As filed with the Securities and Exchange Commission on December 22, 2004
SEC File No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
DATA I/O CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Washington 91-0864123
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
10525 Willows Road N.E.
Redmond, Washington 98052
(425) 881-6444
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Joel S. Hatlen
Vice President, Chief Financial Officer, Secretary and Treasurer
10525 Willows Road N.E.
Redmond, Washington 98052
(425) 881-6444
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Kimberley R. Anderson, Esq.
Dorsey & Whitney LLP
1420 Fifth Avenue, Suite 3400
Seattle, WA 98101-4010
Telephone: (206) 903-8800
Facsimile: (206) 903-8820
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, as amended, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| If delivery of the prospectus
is expected to be made pursuant to Rule 434, check the following box. |_|
CALCULATION OF REGISTRATION FEE
=========================================================================================================================
Title of Shares Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered(1) Offering Price Aggregate Registration Fee
per share(2) Offering Price(2)
-------------------------------------------------------------------------------------------------------------------------
Common Stock Without Par Value 1,100,000 $3.37 $3,707,000 $436
=========================================================================================================================
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers such additional number of shares of
common stock as may become issuable under any stock split, stock divided or
similar transactions.
(2) Estimated based upon the average of the high and low sales prices of the
Registrant's common stock on December 21, 2004, as reported by the Nasdaq
SmallCap Market, pursuant to Rule 457(c) promulgated under the Securities
Act of 1933, as amended.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the registration statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
===============================================================================
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities, and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to completion: Dated December 22, 2004
DATA I/O CORPORATION
1,100,000 Shares of Common Stock
---------------------------
This prospectus relates to the sale, transfer or distribution of up to 1,100,000
shares of the common stock, without par value per share, of Data I/O Corporation
by the selling shareholders described herein. The price at which the selling
shareholders may sell the shares will be determined by the prevailing market
price for the shares or in negotiated transactions.
We will not receive any proceeds from the sale or distribution of the common
stock by the selling shareholders. We could receive up to $664,032 in gross
proceeds from the cash exercise of certain options by the selling shareholders,
which proceeds would be used for general corporate purposes.
Our common stock is quoted on the Nasdaq SmallCap Market under the trading
symbol "DAIO." On December 21, 2004, the last price for our common stock, as
reported by the Nasdaq SmallCap Market, was $3.39 per share.
---------------------------
See "Risk Factors" beginning at page two to read about certain factors you
should consider before buying shares of our common stock.
---------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------------------
The date of this prospectus is ____________, 2004.
===============================================================================
TABLE OF CONTENTS
Section Page
Data I/O Corporation 5
Risk Factors 6
Special Note About Forward-Looking Information 11
Use of Proceeds 11
Selling Shareholders 11
Plan of Distribution 12
Validity of Common Stock 12
Experts 12
Where You Can Find More Information 12
===============================================================================
DATA I/O CORPORATION
Data I/O Corporation ("Data I/O") designs, manufactures, and sells programming
systems used by designers and manufacturers of electronic products. Our
programming system products are used to program integrated circuits ("ICs" or
"devices" or "semiconductors") so that the ICs will function as desired in the
customer's electronic product. They are an important tool for the electronics
industry experiencing growing use of programmable ICs. Data I/O markets and
distributes our programming systems worldwide, and is a global leader in this
market. Data I/O incorporated in the state of Washington in 1969.
Data I/O Mission. Data I/O's mission is to design and deliver innovative
customer-focused programming solutions, which enable customers to manage their
firmware supply chain, getting their products to market faster, while reducing
costs in their process. We align our products and services to make programming
easy, delight our customers and satisfy their whole product needs.
Helping customers manage their firmware supply chain. Much of the innovation and
competitive advantage of today's electronic products comes from the software
buried inside the product, which is commonly referred to as "firmware."
