and ~~was~~expenses, ~~4.2~~ and ~~4.0~~related ~~for~~disclosures ~~December~~of ~~31,~~contingent ~~2024~~assets and ~~2023, respectively~~liabilities. ~~The company continues to have no debt.~~

~~Although~~We webelieve ~~have~~the nofollowing ~~significant~~critical ~~external~~accounting ~~capital~~policies ~~expenditure~~affect ~~plans~~the ~~currently,~~more wesignificant ~~expect~~judgments ~~to continue to carefully make~~ and ~~manage~~estimates ~~capital~~used ~~expenditures~~in tothe ~~support~~preparation ~~our~~of ~~business. We plan to increase~~ our ~~internally~~financial ~~developed rental, sales demonstration and test equipment as we develop and release new products. Capital expenditures are currently expected to be funded by existing and internally generated funds.~~statements:

AsRevenue aRecognition: ~~result~~Accounting ofStandards ~~our~~Codification ~~cyclical~~(ASC) ~~and~~Topic ~~seasonal industry~~606, ~~significant~~Revenue ~~product~~from ~~development,~~Contracts ~~factory~~with ~~resilience~~Customers ~~strategies,~~(ASC ~~customer~~606) ~~support~~provides ~~and~~a ~~selling and marketing efforts~~single, weprinciples-based ~~require~~five-step ~~substantial~~model ~~working~~to ~~capital~~be applied to ~~fund~~all ~~our~~contracts ~~operations~~with customers. We It ~~have~~generally ~~implemented~~provides orfor ~~have~~the ~~initiatives~~recognition toof ~~implement~~revenue ~~geographic shifts~~ in ~~our~~an ~~operations,~~amount ~~optimize~~that ~~real~~reflects ~~estate~~the ~~usage,~~consideration ~~adjust~~to ~~pricing~~which ~~for~~the ~~cost~~Company ~~inflation,~~expects ~~lower~~to ~~unit~~be ~~costs~~entitled, ~~lower~~net ~~tariff~~of ~~expenses,~~allowances ~~reduce~~for ~~exposure~~estimated toreturns, ~~the~~discounts ~~impact~~or ofsales ~~currency volatility~~incentives, ~~increase~~as ~~product~~well ~~development~~as ~~differentiation,~~taxes ~~and~~collected ~~reduce~~from ~~other~~customers ~~costs. We~~when ~~believe~~control ~~that~~over wethe ~~have~~promised ~~sufficient~~goods ~~cash~~ or ~~working~~services ~~capital~~are ~~available~~transferred ~~under our operating plan~~ to ~~fund our operations and capital requirements through~~ the ~~next one-year period, and beyond~~customer.

We ~~may~~expense ~~require~~contract ~~additional~~acquisition ~~cash~~costs, atprimarily ~~the~~sales ~~U.S. headquarters~~commissions, ~~which~~for ~~could~~contracts ~~cause~~with ~~potential~~terms ~~repatriation~~ of ~~cash~~one ~~that~~year isor ~~held~~less inand ~~our~~will ~~foreign~~capitalize ~~subsidiaries. For~~and ~~any~~amortize ~~repatriation,~~incremental ~~there~~costs ~~may~~with beterms ~~tax~~that ~~and~~exceed ~~other~~one ~~impediments to any repatriation actions~~year. As During ~~many~~2025 ~~repatriations~~and ~~typically have associated withholding taxes~~2024, ~~those~~the ~~withheld~~impact ~~will~~of becapitalization aof ~~current~~incremental ~~tax~~costs ~~without~~for ~~generating~~obtaining acontracts ~~current~~was ~~or deferred tax benefit recognition~~immaterial. We Inexclude ~~the second quarter of 2024~~sales, ~~we completed a $3.4 million dividend distribution from our China subsidiary operation~~use, ~~incurring~~value ~~a $337~~added,~~000~~ ~~foreign~~some ~~tax~~excise ~~withholding~~taxes ~~expense. This was undertaken to optimize the cash position~~ and ~~operating~~other ~~needs~~similar oftaxes ~~each~~from ~~subsidiary, increase~~ the ~~interest~~measurement ~~earning potential~~ of ~~our cash holdings and ensure available liquidity at~~ the ~~U.S.~~transaction ~~headquarters to support future strategic and operational initiatives~~price.

~~Our~~We ~~working~~recognize ~~capital~~revenue ~~may~~upon betransfer ~~used~~of control of the promised products or services to ~~fund~~customers ~~possible~~in ~~losses,~~an ~~business~~amount ~~growth,~~that ~~project~~reflects ~~initiatives,~~the ~~share~~consideration ~~repurchases~~we ~~and~~expect ~~business~~to ~~development~~receive ~~initiatives~~in ~~including~~exchange ~~acquisitions,~~for ~~which~~those ~~could~~products ~~reduce~~or services. We have determined that our ~~liquidity~~programming ~~and~~equipment ~~result~~has inreached a ~~requirement~~point ~~for~~of ~~additional~~maturity ~~cash~~and ~~before~~stability such that ~~time. Any~~product ~~substantial~~acceptance ~~inability~~can be assured by testing at the factory prior to ~~achieve~~shipment. These ~~our~~systems ~~current~~are ~~business~~standard ~~plan~~products with published product specifications and are configurable with standard options. The evidence that these systems could ~~have~~be adeemed ~~material~~accepted ~~adverse~~was ~~impact~~based onupon ~~our~~having ~~financial~~standardized ~~position,~~factory ~~liquidity,~~production orof the units, results from batteries of ~~operations~~tests of product performance to our published specifications, quality inspections and ~~may~~installation ~~require~~standardization, usas towell ~~reduce~~as ~~expenditure~~past product operation validation with the customer and~~/or~~ ~~seek~~the ~~possible~~history ~~additional~~provided ~~financing~~by our installed base of products upon which the current versions were based.

~~OFF~~We enter into arrangements with multiple performance obligations that arise during the sale of a system that could include hardware, software, service and support, and extended maintenance components. We allocate the transaction price of each element based on the relative selling price of each performance obligation. For hardware, we determine our best estimate of selling price based on an expected cost-~~BALANCE~~plus-a-margin ~~SHEET~~approach. ~~ARRANGEMENTS~~For the service and support performance obligations, we use the price charged by distributors who perform these components. For software maintenance performance obligations, we use what we charge for annual software maintenance renewals after the initial year the system is sold. Revenue is recognized on the system based on shipping terms, software based on delivery, and services based on completion of work and software maintenance and extended warranty support ratably over the term of the agreement, typically one year.

~~Except~~When aswe ~~noted~~license insoftware separately, we recognize revenue upon the ~~accompanying~~transfer ~~consolidated~~of ~~financial~~control ~~statements~~of inthe ~~Note~~software, 7which is generally upon shipment, ~~“Other~~provided ~~Commitments”~~that weonly ~~had~~inconsequential noperformance ~~material~~obligations ~~off-balance~~remain ~~sheet~~on ~~arrangements~~our part and substantive acceptance conditions, if any, have been met.

~~SHARE~~27 ~~REPURCHASE~~Table ~~PROGRAMS~~of Contents

~~Data~~We ~~I/O~~recognize ~~did~~revenue when there is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of substantially all the consideration is probable, the transaction price has been determined and allocated over the performance obligations, the performance obligations, including substantive acceptance conditions, if any, in the contract have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us, and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a ~~share~~reserve ~~repurchase~~for ~~program~~sales returns based on historical trends in ~~2024~~product orreturns ~~2023~~and estimates for new items. Payment terms are generally 30 to 60 days from shipment.

~~NON-GENERALLY~~We ~~ACCEPTED~~transfer ~~ACCOUNTING~~certain ~~PRINCIPLES~~products ~~(GAAP)~~out ~~FINANCIAL~~of ~~MEASURES~~service from their internal use and make them available for sale. The products transferred are typically our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing with standard equipment warranty provided and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value, and the sale transaction is accounted for as revenue and cost of goods sold.

~~Earnings~~Allowance ~~Before~~for ~~Interest,~~Credit ~~Taxes,~~Losses: ~~Depreciation,~~Allowance ~~and~~for ~~Amortization~~credit ~~(“EBITDA”)~~losses ~~and~~is ~~Adjusted~~based ~~EBITDA~~on ~~excluding~~our ~~equity~~assessment ~~compensation~~of ~~and~~the ~~impairment~~losses &collectively ~~related~~expected ~~charges~~for ~~(non-cash~~the future, ~~one-time~~as ~~items)~~well ~~are~~as ~~set~~collectability ~~forth~~of ~~below. Non-GAAP~~specific ~~financial~~customer ~~measures~~accounts ~~should~~and ~~not~~the beaging ~~considered~~of aaccounts ~~substitute~~receivable. If ~~for,~~there oris ~~superior~~deterioration ~~to,~~of ~~measures~~a ofmajor ~~financial~~customer’s ~~performance~~credit ~~prepared~~worthiness inor ~~accordance~~actual ~~with~~defaults ~~GAAP. We~~are ~~believe~~higher ~~that~~than ~~these~~historical ~~non-GAAP~~experience, ~~financial~~or ~~measures~~events ~~provide~~forecast ~~meaningful~~that ~~supplemental~~collectively ~~information~~indicate ~~regarding~~some ~~our~~impairment ~~results~~is ~~and~~expected, ~~facilitate~~our estimates of the ~~comparison~~recoverability of ~~results~~amounts due to us could be adversely affected.

26Inventory: ~~Table~~Inventories are stated at the lower of ~~Contents~~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.

AWarranty ~~reconciliation~~Accruals: We ofaccrue ~~net~~for ~~income~~warranty tocosts ~~EBITDA~~based on the expected material and ~~Adjusted~~labor ~~EBITDA~~costs ~~follows:~~to fulfill our warranty obligations. If we experience an increase in warranty claims, which are higher than our historical experience, our gross margin could be adversely affected.

	For Year Ended December 31,
	2024			2023
(in thousands)
Net Income (loss)	$	(3,093	)	$	486
Interest (income)		(273	)		(190	)
Taxes		386			194
Depreciation and amortization		565			608
EBITDA	$	(2,415	)	$	1,098
Equity compensation		976			1,190
Adjusted EBITDA, excluding equity compensation	$	(1,439	)	$	2,288

Tax Valuation Allowances: Given the uncertainty created by our loss history, capital and geographic spending, as well as income and current net deferred tax assets by entity and country, we expect to continue to limit the recognition of net deferred tax assets and accounting for uncertain tax positions and maintain the tax valuation allowances. At the current time, we expect, therefore, that reversals of the tax valuation allowance will take place as we are able to take advantage of the underlying tax loss or other attributes in carry forward or their use by future income or circumstances allow us to realize these attributes. The transfer pricing and expense or cost sharing arrangements are complex areas where judgments, such as the determination of arms-length arrangements, can be subject to challenges by different tax jurisdictions.

~~NEW~~Share-based ~~ACCOUNTING~~Compensation: ~~PRONOUNCEMENTS~~We account for share-based ~~STANDARDS~~awards ~~ISSUED~~provided ~~AND~~to ~~IMPLEMENTED~~our employees and directors, including employee stock option awards, performance stock unit awards and restricted stock unit awards, using the estimated grant date fair value method of accounting. For options, we estimate the fair value using the Black-Scholes valuation model and an estimated forfeiture rate. Restricted stock unit awards and performance stock unit awards are valued based on the average of the high and low price on the date of the grant and an estimated forfeiture rate. For options, performance and restricted stock unit awards, expense is recognized as compensation expense on the straight-line basis. Employee Stock Purchase Plan (“ESPP”) shares were issued under provisions that do not require us to record any equity compensation expense.

~~Effective~~28 ~~January~~Table 1, 2024, the Company adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires entities, including those with a single reportable segment, to disclose significant segment expenses regularly provided to the Chief Operating Decision Maker (CODM) and included in the reported measure of ~~segment profit or loss.~~Contents

~~The~~RESULTS ~~Company~~OF operates as a single reportable segment. The CODM evaluates the Company's performance based on operating income, as presented in the consolidated statements of operations. Significant segment expenses are those that are already disclosed in operating income and regularly reviewed by the CODM for purposes of assessing performance and allocating resources. Additional significant single segment expense categories are provided in Note 13 – Segment Information.OPERATIONS:

~~NEW~~NET ~~ACCOUNTING PRONOUNCEMENTS - STANDARDS ISSUED AND NOT YET IMPLEMENTED~~ SALES

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.

Net sales by location	2025		Change		2024
(in thousands)
United States	$	1,289	(6.4%	)	$	1,377
% of total		6.0%				6.3	%
International	$	20,211	(0.9%	)	$	20,392
% of total		94.0%				93.7	%

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. This standard is effective for the annual reporting period beginning January 1, 2027 and interim reporting periods beginning January 1, 2028 and should be applied retrospectively to all comparative periods. Early adoption is permitted. The Company is currently evaluating the effects of adopting this new accounting guidance.

Net sales by type	2025		Change			2024 (as Revised)
(in thousands)
Platform Sales	$	8,997	(14.0%)		$	10,466
Adapter Sales		7,903		9.9%		7,190
Software and Services Sales*		4,600		11.9%		4,113
Total	$	21,500	(1.2%)		$	21,769

* includes service and parts sales associated with equipment service contracts

The Company identified an error in the prior‑year disaggregated revenue amounts of net sales by type. As a result, the 2024 revenue by major category amounts have been revised. The correction did not impact the Company’s previously reported consolidated balance sheets, statements of operations, comprehensive income (loss), or statements of cash flows. See Note 15 for additional information regarding the revision of prior‑period disaggregated revenue amounts.

Net sales for the year ended December 31, 2025 decreased approximately 1.2%, to $21.5 million, compared to $21.8 million in 2024. In 2025, automotive electronics uncertainty persisted and customer capacity expansion slowed, resulting in lower system shipments, notably in Europe, which were partially offset by growth in Asia. Automotive electronics represented 64% of 2025 bookings compared to 59% for 2024. For the full year, consumable adapters and services revenue increased, representing 58% of total revenue and helping mitigate the decline in system sales.

