UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-K
 
 xANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
ACT OF 1934
 
 For the
fiscal year ended December 31, 2008
 
 or
 
  ̈RANSITION
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 of
                  
                  (I.R.S.
      Employer Identification No.)incorporation
      or organization)708
      Third Avenue, New York, NY
                  
                  10017(Address
      of principal executive offices)
                  
                  (Zip
      Code)
 
 Registrant's
telephone number, including area code:  (212) 682-8300
 
 Securities
registered pursuant to Section 12(b) of the Act:
 
 Title of each class
                      
                      Name of each exchange on which
      registeredCommon
      Stock, par value $0.01 per share
                      
                      National
      Market System of
NASDAQ
 
 Securities
registered pursuant to Section 12(g) of the Act:  None
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes  ̈No
x
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.  Yes  ̈No
x
 
 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 xNo
 ̈
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definitions of “large accelerated filer”, “accelerated
filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 
 Large
      accelerated filer  ̈
                    Accelerated
      filer  ̈Non-accelerated
      filer  ̈(Do not check if a
      smaller reporting company)
                    Smaller
      reporting company x
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).  Yes  ̈No
x
 
 The
aggregate market value of the registrant’s voting and non-voting common equity
held by non-affiliates based on the closing market price on June 30, 2008, was
$6,200,010.
 
 The
number of shares of the registrant’s common stock outstanding as of February 28,
2009, was 6,428,059 shares.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 Portions
of the registrant’s 2009 Definitive Proxy Statement to be filed with the
Securities and Exchange Commission are incorporated by reference into Part III
hereof.
  
  TABLE
OF CONTENTS
 
 Item
                                
                                
                                PagePART
      I1
                                
                                Business
                                21A
                                
                                Risk
      Factors
                                61B
                                
                                Unresolved
      Staff Comments
                                82
                                
                                Properties
                                83
                                
                                Legal
      Proceedings
                                84
                                
                                Submission
      of Matters to a Vote of Security Holders
                                8Executive
      Officers of the Company
                                9PART
      II5
                                
                                Market
      for the Registrant's Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                                106
                                
                                Selected
      Financial Data
                                107
                                
                                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                117A
                                
                                Quantitative
      and Qualitative Disclosures About Market Risk
                                158
                                
                                Financial
      Statements and Supplementary Data
                                159
                                
                                Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                                159A(T)
                                
                                Controls
      and Procedures
                                169B
                                
                                Other
      Information
                                16PART
      III10
                                
                                Directors,
      Executive Officers and Corporate Governance
                                1711
                                
                                Executive
      Compensation
                                1712
                                
                                Security
      Ownership of Certain Beneficial Owners and Management and
      Related  Stockholder Matters
                                1713
                                
                                Certain
      Relationships and Related Transactions, and Director
      Independence
                                1714
                                
                                Principal
      Accountant Fees and Services
                                17PART
      IV15
                                
                                Exhibits,
      Financial Statement Schedules
                                18Signatures
                                19
  
  PART
I
 
 Certain
statements made in this Annual Report on Form 10-K are “forward looking”
statements (within the meaning of the Private Securities Litigation Reform Act
of 1995, as amended).  Such statements involve known and unknown
risks, uncertainties, and other factors that may cause our actual results,
performance, or achievements to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements.  Although we believe that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, our
actual results could differ materially from those set forth in the
forward-looking statements.  See “Item 1A – Risk Factors” for a
description of certain factors that might cause such a difference.
 
 Item
      1.
              Business.
 
 General
 
 Medialink
Worldwide Incorporated (the “Company”, “Medialink”, “we”, “us”, “our”) is a
leading provider of media communications services to corporations and other
organizations.  Through our operations in the United States we provide
news and marketing media strategies and solutions that enable our clients to
inform and educate their audiences through various media, including television,
radio, and the Internet.
 
