<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


[ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended September 30, 2000

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from      to


                           Commission File No. 0-21858

                           INTERLINK ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)

         Delaware                                     77-0056625
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

  546 Flynn Road
  Camarillo, California                                 93012
  (Address of principal executive offices)            (Zip Code)


                                 (805) 484-8855
              (Registrant's telephone number, including area code)

                                 Not applicable.
               (Former name, former address and former fiscal year
                         if changed since last report.)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days.

         Yes X             No
            ---              ---

Shares of Common Stock Outstanding, at October 25, 2000: 9,094,834



<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
INTERLINK ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>

----------------------------------------------------------------------------------------------------------
                                                                          September 30,      December 31,
                                                                              2000              1999
                                                                         ---------------  ----------------
                                                                           (Unaudited)
<S>                                                                      <C>              <C>

ASSETS
Current assets:
   Cash and cash equivalents                                                 $   8,615         $   7,492
   Accounts receivable, less allowance for doubtful
     accounts of $656 and $620 in 2000 and 1999, respectively                    6,688             7,056
   Inventories                                                                   9,824             7,928
   Prepaid expenses and other current assets                                       947               173
                                                                             ---------         ---------

     Total current assets                                                       26,074            22,649
                                                                             ---------         ---------

Property and equipment, net                                                      1,648             1,559
Patents and trademarks, less accumulated
   amortization of $830 and $739
   in 2000 and 1999, respectively                                                  265               282
Other assets                                                                        83               217
                                                                             ---------         ---------

       Total assets                                                          $  28,070         $  24,707
                                                                             =========         =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current maturities of long-term debt
      and capital lease obligations                                          $     560         $     518
   Accounts payable                                                              2,296             3,041
   Accrued payroll and related expenses                                            948               957
   Other accrued expenses                                                          682               489
                                                                             ---------         ---------

      Total current liabilities                                                  4,486             5,005
                                                                             ---------         ---------

Minority interest                                                                   11                31
Long term debt and capital lease obligations,
   net of current portion                                                        2,838             1,424
Commitments and contingencies                                                        -                 -
Stockholders' equity:
   Common stock, $0.00001 par value (50,000 shares authorized
      9,110 and 8,553 outstanding at September 30, 2000
      and December 31, 1999, respectively)                                      27,352            26,197
Accumulated other comprehensive income (loss)                                      (57)              187
Accumulated deficit                                                             (6,560)           (8,137)
                                                                             ---------         ---------

     Total stockholders' equity                                                 20,735            18,247
                                                                             ---------         ---------

Total liabilities and stockholders' equity                                   $  28,070         $  24,707
                                                                             =========         =========

  The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                       2
<PAGE>


INTERLINK ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------
                                                  Three Month Period               Nine Month Period
                                                  Ended September 30,             Ended September 30,
                                               -------------------------       ------------------------
                                                  2000             1999           2000          1999
                                               ---------      ----------       ---------     ----------
<S>                                            <C>            <C>              <C>           <C>
Revenues                                       $  8,625       $   7,207         $ 24,567     $ 20,668

Cost of revenues                                  4,833           4,573           14,265       12,967
                                               --------       ---------         --------     --------

Gross profit                                      3,792           2,634           10,302        7,701

Operating expense:
   Product development and research                 725             543            2,299        1,629
   Selling, general and administrative            2,207           1,431            5,508        4,373
                                               --------       ---------         --------     --------

     Total operating expense                      2,932           1,974            7,807        6,002
                                               --------       ---------         --------     --------

Operating income                                    860             660            2,495        1,699
                                               --------       ---------         --------     --------

Other income (expense):
   Interest income (expense), net                    44              (9)              65           47
   Cost of cancelled equity offering                  -               -             (769)           -
   Other income (expense)                            (1)              -               36          (32)
                                               --------       ---------         --------     --------

     Total other income (expense)                    43              (9)            (668)          15
                                               --------       ---------         ---------    --------

Income before provision for income taxes            903             651            1,827        1,714

