Interlink may be in default under 8% convertibles

By Devika Patel

Knoxville, Tenn., Dec. 23 - Interlink Electronics, Inc. has been accused of default in regard to its 8% convertible notes, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The company said in the filing it received a Dec. 17 letter from counsel to Special Situations Fund III QP, LP, Special Situations Fund III, LP, Special Situations Technology Fund, LP and Special Situations Technology Fund II, LP, the noteholders.

The letter demands the company pay the funds $291,550, purportedly representing liquidated damages for failing to timely comply with the terms of a registration rights agreement, which required that the company file a registration statement with the SEC for the securities issuable upon conversion of the notes.

Additionally, the letter alleges that the company defaulted under the notes by failing to pay the $291,550 in liquidated damages.

The notice declared all unpaid principal and interest on the notes immediately due and payable, totaling $2.98 million.

The company said in the filing that if it were to pay this amount immediately, it could deplete the company's cash so that a default may occur on its bank line of credit, under which it does not currently have any borrowings.

The company said it disputes that it is in default, and it intends to defend itself vigorously against any allegations to the contrary. However, it is continuing to review the liquidated damages matter and intends to respond accordingly.

Interlink is a Camarillo, Calif.-based designer and manufacturer of human interface products and technologies.

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