Interlink Electronics Reports 2008 Fourth Quarter and Fiscal Year Financial Results

Interlink Electronics, Inc. (OTC: LINK), a worldwide provider of intuitive interface components and solutions, today announced results for the quarter and fiscal year ended December 31, 2008.

Interlink reported total revenues for the fiscal year ended December 31, 2008 of $25.6 million, up 33 percent from $19.3 million in the same period in 2007. Gross profit increased to $10.2 million, or 40% of revenues for the 2008 fiscal year from $5.8 million, or 30% or revenues for the 2007 fiscal year. The company’s operating loss was $4.5 million for the 2008 fiscal year compared to an operating loss of $8.5 million for the 2007 fiscal year. These results include charges for share-based compensation of $655,000 and $2,242,000 in the 2008 and 2007 fiscal years, respectively. Interlink’s net loss for the year ended December 31, 2008 was $3.3 million, with a basic and diluted loss per share of ($0.24), compared to a net loss of $5.7 million, with a basic and diluted loss per share of ($0.41), for the year ended December 31, 2007. The 2007 fiscal year numbers include a $5.9 million gain, or earnings per share of $0.43, from the sale of assets.

Interlink reported total fourth quarter revenues of $5.9 million, down 11 percent from $6.7 million in the fourth quarter of 2007. However, gross profit increased to $2.0 million from $1.6 million in the same quarter last year. Interlink’s operating loss for the fourth quarter of 2008 was $818,000, compared to a $2.2 million operating loss in the fourth quarter of 2007. These results include charges (reductions) for share-based compensation of ($336,000) and $471,000 in the fourth quarters of 2008 and 2007, respectively. Interlink’s net loss in the fourth quarter of 2008 was $802,000, with a basic and diluted loss per share of ($0.06), compared to a net loss of $2.6 million with a basic and diluted loss per share of ($0.19) in the same quarter last year.

“In 2008 we saw revenue growth, improved gross margins and reduced operating losses when compared to 2007,” stated Kevin Wiley, Interlink Chief Executive Officer. “We continue to look at ways to increase our value, be it by better aligning costs with revenues or through various strategic alternatives. We are still taking hard looks at the cost structures of our eTransactions and Specialty Components business segments and will make adjustments where necessary,” said Mr. Wiley.

“Currently, while we are no longer required to make filings in accordance with SEC regulations, we intend to continue to keep our shareholders informed of our financial results through press releases, the Pink Sheets disclosure system and/or updates on our web site at www.interlinkelectronics.com,” stated Mr. Wiley.

About Interlink Electronics, Inc.

Interlink Electronics, Inc. (OTC: LINK) is a worldwide provider of intuitive interface components and solutions. Setting tomorrow’s standards for electronic signature, e-notarization products and interface components for consumer electronics, Interlink has established itself as one of the world’s leading innovators of intuitive interface design. With more than 41 patents around the world protecting its technologies and products, Interlink Electronics serves a world-class customer-base from its corporate headquarters in Camarillo, California and offices in Japan, Hong Kong and China. For more information, see http://www.interlinkelectronics.com.

This release contains forward-looking statements that involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: historical losses and negative cash flow, the success of business divestitures and acquisitions, the ownership of the majority of our stock by a small group of investors, our success in predicting new markets and the acceptance of our new products, efficient management of our infrastructure, the pace of technological developments and industry standards evolution and their effect on our target product and market choices, the effect of outsourcing technology development, changes in the ordering patterns of our customers, a decrease in the quality and/or reliability of our products, protection of our proprietary intellectual property, competition by alternative sophisticated as well as generic products, pending litigation against Interlink, historical weaknesses in internal controls over financial accounting, the continued availability at competitive prices of raw materials for our products, disruptions in our manufacturing facilities, risks of international sales and operations including fluctuations in exchange rates, compliance with regulatory requirements applicable to our manufacturing operations, and customer concentrations. The forward-looking statements contained in this release should be considered in light of these risk factors.