UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
                                   (Mark One)

              ( X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    For the quarter ended September 30, 2002

                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
           Or the transition period from ___________ to ______________



                           Commission File No. 0-10394


                              DATA I/O CORPORATION
             (Exact name of registrant as specified in its charter)





               Washington                              91-0864123

      (State or other jurisdiction of               (I.R.S. Employer
       incorporation or organization)              Identification No.)



               10525 Willows Road N.E., Redmond, Washington, 98052
               (Address of principal executive offices, 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


7,767,630 shares of no par value or the Registrant's Common Stock were issued
and outstanding as of Nov. 11, 2002.

<PAGE>


                              DATA I/O CORPORATION

                                    FORM 10-Q
                    For the Quarter Ended September 30, 2002

                                      INDEX


Part I - Financial Information                                           Page

     Item 1.    Financial Statements (unaudited)                           3

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations              8

     Item 3.    Quantitative and Qualitative Disclosures
                About Market Risk                                         13

     Item 4.    Controls and Procedures                                   13

Part II - Other Information

     Item 1.    Legal Proceedings                                         13

     Item 2.    Changes in Securities and Use of Proceeds                 13

     Item 3.    Defaults Upon Senior Securities                           13

     Item 4.    Submission of Matters to a Vote of Security Holders       13

     Item 5.    Other Information                                         13

     Item 6.    Exhibits and Reports on Form 8-K                          13

Signatures                                                                17

Chief Executive Officer Section 302(a) Certification                      18

Chief Financial Officer Section 302(a) Certification                      19

Exhibit 10.26   Letter Agreement with John Vicklund                       20

Exhibit 99.1    Chief Executive Officer Section 906 Certification         21

Exhibit 99.2    Chief Financial Officer Section 906 Certification         22





<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

                              DATA I/O CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------

                                                                                    Sept. 30,                 Dec. 31,
                                                                                      2002                      2001
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                      <C>
(in thousands, except share data)                                                  (unaudited)
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                         $3,439                 $2,656
     Marketable securities                                                              1,087                  3,236
     Trade accounts receivable, less allowance for
        doubtful accounts of $271 and $372                                              5,346                  5,666

     Inventories                                                                        4,718                  6,388
     Other current assets                                                                 505                    485
                                                                                   -----------           -------------

        TOTAL CURRENT ASSETS                                                           15,095                 18,431

Property and equipment - net                                                            1,389                  1,741
Other assets                                                                              107                    168
                                                                                   -----------           -------------

        TOTAL ASSETS                                                                  $16,591                $20,340
                                                                                   ===========           =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable                                                                  $1,602                 $1,599
     Accrued compensation                                                                 664                    848
     Deferred revenue                                                                   1,693                  1,686
     Other accrued liabilities                                                          1,714                  1,871
     Accrued costs of business restructuring                                              158                     88
     Income taxes payable                                                                 250                    329
                                                                                   -----------           -------------

        TOTAL CURRENT LIABILITIES                                                       6,081                  6,421

Deferred gain on sale of property                                                       1,517                  1,765
                                                                                   -----------           -------------

        TOTAL LIABILITIES                                                               7,598                  8,186

COMMITMENTS                                                                                 -                      -

STOCKHOLDERS' EQUITY:
     Preferred stock -
        Authorized, 5,000,000 shares, including
           200,000 shares of Series A Junior Participating
        Issued and outstanding, none                                                        -                      -
     Common stock, at stated value -
        Authorized, 30,000,000 shares
        Issued and outstanding, 7,767,630
           and 7,613,754 shares                                                        18,638                 18,500
     Accumulated deficit                                                               (9,530)                (6,173)
     Accumulated other comprehensive loss                                                (115)                  (173)
                                                                                   -----------            -------------
        TOTAL STOCKHOLDERS' EQUITY                                                      8,993                 12,154
                                                                                   -----------            -------------

        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $16,591                $20,340
                                                                                   ===========            =============


See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>




                              DATA I/O CORPORATION

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             Quarters Ended              Nine Months Ended
------------------------------------------------------------------------ ------------------------ -- --------------------------
                                                                         Sept 30,      Sept 30,       Sept 30,       Sept 30,
                                                                           2002          2001           2002           2001
------------------------------------------------------------------------ ---------- -- ---------- -- ----------- -- -----------
<S>                                                                      <C>           <C>            <C>            <C>
(in thousands, except per share data)

Net sales                                                                  $6,443        $6,479       $16,629        $20,849
Cost of goods sold                                                          3,172         3,124         8,851         11,949
                                                                         ----------    ----------    -----------    -----------
Gross margin                                                                3,271         3,355         7,778          8,900

Operating expenses:
     Research and development                                               1,430         1,450         4,136          5,153
     Selling, general and administrative                                    2,109         2,011         6,376          7,457
     Net provision for business restructuring                                 497           499           497            959
                                                                         ----------    ----------    -----------    -----------
         Total operating expenses                                           4,036         3,960        11,009         13,569
                                                                         ----------    ----------    -----------    -----------

         Operating loss                                                      (765)         (605)       (3,231)        (4,669)


Non-operating income (expense):
     Interest income                                                           20            77            69            195
     Interest expense                                                          (4)           (2)          (12)           (13)
     Foreign currency exchange                                               (121)           29          (179)           (61)
                                                                         ----------    ----------    -----------    -----------
         Total non-operating income (expense)                                (105)          104          (122)           121

                                                                         ----------    ----------    -----------    -----------
        Loss from operations before income taxes                             (870)         (501)       (3,353)        (4,548)

Income tax expense (benefit)                                                  (37)           70             4             92
                                                                         ----------    ----------    -----------    -----------

Net loss                                                                   ($ 833)        ($571)      ($3,357)       ($4,640)
                                                                         ==========    ==========    ===========    ===========

Basic and diluted loss per share:
     Total basic and diluted loss per share                                ($0.11)       ($0.08)       ($0.44)        ($0.61)
                                                                         ==========    ==========    ===========    ===========

Weighted average and potential shares outstanding                           7,733         7,596         7,682          7,572
                                                                         ==========    ==========    ===========    ===========

