|UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
|----------------------------------------------------------------------------------

| | |X| | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
| | --- | --------------------------------------------------------------------------------------

| |  | For the
quarterly period ended September 30, 2002
| |  | -------------------------------------------------

|or
|--

| | || | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES 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(State or other jurisdiction ofincorporation or organization) | 77-0056625(I.R.S. Employer Identification Number)
|--------------------------------------------------------------------- | -------------------------------------------------

|546 Flynn RoadCamarillo, California
(Address of principal executive offices) | 93012(Zip Code)
|---------------------------------------------------------------------------- | ---------------

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


Not applicable.(Former
name, former address and former fiscal yearif 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 November 6, 2002: 9,771,073
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART I - FINANCIAL
INFORMATIONItem 1.  Financial Statements


INTERLINK ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT PAR VALUE)
|-----------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            | December 31,2001 | September 30,2002
|----------------------------------------------------------- | ---------------- | -----------------
|
|Current assets:                                             |                  |                  
|Cash and cash equivalents                                   |                  | $   6,868        
|Marketable securities                                       |                  | 2,457            
|Accounts receivable, less allowance for doubtful accounts   |                 
|of $914 and $938 at 2001 and  2002, respectively            |                  | 5,493            
|Inventories                                                 |                  | 8,502            
|Prepaid expenses and other current assets                   |                  | 426              
|                                                            |                  |                  
|Total current assets                                        |                  | 23,746           
|                                                            |                  |                  
|Property and equipment, net                                 |                  | 1,393            
|Deferred tax asset                                          |                  | 1,301            
|Patents and trademarks, less accumulated amortization       |                 
|of $981 and $1,070 at 2001 and 2002, respectively           |                  | 114              
|Other assets                                                |                  | 87               
|                                                            |                  |                  
|Total assets                                                |                  | $ 26,641         
|                                                            |                  |                  
|Liabilities and Stockholders Equity                        |                 
|Current liabilities:                                        |                 
|Current maturities of long-term debt                        |                  | $   1,923        
|Accounts payable                                            |                  | 1,679            
|Accrued payroll and related expenses                        |                  | 609              
|Other accrued expenses                                      |                  | 202              
|                                                            |                  |                  
|Total current liabilities                                   |                  | 4,413            
|                                                            |                  |                  
|Long-term debt, net of current portion                      |                  | 1,855            
|Minority interest                                           |                  | 68               
|Commitments and contingencies                               |                  |                 
|Stockholders equity:                                       |                 
|Preferred stock, $5.00 par value (100 shares authorized,    |                 
|none issued and outstanding)                                |                  |                 
|Common stock, $0.00001 par value (50,000 shares authorized, |                 
|9,759 and 9,772 shares issued and outstanding at            |                 
|2001 and 2002, respectively)                                |                  | 29,029           
|Due from stockholders                                       |                  | (838             
|Accumulated other comprehensive loss                        |                  | (843             
|Accumulated deficit                                         |                  | (7,043           
|                                                            |                  |                  
|Total stockholders equity                                  |                  | 20,305           
|                                                            |                  |                  
|Total liabilities and stockholders equity                  |                  | $ 26,641         
|                                                            |                  |                  

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


2
|-------------------------------------------------------------------------------------------

|INTERLINK ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)(IN THOUSANDS, EXCEPT PER SHARE DATA)
|------------------------------------------------------------------------------------------------------------------

|                                           | Three Month PeriodEnded September 30, | Nine Month PeriodEnded September 30,
|------------------------------------------ | ------------------------------------- | ------------------------------------
|
|Revenues                                   |                                       | $ 6,036                             
|Cost of revenues                           |                                       | 3,572                               
|                                           |                                       |                                     
|Gross profit                               |                                       | 2,464                               
|                                           |                                      
|Operating expense:                         |                                      
|Product development and research           |                                       | 839                                 
|Selling, general and administrative        |                                       | 2,218                               
|                                           |                                       |                                     
|Total operating expense                    |                                       | 3,057                               
|                                           |                                       |                                     
|Operating income (loss)                    |                                       | (593                                
|                                           |                                       |                                     
|Other income (expense):                    |                                      
|Interest income (expense), net             |                                       | 35                                  
|Minority interest                          |                                       |                                    
|Other income (expense)                     |                                       | (19                                 
|                                           |                                       |                                     
|Total other income (expense)               |                                       | 16                                  
|                                           |                                       |                                     
|Income (loss) before provision for         |                                      
|income taxes                               |                                       | (577                                
|                                           |                                       |                                     
|Provision for income tax expense (benefit) |                                       | (115                                
|                                           |                                       |                                     
|Net income (loss)                          |                                       | $  (462                             
|                                           |                                       |                                     
|Earnings (loss) per share  basic          |                                       | $   (.05                            
|Earnings (loss) per share  diluted        |                                       | $   (.05                            
|                                           |                                      
|Weighted average shares  basic            |                                       | 9,744                               
|Weighted average shares  diluted          |                                       | 9,744                               

