What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-26 compared with 2025-03-27 · 117 added, 127 removed, 620 unchanged (28% of the section changed)

65 unchanged sentences

Preferred stock, $ 0.01 par value:

1,000 shares authorized, 200 shares of Series A Convertible Preferred Stock issued and outstanding at both December 31, 2024 and 2023 ($ 5.0 million liquidation preference)

1,000 shares authorized, 0 and 200 shares of Series A Convertible Preferred Stock issued and outstanding at December 31, 2025 and 2024

Common stock, $ 0.001 par value:

18 unchanged sentences

Loss before income taxes

Income tax expense

Income tax expense (benefit)

Net loss applicable to common stockholders

20 unchanged sentences

Balance at December 31, 2023

Repurchases of common stock

Preferred stock dividends

3 unchanged sentences

Preferred stock dividends

Conversion of preferred stock to common stock

Issuance of common stock

Foreign currency translation adjustment

22 unchanged sentences

Acquisition of Conductive Transfers and Global Print Solutions

Acquisition of Calman Technology Limited, net of cash acquired

Acquisition of SPEC and KWJ, net of cash acquired

Net cash (used in) investing activities

1 unchanged sentence

Payment of dividends on preferred stock

Repurchases of common stock

Proceeds from issuance of common stock (net of offering costs of $ 86 )

Net cash (used in) financing activities

14 unchanged sentences

Interlink Electronics, Inc.

(“we”, “us”, “our”, “Interlink” or the “Company”) is a leading provider of sensors and printed electronics used extensively in Human-Machine Interface (“HMI”) devices and Internet-of-Things (“IoT”) solutions.

Our broad product and technology portfolio encompasses force, piezo-electric, rugged HMI, wearable sensors for textiles and fabrics, gas sensors, instruments, and systems.

Our blue-chip customers trust our products and solutions which span various markets, including industrial, medical, automotive, consumer, wearables, and IoT.

Our technical and engineering expertise in materials science, manufacturing, embedded electronics, firmware, and software enables us to create and deliver high-quality, cost-effective custom solutions tailored to our customers’ unique requirements.

We serve our world-wide customer base from our corporate headquarters in Fremont, California, which is also our advanced and proprietary gas sensor production and product development facility;

our Global Product Development and Materials Science Center and distribution and logistics center in Camarillo, California;

our printed-electronics manufacturing facilities in Shenzhen, China;

Irvine, Scotland;

and Barnsley, England;

our engineering, research and development center in Singapore;

our technical sales office in Japan;

our distribution and logistics center in Hong Kong;

and our administrative and executive offices in Irvine, California and Bellevue, Washington.

(“Interlink,” “we,” “us,” “our,” or the “Company”) is a leading global provider of advanced sensing technologies and printed electronics solutions that enable Human-Machine Interface (“HMI”) devices and Internet-of-Things (“IoT”) applications.

Our broad product and technology portfolio spans force and touch sensors, piezoelectric sensors, rugged HMI devices, wearable and textile-based sensors and electrochemical gas and environmental sensors, along with instruments and fully integrated systems based on our sensor technologies.

We serve global blue-chip customers and innovative emerging companies across diverse end-use markets, including medical, industrial, automotive, consumer electronics, wearables, environmental monitoring, and specialty applications.

Our technical and engineering expertise in materials science, printed electronics manufacturing, embedded electronics, and related firmware, software, and system integration allows us to deliver high-performance, cost-effective standard and custom solutions tailored to our customers’ unique requirements.

We were incorporated in California in 1985, re-incorporated in Delaware in 1996, and changed our domicile to Nevada in 2012 through a merger with a newly formed Nevada corporation named Interlink Electronics, Inc.

Our principal executive office is located at 48389 Fremont Boulevard, Suite 110, Fremont, California 94538, and our telephone number is (510) 244-0424.

Our website address is www.interlinkelectronics.com.

March 2024 Common Stock Dividend

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.

We make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports available free of charge on our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

October 2025 Common Stock Dividend

On September 24, 2025, the Board declared a 50 % common stock dividend with a record date of October 14, 2025, that was paid on October 28, 2025.

