United
      States Securities and Exchange Commission


Washington,
      D.C. 20549


Form
      10-Q





x QUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the
      quarterly period ended June 30, 2005





or





o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES


EXCHANGE
      ACT OF 1934





For
      the
      transition period from _____ to _____




Commission
      File Number 0-21989




Medialink
                Worldwide Incorporated(Exact
                name of registrant as specified in its
                charter)Delaware
            
            52-1481284(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or
            
            Identification
                Number)organization)





708
                  Third Avenue, New York, New York
                  10017(Address
                  of principal executive offices) (Zip
                  Code)(212)
                  682-8300(Registrant's
                  telephone number, including area
                  code)


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 o





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act.) Yes o  No x





The
      number of shares of the issuer's common stock, outstanding as of the close
      of
      August 12, 2005, was 6,153,203









TABLE
      OF
      CONTENTS


**PART
                    I. FINANCIAL INFORMATION**ITEM
                    1.
                Financial
                    Statements
                3Consolidated
                    Balance Sheets as of June 30,2005
                    (unaudited) and December 31, 2004
                3Unaudited
                    Consolidated Statements of Operationsfor
                    the six months ended June 30, 2005 and 2004
                4Unaudited
                    Consolidated Statements of Operationsfor
                    the three months ended June 30, 2005 and 2004
                5Unaudited
                    Consolidated Statements of Cash Flowsfor
                    the six months ended June 30, 2005 and 2004
                6Notes
                    to Unaudited Consolidated Financial Statements
                7
                    -
                    12ITEM
                    2.
                Management's
                    Discussion and Analysis of Financial Conditionand
                    Results of Operations
                13
                    - 21ITEM
                    3.
                Quantitative
                    and Qualitative Disclosure About Market Risk
                22ITEM
                    4.
                Controls
                    and Procedures
                22**PART
                    II. OTHER INFORMATION**ITEM
                    1.
                Legal
                    Proceedings
                23ITEM
                    2.
                Unregistered
                    Sales of Equity Securities andUse
                    of Proceeds
                23ITEM
                    3.
                Defaults
                    Upon Senior Securities
                23ITEM
                    4.
                Submission
                    of Matters to a Vote of Security Holders
                23ITEM
                    5.
                Other
                    Information
                23ITEM
                    6.
                Exhibits
                23








MEDIALINK
                WORLDWIDE INCORPORATED AND SUBSIDIARIESCONSOLIDATED
                BALANCE SHEETSAs
                of June 30, 2005 and December 31, 2004June
                30,
            
            December
                31,2005
            
            2004(Unaudited)ASSETSCurrent
                Assets:Cash
                and cash equivalents
            
            $
            9,114,066
            
            $
            11,674,828Accounts
                receivable, net of allowance for doubtful accounts of$584,122
                and $592,781
            
            
            5,593,626
            
            
            6,144,658Prepaid
                expenses
            
            
            624,025
            
            
            625,457Prepaid
                and refundable taxes
            
            
            905,589
            
            
            565,004Other
                current assets
            
            
            902,913
            
            
            1,882,990Total
                current assets
            
            
            17,140,219
            
            
            20,892,937Property
                and equipment, net
            
            
            3,856,496
            
            
            4,068,987Goodwill
            
            
            13,006,137
            
            
            13,006,137Other
                assets
            
            
            1,103,993
            
            
            804,480Total
                assets
            
            $
            35,106,845
            
            $
            38,772,541LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                Liabilities:Accounts
                payable
            
            $
            2,355,755
            
            $
            2,497,813Accrued
                expenses and other current liabilities
            
            
            5,064,461
            
            
            6,357,928Current
                portion of obligations under capital lease
            
            
            127,894
            
            
            113,332Taxes
                payable
            
            
            —
            
            
            340,000Total
                current liabilities
            
            
            7,548,110
            
            
            9,309,073Convertible
                debentures, net of unamortized discount of $1,064,312 and
                $1,167,000
            
            
            3,935,688
            
            
            3,833,000Capital
                lease obligation, net of current portion
            
            
            —
            
            
            97,428Other
                long-term liabilities
            
            
            437,241
            
            
            453,777Total
                liabilities
            
            
            11,921,039
            
            
            13,693,278Stockholders'
                Equity:Common
                stock: $.01 par value. Authorized 15,000,000 shares;
                issued6,153,203
                shares in 2005 and 6,055,430 shares in 2004
            
            
            61,532
            
            
            60,554Additional
                paid-in capital
            
            
            26,568,597
            
            
            26,291,385Accumulated
                deficit
            
            
            (2,784,944
            )
            
            (733,235
            )Accumulated
                other comprehensive loss
            
            
            (316,015
            )
            
            (196,077
            )23,529,170
            
            
            25,422,627Less
                common stock in treasury (at cost, 101,121shares)
            
            
            (343,364
            )
            
            (343,364
            )Total
                stockholders' equity
            
            
            23,185,806
            
            
            25,079,263Total
                liabilities and stockholders' equity
            
            $
            35,106,845
            
            $
            38,772,541


See
      accompanying notes to unaudited consolidated
      financial statements






3




MEDIALINK
                    WORLDWIDE INCORPORATED AND SUBSIDIARIESUNAUDITED
                    CONSOLIDATED STATEMENTS OF OPERATIONSFor
                    the Six Months Ended June 30, 2005 and 20042005
                
                2004Revenues
                
                $
                17,770,779
                
                $
                18,290,467Direct
                    costs
                
                
                6,954,015
                
                
                6,820,397Gross
                    Profit
                
                
                10,816,764
                
                
                11,470,070Operating
                    expenses:Selling,
                    general and administrative expenses
                
                
                12,064,750
                
                
                10,690,052Depreciation
                    and amortization
                
                
                869,520
                
                
                944,689Loss
                    from joint venture
                
                
                —
                
                
                136,076Impairment
                    of investments
                
                
                —
                
                
                342,000Total
                    Operating Expenses
                
                
                12,934,270
                
                
                12,112,817Operating
                    loss
                
                
                (2,117,506
                )
                
                (642,747
                )Interest
                    expense, net
                
                
                (214,425
                )
                
                (152,688
                )Loss
                    from continuing operations before taxes
                
                
                (2,331,931
                )
                
                (795,435
                )Income
                    tax benefit
                
                
                (220,000
                )
                
                (30,000
                )Loss
                    from continuing operations
                
                
                (2,111,931
                )
                
                (765,435
                )Discontinued
                    operations:Loss
                    from discontinued operations
                
                
                —
                
                
                (303,040
                )Gain
                    on sale of division
                
                
                60,222
                
                
                —Income
                    (loss) from discontinued operations before income taxes
                
                
                60,222
                
                
                (303,040
                )Income
                    tax benefit
                
                
                —
                
                
                (60,000
                )Income
                    (loss) on discontinued operations
                