Companies use firmware to differentiate their products from their competitors'
products, constantly writing new code to add features. This allows them to build
multiple models with identical hardware and many versions of firmware, all on
one production line. Any improvement in production efficiency boosts the
profitability of all products on that line. Many original equipment
manufacturers ("OEMs") now outsource production to specialists in electronic
manufacturing services ("EMS") to maximize the profit impact from highly
efficient production. The challenges of managing the firmware supply chain
remain, however, and can even increase with this additional interface. Our
systems allow our customers - both OEM and EMS companies - to build products
with the exact firmware features that consumers specify, virtually real-time
with the latest software release. We help our customers eliminate inventory
risks, delays, rework, and lost market opportunities while enabling them to
better serve their customers.
Connected Strategy. Data I/O's connected strategy leverages network capable
products to move the customer's intellectual property seamlessly and securely up
and down the supply chain. Our connected strategy allows customers to connect
engineering to manufacturing to end customers.
Some of our customers are delaying shipments which were anticipated for the
fourth quarter of 2004 until the first quarter of 2005 and in some cases, they
are pushing out orders as well. We believe that these delays are not related to
the overall demand for our products, but reflect the seasonality of our
customers' business.
Our principal executive offices are located at 10525 Willows Road NE, Redmond,
Washington 98052. Our telephone number at that location is (425) 881-6444.
Unless the context otherwise requires, when used herein, the terms "we," "us,"
"our," "Data I/O," or the "Company" refers to Data I/O Corporation and its
subsidiaries.
RISK FACTORS
Our business is subject to a number of risks, some of which are discussed below.
Other risks are presented elsewhere in this prospectus and in the information
incorporated by reference into this prospectus. Before deciding to invest in our
company or to maintain or increase your investment, you should carefully
consider the risks described below, in addition to the other information
contained in this prospectus, our Annual Report on Form 10-K for the fiscal year
ended December 31, 2003, our Quarterly Reports on 10-Q for the fiscal quarters
ended March 31, 2004, June 30, 2004 and September 30, 2004; and in our other
filings with the Securities and Exchange Commission (the "SEC"), including any
subsequent reports filed on Forms 10-K, 10-Q and 8-K. The risks and
uncertainties described below are not the only ones that we face. Additional
risks and uncertainties not presently known to us or that we currently deem
immaterial may also affect our business and results of operations. If any of
these risks actually occurs, our business, financial condition or results of
operations could be seriously harmed. In that event, the market price for our
common stock could decline and you may lose all or part of your investment.
DELAYS IN DEVELOPMENT, INTRODUCTION AND SHIPMENT OF NEW PRODUCTS MAY RESULT IN A
DECLINE IN SALES.
Data I/O currently is developing new engineering and automated programming
systems. Significant technological, supplier, manufacturing or other problems
may delay the development, introduction or production of these products.
For example, we may encounter these problems:
o technical problems in the development of a new programming system platform or
the robotics for new automated handing systems
o inability to hire qualified personnel
o delays or failures to perform by third parties involved in our development
projects
Delays in the development, completion and shipment of new products, or failure
of customers to accept new products, may result in a decline in sales.
QUARTERLY FLUCTUATIONS IN OUR OPERATING RESULTS MAY ADVERSELY AFFECT OUR STOCK
PRICE.
Data I/O's 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 results of operations 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:
o increased competition
o timing of new product announcements
o product releases and pricing changes by us or our competitors
o market acceptance or delays in the introduction of new products
o production constraints
o labor or material shortages
o the timing of significant orders
o the sales channel mix of direct vs. indirect distribution
o war or terrorism
o health issues (such as Severe Acute Respiratory Syndrome ("SARS"))
o customers' budgets
o adverse movements in exchange rates, interest rates or tax rates
o cyclical nature of demand for our customers' products
o general economic conditions in the countries where we sell products
Due to all of the foregoing factors, it is possible that in some future
quarters, our operating results will be below expectations of analysts and
investors.
FAILURE TO ADAPT TO TECHNOLOGY TRENDS IN OUR INDUSTRY MAY NEGATIVELY IMPACT OUR
COMPETITIVENESS AND FINANCIAL RESULTS.