Settlement of fractional share interests was made by issuing one full share of Common Stock in lieu of a fractional share.

The stock dividend increased the number of issued and outstanding shares of Common Stock from 9,896,366 to 14,844,573 .

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.

Except as otherwise noted, all references to Common Stock, Common Stock issuable upon conversion of preferred stock, and corresponding per share information throughout this 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.

Our fiscal year is the calendar year reporting cycle beginning January 1 and ending December 31.

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and the functional currency of our United Kingdom subsidiaries is the British pound sterling.

The functional currency of our Hong Kong and Singapore subsidiaries is the United States dollar.

The functional currency of our Hong Kong subsidiary is the United States dollar.

Assets and liabilities are translated into United States dollars at the exchange rate in effect on the balance sheet date.

Revenues and expenses are translated at the average exchange rate prevailing during the respective periods.

Foreign currency transaction gains and losses are included in results of operations within other income (expense), net, for which net gains of $ 39,000 and $ 3,000 were recorded in the years ended December 31, 2024 and 2023, respectively.

Segment Reporting

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Revenue recognition is deferred until the earnings process is complete.

We (i) input orders based upon receipt of a customer purchase order, (ii) confirm pricing through the customer purchase order record, (iii) validate creditworthiness through past payment history, credit agency reports and other financial data, and (iv) recognize revenue upon shipment of goods or when risk of loss and title transfer to the buyer.

We (i) input orders based upon receipt of a customer purchase order, (ii) confirm pricing through the customer purchase order record, (iii) validate creditworthiness through past payment history, credit agency reports and other financial data, and (iv) recognize revenue when goods are shipped and title and risk of loss transfer to the customer.

All customers have warranty rights, and some customers also have explicit or implicit rights of return.

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This method reflects the pattern of transfer of control, as it aligns revenue recognition with the extent of work performed.

For the year ended December 31, 2024, the amount of revenue recognized at a point in time was approximately $ 10,867,000 , and the amount of revenue recognized over time was approximately $ 812,000 .

For the year ended December 31, 2023, the amount of revenue recognized at a point in time was approximately $ 13,604,000 , and the amount of revenue recognized over time was approximately $ 336,000 .

Revenue recognized at a point in time primarily relates to product sales.

Revenue recognized over time primarily relates to engineering service contracts and other services agreements.

The following table presents revenue recognized at a point in time and revenue recognized over time:

Year Ended December 31,

(in thousands)

Revenue recognized at a point in time

Revenue recognized over time

Total revenue

We establish reserves for future product warranty costs that are expected to be incurred pursuant to specific warranty provisions with our customers.

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We have elected to recognize compensation expense for all stock-based awards on a straight-line basis over the requisite service period for the entire award.

The amount of compensation expense recognized through the end of each reporting period is equal to the portion of the grant-date value of the awards that have vested, or for partially vested awards, the value of the portion of the award that is ultimately expected to vest for which the requisite services have been provided.

The amount of compensation expense recognized through the end of each reporting period is equal to the

portion of the grant-date value of the awards that have vested, or for partially vested awards, the value of the portion of the award that is ultimately expected to vest for which the requisite services have been provided.

The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow.

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Earnings Per Share

Basic earnings per share is computed by dividing net income (loss) applicable to common stockholders (i.e., net income (loss) adjusted for preferred stock dividends declared or accumulated) by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of diluted common shares, which includes common stock equivalents from, if applicable, and if dilutive, unexercised stock options, unvested restricted stock units, and shares issuable upon conversion of convertible preferred stock.

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Under the two-class method of determining earnings for each class of stock, we consider the dividend rights and participating rights in undistributed earnings for each class of stock.

On March 1, 2024, the Board of Directors declared a 50 % common stock dividend that was paid on March 22, 2024.

On September 24, 2025, the Company declared a 50 % common stock dividend with a record date of October 14, 2025, that was paid on October 28, 2025.

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.

1 unchanged sentence

Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate.

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term.

Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset

is amortized over the lease term.

For finance leases, interest on the lease liability and the amortization of the right-of-use asset results in front-loaded expense over the lease term.