Order bookings in 2025 were $18.6 million, down approximately 17% compared to $22.5 million in 2024, due to similar market challenges noted for revenue. The order backlog on December 31, 2025 was $1.6 million. Additionally, deferred revenue was approximately $1.5 million on December 31, 2025.

GROSS MARGIN

	2025			Change	2024
(in thousands)
Gross margin	$	10,596		(8.7%)	$	11,606
Percentage of net sales		49.3	%			53.3	%

Gross margin as a percentage of sales for the year ended December 31, 2025, was 49.3%, compared to 53.3% in 2024. The decrease in gross margin as a percentage of sales primarily reflects lower sales volume and lower related absorption of labor and overhead costs.

RESEARCH AND DEVELOPMENT

	2025			Change			2024
(in thousands)
Research and development	$	6,531			4.7	%	$	6,240
Percentage of net sales		30.4	%					28.7	%

Research and development (“R&D”) expense increased $291,000 for the year ended December 31, 2025, compared to 2024. The increase was primarily related to increased staff, notably in China.

We invest in R&D to significantly enhance our existing solutions and create new products as markets develop and technologies change. During 2025, we continued to invest in the creation of new and enhancement of existing capabilities for our PSV family of automated systems, LumenX and FlashPAK family of non-automated programmers and related software. In addition to product development, a significant part of R&D spending is on creating algorithm software and support for new devices introduced by the semiconductor companies. Our R&D spending fluctuates based on the number, type, and the development stage of our product initiatives and projects.

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SELLING, GENERAL AND ADMINISTRATIVE

	2025			Change			2024
(in thousands)
Selling, general & administrative	$	9,181			9.2	%	$	8,404
Percentage of net sales		42.7	%					38.6	%

Selling, General and Administrative (“SG&A”) expenses increased approximately $777,000 for the year ended December 31, 2025, compared to 2024. The increase was primarily related to increased legal and accounting fees tied to SEC filings, one-time charges associated with the ransomware incident report on August 16, 2025, and increased spending on infrastructure and security, partially offset by reduced IT spending in other areas. Cost control measures remain in effect.

INTEREST

	2025		Change		2024
(in thousands)
Interest income	$	130	(52.4	%)	$	273

Interest income was lower for the year ended December 31, 2025 compared to 2024 primarily due to lower invested balances.

INCOME TAXES

	2025			Change		2024
(in thousands)
Income tax (expense) benefit	$	(240	)	(37.8	%)	$	(386	)

Income tax (expense) decreased by $146,000 for the year ended December 31, 2025 compared to 2024.

In 2025, income tax expense includes $250,000 of deferred income taxes from recording deferred tax liabilities primarily related to outside basis differences in foreign subsidiaries. In 2024, the Company repatriated cash from our China subsidiary resulting in a withholding tax of $337,000.

The effective tax rates in 2025 and 2024, respectively were (4.8%) and (14.3%), and differed from the statutory tax rates in our tax reporting jurisdictions primarily due to subsidiaries income and losses and consolidated losses and the effect of valuation allowances. We have a valuation allowance of $10.5 million and $9.2 million as of December 31, 2025 and 2024, respectively. Given the uncertainty created by our loss history, particularly the U.S., which is where most of our net deferred tax assets are located, and the ongoing uncertain economic outlook for our industry, as well as capital and geographic spending, we currently expect to continue to limit the recognition of net deferred tax assets and maintain the tax valuation allowances.

INFLATION AND CHANGES IN FOREIGN CURRENCY EXCHANGE RATES

We recognized foreign currency transaction losses of ($10,000) in 2025 and $58,000 transactions gains in 2024.

Sales and expenses incurred by foreign subsidiaries are denominated in the subsidiary’s local currency and translated into U.S. Dollar amounts at average rates of exchange during the year. The transaction gains resulted primarily from translation adjustments to foreign inter-company accounts and U.S. Dollar accounts held by foreign subsidiaries and sales by our German subsidiary to certain customers, which were invoiced in U.S. Dollars. Because approximately 94% of sales are to international markets, volatile exchange rates may also impact our competitiveness and margins. Product and service price increases have been increased in response to cost increases caused by inflation, tariffs and part shortages.

FINANCIAL CONDITION:

LIQUIDITY AND CAPITAL RESOURCES

	2025		Change			2024
(in thousands)
Working capital	$	12,270	$	(4,065	)	$	16,085

Working capital decreased by $4.1 million during 2025, primarily due to the revenue decline and resulting operating loss. Our current ratio was 3.3 and 4.2 for December 31, 2025 and 2024, respectively.

At December 31, 2025, our principal sources of liquidity consisted of existing cash and cash equivalents. Cash at December 31, 2025 and 2024 was $7.9 million and $10.3 million, respectively. The company continues to have no debt.

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We expect to continue to carefully make and manage capital expenditures to support our business. We plan to increase our internally developed rental, sales demonstration and test equipment as we develop and release new products. Capital expenditures are currently expected to be funded by existing and internally generated funds.

As a result of the cyclical and seasonal nature of capital expenditure businesses, we require significant working capital to fund our operations. We have continued to manage the geographic posture of our operations to align to our customers’ needs and to minimize impacts of exogenous factors such as tariffs. All that said, we believe that we have sufficient cash or working capital available under our operating plan to fund our operations and capital requirements through the next one-year period, and beyond.

We may require additional cash at the U.S. headquarters to support future strategic and operational initiatives., which could cause potential repatriation of cash that is held in our foreign subsidiaries. For any repatriation, there may be tax and other impediments to any repatriation actions. As many repatriations typically have associated withholding taxes, those withheld will be a current tax without generating a current or deferred tax benefit recognition. We are actively tuning our operations and intercompany structures to minimize the need for and impact of any repatriation of monies.

Our working capital may be used to fund possible losses, business growth, project initiatives, share repurchases and business development initiatives including acquisitions, which could reduce our liquidity and result in a requirement for additional cash before that time. Any substantial inability to achieve our current business plan could have a material adverse impact on our financial position, liquidity, or results of operations and may require us to reduce expenditure and/or seek possible additional financing.

OFF-BALANCE SHEET ARRANGEMENTS

Except as noted in the accompanying consolidated financial statements in Note 7, “Other Commitments” we had no material off-balance sheet arrangements.

SHARE REPURCHASE PROGRAMS

Data I/O did not have a share repurchase program in 2025 or 2024.

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NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) FINANCIAL MEASURES

Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”) and Adjusted EBITDA excluding equity compensation and impairment & related charges (non-cash, one-time items) are set forth below. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our results and facilitate the comparison of results. A reconciliation of net income to EBITDA and Adjusted EBITDA follows:

	For Year Ended December 31,
	2025			2024
(in thousands)
Net Income (loss)	$	(5,236	)	$	(3,093	)
Interest (income)		(130	)		(273	)
Taxes		240			386
Depreciation and amortization		495			565
EBITDA	$	(4,631	)	$	(2,415	)

Equity compensation		697			976

Adjusted EBITDA, excluding equity compensation	$	(3,934	)	$	(1,439	)

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

See pages ~~28 through 47~~ 32-57.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Data I/O Corporation

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Data I/O Corporation (a Washington corporation) and subsidiaries (the “Company”) as of December 31, ~~2024~~2025 and ~~2023~~2024, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the two years in the period ended December 31, ~~2024~~2025, and the related notes and financial statement schedules included under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2024~~2025 and ~~2023~~2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, ~~2024~~2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Net Realizable Value of Inventory

As described further in Note 1 to the financial statements, management measures the net realizable value of inventory based on estimated reductions to inventory for obsolete, slow-moving, excess and non-salable inventory by reviewing current transactions and forecasted demand. We identified net realizable value of inventory specifically as a critical audit matter.

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The principal considerations for our determination that the net realizable value of inventory represents a critical audit matter are that the assessment of the valuation of inventory is complex and includes an estimate of forecasted demand. The demand estimate is subjective and requires the Company to consider significant assumptions such as economic conditions, technological advances, historical usage, and consumer trends, which are subject to significant uncertainty and therefore require significant auditor judgement.

Our audit procedures related to the net realizable value of inventory included the following, among others:

To test the adequacy of the Company’s allowance for excess and obsolete inventories, we performed substantive audit procedures that included, among others, testing the completeness and accuracy of the underlying data used in the estimation calculations, specifically those related to inventory movements and aging. We also evaluated the reasonableness of significant assumptions including the estimated reserve percentage and other significant assumptions through inquiry of management and personnel outside of finance team and analytical procedures.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2001.

~~Bellevue~~San Jose, ~~Washington~~California

~~March~~April 3116, ~~2025~~2026

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DATA I/O CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	December 31, 2024			December 31, 2023
	December 31, 2025			December 31, 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	107,~~326~~901		$	1210,~~341~~326
Trade accounts receivable, net of allowance for credit losses of $22 and $72, respectively		3,960			5,707
Trade accounts receivable, net of allowance for credit losses of $29 and $22, respectively		2,841			3,960
Inventories		65,~~212~~710			56,~~875~~212
Other current assets		~~659~~799			~~690~~659
TOTAL CURRENT ASSETS		2117,~~157~~251			2421,~~613~~157
Property, plant and equipment – net		~~1,001~~807			1,~~359~~001
Other assets		2,~~812~~118			12,~~429~~812
TOTAL ASSETS	$	2420,~~970~~176		$	2724,~~401~~970
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	~~820~~1,227		$	~~1,272~~820
Accrued compensation		~~1,517~~958			21,~~003~~517
Deferred revenue		1,~~535~~464			1,~~362~~535
Other accrued liabilities		1,~~161~~328			1,~~438~~161
Income taxes payable		39			113
Other income taxes payable		4			39
TOTAL CURRENT LIABILITIES		54,~~072~~981			65,~~188~~072
Operating lease liabilities		2,160			702
Deferred foreign income tax		250			-
Long-term other payables		112			192
Operating lease liabilities		1,411			2,160
Long-term other payables		20			112
STOCKHOLDERS’ EQUITY
Preferred stock -
Authorized, 5,000,000 shares, including 200,000 shares of Series A Junior Participating Issued and outstanding, none		-			-
Authorized, 5,000,000 shares, including
200,000 shares of Series A Junior Participating
Issued and outstanding, none		-			-
Common stock, at stated value -
Authorized, 30,000,000 shares Issued and outstanding, 9,236,040 shares as of December 31, 2024 and 9,020,819 shares as of December 31, 2023		23,475			22,731
Authorized, 30,000,000 shares
Accumulated earnings (deficit)		(5,738	)		(2,645	)
Issued and outstanding, 9,391,922 shares as of December 31,
Accumulated other comprehensive income		(111	)		233
2025 and 9,236,040 shares as of December 31, 2024		24,062			23,475
TOTAL STOCKHOLDERS’ EQUITY		17,626			20,319
Accumulated earnings (deficit)		(10,974	)		(5,738	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	24,970		$	27,401
Accumulated other comprehensive income		426			(111	)
TOTAL STOCKHOLDERS’ EQUITY		13,514			17,626
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	20,176		$	24,970

See notes to consolidated financial statements

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DATA I/O CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	For the Years Ended December 31,
	2024			2023
	2025			2024
Net sales	$	21,~~769~~500		$	2821,~~064~~769
Cost of goods sold		10,~~163~~904			1110,~~878~~163
Gross margin		1110,~~606~~596			1611,~~186~~606
Operating expenses:
Research and development		6,~~240~~531			6,~~524~~240
Selling, general and administrative		89,~~404~~181			98,~~214~~404
Total operating expenses		1415,~~644~~712			1514,~~738~~644
Operating income (loss)		(35,~~038~~116	)		~~448~~(3,038	)
Non-operating income (loss):
Interest income		~~273~~130			~~190~~273
Foreign currency transaction gain (loss)		58(10	)		4258
Total non-operating income (loss)		~~331~~120			~~232~~331
Income (loss) before income taxes		(24,~~707~~996	)		~~680~~(2,707	)
Income tax (expense) benefit		(~~386~~240	)		(~~194~~386	)
Net income (loss)	$	(35,~~093)~~236	)	$	~~486~~(3,093	)
Basic earnings (loss) per share	$	(0.~~34)~~56	)	$	(0.0534	)
Diluted earnings (loss) per share	$	(0.~~34)~~56	)	$	(0.0534	)
Weighted-average basic shares		9,~~150~~329			89,~~941~~150
Weighted-average diluted shares		9,~~150~~329			9,~~073~~150

~~See~~36 ~~notes~~Table toof ~~consolidated financial statements~~Contents

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DATA I/O CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	For the Years Ended December 31,
	2024			2023
	2025			2024
Net Income (loss)	$	(35,~~093~~236	)	$	~~486~~(3,093	)
Other comprehensive income:
Foreign currency translation gain (loss)		~~(344~~537	)		(~~110~~344	)
Comprehensive income (loss)	$	(34,~~437~~699	)	$	~~376~~(3,437	)

See notes to consolidated financial statements

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~~DATA~~CONSOLIDATED ~~I/O~~STATEMENTS ~~CORPORATION~~OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(in thousands, except share amounts)

									Accumulated
	Common Stock					AccumulatedEarnings			and OtherComprehensive			TotalStockholders'
						Accumulated			and Other			Total
	Common Stock					Earnings			Comprehensive			Stockholders'
	Shares		Amount			(Deficit)			Income (Loss)			Equity
Balance at December 31, 2022		8,816,381	$	21,897		$	(3,131	)	$	343		$	19,109
Stock awards issued, net of tax withholding		201,172		(370	)		-			-			(370	)
Issuance of stock through:
Employee Stock Purchase Plan		3,266		14			-			-			14
Share-based compensation		-		1,190			-			-			1,190
Net income (loss)		-		-			486			-			486
Other comprehensive income gain (loss)		-		-			-			(110	)		(110	)
Balance at December 31, 2023		9,020,819	$	22,731		$	(2,645	)	$	233		$	20,319
Stock awards issued, net of tax withholding		210,202		(246	)		-			-			(246	)
Stock options exercised		-		-									-
Issuance of stock through:
Stock awards issued, net of tax withheld		210,202		(246	)					-			(246	)
Employee Stock Purchase Plan		5,019		14			-			-			14
Issuance of stock through: ESPP		5,019		14						-			14
Share-based compensation		-		976			-			-			976
Net income (loss)		-		-			(3,093	)		-			(3,093	)
Other comprehensive income gain (loss)		-		-			-			(344	)		(344	)
Other comprehensive income (loss)		-		-						(344	)		(344	)
Balance at December 31, 2024		9,236,040	$	23,475		$	(5,738	)	$	(111)	)	$	17,626
Stock options exercised		-		-			-			-			-
Stock awards issued, net of tax withheld		151,632		(124	)		-			-			(124	)
Issuance of stock through: ESPP		4,250		14			-			-			14
Share-based compensation		-		697			-			-			697
Net income (loss)				-			(5,236	)		-			(5,236	)
Other comprehensive income (loss)		-		-			-			537			537
Balance at December 31, 2025		9,391,922	$	24,062		$	(10,974	)	$	426		$	13,514

