Data IO Corporation

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Data I/O Corporation

• Investor Presentation
• Fred Hume
• August, 2008

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Safe harbor statement

• Statements in this news release concerning future
  revenues, margins, results from operations,
  financial position, economic conditions, product
  releases and any other statement that may be
  construed as a prediction of future performance
  or events are forward-looking statements which
  involve known and unknown risks, uncertainties
  and other factors which may cause actual results
  to differ materially from those expressed or
  implied by such statements.  These factors
  include uncertainties as to levels of orders,
  ability to record revenues based upon the timing
  of product deliveries and installations, market
  acceptance of new products, changes in economic
  conditions and market demand, pricing and other
  activities by competitors, and other risks
  including those described from time to time in
  the Company's filings on Forms 10K and 10Q with
  the Securities and Exchange Commission (SEC),
  press releases and other communications. The
  accuracy and completeness of forward-looking
  statements should not be unduly relied upon.
  Data I/O is under no duty to update any of these
  forward-looking statements.

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Data I/O at a Glance

• World leader in solutions for programming Flash
  memory and microcontrollers
• DAIO founded 1972
• Market capitalization 50M
• Market share 2-3 times next largest competitor
• Razor/razor-blade model with capital equipment
  sales and follow-on consumables
• High gross margins and low fixed expense from
  restructuring in Q207 provides substantial
  financial leverage
• Relationship with premier customers, APPL, NOK,
  RIMM, MOT, LG, MSFT, HTC, etc. provides stability
  and growth
• Addresses the programming market for 12 billion
  programmable devices shipped annually

Germany
China
USA
Mexico
India
Brazil
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DAIOs has solutions for nearly every programming
application
Off-line Programming
Desktop Automated Programming
Volume
PS Series
Engineering, RD
In-System Programming
FLX500
FlashPAK
ImageWriter
Variety
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Sample customer applications
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Sample customer applications
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Data I/O has an attractive financial model

• Restructuring completed in Q207
• 60 gross margin goal with some
  quarter-to-quarter variation based on channel and
  product mix
• Low fixed expense on the order of 3.2M at the
  6M revenue level
• Reduced quarterly breakeven to 5.3M

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Restructuring in Q207 provided substantial
financial leverage
Full expense savings 1M per quarter
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Cash has grown substantially (in millions)
Q108 cash includes 2.1M from patent sale
Includes 2.1M from the sale of patents in Q108
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The business is shifting from manual programmers
to higher value automated solutions
2007
2002
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Gross margins are increasing
Gains driven by offshore production and value
improvements Variability driven by channel and
product mix
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We are operating at our business model
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Orders are growing in all regions
11 Growth
40 Growth
14 Growth
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The majority of the business is outside of the US
2007
2002
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Data I/O financial summary

• Strong financial position, 10.8M cash no debt
• Low quarterly revenue breakeven point provides
  leverage from growth in revenue
• The company is achieving its financial model of
  60 gross margin, 15 income, and 15 growth
• Additional revenue growth is the driving
  objective for 2008

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The business environment remains favorable

• Backlog at the start of the third quarter was
  2.5M
• Orders in July were 2.6M up from 1.8M in July
  07, continuing the momentum seen in the first
  half of the year
• Our wireless business should remain strong driven
  by the Smartphone growth and the continued
  success of our wireless customers
• Our automotive business should continue to grow
• Many new electronics systems are being deployed
  with higher semiconductor content per vehicle
• DAIO has the new XLF RoadRunner and special
  software that address specific needs

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Automotive growth drivers

• Infotainment
• Audio, radio, satellite
• Navigation
• Wireless connectivity
• Rear-seat entertainment
• Under-the-hood
• ABS, engine, and chassis control
• Solid-state lighting
• Fuel efficiency
• Safety
• Blind-spot detection ESC
• Airbag control and tire pressure warning

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Automotive microcontroller applications, 60
devices per vehicle
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Our three part plan for growth

• 1. Increase sales effectiveness
• Leverage new Asia sales management team put in
  place in Q407
• Replace non-performing sales channels
• Add sales channels to increase coverage
• 2. Take share from alternative solutions such as
  using existing ATE, manual programming and
  outsourcing
• 3. Enter new markets that promise explosive
  growth
• Flash Media Duplication
• Secure Data Management

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Portable platforms drive the demand for Flash
media
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(No Transcript)
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Flash Media Duplication

• Based on the FLX500 platform
• Built from Flash Media Duplication solution
  developed for Nokia
• Solution includes capital equipment and
  value-added software
• Introduced worldwide in Q108

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Flash Media applications are unlimited
Healthcare Applications
Software Publications
Music for Mobile Devices
Mobile Games
Financial/Business Applications (Trusted Flash)
Rental Video
Yellow Pages
Movies to go
e-Books (Audio or text)
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Secure Data Management Software

• We expect it to be introduced and delivered to
  customers in 2008
• Protects customers intellectual property in a
  globally distributed supply chain
• Meets the growing need for secure memory and data
  in automotive as well as wireless applications
• Builds on DAIOs expertise in serving needs of
  demanding customers such as RIMM and APPL
• Positions DAIO as a supplier of high-value added
  software