 In August
2008, we transferred our 76% ownership interests in TTX (US) LLC and TTX Limited
(collectively, “Teletrax”) to Philips Electronics North America Corporation and
Koninklijke Philips Electronics N.V., respectively (collectively,
“Philips”).  Teletrax provided digital video tracking services to
video content providers, such as entertainment companies, news organizations,
television syndicators, direct-response marketing companies, and sports
organizations.  Teletrax comprised our digital video monitoring
services segment, and as a result of the transfer of ownership we no longer
provide such services.
 
 In
October 2008, we sold the client list of Medialink UK Limited (“Medialink UK”),
our UK-based media communications services business, to World Television Group
plc (“World”) and subsequently wound down the operation.  Medialink UK
was an operating segment within our media communications services segment, and
as a result of the sale we no longer operate a UK-based media communications
services business.
 
 The
Company has a history of operating losses and expects to incur operating losses
in 2009 as revenues continue to decline in the current economic
climate.  The Company’s sole source of capital is its working capital,
which may not be sufficient to fund continuing operating losses and existing
obligations.  The Company is currently pursuing various strategic
alternatives, including obtaining additional financing or investment from
potentially interested third-party investors or buyers.  The Company
also continues to take action to reduce its costs, and has completed, and will
continue to initiate, various measures in an effort to achieve
profitability.  If the Company is not successful in these efforts it
may not be able to finance its operations and commitments with its working
capital, and therefore may not be able to continue as a going concern, which
would result in the Company’s inability to realize the carrying value of its
assets and liquidate its liabilities.
 
 Medialink
was incorporated in Delaware in 1986.  Our website is
http://www.medialink.com.  Our Annual Reports on Forms 10-K, Quarterly
Reports on Forms 10-Q, and Current Reports on Forms 8-K along with any
amendments to those reports are available, free of charge, on or through our
website as soon as reasonably practicable after we electronically file such
reports with the Securities and Exchange Commission.
 
 Segment
Information
 
 Upon the
transfer of our ownership interests in Teletrax and the winding down of
Medialink UK, our sole reporting and operating segment is our US-based media
communications services business.
  2
  Services
 
 We offer
a range of video and audio consultation, production, electronic storage,
distribution, and monitoring services.  Our video and audio offerings
include video news releases, “b-roll” packages, short-form promotional videos,
live event broadcasts, and audio news releases that we deliver to traditional
broadcast and Internet outlets.  Our clients can choose individual
service offerings on a stand-alone basis or a suite of our service offerings and
distribution channels to better reach their intended audience.  We
provide our clients with consultative guidance to assist them in identifying
potential interest in their message, and offer our clients all aspects of
production services, including scripting, recording, editing, and
narration.  Through Mediaseed®, our Web-based content management
platform, we also offer our clients a subscription-based electronic storage,
management, delivery, and retrieval solution for their video, audio, and other
content.
 
 We
distribute our clients’ content to appropriate broadcast television and radio
stations through our comprehensive distribution platform and to on-line media
outlets worldwide.  In addition, we deliver branded client content in
multiple formats directly to consumers and other specific and general audiences
via the Internet.  Our wide range of standard and customized services
enables our clients to build public recognition, highlight the launch of new
products, explain or respond to crisis situations, and meet their other
communications objectives.  We monitor and analyze the extent to which
content is aired through the use of several distinct third-party services, used
either independently or in combination.  This monitoring and analysis
provides valuable feedback to our clients about the size and type of audience
that was reached, and the context in which the video was aired.
 
