10-Q/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Amendment No. 1)
(Mark One)
(X)	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
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.)
6464 185th Ave NE, Suite 101, Redmond, Washington, 98052 (Address of principal executive offices, including zip code)
(425) 881-6444 (Registrant’s telephone number, including area code)

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

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 X   No __

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

 Large accelerated filer __  Accelerated filer __  Non-accelerated filer __  Smaller reporting company X 

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

Shares of Common Stock, no par value, outstanding as of July 30, 2012:

7,738,114

1

Explanatory Note

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q for Data I/O Corporation (the "Company") for the period ended June 30, 2012, filed with the Securities and Exchange Commission on August 10, 2012 (the "Form 10-Q"), is to furnish Exhibit 101 to the Form 10-Q within the 30-day grace period ascribed by Rule 405(a)(2) of Regulation S-T, applicable for the first quarterly period in which detailed footnote tagging is required.

This Amendment No. 1 does not otherwise change or update the disclosures set forth in the Form 10-Q as originally filed and does not otherwise reflect events occurring after the original filing of the Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files contained in Exhibit 101 are not deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

Item 6.Exhibits 

(a) Exhibits 

10Material Contracts:

10.23Amended and Restated 2000 Stock Compensation Incentive Plan dated January 25, 2012 (Incorporated by reference to Appendix A of Data I/O’s proxy statement filed on April 3, 2012) *

                 31     Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002:

31.1Chief Executive Officer Certification *

31.2Chief Financial Officer Certification *

                 32     Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002:

32.1Chief Executive Officer Certification *

32.2Chief Financial Officer Certification *

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

* Previously filed or furnished, as applicable, as an exhibit (or incorporated by reference) to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2012.

**Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

2

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.

DATA I/O CORPORATION

                                                                                                                                                              (REGISTRANT)

DATED:   September 13, 2012

                                                                                                                                                       By: //S//Joel S. Hatlen

                                                                                                                                                                Joel S. Hatlen

                                                                                                                                                      Vice President - Finance

                                                                                                                                                        Chief Financial Officer

                                                                                                                                                       Secretary and Treasurer

                                                                                                                          (Principal Financial Officer and Duly Authorized Officer)

                                                                                                                                        By: //S//Frederick R. Hume

                                                                                                                       Frederick R. Hume

President

                                                                                                                Chief Executive Officer

                                                                                                                          (Principal Executive Officer and Duly Authorized Officer)

3

Exhibit Index

10Material Contracts:

10.24Amended and Restated 2000 Stock Compensation Incentive Plan dated January 25, 2012 (Incorporated by reference to Appendix A of Data I/O’s proxy statement filed on April 3, 2012) *

                 31     Certification pursuant to Section 302 of the Sarbanes Oxley Act of 2002:

31.3Chief Executive Officer Certification *

31.4Chief Financial Officer Certification *

                 32     Certification pursuant to Section 906 of the Sarbanes Oxley Act of 2002:

32.3Chief Executive Officer Certification *

32.4Chief Financial Officer Certification *

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

* Previously filed or furnished, as applicable, as an exhibit (or incorporated by reference) to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2012.

**Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

4

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NOTE 7 - OTHER COMMITMENTS (Details Narrative) (USD $)	Jun. 30, 2012
Commitments and Contingencies Disclosure [Abstract]
Purchase and other obligations	$ 911,000
2012	$ 4,000

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NOTE 9 - EARNINGS PER SHARE (Details Narrative)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share [Abstract]
Anti dilutive options	1,086,892	310,209	905,571	223,362

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NOTE 10 - SHARE-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2012

Note 10 - Share-Based Compensation Tables

Impact on operations of recording share-based compensation

The impact on our results of operations of recording share-based compensation for the three and six months ended June 30, 2012 and June 30, 2011, respectively, was as follows:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
(in thousands)
Cost of goods sold	$15	$12	$26	$21
Research and development	34	23	60	32
Selling, general and administrative	101	88	195	157
Total share-based compensation	$150	$123	$281	$210
Impact on net income per share:
Basic and diluted	($0.02)	($0.01)	($0.03)	($0.02)

Fair value of share-based awards for employee stock options

The fair value of share-based awards for employee stock options was estimated using the Black-Scholes valuation model.  The following weighted average assumptions were used to calculate the fair value of stock options granted during the three months and six months ended June 30, 2012 and 2011:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
Risk-free interest rates	0.61%	1.41%	0.62%	1.40%
Volatility factors	0.53	0.55	0.53	0.55
Expected life of the option in years	4.00	4.00	4.00	4.00
Expected dividend yield	None	None	None	None