See notes to consolidated financial statements

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DATA I/O CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	For the Twelve Months Ended December 31,
	For the Twelve Months Ended
	2024			2023
	December 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(35,~~093~~236	)	$	~~486~~(3,093	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		~~564~~495			~~608~~564
Equipment transferred to cost of goods sold		~~260~~257			~~301~~260
Share-based compensation		~~977~~697			~~1,190~~977
Net change in:		1,214
Trade accounts receivable		~~1,711~~566			~~(719~~1,711	)
Inventories		(~~358~~135	)		~~815~~(358	)
Other current assets		29(76	)		~~(48~~29	)
Accounts payable and accrued liabilities		~~(1,263~~	)		~~109~~(1,263	)
Deferred revenue		122			(267	)
Deferred foreign income tax		250
Other long-term liabilities		1,458			(684	)
Deferred revenue		(245	)		122
Deposits and other long-term assets		(1,402	)		637
Other long-term liabilities		(749	)		1,458
Net cash provided by (used in) operating activities		(995	)		2,428
Deposits and other long-term assets		735			(1,402	)
Net cash provided by (used in) operating activities		(2,227	)		(995	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(~~467~~558	)		(~~1,195~~467	)
Cash provided by (used in) investing activities		(~~467~~558	)		(~~1,195~~467	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock, less payments for shares withheld to cover tax		(~~232~~107	)		(~~356~~232	)
Cash provided by (used in) financing activities		(232	)		(356	)
Repurchase of common stock		-			-
Increase (decrease) in cash and cash equivalents		(1,694	)		877
Payment of capital lease obligation		-			-
Effects of exchange rate changes on cash		(321	)		(46	)
Cash provided by (used in) financing activities		(107	)		(232	)
Cash and cash equivalents at beginning of period		12,341			11,510
Increase (decrease) in cash and cash equivalents		(2,892	)		(1,694	)
Cash and cash equivalents at end of period	$	10,326		$	12,341
Effects of exchange rate changes on cash		467			(321	)
Cash and cash equivalents at beginning of period		10,326			12,341
Cash and cash equivalents at end of period	$	7,901		$	10,326
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes	$	~~459~~10		$	~~171~~459

See notes to consolidated financial statements

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DATA I/O CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) ~~designs,~~is ~~manufactures~~the ~~and~~leading ~~sells~~global ~~programming~~provider ~~systems~~of ~~used~~advanced bysecurity ~~designers~~ and ~~manufacturers~~data ofdeployment ~~electronic~~solutions ~~products. Our~~for ~~programming~~microcontrollers, ~~system~~security ~~products are used to program integrated circuits (“~~ICs” ~~or “devices” or “semiconductors”) with the specific unique data necessary for the ICs contained in various products~~ and ~~are~~memory ~~an important tool for the electronics industry experiencing growing use of programmable ICs~~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.

Principles of Consolidation

The consolidated financial statements include the accounts of Data I/O Corporation and wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates include:

	·	Revenue Recognition
	·	Allowance for Credit Losses
	·	Inventory Obsolescence Allowances
	·	Warranty Accruals
	·	Tax Valuation Allowances
	·	Share-based Compensation

Foreign Currency Translation

Assets and liabilities of foreign subsidiaries are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses of foreign subsidiaries are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to stockholders’ equity. Realized and unrealized gains and losses resulting from the effects of changes in exchange rates on assets and liabilities denominated in foreign currencies are included in non-operating expense as foreign currency transaction gains and losses.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of 90 days or less are considered cash equivalents. We maintain our cash and cash equivalents with major financial institutions in the United States of America, which are insured by the Federal Deposit Insurance Corporation (FDIC), and in foreign jurisdictions. Deposits in U.S. banks exceed the FDIC insurance limit. We have not experienced any losses on our cash and cash equivalents. Cash and cash equivalents held in foreign bank accounts, typically in local currency, in China and Germany, totaled $45.32 million and $64.63 million at December 31, ~~2024~~2025 and ~~2023~~2024, respectively. This cash held in subsidiaries have restrictions and costs associated with repatriations, currency conversions, and complying with government policies, regulations and controls, especially in China.

Fair Value of Financial Instruments

Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and other short-term liabilities.

35Trade ~~Table~~Accounts ~~of Contents~~Receivable

Accounts Receivable

Majority of our accounts receivable are due from companies in the electronics manufacturing industries. Credit is extended based on an evaluation of a customer’s financial condition and, generally, collateral is not required. Account receivables are typically due within 30 to 60 days and are stated at amounts due net of an allowance for credit losses. Accounts receivable outstanding longer than the contractual payment terms are considered past due. We determine the allowance by considering a number of factors, including a forward-looking expectation based upon the condition of the general economy and the industry as a whole and our previous bad debt experience, as well as the length of time trade accounts receivable are past due, the industry and geographic payment practices involved, and the customer’s current ability to pay their obligation to us. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for credit losses.

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Inventories

Inventories are stated at the lower of cost or net realizable value with cost being the currently adjusted standard cost, which approximates cost on a first-in, first-out basis. We estimate changes to inventory for obsolete, slow-moving, excess and potential non-salable inventory by reviewing current transactions and forecasted product demand. We evaluate our inventories on an item-by-item basis and record an adjustment (lower of cost or net realizable value) accordingly.

Property, Plant and Equipment

Property, plant and equipment, including leasehold improvements, are stated at cost, and depreciation is calculated over the estimated useful lives of the related assets or lease terms on the straight-line basis. We depreciate substantially all property, plant and equipment over periods of three to seven years. We depreciate leasehold improvements over the remaining portion of the lease or over the expected life of the asset if less than the remaining term of the lease.

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the total of future undiscounted cash flows is less than the carrying amount of these assets, an impairment loss, if any, based on the excess of the carrying amount over the fair value of the assets, is recorded. Based on these evaluations, for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, no impairment was noted or recorded for property, plant and equipment.

Patent Costs

We expense external costs, such as filing fees and associated attorney fees, incurred to obtain initial patents, but capitalize patents obtained through acquisition as intangible assets. We also expense costs associated with maintaining and defending issued patents.

Income Taxes

Income taxes are computed at current enacted tax rates, less tax credits, using the asset and liability method. Deferred taxes are adjusted both for items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, and any changes in the valuation allowance caused by a change in judgment about the realization of the related deferred tax assets. 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 (“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, the Company continues to amortize R&E expenditures over the five-year period as previously required under Section 174. The Company will continue to evaluate the impact of OB3 on future periods.

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. 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.

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Revenue Recognition

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.

We expense contract acquisition costs, primarily sales commissions, for contracts with terms of one year or less and will capitalize and amortize incremental costs with terms that exceed one year. During ~~2024~~2025 and ~~2023~~2024, the impact of capitalization of incremental costs for obtaining contracts was immaterial. We exclude sales, use, value added, some excise taxes and other similar taxes from the measurement of the transaction price.

We recognize revenue upon transfer of control of the promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We have determined that our programming equipment has reached a point of maturity and stability such that product acceptance can be assured by testing at the factory prior to shipment ~~and that the installation meets the criteria to be a separate performance obligation~~. These systems are standard products with published product specifications and are configurable with standard options. The evidence that these systems could be deemed accepted was based upon having standardized factory production of the units, results from batteries of tests of product performance to our published specifications, quality inspections and installation standardization, as well as past product operation validation with the customer and the history provided by our installed base of products upon which the current versions were based.

~~The~~41 ~~revenue~~Table ~~related to products requiring installation, that is perfunctory, is recognized upon transfer~~ of control of the product to customers, which generally is at the time of shipment. 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 analysis considers the complexity, skill and training needed as well as customer expectations regarding installation.Contents

We enter into arrangements with multiple performance obligations that arise during the sale of a system that could include hardware, software, ~~installation,~~ services and support and extended maintenance components. We allocate the transaction price of each element based on the relative selling ~~prices~~price of each performance obligation. ~~Relative~~ ~~selling~~For ~~price~~hardware, iswe ~~based~~determine onour ~~the~~best estimate of selling price ofbased ~~the~~on ~~standalone~~an ~~system~~expected cost-plus-a-margin approach. For the ~~installation and~~ service and support performance obligations, we ~~use~~estimate the ~~value~~standalone ofselling price using the ~~discount~~adjusted ~~given~~market toassessment ~~distributors~~approach, ~~who~~which ~~perform~~considers ~~these~~observable ~~components~~market pricing, discounting practices, and prices charged for comparable standalone arrangements. For software maintenance performance obligations, we ~~use~~determine ~~what~~our webest ~~charge~~estimate ~~for~~of ~~annual~~selling ~~software~~price ~~maintenance~~based ~~renewals~~on ~~after~~observable ~~the~~standalone ~~initial~~sales ~~year~~of ~~the~~annual ~~system~~software ismaintenance ~~sold~~renewals. 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 maintenance contracts was $1.75 million and $1.67 million and the portion expected to be recognized within one year was $1.5 million and $1.45 million for December 31, ~~2024~~2025 and ~~2023~~2024, respectively. Deferred revenue as of December 31, 2023 was $1.4 million.

When we ~~sell~~license software separately, we recognize revenue upon the transfer of control of the software, which is generally upon delivery, provided that only immaterial items in the context of the contract with the customer remain on our part and substantive acceptance conditions, if any, have been met.

We recognize revenue when there is an approved contract that both parties are committed to perform, both parties’ rights have been identified, the contract has substance, collection of substantially all the consideration is probable, the transaction price has been determined and allocated over the performance obligations, the performance obligations including substantive acceptance conditions, if any, in the contract have been met, the obligation is not contingent on resale of the product, the buyer’s obligation would not be changed in the event of theft, physical destruction or damage to the product, the buyer acquiring the product for resale has economic substance apart from us and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. We establish a reserve for sales returns based on historical trends in product returns and estimates for new items. Payment terms are generally 30 to 60 days from shipment.

We transfer certain products out of service from their internal use and make them available for sale. The products transferred are typically our standard products in one of the following areas: service loaners, rental or test units; engineering test units; or sales demonstration equipment. Once transferred, the equipment is sold by our regular sales channels as used equipment inventory. These product units often involve refurbishing and an equipment warranty and are conducted as sales in our normal and ordinary course of business. The transfer amount is the product unit’s net book value, and the sale transaction is accounted for as revenue and cost of goods sold.

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The following table represents our revenues by major categories:

Net sales by type	~~2024~~2025		~~Change~~2024 As Revised		~~2023~~
(in thousands)
Equipment Sales	$	10,985	(32.8%)		$	16,343
Platform Sales	$	8,997	$	10,466
Adapter Sales		7,~~250~~903	~~(11.1%)~~	7,190		~~8,154~~
Software and Maintenance Sales *		3,534	(0.9%)			3,567
Software and Services Sales *		4,600		4,113
Total	$	21,~~769~~500	~~(22.4%)~~$	21,769	$	~~28,064~~

* includes ~~an insignificant amount of~~ service and parts sales associated with equipment service contracts

~~Leases~~The -Company ~~Accounting~~identified ~~Standards~~an ~~Codification~~error ~~842~~in the prior‑year disaggregated revenue amounts. As a result, the 2024 revenue by major category amounts have been revised. The correction did not impact the Company’s previously reported consolidated balance sheets, statements of operations, comprehensive income (loss), or statements of cash flows. See Note 15 for additional information regarding the revision of prior‑period disaggregated revenue amounts.

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Leases – Accounting Standards Codification 842

Leases arise from contracts which convey the right to control the use of identified property or equipment for a period of time in exchange for consideration. Our leasing arrangements are primarily for office and manufacturing facility space we use to conduct our operations. In addition, there are automobiles, and a small amount of office equipment leased. We determine whether contracts include a lease at the inception date, which is generally upon contract signing, considering factors such as whether the contract includes an asset which is physically distinct, which party obtains substantially all of the capacity and economic benefit of the asset, and which party directs how, and for what purpose, the asset is used during the contractual period of use. Our leases commence when the lessor makes the asset available for our use. At commencement, we record a lease liability at the present value of future lease payments, net of any future lease incentives to be received. Some of our lease agreements include cancellable future periods subject to termination or extension options. We include cancellable lease periods in our future lease payments when we are reasonably certain to continue to utilize the asset for those periods. We calculate the present value of future lease payments at commencement using a discount rate which we estimate as the collateralized borrowing rate we believe would be incurred on our future lease payments over a similar term. At commencement, we record a corresponding right-of-use asset, which is calculated based on the amount of the lease liability, adjusted for any advance lease payments paid, initial direct costs incurred or lease incentives received prior to commencement. Right-of-use assets are subject to evaluation for impairment or disposal on a basis consistent with other long-lived assets.

Leases are classified at commencement as either operating or finance leases. As of December 31, ~~2024~~2025, all leases are classified as operating leases. Rent expense for operating leases is recognized on the straight-line method over the term of the agreement beginning on the lease commencement date.

In accounting for leases, we utilize certain practical expedients and policy selections available under the lease accounting standard. ~~For~~We ~~example, we~~ do not record right-of-use assets or lease liabilities for leases with terms of 12 months or less. For contracts containing real estate leases, we do not combine lease and non-lease components. The primary impact of this policy election is that we do not include in our calculation of lease liabilities any fixed and non-~~cancelable~~cancellable future payments due under the contract for items such as common area maintenance, utilities and other costs. Lease-related costs which are variable rather than fixed are expensed in the period incurred.