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>



                              DATA I/O CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------

                                                                                                  Sept. 30,         Sept 30,
For the nine months ended                                                                           2002              2001
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                              <C>               <C>
(in  thousands)
OPERATING ACTIVITIES:
    Loss from operations                                                                           ($3,357)         ($4,640)
    Adjustments to reconcile loss from operations to net cash provided by
      (used in) operating activities:
       Depreciation and amortization                                                                   783            1,720
       Net loss on dispositions                                                                        233              141
       Amortization of deferred gain on sale                                                          (247)            (247)
       Net change in:
         Deferred revenue                                                                                7             (584)
         Trade accounts receivable                                                                     335            4,477
         Inventories                                                                                 1,658            2,448
         Recoverable income taxes                                                                        -               91
         Other current assets                                                                          (22)              50
         Accrued costs of business restructuring                                                        69              271
         Accounts payable and accrued liabilities                                                     (436)            (569)
                                                                                                 -----------      --------------
    Net cash provided by (used in) operating activities                                               (977)           3,158

INVESTING ACTIVITIES:
    Purchases of property and equipment                                                               (600)            (687)
    Net from purchase and sale of marketable securities                                              2,148              537
                                                                                                 -----------      --------------
       Net cash provided by (used in) investing activities                                           1,548             (150)

FINANCING ACTIVITIES:
    Sale of common stock                                                                               137              209
                                                                                                 -----------      --------------
       Net cash provided by financing activities                                                       137              209

                                                                                                 -----------      --------------
Increase/(decrease) in cash and cash equivalents                                                       708            3,217

Effects of exchange rate changes on cash                                                                75              (15)
Cash and cash equivalents at beginning of year                                                       2,656            3,133
                                                                                                 -----------      --------------
Cash and cash equivalents at end of quarter                                                         $3,439           $6,335
                                                                                                 ===========      ==============

See accompanying notes to consolidated financial statements.
</TABLE>

<PAGE>



                              DATA I/O CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1 - FINANCIAL STATEMENT PREPARATION

The financial  statements as of September 30, 2002 and September 30, 2001,  have
been  prepared  by the  Company  pursuant  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, 2001 has been derived
from the audited  financial  statements at that date.  Certain  information  and
footnote  disclosures  normally  included in  financial  statements  prepared in
accordance with accounting principles generally accepted in the United States of
America  have  been  condensed  or  omitted  pursuant  to  such  SEC  rules  and
regulations.  Operating results for the nine months ended September 30, 2002 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December  31,  2002.  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, 2001.

NOTE 2 - INVENTORIES

Inventories consisted of the following components (in thousands):

                                            Sept. 30,                Dec. 31,
                                              2002                     2001
                                        ----------------        ----------------
                  Raw material              $2,471                    $3,588
                  Work-in-process            1,068                     1,354
                  Finished goods             1,179                     1,446
                                        ----------------        ----------------
                                            $4,718                    $6,388
                                        ================        ================

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following components (in thousands):

                                            Sept. 30,               Dec.31,
                                              2002                   2001
                                        -----------------       ----------------
    Leasehold improvements                 $   239                   $   229
    Equipment                               12,029                    12,188
                                        -----------------       ----------------
                                            12,268                    12,417
    Less accumulated depreciation           10,879                    10,676
                                        ----------------        ----------------
    Property and equipment - net           $ 1,389                   $ 1,741
                                        ================        ================

NOTE  4 - BUSINESS RESTRUCTURING PROGRESS

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and realign the Company with growth activities.  This operational  repositioning
was mandated by the impact  which the  economic  slowdown and decline in capital
spending  across a high  number of  customer  groups had on  general  demand for
programming equipment.

The  Company's  second  quarter   repositioning   included  the  following  four
components:  a reduction in the Company's  global  workforce of approximately 40
persons or 20% of the  workforce;  discontinuance  or  reallocation  of numerous
projects  and  activities  not  essential  to  the  Company's  long-term  goals;
streamlining of activities to decrease discretionary marketing, distribution and
promotional  expenses;  and  consolidation  of  numerous  functions  across  the
organization  to create a team  which was more  productive  and able to  respond
faster to global customer needs.

On July 12, 2001, during its third quarter,  the Company announced that it would
take further strategic actions to reduce its breakeven point, which included the
following  actions:  closure of a facility in Germany  moving its  operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third quarter of 2001.

In the fourth quarter of 2001, the Company reduced its staff by 29 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted revenues, and to maintain the cash position of the Company.
The Company incurred restructuring costs of $252,000 during the fourth quarter.

At September 30, 2002 all  restructuring  expenses  associated  with the actions
prior to the third  quarter  of 2002  detailed  above had been paid  except  for
approximately $15,000.

In the third quarter of 2002, the Company  reduced its staff by 33 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted  revenues and to maintain the cash position of the Company.
The Company recorded a restructuring  charge of $497,000 in the third quarter of
2002. This charge relates to severance and benefits, consulting and professional
services,  and facility costs.  The Company has planned a restructure  charge in
the fourth quarter of 2002 of approximately $30,000.

An analysis of the restructuring is as follows (in thousands):
<TABLE>
<CAPTION>

                                                          Reserve         August         2002          Reserve
                                                         Balance at        2002       Payments/       Balance at
 Description                                           Dec. 31, 2001       Adj.      Write-offs     Sept. 30, 2002
 --------------                                       ----------------- -----------  ------------- ------------------
<S>                                                     <C>             <C>            <C>             <C>
 Downsizing U.S. Operations:
    Employee severance                                    $  4           $ 428          $ 326           $ 106
    Redmond facility consolidation                          46              11             44              13
    Consulting and legal expenses                           19              50             43              26
     Downsizing Foreign Operations                          19               8             14              13
                                                      ----------------- -----------  ------------- ------------------
 Total                                                    $ 88           $ 497          $ 427           $ 158
                                                      ================= ===========  ============= ==================
</TABLE>

NOTE 5 - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share (in thousands except per share data):
<TABLE>
<CAPTION>

                                                                        Third Quarter                 First Nine Months
                                                                  -----------------------------    ---------------------------
                                                                     2002             2001            2002            2001

                                                                 -----------     -------------    -----------     -----------
<S>                                                                <C>              <C>              <C>             <C>
Numerator for basic and diluted earnings (loss) per share:
       Net loss                                                    ($ 833)          ($ 571)          ($3,357)        ($4,640)
                                                                  -----------     -------------    -----------     -----------

Denominator:
        Denominator for basic earnings per share -
         weighted-average shares                                    7,733            7,596             7,682           7,572
        Employee stock options (1)                                     -                -               -               -
                                                                  -----------     -------------    -----------     -----------
         Denominator for diluted earnings per share -
                       adjusted weighted-average shares and
                  assumed conversions of stock options              7,733            7,596             7,682           7,572
                                                                  -----------     -------------    -----------     -----------
Basic and diluted earnings (loss) per share
         Total basic and diluted earnings (loss) per share         ($0.11)          ($0.08)           ($0.44)         ($0.61)
                                                                  ===========     =============    ===========     ===========

     (1)  At  September,  30 2002 and 2001 there were  1,222,438  and  1,168,125
          shares respectively,  of outstanding options potentially  issueable as
          common  stock.  Because of the net loss for the three  months and nine
          months ended September 30, 2002 and 2001, potentially issueable common
          stock was not included in the calculation of diluted loss per share as
          their inclusion would be anti-dilutive.
</TABLE>

NOTE 6 - ACCOUNTING FOR INCOME TAXES

The Company's effective tax rate for the first nine months of 2002 differed from
the  statutory 34% tax rate  primarily due to operating  losses for which no tax
benefit was recorded.  The tax valuation  allowance  increased by  approximately
$284,000  during the quarter ended  September 30, 2002. As of September 30, 2002
the Company has a valuation allowance of $10,239,000.

