Interlink Electronics (LINK) 10-Q 10 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 08, 2016
Document and Entity Information
Entity Registrant Name	INTERLINK ELECTRONICS INC
Entity Central Index Key	828,146
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,328,055
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 6,162	$ 4,435
Accounts receivable, net	1,769	1,599
Inventories	1,242	1,015
Prepaid expenses and other current assets	140	298
Total current assets	9,313	7,347
Property, plant and equipment, net	357	176
Intangibles, net	38	13
Other assets	58	26
Total assets	9,766	7,562
Current liabilities:
Accounts payable	330	484
Accrued liabilities	322	304
Accrued income taxes	329
Deferred revenue, current	88	71
Total current liabilities	1,069	859
Deferred revenue, long term		40
Total liabilities	1,069	899
Commitments and contingencies (See note 9)
Stockholders' equity:
Common stock, $0.001 par value: 30,000 shares authorized, 7,328 and 7,326 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	7	7
Additional paid-in-capital	60,341	60,251
Accumulated deficit	(51,651)	(53,595)
Total stockholders' equity	8,697	6,663
Total liabilities and stockholders' equity	$ 9,766	$ 7,562

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	7,328,000	7,326,000
Common stock, shares outstanding	7,328,000	7,326,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Condensed Consolidated Statements of Income
Revenue, net	$ 3,246	$ 2,646	$ 9,105	$ 7,744
Cost of revenue	1,296	1,135	3,641	3,638
Gross profit	1,950	1,511	5,464	4,106
Operating expenses:
Engineering, research and development	183	219	498	637
Selling, general and administrative	830	816	2,497	2,291
Total operating expenses	1,013	1,035	2,995	2,928
Income from operations	937	476	2,469	1,178
Other income (expense)
Other income (expense), net	6	(10)	35	32
Income before income tax expense (benefit)	943	466	2,504	1,210
Income tax expense (benefit)	329	8	535	(3)
Net income	614	458	1,969	1,213
Other comprehensive income, net of tax:
Foreign currency translation adjustments	(4)	(8)	(25)	(9)
Comprehensive income	$ 610	$ 450	$ 1,944	$ 1,204
Earnings per share , basic and diluted	$ 0.08	$ 0.06	$ 0.27	$ 0.17
Weighted average common shares outstanding - basic	7,327	7,325	7,327	7,324
Weighted average common shares outstanding - diluted	7,410	7,331	7,406	7,330

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 1,969	$ 1,213
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	63	46
Stock based compensation	90	55
Changes in operating assets and liabilities:
Accounts receivable	(170)	(35)
Inventories	(227)	122
Prepaid expenses and other current assets	158	129
Other assets	(32)	(8)
Accounts payable	(154)	(169)
Accrued liabilities	18	(14)
Accrued income taxes	329
Deferred revenue	(23)	(22)
Net cash provided by operations	2,021	1,317
Cash flows from investing activities:
Purchases of property and equipment	(239)	(83)
Costs of intangibles	(30)
Net cash used in investing activities	(269)	(83)
Effect of exchange rate changes on cash and cash equivalents	(25)	(1)
Net increase in cash and cash equivalents	1,727	1,233
Cash and cash equivalents, beginning of year	4,435	2,386
Cash and cash equivalents, end of year	6,162	3,619
Supplemental disclosure of cash flow information:
Income taxes paid	$ 206	$ 1