Assumptions, judgments and estimates impacting the carrying value of our right-of-use assets and liabilities include evaluating whether an arrangement contains a lease, determining whether the lease term should include any cancellable future periods, estimating the discount rate used to calculate our lease liabilities, estimating the fair value and useful life of the leased asset for the purpose of classifying the lease as an operating or finance lease, evaluating whether a lease contract amendment represents a new lease agreement or a modification to the existing lease and evaluating our right-of-use assets for impairment.

Research and Development

Research and development costs are generally expensed as incurred.

Advertising Expense

Advertising costs are expensed as incurred. Total advertising expenses were approximately $92139,000 and $~~196~~92,000 infor ~~2024~~the years ending December 31, 2025 and ~~2023~~2024, respectively.

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Warranty Expense

We record a liability for an estimate of costs that we expect to incur under our basic limited warranty when product revenue is recognized. Factors affecting our warranty liability include the number of units sold and historical and anticipated rates of claims and costs per claim. We normally provide a warranty for our products for defects for periods ranging from ninety days to one year. We provide for the estimated cost that may be incurred under our product warranties and periodically assess the adequacy of our warranty liability based on changes in the above factors. We record revenues on extended warranties on a straight-line basis over the term of the related warranty contracts. Service costs are expensed as incurred.

Earnings (Loss) Per Share

Basic earnings (loss) per share exclude any dilutive effects of stock options. Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares and common stock equivalent shares outstanding during the period. The common stock equivalent shares from equity awards used in calculating diluted earnings per share were 7486,000 and ~~133~~74,000 for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively. Excluded from the computation of diluted earnings per share were options to purchase 200,000 and 12200,~~500~~000 shares of common stock because of the net loss in ~~2024~~2025 and ~~options’ purchase price exceeding market price (underwater) in 2023~~2024, thus the options were anti-dilutive for the years ended December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

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Diversification of Credit Risk

Financial instruments, which potentially subject us to concentrations of credit risk, consist primarily of trade receivables. Our trade receivables are geographically dispersed and include customers in many different industries. Our consolidated accounts receivable balance as of December 31, ~~2024~~2025 and ~~2023~~2024 includes foreign accounts receivable in the functional currency of our foreign subsidiaries amounting to $~~1.2~~612,000 and $1.02 million, respectively. We generally do business with our foreign distributors in U.S. Dollars. We believe that the risk of loss is significantly reduced due to the diversity of our end customers and sales geographies. We perform on-going credit evaluations of our customers’ financial conditions and require collateral, such as letters of credit and bank guarantees, or prepayment whenever deemed necessary.

The following represented greater than 10% of our ~~consolidated~~ accounts receivable for the applicable years:

Percentage of Consolidated Accounts Receivable	2024			2023
Percentage of Accounts Receivable	2025			2024
Number of customers		23			32
Approximate percentage of consolidated accounts receivable balance		43	%		47	%
Approximate percentage of accounts receivable balance		49	%		43	%
Percentage of each		30	%		18	%
Percentage of Customer 1		19	%		30	%
Percentage of each		13	%		16	%
Percentage of Customer 2		16	%		13	%
Percentage of each		-			13	%
Percentage of Customer 3		14	%		-

Diversification of ~~net~~Net ~~sales~~Sales

The following represented greater than 10% of net sales for the applicable years:

Percentage of Net Sales	~~2024~~2025			~~2023~~2024
Number of customers		23			2
Approximate percentage of net sales		3441	%		2434	%
Percentage of each		19	%		13	%
Percentage of Customer 1		18	%		19	%
Percentage of each		15	%		11	%
Percentage of Customer 2		12	%		15	%
Percentage of Customer 3		11	%		-

~~39 Table of Contents~~Reclassifications

~~New~~Certain ~~Accounting~~prior‑year ~~Pronouncements~~amounts -have ~~Standards~~been ~~Issued~~reclassified ~~and Implemented~~within the notes to the consolidated financial statements to conform to the current‑year presentation. These reclassifications had no impact on the consolidated balance sheets, statements of operations, statements of comprehensive income (loss), statements of stockholders’ equity or cash flows as previously reported.

~~Effective~~New ~~January~~Accounting 1,Pronouncements ~~2024,~~– ~~the~~Standards ~~Company~~Issued adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires entities, including those with a single reportable segment, to disclose significant segment expenses regularly provided to the Chief Operating Decision Maker (CODM) and ~~included in the reported measure of segment profit or loss.~~Implemented

~~The~~In ~~Company~~December ~~operates~~2023, asthe aFASB ~~single~~issued ~~reportable~~ASU ~~segment.~~2023-09, ~~The~~“Income ~~CODM~~Taxes ~~evaluates~~(Topic ~~the~~740): ~~Company's~~Improvements ~~performance~~to ~~based~~Income onTax ~~operating income~~Disclosures,” aswhich ~~presented~~expands indisclosure ~~the~~requirements ~~consolidated~~for ~~statements~~income oftaxes, ~~operations.~~specifically ~~Significant~~related ~~segment~~to ~~expenses~~the ~~are~~rate ~~those~~reconciliation ~~that~~and ~~are~~income ~~already~~taxes ~~disclosed~~paid. inASU ~~operating~~2023-09 ~~income~~became ~~and~~effective ~~regularly~~for ~~reviewed by~~ the ~~CODM~~Company’s ~~for~~annual ~~purposes~~period ofbeginning ~~assessing~~January ~~performance~~1, 2025, and ~~allocating~~has ~~resources. Additional~~been ~~significant~~applied ~~single~~on ~~segment~~a ~~expense~~prospective ~~categories~~basis ~~are provided~~ in ~~Note~~these 13consolidated –financial ~~Segment Information~~statements.

New Accounting Pronouncements -– Standards Issued and Not Yet Implemented

In ~~December~~November ~~2023~~2024, the FASB issued ASU ~~2023~~2024-0903, "“Income ~~Taxes~~Statement ~~(Topics~~– ~~740):~~Reporting ~~Improvements~~Comprehensive to Income ~~Tax~~– ~~Disclosures"~~Expense toDisaggregation ~~expand~~(Subtopic ~~the~~220-40),” which requires disclosure ~~requirements~~of ~~for~~specific ~~income~~information ~~taxes,~~about ~~specifically~~costs ~~related~~and toexpenses within relevant expense captions on the ~~rate~~face ~~reconciliation~~of ~~and~~the income ~~taxes paid~~statement. ~~ASU~~This ~~2023-09~~standard is effective for ~~our~~the Company’s annual reporting period beginning January 1, 2027, and interim reporting periods beginning January 1, ~~2025~~2028, ~~with~~and ~~early~~should ~~adoption~~be ~~permitted.~~applied Weretrospectively ~~are~~to ~~currently~~all ~~evaluating~~comparative ~~the~~periods. ~~potential~~Early ~~effect~~adoption ~~that~~is ~~the~~permitted. ~~updated~~The ~~standard~~Company ~~will~~is ~~have~~currently onevaluating ~~our~~the ~~financial~~effects ~~statement~~of ~~disclosures~~adopting this new accounting guidance.

In44 ~~November~~Table ~~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. This standard is effective for the annual reporting period beginning January 1, 2027 and interim reporting periods beginning January 1, 2028 and should be applied retrospectively to all comparative periods. Early adoption is permitted. The Company is currently evaluating the effects of adopting this new accounting guidance.Contents

NOTE 2 – TRADE ACCOUNTS RECEIVABLE, NET

	December 31,2024		December 31,2023
	December 31,2025		December 31,2024
(in thousands)
Trade accounts receivable	$	32,~~982~~870	$	53,~~779~~982
Less allowance for credit losses		2229		7222
Trade accounts receivable, net	$	3,960	$	5,707
Trade accounts receivable, net*	$	2,841	$	3,960

________________

Trade accounts receivable, net was $5.7 million as of December 31, 2023.

Changes in Data I/O’s allowance for credit losses are as follows:

	December 31,2024			December 31,2023
	December 31,2025			December 31,2024
(in thousands)
Beginning balance	$	7222		$	~~147~~72
Credit loss (reversal)		(37	)		(753	)
Accounts written off		(47	)		-
Accounts written-off		-			(47	)
Ending balance	$	2229		$	7222

NOTE 3 – INVENTORIES

	December 31,2024		December 31,2023
	December 31,2025		December 31,2024
(in thousands)
Raw material	$	32,~~273~~912	$	3,~~328~~273
Work-in-process		1,~~845~~661		1,~~596~~845
Finished goods		1,~~094~~137		~~951~~1,094
Inventories	$	65,~~212~~710	$	56,~~875~~212

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NOTE 4 – PROPERTY, PLANT AND EQUIPMENT, NET

	December 31,2024		December 31,2023
	December 31,2025		December 31,2024
(in thousands)
Leasehold improvements	$	~~343~~356	$	~~394~~343
Equipment		34,~~777~~242		43,~~977~~777
Sales demonstration equipment		1,~~031~~029		1,~~396~~031
		5,151		6,767
		5,627		5,151
Less accumulated depreciation		4,~~150~~820		54,~~408~~150
Property and equipment, net	$	~~1,001~~807	$	1,~~359~~001

Total depreciation expense recorded for ~~2024~~2025 and ~~2023~~2024 was $~~564~~495,000 and $~~608~~564,000, respectively.

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NOTE 5 – OTHER ACCRUED LIABILITIES

Other accrued liabilities consisted of the following components:

	December 31,2024		December 31,2023
	December 31,2025		December 31,2024
(in thousands)
Lease liability - short term	$	~~640~~690	$	~~798~~640
Product warranty		~~350~~517		~~449~~350
Sales return reserve		32		32
Other taxes		6960		69
Other		7029		9070
Other accrued liabilities	$	1,~~161~~328	$	1,~~438~~161

The changes in our product warranty liability for the year ~~ending~~ended:

	December 31,2024			December 31,2023
	December 31,2025			December 31,2024
(in thousands)
Liability, beginning balance	$	~~449~~350		$	~~425~~449
Net expenses		~~901~~576			~~902~~901
Warranty claims		(~~901~~576	)		(~~902~~901	)
Accrual revisions		~~(99~~167	)		24(99	)
Liability, ending balance	$	~~350~~517		$	~~449~~350

NOTE 6 – ~~OPERATING LEASE COMMITMENTS~~LEASES

WeOperating ~~have~~Lease 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 for the year ending December 31 are as follows: Commitments

	Dec. 31,2024 OperatingLease Commitments
(in thousands)
2025	$	759
2026		757
2027		683
2028		433
2029 & thereafter		369
Total	$	3,001
Less imputed interest		(297	)
Total operating lease liabilities	$	2,704

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. Future minimum lease payments as of December 31 are as follows:

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(in thousands)
2026	$	775
2027		694
2028		433
2029		369
2030		-
Thereafter		-
Total		2,271
Less imputed interest		(170	)
Total operating lease liabilities	$	2,101

~~Payments~~Cash paid for ~~operating~~amounts ~~lease~~included ~~liabilities~~in ~~for~~ the ~~twelve~~measurement ~~months~~of ~~ending~~lease ~~December~~liabilities ~~31,~~was ~~2024 and 2023, respectively, were~~ $~~833~~735,000 and $~~894~~795,000 ~~which~~for ~~included~~the ~~short-term~~years ~~lease~~ended ~~costs~~December ~~of $38~~31,~~000~~ 2025 and ~~$25~~2024,~~000~~ respectively. The Company has no finance leases. The total annual lease expense in ~~2024~~2025 and ~~2023~~2024, including operating lease expenses and short-term lease expenses of $30,000 and $38,000, was approximately $~~845~~807,000 and $~~745~~845,000, respectively. Variable payments were not material and were treated as non-lease components and were recognized in the period for which the costs occur.

~~For~~46 ~~the~~Table largest lease component, the company has three facilities with our headquarters and primary engineering and operational functions located in Redmond, Washington. Our two subsidiary facilities in Munich, Germany and Shanghai, China provide extended worldwide sales, service, engineering and operations services. The total annual gross or base lease payments during 2024 and 2023 were approximately $795,000 and $823,000, respectively. The lease payment decrease in 2024 was due primarily to a reduction in lease rates for our Redmond, Washington and Shanghai, China facilities. The lower rates reflect the real estate market conditions as part of ~~the lease extensions which occurred in the fourth quarter of 2024. The Redmond lease was renewed and extended by 3.75 years and the Shanghai, China lease was renewed and extended by 3 years.~~Contents

For the largest lease component, the company has three facilities with our headquarters and primary engineering and operational functions located in Redmond, Washington. Our two subsidiary facilities in Munich, Germany and Shanghai, China provide extended worldwide sales, service, engineering and operations services. The lease payment decrease in 2025 versus 2024 was due primarily to the realization of a full year of the reduction in lease rates for our Redmond, Washington and Shanghai, China facilities effected in 2024 when, the Redmond lease was renewed and extended by 3.75 years and the Shanghai, China lease was renewed and extended by 3 years. Right-of-use assets obtained in exchange for lease liabilities was approximately $2.5 million the year ended December 31, 2024

The following table presents supplemental balance sheet information related to leases as of December 31, ~~2024~~2025 and ~~2023~~2024:

	Year Ended December 31,
	2024		2023
	2025		2024
(in thousands)
Right-of-use assets (Long-term other assets)	$	2,~~704~~005	$	12,~~363~~704
Lease liability-short term (Other accrued liabilities)	$	~~640~~690	$	~~798~~640
Lease liability-long term (Operating lease liabilities)	$	21,~~064~~411	$	~~703~~2,064

At December 31, ~~2024~~2025, the weighted average remaining lease term is 43.12 years and the weighted average discount rate ~~used~~ is 5%.

Lessor Arrangements

During the year ended December 31, 2025, the Company recognized approximately $0.6 million of revenue from one sales‑type lease related to the lease of programming equipment, which is included in Platform Sales in the consolidated statements of operations. The Company did not recognize sales‑type lease revenue during the year ended December 31, 2024. The Company does not typically enter into sales‑type lease arrangements and does not expect such arrangements to be recurring.