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NOTE 9 - EARNINGS PER SHARE (Details) (in thousands, except per share data) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share [Abstract]
Net income (loss)	$ (57)	$ 398	$ (1,735)	$ 930
weighted-average shares	7,734	9,176	8,250	9,103
Employee stock options and awards	0	167	0	186
Adjusted weighted-average shares and assumed conversions of stock options	7,734	9,343	8,250	9,289
Total basic earnings per share	$ (0.01)	$ 0.04	$ (0.21)	$ 0.10
Total diluted earnings per share	$ (0.01)	$ 0.04	$ (0.21)	$ 0.10

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NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET

Property and equipment consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Leasehold improvements	$478	$479
Equipment	7,536	7,515
	8,014	7,994
Less accumulated depreciation	6,759	6,505
Property and equipment, net	$1,255	$1,489

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NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET (Details) (in thousands) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
Intangible software technology	$ 3,089	$ 3,089
Less accumulated amortization	517	296
Intangible software technology, net	$ 2,572	$ 2,793

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NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET (Details) (in thousands) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Property, Plant and Equipment [Abstract]
Leasehold improvements	$ 478	$ 479
Equipment	7,536	7,515
Property and equipment gross	8,014	7,994
Less accumulated depreciation	6,759	6,505
Property and equipment, net	$ 1,255	$ 1,489

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NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET (Details 1) (in thousands) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Notes to Financial Statements
2012 (remaining)	$ 219
2013	438
2014	438
2015	438
2016	438
Thereafter	601
Total	$ 2,572	$ 2,793

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NOTE 5 - OTHER ACCRUED LIABILITIES (Details) (in thousands) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Payables and Accruals [Abstract]
Product warranty	$ 316	$ 396
Sales return reserve	70	81
Other taxes	188	100
Other	124	133
Other accrued liabilities	$ 698	$ 710

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NOTE 2 - INVENTORIES

6 Months Ended

Jun. 30, 2012

Inventory Disclosure [Abstract]

NOTE 2 - INVENTORIES

Inventories consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Raw material	$2,602	$2,498
Work-in-process	1,321	985
Finished goods	712	481
Inventories	$4,635	$3,964

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NOTE 6 - OPERATING LEASE COMMITMENTS (Details) (in thousands) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2012 (remaining)	$ 569
2013	972
2014	848
2015	800
2016	505
Thereafter
Total	$ 3,694

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NOTE 10 - SHARE-BASED COMPENSATION (Details 1)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Risk-free interest rates	0.61%	1.41%	0.62%	0.14%
Volatility factors	53.00%	55.00%	53.00%	55.00%
Expected life of the option in years	4 years	4 years	4 years	4 years
Expected dividend yield	0.00%	0.00%	0.00%	0.00%

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CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 11,031	$ 18,120
Trade accounts receivable, net of allowance for doubtful accounts of $89 and $115	3,639	4,351
Inventories	4,635	3,964
Other current assets	397	543
TOTAL CURRENT ASSETS	19,702	26,978
Property, plant and equipment - net	1,255	1,489
Intangible software technology - net	2,572	2,793
Other assets	84	85
TOTAL ASSETS	23,613	31,345
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	946	1,122
Accrued compensation	1,317	1,255
Deferred revenue	1,413	1,464
Other accrued liabilities	698	710
Income taxes payable	63	72
TOTAL CURRENT LIABILITIES	4,437	4,623
Long-term other payables	242	253
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,7,738,114 shares as of June 30 2012 and 9,207,730 shares as of December 31, 2011	17,674	23,414
Accumulated earnings	228	1,963
Accumulated other comprehensive income	1,032	1,092
TOTAL STOCKHOLDERS' EQUITY	18,934	26,469
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 23,613	$ 31,345

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CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) (unaudited (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ (1,735)	$ 930
Adjustments to reconcile income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	649	573
Equipment transferred to cost of goods sold	185	83
Share-based compensation	281	210
Net change in:
Trade accounts receivable	683	(182)
Inventories	(681)	(313)
Other current assets	143	73
Accounts payable and accrued liabilities	(126)	(779)
Deferred revenue	(71)	(222)
Other long-term liabilities	20	189
Deposits and other long-term assets	(1)	59
Net cash provided by (used in) operating activities	(653)	621
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment	(378)	(596)
Purchase of software technology	0	(2,089)
Cash provided by (used in) investing activities	(378)	(2,685)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock	6	5
Repurchase of common stock	(6,026)	0
Payment of capital lease obligation	0	(69)
Cash provided by (used in) financing activities	(6,020)	(64)
Decrease in cash and cash equivalents	(7,051)	(2,128)
Effects of exchange rate changes on cash	(38)	176
Cash and cash equivalents at beginning of period	18,120
Cash and cash equivalents at end of period	11,031	16,990
Supplemental disclosure of non-cash financing activities:
Issuance of common stock for consideration in asset purchase 163,934 shares	$ 0	$ 1,000

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NOTE 5 - OTHER ACCRUED LIABILITIES (Details 1) (in thousands) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Payables and Accruals [Abstract]
Liability, beginning balance	$ 396
Net expenses	350
Warranty claims	(350)
Accrual revisions	(80)
Liability, ending balance	$ 316