THE COMPANY AND ITS SIGNIFICANT

THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES	NOTE 1-THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES Description of Business Interlink Electronics, Inc. (“we,” “us,” “our,” “Interlink” or the “Company”) designs, develops, manufactures and sells a range of force-sensing technologies that incorporate our proprietary materials technologies, firmware and software into a portfolio of standard sensor based products and custom sensor system solutions. These include sensor components, subassemblies, modules and products that support effective, efficient cursor control and novel three-dimensional user inputs. Our principal executive office is located at 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 and our telephone number is (805) 484-8855. Our website address is www.interlinkelectronics.com. Fiscal Year Our fiscal year is January 1 through December 31. Basis of Presentation The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. They do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2015 balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required for annual periods. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2015, included in our Annual Report on Form 10-K, filed with the SEC on March 25, 2016. The condensed consolidated financial statements included herein are unaudited. However, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our consolidated financial position and our consolidated results of operations and consolidated cash flows. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for future quarters or the full year. Our condensed consolidated financial statements include the accounts of Interlink and our subsidiaries in Shenzhen, China, Hong Kong and Singapore. All intercompany accounts and transactions between our consolidated operations have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and disclosures made in the accompanying notes to the condensed consolidated financial statements. Management regularly evaluates estimates and assumptions including those related to revenue recognition, allowances for doubtful accounts, warranty reserves, inventory valuations reserves, stock-based compensation, purchased intangible asset valuations and useful lives, asset retirement obligations, and deferred income tax asset valuation allowances. These estimates and assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The actual results we experience may differ materially and adversely from our original estimates. To the extent there are material differences between the estimates and the actual results, our future results of operations will be affected. Risk and Uncertainties Our future results of operations involve a number of risks and uncertainties. Factors that could affect our business or future results and cause actual results to vary materially from historical results include, but are not limited to, the rapid change in our industry; problems with the performance, reliability or quality of our products; loss of customers; impacts of doing business internationally, including foreign currency fluctuations; potential shortages of the supplies we use to manufacture our products; disruptions in our manufacturing facilities; changes in environmental directives impacting our manufacturing process or product lines; the development of new proprietary technology and the enforcement of intellectual property rights by or against us; our ability to attract and retain qualified employees; and our ability to raise additional capital. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The amendments to this update supersede nearly all existing revenue recognition guidance under GAAP, including the revenue recognition requirements in ASC 605, “ Revenue Recognition . ” The standard was originally set to become effective in annual periods beginning after December 15, 2016 and for interim and annual reporting periods thereafter. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers; Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for all entities by one year, thereby delaying the effective date of the standard to January 1, 2018, with an option that would permit companies to adopt the standard as early as the original effective date. Early adoption prior to the original effective date is not permitted. The core principle of this Topic is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This Topic defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than were required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company has not yet assessed the impact of ASU 2014-09 on its consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-12, “ Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force),” effective for annual periods and interim periods within those annual periods, beginning after December 15, 2015. This update is intended to resolve the diverse accounting treatment of share-based payment awards whose performance target may be achieved after the requisite service period. An entity may apply the standards (1) prospectively to all share-based payment awards that are granted or modified on or after the effective date, or (2) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Earlier application is permitted. Effective January 1, 2016, the Company adopted ASU No. 2014-12 and there was no impact to our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements – Going Concern (Sub-Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”, which provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This update is effective for annual periods ending after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” to change the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The standard is effective for fiscal and interim periods within those fiscal years, beginning after December 15, 2015. Effective January 1, 2016, the Company adopted ASU No. 2015-12 and it had no impact on our consolidated financial statments. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory ,” which provides new guidance regarding the measurement of inventory. The new guidance requires most inventory to be measured at the lower of cost or net realizable value. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard applies to companies other than those that measure inventory using last-in, first-out ("LIFO") or the retail inventory method. The standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. Early application is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU may be applied prospectively or retrospectively. The Company adopted the ASU No. 2015-17 on January 1, 2016, and it had no impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition anf Measurment of Financial Assets and Financial Liabilities,” that amends existing guidance around classification and measurement of certain financial assets and liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. For equity investments without readily determinable fair values, the cost method is also eliminated. However, most entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. The standard also requires that financial assets and liabilities be disclosed separately in the notes to the financial statements based on measurement principle and form of financial asset. The amendments in this guidance are effective for financial statements issued for interim and annual periods beginning after December 15, 2017. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842) ,” which replaces the existing guidance in ASC 840, “ Leases” . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and requires retrospective application. The Company is currently evaluating the impact of ASU 2016-02 to its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which modifies and simplifies several aspects of accounting for share-based payment transactions. Changes to the current guidance primarily pertain to the income tax consequences of share-based payment transactions. Under the standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur, regardless of whether the benefit reduces taxes payable in the current period. The full amount of excess tax benefits should be classified along with other income tax cash flows as an operating activity. When awards are settled, cash paid to the taxing authorities by an employer when directly withholding shares for tax withholding purposes will be classified as a financing activity. Additionally, with respect to forfeitures of awards, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables. The standard requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company has not yet evaluated the impact of the adoption of this accounting standard on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. We are currently evaluating the impact of ASU 2016-16 on our consolidated financial statements and related disclosures.

INVENTORIES

INVENTORIES	9 Months Ended
	Sep. 30, 2016
INVENTORIES
INVENTORIES	NOTE 2-INVENTORIES Inventories, stated at the lower of cost or market, consist of the following: September 30, December 31, 2016 2015 Inventories (in thousands) Raw materials $ $ Work-in-process Finished goods Total inventories $ $

STOCKHOLDERS EQUITY

STOCKHOLDERS EQUITY	9 Months Ended
	Sep. 30, 2016
STOCKHOLDERS EQUITY
STOCKHOLDERS' EQUITY	NOTE 3-STOCKHOLDERS’ EQUITY On February 24, 2015, we completed a two (2) share for one (1) share forward stock split of our common stock. On April 1, 2016, we completed a stock dividend of one quarter (¼) of one share of common stock for every one (1) share of common stock outstanding. All share amounts, exercise prices, and weighted-average grant date fair value for our common stock, stock options and restricted stock reflect the stock split and stock dividend. In conjunction with the February 24, 2015 stock split, the board of directors authorized the adoption of an amendment to the Articles of Incorporation to increase the Company’s authorized Common Stock from 15,000,000 shares to 30,000,000 shares. The number of authorized shares, common and preferred, and par values in the accompanying unaudited condensed consolidated financial statements have been recast to reflect the number of authorized shares and par values on a post-split basis.

