Everyone, thank you. No, Gary, you should sit down. This company has all the parameters that you seek. Okay, fine. I have got to play tennis with him. You guys, thank you so much for coming. This is very special. I cannot really publicly say it, even though I am doing it right now, but track one are usually the best companies that we have in our universe. These are companies that we feel have made a positive impact within their existence, and look, I have been doing this as a hobby since 1996. I have been doing it professionally since November of 2002. There are very, very, very few guys like our next presenter. You could probably count them with two hands. Guys that work hard each day, guys who care about building shareholder equity, guys that care about bringing value to their share price.
This man does it all. With that, the joke that I always make is if there was 100 Interlinks, I would own all of them. For full disclosure purposes, I own shares in the company. But with that, please, let us give a warm round of applause to the CEO of Interlink Electronics, Mr. Steve Bronson.
Thank you. Is my dues going to go up?
Oh, no. There will be an invoice somewhere. Somewhere in the winter.
I feel like my presenter fee is going to double now.
30%
30% higher.
Inflation.
Okay. Well, thank you very much, Chris, and thank you everybody for attending my presentation. I am here to talk about Interlink Electronics. We are listed on NASDAQ under the symbol LINK, L-I-N-K. Please don't get confused with Chainlink. We have no relationship to Chainlink. We are a global sensor, printed electronics, engineered solution organization with a very rich history. Our forward-looking statements, you probably have seen these before, but everybody talks about KISS, keep it simple, stupid. I try to relate to it as the four S's. Do we have a sound strategy? I believe we do. We are executing on a roll-up within the sensor, printed electronics, and engineered solutions space. Sensors are very relevant. We are going to talk about it. I believe everybody in this room heard about data analytics and AI. Without sensors to capture that information, you have nothing to process. Successful track record.
Interlink, I initially got involved to execute a turnaround that was successful. We were consistently profitable, and then about four or five years ago, we kicked off this bigger global M&A strategy to do a roll-up within the sensor space. Skin in the game. To date, I am the largest single investor in the company. I have millions invested and directly, indirectly control over 76%, 77% of the shares outstanding. Sexy factor. Are we relevant? I think it goes back to the point that I talked about AI, data analytics. You need sensors to capture that information. I like to refer to us as the picks and shovels of this revolution we are seeing. We are a fully integrated organization. We don't rely on any outside parties to support our customers. Our customers range from Fortune 500 companies to high-growth product and technology solution companies.
We support that by being fully vertically integrated. We do everything from prototype, design, manufacturing, and we really focus on supporting our customers and positioning ourselves as a trusted advisor. As we expand our technology portfolio, we can deliver more to our end customers. IP, we currently have 49 patents. We have 14 pending. Technical capabilities. Everything's in-house, the firmware, the software capabilities, mechanical, electrical engineering, chemistry, because everything we're doing is dealing with different types of materials, whether it's substrates, inks, and delivering the complete solution from a sensor standpoint. Global footprint. We're headquarters in Fremont, California, and we have operations in China, Hong Kong, which is part of China, Japan, Scotland, England, and here in the U.S. The company has a rich history. It was founded in 1985.
We invented force-sensing resistors, which is a type of sensor technology that detects physical force or pressure. Who in this room has an iPhone or an Android device? I think I covered almost everyone, right? When you touch your phone, that's capacitive. That's detecting touch. Our roots of the company is we invented force-sensing resistor that detects physical force or pressure. The user can be wearing a glove. It works in a positive 85 C to a minus 40 C. You could spill liquid on it. It works in a harsh environment. Our core technology and our core roots brings us to a position that we are really good in industrial-type rugged applications, and the success we've had around FSRs has been very broad. Our technology today, our FSR technology's in all Panasonic fully rugged Toughbook models.
They use our rugged touchpad solution, our VersaPad solution for the benefits that I described, including its low power consumption. Unless you're engaging our force sensing technology, it's not draining power. When I got involved, I successfully turned the business, consistently generating profits around the force sensing, and then there was this bigger opportunity that the world of sensors, printed electronics, is very fragmented, and we kicked off our first two acquisitions, two affiliated companies in the gas environmental air quality sensing in December of 2022, KWJ Engineering and SPEC Sensors, that had a 25-year track record in that space and a really core team in Silicon Valley.