Product technology in Data I/O's industry evolves rapidly, making timely product
innovation essential to success in the marketplace. Introducing products with
improved technologies or features may render our existing products obsolete and
unmarketable. Technological advances that may negatively impact our business
include:
o new device package types, densities, and technologies requiring
hardware and software changes in order to be programmed by our products
o electronics equipment manufacturing practices, such as widespread use of
custom in-circuit programming ("ISP") solutions
o customer software platform preferences different from those on which our
products operate
o more rigid industry standards, which would decrease the value-added element
of our products and support services
If we cannot develop products in a timely manner in response to industry
changes, or if our products do not perform well, our business and financial
condition will be adversely affected. Also, our new products 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.
A DECLINE IN ECONOMIC AND MARKET CONDITIONS MAY RESULT IN DECREASED CAPITAL
SPENDING BY OUR CUSTOMERS.
Our business is highly impacted by capital spending plans and other economic
cycles that affect the users and manufacturers of ICs. These industries are
highly cyclical and are characterized by rapid technological change, short
product life cycles, fluctuations in manufacturing capacity and pricing and
gross margin pressures. Our operations may in the future reflect substantial
fluctuations from period-to-period as a consequence of these industry patterns,
general economic conditions affecting the timing of orders from major customers,
and other factors affecting capital spending. These factors could have a
material adverse effect on our business and financial condition.
WE HAVE A HISTORY OF RECENT OPERATING LOSSES AND MAY BE UNABLE TO GENERATE
ENOUGH REVENUE TO ACHIEVE AND MAINTAIN PROFITABILITY.
We have incurred net losses in two of our last three fiscal years. We will
continue to examine our level of operating expense based upon our projected
revenues. Any planned increases in operating expenses may result in larger
losses in future periods if projected revenues are not achieved. As a result, we
may need to generate greater revenues than we have recently to achieve and
maintain profitability. However, we cannot provide assurance that our revenues
will increase and our strategy may not be successful resulting in future losses.
OUR RECENT RESTRUCTURING ACTIVITIES MAY HAVE A NEGATIVE IMPACT ON OUR FUTURE
OPERATIONS.
Our restructuring plans may yield unanticipated consequences, such as increased
burden on our administrative, operational, and financial resources and increased
responsibilities for our management personnel. As a result, our ability to
respond to unexpected challenges may be impaired and we may be unable to take
advantage of new opportunities.
In addition, many of the employees that were terminated as part of our
restructuring possessed specific knowledge or expertise, and that knowledge or
expertise may prove to have been important to our operations. In that case,
their absence may create significant difficulties, particularly if our business
experiences significant growth. Any failure by us to properly manage this rapid
change in workforce could impair our ability to efficiently manage our business,
to maintain and develop important relationships with third-parties, and to
attract and retain customers. It could also cause us to incur higher operating
costs and delays in the execution of our business plan or in the reporting or
tracking of our financial results.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL AND OUR FUTURE ACCESS TO CAPITAL IS
UNCERTAIN.
Our past revenues have been and our future revenues may continue to 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 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 our existing cash and cash equivalents will be sufficient to meet our
working capital requirements for at least the next twelve months. Thereafter,
depending on the development of our business, we may need to raise additional
cash for working capital or other expenses. We may also encounter opportunities
for acquisitions or other business initiatives that require significant cash
commitments, or unanticipated problems or expenses that could result in a
requirement for additional cash before that time.
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 we may experience difficulty 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 Data I/O's common stock
("Common Stock") and may dilute your ownership interest.
WE MAY FACE INCREASED COMPETITION AND MAY NOT BE ABLE TO COMPETE SUCCESSFULLY
WITH CURRENT AND FUTURE COMPETITORS.
Technological advances have reduced the barriers of entry into the programming
systems markets. 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.
IF OUR RELATIONSHIPS WITH SEMICONDUCTOR MANUFACTURERS DETERIORATE, OUR BUSINESS
MAY BE ADVERSELY AFFECTED.
We work closely with most semiconductor manufacturers to ensure that our
programming systems comply with their requirements. In addition, many
semiconductor manufacturers recommend our programming systems for use by users
of their programmable devices. These working relationships enable us to keep our
programming systems product line up to date and provide end-users with broad and
current programmable device support. Our business may be adversely affected if
our relationships with semiconductor manufactures deteriorate.
