UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One) | ||
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | ||
Or | ||
☐ | 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 or organization) | (I.R.S. Employer Identification No.) |
6645 425-881-6444 (Address of principal executive offices, including zip code) | ||
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 |
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.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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,” “acceleratedfiler”, ”accelerated filer”, “smaller reporting company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act. (Check one):
Accelerated filer | ☐ | Smaller reporting company | ☒ |
Large accelerated filer | ☐ | Emerging growth company | ☐ |
Non-accelerated filer | ☐ | ||
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Shares of Common Stock, no par value, outstanding as of October 26, 2017:
DATA I/O CORPORATION | |||
FORM 10-Q | |||
For the Quarter Ended | |||
INDEX | |||
Page | |||
3 | |||
15 | |||
22 | |||
22 | |||
23 | |||
23 | |||
23 | |||
23 | |||
23 | |||
23 | |||
24 | |||
25 |
DATA I/O CORPORATION | ||||||||
| ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except share data) | ||||||||
(UNAUDITED) | ||||||||
|
|
|
|
|
|
| ||
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
CURRENT ASSETS: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 12,296 |
|
| $ | 14,190 |
|
Trade accounts receivable, net of allowance for |
|
|
|
|
|
|
|
|
doubtful accounts of $73 and $89, respectively |
|
| 3,055 |
|
|
| 3,995 |
|
Inventories |
|
| 6,625 |
|
|
| 6,351 |
|
Other current assets |
|
| 817 |
|
|
| 737 |
|
TOTAL CURRENT ASSETS |
|
| 22,793 |
|
|
| 25,273 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment – net |
|
| 953 |
|
|
| 946 |
|
Other assets |
|
| 2,742 |
|
|
| 2,838 |
|
TOTAL ASSETS |
| $ | 26,488 |
|
| $ | 29,057 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 1,463 |
|
| $ | 1,373 |
|
Accrued compensation |
|
| 1,526 |
|
|
| 2,496 |
|
Deferred revenue |
|
| 1,466 |
|
|
| 1,507 |
|
Other accrued liabilities |
|
| 1,439 |
|
|
| 1,413 |
|
Income taxes payable |
|
| 3 |
|
|
| 0 |
|
TOTAL CURRENT LIABILITIES |
|
| 5,897 |
|
|
| 6,789 |
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
| 2,138 |
|
|
| 2,277 |
|
Long-term other payables |
|
| 193 |
|
|
| 138 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Preferred stock - |
|
|
|
|
|
|
|
|
Authorized, 5,000,000 shares, including |
|
|
|
|
|
|
|
|
200,000 shares of Series A Junior Participating |
|
|
|
|
|
|
|
|
Issued and outstanding, none |
|
| 0 |
|
|
| 0 |
|
Common stock, at stated value - |
|
|
|
|
|
|
|
|
Authorized, 30,000,000 shares |
|
|
|
|
|
|
|
|
Issued and outstanding, 8,622,369 shares as of March 31, |
|
|
|
|
|
|
|
|
2022 and 8,621,007 shares as of December 31, 2021 |
|
| 21,183 |
|
|
| 20,886 |
|
Accumulated earnings (deficit) |
|
| (3,831 | ) |
|
| (2,011 | ) |
Accumulated other comprehensive income |
|
| 908 |
|
|
| 978 |
|
TOTAL STOCKHOLDERS’ EQUITY |
|
| 18,260 |
|
|
| 19,853 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 26,488 |
|
| $ | 29,057 |
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements |
3 |
Table of Contents |
DATA I/O CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except per share amounts) | ||||||||
(UNAUDITED) | ||||||||
|
|
|
|
| ||||
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
Net sales |
| $ | 4,965 |
|
| $ | 6,015 |
|
Cost of goods sold |
|
| 2,662 |
|
|
| 2,677 |
|
Gross margin |
|
| 2,303 |
|
|
| 3,338 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
| 1,616 |
|
|
| 1,606 |
|
Selling, general and administrative |
|
| 2,048 |
|
|
| 2,062 |
|
Total operating expenses |
|
| 3,664 |
|
|
| 3,668 |
|
Operating income (loss) |
|
| (1,361 | ) |
|
| (330 | ) |
Non-operating income: |
|
|
|
|
|
|
|
|
Interest income |
|
| 1 |
|
|
| 3 |
|
Gain on sale of assets |
|
| 58 |
|
|
| 0 |
|
Foreign currency transaction gain (loss) |
|
| (60 | ) |
|
| 26 |
|
Total non-operating income (loss) |
|
| (1 | ) |
|
| 29 |
|
Income (loss) before income taxes |
|
| (1,362 | ) |
|
| (301 | ) |
Income tax (expense) benefit |
|
| (458 | ) |
|
| (32 | ) |
Net income (loss) |
| ($1,820) |
|
| ($333) |
| ||
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
| ($0.21) |
|
| ($0.04) |
| ||
Diluted earnings (loss) per share |
| ($0.21) |
|
| ($0.04) |
| ||
Weighted-average basic shares |
|
| 8,622 |
|
|
| 8,420 |
|
Weighted-average diluted shares |
|
| 8,622 |
|
|
| 8,420 |
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements |
4 |
Table of Contents |
DATA I/O CORPORATION | |||||
September 30, 2017 | December 31, 2016 | |
ASSETS | ||
CURRENT ASSETS: | ||
Cash and cash equivalents | $15,164 | $11,571 |
Trade accounts receivable, net of allowance for | ||
doubtful accounts of $104 and $96, respectively | 5,233 | 4,725 |
Inventories | 4,950 | 4,059 |
Other current assets | 537 | 483 |
TOTAL CURRENT ASSETS | 25,884 | 20,838 |
Property, plant and equipment – net | 2,158 | 1,875 |
Other assets | 45 | 63 |
TOTAL ASSETS | $28,087 | $22,776 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
CURRENT LIABILITIES: | ||
Accounts payable | $1,598 | $1,428 |
Accrued compensation | 3,273 | 2,208 |
Deferred revenue | 1,570 | 1,926 |
Other accrued liabilities | 1,029 | 703 |
TOTAL CURRENT LIABILITIES | 7,470 | 6,265 |
Long-term other payables | 438 | 479 |
COMMITMENTS | - | - |
STOCKHOLDERS’ EQUITY | ||
Preferred stock - | ||
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, 8,240,711 shares as of September 30, | ||
2017 and 8,015,746 shares as of December 31, 2016 | 18,836 | 19,204 |
Accumulated earnings (deficit) | 553 | (3,360) |
Accumulated other comprehensive income | 790 | 188 |
TOTAL STOCKHOLDERS’ EQUITY | 20,179 | 16,032 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $28,087 | $22,776 |
See notes to consolidated financial statements |
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2017 | 2016 | 2017 | 2016 | |
Net sales | $9,596 | $6,588 | $25,955 | $17,002 |
Cost of goods sold | 3,639 | 2,945 | 10,629 | 7,743 |
Gross margin | 5,957 | 3,643 | 15,326 | 9,259 |
Operating expenses: | ||||
Research and development | 1,814 | 1,358 | 5,130 | 3,655 |
Selling, general and administrative | 2,319 | 1,664 | 6,300 | 4,766 |
Total operating expenses | 4,133 | 3,022 | 11,430 | 8,421 |
Operating income | 1,824 | 621 | 3,896 | 838 |
Non-operating income (expense): | ||||
Interest income | 6 | 11 | 19 | 34 |
Gain on sale of assets | 72 | - | 363 | - |
Foreign currency transaction gain (loss) | (66) | (3) | (158) | 41 |
Total non-operating income | 12 | 8 | 224 | 75 |
Income before income taxes | 1,836 | 629 | 4,120 | 913 |
Income tax (expense) | (108) | (4) | (207) | (12) |
Net income | $1,728 | $625 | $3,913 | $901 |
Basic earnings per share | $0.21 | $0.08 | $0.48 | $0.11 |
Diluted earnings per share | $0.20 | $0.08 | $0.47 | $0.11 |
Weighted-average basic shares | 8,201 | 7,977 | 8,112 | 7,955 |
Weighted-average diluted shares | 8,467 | 8,183 | 8,400 | 8,083 |