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Cash that is reserved for a specific purpose and therefore not available for immediate or general business use is classified as restricted cash.

All of our cash, cash equivalents and restricted cash are held at major financial institutions in the United States, China,the United Kingdom, Hong Kong and Singapore.

All of our cash, cash equivalents and restricted cash are held at major financial institutions in the United States, China, the United Kingdom, and Hong Kong.

Our balances in each country were insured at the maximum limit determined by each country.

In the U.S., we had approximately $ 0 and $ 94,000 in excess of the Federal Deposit Insurance Corporation limit of $ 250,000 per depositor, per insured bank at December 31, 2024 and 2023, respectively.

In the U.S., we had no bank balances in excess of the Federal Deposit Insurance Corporation limit of $ 250,000 at December 31, 2025 and 2024.

Approximately $ 0.7 million and $ 1.3 million held in banks in China at December 31, 2025 and 2024, respectively, was not insured.

Approximately $ 420,000 and $ 1.1 million held in banks in the United Kingdom at December 31, 2024 and 2023, respectively, was not insured.

Approximately $ 0 and $ 132,000 held in banks in Singapore at December 31, 2024 and 2023, respectively, was not insured.

Approximately $ 1.4 million and $ 0.4 million held in banks in the United Kingdom at December 31, 2025 and 2024, respectively, was not insured.

Approximately $ 38,000 and $ 12,000 held in banks in Hong Kong at December 31, 2025 and 2024, respectively, was not insured.

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After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

(in thousands)

Balance, beginning of year

Provisions for expected credit losses, net of recoveries

Foreign currency exchange rate changes

Balance, end of year

Inventories are stated at the lower of cost or net realizable value (“NRV”).

9 unchanged sentences

In order to state the inventory at the lower of cost or NRV, we maintain reserves against individual stocking units Inventory reserves, once established, are not reversed until the related inventories have been sold or scrapped.

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 revenues sold in the period the revision is made.

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 revenues sold in the period the revision is made.

Property, Plant and Equipment, Net

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Recently Issued Accounting Pronouncements

We reviewed all recently issued accounting pronouncements and concluded they are not applicable or not expected to be material to our financial statements.

We reviewed all recently issued accounting pronouncements and, other than as described below, concluded they are not applicable or not expected to be material to our financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions.

The Company will adopt ASU 2023-09 in its fourth quarter of 2026 using a prospective transition method.

In November 2024, the FASB issued ASU No.

2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date , which clarified the effective date of ASU 2024-03.

ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Consolidated Statements of Operations, as well as qualitatively describe remaining amounts included in those captions.

ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses.

The Company will adopt ASU 2024-03 in its fourth quarter of 2027 using a prospective transition method.

Subsequent Events

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The following tables provide details of selected balance sheet items:

Accounts receivable, net

(in thousands)

Accounts receivable, gross

Allowance for expected credit losses

Accounts receivable, net

(in thousands)

Raw materials

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Depreciation expense totaled $ 191,000 and $ 140,000 in 2025 and 2024, respectively.

The changes in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 are as follows:

(in thousands)

Balance as of December 31, 2022

Adjustment to goodwill, acquisition price allocation of SPEC/KWJ

Goodwill acquired in acquisition of Calman

Adjustment to goodwill, foreign currency exchange rate changes

Balance as of December 31, 2023

Goodwill acquired in acquisition of Conductive Transfers and Global Print Solutions

Adjustment to goodwill, foreign currency exchange rate changes

Balance as of December 31, 2024

December 31, 2025

December 31, 2024

Intangible assets, net

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In-process research and development

accumulated amortization

Total intangible assets, net

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(in thousands)

The changes in the carrying amount of goodwill for the years ended December 31, 2025 and 2024 are as follows:

(in thousands)

Balance as of December 31, 2023

Goodwill acquired in acquisition of Conductive Transfers

Adjustment to goodwill, foreign currency exchange rate changes

Balance as of December 31, 2024

Adjustment to goodwill, acquisition price allocation of Conductive Transfers

Adjustment to goodwill, foreign currency exchange rate changes

Balance as of December 31, 2025

Accrued liabilities

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Note 3 – Acquisitions

Acquisition of Calman Technology Limited

On March 17, 2023, we acquired all of the outstanding shares in Calman Technology Limited (“Calman”), a Scotland-based designer and manufacturer of membrane keypads, graphic overlays and printed electronics, pursuant to a Share Purchase Agreement (the “Share Purchase Agreement”) by and among the Company’s wholly owned United Kingdom subsidiary, Interlink Electronics Limited, and the shareholders of Calman.