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION	9 Months Ended
	Sep. 30, 2016
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION	NOTE 4-STOCK BASED COMPENSATION Under the terms of our 2016 Omnibus Incentive Plan (the “2016 Plan”), officers and key employees could be granted restricted stock units, as well as non-qualified or incentive stock options, at the discretion of the Compensation Committee of the Board of Directors. The Plan replaces the 1996 Stock Incentive Plan (the “1996 Plan”) which was terminated in December 2015; however, all grants issued under the 1996 Plan prior to its termination will continue to vest, expire or terminate in accordance with the 1996 Plan document and the terms of each award. Restricted Stock Units Our outstanding restricted stock unit grants vest over five years in installments of 50% on the fourth anniversary of the grant date and the remaining 50% on the fifth anniversary of the grant date. Unvested restricted shares are forfeited if the recipient’s employment terminates for any reason other than death, disability or special circumstances as determined by the Compensation Committee of the Board of Directors. Activity for our restricted stock units is as follows: Weighted Average Restricted Stock Weighted-Average Grant Remaining Aggregate Intrinsic Units Date Fair Value Contractual Life Value (in thousands) (years) (in thousands) Restricted stock units, December 31, 2015 $ $ Awarded $ Released — $ — Forfeited $ Restricted stock units, September 30, 2016 $ $ The aggregate intrinsic values in the preceding table for the restricted stock units outstanding represent the total pretax intrinsic value, based on our closing stock price of $10.00 and $5.71 as of September 30, 2016 and December 31, 2015, respectively. No restricted stock units vested in the nine months ended September 30, 2016. Stock Options The exercise price of our stock options is the closing price on the date the options are granted. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Options generally expire 10 years from the date of grant. The following table summarizes the activity for the remaining options outstanding under the Plan: Weighted Average Weighted Average Remaining Aggregate Intrinsic Shares Exercise Price Contractual Life Value (in thousands) (years) (in thousands) Options outstanding, December 31, 2015 $ $ Granted — $ — Exercised — $ — Cancelled or expired $ Options outstanding, September 30, 2016 $ $ Options exercisable, September 30, 2016 $ $ This intrinsic value represents the excess of the fair market value of our common stock on the date of exercise over the exercise price of such options. The aggregate intrinsic values in the preceding table for the options outstanding represent the total pretax intrinsic value, based on our closing stock price of $10.00 and $5.71 as of September 30, 2016 and December 31, respectively, which would have been received by the option holders had those option holders exercised their in-the-money options as of those dates. The fair value of stock-based option awards is estimated at the date of grant using the Black-Scholes option pricing model; however, the value calculated using an option pricing model may not be indicative of the fair value observed in a willing buyer/willing seller market transaction, or actually realized by the employee upon exercise. Expected volatility used to estimate the fair value of options granted is based on the historical volatility of our common stock. The risk-free interest rate is based on the United States Treasury constant maturity rate for the expected life of the stock option. The expected life of a stock award is the period of time that the award is expected to be outstanding. We have not granted any stock options since 2008. The following table provides additional information in regards to options outstanding as of September 30, 2016: Options Outstanding Options Exercisable Weighted Range of Number Weighted Average Weighted Average Number Average Exercise Exercise Price Outstanding Remaining Contractual Life Exercise Price Exercisable Price (in thousands) (years) (in thousands) $ 1.56 $ $ $ - 5.30 $ $ $ $

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
EARNINGS PER SHARE	NOTE 5-EARNINGS PER SHARE Basic earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding during the period, plus the dilutive effect of outstanding stock options and restricted stock-based awards using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (in thousands) (in thousands) Net income $ $ $ $ Weighted average outstanding shares of common stock Dilutive potential common shares from stock options and restricted stock units Common stock and common stock equivalents Earnings per share: Earnings per share, basic and diluted $ $ $ $ Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation

SIGNIFICANT CUSTOMERS, CONCENTR

SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION	9 Months Ended
	Sep. 30, 2016
SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION
SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION	NOTE 6-SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION We manage and operate our business through one operating segment. Net revenues from customers equal to, or greater than, 10% of total net revenues are as follows: Three months endedSeptember 30, Nine months ended September 30, 2016 2015 2016 2015 (in thousands) (in thousands) Customer A % % % % Customer B % % % % Customer C % % % % Customer D * % % % * % * Net revenues by geographic area are as follows: Three months endedSeptember 30, Nine months ended September 30, 2016 2015 2016 2015 (in thousands) (in thousands) United States $ $ $ $ Asia Europe and other Revenue, net $ $ $ $ Revenues by geographic area are based on the country of shipment. 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. We provide credit only to creditworthy third parties who are subject to our credit verification procedures. Accounts receivable balances are monitored on an ongoing basis, and accounts deemed to have credit risk are fully reserved. At September 30, 2016, four customers accounted for 31%, 26%, 10% and 10% of total accounts receivable, respectively. At December 31, 2015, four customers accounted for approximately 33%, 19%, 14% and 11% of total accounts receivable, respectively. Our allowance for doubtful accounts was $0 and $10 thousand as of September 30, 2016 and December 31, 2015, respectively. Our long-lived assets (property, plant and equipment plus intangibles, net) were geographically located as follows: September 30, December 31, 2016 2015 (in thousands) United States $ $ Asia Total long-lived assets $ $

