Hello, and welcome to the Interlink Electronics company fireside chat. My name is Adam Lowensteiner, Vice President at Lytham Partners, and today Mr. Steven Bronson, Chief Executive Officer at Interlink Electronics, has joined us for a fireside chat discussion. Interlink Electronics trades under the ticker LINK on the Nasdaq, and let's get started. Steve, welcome. Thank you. Steve, you have a long track record of taking undervalued tech firms and restructuring them for growth. Can you tell us a little about that and where you are currently in that cycle with Interlink? Yes. Interlink is one of three public technology companies that I got involved as a turnaround. When I originally got involved with Interlink, they sold off two business units that was most of the revenues around Interlink, and I took control because of the promise around the core of force sensing technology. Within a year of taking control, I took the business from a loss of a few million in revenues to break even. Prior to that, I also successfully did a turnaround on Micron Instruments, where I bought out one of the co-founders, myself, and a small group of investors, with myself being a majority investor. With a year of taking over as president, I had the business back to break even and then built out a very solid management team that subsequently grew the business over the next six years, and we ended up selling our original investment for almost 11x. In addition to Interlink and Micron Instruments, I also got involved and executed a turnaround on Qualstar Corporation, which is in the data storage arena, where I took control of the business and in my first year cleaned up legacy commitments made by my predecessor. After the first year of cleaning up those financial commitments, we had it back on track to break even, and then subsequently profitable. Interlink is definitely not my first rodeo, and where we are with Interlink is beyond the turnaround stage. We are in a very high-growth mode, both organically and through acquisitions, and we are very bullish on the long-term prospects of the company. It has been a year since we last chatted. There has been some really positive news, as you just explained. Can you review what has been going on in the past year? Sure. We have made progress. When we acquired the gas environmental air quality businesses, we have the sensor business and the instrument business. We have invested a lot within that business unit the last couple of years, so we have expanded the portfolio, both on the types of gases we can measure, and we are also rolling out some new instruments related to the gas measurement side. In addition, and I would say one of the most exciting ones, there is so much going on at Interlink, and part of the attractiveness is we have different irons and different fires, and we acquired Conductive Transfers, that is in the smart textile wearable space in December 2024. We recently launched a new product development and R&D center that is focusing on driving larger commercialized opportunities within that segment, and so we are excited about that. We also have some very strong momentum at our Scotland unit, which is the print electronics membrane keypads. That was Calman Technology that we acquired in March of 2023. We have a lot of momentum on the printed electrodes segment, which is the ability to miniaturize leveraging printed electronics, so our expertise around the inks and the substrates to use, that is applied in the biomedical industry. We have a customer who uses, we print, basically it's used as a precursor before they run RNA and DNA testing. We see a lot of opportunities. There's a lot of activity on expanding in the world of home healthcare, so point-of-care devices, and all of that has a need for the printed electrodes to analyze the chemistry and our expertise, not just on the inks and the substrates, but it's also the high volume precision manufacturing and print electronics that we have within the Interlink family. You've positioned Interlink into many growth sub-sectors, as you explained, operating at the crossroads of smart textiles, wearables, Internet of Things, medical automation, and anything that can supply necessary hardware for intelligent data collection. What are some of the major applications Interlink is involved in, and are they affected by the future use of AI? Yeah. We play in the AI universe today, and we see the future is only going to expand the opportunities for Interlink. For example, on our gas environmental air quality sensing, we are able to measure multiple types of gases. We can create a true air quality index, and it's leveraging our in-house capabilities from a firmware software that we've designed and developed an algorithm that utilizes AI to take the different gases that we're measuring to create a true air quality index. That's one example. Another, through an SBIR grant, we developed a low-cost sensor platform to detect early warning detection for wildfires, which is extremely relevant in today's world, unfortunately. Every part of the world has been impacted by wildfires, and there's definitely some examples of that in the news today. It's constant, so whether it's today or, unfortunately, weeks from now, that will be in the news. We leverage AI as part of that, able to detect and pick up a reading that is above normal or abnormal and is an indicator that more than likely it's the beginning of a wildfire, so allows first responders to address the situation in a timely fashion. Many investors view sensors as a commoditized hardware business. How does Interlink's tech stack capture premium margins from the AI boom, and what proprietary software layer are you building to lock in