OUR RELIANCE ON A SMALL NUMBER OF SUPPLIERS COULD RESULT IN A SHORTAGE OF KEY
COMPONENTS, WHICH MAY ADVERSELY AFFECT OUR BUSINESS.
Certain parts used in our products are currently available from either a single
supplier or from a limited number of suppliers. If we cannot develop alternative
sources of these components, if sales of parts are discontinued by the supplier
or we experience deterioration in our relationship with these suppliers, there
may be delays or reductions in product introductions or shipments, which may
materially 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 under estimate our production
schedule, suppliers may be unable to meet our demand for components. This delay
in the supply of key components may materially adversely affect our business.
Over estimation of demand will lead to excess inventories that may become
obsolete.
The non-automated programming system products we acquired when we acquired SMS
in November 1998 are currently manufactured to our specifications by a
third-party foreign contract manufacturer. We may not be able to obtain a
sufficient quantity of these products if and when needed, which may result in
lost sales.
IF WE ARE UNABLE TO ATTRACT AND RETAIN QUALIFIED THIRD-PARTY DISTRIBUTORS, OUR
OPERATIONS MAY BE ADVERSELY AFFECTED.
Data I/O has an internal sales force and also utilizes third-party
representatives, and distributors. Therefore, the financial stability of these
distributors is important. Highly skilled professional engineers use most of our
products. To be effective, third-party distributors must possess significant
technical, marketing 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. Our business
will suffer if we cannot attract and retain a sufficient number of qualified
third-party distributors to market our products.
OUR INTERNATIONAL OPERATIONS MAY EXPOSE US TO ADDITIONAL RISKS THAT MAY
ADVERSELY AFFECT OUR BUSINESS.
International sales represented 70% of our net revenue for the fiscal year ended
December 31, 2003 and 80% for the first nine months of 2004. We expect that
international sales will continue to be a significant portion of our net
revenue. International sales and operations may fluctuate due to various
factors, including:
o migration of manufacturing to low cost geographies
o unexpected changes in regulatory requirements
o tariffs and taxes
o difficulties in staffing and managing foreign operations
o longer average payment cycles and difficulty in collecting accounts receivable
o fluctuations in foreign currency exchange rates
o impact of the Euro
o compliance with applicable export licensing requirements
o product safety and other certification requirements
o difficulties in integrating foreign and outsourced operations
o political and economic instability
The European Community and European Free Trade Association have established
certain electronic emission and product safety requirements ("CE"). Although our
products currently meet these requirements, failure to obtain either a CE
certification or a waiver for any product may prevent us from marketing that
product in Europe.
We operate subsidiaries in Germany, China, Canada and Brazil. Our business and
financial condition is sensitive to currency exchange rates or any other
restrictions imposed on their currencies. Currency exchange fluctuations in
Canada, China, Germany and Brazil may adversely affect our investment in our
subsidiaries.
IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY OR INFRINGE ON OTHER
INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE TO COMPETE EFFECTIVELY OR OPERATE
PROFITABLY.
Data I/O relies on patents, copyrights, trade secrets and trademarks to protect
our intellectual property, as well as product development and marketing skill to
establish and protect our market position. We attempt to protect our rights in
proprietary software products, including TaskLink 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 may, therefore, be required
to obtain licenses or discontinue the use of the 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 MAY PURSUE BUSINESS ACQUISITIONS THAT MAY IMPAIR OUR FINANCIAL POSITION AND
PROFITABILITY.
We may pursue acquisitions of complementary technologies, product lines or
businesses. Future acquisitions may include risks, such as:
o burdening management and our operating teams during the integration of the
acquired entity
o diverting management's attention from other business concerns
o failing to successfully integrate the acquired products
o lack of acceptance of the acquired products by our sales channels or customers
o entering markets where we have no or limited prior experience
o potential loss of key employees of the acquired company
o additional burden of support for an acquired programmer architecture
Future acquisitions may also impact Data I/O's financial position. For example,
we may use significant cash or incur additional debt, which would weaken our
balance sheet. We may also capitalize goodwill and intangible assets acquired,
the impairment of which would reduce our profitability. We cannot guarantee that
future acquisitions will improve our business or operating results.
