[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Interlink Electronics reported strong Q2 2025 results, driven by growth in key product lines, strategic wins, and a focus on M&A [Q2 2025 and Recent Highlights](index=1&type=section&id=Q2%202025%20and%20Recent%20Highlights) Interlink Electronics achieved strong Q2 2025 results with **18%** revenue growth, improved gross margins, and positive net income, driven by strategic wins and M&A focus - Revenue increased **18%** year-over-year to **$3.4 million**[1](index=1&type=chunk)[6](index=6&type=chunk) - Gross margin improved to **45%**, driving **$323,000** of adjusted EBITDA (non-GAAP) and positive net income of **$100,000**[1](index=1&type=chunk)[6](index=6&type=chunk) - Secured an integrated sensing solution program with a division of a top-10 global company, with approximately **$1 million** of revenue expected in 2026[1](index=1&type=chunk)[6](index=6&type=chunk) - Received a **$280,000** SBIR Phase 1 award from the National Institute of Environmental Health Sciences (NIEHS) to develop a high-resolution, hyper-local air quality monitoring system[1](index=1&type=chunk)[6](index=6&type=chunk) - The Company is actively evaluating a growing pipeline of strategic acquisition opportunities that align with long-term goals and enhance shareholder value[5](index=5&type=chunk)[6](index=6&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) CEO Steven N. Bronson emphasized progress towards sustainable, profitable growth, driven by strong product lines and strategic M&A, anticipating continued improvements into 2026 - Revenue increased **18%** year-over-year, driven by higher gas-sensor shipments, stronger printed electronics demand through Calman Technology, and contributions from the Conductive Transfers acquisition[4](index=4&type=chunk) - Sequential gross margin improved to **45%**, reflecting disciplined execution and a favorable product mix[4](index=4&type=chunk) - Management expects continued year-over-year revenue and gross margin improvements in the second half of 2025 and into 2026[4](index=4&type=chunk) - Momentum in gas-sensor and printed electronics product-lines is encouraging, with an anticipated rebound in the force-sensing business[5](index=5&type=chunk) - The company is actively evaluating a robust M&A pipeline and believes 2026 will be a defining year characterized by accelerating top-line growth, expanding gross margins, and consistent profitability[5](index=5&type=chunk)[6](index=6&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=Consolidated%20Financial%20Performance) Interlink Electronics demonstrated significant financial improvements in Q2 2025, marked by revenue growth, improved profitability, and positive Adjusted EBITDA [Q2 2025 Financial Results Summary](index=2&type=section&id=Q2%202025%20Financial%20Results%20Summary) Interlink Electronics achieved strong Q2 2025 financial improvements, with revenue growing **17.8%** to **$3.414 million**, returning to profitability with **$100,000** net income and positive Adjusted EBITDA Q2 2025 Financial Results (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | $ Change | % Change | | :--------------------------- | :---------------------------------------------- | :---------------------------------------------- | :------- | :------- | | Revenue | $3,414 | $2,898 | $516 | 17.8% | | Gross profit | $1,538 | $1,305 | $233 | 17.9% | | Gross margin | 45.0% | 45.0% | 0.0% | 0.0% | | Income (loss) from operations | $66 | $(313) | $379 | N/A | | Net income (loss) | $100 | $(307) | $407 | N/A | | Adjusted EBITDA | $323 | $(80) | $403 | N/A | - The year-over-year revenue growth was driven by higher shipments of gas-sensor products, increased sales of printed electronics through Calman Technology (benefiting in part from a stronger Pound Sterling), and contributions from the recently acquired Conductive Transfers subsidiary, partially offset by lower sales of force-sensor products[7](index=7&type=chunk) [Gross Margin and Net Income Analysis](index=2&type=section&id=Gross%20Margin%20and%20Net%20Income%20Analysis) Q2 2025 gross margin remained strong at **45.0%**, with sequential improvement, and net income reached **$100,000**, driven by higher revenue and reduced operating expenses - Gross margin for the quarter was **45.0%**, flat compared to the second quarter of last year, and up from **35.6%** in the first quarter of 2025[8](index=8&type=chunk) - The sequential improvement in gross margin primarily reflects higher revenue and favorable product mix[8](index=8&type=chunk) - Net income totaled **$100,000**, compared to a net loss of **$307,000** in the year-ago period[8](index=8&type=chunk) - The improvement in net income was driven by higher revenue and lower operating expenses, reflecting reduced headcount and related compensation costs[8](index=8&type=chunk) [Adjusted EBITDA Performance](index=2&type=section&id=Adjusted%20EBITDA%20Performance) Interlink Electronics reported a positive Adjusted EBITDA of **$323,000** for Q2 2025, a significant turnaround reflecting improved operational efficiency and profitability - Adjusted EBITDA, a non-GAAP financial measure, was **$323,000**, compared to **$(80,000)** in the prior-year period[9](index=9&type=chunk) [Company Overview](index=2&type=section&id=Company%20Overview) Interlink Electronics is a global leader in sensor and printed electronic solutions, operating internationally with specialized expertise and manufacturing capabilities [About Interlink Electronics, Inc.](index=2&type=section&id=About%20Interlink%20Electronics%2C%20Inc.) Interlink Electronics is a 40-year leader in sensor and printed electronic solutions, delivering mission-critical technologies across diverse markets through specialized expertise - Interlink Electronics is a leading provider of sensors and printed electronic solutions, boasting **40 years** of success in delivering mission-critical technologies[10](index=10&type=chunk) - Products and solutions span various markets, including medical, industrial, automotive, wearables, IoT, and other specialty markets[10](index=10&type=chunk) - Expertise in materials science, manufacturing, embedded electronics, firmware, and software enables the creation of custom solutions tailored to customer needs[10](index=10&type=chunk) [Global Operations](index=2&type=section&id=Global%20Operations) Interlink Electronics operates globally with headquarters in Fremont, California, a development center in Camarillo, and manufacturing facilities across China and the UK - The company's corporate headquarters and proprietary gas sensor production and product development facility are located in Fremont, California[11](index=11&type=chunk) - A Global Product Development and Materials Science Center and distribution and logistics center are in Camarillo, California[11](index=11&type=chunk) - Advanced printed-electronics manufacturing facilities are located in Shenzhen, China; Irvine, Scotland; and Barnsley, England[11](index=11&type=chunk) [Forward-Looking Statements & Non-GAAP Measures](index=3&type=section&id=Forward-Looking%20Statements%20%26%20Non-GAAP%20Measures) This section addresses the inherent uncertainties