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



3
|--------------------------------------------------------------------------------------------

|INTERLINK ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(IN THOUSANDS)
|-------------------------------------------------------------------------------------------

|                                                          | Nine Month PeriodEnded September 30,
|--------------------------------------------------------- | ------------------------------------
|
|Cash flows from operating activities:                     |                                     
|Net loss                                                  |                                     
|Adjustments to reconcile net loss to net cash provided by |                                     
|operating activities:                                     |                                     
|Provision for bad debts                                   |                                     
|Depreciation and amortization                             |                                     
|Minority interest                                         |                                     
|Deferred tax asset                                        |                                     
|Changes in operating assets and liabilities:              |                                     
|Accounts receivable                                       |                                     
|Inventories                                               |                                     
|Prepaid expenses and other current assets                 |                                     
|Other assets                                              |                                     
|Accounts payable                                          |                                     
|Accrued payroll and related expenses                      |                                     
|                                                          |                                     
|Net cash provided by operating activities                 |                                     
|                                                          |                                     
|Cash flows from investing activities:                     |                                     
|Sales of marketable securities                            |                                     
|Purchases of property and equipment                       |                                     
|Costs of patents and trademarks                           |                                     
|                                                          |                                     
|Net cash provided by (used in) investing activities       |                                     
|                                                          |                                     
|Cash flows from financing activities:                     |                                     
|Borrowings on notes payable to bank                       |                                     
|Principal payments on debt                                |                                     
|Principal payments on capital lease obligations           |                                     
|Proceeds from issuance of common stock, net               |                                     
|Due from stockholder                                      |                                     
|                                                          |                                     
|Net cash provided by (used in) financing activities       |                                     
|                                                          |                                     
|Effect of exchange rate changes on cash                   |                                     
|                                                          |                                     
|Increase (decrease) in cash and cash equivalents          |                                     
|                                                          |                                     
|Cash and cash equivalents:                                |                                     
|Beginning of period                                       |                                     
|                                                          |                                     
|End of period                                             |                                     
|                                                          |                                     
|Supplemental disclosures of cash flow information:        |                                     
|Interest paid                                             |                                     
|Income taxes paid                                         |                                     

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



4
|--------------------------------------------------------------------------------------------

|INTERLINK ELECTRONICS, INC. NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS FOR THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30,
2002 (UNAUDITED)1. Basis of Presentation
of Interim Financial Data


The financial information as of
September 30, 2002 and for the three month and nine month periods ended September 30, 2001
and 2002 included in this report is unaudited. Such information, however, 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 Annual Report on Form 10-K for the fiscal year ended
December 31, 2001.


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 Loss


The following table provides the data
required to calculate comprehensive loss:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                               | (In thousands)
| | ----------------------------- | --------------
|
| | Balance at December 31, 2000  |               
| | Translation adjustment        |               
| | Net loss                      |               
| |                               |               
| |                               |               
| | Balance at September 30, 2001 |               
| |                               |               
| |                               |               
| | Balance at December 31, 2001  |               
| | Translation adjustment        |               
| | Net loss                      |               
| |                               |               
| |                               |               
| | Balance at September 30, 2002 |               
| |                               |               

|3. Segment Information


The Company has four business
segments: (i) business communications (ii) home entertainment, (iii) e-transactions
and (iv) specialty components. The accounting policies of the segments are the same
as those described in Managements Discussion and Analysis of Financial
Condition and Results of Operations  Critical Accounting Policies. However,
the Company evaluates performance based on revenue and gross profit. The Company does not
allocate any other income, expenses or assets to these segments. Reportable segment
information for the nine months ended September 30, 2001 and 2002 is as follows (in
thousands):
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Nine Months Ended: | BusinessCommunications | HomeEntertainment | E-Transactions | SpecialtyComponentsand Other | Total
|------------------ | ---------------------- | ----------------- | -------------- | ---------------------------- | -----
|September 30, 2001 |                        |                   |                |                              |      
|Revenue            |                        | $13,156           |                | $1,224                       |      
|Gross profit       |                        | 3,221             |                | 601                          |      
|September 30, 2002 |                       
|Revenue            |                        | $11,191           |                | $1,759                       |      
|Gross profit       |                        | 4,183             |                | 788                          |      

