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<SEC-DOCUMENT>0001170918-06-000523.txt : 20060523
<SEC-HEADER>0001170918-06-000523.hdr.sgml : 20060523
<ACCEPTANCE-DATETIME>20060523152300
ACCESSION NUMBER:		0001170918-06-000523
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20060523
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060523
DATE AS OF CHANGE:		20060523

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INTERLINK ELECTRONICS INC
		CENTRAL INDEX KEY:			0000828146
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER PERIPHERAL EQUIPMENT, NEC [3577]
		IRS NUMBER:				770056625
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21858
		FILM NUMBER:		06861319

	BUSINESS ADDRESS:	
		STREET 1:		546 FLYNN RD
		CITY:			CAMARILLO
		STATE:			CA
		ZIP:			93012
		BUSINESS PHONE:		8054848855

	MAIL ADDRESS:	
		STREET 1:		546 FLYNN ROAD
		CITY:			CAMARILLO
		STATE:			CA
		ZIP:			93012

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INTERLINK ELECTRONICS
		DATE OF NAME CHANGE:	19940525
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>fm8k-052306.txt
<TEXT>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K


                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


         Date of Report (Date of earliest event reported): MAY 23, 2006


                           INTERLINK ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)

         DELAWARE                    0-21858                    77-0056625
(State or other jurisdiction       (Commission                (IRS Employer
      of incorporation)            File Number)              Identification No.)


          546 FLYNN ROAD, CAMARILLO, CALIFORNIA                    93012
         (Address of principal executive offices)                (Zip Code)


       Registrant's telephone number, including area code: (805) 484-8855



                                    NO CHANGE
          (Former name or former address, if changed since last report)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:

|_|      Written  communications  pursuant to Rule 425 under the  Securities Act
         (17 CFR 230.425)

|_|      Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17
         CFR 240.14a-12)

|_|      Pre-commencement  communications  pursuant to Rule  14d-2(b)  under the
         Exchange Act (17 CFR 240.14d-2(b))

|_|      Pre-commencement  communications  pursuant to Rule  13e-4(c)  under the
         Exchange Act (17 CFR 240.13e-4(c))


<PAGE>


ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

         On May 23, 2006, Interlink  Electronics,  Inc. (the "Company") issued a
press release in the form of an open letter to  stakeholders  from the Company's
Chairman,  Chief Executive  Officer and President,  E. Michael Thoben.  The open
letter  provides  an  update  on each of the  Company's  business  segments  and
discusses  the  Company's  preliminary,   estimated  and  unaudited  results  of
operations  and  financial  condition  for fiscal 2005 and the first  quarter of
2006.  A  copy  of  the  press  release  is  attached  as  Exhibit  99.1  and is
incorporated by reference herein.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

         (c)      Exhibits.

                  99.1     Press Release dated May 23, 2006.


                                       2
<PAGE>


                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned hereunto duly authorized.

         Date:  May 23, 2006.


                                       INTERLINK ELECTRONICS, INC.



                                       By    /S/ CHARLES C. BEST
                                            ------------------------------------
                                            Charles C. Best
                                            Chief Financial Officer


                                       3
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>ex99-1h.txt
<DESCRIPTION>EX-99.1
<TEXT>
                                                                    EXHIBIT 99.1


        INTERLINK ELECTRONICS CEO SENDS SECOND OPEN MEMO TO STAKEHOLDERS

Camarillo, California, May 23, 2006 - Interlink Electronics, Inc. (OTC:LINK.PK),
a global leader in the design,  development  and  manufacture of human interface
products and  technologies,  today  published the following  open  memorandum to
stakeholders from Chairman, CEO and President,  E. Michael Thoben as a follow-up
to his memorandum of May 16, 2006:


TO: All Interlink Electronics Stakeholders

FROM: E. Michael Thoben, Chairman, CEO and President

SUBJECT: The State of the Interlink Business
- --------------------------------------------------------------------------------

This memorandum is the second of two describing where we are and plan to go as a
company.  In the  first I  addressed  our  accounting  and  financial  reporting
situation,  explaining what has been accomplished,  what remains to be done, and
when we plan to finish.  Here I will speak to the state of our overall business,
discussing  the  challenges we currently  confront as well as the truly exciting
opportunities that lie ahead.

MANAGING TRANSITION
- -------------------

In  November  2005 we  announced a  restructuring  plan that  combined  our Home
Entertainment  and  Business  Communications  segments  into a new  OEM  Remotes
organization.  This  restructuring was in response to adverse worldwide industry
trends.  We moved most of our related sales,  engineering  and customer  support
operations  to China to be  closer to our  customers,  better  compete  in these
markets and operate the business more efficiently and profitably.