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NOTE 5 - OTHER ACCRUED LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2012

Note 5 - Other Accrued Liabilities Tables

Other accrued liabilities

Other accrued liabilities consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Product warranty	$316	$396
Sales return reserve	70	81
Other taxes	188	100
Other	124	133
Other accrued liabilities	$698	$710

Product warranty liability

The changes in Data I/O's product warranty liability for the six months ending June 30, 2012 are as follows:
	June 30, 2012
(in thousands)
Liability, beginning balance	$396
Net expenses	350
Warranty claims	(350)
Accrual revisions	(80)
Liability, ending balance	$316

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NOTE 11- SHARE REPURCHASE PROGRAMS (Details) (USD $)	5 Months Ended	1 Months Ended
	Mar. 31, 2012	Jan. 31, 2012 OneMillionProgramMember	Dec. 31, 2011 OneMillionProgramMember	Nov. 30, 2011 OneMillionProgramMember	Mar. 31, 2012 SixMillionProgramMember	Feb. 29, 2012 SixMillionProgramMember	Jan. 31, 2012 SixMillionProgramMember
Total Number of Shares Purchased	1,545,705	10,581	30,848	32,068	1,056,514	243,862	171,832
Average Price Paid per Share	$ 4.02	$ 3.90	$ 4.07	$ 3.88	$ 3.95	$ 4.25	$ 4.18
Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program	1,545,705	10,581	30,848	32,068	1,056,514	243,862	171,832
Approximate Dollar Value of Shares that May Yet Be Purchased under the Program		$ 0	$ 747,463	$ 874,328	$ 0	$ 4,228,920	$ 5,274,294

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NOTE 9 - EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2012

Note 9 - Earnings Per Share Tables

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
(in thousands except per share data)
Numerator for basic and diluted earnings per share:
Net income (loss)	($57)	$398	($1,735)	$930
Denominator for basic earnings per share-
weighted-average shares	7,734	9,176	8,250	9,103
Employee stock options and awards	-	167	-	186
Denominator for diluted earnings per share-
adjusted weighted-average shares and      assumed conversions of stock   options	7,734	9,343	8,250	9,289
Basic and diluted earnings per share:
Total basic earnings per share	($0.01)	$0.04	($0.21)	$0.10
Total diluted earnings per share	($0.01)	$0.04	($0.21)	$0.10

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NOTE 1 - FINANCIAL STATEMENT PREPARATION

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NOTE 1 - FINANCIAL STATEMENT PREPARATION

Data I/O prepared the financial statements as of June 30, 2012 and June 30, 2011 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, 2011 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 months and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.These financial statements should be read in conjunction with the annual audited financial statements and the accompanying notes included in the Company's Form 10-K for the year ended December 31, 2011.

Revenue Recognition

Data I/O generally recognizes revenue at the time products are shipped.  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.  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 amount of revenue recognized is affected by our judgments as to the collectability of the transaction, the existence of an acceptance clause or whether an arrangement includes multiple elements and if so, whether specific objective evidence of selling price exists for those elements.  Allocation between multiple elements is done based on objective evidence of selling price based on a selling price hierarchy, including discounts.    

Installation that is considered perfunctory includes any installation that can be performed by other parties, such as distributors, other vendors, or in most cases the customers themselves.  This takes into account the complexity, skill and training needed as well as customer expectations regarding installation.  The revenue related to products requiring installation that is perfunctory is recognized at the time of shipment provided that persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, and collectability is reasonably assured.  The measure of standalone fair value of the product versus the service installation value component is by the amount we pay to independent representative service groups or the amount of additional discount given to independent distributors to provide the service installation (published price).

We record revenue from the sale of service and update contracts as deferred revenue and we recognize it on a straight-line basis over the contractual period, which is typically one year.  We establish a reserve for sales returns based on historical trends in product returns and estimates for new items.  We have a stated return policy that customers can return standard products for any reason within 30 days after delivery, provided that the returned product is received in its original condition, including all packaging materials, for a refund of the price paid less a restocking charge of 30% of the total amount invoiced for the product returned, unless such restocking charge is waived by us.  We recognize revenue when the price is fixed or determinable, the buyer has paid or is obligated to pay and 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 Data I/O and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. 

When we sell software separately, we recognize software revenue upon shipment provided that no significant obligations remain on our part, substantive acceptance conditions, if any, have been met and when the fee is fixed and determinable and when collection is deemed probable.

Certain fixed-price engineering services contracts that require significant production, modification, or customization of software, are accounted for using the percentage-of-completion method.  We use the percentage-of-completion method of accounting because it is the most accurate method to recognize revenue based on the nature and scope of certain of our fixed-price engineering services contracts.  It is a better measure of periodic income results than other methods and it better matches revenue recognized with the cost incurred.  Percentage-of-completion is measured based primarily on input measures such as hours incurred to date compared to estimated total hours at completion, with consideration given to output measures, such as contract milestones, when applicable.