We determined the residual value of this leased equipment based on its estimated end-of-term market value. We estimate the residual value of leased equipment at the inception of the lease based on a number of factors, including historical wholesale market sales prices, past remarketing experience and any known significant market/product trends. We also consider the following critical factors in our residual value estimates: lease term, market size and demand, total expected hours of usage, machine configuration, application, location, model changes, quantities, third-party residual guarantees and contractual customer purchase options. Although the lease permits month‑to‑month continuation, the Company has concluded that the lessee is reasonably certain to exercise the purchase option. Accordingly, as of December 31, 2025, substantially all remaining undiscounted lease payments related to the Company’s sales‑type lease are expected to be received in 2026. The timing of such payments is consistent with the Company’s estimate of the exercise of the purchase option and supports the carrying amount of the net investment in the lease recognized as of December 31, 2025.

At December 31, 2025, the Company’s net investment in sales‑type leases was $0.4 million, which is included in Trade accounts receivable, net on the consolidated balance sheets. The net investment represents the present value of future lease payments and the expected purchase option proceeds, discounted at the rate implicit in the lease.

NOTE 7 – OTHER COMMITMENTS

We have purchase obligations for inventory and production costs, as well as other obligations such as capital expenditures, service contracts, marketing, and development agreements. Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure and approximate timing of the transaction. Most arrangements are cancelable without a significant penalty, and with short notice, typically less than 90 days. On December 31, ~~2024~~2025, we had ~~four~~ contracts with a commitment of approximately $~~389~~905,000, of which approximately $585,000 is expected to be paid induring ~~2025~~2026, ~~and~~ $1160,~~630~~000 during 2027, $160,000 toduring be2028, ~~paid~~$0 ~~beyond~~during ~~one~~2029, ~~year~~2030 and thereafter.

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NOTE 8 – CONTINGENCIES

As of December 31, ~~2024~~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 9 – STOCK AND RETIREMENT PLANS

Stock Option Plans

At December 31, ~~2024~~2025, there were ~~492~~400,~~843~~838 shares available for future grant under the Data I/O Corporation 2023 Omnibus Incentive Compensation ~~Incentive~~ Plan (the “2023 Plan”). At December 31, ~~2024~~2025, there were shares of Common Stock reserved for issuance for outstanding awards~~, consisting of 61,250 inducement reserve shares, 79,875 shares under the 2000 Plan, and 530,775 shares under the 2023 Plan~~. ~~The~~ ~~inducement reserve shares remaining that were granted in 2023 consisted of 56,250 RSU and 5,000 PSU, (which were not from the 2023 Plan, but were made under the terms of the 2023 Plan).~~ Pursuant to the ~~2000 and~~ 2023 ~~Plans~~Plan, options are granted to our officers and key employees with exercise prices equal to the fair market value of the Common Stock at the date of grant and generally vest over four years. Options granted under the plan have a maximum term of six years from the date of grant. Stock awards are ~~now~~ granted under the 2023 Plan ~~(previously the 2000 Plan)~~ which for RSU awards generally vest over three or four years and one year for non-employee Directors. Performance Share Unit (PSU) awards ~~vesting~~vest based upon ~~the~~ three-year performance achievement ~~on December 31, 2025 and 2026~~. The performance measures for the PSUs awarded in 2023 are cumulative revenue growth ~~targets~~over ~~for~~ the three-year period ending December 31, 2025. The performance measures for the PSUs awarded in 2024 are revenue growth targets, EBITDA targets and for Engineers, project objectives for the three-year period ending December 31, 2026. ~~Achieving~~ aThere ~~threshold~~were ~~measure~~no ~~earns 50% of the~~ PSU ~~target~~awards ~~award;~~granted ~~achieving~~in ~~the target measure earns 100% of the PSU target award; and achieving the maximum target measure earns 150% of the PSU target award~~2025.

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Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase shares of our Common Stock at six-month intervals at 95% of the fair market value on the last day of each six-month period. Employees may purchase shares having a value not exceeding ten percent of their gross compensation during an offering period. During ~~2024~~2025 and ~~2023~~2024, a total of 54,~~019~~250 and 35,~~341~~019 shares, respectively, were purchased under the plan at average prices of $23.8500 and $42.1685 per share, respectively. At December 31, ~~2024~~2025 and ~~2023~~2024, 1614,~~955~~637 and 2116,~~525~~955 shares were reserved for future grant respectively.

Stock Appreciation Rights Plan

We have a Stock Appreciation Rights (“SAR”) Plan under which each director, executive officer or holder of 10% or more of our Common Stock has a SAR with respect to each exercisable stock option. The SAR entitles the SAR holder to receive cash from us for the difference between the market value of the stock and the exercise price of the option in lieu of exercising the related option. SARs are only exercisable following a tender offer or exchange offer for our stock or following approval by shareholders of ~~Data I/O of~~ any merger, consolidation, reorganization or other transaction providing for the conversion or exchange of more than 50% of the common shares outstanding. As no event has occurred, which would make the SARs exercisable, and no such event is deemed probable, no compensation expense has been recorded under this plan. At December 31, ~~2024~~2025 and ~~2023~~2024, there were 200,000 and 12200,~~500~~000 SARs outstanding, respectively.

Retirement Savings Plan

We have a savings plan that qualifies as a cash or deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the plan, participating U.S. employees may defer their pre-tax salary or post-tax salary if Roth is elected, subject to IRS limitations. In fiscal year ~~2024~~2025, we contributed one dollar for each dollar contributed by a participant on the first two percent and $.50 for each dollar contributed by participant on the next four percent of a participant’s eligible earnings~~, and as a result this requires a minimum six percent contribution to receive a four percent matching contribution~~. Our matching contribution expense for the savings plan, net of forfeitures, was approximately $~~217~~197,000 and $~~253~~217,000 in ~~2024~~2025 and ~~2023~~2024, respectively. Employer matching contributions owed to the plan were $~~230~~219,000 and $~~248~~230,000 at December 31, ~~2024~~2025 and ~~2023~~2024, respectively.

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NOTE 10 – SHARE-BASED COMPENSATION

For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method. For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures. The impact on our results of operations of recording share-based compensation for the years ended December 31, ~~2024~~2025 and ~~2023~~2024 was as follows:

	Year Ended December 31,
	2024		2023
	2025		2024
(in thousands)
Cost of goods sold	$	~~112~~98	$	95112
Research and development		~~228~~170		~~257~~228
Selling, general and administrative		~~636~~429		~~838~~636
Total share-based compensation	$	~~976~~697	$	~~1,190~~976

AnThe ~~immaterial~~following ~~amount~~table ofsummarizes ~~share-based~~stock ~~compensation~~option ~~was~~activity ~~capitalized~~under ~~into~~our ~~inventory~~stock asoption ~~overhead~~plans for the ~~years~~twelve months ended December 31, ~~2024~~2025 and ~~2023,~~2024: ~~respectively.~~

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	2025						2024
	Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years		Options			Weighted-Average Exercise Price			Weighted-Average Remaining Contractual Life in Years

Outstanding at beginning of year		200,000	$	2.39				12,500		$	4.98
Granted		-		-				200,000			2.39
Exercised		-		-				-			-
Cancelled, Expired or
Forfeited		-		-				(12,500	)		(4.98	)
Outstanding at end of year		200,000	$	2.39		4.67		200,000		$	2.39			5.67

Vested or expected to vest at end of the period		190,445	$	2.39				182,676		$	2.39
Exercisable at end of year		62,500	$	2.39				12,500		$	2.39

The ~~following~~aggregate ~~table~~intrinsic ~~summarizes~~value ~~stock~~of ~~option~~outstanding ~~activity~~options ~~under~~is ~~our~~$81,540. There were no stock option ~~plans~~awards ~~for~~exercised ~~the~~in ~~twelve~~2025 ~~months~~or ~~ended December 31,~~ 2024. ~~and 2023:~~

	2024							2023
	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years		Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life in Years
Outstanding at beginning of year		12,500		$	4.98				12,500	$	4.98
Granted		200,000		$	2.39				-		-
Exercised		-			-				-		-
Cancelled, Expired or Forfeited		(12,500	)	$	4.98				-		-
Outstanding at end of year		200,000		$	2.39		5.67		12,500	$	4.98		1.33
Vested or expected to vest at the end of the period		182,676		$	2.39		1.33		12,500	$	4.98		1.33
Exercisable at end of year		12,500		$	2.39		1.33		12,500	$	4.98		1.33

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The aggregate intrinsic value of outstanding options is $81,540. There were no stock option awards exercised in 2024.

Restricted stock award activity including performance-based stock award activity under our share-based compensation plan was as follows:

	2024					2023
	2025					2024
	Awards			Weighted - Average Grant Date Fair Value		Awards			Weighted - Average Grant Date Fair Value
Outstanding at beginning of year		~~728~~471,~~625~~900		$	43.1755		~~665~~728,~~200~~625		$	34.9417
Granted		~~363~~212,~~150~~348			2.8776		~~387~~363,~~100~~150			42.3687
Vested		(~~296~~195,~~209~~775	)		43.1262		(~~284~~296,~~925~~209	)		34.9312
Cancelled		(~~323~~120,~~666~~343	)		3.6661		(38323,~~750~~666	)		3.9666
Outstanding at end of year		~~471~~368,~~900~~130		$	3.5504		~~728~~471,~~625~~900		$	43.1755

During the years ended December 31, ~~2024~~2025 and ~~2023~~2024, 861,~~007~~100 and 8386,~~753~~507 shares, respectively, were withheld from issuance related to restricted stock units vesting and stock option exercises to cover employee taxes and stock options exercise price.

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 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. 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. For 2024 awards, the performance metrics included revenue growth, EBITDA and project objective targets over the three-year period ending December 31, 2026. The table above includes performance shares granted in 2024 of 124,000 shares at the target performance level (the threshold level would be 50% and the maximum level would be 150% of the target level).

The remaining unamortized expected future compensation expense and remaining amortization period associated with unvested option grants and restricted stock awards are:

	December 31,2024		December 31,2023
	December 31,2025		December 31,2024
Unamortized future compensation expense	$	1924,~~413,500~~149	$	21,~~317~~413,~~524~~500
Remaining weighted average amortization period in years		21.3190		2.4431

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

	Year Ended December 31,
	2024		2023
	2025		2024
Weighted average shares outstanding		9,~~149~~328,~~538~~776		89,~~940~~149,~~612~~538
Restricted and Performance Stock Units		-		~~132,360~~-
Stock Options		-		~~216~~-
Weighted average shares		9,~~149~~328,~~538~~776		9,~~073~~149,~~188~~538

NOTE 11 – SHARE REPURCHASE PROGRAMS

Data I/O did not have a share repurchase program in 2025 or 2024.

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NOTE 12 – INCOME TAXES

Components of income (loss) before taxes:

	Year Ended December 31,
(in thousands)	~~2024~~2025			~~2023~~2024
U.S. operations	$	(35,~~591~~030	)	$	(~~536~~3,591	)
Foreign operations		~~884~~34			~~1,216~~884
Total income (loss) before taxes	$	(24,~~707~~996	)	$	~~680~~(2,707	)

Income tax expense (benefit) consists of:

	Year Ended December 31,
(in thousands)	~~2024~~2025			~~2023~~2024
Current tax expense (benefit)
U.S. federal	$	0		$	0
State		42			204
Foreign		~~382~~(12	)		~~174~~382
		386			194
		(10	)		386
Deferred tax expense (benefit) – U.S. federal		-			-
Deferred tax expense (benefit) – foreign		250			-
Total income tax expense (benefit)	$	~~386~~240		$	~~194~~386

~~Income~~For ~~tax (expense) increased by $192,000 for~~ the year ended December 31, ~~2024~~2025, ~~compared~~income ~~to 2023. The increase was primarily a result of the withholding~~ tax ofexpense includes $~~337~~250,000 ~~on the repatriation~~ of ~~cash from China subsidiary in 2024. Income~~ deferred tax (expense) inresulting ~~2024 and 2023 is primarily~~ from the ~~result~~recognition of ~~foreign~~deferred ~~subsidiary~~tax ~~income~~liabilities ~~tax~~associated ~~and~~with ~~minimal~~outside ~~U.S.~~basis ~~state~~differences ~~income~~in ~~tax~~foreign subsidiaries.