THE LOSS OF KEY EMPLOYEES MAY ADVERSELY AFFECT OUR OPERATIONS.
As of November 30, 2004, we had 129 employees, of which 38 were located outside
the U.S. 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.
FAILURE TO COMPLY WITH REGULATORY REQUIREMENTS MAY ADVERSELY AFFECT OUR STOCK
PRICE AND BUSINESS.
We are subject to numerous governmental and stock exchange requirements as a
public company, which we believe we are in compliance with. The Sarbanes-Oxley
Act of 2002, the Securities and Exchange Commission (SEC) and the Public Company
Oversight Accounting Board (PCOAB) have requirements that we may fail to meet by
required deadlines or we may fall out of compliance with, such as the internal
controls assessment, reporting and auditor attestation required under Section
404 of the Sarbanes-Oxley Act of 2002 for which we are relying on not being an
accelerated filer. We are in the process of documenting and testing our internal
control procedures in order to satisfy the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, which requires annual management assessments of the
effectiveness of our internal controls over financial reporting and a report by
our Independent Auditors addressing these assessments. During the course of our
testing we may identify deficiencies which we may not be able to remediate in
time to meet the deadline imposed by the Sarbanes-Oxley Act of 2002 for
compliance with the requirements of Section 404. In addition, 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. Our failure to meet 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 result in securities claims and
litigation.
Our stock price may be volatile and, as a result, you may lose some or all of
your investment.
The stock prices of technology companies tend to fluctuate significantly. We
believe factors such as announcements of new products by us or our competitors,
quarterly variations in financial results and sales of our common stock may
cause the market price of Data I/O's Common Stock to fluctuate substantially. In
addition, overall volatility in the stock market, particularly in the technology
company 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 Data I/O's Common Stock.
SPECIAL NOTE ABOUT FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated by reference in this prospectus
contain forward-looking statements. These forward-looking statements are based
on our current expectations, estimates and projections about our industry,
management's beliefs and certain assumptions made by us. Words such as
"anticipate," "expect," "intend," "plan," "believe," "seek," "estimate,"
"predict," "continue," "will" and "may" and variations of these words or similar
expressions are intended to identify forward-looking statements. These
statements reflect the views of our management at the time they are made based
on information currently available to management. These statements are not
guarantees of future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to predict. Therefore, our actual results
could differ materially from those expressed or forecasted in any
forward-looking statements as a result of a variety of factors, including those
set forth in "Risk Factors" above and elsewhere in, or incorporated by reference
into, this prospectus. Except as required by law, we undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
USE OF PROCEEDS
The shares of Common Stock offered by this prospectus will be sold or
distributed by the selling shareholders, and the selling shareholders will
receive all of the proceeds, if any, from the sales of such shares by them. We
will not receive any proceeds from the sale or distribution of the Common Stock
by the selling shareholders. We could receive up to $664,032 in gross proceeds
from the cash exercise of certain options by the selling shareholders, which
proceeds would be used for general corporate purposes.
SELLING SHAREHOLDERS
This prospectus covers the offering of shares of Common Stock by the selling
shareholders named below. This prospectus is part of a registration statement
filed in order to register, on behalf of the selling shareholders, an aggregate
total of 1,100,000 shares of Common Stock. The following are the number of
shares beneficially owned by the selling shareholders prior to this offering;
the number of shares to be offered for the selling shareholders' accounts; and
the number of shares to be owned by the selling shareholders following
completion of the offering:
Number of Shares Number of Shares Number of Shares Percentage of
Owned Before Offered Owned Upon Shares Owned Upon
Name Offering Completion of Completion of
Offering Offering
-------------------------------- --------------------- -------------------- --------------------- --------------------
Fredrick R. Hume 342,832(1) 100,000 242,832(2) 3.01%(3)
-------------------------------- --------------------- -------------------- --------------------- --------------------
Bisco Industries, Inc. 723,263(4) 690,000 33,263(2) 0.41%(3)
-------------------------------- --------------------- -------------------- --------------------- --------------------
Bisco Industries, Inc. Profit 334,564(4) 310,000 24,564(2) 0.31%(3)
Sharing and Savings Plan
-------------------------------- --------------------- -------------------- --------------------- --------------------
Total 1,400,659(1)(4) 1,100,000(1) 300,659(2) 3.73%(3)
-------------------------------- --------------------- -------------------- --------------------- --------------------
(1) Includes options to purchase 312,500 shares exercisable within 60 days.