Significant judgment is required when estimating total hours and progress to completion on these arrangements which determines the amount of revenue we recognize as well as whether a loss is recognized if expected to be incurred upon project completion.  Revisions to hour and cost estimates are incorporated in the period the amounts are recognized if the results of the period have not been reported; otherwise, the revision of estimates are recognized in the period in which the facts that give rise to the revision become known.

Data I/O transfers certain products out of service from their internal use and makes them available for sale.  The products transferred are 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.

Stock-Based Compensation Expense

Data I/O measures and recognizes compensation expense as required for all share-based payment awards, including employee stock options and restricted stock awards, based on estimated fair values on the grant dates. Total share-based compensation for the three and six months ended June 30, 2012 was $150,121 and $281,475 respectively.  Total shared based compensation for the three and six months ended June 30, 2011 was $122,788 and $209,900 respectively.

Income Tax

Historically when accounting for uncertainty in income taxes, Data I/O has not incurred any interest or penalties associated with tax matters and no interest or penalties were recognized during the three and six months ended June 30, 2012.  However, the Company has adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense.

Data I/O has incurred net operating losses in certain past years.  We continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance associated with our net operating losses and credit carryforwards, as sufficient uncertainty exists regarding our ability to realize such tax assets in the future. There was $117,000  unrecognized tax benefits related to uncertain tax positions and related valuation allowance as of June 30, 2012.

Tax years that remain open for examination include 2008, 2009, 2010 and 2011in the United States of America. In addition, tax years from 2000 to 2007 may be subject to examination in the event that the Company utilizes the net operating losses and credit carryforwards from those years in its current or future year tax returns.

Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”).  This ASU amends requirements for the presentation of other comprehensive income (OCI), requiring presentation of comprehensive income in either, a single, continuous statement of comprehensive income or on separate but consecutive statements, the statement of operations and the statement of OCI.  We have adopted this amendment effective for the year ended December 31, 2011.  The adoption of this guidance did not impact our financial position, results of operations or cash flows and only impacts the presentation of OCI on the financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Reporting Standards (“ASU No. 2011-04”)  which amended the guidance regarding fair value measurement and disclosure. The amended guidance clarifies the application of existing fair value measurement and disclosure requirements. The amendment was effective for us at the beginning of January 2012, with early adoption prohibited. The adoption of this amendment did not materially affect our financial statements.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (in thousands, except per share data) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
CURRENT ASSETS:
Trade accounts receivable, net of allowance	$ 89	$ 115
STOCKHOLDERS' EQUITY
Preferred stock, authorized shares (including Series A)	5,000,000	5,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, authorized shares	30,000,000	30,000,000
Common stock, issued shares	7,738,114	9,207,730
Common stock, outstanding shares	7,738,114	9,207,730

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NOTE 11- SHARE REPURCHASE PROGRAMS

6 Months Ended

Jun. 30, 2012

NOTE 11- SHARE REPURCHASE PROGRAMS

On October 20, 2011, we announced a stock repurchase program to buy back up to $1 million dollars of stock over four quarters.  Through December 31, 2011, Data I/O repurchased 62,916 shares of stock at an average price of $3.97 for a total repurchase amount of $249,986 plus $2,551 in commissions.  For the quarter ended March 31, 2012 an additional 10,581 shares were repurchased under this plan at an average price of $3.90 for a total repurchase amount of $41,274 plus $432 in commissions.  Since this program began, we have repurchased 73,497 shares of stock at an average price of $3.96 for a total of $291,260 plus $2,983 in commissions.  On January 13, 2012, this stock repurchase program was terminated.

On January 9, 2012, our board of directors approved a new and expanded 2012 share repurchase program with provisions to buy back up to $6 million dollars of stock.  The program included establishing a Rule 10b5-1 plan under the Exchange Act to provide flexibility to make purchases at any time.  The 10b5-1 trading plan allows us to repurchase our common stock in the open market during periods in which stock trading is otherwise closed for us.  For the quarter ended March 31, 2012, 1,472,208 shares of stock have been repurchased at an average price of $4.03 for a total of $5,927,937 plus $56,938 in commissions, completing the program. 

There has been no further share repurchase program activity during the quarter ended June 30, 2012.