                
                60,222
                
                
                (243,040
                )Net
                    loss
                
                $
                (2,051,709
                )
                $
                (1,008,475
                )Basic
                    and diluted loss per share from continuing operations
                
                $
                (0.35
                )
                $
                (0.13
                )Basic
                    and diluted earnings (loss) per share from discontinued
                    operations
                
                $
                0.01
                
                $
                (0.04
                )Basic
                    and diluted net loss per share
                
                $
                (0.34
                )
                $
                (0.17
                )Shares
                    used in per share calculations:Basic
                    and diluted
                
                
                6,001,974
                
                
                5,988,058
  See
        accompanying notes to unaudited consolidated
        financial statements
   4
  MEDIALINK
                    WORLDWIDE INCORPORATED AND SUBSIDIARIESUNAUDITED
                    CONSOLIDATED STATEMENTS OF OPERATIONSFor
                    the Three Months Ended June 30, 2005 and 20042005
                
                2004Revenues
                
                $
                9,223,089
                
                $
                9,802,700Direct
                    costs
                
                
                3,468,019
                
                
                3,874,201Gross
                    Profit
                
                
                5,755,070
                
                
                5,928,499Operating
                    expenses:Selling,
                    general and administrative expenses
                
                
                6,152,677
                
                
                5,322,329Depreciation
                    and amortization
                
                
                430,493
                
                
                454,317Loss
                    from joint venture
                
                
                —
                
                
                41,388Total
                    Operating Expenses
                
                
                6,583,170
                
                
                5,818,034Operating
                    (loss) income
                
                
                (828,100
                )
                
                110,465Interest
                    expense, net
                
                
                (94,728
                )
                
                (73,024
                )(Loss)
                    income from continuing operations before taxes
                
                
                (922,828
                )
                
                37,441Income
                    tax expense
                
                
                —
                
                
                60,000Loss
                    from continuing operations
                
                
                (922,828
                )
                
                (22,559
                )Discontinued
                    operations -Income
                    from discontinued operations
                
                
                —
                
                
                31,850Net
                    (loss) income
                
                $
                (922,828
                )
                $
                9,291Basic
                    and diluted loss per share from continuing operations
                
                $
                (0.15
                )
                $
                (0.00
                )Basic
                    and diluted earnings (loss) per share from discontinued
                    operations
                
                $
                —
                
                $
                0.01Basic
                    and diluted (loss) earnings per share
                
                $
                (0.15
                )
                $
                0.00Shares
                    used in per share calculations:Basic
                    and diluted
                
                
                6,039,362
                
                
                5,991,846
  See
        accompanying notes to unaudited consolidated
        financial statements
   5
  MEDIALINK
                    WORLDWIDE INCORPORATED AND SUBSIDIARIESUNAUDITED
                    CONSOLIDATED STATEMENTS OF CASH FLOWSFor
                    the Six Months Ended June 30, 2005 and 20042005
                
                2004CASH
                    FLOWS FROM OPERATING ACTIVITIES:Net
                    loss
                
                $
                (2,051,709
                )
                $
                (1,008,475
                )Adjustments
                    to reconcile net loss to net cash used in continuingoperating
                    activities:Depreciation
                    and amortization
                
                
                869,520
                
                
                944,689Amortization
                    of discount on convertible debentures
                
                
                102,688
                
                
                —Allowance
                    for doubtful accounts
                
                
                (8,659
                )
                
                132,243Impairment
                    of investments
                
                
                —
                
                
                342,000Deferred
                    income taxes
                
                
                —
                
                
                (115,000
                )Equity
                    loss from joint venture
                
                
                —
                
                
                136,076Gain
                    on sale of division and loss from discontinued operations,
                    netof
                    taxes
                
                
                (60,222
                )
                
                243,040Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                499,975
                
                
                (1,007,771
                )Other
                    assets
                
                
                (327,593
                )
                
                (297,197
                )Prepaid
                    expenses and other current assets
                
                
                981,509
                
                
                (341,481
                )Prepaid
                    and refundable income taxes and taxes payable
                
                
                (680,585
                )
                
                (64,338
                )Accounts
                    payable and accrued expenses
                
                
                (1,435,525
                )
                
                516,027Other
                    liabilities
                
                
                (16,536
                )
                
                (101,930
                )Net
                    cash used in operating activities
                
                
                (2,127,137
                )
                
                (622,117
                )CASH
                    FLOWS FROM INVESTING ACTIVITY -Purchases
                    of property and equipment
                
                
                (628,949
                )
                
                (377,790
                )Net
                    cash used in investing activity
                
                
                (628,949
                )
                
                (377,790
                )CASH
                    FLOWS FROM FINANCING ACTIVITIES:Advances
                    on line of credit
                
                
                —
                
                
                106,203Payments
                    on line of credit
                
                
                —
                
                
                (1,606,203
                )Proceeds
                    from the issuance of common stock in connectionwith
                    the exercise of stock options
                
                
                278,190
                
                
                31,978Repayments
                    of obligations under capital lease
                
                
                (82,866
                )
                
                (59,455
                )Net
                    cash provided by (used in) financing activities
                
                
                195,324
                
                
                (1,527,477
                )Net
                    cash provided by discontinued operations
                
                
                —
                
                
                281,807Net
                    decrease in cash and cash equivalents
                
                
                (2,560,762
                )
                
                (2,245,577
                )Cash
                    and cash equivalents at the beginning of year
                
                
                11,674,828
                
                
                3,708,130Cash
                    and cash equivalents at end of period
                
                $
                9,114,066
                
                $
                1,462,553
  See
          accompanying notes to unaudited consolidated
          financial statements
 6
 **MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**


(1)  Basis
      of
      presentation





The
      consolidated financial statements included herein have been prepared by
      Medialink Worldwide Incorporated and Subsidiaries (collectively, the “Company”
      or “Medialink”), without audit, pursuant to the rules and regulations of the
      Securities and Exchange Commission. Certain information and footnote disclosures
      normally included in consolidated financial statements prepared in accordance
      with generally accepted accounting principles have been condensed or omitted
      pursuant to such rules and regulations. The Company believes that the
      disclosures are adequate to make the information presented not misleading.
      These
      consolidated financial statements should be read in conjunction with the
      consolidated financial statements and the notes thereto included in the
      Company's Annual Report on Form 10-K for the year ended December 31,
      2004.





The
      unaudited consolidated financial statements included herein reflect all
      adjustments (which include only normal, recurring adjustments) which are, in
      the
      opinion of management, necessary to state fairly the results for the six and
      three months ended June 30, 2005. The results for the six and three months
      ended
      June 30, 2005 are not necessarily indicative of the results expected for the
      full fiscal year.