(2) This figure assumes that the selling shareholders will sell all of their
shares available for sale during the effectiveness of the registration
statement that includes this prospectus. The selling shareholders are not
required to sell their shares. See "Plan of Distribution."
(3) Based on 8,056,049 shares of Common Stock outstanding as of November 1,
2004 as reported by the Company in its quarterly report on Form 10-Q filed
with the SEC on November 15, 2004.
(4) The holding shown is as of December 15, 2004, as reported to Data I/O by
Glen F. Ceiley on behalf of Bisco Industries, Inc. ("Bisco") on Form 4 and
Bisco Industries, Inc. Profit Sharing and Savings Plan (the "Bisco Plan")
on Schedule 13D. Mr. Glen Ceiley is the President, a director, and the sole
shareholder of Bisco and is also the sole trustee of the Bisco Plan.
Mr. Glen Ceiley has been a director of Data I/O since February 1999. Since 1973,
Mr. Ceiley has been the President and Chief Executive Officer of Bisco
Industries, a distributor of fasteners and electronic components, which, as part
of a group, currently owns approximately 13.18% of the Company's outstanding
Common Stock.
Frederick R. Hume became President and Chief Executive Officer of Data I/O on
February 23, 1999. He has been a director of Data I/O since January 1999.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling shareholders. When we
refer to selling shareholders, we intend to include donees and pledgees selling
shares received from a named selling shareholder after the date of this
prospectus. All costs, expenses and fees in connection with the registration of
the shares offered under this Registration Statement will be borne by us.
Brokerage commissions and similar selling expenses, if any, attributable to the
sale of shares will be borne by the selling shareholders. Sales of shares may be
effected by the selling shareholders from time to time in one or more types of
transactions (which may include block transactions) on the Nasdaq National
Market, the Nasdaq SmallCap Market, in the over-the-counter market, in
negotiated transactions, through put or call options transactions relating to
the shares, through short sales of shares, or a combination of such methods of
sale, at market prices prevailing at the time of sale, or at negotiated prices.
Such transactions may or may not involve brokers or dealers. The selling
shareholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
shareholders.
The selling shareholders may effect such transactions by selling shares directly
to purchasers or to or through broker-dealers, which may act as agents or
principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling shareholders and/or
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling shareholders and any broker-dealers that act in connection with the
sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"),
and any commissions received by such broker-dealers and any profit on the resale
of shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. The selling
shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against some
liabilities arising under the Securities Act.
Because the selling shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling shareholders will be
subject to the prospectus delivery requirements of the Securities Act. We have
informed the selling shareholders that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") may apply to their sales in the market.
Selling shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such Rule. Upon being
notified by any selling shareholder that any material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file a supplement to this prospectus, if
required, under Rule 424(b) of the Act, disclosing:
o the name of each selling shareholder(s) and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which the shares were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
o that the broker-dealer(s) did not conduct any investigation to verify
information set out or incorporated by reference in this prospectus; and
o other facts material to the transaction.
In addition, upon being notified by any selling shareholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.
LEGALITY OF SECURITIES
Dorsey & Whitney LLP, Seattle, Washington, has provided an opinion that the
shares of Common Stock offered by this prospectus are legally issued, fully paid
and nonassessable.
EXPERTS
The consolidated financial statements and schedule of Data I/O Corporation as of
December 31, 2003 and 2002 and for each of the years in the three-year period
ended December 31, 2003 have been incorporated by reference herein and in the
registration statement in reliance upon the report of Grant Thornton LLP, an
independent registered public accounting firm, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the SEC to register the
sale of the shares of Common Stock offered by the selling shareholders under the
Securities Act. This prospectus, which is a part of the registration statement,
does not contain all of the information that is in the registration statement.