NOTE 7 - COMPREHENSIVE INCOME

During the third quarter and the first nine months of 2002 and 2001 total
comprehensive income (loss) was comprised of the following (in thousands):
<TABLE>
<CAPTION>
                                                       For the Third Quarter                 For the Nine Months
                                                   -------------------------------    ----------------------------------
                                                        2002             2001              2002              2001
<S>                                                    <C>              <C>               <C>               <C>
                                                  -------------    --------------    -------------    -----------------

    Net income (loss)                                  ($833)           ($571)           ($3,357)          ($4,640)
    Foreign currency translation gain (loss)             (21)             171                 58                93
                                                   -------------    --------------    -------------    -----------------
    Total comprehensive income (loss)                  ($854)           ($400)           ($3,299)          ($4,547)
                                                   =============    ==============    =============    =================
</TABLE>

NOTE 8 - CHANGE IN FISCAL YEAR

Prior to 2001, the Company reported on a fifty-two,  fifty-three week basis. The
last  reporting  period using this fiscal period was the year ended December 28,
2000. The Company's  Board of Directors  approved a resolution on March 12, 2001
to change the Company's reporting period to a calendar year and calendar quarter
basis  effective for the current  fiscal year. The first quarter of 2001 covered
the period  December 29, 2000 to March 31, 2001. The second quarter  covered the
period April 1, 2001 to June 30, 2001.

NOTE 9 - FOREIGN CURRENCY TRANSLATION AND DERIVATIVES

Assets and  liabilities of foreign  subsidiaries  are translated at the exchange
rate on the  balance  sheet  date.  Revenues,  costs  and  expenses  of  foreign
subsidiaries are translated at average rates of exchange  prevailing  during the
year.  Translation  adjustments  resulting  from this  process  are  charged  or
credited to stockholders'  equity,  net of taxes.  Realized and unrealized gains
and losses resulting from the effects of changes in exchange rates on assets and
liabilities  denominated  in foreign  currencies  are included in  non-operating
expense as foreign currency transaction gains and losses.

In June 1998, the Company  adopted SFAS No. 133,  Accounting for Derivatives and
Hedging  Activities.   This  statement  establishes   accounting  and  reporting
standards for derivative  instruments and requires recognition of derivatives as
assets or liabilities in the statement of financial  position and measurement of
those  instruments  at fair value.  The adoption of this standard by the Company
did not materially impact its consolidated financial statements.

The Company utilizes forward foreign exchange  contracts to reduce the impact of
foreign currency exchange rate risks where natural hedging  strategies cannot be
effectively employed. All hedging instruments held by the Company are fair value
hedges.  Generally,  these  contracts  have  maturities  less  than one year and
require the Company to exchange foreign currencies for U.S. dollars at maturity.
The change in fair value of the open hedge contracts as of September 30, 2002 is
an unrealized loss of $15,500 and is included in accounts payable on the balance
sheet.

The Company does not hold or issue derivative financial  instruments for trading
purposes.  The purpose of the Company's hedging activities is to reduce the risk
that the valuation of the underlying  assets,  liabilities and firm  commitments
will  be  adversely  affected  by  changes  in  exchange  rates.  The  Company's
derivative  activities do not create foreign currency exchange rate risk because
fluctuations  in the value of the  instruments  used for  hedging  purposes  are
offset by fluctuations in the value of the underlying exposures being hedged.

NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS

The FASB issued SFAS No. 145,  "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB  Statement  No. 13, and Technical  Corrections,"  on April 30,
2002.  Statement No. 145 rescinds  Statement No.4,  which required all gains and
losses  from  extinguishments  of  debt  to  be  aggregated  and,  if  material,
classified as an  extraordinary  item,  net of related  income tax effect.  Upon
adoption of Statement No. 145,  companies will be required to apply the criteria
in APB Opinion No. 30,  "Reporting  the Results of  Operations  - reporting  the
Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual and
Infrequently   Occurring   Events   and   Transactions"   in   determining   the
classification of gains and losses resulting from the  extinguishments  of debt.
Statement  No. 145 is effective for fiscal years  beginning  after May 15, 2002.
The  Company  is  currently  evaluating  the  requirements  and  impact  of this
statement on its results of operations and financial position.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This standard requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan.  Examples of costs
covered by the standard  include lease  termination  costs and certain  employee
severance  costs  that  are  associated  with  a   restructuring,   discontinued
operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002.  The Company is currently  evaluating the  requirements  and impact of
this statement on its results of operations and financial position.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

General

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes  forward-looking  statements  within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. This Act
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  themselves as long as they identify
these  statements  as  forward-  looking  and  provide   meaningful   cautionary
statements  identifying  important  factors that could cause  actual  results to
differ from the  projected  results.  All  statements  other than  statements of
historical fact made in this Quarterly Report on Form 10-Q are  forward-looking.
In particular, statements herein regarding industry prospects; future results of
operations  or  financial   position;   changes  in  gross  margin  percentages;
integration  of acquired  products  and  operations;  market  acceptance  of the
Company's newly introduced or upgraded products;  development,  introduction and
shipment of new  products;  expected  spending  levels;  breakeven and any other
guidance  on future  periods  are  forward-looking  statements.  Forward-looking
statements  reflect   management's   current  expectations  and  are  inherently
uncertain.   The  Company's  actual  results  may  differ   significantly   from
management's expectations. Moreover, neither the Company nor anyone else assumes
responsibility   for   the   accuracy   and   completeness   of  the   Company's
forward-looking  statements.  The  Company is under no duty to update any of its
forward-looking  statements after the date of this report.  You should not place
undue reliance on our forward-looking  statements. The following discussions and
discussions  under the caption  "Business -  Cautionary  Factors That May Affect
Future  Results" in Item 1 in the  Company's  Annual report on Form 10-K for the
year ended  December 31, 2001,  describe  some, but not all, of the factors that
could cause these differences.