A51 ~~reconciliation~~Table of ~~our effective income tax and the U.S. federal tax rate is as follows:~~Contents

	Year Ended December 31,
(in thousands)	2024			2023
Statutory tax	$	(568)		$	143
State and foreign income tax, net of federal income tax benefit		150			(178	)
Valuation allowance for deferred tax assets		804			139
Foreign sourced deemed dividend income		175			322
Stock based compensation		(168	)		(250	)
Other		(7	)		18
Total income tax expense (benefit)	$	386		$	194

Effective Rate Reconciliation:

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(In thousands)	2025			Percent

U.S. federal statutory tax	$	(1,049	)		21.00	%
State and local income tax, net of federal income tax effect		2			(0.04	)%

Foreign tax effects:
China:
Withholding tax		271			(5.42	)%
Statutory rate differential		(180	)		3.60	%
Germany:
Statutory rate differential		139			(2.78	)%

Tax Credits:
Research and development credit		(47	)		0.94	%
Changes in valuation allowances		1,267			(25.36	)%
Nontaxable or nondeductible items:
Permanent differences - stock compensation		(111	)		2.22	%
Permanent differences - other		8			(0.16	)%
Changes in unrecognized tax benefits		(31	)		0.62	%
Other adjustments		(29	)		0.58	%
Global effective tax	$	240			(4.80	)%

The ~~tax~~following ~~effects~~table ofpresents ~~temporary~~the ~~differences~~required ~~that~~disclosures ~~gave~~prior ~~rise~~ to ~~significant~~our ~~portions~~adoption of ASU 2023-09 and reconciles the ~~deferred~~U.S. federal statutory income tax ~~assets~~rate ~~are~~to ~~presented~~the ~~below~~actual global effective income tax rate for the year ended December 31, 2024:

	Year Ended December 31,
(In thousands)	2024
(in thousands)	2024			2023
Statutory tax	$	(568	)
Deferred income tax assets:
State and foreign income tax, net of federal income tax benefit		150
Allowance for credit losses	$	4		$	14
Valuation allowance for deferred tax assets		804
Inventory and product return reserves		1,666			1,168
Foreign sourced deemed dividend income		175
Compensation accruals		2,791			2,750
Stock based compensation		(168	)
Accrued liabilities		(22	)		65
Other		(7	)
Book-over-tax depreciation and amortization		12			18
Total income tax expense (benefit) (effective tax rate of (14.3%))	$	386
Foreign net operating loss carryforwards		241			184
U.S. net operating loss carryforwards		2,983			2,899
U.S. credit carryforwards		1,564			1,557
		9,239			8,655
Valuation Allowance		(9,239	)		(8,655	)
Total Deferred Income Tax Assets	$	-		$	-

~~The~~On ~~valuation~~July 4, ~~allowance~~2025, ~~for~~the ~~deferred~~One ~~tax~~Big ~~assets~~Beautiful ~~increased~~Bill ~~$584,000~~Act ~~and~~(Act) ~~decreased~~was ~~$639,000~~signed ~~during~~into ~~the~~law. ~~years~~The ~~ended~~Act ~~December~~makes ~~31,~~permanent ~~2024~~key elements of the Tax Cuts and ~~2023~~Jobs Act, ~~respectively. The~~including ~~net~~100 ~~deferred~~percent ~~tax~~bonus ~~assets~~depreciation, ~~have~~domestic aresearch ~~full~~cost ~~valuation~~expensing, ~~allowance~~increases ~~provided~~the ~~due~~AMIC to ~~uncertainty~~35 ~~regarding~~percent ~~our~~from ~~ability~~25 topercent ~~utilize~~and ~~such~~makes ~~assets~~modifications into ~~future~~the ~~years~~international tax framework. ~~This~~ ~~full~~The ~~valuation~~Act ~~allowance~~includes ~~evaluation~~multiple iseffective ~~based~~dates, ~~upon~~with ~~our~~certain ~~volatile~~provisions ~~history~~effective ofin ~~losses~~2025 and ~~the~~others ~~cyclical~~phased ~~nature~~in through 2027. We continue to evaluate the impact of ~~our~~the ~~industry~~Act's ~~and~~provisions ~~capital~~that ~~spending~~will take effect in future years. ~~Credit~~ ~~carryforwards~~As ~~consist~~a ~~primarily~~result of ~~research~~this ~~and~~legislation, ~~experimental~~the ~~and~~Company ~~foreign~~is ~~tax~~deducting ~~credits. We~~its ~~intend~~domestic toSection ~~continue~~174A toexpenditures ~~reinvest~~beginning ~~foreign~~in ~~earnings~~the of2025 ~~our~~taxable ~~operating subsidiaries~~year.

~~U.S.~~As ~~net~~noted ~~operating~~in ~~loss~~the ~~carryforwards~~2025 ~~are~~rate ~~$14.2~~reconciliation ~~million on December 31~~above, ~~2024~~we ~~with~~derive ~~expiration years from 2024 to 2035. Utilization of net operating loss and credit carryforwards is subject to certain limitations under Section 382 of~~ the ~~Internal~~effective ~~Revenue~~tax ~~Code~~rate ~~of 1986~~benefit, asor ~~amended. We have not had a Section 382 ownership change~~detriment, ~~but~~attributed ifto wenon-U.S. ~~did the usage of these tax assets would have an~~ income ~~usage~~taxed ~~limitation based on the value of the Company~~ at ~~the~~different ~~time~~rates ofprimarily ~~the~~from ~~change~~our ~~times~~operations ~~the~~in ~~federal~~China, ~~long-term~~among ~~tax-exempt rate~~others.

~~The~~52 ~~gross~~Table ~~changes~~of ~~in uncertain tax positions resulting in unrecognized tax benefits are presented below:~~Contents

	Year Ended December 31,
	2024		2023
(in thousands)
Unrecognized tax benefits, opening balance	$	430	$	422
Prior period tax position increases		-		(6	)
Additions based on tax positions related to current year		12		14
Unrecognized tax benefits, ending balance	$	442	$	430

Deferred Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred tax assets and liabilities at the end of each period were as follows:

(In thousands)	2025			2024
Allowance for credit losses	$	6		$	4
Inventory and product return reserves		1,419			1,666
Compensation accruals		3,013			2,791
Book-over-tax depreciation and amortization		20			12
Foreign net operating loss carryforwards		415			241
U.S. net operating loss carryforwards		4,063			2,983
U.S. credit carryforwards		1,642			1,564
Gross deferred tax assets	$	10,578		$	9,261
Valuation allowance		(10,506	)		(9,239	)

Total net deferred tax assets	$	72		$	22

Deferred tax liabilities:

(In thousands)	2025			2024
Accrued liabilities	$	(72	)	$	(22	)
Deferred tax liabilities - foreign		(250	)		-

Total gross deferred tax liabilities		(322	)		(22	)
	$	(250	)	$	0

Changes in the valuation allowance for deferred tax assets were as follows:

	2025
Balance at Beginning of Year	$	9,239
Additions charged to expenses/other accounts		1,267
(Deductions) recoveries, net		-
Balance at End of Year	$	10,506

The change in valuation allowance is substantially attributable to the uncertainty regarding the realizability of our U.S. deferred tax assets. As of December 31, 2025, our federal and non-U.S. net operating loss carryforwards for income tax purposes were $19,345,000 and $1,690,000 respectively. The majority of the federal and non-U.S. net operating loss carryforwards have multiple expiration dates. The remaining federal U.S. net operating loss carryforwards expire at various dates through 2034.The Company has determined that certain undistributed earnings of its foreign subsidiaries are indefinitely reinvested. Accordingly, no deferred income taxes have been recorded on those earnings. The deferred tax liability related to these indefinitely reinvested earnings that has not been recognized was approximately $294,000 as of December 31, 2025. Deferred income taxes have been recorded for undistributed foreign earnings that are expected to be repatriated.

Uncertain Tax Positions

(In thousands)	2025			2024
Beginning gross unrecognized tax benefits	$	442		$	430

Settlements and effective settlements with tax authorities		-			-
Changes in balances related to tax position taken during prior periods		-			-
Changes in balances related to tax position taken during current period		(31	)		12
Ending gross unrecognized tax benefits	$	411		$	442

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Historically, we have incurred minimal interest expense, and no penalties associated with tax matters. We have adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense.

Tax years that remain open for examination include ~~2021,~~ 2022, 2023, 2024 and ~~2024~~2025 in the United States of America. In addition, various tax years from 2004 to 2014 may be subject to examination if we utilize the net operating losses and credit carryforwards from those years in our current or future year tax returns.

~~NOTE~~Income 13Tax ~~–SEGMENT INFORMATION~~Paid

~~Data~~We ~~I/O~~adopted ~~operates~~ASU as2023-09 on a ~~single~~prospective ~~segment~~basis ~~entity,~~for ~~with~~ the ~~sole~~year ~~objective~~ended ~~to design~~December 31, ~~manufacture,~~2025 and ~~sell~~have ~~programming~~included ~~systems.~~the Wefollowing ~~operate~~table inas ~~three~~a ~~separate~~result ~~locations~~of —our ~~Redmond~~adoption, ~~WA;~~which ~~Shanghai,~~presents ~~China;~~income ~~and~~taxes ~~Munich,~~paid ~~Germany~~(net —of ~~these~~refunds ~~locations~~received) ~~function~~for asthe ~~part~~year ofended ~~a single~~December 31, ~~integrated business and all operations are strategically aligned to support this objective.~~ 2025:

The accounting policies of the programing system segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the balance sheet as total consolidated assets.

(In thousands)	2025
Federal taxes	$	0
State taxes		2
Foreign taxes (China, others minimal)		8
Total income tax paid	$	10

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~~Our~~NOTE ~~chief~~13 ~~operating~~– ~~decision~~SEGMENT 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. 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:INFORMATION

	Year Ended December 31,
	2024			2023
(in thousands)
Net sales	$	21,769		$	28,064
Cost of goods sold		10,163			11,878
Gross margin		11,606			16,186
Operating Expenses:
Employee expenses		9,715			9,840
Customer acquisition costs		1,268			1,916
Professional and outside services		2,025			2,133
Occupancy costs (OPEX portion)		787			761
Depreciation & amortization		540			597
Other		309			491
Total operating expense		14,644			15,738
Operating income (loss)	$	(3,038	)	$	448

Data I/O operates as a single segment entity, with the sole objective to design, manufacture, and sell programming systems. We operate in three separate locations – Redmond, Washington; Shanghai, China; and Munich, Germany – these locations function as part of a single, integrated business and all operations are strategically aligned to support this objective.

~~NOTE~~The 14accounting ~~–GEOGRAPHIC~~policies ~~INFORMATION~~of the programming system segment are the same as those described in the summary of significant accounting policies. The measure of segment assets is reported on the balance sheet as total consolidated assets.

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 CODM and included in the reported segment operating profits are outlined in the following table:

	Year Ended
(in thousands)	December 31, 2025			December 31, 2024
Net sales	$	21,500		$	21,769
Cost of goods sold		10,904			10,163
Gross margin		10,596			11,606
Operating Expenses:
Employee expenses		9,213			9,715
Customer acquisition costs		1,259			1,268
Professional and outside services		2,953			2,025
Occupancy costs		980			787
Depreciation and amortization		460			540
Other expense (income)		847			309
Total operating expense		15,712			14,644
Operating income (loss)	$	(5,116	)	$	(3,038	)

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NOTE 14 – GEOGRAPHIC INFORMATION

Major operations outside the U.S. include sales, engineering and service support by subsidiaries in Germany as well as in China, which also manufactures some of our products. None of our employees are represented by a collective bargaining agreement.

We determine international sales by the international geographic destination into which the products are sold and delivered and include not only sales by foreign subsidiaries but also export sales from the U.S. to our foreign distributors and to our representatives’ customers. Certain revenues recognized over time (for instance, multi-period service contracts under ASC 606) are allocated to geographic regions based on estimates, because our systems do not track the country of these revenues as they are deferred and recognized. In such cases, we allocate revenue to countries proportionally based on the initial contract value by country, which we believe is a reasonable approximation. International sales do not include transfers between Data I/O and our foreign subsidiaries. ~~Operating~~ ~~income~~Long-lived byassets ~~region~~are isreported ~~based~~in onthe ~~sales~~region ~~noted~~where ~~above~~the ~~less~~asset ~~direct~~is ~~costs~~physically located, and ~~allocated~~consist ~~costs~~of ~~including~~property, ~~U.S.~~plant ~~headquarter~~and ~~operations,~~equipment ~~engineering~~ and ~~SG&A~~other long-term assets.

The following tables provide summary operating information by geographic area:

	Year Ended December 31,
(in thousands)	~~2024~~2025			~~2023~~2024
Net sales by region
Net sales by location:
Americas	$	5,453		$	9,719
United States	$	1,289		$	1,377
Europe		6,237			9,469
International		20,211			20,392
Asia and others		10,079			8,876
	$	21,500		$	21,769
	$	21,769		$	28,064
International sales:
Operating income:
Germany	$	4,236		$	3,483
Americas	$	(1,216	)	$	(386	)
China		3,913			4,136
Europe		(857	)		638
Mexico		3,763			3,701
Asia and others		(965	)		196
Korea		2,516			3,265
	$	(3,038	)	$	448
Identifiable assets:
Americas (primarily U.S.)	$	14,292		$	14,606
Europe (primarily Germany)		4,561			4,966
Asia & others (primarily China)		6,117			7,829
	$	24,970		$	27,401

NOTE 15 – SUBSEQUENT EVENTS

Long-lived assets by location:
United States	$	1,874	$	2,500
Germany		310		446
China		747		927
	$	2,931	$	3,873

In56 ~~preparing~~Table ~~the~~of financial statements, the Company has reviewed all known events which occurred after December 31, 2024 through the date on which the financial statements are available for issuance, for potential recognition or disclosure in the consolidated financial statements and footnotes. Contents

~~There~~NOTE ~~were~~15 no– ~~other~~PRIOR ~~subsequent~~PERIOD ~~events which would require additional disclosures to the financial statements other than those already disclosed throughout the Notes to Consolidated Financial Statements.~~REVISION

47The ~~Table~~Company identified an error in the prior‑year disaggregated revenue amounts of ~~Contents~~net sales by type. As such, the Company has revised the net sales by type for the year ended December 31, 2024. This correction affected only the disaggregation of net sales among Platform, Adapter, and Software and Services sales and did not impact the Company’s previously reported consolidated balance sheets, statements of operations, comprehensive income (loss), or statements of cash flows. While the total revenue was not affected, the Company has revised the presentation of net sales by type for the year ended December 31, 2024 to enhance comparability.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Effect of Revision
Net sales by type	2024 As Previously Reported		Effect of Revision			2024 As Revised
(in thousands)
Platform Sales	$	10,985	$	(519	)	$	10,466
Adapter Sales		7,250		(60	)		7,190
Software and Services Sales*		3,534		579			4,113
Total	$	21,769	$	0		$	21,769

* includes service and parts sales associated with equipment service contracts

~~None.~~NOTE 16 – SUBSEQUENT EVENTS

In preparing the financial statements, the Company has reviewed all known events which occurred after December 31, 2025 through the date on which the financial statements are available for issuance, for potential recognition or disclosure in the consolidated financial statements and footnotes.

In January 2026, the Company filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission, providing the ability to issue up to $20 million of equity securities. The shelf registration provides financial flexibility for potential strategic initiatives, including acquisitions aligned with the Company’s growth strategy.

Also in January, the Company took steps to realign its German subsidiary, scaling back on some functions and bringing a number of roles back to headquarters which resulted in the elimination of several positions in the German subsidiary.

