UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

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þ		Preliminary Proxy Statement
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o		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Under Rule 14a-12

INTERLINK ELECTRONICS, INC.

(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER
THAN THE REGISTRANT)

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PRELIMINARY PROXY STATEMENT

(SUBJECT TO COMPLETION)

OF

STEVEN R. BECKER

SRB GREENWAY CAPITAL, L.P.

BC ADVISORS, LLC

SRB MANAGEMENT, L.P.

SRB GREENWAY CAPITAL (Q.P.), L.P.

SRB GREENWAY OFFSHORE OPERATING FUND, L.P.

TOM THIMOT

AND

LAWRENCE BARKER

 

 

ANNUAL MEETING OF STOCKHOLDERS OF

INTERLINK ELECTRONICS, INC.

TO BE HELD OCTOBER 18, 2006

 

 

 

September   , 2006

 

Fellow Stockholders of Interlink Electronics, Inc.:

 

Steven R. Becker, SRB Greenway Capital, L.P., SRB Management, L.P., BC Advisors, LLC, SRB Greenway Capital (Q.P.), L.P., SRB Greenway Offshore Operating Fund, L.P., Tom Thimot and Lawrence Barker (which we refer to collectively as the “Becker Group,” “we,” or “us”) are significant stockholders of Interlink Electronics, Inc. (the “Company” or “Interlink”). The Becker Group believes that a change in the composition of the current board of directors of Interlink is in the best interests of Interlink and its unaffiliated stockholders. The Becker Group is therefore seeking your support at the annual meeting of stockholders of Interlink (the “Annual Meeting”) to be held on October 18, 2006 at 2:00 p.m. Pacific Standard Time at the Hampton Inn and Suites, 50 West Daily Drive, Camarillo, California 93010:

 

 

We urge you to elect the Becker Group’s nominees to the Company’s Board of Directors because we believe that the election of new members to the Board would be beneficial to the Company and its unaffiliated stockholders. Among other things, we believe that electing the Becker Group’s nominees would provide a new perspective to Interlink’s Board. We believe that the Board should include these new members, who were successful leaders of small public technology companies and successfully revitalized them.

 

This Proxy Statement, dated          , 2006, and the accompanying BLUE proxy card are being furnished in connection with the solicitation of proxies by the Becker Group, to be voted at the Annual Meeting, including any adjournments, postponements, continuance, or rescheduling thereof, and any annual meeting called in lieu thereof.

 

This solicitation is being conducted by Steven R. Becker, SRB Greenway Capital, L.P., SRB Management, L.P., BC Advisors, LLC, SRB Greenway Capital (Q.P.), L.P., SRB Greenway Offshore Operating Fund, L.P., Tom Thimot and Lawrence Barker. Collectively, the members of the Becker Group beneficially own approximately 9.4%

/s/  Steven R. Becker

However, there can be no assurances that the Becker Group nominees, if elected, and the Board of Directors will succeed in creating stockholder value.

 

The proposed Becker Group nominees will, if elected, constitute a minority of the Board of Directors and, therefore, even if they vote unanimously, will not be able to adopt any measures without the support of other members of the Board of Directors. The Becker Group members believe, however, that the Becker Group nominees, if elected to the Board of Directors, will be in a position to influence the strategic direction of the Company and to bring to the Board of Directors a fresh perspective, will be sensitive to the concerns of significant stockholders, and will be willing to reexamine the Company’s strategy and approach. The Becker Group members may, depending upon future events, seek to nominate additional directors to the Board of Directors in the future. The Becker Group has also asked the Board of Directors to repeal or amend certain provisions of the Bylaws and the Certificate of Incorporation of the Company which presently provide that directors serve “staggered” terms of office, because the Becker Group believes that having all directors subject to election each year will make directors more responsive to stockholders. However, such a repeal or amendment will require action by a majority of the Board of directors and approval by the stockholders, and is not being considered at the Annual Meeting. Even if the Becker group nominees are elected, they will be unable to repeal the provisions for a “staggered” board of directors without the cooperation of other directors. The Becker Group nominees have stated that they would favor an amendment to the Company’s charter documents to eliminate the “staggered” nature of the Board of Directors.

