PART I – FINANCIAL INFORMATION 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) Presents Interlink Electronics, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for the reporting period Condensed Consolidated Balance Sheets 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 inventories9 - Total liabilities decreased by $152,000, while total stockholders' equity decreased by $454,000 over the same period9 Condensed Consolidated Statements of Operations 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 year11 - 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 year11 Condensed Consolidated Statements of Comprehensive Income (Loss) 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 adjustments14 - 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 translation14 Condensed Consolidated Statements of Stockholders' Equity 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 adjustments17 - Accumulated other comprehensive income significantly increased from $15,000 to $452,000, driven by foreign currency translation adjustments17 Condensed Consolidated Statements of Cash Flows 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 liabilities19129 - Cash and cash equivalents decreased by $621,000 during the six months ended June 30, 2025, resulting in an ending balance of $2,329,00019 Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1 – The Company and its Significant Accounting Policies 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 globally20 - 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)2731 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 period3336 Note 2 – Details of Certain Financial Statement Components 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 materials53 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 changes56 Note 3 – Acquisition of Conductive Transfers 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 $314,00058 - The acquisition expands Interlink's offerings in wearables, smart textiles, conductive ink, and printed electronics58 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 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 effect63 Note 5 – Restricted Stock Units 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 share64 - Unrecognized compensation cost for nonvested restricted stock units totaled approximately $102,000, with an expected recognition period of 3.6 years64 Note 6 – Significant Customers, Concentrations of Credit Risk, and Geographic Information 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 $46,00067 Note 7 – Related Party Transactions 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 transactions6970 - Transactions include mutual facilities sharing agreements, consulting services, and expense reimbursements6970 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 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 - 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 assets7172 - 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 effects74 Note 9 – Commitments and Contingencies 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 liabilities7576 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 expenses87 - The company is not party to any legal proceedings as of June 30, 2025, and historically, warranty returns and indemnification claims have not been material899095 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Interlink's financial condition and operational results, analyzing revenues, expenses, liquidity, and cash flows for the reporting periods 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 sensors9899100 - The company serves global blue-chip customers across medical, industrial, automotive, wearables, IoT, and other specialty markets98101 - 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 tech99102 Critical Accounting Policies and Estimates 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 assumptions103 - No material changes to critical accounting policies and estimates since the Annual Report on Form 10-K filed on March 27, 2025104 Recently Issued and Adopted Accounting Pronouncements 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 statements105 Results of Operations 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 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%)108109 - Gross profit increased by 17.9% to $1,538,000, with gross margin percentage remaining flat at 45.0%107110 - Engineering and R&D expenses decreased by 28.8% due to lower employee and consultant compensation costs111 Comparison of Six Months Ended June 30, 2025 and 2024 Compares the company's financial performance, including revenue, gross profit, and expenses, for the first half of 2025 and 2024 Half-Year Financial Performance (in thousands) | Metric | H1 2025 (in thousands) | H1 2024 (in thousands) | Change ($) | 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 - 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 mix107118 - 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 fees119121122 Liquidity and Capital Resources 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 dividends126 - 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 covenants127 Cash Flow Analysis 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 liabilities129 - 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 flows130 - Investing activities primarily consisted of property, plant, and equipment purchases, and financing activities were solely for preferred stock dividend payments131132 Off-Balance Sheet Arrangements Interlink Electronics, Inc. does not have any off-balance sheet arrangements - The company has no off-balance sheet arrangements133 Item 3. Quantitative and Qualitative Disclosures about Market Risk 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 risk134 Item 4. Controls and Procedures 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 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 effective136 Changes in Internal Controls over Financial Reporting 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, 2025137 Limitations on Effectiveness of Controls and Procedures 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 breakdowns139 PART II – OTHER INFORMATION This section includes other required information such as risk factors, other disclosures, exhibits, and signatures Item 1A. Risk Factors 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-K141 Item 5. Other Information 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, 2025142 Item 6. Exhibits 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 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, 2025146
Interlink Electronics(LINK) - 2025 Q2 - Quarterly Report