The following is a summary of share repurchase activity under both plans through June 30, 2012:

		Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program	Approximate Dollar Value of Shares that May Yet Be Purchased under the Program
$1 million progam dated October 20, 2011:
	November 2011	32,068	$3.88	32,068	$874,328
	December 2011	30,848	$4.07	30,848	$747,463
	January 2012	10,581	$3.90	10,581	$0	(1)
$6 million program dated January 9, 2012:
	January 2012	171,832	$4.18	171,832	$5,274,294
	February 2012	243,862	$4.25	243,862	$4,228,920
	March 2012	1,056,514	$3.95	1,056,514	$0	(2)
	Total	1,545,705	$4.02	1,545,705
(1) Program terminated January 13, 2012
(2) Program terminated March 26, 2012

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Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2012	Jul. 30, 2012
Document And Entity Information
Entity Registrant Name	DATA I/O CORPORATION
Entity Central Index Key	0000351998
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float		$ 20,885,233
Entity Common Stock, Shares Outstanding		7,738,114
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012

XML

NOTE 1 - FINANCIAL STATEMENT PREPARATION (Policies)

6 Months Ended

Jun. 30, 2012

Note 1 - Financial Statement Preparation Policies

Revenue Recognition

Data I/O generally recognizes revenue at the time products are shipped.  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.  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 amount of revenue recognized is affected by our judgments as to the collectability of the transaction, the existence of an acceptance clause or whether an arrangement includes multiple elements and if so, whether specific objective evidence of selling price exists for those elements.  Allocation between multiple elements is done based on objective evidence of selling price based on a selling price hierarchy, including discounts.    

Installation that is considered perfunctory includes any installation that can be performed by other parties, such as distributors, other vendors, or in most cases the customers themselves.  This takes into account the complexity, skill and training needed as well as customer expectations regarding installation.  The revenue related to products requiring installation that is perfunctory is recognized at the time of shipment provided that persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, and collectability is reasonably assured.  The measure of standalone fair value of the product versus the service installation value component is by the amount we pay to independent representative service groups or the amount of additional discount given to independent distributors to provide the service installation (published price).

We record revenue from the sale of service and update contracts as deferred revenue and we recognize it on a straight-line basis over the contractual period, which is typically one year.  We establish a reserve for sales returns based on historical trends in product returns and estimates for new items.  We have a stated return policy that customers can return standard products for any reason within 30 days after delivery, provided that the returned product is received in its original condition, including all packaging materials, for a refund of the price paid less a restocking charge of 30% of the total amount invoiced for the product returned, unless such restocking charge is waived by us.  We recognize revenue when the price is fixed or determinable, the buyer has paid or is obligated to pay and 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 Data I/O and we do not have significant obligations for future performance to directly bring about the resale of the product by the buyer. 

When we sell software separately, we recognize software revenue upon shipment provided that no significant obligations remain on our part, substantive acceptance conditions, if any, have been met and when the fee is fixed and determinable and when collection is deemed probable.

Certain fixed-price engineering services contracts that require significant production, modification, or customization of software, are accounted for using the percentage-of-completion method.  We use the percentage-of-completion method of accounting because it is the most accurate method to recognize revenue based on the nature and scope of certain of our fixed-price engineering services contracts.  It is a better measure of periodic income results than other methods and it better matches revenue recognized with the cost incurred.  Percentage-of-completion is measured based primarily on input measures such as hours incurred to date compared to estimated total hours at completion, with consideration given to output measures, such as contract milestones, when applicable. 

Significant judgment is required when estimating total hours and progress to completion on these arrangements which determines the amount of revenue we recognize as well as whether a loss is recognized if expected to be incurred upon project completion.  Revisions to hour and cost estimates are incorporated in the period the amounts are recognized if the results of the period have not been reported; otherwise, the revision of estimates are recognized in the period in which the facts that give rise to the revision become known.

Data I/O transfers certain products out of service from their internal use and makes them available for sale.  The products transferred are 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.

Stock-Based Compensation Expense

For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method.  For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures.  

The impact on our results of operations of recording share-based compensation for the three and six months ended June 30, 2012 and June 30, 2011, respectively, was as follows:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
(in thousands)
Cost of goods sold	$15	$12	$26	$21
Research and development	34	23	60	32
Selling, general and administrative	101	88	195	157
Total share-based compensation	$150	$123	$281	$210
Impact on net income per share:
Basic and diluted	($0.02)	($0.01)	($0.03)	($0.02)

The fair value of share-based awards for employee stock options was estimated using the Black-Scholes valuation model.  The following weighted average assumptions were used to calculate the fair value of stock options granted during the three months and six months ended June 30, 2012 and 2011:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
Risk-free interest rates	0.61%	1.41%	0.62%	1.40%
Volatility factors	0.53	0.55	0.53	0.55
Expected life of the option in years	4.00	4.00	4.00	4.00
Expected dividend yield	None	None	None	None

Option grants during the three and six months ended June 30, 2012 was 175,000 and 190,000 respectively.  Option grants during the  three and six months ended June 30, 2011 was 0 and 322,000 respectively.

At June 30, 2012, there remained approximately $1,182,586 of unamortized expected future compensation expense associated with unvested option grants and restricted stock awards, with a remaining weighted average amortization period of 2.59 years.