See notes to consolidated financial statements |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||||
(in thousands) | ||||||
(UNAUDITED) | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||
2017 | 2016 | 2017 | 2016 | |
Net income | $1,728 | $625 | $3,913 | $901 |
Other comprehensive income: | ||||
Foreign currency translation gain (loss) | 248 | (17) | 602 | (77) |
Comprehensive income | $1,976 | $608 | $4,515 | $824 |
See notes to consolidated financial statements |
DATA I/O CORPORATION | ||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(in thousands) | ||
(UNAUDITED) | ||
For the Nine Months Ended September 30, | ||
2017 | 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $3,913 | $901 |
Adjustments to reconcile net income | ||
to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 634 | 409 |
Gain on sale of assets | (363) | - |
Equipment transferred to cost of goods sold | 725 | 720 |
Share-based compensation | 540 | 409 |
Net change in: | ||
Trade accounts receivable | (192) | (2,385) |
Inventories | (766) | (211) |
Other current assets | (33) | 213 |
Accounts payable and accrued liabilities | 1,497 | 160 |
Deferred revenue | (485) | 163 |
Other long-term liabilities | (52) | 86 |
Deposits and other long-term assets | 18 | 1 |
Net cash provided by (used in) operating activities | 5,436 | 466 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (1,642) | (1,688) |
Net proceeds from sale of assets | 363 | - |
Cash provided by (used in) investing activities | (1,279) | (1,688) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Net Proceeds from issuance of common stock, less payments | ||
for shares withheld to cover tax | (895) | (76) |
Repurchase of common stock | - | (191) |
Cash provided by (used in) financing activities | (895) | (267) |
Increase/(decrease) in cash and cash equivalents | 3,262 | (1,489) |
Effects of exchange rate changes on cash | 331 | (54) |
Cash and cash equivalents at beginning of period | 11,571 | 11,268 |
Cash and cash equivalents at end of period | $15,164 | $9,725 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for: | ||
Income Taxes | $82 | $6 |
See notes to consolidated financial statements |
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
| ||||
Net income (loss) |
| ($1,820) |
|
| ($333) |
| ||
Other comprehensive income (loss): |
|
|
|
|
|
| ||
Foreign currency translation gain (loss) |
|
| (70 | ) |
|
| (180 | ) |
Comprehensive income (loss) |
| ($1,890) |
|
| ($513) |
| ||
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements |
5 |
Table of Contents |
DATA I/O CORPORATION | ||||||||||||||||||||
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | ||||||||||||||||||||
(in thousands, except share amounts) | ||||||||||||||||||||
(UNAUDITED) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
| |||||
|
| Common Stock |
|
| Retained |
|
| and Other |
|
| Total |
| ||||||||
|
|
|
|
|
|
|
| Earnings |
|
| Comprehensive |
|
| Stockholders' |
| |||||
|
| Shares |
|
| Amount |
|
| (Deficit) |
|
| Income (Loss) |
|
| Equity |
| |||||
Balance at December 31, 2020 |
|
| 8,416,335 |
|
| $ | 20,071 |
|
| ($1,456) |
|
| $ | 1,024 |
|
| $ | 19,639 |
| |
Stock awards issued, net of tax withholding |
|
| 2,089 |
|
|
| (4 | ) |
|
| 0 |
|
|
| 0 |
|
|
| (4 | ) |
Issuance of stock through: ESPP |
|
| 3,175 |
|
|
| 16 |
|
|
| 0 |
|
|
| 0 |
|
|
| 16 |
|
Share-based compensation |
|
| - |
|
|
| 278 |
|
|
| 0 |
|
|
| 0 |
|
|
| 278 |
|
Net income (loss) |
|
| - |
|
|
| 0 |
|
|
| (333 | ) |
|
| 0 |
|
|
| (333 | ) |
Other comprehensive income (loss) |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (180 | ) |
|
| (180 | ) |
Balance at March 31, 2021 |
|
| 8,421,599 |
|
| $ | 20,361 |
|
| ($1,789) |
|
| $ | 844 |
|
| $ | 19,416 |
| |
Balance at December 31, 2021 |
|
| 8,621,007 |
|
| $ | 20,886 |
|
| ($2,011) |
|
| $ | 978 |
|
| $ | 19,853 |
| |
Stock awards issued, net of tax withholding |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
Issuance of stock through: ESPP |
|
| 1,362 |
|
|
| 6 |
|
|
| 0 |
|
|
| 0 |
|
|
| 6 |
|
Share-based compensation |
|
| - |
|
|
| 291 |
|
|
| 0 |
|
|
| 0 |
|
|
| 291 |
|
Net income (loss) |
|
| - |
|
|
| 0 |
|
|
| (1,820 | ) |
|
| 0 |
|
|
| (1,820 | ) |
Other comprehensive income (loss) |
|
| - |
|
|
| 0 |
|
|
| 0 |
|
|
| (70 | ) |
|
| (70 | ) |
Balance at March 31, 2022 |
|
| 8,622,369 |
|
| $ | 21,183 |
|
| ($3,831) |
|
| $ | 908 |
|
| $ | 18,260 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements |
6 |
Table of Contents |
DATA I/O CORPORATION | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
(UNAUDITED) | ||||||||
|
|
|
|
|
|
| ||
|
| For the Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
|
|
|
|
|
|
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
| ||
Net income (loss) |
| ($1,820) |
|
| ($333) |
| ||
Adjustments to reconcile net income (loss) |
|
|
|
|
|
| ||
to net cash provided by (used in) operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 140 |
|
|
| 200 |
|
Equipment transferred to cost of goods sold |
|
| 125 |
|
|
| 132 |
|
Share-based compensation |
|
| 291 |
|
|
| 278 |
|
Net change in: |
|
|
|
|
|
|
|
|
Trade accounts receivable |
|
| 913 |
|
|
| (843 | ) |
Inventories |
|
| (277 | ) |
|
| 442 |
|
Other current assets |
|
| (98 | ) |
|
| 36 |
|
Accounts payable and accrued liabilities |
|
| (835 | ) |
|
| (94 | ) |
Deferred revenue |
|
| 28 |
|
|
| 175 |
|
Other long-term liabilities |
|
| (253 | ) |
|
| (105 | ) |
Deposits and other long-term assets |
|
| 204 |
|
|
| 136 |
|
Net cash provided by (used in) operating activities |
|
| (1,582 | ) |
|
| 24 |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
| (272 | ) |
|
| (92 | ) |
Cash provided by (used in) investing activities |
|
| (272 | ) |
|
| (92 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock, less payments |
|
|
|
|
|
|
|
|
for shares withheld to cover tax |
|
| 6 |
|
|
| 12 |
|
Cash provided by (used in) financing activities |
|
| 6 |
|
|
| 12 |
|
Increase (decrease) in cash and cash equivalents |
|
| (1,848 | ) |
|
| (56 | ) |
|
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash |
|
| (46 | ) |
|
| (490 | ) |
Cash and cash equivalents at beginning of period |
|
| 14,190 |
|
|
| 14,167 |
|
Cash and cash equivalents at end of period |
| $ | 12,296 |
|
| $ | 13,621 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Income taxes |
| $ | 441 |
|
| $ | 40 |
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements |
7 |
Table of Contents |
DATA I/O CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - FINANCIAL STATEMENT PREPARATION
Data I/O Corporation (“Data I/O”, “We”, “Our”, “Us”) prepared the financial statements as of September 30, 2017March 31, 2022 and September 30, 2016March 31, 2021 according to the rules and regulations of the Securities and Exchange Commission ("SEC"). These statements are unaudited but, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the results for the periods presented. The balance sheet at December 31, 20162021 has been derived from the audited financial statements at that date. We have condensed or omitted certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America according to such SEC rules and regulations. Operating results for the three and nine months ended September 30, 2017March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.2022. These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in our Form 10-K for the year ended December 31, 2016.
