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E-Transaction Technology Helped Put Interlink in Black

CORPORATE FOCUS E-Transaction Technology Helped Put Interlink in Black By SLAV KANDYBA For Camarillo-based Interlink Electronics, Inc., the difference between 2002 and 2003 is akin to the difference between day and night. The company came back from a horrid 2002 losses in three of four quarters with strong signs in 2003. The highlight perhaps came in the fourth quarter, when Wells Fargo Bank ordered the company’s e-transaction technology to install in all of its branches. The deal, said Interlink CEO E. Michael Thoben III, was “a breakthrough,” but all of Interlink’s businesses segments contributed to its strong performance. “We have met or exceeded our objectives and continue to build momentum in our business segments,” said Thoben. Interlink designs and manufactures products in three business segments business communications including remote controls used for PowerPoint presentations and other projectors; home entertainment including remote control technology used in interactive television applications; and e-transactions, technology that allows companies to capture signatures and other data electronically. The company also has a specialty products division which designs technology for cell phones, PDAs and other applications. Net income for the fourth quarter ended Dec. 31 stood at $407,000, or $0.03 per diluted share, compared to a net loss of $3.6 million, or $0.37 per diluted share, for the same quarter in 2002. Revenues in the fourth quarter were $8.7 million, up 25 percent from fourth quarter of 2002. For the full year, net income was $1.1 million, or $0.09 per diluted share, on revenues of $31 million, versus a loss of $4.3 million or $0.44 per diluted share on $25 million in 2002 revenues. “We have three strategic markets and each is benefiting from each other as well as the rebounding of markets around the world,” Thoben said. “The niche markets are becoming more mainstream.” Business communications has been Interlink’s most dependable segment, Thoben said, accounting for 64 percent of the revenues. The company has a 70 percent market share in this area. Interlink primarily distributes its products through original equipment manufacturers, for use in a variety of products from computers to televisions. As an OEM supplier, Thoben noted that Interlink is well positioned to observe the trends in business spending. Interlink has benefited from the recent uptick in spending, but its performance can also be attributed to the innovative technologies the company has developed. Chief among those, the company is developing devices such as ePad, a technology that allows financial institutions and others to capture and authenticate signatures and thumbprints electronically and avoid the need for paper documents in a range of transactions. Interlink recently struck a deal with Wells Fargo, which will be using the company’s ePad technology throughout the company. Thoben said the deal was “one of our biggest successes,” being the first of its kind with a top-tier U.S. bank. Late in the fourth quarter last year, the company introduced another technology, MicroNav, which is already in trials with some OEMs. Interlink touts MicroNav as the world’s smallest 360-degree pointing device and is targeting the device for markets such as cell phones, PDAs and digital cameras. The device can be used somewhat like a computer mouse to navigate the Internet or play computer games. With about 20 percent of 460 million to 500 million cell phones made in the country equipped for Web browsing and gaming, MicroNav will “present a pretty significant opportunity,” Thoben said. Still a small player in the technology sector, Interlink has not yet garnered much interest among Wall Street analysts, but its stock price has nonetheless kept a strong pace over the past year. After reaching a 52-week low of $2.50 on March 24, 2003, Interlink shares have rebounded, trading close to their 52-week high of $12.15. On March 25, 2004 the stock price closed at $11.30. And the company has been adding personnel, including engineers and operations staff overseas and sales and marketing employees in Camarillo. “We’ve been hiring people and expanding our operations,” Thoben said.

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