On
      December 31, 2004 Medialink sold its research division, Delahaye, a provider
      of
      public relations research services for businesses and other organizations.
      Delahaye’s operations are reported as discontinued operations for all periods
      presented in the accompanying unaudited consolidated financial statements,
      and
      the operating results of Delahaye through December 31, 2004, the date of sale,
      are reflected separately from the results of continuing operations.





Certain
      reclassifications have been made to the 2004 financial statements to conform
      to
      the 2005 presentation, including reclassifications to reflect the presentation
      of Delahaye as a discontinued operation in 2004.








(2)  Earnings
      (Loss) per Share





Basic
      earnings (loss) per common share is computed using net income (loss) applicable
      to common stock and the weighted average number of shares outstanding. Diluted
      earnings (loss) per common share is computed using the weighted average number
      of shares outstanding adjusted for the incremental shares from assumed
      conversion of all potentially dilutive securities attributed to outstanding
      options and warrants to purchase common stock. For the six month periods ended
      June 30, 2005 and 2004, the Company had common stock equivalents of 163,751
      and
      143,587, respectively, related to stock options and warrants that were not
      included in the computation of diluted loss per common share on continuing
      operations nor net loss per common share because they were antidilutive. For
      the
      three month period ended June 30, 2005, the Company had common stock equivalents
      of 84,271 related to stock options that were not included in the computation
      of
      diluted loss per common share because they were antidilutive.






7




**MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **(continued)**
  (3)  Accumulated
      Other Comprehensive Loss and Comprehensive Loss





The
      components of comprehensive loss consist of the following:


For
                the six months ended June 30,2005
            
            2004Net
                loss
            
            $
            (2,051,709
            )
            $
            (1,008,475
            )Other
                comprehensive loss:Foreign
                currency translationadjustments
            
            
            (119,938
            )
            
            52,848Comprehensive
                loss
            
            $
            (2,171,647
            )
            $
            (955,627
            )For
                  the three months ended June 30,2005
            
            
            2004Net
                (loss) income
            
            $
            (922,828
            )
            $
            9,291Other
              comprehensive loss:Foreign
                currency translationadjustments
            
            
            (52,262
            )
            
            (50,807
            )Comprehensive
                loss
            
            $
            (975,090
            )
            $
            (41,516
            )


Accumulated
      other comprehensive loss at June 30, 2005 and December 31, 2004 consists of
      foreign currency translation adjustments.





(4)  Recent
      Accounting Pronouncements





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004),
      "Share-Based Payment" ("SFAS 123R"), which replaces SFAS No. 123, "Accounting
      for Stock-Based Compensation" ("SFAS 123") and supercedes Accounting Principals
      Board (“APB”) Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS
      123R requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the financial statements based
      on
      their fair values, beginning with the first interim or annual period commencing
      after December 15, 2005, with early adoption encouraged. The pro forma
      disclosures previously permitted under SFAS 123 no longer will be an alternative
      to financial statement recognition. The Company is required to adopt SFAS 123R
      in its first quarter of fiscal 2006. Under SFAS 123R, the Company must determine
      the appropriate fair value model to be used for valuing share-based payments,
      the amortization method for compensation cost and the transition method to
      be
      used at date of adoption. The transition methods include prospective and
      retroactive adoption options. Under the retroactive option, prior periods may
      be
      restated either as of the beginning of the year of adoption or for all periods
      presented. The prospective method requires that compensation expense be recorded
      for all unvested stock options and restricted stock at the beginning of the
      first quarter of adoption of SFAS 123R, while the retroactive method would
      record compensation expense for all unvested stock options and restricted stock
      beginning with the first period restated. The Company is evaluating the
      requirements of SFAS 123R and expects that the adoption of SFAS 123R will have
      an adverse impact on its consolidated results of operations and earnings per
      share. The Company has not yet determined the method of adoption or the effect
      of adopting SFAS 123R.





8


**MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **(continued)**




In
      May
      2005, SFAS No. 154, “Accounting Changes and Error Corrections—a replacement of
      APB Opinion No. 20 and FASB Statement No. 3” (“SFAS 154”), was issued and is
      effective for accounting changes and corrections of errors made in fiscal years
      beginning after December 15, 2005. SFAS 154 applies to all voluntary changes
      in
      accounting principles and to changes required by accounting pronouncements
      that
      do not contain transition provisions. SFAS 154 requires, among other things,
      the
      retrospective application to prior periods’ financial statements of changes in
      accounting principles as opposed to including in net income the cumulative
      effect of the change in accounting principal in the period of adoption, which
      was the standard under APB Opinion No. 20, “Accounting Changes.” The impact of
      the adoption of SFAS 154 on the Company’s financial condition or results of
      operations is not determinable since SFAS No. 154 only affects the adoption
      of
      accounting standards in future periods.





(5)  Business
      Transactions





On
      April
      8, 2002, TTX Limited ("TeletraxTM"), a subsidiary of the Company, entered into a
      Technology License Agreement with Koninklijke Philips Electronics N.V.
      ("Philips") for the use of Philips' WaterCast technology. Medialink owns 76%
      of
      TeletraxTM. The minority shareholder of TeletraxTM has no future funding
      obligations and, accordingly, the Company has recorded 100% of the loss from
      operations of this subsidiary, which it consolidates.





On
      August
      1, 1999, the Company entered into a joint venture with Business Wire to form
      Business Wire/Medialink, LLC (“Newstream”), for the purpose of connecting its
      clients to multimedia Internet news sites as Newstream.com. The Company, which
      had a 50% interest in the joint venture, accounted for its interest in Newstream
      under the equity method, as it did not have a controlling interest in the
      entity. In December 2004 Newstream was dissolved. As a result of the
      dissolution, the Company recorded a non-cash charge of $373,000 to write off
      the
      remaining balance in its investment in Newstream. In accordance with the
      dissolution agreement, the Company is permitted to and is currently providing
      Newstream services to its client base under the Newstream name, through December
      31, 2005. Medialink anticipates it will continue to provide these services
      under
      a different service name.




9


**MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **(continued)**




During
      the six months ended June 30, 2004, the Company recorded a loss on the
      impairment of investments of $342,000 related to two investments accounted
      for
      under the cost method.





In
      December 2004, the Company sold substantially all of the assets and liabilities
      of its research division, Delahaye, for approximately $8 million, of which
      $7.70
      million was collected at closing and the balance is expected to be settled
      in
      the third quarter of 2005. Additionally, the proceeds are to be adjusted for
      the
      amount by which working capital on the date of the sale exceeds certain
      thresholds. Any additional balances due are expected to be settled in the third
      quarter of 2005. As part of the transaction, Medialink divested substantially
      all of the net assets of Delahaye, which had an estimated carrying value of
      $2.90 million, including $228,000 of goodwill and $1.40 million in net trade
      receivables, for the US and UK divisions combined. Any assigned and uncollected
      receivables as of June 29, 2005, the specific accounts expected to be agreed
      to
      during the third quarter of 2005, will be transferred and assigned to Medialink
      for subsequent collection. Delahaye’s operations are reported as discontinued
      operations for all periods presented in the accompanying consolidated financial
      statements, and the operating results of Delahaye through December 31, 2004,
      the
      date of sale, are reflected separately from the results of continuing
      operations.