The Share Purchase Agreement contains customary representations, warranties and covenants, including non-competition covenants on the part of the sellers, who continue to be employed by Calman.

Under the terms of the Share Purchase Agreement, the purchase price was GB£ 4,127,000 (approximately $ 4,912,000 ), of which GB£ 3,627,000 (approximately $ 4,317,000 ) was paid at closing and the remaining GB£ 500,000 (approximately $ 595,000 ) was held back against potential claims for breaches of representations and warranties (subject to certain deductibles and caps) and was paid to the sellers in December 2023.

The purchase price was subject to adjustment based on the extent, if any, to which Calman’s net working capital at closing was more or less than GB£ 600,000 (approximately $ 714,000 ), which resulted in additional purchase consideration of approximately GB£ 1,292,000 (approximately $ 1,538,000 ).

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands).

Accounts receivable

Prepaid expenses and other current assets

Property, plant, and equipment

Right-of-use assets

Accounts payable and accrued liabilities

Lease liabilities

Net identifiable tangible assets acquired

Developed technology

Tradenames and trademarks

Customer relationships

Non-compete agreements

Deferred tax liabilities

Net assets acquired

The fair value of accounts receivable is equal to the $ 656,000 gross contractual amount, as we expect the entire balance to be collectible.

The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Calman.

The goodwill is not expected to be deductible for income tax purposes.

Acquisition of Conductive Transfers

On December 20, 2024, we acquired substantially all of the operating assets of Conductive Transfers Limited and Global Print Solutions Limited (collectively, “Conductive Transfers”), an England-based designer and manufacturer of wearables and smart textiles, conductive ink, and other printed electronics, pursuant to an Asset Sale Agreement (the “Asset Purchase Agreement”) by and among the Company’s wholly owned United Kingdom subsidiary, Conductive Transfers International Limited, and Conductive Transfers.

On December 20, 2024, we acquired substantially all of the operating assets of Conductive Transfers Limited and its affiliate Global Print Solutions Limited (collectively, “Conductive Transfers”), England-based designers and manufacturers of wearables and smart textiles, conductive ink, and other printed electronics.

This acquisition was effected pursuant to an Asset Sale Agreement (the “Asset Purchase Agreement”) by and among the Company’s wholly owned United Kingdom subsidiary, Conductive Transfers International Limited, and Conductive Transfers.

Under the terms of the Asset Purchase Agreement, the purchase price was GB£ 250,000 (approximately $ 314,000 ) which was paid to the sellers in cash on the acquisition date.

The following table summarizes the estimated fair values of the assets acquired at the acquisition date (in thousands).

We are in the process of identifying and measuring the fair value of certain property and equipment assets and intangible assets, thus the provisional measurements of these assests and goodwill are subject to change.

The following table summarizes the fair values of the assets acquired at the acquisition date (in thousands).

Property and equipment

Net identifiable tangible assets acquired

Developed technology

Net assets acquired

The goodwill recognized is attributable primarily to expected synergies and the assembled workforce of Conductive Transfers.

The goodwill is expected to be deductible for income tax purposes.

The following represents pro forma consolidated statement of operations information as if both Calman and Conductive Transfers had been included in our consolidated results for the full fiscal years ended December 31, 2024 and 2023 (unaudited):

The following represents pro forma consolidated statement of operations information as if Conductive Transfers had been included in our consolidated results for the full fiscal years ended December 31, 2025 and 2024 (unaudited):

Year Ended December 31,

(in thousands)

Net income (loss)

Note 4 – Series A Convertible Preferred Stock

1 unchanged sentence

After payment of placement agent cash fees and expenses of the offering, the Company received net proceeds of approximately $ 4.6 million.