Critical Accounting Policy Judgements and Estimates

The preparation of financial statements in accordance with accounting principles
generally  accepted in the United  States  requires  that we make  estimates and
judgments,  which affect the reported amounts of assets,  liabilities,  revenues
and expenses,  and related disclosures of contingent assets and liabilities.  On
an on-going basis, the Company evaluates its estimates,  including those related
to sales returns, bad debts, inventories, investments, intangible assets, income
taxes,  warranty  obligations,  restructuring  charges,  contingencies  such  as
litigation,   and  contract   terms  that  have  multiple   elements  and  other
complexities typical in the  telecommunications  equipment industry. The Company
bases its  estimates on  historical  experience  and other  assumptions  that it
believes are reasonable under the circumstances.  Actual results may differ from
these estimates under different assumptions or conditions.

The Company believes the following critical  accounting policies affect the more
significant  judgments and estimates  used in the  preparation  of its financial
statements.

Revenue Recognition:  Sales of the Company's semiconductor programming equipment
products  requiring  installation by the Company that is other than  perfunctory
are  recorded  when  installation  is  complete,  or at the  later  of  customer
acceptance or  installation,  if an acceptance  clause is specified in the sales
terms.  Revenue from other  product sales is recognized at the time of shipment.
Revenue  from the sale of service and update  contracts  is recorded as deferred
revenue and recognized on a  straight-line  basis over the  contractual  period,
which is typically one year. A reserve for sales returns is established based on
historical  trends in product returns and estimates for new items. If the actual
future returns differ from  historical  levels,  the Company's  revenue could be
adversely affected.

Allowance for Doubtful Accounts:  The allowance for doubtful accounts receivable
is based on the Company's  assessment of the collectibility of specific customer
accounts and the aging of accounts receivable.  If there is a deterioration of a
major customer's credit worthiness or actual defaults are higher than historical
experience,  the  Company's  estimates of the  recoverability  of amounts due us
could be adversely affected.

Inventory Provisions:  Inventory purchases and commitments are based upon future
demand  forecasts  and historic  usage.  If there is a  significant  decrease in
demand  for the  Company's  products  or  there is a  higher  risk of  inventory
obsolescence  because of rapidly changing technology and customer  requirements,
the Company may be required to increase its inventory provision  adjustments and
its gross margin could be adversely affected.

Warranty Accruals:  The Company accrues for warranty costs based on the expected
material  and labor costs to fulfill its  warranty  obligations.  If the Company
experiences an increase in warranty claims, which are higher than its historical
experience, its gross margin could be adversely affected.

Deferred  Taxes:  The Company has  incurred  tax losses in each of the last four
years  and has net  operating  loss  and tax  credit  carryforwards  that  begin
expiring in 2020.  The Company has provided a full valuation  allowance  against
its tax assets, given the uncertainty as to their realization.  In future years,
these  benefits are  available to reduce or  eliminate  taxes on future  taxable
income.

Results of Operations
<TABLE>
<CAPTION>

Net Sales
--------------------------------------------------------------------------------------------------------------------------------
 (in thousands)


                                                        Third Quarter                             First Nine Months
                                           -----------------------------------------  ------------------------------------------

 Net sales by product line                      2002         % Change       2001           2002        % Change         2001
 -----------------------------------------------------------------------------------  ------------------------------------------
<S>                                            <C>           <C>           <C>            <C>          <C>           <C>
 Non-automated programming systems              $3,059        (2.8%)        $3,147         $8,607        (6.4%)      $ 9,196

 Automated programming systems                   3,384         1.6%          3,332          8,022       (31.2%)       11,653

                                           -----------------------------------------  ---------------------------------------------

 Total programming systems                      $6,443        (0.5%)        $6,479        $16,629       (20.2%)      $20,849
                                           =========================================  ==========================================


                                                        Third Quarter                             First Nine Months
                                           -----------------------------------------  ------------------------------------------

 Net sales by location                           2002        % Change        2001          2002        % Change         2001
 -----------------------------------------------------------------------------------  ------------------------------------------

 United States                                 $2,057          (2.8%)      $2,116        $ 5,964         (19.3%)     $ 7,394

    % of total                                  31.9%                       32.7%          35.9%                       35.5%

 International                                 $4,386           0.5%       $4,363        $10,665         (20.7%)     $13,455

    % of total                                  68.1%                       67.3%          64.1%                       64.5%

 -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Revenues for the third quarter of 2002 decreased  slightly compared to the third
quarter of 2001. Sales were lower for non-automated programming systems with the
decline  primarily due to lower sales of products for use in  manufacturing  and
lower contract sales.  Offsetting this were higher sales of PS series  automated
programming systems. A significant number of new products were introduced during
the quarter,  including the PS 300  FlashCORE;  TF-20 Tray Feeder  System;  High
Insertion Socket Adapters;  ProLINE- RoadRunner  Variable Capacity options;  and
ProWriter desktop programmers.  For the first nine months of 2002 as compared to
the same period  2001,  the decline in revenues is due to a reduction  in orders
for  programming  equipment  that the Company  believes is due to the  continued
general  economic  sluggishness  of the  electronics  industry  and the  capital
equipment market in particular.

Orders were  stronger with $7.1 million in bookings for the third  quarter.  The
Company  continues  to  experience  a trend in its sales mix  towards  increased
international sales and believes that, with the economic situation in the United
States and with the  electronics  industry trend toward  offshore and outsourced
manufacturing,  this trend is likely to continue.  The Company  believes  that a
significant  part of its  manufacturing  capital  equipment  orders  during  the
quarter were received to support its  customers'  holiday  season  manufacturing
capacity  and,  given the  economic  uncertainty,  is not sure if the rebound in
orders is temporary or if it  establishes a trend.  While  significant  economic
uncertainty  remains in its forecast,  the Company  believes that for the fourth
quarter of 2002, revenues will be about the same as in the third quarter.

Gross Margin
<TABLE>
<CAPTION>

                                                      Third Quarter                        First Nine Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001               2002               2001
----------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                <C>                <C>
Gross Margin                                    $3,271              $3,355             $7,778             $8,900

Percentage of net sales                          50.8%              51.8%               46.8%              42.7%
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Gross margins decreased slightly in dollars and as a percentage of sales for the
third quarter of 2002  compared  with the same period of 2001,  primarily due to
sales mix changes. Partially offsetting the decrease are reduced costs resulting
from  the  Company's  restructuring  actions  taken  during  the last  year.  No
significant  changes were made to the  inventory- or  warranty-related  reserves
during the quarter.