 

Background

 

The Becker Group holds approximately 9.4% of the Company’s common stock, which was acquired for investment purposes. The Becker Group has become increasingly concerned with the operating performance of Interlink under the direction of Michael Thoben, Chief Executive Officer of Interlink for the past fifteen years. According to Interlink’s recently restated 10-K, the Company has lost money consistently in every year since 2001. From 2001 through 2005, and not including year to date 2006, Interlink had an aggregate net loss of $20,793,000. In Mr. Thoben’s recent “Second Open Memo to Stakeholders” dated May 23, 2006, he indicates revenues declined in the first quarter of 2006 compared to the first quarter of 2005, and that the Company expects continued losses in the first quarter of 2006. Additionally, Interlink is not current in its filings with the SEC and the Company has been delisted and now trades on the pink sheets. The market appears to share the same concerns, as Interlink has, as of September 15, 2006, lost 77% of its value since its most recent high of $12.08 in April of 2004.

 

Interlink’s Chairman and Chief Executive Officer, Michael Thoben, is asking shareholders to re-elect the same board members that have guided the company through the past five years. The Becker Group believes that Interlink and its shareholders would benefit from the guidance of new directors with turnaround experience at small public technology companies. Without the benefit of recent financials, the Becker Group cannot make specific suggestions. It is clear that an unbroken string of what now appears to be six consecutive years of losses is not acceptable. Based on the assertions of Mr. Thoben in his recent open letter to stockholders it appears that the e-Transactions business and Specialty Components business have compelling growth trajectories and a positive outlook. However, the rationale for surrounding these businesses with the divisions formerly known as Home Entertainment and Business Solutions, businesses which are in decline according to Interlink’s latest Form 10-K and Mr. Thoben’s recent communications, is unclear to us. The Becker Group members believe the sum of these parts may be worth well in excess of the current enterprise value if these businesses were rationalized. However, due in part to the fact that the Company has failed to file timely SEC reports as required by law, there is not sufficient information available to make a specific proposal as to whether or how to rationalize these business units. The Becker Group believes a Board with new members experienced in small public technology company turnarounds should consider these and other issues.

 

Mr. Becker called Mr. Michael Thoben, Chief Executive Officer of Interlink for the past fifteen years and current Chairman of the Board, and advised him of his view that the board needs some fresh perspectives, noting the trends in the Company’s business over the last three years and the fact that the Company’s stock has been delisted and now trades on the pink sheets. Mr. Becker recommended that there be new directors with relevant experience in managing technology turnarounds, but Mr. Thoben rejected this recommendation. Subsequently, Mr. Becker received an email message from Mr. Thoben indicating that the Company’s Nominating Committee would consider

competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws, or finding any violation with respect to such laws; (iii) was a party to a civil proceeding which ultimately mandated activities that were subject to federal securities laws.

 

Except as set forth in this proxy statement or in the exhibits hereto, none of the Becker Group, any of the persons participating in this proxy solicitation on behalf of the Becker Group, the Becker Group nominees or, with respect to items (i), (vii) and (viii) of this paragraph, any associate (within the meaning of Rule 14a-1 of the Securities Exchange Act of 1934) of the foregoing persons (i) owns beneficially, directly or indirectly, any securities of the Company, (ii) owns beneficially, directly or indirectly, any securities of any parent or subsidiary of the Company, (iii) owns any securities of the Company of record but not beneficially, (iv) has purchased or sold any securities of the Company within the past two years, (v) has incurred indebtedness for the purpose of acquiring or holding securities of the Company, (vi) is or has within the past year been a party to any contract, arrangement or understanding with respect to any securities of the Company, (vii) since the beginning of the Company’s last fiscal year has been indebted to the Company or any of its subsidiaries in excess of $60,000 or (viii) has any arrangement or understanding with respect to future employment by the Company or with respect to any future transactions to which the Company or any of its affiliates will or may be a party. In addition, except as set forth in this proxy statement or in the exhibits hereto, none of the Becker Group, any of the persons participating in this proxy solicitation on behalf of the Becker Group, the Becker Group nominees and any associates of the foregoing persons, has had or is to have a direct or indirect material interest in any transaction or proposed transaction with the Company in which the amount involved exceeds $60,000, since the beginning of the Company’s last fiscal year.

 

Except as set forth in this proxy statement or in the exhibits hereto, none of the Becker Group nominees, since the beginning of the Company’s last fiscal year, has been affiliated with (i) any entity that made or received, or during the Company’s current fiscal year proposes to make or receive, payments to or from the Company or its subsidiaries for property or services in excess of five percent of either the Company’s or such entity’s consolidated gross revenues for its last full fiscal year, or (ii) any entity to which the Company or its subsidiaries were indebted at the end of the Company’s last full fiscal year in an aggregate amount exceeding five percent of the Company’s total consolidated assets at the end of such year. None of the Becker Group nominees is, or during the Company’s last fiscal year has been, affiliated with any law or investment banking firm that has performed or proposes to perform services for the Company.

