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What changed in INTERLINK ELECTRONICS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of INTERLINK ELECTRONICS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+294 added−260 removedSource: 10-K (2024-03-25) vs 10-K (2023-03-29)

Top changes in INTERLINK ELECTRONICS INC's 2023 10-K

294 paragraphs added · 260 removed · 231 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

103 edited+29 added−10 removed20 unchanged
Biggest changeCustom solutions can be a single- or multi-technology platform to meet customer requirements and include both input and output technologies. We also offer full embedded firmware development and integration support. In many instances we work very closely with our OEM partners from the concept phase to ensure that our solutions are successfully integrated. Standard Solutions .
Biggest changeThe largest part of our business, however, is the development and manufacture of custom solutions for our major customers. We offer full integration capability spanning initial concept to large-volume manufacturing. Custom solutions can be a single- or multi-technology platform to meet customer requirements and include both input and output technologies. We also offer full embedded firmware development and integration support.
SPEC Sensors was created to address the growing market demand for smaller, lower cost, high performance electrochemical sensors for wireless, wearable and IoT applications, and we now combine proven electrochemical sensor technology with new materials and manufacturing methods to produce some of the smallest, thinnest, lowest cost gas sensors still capable of performing in demanding applications.
SPEC was created to address the growing market demand for smaller, lower cost, high performance electrochemical sensors for wireless, wearable and IoT applications, and we now combine proven electrochemical sensor technology with new materials and manufacturing methods to produce some of the smallest, thinnest, lowest cost gas sensors still capable of performing in demanding applications.
We are bringing our highly-successful product lines and technologies to markets previously unaware of the opportunities provided by force-sensing, gas-sensing and related technology solutions. ● Expand our presence with our current customers . We work with some of the world’s largest companies and most recognizable brands and provide second and third generation turn-key solutions to meet their technology needs.
We are bringing our highly successful product lines and technologies to markets previously unaware of the opportunities provided by force/touch-sensing, gas-sensing and related technology solutions. ● Expand our presence with our current customers . We work with some of the world’s largest companies and most recognizable brands and provide second and third generation turn-key solutions to meet their technology needs.
Our sales cycle for our custom solutions generally includes the following two phases: Design Opportunity to Design Win ● Our sales and engineering team engages with the customer to establish the nature of the design and explore various technical applications that may fit the customer’s need. ● A customer might select one of our standard solutions or a custom design might be required to fulfill the customer’s product needs.
Our sales cycle for our custom solutions generally includes the following two phases: Design Opportunity to Design Win ● Our sales and engineering team engages with the customer to establish the nature of the design and explore various technical applications that may fit the customer’s needs. ● A customer might select one of our standard solutions or a custom design might be required to fulfill the customer’s product needs.
Our teams engage early in the development phase with our customers and we provide critical design inputs to ensure the solutions developed address the customer’s needs and meet their design goals and intent. We strive to solve our customers’ problems. Our Technology Platforms and Products Force-Sensing Technology and HMI .
Our teams engage early in the development phase with our customers and we provide critical design inputs to ensure the solutions developed address the customer’s needs and meet their design goals and intent. We strive to solve our customers’ problems. Our Technology Platforms and Products Force/Touch Sensing Technology and HMI .
We also combine our sensors with custom electronics, calibration and compensation to enhance performance and provide plug-and-play solutions that reduce the customer’s need to invest in calibration infrastructure. We maintain a market advantage in ozone sensing through our deep industry knowledge and advanced calibration and compensation.
We also combine our sensors with custom electronics, calibration and compensation techniques to enhance performance and provide plug-and-play solutions that reduce the customer’s need to invest in calibration infrastructure. We maintain a market advantage in ozone sensing through our deep industry knowledge and advanced calibration and compensation techniques.
Our electrochemical gas-sensing technology products and solutions combine our innovations with custom electronics, calibration and compensation to deliver unique solutions and address needs in industry, community, health and home settings, with uses in fields such as carbon monoxide and ozone detection and air quality monitoring. ● Our Eco Sensors™ branded line of ozone monitors and detectors is the low-cost market leader in the space, incorporating state-of-the-art SPEC sensors to achieve reference-level accuracy at a low cost.
Our electrochemical gas-sensing technology products and solutions combine our innovations with custom electronics, as well as calibration and compensation techniques to deliver unique solutions and address needs in industry, community, health and home settings, with uses in fields such as carbon monoxide and ozone detection and air quality monitoring. ● Our Eco Sensors™ branded line of ozone monitors and detectors is the low-cost market leader in the space, incorporating state-of-the-art SPEC sensors to achieve reference-level accuracy at a low cost.
Today, the demand for gas sensors has expanded beyond traditional applications with new industries requiring solutions from breath analysis to food transport and storage to wearable monitors for air quality and transdermal detection. Government and consumers are looking for information about their environment as the negative impact of global pollution, including greenhouse gas emissions, has become apparent.
Today, the demand for gas and environmental sensors has expanded well beyond traditional applications, with new industries requiring solutions from breath analysis to food transport and storage to wearable monitors for air quality and transdermal detection. Government and consumers are looking for information about their environment as the negative impact of global pollution, including greenhouse gas emissions, has become apparent.
Over time, devices became smaller and more portable, reflecting the need for better solutions to improve health and safety in the workplace, but for many years, gas-sensor technology lagged begind. Most sensors used today are still relatively large or expensive or require too much power to operate to enable new applications in the field.
Over time, devices became smaller and more portable, reflecting the need for better solutions to improve health and safety in the workplace, but for many years, gas-sensor technology lagged behind. Most sensors used today are still relatively large or expensive or require too much power to operate to enable new applications in the field.
HMI technologies have been available since the early 1970’s but were used almost exclusively in industrial products during the first 20 years of their existence. The introduction of touchpad mouse devices for laptop computers in the early 1990’s represented the first significant transition of HMI technologies into the consumer electronics market.
HMI technologies have been available since the early 1970’s but were used almost exclusively in industrial products during the first 20 years of their existence. The introduction of touchpad mouse devices for laptop computers in the early 1990s represented the first significant transition of HMI technologies into the consumer electronics market.
The market is increasingly requiring innovative solutions that enable smaller, thinner devices, lower power consumption, highly refined designs, better navigation and more intuitive usability in all environments, which is driving increased demand for our products. High-tech products are moving towards the use of multi-modal HMI in the home, industrial, medical and automotive spaces.
The market is increasingly requiring innovative solutions that enable smaller, thinner devices, lower power consumption, highly refined designs, better navigation and more intuitive usability in all environments, and the need for these solutions is driving increased demand for our products. High-tech products are moving towards the use of multi-modal HMI in the home, industrial, medical and automotive spaces.
For example, in a pointing device, increased pressure can be used to produce faster cursor movement. Unlike 8 Table of Contents capacitive devices, an FSR® sensor’s performance is not impeded by the presence of moisture, dirt or dust, making the sensor suitable for use outdoors and in moist and other “hostile” environments.
For example, in a pointing device, increased pressure can be used to produce faster cursor movement. Unlike capacitive devices, an FSR ® sensor’s performance is not impeded by the presence of moisture, dirt or dust, making the sensor suitable for use outdoors and in moist and other “hostile” environments.
Our ability to attract and retain qualified personnel is essential to our continued success. None of our employees are represented by a collective bargaining agreement. We believe our employee relations are good. ​ 13 Table of Contents
Our ability to attract and retain qualified personnel is essential to our continued success. None of our employees are represented by a collective bargaining agreement. We believe our employee relations are good. ​ 14 Table of Contents
Our Human Machine Interface (“HMI”) technology platforms are deployed in a wide range of markets including consumer electronics, automotive, industrial, and medical. The application of our HMI technology platforms includes vehicle entry, vehicle multi-media control interface, rugged touch controls, presence detection, collision detection, speed and torque controls, pressure mapping, biological monitoring and others.
Our HMI technology platforms are deployed in a wide range of markets, including consumer electronics, automotive, industrial and medical. The application of our HMI technology platforms includes vehicle entry, vehicle multi-media control interface, rugged touch controls, presence detection, collision detection, speed and torque controls, pressure mapping, biological monitoring and others.
Personal devices utilizing touch-sensitive technology became ubiquitous in our daily human-machine interactions with the introduction in 2007 of smart phone technology incorporating capacitive touchscreens. As the smart phone became an integral part of consumers’ daily lives throughout the world, it influenced consumers’ expectations of how we should interact with all types of devices.
Personal devices utilizing touch-sensitive technology became ubiquitous in our daily human-machine interactions with the introduction in 2007 of smartphone technology incorporating capacitive touchscreens. As the smartphone became an integral part of consumers’ daily lives throughout the world, it influenced consumers’ expectations of how we should interact with all types of devices.
The modern era of gas detection started in the 1920s with the development of the catalytic combustion sensor by Dr. Oliver Johnson, the father of KWJ’s namesake Ken Johnson. Dr. Johnson also started what is widely recognized as the first electronics company in Silicon Valley, J-W Instruments, to commercialize the technology.
The modern era of gas detection started in the 1920s with the development of the catalytic combustion sensor by Dr. Oliver Johnson, the father of KWJ’s namesake Ken Johnson. Dr. Johnson also started what 7 Table of Contents is widely recognized as the first electronics company in Silicon Valley to commercialize the technology, J-W Instruments.
Jospeh Stetter, the inventor of SPEC’s Screen Printed Electrochemical Sensor technology, was one of the first to design and build commercial electrochemical gas sensors, and today SPEC delivers one of the smallest electrochemical gas sensors on the market.
Joseph Stetter, the inventor of SPEC’s Screen Printed Electrochemical Sensor technology, was one of the first to design and build commercial electrochemical gas sensors, and today SPEC delivers one of the smallest electrochemical gas sensors on the market.
Custom solutions might require engineering design fees and tooling costs. ● Product samples are provided to the customer and our team works with the customer to ensure product performance and address customer needs and specifications. ● A firm commitment from a customer’s engineering and/or purchasing organization or pre-production orders indicate a design win.
Custom solutions might require fees for engineering design and tooling. ● Product samples are provided to the customer and our team works with them to ensure product performance and address customer needs and specifications. ● A firm commitment from a customer’s engineering and/or purchasing organization or pre-production orders indicate a design win.
We also operate an engineering center in our facility in Shenzhen, China, which is focused on sustaining engineering, customer support, quality control and new product introduction in our force-sensing/HMI business, and an engineering and R&D facility in Newark, California, focused on new product development, SBIR-funded research and quality control.
We also operate an engineering center in our facility in Shenzhen, China, which is focused on sustaining engineering, customer support, quality control and new product introduction in our force-sensing/HMI business, and an engineering and R&D facility in Newark, California, focused on new product development, SBIR-funded research and quality control in our gas and environmental sensors business.
This team also explores opportunities to work on government funded research projects that are aligned with our technology competencies. Our Employees As of December 31, 2022, we had 98 full-time employees worldwide. Our employees, listed in population size order from largest to smallest, are in the following departments: operations, R&D, administration, and sales.
This team also explores opportunities to work on government funded research projects that are aligned with our technology competencies. Our Employees As of December 31, 2023, we had 107 full-time employees worldwide. Our employees, listed in population size order from largest to smallest, are in the following departments: operations, R&D, administration, and sales.
We group our patents into three general categories: sensors, which includes eight (8) patents expiring between 2024 and 2032; sensing systems, which includes five (5) patents expiring between 2029 and 2038; and human interface devices, which includes eleven (11) patents expiring between 2024 and 2036.
We group our patents into three general categories: sensors, which includes eight (8) patents expiring between 2024 and 2032; sensing systems, which includes five (5) patents expiring between 2029 and 2038; and HMI devices, which includes eleven (11) patents expiring between 2024 and 2036.
Whether those devices are personal electronics, industrial and medical equipment, or automobiles, users of this equipment expect sleek, highly-functioning design including touch-sensing technology. Consumers no longer want to push buttons or flip switches; rather, they expect smooth touch pads and gesture-driven input.
Whether those devices are personal electronics, industrial or medical equipment or automobiles, users expect sleek, highly functioning design including touch-sensing technology. Consumers no longer want to push buttons or flip switches; rather, they expect smooth touchpads and gesture-driven input.
These sensors are designed to be integrated into a device’s host processor without the need for a dedicated microprocessor. ● Our integrated mouse modules and pointing solutions can add touchpad or 360-degree pointing control to virtually any electronic device.
All of our FSLP sensors are designed to be integrated into a device’s host processor without the need for a dedicated microprocessor. ● Our integrated mouse modules and pointing solutions can add touchpad or 360-degree pointing control to virtually any electronic device.
The market has consistently demanded innovations making gas sensors smaller and more portable, and KWJ-SPEC and its predecessors have been on the forefront; for example, KWJ’s SPARROW stands out in today’s marketplace as the world’s smallest Bluetooth low energy (“BLE”)-enabled carbon monoxide monitor. Similarly, Dr.
The market has consistently demanded innovations to make gas sensors smaller and more portable, and KWJ, SPEC and their predecessors have been on the forefront; for example, KWJ’s SPARROW™ stands out in today’s marketplace as the world’s smallest Bluetooth low energy (“BLE”)-enabled carbon monoxide monitor. Similarly, Dr.
Interlink was founded on the invention and commercialization of FSR® technology, the industry’s first force-sensing solution using printed electronics manufacturing. As we transition from an FSR® sensor supplier to an HMI solutions provider, we pursue and embrace leading edge force-sensing and related technology platforms.
Interlink was founded on the invention and commercialization of FSR ® technology, the industry’s first force-sensing solution using printed electronics manufacturing. As we transition from an FSR ® sensor supplier to an HMI solutions provider, we are pursuing and embracing leading edge force-sensing and related technology platforms.
Under the Eco Sensors brand, we offer a full line of ozone instruments, including low cost handhelds, wall mount alarms, remote generator controllers and OEM modules. ● We offer a number of standard and custom solutions for in-line carbon monoxide monitoring for supplied breathing air applications.
Under the Eco Sensors™ brand, we offer a full line of ozone instruments, including low-cost handhelds, wall mount alarms, remote generator controllers and OEM modules. ● We offer a number of standard and custom solutions for in-line carbon monoxide monitoring for supplied breathing air applications. Designed to meet the requirements of the U.S.
We also make low-pressure cylinder alarms and the world’s smallest Bluetooth CO monitor, the SPARROW. ● Our line of screen-printed electrochemical gas sensors offer high performance and a unique, small form factor at a low price. Our UL-2034 recognized CO sensor offers air quality level sensitivity with an industry-leading 10-year lifetime.
We also make low-pressure cylinder alarms and the world’s smallest rechargeable Bluetooth-enabled carbon monoxide and harmful gas monitor, the SPARROW PROTECT+™. ● Our line of screen-printed electrochemical gas sensors offers high performance and a unique, small form factor at a low price. Our UL-2034 recognized carbon monoxide sensor offers air quality level sensitivity with an industry-leading 10-year lifetime.
Engineering, Research and Development Rapid advancements in process technologies and increasing levels of functional integration characterize the market for our products. We believe that our future success will depend largely on our ability to continue improving our products and our process technologies, and to develop or acquire new technologies.