 Video
news releases are video productions ranging in length from 90 seconds to several
minutes that are written and produced to communicate a client’s public
relations, public affairs, or corporate message, and are analogous to a printed
press release, transforming the printed word into the sound and pictures that
television newsrooms can use in news programming at their
discretion.  Video news releases have been produced and distributed to
television stations for decades and are used to display new products or
services, demonstrate scientific or technological breakthroughs, and generally
offer broadcasters content that they may otherwise not be able to obtain on
their own, such as motion picture trailers, wind-tunnel testing of automobiles,
or NASA space launches.  Produced in broadcast news style, video news
releases relay the client’s news directly to television news decision makers who
may use the video and audio material either in full or edited form, just as
print media utilize traditional press releases.  Television station
journalists decide whether and how to use video news releases to illustrate or
explain products, services, or issues of interest to their
viewers.  While the production and distribution of video news releases
are paid for by our client, neither the client nor Medialink pays any fee for
the broadcast of video news releases.  The video news releases are
considered “earned media” since the broadcaster is not paid and they are
broadcast during regular program times solely at the discretion of the media
outlet.
 
 The
“b-roll” material is video that does not contain a narrated audio track,
providing broadcasters with the ability to choose select portions of the video
and provide their own editorial context.  The “b-roll” material may be
supplementary and back-up material that is distributed in conjunction with a
video news release or it may be video that is produced without a corresponding
video news release and is provided to broadcasters on a stand-alone
basis.
 
 We also
provide our clients, through our “In the Know” segments and other narrative
marketing offerings, traditional branded advertising for their content by
directly purchasing commercial airtime from broadcasters.  These
narrative marketing segments, which are standard 30- or 60-second commercials
that are produced more quickly and inexpensively than traditional
advertisements, are intended to inform and educate the audience rather than sell
products or services.  We provide our narrative marketing offerings as
a stand-alone solution for clients as well as an adjunct to our traditional
earned media offering.  We also produce short-form promotional videos
that clients use for internal and external presentations, the production of
which is similar to that of video news releases, and present them on Internet
websites, video kiosks, and other non-broadcast platforms.
  3
  Our
service offerings for live event broadcasts include satellite media tours, radio
media tours, video and audio conferences, webcasts, and special events
broadcasts.  Satellite media tours consist of a sequence of one-on-one
satellite interviews with a series of television reporters across the country or
around the world.  Satellite media tours typically allow an author,
performer, executive, or other spokesperson to bring attention to an issue or to
promote an upcoming event, product, movie, or book release.  Satellite
media tours generally are conducted from a studio but can originate from remote
locations and may be aired live by the television station or recorded for a
later airing.  Radio media tours are similar to satellite media tours,
but are provided to radio stations.  Both satellite media tours and
radio media tours are fully interactive with traditional broadcast or Internet
journalists, who ask their own questions of the guests, and are effectively no
different than traditional in-studio appearances, except that they do not
require the guests to travel from city to city.
 
 Audio
news releases are similar to video news releases, but are made available to
radio stations and audio-based websites.  Audio news releases may be
broadcast by radio stations based on the stations’ internal editorial decisions
or through traditional advertising means by the direct purchase of commercial
airtime.
 
 Mediaseed®
offers our clients an Internet-based platform for managing all of their video,
audio, still picture, and print content regardless of its format and
origination.  Mediaseed® allows clients to collaborate with their
colleagues, provide archive access to traditional broadcast and Internet media
interested in the client’s content, and easily post their content on their own
or other third-party websites.  Through the use of custom designed
digital newsrooms, Mediaseed® enables clients to post video and other rich
media, select media distribution options, and expedite delivery of content
worldwide to professional journalists and publishers.  Through our
Interactive News Release, Mediaseed® enables consumers to access content
directly and to participate in news dissemination through various social media
tools, further widening the audience viewing our clients’ content.
 
 We
distribute our clients’ content to the various media outlets with full
disclosure as to its source.  All video news releases and b-roll
material clearly identify Medialink as the source of the material and are
delivered with “slates” or other labeling at the beginning of the video
providing the name of the client, certain technical information, and editorial
contact information so that station personnel may request additional information
or clarification.  Audio news releases identify Medialink as the
source of the material and indicate the name of the client.  Satellite
media tours and radio media tours are delivered to broadcasters with the
identity of the source or entity sponsoring the media tour.  All video
content distributed through Mediaseed® is clearly identified as being provided
by Medialink, and includes the name of our client and in many instances includes
the client’s website information so viewers can seek additional
information.
 