 

Except as set forth in this proxy statement, none of the corporations or organizations in which the Becker Group nominees have conducted their principal occupation or employment was a parent, subsidiary or other affiliate of the Company, and the Becker Group nominees do not hold any position or office with the Company or have any family relationship with any executive officer or director of the Company or have been involved in any proceedings, legal or otherwise, of the type required to be disclosed by the rules governing this solicitation.

 

Both Mr. Thimot and Mr. Barker have indicated their willingness to serve as directors if elected. The Becker Group reserves the right to nominate substitute persons if the Company makes or announces any changes to its bylaws or takes or announces any other action that has, or if consummated would have, the effect of disqualifying any of the Becker Group nominees. In addition, if any additional directorships are to be voted upon at the Annual Meeting, the Becker Group reserves the right to nominate additional persons to fill the added positions. In such case, shares represented by proxies given to us will be voted for any substitute or additional nominees of the Becker Group.

 

There can be no assurance that the Company will not experience adverse consequences in the event that the Becker Group’s nominees are elected to the board of directors.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

No Becker Group nominee has failed to file reports in 2005 related to Interlink that are required by Section 16(a) of the Securities Exchange Act of 1934, as amended.

 

WE STRONGLY RECOMMEND THAT YOU VOTE “FOR” THE ELECTION OF THE

BECKER GROUP NOMINEES.

 

Proposal 2: Amendment of Interlink’s Certificate of Incorporation
to Effect a Reverse Stock Split

 

The Board of Directors of the Company has proposed to amend the Company’s Certificate of Incorporation to effect a reverse stock split of all outstanding shares of common stock of the Company at an exchange ratio ranging from one-to-two to one-to-five. This proposal is set forth in Interlink’s Proxy Statement filed with the SEC on September 6, 2006 (the “Company’s Proxy Statement”), and any description of the proposal contained herein is qualified in its entirety by reference to the Company’s Proxy Statement. The Becker Group makes no recommendation as to whether you should support this proposal. Accordingly, shares represented by proxies returned duly executed to the Becker Group will be voted in accordance with instructions contained on the proxies.

 

WE MAKE NO RECOMMENDATION AS TO WHETHER YOU VOTE “FOR” OR “AGAINST”

THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF THE COMPANY.

ACCORDINGLY, WE WILL VOTE AS INSTRUCTED BY YOU ON THE PROXY CARD.

 

OTHER MATTERS

 

As of the date of this proxy statement, we are not aware of any other matter that will be presented for consideration at the Annual Meeting. However, we do not set the agenda, and the Company may submit additional matters.

 

Voting Procedures

 

You may vote by mail.

 

To vote by mail, please sign your BLUE proxy card and return it in the enclosed, prepaid and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct.

 

You may vote in person at the meeting.

 

We will ask the Company to pass out written ballots to anyone who wants to vote at the meeting. If you hold your shares in street name, you must request a legal proxy from your stockbroker in order to vote at the meeting. Holding shares in “street name” means your shares of stock are held in an account by your stockbroker, bank, or other nominee, and the stock certificates and record ownership are not in your name. If your shares are held in “street name” and you wish to attend the Annual Meeting, you must notify your broker, bank, or other nominee and obtain the proper documentation to vote your shares at the Annual Meeting.

 

You may change your mind after you have returned your proxy.

 

If you change your mind after you return your proxy, you make revoke your proxy at any time before the polls close at the meeting. You may do this by:

 

 

If you received more than one BLUE proxy card, it means that you hold shares in more than one account. Please sign and return all proxy cards to ensure that all your shares are voted. If you receive proxy cards from the Company, we urge you not to sign or return them.

 

The Board of Directors has fixed the close of business on August 28, 2006 as the record date for the determination of stockholders entitled to notice of, and to vote at, this Annual Meeting. According to Interlink’s Proxy Statement filed with the SEC on September 6, 2006, as of August 28, 2006, the Company had 13,761,812 shares of Common Stock outstanding.

 

The proxy holders identified in the BLUE proxy card accompanying this Proxy Statement will vote all BLUE proxy cards in accordance with the instructions contained in the BLUE proxy card and, if no choice is specified,

shares represented by the enclosed BLUE proxy card will be voted FOR Proposal 1 and [ABSTAIN] with respect to Proposal 2.