|5
|-

|4. Earnings Per Share


For all periods presented, per share
information was computed pursuant to provisions of the Statement of Financial Accounting
Standards (SFAS) No. 128, Earnings Per Share, issued by the Financial
Accounting Standards Board (FASB). The computation of earnings per sharebasic is
based upon the weighted average number of common shares outstanding during the periods
presented. Earnings per sharediluted also includes the effect of common shares
contingently issuable from options and warrants in periods which they have a dilutive
effect.


Common stock equivalents are
calculated using the treasury stock method. Under the treasury stock method, the proceeds
from the assumed conversion of options and warrants are used to repurchase outstanding
shares using a yearly average market price.


The following table contains
information necessary to calculate earnings per share (in thousands):
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                            | Three MonthsEnded Sept. 30, | Nine MonthsEnded Sept. 30,
|------------------------------------------- | --------------------------- | --------------------------
|
|Weighted average shares outstanding  basic |                             | 9,744                     
|Effect of dilutive securities (options)     |                             |                          
|                                            |                             |                           
|Weighted average sharesdiluted             |                             | 9,744                     
|                                            |                             |                           

---

| | (1) | Due to the net loss, the diluted share calculation result was anti-dilutive.
               Thus, the basic weighted average shares were used. Shares of common stock
               equivalents of approximately 1,052 for the nine months ended September 30, 2002,
               and 1,212 and 1,542 for the three months and nine months ended September 30,
               2001, respectively, were not included in the diluted calculations because they
               were anti-dilutive.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. Inventories



Inventories consisted of the
following (in thousands):
|------------------------------------------------------------------------

| |                   | December 31,2001 | Sept. 30,2002
| | ----------------- | ---------------- | -------------
| | Raw material      |                  | $3,218       
| | Work in process   |                  | 351          
| | Finished goods    |                  | 4,933        
| |                   |                  |              
| | Total inventories |                  | $8,502       
| |                   |                  |              

|6. Lines of Credit


In June 2002, we renegotiated the
terms of our $5,000,000 domestic revolving line of credit which remained unused at
September 30, 2002. All financial covenants have been removed and any future borrowings
will be secured by cash and investments held at the bank. The new agreement will expire on
June 1, 2004.


In June 2002, we converted our
previous equipment purchases line of credit with an outstanding balance of $347,000 to a
long term note. The revised loan is payable in equal installments for 48 months at an
interest rate of LIBOR plus 2.25%.


In June 2002, we entered into a new
equipment purchases line of credit agreement for an aggregate maximum of $500,000. The
line of credit bears interest at LIBOR plus 2.5% and is secured by cash and investments
held at the bank. This line matures on July 1, 2003, at which time, any outstanding
balance will be converted to a 48 month note.



6
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. Recent Pronouncements


In April 2002, the FASB issued SFAS
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections which, among other things, provides
guidance in reporting gains and losses from extinguishments of debt and accounting for
leases. We will adopt this statement in 2003 and are currently reviewing this statement to
determine its impact, however, we do not expect the adoption of this standard to have a
material impact on our financial position or results of operations.


On July 30, 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 nullifies EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). It requires that a liability be
recognized for those costs only when the liability is incurred, that is, when it meets the
definition of a liability in the FASBs conceptual framework. SFAS No. 146 also
establishes fair value as the objective for initial measurement of liabilities related to
exit or disposal activities that are initiated after December 31, 2002, with earlier
adoption encouraged. The Company does not expect that the adoption of SFAS No. 146 will
have a material impact on its financial position or results of operations.



7
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 2.  Managements
Discussion and Analysis of Financial Condition and Results of Operations


Disclosure Regarding
Forward-Looking Statements


This Quarterly Report on Form 10-Q
contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that involve substantial risks and uncertainties and which are intended to be
covered by the safe harbors created thereby. These statements can be identified by the
fact that they do not relate strictly to historical information and may include the words
expects, believes, anticipates, plans,
may, will, intends, estimates,
continue or other similar expressions. These forward-looking statements are
subject to various risks and uncertainties that could cause actual results to differ
materially from those currently anticipated. These risks and uncertainties include, but
are not limited to, items discussed in the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2001 under the heading Forward-looking
Statements, Historical Factors Affecting Financial Performance and
2001 Overview. Forward-Looking statements speak only as of the date made. We
undertake no obligation to publicly release or update forward-looking statements, whether
as a result of new information, future events or otherwise.