Summarized
      operating results and gain on sale for the six and three months ended June
      30,
      2005 and 2004 are as follows:


For
                  the Six Months Ended June 30,2005
              
              
              2004(in
                  thousands)Total
                  Revenue
              
              $
              —
              
              $
              4,286Loss
                  from operations before income taxes
              
              $
              —
              
              $
              (303
              )Gain
                  on sale of discontinued operations
              
              
              60
              
              
              —Income
                  (loss) from discontinuedoperations
                  before income taxes
              
              
              60
              
              
              (303
              )Income
                  tax expense benefit
              
              
              —
              
              
              60Income
                  (loss) from discontinued operations
              
              $
              60
              
              $
              (243
              )For
                  the Three Months Ended June 30,2005
              
              
              2004(in
                  thousands)Total
                  Revenue
              
              $
              —
              
              $
              2,206Income
                  from discontinued operations
              
              $
              —
              
              $
              32




10
 
  **MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **(continued)**


(6)  Line
      of
      Credit





The
      Company had a line of credit facility with a bank expiring in January 31, 2005.
      Interest under the line was payable monthly at the rate of the 30-Day LIBOR
      Rate
      plus 5.5% per annum.





On
      November 8, 2004, the Company amended certain provisions of its loan credit
      facility. Pursuant to the amending letter, the term of the loan credit facility
      was extended to December 31, 2005; several financial covenants were amended;
      and
      maximum borrowings were reduced to $2 million.





In
      December 2004 the outstanding balance on the line of credit was paid in full
      and
      the agreement was terminated.





(7)  Stock
      Based Compensation





The
      Company applies the intrinsic-value-based method of accounting prescribed by
      APB
      Opinion No. 25, “Accounting for Stock Issued to Employees”, and related
      interpretations including FASB Interpretation No. 44, “Accounting for Certain
      Transactions involving Stock Compensation, an interpretation of APB Opinion
      No.
      25”, to account for its fixed-plan stock options. Under this method,
      compensation expense is recorded on the date of grant only if the current market
      price of the underlying stock exceeded the exercise price. SFAS 123 and SFAS
      148, “Accounting for Stock-Based Compensation - Transition and Disclosure, an
      amendment of SFAS 123”, established accounting and disclosure requirements using
      a fair-value-based method of accounting for stock-based employee compensation
      plans. As permitted by existing accounting standards, the Company has elected
      to
      continue to apply the intrinsic-value-based method of accounting described
      above, and has adopted only the disclosure requirements of SFAS 123, as amended.
      The following table illustrates the effect on net loss if the fair-value-based
      method had been applied to all outstanding and unvested awards in each period.





For
                the Six Months Ended June 30,2005
            
            2004Net
                loss - as reported
            
            $
            (2,051,709
            )
            $
            (1,008,475
            )Deduct:
                total stock-basedemployee
                compensation expensedetermined
                under the fairvalue
                method, net of related taxeffects
            
            
            (151,789
            )
            
            (64,332
            )Net
                loss - pro forma
            
            $
            (2,203,498
            )
            $
            (1,072,807
            )Basic
                and diluted loss per share - as reported
            
            $
            (.34
            )
            $
            (.17
            )Basic
                and diluted loss per share - pro forma
            
            $
            (.37
            )
            $
            (.18
            )




11




**MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **(continued)**




For
                the Three Months Ended June 30,2005
            
            2004Net
                (loss) income - as reported
            
            $
            (922,828
            )
            $
            9,291Deduct:
              total
              stock-basedemployee
                compensation expensedetermined
                under the fairvalue
                method, net of related taxeffects
            
            
            (51,589
            )
            
            (30,199
            )Net
                loss - pro forma
            
            $
            (974,417
            )
            $
            (20,908
            )Basic
                and diluted (loss) earnings per share -
              as
                reported
            
            $
            (.15
            )
            $
            .00Basic
                and diluted loss per share - pro forma
            
            $
            (.16
            )
            $
            .00




The
      fair
      value of each grant is estimated using the Black-Scholes Option Pricing Model
      with the following assumptions: dividend yield of 0% for all grants, expected
      volatility of 34.6% for 2005, risk free interest rates of 3.65% for 2005, and
      expected lives of 10 years for all grants. There were no options granted during
      the six months ended June 30, 2004.







(8)  Supplemental
      Cash Flow Information:





Cash
      paid
      for interest and income taxes during the six months ended June 30, 2005 and
      2004
      was as follows:





2005
            
            2004Interest
            
            $
            211,000
            
            $
            152,000Income
                Taxes
            
            $
            481,000
            
            $
            72,000






12




**MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS**


**RESULTS
      OF OPERATIONS**





*Summary
      and Outlook*





While
      revenue for the first half of 2005 was down 3% as compared to 2004, the Company
      recorded growth in TeletraxTM service revenue.




Having
      entered 2005 with a markedly improved balance sheet and capital in place, as
      a
      result of the sale of Delahaye and the issuance of $5 million subordinated
      convertible debenture financing, the Company began to execute its plan to
      accelerate the growth of TeletraxTM and to make strategic investments to grow its
      core services.





*Six
      months ended June 30, 2005 compared to six months ended June 30,
      2004*





Revenues
      for the six months ended June 30, 2005 (“2005”) were $17.77 million as compared
      to $18.29 million for the six months ended June 30, 2004 (“2004”), broken out as
      follows:





(in
                thousands)For
                the Six Months Ended June 30,2005
            
            2004
            
            Change
            
            %Media
                Communication Services
            
            $
            16,878
            
            $
            17,469
            
            $
            (591
            )
            
            (3
            %)TeletraxTM:Service
                Revenue
            
            
            855
            
            
            583
            
            
            272
            
            
            47
            %Equipment
                Sales
            
            
            38
            
            
            238
            
            
            (200
            )
            
            (84
            %)Total
                TeletraxTM
            
            
            893
            
            
            821
            
            
            72
            
            
            9
            %Total
                Revenue
            
            $
            17,771
            
            $
            18,290
            
            $
            (519
            )
            
            (3
            %)





During
      2005, revenues from Medialink’s Media Communications services decreased
      $591,000, or 3% as compared to 2004. At the same time, the Company has continued
      to invest in its TeletraxTM service and increased revenue from TeletraxTM,
      excluding sales of equipment, by $272,000, from $583,000 derived from 9 clients
      in 2004 to $855,000 derived from 13 clients in 2005.