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2016
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 7-RELATED PARTY TRANSACTIONS BKF Capital Group We entered into an agreement, dated March 1, 2015, with BKF Capital Group, Inc. (“BKF”). Pursuant to the agreement, commencing on March 1, 2015, BKF occupies and uses one furnished office, telephone and other services, located at our corporate offices for a fee of $1 thousand per month. BKF paid $3 thousand and $3 thousand for the three months ended September 30, 2016 and 2015, respectively. BKF paid us $9 thousand and $7 thousand for the nine months ended September 30, 2016 and 2015, respectively. Steven N. Bronson, our CEO and Chairman, is also the Chairman, CEO and majority shareholder of BKF. Qualstar Corporation (QBAK) The Company agreed to reimburse, or be reimbursed by, Qualstar Corporation (“Qualstar”) for our occupation and use of a portion of their Simi Valley manufacturing location and other expenses paid by or on behalf of our Company. Steven N. Bronson, our CEO and Chairman, is also the Chairman and CEO of Qualstar. Transactions with Qualstar are as follows: Three months ended September 30, 2016 2015 Due from Qualstar Due to Qualstar Due from Qualstar Due to Qualstar (in thousands) Balance at June 30, $ $ $ $ Billed to Qualstar by Interlink — — Paid by Qualstar to Interlink — — Billed to Interlink by Qualstar — — Paid by Interlink to Qualstar — — Balance at September 30, $ — $ $ — $ Nine months endedSeptember 30, 2016 2015 Due from Qualstar Due to Qualstar Due from Qualstar Due to Qualstar (in thousands) Balance at January 1, $ — $ $ $ Billed to Qualstar by Interlink — — Paid by Qualstar to Interlink — — Billed to Interlink by Qualstar — — Paid by Interlink to Qualstar — — Balance at September 30, $ — $ $ — $

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2016
INCOME TAXES
INCOME TAXES	NOTE 8-INCOME TAXES Income tax expense (benefit) as a percentage of income before incomes taxes was 21.4% for the nine months ended September 30, 2016 compared to negative 0.2% for the comparable period in the prior year. Our income tax expense (benefit) is primarily impacted by the mix of domestic and foreign pre-tax earnings, as well as our ability to utilize prior net operating loss carryovers (NOLs). Because of the change of ownership provisions of the Tax Reform Act of 1986, use of a portion of our domestic NOL and tax credit carryforwards may be limited in future periods. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities. Our federal and state NOLs are subject to annual limitations due to a February 2010 ownership change. We recorded a valuation allowance against all of our net deferred tax assets as of both September 30, 2016, and December 31, 2015. We intend to continue maintaining a full valuation allowance on our net deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. However, given our current earnings and anticipated future earnings, we believe that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to allow us to reach a conclusion that a portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	NOTE 9-COMMITMENTS AND CONTINGENCIES Operating Leases We lease certain facilities under non-cancellable operating leases. The leases expire at various dates through fiscal 2020 and frequently include renewal provisions for varying periods of time, provisions which require us to pay taxes, insurance and maintenance costs, and provisions for minimum rent increases. Minimum lease payments, including scheduled rent increases are recognized as rent expenses on a straight-line basis over the term of the lease. Future minimum lease payments under non-cancellable operating leases that have remaining non-cancellable lease terms in excess of one year are as follows: Remaining 2016 2017 2018 2019 Thereafter Total (in thousands) Operating Leases $ $ $ $ $ $ Litigation From time to time, we are involved in legal proceedings in the ordinary course of business, including actions against us which assert or may assert claims or seek to impose fines and penalties in substantial amounts. Related legal defense costs are expensed as incurred. We are not currently a party to any legal proceedings that we believe would reasonably be expected to have a material adverse effect on our business, financial condition or results of operation or cash flows. Warranties We establish reserves for future product warranty costs that are expected to be incurred pursuant to specific warranty provisions with our customers. We generally warrant our products against defects for one year from date of shipment, with certain exceptions in which the warranty period can extend to more than one year based on contractual agreements. Our warranty reserves are established at the time of sale and updated throughout the warranty period based upon numerous factors including historical warranty return rates and expenses over various warranty periods. Historically, our warranty returns have not been material. Intellectual Property Indemnities We indemnify certain customers and our contract manufacturers against liability arising from third-party claims of intellectual property rights infringement related to our products. These indemnities appear in development and supply agreements with our customers as well as manufacturing service agreements with our contract manufacturers, are not limited in amount or duration and generally survive the expiration of the contract. Given that the amount of any potential liabilities related to such indemnities cannot be determined until an infringement claim has been made, we are unable to determine the maximum amount of losses that we could incur related to such indemnifications. Director and Officer Indemnities and Contractual Guarantees We have entered into indemnification agreements with our directors and executive officers, which require us to indemnify such individuals to the fullest extent permitted by Nevada law. Our indemnification obligations under such agreements are not limited in amount or duration. Certain costs incurred in connection with such indemnifications may be recovered under certain circumstances under various insurance policies. Given that the amount of any potential liabilities related to such indemnities cannot be determined until a lawsuit has been filed, we are unable to determine the maximum amount of losses that we could incur relating to such indemnities. We have also entered into severance and change in control agreements with certain of our executives. These agreements provide for the payment of specific compensation benefits to such executives upon the termination of their employment with us. Guarantees and Indemnities In the normal course of business, we are occasionally required to undertake indemnification for which we may be required to make future payments under specific circumstances. We review our exposure under such obligations no less than annually, or more frequently as required. The amount of any potential liabilities related to such obligations cannot be accurately determined until a formal claim is filed. Historically, any such amounts that become payable have not had a material negative effect our business, financial condition or results of operations. We maintain general and product liability insurance which may provide a source of recovery to us in the event of an indemnification claim.

