Data I/O Corporation

Welcome to the Data I.O. Corporation Second Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jordan Darrow. Please go ahead.

Thank you, and welcome to the Data I.O. Corporation's second quarter 2020 financial results conference call. With me today are Anthony Ambrose, President and Chief Executive Officer of Data I.O., and Joel Hatland, Chief Operating Officer and Chief Financial Officer of Data I.O. Before we begin, I'd like to remind you that statements made in this conference call concerning COVID-19, future revenues, results from operations, financial position, markets, economic conditions, estimated impact of tax reform, product releases, new industry partnerships, and any other statements 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 and the Board of Directors of the Board of Directors of the Board of Directors pricing and other activities by competitors and other risks, including those described from time to time in the company's filings on Forms 10-K and 10-Q with the Securities and Exchange Commission, 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. Now, I would like to turn the call over to Anthony Ambrose, President and CEO of Data I.O.

Well, thank you very much, Jordan. I'll begin my formal remarks by addressing some corporate governance matters, and then we'll move on to commenting about 2020 Q2 and recent developments. And then I'll turn it over to Joel for details on the numbers. On corporate governance matters, our annual meeting was held on May 18th at our corporate headquarters in Redmond, Washington. For this year's event, due to the COVID-19 challenges, we made our information available via internet delivery, and the process worked extremely well with excellent shareholder participation. All of our proposals received affirmation from shareholders, including the election of directors, ratification of independent auditors, and stay on pay provisions for our executive officers. I'd also like to comment on a few of the SEC's recent announcements. On July 22nd, the SEC adopted new rules pertaining to proxy advisory firm disclosures. These rulings seek to provide an improved framework for transparency pertaining to institutional proxy voting practices. and we applaud the SEC for ushering in such advancements. We worked with NASDAQ and let them know how we felt about the current situation and proposals and are happy with the new rules. There's also a proposed rule change from the SEC for modifying which investment firms must file 13 ownership data. The proposal is to change from 100 million in assets under management to 3.5 billion as the threshold for these firms required to file quarterly 13 reports. This would limit transparency of investment firm ownership in our opinion. The proposal remains under review, but if passed, would work against all public companies, and particularly smaller public companies, since the smaller stocks such as Data.io typically have a shareholder base represented by investment firms managing under 3.5 billion US dollars. Moving on to the second quarter, ending June 30th, challenging conditions for us, for society, and all companies continued from the first quarter. We're grateful for the health of our staff, our customers, our partners, and their families and appreciate the sacrifices made by many healthcare professionals and first responders around the world. To reiterate, we remain committed to our priorities amid COVID-19, which are number one, keeping our people and their families safe. Number two, keeping our facilities safe and secure. Number three, serving our customers with COVID-19 related customers is our top priority. Further, as I noted in last quarter's call, we believe our business and operational strategies have proven helpful as we manage the effects of the pandemic. Under the circumstances during the better part of the past six months, global commerce has been anything but predictable. In addition to COVID-19, there have been increased trade and geopolitical tensions. Expectations in general have been reduced, and our performance in the second quarter reflected those reduced business conditions. As an essential supplier to the medical and aerospace industries, Dataio has remained open for business in China, the United States, and Germany. Within our markets, we've seen recovery in China and some encouraging signs in EMEA. Southeast Asia and the Americas are lagging in terms of recovery from COVID-19. Overall progress is happening in fits and starts, and this is impacting capital equipment markets all over the world. During the second quarter, COVID-19 negatively affected many of our customers and our business. Capacity-related purchases were being deferred, while new technology-related purchases and process improvements continue. We saw many automotive manufacturing facilities temporarily closing in the second quarter, delaying equipment and consumable purchases. Within automotive, the market for electric vehicles has been emerging to complement our strength in ADAS and infotainment market segments. In the second quarter, we shipped a PSV 7000 unit for use in a major European OEM's electrification program. We also had other competitive automotive system wins in Asia and Latin America, and additional UFS programming purchases. While the traditional automotive capital market has been challenging, we experienced pockets of strength within the broader industrial and IOT electronics market as well as from other sectors. We gained a significant new IOT customer in Asia in the second quarter. We're pleased to have reached the milestone of deploying our 300th PSV unit during the second quarter. It's a major milestone for that program. Our Centrix initiative saw continued progress with our channel partners in the second quarter. For our programming center partner, we want a significant opportunity in utilities and smart metering. On the semiconductor side, Cypress, an Infineon Technologies company, announced in July the production availability of its PSOC64 standard secure Amazon Web Services microcontroller. This MCU provides secure IoT device management that enables OEMs to safely deploy applications and handle data at scale. We've been a partner of Cypress for a couple of years on the PSOC program and are very excited about this announcement. These are just a couple of the highlights in our Centrix ecosystem in Q2 and illustrate its growing presence. The basic tenets of our success over the years have been well and continue to be rooted in our technology and prudent financial planning with realistic expectations. DataIO has built a sustainable and resilient business to withstand down periods, such as the one we're in, and then to flourish from our proven operational leverage as conditions improve. The last market cycle upswing for DataIO was based on our capital equipment and consumable business lines, whereas the next cycle upswing will also include and benefit from our Centrix platform. At the end of the second quarter, we had $13.3 million in cash and no debt. This provides us with ample liquidity so that we may be flexible in these challenging times and remain committed to our long-term growth objectives. With that, I'll turn it over to Joel Hatlin, our Chief Operating Officer and Chief Financial Officer. Joel?