While
      the
      Company detected signs of a rebound in spending in the public relations industry
      during the first quarter of 2005, the Company experienced a decrease in demand
      for its media communications services in April 2005 largely due to the unusually
      protracted global news coverage of major world events, including the death
      of
      Pope John Paul II and the subsequent installation of Pope Benedict XVI. Events
      which dominate news broadcasts can have a material adverse effect on the
      Company’s business.





Direct
      costs increased by $134,000 or 2.0%, from $6.82 million in 2004 to $6.95 million
      in 2005. Included in direct costs were direct costs associated with TeletraxTM
      services of $711,000 and $601,000, respectively, in 2005 and 2004. The Company’s
      gross profit percentage was 61% and 63% in 2005 and 2004, respectively. The
      decrease in the gross profit margin was attributable to changes in product
      mix,
      as well as an increase in marketing communications services in the first quarter
      of 2005, where the Company purchases paid placements to strategically improve
      client results on distribution projects. These placements are generally sold
      at
      a lower gross profit margin. The Company believes that as it increasingly
      integrates its existing services with marketing communications services, it
      will
      increase its buying leverage, resulting in improved margins as well as fuel
      growth in revenue.




13


**MEDIALINK
        WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
        2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS (continued)**




Selling,
      general and administrative expenses (“S, G & A”) increased by $1.37 million,
      or 12.9%, from $10.69 million in 2004 to $12.06 million in 2005. The increase
      in
      S, G & A includes increases in payroll and payroll-related costs (“Payroll”)
      of approximately $590,000. Not including the increase in Payroll, the Company
      otherwise increased its S, G & A expenses by $784,000. The increases in both
      payroll and S, G & A are largely the result of additional costs incurred to
      develop new services, including the Company's recently announced Mediavision
      venture, as well as increased spending for sales and promotional efforts for
      TeletraxTM and the Company’s core business.




Depreciation
      and amortization expense decreased by $75,000, or 8%, from $945,000 in 2004
      to
      $870,000 in 2005. Included in depreciation and amortization is depreciation
      related to TeletraxTM of $299,000 and $264,000 in 2005 and 2004, respectively.
      The decrease was substantially due to amortization on intangibles that were
      fully amortized during 2004.





During
      2004 the Company recorded a loss on the impairment of investments of $342,000
      related to two investments accounted for under the equity cost method, both
      of
      which were determined to have no value in 2004.





As
      a
      result of the foregoing, the Company had an operating loss of $2.12 million
      in
      2005 as compared to an operating loss of $643,000 in 2004. The operating loss
      in
      2005 and 2004 included operating losses of $1.22 million and $1.00 million,
      respectively, from the Company’s 76% owned subsidiary, TeletraxTM, which was
      formed in April 2002. The minority shareholder of TeletraxTM has no future
      funding obligations and, accordingly, the Company has recorded 100% of the
      loss
      from this subsidiary.





Interest
      expense, net of interest income, increased by $62,000 from $153,000 in 2004
      to
      $214,000 in 2005. The increase was substantially due to the issuance of
      convertible debentures in the amount of $5.00 million in November 2004. Interest
      expense related to this issuance was $302,000, which included $103,000 of
      amortization of the discount recorded against the convertible debentures. In
      December 2004, the Company paid off the remaining balance on its line of credit.
      Interest expense on the Company’s line of credit amounted to $144,000 in 2004.
      Additionally, as a result of higher average cash balances during 2005 as
      compared to 2004, the Company had an increase in interest income of $93,000.




14


**MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS (continued)**




The
      Company recorded a benefit for income taxes for 2005 and 2004 based on the
      anticipated effective tax rate for the respective full year.





As
      of
      December 31, 2004 and through June 30, 2005, due to a number of factors,
      including the fiscal 2004 and first six months of 2005 taxable losses from
      continuing operations and the additional investments to be made in TeletraxTM and
      in other areas of the Company’s operations, the Company lowered its projections
      of future taxable income, particularly for the year ending December 31, 2005.
      As
      a result of these lower projections of future taxable income, management
      believes the future utilization of the Company’s deferred tax assets is no
      longer more-likely-than-not. The Company made the decision to fully reserve
      its
      net deferred tax assets at December 31, 2004 and continues to fully reserve
      its
      net deferred tax assets at June 30, 2005.





Including
      gain on the sale of a division and losses on discontinued operations, the
      Company had a net loss of $2.05 million in 2005 as compared to a net loss of
      $1.01 million in 2004. In 2005 the Company had a basic loss per share of $0.34
      compared to a basic loss per share of $0.17 in 2004.








*Three
      months ended June 30, 2005 compared to three months ended June 30,
      2004*





Revenues
      for the three months ended June 30, 2005 (the “2005 Quarter”) were $9.22 million
      as compared to $9.80 million for the three months ended June 30, 2004 (the
“2004
      Quarter”), broken out as follows:





(in
                thousands)For
                the Three Months Ended June 30,2005
            
            2004
            
            Change
            
            %Media
                Communication Services
            
            $
            8,744
            
            $
            9,410
            
            $
            (666
            )
            
            (7
            %)TeletraxTM:Service
                Revenue
            
            
            441
            
            
            315
            
            
            126
            
            
            40
            %Equipment
                Sales
            
            
            38
            
            
            78
            
            
            (40
            )
            
            (51
            %)Total
                TeletraxTM
            
            
            479
            
            
            393
            
            
            86
            
            
            22
            %Total
                Revenue
            
            $
            9,223
            
            $
            9,803
            
            $
            (580
            )
            
            (6
            %)





For
      the
      2005 Quarter, revenues from Medialink’s Media Communications services decreased
      $666,000, or 7% as compared to the 2004 Quarter. At the same time, the Company
      has continued to invest in TeletraxTM and increased revenue from TeletraxTM,
      excluding sales of equipment, by $127,000, from $314,000, derived from 9 clients
      in the 2004 Quarter to $441,000 derived from 13 clients in the 2005
      Quarter.





The
      Company experienced a decrease in demand for its media communications services
      in April 2005 substantially due to the unusually protracted global news coverage
      of major world events, including the death of Pope John Paul II and the
      subsequent installation of Pope Benedict XVI.




15




**MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS (continued)**




Direct
      costs decreased by $406,000 or 10.5%, from $3.87 million in the 2004 Quarter
      to
      $3.47 million in the 2005 Quarter. Included in direct costs were direct costs
      associated with TeletraxTM services of $392,000 and $295,000, respectively, in
      the 2005 Quarter and the 2004 Quarter. The Company’s gross profit percentage was
      62.4% and 60.5% in the 2005 and 2004 Quarters, respectively. The increase in
      the
      gross profit margin was attributable to changes in product mix during the 2005
      Quarter as compared to the 2004 Quarter.