Overview


We were incorporated in California in
February 1985 and reincorporated in Delaware in July 1996. From 1985 to 1992, we
developed and refined our Force Sensing Resistor, or FSR, technology and sold it to
customers for use in electronic, musical, medical and other applications, which we now
refer to as the specialty components market. In 1992, we introduced our first
Interlink-branded computer-pointing device, PortaPoint, and in 1994, we introduced
our first wireless pointing device, RemotePoint. RemotePointestablished
Interlink as a leading supplier of both branded and OEM remote controls and other
products for the computerized presentation system market, which we refer to as the
business communication market. In 1999, we introduced an electronic signature-capture
product, ePad, for sales to customers in the e-transactions market. In 2000, we
first demonstrated IntuiTouch Technology, which we are marketing to customers in
the home entertainment market.


Revenue by market segment for the
first nine months of 2001 and 2002 is shown in the following table:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |       |  |    
|----------------------- |  | ----- |  | ---
|
|
|Business Communications |  | $13.2 |  | 66 
|                        | 
|Specialty Components    |  | 5.0   |  | 25 
|                        | 
|Home Entertainment      |  | 1.2   |  | 6  
|                        | 
|E-Transactions          |  | 0.6   |  | 3  
|                        | 
|Total                   |  | $20.0 |  | 100
|                        | 

|Our principal source of revenue
continues to come from our business communications business. Sales in that market recorded
quarterly sequential declines in 2001 as a result of general economic conditions and
resulting adjustments to purchasing and inventory levels by our customers. In 2002, our
presentation market volumes have begun to recover. Thus, while business communication
revenues for the nine months ended September 30, 2002 are down as compared to the same
period in 2001, for the third quarter comparison, 2002 revenues are up.



8
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Specialty components, the original
market into which we sold our products, continues to be a strong contributor to revenue.
The primary reason our revenues in this market declined by 26% in the first nine months of
2002 compared to that same period last year is that licensing revenues received from
International Electronics and Engineering (IEE), did not recur this year due to the
expiration of the license term. We expect sales to customers in the specialty components
market to continue to be a significant contributor to our revenue but do not anticipate
significant growth in this market.


Revenue from sales to customers in
the home entertainment sector are derived primarily from sales of an FSR-based component
for use in the Microsoft Xbox game controller. We expect that these sales will continue
for the remainder of 2002, but we believe revenue from our IntuiTouch products will
develop slowly as new technologies are introduced by our customers and development
partners. At the date of this report, we do not expect meaningful revenues from
IntuiTouch products until 2003. Home entertainment revenues in the first nine
months of 2001 and 2002 continued to be primarily driven by the Xbox program.


Our e-transactions business was
adversely affected during 2001 by a general slowdown in new equipment purchasing.
Nonetheless, we completed significant transactions with two insurance companies and two
financial services companies and continued to build our sales volume to customers making
smaller orders. At both large and small volumes, sales of e-transaction devices tend to
result in one-time revenue and therefore sales levels in this segment can be
more volatile than in other markets in which we operate. However, we believe that the
increasing installed base of our e-transactions devices can have a positive effect on
future sales by providing evidence of technological soundness and customer acceptance. As
we build our customer base and reference accounts, we have achieved a 118% increase in
e-transaction revenues in the first nine months of 2002 as compared to the first nine
months of 2001.


In 2001, we recorded our first annual
decline in revenue in more than a decade and our first annual loss since 1994. We believe
that these results were significantly affected by general economic conditions that
adversely affected purchasing levels in our established business communications and
specialty components markets and slowed the penetration of our products into the
e-transactions and home entertainment markets. In the case of the particular industries
that we have targeted for our e-transactions products, such as the insurance industry, the
events of September 11 further impacted our ability to achieve penetration levels that we
had originally anticipated. While these factors continued to affect our results in 2002,
we believe that our basic market positioning is sound. We continue to enjoy a dominant
share of the OEM business presentations controller market and are having success in
developing sales channels for branded aftermarket products. Our FSR-based products and
components continue to sell well in both the specialty components and home entertainment
markets, our e-transactions business appears to be gaining acceptance with customers and
we believe that our technology, products and commercial relationships addressing
interactive digital remote communication put us in a position to capitalize on any growth
in the home entertainment market sector.