For the first nine  months of 2002 as  compared  to the same  period  2001,  the
decrease in gross margin is due to the lower sales volume,  partially  offset by
cost reductions due to restructure-related savings.

Research and Development
<TABLE>
<CAPTION>

                                                      Third Quarter                         First Nine Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                 <C>               <C>
 Research and development                       $1,430              $1,450              $4,136            $5,153

 Percentage of net sales                         22.2%              22.4%               24.9%              24.7%
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Research and development ("R&D") spending for the third quarter 2002 as compared
to the third quarter 2001 was relatively  flat in dollars and as a percentage of
sales.  During the third  quarter,  the Company's R&D focus was on the new PS300
FlashCore  automated  programming system which was integrated in the programming
architecture  first introduced in the  ProLINE-RoadRunner.  The savings from the
Company's  restructuring  actions were mostly offset by higher R&D materials and
new product development costs in the third quarter of 2002.

The  decline in R&D  spending  for the first nine months 2002 as compared to the
same period 2001 reflects the lower headcount primarily related to the Company's
restructuring actions over the past year.

Selling, General and Administrative
<TABLE>
<CAPTION>

                                                      Third Quarter                         First Nine Months
                                           ---------------------------------------------------------------------------

                                                 2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                 <C>                 <C>               <C>
 Selling, general & administrative              $2,109              $2,011              $6,376            $7,457

 Percentage of net sales                         32.7%              31.0%               38.3%              35.8%
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Selling,  general and administrative  ("SG&A") expenses for the third quarter of
2002 compared with the same period in 2001 were  relatively  flat with increases
in rent expense,  due to rental rate increases and the expiration of a sublease,
along with higher  marketing and new product launch costs being mostly offset by
the Company's reduced costs from restructuring  actions.  The sub-tenant leasing
the bottom floor of the corporate  headquarters' building in Redmond vacated the
premises  during the second quarter at the end of the  sub-tenant's  lease.  The
Company has the space listed with a broker and is actively  marketing the space,
but the  Company  believes  the local  market  for  subleased  space is not very
favorable at this time.

For the nine months 2002 as compared to the same period  2001,  savings from the
restructuring actions were the primary reason for the lower SG&A expense levels.

Interest
<TABLE>
<CAPTION>

                                                      Third Quarter                         First Nine Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>                 <C>               <C>
 Interest income                                  $20                $77                 $69               $195

 Interest expense                                 ($4)               ($2)               ($12)              ($13)
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Interest  income  decreased  in the third  quarter and first nine months of 2002
compared  to the same  periods  in 2001 due to lower  interest  rates  and lower
levels of invested funds.

Income Taxes
<TABLE>
<CAPTION>

                                                      Third Quarter                         First Nine Months
                                           ---------------------------------------------------------------------------

 (in thousands)                                  2002                2001                2002              2001
 ---------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                 <C>                 <C>               <C>
 Income tax expense (benefit)                    ($37)               $70                  $4                $92
 ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Tax expense  recorded  for both the third  quarter and first nine months of 2002
was due to foreign  taxes.  Tax valuation  reserves  increased by  approximately
$284,000 during the quarter.  The Company has valuation  reserves of $10,239,000
and $8,779,000 as of September 30, 2002 and September 30, 2001, respectively.

Financial Condition
<TABLE>
<CAPTION>
Liquidity and Capital Resources
                                                                   Sept. 30,                                  Dec. 31,
(in thousands)                                                        2002                Change                2001
------------------------------------------------------------- --------------------- -------------------- -------------------
<S>                                                                <C>                   <C>                 <C>
Working capital                                                     $9,014               ($2,996)             $12,010
------------------------------------------------------------- --------------------- -------------------- -------------------
</TABLE>

Working capital  decreased during the first nine months of 2002 primarily due to
funding of the losses for the period.  Cash,  cash  equivalents  and  marketable
securities  decreased  approximately $1.4 million during this period,  inventory
decreased $1.7 million,  and accounts  receivable  decreased $0.3 million. As of
September 30, 2002 and 2001, the Company had no debt outstanding.

The  Company  estimates  that  capital  expenditures  for  property,  plant  and
equipment  during the remainder of 2002 will be less than $250,000 other than in
connection   with  any  strategic   purposes.   The  Company's   future  capital
requirements will depend on a number of factors including; costs associated with
R&D,  successful  launch  of new  products  and the  potential  use of funds for
strategic purposes. Capital expenditures are expected to be funded from existing
and internally  generated funds or may be leased.  Management  believes that the
Company has sufficient  working  capital  available  under its operating plan to
fund its  operations  and  capital  requirements  for at least  12  months.  The
sub-tenant leasing the bottom floor of the corporate  headquarters'  building in
Redmond  vacated  the  premises  during  the  second  quarter  at the end of the
sub-tenant's  lease.  The  Company  has the space  listed  with a broker  and is
actively  marketing  the space,  but the Company  believes  the local market for
subleased space is not very favorable at this time.

The Company  established  a foreign  line of credit for 50,000 Euros in February
2002.  In July,  2002 the  Company  established  a $100,000  line of credit with
Accelerated  Transportation  Solutions  to handle  purchasing  card and travel &
entertainment credit card purchases.

General

Restructuring

In the second quarter of 2001, the Company  recorded a  restructuring  charge of
$460,000  associated with actions taken to reduce the Company's  breakeven point
and realign the Company with growth activities.  This operational  repositioning
was mandated by the impact  which the  economic  slowdown and decline in capital
spending  across a high  number of  customer  groups had on  general  demand for
programming equipment.

The  Company's  second  quarter   repositioning   included  the  following  four
components:  a reduction in the Company's  global  workforce of approximately 40
persons or 20% of the  workforce;  discontinuance  or  reallocation  of numerous
projects  and  activities  not  essential  to  the  Company's  long-term  goals;
streamlining of activities to decrease discretionary marketing, distribution and
promotional  expenses;  and  consolidation  of  numerous  functions  across  the
organization  to create a team  which was more  productive  and able to  respond
faster to global customer needs.

On July 12, 2001, during its third quarter,  the Company announced that it would
take further strategic actions to reduce its breakeven point, which included the
following  actions:  closure of a facility in Germany  moving its  operations to
other  locations  within the  Company;  combining  the  Company's  four  product
families  into two business  groups;  consolidating  service  groups  across the
organization  to create a team more  responsive to global  customer  needs;  and
targeting  certain other expense  reductions for the third quarter,  including a
closure of the company's  Redmond facility for one week. A restructuring  charge
of $499,000 was recorded in the third quarter of 2001.