of forward-looking statements and clarifies the definition, use, and limitations of non-GAAP financial measures [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) Forward-looking statements are subject to inherent uncertainties and risks that may cause actual results to differ materially, with no obligation for public updates - Forward-looking statements are identified by phrases such as 'thinks,' 'anticipates,' 'believes,' 'estimates,' 'expects,' 'intends,' 'plans,' and similar words[13](index=13&type=chunk) - These statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially[13](index=13&type=chunk) - Risks and uncertainties include success in predicting new markets, efficient infrastructure management, technological developments, changes in customer ordering patterns, product quality, intellectual property protection, raw material availability, disruptions in manufacturing, risks of international sales and operations, and compliance with regulatory requirements[13](index=13&type=chunk) - The company expressly disclaims any obligation to publicly update or revise any forward-looking statements[13](index=13&type=chunk) [Non-GAAP Financial Measure Definition and Use](index=3&type=section&id=Non-GAAP%20Financial%20Measure%20Definition%20and%20Use) Adjusted EBITDA is a non-GAAP measure used by management and investors to assess core performance, supplementing GAAP statements for financial and operational decisions - Adjusted EBITDA is a non-GAAP financial measure used to supplement condensed consolidated financial statements prepared in accordance with GAAP[14](index=14&type=chunk) - Adjusted EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization, and as further adjusted for stock-based compensation expense[15](index=15&type=chunk) - This non-GAAP measure is used for financial and operational decision-making, period-to-period comparisons, and to evaluate performance by excluding items not indicative of core business operating results, such as amortization expense related to recent acquisitions[16](index=16&type=chunk) - It provides greater transparency with respect to key metrics used by management and helps investors analyze the health of the business[16](index=16&type=chunk) [Limitations of Non-GAAP Financial Measures](index=3&type=section&id=Limitations%20of%20Non-GAAP%20Financial%20Measures) The company acknowledges non-GAAP measure limitations, providing GAAP exclusions and emphasizing their evaluation alongside relevant GAAP financial measures - There are a number of limitations related to the use of non-GAAP financial measures[17](index=17&type=chunk) - The company compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures[17](index=17&type=chunk) - Non-GAAP financial measures are evaluated together with their relevant financial measures in accordance with GAAP[17](index=17&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and reconciliation of net loss to Adjusted EBITDA [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited condensed consolidated balance sheets for Interlink Electronics as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $2,329 | $2,950 | | Accounts receivable, net | $2,022 | $1,612 | | Inventories | $1,651 | $2,009 | | Total current assets | $6,424 | $6,899 | | Total assets | $12,510 | $13,116 | | Accounts payable | $501 | $573 | | Total current liabilities | $1,422 | $1,390 | | Total liabilities | $2,471 | $2,623 | | Total stockholders' equity | $10,039 | $10,493 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue | $3,414 | $2,898 | $6,078 | $6,022 | | Cost of revenue | $1,876 | $1,593 | $3,591 | $3,464 | | Gross profit | $1,538 | $1,305 | $2,487 | $2,558 | | Engineering, research and development | $363 | $510 | $797 | $1,086 | | Selling, general and administrative | $1,109 | $1,108 | $2,473 | $2,536 | | Total operating expenses | $1,472 | $1,618 | $3,270 | $3,622 | | Income (loss) from operations | $66 | $(313) | $(783) | $(1,064) | | Net income (loss) | $100 | $(307) | $(705) | $(1,048) | | Earnings (loss) per common share – diluted | $0.00 | $(0.04) | $(0.09) | $(0.13) | [Reconciliation of Consolidated Net Loss to Consolidated Adjusted EBITDA](index=5&type=section&id=Reconciliation%20of%20Consolidated%20Net%20Loss%20to%20Consolidated%20Adjusted%20EBITDA) This section provides the unaudited reconciliation of consolidated net loss to consolidated Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024 Reconciliation of Consolidated Net Loss to Consolidated Adjusted EBITDA (in thousands) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $100 | $(307) | $(705) | $(1,048) | | Interest (income) | $(7) | $(14) | $(13) | $(32) | | Income tax expense (benefit) | $(9) | $10 | $(48) | $32 | | Depreciation expense | $47 | $37 | $94 | $77 | | Amortization expense | $185 | $189 | $358 | $378 | | EBITDA | $316 | $(85) | $(314) | $(593) | | Stock-based compensation expense | $7 | $5 | $14 | $5 | | Adjusted EBITDA | $323 | $(80) | $(300) | $(588) |

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20--%20FINANCIAL%20INFORMATION) This section presents Interlink Electronics, Inc.'s unaudited condensed consolidated financial statements and detailed notes on accounting policies, financial components, and related disclosures [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) Presents Interlink Electronics, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for the reporting period [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total assets | $12,510 | $13,116 | | Total liabilities | $2,471 | $2,623 | | Total stockholders' equity | $10,039 | $10,493 | - Total assets **decreased by $606,000** from December 31, 2024, to June 30, 2025, primarily due to a decrease in cash and cash equivalents and inventories[9](index=9&type=chunk) - Total liabilities **decreased by $152,000**, while total stockholders' equity **decreased by $454,000** over the same period[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Presents the company's revenues, expenses, and net income or loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenue | $3,414 | $2,898 | $6,078 | $6,022 | | Gross profit | $1,538 | $1,305 | $2,487 | $2,558 | | Income (loss) from operations | $66 | $(313) | $(783) | $(1,064) | | Net income (loss) | $100 | $(307) | $(705) | $(1,048) | | Earnings (loss) per common share – basic and diluted | $0.00 | $(0.04) | $(0.09) | $(0.13) | - For the three months ended June 30, 2025, revenue **increased by 17.8%** year-over-year, leading to a net income of **$100,000** compared to a net loss of $307,000 in the prior year[11](index=11&type=chunk) - For the six months ended June 30, 2025, revenue saw a slight increase of **0.9%** year-over-year, but the company reported a net loss of **$705,000**, an improvement from the $1,048,000 net loss in the same period last year[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) Details net income or loss and other comprehensive income items, such as foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income (loss) | $100 | $(307) | $(705) | $(1,048) | | Foreign currency translation adjustments | $267 | $(9) | $437 | $(116) | | Comprehensive income (loss) | $367 | $(316) | $(268) | $(1,164) | - Comprehensive income for the three months ended June 30, 2025, was **$367,000**, a significant improvement from a loss of $316,000 in the prior year, largely driven by positive foreign currency translation adjustments[14](index=14&type=chunk) - For the six months ended June 30, 2025, comprehensive loss **decreased to $268,000** from $1,164,000 in the prior year, also benefiting from favorable foreign currency translation[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in equity components, including net income, dividends, and other comprehensive income Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $10,039 | $10,493 | | Accumulated Deficit | $(52,752) | $(51,847) | | Accumulated Other Comprehensive Income | $452 | $15 | - Total stockholders' equity **decreased from $10,493,000** at December 31, 2024, to **$10,039,000** at June 30, 2025, primarily due to net loss and preferred stock dividends, partially offset by foreign currency translation adjustments[17](index=17&type=chunk) - Accumulated other comprehensive income significantly **increased from $15,000 to $452,000**, driven by foreign currency translation adjustments[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash (used in) operating activities | $(409) | $(76) | | Net cash (used in) investing activities | $(34) | $(20) | | Net cash (used in) financing activities | $(200) | $(200) | | Net (decrease) in cash and cash equivalents | $(621) | $(344) | | Cash and cash equivalents, end of period | $2,329 | $3,960 | - Net cash used in operating activities **increased to $409,000** for the six months ended June 30, 2025, compared to $76,000 in the prior year, primarily due to changes in operating assets and liabilities[19](index=19&type=chunk)[129](index=129&type=chunk) - Cash and cash equivalents **decreased by $621,000** during the six months ended June 30, 2025, resulting in an ending balance of **$2,329,000**[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1 – The Company and its Significant Accounting Policies](index=9&type=section&id=Note%201%20%E2%80%93%20The%20Company%20and%20its%20Significant%20Accounting%20Policies) Describes Interlink Electronics, Inc.'s business, global operations, and significant accounting policies, including revenue recognition and R&D costs - Interlink Electronics, Inc. specializes in sensors and printed electronics for Human-Machine Interface (HMI) and Internet-of-Things (IoT) solutions, serving medical, industrial, automotive, wearables, and other specialty markets globally[20](index=20&type=chunk) - The company's revenue recognition policy follows ASC 606, distinguishing between revenue recognized at a point in time (primarily product sales) and over time (engineering services)[27](index=27&type=chunk)[31](index=31&type=chunk) Revenue by Type (in thousands) | Revenue Type | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Point in time | $3,078 | $2,701 | $5,581 | $5,657 | | Over time | $336 | $197 | $497 | $365 | | Total revenue | $3,414 | $2,898 | $6,078 | $6,022 | - R&D costs are expensed as incurred, and stock-based compensation is recognized on a straight-line basis over the service period[33](index=33&type=chunk)[36](index=36&type=chunk) [Note 2 – Details of Certain Financial Statement Components](index=16&type=section&id=Note%202%20%E2%80%93%20Details%20of%20Certain%20Financial%20Statement%20Components) This note provides a breakdown of key financial statement components, including inventories, property, plant and equipment, intangible assets, goodwill, and accrued liabilities, detailing their values and changes between December 31, 2024, and June 30, 2025 Inventories (in thousands) | Inventories (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Raw materials | $1,232 | $1,608 | | Work-in-process | $198 | $179 | | Finished goods | $221 | $222 | | Total inventories | $1,651 | $2,009 | - Total inventories **decreased by $358,000** from December 31, 2024, to June 30, 2025, primarily due to a reduction in raw materials[53](index=53&type=chunk) Intangible Assets, Net (in thousands) | Intangible Assets, Net (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Patents, tradenames, and trademarks | $951 | $931 | | Developed technology | $663 | $536 | | Customer relationships | $1,549 | $1,427 | | Non-compete agreements | $998 | $916 | | Order backlog | $0 | $22 | | In-process research and development | $0 | $29 | | Total intangible assets, net | $1,723 | $1,874 | - Goodwill **decreased from $2,658,000** at January 1, 2025, to **$2,626,000** at June 30, 2025, due to an acquisition price allocation adjustment for Conductive Transfers and foreign currency exchange rate changes[56](index=56&type=chunk) [Note 3 – Acquisition of Conductive Transfers](index=18&type=section&id=Note%203%20%E2%80%93%20Acquisition%20of%20Conductive%20Transfers) Interlink Electronics acquired Conductive Transfers Limited and its affiliate Global Print Solutions Limited on December 20, 2024, for GB£250,000 (approximately $314,000) in cash. This acquisition enhances Interlink's capabilities in wearables, smart textiles, conductive ink, and printed electronics - Acquired Conductive Transfers Limited and Global Print Solutions Limited on December 20, 2024, for approximately **$314,000**[58](index=58&type=chunk) - The acquisition expands Interlink's offerings in wearables, smart textiles, conductive ink, and printed electronics[58](index=58&type=chunk) Acquired Assets (in thousands) | Acquired Assets (in thousands) | Fair Value | | :-------------------------- | :--------- | | Inventories | $21 | | Property and equipment | $238 | | Net identifiable tangible assets acquired | $259 | | Developed technology | $55 | | Net assets acquired | $314 | [Note 4 – Earnings Per Share](index=18&type=section&id=Note%204%20%E2%80%93%20Earnings%20Per%20Share) This note details the computation of basic and diluted earnings per share, highlighting that preferred stock and restricted stock units were excluded from diluted EPS calculations due to their anti-dilutive effect Earnings Per Share Data (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) applicable to common stockholders (in thousands) | $0 | $(407) | $(905) | $(1,248) | | Weighted average common shares outstanding – basic and diluted (in thousands) | 9,864 | 9,860 | 9,864 | 9,860 | | Earnings (loss) per common share, basic and diluted | $0.00 | $(0.04) | $(0.09) | $(0.13) | - **200,000 shares** of Series A Convertible Preferred Stock (convertible into 600,000 common shares) and **31,250 restricted stock units** were excluded from diluted EPS calculations for all periods due to their anti-dilutive effect[63](index=63&type=chunk) [Note 5 – Restricted Stock Units](index=19&type=section&id=Note%205%20%E2%80%93%20Restricted%20Stock%20Units) The company recognized $7,000 and $14,000 in stock-based compensation expense for restricted stock units during the three and six months ended June 30, 2025, respectively. As of June 30, 2025, there was $102,000 of unrecognized compensation cost related to 31,250 nonvested restricted stock units, expected to be recognized over 3.6 years Stock-Based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :------------------------------------------ | | Stock-based compensation expense | $7 | $14 | - As of June 30, 2025, **31,250 nonvested restricted stock units** remained outstanding with a weighted average grant-date fair value of **$4.35 per share**[64](index=64&type=chunk) - Unrecognized compensation cost for nonvested restricted stock units totaled approximately **$102,000**, with an expected recognition period of **3.6 years**[64](index=64&type=chunk) [Note 6 – Significant Customers, Concentrations of Credit Risk, and Geographic Information](index=20&type=section&id=Note%206%20%E2%80%93%20Significant%20Customers%2C%20Concentrations%20of%20Credit%20Risk%2C%20and%20Geographic%20Information) Interlink operates as a single segment and reports revenue concentrations from key customers and geographic regions. Customer A and B represented significant portions of revenue, while the United States, Asia, and Europe were the primary geographic markets. The company monitors credit risk and maintains an allowance for credit losses Revenue Concentration by Customer (% of total revenues) | Customer | Three Months Ended June 30, 2025 (% of total revenues) | Three Months Ended June 30, 2024 (% of total revenues) | Six Months Ended June 30, 2025 (% of total revenues) | Six Months Ended June 30, 2024 (% of total revenues) | | :--------- | :--------------------------------------------------- | :--------------------------------------------------- | :------------------------------------------------- | :------------------------------------------------- | | Customer A | 17% | 16% | 19% | 15% | | Customer B | 13% | 24% | 10% | 20% | Revenue by Geographic Area (in thousands) | Geographic Area (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $1,728 | $1,403 | $2,830 | $2,848 | | Asia and Middle East | $424 | $478 | $793 | $1,207 | | Europe and other | $1,262 | $1,017 | $2,455 | $1,967 | | Total Revenue | $3,414 | $2,898 | $6,078 | $6,022 | - At June 30, 2025, three customers accounted for **22%, 21%, and 10%** of total accounts receivable, with an allowance for credit losses of approximately **$46,000**[67](index=67&type=chunk) [Note 7 – Related Party Transactions](index=21&type=section&id=Note%207%20%E2%80%93%20Related%20Party%20Transactions) Interlink engages in related party transactions with Qualstar Corporation and BKF Capital Group, Inc., both controlled by Steven N. Bronson. These transactions involve mutual facilities sharing, consulting services, and expense reimbursements, with balances due to and from these entities fluctuating quarterly - Steven N. Bronson, CEO of Interlink, also controls Qualstar Corporation and BKF Capital Group, Inc., leading to related party transactions[69](index=69&type=chunk)[70](index=70&type=chunk) - Transactions include mutual facilities sharing agreements, consulting services, and expense reimbursements[69](index=69&type=chunk)[70](index=70&type=chunk) Related Party Balances (in thousands) | Related Party | Balance at June 30, 2025 (Due from, in thousands) | Balance at June 30, 2025 (Due to, in thousands) | | :-------------- | :---------------------------------------------- | :-------------------------------------------- | | Qualstar | $17 | $18 | | BKF Capital | $0 | $0 | [Note 8 – Income Taxes](index=22&type=section&id=Note%208%20%E2%80%93%20Income%20Taxes) Interlink's income tax expense and effective tax rate are influenced by the mix of domestic and foreign pre-tax earnings/losses, permanent differences, and the ability to utilize net operating loss (NOL) carryforwards. The company maintains a valuation allowance against federal, state, and certain foreign deferred tax assets due to uncertainty of recovery - Income taxes were **9.9%** of pre-tax income for Q2 2025 (vs. 3.4% of pre-tax loss in Q2 2024) and **6.4%** of pre-tax loss for H1 2025 (vs. 3.1% in H1 2024)[71](index=71&type=chunk) - The effective tax rate varies from the U.S. statutory rate of **21%** due to the mix of domestic and foreign earnings/losses and valuation allowances on domestic and certain foreign deferred tax assets[71](index=71&type=chunk)[72](index=72&type=chunk) - Of the **$2.3 million** cash at June 30, 2025, **$1.5 million** was held by foreign subsidiaries, with methods available for repatriation without significant tax effects[74](index=74&type=chunk) [Note 9 – Commitments and Contingencies](index=24&type=section&id=Note%209%20%E2%80%93%20Commitments%20and%20Contingencies) This note details the company's lease agreements for various facilities globally, outlining lease terms, payments, and related assets/liabilities. It also covers the company's policies on litigation, product warranties, intellectual property indemnities, and director/officer indemnities, noting that historically, these have not had a material negative effect on the business - Interlink leases facilities under non-cancellable operating leases expiring through 2029, with a weighted average incremental borrowing rate of **9.5%** for capitalized ROU assets and lease liabilities[75](index=75&type=chunk)[76](index=76&type=chunk) Lease Liabilities and Right-of-Use Assets (in thousands) | Lease Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------- | :------------ | :---------------- | | Current lease liabilities | $353 | $352 | | Long-term lease liabilities | $641 | $777 | | Right-of-use assets | $931 | $1,064 | | Weighted average remaining lease term | 2.0 years | 2.2 years | - Operating lease costs for the three months ended June 30, 2025, were approximately **$136,000**, with $76,000 in cost of revenue and $60,000 in operating expenses[87](index=87&type=chunk) - The company is not party to any legal proceedings as of June 30, 2025, and historically, warranty returns and indemnification claims have not been material[89](index=89&type=chunk)[90](index=90&type=chunk)[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Interlink's financial condition and operational results, analyzing revenues, expenses, liquidity, and cash flows for the reporting periods [Overview](index=29&type=section&id=Overview) Interlink Electronics, Inc. is a global leader in HMI and IoT sensors, expanding its technology and market reach through strategic acquisitions - Interlink is a leading provider of sensors and printed electronics for HMI and IoT solutions, with products including force/touch sensors and gas/environmental sensors[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The company serves global blue-chip customers across medical, industrial, automotive, wearables, IoT, and other specialty markets[98](index=98&type=chunk)[101](index=101&type=chunk) - Strategic acquisitions (Calman in 2023, Conductive Transfers in 2024) have expanded HMI design, manufacturing expertise, and innovative printed electronic technologies, including functional e-textiles and wearable tech[99](index=99&type=chunk)[102](index=102&type=chunk) [Critical Accounting Policies and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company prepares its financial statements in accordance with GAAP, requiring management to make estimates and assumptions that affect reported amounts. There have been no material changes to the critical accounting policies and