Engineering, Research and Development The markets for our products are characterized by rapid advancements in process technologies and increasing levels of functional integration. We believe that our future success will depend largely on our ability to continue improving our products and our process technologies, and to develop or acquire new technologies.
Our embedded software engineering team located in Singapore, along with our VP of Engineering & Advanced Materials and our expanding materials science and engineering team in Camarillo, California, are focused on strategic technology roadmaps, development of scalable technology platform architectures and pursuit of synergistic technology partnerships.
Our materials science and engineering team in Camarillo, California, led by our VP of Engineering & Advanced Materials, and our embedded software engineering team located in Singapore, are focused on strategic technology roadmaps, development of scalable technology platform architectures and pursuit of synergistic technology partnerships.
The global R&D team pursues scientific research, technology platform development and advanced product development in areas of materials science, printed electronics devices and manufacturing processes, and multi-disciplinary system engineering. The global R&D centers support strategic partnerships with key partners in electronics manufacturing services, digital manufacturing including 3D printing and product development.
The worldwide R&D team pursues scientific research, technology platform development and advanced product development in areas of materials science, printed electronics devices, gas and environmental sensors, and manufacturing processes, and multi-disciplinary system engineering. The global R&D centers support strategic partnerships with key partners in electronics manufacturing services, air and environmental quality monitoring, digital manufacturing, including 3D printing, and product development.
Our in-line CO monitors remain the industry standard for reliability and can garner a premium over lower cost, lower quality competitors. We believe that adding features such as connectivity and portability will enhance our offering and maintain our advantage in the future.
Our in-line carbon monoxide monitors remain the industry standard for reliability and garner a premium over the lower cost, lower quality products of our competitors. We believe that adding features such as connectivity and portability will enhance our offering and maintain our advantage in the future.
For customers requiring specialized design and engineering work on new products incorporating gas-sensing, we offer circuit design and optimization, advanced characterization and compensation, development of operating firmware and algorithms, enclosure design and implementation, and testing and calibration.
For customers requiring specialized design and engineering work on new products incorporating gas and environmental sensing, we offer custom-built sensors and modules, circuit design and optimization, advanced characterization and compensation techniques, development of operating firmware and algorithms, enclosure design and implementation, and testing and calibration.
We entered the gas-sensing market through our acquisition in December 2022 of the business assets of SPEC Sensors, LLC (“SPEC”) and KWJ Engineering, Inc. (“KWJ”), early pioneers in miniaturized, low-cost gas-sensing technologies, for approximately $2.2 million.
Gas and Environmental Sensors . We entered the gas and environmental sensing market in 2022 through our acquisition of the business assets of SPEC Sensors, LLC (“SPEC”) and KWJ Engineering, Inc. (“KWJ”), early pioneers in miniaturized, low-cost gas and environmental sensing technologies.
We offer our own line of instruments including Eco Sensors ozone monitors, an inline monitor for CO and other gases, a low-pressure alarm to notify users when tanks for life-critical gases such as oxygen and nitrogen need to be replenished, and sensor modules for air quality monitoring in “smart city” projects and IoT applications.
Additionally, we offer our own line of full-function instruments, including, for example, Eco Sensors™ ozone monitors; an inline monitor for carbon monoxide and other gases; a low-pressure alarm to notify users when tanks for life-critical gases such as oxygen and nitrogen need to be replenished; and sensor modules for air quality monitoring in “smart city” projects and IoT applications. ● Custom Design and Engineering .
We are also capable of rapid customization of our sensors to meet the specific detection needs of our OEM customers, giving us an advantage in new and difficult applications and providing a better solution overall.
We are also able to rapidly customize our sensors to meet the specific detection needs of our OEM customers, giving us an advantage in new and difficult applications and providing a better solution overall.
Our use of force allows for high rate scrolling and a more intuitive user experience. The FSLP is an easy to integrate, high resolution, ultra-low-power based solution that brings intuitive user controls to reduced form factor hand-held consumer electronic devices. These sensors are available in multiple lengths. We also offer a ring sensor for full 360-degree position sensing.
The FSLP is an easy to integrate, high resolution, ultra-low-power based solution that brings intuitive user controls to reduced form factor hand-held consumer electronic devices. These sensors are available in multiple lengths. We also offer a ring sensor for full 360-degree position sensing.
Examples include the world’s first carbon monoxide shutoff for portable generators and a rapid transdermal alcohol detector that can serve as a barrier to starting a vehicle while intoxicated. ● SBIR Awards .
Examples include the world’s first carbon monoxide shutoff for portable generators and a rapid transdermal alcohol detector that can serve as a barrier to starting a vehicle while intoxicated. ● In-House R&D .
Interlink benefits from its own world-class manufacturing facility in Shenzhen, China, and its advanced and proprietary KWJ-SPEC facility in Silicon Valley, allowing us to react quickly to customer needs while ensuring the highest quality standards. We also maintain a technical sales force that can address new and existing customer opportunities worldwide.
Interlink benefits from its own world-class manufacturing facilities in Shenzhen, China, and Irvine, Scotland, and its advanced and proprietary gas and environmental sensors production and development facility in Silicon Valley, allowing us to react quickly to customer needs while ensuring the highest quality standards. We also maintain a technical sales force that can address new and existing customer opportunities worldwide.
We utilize multiple technologies in our HMI solutions, and we will continue to invest in research and development (“R&D”) and expand our offerings to include resistive, piezo, capacitive and other emerging touch and sensing technologies. These will enable us to integrate our solutions and create the smart surfaces of the future.
We utilize multiple technologies in our HMI solutions, and we will continue to invest in R&D and expand our product and services offerings to include resistive, piezo, capacitive and other emerging touch and sensing technologies. These will enable us to integrate our solutions and create the smart surfaces of the future.
Traditional safety and environmental monitoring markets are expected to grow with the reduction in size and cost of sensors and instruments, leading to larget networks of gas sensors improving the safety and performance of infrastructure.
Traditional safety and environmental monitoring markets are expected to grow with the reduction in size and cost of sensors and instruments, leading to larger networks of gas sensors that will improve the safety and performance of infrastructure.
We will continue to exploit new opportunities in the markets we occupy by leveraging our demonstrable success in the solutions we are providing today. ● Expand into new and emerging markets .
To achieve our strategy, we intend to: ● Expand our presence in the markets we occupy . We will continue to identify and exploit new opportunities in the markets we occupy and in adjacent markets by leveraging our demonstrable success in the solutions we are providing today. ● Expand into new and emerging markets .
We partner with leading institutions such as Georgia Tech and San Jose State to develop novel technologies under government grants, while also performing new product development and engineering services for private partners that include startups and Fortune 500 companies. 9 Table of Contents Gas-sensor technologies are diverse and fragmented with devices and sensors focused on specific solitions and applications.
We partner with leading institutions such as Georgia Institute of Technology and San Jose State University to develop novel technologies under government grants, while also performing new product development and engineering services for private partners that include companies ranging in size from startups to Fortune 500 companies. 10 Table of Contents Gas and environmental sensor technologies are diverse and fragmented with devices and sensors focused on specific solutions and applications.
Interlink has been a leader in the printed electronics industry for over 35 years with the commercialization of our patented Force-Sensing Resistor (“FSR®”) technology that has enabled rugged and reliable HMI solutions. Our solutions have focused on handheld user input, menu navigation, cursor control, and other intuitive interface technologies for the world’s top electronics manufacturers.
Interlink has been a leader in the printed electronics industry for nearly 40 years with the commercialization of our patented FSR ® technology that has enabled rugged and reliable HMI solutions. Our applications and solutions have focused on handheld user input, menu navigation, cursor control, and other intuitive interface technologies for the world’s top electronics manufacturers.
In 2021, we launched our new Global Product Development and Materials Science Center in Camarillo, California, where our VP of Engineering & Advanced Materials is located, along with other current and future resources. At this location, we focus on new product development including, among other areas, materials science and printed electronics.
We operate our Global Product Development and Materials Science Center in Camarillo, California, where our VP of Engineering & Advanced Materials is located, along with other current and future resources. At this location, we focus on new product development including, among other areas, materials science and printed electronics. We maintain a core embedded software engineering team in Singapore.
IoT-enabled intelligent sensing applications are gaining rapid commercial attention. Our sensing technology platforms are capable of providing the critical backbone for data sensing, measurement and analytics used in emerging wireless connectivity implementations in both short-range low-power wireless communications such as Bluetooth and long-range ultra low-power wireless communications such as LoRaWAN®. Gas-Sensing Technology .
Our sensing technology platforms are capable of providing the critical backbone for data sensing, measurement and analytics used in emerging wireless connectivity implementations in both short-range low-power wireless communications such as Bluetooth and long-range ultra-low-power wireless communications such as LoRaWAN ® . Gas and Environmental Sensors Technology .
Engineers are responding to this demand by incorporating touch-sensitive technology into a wide range of products, and any device that can utilize force and position sensing inputs to control or enhance its functionality is a candidate for use of the technology.
Engineers are responding to this demand by incorporating touch-sensitive technology into a wide range of products, and any device that can utilize force- and position-sensing inputs to control or enhance its functionality is a candidate for use of the technology. Similarly, membrane keypads have been an established HMI technology since the early 1980s.
Our FSR® sensors are manufactured using proprietary screen-printing techniques. All proprietary aspects of the manufacturing process are currently conducted in-house at our U.S. and China manufacturing facilities to maintain quality and protect our force-sensing technology from infringement.
All proprietary aspects of our force-sensing technology manufacturing process are currently conducted in-house at our U.S., China and Scotland manufacturing facilities to maintain quality and protect our technology from infringement.
In addition, we maintain a global distribution and logistics center in Hong Kong, a technical sales office in Japan, and several manufacturer representatives and distributors in strategic locations in our key markets, all of which allows us to support our global customer base. We sell our products in a wide range of markets, including consumer electronics, automotive, industrial and medical.
In addition, we maintain a global distribution and logistics center in Hong Kong, a technical sales office in Japan, and several manufacturer representatives and distributors in strategic locations in our key markets, all of which allows us to support our global customer base. We were incorporated in California in 1985.
In most cases, we are a sole-source supplier to our customer and cannot be easily and/or quickly replaced once the product goes into production. Mass Production ● Once the customer has chosen our solution, they may move their product into the production phase. It may take several months or more to go from design win to production.
In most cases, we are a sole-source supplier to our customer and cannot be easily and/or quickly replaced once the product goes into production, particularly in cases where the product requires governmental approval. Mass Production ● Once the customer has chosen our solution, they may move their product into the production phase.
Our intellectual property strategy involves filing patent applications in our strategic focus markets on a regular basis. We have also strengthened our patent portfolio to align with rapidly emerging market opportunities in IoT and smart surfaces. Our sensor fusion platform portfolio, for example, enables strategic pre-positioning in capturing intelligent multi-sensing applications including, for example, haptics.
Our intellectual property strategy involves filing patent applications in our strategic focus markets on a regular basis. We have also strengthened our patent portfolio to align with rapidly emerging market opportunities in IoT and smart surfaces.
In connection with our growth strategy, we will continue to evaluate potential acquisitions that provide us with relevant new technologies to add to our “technology toolbox.” Our product development teams are skilled in concept definition, rapid prototyping, hardware and firmware development and integration support.
In connection with our growth strategy, we will continue to evaluate potential acquisitions that provide us with relevant new technologies to add to our “technology toolbox” and/or expand the customer base for our existing products and solutions. 8 Table of Contents Our product development teams are skilled in concept definition, rapid prototyping, hardware and firmware development and integration support.
They encompass large multi-national organizations as well as start-ups, design houses, original design manufacturers, OEMs and universities. We supply some of the world’s largest consumer electronics manufacturers, luxury and mid-market car companies, familiar names in the medical and industrial equipment markets, research engineers and designers entering the IoT market, and companies of all different sizes in other markets.
We supply some of the world’s largest consumer electronics manufacturers, luxury and mid-market car companies, familiar names in the medical and industrial equipment markets, research engineers and designers entering the IoT market, and companies of all different sizes in other markets.
The majority of that is OLEDs (organic but not printed) and conductive ink used for a wide range of applications; however, stretchable electronics, logic and memory, thin film sensors have huge growth potential. As a member of OE-A, the Organic and Printed Electronics Association, we actively influence and contribute to the global landscape of printed electronics.
The majority of the current printed sensor market is OLEDs (organic but not printed) and conductive ink used for a wide range of applications; however, stretchable electronics, logic and memory technologies, and thin film sensors have huge growth potential.
Product lifespan varies dramatically depending on the marketplace and product. Consumer electronics may have a lifespan of six months to five years, industrial and automotive applications may continue for three to ten years, and medical product lifespans may continue past 20 years. Our Customers Our customers include many of the world’s leading electronics companies.
It may take several months or more to go from design win to production. Product lifespan varies dramatically depending on the marketplace and product. Consumer electronics may have a lifespan of six months to five years, industrial and automotive applications may continue for three to ten years, and medical product lifespans may continue past 20 years.
Capacitive sensors are used in the touch screens found in most smart phones and similar devices used globally by millions of consumers. The most significant drawback to the capacitive technology is its inability to measure force, although there has been some progress recently in enhancing the technology with pseudo force-sensing. Capacitive sensors have become a high-volume, low-margin commodity product.
The most significant drawback to the capacitive technology is its inability to measure force, although there has been some progress recently in enhancing technology designed to mimic force-sensing. Capacitive sensors have become a high-volume, low-margin commodity product.
This strategy is designed to provide a strong barrier against competition in our core sensor technologies while ensuring competitive advantages in applications of sensing systems and human machine interface devices in the event a competitor successfully circumvents the core sensor patents.
This strategy is designed to provide a strong barrier against competition in our core sensor technologies while ensuring competitive advantages in applications of sensing systems and HMI devices in the event a competitor successfully circumvents the core sensor patents. Our failure to obtain or maintain adequate protection for our intellectual property rights for any reason could hurt our competitive position.
While screen-printing is a common process in various industries, the quality and precision of printing, as well as the specific processes required to make high-quality FSR® sensors, require considerable domain knowledge expertise and know how. We believe this expertise is difficult to replicate over the short term and, to our knowledge, no unrelated party has done so.
While screen-printing is a common process in various industries, the quality and precision of printing, as well as the specific processes required to make high-quality FSR ® sensors, require considerable domain knowledge expertise and knowhow.
On a bill-to basis, international sales constituted 55% and 71% of our net revenues for the years ended December 31, 2022 and 2021, respectively, with sales in 2022 to customers in Japan, China, and Taiwan accounting for 24%, 15%, and 6% of net revenues, respectively.
International sales constituted 52% and 55% of our net revenues for the years ended December 31, 2023 and 2022, respectively, with sales in 2023 to customers in Japan and China each representing 11% of net revenues, compared to representing 24% and 15%, respectively, in 2022.
We believe we are positioned to take advantage of these trends with our proprietary, low-cost, low-power gas-sensing technologies and deep domain expertise in instrument design and implementation. Locations .