THE COMPANY AND ITS SIGNIFICA15

THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Description of Business	Description of Business Interlink Electronics, Inc. (“we,” “us,” “our,” “Interlink” or the “Company”) designs, develops, manufactures and sells a range of force-sensing technologies that incorporate our proprietary materials technologies, firmware and software into a portfolio of standard sensor based products and custom sensor system solutions. These include sensor components, subassemblies, modules and products that support effective, efficient cursor control and novel three-dimensional user inputs. Our principal executive office is located at 31248 Oak Crest Drive, Suite 110, Westlake Village, California 91361 and our telephone number is (805) 484-8855. Our website address is www.interlinkelectronics.com.
Fiscal Year	Fiscal Year Our fiscal year is January 1 through December 31.
Basis of Presentation	Basis of Presentation The interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. They do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2015 balance sheet data was derived from the Company’s audited consolidated financial statements, but does not include all disclosures required for annual periods. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2015, included in our Annual Report on Form 10-K, filed with the SEC on March 25, 2016. The condensed consolidated financial statements included herein are unaudited. However, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly our consolidated financial position and our consolidated results of operations and consolidated cash flows. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for future quarters or the full year. Our condensed consolidated financial statements include the accounts of Interlink and our subsidiaries in Shenzhen, China, Hong Kong and Singapore. All intercompany accounts and transactions between our consolidated operations have been eliminated.
Use of Estimates	Use of Estimates The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and disclosures made in the accompanying notes to the condensed consolidated financial statements. Management regularly evaluates estimates and assumptions including those related to revenue recognition, allowances for doubtful accounts, warranty reserves, inventory valuations reserves, stock-based compensation, purchased intangible asset valuations and useful lives, asset retirement obligations, and deferred income tax asset valuation allowances. These estimates and assumptions are based on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The actual results we experience may differ materially and adversely from our original estimates. To the extent there are material differences between the estimates and the actual results, our future results of operations will be affected.
Risk and Uncertainties	Risk and Uncertainties Our future results of operations involve a number of risks and uncertainties. Factors that could affect our business or future results and cause actual results to vary materially from historical results include, but are not limited to, the rapid change in our industry; problems with the performance, reliability or quality of our products; loss of customers; impacts of doing business internationally, including foreign currency fluctuations; potential shortages of the supplies we use to manufacture our products; disruptions in our manufacturing facilities; changes in environmental directives impacting our manufacturing process or product lines; the development of new proprietary technology and the enforcement of intellectual property rights by or against us; our ability to attract and retain qualified employees; and our ability to raise additional capital.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board, (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “ Revenue from Contracts with Customers (Topic 606) .” The amendments to this update supersede nearly all existing revenue recognition guidance under GAAP, including the revenue recognition requirements in ASC 605, “ Revenue Recognition . ” The standard was originally set to become effective in annual periods beginning after December 15, 2016 and for interim and annual reporting periods thereafter. In August 2015, the FASB issued ASU 2015-14 Revenue from Contracts with Customers; Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for all entities by one year, thereby delaying the effective date of the standard to January 1, 2018, with an option that would permit companies to adopt the standard as early as the original effective date. Early adoption prior to the original effective date is not permitted. The core principle of this Topic is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. This Topic defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than were required under existing GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The Company has not yet assessed the impact of ASU 2014-09 on its consolidated financial statements. In June 2014, the FASB issued ASU No. 2014-12, “ Compensation—Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force),” effective for annual periods and interim periods within those annual periods, beginning after December 15, 2015. This update is intended to resolve the diverse accounting treatment of share-based payment awards whose performance target may be achieved after the requisite service period. An entity may apply the standards (1) prospectively to all share-based payment awards that are granted or modified on or after the effective date, or (2) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. Earlier application is permitted. Effective January 1, 2016, the Company adopted ASU No. 2014-12 and there was no impact to our consolidated financial statements. In August 2014, the FASB issued ASU No. 2014-15, “ Presentation of Financial Statements – Going Concern (Sub-Topic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern ”, which provides guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. This update is effective for annual periods ending after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” to change the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The standard is effective for fiscal and interim periods within those fiscal years, beginning after December 15, 2015. Effective January 1, 2016, the Company adopted ASU No. 2015-12 and it had no impact on our consolidated financial statments. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory ,” which provides new guidance regarding the measurement of inventory. The new guidance requires most inventory to be measured at the lower of cost or net realizable value. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard applies to companies other than those that measure inventory using last-in, first-out ("LIFO") or the retail inventory method. The standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within those reporting periods. Early application is permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In November 2015, the FASB issued ASU No. 2015-17, “ Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes,” which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU may be applied prospectively or retrospectively. The Company adopted the ASU No. 2015-17 on January 1, 2016, and it had no impact on our consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition anf Measurment of Financial Assets and Financial Liabilities,” that amends existing guidance around classification and measurement of certain financial assets and liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) will generally be measured at fair value through earnings. For equity investments without readily determinable fair values, the cost method is also eliminated. However, most entities will be able to elect to record equity investments without readily determinable fair values at cost, less impairment, and plus or minus subsequent adjustments for observable price changes. The standard also requires that financial assets and liabilities be disclosed separately in the notes to the financial statements based on measurement principle and form of financial asset. The amendments in this guidance are effective for financial statements issued for interim and annual periods beginning after December 15, 2017. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842) ,” which replaces the existing guidance in ASC 840, “ Leases” . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years and requires retrospective application. The Company is currently evaluating the impact of ASU 2016-02 to its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” which modifies and simplifies several aspects of accounting for share-based payment transactions. Changes to the current guidance primarily pertain to the income tax consequences of share-based payment transactions. Under the standard, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur, regardless of whether the benefit reduces taxes payable in the current period. The full amount of excess tax benefits should be classified along with other income tax cash flows as an operating activity. When awards are settled, cash paid to the taxing authorities by an employer when directly withholding shares for tax withholding purposes will be classified as a financing activity. Additionally, with respect to forfeitures of awards, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income, including trade receivables. The standard requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. The standard is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. This standard is not expected to have a significant impact on our consolidated financial statements or disclosures. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which clarifies how cash receipts and cash payments in certain transactions are presented and classified in the statement of cash flows. The effective date of this update is for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The update requires retrospective application to all periods presented but may be applied prospectively if retrospective application is impracticable. The Company has not yet evaluated the impact of the adoption of this accounting standard on its consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. We are currently evaluating the impact of ASU 2016-16 on our consolidated financial statements and related disclosures.