estimates described in the Annual Report on Form 10-K filed on March 27, 2025 - Financial statements are prepared under GAAP, involving significant management estimates and assumptions[103](index=103&type=chunk) - No material changes to critical accounting policies and estimates since the Annual Report on Form 10-K filed on March 27, 2025[104](index=104&type=chunk) [Recently Issued and Adopted Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20and%20Adopted%20Accounting%20Pronouncements) The company has reviewed all recently issued accounting pronouncements and concluded that they are either not applicable or not expected to have a material impact on its financial statements - Recently issued accounting pronouncements are not applicable or not expected to be material to the financial statements[105](index=105&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the three and six months ended June 30, 2025, compared to the prior year. It details changes in revenue by market, gross profit, operating expenses (R&D, SG&A), other income/expense, and income taxes, highlighting key drivers for these fluctuations [Comparison of Three Months Ended June 30, 2025 and 2024](index=32&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's financial performance, including revenue, gross profit, and expenses, for the second quarter of 2025 and 2024 Quarterly Financial Performance (in thousands) | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Revenue | $3,414 | $2,898 | $516 | 17.8% | | Gross profit | $1,538 | $1,305 | $233 | 17.9% | | Engineering, research and development | $363 | $510 | $(147) | (28.8)% | | Selling, general and administrative | $1,109 | $1,108 | $1 | 0.1% | | Other income (expense), net | $25 | $16 | $9 | 56.3% | | Net income (loss) | $100 | $(307) | $407 | 132.6% | - Revenue **increased by 17.8%** due to higher demand in industrial (up **87.0%**) and automotive (up **130.8%**) markets, and standard products (up **10.6%**), offsetting a decrease in medical market revenue (down **22.2%**)[108](index=108&type=chunk)[109](index=109&type=chunk) - Gross profit **increased by 17.9% to $1,538,000**, with gross margin percentage remaining flat at **45.0%**[107](index=107&type=chunk)[110](index=110&type=chunk) - Engineering and R&D expenses **decreased by 28.8%** due to lower employee and consultant compensation costs[111](index=111&type=chunk) [Comparison of Six Months Ended June 30, 2025 and 2024](index=35&type=section&id=Comparison%20of%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) Compares the company's financial performance, including revenue, gross profit, and expenses, for the first half of 2025 and 2024 Half-Year Financial Performance (in thousands) | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | :--------- | | Revenue | $6,078 | $6,022 | $56 | 0.9% | | Gross profit | $2,487 | $2,558 | $(71) | (2.8)% | | Engineering, research and development | $797 | $1,086 | $(289) | (26.6)% | | Selling, general and administrative | $2,473 | $2,536 | $(63) | (2.5)% | | Other income (expense), net | $30 | $48 | $(18) | (37.5)% | | Net income (loss) | $(705) | $(1,048) | $343 | 32.7% | - Revenue **increased slightly by 0.9%**, driven by growth in industrial (up **44.2%**) and automotive (up **165.9%**) markets, while medical revenue decreased by **30.0%** and standard products by **2.2%**[117](index=117&type=chunk) - Gross profit **decreased by 2.8% to $2,487,000**, with gross margin percentage declining from **42.5% to 40.9%** due to changes in product and customer mix[107](index=107&type=chunk)[118](index=118&type=chunk) - Engineering and R&D costs **decreased by 26.6%** due to lower compensation costs, and SG&A costs **decreased by 2.5%** due to lower compensation expenses, partially offset by higher consultant fees[119](index=119&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses Interlink's cash position, working capital, and potential future capital needs, including implications of equity or debt financing Liquidity and Capital Resources Summary (in millions) | Metric | June 30, 2025 (in millions) | | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $2.3 | | Working capital | $5.0 | | Indebtedness | $0 | | Foreign subsidiaries cash | $1.5 | - The company has **200,000 shares** of **8.0% Series A Convertible Preferred Stock** outstanding, with an aggregate liquidation preference of **$5.0 million**, paying monthly cash dividends[126](index=126&type=chunk) - Management believes existing cash is sufficient for current operations but may raise additional capital through equity or debt, potentially leading to stockholder dilution or restrictive covenants[127](index=127&type=chunk) [Cash Flow Analysis](index=39&type=section&id=Cash%20Flow%20Analysis) This section provides a summary of cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024. It details the drivers behind the net cash used in each category, including net loss, non-cash adjustments, changes in working capital, capital expenditures, and preferred stock dividends Cash Flow Activities (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash (used in) operating activities | $(409) | $(76) | | Net cash (used in) investing activities | $(34) | $(20) | | Net cash (used in) financing activities | $(200) | $(200) | - Net cash used in operating activities **increased to $409,000** in H1 2025 (from $76,000 in H1 2024), primarily due to a net loss of $705,000 and changes in operating assets and liabilities[129](index=129&type=chunk) - Accounts receivable **increased from $1.6 million to $2.1 million**, while inventories **decreased from $2.0 million to $1.7 million**, impacting operating cash flows[130](index=130&type=chunk) - Investing activities primarily consisted of property, plant, and equipment purchases, and financing activities were solely for preferred stock dividend payments[131](index=131&type=chunk)[132](index=132&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) Interlink Electronics, Inc. does not have any off-balance sheet arrangements - The company has no off-balance sheet arrangements[133](index=133&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for Interlink Electronics, Inc. in this report - The company has no applicable quantitative and qualitative disclosures about market risk[134](index=134&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the evaluation of Interlink's disclosure controls and internal controls over financial reporting, concluding their effectiveness with no material changes [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level - As of June 30, 2025, management, with CEO and CFO participation, concluded that disclosure controls and procedures were designed at a reasonable assurance level and were effective[136](index=136&type=chunk) [Changes in Internal Controls over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Controls%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[137](index=137&type=chunk) [Limitations on Effectiveness of Controls and Procedures](index=40&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) Management acknowledges that control systems provide reasonable, not absolute, assurance and are subject to inherent