Statements made in this prospectus as to the content of any contract, agreement
or other document are not necessarily complete. Some contracts, agreements, or
other documents are filed as exhibits to the registration statement or to a
document incorporated by reference in this prospectus. In those cases, investors
should refer to such exhibits for more complete descriptions.
We file annual, quarterly and special reports, proxy and information statements
and other information with the SEC. The public may read and copy, at prescribed
rates, any materials we file with the SEC, including the registration statement
and its exhibits and any documents incorporated by reference into this
prospectus, at the SEC's offices at: Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549. For information on how to obtain such documents
from the SEC, investors may telephone the SEC's Public Reference Room at
1-800-SEC-0330. The SEC Internet site at http://www.sec.gov contains materials
that we file with the SEC in electronic version through the SEC's Electronic
Data Gathering, Analysis and Retrieval (EDGAR) system.
We are allowed by the SEC to "incorporate by reference" information filed with
the SEC, which means that we can disclose important information to people by
referring them to other documents that we file with the SEC. The information
incorporated by reference is considered to be part of this prospectus. We have
filed the following documents with the SEC pursuant to the Exchange Act and are
incorporating them by reference into this prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2004, June 30, 2004 and September 30, 2004;
(c) the Company's Current Report on Form 8-K filed on February 18, 2004,
April 26, 2004, August 5, 2004 and October 25, 2004; and
(c) the description of the Company's Common Stock, no par value per share, as
contained in Item 1 of the Registration Statement on Form 8-A filed on
April 29, 1982 including any amendment or report filed for the purpose of
updating such description filed for the purpose of updating such
description.
We also incorporate all documents we subsequently file with the SEC pursuant to
Section 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of this offering. The information in
these documents will update and supersede the information in this prospectus.
We will provide at no cost to each person to whom this prospectus is delivered,
including any beneficial owner, upon written or oral request, a copy of any or
all of the information that has been incorporated by reference in this
prospectus but not delivered with this prospectus. Investors should direct
requests to Joel S. Halten, Data I/O Corporation, 10525 Willows Road NE, P.O.
Box 97046, Redmond, Washington 98073-9746, telephone: (425) 881-6444.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following are the estimated expenses in connection with the distribution of
the securities being registered:
Securities and Exchange Commission registration fee $ 436
Legal fees $10,000
Accounting fees and expenses $ 7,500
----------
Total $17,936
==========
All expenses, except the SEC fees, are estimates.
The selling shareholders will not bear any portion of the foregoing expenses,
but will pay fees in connection with the sale of the Common Stock in those
transactions completed to or through securities brokers and/or dealers in the
form of markups, markdowns, or commissions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's articles of incorporation and bylaws limit the liability of the
Company's directors to the fullest extent permitted by the Washington business
corporation act (the "WBCA") as it currently exists or as it may be amended in
the future. Consequently, subject to the WBCA, no director will be personally
liable to the Company or its shareholders for monetary damages resulting from
his or her conduct as a director, except liability for:
o acts or omissions involving intentional misconduct or knowing violations of
law;
o unlawful distributions; or
o transactions from which the director personally receives a benefit in
money, property or services to which the director is not legally entitled.
The Company's articles of incorporation also provide that the Company may
indemnify any individual made a party to a proceeding because that individual is
or was a director or officer of the Company, and this right to indemnification
will continue as to an individual who has ceased to be a director or officer and
will inure to the benefit of his or her heirs, executors or administrators. Any
subsequent repeal of or modification to the Company's articles of incorporation
will not adversely affect any right of a director or officer of ours who is or
was a director or officer at the time of such repeal or modification. To the
extent the provisions of the Company's articles of incorporation provide for
indemnification of directors or officers for liabilities arising under the
Securities Act, those provisions are, in the opinion of the SEC, against public
policy as expressed in the Securities Act and therefore unenforceable.
The Company's articles of incorporation and bylaws provide that the Company will
indemnify its directors and officers and may indemnify its other employees and
agents to the fullest extent permitted by law. The Company's directors, officers
and employees also may be indemnified against liability they may incur for
serving in that capacity pursuant to a liability insurance policy maintained by
the Company for such purpose.