Revenue Recognition
Topic 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 2022 and 2021, 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 atupon transfer of control of the timepromised products or services to customers in an amount that reflects the product is shipped.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 considered a separate element.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 as 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 canis expected to be performed by other parties, such as distributors, other vendors, or the customers themselves. This takes into accountconsiders the complexity, skill and training needed as well as customer expectations regarding installation.
We enter into arrangements with multiple deliverable arrangementsperformance obligations that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. We allocate the valuetransaction price of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support components,performance obligations, we use the value of the discount given to distributors who perform these components. For software maintenance components,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 sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year.
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When we sell software separately, we recognize revenue upon the transfer of control of the software, revenuewhich 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 persuasive evidencethere is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of an arrangement exists, shipmentsubstantially all the consideration is probable, the transaction price has occurred,been determined and allocated over the price is fixed or determinable,performance obligations, the buyer has paid or is obligated to pay, collectability is reasonably assured,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.
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.
The following table represents our revenues by major categories:
|
| Three Months Ended |
| |||||||
Net sales by type |
| March 31, 2022 |
|
| Change |
| March 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
|
|
| ||
Equipment |
| $ | 2,607 |
|
| (22.1%) |
| $ | 3,347 |
|
Adapter |
|
| 1,622 |
|
| (15.0%) |
|
| 1,908 |
|
Software and Maintenance |
|
| 736 |
|
| (3.2%) |
|
| 760 |
|
Total |
| $ | 4,965 |
|
| (17.5%) |
| $ | 6,015 |
|
Share-Based Compensation Expense
All stock-based compensation expense as required for all share-based payment awards including employee stock options and restricted stock unit awards,are measured based on estimated fair values and estimated forfeiture rate on the date of grant dates.
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Income Tax
Income taxes are computed at current enacted tax mattersrates, less tax credits using the asset and liability method. Deferred taxes are classified as generaladjusted both for items that do not have tax consequences and administrative expense when incurred and amounts relatedfor the cumulative effect of any changes in tax rates from those previously used to interest associated with tax matters are classified as interest income or interest expense. We did not incur any interest or penalties associated with tax matters during the three and nine months ended September 30, 2017.
Recently Adopted Accounting Pronouncements
On January 1, 2017.2021 the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. The adoption of this ASU 2016-09 wasdid not have a material toimpact on our consolidated financial statements.
NOTE 2 – INVENTORIES
Inventories consisted of the following components: | ||
September 30, 2017 | December 31, 2016 | |
(in thousands) | ||
Raw material | $2,806 | $2,402 |
Work-in-process | 1,465 | 1,226 |
Finished goods | 679 | 431 |
Inventories | $4,950 | $4,059 |
Inventories consisted of the following components:
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Raw material |
| $ | 3,992 |
|
| $ | 3,771 |
|
Work-in-process |
|
| 1,727 |
|
|
| 1,602 |
|
Finished goods |
|
| 906 |
|
|
| 978 |
|
Inventories |
| $ | 6,625 |
|
| $ | 6,351 |
|
NOTE 3 – PROPERTY, PLANT AND EQUIPMENT, NET
Property and equipment consisted of the following components:
September 30, 2017 | December 31, 2016 | |
(in thousands) | ||
Leasehold improvements | $409 | $376 |
Equipment | 5,293 | 4,449 |
Sales demonstration equipment | 1,102 | 1,158 |
6,804 | 5,983 | |
Less accumulated depreciation | 4,646 | 4,108 |
Property and equipment, net | $2,158 | $1,875 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Leasehold improvements |
| $ | 431 |
|
| $ | 430 |
|
Equipment |
|
| 5,191 |
|
|
| 5,218 |
|
Sales demonstration equipment |
|
| 807 |
|
|
| 754 |
|
|
|
| 6,429 |
|
|
| 6,402 |
|
Less accumulated depreciation |
|
| 5,476 |
|
|
| 5,456 |
|
Property and equipment, net |
| $ | 953 |
|
| $ | 946 |
|
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NOTE 4 – OTHER ACCRUED LIABILITIES
Other accrued liabilities consisted of the following components:
September 30, 2017 | December 31, 2016 | |
(in thousands) | ||
Product warranty | $501 | $371 |
Sales return reserve | 80 | 50 |
Other taxes | 262 | 149 |
Other | 186 | 133 |
Other accrued liabilities | $1,029 | $703 |
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Lease liability - short term |
| $ | 623 |
|
| $ | 601 |
|
Product warranty |
|
| 430 |
|
|
| 432 |
|
Sales return reserve |
|
| 71 |
|
|
| 71 |
|
Other taxes |
|
| 132 |
|
|
| 180 |
|
Other |
|
| 183 |
|
|
| 129 |
|
Other accrued liabilities |
| $ | 1,439 |
|
| $ | 1,413 |
|
The changes in our product warranty liability for the ninethree months ending September 30, 2017March 31, 2022 are as follows:
|
| March 31, 2022 |
|
| December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Liability, beginning balance |
| $ | 432 |
|
| $ | 371 |
|
Net expenses |
|
| 217 |
|
|
| 864 |
|
Warranty claims |
|
| (217 | ) |
|
| (864 | ) |
Accrual revisions |
|
| (2 | ) |
|
| 61 |
|
Liability, ending balance |
| $ | 430 |
|
| $ | 432 |
|
NOTE 5 – OPERATING LEASE COMMITMENTS
Our leasing arrangements are primarily for facility leases we use to conduct our operations. The following table presents our future lease payments for long-term operating leases as of March 31, 2022:
|
| Operating Lease Commitments |
| |
(in thousands) |
|
|
| |
2022 (remaining) |
| $ | 594 |
|
2023 |
|
| 920 |
|
2024 |
|
| 836 |
|
2025 |
|
| 585 |
|
2026 |
|
| 133 |
|
Thereafter |
|
| 48 |
|
Total |
| $ | 3,116 |
|
Less Imputed interest |
|
| (356 | ) |
Total operating lease liabilities |
| $ | 2,760 |
|
Cash paid for operating lease liabilities for the three months ended March 31, 2022 and other agreements, primarily2021 were $212,000 and $201,000, respectively.