limitations - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to human diligence, judgment lapses, and potential breakdowns[139](index=139&type=chunk) [PART II – OTHER INFORMATION](index=41&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section includes other required information such as risk factors, other disclosures, exhibits, and signatures [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors outlined in the company's Annual Report on Form 10-K filed on March 27, 2025. No material changes to these risk factors occurred during the three months ended June 30, 2025 - No material changes to risk factors occurred during the three months ended June 30, 2025, as referenced in the Annual Report on Form 10-K[141](index=141&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2025, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[142](index=142&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications (302 and 906), XBRL documents, and the iXBRL cover page - The report includes various exhibits such as Articles of Incorporation, Bylaws, certifications (31.1, 31.2, 32.1), and XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[144](index=144&type=chunk) [Signatures](index=43&type=section&id=Signatures) The report is duly signed on behalf of Interlink Electronics, Inc. by Ryan J. Hoffman, Chief Financial Officer, on August 13, 2025 - The report was signed by Ryan J. Hoffman, Chief Financial Officer, on August 13, 2025[146](index=146&type=chunk)

Core Insights - Interlink Electronics reported a significant revenue increase of 18% year-over-year for Q2 2025, reaching $3.4 million, driven by higher gas-sensor shipments and strong demand for printed electronics [4][8][10] - The company achieved a gross margin of 45%, reflecting disciplined execution and a favorable product mix, with expectations for continued improvements in the second half of 2025 and into 2026 [4][10] - Interlink is focusing on strategic growth initiatives, including evaluating a robust M&A pipeline to enhance shareholder value [5][8] Financial Performance - Revenue for Q2 2025 was $3,414,000, compared to $2,898,000 in Q2 2024, marking a $516,000 increase or 17.8% [6][22] - Gross profit for the quarter was $1,538,000, up from $1,305,000 in the previous year, representing a 17.9% increase [6][22] - Net income for Q2 2025 was $100,000, a significant improvement from a net loss of $307,000 in Q2 2024 [10][22] Strategic Initiatives - The company secured a major design win for an integrated sensing solution with a division of a top-10 global OEM, with expected revenue of approximately $1 million in 2026 [8] - Interlink received a $280,000 SBIR Phase 1 award to develop a high-resolution air quality monitoring system, highlighting its leadership in the gas sensing industry [8][7] - The company is expanding relationships with Fortune 500 customers, supported by a scalable product portfolio [8]

Market Trend - $LINK has started an upwards trend after launching the Treasury Strategy [1] - $LINK held the $15 level and reached a new 7-month high [1] Financial Performance - The report suggests potentially positive future performance for $LINK [1]

Core Insights - Interlink Electronics, Inc. has received a $280,000 Phase 1 Small Business Innovation Research (SBIR) award from the National Institute of Environmental Health Sciences to develop a next-generation air quality monitoring system [1] - The company's gas sensing technology aims to address growing global concerns over air quality and climate change, providing real-time, actionable environmental data [2] - Interlink's AI-enhanced sensing nodes are designed for widespread deployment, creating a network effect that can transform air quality monitoring into a predictive service for government and commercial users [3] Company Overview - Interlink Electronics is a leader in sensor and printed electronic solutions, with nearly 40 years of experience serving various markets including medical, industrial, automotive, wearables, and IoT [4] - The company emphasizes its expertise in materials science, manufacturing, embedded electronics, firmware, and software to create custom solutions tailored to customer needs [4] - The recent SBIR grant highlights the company's strategic focus on emerging applications where its sensor expertise can drive long-term growth [4]

Company Overview - Interlink Electronics, Inc. is a leading provider of sensors and printed electronic solutions with 40 years of experience in delivering mission-critical technologies across diverse markets [4] - The company serves blue-chip customers in various sectors, including industrial, medical, consumer, and automotive [4] Event Participation - Interlink Electronics will present at Sensors Converge 2025, taking place from June 24-26, 2025, at the Santa Clara Convention Center [1] - The event is a platform for industry leaders, innovators, and experts to network and share knowledge on advancements in sensor technology [1] Featured Presentation - Paul Brook and Dr. Sreeni Rao will deliver a presentation on "Advanced Printed Manufacturing Technologies for Smart Wearables with Application to Gas Sensing" on June 24 at 3:00 p.m. PDT [2] - The presentation will focus on the latest advancements in smart, functional fabrics and the integration of multiple sensing modalities into wearable platforms [2] Company Leadership and Commitment - Steven N. Bronson, Chairman and CEO, emphasized the company's position as a technology leader in the sensors and printed electronics space [3] - The company is committed to advancing innovation and enhancing investor visibility while expanding its shareholder base [3]

[Overview and Management Commentary](index=1&type=section&id=Overview%20and%20Management%20Commentary) Management positions Q1 2025 as a transitional low point, focusing on strategic execution for double-digit organic growth and profitability by 2026, driven by gas sensor traction, a major OEM design win, and production shifts - Management views Q1 as the start of a year focused on disciplined execution towards long-term goals, with recent customer wins and product introductions indicating the strategy is effective[4](index=4&type=chunk) - The company is experiencing encouraging traction in its gas sensor product line, particularly with advancements in odor and carbon monoxide detection for high-value environmental and safety markets[5](index=5&type=chunk) - To counter recent tariff fluctuations, some production activities will be shifted from the low-cost facility in China to the facility in Scotland, aiming to reduce cost structure impacts[6](index=6&type=chunk) - Secured a major integrated sensing solution design win with a division of a top 10 global company, with pre-production starting in Q3 2025 and expected revenue of almost **$1 million** in 2026[8](index=8&type=chunk) [Financial Performance](index=2&type=section&id=Financial%20Performance) Interlink's Q1 2025 revenue declined **14.7%** to **$2.6 million**, with gross margin at **35.6%**, leading to an **$805,000** net loss and **$623,000** negative Adjusted EBITDA, while total assets remained **$12.5 million** [Q1 2025 Financial