In the fourth quarter of 2001, the Company reduced its staff by 29 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted revenues, and to maintain the cash position of the Company.
The Company incurred restructuring costs of $252,000 during the fourth quarter.

At September 30, 2002 all  restructuring  expenses  associated  with the actions
prior to the third  quarter  of 2002  detailed  above had been paid  except  for
approximately $15,000.

In the third quarter of 2002, the Company  reduced its staff by 33 persons.  The
actions  taken were meant to reduce the Company's  breakeven  point and bring it
closer to forecasted revenues, and to maintain the cash position of the Company.
The Company recorded a restructuring  charge of $497,000 in the third quarter of
2002. This charge relates to severance and benefits, consulting and professional
services,  and facility costs. As of September 30, 2002, all expenses associated
with  this  restructure  have  been paid  with the  exception  of  approximately
$143,000.  The Company has planned a restructure charge in the fourth quarter of
approximately $30,000.

New Accounting Pronouncements

The FASB issued SFAS No. 145,  "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB  Statement  No. 13, and Technical  Corrections,"  on April 30,
2002.  Statement No. 145 rescinds  Statement No.4,  which required all gains and
losses  from  extinguishments  of  debt  to  be  aggregated  and,  if  material,
classified as an  extraordinary  item,  net of related  income tax effect.  Upon
adoption of Statement No. 145,  companies will be required to apply the criteria
in APB Opinion No. 30,  "Reporting  the Results of  Operations  - reporting  the
Effects of Disposal of a Segment of a Business,  and Extraordinary,  Unusual and
Infrequently   Occurring   Events   and   Transactions"   in   determining   the
classification of gains and losses resulting from the  extinguishments  of debt.
Statement  No. 145 is effective for fiscal years  beginning  after May 15, 2002.
The  Company  is  currently  evaluating  the  requirements  and  impact  of this
statement on its results of operations and financial position.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This standard requires companies to recognize
costs associated with exit or disposal  activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan.  Examples of costs
covered by the standard  include lease  termination  costs and certain  employee
severance  costs  that  are  associated  with  a   restructuring,   discontinued
operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002.  The Company is currently  evaluating the  requirements  and impact of
this statement on its results of operations and financial position.

Fourth Quarter 2002 Forward-Looking Statement

While  significant  economic  uncertainty  remains in its forecast,  the Company
believes that for the fourth quarter of 2002, revenues will be about the same as
in the third  quarter.  The  Company  continues  to focus on efforts to increase
revenues and control costs. The restructuring actions taken in the third quarter
are  expected  to  reduce  costs and lower  the  breakeven  point in the  fourth
quarter.  As a result,  the Company  announced  it expects to record a profit of
approximately $0.03 per share for the fourth quarter of 2002.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company has  experienced  no material  changes in market  risk.  The Company
currently uses only foreign currency hedge derivative instruments, which are not
material as of September 30, 2002.  However,  the Company is exposed to interest
rate risks. The Company  generally  invests in high-grade  commercial paper with
original  maturity dates of twelve months or less and conservative  money market
funds  to  minimize  its  exposure  to  interest  rate  risk  on its  marketable
securities,  which are classified as available-for-sale as of September 30, 2002
and December 31, 2001.

Item 4.  Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Under the supervision and with the  participation  of the Company's  management,
including its Chief Executive Officer and Chief Financial  Officer,  the Company
evaluated  the  effectiveness  of the design  and  operation  of its  disclosure
controls and procedures  (as defined in Rule 13a-14(c) and Rule 15d-14(c)  under
the Exchange Act) as of a date (the  "Evaluation  Date") within 90 days prior to
the filing date of this report. Based upon that evaluation,  the Chief Executive
Officer and Chief Financial  Officer  concluded that, as of the Evaluation Date,
the  Company's  disclosure  controls  and  procedures  were  effective in timely
alerting  them to the  material  information  relating  to the  Company  (or its
consolidated  subsidiaries)  required to be included in its periodic SEC filings
and Form 8-K reports.

(b) Changes in internal controls.

There were no significant changes made in the Company's internal controls or, to
our knowledge,  in other factors that could significantly  affect these controls
subsequent to the date of their evaluation.

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

                  None

Item 2.           Changes in Securities and Use of Proceeds

                  None

Item 3.           Defaults Upon Senior Securities

                  None

Item 4.           Submission of Matters to a Vote of Security Holders

                  None

Item 5.           Other Information

Effective  November  1,  2002,  the NASDAQ  National  Market  continued  listing
requirement changed from a minimum $4,000,000 net tangible assets requirement to
a minimum $10,000,000  stockholder's  equity  requirement.  The Company does not
currently  meet the new  requirement  and  expects  that  NASDAQ will notify the
Company of this  deficiency  and  address  the  Company's  options,  which could
include transferring the Company to the NASDAQ SmallCap Market.

Item 6.           Exhibits and Reports on Form 8-K

                  (a)  Exhibits

                  The  following  list  is  a  subset  of  the list of  exhibits
described  below  and contains all compensatory plans, contracts or arrangements
in which any director or  executive  officer  of the  Company is a  participant,
unless the method of allocation of benefits thereunder is the same for
management and non-management participants:

(1)  Amended and Restated 1982 Employee  Stock  Purchase Plan. See Exhibit 10.7.

(2)  Retirement Plan and Trust Agreement. See Exhibit 10.2, 10.3, 10.4, 10.11,
     10.14, 10.15, and 10.16.

(3)  Summary of Management Incentive Compensation Plan. See Exhibit 10.12.

(4)  Amended and Restated 1983 Stock Appreciation Rights Plan. See Exhibit 10.1.

(5)  Amended and Restated 1986 Stock Option Plan.  See Exhibit 10.19.

(6)  Form of Change in Control Agreements. See Exhibit 10.5.

(7)  1996 Director Fee Plan.  See Exhibit 10.6 and 10.17.

(8)  Letter Agreement with Frederick R. Hume. See Exhibit 10.21.

(9)  Letter Agreement with Irene Bjorklund. See Exhibit 10.25.

(10) Letter Agreement with John Vicklund. See Exhibit 10.26.


          3    Articles of Incorporation:

               3.1    The Company's  restated  Articles of Incorporation filed
                      November 2, 1987 (Incorporated by reference to Exhibit 3.1
                      of the Company's 1987 Annual Report on Form 10-K (File No.
                      0-10394)).

