What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-27 compared with 2024-03-25 · 115 added, 117 removed, 632 unchanged (27% of the section changed)

69 unchanged sentences

Additional paid-in-capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Accumulated deficit

12 unchanged sentences

Loss from operations

Other income (expense):

Other income (expense), net

Income (loss) before income taxes

Loss before income taxes

Income tax expense

Net income (loss)

Net income (loss) applicable to common stockholders

Net loss applicable to common stockholders

Earnings (loss) per common share, basic

7 unchanged sentences

(in thousands)

Net income (loss)

Other comprehensive income, net of tax:

Foreign currency translation adjustments

Comprehensive income (loss)

Comprehensive loss

The accompanying notes are an integral part of these consolidated financial statements.

5 unchanged sentences

Income (Loss)

(in thousands)

Balance at December 31, 2022

Issuance of common stock

Repurchases of common stock

Preferred stock dividends

2 unchanged sentences

Balance at December 31, 2023

Repurchases of common stock

Preferred stock dividends

8 unchanged sentences

Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash (used in) operating activities:

Adjustments to reconcile net loss to net cash (used in) operating activities:

Depreciation and amortization

Stock-based compensation expense

Unrealized and realized (gains) on marketable securities

Adjustment to reconcile operating lease expense to cash paid

8 unchanged sentences

Cash flows from investing activities:

Purchases of marketable securities

Proceeds from sales of marketable securities

Purchases of property, plant and equipment

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 provided by (used in) investing activities

Net cash (used in) investing activities

Cash flows from financing activities:

1 unchanged sentence

Repurchases of common stock

Issuance of common stock

Net cash (used in) financing activities

Effect of exchange rate changes on cash

Net (decrease) in cash, cash equivalents, and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Net (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of cash flow information:

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Interlink Electronics, Inc.

(“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.

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

Our force-sensing products and solutions 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 membrane keypads, graphic overlays, printed electronics and industrial label products are applicable for use in a wide range of fields, from industrial automation, process control and monitoring to medical and diagnostic devices and defense systems.

Our electrochemical gas-sensing technology instruments, products and solutions are deployed in industry, community, health and home settings, with uses in fields such as carbon monoxide and ozone detection and air quality monitoring.

We serve our world-wide customer base from our corporate headquarters in Irvine, California;

(“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, and Irvine, Scotland;

our advanced and proprietary production and product development facility in Newark, 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;

and our distribution and logistics center in Hong Kong.

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

our distribution and logistics center in Hong Kong;

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

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.

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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.

Settlement of fractional share interests will be made by issuing one full share of common stock in lieu of a fractional share.

Although the exact effect on common stock outstanding will depend on the number of fractional share settlements, the stock dividend is expected to increase the number of issued and outstanding shares of common stock from 6,573,570 to approximately 9,860,355 .

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 6,573,570 to 9,860,368 .

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.

8 unchanged sentences

The functional currency of our Chinese subsidiary is the Chinese Yuan Renminbi;

The functional currency for our Hong Kong, Singapore and United Kingdom subsidiaries is the United States dollar.

However, our Hong Kong, Singapore, and United Kingdom subsidiaries also transact business in their local currency.

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.

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 and remeasurement gains and losses are included in results of operations within other

income (expense), net, for which gains of $ 3,000 and $ 121,000 were recorded in the years ended December 31, 2023 and 2022, respectively.

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

We operate in one reportable segment:

the manufacture and sale of force/touch - and gas/environmental-sensing technology solutions.

The Company operates as a single operating and reportable segment:

the design, development, and manufacture of sensor technologies.

The Company’s chief operating decision maker is its Chief Executive Officer, who reviews the performance of the Company as a whole and allocates resources based on overall performance.

Use of Estimates

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Our past history with these sell-through right of return provisions allow us to reasonably estimate the amount of inventory that could be returned pursuant to these agreements, and revenue is recognized accordingly.

Revenue for engineering services contracts and grants is recognized ratably over the contract term as the related performance obligations are satisfied.

Progress toward completion is measured based on the ratio of costs incurred to total estimated costs at completion.

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.

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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Warranty claims charges are recorded within cost of revenue as claims are incurred and honored.

At each reporting period, we adjust our reserve for warranty claims (as either a charge or benefit to cost of revenue) based on our actual warranty claims experience as a percentage of net revenue during the preceding 24 months, as an estimation of the total future warranty claims expected to be incurred and honored for goods sold through

the end of the reporting period.

At each reporting period, we adjust our reserve for warranty claims (as either a charge or benefit to cost of revenue) based on our actual warranty claims experience as a percentage of revenue during the preceding 24 months, as an estimation of the total future warranty claims expected to be incurred and honored for goods sold through the end of the reporting period.