 

REMEMBER, YOUR LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS, so return the BLUE proxy card accompanying this Proxy Statement even if you delivered a prior proxy to the Company. We urge you not to vote any proxy card sent to you by the Board.

 

If you are the beneficial owner of shares held through a broker or other nominee, your broker or nominee should provide you with information regarding the methods by which you can direct your broker or nominee to vote your shares. Your broker or nominee might send you, for example, a voting instruction card, similar to the company’s proxy card, to be completed, signed, dated and returned to your broker or nominee by a date in advance of the meeting, and/or information on how to communicate your voting instructions to your broker or nominee by telephone or over the Internet.

 

By completing, signing, dating, and returning the proxy card in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the meeting in the manner you indicate. We encourage you to sign and return the proxy card even if you plan to attend the meeting. In this way, your shares will be voted if you are unable to attend the meeting.

 

Revocability Of Proxies

 

Any person giving a proxy card in the form accompanying this Proxy Statement has the power to revoke it at any time before its exercise. The proxy card may be revoked by filing with Mr. Becker and Mr. Blazek an instrument of revocation or a duly executed proxy bearing a later date. It also may be revoked by furnishing a later-dated proxy to the Company or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not by itself revoke a proxy.

 

Quorum Requirement

 

Shares are counted as present at the Annual Meeting if the stockholder either:

 

 

A majority of the outstanding shares as of the record date must be present at the meeting (either in person or by proxy) in order to hold the Annual Meeting and conduct business. This is called a “quorum.”

 

Consequences of Not Returning Your Proxy; Broker Non-Votes

 

If your shares are held in your name, you must return your proxy (or attend the Annual Meeting in person) in order to vote on the proposals. If your shares are held in street name and you do not vote your proxy, your brokerage firm may either:

 

 

If the proposals to be acted upon at any meeting include both routine and non-routine matters, the broker may turn in a proxy card for uninstructed shares that vote FOR the routine matters, but expressly states that the broker is not voting on non-routine matters. This is called a “broker non-vote.”

 

Broker non-votes will be counted for the purpose of determining the presence or absence of a quorum, but will not be counted for the purpose of determining the number of votes cast.

 

We encourage you to provide instructions to your brokerage firm to vote your shares on the Proposals.

Effect Of Abstentions

 

Abstentions are counted as shares that are present and entitled to vote for the purposes of determining the presence of a quorum and have the same effect as votes AGAINST for purposes of determining the approval of any matter submitted to the stockholders for a vote, other than the election of directors. With respect to the election of directors, abstentions have no effect. Provided that a quorum is present, the candidates receiving the greatest number of “FOR” votes are elected, even if they do not receive a majority of the votes represented at the meeting. This is because the directors will be elected by a plurality vote.

 

Required Vote

 

Each share of Common Stock is entitled to one vote. In the election of directors, each stockholder has the right to vote the number of shares owned by such stockholder for as many persons as there are directors to be elected. According to the Company’s Proxy Statement filed with the SEC on September 6, 2006 (the “Proxy Statement”), stockholders do not have the right to cumulate votes. Assuming a quorum is present, the two nominees receiving the highest number of votes will be elected as Directors.

 

Appraisal Rights

 

The Company’s stockholders have no appraisal rights under Delaware General Corporation Law in connection with the Proposals.

 

Solicitation

 

These proxies are being solicited by the Becker Group. Copies of solicitation materials will be furnished without charge to banks, brokerage houses, fiduciaries, and custodians holding in their name shares of Common Stock beneficially owned by others to forward to such beneficial owners. The proxy solicitations will be made by the use of the mails and through direct communication with certain stockholders or their representatives by the Becker Group personnel, who will receive no additional compensation therefor.

 

The Becker Group will bear the entire cost of this solicitation. Although no precise estimate can be made at the present time, we currently estimate the total expenditures relating to the proxy solicitation incurred by the Becker Group will be approximately [$     ], of which approximately [$     ] has been spent to date. The Becker Group currently intends to seek reimbursement from the Company for the costs incurred in connection with the Becker Group’s solicitation of stockholders, but anticipates such request will be refused even if the Becker Group nominees are elected, because those nominees will represent a minority of the directors.

 

ADDITIONAL INFORMATION

 

In reliance upon Rule 14a-5(c) of the Securities Exchange Act of 1934, reference is made to the Company’s Proxy Statement filed with the SEC on September 6, 2006 (the “Company’s Proxy Statement”), which can be found in the Company’s public filings with the SEC. Stockholders may read this filing for a full description of management’s director nominees, the securities ownership of the Board members in the Company, and additional information about the Company’s officers and directors, including compensation information. Also included in the Company’s Proxy Statement is information regarding the Company’s director nomination process and information regarding the various committees of the Company’s Board and other corporate governance matters.