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The following table presents supplemental balance sheet information related to leases:
|
| Balance at March 31, 2022 |
|
| Balance at December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Right-of-use assets (Long-term other assets) |
| $ | 2,697 |
|
| $ | 2,793 |
|
Lease liability-short term (Other accrued liabilities) |
|
| 623 |
|
|
| 601 |
|
Lease liability-long term (Operating lease liabilities) |
|
| 2,138 |
|
|
| 2,277 |
|
At March 31, 2022, the weighted average remaining lease term is 3.67 and the weighted average discount rate used is 5%.
The components of our lease expense for factorythe three months ended March 31, 2022 and office space, with initial or remaining terms2021 include operating lease costs of one year or more as follows:
Operating Leases | |
(in thousands) | |
2017 (remaining) | $197 |
2018 | 909 |
2019 | 937 |
2020 | 919 |
2021 | 753 |
Thereafter | 231 |
Total | $3,946 |
Our real estate facility leases are described below:
During the thirdfourth quarter of 2017,2021, we amended our lease agreement for the Redmond, Washington headquarters facility, effective September 12, 2017, extending the lease to JulyJanuary 31, 2022, waiving a potential space give back provision and receiving2026. The lease inducement incentives. Previously on June 8, 2015 the lease had been amended to relocate our headquarters to a nearby building and lower theis for approximately 20,460 square footage to approximately 20,460.
In addition to the Redmond facility, approximately 24,000 square feet is leased at two foreign locations, including our sales, service, operations and engineering office located in Shanghai, China, and our German sales, service and engineering office located near Munich, Germany.
Our lease rental rate.
NOTE 6 – 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. At September 30, 2017,March 31, 2022, the purchase commitments and other obligations totaled $2,058,000$2.0 million of which all but $18,000$590,000 are expected to be paid over the next twelve months.
NOTE 7 – CONTINGENCIES
As of September 30, 2017,March 31, 2022, 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 the aggregate, would have a material adverse effect on our results of operations or financial position.
NOTE 8 – EARNINGS PER SHARE
Basic earnings per share is calculated based on the weighted average number of common shares outstanding during each period. Diluted earnings per share is calculated based on these same weighted average shares outstanding plus the effect of potential shares issuable upon assumed exercise of stock options based on the treasury stock method.
Potential shares issuable upon the exercise of stock options are excluded from the calculation of diluted earnings per share to the extent their effect would be anti-dilutive.
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The following table sets forth the computation of basic and diluted earnings per share:
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
(in thousands except per share data) | ||||
Numerator for basic and diluted | ||||
earnings per share: | ||||
Net income | $1,728 | $625 | $3,913 | $901 |
Denominator for basic | ||||
earnings per share: | ||||
weighted-average shares | 8,201 | 7,977 | 8,112 | 7,955 |
Employee stock options and awards | 266 | 206 | 288 | 128 |
Denominator for diluted | ||||
earnings per share: | ||||
adjusted weighted-average shares & | ||||
assumed conversions of stock options | 8,467 | 8,183 | 8,400 | 8,083 |
Basic and diluted | ||||
earnings per share: | ||||
Total basic earnings per share | $0.21 | $0.08 | $0.48 | $0.11 |
Total diluted earnings per share | $0.20 | $0.08 | $0.47 | $0.11 |
|
| Three Months Ended |
| |||||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
(in thousands except per share data) |
|
|
|
|
|
| ||
Numerator for basic and diluted |
|
|
|
|
|
| ||
earnings (loss) per share: |
|
|
|
|
|
| ||
Net income (loss) |
| (1,820) |
|
| ($333) |
| ||
|
|
|
|
|
|
| ||
Denominator for basic |
|
|
|
|
|
| ||
earnings (loss) per share: |
|
|
|
|
|
| ||
Weighted-average shares |
|
| 8,622 |
|
|
| 8,420 |
|
|
|
|
|
|
|
|
|
|
Employee stock options and awards |
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
|
|
|
|
Denominator for diluted |
|
|
|
|
|
|
|
|
earnings (loss) per share: |
|
|
|
|
|
|
|
|
Adjusted weighted-average shares & |
|
|
|
|
|
|
|
|
assumed conversions of stock options |
|
| 8,622 |
|
|
| 8,420 |
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
|
|
|
|
|
|
|
|
earnings (loss) per share: |
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
| ($0.21) |
|
| ($0.04) |
| ||
Diluted earnings (loss) per share |
| ($0.21) |
|
| ($0.04) |
|
Options to purchase 8,42512,500 and 198,39525,000 shares respectively were outstanding as of September 30, 2017March 31, 2022 and 2016, respectively,2021, but were excluded from the computation of diluted earnings per share for the periods then ended because the options were anti-dilutive.
NOTE 9 – 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 reduced for estimated forfeitures.