Three months after that, we acquired Calman Technology in Scotland for two reasons, product expansions, revenues, earnings, but also we were looking for manufacturing diversification because all of our manufacturing for force sensing was in China, and we wanted to have diversification. The same process that Calman uses to manufacture membrane keypads, you can produce force sensing resistors. Then in December of 2024, we acquired Conductive Transfers out of administration, which is the U.K. equivalency to bankruptcy. We bought the assets very attractively, and then we reassembled the core team and just recently launched that operation in a very strategic center near Sheffield University in an advanced manufacturing park where we have neighbors like McLaren, and we're working with those types of organizations leveraging Conductive Transfers proprietary technology around smart textiles.
In a very simple analogy, if you think of a decal on a jersey, we are able to create different sensing characteristics or properties within the ink formulation. We apply it to the substrate. We can peel and stick that to any textile and create a heating element. So without the wires, the ink formulation is creating the heating properties. You do need a power source, and then you have a hot surface. Part of our strategy, in addition to organic growth, is the M&A side. We focus on how we can add strategic technologies to our portfolio, and we have done that successfully to date. In addition, we look at the cross-selling opportunities. In two months, we will be exhibiting at CES in Las Vegas, and that is a great example of how we cross-sell because we have all of our technology offerings.
We are also going to be in electronica in Germany, which is the largest electronics technology trade show in Europe. We leverage as we add these different organizations from a cross-selling and marketing and also from a back office standpoint. If you think of a clearing firm, they can clear for 100 different investment firms.
We are able to centralize the back office and some of the accounting functions so we can focus on the different business units to drive growth. Integration, we are very good. Sometimes it takes time, but we really focus on making sure we are doing what is best for the business and the big picture and not what is best in the short run. At times, we will sacrifice profitability to get to the end game. A perfect example of that is when we acquired KWJ Engineering and SPEC Sensors, it was somewhat of a turnaround.
Their margins were in the low teens. Today, the margins are at 40%, so that is part of that integration process. I mentioned our global footprint. We deal with very large customers in different time zones. Even if it is a division of Siemens here in the U.S., there is interaction with their subsidiary in Asia. Having the global footprint helps us compete and helps us win larger opportunities. Here is the different areas. We really built out a very strong portfolio of offerings. When I talk about printed electronics, our sensors are all printed. The advantage of printing a sensor is we can do it in a small form factor to meet our customer requirements. Typically, they give us a certain real estate space that they are trying to work in to create a sensor and functionality.
A very good example of this, I think everybody in this room has heard of Tesla. When Tesla wanted to incorporate force-sensing resistors when they launched the Model S, they came to us, true story, and we told them it was not going to work in that application. They did not listen to us. They went to a competitor to work on an FSR. Six months later, they came back to us and said, "You guys were right. What can we do? We are in a pickle." We work with a cousin technology, Piezo, that has the characteristics of opposite of FSR, and we successfully developed a solution for them that they used for five and a half years when they launched a Model S that detect the physical force or pressure that was being applied to the door handle, so therefore the door handle presented itself.
That is part of that force sensing portfolio. Today, they have been a customer of ours since 1990, Varian Medical, which was a publicly traded midcap that got acquired by Siemens over two years ago, make radiation oncology equipment. When the patient is having radiation therapy, the bumper that goes against the patient has our force-sensing element in it to detect that if the patient moves, it detects that physical force or pressure, so it is another tool for the technician to make an adjustment in the radiation therapy to make sure they are delivering it in the right area. Wearable technology. When we acquired Conductive Transfers out of administration, their most successful commercial application was in a pair of smart shorts for women who had incontinence issues. Part of their rehab, our Conductive Transfers creates the stimulation.