More  importantly,  however,  this  restructuring  better  aligns the  Company's
resources with our future  opportunities for growth. In the short-term we expect
revenues from this segment to continue to decline as the market  demands  change
and we remain more  selective  on the types of  projects  we accept.  Yet in the
longer-term,  we expect increasing  revenues from home entertainment sales could
reverse  this trend.  This  dynamic  should  also lead to a stronger  margin OEM
Remotes  business even if we no longer  experience  our historic  growth in this
segment.


<PAGE>


MANAGING GROWTH
- ----------------

While the  transition  evolves  in our OEM  Remotes  business,  we look to three
strategic opportunities for accelerating our rates of growth and profitability.

         o        e-Transactions

Over the last  three  quarters  our  e-Transactions  business  made  significant
strategic  accomplishments and produced  impressive revenue growth.  Through our
customer   experience,   understanding  of  market  trends,  and  commitment  to
innovation and development,  we have built both a record customer pipeline and a
very  robust  product  roadmap.  We continue  to be  encouraged  by the level of
engagement  we have in new sell cycles and pilot  activity in the banking,  auto
finance and insurance industries. Most of our e-Transaction revenues should come
from these highly targeted  sectors over the next twelve to twenty-four  months.
Given  our  past  successes  with  industry  leaders  in these  markets  and our
ever-expanding  product and software solutions capability,  we are positioned to
continue   strong  growth  in  this   business.   Our  revenue   growth  in  the
e-Transactions  segment  came in for  the  year  consistent  with  our  previous
guidance  at  approximately  60% year over the prior  year.  Looking  forward we
expect to be able to continue  growing this segment of our business in a similar
range in 2006.  We would also  expect to see margins  remain  strong as software
continues to become an increasingly important component of this solution sale.

To better address customer needs for seamless  integration,  we have developed a
comprehensive  software  strategy.  We recently  introduced  new versions of the
IntegriSign  Signature  Software Suite that further expand our product offering.
This powerful and flexible software suite provides  organizations with the tools
necessary  to  integrate  electronic  signature  processes  into their  business
applications.  We have used this  software  to build  custom  applications  that
recently  won us such key  customers as Jackson  National  Life and World Saving
Bank.

In the last several months we also introduced three new ePad hardware platforms.
The  ePad-XL  is a  combination  signature  and card  swipe  and pin pad  device
targeted to meet the needs in banking where multiple devices can be consolidated
into one simple device for customer  authentication and signature  applications.
We also launched the ePad-Ink Pro and ePad-ID Pro, which incorporate an entirely
new processor for increased  performance and that support an encryption  option.
This unique option was designed to address growing  customer  concerns about the
security  of  information  traveling  between  signature  devices  and the  host
computers.


<PAGE>


Overall,  the outlook for the  e-Transactions  business remains very strong.  We
have established  ourselves with industry leading solutions that have enabled us
to capture the  industry's  top  customers and at the same time  accelerate  our
momentum in this exciting growth market.

         o        Specialty Business

Our  Specialty  Business  segment  is in the early  stages of  implementing  our
MicroNav  growth  strategy.  MicroNav is a  miniaturized  family of sensors that
bring new and intuitive interface designs to consumer electronics manufactures -
specifically MP3 and cell phone producers.  This business experienced early wins
with  iRiver,  Siemens,  Microsoft,  and Sony which  reinforced  our  investment
decision  and  focused  our  development.   We  recently  announced   additional
significant  design  wins with two major cell phone  programs at Pantech and LG.
Revenue from these handset  programs  will begin late in the second  quarter and
should result in solid revenue growth in 2006 and beyond.

While developing and marketing the MicroNav family we received  excellent market
feedback on product  enhancements  and new features.  We responded by developing
new connection methods, substrates, lighting, surface treatments, sensor designs
and actuators.  Our evolution in sensor technology and  implementation  over the
past year has been  greater  than  anytime in our history and has resulted in us
filing an additional ten patents around this technology.

Given our continued  innovation and recent wins, Interlink is well-positioned to
continue to take advantage of the growth trends in these identified markets. The
primary  opportunity  is the  increased  need for  simple  cost  effective  file
navigation systems in cell phones and media players. Manufacturers and marketers
desire to  differentiate  their own products  through unique design  features or
intuitive user interface  technologies and we believe these trends all play well
to the benefits offered by utilizing our MicroNav products.

         o        Branded Products Business

Interlink  Branded Products  continue to show promise and improving  financials.
After three sequentially  growing quarters,  revenue declined in the 2005 fourth
quarter due to our decision to take positive steps to reduce  channel  marketing
costs and lower overall inventory in distribution.  In the first quarter of 2006
Branded Products  revenue returned to near record levels.  We expect to continue
to innovate in this  segment and take  advantage  of the overall  market  trends
towards PowerPoint presentations.


