Interlink Electronics (LINK) risk factors, FY2024 10-K

Other

1. 01We have derived, and expect to continue to derive, a significant amount of revenue from a small number of customers
2. 02We rely on third parties for the materials that we use to manufacture our products, and supply shortages and price increases could adversely affect our revenue, operating results and customer relationships
3. 03Disruptions in our manufacturing facilities or arrangements could cause our revenue and operating results to decline
4. 04Defects may also result in product returns, loss of sales and cancelled orders, delays in market acceptance, injury to our reputation, injury to customer relationships and increased warranty costs, which could have an adverse effect on our business, operating results and financial condition
5. 05We cannot guarantee that our solutions for new markets will be successful or that we will be able to generate significant revenue from these markets
6. 06If we fail to build and maintain relationships with new and existing customers, or if our customers’ products that utilize our solutions do not gain widespread market acceptance, our revenue may stagnate or decline
7. 07If we are not able to protect our intellectual property or if we infringe on the intellectual property of others, our business and operating results could be adversely affected
8. 08Our success depends in part on our CEO and CFO, who simultaneously lead other public corporations
9. 09We face risks associated with security breaches or cyber-attacks

Risks Related to Our Industry

1. 10If we are unable to keep pace with rapid technological change and gain market acceptance of new products, we may not be able to compete effectively
2. 11Our markets are intensely competitive and many of our potential competitors have resources that we lack

Risks Relating to Ownership of Our Stock

1. 12There is a limited or no public market for our securities
2. 13While our common stock is quoted on The Nasdaq Capital Market, the daily trading volume is typically very low. This is due in part to the significant percentage (approximately 83% as of December 31, 2024) of our shares that are held by officers and directors and their affiliates
3. 14The price of our common stock may be volatile, and the value of a stockholder’s investment could decline
4. 15The liquidation preference of shares of our Preferred Stock currently outstanding or issued in the future would reduce the amount available to our common stockholders in the event of our liquidation or winding up
5. 16The issuance of shares of common stock upon conversion of the Series A Convertible Preferred Stock may cause immediate and substantial dilution to our existing stockholders
6. 17Certain provisions in our Series A Convertible Preferred Stock may impact our ability to obtain additional financing in the future
7. 18If securities or industry analysts do not publish research or reports about our business, or if they publish inaccurate or unfavorable research reports, our share price and trading volume could decline
8. 19Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates on unfavorable terms to us
9. 20Our CEO has control over key decision making as a result of his control of a majority of our voting stock
10. 21We do not intend to pay dividends on our common stock for the foreseeable future and, consequently, our common stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our common stock
11. 22Our charter documents and Nevada law could discourage takeover attempts and lead to management entrenchment

Risks Related to Government Regulation

1. 23Our failure to comply with U.S. laws and regulations relating to the export and import of goods, technology, and software could subject us to penalties and other sanctions and restrict our ability to license and develop our circuit designs
2. 24Increasing global tariffs create risks to our global business and that of our customers
3. 25If we fail to comply with anti-bribery laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”), we could be subject to civil and/or criminal penalties
4. 26We cannot provide any assurance that current environmental laws and product quality specification standards, or any laws or standards enacted in the future, will not have a material adverse effect on our business

General Risks

1. 27Our business, financial position, results of operations, and cash flows may be adversely affected by the global COVID-19 pandemic, in particular if there is a resurgence in infections, or any broad outbreak of an avian flu or other epidemic in the human population
2. 28If we fail to manage change successfully, our operations could be adversely impacted and our business could be impaired
3. 29International sales and manufacturing risks could adversely affect our operating results
4. 30Political instability and uncertainty could adversely affect our operating results
5. 31Acquisitions involve multiple risks and uncertainties
6. 32Our ability to operate effectively could be impaired if we were to lose the services of key personnel, or if we are unable to recruit qualified managers and key personnel in the future
7. 33We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price
8. 34The requirements of being a public company may strain our resources, divert our management’s attention and affect our ability to attract and retain qualified board members