During the second quarter of fiscal
2001, as a result of a continued decline in revenues and customer demand, we provided
additional reserves of $2 million for excess and obsolete inventories. The continued
industry-wide reduction in capital spending and the resulting decrease in demand for our
products led to significant reductions in our sales forecast. Our regular and ongoing
reserve analysis and methodology includes a comparison of sales forecasts and inventory
levels. As a result of the analysis based on second quarter 2001 sales forecast revisions,
we recorded a $2.0 million charge, which was included in the cost of revenues. Increases
to the inventory reserve during the remainder of fiscal 2001 and the first nine months of
2002 were not significant. In addition, we recorded a $300,000 increase in bad debt
reserves in the third quarter of 2001 due to changes in certain customers ability to
pay arising after the original sales had been made. Since third quarter 2001, no material
modification to inventory and bad debt reserves were made. Excluding the bad debt
adjustment, total quarterly operating expenses have remained relatively constant in the
$2.7 to $2.8 million range.


9
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The loss in 2001 and the first nine
months of 2002 resulted in modest reductions in working capital and stockholders
equity. However, liquidity remains relatively strong and we foresee no immediate need for
additional capital or immediate risk of capital inadequacy.


Critical Accounting
Policies


Material accounting policies that we believe
are the most critical to an investors understanding of our financial results and
condition and require complex management judgment are discussed below.


Revenue Recognition. We
recognize revenue in accordance with SEC Staff Accounting Bulletin (SAB) No. 101,
Revenue Recognition in Financial Statements, as amended by SAB 101A and 101B.
SAB 101 requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services
rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) require managements judgments
regarding the fixed nature of the fee charged for services rendered and products delivered
and the collectibility of those fees. Other than through warranty rights, our customers do
not have explicit or implicit rights of return. Should changes in conditions cause
management to determine the revenue recognition criteria are not met for certain future
transactions, such as a determination that an outstanding account receivable has become
uncollectible, revenue recognized for any reporting period could be adversely affected.


Accounts Receivable and Allowance
for Doubtful Accounts. Our accounts receivable are unsecured, and we are at risk to
the extent such amounts become uncollectible. We continually monitor individual account
receivable balances, and provide for an allowance of doubtful accounts at the time
collection may become questionable based on payment performance or age of the receivable
and other factors related to the customers ability to pay.


Inventory Reserve. At each
balance sheet date, we evaluate our ending inventories for excess quantities and
obsolescence. This evaluation includes analyses of forecast sales levels by product and
historical demand. We write off inventories that are considered obsolete. Remaining
inventory balances are adjusted to approximate the lower of our cost or market value and
result in a new cost basis in such inventory until sold. If future demand or market
conditions are less favorable than our projections, additional inventory write-down may be
required, and would be reflected in cost of sales in the period the revision is made.


Provision for Income Tax. We
first achieved profitable operations in 1995. Because of net operating loss carryforwards
available both for our U.S.-based and Japan-based operations, we did not accrue income
tax expense until 1999. In that year, due to the expiration or full utilization of NOL
carryforwards in California and Japan, we began to record a provision for income tax
expense in those jurisdictions. By the end of 2000, we also began to accrue an income tax
benefit related to our federal NOL carryforwards to be used in future periods. However, in
mid-2001, we began to record quarterly tax losses and suspended any further recognition of
NOL carryforward tax benefits. Management believes we will be able to utilize the deferred
tax asset; however, if we do not return to sustainable quarterly profitability by the end
of 2002, it is likely that we will eliminate this asset ($1.3 million) by recording a tax
expense.


Foreign Exchange Exposure. We
have established relationships with most of the major OEMs in the business
communications market. Many of these OEMs are based in Japan and approximately 40%
and 30% of our 2001 and 2002 revenues, respectively, came from Japanese customers.
Revenues from these customers are denominated in Japanese yen and as a result we are
subject to foreign currency exchange rate fluctuations in the yen/dollar exchange rate. We
use foreign currency forward contracts to hedge this exposure. The gain or loss from these
contracts is recorded in business communications revenue ($29,000 and $40,000 gain for the
three months ended September 30, 2001 and 2002, respectively; and, $713,000 and $302,000
gain in the first nine months of 2001 and 2002, respectively). These contracts typically
have a six-month duration; thus, yen/dollar fluctuations lasting more than six months will
have an impact on our revenues. In addition, because our Japanese subsidiarys
functional currency is the yen, the translation of the net assets of that subsidiary into
the consolidated results will fluctuate with the yen/dollar exchange rate.