               3.2    The Company's Bylaws as amended and  restated as of March
                      2001. (Incorporated by reference to the Company's 2001
                      Annual Report on Form 10-K (File No. 0-10394)).

               3.3    Certificate of Designation, Preferences and Rights of
                      Series A Junior Participating Preferred Stock
                      (Incorporated by reference to Exhibit 1 of the Company's
                      Registration Statement on Form 8-A filed March 13, 1998
                      (File No. 0-10394)).

          4    Instruments Defining the Rights of Security Holders, Including
               Indentures:

               4.1    Rights Agreement, dated as of April 4, 1998, between Data
                      I/O Corporation and ChaseMellon Shareholder Services,
                      L.L.C. as Rights Agent, which includes: as Exhibit A
                      thereto, the Form of Right Certificate; and, as Exhibit B
                      thereto, the Summary of Rights to Purchase Series A Junior
                      Participating Preferred Stock (Incorporated by reference
                      to the Company's Current Report on Form 8-K filed on March
                      13, 1998).

               4.2    Rights Agreement, dated as of March 31, 1988, between Data
                      I/O Corporation and First Jersey National Bank, as Rights
                      Agent, as amended by Amendment No. 1 thereto, dated as of
                      May 28, 1992 and Amendment No. 2 thereto, dated as of July
                      16, 1997 (Incorporated by reference to the Company's
                      Report on Form 8-K filed on March 13, 1998).

               4.3    Amendment No. 1, dated as of February 10, 1999, to Rights
                      Agreement, dated as of April 4, 1998, between Data I/O
                      Corporation and ChaseMellon Shareholder Services, L.L.C.
                      as Rights Agent (Incorporated by reference to Exhibit 4.1
                      of the Company's Form 8-A/A dated February 10, 1999).

          10   Material Contracts:

               10.1   Amended and Restated 1983 Stock Appreciation Rights Plan
                      dated February 3, 1993 (Incorporated by reference to
                      Exhibit 10.23 of the Company's 1992 Annual Report on
                      Form 10-K  (File No. 0-10394)).

               10.2   Amended and Restated Retirement Plan and Trust Agreement.
                      (Incorporated by reference to Exhibit 10.26 of the
                      Company's  1993  Annual  Report  on  Form 10-K
                      (File No.0-10394)).

               10.3   First Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.21 of the
                      Company's 1994 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.4   Second Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.26 of the
                      Company's 1995 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.5   Form of Change in Control Agreements (Incorporated by
                      reference to Exhibit 10.20 of the Company's 1994 Annual
                      Report on Form 10-K (File No. 0-10394)).

               10.6   Data I/O Corporation 1996 Director Fee Plan (Incorporated
                      by reference to Exhibit 10.27 of the Company's 1995 Annual
                      Report on Form 10K (File No. 0-10394)).

               10.7   Data I/O Corporation 1982 Employee Stock Purchase Plan
                      Amended and Restated December 11, 1996 (Incorporated by
                      reference to Exhibit 10.1 to the Company's Registration
                      Statement of Form S-8 (File No. 333-20657, filed January
                      29, 1997)).

               10.8   Purchase and Sale Agreement dated as of July 9, 1996
                      (Relating to the sale of Data I/O Corporation's
                      headquarters property in Redmond, Washington consisting of
                      approximately 79 acres of land and an approximately 96,000
                      square foot building. (Portions of this exhibit have been
                      omitted pursuant to an application for an order granting
                      confidential treatment. The omitted portions have been
                      separately filed with the Commission) (Incorporated by
                      reference to Exhibit 10.32 of the Company's 1996 Annual
                      Report on Form 10-K (File No. 0-10394)).

               10.9   Letter dated as of December 20, 1996, First Amendment and
                      extension of the Closing Date under that certain Purchase
                      and Sale Agreement dated as of July 9, 1996. (Portions of
                      this exhibit have been omitted pursuant to an application
                      for an order granting confidential treatment. The omitted
                      portions have been separately filed with the Commission)
                      (Incorporated by reference to Exhibit 10.33 of the
                      Company's 1996 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.10  Letter dated as of February 17, 1997, Second Amendment and
                      extension of the Closing Date under that certain Purchase
                      and Sale Agreement dated as of July 9, 1996. (Portions of
                      this exhibit have been omitted pursuant to an application
                      for an order granting confidential treatment. The omitted
                      portions have been separately filed with the Commission)
                      (Incorporated by reference to Exhibit 10.34 of the
                      Company's 1996 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.11  Third Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.35 of the
                      Company's 1996 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.12  Amended and Restated Management Incentive Compensation
                      Plan dated January 1, 1997 (Incorporated by reference to
                      Exhibit 10.25 of the Company's 1997 Annual Report on Form
                      10-K (File No. 0-10394)).

               10.13  Amended and Restated Performance Bonus Plan dated January
                      1, 1997 (Incorporated by reference to Exhibit 10.26 of the
                      Company's 1997 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.14  Fourth Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.27 of the
                      Company's 1997 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.15  Fifth Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.28 of the
                      Company's 1997 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.16  Sixth Amendment to the Data I/O Tax Deferred Retirement
                      Plan (Incorporated by reference to Exhibit 10.29 of the
                      Company's 1997 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.17  Amended and Restated Data I/O Corporation 1996 Director
                      Fee Plan (Incorporated by reference to Exhibit 10.32 of
                      the Company's 1997 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.18  Amended and Restated Data I/O Corporation 1996 Director
                      Fee Plan (Incorporated by reference to Exhibit 10.32 of
                      the  Company's 1997  Annual  Report  on  10-K
                      (File No. 0-10394)).

               10.19  Amended and Restated 1986 Stock Option Plan dated May 12,
                      1998 (Incorporated by reference to Exhibit 10.37 of the
                      Company's 1998 Annual Report on Form 10-K (File No.
                      0-10394)).

               10.20  Sublease dated December 22, 1999 between Data I/O
                      Corporation and Imandi.com, Inc. (Incorporated by
                      reference to Exhibit 10.34 of the Company's 1999 Annual
                      Report on Form 10-K (File No. 0-10394)).

               10.21  Letter Agreement with Fred R. Hume dated January 29, 1999.
                      (Incorporated by reference to Exhibit 10.35 of the
                      Company's 1999 Annual Report on Form 10-K (File 0-10394)).

               10.22  Letter Agreement dated May 28, 1999, among Data I/O
                      Corporation, JTAG Technologies B.V., and JTAG Holding B.V.
                      (Incorporated by reference to Exhibit 10.36 of the
                      Company's  1999  Annual  Report  on  Form 10-K
                      (File No. 0-10394)).