We believe we are positioned to take advantage of these trends with our proprietary, low-cost, low-power gas- and environmental-sensing technologies and deep domain expertise in instrument design and implementation. Locations . We serve our world-wide customer base from our corporate headquarters in Irvine, California, from our facility in Camarillo, California, and from our facility in Newark, California (Silicon Valley area).
We actively monitor these suppliers, but we are subject to substantial risks associated with the performance of our suppliers. We source certain of our components from single-suppliers, including multinational conglomerates Henkel, DuPont, Solvay, SABIC and 3M, which increases the risk of shortages and shipment delays and decreases our ability to negotiate with that supplier.
We source certain of our components from single-source suppliers, including multinational conglomerates Henkel, DuPont, Solvay, SABIC and 3M, which increases the risk of shortages and shipment delays and decreases our ability to negotiate with that supplier. Many of our products are subject to qualification testing and approval by our customers, which includes approval of the materials used in their product.
Designed to meet the requirements of OSHA monitoring for CO in compressed gas lines and carrying CSA approval, our CO monitors offer a robust and reliable solution for medical gas verification and demanding supplied air applications such as sandblasting and painting.
Occupational Safety and Health Administration monitoring for carbon monoxide in compressed gas lines and carrying Canadian Standards Agency (CSA) approval, our carbon monoxide monitors offer a robust and reliable solution for medical gas verification and demanding supplied air applications such as sandblasting and painting.
We manufacture all of our force-sensing/HMI products in our printed electronics manufacturing facility in Shenzhen, China, which has been in operation since 2006, and all of our gas-sensing products at the SPEC-KWJ facility in Newark.
We manufacture all of our force-sensing/HMI products in our printed electronics manufacturing facility in Shenzhen, China, and at the Calman facility in Irvine, Scotland, and all of our gas and environmental sensing products in our production facility in Newark, California.
We plan to start the process of acquiring IATF 16949 certification as our automotive customer base expands. We work hard to meet current environmental and sustainability standards required by our customers and legislation in various geographic markets. All products are RoHS (Restriction of Hazardous Substances) and REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) compliant.
We work hard to meet current environmental and sustainability standards required by our customers and legislation in various geographic markets. All products are RoHS (Restriction of Hazardous Substances) and REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) compliant. We also monitor our suppliers as part of our efforts to eliminate conflict minerals from our supply chain.
Interlink makes available its annual financial statements, quarterly financial statements, and other significant reports and amendments to such reports, free of charge, on its website as soon as reasonably practicable after such reports are prepared. 6 Table of Contents Our Industry Force-Sensing and HMI .
Our website address is www.interlinkelectronics.com. Interlink makes available its annual financial statements, quarterly financial statements, and other significant reports and amendments to such reports, free of charge, on its website as soon as reasonably practicable after such reports are electronically filed with (or furnished to) the SEC. Our Industry Force/Touch Sensors .
As a result, we consider this expertise to be one of our more important trade secrets. We require our employees to sign nondisclosure agreements and seek to limit access to sensitive information to the greatest practical extent. 10 Table of Contents As of December 31, 2022, we held twenty-four (24) patents, and had sixteen (16) patents pending.
We require our employees to sign nondisclosure agreements and seek to limit access to sensitive information to the greatest practical extent. As of December 31, 2023, we held twenty-four (24) patents and had fourteen (14) patents pending.
In force-sensing/HMI, we offer a disruptive technology that is replacing outdated and undesirable approaches including switch technology. We often must convince companies to abandon older, proven but less elegant technologies and adopt our solutions. This change is supported by significant end-user demand for touch-sensitive solutions. We also compete against the highly commoditized capacitive sensing technology.
We often must convince companies to abandon older, proven but less elegant technologies and adopt our solutions. This change is supported by significant end-user demand for touch-sensitive solutions. We also compete against the highly commoditized capacitive sensing technology. However, our solutions are focused on providing functionality in situations where capacitive is not the appropriate solution, is unreliable or entirely unavailable.
ITEM 1. BUSINESS Our Company Interlink Electronics, Inc. (“we”, “us”, “our”, “Interlink” or the “Company”) operates in two principal divisions: force-sensing resistors/Human Machine Interface (“HMI”) technology and gas-sensing technology. Force-Sensing Resistors .
ITEM 1. BUSINESS Our Company Interlink Electronics, Inc. (“we”, “us”, “our”, “Interlink” or the “Company”) is a global sensor and printed electronics company operating in two principal sensor technology divisions: force/touch sensors, and gas and environmental sensors.
Our engineering team includes five Ph.Ds in a broad range of disciplines from Chemical Engineering to Electrical Engineering and Physics. We design and build all of our sensors and instruments in-house, and our facilities include proprietary high-volume electrochemical sensor manufacturing, device assembly and calibration, and advanced test and measurement capabilities.
We design and build all of our sensors and instruments in-house in Newark, California, and our capabilities include proprietary high-volume electrochemical sensor manufacturing, device assembly and calibration, and advanced test and measurement capabilities.
We also monitor all of our suppliers to ensure that conflict minerals are eliminated from our supply chain. We purchase our materials from outside suppliers. We carefully select suppliers based on their ability to provide quality parts and components that meet technical specifications.
We purchase our materials from outside suppliers. We carefully select suppliers based on their ability to provide quality parts and components that meet technical specifications. We actively monitor these suppliers, but we are subject to substantial risks associated with their performance.
The products and solutions that we design, develop and manufacture for HMI and IoT applications are primarily printed electronic products. Printed electronics is an additive manufacturing technology used to create electrical devices on various substrates. For over 35 years we have honed and developed the processes necessary to manufacture high quality printed electronic products for HMI applications.
Printed electronics is an additive manufacturing technology used to create electrical devices on various substrates. For nearly 40 years, we have honed and developed the processes necessary to manufacture high quality printed electronic products for HMI applications. Printed electronic technologies are emerging as potential low-cost replacements to silicon-based electronics in many specific application areas.
We also expect to launch an engineering, research and development center in the United Kingdom. In an ever-changing and competitive landscape, we are committed to staying ahead of the technology curve. The two primary types of user-input technologies common in today’s devices are capacitive and resistive.
In an ever-changing and competitive landscape, we are committed to staying ahead of the technology curve. The two primary types of user-input technologies common in today’s devices are capacitive and resistive. Capacitive sensors are used in the touch screens found in most smartphones and similar devices used globally by millions of consumers.
These provide engineers and designers with a durable, reliable, easy to measure, easy to integrate, thin-form factor and low-cost solution for HMI touch solutions and analog data capture for machines. FSR® sensors are available in a range of sizes, shapes and lengths and with several connection options.
These innovative sensors provide an inverse change in resistance in response to an increase or decrease in applied force. These provide engineers and designers with a durable, reliable, easy to measure, easy to integrate, thin-form factor and low-cost solution for HMI touch solutions and analog data capture for machines.
The markets for our products are characterized by significant price competition and we anticipate that our products will continue to face substantial pricing pressure. We believe that our strategy of developing and offering more sophisticated solutions, including smart surfaces for HMI applications and connected, cost-effective gas detection instruments, will enable us to maintain our leading edge over our competitors.
We believe that our strategy of developing and offering more sophisticated solutions, including smart surfaces for HMI applications and connected, cost-effective gas and environmental detection instruments, will enable us to maintain our leading edge over our competitors. Sales and Marketing We sell our products and solutions through our direct sales employees as well as outside sales representatives and distributors.
We are not currently engaged in any patent infringement suits. We implement a ring-fencing strategy of patenting core technology platforms related to sensors, sensing systems and human interface devices.
We maintain and support an active program to protect our intellectual property primarily through the filing of patent applications and the defense of issued patents against infringement. We are not currently engaged in any patent infringement suits. We implement a ring-fencing strategy of patenting core technology platforms related to sensors, sensing systems and HMI devices.
Recent SBIR-funded projects include wildland fire air pollution monitoring and firefighter safety devices, transdermal blood alcohol monitors, and a simple lead test for drinking water safety. ● Proprietary Product Lines .
Recent SBIR-funded projects include wildfire air pollution monitoring and firefighter safety devices, transdermal blood alcohol monitors, a simple lead test for drinking water safety, and a grant to enable large-scale, mass-manufacturing of printed electrochemical gas sensors.
We see SPEC’s printed sensor technology as a pathway to ubiquitous environmental sensing where low-power, low-cost sensors can provide a hyper-local picture of the air we breathe everyday, not just for those in industrial settings. 7 Table of Contents Our Strategy Our primary objective is to be the global leader and provider of multi-sensing based HMI technology and gas-sensing solutions for the automotive, consumer electronics, medical, industrial automation and environmental monitoring markets.
We see SPEC’s printed sensor technology as a pathway to ubiquitous environmental sensing where low-power, low-cost sensors can provide a hyper-local picture of the air we breathe in our everyday lives, not just in industrial settings.
After highly successful custom implementation in automotive applications, we have developed a set of standard piezo sensors and development kit. These sensors are polymeric piezoelectric sensors with a wide range of applications and uses such as dynamic strain gauges, impact/force sensors, vital signs sensors, motion sensors, vibration sensors, accelerometers, and solid state rugged switches.
These sensors are polymeric piezoelectric sensors with a wide range of applications and uses such as dynamic strain gauges, impact/force sensors, vital signs sensors, motion sensors, vibration sensors, accelerometers, and solid-state rugged switches . Many of these diverse application modes require extensive domain knowledge for successful integration.
Our FSR® sensors have no moving parts, can be packaged in a sealed environment, and are lower power and less susceptible to false readings or unintended touches than capacitive sensors. We have developed sophisticated algorithms and firmware that allows our FSR® technology to become a complete solution delivering effective HMI functionality to our customers. Custom Solutions .
Our FSR ® sensors have no moving parts, can be packaged in a sealed environment, and are lower power and less susceptible to false readings or unintended touches than capacitive sensors. Thanks to our optimized manufacturing processes developed over many years, we can produce easily customized, high-margin solutions for our customers.
We have established a Global Product Development and Materials Science Center in our Camarillo footprint that has a state-of-the-art printed electronics development laboratory as well as a materials science lab. Our force-sensing/HMI engineering team is based in this center where we work with our U.S. and global customers on developing, engineering, prototyping and implementing our advanced HMI and sensing solutions.
We have established a Global Product 6 Table of Contents Development and Materials Science Center in our Camarillo footprint that has a state-of-the-art printed electronics development laboratory as well as a materials science lab.
Additionally, we provide a line of electrochemical sensors that are suited for wearable technology. The market for gas sensors is growing rapidly, driven by demand in a broad range of industries and the availability of smaller, lower-cost, connected sensors.
The market for gas and environmental sensors is growing rapidly, driven by demand in a broad range of industries and the availability of smaller, lower-cost, connected sensors. On a worldwide basis, green initiatives and accompanying government mandates are driving demand for facilities monitoring.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, COVID-19 has adversely affected the global economy and the economies and financial markets of many countries, which may result in further economic downturn that could affect demand for our products and services and impact our operations. ● Employee-related risks : We have experienced and expect to continue to experience disruptions to our operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to deliver our products and services in a timely manner or meet milestones or customer commitments.
Biggest changeIn addition, the COVID-19 pandemic adversely affected the global economy and the economies and financial markets of many countries, and a re-emergence of the pandemic could result in further economic downturns affecting demand for our products and services and impact our operations. ● Employee-related risks : We have experienced and may in the future experience disruptions to our operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to deliver our products and services in a timely manner or meet milestones or customer commitments. 24 Table of Contents The full extent of the effect of the pandemic on us, our customers, our supply chain and our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak or subsequent outbreaks.
We face risks associated with security breaches or cyber-attacks. We face risks associated with security breaches or cyber-attacks of our computer systems or those of our third-party representatives, vendors, and service providers.
We face risks associated with security breaches or cyber-attacks of our computer systems or those of our third-party representatives, vendors, and service providers.
Depending on the continued extent and duration of these constraints and disruptions, our supply chain, results of operations (including sales) or future business may be materially and adversely impacted. These and other issues affecting our international suppliers or internationally manufactured merchandise could have a material adverse effect on our business, results of operations and financial condition.
Depending on the continued extent and duration of these constraints and disruptions, our supply chain, results of operations (including sales) or future business could be materially and adversely impacted. These and other issues affecting our international suppliers or internationally manufactured merchandise could have a material adverse effect on our business, results of operations and financial condition.
If we were to either lose one of our major customers or have a major customer significantly reduce its volume of business with us, our business, results of operations and financial condition would be harmed unless we are able to replace such demand with other orders promptly.
If we were to either lose one of our major customers or have a major customer significantly reduce its volume of business with us, our business, results of operations and financial condition would be harmed unless we were able to replace such demand with other orders promptly.
Factors that could cause fluctuations in the trading price of our common stock include, without limitation, the following: ● announcements of new offerings, products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors; ● price and volume fluctuations in the overall stock market from time to time; ● significant volatility in the market price and trading volume of technology companies in general; ● fluctuations in the trading volume of our shares or the size of our public float; ● actual or anticipated changes or fluctuations in our results of operations; ● failure of our results of operations to meet the expectations of securities analysts or investors; ● actual or anticipated changes in the expectations of investors or securities analysts; ● litigation involving us, our industry, or both; ● regulatory developments in the United States, foreign countries, or both; ● general economic conditions and trends; 18 Table of Contents ● economic disruptions caused by political disputes and governmental gridlock in the United States; ● major catastrophic events; ● lockup releases, and sales of large blocks of our common stock; ● the impact of outbreaks, and threat or perceived threat of outbreaks, of epidemics and pandemics, including, without limitation, the coronavirus outbreak, on our sourcing and manufacturing operations as well as on consumer spending; ● departures of key employees; or ● an adverse impact on the company from any of the other risks cited herein.
Factors that could cause fluctuations in the trading price of our common stock include, without limitation, the following: ● announcements of new offerings, products, services or technologies, commercial relationships, acquisitions or other events by us or our competitors; ● price and volume fluctuations in the overall stock market from time to time; ● significant volatility in the market price and trading volume of technology companies in general; ● fluctuations in the trading volume of our shares or the size of our public float; ● actual or anticipated changes or fluctuations in our results of operations; ● failure of our results of operations to meet the expectations of securities analysts or investors; ● actual or anticipated changes in the expectations of investors or securities analysts; ● litigation involving us, our industry, or both; ● regulatory developments in the United States, foreign countries, or both; ● general economic conditions and trends; ● economic disruptions caused by political disputes and governmental gridlock in the United States; ● major catastrophic events; ● lockup releases, and sales of large blocks of our common stock; ● the impact of outbreaks, and threat or perceived threat of outbreaks, of epidemics and pandemics, including, without limitation, the coronavirus outbreak, on our sourcing and manufacturing operations as well as on consumer spending; ● departures of key employees; or ● an adverse impact on the company from any of the other risks cited herein.
Our products have in the past contained, and may in the future contain, errors or defects that may be detected at any point in the life of the product. Detection of such errors could result in delays in shipping and sales during the period required to correct such errors.
Our products have in the past contained, and may in the future contain, errors or defects that may be detected at any point in the life of the product. Detection of such errors could result in delays in sales during the period required to correct such errors.
