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Item 1. Business

2024-03-25 compared with 2023-03-29 · 172 added, 133 removed, 169 unchanged (64% of the section changed)

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 .

(“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 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.

Our gas and environmental sensors and instruments are used in environmental and air quality monitoring across a broad range of applications.

Force/Touch Sensors .

We design, develop, manufacture and sell a range of force-sensing technologies that incorporate our proprietary materials technology, firmware and software into a portfolio of standard products and custom solutions.

These include sensor components, subassemblies, modules and products that support effective, efficient cursor control and novel three-dimensional user inputs.

Our Human Machine Interface (“HMI”) technology platforms are deployed in a wide range of markets including consumer electronics, automotive, industrial, and medical.

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.

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.

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.

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.

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.

We invented FSR ® technology and pioneered commercialization of printed electronics manufacturing, paving the way for industry-wide adoption of force-sensing technology.

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Force-sensing input provides a critical novel modality that drives a paradigm shift in HMI.

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.

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.

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We have had success in using our force-sensing solutions in combination with capacitive technologies to minimize the latter’s performance issues, enabling force-sensing solutions to complement competitive technologies and provide hybrid solutions and open up new opportunities for growth.

We continue to simultaneously expand our standard product portfolio and develop new technology platforms to grow existing markets and capture emerging markets.

This portfolio expansion will incorporate other complimentary sensing technologies.

This broader portfolio of technologies will allow us to use our expertise in integrating multiple sensing technologies for applications in the rapidly growing Internet-of-Things (“IoT”).

Gas-Sensing Technology .

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.

Through these divisions (collectively, “SPEC-KWJ”), we now 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.

Our SPEC-KWJ division operates three primary business activities:

At the same time, we continue to expand our standard product portfolio and develop new technology platforms to grow existing markets and capture emerging markets.

We have recently added a range of standard piezoelectric sensor products which are used as dynamic strain gauges and vibration sensors.

These sensors are thin, flexible and light-weight while also being extremely rugged and durable.

We possess deep domain knowledge about how to integrate these into custom applications and have developed machine learning and artificial intelligence to make information-rich data available to our customers for their unique and innovative applications.

Our piezoelectric sensor solutions

can be used in force-sensing, impact and vibration detection, contact microphones, air/liquid flow detection, ultrasonic transducers and many other settings.

They have applications in medical vital sign monitoring, industrial solid-state switches, structural health and condition monitoring, touch and tactile sensing and motion sensing amongst others.

This portfolio expansion will incorporate other complimentary sensing technologies and will allow us to use our expertise in integrating multiple sensing technologies for applications in the rapidly growing Internet-of-Things (“IoT”).

We have already begun integrating our force sensing technology into our recently acquired membrane keypad product line to create unique solutions not offered by others in this market.

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 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.

Our gas and environmental sensors operations focus on three primary business activities:

● Proprietary Product Lines .

We provide an extensive line of miniature, low-power, robust electrochemical sensor elements for detecting several common as well as complex gaseous compounds.

These sensors are most suited for consumer and commercial IoT applications, as well as industrial and other demanding usage scenarios.

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 .

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.

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 .

● In-House R&D .

We have been successful in obtaining Small Business Innovation Research (“SBIR”) grants from government agencies such as the NIH, the USDA, the NSF and the EPA that have enabled us to conduct research and development and develop new products.

For example, SPEC’s Screen Printed Electrochemical Sensor technology was developed in part under NSF Phase I, II and IIB grants.

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 .

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 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.

On a worldwide basis, green initiatives and accompanying government mandates are driving demand for facilities monitoring, especially in the energy space where regulations targeting fugitive gas emissions will require expanded detection efforts.

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.

Our team of in-house scientists has an established track record in winning awards for this advanced research and we continue to submit proposals for funding for strategically relevant research projects that we could commercialize in the future.

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.

Similarly, environmental regulations increasingly target fugitive gas emissions in the oil and gas (energy) space, where monitoring has become mandatory.

Additionally, government and consumer demand for air quality information and pollution monitoring represent a significant opportunity for high performance, low-cost sensors and IoT devices as part of smart cities and smart homes.

New applications in breath analysis and transdermal detection are also expected to create new opportunities in medical, commercial and consumer markets.

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.

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.

Interlink serves our world-wide customer base from our corporate headquarters in Irvine, California (Orange County area), from our facility in Camarillo, California (Ventura County), and from the SPEC-KWJ facility in Newark, California (Silicon Valley area).