Income taxes                                        106             105              250          252
                                               --------       ---------         --------     --------

Net income                                     $    797       $     546         $  1,577     $  1,462
                                               ========       =========         ========     ========

Earnings per share - basic                     $    .09       $     .07         $    .18     $    .19
                                               ========       =========         ========     ========
Earnings per share - diluted                   $    .07       $     .05         $    .14     $    .15
                                               ========       =========         ========     ========

Weighted average shares - basic                   9,029           8,012            8,794        7,892
                                               ========       =========         ========     ========
Weighted average shares - diluted                11,225          10,232           11,242        9,722
                                               ========       =========         ========     ========


  The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       3
<PAGE>


INTERLINK ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                                      Nine Month Period
                                                                                     Ended September 30,
                                                                                     -------------------
                                                                                     2000          1999
                                                                                  -----------   ----------
<S>                                                                               <C>            <C>
Cash flows from operating activities:
     Net income                                                                    $ 1,577       $  1,462
     Adjustments to reconcile net income to net cash
        provided by (used in) operating activities:
         Provision for bad debts                                                        36            166
         Depreciation and amortization                                                 585            583
         Changes in operating assets and liabilities:
           Accounts receivable                                                         332            (24)
           Inventories                                                              (1,896)          (158)
           Prepaid expenses and other current assets                                  (774)          (733)
           Other assets                                                                134            (26)
           Accounts payable                                                           (745)          (202)
           Accrued payroll and expenses                                                164          1,633
                                                                                   -------       ---------
              Net cash provided by (used in) operating activities                     (587)         2,701

Cash flows from investing activities:
     Purchases of property and equipment                                              (584)          (165)
     Cost of patents and trademarks                                                    (73)            --
                                                                                   --------      ---------
           Net cash used for investing activities                                     (657)          (165)

Cash flows from financing activities:
     Payments on bank line of credit                                                    --           (132)
     Borrowings on notes payable to bank                                             2,232            556
     Principal payments on notes payable to bank                                      (632)          (191)
     Principal payments on capital lease obligations                                  (144)          (266)
     Proceeds from issuance of common stock, net                                     1,155            450
                                                                                   -------       ---------
Net cash provided by financing activities                                            2,611            417

Effect of exchange rate changes on cash                                               (244)          (234)
                                                                                   -------       ---------

Increase in cash and cash equivalents                                                1,123          2,719

Cash and cash equivalents:
     Beginning of period                                                             7,492          3,900
                                                                                   -------       ---------
     End of period                                                                 $ 8,615       $  6,619
                                                                                   =======       =========

Supplemental disclosures of cash flow information:
    Interest paid                                                                  $    66       $     81
    Income taxes paid                                                              $     1       $      1


  The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       4
<PAGE>


INTERLINK ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE UNAUDITED NINE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------------------------

1.   BASIS OF PRESENTATION OF INTERIM FINANCIAL DATA

The financial information included in this report for the three month and nine
month periods ended September 30, 2000 and 1999 is unaudited; however, such
information reflects all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. The interim statements should
be read in conjunction with the financial statements and the related notes
included in our Form 10-K for the fiscal year ended December 31, 1999.

The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.

2.       COMPREHENSIVE INCOME

The following table provides the data required to calculate comprehensive
income (in thousands):

<TABLE>
<CAPTION>

                                                              Accumulated Other
                                                                Comprehensive           Comprehensive
                                                                    Income                  Income
                                                              -----------------         -------------
                 <S>                                          <C>                       <C>

                  Balance at December 31, 1999                    $   187
                  Translation adjustment                             (244)                   $   (244)
                  Net income                                                                    1,577
                                                                  -------                    --------

                  Balance at September 30, 2000                   $   (57)                   $  1,333
                                                                  =======                    ========

</TABLE>


                                       5
<PAGE>


ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

OVERVIEW

We are a leader in the development of intuitive interface devices for a variety
of home and business applications. We were incorporated in California in
February 1985 and reincorporated in Delaware in July 1996. From 1985 to 1993, we
developed and refined our Force Sensing Resistor, or FSR, technology and sold it
to customers for electronic, musical, medical and other applications, which we
now refer to as the Specialty Components market. In 1992, we introduced our
first branded computer pointing device, PortaPoint, and in 1994, we introduced
our first wireless pointing device, RemotePoint. With the advent of this latter
device, we established ourselves as a leading supplier to OEMs in the
computerized presentation system market, which we now call the Business
Communication market. In 1999, we introduced products for E-Transactions
applications and began developing products for the Broadband Home Entertainment
market.