We or our vendors could also incur significantly higher costs and longer lead times associated with distributing inventory during the time it takes for us or our vendors to reopen or replace our distribution center or any of their fulfillment centers.
We or our vendors could also incur significantly higher costs and longer lead times associated with distributing inventory during the time it takes for us or our vendors to reopen or replace any of our distribution centers or any of their fulfillment centers.
If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research reports about our business, our share price and trading volume could decline. The trading market for our common stock, to some extent, depends on the research and reports that securities or industry analysts publish about us or our business.
If securities or industry analysts do not publish research or reports about our business, or if they publish inaccurate or unfavorable research reports, our share price and trading volume could decline. The trading market for our common stock, to some extent, depends on the research and reports that securities or industry analysts publish about us or our business.
These provisions include: ● the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; 20 Table of Contents ● the requirement that a special meeting of stockholders may be called only by our board of directors, by majority vote, or by any shareholder or group of shareholders who own and have the right to vote more than 25% of our issued and outstanding securities, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ● the ability of our board of directors, by majority vote, to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate an unsolicited takeover attempt.
These provisions include: ● the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; ● the requirement that a special meeting of stockholders may be called only by our board of directors, by majority vote, or by any shareholder or group of shareholders who own and have the right to vote more than 25% of our issued and outstanding securities, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ● the ability of our board of directors, by majority vote, to amend our bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend our amended and restated bylaws to facilitate an unsolicited takeover attempt.
We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any dividends on our common stock in the foreseeable future, if at all.
We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any such dividends on our common stock in the foreseeable future, if at all.
Our international operations involve a number of risks, including with respect to: ● import-export license agreements, tariffs, taxes and other trade barriers; 23 Table of Contents ● staffing and managing foreign operations; ● securing credit and funding; ● maintaining an effective system of internal controls at our foreign facilities; ● collecting foreign receivables; ● transfer pricing and other tax uncertainties; ● currency exchange fluctuations; ● reduced protection of intellectual property rights; ● the impact of outbreaks, and threat or perceived threat of outbreaks, of epidemics and pandemics, including, without limitation, the coronavirus outbreak, on our sourcing and manufacturing operations as well as consumer spending; ● political and economic instability, and terrorism; and ● transportation risks.
Our international operations involve a number of risks, including with respect to: ● import-export license agreements, tariffs, taxes and other trade barriers; ● staffing and managing foreign operations; ● securing credit and funding; ● maintaining an effective system of internal controls at our foreign facilities; ● collecting foreign receivables; ● transfer pricing and other tax uncertainties; ● currency exchange fluctuations; ● reduced protection of intellectual property rights; ● the impact of outbreaks, and threat or perceived threat of outbreaks, of epidemics and pandemics, including, without limitation, the coronavirus outbreak, on our sourcing and manufacturing operations as well as consumer spending; ● political and economic instability, and terrorism; and ● transportation risks.
This is due in part to the significant percentage (approximately 83% as of December 31, 2022) of our shares that are held by officers and directors and their affiliates. We cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market or how liquid that market might become.
This is due in part to the significant percentage (approximately 83% as of December 31, 2023) of our shares that are held by officers and directors and their affiliates. We cannot predict the extent to which investor interest in our Company will lead to the development of an active trading market or how liquid that market might become.
If one or more of our key management personnel leaves Interlink and we are unable to find a replacement with the combination of skills and attributes necessary to execute our business plan, it may have an adverse impact on our business.
If one or more of our key management personnel leaves Interlink and we are unable to find a replacement with the combination of skills and attributes necessary to execute our business plan, it could have an adverse impact on our business.
In particular, if COVID-19 continues to spread or re-emerges, 22 Table of Contents particularly in the United States, Singapore and China where our operations are most concentrated, resulting in a prolonged period of travel, commercial, social and other similar restrictions, we could experience, among other things: ● Adverse impacts on our operations and financial results caused by government and regulatory measures to contain or mitigate the spread of the virus, temporary closures of our facilities or the facilities of our customers or suppliers, which could impact our ability to timely meet our customers’ orders or negatively impact our supply chain; ● The failure of third parties on which we rely, including our suppliers, customers and external business partners, to meet their respective obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties including bankruptcy or default; ● Disruptions or restrictions on our employees’ ability to work effectively, due to illness, quarantines, travel bans, shelter-in-place orders or other limitations; ● Interruptions to the operations of our business if the health of our executives, management personnel and other employees are affected, particularly if a significant number of individuals are impacted; ● Litigation, manufacturing delays and harm to our reputation resulting from any accident, illness, or injury to our employees related to COVID-19 that could negatively affect our business, results of operations and financial condition; ● Changes in prices of products and services may be impacted by worldwide demand and by the ongoing COVID-19 pandemic, which price increases could materially increase our operating costs and adversely affect our profit margin; ● Increased cybersecurity and privacy risks and risks related to the reliability of technology to support remote operations; ● Sudden and/or severe declines in the market price of our common stock; and ● Costs incurred and revenues lost during and from the effects of the COVID-19 pandemic that likely will not be recoverable.
In particular, if COVID-19 re-emerges with serious and widespread impact on public health, particularly in the United States, Singapore, China, and the United Kingdom where our operations are most concentrated, and results in a prolonged period of travel, commercial, social and other similar restrictions, we could experience, among other things: ● Adverse impacts on our operations and financial results caused by government and regulatory measures to contain or mitigate the spread of the virus, temporary closures of our facilities or the facilities of our customers or suppliers, which could impact our ability to timely meet our customers’ orders or negatively impact our supply chain; ● The failure of third parties on which we rely, including our suppliers, customers and external business partners, to meet their respective obligations to us, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties including bankruptcy or default; ● Disruptions or restrictions on our employees’ ability to work effectively, due to illness, quarantines, travel bans, shelter-in-place orders or other limitations; ● Interruptions to the operations of our business if the health of our executives, management personnel and other employees are affected, particularly if a significant number of individuals are impacted; ● Litigation, manufacturing delays and harm to our reputation resulting from any accident, illness, or injury to our employees related to COVID-19 that could negatively affect our business, results of operations and financial condition; ● Changes in prices of products and services impacted by worldwide demand and by the pandemic, which price increases could materially increase our operating costs and adversely affect our profit margin; ● Increased cybersecurity and privacy risks and risks related to the reliability of technology to support remote operations; ● Sudden and/or severe declines in the market price of our common stock; and ● Costs incurred and revenues lost during and from the effects of the COVID-19 pandemic that likely will not be recoverable.
Bronson and Hoffman currently works an equivalent full-time schedule; however, there can be no assurance that the amount of time these officers devote to our company will not diminish from time to time for limited or extended periods as their other business obligations require a greater portion of their attention. Neither Mr. Bronson nor Mr.
Bronson and Hoffman currently works an equivalent full-time schedule; 17 Table of Contents however, there can be no assurance that the amount of time these officers devote to our company will not diminish from time to time for limited or extended periods as their other business obligations require a greater portion of their attention. Neither Mr. Bronson nor Mr.
If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company and our customers could be disclosed and we may incur substantial costs and liabilities, including the following: ● expenses to rectify the consequences of the security breach or cyber-attack; ● liability for misused or stolen assets or information; ● costs of repairing damage to our systems; ● lost revenue and income resulting from any system downtime caused by such breach or attack; 17 Table of Contents ● loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; ● increased costs of cyber security protection; ● costs of incentives we may be required to offer to our customers or business partners to retain their business; and ● damage to our reputation.
If our systems, or systems owned by third parties affiliated with our company, were breached or attacked, the proprietary and confidential information of our company and our customers could be disclosed and we could incur substantial costs and liabilities, including the following: ● expenses to rectify the consequences of the security breach or cyber-attack; ● liability for misused or stolen assets or information; ● costs of repairing damage to our systems; ● lost revenue and income resulting from any system downtime caused by such breach or attack; ● loss of competitive advantage if our proprietary information is obtained by competitors as a result of such breach or attack; ● increased costs of insurance and cybersecurity protection; ● costs of incentives we may be required to offer to our customers or business partners to retain their business; and ● damage to our reputation.
In addition, if the market for technology stocks or the stock market, in general, experience a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, results of operations or financial condition.
In addition, if the market for technology stocks or the stock market, in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, results of operations or financial condition.
Technology, both in our markets and in our customers’ markets, is undergoing rapid change. In order to maintain our leadership position in our existing markets and to emerge as a leader in new markets, we will have to maintain a leadership position in the technologies supporting those markets.
Technology, both in our markets and in our customers’ markets, is undergoing and will continue to undergo rapid change. In order to maintain our leadership position in our existing markets and to emerge as a leader in new markets, we will have to maintain a leadership position in the technologies supporting those markets.
There are risks and uncertainties related to acquisitions, including: difficulties integrating acquired technology, operations, personnel and financial and other systems; unrealized sales expectations from the acquired business; unrealized synergies and cost savings; unknown or underestimated liabilities; diversion of management attention from running our existing businesses and potential loss of key management employees of the acquired business.
There are risks and uncertainties related to acquisitions, including: difficulties integrating acquired technology, operations, personnel and financial and 26 Table of Contents other systems; unrealized sales expectations from the acquired business; unrealized synergies and cost savings; unknown or underestimated liabilities; diversion of management attention from running our existing businesses and potential loss of key management employees of the acquired business.
Holders of our Series A Convertible Preferred Stock have a liquidation preference equal to the greater of $25.00 per share plus any accrued and unpaid dividends, and such amount per share as would have been payable had all shares of Series A Convertible Preferred Stock been converted into our common stock in the event of our liquidation or winding up.
Holders of our Series A Convertible Preferred Stock have a liquidation preference equal to the greater of $25.00 per share plus any accrued and unpaid 20 Table of Contents dividends, and such amount per share as would have been payable had all shares of Series A Convertible Preferred Stock been converted into our common stock in the event of our liquidation or winding up.
Our competitors include companies with similar products or technologies, companies that sell complementary products to our target markets and our customers themselves, who could choose to manufacture products that they currently buy from us.
Our competitors include companies with similar products or technologies, companies that sell complementary products to our target markets, and our customers themselves, who could choose to manufacture in-house products that they currently buy from us.
The issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock may cause immediate and substantial dilution to our existing stockholders. Our Series A Convertible Preferred Stock is presently convertible into 400,000 shares of common stock.
The issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock may cause immediate and substantial dilution to our existing stockholders. Our Series A Convertible Preferred Stock is presently convertible into 600,000 shares of common stock.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problem at either manufacturing facility could result in delayed shipment of products, missed delivery deadlines and harm to our reputation, which may cause our revenues and operating results to decline.
Despite any precautions we may take, the occurrence of a natural disaster or other unanticipated problem at any of our manufacturing facilities could result in delayed shipment of products, missed delivery deadlines and harm to our reputation, which could cause our revenues and operating results to decline.
In addition, the COVID-19 pandemic has recently subjected our operations and financial performance to several risks, including the following: ● Operations-related risks : Our business is facing increased operational challenges including a heightened need to protect employee health and safety, office shutdowns, workplace disruptions, and restrictions on the movement of people, both at our own offices and at those of our clients and suppliers.
In addition, the COVID-19 pandemic subjects our operations and financial performance to several risks, including the following: ● Operations-related risks : Our business is facing increased operational challenges including a heightened need to protect employee health and safety, office shutdowns, workplace disruptions, and restrictions on the movement of people, both at our own offices and at those of our clients and suppliers.
In addition, internal controls over financial reporting of acquired companies may not be up to required standards. Our integration activities may place substantial demands on our management, operational resources and financial and internal control systems. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.
In addition, internal controls over financial reporting of acquired companies may not comply with required standards. Our integration activities may place substantial demands on our management, operational resources and financial and internal control systems. Customer dissatisfaction or performance problems with an acquired business, technology, service or product could also have a material adverse effect on our reputation and business.
These factors could also make it more difficult for us to attract and retain qualified executive officers and qualified members of our board of directors, particularly to serve on our audit committee and compensation committee. ​ ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​
These factors could also make it more difficult for us to attract and retain qualified executive officers and qualified members of our board of directors, particularly to serve on our audit committee and compensation committee. ​ 27 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS None. ​
We are obligated by law to comply with all U.S. laws and regulations governing the export and import of goods, technology, and services, including without limitation the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), regulations administered by the Department of Treasury’s Office of Foreign Assets Control, and regulations administered by the Bureau of Alcohol Tobacco Firearms and Explosives governing the importation of items on the U.S.
We are obligated by law to comply with all U.S. laws and regulations governing the export and import of goods, technology, and services, including without limitation the International Traffic in Arms Regulations (ITAR), the Export Administration Regulations (EAR), regulations administered by the Department of Treasury’s Office of Foreign Assets Control, and regulations administered by the Bureau of Alcohol Tobacco Firearms and Explosives governing the importation of items on the U.S.
If one or more of these 19 Table of Contents analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
Our CEO has control over key decision making as a result of his control of a majority of our voting stock. Steven N. Bronson, our Chairman of the Board, President and Chief Executive Officer, beneficially owned approximately 82% of the outstanding shares of our common stock as of December 31, 2022. As a result, Mr.
Our CEO has control over key decision making as a result of his control of a majority of our voting stock. Steven N. Bronson, our Chairman of the Board, President and Chief Executive Officer, beneficially owned approximately 83% of the outstanding shares of our common stock as of December 31, 2023. As a result, Mr.
Furthermore, changes in U.S. trade policies, including new restrictions, tariffs or other changes could lead to additional costs, delays in shipments, embargos and other uncertainties that could negatively impact our relationships with our international suppliers and materially adversely affect our business.
Furthermore, changes in U.S. trade policies, including new restrictions, tariffs or other changes, especially as regards China, could lead to additional costs, delays in shipments, embargos and other uncertainties that could negatively impact our relationships with our international suppliers and materially adversely affect our business.
There is no assurance that we will be able to achieve any of these objectives. Our markets are intensely competitive and many of our potential competitors have resources that we lack. Our markets are competitive, and we expect competition in our newer markets to increase.
There is no assurance that we will be able to achieve any of these objectives in whole or in part. Our markets are intensely competitive and many of our potential competitors have resources that we lack. Our markets are highly competitive, and we expect competition in our newer markets to increase.
Bronson has the ability to control the management and affairs of our company as a result of his position as our CEO and his ability to control the election of our directors. As a board member and officer, Mr.
Bronson has the ability to control the management and affairs of our company as a 21 Table of Contents result of his position as our CEO and his ability to control the election of our directors. As a board member and officer, Mr.
An inactive market may also impair our ability to raise capital by selling our common stock and may impair our ability to acquire or invest in other companies, products, or technologies by using our common stock as consideration. The price of our common stock may be volatile, and the value of a stockholder’s investment could decline.
An inactive market may also impair our ability to raise capital by selling our common stock (or other securities convertible into our common stock) and may impair our ability to acquire or invest in other companies, products, or technologies by using our common stock as consideration. 19 Table of Contents The price of our common stock may be volatile, and the value of a stockholder’s investment could decline.