The impact on our results of operations of recording share-based compensation, net of forfeitures, for the three and nine months ended September 30, 2017March 31, 2022 and 2016, respectively, was2021 were as follows:
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
(in thousands) | ||||
Cost of goods sold | $4 | $3 | $14 | $11 |
Research and development | 39 | 23 | 127 | 82 |
Selling, general and administrative | 130 | 84 | 399 | 316 |
Total share-based compensation | $173 | $110 | $540 | $409 |
Impact on net earnings (loss) per share: | ||||
Basic and diluted | $(0.02) | $(0.01) | $(0.07) | $(0.05) |
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Risk-free interest rates | 1.72% | N/A | 1.72% | N/A |
Volatility factors | 0.62 | N/A | 0.62 | N/A |
Expected life of the option in years | 4.00 | N/A | 4.00 | N/A |
Expected dividend yield | None | N/A | None | N/A |
|
| Three Months Ended |
| |||||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Cost of goods sold |
| $ | 15 |
|
| $ | 10 |
|
Research and development |
|
| 64 |
|
|
| 71 |
|
Selling, general and administrative |
|
| 212 |
|
|
| 197 |
|
Total share-based compensation |
| $ | 291 |
|
| $ | 278 |
|
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Equity awards granted during the three and nine months ended September 30, 2017March 31, 2022 and 20162021 were as follows:
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
Restricted Stock | 51,000 | 3,000 | 286,600 | 225,100 |
Stock Options | 25,000 | - | 25,000 | - |
|
| Three Months Ended |
| |||||
|
| March 31, 2022 |
|
| March 31, 2021 |
| ||
|
|
|
|
|
|
| ||
Restricted Stock Units |
|
| 2,515 |
|
|
| 2,000 |
|
Non-employee directors Restricted Stock Units (“RSU’s”RSUs”) typically vest over the earlier of one year employee RSU’sor 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 over four years and employee Non-Qualified stock options typically vest quarterly over 4 years and have a six yearsix-year exercise period.
The remaining unamortized expected future equity compensation expense and remaining amortization period associated with unvested option grants, restricted stock awards and restricted stock unit awards at September 30, 2017March 31, 2022 are:
|
| March 31, 2022 |
| |
|
|
|
| |
Unamortized future equity compensation expense (in thousands) |
| $ | 2,021 |
|
Remaining weighted average amortization period (in years) |
|
| 2.44 |
|
General
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q are forward-looking. In particular, statements herein regarding economic outlook, impact of COVID-19; Shanghai COVID-19 resurgence lockdown impact and timing; industry prospects orand trends; expected revenues; expected level of expense; expected savings;business recovery; industry partnerships; future results of operations; reversals of tax valuation allowances; breakeven point,operations or financial position; changes in gross margin; economic conditions and capital spending outlook;future spending; breakeven revenue point; expected market decline, bottom or growth; market acceptance of our newly introduced or upgraded products;products or services; the sufficiency of our cash to fund future operations and capital requirements; development, introduction and shipment of new products; building lease arrangements; sales channelsproducts or services; changing foreign operations; 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; supply chain expectations; semiconductor chip shortages; 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 weData 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 report.Quarterly Report. The readerReader should not place undue reliance on these forward-looking statements. The discussions above and in the section in Item 1A., Risk Factors “Cautionary Factors That May Affect Future Results” in our Annual report on Form 10-K for the year ended December 31, 20162021, describe some, but not all, of the factors that could cause these differences.
OVERVIEW
The first quarter of 2022 was very unusual. It started strongly with orders and new sales funnel prospect additions, which appeared to relate to improved supply chain and semiconductor part shortage problems that had been significant issues in the second half of 2021. The improvement of business conditions was before the geopolitical issues stemming from the late-February Russian invasion of Ukraine and the mid-March COVID-19 resurgence in China resulting in restrictions and the lockdown of Shanghai. We discontinued our relationship with our Russian distributor, which represented an immaterial level of business. We had no distribution or operations in Ukraine. The lockdown impacted end of quarter shipments that were completed and ready for delivery to customers from Shanghai. Approximately $1 million of potential revenue, including 5 PSV systems remained in inventory and backlog at the end of the quarter. No orders were cancelled and we expect to be able to resume shipments later in the second quarter. The timing of ending the lockdown is uncertain and depending when we are managingallowed to resume deliveries may result in not having enough time to expect collections to occur in the core programmingsecond quarter. We expect that we have adequate cash resources and that the collections and cash should be normalized before the end of the third quarter.
In the first quarter of 2022, due to a continued cyclical downturn, Russian invasion of Ukraine impacts particularly on Europe, the COVID-19 related Shanghai lockdown resulting in about $1M of potential revenue not being shipped and realized, combined with continued significant investments in our security deployment business, we incurred operating losses. Our strong cash position and balance sheet combined with our long-term view of the market gave us the financial flexibility to make these security business investments. At Data I/O, we are investing for growththe long-term to retain and profitability, while developingextend our leadership position in automotive electronics and enhancingsecurity deployment. On the product side, we continue to invest with a long-term focus towards expanding our markets and creating unique value for our customers. This is true for both our traditional core products and our managed and secure programming platform to drive future revenue and earnings growth. We continuebusiness as well as the emerging security deployment business.
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Our short-term challenge continues to be operating in a cyclical, seasonalCOVID-19 impacted, geopolitical uncertainties and rapidly evolving industry environment.environment with continued supply chain and silicon part shortages issues. We attemptcontinue to balance industry changes, industry partnerships, new technologies, business geography shifts, travel and customer restrictions, customer shut downs, exchange rate volatility, trade issues and tariffs, COVID-19 impacts, semiconductor chip shortages, increasing costs and strategic investments in our business with the level of demand and mix of current business opportunities
We are concentratingfocusing our research and development efforts in our strategic growth markets, namely automotive electronics and Internet of Things (IoT), focusing onIoT new programming technologies, security provisioning,secure supply chain solutions, automated programming systems and their enhancements for the manufacturing environment and software. We are developingcontinuing to develop technology to securely programprovision new categories of semiconductors, including authentication ICs (especially secure elements)Secure Elements, Authentication Chips, and secure microcontrollers. We are delivering new programming technology and automated handling systems for managed and secure programming in the manufacturing environment. In these new security initiatives, we face a new evolving market; are in a period of rapid learning; and are establishing new industry relationships, business processes, supply chains, and investing heavily in advance of revenue.
Our customer focus remainshas been on global and strategic high volumehigh-volume manufacturers in key market segments like automotive electronics, IoT, industrial controls and consumer electronics as well as programming centerscenters.
Although the long-term prospects for our strategic growth markets should be good, these markets and contract manufacturing.