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.

The growth of the hydrogen economy is expected to create a large need for hydrogen sensors that are low-cost, low-power and widely distributed, and our hydrogen sensor solutions are ideally suited to exploit this growing market.

New applications in breath analysis and transdermal detection are also expected to create new opportunities in medical, law enforcement, commercial and consumer markets.

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 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.

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 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.

The SPEC-KWJ engineering team is located at the Newark facility.

We also maintain a small embedded software and IoT application development center in Singapore, and we expect to launch an engineering, research and development center in the United Kingdom.

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.

The gas and environmental technology engineering team is located at the Newark facility.

We also maintain a focused, embedded software and IoT application development center in Singapore.

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.

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.

Our customers are some of the world’s largest companies and most recognizable brands.

We were incorporated in California in 1985.

In 1996, we re-incorporated into a Delaware corporation and, in 2012, we again changed our domicile from Delaware to Nevada by completing a merger with a newly formed Nevada corporation named Interlink Electronics, Inc.

Our principal executive office is located at 1 Jenner, Suite 200, Irvine, California 92618 and our telephone number is (805) 484-8855.

Our principal executive office is located at 15707 Rockfield Boulevard, Suite 105, Irvine, California 92618 and our telephone number is (805) 484-8855.

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 prepared.

Force-Sensing and HMI .

Force/Touch Sensors .

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.

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.

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.

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.

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 touch pads and gesture-driven input.

rather, they expect smooth touchpads and gesture-driven input.

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.

Since then, they have become functionally denser with more switches per square inch and the integration of other interface features such as visual feedback via integrated LEDs and electro-luminescent light material.

This has largely been driven by the incorporation of membrane keypads in hand-held devices where space is at a premium.

Shifting more functionality to the slim keypad interface and away from the printed circuit boards on a device provides improved functionality and space saving benefits at a lower cost.

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.

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.

As reported by industry analyst group IDTechEx, printed force sensors alone already account for approximately 30% of printed sensor market share, and by 2025, the projected market for all printed sensor components is expected to surpass $8 billion.

According to the IDTechEx study Printed, Organic and Flexible Electronics 2020-2030:

Forecasts, Technologies, Markets , the total market for printed, flexible, and organic electronics will grow from $41.2 billion in 2020 to $74 billion in 2030.

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.

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.

As a member of OE-A, the Organic and Printed Electronics Association, we actively influence and contribute to the global landscape of printed electronics.

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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 .

Gas and Environmental Sensors 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.

Johnson also started what is widely recognized as the first electronics company in Silicon Valley, J-W Instruments, to commercialize the technology.

The market has consistently demanded innovations making gas sensors smaller and more portable, and KWJ-SPEC and its predecessors have been on the forefront;

Johnson also started what

is widely recognized as the first electronics company in Silicon Valley to commercialize the technology, J-W Instruments.

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.

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.

The gas-detection industry has traditionally revolved around safety applications in hazardous environments, from oil and gas facilities to coal mines and other confined spaces where toxic and combustible gases could cause catastrophic losses.

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.

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.

SPEC’s screen-printed sensors offer an alternative using proven electrochemical techniques with new materials and manufacturing techniques to produce sensors that offer high performance but at low cost and with a small footprint.

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.

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.

Gas sensors are a core element of many IoT applications and a critical part of the vision of a sensor-driven society where new technologies enable improved monitoring to enhance lives and protect the planet.

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.

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.

Our primary objective is to be the global leader and provider of multi-sensing based HMI technology and gas-sensing solutions for the consumer electronics, automotive, industrial automation, medical, and environmental monitoring markets.

We also intend to utilize our role as a disruptive technology provider to bring our HMI and gas-sensing solutions to new markets.

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● Expand our presence in the markets we occupy .

We will continue to exploit new opportunities in the markets we occupy by leveraging our demonstrable success in the solutions we are providing today.

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 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.

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 .

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● Pursue a multi-technology roadmap .

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.

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.

We believe there are significant opportunities to integrate our various touch and sensing technologies into one HMI platform to benefit our customers’ continually evolving needs.

These may include haptic technology to enhance the user experience of these next generation technologies.

● Pursue inorganic growth opportunities.

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.”