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2016
INVENTORIES
Schedule of inventories	September 30, December 31, 2016 2015 Inventories (in thousands) Raw materials $ $ Work-in-process Finished goods Total inventories $ $

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
STOCK BASED COMPENSATION
Schedule of activity for restricted stock units	Weighted Average Restricted Stock Weighted-Average Grant Remaining Aggregate Intrinsic Units Date Fair Value Contractual Life Value (in thousands) (years) (in thousands) Restricted stock units, December 31, 2015 $ $ Awarded $ Released — $ — Forfeited $ Restricted stock units, September 30, 2016 $ $
Schedule of activity for remaining options outstanding under the plan	Weighted Average Weighted Average Remaining Aggregate Intrinsic Shares Exercise Price Contractual Life Value (in thousands) (years) (in thousands) Options outstanding, December 31, 2015 $ $ Granted — $ — Exercised — $ — Cancelled or expired $ Options outstanding, September 30, 2016 $ $ Options exercisable, September 30, 2016 $ $
Schedule of additional information in regards to options outstanding	Options Outstanding Options Exercisable Weighted Range of Number Weighted Average Weighted Average Number Average Exercise Exercise Price Outstanding Remaining Contractual Life Exercise Price Exercisable Price (in thousands) (years) (in thousands) $ 1.56 $ $ $ - 5.30 $ $ $ $

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2016
EARNINGS PER SHARE
Schedule of computation of basic and diluted earnings per share	Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (in thousands) (in thousands) Net income $ $ $ $ Weighted average outstanding shares of common stock Dilutive potential common shares from stock options and restricted stock units Common stock and common stock equivalents Earnings per share: Earnings per share, basic and diluted $ $ $ $ Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation

SIGNIFICANT CUSTOMERS, CONCEN19

SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION (Tables)	9 Months Ended
	Sep. 30, 2016
SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION
Schedule of net revenues from customers	Three months endedSeptember 30, Nine months ended September 30, 2016 2015 2016 2015 (in thousands) (in thousands) Customer A % % % % Customer B % % % % Customer C % % % % Customer D * % % % * % *
Schedule of net revenues by geographical area	Three months endedSeptember 30, Nine months ended September 30, 2016 2015 2016 2015 (in thousands) (in thousands) United States $ $ $ $ Asia Europe and other Revenue, net $ $ $ $
Schedule of assets by geographical area	September 30, December 31, 2016 2015 (in thousands) United States $ $ Asia Total long-lived assets $ $