Holders of the Series A Convertible Preferred Stock generally have no voting rights.

Dividends on the Series A Convertible Preferred Stock accrue daily and are payable monthly in arrears on the 15th day of the calendar month, at the rate of 8.0 % per annum of its liquidation preference, which is the equivalent to $ 2.00 per annum per share.

Each share of Series A Convertible Preferred Stock is convertible into shares of the Company’s common stock at a conversion price of $ 8.33 per common share, or three shares of common stock, at any time at the option of the holder, subject to certain customary adjustments.

Holders of Series A Convertible Preferred Stock do not participate in common stock dividends, but such common stock dividends if and when declared would reduce the conversion price at which shares of Series A Convertible Preferred Stock would convert into common stock.

The Company may elect to automatically convert some or all of the Series A Convertible Preferred Stock into shares of common stock at any time on or after April 22, 2022 if the closing price of the common stock equals or exceeds $ 10.00 ( 120 % of the initial conversion price) for at least 20 out of 30 consecutive trading days ending within five trading days prior to the notice of automatic conversion.

The Company may redeem, at the Company’s option, the Series A Convertible Preferred Stock, in whole or in part, at a cash redemption price of $ 27.50 plus accrued and unpaid dividends beginning April 22, 2022 through October 21, 2023, at a cash redemption price of $ 28.125 plus accrued and unpaid dividends beginning October 22, 2023 through October 21, 2024, and, at a cash redemption price of $ 28.75 plus accrued and unpaid dividends beginning October 22, 2024.

If the Company exercises the foregoing redemption right, holders of the Series A Convertible Preferred Stock will have the right to convert such shares into shares of common stock at the conversion price until the redemption date specified in the redemption notice delivered by the Company.

The Company entered into a registration rights agreement with the investors pursuant to which the Company agreed to register for resale by the investors the shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock.

The registration statement was filed on December 10, 2021, and was declared effective on December 21, 2021.

On October 15, 2025, with the closing price of the Company’s Common Stock having equaled or exceeded $ 6.67 ( 120 % of the initial conversion price of $ 5.56 , as adjusted for stock splits since the issuance) for at least 20 out of the prior 30 consecutive trading days, the Company converted all 200,000 shares of Series A Convertible Preferred Stock into 900,000 shares of Common Stock as permitted by the certificate of designations of the preferred stock.

Note 5 – Stock-Based Compensation

Under the terms of our 2016 Omnibus Incentive Plan, directors, officers and key employees could be granted restricted stock units and stock awards, as well as non-qualified or incentive stock options, at the discretion of the compensation committee of the Board of Directors.

All stock-based payments to directors and employees, including grants of stock options and stock purchase rights, are recognized in the financial statements based on their respective grant-date (measurement date) fair values.

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The benefits of tax deductions in excess of recognized compensation cost are reported as a financing cash flow.

The stock-based compensation expense recorded in the years ended December 31, 2024 and 2023 is comprised of $ 15,000 in each of 2024 and 2023 for shares of common stock issued to members of the Board of Directors as partial compensation for their service as a director, and approximately $ 19,000 in 2024 for the restricted stock units described below.

In May 2024, the compensation committee of the Company’s Board of Directors approved the Company’s grant of 31,250 restricted stock units to certain employees under the Interlink Electronics, Inc.

The $ 43,000 and $ 34,000 of stock-based compensation expense recorded in the years ended December 31, 2025 and 2024, respectively, is comprised of $ 15,000 in each of 2025 and 2024 for shares of Common Stock issued to members of the Board as partial compensation for their service as a director, and $ 28,000 in 2025 and $ 19,000 in 2024 for the restricted stock units described below.

In May 2024, the compensation committee of the Board approved the Company’s grant of 46,875 restricted stock units to certain employees under the Interlink Electronics, Inc.

2016 Omnibus Incentive Plan.

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Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period, plus the dilutive effect of any dilutive securities.

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.