               10.23  Amended and Restated 2000 Stock Compensation Incentive
                      Plan dated May 19, 2000. (Incorporated by reference to the
                      Company's 2000 Proxy Statement dated March 27, 2000.)

               10.24  Amended and Restated 1982 Employee Stock Purchase Plan
                      dated May 16,2001 (Incorporated by reference to the
                      Company's 2001 Proxy Statement dated March 28, 2001.)

               10.25  Letter Agreement with Irene Bjorklund dated March 13, 2001
                      (Incorporated by reference to Exhibit 10.25 of the
                      Company's  2001  Annual  Report  on  Form 10-K
                      (File No. 0-10394)

               10.26  Letter Agreement with John Vicklund dated
                      December 13, 2000                                      21

        99     Other Exhibits

               99.1  Chief Executive Officer Section 906 Certification       22

               99.2  Chief Financial Officer Section 906 Certification       23


               (b) Reports on Form 8-K

The Company furnished a Form 8-K on September 10, 2002 regarding a copy of a web
site posting to be made entitled  "President's  Perspective"  at  www.dataio.com
providing  a  business  update  and  outlook  for  Data  I/O  Corporation.   The
information  in the Form 8K furnished  pursuant to Item 9 shall not be deemed to
be filed under the Securities Exchange Act of 1934, as amended.

<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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:   November 13, 2002


                                     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://Frederick R. Hume               By://S//Frederick R. Hume
                                          Frederick R. Hume
                                              President
                                     Chief Executive Officer
                 (Principal Chief Executive Officer and Duly Authorized Officer)



<PAGE>


I, Frederick R. Hume, certify that:
1)   I have reviewed this quarterly report on Form 10-Q of Data I/O Corporation;
2)   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3)   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4)   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
c)   presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;
5)   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent functions):
a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and
6)   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 13, 2002

                  /s/ Frederick R. Hume
                  Frederick R. Hume
                  Chief Executive Officer
                  (Principal Executive Officer)


<PAGE>


I, Joel S. Hatlen, certify that:
1)   I have reviewed this quarterly report on Form 10-Q of Data I/O Corporation;
2)   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3)   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4)   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
c)   presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;
5)   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent functions):
a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and
6)   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 13, 2002

                   /s/ Joel S. Hatlen
                  Joel S. Hatlen
                  Chief Financial Officer
                  (Principal Financial Officer)



<PAGE>

                  Exhibit 10.26

                  Letter Agreement with John Vicklund dated December 13, 2000

                  December 13, 2000


                  John Vicklund
                  19515 94th Pl. West
                  Edmonds, WA  98020

                  Re:  Offer of Employment


                  Dear John,

                  Welcome to Data I/O Corporation!

                  This letter confirms our offer of the VP of Human Resources
                  position, reporting to Fred Hume. As agreed, your start date
                  will be January 2, 2001. The total annual cash compensation
                  for this offer is comprised of two elements, an annual base
                  salary of $90,000 per year (or $7,500 per month) plus
                  participation in the 2001 Management Incentive Compensation
                  Plan (prorated from your start date for year 2001) at 25% of
                  your base pay for performance at team target.

                  You will also receive 10,000 shares of stock options. These
                  options are priced at the average Fair Market Value of our
                  stock on your start date, with 4 year vesting (25% per year).

                  You will be eligible for all company benefit programs as
                  outlined in the Team Member Handbook. Your medical, dental,
                  vision, and life insurance benefits are effective on your
                  first day of employment. You will have 30 days after you begin
                  work to choose the type of coverage you would like. In order
                  for us to expedite the benefits enrollment process, please
                  complete the attached documents and return them to Human
                  Resources with your acceptance of this offer.

                  Your employment is conditional upon execution of our
                  Employment Agreement (see attached) and completion of an I-9
                  Form. In order to comply with the Immigration Reform and
                  Control Act of 1986, we must make sure that all new team
                  members have the right to legally work in the United States.
                  Please bring sufficient documents to complete the I-9 Form on
                  your first day of work (e.g.: (1) passport (2) drivers license
                  and social security card, or (3) drivers license and original
                  birth certificate).

                  While this offer does not express or imply an employment
                  contract between you and Data I/O for any specific period of
                  time, we believe that the relationship will be productive and
                  mutually beneficial.

                  Your signature below indicates acceptance of this offer. The
                  terms and conditions outlined above are all of the terms and
                  conditions of this offer. Please return one copy of this
                  letter by December 18, 2000. The second copy is provided for
                  your records. If you have any questions concerning this offer,
                  please contact Denise Wrisley, she can be reached at
                  425-867-6938.

                  Sincerely,

                  Brenda Rempel
                  Human Resources

                  enclosures

================================================================================

                  I agree to the offer as stated above.

                  Signed  /s/ John Vicklund                     Date  12/31/00
                         ------------------------------         --------------

<PAGE>

                  Exhibit 99.1

                  Certification by Chief Executive Officer
                  Pursuant to 18 U.S.C. Section 1350
                  As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

                  In connection with the quarterly Report of Data I/O
                  Corporation (the "Company") on Form 10-Q for the period ended
                  September 30, 2002 as filed with the Securities and Exchange
                  Commission on the date hereof (the "Report"), I, Frederick R.
                  Hume, Chief Executive Officer of the Company, certify, that
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002, that:

                  (1) The Report fully complies with the requirements of
                  Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
                  and (2) The information contained in the Report fairly
                  presents, in all material respects, the financial condition
                  and results of operations of the Company.


                   /s/ Frederick R. Hume
                  Frederick R. Hume
                  Chief Executive Officer
                  (Principal Executive Officer)
                  November 13, 2002



<PAGE>



                  Exhibit 99.2

                  Certification by Chief Financial Officer
                  Pursuant to 18 U.S.C. Section 1350
                  As Adopted Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

                  In connection with the quarterly Report of Data I/O
                  Corporation (the "Company") on Form 10-Q for the period ended
                  September 30, 2002 as filed with the Securities and Exchange
                  Commission on the date hereof (the "Report"), I, Joel S.
                  Hatlen, Chief Financial Officer of the Company, certify, that
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002, that:

                  (1) Report fully complies with the requirements of
                  Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
                  and (2) The information contained in the Report fairly
                  presents, in all material respects, the financial condition
                  and results of operations of the Company.


                   /s/ Joel S. Hatlen
                  Joel S. Hatlen
                  Chief Financial Officer
                  (Principal Financial Officer)
                  November 13, 2002