Income Tax

Historically when accounting for uncertainty in income taxes, Data I/O has not incurred any interest or penalties associated with tax matters and no interest or penalties were recognized during the three and six months ended June 30, 2012.  However, the Company has adopted a policy whereby amounts related to penalties associated with tax matters are classified as general and administrative expense when incurred and amounts related to interest associated with tax matters are classified as interest income or interest expense.

Data I/O has incurred net operating losses in certain past years.  We continue to maintain a valuation allowance for the full amount of the net deferred tax asset balance associated with our net operating losses and credit carryforwards, as sufficient uncertainty exists regarding our ability to realize such tax assets in the future. There was $117,000  unrecognized tax benefits related to uncertain tax positions and related valuation allowance as of June 30, 2012.

Tax years that remain open for examination include 2008, 2009, 2010 and 2011in the United States of America. In addition, tax years from 2000 to 2007 may be subject to examination in the event that the Company utilizes the net operating losses and credit carryforwards from those years in its current or future year tax returns.

Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”).  This ASU amends requirements for the presentation of other comprehensive income (OCI), requiring presentation of comprehensive income in either, a single, continuous statement of comprehensive income or on separate but consecutive statements, the statement of operations and the statement of OCI.  We have adopted this amendment effective for the year ended December 31, 2011.  The adoption of this guidance did not impact our financial position, results of operations or cash flows and only impacts the presentation of OCI on the financial statements.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Reporting Standards (“ASU No. 2011-04”)  which amended the guidance regarding fair value measurement and disclosure. The amended guidance clarifies the application of existing fair value measurement and disclosure requirements. The amendment was effective for us at the beginning of January 2012, with early adoption prohibited. The adoption of this amendment did not materially affect our financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Statement [Abstract]
Net Sales	$ 5,360	$ 6,849	$ 9,039	$ 13,892
Cost of goods sold	2,419	2,841	4,157	5,720
Gross margin	2,941	4,008	4,882	8,172
Operating expenses:
Research and development	1,427	1,276	2,819	2,627
Selling, general and administrative	1,996	2,215	4,245	4,388
Total operating expenses	3,423	3,491	7,064	7,015
Operating income(loss)	(482)	517	(2,182)	1,157
Non-operating income (expense):
Interest income	174	19	207	32
Interest expense	0	(1)	0	(2)
Foreign currency transaction gain (loss)	(45)	(32)	(36)	(66)
Total non-operating income (expense)	129	(14)	171	(36)
Income (loss) before income taxes	(353)	503	(2,011)	1,121
Income tax (expense) benefit	296	(105)	276	(191)
Net income (loss)	$ (57)	$ 398	$ (1,735)	$ 930
Basic earnings per share	$ (0.01)	$ 0.04	$ (0.21)	$ 0.10
Diluted earnings per share	$ (0.01)	$ 0.04	$ (0.21)	$ 0.10
Weighted-average basic shares	7,734	9,176	8,250	9,103
Weighted-average diluted shares	7,734	9,343	8,250	9,289

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NOTE 6 - OPERATING LEASE COMMITMENTS

6 Months Ended

Jun. 30, 2012

Text Block [Abstract]

NOTE 6 - OPERATING LEASE COMMITMENTS

Data I/O has commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as follows:

For the years ending December 31:

	Operating Leases
(in thousands)
2012 (remaining)	$569
2013	972
2014	848
2015	800
2016	505
Thereafter	-
Total	$3,694

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NOTE 5 - OTHER ACCRUED LIABILITIES

6 Months Ended

Jun. 30, 2012

Note 5 - Other Accrued Liabilities

NOTE 5 - OTHER ACCRUED LIABILITIES

Other accrued liabilities consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Product warranty	$316	$396
Sales return reserve	70	81
Other taxes	188	100
Other	124	133
Other accrued liabilities	$698	$710
The changes in Data I/O's product warranty liability for the six months ending June 30, 2012 are as follows:
	June 30, 2012
(in thousands)
Liability, beginning balance	$396
Net expenses	350
Warranty claims	(350)
Accrual revisions	(80)
Liability, ending balance	$316

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NOTE 6 - OPERATING LEASE COMMITMENTS (Tables)

6 Months Ended

Jun. 30, 2012

Note 6 - Operating Lease Commitments Tables

OPERATING LEASE COMMITMENTS

Data I/O has commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as follows:

For the years ending December 31:

	Operating Leases
(in thousands)
2012 (remaining)	$569
2013	972
2014	848
2015	800
2016	505
Thereafter	-
Total	$3,694

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NOTE 2 - INVENTORIES (Tables)

6 Months Ended

Jun. 30, 2012

Note 2 - Inventories Tables

INVENTORIES

Inventories consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Raw material	$2,602	$2,498
Work-in-process	1,321	985
Finished goods	712	481
Inventories	$4,635	$3,964