Revenue, net of allowances for returns and warranty, is recognized upon shipment
of product. Royalty revenue is recorded when earned. Revenues have increased
steadily during the last five years as we have established ourselves in new
markets and built a base of OEM customers in the computer and computer
peripheral industry. Gross profit as a percentage of revenues declined between
1995 and 1997 as a result of the increasing percentage of our business that
involved sales of computer products to OEMs but has remained relatively steady
over the last three years. Product development and research expenditures, which
includes engineering, contract engineering and development and material costs of
development, have generally increased as revenue has increased but has remained
relatively consistent as a percentage of revenues, reflecting our continuing
commitment to the technological and design innovation required to maintain a
leadership position in existing markets and to develop new ones. Selling,
general and administrative (SG&A) expense, which includes sales, marketing and
administrative personnel, advertising, sales commissions, reseller incentives,
tradeshow costs and other sales expenses, has declined each year as a percentage
of sales, reflecting the amortization of a relatively fixed expense requirement
over larger revenue base. Because of net operating loss carryforwards available
both for our U.S.-based and Japan-based operations, we historically have not
paid income tax. Beginning in 1999, some of these loss carryforwards began to
expire or become fully utilized; therefore income taxes are expected to increase
on both a percentage and absolute dollar basis.

Prior to 1999, operations was a net user of cash and we funded this through
existing cash balances, private placement of equity and, to a lesser extent,
bank and lease financing. In 1999, operations was a net provider of cash,
generating $2.9 million.

Sales of Business Communication intuitive interface devices accounted for 63% of
our total sales in 1999 and 60% of our total sales in the three years ended
December 31, 1999. Our Business Communication sales in dollars grew at an
average annualized rate of 31% in 1999. Because our market share for Business
Communication interface devices is approximately 80%, we expect that our ability
to achieve further revenue growth in this market will largely depend on growth
in the market itself.

We have established relationships with most of the major OEMs in the Business
Communication market. Many of these OEMs are based in Japan and approximately
50% of our 1999 revenues came from Japanese customers. As a result we are
subject to foreign currency exchange rate fluctuations, primarily in the
yen/dollar exchange rate.

RESULTS OF OPERATIONS

Revenues grew 20% from $7.2 million in the three month period ended September
30, 1999 to $8.6 million in the three month period ended September 30, 2000 and
grew 19% from $20.7 million in the nine month


                                       6
<PAGE>




period ended September 30, 1999 to $24.6 million for the same period of 2000.
This revenue growth is a result primarily of a 20% increase in sales to OEMs in
the business communication market. Sales to this market constituted
approximately 62% of our total revenues for the nine month period ended
September 30, 2000. In addition, we recorded revenue in two newer market areas,
Broadband Home Entertainment and E-Transactions. These areas constituted
approximately 9% and 2% of our total revenues for the first nine months of 2000,
respectively. Sales of specialty components accounted for approximately 27% of
total revenues for the nine month period ended September 30, 2000. In June of
this year, we announced the enhancement of our license agreement with
International Electronics and Engineering (IEE). IEE pays us license fees for
the use of FSR technology in auto safety systems.

Gross profit increased 44% from $2.6 million in the three month period ended
September 30, 1999 to $3.8 million in the same period of 2000 and increased 34%
from $7.7 million in the first nine months of 1999 to $10.3 million in the same
period of 2000. As a percentage of revenues, gross profit increased from 36.5%
for the three month period ended September 30, 1999 to 44.0% for the same period
in 2000 and improved from 37.3% in the first nine months of 1999 to 41.9% of the
same period in 2000. These increases reflect increased sales of higher margin
products to the Broadband Home Entertainment and E-Transactions markets and the
impact of the additional licensing revenue recorded in 2000 resulting from the
expanded licensing agreement with IEE.