The effect of this stock dividend (which is accounted for as a stock split effected in the form of a stock dividend) has been applied retroactively to weighted average common shares outstanding, earnings per share, and the conversion rate and conversion price applicable for our Series A Convertible Preferred Stock, as if the 50 % common stock dividend had occurred at the beginning of the earliest period presented.

On September 24, 2025, the Company declared a 50 % common stock dividend that was paid on October 28, 2025.

The effect of this stock dividend (which is accounted for as a stock split effected in the form of a stock dividend) has been applied retroactively to weighted average common shares outstanding and earnings per share, as if the 50 % common stock dividend had occurred at the beginning of the earliest period presented.

The following table sets forth the computation of basic and diluted earnings per share:

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Shares subject to restricted stock units excluded from calculation because their effect would be anti-dilutive

200,000 shares of Series A Convertible Preferred Stock convertible into 600,000 shares of common stock were outstanding but were not included in the computation of diluted earnings (loss) per share because the effect of their conversion would be anti-dilutive due to the net losses and/or due to the $ 8.33 conversion price being higher than the average market price of the common stock.

restricted stock units (relating to the same number of shares of common stock) were outstanding for 2024 but were not included in the computation of diluted earnings (loss) per share for 2024 because their effect would be anti-dilutive due to the net losses.

For 2024, 200,000 shares of Series A Convertible Preferred Stock convertible into 900,000 shares of Common Stock were outstanding but were not included in the computation of diluted earnings (loss) per share because the effect of their conversion would have been anti-dilutive due to the net losses;

for 2025, they are not included because the preferred shares were converted to common shares in October 2025.

For both years, 46,875 restricted stock units (relating to the same number of shares of Common Stock) were outstanding but were not included in the computation of diluted earnings (loss) per share because their effect would be anti-dilutive due to the net losses.

Note 7 – Income Taxes

Under GAAP, we use the asset and liability method of accounting for income taxes.

The Company accounts for income taxes using the asset and liability method under U.S.

Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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Income (loss) before income taxes:

Income tax provision consists of the following for the years ended December 31, 2024 and 2023:

Income tax provision (benefit) consists of the following for the years ended December 31, 2025 and 2024:

Year Ended December 31,

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Total deferred

Total income tax provision

Total income tax provision (benefit)

A reconciliation of the income tax provision (benefit) by applying the statutory United States federal income tax rate to income (loss) before income taxes is as follows:

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Change in valuation allowance

Income tax provision

Income tax provision (benefit)

Deferred tax assets and liabilities are recognized for future tax consequences between the carrying amounts of assets and liabilities and their respective tax basis using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse.

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Net operating losses

The federal and state NOLs expire at various dates between 2025 through 2031.

Foreign NOLs are related to the jurisdiction of Hong Kong and may be carried forward indefinitely.

The federal and state NOLs expire at various dates through 2045.

Foreign NOLs are related to the jurisdictions of China (expiring at various dates through 2031) and Hong Kong (no expiration).

During the year ended December 31, 2025, the Company’s $ 126,000 of income tax payments consisted of $ 5,000 in California and $ 124,000 in the United Kingdom, offset by refunds of $ 3,000 in the United States.

During the year ended December 31, 2024, the Company’s $ 384,000 of income tax payments consisted of 12,000 in the United States, $ 1,000 in California, $ 17,000 in China, $ 1,000 in Singapore, and $ 353,000 in the United Kingdom.

The Company experienced an ownership change under IRC Section 382 in February 2010.

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Because the Company maintained a full valuation allowance against these deferred tax assets, this write-off had no impact on tax expense.

At December 31, 2024, the gross NOLs without regard to this

permanent write-off is $ 29.7 million for federal and $ 13.7 million for state.

At December 31, 2025, the gross NOLs without regard to this permanent write-off is $ 3.5 million for federal, $ 4.1 million for state, and $ 0.5 million for foreign.

A roll-forward of the NOLs for which deferred tax assets are recorded is as follows:

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At December 31, 2025, one customer accounted for 23 % of total accounts receivable.

At December 31, 2023, two customers accounted for 35 % and 16 % of total accounts receivable.