Results](index=2&type=section&id=Q1%202025%20Financial%20Results) Q1 2025 revenue decreased **14.7%** to **$2.6 million** due to lower traditional sensor shipments, with gross margin falling to **35.6%**, resulting in a **$905,000** net loss or **($0.09)** per share Q1 2025 vs Q1 2024 Consolidated Financial Results | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $2.66M | $3.12M | (14.7)% | | Gross Profit | $0.95M | $1.25M | (24.3)% | | Gross Margin | 35.6% | 40.1% | -4.5 p.p. | | Loss from Operations | ($0.85M) | ($0.75M) | (13.0)% | | Net Loss | ($0.81M) | ($0.74M) | (8.6)% | | Diluted EPS | ($0.09) | ($0.09) | 0.0% | - The year-over-year revenue decline was primarily caused by lower shipments of traditional force-sensor and gas-sensor products, though partially offset by sales from the Calman Technology and Conductive Transfers businesses[10](index=10&type=chunk) - The increase in net loss was driven by lower revenue and gross profit, which was partially mitigated by reduced operating expenses from lower headcount and compensation costs[11](index=11&type=chunk) [Financial Position (Balance Sheet)](index=5&type=section&id=Financial%20Position%20%28Balance%20Sheet%29) As of March 31, 2025, total assets decreased to **$12.47 million**, with cash declining to **$2.59 million**, while total liabilities slightly increased to **$2.71 million** and stockholders' equity decreased to **$9.77 million** Condensed Consolidated Balance Sheet (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,585 | $2,950 | | Total current assets | $6,394 | $6,899 | | Total assets | $12,472 | $13,116 | | Total current liabilities | $1,592 | $1,390 | | Total liabilities | $2,707 | $2,623 | | Total stockholders' equity | $9,765 | $10,493 | [Non-GAAP Measures (Adjusted EBITDA)](index=2&type=section&id=Non-GAAP%20Measures%20%28Adjusted%20EBITDA%29) Adjusted EBITDA, a non-GAAP metric, showed a loss of **$623,000** in Q1 2025, compared to a **$508,000** loss in Q1 2024, used by the company for internal performance evaluation Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net (loss) | $(805) | $(741) | | EBITDA | $(630) | $(508) | | Stock-based compensation | $7 | $— | | **Adjusted EBITDA** | **$(623)** | **$(508)** | - The company uses Adjusted EBITDA for financial and operational decision-making, to evaluate period-to-period comparisons, and to provide investors with greater transparency into key metrics used by management[19](index=19&type=chunk) [Business Outlook and Strategy](index=1&type=section&id=Business%20Outlook%20and%20Strategy) Interlink anticipates 2026 as a breakout year with profitability, double-digit organic revenue growth, and expanded gross margins, prioritizing organic execution while evaluating strategic M&A opportunities - The company is focused on executing its strategy to lay the foundation for a return to profitability and double-digit organic growth in 2026[2](index=2&type=chunk) - Management believes 2026 will be a breakout year, driven by profitability, margin expansion, and sustained revenue growth[9](index=9&type=chunk) - While organic growth is the top priority, Interlink continues to evaluate a growing pipeline of strategic acquisition opportunities and will act opportunistically[8](index=8&type=chunk)[9](index=9&type=chunk) [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section provides corporate background, legal disclaimers, and contact details, describing Interlink as a global provider of sensors and printed electronic solutions, including standard forward-looking statements and contact information [About Interlink Electronics, Inc.](index=2&type=section&id=About%20Interlink%20Electronics%2C%20Inc.) Interlink Electronics is a leading provider of sensors and printed electronic solutions with nearly 40 years of experience, serving diverse industrial, medical, consumer, and automotive markets globally - Interlink is a leading provider of sensors and printed electronic solutions, serving diverse markets including industrial, medical, consumer, and automotive[13](index=13&type=chunk) - The company operates globally with headquarters and a gas sensor facility in Fremont, CA; a product development center in Camarillo, CA; and manufacturing facilities in Shenzhen, China; Irvine, Scotland; and Barnsley, England[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward%20Looking%20Statements) This section provides a standard safe harbor disclaimer, cautioning that forward-looking statements on future performance and strategy are subject to risks and uncertainties, with actual results potentially differing materially - Forward-looking statements in the release, including projections for 2025 and 2026 performance, are not guarantees of future results and are subject to significant uncertainties and risks[16](index=16&type=chunk) [Contact Information](index=4&type=section&id=Contact%20Information) Contact details are provided for company inquiries to CEO Steven N. Bronson and for investor relations inquiries to Gateway Group - Contact information is provided for both the company (CEO Steven N. Bronson) and its investor relations firm (Gateway Group)[21](index=21&type=chunk)

PART I -- FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited Q1 2025 financial statements reflect decreased assets and equity, a revenue decline, increased net loss, and negative operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$12.47 million** by March 31, 2025, from **$13.12 million** at year-end 2024, driven by reduced cash and equity Balance Sheet Highlights | Balance Sheet Highlights | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $2,585 | $2,950 | | Total current assets | $6,394 | $6,899 | | Total assets | $12,472 | $13,116 | | Total current liabilities | $1,592 | $1,390 | | Total liabilities | $2,707 | $2,623 | | Total stockholders' equity | $9,765 | $10,493 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 revenue decreased to **$2.66 million** from **$3.12 million** YoY, resulting in a net loss of **$805 thousand** Income Statement Highlights | Income Statement Highlights | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $2,664 | $3,124 | | Gross Profit | $949 | $1,253 | | (Loss) from operations | $(849) | $(751) | | Net (loss) | $(805) | $(741) | | Net (loss) applicable to common stockholders | $(905) | $(841) | | Earnings (loss) per common share – basic and diluted | $(0.09) | $(0.09) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw **$271 thousand** net cash used in operations, a shift from prior year, leading to a **$365 thousand** decrease in cash Cash Flow Summary | Cash Flow Summary | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(271) | $222 | | Net cash (used in) investing activities | $(29) | $(18) | | Net cash (used in) financing activities | $(100) | $(100) | | Net increase (decrease) in cash and cash equivalents | $(365) | $63 | | Cash and cash equivalents, end of period | $2,584 | $4,367 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, single segment operations, the Conductive Transfers acquisition, geographic revenue shifts, and customer concentration - The company operates as a single reportable segment focused on the design, development, and