10
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Results of Operations


The following table presents our
historical operating results for the periods indicated as a percentage of revenues:
|--------------------------------------------------------------------------------------------------------------------------------------------

|                                    | Three Months Ended | Nine Months Ended
|----------------------------------- | ------------------ | -----------------
|
|Revenues                            |                    | 100.0            
|                                    |                    |                  
|Gross profit                        |                    | 40.8             
|Operating expenses:                 |                   
|Product development and research    |                    | 13.9             
|Selling, general and administrative |                    | 36.7             
|                                    |                    |                  
|Total operating expenses            |                    | 50.6             
|                                    |                    |                  
|Operating income (loss)             |                    | (9.8             
|Other income                        |                    | 0.3              
|Income tax benefit                  |                    | 1.9              
|                                    |                    |                  
|Net income  (loss)                  |                    | (7.6             
|                                    |                    |                  

|Results of Operations  Three
and nine months ended September 30, 2002 compared to three and nine months ended September
30, 2001


For the third quarter, revenues
increased 9.8% from $6.0 million in the three month period ended September 30, 2001 to
$6.6 million in the same period of 2002. This net increase resulted from the following
factors:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Business communications
segment revenues increased 13.5% due to a recovery in our OEM business.
| | - | -----------------------------------------------------------------------------------------------

| |  | Specialty components
segment revenues declined 8.3% due to the elimination of approximately $500,000 per
quarter in licensing royalties we had been receiving from IEE.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Home entertainment
segment revenues decreased 37.7% due to a reduction in sales of our Force Sensing
Resistors for use in the Microsoft Xbox program.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------

| |  | E-transactions
segment revenues increased 445% due to sales to more customers.
| | - | ------------------------------------------------------------------------------

|For the nine months, revenues
decreased 10.5% from $20.0 million in 2001 to $18.1 million in 2002. This net decrease is
due to the following factors:
|-----------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Business communication
revenues declined 14.9% due to the general economic slowdown.
| | - | ------------------------------------------------------------------------------------

| |  | Exclusive of
the $1.5 million in IEE licensing recorded in the 2001 period, specialty components would
have increased 8.4%.
| | - | ---------------------------------------------------------------------------------------------------------------------------

| |  | Home entertainment
revenues increased 43.7% due to the success of the Microsoft Xbox program.
| | - | ---------------------------------------------------------------------------------------------

| |  | E-transactions revenues
increased 117.6% due to sales to a greater number of customers.
| | - | ---------------------------------------------------------------------------------------

|For the quarter, gross profit
increased 9.6% from $2.5 million (40.8% of sales) in the three month period ended
September 30, 2001 to $2.7 million (40.7% of sales) in the three month period ended
September 30, 2002 due to the revenue growth discussed above.


For the nine month period, gross
profit increased 12.9% from $6.6 million (33% of revenues) in the nine months ended
September 30, 2001 to $7.4 million (41.2% of revenue) for the same period of 2002. Gross
profit for the 2001 period was negatively impacted by a $2 million inventory reserve
adjustment recorded in cost of sales in second quarter 2001.


11
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Product development and research
expense decreased 10.8% from $839,000 (13.9% of sales) in the three month period ended
September 30, 2001 to $748,000 (11.3% of revenues) in the three month period ended
September 30, 2002 and decreased 7.6% from $2.7 million (13.4% of revenues) in the nine
month period ended September 30, 2001 to $2.5 million (13.7% of revenues) for the nine
month period ended September 30, 2002. The decrease in the dollar amount primarily
resulted from our decreased use of outside design services coupled with the re-allocation
of some engineering costs to cost of revenues related to engineering service revenues.


Selling, general and administrative
expense (SG&A) decreased 13.3% from $2.2 million (36.7% of revenues) in the three
month period ended September 30, 2001 to $1.9 million (29.0% of revenues) in the three
month period ended September 30, 2002 and decreased 11.7% from $6.4 million (32.1% of
revenues) in the nine month period ended September 30, 2001 to $5.7 million (31.3% of
revenues) for the nine month period ended September 30, 2002. The decrease in the dollar
amount of SG&A is due to the reduction of staff and implementation of operating cost
reduction programs implemented in the second quarter of 2001 and due to the $300,000 bad
debt reserve adjustment recorded in the third quarter 2001.