recurring revenue? Yeah. We're definitely, other than if you look at our business as a whole and the various technologies and product groups, for the most part, we're not in the commoditized business. I would say the only segment is the membrane keypads on a standalone basis, but if you incorporate other types of technologies into that membrane pad, it gets you away from the commoditized side. The fact that we're fully integrated, so not only we're developing the sensor, but we're also developing in-house the firmware and the software, adding another layer. Our proprietary algorithms and some of the applications I described previously adds extra IP and also a pillar of defense from competitors. That allows us to garnish a higher margin and avoid being in a commoditized electronic component or solution business. We're really focusing on delivering sensors and printed electronics that are our expertise, and our firmware software is allowing us to obtain higher margins. Will you be selling a lot of products for robotic applications in the future? Well, it's interesting. That's a great question. We actually support robotic applications today on the medical side. We have a large tier medical customer that uses our force sensors as a safety tool to detect pinch detection, which is critical. Not only are we in that market today, but we believe strongly that physical AI is a place for significant growth for Interlink with our current portfolio, and we're opportunistic, so we feel we're going to continue to do additional acquisitions that will also expand the areas that could support AI. In the recent past, you outlined a target to achieve $100 million in revenue within the next few years. To reach $100 million from your current base, what percentage of this growth must come from organic scaling of your custom sensor solutions versus aggressive M&A? If the answer relies heavily on M&A, how do you plan to scale corporate infrastructure without eroding your current operating margins? Excellent. It's hard to predict an exact percentage what's going to come from organic growth versus acquisitions, but I would tend to stress that we're pursuing both. We understand that we can't just grow by acquisitions, and we also appreciate that we're not just going to grow by organic means, so we try to pursue both aggressively, but also on a prudent basis. We just recently announced a non-binding LOI, which we feel confident over the next 60 days- 90 days, we will close that acquisition barring any unforeseen obstacle. Last year, we did $12 million in revenues. We've publicly stated the target last year did north of $33 million in revenues. We feel we're very much at the crossroads of approaching, assuming the acquisition closes, $50 million in revenues for this coming calendar year that we're in. That's up from $12 million last year. That's obviously transformative, and it puts us almost at 50% of that $100 million target. We also are involved in programs where there's meaningful growth. Today I'm not on liberty to expand on that, but I did touch on the different segments, whether it's smart textiles. Our gas sensing platforms could be used in chemical weapon detection related to drones. That's a very hot market right now, and unfortunately in our geopolitical environment, that's not going to go away anytime soon. We feel that based on the portfolio of technologies and solutions that Interlink provides to its customers or potential customers, that we're going to deliver on that organic growth commitment. You mentioned about the non-binding LOI, the acquisition that you're making. Can you discuss a little bit about the financing? It seems very intriguing, and how do you reassure investors that the debt structure won't over-leverage the balance sheet? Well, I think first, we have to show by example. We've done four smaller acquisitions. We used cash on hand. We tend to have a good track record of buying businesses at a fair valuation or an attractive valuation, and also making sure that they're integrated properly. Just the purchase is the initial step. The harder work is getting involved, leveraging the strengths and synergies between the businesses. We do that by maintaining the core foundation of the acquisition target. We're not going in there just stripping out the technology and the customer base. We keep the core team members, the physical footprints, so there's less of an integration risk because we're keeping the continuity of the businesses, the ingredients that made them successful to date, and we try to look on ways we can enhance the underlying businesses. Based on that, we feel that we mitigate the risk. As far as the debt structure, we're very prudent operators, very fiscally responsible. We feel based on the cash flow of the target, we could add some debt at a very low or reasonable ratio, debt to EBITDA ratio. From that standpoint, our interests is very much in line with our shareholders. In addition to our fiduciary duty, I represent between myself and some shares that I control, more than a majority of the shares outstanding. I have to date, the largest single investment that's been made in Interlink, and my interest is aligned with every shareholder of the company. We'll get to a question shortly on that. First, Interlink has successfully entered a high barrier to entry sectors, including volume production of custom piezoelectric sensors for autonomous vehicles and second generation FSR solutions for robotic-assisted surgery platforms. Design wins in automotive and medical diagnostics offer incredible long-term revenue stickiness, but they also carry notoriously long qualification cycles and regulatory hurdles. How are you insulating Interlink's