S,
      G
& A increased by $830,000, or 15.6%, from $5.32 million in the 2004 Quarter
      to $6.15 million in the 2005 Quarter. The increase in S, G & A includes
      increases in Payroll of approximately $316,000. Not including the increase
      in
      Payroll, the Company otherwise increased its S, G & A expenses by $514,000.
      The increases in both payroll and S, G & A are substantially the result of
      additional costs incurred to develop new services, including the Company's
      recently announced Mediavision venture, as well as increased spending for sales
      and promotional efforts for TeletraxTM and the Company’s core
      business.




Depreciation
      and amortization expense decreased by $24,000, or 5%, from $454,000 in the
      2004
      Quarter to $430,000 in the 2005 Quarter. Included in depreciation and
      amortization is depreciation related to TeletraxTM of $148,000 and $135,000 in
      the 2005 Quarter and the 2004 Quarter, respectively. The decrease was
      substantially due to amortization on intangibles that were fully amortized
      during 2004.





As
      a
      result of the foregoing, the Company had an operating loss of $828,000 in the
      2005 Quarter as compared to an operating income of $110,000 in the 2004 Quarter.
      The operating losses in the 2005 and 2004 Quarter included operating losses
      of
      $650,000 and $489,000, respectively, from the Company’s 76% owned subsidiary,
      TeletraxTM, which was formed in April 2002. The minority shareholder of TeletraxTM
      has no future funding obligations and, accordingly, the Company has recorded
      100% of the loss from this subsidiary.





Interest
      expense, net of interest income, increased by $22,000 from $73,000 in the 2004
      Quarter to $95,000 in the 2005 Quarter. The increase was substantially due
      to
      the issuance of convertible debentures in the amount of $5.00 million in
      November 2004. Interest expense related to this issuance was $144,000, which
      included $43,000 of amortization of the discount recorded against the
      convertible debentures. In December 2004, the Company paid off the remaining
      balance on its line of credit. Interest expense on the Company’s line of credit
      amounted to $69,000 in 2004. Additionally, as a result of higher average cash
      balances during the 2005 Quarter as compared to the 2004 Quarter, the Company
      had an increase in interest income of $50,000.





The
      Company recorded a provision for income taxes in the 2004 Quarter based on
      the
      anticipated effective tax rate for the respective full year.





Including
      discontinued operations, the Company had a net loss of $923,000 in the 2005
      Quarter as compared to net income of $9,000 in the 2004 Quarter. In the 2005
      Quarter the Company had basic loss per share of $0.15 compared to a basic
      break-even per share amount in the 2004 Quarter.





16
 
  **MEDIALINK
            WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS (continued)**


LIQUIDITY
      AND CAPITAL RESOURCES





Medialink
      has financed its operations primarily through cash generated from operations,
      reliance on its line of credit facility and the issuance of $5 million
      convertible debentures in November 2004. Additionally, the Company sold its
      research division, Delahaye, in December 2004 for approximately $8 million,
      recording a pre-tax gain on sale of $5 million. Cash flow used in operating
      activities of continuing operations amounted to $2.13 million and $622,000
      in
      2005 and 2004, respectively. Capital expenditures which are primarily incurred
      to support Medialink's sales and operations and the roll-out of the TeletraxTM
      network were $629,000 in 2005 and $250,000 in 2004.





On
      November 9, 2004, the Company issued $5 million of redeemable subordinated
      unsecured convertible debentures (the “Debentures”) to institutional investors.
      The Debentures which mature on November 9, 2009, bear interest at a rate equal
      to the higher of 7% or 6-month LIBOR plus 4.5% per annum for the first three
      years and an adjusted rate thereafter, as defined in the agreement with the
      institutional investors, and provide the holders with the option to convert
      the
      loan to common stock at $4.05 per share. In addition, the Company issued to
      the
      investors warrants to purchase an aggregate of 582,929 shares of the Company's
      common stock at an exercise price of $3.99 per share. The aggregate purchase
      price of the Debentures and warrants ($5,000,000) was allocated between the
      Debentures and the warrants based upon their relative fair market value. The
      purchase price assigned to the Debentures and the warrants was $3.80 million
      and
      $1.20 million, respectively. The $1.20 million difference between the face
      amount of the Debentures of $5 million and the purchase price assigned to the
      Debentures was recorded as a debt discount and is being amortized over the
      life
      of the Debentures. The Company used the Black-Scholes Model to calculate the
      fair value of the warrants. The underlying assumptions included in the
      Black-Scholes Model were: a risk-free interest rate of 3.51%; an expected life
      of five years; and an expected volatility of 81.1% with no dividend
      yield.





In
      December 2004, the Company sold its research division, Delahaye, for
      approximately $8 million, of which $7.70 million was collected at closing with
      the balance expected to be settled in the third quarter of 2005. Delahaye’s
      operations are reported as discontinued operations for all periods presented
      in
      the accompanying consolidated financial statements, and the operating results
      of
      Delahaye through December 31, 2004, the date of sale, are reflected separately
      from the results of continuing operations. The gain on the sale of Delahaye
      was
      approximately $3.05 million net of taxes and included transaction expenses
      of
      approximately $460,000, including broker and legal fees.





As
      of
      June 30, 2005 Medialink had $9.11 million in cash and cash equivalents as
      compared to $11.67 million as of December 31, 2004. As of June 30, 2005
      long-term debt, including current portion, was $4.06 million, net of unamortized
      discount of $1.06 million as compared to $4.04 million, net of unamortized
      discount of $1.17 million at December 31, 2004. The decrease in cash and cash
      equivalents of $2.6 million includes purchases of fixed assets of $629,000.
      The
      remaining change was substantially attributable to the losses incurred during
      2005 and to the changes in its operating assets and liabilities.





17


**MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS (continued)**




The
      Company believes, based upon its financial forecast, that it has sufficient
      capital resources to fund its net cash needs for at least the next twelve
      months.





*Contractual
      Obligations*


There
      were no material changes to our contractual obligations during the 2005 Quarter.
      For information regarding our contractual obligations at December 31, 2004,
      see
      our Annual Report on Form 10-K for the fiscal year ended December 31,
      2004.





*Off
      Balance Sheet Arrangements*


We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that are material to investors.








RISK
      FACTORS





*Major
      News Events*


Events
      which dominate news broadcasts, such as the events of September 11, 2001 or
      the
      involvement by the United States in a war, may cause the Company’s clients to
      delay or not use the Company’s services for a particular project as such clients
      may determine that their messages may not receive adequate attention in light
      of
      the coverage of other news events. Such circumstances could have a material
      adverse effect on the Company’s business, operating results and financial
      condition.