That company got acquired by a larger U.S. company and now is in the process of launching Gen 3, which we are a part of, and a key part of. The gas sensing. I talk about gas sensing, but it is gas, environmental, and air quality, and we are in a lot of relevant areas. If you go to San Jose State University, we have our multi-sensing air quality platform that detects four different gases that give you a very accurate reading on the air quality real-time. The ones that get the worst readings are the ones that we set up in the parking facility. We know it works, real-time data, and that is part of the world of data analytics.
We have a customer that we deliver a methane sensor along with our electronics and our proprietary algorithm, and they use to detect the level of methane around oil and gas drilling sites. If you start picking up a higher level of methane, you have a problem, and you better deal with it. On the HMI membrane keypad, the one segment of our business that I would tell you is commoditized is the membrane keypads. That business opportunity was part of that manufacturing diversification. The group in Scotland has a very strong knowledge base and track record around printing certain printed electronics related for point-of-care health devices that are very relevant and a big area of growth for us. The market we are in is a big market. That is what it boils down to.
We have, what I like to say, is a really small slice of 1%, so the opportunity for us to grow is tremendous. Here are some current and past customers, and that helps us get new business. When we are talking to a potential customer, and we can show that we delivered high volume sensors for some of the names that are here, both current and in the past, that is what we bring leverage, especially as we add these additional acquisitions as part of the Interlink family. Q2, we were a little bit ahead of ourselves because we have been investing in our different technology portfolios. Last year, we did just under $12 million in revenues with an adjusted EBITDA of a negative $900,000. Story is going to get better in a minute.
We, Q2, went back into profitability, and this year we expect a slight uptick organically on revenue and a slight improvement on our adjusted EBITDA. The big news is in May, we signed an acquisition. We signed a non-binding letter of intent, but we are very confident that we will close in the next six weeks of a business that did $33 million last year in revenues and north of $4 million of EBITDA. Assuming that deal closes, our pro forma numbers for 2025 will be $45 million in revenues, adjusted EBITDA of three and a half, and we are projecting both of those numbers to be higher this year on a pro forma basis, north of $50 million in revenues and $4 million-ish of EBITDA. This is part of this M&A platform and machine that we are building.
We are going to continue executing both organically and inorganic, and we have an objective. Our first goal is to hit $100 million in revenues with strong profitability. I said this a few years ago when we were at $7.5 million in revenues, and I got a lot of stares that maybe there was something in his lemonade before he came on the podium, but we are committed to execution, and I think that is why Chris gave me that nice endorsement. Our model is we use Measurement Specialties. That was a midcap public company. In 2009 to 2014, they averaged about four or five acquisitions a year, and their stock went from under $4 to north of $86, where they were acquired by TE Connectivity. This is a team effort.
We are constantly adding to the human capital, and I do not care what business you are running, even an AI bot business, at the end of the day, as the previous presenter touched on, you have to have that human factor in a business like Interlink, the engineering capabilities, the team and execution, and we have a very strong team, and we are constantly adding to that team.
The innovation scale trust is very critical to our business and most importantly to our end users. Whether it is our growing technology portfolio, our expansion from a capability both engineering and manufacturing. We also added just in July a second footprint in Scotland to support some future growth opportunities. We have really a great diversified customer base, and we are not tied to one industry or one customer. Key takeaways. I believe we are building out a platform that is pretty powerful.
We get a lot of interest from large organizations on some of the progress we are making, and that is validated when we are at shows at CES because we have some very large organizations that are not customers of ours, but they stop by the booth once and then they come back and there are two more executives. We are definitely getting on people's radar as far as the technology portfolio that we are building out and some of the success. We really are positioned as the picks and shovels in this world of, it is beyond the data analytics and AI. As humans, we like neat experiences so that human-machine interface, you can make it more of an experience. If you survey most Tesla owners, what do you think is the number one feature they like of a Tesla automotive?
It is actually the screen, the big screen in the center, more so than anything else. Proven execution. This is an important point. Prior to doing Interlink, I did one other public turnaround. It was a company called Micron Instruments that I bought out one of the co-founders, took over the helm for a year, executed, got it back to profitability, recruited a very strong team, took a passive role. Six years later, we sold it for 11x of our original investment. So execution is important, track record, and making sure you do the daily blocking and tackling. We are committed to that $100 million-plus number with strong adjusted EBITDA. We are going to do it both organically and M&A, and I am going to be preemptive. Everybody asks me this question, what percentage is going to come from M&A and organic?