As a global company with over 90% of our sales in international markets, we have been and expect to continue to be impacted by the COVID-19 pandemic in all markets we serve, with follow-on waves of impact. On March 29, 2022 we announced that our Shanghai facility was being closed due to the local government lockdown. We were unable to ship products valued at $1M, and the facility remains closed. We are supporting customers from our Redmond, Washington USA facility and dealing with shipping bottlenecks and shutdowns. We believe that our classification as essential by certain U.S. customer groups will continue to keep operations open in the USA. We source other components from China and other countries that are used to manufacture our equipment in China and in our Redmond, Washington facility. These components may not be readily available or subject to delays. Our manufacturing facilities in Shanghai and Redmond have helped us to be part of a resilient supply chain to our customers with dual production of some products and local sourcing of many suppliers. Many of our employees and executives are working from home or on a hybrid basis and we are limiting visitors to our facilities as the pandemic continues. All of our facilities are subject to restrictions and closure by governmental entities. The pandemic has and may continue to impact our revenues in some geographies, our ability to obtain key components and to manufacture our products, as well as sell, install and support our products around the world. We expect wide-spread vaccinations to help restore business interactions with customers, however we expect to continue to be impacted and respond to customer site restrictions on sales and service visits, travel restrictions, closed borders, cancelled trade shows and industry gatherings, and modifications in our operations to allow social distancing. The geopolitical uncertainty from the Russian invasion of Ukraine remains a continuing issue. See also the detailed discussion of the impacts of COVID-19 on our business and markets in Item 1A, Risk Factors in our annual report on Form 10-K. The pandemic could have the effect of heightening many of the other risks described in Item 1A of our Form 10-K . Annual projections on spending, growth, mix, and profitability have been and are likely to be further revised substantially as new information is obtained.
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, estimating the percentage-of-completion on fixed-price professional engineering service contracts, sales returns, bad debts, inventories, investments, intangible assets, 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:
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Revenue Recognition: Topic 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 2022 and 2021, 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 atupon transfer of control of the timepromised products or services to customers in an amount that reflects the product is shipped.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 considered a separate element.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 as 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 canis expected to be performed by other parties, such as distributors, other vendors, or in most cases the customers themselves. This takes into accountconsiders the complexity, skill and training needed as well as customer expectations regarding installation.
We enter into arrangements with multiple deliverable arrangementsperformance obligations that arise during the sale of a system that includes an installation component, a service and support component and a software maintenance component. We allocate the valuetransaction price of each element based on relative selling prices. Relative selling price is based on the selling price of the standalone system. For the installation and service and support components,performance obligations, we use the value of the discount given to distributors who perform these components. For software maintenance components,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 sale based on shipping terms, installation revenue is recognized after the installation is performed, and hardware service and support and software maintenance revenue is recognized ratably over the term of the agreement, typically one year. OtherDeferred revenue includes service, revenue is recognized as it is delivered.
When we sell software separately, we recognize revenue upon the transfer of control of the software, revenuewhich 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 persuasive evidencethere is an approved contract that both parties are committed to perform, both parties rights have been identified, the contract has substance, collection of an arrangement exists, shipmentsubstantially all the consideration is probable, the transaction price has occurred,been determined and allocated over the price is fixed or determinable,performance obligations, the buyer has paid or is obligated to pay, collectability is reasonably assured,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.
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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Allowance for Doubtful Accounts: We base the allowance for doubtful accounts receivable on our assessment of the 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, our estimates of the recoverability of amounts due to us could be adversely affected.
Inventory: Inventories are stated at the lower of cost or market.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 itemitem-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.
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, as well as the volatilecurrent and ongoing cyclical and COVID-19 pandemic related uncertain economic outlook for our industry, capital and capitalgeographic spending, as well as income and current net deferred tax assets by entity and country, we have limitedexpect to continue to limit the recognition of net deferred tax assets associated with our net operating losses and credit carryforwardsaccounting for uncertain tax positions and continue to maintain athe tax valuation allowance for the full amount of the net deferred tax asset balance.allowances. At the current time, we expect, to continue to analyze and evaluate potentialtherefore, that reversals of the tax valuation allowance during the remainder of 2017. Any reversals will take place only as we are able to determine that it will be possible to take advantage of the underlying tax loss or other attributes in carry forward. Transferforward 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 made to our employees and directors, including employee stock option 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, which requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The expected stock price volatility assumption was determined using the historical volatility of our common stock. Changes in the subjective assumptions required in the valuation model may significantly affect the estimated value of the awards, the related stock-based compensation expense and, consequently, our results of operations.rate. Restricted stock unit awards are valued based on the average of the high and low price on the date of the grant.grant and an estimated forfeiture rate. For both options and restricted 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
Three Months Ended | Nine Months Ended | |||||
Net sales by product line | September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 |
(in thousands) | ||||||
Automated programming systems | $7,766 | 49.5% | $5,196 | $21,193 | 58.0% | $13,417 |
Non-automated programming systems | 1,830 | 31.5% | 1,392 | 4,762 | 32.8% | 3,585 |
Total programming systems | $9,596 | 45.7% | $6,588 | $25,955 | 52.7% | $17,002 |
Three Months Ended | Nine Months Ended | |||||
Net sales by location | September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 |
(in thousands) | ||||||
United States | $610 | 31.5% | $464 | $2,256 | 8.1% | $2,086 |
% of total | 6.4% | 7.0% | 8.7% | 12.3% | ||
International | $8,986 | 46.7% | $6,124 | $23,699 | 58.9% | $14,916 |
% of total | 93.6% | 93.0% | 91.3% | 87.7% |
|
| Three Months Ended |
| |||||||||
Net sales by product line |
| March 31, 2022 |
|
| Change |
|
| March 31, 2021 |
| |||
(in thousands) |
|
|
|
|
|
|
|
|
| |||
Automated programming systems |
| $ | 3,876 |
|
| (21.1%) |
|
| $ | 4,910 |
| |
Non-automated programming systems |
|
| 1,089 |
|
| (1.4%) |
|
|
| 1,105 |
| |
Total programming systems |
| $ | 4,965 |
|
| (17.5%) |
|
| $ | 6,015 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Three Months Ended | ||||||||||
Net sales by location |
| March 31, 2022 |
|
| Change |
|
| March 31, 2021 |
| |||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
| |
United States |
| $ | 288 |
|
|
| 1.4 | % |
| $ | 284 |
|
% of total |
|
| 5.8 | % |
|
|
|
|
|
| 4.7 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
International |
| $ | 4,677 |
|
| (18.4%) |
|
| $ | 5,731 |
| |
% of total |
|
| 94.2 | % |
|
|
|
|
|
| 95.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended | ||||||||||
Net sales by type |
| March 31, 2022 |
|
| Change |
|
| March 31, 2021 |
| |||
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales |
| $ | 2,607 |
|
| (22.1%) |
|
| $ | 3,347 |
| |
Adapter sales |
|
| 1,622 |
|
| (15.0%) |
|
|
| 1,908 |
| |
Software and maintenance |
|
| 736 |
|
| (3.2%) |
|
|
| 760 |
| |
Total programming systems |
| $ | 4,965 |
|
| (17.5%) |
|
| $ | 6,015 |
|
Net sales in the thirdfirst quarter of 20172022 were $9.6$5.0 million, as compared with $6.6$6.0 million in the thirdprior year period and $6.4 million in the fourth quarter of 2016. Automotive Electronics demand from both OEMs2021. Sales in the first quarter of 2022 were impacted by a resumption of COVID-19 related shut downs in Shanghai. This resulted in approximately $1 million in potential product revenue that could not ship. No orders have been cancelled and Programming Centers drove increased revenues primarilytheir shipment is expected later in the second quarter.