We also consider the effect of known operations issues that may have an impact that differs from historical trends.

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All of the costs related to advertising and marketing our products are expensed as incurred or at the time the marketing takes place.

Advertising and marketing costs incurred in the years ended December 31, 2024 and 2023 were $ 67,000 and $ 48,000 , respectively.

Stock-based Compensation

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Our operations and financial results may be adversely affected by outbreaks of viruses, widespread illness, infectious diseases, contagions and unforeseen epidemics (such as the COVID-19 coronavirus) in countries in which our products are manufactured and sold.

We experienced delays in the receipt of certain goods and the supply of our products from international and domestic shipping origins as a result of the COVID-19 pandemic and more general global supply chain constraints in fiscal 2021, and to a lesser extent in

fiscal 2022 and 2023.

Depending on the continued extent and duration of these and similar constraints and disruptions, our supply chain, results of operations (including sales) or future business may be materially and adversely impacted.

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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, 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, Hong Kong and Singapore.

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

In the U.S., we had approximately $ 94,000 and $ 8.4 million in excess of the Federal Deposit Insurance Corporation limit of $ 250,000 per depositor, per insured bank at December 31, 2023 and 2022, respectively.

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.

Approximately $ 1.3 million and $ 1.1 million held in banks in China at December 31, 2024 and 2023, 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 $ 12,000 and $ 40,000 held in banks in Hong Kong at December 31, 2024 and 2023, respectively, was not insured.

Approximately $ 1.1 million held in banks in the United Kingdom at December 31, 2023 was not insured.

Accounts Receivable and Allowance for Credit Losses

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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.

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.

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

6 unchanged sentences

We perform periodic reviews to evaluate the recoverability of property, plant and equipment and to determine whether facts and circumstances exist that would indicate that the carrying amounts of property, plant and equipment exceed their fair values.

If facts and circumstances indicate that the carrying amount of property, plant and equipment might not be fully recoverable, projected undiscounted net cash flows associated with the related asset or group of assets over their estimated remaining useful lives are

compared against their respective carrying amounts.

In the event that the projected undiscounted cash flows are not sufficient to recover the carrying value of the assets, the assets are written down to their estimated fair values.

37 unchanged sentences

(in thousands)

Balance as of January 1, 2022

Goodwill acquired in acquisition of SPEC/KWJ

Balance as of December 31, 2022

3 unchanged sentences

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

Intangible assets, net

18 unchanged sentences

Total accrued liabilities

Note 3 – Marketable Securities

Our marketable securities consist of equity securities classified as available-for-sale (“AFS”) and recorded at fair value, as determined using Level 1 inputs on the fair value hierarchy.

Realized and unrealized gains and losses are reported in earnings within “other income (expense), net”.

The specific identification method is used to determine realized gains and losses on AFS securities.

During the years ended December 31, 2023 and 2022, we purchased $ 0 and $ 6.027 million of marketable securities, respectively and we sold $ 0 and $ 8.476 million of marketable securities, respectively, for realized gains of $ 0 and $ 2.249 million, respectively.

Note 4 – Acquisition

Acquisition of Assets of SPEC Sensors and KWJ Engineering

On December 16, 2022, we acquired substantially all of the assets of SPEC Sensors, LLC (“SPEC”), and KWJ Engineering, Inc.

(“KWJ”) (collectively, “SPEC/KWJ”), two designers and manufacturers of gas, air and environmental quality sensors that were under common ownership, pursuant to an Asset Purchase Agreement, dated as of December 16, 2022 (the “Asset Purchase Agreement”), by and among the Company, SPEC/KWJ, and the respective equity holders of SPEC and KWJ.

The Asset Purchase Agreement contains customary representations, warranties and covenants, including non-competition covenants.

Under the terms of the Asset Purchase Agreement, the purchase price for both companies’ assets was $ 2,000,000 plus the amount by which the combined companies’ net working capital at closing was more than $ 1,350,000 .

At closing, the purchase price was preliminarily calculated as $ 2,269,000 , of which $ 1,519,000 was paid to SPEC/KWJ, and $ 750,000 was paid into escrow against purchase price adjustments and potential claims for breaches of representations and warranties by SPEC/KWJ or the equity holders.

Subsequent to the closing, the parties reached an agreement pursuant to which (i) the purchase price was reduced to $ 2,102,313 resulting from the determination that the closing date net working capital was $ 166,687 lower than was preliminarily calculated, with such funds having been distributed back to the Company from the escrow account in May 2023, and (ii) the remaining funds in the escrow account were released to SPEC/KWJ in May 2023 without prejudice to the Company’s rights in respect of breaches of representations, warranties or covenants.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date, giving effect to the post-closing purchase price adjustment (in thousands).