 

Where You Can Find More Information

 

The Company files annual, quarterly and special reports, proxy statements, and other information with the SEC. You may read and copy any reports, statements, or other information the Company files with the SEC at the SEC’s public reference room at Station Place, 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. These SEC filings are also available to the public from commercial document retrieval services and at the Internet World Wide Web site maintained by the SEC at http://www.sec.gov.

EXHIBIT B

 

TRANSACTIONS WITHIN THE PAST TWO YEARS BY THE PARTICIPANTS

IN THIS SOLICITATION OF PROXIES

 

Neither Tom Thimot nor Lawrence Barker have entered into transactions involving the Company’s securities in the past two years. SRB Greenway Capital, L.P. (“SRBGC”), SRB Management, L.P. (“SRB Management”), BC Advisors, LLC (“BCA”), Steven R. Becker (“Becker”), SRB Greenway Capital (Q.P.), L.P. (“SRBQP”) and SRB Greenway Offshore Operating Fund (“SRB Offshore”) have made only the following purchases (and no sales) of the Company’s securities in the past two years:

 

EXHIBIT C

 

BENEFICIAL OWNERSHIP OF COMMON STOCK

 

The following table sets forth information regarding the beneficial ownership of Interlink’s Common Stock by each person or group known to own more than five percent of the outstanding shares of Interlink’s Common Stock, each of the Company’s executive officers named in the Summary Compensation Table of Interlink’s Proxy Statement filed on September 6, 2006 with the SEC, each of the Company’s directors, and all of its directors and executive officers as a group.

 

The information for the five percent owners is derived from Interlink’s Proxy Statement filed on September 6, 2006 with the SEC, and Schedules 13F, 13G and 13D filed with the SEC. Except as otherwise noted, the address for each owner is 546 Flynn Road, Camarillo, California 93012.

 

 

 

PRELIMINARY COPY—SUBJECT TO COMPLETION

PROXY

THIS PROXY IS SOLICITED BY Steven R. Becker, SRB Greenway Capital, L.P., SRB Management, L.P., BC
Advisors, LLC, SRB Greenway Capital (Q.P.), L.P., SRB Greenway Offshore Operating Fund, L.P., Tom
Thimot and Lawrence Barker (THE “BECKER GROUP”) AND NOT
BY THE BOARD OF DIRECTORS OF INTERLINK ELECTRONICS, INC.

ANNUAL MEETING OF STOCKHOLDERS

     The undersigned stockholder of Interlink Electronics, Inc. (the “Company”) hereby appoints Steven R. Becker and Philip Blazek, and each or any of them with full power of substitution, as Proxy for the undersigned to vote all shares of common stock, par value $0.00001, of the Company, which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on October 18, 2006, or any adjournment(s) or postponement(s) thereof (the “Annual Meeting”), as follows:

     The undersigned hereby revokes any other proxy or proxies heretofore given to vote or act with respect to the shares of common stock of the Company held by the undersigned.

     If properly executed, this proxy will be voted as directed on the reverse side hereof. If no direction is given, this proxy will be voted FOR Proposal 1 and ABSTAIN with respect to Proposal 2, and in the discretion of the proxies as to any other matter which may properly come before the Annual Meeting or any adjournment or postponement thereof.

IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE.

PLEASE RETURN THIS BLUE PROXY CARD,
USING THE ENCLOSED POSTAGE-PAID ENVELOPE

     The Becker Group recommends a Vote FOR Proposal 1. The Becker Group makes no recommendation as to Proposal 2 but will vote as instructed on this Proxy.

Proposal 1: Election of Tom Thimot and Lawrence Barker as directors of the Company, each to serve a term of three years or until a successor has been elected and qualified.

     ¨ FOR                ¨ ABSTAIN

Proposal 2: To approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s common stock, at an exchange ratio ranging from one-to-two to one-to-five.

     ¨ FOR                ¨ AGAINST                ¨ ABSTAIN

		Dated:                                         , 2006
		Signature
		Signature if held jointly
		Name:
		Title:

THE SIGNATURE(S) ABOVE SHOULD AGREE WITH THE NAME(S) SHOWN ON THIS PROXY. WHERE STOCK IS OWNED BY MORE THAN ONE PERSON, ALL OWNERS SHOULD SIGN THE PROXY.