In addition, events beyond our control, such as disruptions in operations due to natural or man-made disasters, inclement weather conditions, accidents, system failures, power outages, political instability (for example, the conflict between Russia and Ukraine), physical or cyber break-ins, server failure, work stoppages, slowdowns or strikes by employees, acts of terrorism, the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics (including the outbreak of the coronavirus and its potential impact on our financial results) and other unforeseen or catastrophic events, could damage our manufacturing facilities or our vendors’ fulfillment centers or render them inoperable, making it difficult or impossible for us or our vendors to process customer orders for an extended period of time.
In addition, events beyond our control, such as disruptions in operations due to natural or man-made disasters, inclement weather conditions, accidents, system failures, power outages, political instability, physical or cyber break-ins, server failure, work stoppages, slowdowns or strikes by employees, acts of terrorism, the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics and other unforeseen or catastrophic events, could damage our manufacturing facilities or our vendors’ fulfillment centers or render them inoperable, making it difficult or impossible for us or our vendors to process customer orders for an extended period of time.
We rely on third parties for the materials that we use to manufacture our products and a shortage of supply could adversely affect our revenues, operating results and customer relationships. We rely on third-party suppliers for the raw material components of our products.
We rely on third parties for the materials that we use to manufacture our products, and supply shortages and price increases could adversely affect our revenues, operating results and customer relationships. We rely on third-party suppliers for the raw material components of our products.
We do not have any control over these analysts. If one or more of the analysts who cover us should downgrade our shares or change their opinion of our business prospects, our share price would likely decline.
We do not have any control over these analysts. If one or more of the analysts who cover us downgrades our shares or changes their opinion of our business prospects, our share price would likely decline.
We cannot predict the size or growth rate of these markets or the market share we will achieve or maintain in these markets in the future. 15 Table of Contents If we fail to maintain and build relationships with our customers, or if our customers’ products which utilize our solutions do not gain widespread market acceptance, our revenue may stagnate or decline.
We cannot predict the size or growth rate of these markets or the market share we will achieve or maintain in these markets in the future. If we fail to build and maintain relationships with new and existing customers, or if our customers’ products that utilize our solutions do not gain widespread market acceptance, our revenue may stagnate or decline.
Risks Relating to Ownership of Our Stock There is a limited or no public market for our securities. Our common stock is quoted on The Nasdaq Capital Market, where the daily trading volume has been low.
Risks Relating to Ownership of Our Stock There is a limited or no public market for our securities. While our common stock is quoted on The Nasdaq Capital Market, the daily trading volume is typically very low.
Performance, reliability or quality problems with our products may cause our customers to reduce or cancel orders which would harm our operating results. 14 Table of Contents We regularly introduce new products with new technologies or manufacturing processes.
Performance, reliability or quality problems with our products could cause our customers to reduce or cancel orders, which would harm our operating results. We regularly introduce new products with new technologies or manufacturing processes.
Although we have implemented security procedures and controls to address these threats, our systems may still be vulnerable to theft, loss or misuse of data, including proprietary or confidential information, relating to our business, products, employees, suppliers and customers; disruption due to computer viruses and programming errors; attacks by third parties including demanding ransom to return control of our systems and services; or similar disruptive problems.
Although we have implemented security procedures and controls to address these threats, such as firewalls, encryption, access controls, and employee training, cybersecurity threats are dynamic and evolving and our systems may still be vulnerable to theft, loss or misuse of data, including proprietary or confidential information, relating to our business, products, employees, suppliers and customers; disruption due to computer viruses and programming errors; attacks by third parties including destruction of data or demanding ransom to return control of our systems and services; or similar disruptive problems.
International conflicts such as between Russia and Ukraine, and tensions with countries such as Iran and North Korea, and resulting political uncertainties also could result in an increase in cyberattacks that could either directly or indirectly impact our operations.
Armed conflicts in the Middle East and between Russia and Ukraine, and tensions with countries such as Iran and North Korea and resulting geopolitical uncertainties also could result in an increase in cyberattacks that could either directly or indirectly impact our operations.
Our insurance may not cover such events and, if the event is covered, our insurance may not be sufficient to compensate us for any losses that may occur.
Our insurance may not cover such events and, if the event is covered, our insurance may not be sufficient to compensate us 15 Table of Contents in full for any losses that may occur.
If any of the holders of these patents assert claims that we are infringing them, we could be forced to incur substantial litigation expenses, and if we were found to be infringing on someone else’s patent, we could be required to pay substantial damages, pay royalties in the future or be enjoined from infringing in the future.
If any of the holders of these patents assert claims that we are infringing them, we could be forced to incur substantial litigation expenses, and if we were found to be infringing on someone else’s patent, we could be required to pay substantial damages, and pay royalties in the future, which would adversely impact our profitability, or be enjoined from infringing in the future, which could materially impede our ability to operate.
We may continue to experience the effects of the pandemic even after it has waned, and our business, results of operations and financial condition could continue to be affected.
We may continue to experience the effects of the pandemic even now that its severity has waned, and our business, results of operations and financial condition could continue to be affected.
The liquidation preference of the shares of our Series A Convertible Preferred Stock would reduce the amount available to our common stockholders in the event of our liquidation or winding up.
The liquidation preference of shares of our Preferred Stock currently outstanding or issued in the future would reduce the amount available to our common stockholders in the event of our liquidation or winding up. We currently have one series of Preferred Stock outstanding, the Series A Convertible Preferred Stock.
Disruptions in our manufacturing facilities or arrangements could cause our revenues and operating results to decline. We manufacture of our products in Shenzhen, China and Newark, California. These facilities are vulnerable to damage from earthquakes, floods, fires, power loss and similar events. They could also be subject to break-ins, sabotage and intentional acts of vandalism.
We manufacture our products in Shenzhen, China; Newark, California; and Irvine, Scotland. These facilities are vulnerable to damage from earthquakes, floods, fires, power loss and similar events. They could also be subject to break-ins, sabotage and intentional acts of vandalism.
Because our customers generally do not provide us with firm, long-term volume purchase commitments, our customers, including our largest customers upon whom we may become dependent, can reduce or terminate altogether their business with us at any time.
Because our customers generally do not provide us with firm, long-term volume purchase commitments, our customers, including our largest customers upon whom we may become dependent, can reduce or terminate altogether their business with us at any time, whether because they choose an alternate supplier, see reduced demand for their products, or otherwise.
Our ability to manage change effectively will require us to attract, train, motivate and manage new employees, to reallocate human and other resources to support new undertakings and to restructure our operations to manage a restructured business effectively. If we are unable to respond effectively to change, our operations could be adversely affected and our business could be impaired.
Our ability to manage change effectively will require us to attract, train, motivate and manage new employees, to reallocate human and other resources to support new undertakings and to restructure our operations to manage a restructured business effectively.
We also are subject to provisions of Nevada law found in Nevada Revised Statutes, Sections 78.411 to 78.444, inclusive, that prohibit us from engaging in any business combination with any “interested stockholder,” meaning generally that a stockholder who beneficially owns 10 percent (10%) or more of our stock, cannot acquire us for a period of time after the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our board of directors and stockholders.
We also are subject to provisions of Nevada law found in Nevada Revised Statutes, Sections 78.411 to 78.444, inclusive, that prohibit us from engaging in any business combination with any “interested stockholder,” meaning generally that a stockholder who beneficially owns 10 percent (10%) or more of our stock, cannot acquire us for a period of time after the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our board of directors and stockholders. 22 Table of Contents Risks Related to Government Regulation Our failure to comply with U.S. laws and regulations relating to the export and import of goods, technology, and software could subject us to penalties and other sanctions and restrict our ability to license and develop our circuit designs.
This means that those holders are entitled to receive the liquidation preference before any payment or other distribution of assets to our common stockholders, and the amount of any such payment or other distribution will be reduced by that amount. The aggregate liquidation preference of the Series A Convertible Preferred Stock as of December 31, 2022 was $5 million.
This means that those holders are entitled to receive the liquidation preference before any payment or other distribution of assets to our common stockholders, and the amount of any such payment or other distribution to our common stockholders will be reduced by that amount.
We cannot guarantee that our solutions for new markets will be successful or that we will be able to continue to generate significant revenue from these markets. Our HMI and gas-sensing solutions may not be successful in new markets. Various target markets for our products and solutions may develop slower than anticipated or could utilize competing technologies.
We cannot guarantee that our solutions for new markets will be successful or that we will be able to generate significant revenue from these markets. Our HMI and gas-sensing solutions may not be successful in new markets.
We have also experienced lower demand and volume for products and services, client requests for engagement deferrals or other contract modifications, and other factors related directly and indirectly to the COVID-19 pandemic that adversely impact our business.
During the early years of the pandemic, we experienced lower demand and volume for products and services, client requests for engagement deferrals or other contract modifications, and other circumstances related directly and indirectly to the pandemic that adversely impacted our business.
The successful integration of gas sensors relies heavily on our customers’ investment in the required infrastructure to bring up a device or instrument and also on their competency and execution in development. The performance of any gas sensor depends on the quality of its implementation and may vary depending on design decisions, tradeoffs, or lack of experience.
The markets for our gas and environmental sensors rely heavily on our customers’ investment in the required infrastructure for new devices or instruments and also on their competency and execution in development. The performance of any sensor depends on the quality of its implementation and may vary depending on design decisions, tradeoffs, or lack of experience.
We cannot provide any assurance that current environmental laws and product quality specification standards, or any laws or standards enacted in the future, will not have a material adverse effect on our business. Our operations are subject to environmental and various other regulations in each of the jurisdictions in which we conduct business.
Competitors in foreign countries that are not subject to the FCPA or similar laws may have competitive advantages. We cannot provide any assurance that current environmental laws and product quality specification standards, or any laws or standards enacted in the future, will not have a material adverse effect on our business.
Our ability to generate significant revenue from new markets will depend on various factors, including the following: ● the development and growth of these markets; ● the ability of our technologies and product solutions to address the needs of these markets; ● the price and performance requirements of our customers and the preferences of end users; and ● our ability to provide our customers with solutions that provide advantages in terms of size, power consumption, reliability, durability, performance and value-added features compared with alternative solutions.
Our ability to generate significant revenue from new markets will depend on various factors, including the following: ● the development and growth of these markets; ● the ability of our technologies and product solutions to address the needs of these markets; ● the price and performance requirements of our customers and the preferences of end users; ● our ability to provide our customers with solutions that provide advantages in terms of size, power consumption, reliability, durability, performance and value-added features compared with alternative solutions; and ● the effectiveness of our sales and marketing efforts in communicating all of these capabilities to the marketplace. 16 Table of Contents The failure of any of these target markets to develop as we expect, or any significant failure on our part to serve these markets, will impede our sales growth and could result in substantially reduced earnings.
(OTCMKTS: BKFG). Mr. Bronson serves as President and Chief Executive Officer and as a director of Qualstar Corporation and as Chairman of the Board and Chief Executive Officer for BKF Capital Group, Inc., and Mr. Hoffman serves as Chief Financial Officer of each of Qualstar Corporation and BKF Capital Group, Inc. As a result, each of Messrs.
Hoffman, our Chief Financial Officer, simultaneously serve as officers and, in the case of Mr. Bronson, as a director, of other affiliated companies. Mr. Bronson serves as President and Chief Executive Officer and as a director of Qualstar Corporation (OTCMKTS: QBAK) and as Chairman of the Board and Chief Executive Officer of BKF Capital Group, Inc. (OTCMKTS: BKFG), and Mr.
A failure to obtain an adequate supply of the materials for our products could increase our costs, cause us to fail to meet delivery commitments and cause our customers to purchase from our competitors, which could adversely affect our operating results and customer relationships. In some situations, we rely on a single supplier for raw material components of our products.
A failure to obtain an adequate supply of the materials for our products could increase our costs (because purchases on the spot market would likely be more expensive), cause us to fail to meet delivery commitments and/or cause our customers to purchase from our competitors, which could adversely affect our operating results and customer relationships.
Any of the above factors could adversely affect our operating results. We expect to make acquisitions, which could involve certain risks and uncertainties. We expect to make acquisitions in the future. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities, properly evaluating risks and other diligence matters, ensuring adequate capital availability and balancing other resource constraints.
We recently completed the acquisitions of SPEC, KWJ and Calman, and we expect to make further acquisitions in the future. Acquisitions involve numerous inherent challenges, such as properly evaluating acquisition opportunities, properly evaluating risks and other diligence matters, ensuring adequate capital availability and balancing other resource constraints.
If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price. As a non-accelerated filer, we are required to evaluate and report on the effectiveness of our internal control over financial reporting.
This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management. If we are unable to assert that our internal control over financial reporting is effective, we could lose investor confidence in the accuracy and completeness of our financial reports, which could have an adverse effect on our stock price.
In addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering into transactions that involve providing confidential information to us. As a result, any compromise to the security of our systems could have a material adverse effect on our business, reputation, financial condition, and operating results.
In addition, any compromise of security from a security breach or cyber-attack could deter customers or business partners from entering into transactions that involve providing confidential information to us.
The issuance of shares of common stock upon conversion of shares of our Series A Convertible Preferred Stock will result in dilution to the interests of other common stockholders. Certain provisions in our Series A Convertible Preferred Stock may impact our ability to obtain additional financing in the future.
The issuance of shares of common stock upon conversion of shares of our Series A Convertible Preferred Stock will result in dilution to the interests of other common stockholders. The same would be true of any shares of convertible preferred stock we may issue in the future.
In addition to cash flows generated from operations, we may need to raise capital in the future through the issuance of capital stock.
Certain provisions in our Series A Convertible Preferred Stock may impact our ability to obtain additional financing in the future. In addition to cash flows generated from operations, we may need to raise capital in the future through the issuance of capital stock.
In 2022, our top three customers accounted for 25%, 18% and 9% of our net revenues, respectively.
In 2023, our top three customers accounted for 22%, 12% and 10% of our net revenues, respectively.
A reduction in their services to Interlink from current levels due to obligations to Qualstar Corporation, BKF Capital Group, Inc. or other organizations with which these officers are affiliated could have a disruptive effect, adversely impacting our ability to manage our business effectively and execute our business strategy. 16 Table of Contents Risks Related to Our Industry If we are unable to keep pace with rapid technological change and gain market acceptance of new products, we may not be able to compete effectively.
A reduction in their services to Interlink from current levels due to obligations to Qualstar Corporation, BKF Capital Group, Inc. or other organizations with which these officers are affiliated could have a disruptive effect, adversely impacting our ability to manage our business effectively and execute our business strategy. We face risks associated with security breaches or cyber-attacks.
Bronson and Hoffman divides his time among these companies and does not devote his full business time and attention to Interlink’s business. Each of Messrs.
Hoffman serves as Chief Financial Officer of BKF Capital Group, Inc., and until August 2023, of Qualstar Corporation. As a result, each of Messrs. Bronson and Hoffman divides his time among these companies and does not devote his full business time and attention to Interlink’s business. Each of Messrs.
Regulations have been enacted in certain jurisdictions which impose restrictions on waste disposal of electronic products and 21 Table of Contents electronics recycling obligations.