Similarly in our gas sensing business, we utilize electrochemical (EC), Metal Oxide (MOx), Micro Electro-Mechanical Systems (MEMS), along with electronics, software and communication technologies to deliver world-class sensing solutions for high performance applications.

● Pursue acquisition opportunities.

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.

Our product development teams are skilled in concept definition, rapid prototyping, hardware and firmware development and integration support.

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.

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.

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Our Technology Platforms and Products

Force-Sensing Technology and HMI .

Force/Touch Sensing Technology and HMI .

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.

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.

We also expect to launch an engineering, research and development center in the United Kingdom.

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.

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.

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 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 are used in the touch screens found in most smartphones 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 technology designed to mimic force-sensing.

Capacitive sensors have become a high-volume, low-margin commodity product.

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For example, in a pointing device, increased pressure can be used to produce faster cursor movement.

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.

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 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.

Thanks to our optimized manufacturing processes developed over many years, we can produce easily customized, high-margin solutions for our customers.

Our piezoelectric sensors consist of an electroactive polymer which generates an electric charge when a mechanical stress or strain is applied.

This polymer film can be as thin as 30 micrometers (less than half the thickness of a human hair).

The electric charge generated can be accumulated, collected and used with specially printed electrodes on the surface of the thin film.

The resulting transducers can be used as dynamic strain, vibration and force sensors.

The sensors are unique in that they can also be operated in reverse whereby applying an electrical charge to the sensor can cause it to bend or deform.

This deformation can be used to create polymeric actuators for haptic applications.

Finally, these sensors can also generate an electrical charge when exposed to a temperature change.

This effect is known as a pyroelectric effect.

This characteristic can be used to create passive infra-red motion sensors where the emitted heat of a body in proximity to the sensor causes a change in temperature on the sensor surface and the resulting charge can be transduced and correlated to a motion event.

These properties enable us to create thin, light-weight, and flexible dynamic strain gauges and vibration sensors.

These sensors have a very broad frequency band and are suitable for many applications.

They are extremely rugged and can be used for high impact force-sensing applications, and can also be implemented on large areas and curved surfaces.

In addition, they have high voltage sensitivity and simple interface electronics.

These transducers produce an information-rich signal, and it requires deep domain knowledge to successfully integrate these sensors.

We have developed sophisticated algorithms and firmware that allows our FSR ® and piezo sensor technology to become a complete solution delivering effective HMI functionality to our customers.

We are now also using machine learning and artificial intelligence to further enhance the user experience and provide compelling solutions for our customers.

The acquisition of Calman Technology has given us a manufacturing capability close to the UK and European markets, providing custom solutions in a broad range of sectors, including the medical and diagnostic sensor marketplace.

The integration of our force-

sensing technology into this capability is already underway and offers significant improvement in the design options available to our customers.

Our solutions fall into two categories, custom and standard:

Custom Solutions .

Interlink offers a comprehensive portfolio of standard solutions, from simple force sensors to multi-finger capable rugged trackpads.

We offer a comprehensive portfolio of standard solutions, from simple force and piezo sensors to multi-finger capable rugged trackpads.

The largest part of our business, however, is the development and manufacture of custom solutions for our major customers.

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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.

In many instances, we work very closely with our original equipment manufacturer (“OEM”) partners from the concept phase to ensure that our solutions are successfully integrated.

Standard Solutions .

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We also offer a ring sensor for full 360-degree position sensing.

These sensors are designed to be integrated into a device’s host processor without the need for a dedicated microprocessor.

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.

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The modules use FSR ® technology and measurement firmware in a four-zone sensor or 4-wire resistive touchpad configuration along with a micro-controller to provide pressure sensitive cursor direction and speed control in a durable and easy to integrate form factor.

● Piezoelectric sensors are an upcoming addition to our standard sensor portfolio.

After highly successful custom implementation in automotive applications, we have developed a set of standard piezo sensors and development kit.

● After initial product development activity in the area of piezoelectric film sensors consisting of a highly successful custom implementation in automotive applications, we now have a set of standard piezo sensors as well as a development kit available for our customers to evaluate and test the capabilities and potential of this sensor solution.

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.

We believe our expertise in this area will allow us to be a trusted advisor to help our customers develop specialized solutions and solve their integration challenges.

Gas-Sensing Technology .

Our gas-sensing products and technologies are based on developing smaller, low-power, low-cost solutions to challenging applications in gas sensing.