Operating results improved from a
$593,000 loss in the three month period ended September 30, 2001 to an operating profit of
$30,000 in the three month period ended September 30, 2002 and from a $2.5 million loss in
the nine months ended September 30, 2001 to a $692,000 loss in the nine months ended
September 30, 2002. Key factors contributing to the operating improvements were: i) an
improving quarterly revenue trend in 2002; ii) the positive effect of organizational
downsizing implemented in mid-2001; and iii) the negative impact of adjustments to
inventory and bad debt reserves which occurred in the second and third quarters of 2001,
respectively.


We recorded a $764,000 income tax
benefit in the nine month period ended September 30, 2001 and a zero tax provision in the
nine month period ended September 30, 2002. No tax benefit was recorded in the 2002 period
due to lack of sufficient probability that any additional potential benefit would actually
be realized.


Our net results improved from a
$462,000 net loss in the three months ended September 30, 2001 to net income of $40,000
for the same period in 2002 and a net loss of $1.5 million for the nine months ended
September 30, 2001 to a net loss of $692,000 for the same period in 2002, for the reasons
described above.


Liquidity and Capital
Resources


At September 30, 2002, working
capital totaled $18.8 million as compared to $19.3 million at December 31, 2001. This
decrease is a result the usage of cash to purchase fixed assets and to reduce long-term
debt.


For the nine months ended September
30, 2002 operations generated $425,000 in positive cash flow. This result is due to the
negative year-to-date operating results offset by non-cash adjustments and a net
improvement in operating assets and liabilities.


For the nine month period ended
September 30, 2002, investing activities consisted primarily of our purchase of production
and computer network equipment for $286,000 which was offset by the conversion to cash of
marketable securities of $2.5 million that matured during the period.


We believe we can fund operations for
at least the next twelve months from existing cash balances. We renegotiated our U.S. bank
lines of credit to eliminate the financial covenants; however, the agreements governing
the lines of credit now require any future borrowings to be secured by cash and
investments held at the bank. To date, we have not borrowed under these facilities.
Negotiated lines of credit in Japan and the exercise of employee stock options are also
potential sources of capital available to us. We require liquidity to fund capital
expenditures and for working capital and other general corporate purposes.


12
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3. Quantitative and
Qualitative Disclosures about Market Risk


We use six-month 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 we would not expect a sudden or
significant change in foreign exchange rates to have a material impact on future net
income or cash flows. However, a foreign exchange movement with a duration of over six
months could materially impact financial performance.


Item 4. Controls and
Procedures


Disclosure Controls and
Procedures


Within the 90 days prior to the date
of this report, our Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of our disclosure controls and procedures. Our Chief
Executive Officer and Chief Financial Officer designed our disclosure controls and
procedures with the participation and assistance of our management and outside advisors to
ensure that we record, process, summarize and report in a timely manner the information we
must disclose in reports that we file with or submit to the SEC. Based on their review of
our disclosure controls and procedures, the Chief Executive Officer and the Chief
Financial Officer have concluded that our disclosure controls and procedures are effective
in alerting them to material information that is required to be included in the reports
that we file or submit under the Securities Exchange Act of 1934.


Internal Controls and
Procedures


There were no significant changes in
internal controls or in other factors that could significantly affect the internal
controls after the date of the most recent evaluation of our Chief Executive Officer and
Chief Financial Officer, described above, including any corrective actions with regard to
significant deficiencies and material weaknesses.


13
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II  OTHER
INFORMATION


Item 6. Exhibits and Reports
on Form 8-K
|----------------------------------------------------------------------

| | (a) Exhibits
| | ------------

| | 3.1 | Certificate
of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the
                  Registrants Annual Report on Form 10-K for the year ended
December 31, 2000).
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | Bylaws
(incorporated by reference to Exhibit 3.2 to the Registrants Annual Report on Form
10-K                   for the year ended December 31, 2000).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.1 | Certification
of Chief Executive Officer of Registrant Pursuant to 18 U.S.C. Section 1350, as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 | Certification
of Chief Financial Officer of Registrant Pursuant to 18 U.S.C. Section 1350, as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) Reports on Form 8-K
| | -----------------------

| | On
July 23, 2002, we filed a Current Report on Form 8-K under Item 4. Changes in
Registrants Certifying Accountant. We announced the engagement of KPMG LLP as
our new principal accountants to replace Arthur Andersen LLP, which we had dismissed on
June 24, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--

|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 13, 2002 |  | /s/ Paul D. MeyerPaul D. Meyer
Chief Financial Officer
|----------------------- |  | ------------------------------------------------------

|15
|--

|I, E. Michael Thoben, III, certify
that:


     1.    
          I have reviewed this quarterly report on Form 10-Q of Interlink Electronics,
          Inc.;


     2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;


     3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations an cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;


     4.    
          The registrants other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


     a)       
          designed such disclosure controls and procedures to ensure that material
          information relating to the registrant, including its consolidated subsidiaries,
          is made known to us by others within those entities, particularly during the
          period in which this quarterly report is being prepared;


     b)       
          evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this
          quarterly report (the Evaluation Date); and


     c)       
          presented in this quarterly report our conclusions about the effectiveness of
          the disclosure controls and procedures based on our evaluation as of the
          Evaluation Date;


     5.    
          The registrants other certifying officer and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent function):


     a)       
          all significant deficiencies in the design or operation of internal controls
          which could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and


     b)       
          any fraud, whether or not material, that involves management or other employees
          who have a significant role in the registrants internal controls; and


     6.    
          The registrants other certifying officer and I have indicated in this
          quarterly report whether or not there were significant changes in internal
          controls or in other factors that could significantly affect internal controls
          subsequent to the date of our most recent evaluation, including any corrective
          actions with regard to significant deficiencies and material weaknesses.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:   November 13, 2002 |  | 
|------------------------- |  | 

| |  | /s/ E. Michael Thoben, IIIE. Michael Thoben, IIIChairman, President and Chief Executive Officer
| |  | -----------------------------------------------------------------------------------------------

|16
|--

|I, Paul D. Meyer, certify that:


     1.    
          I have reviewed this quarterly report on Form 10-Q of Interlink Electronics,
          Inc.;


     2.    
          Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;


     3.    
          Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations an cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;


     4.    
          The registrants other certifying officer and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


     a)       
          designed such disclosure controls and procedures to ensure that material
          information relating to the registrant, including its consolidated subsidiaries,
          is made known to us by others within those entities, particularly during the
          period in which this quarterly report is being prepared;


     b)       
          evaluated the effectiveness of the registrants disclosure controls and
          procedures as of a date within 90 days prior to the filing date of this
          quarterly report (the Evaluation Date); and


     c)       
          presented in this quarterly report our conclusions about the effectiveness of
          the disclosure controls and procedures based on our evaluation as of the
          Evaluation Date;


     5.    
          The registrants other certifying officer and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent function):


     a)       
          all significant deficiencies in the design or operation of internal controls
          which could adversely affect the registrants ability to record, process,
          summarize and report financial data and have identified for the
          registrants auditors any material weaknesses in internal controls; and


     b)       
          any fraud, whether or not material, that involves management or other employees
          who have a significant role in the registrants internal controls; and


     6.    
          The registrants other certifying officer and I have indicated in this
          quarterly report whether or not there were significant changes in internal
          controls or in other factors that could significantly affect internal controls
          subsequent to the date of our most recent evaluation, including any corrective
          actions with regard to significant deficiencies and material weaknesses.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date:   November 13, 2002 |  | 
|------------------------- |  | 

| |  | /s/ Paul D. MeyerPaul D. MeyerChief Financial Officer
| |  | -----------------------------------------------------

|17
|--

|EXHIBIT INDEX


The following exhibits are filed with
or incorporated by reference into this Quarterly Report:
|--------------------------------------------------------------------------------------------------------------

|ExhibitNumber |  | Description
|------------- |  | -----------

|3.1 |  | Certificate
of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the
                  Registrants Annual Report on Form 10-K for the year ended
December 31, 2000).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Bylaws
(incorporated by reference to Exhibit 3.2 to the Registrants Annual Report on Form
10-K                   for the year ended December 31, 2000).
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|99.1 |  | Certification
of Chief Executive Officer of Registrant Pursuant to 18 U.S.C. Section 1350, as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|99.2 |  | Certification
of Chief Financial Officer of Registrant Pursuant to 18 U.S.C. Section 1350, as
                  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|18
|--