Our operations are subject to environmental and various other regulations in each of the jurisdictions in which we conduct business. Regulations have been enacted in certain jurisdictions which impose restrictions on waste disposal of electronic products and electronics recycling obligations.
International sales and manufacturing risks could adversely affect our operating results. Our revenue from international sales represents a substantial portion of our overall sales, and this trend will continue for the foreseeable future. The majority of our manufacturing is currently performed in China.
If we are unable to respond effectively to change, our operations could be adversely affected and our business could be impaired. 25 Table of Contents International sales and manufacturing risks could adversely affect our operating results. Our revenue from international sales represents a substantial portion of our overall sales, and this trend will continue for the foreseeable future.
If we fail to comply with applicable rules and regulations in connection with the use and disposal of such substances or other environmental or recycling legislation, we could be subject to significant liability or loss of future sales.
If we fail to comply with applicable rules and regulations in connection with the use and disposal of such substances or other environmental or recycling legislation, we could be subject to significant liability or loss of future sales. 23 Table of Contents General Risks The global COVID-19 pandemic had a significant and adverse effect on, and may continue to adversely affect, our business, financial position, results of operations, and cash flows.
Any disruption in these supplier relationships could prevent us from maintaining an adequate supply of materials and could adversely affect our results of operation and financial position.
In some situations, we rely on a single supplier for raw material components of our products. Any disruption in these supplier relationships could prevent us from maintaining an adequate supply of materials and could adversely affect our results of operation and financial position. Disruptions in our manufacturing facilities or arrangements could cause our revenues and operating results to decline.
For example, in March 2022, China imposed a multi-day lockdown in the city of Shenzhen due to a rise in the number of coronavirus cases, which required factories to close and disrupted our manufacturing operations in that city; while China has now officially ended its “zero-COVID” policy, there can be no assurance that such a policy will not be reimposed at some time in the future if deemed necessary or desirable by the Chinese government, which could result in further lockdowns.
For example, in March 2022, China imposed a multi-day lockdown in the city of Shenzhen due to a rise in the number of coronavirus cases, which required factories to close and disrupted our manufacturing operations in that city.
Our success depends in part on our CEO and CFO, who simultaneously lead other public corporations. Steven N. Bronson, our Chairman of the Board, President and Chief Executive Officer, and Ryan J. Hoffman, our Chief Financial Officer, simultaneously serve as officers and, in the case of Mr. Bronson, a director, of Qualstar Corporation (OTCMKTS: QBAK) and BKF Capital Group, Inc.
There is no assurance that we would be successful in enforcing our legal rights against the offending party in such circumstances. Our success depends in part on our CEO and CFO, who simultaneously lead other public corporations. Steven N. Bronson, our Chairman of the Board, President and Chief Executive Officer, and Ryan J.
Removed
We experienced delays in the receipt of certain goods and the supply of our products from international and domestic shipping origins as a result of the COVID-19 pandemic and more general global supply chain constraints in fiscal 2021, and to a lesser extent in fiscal 2022.
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We do not have long-term fixed price contracts for the supply of our raw materials and components. Accordingly, increases in prevailing market prices (including due to increases in transportation, shipping and freight costs) would have an adverse effect on our operations to the extent we were unable to pass on increases to our customers.
Removed
The failure of any of these target markets to develop as we expect, or our failure to serve these markets to a significant extent, will impede our sales growth and could result in substantially reduced earnings.
Added
Armed conflicts in the Middle East and between Russia and Ukraine, tensions between the U.S. and countries such as Iran and North Korea and between other countries such as China and Taiwan, and disruptions to traffic through key shipping routes such as the Suez Canal, also could adversely impact our sales, shipping costs, and results of operations.
Removed
International conflicts such as between Russia and Ukraine, and tensions with countries such as Iran and North Korea, and resulting political uncertainties also could result in an increase in cyberattacks that could either directly or indirectly impact our operations.
Added
Various target markets for our products and solutions may develop more slowly than anticipated or participants in those markets could choose to utilize competing technologies.
Removed
Risks Related to Government Regulation Our failure to comply with U.S. laws and regulations relating to the export and import of goods, technology, and software could subject us to penalties and other sanctions and restrict our ability to license and develop our circuit designs.
Added
Our global operations require us to maintain intellectual property in a number of foreign jurisdictions, in particular in connection with our manufacturing facility in Shenzhen, China. This may expose us to material risks of theft or compromise of proprietary technology and other intellectual property, including technical data, business processes, data sets or other sensitive information.
Removed
General Risks The ongoing, global coronavirus pandemic has significantly and adversely affected, and may continue to adversely affect, our business, financial position, results of operations, and cash flows.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES We maintain our principal office, totaling approximately 4,351 square feet, in Irvine, California, under a sub-lease that expires in May 2023. We conduct engineering, assembly and prototyping activities in Camarillo, California, where we established a Global Product Development and Materials Science Center, and (for SPEC-KWJ) in Newark, California.
Biggest changeITEM 2. PROPERTIES We maintain our principal office in Irvine, California. We conduct engineering, assembly and prototyping activities in Camarillo, California, where we have established a Global Product Development and Materials Science Center, and also in our Newark, California facility. We conduct production operations in our facilities in Shenzhen, China; Newark, California; and Irvine, Scotland.
We conduct production operations in our facilities in Shenzhen, China, and Newark, California, research and development activities in our electronics lab in Singapore, distribution operations in our Hong Kong facility, and sales operations in our Tokyo office and various other locations in the United States. In total, we lease approximately 33,000 square feet, and do not own any real estate.
We conduct research and development activities in our electronics lab in Singapore; distribution operations in our Hong Kong facility; and sales operations in our Tokyo office and various other locations in the United States. In total, we lease approximately 40,000 square feet, and do not own any real estate.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 25 Table of Contents PART II
Biggest changeThe outcome of litigation and claims cannot be predicted with certainty, and the resolution of any future matters could materially affect our future financial position, results of operations or cash flows. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 29 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends on the Series A Convertible Preferred Stock will accrue daily and be cumulative from, and including, the first day of the calendar month in which the shares are issued and will be payable monthly in arrears on the 15th day of each calendar month.
Biggest changeDividends on the Series A Convertible Preferred Stock accrue daily and are payable monthly in arrears on the 15th day of each calendar month.
The declaration, amount and payment of any future dividends on shares of our common stock, if any, is subject to the designations, rights and preferences of the Series A Convertible Preferred Stock and will be at the sole discretion of our board of directors, which may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, the implications of the payment of dividends by us to our stockholders or by our subsidiaries to us, and any other factors that our board of directors may deem relevant.
The declaration, amount and payment of any future dividends on shares of our common stock, if any, is subject to the designations, rights and preferences of the Series A Convertible Preferred Stock and other preferred stock that we may issue in the future, and will be at the sole discretion of our board of directors, which may be subject to general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, the implications of the payment of dividends by us to our stockholders or by our subsidiaries to us, and any other factors that our board of directors may deem relevant.
ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed on The Nasdaq Capital Market under the symbol “LINK.” Holders of Record As of December 31, 2022, we had 23 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed on The Nasdaq Capital Market under the symbol “LINK.” Holders of Record As of December 31, 2023, we had 24 holders of record of our common stock.
Dividend Policy Common Stock We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any dividends on our common stock in the foreseeable future, if at all.
Dividends Common Stock We have never declared or paid cash dividends on our common stock, and we do not anticipate paying any such dividends on our common stock in the foreseeable future, if at all.
Our board of directors commenced paying dividends on our Series A Convertible Preferred Stock in November 2021, and we expect that our board of directors will continue to declare and pay monthly cash dividends on our Series A Convertible Preferred Stock, subject to the limitations to do so under Nevada law.
Our board of directors commenced declaring and we commenced paying dividends on our Series A Convertible Preferred Stock in November 2021, and we expect that our board of directors will continue to declare and we will continue to pay monthly cash dividends on our Series A Convertible Preferred Stock, subject to applicable limitations under Nevada law.
Series A Convertible Preferred Stock We have 200,000 shares of our Series A Convertible Preferred Stock outstanding, each of which currently is convertible into two shares of our common stock.
Series A Convertible Preferred Stock We have 200,000 shares of our Series A Convertible Preferred Stock outstanding, each of which currently is convertible into 3.0 shares of our common stock, as adjusted for the 50% common stock dividend declared and paid in March 2024.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Recent Sales of Unregistered Securities None. ​ ITEM 6. RESERVED ​ 26 Table of Contents
Added
On March 1, 2024, the Board of Directors declared a 50% common stock dividend with a record date of March 11, 2024, that was paid on March 22, 2024. Settlement of fractional share interests will be made by issuing one full share of common stock in lieu of a fractional share.
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Although the exact effect on common stock outstanding will depend on the number of fractional share settlements, the stock dividend is expected to increase the number of issued and outstanding shares of common stock from 6,573,570 to approximately 9,860,355.
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Except as otherwise noted, all references to common stock, common stock issuable upon conversion of preferred stock, and corresponding per share information throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the stock dividend, which is accounted for as a stock split effected in the form of a stock dividend.
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers On May 16, 2023, our Board of Directors authorized the Company to purchase up to 150,000 shares of our common stock. Under this authorization, we have cumulatively purchased 48,180 shares at a total cost of $300,259 through December 31, 2023.
Added
Our share repurchase program expires on May 15, 2024, does not require us to purchase a specific number of shares and may be modified, suspended, terminated, or extended at any time.
Added
In addition, in June 2023, the Company repurchased 8,250 shares of our common stock from a prior employee in a private transaction at a total cost of $50,000. ​ 30 Table of Contents The following table presents our purchases of our common stock during the year ended December 31, 2023, and has been adjusted to reflect the 50% common stock dividend declared and paid in March 2024 (which is accounted for as a stock split effected in the form of a stock dividend): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum ​ ​ ​ ​ ​ ​ Total Number of ​ Number of Shares ​ ​ ​ ​ ​ ​ Shares Purchased ​ that May Yet Be ​ ​ ​ ​ ​ ​ as Part of Publicly ​ Purchased Under ​ ​ Total Number of ​ Average Price ​ Announced Plans ​ the Plans or Period Shares Purchased Paid Per Share or Programs Programs May 1, 2023 to May 31, 2023 20,250 ​ $ 6.08 20,250 129,750 June 1, 2023 to June 30, 2023 8,854 ​ $ 6.09 604 129,146 July 1, 2023 to July 31, 2023 — ​ — — 129,146 August 1, 2023 to August 31, 2023 12,326 ​ $ 6.31 12,326 116,820 September 1, 2023 to September 30, 2023 15,000 ​ $ 6.36 15,000 101,820 October 1, 2023 to October 31, 2023 — ​ — — 101,820 November 1, 2023 to November 30, 2023 — ​ — — 101,820 December 1, 2023 to December 31, 2023 — ​ — — 101,820 Total 56,430 ​ 48,180 ​ Recent Sales of Unregistered Securities None. ​ ITEM 6.
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RESERVED ​ Not applicable. ​ 31 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

48 edited+11 added−9 removed33 unchanged
Biggest changeThe percentages in the tables are based on net revenues. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 ​ 2021 ​ ​ $ % $ % ​ ​ (in thousands, except percentages) Revenue, net ​ $ 7,493 ​ 100.0 % $ 7,478 ​ 100.0 % Cost of revenue ​ 3,632 ​ 48.5 ​ 3,420 ​ 45.7 ​ Gross profit ​ 3,861 ​ 51.5 ​ 4,058 ​ 54.3 ​ Operating expenses: ​ ​ ​ ​ ​ Engineering, research and development ​ 1,220 ​ 16.3 ​ 893 ​ 11.9 ​ Selling, general and administrative ​ 3,309 ​ 44.2 ​ 3,244 ​ 43.4 ​ Total operating expenses ​ 4,529 ​ 60.4 ​ 4,137 ​ 55.3 ​ Loss from operations ​ (668) ​ (8.9) ​ (79) ​ (1.1) ​ Other income (expense): ​ ​ ​ ​ ​ Other income (expense), net ​ 2,611 ​ 34.8 ​ (50) ​ (0.7) ​ Income (loss) before income taxes ​ 1,943 ​ 25.9 ​ (129) ​ (1.7) ​ Income tax expense ​ 271 ​ 3.6 ​ 605 ​ 8.1 ​ Net income (loss) ​ $ 1,672 ​ 22.3 % $ (734) ​ (9.8) % ​ Comparison of the Years Ended December 31, 2022 and 2021 Revenue, net by the markets we serve is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ ​ Amount Revenue Amount Revenue $ Change % Change ​ (in thousands, except percentages) Industrial ​ $ 2,269 30.3 % $ 2,191 29.3 % $ 78 3.6 % Medical ​ 1,865 24.9 ​ 1,102 14.7 ​ 763 69.2 ​ Consumer ​ 363 4.8 ​ 1,271 17.0 ​ (908) (71.4) ​ Automotive ​ 24 0.3 ​ 14 0.2 ​ 10 71.4 ​ Standard ​ 2,972 39.7 ​ 2,900 38.8 ​ 72 2.5 ​ Revenue, net ​ $ 7,493 100.0 % $ 7,478 100.0 % $ 15 0.2 % ​ We sell our custom products into the industrial, medical, consumer, automotive and environmental monitoring markets.
Biggest changeThe percentages in the tables are based on net revenues. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2022 ​ ​ $ % $ % ​ ​ (in thousands, except percentages) Revenue, net ​ $ 13,940 ​ 100.0 % $ 7,493 ​ 100.0 % Cost of revenue ​ 7,381 ​ 52.9 ​ 3,632 ​ 48.5 ​ Gross profit ​ 6,559 ​ 47.1 ​ 3,861 ​ 51.5 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Engineering, research and development ​ 2,326 ​ 16.7 ​ 1,220 ​ 16.3 ​ Selling, general and administrative ​ 4,672 ​ 33.5 ​ 3,309 ​ 44.2 ​ Total operating expenses ​ 6,998 ​ 50.2 ​ 4,529 ​ 60.4 ​ Loss from operations ​ (439) ​ (3.1) ​ (668) ​ (8.9) ​ Other income (expense): ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense), net ​ 164 ​ 1.2 ​ 2,611 ​ 34.8 ​ Income (loss) before income taxes ​ (275) ​ (2.0) ​ 1,943 ​ 25.9 ​ Income tax expense ​ 108 ​ 0.8 ​ 271 ​ 3.6 ​ Net income (loss) ​ $ (383) ​ (2.7) % $ 1,672 ​ 22.3 % ​ Comparison of the Years Ended December 31, 2023 and 2022 Revenue, net by the markets we serve is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ ​ Amount Revenue Amount Revenue $ Change % Change ​ (in thousands, except percentages) Industrial ​ $ 4,141 29.7 % $ 2,269 30.3 % $ 1,872 82.5 % Medical ​ 5,210 37.4 ​ 1,865 24.9 ​ 3,345 179.4 ​ Consumer ​ 577 4.1 ​ 363 4.8 ​ 214 59.0 ​ Standard ​ 4,012 28.8 ​ 2,996 40.0 ​ 1,016 33.9 ​ Revenue, net ​ $ 13,940 100.0 % $ 7,493 100.0 % $ 6,447 86.0 % ​ We sell our custom products into the industrial, medical, and consumer markets.