Product development and research expense increased 34% from $543,000 for the
three month period ended September 30, 1999 to $725,000 for the same period in
2000 and increased 41% from $1.6 million in the first nine months of 1999 to
$2.3 million in the same period of 2000. As a percentage of revenues, product
development and research expense increased from 7.5% for the three month period
ended September 30, 1999 to 8.4% for the same period in 2000 and increased from
7.9% in the first nine months of 1999 to 9.4% in the same period of 2000. The
increases resulted primarily from our continued development of products based on
our proprietary VersaPoint and RemoteLink technologies and the development of
the IntuiTouch broadband home entertainment interface system.

SG&A expense increased 54% from $1.4 million for the three month period ended
September 30, 1999 to $2.2 million for the same period in 2000 and increased 26%
from $4.4 million in the first nine months of 1999 to $5.5 million in the same
period of 2000. As a percentage of revenues, SG&A expense increased from $19.9%
for the three month period ended September 30, 1999 to 25.6% for the same period
in 2000 and increased from 21.2% in the first nine months of 1999 to 22.4% in
the same period of 2000. The SG&A increases primarily resulted from our
investment in sales and marketing infrastructure in connection with increasing
customer awareness in, and marketing our technology to, the Broadband Home
Entertainment and E-Transaction markets.

Operating income improved from $660,000 or 9.2% of revenues in the three month
period ended September 30, 1999 to $860,000 or 10% of revenues for the same
period of 2000 and increased from $1.7 million or 8.2% of revenues for the first
nine months of 1999 to $2.5 million or 10.2% of revenues for same period of
2000.

In June 2000, we recorded a one-time, non-operating charge of $769,000 related
to the expenses of our cancelled follow-on public stock offering.

Income taxes as a percentage of income before provision for income taxes
decreased from 14.7% for the nine-month period ended September 30, 1999 to 13.7%
for the same period in 2000. The lower tax rate reflects an improved tax rate
for our Japanese subsidiary in the third quarter of 2000.

Net income increased from $546,000 or 7.6% of revenues for the quarter ended
September 30, 1999 to $797,000 or 9.2% of revenues for the same quarter in 2000
and increased from $1.5 million or 7.1% of revenues in the nine months ended
September 30, 1999 to $1.6 million or 6.4% of revenues in the same period of
2000. The improved net income results from good revenue growth partially offset
by the R&D



                                       7
<PAGE>

and SG&A investments in our new markets, Broadband Home Entertainment
and E-Transactions, and the one-time non-operating charge in the second quarter.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2000, working capital totaled $21.6 million as compared to
$17.6 million at December 31, 1999. This increase is primarily a result of the
positive results from operations and additional bank debt.

For the nine month period ended September 30, 2000, operations used $587,000 in
cash due to inventory increases associated with a planned switch to a new
Chinese contract manufacturer.

For the nine month period ended September 30, 2000, investing activities
consumed $657,000 in cash, consisting primarily of the purchase of production
equipment.

For the nine month period ended September 30, 2000, financing activities
provided $2.6 million in cash, consisting primarily of long term borrowings from
Japanese banks and the proceeds of the exercise of employee stock options
partially offset by the repayment of capital lease and other debt obligations.
Our U.S. and Japanese bank lines of credit, totaling a combined $6.1 million,
were unused as of September 30, 2000. Additionally, in September 2000 we
established a $1 million credit facility for U.S. equipment purchases that was
unused at September 30, 2000. The exercise of outstanding stock options is a
potential source of equity capital that may be available to us. We believe that
our current cash balances, lines of credit and operating cash flow will allow us
to fund our operations for at least the next 12 months. However, an unforeseen
downturn of results of a sufficient magnitude could affect our ability to meet
that forecast.

EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998 and June 1999, the AICPA issued Statement of Financial Accounting
Standards, or SFAS, No. 133 "Accounting for Derivative Instruments and Hedging
Activities" and SFAS No. 137, which delayed the effective date of SFAS No. 133
and required its adoption beginning January 1, 2001. We will adopt this standard
in January 2001 and are currently analyzing the statement to determine the
impact, if any, on our financial position or results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We entered into foreign exchange forward contracts to hedge certain revenue
exposures against future movements in foreign exchange rates. Gains and losses
on the forward contracts are largely offset by gains and losses on the
underlying exposure and consequently a sudden or significant change in foreign
exchange rates would not have a material impact on future net income or cash
flows.

FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains statements that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements involve a number of risks and
uncertainties. These risks may include the following:

-         the amount or timing of growth in the markets to which we sell our
          products;

-         fluctuations in our operating results;

-         dependence on one or more customers or limited market or geographic
          areas;



                                       8
<PAGE>


-         our ability to implement our new business strategy of developing
          products for the home entertainment and e-transactions markets;

-         risks related to international sales and manufacturing;

-         fluctuations in the value of foreign currencies;

-         our ability to develop and introduce new products to respond to
          evolving industry requirements;

-         failure of the home entertainment and e-transactions markets to adopt
          our technology;

-         failure to attract and retain qualified individuals for critical
          positions;

-         failure to manage our growth effectively;

-         reliance on others for significant aspects of our manufacturing;

-         interruptions in the supply of any significant FSR sensor or other
          component;

-         performance, reliability or quality problems with our products;

-         federal, state and international legislation and regulation affecting
          e-commerce;

-         adoption of technologies and standards by electronics manufacturers
          and service providers;

-         reliance on others for significant aspects of our technology
          development; and

-         industry downturns in the markets we serve.

The following, in addition to the risk factors described above, are among the
factors that could cause actual results to differ materially from the
forward-looking statements: an unexpected change in business conditions or a
slowdown in growth in the electronics industry and general economies, both
domestic and international; lower than expected customer orders, delays in
receipt of orders or cancellation of orders; competitive factors, including
increased competition, new product offerings by competitors and price pressures;
significant quarterly performance fluctuations due to the receipt of a
significant portion of customer orders and product shipments in the last month
of each quarter; and product shipment interruptions due to manufacturing
problems. The forward-looking statements contained in this report on Form 10-Q
regarding industry trends, revenue and product mix, costs and gross profit
expectations, income taxes, revenue growth, product development and marketing
and sales expenses, cash flow, foreign currency exchange risk and future
business activities should be considered in light of these factors.

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         a) EXHIBITS

              10.1  Credit Agreement between Wells Fargo Bank, National
                    Association, and the Registrant dated September 1, 2000.
                    Confidential treatment has been requested with respect to
                    certain portions of this exhibit pursuant to an application
                    for confidential treatment filed with the Securities and
                    Exchange Commission under Rule 24b-2 of the Securities
                    Exchange Act of 1934, as amended.


                                       9
<PAGE>

              27.1  Financial Data Schedule

         b) REPORTS ON FORM 8-K

                 No reports on Form 8-K have been filed during the period for
                 which this report is filed.






                                       10
<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            INTERLINK ELECTRONICS, INC.



DATE:  November 14, 2000                    PAUL D. MEYER
                                            ------------------------------------
                                            Paul D. Meyer
                                            Chief Financial Officer
                                            (Principal Financial and Accounting
                                             Officer)





                                       11
<PAGE>

                                     EXHIBIT INDEX

10.1  Credit Agreement between Wells Fargo Bank, National Association, and
      the Registrant dated September 1, 2000. Confidential treatment has been
      requested with respect to certain portions of this exhibit pursuant to an
      application for confidential treatment filed with the Securities and
      Exchange Commission under Rule 24b-2 of the Securities Exchange Act of
      1934, as amended.

27.1  Financial Data Schedule