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Thursday, 10/24/2002 4:32:41 PM

Thursday, October 24, 2002 4:32:41 PM

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First profit in six quarters!

[comment] not bad considering the general state of the economy these days IMO

CAMARILLO, Calif., Oct 24, 2002 (BUSINESS WIRE) -- Interlink Electronics, Inc. (LINK, Trade), the world's leading developer of intuitive interface technologies and solutions for business and home applications, today announced its financial results for the third quarter of 2002. Revenues for the three months totaled $6.6 million -- up 10% as compared to $6.0 million for the second quarter of this year. The Company generated its first operating profit in six quarters, yielding a $30,000 operating profit in the third quarter as compared to an operating loss of $283,000 in the second quarter of this year. The net results for the third quarter of 2002 showed net income of $40,000 or break-even on a per share basis as compared to a loss of $333,000 or $0.03 loss per diluted share reported in the second quarter of 2002.

"We are very pleased with the Company's financial performance in the third quarter," said E. Michael Thoben, chairman, CEO and president. "We improved revenues by 10%, giving us two consecutive quarters of double-digit growth. This is particularly encouraging in light of the negative macro-economic factors influencing most technology companies. While it remains difficult to maintain much long term visibility under current market conditions, our shorter term expectations remain very positive and we expect to continue on a similar growth track.

"The Company's return to profitability is clearly a milestone. This accomplishment is attributed to not only the recent sales growth, but to the company's recently stream-lined structure and record operating efficiencies," continued Mr. Thoben. "Cash flow also remained strong as our positive operating cash flow of nearly $400,000 enabled us to complete the repayment of some of our Japanese loans without significant impact on our overall cash balance.

"Our business communications segment performed well again this quarter and accounted for 63% of our total worldwide revenues," added Mr. Thoben. "Our top OEMs in Asia and North America both continued to show progress over the last quarter, improving revenue by 8%. The Company's business communications branded business also continued to show steady progress at a modest 5%. We expect stronger fourth quarter growth in branded product sales as seasonality influences retail buying patterns.

"Our e-transactions business also continued to achieve record sales growth as well as solid market momentum during the third quarter," said Mr. Thoben. "This revenue growth was largely attributed to reorders from several of our existing key customers, such as Prudential, Walgreens, Charles Schwab and Ford Credit.

"We also continued building strategic relationships in vertical markets as part of our strategy to ensure ePad is the standard for electronic signatures. Specifically, we made significant progress in both drug testing and security/ID card vertical markets, announcing relationships with eScreen, Inc. and Viisage Technology, Inc. eScreen, who develops and markets rapid employment drug screening devices, currently processes millions of healthcare data transactions per year. As a first step, we have integrated ePad e-signature capability into their eScreen point-of-care drug screening products.

"Additionally, last week we announced that we had established a strategic partnership with Viisage Technology, Inc., who delivers more than 25 million digital-identification documents to federal, state and local government agencies issuing digital drivers' licenses, identity cards, social services cards and local law enforcement credentials. The first deployment of Interlink's ePad electronic signature solution with Viisage's image capture and facial recognition system is taking place at the Rhode Island Department of Motor Vehicles."

About Interlink Electronics, Inc.

Interlink Electronics, Inc. (LINK, Trade) is a global leader in the design and manufacture of intuitive interface technologies and products. Creating today's interface standards, our business communications, e-transactions, home entertainment and specialty businesses have established Interlink as the comprehensive source for branded and OEM solutions. Selected customers include Dell, HP/Compaq, InFocus, Microsoft, Mitsubishi, NEC, Sanyo, Sharp, Sony and Toshiba.

Recognized worldwide for innovative interface technologies and solutions, Interlink Electronics, Inc. serves a world-class customer-base from its corporate headquarters in Camarillo, CA and offices in Tokyo and Hong Kong. The company currently holds more than 70 patents protecting its Force Sensing Resistor (FSR(R)), VersaPoint(R) Pressure Pointing, VersaPad(R) pen input pad and RemoteLink(R) wireless communication technologies. See LINK online at or in Japan at

All registrations and trademarks are properties of their respective owners.

Summarized Consolidated Statements of Operations
(000s except per share data)
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
(unaudited) (unaudited)
2002 2001 2002 2001
Revenue $ 6,629 $ 6,036 $18,065 $19,964
Gross profit 2,701 2,464 7,442 6,590(1)
Product development &
research 748 839 2,481 2,684
Sales, marketing &
administration 1,923 2,218(2) 5,653 6,400(2)
Total operating expenses 2,671 3,057 8,134 9,084
Operating income (loss) 30 (593) (692) (2,494)
Other income 10 16 -- 183
Provision for tax expense
(benefit) -- (115) -- (764)
Net income (loss) $ 40 $ (462) $ (692) $(1,547)
Earnings (loss) per
share -- basic $ -- $ (.05) $ (.07) $ (.16)
Earnings (loss) per
share -- diluted $ -- $ (.05) $ (.07) $ (.16)
(1) Includes $2 million excess inventory reserve adjustment in second
quarter, 2001.
(2) Includes $50,000 in severance charges in second quarter, 2001 and
$300,000 adjustment to bad debt reserves in third quarter, 2001.
Selected Consolidated Balance Sheet Data (000s)
Sept. 30, Dec. 31,
2002 2001
Cash and cash equivalents $ 8,222 $ 9,325
Working capital 18,759 19,333
Total assets 26,207 26,641
Long-term debt 1,637 1,855
Stockholders' equity 19,635 20,305

From time to time the Company may issue forward-looking statements that involve a number of risks and uncertainties. The following are among the factors that could cause actual results to differ materially from the forward-looking statements: business conditions and growth in the electronics industry and general economies, both domestic and international; lower than expected customer orders; delays in receipt of orders or cancellation of orders; competitive factors, including increased competition, new product offerings by competitors and price pressures; the availability of third party parts and supplies at reasonable prices; changes in product mix; significant quarterly performance fluctuations due to the receipt of a significant portion of customer orders and product shipments in the last month of each quarter; and product shipment interruptions due to manufacturing problems. The forward-looking statements contained in this document regarding industry and revenue trends, seasonality, sales channels, industry product acceptance and future business activities should be considered in light of these factors.

Conference Call Information
Thursday, October 24, 2002 at 1:30 p.m. PT
Live Call-in #: 888-455-3620
Live International Call-in #: 312-470-7325
(Pass Code: "link")
Web cast address:
Telephonic replay available until October 29, 2002
Telephonic replay call in # (US) 800-945-7650
or (Intl) 402-220-3567

Interlink Electronics, Inc., Camarillo
Investor Contact:
Michelle Lockard, 805/484-8855, ext. 114
Press Contact:
Keith M. Roberts, 805/484-8855, ext. 130


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