In February 2026, the Company announced a collaboration with IAR, a global leader in embedded development tools and security solutions, to combine IAR’s security expertise with Data I/O’s provisioning expertise. The collaboration is intended to create a frictionless solution that reduces the complexity inherent in current device provisioning approaches, simplifying the process of securely programming and provisioning devices across global manufacturing supply chains.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures

As previously disclosed in the Company’s Annual Report on the Form 10-K for the year ended December 31, 2024, the Company identified a material weakness in our internal control over financial reporting in the areas of user access and segregation of duties related to the information technology system that support the Company’s financial reporting processes. 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.

During 2025, the Company implemented enhancements to system access controls, user access provisioning and de‑provisioning controls, role‑based access restrictions, monitoring controls over privileged access, improved segregation of duties, and expanded monitoring and review procedures in efforts to address the previously identified IT user access control deficiencies. The August 2025 ransomware incident prompted additional IT infrastructure improvements that support both cybersecurity and internal control objectives. Specifically, the Company removed administrative access from all employees outside of the IT department. We instituted regular reviews of access rights across all systems, and we implemented improved segregation of duties with respect to financial transactions and reporting, Management completed testing of the design and operating effectiveness of the revised controls and procedures during 2025.

While these actions were taken to improve access management and security controls, the material weakness was not fully remediated as of December 31, 2025. A material weakness continues to exist related to ineffective user access and segregation‑of‑duties controls within IT systems that support financial reporting, Accordingly, management concluded that the conditions underlying the previously identified IT‑related material weakness remained present as of December 31, 2025. Due to this material weakness, there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements would not be prevented or detected on a timely basis.

In addition, management determined that the Company did not maintain effective controls over the completeness and accuracy of internally generated reports used in the preparation of the disaggregated revenue footnote. The report used to compile revenue by major category was not reconciled to the general ledger, resulting in a misstatement of revenue by category in previously issued financial statements. While total revenue and other primary financial statement line items were not affected, the control deficiency resulted in a misstatement of a required disclosure that could have been material and was not detected by the Company’s internal controls.

(a) Evaluation of disclosure controls and procedures.

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 not effective due to athe material weakness ~~in our internal control over financial reporting as~~ described below.

~~(b)~~58 ~~Management’s~~Table ~~Report~~of ~~on Internal Control Over Financial Reporting.~~Contents

~~Our~~(b) management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control systems are designed to provide reasonable assurance to the CompanyManagement’s ~~management~~report ~~and~~on ~~board~~internal ~~of directors regarding reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal~~ control over financial reporting ~~is defined in Rule 13a-15(f) promulgated under the Exchange Act and includes those policies and procedures that:~~

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(if) ~~pertain~~and to15d-15(f) under the ~~maintenance~~Securities Exchange Act of ~~records~~1934 ~~that~~as a process designed by, inor ~~reasonable~~under ~~detail~~the supervision of, ~~accurately~~our principal executive and ~~fairly~~principal ~~reflect~~financial ~~the~~officers ~~transactions~~and effected by our Board of Directors, management and ~~dispositions~~other personnel to provide reasonable assurance regarding the reliability of financial reporting and the ~~assets~~preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the ~~company;~~Exchange Act and includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

(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.

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~~2025. 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, asmaterial ofweaknesses ~~December~~existed ~~31,~~related ~~2024,~~to ~~our~~segregation ~~internal~~of ~~control~~duties ~~over~~and ~~financial~~to ~~reporting~~the ~~was~~completeness ~~not~~and ~~effective~~accuracy as of ~~December 31,~~internally ~~2024~~generated ~~because~~reports ofused anin ~~identified~~the ~~material~~preparation ~~weakness~~of inthe ~~our~~disaggregated ~~internal~~revenue ~~control~~footnote ~~over~~as ~~financial~~of ~~reporting~~December as31, ~~described~~2025. ~~below:~~

~~Material~~Subsequent ~~Weakness~~to ~~Identified~~the byidentification of the material weakness, management has implemented remediation actions designed to address the underlying control deficiencies, including enhancing review procedures and increasing management oversight over financial reporting activities. These actions are intended to improve the design and operation of the Company’s internal control environment. Management believes these remediation efforts appropriately address the root causes of the material weakness; however, the material weakness will not be considered remediated until the relevant controls have operated for a sufficient period of time and management has concluded, based on testing, that the controls are operating effectively. As of December 31, 2025, remediation efforts were ongoing. .

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. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permanently exempts smaller reporting companies from complying with Section 404(b) of the Sarbanes-Oxley Act of 2002.

There were no changes made in our internal controls during the period covered by this report that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Item 9B. Other Information

During the year ended December 31, ~~2024~~2025, 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.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

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~~June 1511, ~~2025~~2026, and is incorporated herein by reference. 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.”~~

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.”

Code of Ethics

We have adopted a Code of Ethics that applies to all directors, officers and employees of Data I/O, including the Chief Executive Officer and Chief Financial Officer. ~~The~~ ~~key principles of the Code of Ethics are to act legally and with integrity in all work for Data I/O.~~ The Code of Ethics is posted on the corporate governance page of our website:.

http://www.dataio.com/Company/InvestorRelations/CorporateGovernance.aspx

We will post any amendments to our Code of Ethics on our website. In the unlikely event that the Board of Directors approves any sort of waiver to the Code of Ethics for our executive officers or directors, information concerning such waiver will also be posted on our website. In addition to posting information regarding amendments and waivers on our website, the same information will be included in a Current Report on Form 8-K within four business days following the date of the amendment or waiver, unless website posting of such amendments or waivers is permitted by NASDAQ’s rules.

Item 11. Executive Compensation

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~~June 1511, ~~2025~~2026 and is incorporated herein by reference. ~~The information appears in the Proxy Statement under the caption “Executive Compensation.” Proxy Statement will be filed within 120 days of our year-end.~~

~~Item~~The 12Board has previously adopted a clawback policy which allows us to recover performance-based compensation in the event of an accounting restatement. ~~Security~~ ~~Ownership~~The policy is incorporated by reference as an exhibit to this Form 10-K. In connection with the preparation of ~~Certain~~this ~~Beneficial~~annual ~~Owners~~report, ~~and~~we ~~Management~~determined ~~and~~that ~~Related~~there ~~Stockholder~~was ~~Matters~~an error to previously issued financial statements, which has been corrected in this annual report. As such, we are conducting a clawback analysis in connection with the restatement as required by the Company’s policies but have not yet determined if any erroneously awarded compensation was paid based on the restated financial results

~~Information called for by Part III,~~ Item 12,. isSecurity ~~included~~Ownership ~~in our Proxy Statement relating to our annual meeting~~ of ~~shareholders~~Certain toBeneficial beOwners ~~held on May 15, 2025~~ and isManagement ~~incorporated herein by reference. The information appears in the Proxy Statement under the caption “Voting Securities~~ and ~~Principal~~Related ~~Holders.” Proxy~~Stockholder ~~Statement will be filed within 120 days of our year end.~~Matters

49Information ~~Table~~called for by Part III, Item 12, is included in our Proxy Statement relating to our annual meeting of ~~Contents~~shareholders to be held on June 11, 2026 and is incorporated herein by reference.

Equity Compensation Plan Information

The following table gives information about our Common Stock that may be issued upon the exercise of options and rights under all of our existing equity compensation plans as of December 31, ~~2024~~2025. ~~See Notes 9 and 10 of “Notes to Consolidated Financial Statements.”~~

	(a) Number of securities to be issued upon the exercise of outstanding options, warrants and rights		(b) Weighted–average exercise price of outstanding options, warrants and rights		(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by the security holders (1) (2)		~~201~~200,~~932~~161	$	2.4039		~~509~~419,~~798~~564
Equity compensation plans not approved by the security holders (3)		-		-		-
Total		~~201~~200,~~932~~161	$	2.4039		~~509~~419,~~798~~564

(1)	Represents shares of our Common Stock issuable pursuant to the Data I/O Corporation 2023 Omnibus Incentive Compensation Incentive Plan, 2000 Stock Compensation Incentive Plan, and 1982 Employee Stock Purchase Plan. Table excludes unvested: RSU awards of 79331,~~875~~400 from the 2000 Plan, ~~RSU awards of 325,525 from the~~ 2023 Plan, and PSU awards of 6136,~~500~~750 from the 2023 Plan.
(2)	Stock Appreciation Rights Plan (“SAR”) provides that directors, executive officers or holders of 10% or more of our Common Stock have an accompanying SAR with respect to each exercisable option. While the plan has been approved by the security holders, no amounts are included in columns (a), (b), or (c) relating to the SAR.
(3)	Table excludes unvested inducement grants to Gerald Ng of 56,250 RSU and 5,000 PSU awards.

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~~June 1511, ~~2025~~2026. ~~Proxy Statement will be filed within 120 days of our year-end.~~

Item 14. 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~~June 1511, ~~2025~~2026. ~~Proxy Statement will be filed within 120 days of our year-end.~~

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PART IV

Item 15. Exhibits, Financial Statement Schedules

Executive Compensation Plans and Arrangements

The following list is a subset of the list of exhibits described below and contains all compensatory plans, contracts or arrangements in which any director or executive officer of Data I/O is a participant, unless the method of allocation of benefits thereunder is the same for management and non-management participants:

(1)	Amended and Restated 1982 Employee Stock Purchase Plan. See Exhibit 10.5.
(2)	Data I/O Corporation Tax Deferral Retirement Plan and Trust with Empower Retirement (formerly known as Great West Financial (formerly known as Orchard Trust Company)). See Exhibits 10.1110, 10.1211, 10.1312, 10.2320, 10.3421 and 10.3128.
(3)	Summary of Amended and Restated Management Incentive Compensation Plan. See Exhibit 10.2.
(4)	Amended and Restated 1983 Stock Appreciation Rights Plan. See Exhibit 10.1.
(5)	Amended and Restated Executive Agreements. See Exhibit 10.2018, and 10.3229
(6)	1996 Director Fee Plan (terminated in 2023). See Exhibit 10.4.
(7)	Data I/O Corporation 2000 Stock Compensation Incentive Plan. See Exhibit 10.6, 10.109, 10.1615, 10.1917, 10.2926 and 10.3330 .
(8)	Form of Option Agreement. See Exhibit 10.7.
(9)	Form of Indemnification Agreement. See Exhibit 10.1413.
(10)	Letter Agreement with Anthony Ambrose. See Exhibit 10.1514.
(11)	Letter Agreement with Rajeev Gulati. See Exhibit 10.1716.
(12)	Form of Executive Agreement. See Exhibit 10.2018 and 10.3229.
(13)	Form of Restricted Stock Unit Award Agreement. See Exhibit 10.18 and 10.3633.
(14)	Letter Agreement with Michael Tidwell. See Exhibit 10.2825.
(15)	Data I/O Corporation 2023 Omnibus Incentive Compensation Incentive Plan. See Exhibit 10.3431.
(16)	Form of Performance Stock Unit Award Agreement. See Exhibit 10.3532.
(17)	Letter Agreement with Gerald Y. Ng. See Exhibit 10.3734.
(18)	Executive Employment Agreement with William Wentworth. See Exhibit 10.3835.
(19)	Transition Agreement with Anthony Ambrose. See Exhibit 10.3936.
(20)	Executive Employment Agreement with Charles DiBona and Amendment No. 1 to the Executive Employment Agreement with Charles DiBona. See Exhibit 10.39. and 10.40.

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(a)	List of Documents Filed as a Part of This Report:		Page
	(1)	Index to Financial Statements:
		Report of Independent Registered Public Accounting Firm (PCAOB ID 248)	2833
		Consolidated Balance Sheets as of December 31, 2024 and December 31, 2023	30
		Consolidated Balance Sheets as of December 31, 2025 and December 31, 2024	35
		Consolidated Statements of Operations for each of the two years ended December 31, 2024 and December 31, 2023	31
		Consolidated Statements of Operations for each of the two years ended December 31, 2025 and December 31, 2024	36
		Consolidated Statements of Comprehensive Income (Loss) for each of the two years ended December 31, 2024 and December 31, 2023	32
		Consolidated Statements of Comprehensive Income (Loss) for each of the two years ended December 31, 2025 and December 31, 2024	37
		Consolidated Statements of Stockholders’ Equity for each of the two years ended December 31, 2024 and December 31, 2023	33
		Consolidated Statements of Stockholders’ Equity for each of the two years ended December 31, 2025 and December 31, 2024	38
		Consolidated Statements of Cash Flows for each of the two years ended December 31, 2024 and December 31, 2023	34
		Consolidated Statements of Cash Flows for each of the two years ended December 31, 2025 and December 31, 2024	39
		Notes to Consolidated Financial Statements	3540
	(2)	Index to Financial Statement Schedules:
		Schedule II – Consolidated Valuation and Qualifying Accounts
			57
		All other schedules not listed above have been omitted because the required information is included in the consolidated financial statements or the notes thereto, or is not applicable or required.

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(2)	Index to Financial Statement Schedules:

	Schedule II – Consolidated Valuation and Qualifying Accounts	68

	All other schedules not listed above have been omitted because the required information is included in the consolidated financial statements or the notes thereto, or is not applicable or required.

(3)	Index to Exhibits:

(3) Index to Exhibits:

3	Articles of Incorporation:

	3.1	Data I/O’s restated Articles of Incorporation filed November 2, 1987 (Incorporated by reference to Exhibit 3.1 of Data I/O’s 1987 Annual Report on Form 10-K (File No. 0-10394) and attached as a PDF to Exhibit 3.1 in our 2017 Annual Report on Form 10-K).

	3.2	Data I/O’s Bylaws as amended and restated as of July 20, 2011 (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed July 26, 2011).

	3.3	Certification of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock (Incorporated by reference to Exhibit 1 of Data I/O’s Registration Statement on Form 8-A filed March 13, 1998 (File No. 0-10394)).

4	Instruments Defining the Rights of Security Holders, Including Indentures:

	4.1	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: as Exhibit A thereto, the Form of Right Certificate; and, as Exhibit B thereto, the Summary of Rights to Purchase Series A Junior Participating Preferred Stock (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed on March 13, 1998).

	4.2	Description of Data I/O Corporation’s Common Stock (Incorporated by reference to Data I/O’s 2022 Annual Report on Form 10-K (File No. 0-10394)).