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Accounts payable and accrued liabilities

Net identifiable tangible assets acquired

Developed technology

Customer relationships

Tradenames and trademarks

In-process research and development

Non-compete agreements

Order backlog

Net assets acquired

The fair value of accounts receivable is equal to the $ 306,000 gross contractual amount, as we expect the entire balance to be collectible.

The goodwill recognized is attributable primarily to expected synergies and the assembled workforces of SPEC/KWJ.

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

Note 3 – Acquisitions

Acquisition of Calman Technology Limited

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Net assets acquired

After our September 30, 2023 financial statements were issued, the valuation report for the acquired intangible assets was completed.

Based on the results of that valuation report, we have revised the preliminarily allocated GB£ 3,404,000 (approximately $ 4,052,000 ) of goodwill to be allocated as follows:

GB£ 320,000 (approximately $ 381,000 ) developed technology, GB£ 180,000 (approximately $ 214,000 ) trademarks and tradenames, GB£ 1,059,000 (approximately $ 1,260,000 ) customer relationships, GB£ 708,000 (approximately $ 843,000 ) non-compete agreements, and GB£ 1,734,000 (approximately $ 2,064,000 ) goodwill, offset by GB£ 597,000 (approximately $ 710,000 ) deferred tax liabilities.

In addition, the changes in these provisional amounts resulted in an increase in amortization expense and accumulated amortization of GB£ 266,000 (approximately $ 329,000 ) recorded in the three months ended December 31, 2023, of which GB£ 20,000 (approximately $ 25,000 ) relates to the three months ended March 31, 2023, GB£ 123,000 (approximately $ 155,000 ) relates to the three months ended June 30, 2023, and GB£ 123,000 (approximately $ 149,000 ) relates to the three months ended September 30, 2023.

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

1 unchanged sentence

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

The following represents the pro forma consolidated statement of operations as if both SPEC/KWJ and Calman had been included in our consolidated results for the full fiscal years ended December 31, 2023 and 2022 (unaudited):

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.

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.

Property and equipment

Net identifiable tangible assets acquired

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):

Year Ended December 31,

(in thousands)

Net income (loss)

Note 4 – Series A Convertible Preferred Stock

3 unchanged sentences

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 3.0 shares of common stock, as adjusted for the 50 % common stock dividend declared and paid in March 2024, at any time at the option of the holder, subject to certain customary adjustments.

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.

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

As of December 31, 2023, there were no stock-based compensation awards outstanding.

The stock-based compensation expense recorded in the years ended December 31, 2023 and 2022 was for shares of common stock issued to members of the Board of Directors as partial compensation for their service as a director.

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.

2016 Omnibus Incentive Plan.

A summary of the status of the Company’s nonvested restricted stock units as of and for the year ended December 31, 2024, is as follows:

Nonvested Restricted Stock Units

Nonvested at January 1, 2024

Nonvested at December 31, 2024

As of December 31, 2024, there was approximately $ 117,000 of total unrecognized compensation cost related to nonvested restricted stock units.

That cost is expected to be recognized over a weighted-average period of 4.1 years.

Note 6 – Earnings Per Share

4 unchanged sentences

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

Year Ended December 31,

(in thousands, except per share data)

Net income (loss)

Preferred stock dividends

Net income (loss) applicable to common stockholders

Net loss applicable to common stockholders

Weighted average common shares outstanding – basic

Dilutive potential common shares from convertible preferred stock

Dilutive potential common shares from convertible preferred stock and restricted stock units

Weighted average common shares outstanding – diluted

1 unchanged sentence

Earnings (loss) per common share, diluted

Shares subject to anti-dilutive Series A Convertible Preferred Stock excluded from calculation

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 $ 8.33 conversion price was greater than the average market price of the common stock.

Shares issuable upon conversion of Series A Convertible Preferred Stock excluded from calculation because their conversion would be anti-dilutive

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.

Note 7 – Income Taxes

3 unchanged sentences

The components of earnings before income taxes for the years ended December 31, 2024 and 2023 were as follows:

Year Ended December 31,

(in thousands)

1 unchanged sentence

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

Year Ended December 31,

(in thousands)

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Net deferred tax assets

Intangible assets

Property, plant and equipment, and intangible assets

Net deferred tax liabilities

11 unchanged sentences

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, 2023, the gross NOLs without regard to this permanent write-off is $ 29.7 million for federal and $ 13.7 million for state.

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

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.

