Interlink Electronics Reports 2009 Second Quarter and First Half Financial Results

Interlink Electronics, Inc. (Pink Sheets: LINK), a worldwide provider of intuitive interface components and solutions, today announced results for the quarter and six months ended June 30, 2009.

The company reported second quarter revenues of $3.6 million, down 46 percent from $6.7 million in the second quarter of 2008, but up 13 percent from the first quarter of 2009. Gross profit decreased to $1.6 million, or 43 percent of revenues, from $3.1 million, or 46 percent of revenues, in the same quarter last year. Operating expenses were $2.8 million, down from $4.1 million in the 2008 second quarter. Interlink’s operating loss was $1.2 million for the second quarter of 2009, compared to a $1.0 million operating loss in the same quarter last year. These operating results include charges for share-based compensation of $144,000 and $115,000 in the second quarters of 2009 and 2008, respectively.

The company incurred a net loss of $1.3 million for the second quarter of 2009, compared to a net loss of $522,000 in the second quarter of 2008. Results in 2008 included a $622,000 benefit to Other Income related to the valuation of convertible notes and warrants outstanding at that time. Interlink reported a net loss of $3.5 million in the first quarter of 2009.

For the six month period ended June 30, 2009, the company reported revenues of $6.8 million, down 46 percent from $12.5 million in the first six months of 2008. Gross profit decreased to $2.3 million, or 34 percent of revenues, from $5.0 million, or 40 percent of revenues, in the same period last year. Operating expenses were $5.8 million for the first six months of 2009, down from $8.7 million for the first six months of 2008. Interlink’s operating loss was $3.5 million for the first six months of 2009, compared to a $3.7 million operating loss in the same period last year. These operating results include charges for share-based compensation of $291,000 and $847,000 in the six months ended June 30, 2009 and 2008, respectively.

The company incurred a net loss of $4.8 million for the first six months of 2009, compared to a net loss of $2.6 million in the first six months of 2008. Results in 2008 included a $1.6 million benefit to Other Income related to the valuation of convertible notes and warrants outstanding at that time.

“We continued to see the effects of the economy on eTransactions revenues,” said Kevin Wiley, Interlink Chief Executive Officer. “Yet our overall revenues increased sequentially from the first quarter of the year because of significant growth in our Specialty Components business segment, which should continue over the next few quarters. We also made considerable strides in reducing fixed costs throughout the organization. And with the transition of our manufacturing operations to China now complete, we expect to realize even more cost savings going forward. These changes have reduced the company’s cash requirements and better position us for growth while we continue to look at strategic alternatives.”

Effective March 30, 2009, Interlink was 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 updates on our web site at www.interlinkelectronics.com.

About Interlink Electronics, Inc.

Interlink Electronics, Inc. (OTC: LINK.PK) 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.