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NOTE 9 - EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

NOTE 9 - 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.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
(in thousands except per share data)
Numerator for basic and diluted earnings per share:
Net income (loss)	($57)	$398	($1,735)	$930
Denominator for basic earnings per share-
weighted-average shares	7,734	9,176	8,250	9,103
Employee stock options and awards	-	167	-	186
Denominator for diluted earnings per share-
adjusted weighted-average shares and      assumed conversions of stock   options	7,734	9,343	8,250	9,289
Basic and diluted earnings per share:
Total basic earnings per share	($0.01)	$0.04	($0.21)	$0.10
Total diluted earnings per share	($0.01)	$0.04	($0.21)	$0.10

The computation for the three and six months ended June 30, 2012 excludes 1,086,892 and 905,571 options, respectively, to purchase common stock as their effect is anti-dilutive.  The computation for the three and six months ended June 30, 2011 excludes 310,209 and 223,362 options, respectively, to purchase common stock as their effect is anti-dilutive.

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NOTE 7 - OTHER COMMITMENTS

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

NOTE 7 - OTHER COMMITMENTS

Data I/O has 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 June 30, 2012, the purchase and other obligations totaled $911,000 of which all but $4,000 are 2012 commitments.

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NOTE 8 - CONTINGENCIES

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

NOTE 8 - CONTINGENCIES

As of June 30, 2012, Data I/O was not a party to any legal proceedings, 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.

Indemnification Arrangements:  We may, from time to time in the ordinary course of our business enter into contractual arrangements with third parties that include indemnification obligations.  Under these contractual arrangements, we have agreed to defend, indemnify and/or hold the third party harmless from and against certain liabilities.  These arrangements include indemnities in favor of customers in the event that our programming system products infringe a third party's intellectual property and indemnities in favor of our lessors in connection with facility leasehold liabilities that we may cause.  In addition, we have entered into indemnification agreements with our directors and certain of our officers, and our bylaws contain indemnification obligations in favor of our directors, officers and agents.  These indemnity arrangements may limit the type of the claim, the total amount that we can be required to be paid in connection with the indemnification obligation and the time within which an indemnification claim can be made.  The duration of the indemnification obligation may vary, and for most arrangements, survives the agreement term and is indefinite.  We believe that substantially all of our indemnity arrangements provide either for limitations on the maximum potential future payments we could be obligated to make, or for limitations on the types of claims and damages we could be obligated to indemnify, or both.  However, it is not possible to determine or reasonably estimate the maximum potential amount of future payments under these indemnification obligations due to the varying terms of such obligations, a lack of history of prior indemnification claims, the unique facts and circumstances involved in each particular contractual arrangement and in each potential future claim for indemnification, and the contingency of any potential liabilities upon the occurrence of events that are not reasonably determinable.  We have not had any requests for indemnification under these arrangements.  Our management believes that any liability for these indemnity arrangements would not be material to our accompanying consolidated financial statements.  We have not recorded any liabilities for these indemnification arrangements on our consolidated balance sheet as of June 30, 2012.

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NOTE 10 - SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2012

Share-based Compensation [Abstract]

NOTE 10 - SHARE-BASED COMPENSATION

For share-based awards granted, we have recognized compensation expense based on the estimated grant date fair value method.  For these awards we have recognized compensation expense using a straight-line amortization method and reduced for estimated forfeitures.  

The impact on our results of operations of recording share-based compensation for the three and six months ended June 30, 2012 and June 30, 2011, respectively, was as follows:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
(in thousands)
Cost of goods sold	$15	$12	$26	$21
Research and development	34	23	60	32
Selling, general and administrative	101	88	195	157
Total share-based compensation	$150	$123	$281	$210
Impact on net income per share:
Basic and diluted	($0.02)	($0.01)	($0.03)	($0.02)

The fair value of share-based awards for employee stock options was estimated using the Black-Scholes valuation model.  The following weighted average assumptions were used to calculate the fair value of stock options granted during the three months and six months ended June 30, 2012 and 2011:

	Three Months Ended		Six Months Ended
	June 30, 2012	June 30, 2011	June 30, 2012	June 30, 2011
Risk-free interest rates	0.61%	1.41%	0.62%	1.40%
Volatility factors	0.53	0.55	0.53	0.55
Expected life of the option in years	4.00	4.00	4.00	4.00
Expected dividend yield	None	None	None	None

Option grants during the three and six months ended June 30, 2012 was 175,000 and 190,000 respectively.  Option grants during the  three and six months ended June 30, 2011 was 0 and 322,000 respectively.

At June 30, 2012, there remained approximately $1,182,586 of unamortized expected future compensation expense associated with unvested option grants and restricted stock awards, with a remaining weighted average amortization period of 2.59 years.