quarterly cash flows from the unpredictability of these deployment timelines? Well, I think that's the beauty of Interlink's business is we're not tied to one vertical, and we're not tied to one product group. The best way we can address it is what the steps we've taken to date, where we've diversified our portfolio. When we kicked off InterLink 2.0 of launching a broader strategy of building out our global organization by adding different technologies and capabilities to the team, that created that diversification. So in essence, we've created our own mutual fund by adding these different technologies and businesses and different customer base to create that diversification that allows us not to be dependent on either one customer or one product group. I think it's very worthwhile to pursue the medical or automotive because even though the design cycle's longer, the life of that product and program is longer. The best example of that is in our force sensing technology portfolio, we've had a long-term relationship with Varian Medical, who was acquired by Siemens Healthineers a couple of years ago, where they use our force sensing technology as a collision detection system in essence, because it's used in their radiation oncology equipment during radiation therapy. So the bumper that goes against the patient has our force sensing element, and it's a tool to detect pressure. So if the patient moves, it's another measurement for the technician to make an adjustment during that therapy. That's been a relationship that dates to now, it dates over 30 years+. So we love medical, even though you have to be patient and get designed in and it could take five years, but the stickiness pays off, and the margins are attractive. You mentioned you personally hold a large portion of the company. I think it's around 68% stake in the company. This provides, obviously, an immense alignment with retail shareholders. It also creates sometimes concerns regarding public flow, liquidity, and institutional volume. With such a heavy insider position, your personal net worth is fundamentally tied to the long-term appreciation of Interlink. But the low liquidity can prevent larger institutions from building meaningful positions. What steps are you taking to improve trading liquidity and attract major institutional backers into the stock? It is an interesting discussion, and people have different views on that. Some very successful fund managers also vary in opinion on insider ownership. Being high is very attractive to some parties. Others like to see a larger flow. It really goes back to the basics. If we are executing and delivering revenues and earnings growth, I believe that is ultimately going to impact not just the liquidity of our shares, but also our stock price. First and foremost, my job as Chief Executive Officer is to oversee, to make sure that we are executing as a team, as an organization, and delivering strong financial performance to our shareholders. I believe that addresses the liquidity aspects. Then, over time, as we expand and grow the business, we will also look to raise additional equity capital if needed. That is also another way for institutions to invest in Interlink. The good news is we are very shareholder-friendly. Over the years, we get approached on a regular basis, parties that are looking to make investments, and some of them are potentially attractive, and some were very non-shareholder friendly. I think in addition to our fiduciary duty, the heavy insider ownership is a reinforcement of our commitment to drive long-term shareholder value. Ultimately, between that and the execution, continue growing the business, driving the fundamental growth, and raising additional capital if needed will address the liquidity aspect. Obviously, the recently announced acquisition and its closing will be a key catalyst going forward. Is that, plus other reasons why investors should tune in now? Yes, I think that, plus the fact that we touched on AI. We also did not mention an extension of AI is super computing, data analytics. All that requires sensors to capture that information. Without sensors being able to retrieve that data, there is nothing to process. I like to make reference that we tend to be the high-quality picks and shovels in the world of AI. It is a great area for investors to get exposure to the segment of the market that people talk less about because AI is catchy. But we are definitely addressing and play in these markets in multiple segments, and I touched on some of them, whether it is the air quality, it is also used in biomedical. So there is a whole host of opportunities that we built with just the current technology portfolio. Anything else you want to add before we conclude the discussion that I have not asked? I think we covered a lot of the areas. I will stress that the pending acquisition is a catalyst and transformative. I do agree with your assessment that that does make Interlink more attractive to take a look at us as an organization today, an investment opportunity. Thank you, Steven, and thank you for everyone for watching. If you have any questions or would like to schedule a meeting with Interlink, please send me an email at lowensteiner@lythampartners.com. We have more presentations and fireside chats coming up next, so don't go anywhere yet. Thank you and have a great rest of your day. All right, great. Adam, Steve, thank you so much for the discussion and the insights there into Interlink. Again, quick reminder, if you're just tuning in, all of the webcasts will be available to watch on demand after the summit. Up next, Adam will sit down with the team at Beyond Oil to discuss the business. Please stick around.