First quarter 2022 bookings were $6.2 million, as compared with $5.4 million in the prior year period and $6.2 million in fourth quarter of 2021. We began the quarter strongly with improved orders and sales funnel additions. The improvement in the business conditions was before the late February Russian invasion of Ukraine and the mid-March COVID-19 resurgence in China resulting in restrictions and a lockdown in Shanghai. We believe these events caused uncertainty and a late quarter slowdown in Europe, and shut down related tointerruptions in our PSV familyShanghai business. The first quarter of automated programming systems. Revenues from adapters,2021 was early in the original COVID-19 recovery with business just resuming.
On a consumable, increased approximately $100,000 from the year earlier period. Internationalgeographic basis, international sales represented 94%approximately 94.2% of total net sales for the thirdfirst quarter of 2022 compared to 93% duringwith 95.3% in the same periodprior year period. Total equipment sales were 52% of revenues, adapters were 33% and software and services revenues were 15% of revenues respectively in 2016.
Backlog at March 31, 2022 was approximately 74% equipment, 20% consumables$4.1 million, as compared with $2.9 million at year end and 6% softwareup from $3.0 million at March 31, 2021. The backlog increase was primarily due to the Shanghai lockdown related $1 million of potential revenue shipments that were caught up in the shutdown and services.
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GROSS MARGIN
|
| Three Months Ended |
| |||||||
|
| March 31, 2022 |
|
| Change |
| March 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
|
|
| ||
Gross margin |
| $ | 2,303 |
|
| (31.0%) |
| $ | 3,338 |
|
Percentage of net sales |
|
| 46.4 | % |
|
|
|
| 55.5 | % |
Gross margin as a percentage of sales in the first quarter of 2022 was 46.4% as compared to 55.5% in the same period last year. For the nine months ending September 30, 2017,first quarter of 2022, gross margin was primarily impacted by the lower sales volume and mix. The Shanghai lockdown prevented shipments of approximately $1 million in potential revenue that would have added approximately 5 gross margin percentage points.
RESEARCH AND DEVELOPMENT
|
| Three Months Ended |
| |||||||||
|
| March 31, 2022 |
|
| Change |
|
| March 31, 2021 |
| |||
(in thousands) |
|
|
|
|
|
|
|
|
| |||
Research and development |
| $ | 1,616 |
|
|
| 0.6 | % |
| $ | 1,606 |
|
Percentage of net sales |
|
| 32.5 | % |
|
|
|
|
|
| 26.7 | % |
Research and development (“R&D”) expenses in the first quarter of 2022 were approximately the same as compared to the same period in 2016, net sales growth was generally due to the same factors discussed above for the third quarter, with a continued trend of higher automated and lower non-automated system sales. On a regional basis, all regions had sales growth compared to the same period in 2016.
Three Months Ended | Nine Months Ended | |||||
September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 | |
(in thousands) | ||||||
Gross margin | $5,957 | 63.5% | $3,643 | $15,326 | 65.5% | $9,259 |
Percentage of net sales | 62.1% | 55.3% | 59.0% | 54.5% |
Three Months Ended | Nine Months Ended | |||||
September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 | |
(in thousands) | ||||||
Research and development | $1,814 | 33.6% | $1,358 | $5,130 | 40.4% | $3,655 |
Percentage of net sales | 18.9% | 20.6% | 19.8% | 21.5% |
SELLING, GENERAL AND ADMINISTRATIVE
Three Months Ended | Nine Months Ended | |||||
September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 | |
(in thousands) | ||||||
Selling, general & | ||||||
administrative | $2,319 | 39.4% | $1,664 | $6,300 | 32.2% | $4,766 |
Percentage of net sales | 24.2% | 25.3% | 24.3% | 28.0% |
|
| Three Months Ended |
| |||||||
|
| March 31, 2022 |
|
| Change |
| March 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
|
|
| ||
Selling, general & |
|
|
|
|
|
|
|
| ||
administrative |
| $ | 2,048 |
|
| (0.7%) |
| $ | 2,062 |
|
Percentage of net sales |
|
| 41.2 | % |
|
|
|
| 34.3 | % |
Selling, General and Administrative (“SG&A”) expenses increased $655,000 inwere approximately the third quarter of 2017same as compared to the same period in 2016, due to the increased level of business activity2021. The lower sales volume resulted in lower sales commissions, however these were offset by higher marketing and include higher incentive, commission and stock based compensation and depreciation, offsetrent costs. Cost control measures have remained in part by lower rent costs.
INTEREST
|
| Three Months Ended |
| |||||||
|
| March 31, 2022 |
|
| Change |
| March 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
|
|
| ||
Interest income |
| $ | 1 |
|
| (66.7%) |
| $ | 3 |
|
Interest income was approximately the same in the first quarter of 2022 as compared to the same period in 2016, the increase in SG&A expense was generally due to the same factors discussed above for the third quarter.
Three Months Ended | Nine Months Ended | |||||
September 30, 2017 | Change | September 30, 2016 | September 30, 2017 | Change | September 30, 2016 | |
(in thousands) | ||||||
Interest income | $6 | (45.5%) | $11 | $19 | (44.1%) | $34 |
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INCOME TAXES
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
(in thousands) | ||||
Income tax (expense) | $(108) | $(4) | $(207) | $(12) |
|
| Three Months Ended | |||||||
|
| March 31, 2022 |
| Change |
|
| March 31, 2021 | ||
(in thousands) |
|
|
|
|
|
|
| ||
Income tax benefit (expense) |
| ($458) |
|
| 1331.3 | % |
| ($32) |
Income tax benefit (expense) for the thirdfirst quarter of 2017 comparedboth 2022 and 2021, primarily related to same period in 2016, primarily resulted from foreign subsidiary income tax.
The effective tax rate differed from the statutory tax rate primarily due to the effect of valuation allowances, as well as foreign taxes. We have a valuation allowance of $10.6$8.2 million as of September 30, 2017. OurMarch 31, 2022. As of March 31, for both 2022 and 2021, our deferred tax assets and valuation allowance have been reduced by approximately $249,000$399,000 and $226,000$371,000, respectively, associated with the requirements of accounting for uncertain tax positions as of September 30, 2017 and December 31, 2016, respectively.positions. Given the uncertainty created by our loss history, as well as the volatile and uncertain economic outlook for our industry and capital spending, we have limited the recognition of net deferred tax assets associated withincluding our net operating losses and credit carryforwards and continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance. We expect to further analyze the level of valuation allowance during the remainder of 2017.