Our allowance for credit losses was $ 0 at both December 31, 2024 and 2023.

At December 31, 2024, one customer accounted for 41 % of total accounts receivable.

Our long-lived assets were geographically located as follows:

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(OTCMKTS:BKFG) which he controls, has a controlling interest in both Interlink and Qualstar.

We have a facilities agreement with Qualstar to allow Qualstar to use a portion of our Irvine, California and Bellevue, Washington office facilities, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

Qualstar also has a facilities agreement with us to allow us to use of a portion of its Camarillo, California office and warehouse facility, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

In addition, we have various consulting agreements with Qualstar for certain of our respective employees and/or independent contractors that provide certain operational, sales, marketing, general and administrative services to the other entity.

We have a mutual facilities sharing agreement with Qualstar under which Qualstar allows us to use of a portion of its Camarillo, California office and warehouse facility, and we previously allowed Qualstar to use a portion of our former Irvine, California and Bellevue, Washington office facilities, in each case splitting substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

In addition, we have a mutual consulting agreement with Qualstar under which certain of our respective employees and/or independent contractors provide certain operational, sales, marketing, general and administrative services to the other entity.

Interlink and Qualstar also agree to reimburse, or be reimbursed by, one another for expenses paid by one company on behalf of the other.

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Bronson, together with BKF Capital, has a controlling interest in Interlink.

We have a facilities agreement with BKF Capital to allow BKF Capital to use a portion of our Irvine, California office facility, for which we have agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

In addition, we have consulting agreements with BKF Capital for certain of our respective employees and/or independent contractors that provide certain operational and general and administrative services to the other entity.

We have a facilities agreement with BKF Capital to allow BKF Capital to previously use a portion of our former Irvine, California office facility, for which we agreed to split substantially all rent and lease-related costs on an apportioned basis according to the approximate relative usage levels by each entity.

In 2021, we entered into a M&A advisory consulting services agreement with Bronson Financial LLC (“BF”), a wholly owned subsidiary of BKF Capital, pursuant to which BF provided M&A advisory consulting services to us.

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We lease facilities under non-cancellable operating leases.

The leases expire at various dates through fiscal 2024 and frequently include renewal provisions for varying periods of time, provisions which require us to pay taxes, insurance and maintenance costs, and provisions for minimum rent increases.

The leases expire at various dates through 2029 and frequently include renewal provisions for varying periods of time, provisions which require us to pay taxes, insurance and maintenance costs, and provisions for minimum rent increases.

Minimum leases payments, including scheduled rent increases are recognized as rent expenses on a straight-line basis over the term of the lease.

The rate implicit in each lease is not readily determinable, and we therefore use our incremental borrowing rate to determine the present value of the lease payments.

The weighted average incremental borrowing rate used to determine the initial value of right-of-use (“ROU”) assets and lease liabilities capitalized during the years ended December 31, 2024 and 2023 was 9.50 % and 5.50 %, respectively.

ROU assets for operating leases are periodically reduced by impairment losses.

We use the long-lived assets impairment guidance in ASC Subtopic 360-10, Property, Plant and Equipment – Overall , to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize.

As of December 31, 2024, we have not recognized any impairment losses for our ROU assets.

The weighted average incremental borrowing rate used to determine the initial value of right-of-use (“ROU”) assets and lease liabilities capitalized during both of the years ended December 31, 2025 and 2024 was 9.50 %.

ROU assets for operating leases are periodically assessed for impairment.

We have not recognized any impairment losses for our ROU assets.

We monitor for events or changes in circumstances that require a reassessment of our leases.

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In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in profit or loss.

In June 2023, we entered into a lease agreement to lease 1,560 square feet of office space in Irvine, California for approximately $ 4,000 per month for a term commencing June 2023 and ending May 2024.

In March 2024 we extended the term of this lease through May 2025 for the same approximately $ 4,000 per-month rental fee, and in March 2025 we extended the term of this lease through December 31, 2025 for the same approximately $ 4,000 per-month rental fee.

Our Irvine, California office is used for executive offices, sales, finance and administration.

