Data I/O signs agreement for $13.25 million private placement to fund acquisition

Key Facts

Data I/O announced on October 19, 2026, that it had signed a securities purchase agreement for a proposed private placement of about $13.25 million tied to financing an acquisition. The offering includes convertible subordinated notes and common shares, according to the company's statement on the financing terms. The agreement coincides with the signing of a definitive agreement to acquire V-Tek and A&G Programming for about $23 million. The company said in its acquisition announcement that it would use the securities offering proceeds to help pay for the deal. It will fund the purchase price through a combination of offering proceeds, cash on hand and its common shares.

Under the acquisition agreement, the purchase price for the two companies will be paid in cash and common shares, with the Data I/O stock component valued at about $3 million. V-Tek manufactures semiconductor handling and packaging solutions, according to the company's announcement of the definitive agreement. Data I/O management had outlined its expectations for a forthcoming transformative acquisition in its second-quarter results announcement issued on August 12, 2026. It said at the time that the transaction was expected to "nearly double our annual revenue," indicating the scale of expansion it anticipated following the acquisition. Management also expected the acquisition to support earnings and cash flow after completion, linking the anticipated financial impact to the transaction's closing.

On borrowing terms, the company set the convertible notes' maturity at 5 years, according to the proposed private placement announcement. Interest on the notes starts at 5% in the first year, then rises by 1 percentage point annually in subsequent years. The financing agreement thus includes a rising interest schedule throughout the term, with the rate payable varying according to the year of the notes' life. The company set the conversion price into common shares at $2.68 per share as part of the announced securities purchase terms. Preferred shares resulting from conversion carry no voting rights, according to the statement, which listed this feature among the conversion arrangements accompanying the offering.

The financing and acquisition plan follows an improvement in Data I/O's revenue in the second quarter of 2026 compared with the previous quarter, according to its financial results. The company reported revenue of $5.2 million for the period, up 59% quarter on quarter. In its results statement issued in August, the company identified the first quarter of the same year as the basis for this comparison. On liquidity, its cash balance stood at $10.8 million at the end of the second quarter, according to the same statement. That balance reflects the end of the reported financial period, while the October acquisition agreement provided for using cash on hand as one source of payment for the purchase price.

Explaining its second-quarter operating performance, Data I/O attributed the improvement in gross margin to a range of sales, pricing and cost factors. In its results statement, the company cited a "favorable shift in sales mix" as one driver of the improvement during the period. It also listed value-based pricing among the factors that contributed to the margin improvement, alongside the sales mix effect. Operational efficiency was another driver management cited in explaining the quarter's gross profitability. The company's explanation also included improved absorption of labor and overhead costs among the operating factors accompanying the reported margin improvement.

As for the next step, Data I/O said in its October 19, 2026, announcement that it expected to close the acquisition during the week of the announcement, subject to customary closing conditions. For the offering, the company committed to filing a registration statement on the designated regulatory form within 30 days of its closing. It also plans to hold a special shareholder meeting within 120 days of the securities offering's closing, according to the financing announcement. Shareholders will be asked at that meeting to approve the issuance of common shares exceeding 19.9% of outstanding shares. The registration and shareholder meeting deadlines are tied to the offering's closing date, while the announced timing for the week of the agreement concerns completion of the acquisition of the two companies.