Financial Condition
LIQUIDITY AND CAPITAL RESOURCES
September 30, 2017 | Change | December 31, 2016 | |
(in thousands) | |||
Working capital | $18,414 | $3,841 | $14,573 |
|
| March 31, 2022 |
|
| Change |
| December 31, 2021 |
| ||
(in thousands) |
|
|
|
|
|
|
|
| ||
Working capital |
| $ | 16,896 |
|
| ($1,588) |
| $ | 18,484 |
|
At September 30, 2017March 31, 2022, our principal sources of liquidity consisted of existing cash position was $15.2 million, with $10.8 millionand cash equivalents. Cash decreased $1,894,000 from December 31, 2021 primarily from paying off year end accruals for annual incentive compensation of $791,000 and annual 401(k) matching contributions of $224,000, as well as one-time China dividend income withholding tax of $442,000 on the dividend from Shanghai and funding the operating loss.
Our working capital decreased $1,588,000 during 2022, primarily due to the reasons for the cash decline in the USAperiod. The Shanghai lockdown delayed the delivery of approximately $1 million of potential product revenue. Depending on the timing of the expected reopening later in the second quarter and resumption of shipping, there may not be enough time to expect collections to take place before the balance in foreign subsidiaries.end of the second quarter. We believe we have the funds necessary to accommodate this. The change in cash during the quarter resulted primarily from earnings for the period and collections of our accounts receivable.
Although we have no significant external capital expenditure plans currently, we expect that we willto continue to carefully make and manage capital expenditures to support our business. We plan to increase our internally developed rental, security provisioning, 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 our cyclical industry, significant product development, customer support and selling and marketing efforts, we have required substantial working capital to fund our operations. We have tried to balance our level of development spending with the goal of profitable operations.operations or managing down business levels related to COVID-19. We have implemented or have initiatives to implement geographic shifts in our operations, optimizedoptimize real estate usage, reducedreduce exposure to the impact of currency volatility and additionaltariffs, increase product development differentiation, and cost reductions.
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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.period, and beyond. We may require additional cash forat the U.S. operations,headquarters, which could cause potential repatriation of cash that is held in our foreign subsidiaries. Although weWe currently do not have no currentplans and/or intentions to make further repatriations. For any repatriation, plans, 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. 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 expenditures and/or seek possible additional financing.
OFF-BALANCE SHEET ARRANGEMENTS
Except as noted in the accompanying consolidated financial statements in Note 5, “Operating Lease Commitments” and Note 6, “Other Commitments”, we have no off-balance sheet arrangements.
NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) FINANCIAL MEASURES
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) was $2.1 million($1,223,000) in the thirdfirst quarter of 20172022 compared to $755,000($105,000) in the thirdfirst quarter of 2016.2021. Adjusted EBITDA, excluding equity compensation (a non-cash item), was $2.3 million in the third quarter of 2017, compared to $865,000 in the third quarter of 2016.
Non-GAAP financial measures, such as EBITDA and adjusted EBITDA, 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 the Company’s results and facilitate the comparison of results. A reconciliation of net income to EBITDA and adjusted EBITDA follows:
NON-GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) FINANCIAL MEASURE RECONCILIATION
Three Months Ended | Nine Months Ended | |||
September 30, 2017 | September 30, 2016 | September 30, 2017 | September 30, 2016 | |
(in thousands) | ||||
Net Income | $1,728 | $625 | $3,913 | $901 |
Interest (income) expense | (6) | (11) | (19) | (34) |
Taxes | 108 | 4 | 207 | 12 |
Depreciation & amortization | 306 | 137 | 634 | 409 |
EBITDA earnings | $2,136 | $755 | $4,735 | $1,288 |
Equity compensation | 173 | 110 | 540 | 409 |
Adjusted EBITDA earnings, | ||||
excluding equity compensation | $2,309 | $865 | $5,275 | $1,697 |
|
| Three Months Ended March 31, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
(in thousands) |
|
|
|
|
|
| ||
Net Income (loss) |
| ($1,820) |
|
| ($333) |
| ||
Interest (income) |
|
| (1 | ) |
|
| (3 | ) |
Taxes |
|
| 458 |
|
|
| 32 |
|
Depreciation & amortization |
|
| 140 |
|
|
| 199 |
|
EBITDA earnings (loss) |
| ($1,223) |
|
| ($105) |
| ||
Equity compensation |
|
| 291 |
|
|
| 278 |
|
Adjusted EBITDA, excluding equity compensation |
| ($932) |
|
| $ | 173 |
|
NEW ACCOUNTING ANNOUNCEMENTS
On January 1, 2021 the FASB issuedCompany adopted ASU 2016-09, Compensation-Stock Compensation (ASU 2016-09), “Improvements to Employee Share-Based Payment Accounting”.2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU 2016-09 requires excessclarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax benefits to be recognized inallocation principles and the statement of operations as anmethodology for calculating income tax expense and is applied prospectively by means of a cumulative-effect adjustment of excess tax benefits from equityrates in thean interim period, of adoption. The standard establishes an alternative practical expedient for estimating the expected term of an award by recognizing the effects of forfeitures in compensation cost when the forfeitures occur. Adoption of the alternative practical expedient is applied prospectively on an entity-wide basis. The standard requires that amounts paid to a taxing authority on the employee’s behalf as a result of directly withholding shares for tax-withholding purposes are to be presented on a retrospective basis as a financing activity on the statement of cash flows. The standard became effective beginning January 1, 2017.among other updates. The adoption of this ASU 2016-09 wasdid not have a material toimpact on our consolidated financial statements.
Item 3. ASU 2016-02 requires lessees to recognize almost all leases on the balance sheet as a right-of-use asset and a lease liability and requires leases to be classified as either an operating or a finance type lease. The standard excludes leases of intangible assets or inventory. Early adoption of the standard is allowed. The standard becomes effective beginning January 1, 2019.
Not applicable.
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 effective at the reasonable level of assurance. Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROLS
There were no changes made in our internal controls during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting which is still under the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013).
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 September 30, 2017,March 31, 2022, we were not a party to any material pending legal proceedings.
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016,2021, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. There are no material changes to the Risk Factors described in our Annual Report.
None
None
Not Applicable
None
(a)
10 | Material Contracts: | |||
None | ||||
31 | Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002: | |||
32 | Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002: | |||
101 | Interactive Data Files Pursuant to Rule 405 of Regulation S-T |
24 |
Table of Contents |
SIGNATURES
Pursuant to the requirements 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.
DATED: November 9, 2017
DATA I/O CORPORATION
(REGISTRANT)
By: | /s/Anthony Ambrose | |
Anthony Ambrose President and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer) | ||
By: | /s/Joel S. Hatlen | |
Joel S. Hatlen Vice President and Chief Operating and Financial Officer Secretary and Treasurer (Principal Financial Officer and Duly Authorized Officer) |
25 |