We previously occupied a 4,351 square-foot office space in Irvine, California from June 2020 to May 2023 under a sublease agreement for approximately $ 6,000 per month, plus common area maintenance costs.

In April 2024, we entered into a sublease agreement to sublease 2,480 square feet of office space in Bellevue, Washington for approximately $ 9,000 per month for a term commencing July 2024 and ending October 2027.

Our Bellevue, Washington office is used for executive offices, sales and administration.

In May 2024, we entered into a lease agreement for a 5,183 square-foot manufacturing facility and administrative offices located in Fremont, California.

The lease term is five years and three months , with monthly base rent of approximately $ 11,000 , subject to annual increases of 3.5 %.

In addition to base rent, we are responsible for our proportionate share of common area operating expenses.

We previously leased a 10,635 square - foot manufacturing facility located in Newark, California, which had a monthly rent of approximately $ 19,000 .

We vacated the Newark facility in December 2024.

In June 2023, we entered into a lease agreement for a 1,560 square-foot administrative office in Irvine, California for approximately $ 4,000 per month for a term commencing June 2023 and ending May 2024.

In March 2024 we extended the term of this lease through May 2025, and in March 2025 we again extended the term through December 31, 2025.

We vacated this facility in December 2025.

In April 2024, we entered into a lease agreement for a 2,480 square-foot administrative office in Bellevue, Washington, at a monthly rent of approximately $ 9,000 .

This lease term began in July 2024 and ends in October 2027.

In March 2025, we entered into a sublease agreement with a third party for the same office space at a monthly rate of approximately $ 10,000 .

In accordance with the terms of our lease agreement, a portion of the premium of the sublease rent over our base rent is shared with the landlord.

The sublease term began in March 2025 and also ends in October 2027.

We lease a 14,476 square-foot manufacturing facility and administrative office in Shenzhen, China.

In May 2024, we renewed this lease for the period June 2024 through May 2026 for approximately $ 8,000 per month.

In May 2024, we also leased an additional 7,287 square-foot manufacturing facility in Shenzhen, China for the same June 2024 through May 2026 period for approximately $ 3,000 per month.

We lease a 10,635 square-foot manufacturing facility and administrative offices in Newark, California.

In February 2024, we renewed this lease for the period March 2024 through February 2025 for approximately $ 19,000 per month.

In March 2024, we entered into a new lease for a 5,183 square-foot facility in Fremont, California for a five-year and three-month period commencing May 1, 2024 for $ 10,625 per month, escalating 3.5 % annually, plus a share of common area operating expenses.

In May 2024, we also leased an additional 7,287 square-foot manufacturing facility in Shenzhen, China for the same two-year period for approximately $ 3,000 per month.

In June 2025, we modified the lease on this additional facility, reducing the footprint to 1,292 square-feet, reducing the monthly rent to approximately $ 1,000 , and extending the term to June 2027.

We lease a 9,800 square-foot manufacturing facility and administrative offices in Irvine, Scotland for approximately $ 5,000 per month.

This lease term ends February 2028.

We use a 10,786 square-foot manufacturing facility and administrative offices in Barnsley, England subject to a temporary premise license agreement for the period from January 2025 to June 2025 for approximately $ 8,000 per month.

We lease a 275 square-foot engineering and administrative office in Singapore for approximately $ 1,000 per month.

This lease term ends June 2025.

We lease a 3,000 square-foot distribution facility in Hong Kong for approximately $ 2,000 per month.

For the period from January 2025 to September 2025, we used a 10,786 square-foot manufacturing facility and administrative office in Barnsley, England subject to a temporary premise license agreement with payments of approximately $ 11,000 per month.

We are in the process of relocating this facility.

We lease a 3,000 square-foot logistics and distribution facility in Hong Kong for approximately $ 2,000 per month.

This lease term ends April 2027.

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This lease term ends November 2026.

We previously leased a 275 square-foot engineering and administrative office in Singapore for approximately $ 1,000 per month through June 2025.

As of December 31, 2025, the Company had current and long-term lease liabilities of $ 324,000 and $ 493,000 , respectively, and ROU assets of $ 760,000 .

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data