*Susceptibility
      to General Economic Conditions*


The
      Company’s revenues are affected by its clients’ marketing communications
      spending and advertising budgets. The Company’s revenues and results of
      operations may be subject to fluctuations based upon general economic conditions
      in the geographic locations where it offers its services or distributes its
      material. If there were to be continued economic downturn or a continued
      recession in these geographic locations, then the Company expects that business
      enterprises, including its clients and potential clients, could substantially
      and immediately reduce their marketing and communications budgets. In the event
      of such an economic climate, there would be a material adverse effect on the
      Company’s business, operating results and financial condition.





*Receptiveness
      of the Media to Our Services; Changes in Our Marketplace*


The
      Company is the leading provider of creative and distribution services to
      corporations and other organizations seeking to communicate with the public
      through the news media. If the marketplace for our services should change or
      if
      the news media, as a result of recent events or a perceived reduction in the
      value of our services or otherwise, should not be as receptive to our services
      or should decide to reduce or eliminate its use of the news that the Company
      distributes, there would be a material adverse effect on the Company’s business,
      operating results and financial condition.





18
 
  **MEDIALINK
            WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS (continued)**


*Competition*


The
      markets for the Company’s services are highly competitive. The principal
      competitive factors affecting the Company are effectiveness, reliability, price,
      technological sophistication and timeliness. Numerous specialty companies
      compete with the Company in each of its service lines although no single company
      competes across all service lines. Some of the Company’s competitors or
      potential competitors have longer operating histories, longer client
      relationships and significantly greater financial, management, technological,
      sales, marketing and other resources than the Company. In addition, clients
      could perform internally all or certain of the services provided by the Company
      rather than outsourcing such services. The Company could face competition from
      companies in related communications markets which could offer services that
      are
      similar or superior to those offered by the Company. In addition, national
      and
      regional telecommunications providers could enter the market with materially
      lower electronic delivery costs, and radio and television networks could also
      begin transmitting business communications separate from their news programming.
      The Company’s ability to maintain and attract clients depends to a significant
      degree on the quality of services provided and its reputation among its clients
      and potential clients as compared to that of its competitors. There can be
      no
      assurance that the Company will not face increased competition in the future
      or
      that such competition will not have a material adverse effect on the Company’s
      business, operating results and financial condition.





*New
      Services*


The
      Company must develop new services to remain competitive, maintain or grow market
      share and to operate in new markets. There can be no assurance that the Company
      will be successful in developing new services, or that those new services will
      meet customer needs. As a result of the expenses incurred in developing new
      services and the potential inability of the Company to market these services
      successfully, the Company’s operating results may be negatively
      affected.





*Governmental
      Regulations*


Changes
      in governing laws and regulations could, directly or indirectly, adversely
      affect our operations. Limitations, restrictions or conditions imposed by the
      these laws and regulations on the Company or on the news media could have the
      effect of reducing the effectiveness of our services and could have a material
      adverse affect on the Company’s business, operating results and financial
      condition.





*Provisions
      of Our Charter Documents May Have Anti-takeover Effects that Could Prevent
      a
      Change in Control Even if the Change in Control Would be Beneficial to our
      Stockholders*


Provisions
      of our amended and restated certificate of incorporation, by-laws and Delaware
      law could make it more difficult for a third party to acquire the Company,
      even
      if doing so would be beneficial to our shareholders.





19
 
  **MEDIALINK
            WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS (continued)**





*Capital
      Requirements*


One
      or
      more of our businesses could require, or benefit from, additional investment
      beyond our current capability. Such additional funding could be raised by the
      Company, or one or more of its business units separately, and could have the
      effect of diluting shareholders’ interests.





*Other
      Risk Factors*


Other
      risk factors include our recent history of losses, our ability to achieve or
      maintain profitability, effectiveness of our cost reduction programs, our
      ability to develop new services and market acceptance of such services, such
      as
      TeletraxTM, our ability to develop new products and services that keep pace with
      technology, our ability to develop and maintain successful relationships with
      critical vendors, the potential negative effects of our international operations
      on the Company. In addition, future acquisitions or divestitures and the absence
      of long term contracts with customers and vendors may adversely effect our
      operations and have an adverse effect on pricing, revenues, gross margins and
      our customer base.








CRITICAL
      ACCOUNTING POLICIES


We
      have
      identified the policies below as significant to our business operations and
      the
      understanding of our results of operations. The impact and any associated risks
      related to these policies on our business operations is discussed throughout
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations where such policies affect our reported and expected financial
      results. For a detailed discussion on the application of these and other
      accounting policies, see Note 1 in the Notes to the Consolidated Financial
      Statements in the Company’s Annual Report on Form 10-K for the year ended
      December 31, 2004.




*Revenue
      Recognition*


Revenue
      earned from the distribution and monitoring of video news releases and the
      distribution of printed news releases is recognized in the period that the
      release is distributed. Fees earned for webcasts, satellite media tours and
      other live events and the production of video news releases and still
      photographs are recognized in the period that the services are performed. Fees
      earned from TeletraxTM are recognized ratably over the period of service. Fees
      earned from research services are recognized using the percentage of completion
      method. Invoices to clients are generated in accordance with the terms of the
      applicable contract, which may not be directly related to the performance of
      services. Unbilled receivables are invoiced based upon the achievement of
      specific events as defined by each agreement including deliverables, timetables
      and incurrence of certain costs. Unbilled receivables are classified as a
      current asset. Advanced billings to clients in excess of revenue earned are
      recorded as deferred revenues and are classified as a current
      liability.








*Allowance
      for Doubtful Accounts*


The
      allowance for doubtful accounts is based on management's assessment of the
      collectibility of specific customer accounts and includes consideration of
      the
      credit worthiness and financial condition of those specific customers. The
      Company records an allowance to reduce the specific receivables to the amount
      that is reasonably believed to be collectible. The Company also records an
      allowance for all other accounts receivable balances based on multiple factors
      including historical experience with bad debts, customer concentrations, the
      general economic environment, and the aging of such receivables. If there were
      a
      deterioration of a major customer's financial condition, if the Company becomes
      aware of additional information related to the credit-worthiness of a major
      customer, or if future actual default rates on trade receivables, in general,
      differ from those currently anticipated, the Company may have to adjust its
      allowance for doubtful accounts, which would affect earnings in the period
      the
      adjustments are made.