<PAGE>


RECENT FINANCIAL PERFORMANCE
- ----------------------------

We are still not in a position to present audited financial results for 2005, as
our audit is incomplete and any additional  adjustments we make could affect the
top and  bottom  lines in all  quarters  of the  fiscal  year,  including  those
previously reported.  We believe,  however, that on a preliminary basis our 2005
revenues were  approximately  $39 million up 9% from the year ended December 31,
2004.  We are  also  estimating  a net  loss in 2005 of  between  $7.5  and $9.0
million.   This  loss  includes   approximately  $2.8  million  in  charges  and
adjustments  related to the  restructuring  plan and accounting  restatement and
examination  process  discussed  in my May 16,  2006  memorandum.  In  addition,
product  mix,  costs  related to the  rebuilding  of the  company's  operational
infrastructure, as well as legal and accounting fees associated with our current
litigation and restatement activities contributed to this estimated net loss.

Although we similarly cannot present  financial  results that have been reviewed
by our  auditors  for  the  2006  first  quarter,  we  currently  estimate  that
preliminary  revenues in this  period  were  between  $8.3 and $8.8  million,  a
decline from the first quarter of 2005 primarily due to the short-term  dynamics
of our OEM Remote  business  I  discussed  earlier.  We expect a net loss in the
quarter as this revenue drop  combined  with higher legal and  accounting  costs
related to the completion of our 2005 financial and internal control audit.

The Company's  unaudited  balance  sheet as of March 31, 2006  remained  strong,
including a cash balance of over $12 million.  We have put additional  processes
in place to improve the  management of our balance sheet,  including  metrics to
analyze our inventory turns and days sales outstanding.

LOOKING FORWARD
- ---------------

We expect  noticeable  improvement  in our financial  results as we finalize our
2006 operating  budget and implement our three-year  plan,  which will guide the
management of our revenue growth and  profitability  over the next few years. In
addition, we are maintaining our solid customer base and continuing to build our
operational strength as we position ourselves for future growth.

There are many  bright  spots in the  company  and I firmly  believe  our future
remains  promising.  Even with the  recent  challenges,  we grew the  Company to
record revenue levels in 2005. Unfortunately,  some of that growth came at costs
we can no longer  afford.  We are  taking  the  necessary  steps to  reduce  our
dependence  on  traditional  lower  margin  markets and  placing  the  company's
resources  where we believe our future  opportunities  exist.  Sales of our high
profit margin products are at record levels and they continue to build momentum.
The  combination of these factors has our revenue off from our record levels but
rebounding in the second half of this year.

Interlink has made  significant  progress during these difficult  times. We look
forward  to  capitalizing  on the  opportunities  in front of us and  taking the
company to the next level.


<PAGE>


ABOUT INTERLINK ELECTRONICS, INC.

         Interlink Electronics,  Inc.  (OTC:LINK.PK),  is a global leader in the
design,   development   and   manufacture  of  human   interface   products  and
technologies.   Setting  tomorrow's   standards  for  electronic  signature  and
e-notarization  products,  advanced  remote  controls and  consumer  electronics
interface  solutions,  Interlink  has  established  itself as one of the world's
leading  innovators  of intuitive  interface  design.  With more than 80 patents
around the world protecting its technologies and products, Interlink Electronics
serves a world-class customer-base from its corporate headquarters in Camarillo,
California  and  offices  in  Japan,  Taiwan,  Hong  Kong  and  China.  For more
information, see http://www.interlinkelectronics.com.

- ----------
ALL REGISTRATIONS AND TRADEMARKS ARE PROPERTIES OF THEIR RESPECTIVE OWNERS.

This release contains forward-looking  statements that involve a number of risks
and  uncertainties.  The following are among the factors that could cause actual
results  to differ  materially  from the  forward-looking  statements:  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;  problems  or delays in  reporting  our  results of
operations  to  the  public;   and  product   shipment   interruptions   due  to
manufacturing  problems.  The  forward-looking   statements  contained  in  this
document regarding the accounting  restatement process, the Company's results of
operations  and  financial  condition,  product  wins  and  acceptance,  product
launches,  market  trends,  patent  filings,  the  preparation  of the Company's
financial  statements,  the audit and review of our financial  statements by BDO
Seidman,  LLP and future  business  activities  should be considered in light of
these factors.

CONTACTS
- --------

MICHELLE LOCKARD
Investor Relations
805-484-8855 ext. 114
Interlink Electronics, Inc.
546 Flynn Road
Camarillo, CA 93012
www.interlinkelectronics.com
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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