ITEM 16. EXHIBITS
The following documents are included as exhibits to this Registration Statement,
pursuant to Item 601 of regulation S-K.
Exhibit No. Title of Document
5.1 Opinion of Dorsey & Whitney LLP.
23.1 Consent of Grant Thornton LLP, an independent registered public
accounting firm.
23.2 Consent of Dorsey & Whitney LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the SEC by the registrant pursuant
to section 13 or section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the question has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Redmond,
Washington, on December 22, 2004.
DATA I/O CORPORATION
By:/s/Joel S. Hatlen
Vice President, Chief Financial Officer,
Secretary and Treasurer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Fredrick R.
Hume and Joel S. Hatlen, jointly and severally, as attorneys-in-fact, each with
the power of substitution, for him in any and all capacities, to sign any
amendment to this Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting to said attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person hereby ratifying and confirming all
that said attorneys-in-fact or any of them, or their or his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Frederick R. Hume Chief Executive Officer, December 22, 2004
President and a director
(Principal Executive Officer)
/s/ Joel S. Hatlen Vice President of Finance, December 22, 2004
Chief Financial Officer,
Secretary and Treasurer
(Principal Financial Officer and Accounting Officer)
/s/ Glen F. Ceiley Director December 22, 2004
/s/ Daniel A. DiLeo Director December 22, 2004
/s/ Paul A. Gary Director December 22, 2004
/s/ Edward D. Lazowska Director December 22, 2004
/s/ Steven M. Quist Director December 22, 2004
/s/ William R. Walker Director December 22, 2004
EXHIBIT INDEX
Exhibit No. Title of Document
5.1 Opinion of Dorsey & Whitney LLP.
23.1 Consent of Grant Thornton LLP, an independent registered public
accounting firm.
23.2 Consent of Dorsey & Whitney LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included in signature page).
Exhibit 5.1
Dorsey & Whitney LLP
U.S. Bank Building Center, Suite 400
1420 Fifth Avenue
Seattle, WA 98101
December 22, 2004
Data I/O Corporation
10525 Willows Road N.E.
Redmond, WA 98052
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted acted as counsel to Data I/O Corporation, a Washington corporation
(the "Company"), in connection with a Registration Statement on Form S-3 (the
"Registration Statement") relating to the resale of up to 1,100,000 shares of
the Company's common stock, without par value per share, by certain shareholders
of the Company named in the Registration Statement, of which (i) 787,000 shares
(the "Shares") are currently outstanding and (ii) 312,500 shares (the "Option
Shares") are issuable by the Company upon exercise pursuant to the Company's
2000 Stock Compensation Incentive Plan, as amended, and the Company's 1986 Stock
Option Plan, as amended (together, the "Plan").
We have examined such documents and have reviewed such questions of law as we
have considered necessary and appropriate for the purposes of the purposes of
the opinions set forth below.
In rendering our opinions set forth below, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto other than the Company, that such parties had the
requisite power and authority (corporate or otherwise) to execute, deliver and
perform such agreements or instruments, that such agreements or instruments have
been duly authorized by all requisite action (corporate or otherwise), executed
and delivered by such parties and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties. As to questions of
fact material to our opinions, we have relied upon certificates of officers of
the Company and of public officials.
Based on the foregoing, we are of the opinion that (i) the Shares are validly
issued, fully paid and nonassessable, and (ii) the Option Shares, upon issuance,
delivery and payment therefore in accordance with the Plans will be validly
issued, fully paid and nonassessable.
Our opinions expressed above are limited to the laws of the state of Washington.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm in the prospectus
constituting part of the Registration Statement.
Very truly yours,
/s/ Dorsey & Whitney LLP
KRA/
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated February 6, 2004 accompanying the financial
statements of Data I/O Corporation appearing in the Annual Report on Form 10K of
the Company for the year ended December 31, 2003, which is incorporated by
reference in this Registration Statement. We consent to the incorporation by
reference in this Registration Statement of the aforementioned report and to the
use of our name as it appears under the caption "Experts."
/s/ GRANT THORNTON LLP
Seattle, Washington
December 22, 2004