We combine a long history and deep domain knowledge with cutting-edge sensor technology and advanced instrumentation to make reliable products that also enable new applications for wireless and wearable gas sensing.

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 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.

Gas-sensor technologies are diverse and fragmented with devices and sensors focused on specific solitions and applications.

Our expertise in this area allows us to create high-margin custom solutions and be a trusted advisor to help our customers develop specialized solutions and solve their integration challenges.

Gas and Environmental Sensors Technology .

Our gas and environmental sensing products and technologies are based on developing smaller, low-power, low-cost solutions to challenging applications in gas and environmental sensing.

Through our acquisitions of SPEC and KWJ, we combine a long history and deep domain knowledge with cutting-edge sensor technology and advanced instrumentation to make reliable products that also enable new applications for wireless and wearable gas sensing.

Our engineering team includes five PhDs 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 in Newark, California, and our capabilities include proprietary high-volume electrochemical sensor manufacturing, device assembly and calibration, and advanced test and measurement capabilities.

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.

Gas and environmental sensor technologies are diverse and fragmented with devices and sensors focused on specific solutions and applications.

Electrochemical gas sensors are typically more sensitive and selective to particular gases and are inherently low power to operate.

They are also typically very large, expensive and prone to short lifespans in the field.

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.

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.

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.

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.

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● 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 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.

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.

Additionally, we offer sensors for H2S, Ozone, NO2, SO2, Ethanol and VOC’s, as well as new sensors for hydrogen and low-level outdoor CO.

We also sell gas-sensor modules that incorporate operating electronics and signal processing to deliver compensated PPM output off the shelf.

Designed to meet the requirements of the U.S.

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 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.

Additionally, we offer sensors for hydrogen sulfide, ozone, nitrogen dioxide, sulfur dioxide, ethanol, hydrogen, formaldehyde, ethylene, and volatile organic compounds (VOCs) among others.

We also sell gas-sensor modules that incorporate operating electronics and signal processing to deliver compensated parts per million (PPM) output off the shelf.

Intellectual Property

We believe that intellectual property protection is crucial to our business.

We rely on a combination of patents, copyrights, trade secrets, trademarks, nondisclosure agreements with employees and third parties, licensing and other contractual agreements with third parties to protect our intellectual property.

We believe that intellectual property protection is crucial to our business and to this end we rely on a combination of patents, copyrights, trade secrets, trademarks, nondisclosure agreements with employees and third parties, and licensing and other contractual agreements with third parties.

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 human interface devices.

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.

We implement a ring-fencing strategy of patenting core technology platforms related to sensors, sensing systems and HMI devices.

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.

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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.

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.

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.

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.

We believe this expertise is difficult to replicate over the short term and, to our

knowledge, no unrelated party has done so.

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.

As of December 31, 2022, we held twenty-four (24) patents, and had sixteen (16) patents pending.

As of December 31, 2023, we held twenty-four (24) patents and had fourteen (14) patents pending.

We group our patents into three general categories:

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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.

and HMI devices, which includes eleven (11) patents expiring between 2024 and 2036.

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.

This will be enabled by emerging ultra low-power wireless technologies including WiFi, BLE, LoRaWAN®, as well as cellular technologies such as LTE-M and NB-IoT.

The markets for our products, both in force-sensing/HMI and gas-sensing, are highly competitive and subject to rapid advancement in design technology.

For example, our sensor fusion platform enables the capture of multi-sensing data, and using it in combination with haptics and wireless technology to transmit the data enables unique and innovative sensor applications.

This will be further enabled by emerging advances in ultra-low-power wireless technologies including WiFi, BLE, LoRaWAN ® , as well as cellular technologies such as LTE-M and NB-IoT.

The markets for our products, both in force/touch-sensing and gas/environmental-sensing, are highly competitive and subject to rapid advancement in design technology.

We must identify and capture future market opportunities by developing and deploying value-added products.

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Our ability to compete is dependent on the needs of our customers, how well our products address those needs, our corporate relationships, and a variety of other factors.

In force-sensing/HMI, we offer a disruptive technology that is replacing outdated and undesirable approaches including switch technology.

In force/touch-sensing, we offer a disruptive technology that is replacing outdated and increasingly unpopular approaches including switch technology.

We often must convince companies to abandon older, proven but less elegant technologies and adopt our solutions.

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Our hybrid sensor fusion solutions better address our customers’ unique sensing and HMI challenges.

