Data I/O Corporation (NASDAQ: DAIO) has closed a previously announced securities purchase agreement with two institutional investors, raising $9 million in aggregate gross proceeds before placement agent fees and offering expenses.

Under the terms of the agreement, the Redmond, Wash.-based company issued 869,840 shares of common stock, convertible debentures with an aggregate principal amount of approximately $6.8 million, and warrants to purchase up to 1,080,000 shares of common stock.

The warrants carry an exercise price of $3.00 per share and are exercisable for five years from the date of issuance. The unsecured convertible debentures bear interest at 4.0% per annum, payable in cash or Series B preferred stock at the company's discretion, and mature on the fifth anniversary of issuance. The debentures are convertible into Series B preferred stock, which carries an initial conversion price of $2.50 per share into common stock. The Series B preferred stock is non-voting.

The convertible debentures will automatically convert into Series B preferred stock upon stockholder approval at an upcoming shareholders meeting, as required under Nasdaq rules.

Data I/O stated it intends to use the net proceeds for working capital, general corporate purposes, and potential strategic acquisitions. Ladenburg Thalmann & Co. acted as exclusive placement agent, and Benchmark, a StoneX company, served as financial advisor.

The securities were sold in a private placement and have not been registered under the Securities Act of 1933. Data I/O said it has agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares issued, as well as shares issuable upon warrant exercise and preferred stock conversion.