I do not have a crystal ball that can give you that exact answer. So I am going to cut that off. I do recommend that if you get a chance, our investor presentation is on our website, and we have a lot of examples of some of our different technologies and different applications, because we really do cover a very broad range of industry customers and there is a lot of room for growth. So I am going to open it up to Q&A.
Based on your last experience doing a roll-up where it was a stock chart, $3- $80.
That was not my personal experience.
Oh, that wasn't your personal-
Yeah, that was Measurement Specialties that did an exact roll-up of sensor material companies. That's the profile of what we're trying to build.
Okay. Do you see that there are some differences, just between those 20 years ago, do you think there's some differences between now and back then? Also the thing that you're particularly trying to do?
Yeah, that's a great question. First of all, I think there's always opportunities. It's being disciplined and making sure you pursue the right opportunities. Everybody focuses on purchase price, which is very important. But at the end of the day, 90% of the work is the integration. They go hand-in-hand. The opportunities, the pending deal we have, in addition to the expansion of the business, they have their aerospace and defense certifications, which we don't have. They have their AS9100. They also have their ITAR certification. They also have their CMMC, which is cybersecurity. Our technologies and relationships play well in aerospace and defense. Instead of having to build that up from the ground up, we're getting that through that pending acquisition. We see a lot of opportunities and we're constantly out there looking for new opportunities.
All of the acquisitions we made was without an investment banker involved. We sourced all our own deals and we think the industry is ripe. There's a lot more opportunities, but we're selective on what we're pursuing.
The best M&A opportunities may be just entrance into new channels that you're-
Or a bolt-on to an existing business unit.
Got you.
Because they give you an expansion to customer base and typically some type of geographical diversification.
You are buying that.
Yep.
How are you funding these deals?
To date, they were all smaller deals. We did it with cash on hand. This current pending deal, we expect to fund it through senior debt, traditional senior bank debt. No debt spirals, no exotic financing, and I am not giving up one of my children.
Okay. Do you have any leverage targets that you want to stay under?
We run a pretty conservative business, so in this pending transactions, the seller, and this is a very important note, as part of our purchase of the business, they're taking a percentage of that in our stock. I don't think you come across this too often. The part that they're taking in our stock is at a 50% premium to our market price because they believe like we do, one plus one equals four.
In the course of growth and execution, do you have a percentage of revenue on a regular basis of the business that is returned to shareholders?
Yeah. We do have a consistent book of business that I like to refer to, and historically we operated at 50-plus percent gross margins. But through the period of several acquisitions that required investment, we've sacrificed those gross margins. We've been more like 40%, 45%. But we have some very long-term core customers, and we get very good sight of new programs that we're being designed in, but they always take longer than we like because we're at the mercy of our customers. So we sell standard sensors and then we develop custom solutions. The custom solutions are the higher volume opportunities.
What is it? Is there a percentage?
60-40, roughly.
Okay.
Great to see you, by the way.
Thank you.
After about 38 years.
Yes.
I am glad I ran into you today and not being the last month has-
This is the small world. We used to work together over 30 years ago.
I am glad I ran into you today and not September 30th because I bought the stock yesterday.
Okay
before it changed, and I am going to keep buying it. I need to do a deeper dive, but I just trusted you because I know you and I just bought the stock.
Yeah.
Why did it take that dip? If you happen to have talked to debt or overhangs or-
You mean in the last month or so?
Yeah.
I think the last two weeks, everybody in this room knows what is going on. The micro caps have been- unfortunately, it has not been a good segment of the market. I do not focus on the market of our stock. I am really focused, and you know me well enough, on the execution side because if I execute, good things will happen.
Yeah. Right.
So-
It is just the market conditions.
Correct.
I just thought they were-
Yeah, no, I think there is-