3	Articles of Incorporation:
	3.1	Data I/O’s restated Articles of Incorporation filed November 2, 1987 (Incorporated by reference to Exhibit 3.1 of Data I/O’s 1987 Annual Report on Form 10-K (File No. 0-10394) and attached as a PDF to Exhibit 3.1 in our 2017 Annual Report on Form 10-K).
	3.2	Data I/O’s Bylaws as amended and restated as of July 20, 2011 (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed July 26, 2011).
	3.3	Certification of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock (Incorporated by reference to Exhibit 1 of Data I/O’s Registration Statement on Form 8-A filed March 13, 1998 (File No. 0-10394)).
4	Instruments Defining the Rights of Security Holders, Including Indentures:
	4.1	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: as Exhibit A thereto, the Form of Right Certificate; and, as Exhibit B thereto, the Summary of Rights to Purchase Series A Junior Participating Preferred Stock (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed on March 13, 1998).
	4.2	Description of Data I/O Corporation’s Common Stock (Incorporated by reference to Data I/O’s 2022 Annual Report on Form 10-K (File No. 0-10394)).

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10	Material Contracts:
	10.1	Amended and Restated 1983 Stock Appreciation Rights Plan dated February 3, 1993 (Incorporated by reference to Exhibit 10.23 of Data I/O’s 1992 Annual Report on Form 10-K (File No. 0-10394) and attached as a PDF to Exhibit 10.1 in our 2017 Annual Report on Form 10-K).
	10.2	Amended and Restated Management Incentive Compensation Plan dated January 1, 1997 (Incorporated by reference to Exhibit 10.25 of Data I/O’s 1997 Annual Report on Form 10-K (File No. 0-10394)).
	10.3	Amended and Restated Performance Bonus Plan dated January 1, 1997 (Incorporated by reference to Exhibit 10.26 of Data I/O’s 1997 Annual Report on Form 10-K (File No. 0-10394)).
	10.4	Amended and Restated Data I/O Corporation 1996 Director Fee Plan (Incorporated by reference to Exhibit 10.32 of Data I/O’s 1997 Annual Report on Form 10-K (File No. 0-10394)). (Plan cancelled February 22, 2023.)
	10.5	Amended and Restated 1982 Employee Stock Purchase Plan dated May 16, 2003 (Incorporated by reference to Data I/O’s 2003 Proxy Statement dated March 31, 2003).
	10.6	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).
	10.7	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. 0-10394)).
	10.8	Second Amendment to Lease, (Redmond East) between Data I/O Corporation and Arden Realty Limited Partnership, made as of January 31, 2011. (Incorporated by reference to Data I/O’s 2010 Annual Report on Form 10-K (File No. 0-10394)).
	10.9	Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved May 17, 2011 (Incorporated by reference to Data I/O’s 2011 Proxy Statement filed April 5, 2011).

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		10.8	Second Amendment to Lease, (Redmond East) between Data I/O Corporation and Arden Realty Limited Partnership, made as of January 31, 2011. (Incorporated by reference to Data I/O’s 2010 Annual Report on Form 10-K (File No. 0-10394)).
		10.9	Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved May 17, 2011 (Incorporated by reference to Data I/O’s 2011 Proxy Statement filed April 5, 2011).
		10.10	Empower Retirement (formerly known as Great West Financial (formerly known as Orchard Trust Company) Defined Contribution Prototype Plan and Trust (Incorporated by reference to Data I/O’s 2007 Annual Report on Form 10-K (File No. 0-10394)).
		1011	Empower Retirement (formerly known as Great West Financial (formerly known as Orchard Trust Company) Non-standardized 401(k) Plan (Incorporated by reference to Data I/O’s 2007 Annual Report on Form 10-K (File No. 0-10394)).
		10.11	Empower Retirement (formerly known as Great West Financial (formerly known as Orchard Trust Company) Non-standardized 401(k) Plan (Incorporated by reference to Data I/O’s 2007 Annual Report on Form 10-K (File No. 0-10394)).
		10.12	Empower Retirement (formerly known as Great West Financial (formerly known as Orchard Trust Company) Defined Contribution Prototype Plan and Trust Amendment for Pension Protection Act and Heart Act. (Incorporated by reference to Data I/O’s 2009 Annual Report on Form 10-K (File No. 0-10394)).
		10.13	Form of Indemnification Agreement. (Incorporated by reference to Data I/O’s 2010 Annual Report on Form 10-K (File No. 0-10394)).
		10.14	Letter Agreement with Anthony Ambrose (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed on October 29, 2012).
		10.15	Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved May 10, 2012 (Incorporated by reference to Data I/O’s 2012 Proxy Statement filed April 3, 2012).
		10.16	Letter Agreement with Rajeev Gulati (Incorporated by reference to Data I/O’s Current Report on Form 8-K filed on July 31, 2013).
		10.17	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. 0-10394)).
		10.18	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. 0-10394)).
		10.19	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. 0-10394)).
		10.20	Empower Retirement (formerly known as Great West Financial) Financial Adoption Agreement #005 Non-standardized 401(k) Plan (Incorporated by reference to Data I/O’s 2015 Annual Report on Form 10-K (File No. 0-10394)).
		10.21	Empower Retirement (formerly known as Great West Financial) Financial Adoption Agreement #005 Non-standardized 401(k) Plan (Incorporated by reference to Data I/O’s 2016 Annual Report on Form 10-K (File No. 0-10394)).
		10.22	Negotiation Protocol for the Purchase of Data I/O’s PSV7000, a supply agreement executed July 20, 2016, between Data I/O Corporation and Bosch Car Multimedia Group (Incorporated by reference to Exhibit 10.31 of Data I/O’s September 30, 2016 Quarterly Report on Form 10-Q (File No. 0-10394)). (Portions of this exhibit have been omitted based on confidential treatment granted by the SEC. The omitted portions of these exhibits have been filed separately with the SEC. The registrant undertakes to furnish on a supplemental basis a copy of any omitted schedules to the Securities and Exchange Commission upon request.).

5464 Table of Contents

	10.23	Fifth Amendment to Lease, between Data I/O Corporation and BRE WA OFFICE OWNER LLC, made as of September 12, 2017 (Incorporated by reference to Data I/O’s September 30, 2017 Quarterly Report on Form 10-Q (File No. 0-10394)).
	10.24	1st Amendment to Negotiation Protocol executed on September 24, 2018 between Data I/O Corporation and Robert Bosch GmbH (Incorporated by reference to Exhibit 10.35 of Data I/O’s September 30, 2018 Quarterly Report on Form 10-Q (File No. 0-10394)). (Portions of this exhibit have been omitted based on a request for confidential treatment made to the SEC. The omitted portions of these exhibits have been filed separately with the SEC. The registrant undertakes to furnish on a supplemental basis a copy of any omitted schedules to the Securities Exchange Commission upon request.).
	10.25	Letter Agreement with Michael Tidwell (Incorporated by reference to Form 8-K filed on May 1, 2019).
	10.26	Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved May 20, 2021 (Incorporated by reference to Data I/O’s 2021 Proxy Statement dated April 5, 2021).
	10.27	Sixth Amendment to Lease, between Data I/O Corporation and Alco Redmond East, LLC, made as of October 4, 2021 (Incorporated by reference to Data I/O’s 2021 Annual Report on Form 10-K (File No. 0-10394)).
	10.28	Empower Retirement (formerly known as Great West Financial) Financial Adoption Agreement #001 Non-standardized 401(k) Plan (Incorporated by reference to Data I/O’s 2021 Annual Report on Form 10-K (File No. 0-10394)).
	10.29	Form of Executive Agreement (Incorporated by reference to Form 8-K filed on February 6, 2023).
	10.30	Amended and Restated Data I/O Corporation 2000 Stock Compensation Incentive Plan approved May 18, 2023 (Incorporated by reference to Data I/O’s 2023 Proxy Statement dated April 3, 2023).
	10.31	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).
	10.32	Form of Performance Stock Unit Award Agreement (Incorporated by reference to Data I/O’s 2023 Annual Report on Form 10-K (File No. 0-10394).
	10.33	Form of Restricted Stock Unit Award Agreement (Incorporated by reference to Data I/O’s 2023 Annual Report on Form 10-K (File No. 0-10394).
	10.34	Letter Agreement with Gerald Y. Ng (Incorporated by reference to Form 8-K filed on June 30, 2023).
	10.35	Executive Employment Agreement with William Wentworth (Incorporated by reference to Form 10-Q filed on November 12, 2024).
	10.36	Transition Agreement with Anthony Ambrose (Incorporated by reference to Form 10-Q filed on November 12, 2024).
	10.37	Seventh Amendment to Lease, between Data I/O Corporation and Alco Redmond East, LLC, made as of October 17, 2024.
	19.1	Insider Trading Policy
	10.38	Independent Contractor Agreement and Proposal and Statement of Work effective on April 28, 2025 between Data I/O Corporation and Theisen Advisory Group, LLC dba TAG CXO (Incorporated by reference to Form 10-Q filed on August 12, 2025).
	21.1	Subsidiaries of the Registrant
	23.1	Consent of Independent Registered Public Accounting Firm
31	Certification – Section 302:
	31.1	Chief Executive Officer Certification
	31.2	Chief Financial Officer Certification
32	Certification – Section 906:
	32.1	Chief Executive Officer Certification
	32.2	Chief Financial Officer Certification
97	Data I/O Corporation INCENTIVE COMPENSATION RECOVERY POLICY (Incorporated by reference to Data I/O's Annual Report on Form 10-K (File No. 0-10394).
101	Interactive Data Files Pursuant to Rule 405 of Regulation S-T

~~Item~~65 ~~16.~~Table ~~Form~~of ~~10-K Summary~~Contents

None.

	10.39	Executive Employment Agreement with Charlies DiBona (Incorporated by reference to Form 8-K filed on August 12, 2025).

	10.40	Amendment No. 1 to the Executive Employment Agreement with Charles DiBona (incorporated by reference to Form 8-K filed on August 14, 2025).

	19.1	Insider Trading Policy

	21.1	Subsidiaries of the Registrant

	23.1	Consent of Independent Registered Public Accounting Firm

31	Certification – Section 302:

	31.1	Chief Executive Officer Certification
	31.2	Chief Financial Officer Certification

32	Certification – Section 906:

	32.1	Chief Executive Officer Certification
	32.2	Chief Financial Officer Certification

	97	Data I/O Corporation INCENTIVE COMPENSATION RECOVERY POLICY (Incorporated by reference to Data I/O’s 2023 Annual Report on Form 10-K (File No. 0-10394).

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

55Item ~~Table~~16. Form of10-K ~~Contents~~Summary

~~SIGNATURES~~None.

~~Pursuant~~66 toTable ~~the requirements~~ of ~~Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~Contents

DATA I/O CORPORATION	DATA I/O CORPORATION
	(REGISTRANT)
DATED: March 31, 2025	By:	/s/ William Wentworth
		William Wentworth
		President and Chief Executive Officer

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ~~this~~the ~~report~~Registrant has ~~been~~duly ~~signed~~caused ~~below~~this byreport ~~the~~to ~~following~~be ~~persons~~signed on its behalf ofby the ~~Registrant~~undersigned, ~~and~~thereunto induly ~~the capacities and on the dates indicated~~authorized.

NAME & DATE				TITLE
	DATA I/O CORPORATION(REGISTRANT)
By:	/s/ William Wentworth		March 31, 2025	President and Chief Executive Officer
DATED: April 16, 2026	By:	/s/William Wentworth
	~~William Wentworth~~	William Wentworth		~~(Principal Executive Officer), Director~~
By:	/s/ Gerald Y. Ng		March 31, 2025	Chief Financial Officer
		President and Chief Executive Officer
	Gerald Y. Ng			Vice President
				Secretary, Treasurer
				(Principal Financial and Accounting Officer)

By:	/s/ Douglas W. Brown	March 31, 2025	Director
	Douglas W. Brown
By:	/s/ Sally A. Washlow	March 31, 2025	Director
	Sally A. Washlow
By:	/s/ Edward J. Smith	March 31, 2025	Director
	Edward J. Smith
By:	/s/ Garrett Larson	March 31, 2025	Director
	Garrett Larson

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.

56 Table of Contents

NAME & DATE			TITLE

By:	/s/William Wentworth	April 16, 2026	President and Chief Executive Officer
	William Wentworth		(Principal Executive Officer), Director

By:	/s/ Charles J. DiBona	April 16, 2026	Chief Financial Officer Vice President
	Charles J. DiBona		Secretary, Treasurer (Principal Financial and Accounting Officer)

By:	/s/Douglas W. Brown	April 16, 2026	Director
	Douglas W. Brown

By:	/s/Sally A. Washlow	April 16, 2026	Director
	Sally A. Washlow

By:	/s/Edward J. Smith	April 16, 2026	Director
	Edward J. Smith

By:	/s/Garrett Larson	April 16, 2026	Director
	Garrett Larson

By:	/s/Steven Waszak	April 16, 2026	Director
	Steven Waszak

~~DATA I/O~~67 ~~CORPORATION~~Table of Contents

~~SCHEDULE~~DATA I/O ~~II – CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS~~CORPORATION

	Balance at Beginning of Period		Charged/ (Credited) to Costs and Expenses			Deductions-Describe			Balance at End of Period
(in thousands)
Year Ended December 31, 2023:
Allowance for credit losses	$	147	$	(75	)	$	-	(1)	$	72
Year Ended December 31, 2024:
Allowance for credit losses	$	72	$	(3	)	$	(47	)(1)	$	22

SCHEDULE II – CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

(1) Uncollectable accounts written off, net of recoveries

	Balance at Beginning of Period		Charged/ (Credited) to Costs and Expenses			Deductions-Describe			Balance at End of Period
(in thousands)
Year Ended December 31, 2024:
Allowance for credit losses	$	72	$	(3	)	$	(47	)⁽¹⁾	$	22

Year Ended December 31, 2025:
Allowance for credit losses	$	22	$	7		$	-	⁽¹⁾	$	29

57(1) Uncollectable accounts written off, net of recoveries

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