RELATED PARTY TRANSACTIONS (Tab

RELATED PARTY TRANSACTIONS (Tables)	9 Months Ended
	Sep. 30, 2016
RELATED PARTY TRANSACTIONS
Schedule of related party transactions	Three months ended September 30, 2016 2015 Due from Qualstar Due to Qualstar Due from Qualstar Due to Qualstar (in thousands) Balance at June 30, $ $ $ $ Billed to Qualstar by Interlink — — Paid by Qualstar to Interlink — — Billed to Interlink by Qualstar — — Paid by Interlink to Qualstar — — Balance at September 30, $ — $ $ — $ Nine months endedSeptember 30, 2016 2015 Due from Qualstar Due to Qualstar Due from Qualstar Due to Qualstar (in thousands) Balance at January 1, $ — $ $ $ Billed to Qualstar by Interlink — — Paid by Qualstar to Interlink — — Billed to Interlink by Qualstar — — Paid by Interlink to Qualstar — — Balance at September 30, $ — $ $ — $

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2016
COMMITMENTS AND CONTINGENCIES
Schedule of future minimum lease payments under non-cancellable operating leases	Remaining 2016 2017 2018 2019 Thereafter Total (in thousands) Operating Leases $ $ $ $ $ $

INVENTORIES (Details)

INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Inventories
Raw materials	$ 678	$ 681
Work-in-process	330	172
Finished goods	234	162
Total inventories	$ 1,242	$ 1,015

STOCKHOLDERS EQUITY (Details)

STOCKHOLDERS EQUITY (Details)	Feb. 24, 2015shares	Sep. 30, 2016shares	Apr. 01, 2016shares	Dec. 31, 2015shares	Feb. 23, 2015shares
STOCKHOLDERS EQUITY
Stock spilt	2
Common stock dividend for each outstanding share (in shares)			0.25
Common stock, shares authorized	30,000,000	30,000,000		30,000,000	15,000,000

STOCK BASED COMPENSATION - Rest

STOCK BASED COMPENSATION - Restricted Stock Units (Details) - Restricted Stock Units - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Restricted Stock Units
Vesting period	5 years
Restricted Stock Units
Restricted stock units at the beginning of the period (in shares)	161
Awarded (in shares)	10
Released (in shares)	0
Forfeited (in shares)	(6)
Restricted stock units at the end of the period (in shares)	165	161
Weighted-Average Grant Date Fair Value
Restricted stock units at the beginning of the period (in dollars per share)	$ 3.16
Awarded (in dollars per share)	11.20
Forfeited (in dollars per share)	6
Restricted stock units at the end of the period (in dollars per share)	$ 3.54	$ 3.16
Weighted Average Remaining Contractual Life
Restricted stock units	2 years 7 months 2 days	3 years 3 months 18 days
Aggregate Intrinsic Value
Restricted stock units	$ 1,650	$ 921
Stock price	$ 10	$ 5.71
First installment
Restricted Stock Units
Vesting (as a percent)	50.00%
Second installment
Restricted Stock Units
Vesting (as a percent)	50.00%

STOCK BASED COMPENSATION - Stoc

STOCK BASED COMPENSATION - Stock Options (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Stock Options
Expiration period	10 years
Shares
Options outstanding at the beginning of the period (in shares)	18
Cancelled or expired (in shares)	(6)
Options outstanding at the end of the period (in share)	12	18
Options exercisable at the end of the period (in shares)	12
Weighted Average Exercise Price
Options outstanding at the beginning of the period (in dollars per share)	$ 4.70
Cancelled or expired (in dollars per share)	6.32
Options outstanding at the end of the period (in dollars per share)	3.80	$ 4.70
Options exercisable at the end of the period (in dollars per share)	$ 3.80
Weighted Average Remaining Contractual Life
Options outstanding	10 months 13 days	1 year 1 month 10 days
Options exercisable	10 months 13 days
Intrinsic value of options outstanding	$ 72	$ 22
Intrinsic value of options exercisable	$ 72
Stock price	$ 10	$ 5.71

STOCK BASED COMPENSATION - Opti

STOCK BASED COMPENSATION - Option Pricing (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2016$ / sharesshares
Exercise price ranges
Number Outstanding (in shares) | shares	12
Weighted Average Remaining Contractual Life	10 months 13 days
Weighted Average Exercise Price (in dollars per share)	$ 3.80
Number Exercisable | shares	12
Weighted Average Exercise Price (in dollars per share)	$ 3.80
$0 - $1.56
Exercise price ranges
Exercise price range, upper limit (in dollars per share)	$ 1.56
Number Outstanding (in shares) | shares	4
Weighted Average Remaining Contractual Life	1 year 6 months 7 days
Weighted Average Exercise Price (in dollars per share)	$ 1.56
Number Exercisable | shares	4
Weighted Average Exercise Price (in dollars per share)	$ 1.56
$4.80 - $5.30
Exercise price ranges
Exercise price range, lower limit (in dollars per share)	4.80
Exercise price range, upper limit (in dollars per share)	$ 5.30
Number Outstanding (in shares) | shares	8
Weighted Average Remaining Contractual Life	6 months 11 days
Weighted Average Exercise Price (in dollars per share)	$ 4.97
Number Exercisable | shares	8
Weighted Average Exercise Price (in dollars per share)	$ 4.97