Goodwill is determined to have an indefinite useful life and is not amortized, but tested for impairment at least annually or more frequently in events and circumstances exist that indicate that a goodwill impairment test should be performed.
Goodwill is determined to have an indefinite useful life and is not amortized but is tested for impairment at least annually or more frequently in events and circumstances exist that indicate that a goodwill impairment test should be performed.
Off-Balance Sheet Arrangements As of December 31, 2022 and 2021, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Off-Balance Sheet Arrangements As of December 31, 2023 and 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
We also plan to explore potential strategic relationships with companies and technology institutes that will support our growth initiatives. 27 Table of Contents Results of Operations The following table sets forth certain consolidated statements of operations data for the periods indicated.
We also plan to explore potential strategic relationships with companies and technology institutes that will support our growth initiatives. Results of Operations The following table sets forth certain consolidated statements of operations data for the periods indicated.
Our Human Machine Interface (“HMI”) technology platforms are deployed in a wide range of markets including consumer electronics, automotive, industrial, and medical. The application of our HMI technology platforms includes vehicle entry, vehicle multi-media control interface, rugged touch controls, presence detection, collision detection, speed and torque controls, pressure mapping, biological monitoring and others.
Our HMI technology platforms are deployed in a wide range of markets, including consumer electronics, automotive, industrial and medical. The application of our HMI technology platforms includes vehicle entry, vehicle multi-media control interface, rugged touch controls, presence detection, collision detection, speed and torque controls, pressure mapping, biological monitoring and others.
We record reserves for potential customer returns and warranty rights. Inventory Valuation Inventories are stated at lower of cost or net realizable value (“NRV”). Inventory costs are determined using standard costs which approximate actual costs under the first-in, first-out method. We evaluate inventories for excess quantities and obsolescence.
We record reserves for potential customer returns and warranty rights. 37 Table of Contents Inventory Valuation Inventories are stated at lower of cost or net realizable value (“NRV”). Inventory costs are determined using standard costs which approximate actual costs under the first-in, first-out method. We evaluate inventories for excess quantities and obsolescence.
We sell our standard products through various distribution networks. The ultimate customer for standard products may come from different markets which are often unknown to us at the time of sale. Each market has different product design cycles. Products with longer design cycles often have much longer product life-cycles.
We sell our standard products to customers in many markets through various distribution networks. The ultimate customer for our standard products may come from different markets which are often unknown to us at the time of sale. Each market has different product design cycles. Products with longer design cycles often have much longer product life cycles.
If we raise additional financing by the incurrence of indebtedness, we could be subject to fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other 30 Table of Contents operating restrictions that could adversely impact our ability to conduct our business.
If we raise additional financing by the incurrence of indebtedness, we could be subject to fixed payment obligations and could also be subject to restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business.
To the extent we establish a valuation allowance or increase or decrease this allowance in a period, we include an expense or benefit within the tax provision in the statement of operations. 33 Table of Contents The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
To the extent we establish a valuation allowance or increase or decrease this allowance in a period, we include an expense or benefit within the tax provision in the statement of operations. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
We control 100% of the manufacturing and shipping process which enables us to respond quickly to customer product demand and design requirements. We have invested significantly in the expansion of our technology platforms through our own internal development to ensure we provide the market with leading-edge solutions that are seamless to deploy and perform flawlessly.
We control 100% of the manufacturing and shipping process, which enables us to respond quickly to customer product demand and design requirements. 32 Table of Contents We have invested significantly in the expansion of our technology platforms through our own internal development to ensure we continue to provide the market with leading-edge solutions that are seamless to deploy and perform flawlessly.
Our effective tax rate is directly affected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate.
Our effective tax rate is directly affected by the relative proportions of revenue and income before taxes in the jurisdictions in which we operate and the applicable tax rates in such jurisdictions.
They do not bear interest. We evaluate the collectability of accounts receivable at each balance sheet date using a combination of factors, such as historical experience, credit quality, age of the accounts receivable balances, and economic conditions that may affect a customer’s ability to pay.
We evaluate the collectability of accounts receivable at each balance sheet date using a combination of factors, such as historical experience, credit quality, age of the accounts receivable balances, and economic conditions that may affect a customer’s ability to pay.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ​ 34 Table of Contents
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ​ 39 Table of Contents
In all markets, the timing of orders from our customers is not always predictable and can be concentrated in varying periods during the year to coincide with their project and building plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ % of Net ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue ​ $ Change ​ % Change ​ ​ (in thousands, except percentages) Gross profit ​ $ 3,861 51.5 % $ 4,058 54.3 % $ (197) (4.9) % ​ Our gross profit and gross margin percentage are impacted by various factors including product mix, customer mix, sales volume, and fluctuations in our cost of revenues, which are comprised of material costs, direct and indirect production labor costs, warehousing and logistics costs, facilities costs, and other costs related to production activities.
In all markets, the timing of orders from our customers is not always predictable and can be concentrated in varying periods to coincide with their project and building plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ % of Net ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue ​ $ Change ​ % Change ​ ​ (in thousands, except percentages) Gross profit ​ $ 6,559 47.1 % $ 3,861 51.5 % $ 2,698 69.9 % ​ Our gross profit and gross margin percentage are impacted by various factors including product mix, customer mix, sales volume, and fluctuations in our cost of revenues, which are comprised of material costs, direct and indirect production labor costs, warehousing and logistics costs, facilities costs, and other costs related to production activities.
Based on the expected mix of domestic and foreign earnings, we anticipate our effective tax rate to remain similar to the newly stated U.S. statutory rate of 21% primarily due to a significant portion of our earnings originating in the higher rate China jurisdiction (25%), offset by lower rate jurisdictions in Singapore (17%) and Hong Kong (16.5%).
Based on the expected mix of domestic and foreign earnings, we anticipate our effective tax rate to remain higher than the U.S. statutory rate of 21% primarily due to a significant portion of our earnings originating in higher rate jurisdictions of China (25%) and the United Kingdom (25%), offset in part by earnings in lower-rate jurisdictions of Hong Kong (16.5%) and Singapore (17%).
Net Cash Provided By (Used In) Financing Activities Net cash used in financing activities of $350 thousand for the year ended December 31, 2022 consisted of payment of $400 thousand of dividends on our Series A Convertible Preferred Stock, offset by $50 thousand of proceeds from issuance of common stock.
Net cash used in financing activities of $350,000 for the year ended December 31, 2022 consisted of payment of $400,000 of dividends on our Preferred Stock, offset by $50,000 of proceeds from issuance of common stock.
We sell our products and solutions globally to a diverse array of customers that include the Fortune 500 as well as start-ups, design houses, original design manufacturers, OEMs and universities. Our technology has been deployed in the consumer electronics, industrial automation, automotive, medical, and environmental monitoring markets.
We sell our products and solutions globally to a diverse array of customers that include Fortune Global 500 companies with the world’s most recognizable brands, as well as start-ups, design houses, original design and equipment manufacturers, and universities. Our technology has been deployed in the consumer electronics, automotive, industrial automation, medical, defense and environmental monitoring markets.
The designations, rights and preferences of our Series A Convertible Preferred Stock provide that we will pay, when, as and if declared by our board of directors, monthly cumulative cash dividends at an annual rate of 8.0%, which is equivalent to $0.16667 per month and $2.00 per annum per share, based on the $25.00 liquidation preference.
We pay, when, as and if declared by our board of directors, monthly cumulative cash dividends on the Preferred Stock at an annual rate of 8.0%; this is equivalent to $0.16667 per month and $2.00 per annum per share, based on a per share liquidation preference of $25.00.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Overview Interlink Electronics, Inc. operates in two principal divisions: force-sensing technology and gas-sensing technology.
Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Overview Interlink Electronics, Inc. is a global sensor and printed electronics company operating in two principal sensor technology divisions: force/touch sensors, and gas and environmental sensors.
Prepaid expenses and other current assets decreased from $391 thousand at December 31, 2021 to $321 thousand at December 31, 2022. The balance of our prepaid expenses and other assets fluctuates with the timing of payments of insurance premiums, advances, and estimated income taxes.
Prepaid expenses and other current assets increased from $321,000 at December 31, 2022 to $381,000 at December 31, 2023. The balance of our prepaid expenses and other assets fluctuates with the timing of payments of insurance premiums, advances, and estimated income taxes.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Our foreign subsidiaries are subject to foreign income taxes on earnings in their respective jurisdictions. Earnings of our foreign subsidiaries are generally included in our U.S. federal income tax return as they are earned.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 38 Table of Contents Our foreign subsidiaries are subject to foreign income taxes on earnings in their respective jurisdictions.
Liquidity and Capital Resources Cash requirements for working capital, capital expenditures, and acquisition activities have been funded from cash balances on hand, cash generated from operations and marketable securities, and sales of equity securities. As of December 31, 2022, we had cash and cash equivalents of $10.1 million, working capital of $12.6 million and no indebtedness.
Liquidity and Capital Resources Cash requirements for working capital, capital expenditures, and acquisition activities have been funded from our cash balances, cash generated from operations and sales of marketable securities, and issuances of equity securities. As of December 31, 2023, we had cash and cash equivalents of $4.3 million, working capital of $8.0 million and no indebtedness.
We assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not determinable beyond a “more likely than not” standard, we establish a valuation allowance.
Earnings of our foreign subsidiaries are generally included in our U.S. federal income tax return as they are earned. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not determinable beyond a “more likely than not” standard, we establish a valuation allowance.
Other income (expense), net for 2022 was comprised of $2.449 million of gains on marketable securities, $121 thousand of foreign currency 29 Table of Contents transaction gains, and $41 thousand of interest income, while other income (expense), net for 2021 was comprised of $40 thousand of foreign currency transaction losses, and $10 thousand of other non-operating expenses. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Pre- ​ ​ % of Pre- ​ ​ ​ ​ ​ ​ ​ Amount ​ tax Income ​ Amount ​ tax Income Change % Change ​ ​ (in thousands, except percentages) Income tax expense ​ $ 271 13.9 % $ 605 469.0 % $ (334) n/a ​ Tax expense (benefit) reflects statutory tax rates in the jurisdictions in which we operate adjusted for permanent book/tax differences.
Other income (expense), net for 2023 was comprised of $155,000 of interest income, $3,000 of foreign currency transaction gains, and $6,000 of other non-operating income, while other income (expense), net for 2022 was comprised of $2,449,000 of gains on marketable securities, $121,000 of foreign currency transaction gains, and $41,000 of interest income. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ ​ ​ in % of ​ ​ ​ ​ ​ Pre-tax ​ ​ ​ ​ Pre-tax ​ ​ ​ ​ Pre-tax ​ ​ Amount ​ Income ​ Amount ​ Income $ Change Income ​ ​ (in thousands, except percentages) Income tax expense ​ $ 108 39.3 % $ 271 13.9 % $ (163) 25.4 ​ Income tax expense reflects statutory tax rates in the jurisdictions in which we operate adjusted for permanent book/tax differences.
Our global presence in the United States, China, Hong Kong, Singapore and Japan, allows us to provide local sales and engineering support services to our existing and future customers. Our products are manufactured by our wholly-owned subsidiary in a state-of-the-art facility in Shenzhen, China, and in our production facility in Newark, California.
Our global presence in the United States, China, United Kingdom, Hong Kong, Singapore and Japan allows us to broadly provide sales and engineering support services to our existing and future worldwide customers. We manufacture our products in a state-of-the-art facility in Shenzhen, China, and in our advanced and proprietary facilities in Newark, California and Irvine, Scotland.
Gross profit and gross margin percentage for 2022 were down compared to 2021 due primarily to higher materials and components costs on certain orders, higher freight and tariff costs on certain transactions, unfavorable changes in product and customer mix, and changes in production efficiencies in our manufacturing operations. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue $ Change % Change ​ ​ ​ (in thousands, except percentages) Engineering, research and development ​ $ 1,220 16.3 % $ 893 11.9 % $ 327 36.6 % ​ Engineering and R&D expenses consist primarily of compensation expenses for employees engaged in research, design and product development activities, and the cost of those employees’ indirect supplies and allocation of facilities expenses.
Gross profit for 2023 was up compared to 2022 due to higher revenue (resulting primarily from our acquisitions of SPEC and KWJ and Calman), while gross margin percentage was down due to changes in product and customer mix (primarily acquisition-related) and increased materials and components costs on certain orders. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue $ Change % Change ​ ​ ​ (in thousands, except percentages) Engineering, research and development ​ $ 2,326 16.7 % $ 1,220 16.3 % $ 1,106 90.7 % ​ Engineering and R&D expenses consist primarily of compensation expenses for employees engaged in research, design and product development activities, and the cost of those employees’ indirect supplies and allocation of facilities expenses.
Cash and cash equivalents consist of cash and money market funds. We did not have any short-term or long-term investments as of December 31, 2022.
Cash and cash equivalents consist of cash and money market funds. We did not have any short-term or long-term investments as of December 31, 2023. Of our $4.3 million of cash, $2.3 million was held by foreign subsidiaries.
Cash Flow Analysis Our cash flows from operating, investing and financing activities are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2022 2021 ​ (in thousands) Net cash provided by (used in) operating activities ​ $ (915) ​ $ 231 Net cash provided by (used in) investing activities ​ 735 ​ (159) Net cash provided by (used in) financing activities ​ (350) ​ 4,520 ​ Net Cash Provided By (Used In) Operating Activities For the year ended December 31, 2022, the $915 thousand in net cash used in operating activities was attributable to net income of $1.672 million, adjusted for non-cash charges of $256 thousand, realized gain on marketable securities of $2.449 million, and cash used in changes in operating assets and liabilities of $394 thousand.
Cash Flow Analysis Our cash flows from operating, investing and financing activities are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 ​ (in thousands) Net cash (used in) operating activities ​ $ (116) ​ $ (915) Net cash provided by (used in) investing activities ​ (4,885) ​ 735 Net cash (used in) financing activities ​ (750) ​ (350) ​ Net Cash (Used In) Operating Activities For the year ended December 31, 2023, the $116,000 in net cash used in operating activities was attributable to net loss of $383,000, adjusted for non-cash charges of $806,000 and cash used in changes in operating assets and liabilities of $539,000.
If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted.
If our circumstances change, however, we may require additional cash. If we require additional cash, we may attempt to raise additional capital through equity, equity-linked or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted.
We are subject to changing tax laws, regulations, and interpretations in multiple jurisdictions. Corporate tax reform continues to be a priority in the U.S. and other jurisdictions. Additional changes to the tax system in the U.S. could have significant effects, positive and negative, on our effective tax rate, and on our deferred tax assets and liabilities.
We are subject to changing tax laws, regulations, and interpretations in multiple jurisdictions. Corporate tax reform continues to be a priority in the U.S. and other jurisdictions.
For 2022, the Company’s tax provision reflects tax expense on its foreign earnings, and tax expense on its domestic earnings net of utilization of a portion of the previously recorded valuation allocance. For 2021, the Company recorded an income tax provision comprised substantially of valuation allowance against domestic deferred tax assets due to recent history of U.S. taxable losses.
