DATA I/O CORP 8-K

What Happened

• Data I/O Corporation filed an 8-K (May 19, 2026) updating a Securities Purchase Agreement announced May 15, 2026, under which the company agreed to sell securities to Lytton‑Kambara Foundation and Alice W. Lytton Family LLC for $9.0 million in aggregate purchase price. The securities include 869,840 shares of common stock, a five‑year convertible debenture (the Note) with a principal amount of $6,825,400, and warrants to buy 1,080,000 shares of common stock. Closing is subject to customary conditions, including regulatory approval.

Key Details

• Aggregate purchase price: $9,000,000.
• Common shares to be issued up front: 869,840 shares.
• Note: $6,825,400 principal, 5‑year term, 4.0% annual interest (paid semiannually), default interest 18% p.a.; interest payable in cash or, in certain circumstances, in Preferred Stock. Note may convert into Series B Convertible Preferred Stock at $1,000 stated value per share; automatic conversion if shareholders approve a related proposal at the 2026 annual meeting.
• Preferred Stock: non‑voting, $1,000 stated value, accrues cumulative dividends at 4% per annum; initial common conversion price = $2.50; full conversion of the Note (ignoring accrued dividends) would equal ~2.73 million common shares.
• Warrants: exercisable for 1,080,000 common shares at $3.00 per share for five years.
• Conversion/exercise limits: investors may not exceed 9.99% beneficial ownership and, absent shareholder approval, the issuance cap for common shares from these securities is 1,869,470 shares.
• Transaction exempt from registration under Section 4(a)(2) / Regulation D; company will file a resale registration statement for the issued shares and shares issuable on conversion/exercise.

Why It Matters

• This financing provides immediate capital ($9M) to Data I/O but introduces potential dilution: if converted/exercised fully (subject to caps and adjustments), the convertible securities could add millions of common shares.
• The company takes on an interest obligation and potential dividend accruals tied to the convertible preferred, and conversion mechanics (including automatic conversion on shareholder approval) will affect the company’s capitalization and shareholder mix.
• Closing is not final—subject to regulatory and other customary conditions—so the financing may not be completed exactly as described until those conditions are met.