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Basic and diluted earnings
Net income	$ 614	$ 458	$ 1,969	$ 1,213
Weighted average outstanding shares of common stock	7,327	7,325	7,327	7,324
Dilutive potential common shares from stock options and restricted stock units	83	6	79	6
Common stock and common stock equivalents	7,410	7,331	7,406	7,330
Earnings per share:
Earnings per share , basic and diluted	$ 0.08	$ 0.06	$ 0.27	$ 0.17
Shares subject to anti-dilutive stock options and restricted stock-based awards excluded from calculation	93	175	98	175

SIGNIFICANT CUSTOMERS, CONCEN28

SIGNIFICANT CUSTOMERS, CONCENTRATION OF CREDIT RISK AND GEOGRAPHIC INFORMATION (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)segmentcustomer	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)customer
Significant Customers, Concentration of Credit Risk and Geographic Information
Number of operating segments | segment			1
Revenue, net	$ 3,246	$ 2,646	$ 9,105	$ 7,744
Allowance for doubtful accounts	$ 0		$ 0		$ 10
Net revenue | Customer Concentration Risk | Customer A
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)	23.00%	23.00%	21.00%	21.00%
Net revenue | Customer Concentration Risk | Customer B
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)	14.00%	13.00%	12.00%	17.00%
Net revenue | Customer Concentration Risk | Customer C
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)	11.00%	14.00%	11.00%	17.00%
Net revenue | Customer Concentration Risk | Customer D
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)		15.00%	11.00%
Net revenue | Geographic Concentration Risk
Significant Customers, Concentration of Credit Risk and Geographic Information
Revenue, net	$ 3,246	$ 2,646	$ 9,105	$ 7,744
Net revenue | Geographic Concentration Risk | United states
Significant Customers, Concentration of Credit Risk and Geographic Information
Revenue, net	1,699	1,590	5,191	4,462
Net revenue | Geographic Concentration Risk | Asia
Significant Customers, Concentration of Credit Risk and Geographic Information
Revenue, net	1,093	669	2,410	2,056
Net revenue | Geographic Concentration Risk | Europe and other
Significant Customers, Concentration of Credit Risk and Geographic Information
Revenue, net	454	$ 387	$ 1,504	$ 1,226
Accounts receivable | Credit Concentration Risk
Significant Customers, Concentration of Credit Risk and Geographic Information
Number of customers | customer			4		4
Accounts receivable | Credit Concentration Risk | Customer One
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)			31.00%		33.00%
Accounts receivable | Credit Concentration Risk | Customer Two
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)			26.00%		19.00%
Accounts receivable | Credit Concentration Risk | Customer Three
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)			10.00%		14.00%
Accounts receivable | Credit Concentration Risk | Customer Four
Significant Customers, Concentration of Credit Risk and Geographic Information
Concentration risk (as a percent)			10.00%		11.00%
Assets | Geographic Concentration Risk
Significant Customers, Concentration of Credit Risk and Geographic Information
Total long-lived assets	395		$ 395		$ 189
Assets | Geographic Concentration Risk | United states
Significant Customers, Concentration of Credit Risk and Geographic Information
Total long-lived assets	84		84		45
Assets | Geographic Concentration Risk | Asia
Significant Customers, Concentration of Credit Risk and Geographic Information
Total long-lived assets	$ 311		$ 311		$ 144

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) $ in Thousands	Mar. 01, 2016USD ($)item	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)
BKF Capital
RELATED PARTY TRANSACTIONS
Number of offices leased out | item	1
Revenue from related parties per month	$ 1
Revenue from related parties		$ 3	$ 3	$ 9	$ 7
Qualstar
Due to Qualstar
Paid to Qualstar		10	14	33	42
Due to Qualstar, beginning balance		3	4	6	2
Billed to Interlink by Qualstar		10	15	30	45
Due to Qualstar, end balance		3	5	3	5
Due from Qualstar
Reimbursed from Qualstar		9	3	11	18
Due from Qualstar, beginning balance		4	1		5
Billed to Qualstar by Interlink		$ 5	$ 2	$ 11	$ 13

INCOME TAXES (Details)

INCOME TAXES (Details)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
INCOME TAXES
Income tax expense (benefit) (as a percent)	21.40%	(0.20%)

COMMITMENTS AND CONTINGENCIES31

COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)
Future minimum lease payments under non-cancellable operating leases
Remaining 2,016	$ 69
2,017	219
2,018	184
2,019	188
Thereafter	195
Total	$ 855
Minimum
Future minimum lease payments under non-cancellable operating leases
Period of warranty from date of shipment	1 year