For both 2023 and 2022, the Company’s income tax expense reflects tax expense on its foreign earnings, and on its domestic earnings net of utilization of a portion of the previously recorded valuation allowance on domestic deferred tax assets.
Of the $10.1 million of cash balances on hand, $0.9 million was held by foreign subsidiaries; if those funds are needed for our operations in the U.S., we have several methods to repatriate the funds without significant tax effects, including repayment of intercompany loans or distributions of previously taxed income.
If these funds are needed for U.S. operations or for acquisitions, we have several methods to repatriate the funds without significant tax effects, including repayment of intercompany loans or distributions of previously taxed income. Other distributions may require us to incur U.S. or foreign taxes to repatriate these funds.
If future demand or market conditions are less favorable than our projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made. 32 Table of Contents Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoice amount and presented net of the allowance for credit losses.
Inventory write-downs, once established, are not reversed until the related inventories have been sold or scrapped. If future demand or market conditions are less favorable than our projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made.
Accounts payable and accrued liabilities decreased slightly from $845 thousand at December 31, 2021 to $841 thousand at December 31, 2022; payables and accrued expenses fluctuate based on the timing of payment for purchases of materials, compensation accruals, and other outside services.
Accounts payable, accrued liabilities, and accrued income taxes increased from $958,000 at December 31, 2022 to $1,249,000 at December 31, 2023; payables, accrued expenses, and accrued income taxes fluctuate based on the timing of payment for purchases of materials, compensation accruals, outside services, and income taxes, and increased in part from the addition of Calman’s liabilities to our consolidated balances.
Engineering and R&D costs for 2022 were up compared to 2021 due to increased engineering employee headcount and increased costs on prototyping and development activities, and also due to inclusion in 2021 of receipt of a $129 thousand research incentive grant from the Singapore government that reduced expenses in the prior year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ Amount Revenue Amount Revenue $ Change % Change ​ ​ (in thousands, except percentages) Selling, general and administrative ​ $ 3,309 44.2 % $ 3,244 43.4 % $ 65 2.0 % ​ Selling, general and administrative expenses consist primarily of compensation expenses, legal and other professional fees, facilities expenses and communication expenses.
Engineering and R&D costs for 2023 were up compared to the prior year due primarily to increased engineering employee headcount following our acquisitions of SPEC and KWJ in December 2022, the inclusion in the current year period of approximately $136,000 of non-cash amortization expense on intangible assets acquired in the purchases of SPEC and KWJ, and increased prototyping and product-development activities this year as compared to the prior year. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ Amount Revenue Amount Revenue $ Change % Change ​ ​ (in thousands, except percentages) Selling, general and administrative ​ $ 4,672 33.5 % $ 3,309 44.2 % $ 1,363 41.2 % ​ Selling, general and administrative expenses consist primarily of compensation expenses, legal and other professional fees, facilities expenses and communication expenses.
Accounts receivable increased from $1.080 million at December 31, 2021 to $1.178 million at December 31, 2022 due to timing of shipments and cash collections during the fourth quarter of 2022 compared to the fourth quarter of 2021. Many of our customers pay promptly and accounts receivable is generally related to the most recent shipments.
Accounts receivable increased from $1,178,000 at December 31, 2022 to $2,167,000 at December 31, 2023 due to the addition of accounts receivable from our acquisition of Calman during the year, and also timing of shipments and cash collections during the fourth quarter of 2023 compared to the fourth quarter of 2022.
We spent several years building a research and development (R&D) organization in Singapore to develop new product offerings that will meet the market’s growing demand for touch technology and smart surfaces.
Having previously built an R&D organization in Singapore to develop new product offerings that will meet the market’s growing demand for touch technology and smart surfaces, we relocated a majority of our R&D and product development efforts to Camarillo, California, where we have established a Global Product Development and Materials Science Center.
Dividends on the Series A Convertible Preferred Stock will accrue daily and be cumulative from, and including, the first day of the calendar month in which the shares are issued and will be payable monthly in arrears on the 15th day of each calendar month.
Dividends on the Preferred Stock are payable monthly in arrears on the 15th day of each calendar month.
Net Cash Provided By (Used In) Investing Activities Net cash provided by investing activities of $735 thousand for the year ended December 31, 2022 consisted of net proceeds from purchase and sales of marketable securities of $2.449 million, net cash used in the December 2022 acquisition of SPEC and KWJ of $1.672 million, and $42 thousand of cash used for purchases of property and equipment.
Net cash provided by investing activities of $735,000 for the year ended December 31, 2022 consisted of net proceeds from purchase and sales of marketable securities of $2,449,000, net cash used in the December 2022 acquisition of SPEC and KWJ of $1,672,000 (which was net of $541,000 of cash acquired in the acquisition and $56,000 anticipated to have been recovered from the purchase price adjustment escrow), and $42,000 of cash used for purchases of property and equipment. ​ 36 Table of Contents Net Cash (Used In) Financing Activities Net cash used in financing activities of $750,000 for the year ended December 31, 2023 consisted of payment of $400,000 of dividends on our Preferred Stock, and $350,000 used for repurchases of 56,430 shares of common stock.
When comparing selling, general and administrative costs for the periods exclusive of that benefit, costs for 2022 were lower than in the prior year due to lower sales and marketing employee headcount, and lower legal and other professional fees. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue ​ $ Change ​ % Change ​ (in thousands, except percentages) Other income (expense), net ​ $ 2,611 34.8 % $ (50) 0.7 % $ 2,661 n/a ​ Other income (expense), net consists of non-operating income and expenses, such as gains and losses on marketable securities, foreign currency transaction gains and losses, interest income and expense, and other non-operating income and expenses.
Selling, general and administrative expenses for the current year were up compared to last year due to increased employee headcount following our acquisitions of SPEC and KWJ in December 2022 and Calman in March 2023, the inclusion in the current year period of approximately $486,000 of non-cash amortization expense on intangible assets acquired in the Calman purchase, and increased acquisition-related legal and other professional fees. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ Amount ​ Revenue ​ Amount ​ Revenue ​ $ Change ​ % Change ​ (in thousands, except percentages) Other income (expense), net ​ $ 164 1.2 % $ 2,611 34.8 % $ 2,447 93.7 ​ ​ 34 Table of Contents Other income (expense), net consists of non-operating income and expenses, such as gains and losses on marketable securities, foreign currency transaction gains and losses, interest income and expense, and other non-operating income and expenses.
Net cash provided by financing activities of $4.5 million for the year ended December 31, 2021 was from our Series A Convertible Preferred Stock offering in which we raised gross offering proceeds of $5.0 million before reductions for selling commissions and costs. 31 Table of Contents Transactions with Related Parties For a discussion of transactions with related parties, see Note 12, Related Party Transactions , of the notes to the consolidated financial statements, and Item 13, Certain Relationships and Related Transactions, and Director Independence , appearing elsewhere in this Annual Report on Form 10-K.
Transactions with Related Parties For a discussion of transactions with related parties, see Note 11, Related Party Transactions , of the notes to the consolidated financial statements, and Item 13, Certain Relationships and Related Transactions, and Director Independence , appearing elsewhere in this Annual Report on Form 10-K.
Industrial, medical, and environmental monitoring products generally have longer design and life-cycles than consumer products. We currently have products with life-cycles that have exceeded twenty years and are ongoing. Revenues were up in 2022 compared to 2021 in the medical market, down in the consumer market, and generally flat in the industrial and automotive markets, and for our standard products.
We currently have products with life cycles that have exceeded 20 years and are ongoing. ​ 33 Table of Contents Revenues were up in 2023 compared to 2022 to customers in all of the custom markets we sell to and also to customers of our standard products.
Through our acquisition in December 2022 of the business assets of SPEC Sensors, LLC and KWJ Engineering, Inc., early pioneers in miniaturized, low-cost gas-sensing technologies, we also offer electrochemical gas-sensing technology products and solutions for industry, community, health and home, with uses in fields such as carbon monoxide and ozone detection and air quality monitoring.
Following our acquisition of these operations, we now offer electrochemical gas-sensing technology products and solutions for industry, community, health and home, with uses in fields such as safety, personal wellness and air quality monitoring.
For the year ended December 31, 2021, the $231 thousand in net cash provided by operating activities was attributable to net loss of $734 thousand, adjusted for non-cash charges of $819 thousand, non-cash gain on forgiveness of PPP loan of $186 thousand, and cash from changes in operating assets and liabilities of $332 thousand.
For the year ended December 31, 2022, the $915,000 in net cash used in operating activities was attributable to net income of $1,672,000, adjusted for non-cash charges of $256,000, realized gains on marketable securities of $2,449,000, and cash used in changes in operating assets and liabilities of $394,000.
Other distributions may require us to incur U.S. or foreign taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate cash to fund our U.S. operations.
However, our intent is to permanently reinvest these funds outside the U.S. and our current plans do not demonstrate a need to repatriate cash. We have outstanding 200,000 shares of our 8.0% Series A Convertible Preferred Stock (the “Preferred Stock”) that have an aggregate liquidation preference of $5.0 million.
We believe this increased presence in the U.S. will allow us to grow our business and be more closely aligned with current and future large-tier customers. We also expect to launch an engineering, research and development center in the United Kingdom.
Combined with the advanced and proprietary facilities in Silicon Valley and Scotland that were acquired in connection with the acquisitions of SPEC and KWJ and Calman, we believe this will allow us to grow our business and be more closely aligned with current and future top-tier customers.
Inventories increased from $814 thousand at December 31, 2021 to $2.112 million at December 31, 2022 due primarily to the inventory acquired in the acquisition of SPEC and KWJ in December 2022; inventory balances fluctuate depending on the timing of materials purchases and product shipments.
Many of our customers pay promptly and accounts receivable is generally related to the most recent shipments. Inventories increased from $2,112,000 at December 31, 2022 to $2,476,000 at December 31, 2023 due primarily to the addition of Calman’s inventory to our consolidated balances, as well as fluctuations caused by the variability in the timing of materials purchases and product shipments.
Our board of directors commenced paying dividends on our Series A Convertible Preferred Stock in November 2021, and we expect that our board of directors will continue to declare and pay monthly cash dividends on our Series A Convertible Preferred Stock, subject to the limitations to do so under Nevada law.
Our board of directors has declared, and we have paid, cash dividends on the Preferred Stock each month since the Preferred Stock was issued in October 2021, and we expect that the board will continue to declare, and we will continue to pay, such cash dividends each month while the Preferred Stock is outstanding, subject to applicable limitations under Nevada law. ​ 35 Table of Contents We believe that our existing cash and cash equivalents balance will be sufficient to maintain our current operations considering our current financial condition, obligations, and other expected cash flows.
Removed
Interlink has been a leader in the printed electronics industry for over 35 years with the commercialization of our patented FSR® technology that has enabled rugged and reliable HMI solutions. Our solutions have focused on handheld user input, menu navigation, cursor control, and other intuitive interface technologies for the world’s top electronics manufacturers.
Added
Our force/touch sensors, including our Force-Sensing Resistor (“FSR ® ”) technology and related technologies, and our membrane keypads, graphic overlays and printed electronics, are used extensively in Human-Machine Interface (“HMI”) devices, while our gas and environmental sensors and instruments are used in environmental and air quality monitoring across a broad range of applications.
Removed
We have now shifted a majority of R&D and product development efforts to Camarillo, California, where we established a Global Product Development and Materials Science Center, and our advanced and proprietary facility in Silicon Valley.
Added
We design, develop, manufacture and sell a range of technologies that incorporate our proprietary materials technology, firmware and software into a portfolio of standard products and custom solutions. On March 1, 2024, the Board of Directors declared a 50% common stock dividend that was paid on March 22, 2024.
Removed
The increase in revenue from our medical market customers is due to an increase in orders from and shipments to our largest medical customer, whose purchasing volume has increased based on increases in installations at their hospital and medical center customer locations.
Added
For all years presented, all share and per share data have been retroactively adjusted for the effect of the 50% common stock dividend, which is accounted for as a stock split effected in the form of a stock dividend. Our principal products are: Force/Touch Sensors .
Removed
The decrease in revenue from our consumer market customers is primarily due to a design change by one of our largest consumer products customers, offset by shipments of our custom sensors to a 28 Table of Contents new customer in this market.
Added
Additionally, through our acquisition of Calman Technology Limited in March 2023, we offer customized membrane keypads, graphic overlays, printed electronics and industrial label products for use in a wide range of fields, from industrial instrumentation, process control and monitoring to medical and diagnostic devices and defense systems.
Removed
Selling, general and administrative costs for 2022 were up slightly compared to 2021. The prior year period included a $186 thousand benefit from forgiveness of the PPP loan.
Added
With over 25 years as a leading HMI provider, Calman Technology has developed to also become a specialized provider of printed electronics for the medical sector in the UK and Europe. Gas and Environmental Sensors .
Removed
In 2021, we sold 200,000 shares of our 8.0% Series A Convertible Preferred Stock at a price of $25.00 per share for gross proceeds to us of $5.0 million before placement agent fees and transaction expenses. Each share of Series A Preferred Stock is convertible into two shares of our common stock.
Added
We entered the gas and environmental sensing market in 2022 through our acquisition of the business assets of SPEC Sensors, LLC (“SPEC”) and KWJ Engineering, Inc. (“KWJ”), early pioneers in miniaturized, low-cost gas and environmental sensing technologies.
Removed
We believe that our existing cash and cash equivalents balance will be sufficient to maintain our current operations considering our current financial condition, obligations, and other expected cash flows. If our circumstances change, however, we may require additional cash. If we require additional cash, we may attempt to raise additional capital through equity, equity-linked or debt financing arrangements.
Added
Industrial, medical, and environmental monitoring products generally have longer design and life cycles than consumer products.
Removed
Net cash used in investing activities of $159 thousand for the year ended December 31, 2021 consisted primarily of capital expenditures related to completion of the Global Product Development and Materials Science Center in our Camarillo footprint.
Added
The increase in revenue from customers in all markets is due primarily to the inclusion of sales by the SPEC and KWJ businesses and by Calman, acquired in December 2022 and March 2023, respectively, and also to increased shipments of our existing force-sensing products and solutions resulting from increased customer demand.
Removed
Inventory write-downs, once established, are not reversed until the related inventories have been sold or scrapped.
Added
Additional changes to the tax system in the U.S. could have significant effects (which we cannot predict to be net positive or net negative) on our effective tax rate and on our deferred tax assets and liabilities.
Added
Net Cash Provided By (Used In) Investing Activities Net cash used in investing activities of $4,885,000 for the year ended December 31, 2023 consisted of $4,873,000 used to acquire the equity interests of Calman (which was net of $1,577,000 of cash acquired), $111,000 received from the purchase price escrow for the acquisition of SPEC and KWJ upon finalization of the purchase price (which was in excess of the $56,000 previously anticipated to have been recovered), and $123,000 of cash used for purchases of property and equipment.
Added
Accounts Receivable and Allowance for Credit Losses Accounts receivable are recorded at the invoice amount and presented net of the allowance for credit losses. They do not bear interest.

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