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

Year Ended December 31,

(in millions)

3 unchanged sentences

NOL expired unused

Other, including changes in foreign exchange rates

Other, including changes in foreign currency exchange rates

Balance at December 31,

11 unchanged sentences

Other distributions may require us to incur U.S.

foreign taxes to repatriate these funds.

or foreign taxes to repatriate these funds.

However, our intent is to permanently reinvest these funds outside the U.S.

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We manage and operate our business through one operating segment.

Net revenues from customers comprising at least 10% of total net revenues are as follows:

Revenue from customers comprising at least 10% of total revenue are as follows:

Year Ended December 31,

* less than 10% of total net revenues

Net revenues by geographic area are as follows:

* less than 10% of total revenue

Revenue by geographic area are as follows:

Year Ended December 31,

3 unchanged sentences

Europe and other

Revenues by geographic area are based on the country of shipment destination.

Revenue by geographic area are based on the country of shipment destination.

The geographic location of distributors and third-party manufacturing service providers may be different from the geographic location of the purchasers and/or ultimate end users.

1 unchanged sentence

Accounts receivable balances are monitored on an ongoing basis and accounts deemed to have credit risk are fully reserved.

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

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

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

Our allowance for doubtful accounts was $ 0 at both December 31, 2023 and 2022.

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

Our long-lived assets were geographically located as follows:

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We have a qualified retirement plan under the provisions of Section 401(k) of the Internal Revenue Code covering all U.S.

Participants in this plan may contribute between 1 % and 60 % of their eligible pay on a pretax basis, up to the annual Internal Revenue Service dollar limits.

Participants in this plan may contribute up to 100 % of their eligible pay on a pretax basis, up to the annual Internal Revenue Service dollar limits.

The Company will make matching contributions in an amount equal to 50 % of the participant’s deferral contributions, not to exceed $ 5,000 per participant per year.

All contributions, including the Company match, are vested immediately.

Our matching contributions to the plan were $ 69,000 and $ 23,000 in 2023 and 2022, respectively.

Our matching contributions to the plan were $ 89,000 in 2024, and $ 69,000 in 2023.

Note 10 – Related Party Transactions

2 unchanged sentences

Bronson, our Chairman of the Board, President and Chief Executive Officer, is also the President, Chief Executive Officer and a director of Qualstar.

Hoffman, our Chief Financial Officer, was also the Chief Financial Officer of Qualstar through August 2023.

Hoffman, our Chief Financial Officer, is also the Acting Chief Financial Officer of Qualstar.

Bronson, together with BKF Capital Group, Inc.

(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 of a portion of our Irvine, California and Los Angeles, California 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.

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.

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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 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 provides M&A advisory consulting services to us.

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.

This agreement was terminated in April 2024.

Interlink and BKF Capital 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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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 different 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.

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.

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 February 2024, we extended this lease for the period March 1, 2024 to February 28, 2025 for approximately $ 19,000 per month.

We lease a 9,800 square-foot manufacturing facility and administrative offices in Irvine, Scotland for approximately $ 5,000 per month (with a 50 % discount through October 2023).

This lease term ends February 2028, with an option for us to terminate the lease in February 2025.

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.

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 May 2024.

This lease term ends June 2025.

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

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As of December 31, 2023, the Company had current and long-term lease liabilities of $ 126,000 and $ 33,000 , respectively, and ROU assets of $ 143,000 .

Future imputed interest as of December 31, 2023 totaled $ 7,000 .

Future imputed interest as of December 31, 2024 totaled $ 199,000 (weighted average discount rate of 8.9 %);

and future imputed interest as of December 31, 2023 totaled $ 7,000 (weighted average discount rate of 7.2 %).

The weighted average remaining lease term of the Company’s leases as of December 31, 2024 is 2.2 years;

and as of December 31, 2023 was 0.7 years.

Future minimum lease payments under non-cancellable operating leases that have remaining non-cancellable lease terms in excess of one year are as follows:

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Present value of lease liabilities

During the year ended December 31, 2023, we incurred approximately $ 501,000 in operating lease costs, including approximately $ 211,000 in cost of revenue and approximately $ 290,000 in operating expenses.

During the year ended December 31, 2022, we incurred approximately $ 255,000 in operating lease costs, including approximately $ 126,000 in cost of revenue and approximately $ 129,000 in operating expenses.

During the year ended December 31, 2024, we incurred approximately $ 697,000 in operating lease costs, including approximately $ 326,000 recorded in cost of revenue and approximately $ 371,000 recorded in operating expenses.

During the year ended December 31, 2023, we incurred approximately $ 501,000 in operating lease costs, including approximately $ 211,000 recorded in cost of revenue and approximately $ 290,000 recorded in operating expenses.

We are not party to any material legal proceedings at December 31, 2024.

42 unchanged sentences

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