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NOTE 10 - SHARE-BASED COMPENSATION (Details) (in thousands, except per share data) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Share-based compensation	$ 150	$ 123	$ 281	$ 210
Impact on net income: Basic and diluted	$ (0.02)	$ (0.01)	$ (0.03)	$ (0.02)
Cost Of Goods Sold
Share-based compensation	15	12	26	21
Research and Development Expense
Share-based compensation	34	23	60	32
Selling, General and Administrative Expenses
Share-based compensation	$ 101	$ 88	$ 195	$ 157

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NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET (Tables)

6 Months Ended

Jun. 30, 2012

Note 4 - Intangible Software Technology Net Tables

Intangible software technology

The following is a summary of the Company’s intangible software technology:
	June 30, 2012	December 31, 2011
(in thousands)
Intangible software technology	$3,089	$3,089
Less accumulated amortization	517	296
Intangible software technology, net	$2,572	$2,793

Future amortization expense

Future amortization expense related to this intangible asset is as follows:
	Amortization
(in thousands)
2012 (remaining)	$219
2013	438
2014	438
2015	438
2016	438
Thereafter	601
Total	$2,572

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NOTE 11 - SHARE REPURCHASE PROGRAMS (Tables)

6 Months Ended

Jun. 30, 2012

Note 11 - Share Repurchase Programs Tables

SHARE REPURCHASE PROGRAMS

The following is a summary of share repurchase activity under both plans through June 30, 2012:

		Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Repurchase Program	Approximate Dollar Value of Shares that May Yet Be Purchased under the Program
$1 million progam dated October 20, 2011:
	November 2011	32,068	$3.88	32,068	$874,328
	December 2011	30,848	$4.07	30,848	$747,463
	January 2012	10,581	$3.90	10,581	$0	(1)
$6 million program dated January 9, 2012:
	January 2012	171,832	$4.18	171,832	$5,274,294
	February 2012	243,862	$4.25	243,862	$4,228,920
	March 2012	1,056,514	$3.95	1,056,514	$0	(2)
	Total	1,545,705	$4.02	1,545,705

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NOTE 10 - SHARE-BASED COMPENSATION (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Note 10 - Share-Based Compensation Details Narrative
Option grants	175,000	312,500	190,000	322,000
Unamortized expected future compensation expense	$ 1,182,586		$ 1,182,586
Remaining weighted average amortization period	2 years 7 months 2 days		2 years 7 months 2 days

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands)(Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements Of Comprehensive Income Loss In Thousandsunaudited
Net Income (loss)	$ (57)	$ 398	$ (1,735)	$ 930
Other comprehensive income:
Foreign currency translation gain (loss)	(163)	128	(60)	327
Comprehensive income (loss)	$ (220)	$ 526	$ (1,795)	$ 1,257

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NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

NOTE 4 - INTANGIBLE SOFTWARE TECHNOLOGY, NET

On April 29, 2011, Data I/O purchased software technology for $2 million in cash and issuance of 163,934 shares of Data I/O common stock, valued at $1 million on the date of purchase.  Acquisition costs of $89,000 were capitalized as part of the transaction.  The transaction was accounted for as an asset purchase.

For a period of five years, Data I/O will pay the seller royalties of 4% of directly associated revenues relating to this acquired software technology.  We will expense the royalty payments when they are incurred as we could not reasonably estimate the future royalty payment amount at the time of acquisition.  For the first three years, Data I/O will pay an additional royalty of 2.5% of directly associated revenues relating to this acquired software technology to the original developer of the technology.  No royalty expense has been recognized since the acquisition date.

The following is a summary of the Company’s intangible software technology:
	June 30, 2012	December 31, 2011
(in thousands)
Intangible software technology	$3,089	$3,089
Less accumulated amortization	517	296
Intangible software technology, net	$2,572	$2,793

Future amortization expense related to this intangible asset is as follows:
	Amortization
(in thousands)
2012 (remaining)	$219
2013	438
2014	438
2015	438
2016	438
Thereafter	601
Total	$2,572

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NOTE 2 - INVENTORIES (Details) in thousands (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventory Disclosure [Abstract]
Raw material	$ 2,602	$ 2,498
Work-in-process	1,321	985
Finished goods	712	481
Inventories	$ 4,635	$ 3,964

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NOTE 1 - FINANCIAL STATEMENT PREPARATION (Details Narrative) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Total share-based compensation	$ 150,121	$ 122,788	$ 281,475	$ 209,900
Unrecognized tax benefits	$ 117,000		$ 117,000

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NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2012

Note 3 - Property Plant And Equipment Net Tables

PROPERTY, PLANT AND EQUIPMENT, NET

Property and equipment consisted of the following components:
	June 30, 2012	December 31, 2011
(in thousands)
Leasehold improvements	$478	$479
Equipment	7,536	7,515
	8,014	7,994
Less accumulated depreciation	6,759	6,505
Property and equipment, net	$1,255	$1,489