manufacture of sensor technologies[43](index=43&type=chunk) - On December 20, 2024, the company acquired the operating assets of Conductive Transfers Limited for approximately **$314 thousand** in cash[57](index=57&type=chunk) Revenue by Geographic Area (Q1) | Revenue by Geographic Area (Q1) | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | United States | $1,102 | $1,445 | | Asia and Middle East | $369 | $729 | | Europe and other | $1,193 | $950 | - In Q1 2025, Customer A accounted for **22%** of total revenues, up from **17%** in Q1 2024. At March 31, 2025, two customers accounted for **36%** and **11%** of total accounts receivable[64](index=64&type=chunk)[65](index=65&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 revenue decline due to lower demand, gross margin contraction, reduced operating expenses, and current liquidity position [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Q1 2025 revenue declined **14.7%** to **$2.66 million** due to market drops, gross profit fell **24.3%**, and operating expenses decreased Revenue by Market (Q1 2025 vs Q1 2024) | Revenue by Market (Q1 2025 vs Q1 2024) | Q1 2025 (in thousands) | Q1 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Medical | $714 | $1,185 | (39.7)% | | Industrial | $589 | $677 | (13.0)% | | Consumer | $11 | $132 | (91.7)% | | Standard | $1,350 | $1,130 | 19.5% | | **Total Revenue** | **$2,664** | **$3,124** | **(14.7)%** | - Gross profit and margin percentage decreased in Q1 2025 compared to Q1 2024, primarily due to lower revenues and changes in product and customer mix[107](index=107&type=chunk) - Engineering and R&D expenses decreased by **$142 thousand** (**24.7%**) YoY due to lower employee and consultant compensation costs[108](index=108&type=chunk) - Selling, general and administrative expenses decreased by **$64 thousand** (**4.5%**) YoY due to lower compensation and professional services expenses, partially offset by higher facilities costs[109](index=109&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, the company held **$2.6 million** in cash and **$4.8 million** in working capital with no debt - As of March 31, 2025, the company had cash and cash equivalents of **$2.6 million**, working capital of **$4.8 million**, and no indebtedness[114](index=114&type=chunk) - The company pays monthly cumulative cash dividends on its **8.0%** Series A Convertible Preferred Stock, which has an aggregate liquidation preference of **$5.0 million**[115](index=115&type=chunk) Cash Flow Summary (Q1) | Cash Flow Summary (Q1) | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(271) | $222 | | Net cash (used in) investing activities | $(29) | $(18) | | Net cash (used in) financing activities | $(100) | $(100) | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item is reported as not applicable for the current reporting period - The report states "Not Applicable" for this item[123](index=123&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2025, with no material changes to internal controls - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[125](index=125&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[126](index=126&type=chunk) PART II -- OTHER INFORMATION [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported in this period - There have been no material changes to the risk factors from those contained in the Annual Report on Form 10-K filed with the SEC on March 27, 2025[130](index=130&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - During the three months ended March 31, 2025, no director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[131](index=131&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including CEO/CFO certifications and XBRL data files - The report includes a list of exhibits filed, such as CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1) and XBRL documents (Exhibits 101 and 104)[133](index=133&type=chunk)

Core Viewpoint - The first quarter of 2025 is seen as a low point for Interlink Electronics, with a focus on strategic execution to return to profitability and achieve double-digit organic growth by 2026 [1][3]. Financial Performance - Revenue for Q1 2025 was $2.664 million, a decrease of 14.7% from $3.124 million in Q1 2024 [8][9]. - Gross profit was $949,000, down 24.3% from $1.253 million in the same quarter last year, resulting in a gross margin of 35.6%, compared to 40.1% in Q1 2024 [8][10]. - The net loss for the quarter was $805,000, an increase from a loss of $741,000 in Q1 2024, attributed to lower revenue and gross profit [8][10]. - Adjusted EBITDA was $(623,000), compared to $(508,000) in the prior-year period [8][11]. Operational Highlights - The company is encouraged by progress in its gas sensor product line, particularly in odor and carbon monoxide detection, which enhances its relevance in environmental and safety applications [4][6]. - A significant integrated sensing solution design win was secured with a division of a top 10 global OEM, with pre-production expected to begin in Q3 2025 and nearly $1 million in revenue anticipated for 2026 [7]. - The company is shifting some production from China to Scotland to mitigate tariff impacts, maintaining operational discipline and customer momentum [5][6]. Strategic Outlook - The management emphasizes a disciplined execution strategy and is optimistic about returning to profitability in 2026, driven by organic revenue growth and margin expansion [3][6]. - The company is actively monitoring a healthy M&A pipeline and will pursue opportunities that align with long-term goals [6][7].

Company Overview - Interlink Electronics, Inc. is a leading provider of sensor and printed electronics solutions with nearly 40 years of experience in delivering mission-critical technologies across diverse markets [4] - The company serves blue-chip customers in various sectors, including industrial, medical, consumer, and automotive, leveraging expertise in materials science, manufacturing, embedded electronics, firmware, and software to create custom solutions [4] Upcoming Event Participation - Interlink will participate in the Planet MicroCap Showcase: VEGAS 2025, scheduled for April 22-24, 2025, at the Paris Hotel & Casino in Las Vegas, Nevada [1] - Chairman, President, and CEO Steven N. Bronson will present on April 23, 2025, and will host one-on-one meetings with investors on April 24, 2025 [1][2] Presentation Highlights - The presentation will cover Interlink's recent operational progress, including the acquisition of UK-based Conductive Transfers Limited and the awarding of two SBIR grants aimed at accelerating product innovation [2] - Bronson will discuss the company's scaling operations, global expansion, and leadership team enhancements to support long-term growth [2] - Interlink's 2025 growth priorities will focus on environmental sensing, printed electronics, and smart textile solutions, with an emphasis on strong revenue momentum and healthy margins [2] Investor Engagement - Participation in the Planet MicroCap Showcase reflects Interlink's commitment to enhancing investor visibility, expanding its shareholder base, and maintaining engagement with the financial community [3]