In gas-sensing, we offer sensors that are smaller, thinner, and lower cost than most competitors that offer sensors in commoditized packages and pinouts.

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 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.

Our in-line CO monitors remain the industry standard for reliability and can garner a premium over lower cost, lower quality competitors.

Our broader toolbox of technologies, our proven track record, our collaborative design approach and our technical and engineering expertise significantly differentiate us from our competitors.

In gas and environmental sensing, we offer sensors that are smaller, thinner, and lower-cost than those sold by most of our competitors, who generally offer sensors in commoditized packages and standard connection pinouts.

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.

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 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.

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 work directly with large multi-national companies, small start-up companies, technology design houses and original equipment manufacturers (“OEMs”).

We work directly with large multinational companies, small start-up companies, technology design houses and OEMs.

Our sales personnel have extensive engineering backgrounds and receive substantial support from our internal engineering resources.

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We interact with our customers throughout the product development and order process.

We maintain sales offices in the United States and Japan.

We primarily utilize Digi-Key Electronics, based in Thief River Falls, Minnesota, as a global, full-service distributor of our standard products.

In addition to Digi-Key Electronics, we distribute gas-detection instruments through Grainger, Cole Parmer and other worldwide distributors, and we have representative companies located in key markets so we can provide local support to strategic customers in these regions.

Due to the technical nature of our products, the length of our sales cycle can vary from a few months to several years and requires continued participation from our sales, engineering and management teams.

We conduct our sales activities from the U.S., Japan, China, and the United Kingdom.

We use worldwide distributors, primarily Digi-Key Electronics, for full-service distribution of our

standard products, and we have representative companies located in key markets so we can provide local support to strategic customers in these regions.

Due to the technical nature of our products, the length of our sales cycle can vary from a few months to several years, which requires continued participation from our sales, engineering and management teams.

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.

● 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.

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.

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.

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.

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

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Our customers include many of the world’s leading electronics companies.

They encompass large multi-national organizations as well as start-ups, design houses, original design manufacturers, OEMs and universities.

They encompass large multinational 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.

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Sales to customers located outside the United States have historically accounted for a significant percentage of our revenues, and we expect this to continue.

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.

Future sales of our products will be based on, among other elements, expansion into adjacent markets, continued expansion of our product line, the acceptance of our product line, expansion into additional domestic and international markets, and our ability to maintain a competitive position against other technology providers.

For the year ended December 31, 2022, we had three customers that represented 24.9%, 17.8% and 9.3% of net revenues, respectively, and have been customers of ours for over 30 years, over 10 years, and over 10 years, respectively.

These same three customers represented 14.7%, 9.4%, and 14.7% of net revenues for the year ended December 31, 2021.

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.

For the year ended December 31, 2023, we had three customers that each represented over 10% of our net revenues, compared to two in 2022.

Future sales of our products will be based on, among other factors, expansion into adjacent markets, continued expansion of our product line, the acceptance of our product line, expansion into additional domestic and international markets, and our ability to maintain a competitive position against other technology providers.

Manufacturing Operations and Principal Suppliers

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We plan to start the process of acquiring IATF 16949 certification as our automotive customer base expands.

We also conduct manufacturing operations in our approximately 10,635 square-foot production facility in Newark, California and our approximately 9,800 square-foot manufacturing facility in Irvine, Scotland.

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 all of our suppliers to ensure that conflict minerals are eliminated from our supply chain.

We also monitor our suppliers as part of our efforts to eliminate conflict minerals 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 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.

Many of our products are subject to qualification testing and approval by our customers, which includes approval of the materials used in a customer’s product.

We actively monitor these suppliers, but we are subject to substantial risks associated with their performance.

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.

These single-source materials, however, are available from other suppliers, and while their procurement from other sources likely would necessitate additional approvals from our customers and might result in short-term disruption to our business, we do have options to purchase single-sourced materials from alternative suppliers should the need arise.

Engineering, Research and Development

Rapid advancements in process technologies and increasing levels of functional integration characterize the market for our products.

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.

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.

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 also maintain a core embedded software engineering team in Singapore, and we expect to launch an engineering, research and development center in the United Kingdom.

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.

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.

We maintain a core embedded software engineering team in Singapore.

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.

This team also explores opportunities to work on government funded research projects that are aligned with our technology competencies.

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What changed 10-K

Item 1. Business