Interlink Electronics Reports 2009 First Quarter Financial Results

Interlink Electronics, Inc. (Pink Sheets: LINK), a worldwide provider of intuitive interface components and solutions, today announced results for the quarter ended March 31, 2009.

The company reported total 2009 first quarter revenues of $3.2 million, down 44 percent from $5.8 million in the first quarter of 2008. Gross profit decreased to $781,000, or 24 percent of revenues, from $1.9 million, or 34 percent of revenues, in the same quarter last year. Operating expenses decreased by $1.6 million to $3.0 million from $4.6 million for the 2008 first quarter. Interlink’s operating loss was $2.3 million for the first quarter of 2009, down $400,000 from a $2.7 million operating loss in the same quarter last year. These operating results include charges for share-based compensation of $148,000 and $732,000 in the first quarters of 2009 and 2008, respectively.

The company incurred a net loss of $3.5 million for the first quarter of 2009, including $1.2 million of non operating charges, most notably an $858,000 non cash charge related to the total repayment in January 2009 of $5 million in convertible notes and unpaid interest. The company’s net loss was $2.1 million for the first quarter of 2008, consisting primarily of a net non operating and non cash gain of $714,000 related to the valuation of the same convertible notes and warrants.

“Economic conditions prevented us from maintaining our improved 2008 performance into the first quarter of this year,” said Kevin Wiley, Interlink Chief Executive Officer. “The impact was most pronounced on our eTransactions business unit, which targets the four markets most severely affected by the global economic downturn: banking, insurance, financial brokerage, and automotive. While there are some indications for improved performance later in the year, we are not expecting a significant recovery in these markets until the start of 2010.

“By moving all of our manufacturing operations to China and with reductions in headcount and other operating costs, we significantly reduced expenses to better align with our future growth,” Wiley continued. “We also repaid our $5 million convertible notes as well as all related accrued and unpaid interest, eliminating $400,000 in annual interest payments. We will continue to manage our business with the goal of improved operational performance while also evaluating any strategic alternatives.”

Wiley concluded, saying, “We are pleased to announce that effective June 1, 2009, the court approved our settlement agreements with the plaintiffs related to the class action lawsuit originated in November 2005 and the derivative action law suit originated in January 2006. The lawsuits were dismissed with prejudice and we will not face any further exposure. The settlement will be paid entirely from our directors and officers insurance that was in effect at the time of the claim.”

Effective March 30, 2009, Interlink is no longer required to make filings in accordance with SEC regulations. The Company intends to continue to keep shareholders informed of financial results through press releases, postings on the Pink Sheets disclosure system (www.pinksheets.com) under the symbol LINK, and/or updates on our web site at www.interlinkelectronics.com.

About Interlink Electronics, Inc.

Interlink Electronics, Inc. (Pink Sheets: 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.