20





**MEDIALINK
          WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS (continued)**




*Valuation
      of Long-Lived Assets Including Goodwill and Intangible Assets*


In
      accordance with SFAS 144, the Company reviews property and equipment and certain
      identifiable intangible assets for impairment when events or changes in
      circumstances indicate the carrying amount of such an asset may not be
      recoverable. Recoverability of these assets is measured by comparison of their
      carrying amount to future undiscounted cash flows the assets are expected to
      generate. If an asset is considered to be impaired, the impairment to be
      recognized in earnings equals the amount by which the carrying value of the
      asset exceeds their fair market value. Although the Company has recognized
      no
      impairment adjustments related to its property and equipment or identifiable
      intangibles during the past three fiscal years, deterioration in the Company's
      business or revenue from one of its service offerings in the future could lead
      to such impairment adjustments in future periods in which such business issues
      are identified.





We
      review
      the carrying value of our goodwill in accordance with Statement of Financial
      Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets,” by
      comparing the carrying value of our reporting units to their fair values. In
      accordance with paragraph 30 of SFAS 142, Medialink has aggregated certain
      components to arrive at one of its reporting units. These components have been
      aggregated because they are similar in (a) the nature of the products and
      services provided; (b) the similar nature of the processes required to provide
      these services; (c) the similar nature of their customers and (d) their similar
      economic characteristics, being the purchase of third party services, salary
      costs and selling, general and administrative costs. Furthermore, it is
      Medialink’s strategy to leverage the services provided by each component across
      the other components. We are required to perform this comparison at least
      annually or more frequently if circumstances indicate possible impairment.
      When
      determining fair value, we utilize a discounted future cash flow approach using
      various assumptions, including projections of revenues, based on assumed long
      term growth rates, estimated costs, and appropriate discount rates. Our
      estimates of long-term growth and costs are based on historical data, various
      internal estimates and a variety of external sources, and are developed as
      part
      of our routine long range planning process. Based on the Company’s estimates as
      of September 30, 2004 there was no impairment of goodwill; however, changes
      in
      various circumstances, including changes in the Company’s forecasts or changes
      in the Company’s internal business structure, could cause one or more of the
      Company’s reporting units to be valued differently, thereby causing an
      impairment of goodwill. We had approximately $13.01 million of goodwill as
      of
      June 30, 2005. Given the significance of our goodwill, an adverse change to
      the
      fair value could result in an impairment charge, which could be material to
      our
      consolidated earnings.





*Income
      Taxes*


Income
      taxes are accounted for under the asset and liability method. Deferred tax
      assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax bases and for operating
      loss and tax credit carryforwards. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment date.
      As
      of December 31, 2004 and through June 30, 2005, due to a number of factors,
      including the fiscal 2004 and first half 2005 taxable losses from continuing
      operations and the additional investments to be made in TeletraxTM and in other
      areas of the Company’s operations, the Company lowered its projections of future
      taxable income, particularly for the year ending December 31, 2005. As a result
      of these lower projections of future taxable income, management believes the
      future utilization of the Company’s deferred tax assets is no longer
      more-likely-than-not. The Company made the decision to fully reserve its net
      deferred tax assets at December 31, 2004 and continues to fully reserve its
      net
      deferred tax assets at June 30, 2005.





21




**MEDIALINK
            WORLDWIDE INCORPORATED AND SUBSIDIARIES**
 
 **ITEM
            2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
            OPERATIONS (continued)**





Item
      3.
      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK





*Interest
      Rate Risk*


The
      Company has convertible debentures that expose the Company to the risk of
      earnings or cash flow loss due to changes in market interest rates. At June
      30,
      2005, $3.94 million, net of unamortized discount of $1.06 million, was
      outstanding on debentures. The interest rate on these facilities is based upon
      the higher of 7% or 6-month LIBOR (3.69% per annum at June 30, 2005) rate plus
      4.50%, as defined. The effect of a one percentage point change in interest
      rates
      would result in a change in the annual interest costs under the convertible
      debentures by approximately $50,000 based on the face amount of outstanding
      borrowings at June 30, 2005. All other Company debt is fixed-rate and,
      therefore, does not expose the Company to the risk of earnings or cash flow
      loss
      due to changes in market interest rate.





*Foreign
      Operations*


In
      the
      normal course of business, through its UK operations, the Company is exposed
      to
      the effect of foreign exchange rate fluctuations on the United States dollar
      value of its foreign subsidiaries’ results of operations and financial
      condition. At June 30, 2005, the Company’s primary foreign currency market
      exposure was the British pound.





*Market
      Risk*


Our
      accounts receivables are subject, in the normal course of business, to
      collection risks. We regularly assess these risks and have established policies
      and business practices to protect against the adverse effects of collection
      risks. As a result we do not anticipate any material losses in this
      area.





Item
      4.
      CONTROLS AND PROCEDURES





During
      the quarterly period ended June 30, 2005, we carried out an evaluation, under
      the supervision and with the participation of our chief executive officer and
      principal financial officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures. Based on this evaluation, our chief
      executive officer and principal financial officer concluded that our disclosure
      controls and procedures, as of June 30, 2005, are effective in timely alerting
      them to material information required to be included in our periodic SEC
      reports. It should be noted that the design of any system of controls is based
      in part upon certain assumptions about the likelihood of future events, and
      there can be no assurance that any design will succeed in achieving its stated
      goals under all potential future conditions, regardless of how
      remote.





In
      addition, the Company’s management, including its principal executive officer
      and principal financial officer, reviewed our internal controls during the
      quarterly period ended June 30, 2005, and determined that there have been no
      significant changes in those controls or in other factors that could
      significantly affect those controls subsequent to the date of their last
      evaluation.




22




MEDIALINK
      WORLDWIDE INCORPORATED AND SUBSIDIARIES


PART
      II.
      OTHER INFORMATION





ITEM
      1.  Legal
      Proceedings.





From
      time
      to time, the Company becomes involved in various legal matters that the Company
      considers to be in the ordinary course of business. While the Company is not
      presently able to determine the potential liability, if any, related to any
      such
      matters, the Company believes that none of such matters, individually or in
      the
      aggregate, will have a material adverse effect on its financial
      position.





ITEM
      2.  Unregistered
      Sales of Equity Securities and Use of Proceeds.


None





ITEM
      3.  Defaults
      Upon Senior Securities.


None





ITEM
      4.  Submission
      of Matters to a Vote of Security Holders.


None





ITEM
      5.  Other
      Information.


None




ITEM
      6.  Exhibits.





(a)
      Exhibits:


31.1
            Certifications
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.


31.2
              Certification
                  pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002.
 
 32.
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of
                  2002.




23




**MEDIALINK
      WORLDWIDE INCORPORATED AND SUBSIDIARIES**




**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.




MEDIALINK
                WORLDWIDE INCORPORATEDBy:
              /s/ Laurence MoskowitzLaurence
              Moskowitz,Chairman
              of the Board, Chief Executive Officer and President


By:
                /s/ J. Graeme McWhirterJ.
                Graeme McWhirterExecutive
                Vice President, Assistant Secretary,
                Chief
                  Financial Officer and DirectorDated: August 15, 2005