 We rely
on our long-standing distribution alliances and our relationships with major
news organizations for distributing our clients’ content to newsroom decision
makers.  We distribute video news releases via satellite transmission,
which makes the material available to newsrooms for retrieval and
use.  We also distribute our clients’ video through a digital
distribution system that is used for distribution directly to affiliates of
national networks.  We also notify television newsrooms of the
availability of client content through e-mails and direct telephone calls made
by our trained personnel.
 
 Using
Mediaseed® we distribute client video in multiple formats through multiple
on-line distribution channels.  We distribute client material on-line
by posting video and audio podcasts on the Internet through Yahoo!, Google, and
a wide range of other websites, and we have entered into arrangements with
various Internet distribution platforms to provide for the placement of client
material on an even greater array of news, general information, and
interest-specific sites.  We have also developed a proprietary
distribution platform for the advance notification and delivery of multi-media
content to on-line newsrooms.  This proprietary distribution platform,
which leverages off of Mediaseed®, provides for the distribution of broadcast
quality video to newsrooms and journalists by syndicating our clients’ content
via RSS feeds and by delivery to the websites of television news
stations.
 
 For
international distribution, we primarily use the services of the Associated
Press, which for international markets provides both the notification of the
availability of client content as well as the infrastructure through which such
content is distributed.  We also use the services of third-party
providers in the United Kingdom and Europe for the distribution and tracking of
client content.
  4
  Our
revenues are subject to seasonal fluctuations.  The volume of projects
from clients declines immediately after the year-end holiday season and again
during the summer months, resulting in lower revenues in the first and third
quarters of each calendar year as compared to the second and fourth
quarters.  In addition, although not seasonal in nature, the revenues
can decline when media concentrate coverage on significant news events, which
poses the risk of crowding out the clients’ message.
 
 Clients
 
 Our
client base encompasses approximately 400 clients in a wide variety of
enterprises and organizations, including automobile manufacturers,
pharmaceutical companies, consumer goods companies, entertainment companies, and
the public relations firms that represent the various entities.  No
single client accounted for more than 10% of our revenues for the years ended
December 31, 2008 and 2007.  For the years ended December 31, 2008 and
2007, the five largest clients accounted for approximately 24.8% and 20.5%,
respectively, of revenues and the fifty largest clients accounted for
approximately 65.4% and 64.4%, respectively, of revenues.  A
significant reduction in business from any single client would not have a
material adverse effect on the business or on Medialink.  We have
contracts with many of our clients, but in most instances there is no
contractual arrangement that would prevent clients from selecting other means to
perform some or all of their work.
 
 Sales
and Marketing
 
 We rely
primarily on an internal sales force and support staff of 22 employees to sell
and market our services.  Because they have conducted business
together over several years the members of our internal sales force have
established strong working relationships with certain of their
clients.  These strong client relationships enable us to obtain repeat
business over a long-term period in the absence of any
contractual commitment with our clients.  However, because of
these strong client relationships, the loss of any single member of our internal
sales force could result in a decline in revenues if clients choose to move
their business to another provider.
 
 Competition
 
 We have
competitors in all of our service offerings, although many competitors do not
offer our whole array of services and therefore only compete with us for select
services.  Many of our competitors are specialty organizations that
compete within a narrow band of our service offerings.  Certain of our
competitors have available greater financial, technological, marketing, and
other resources, and therefore may pose a more significant
challenge.  We compete for services on the basis of quality of
service, price of service, the ability to satisfy client demands, and the
ability to offer a wide variety of services, products, and distribution means to
better disseminate our clients’ messages.
 
 Employees
 
 We had 77
employees as of December 31, 2008.  In addition, we engage independent
contractors and freelancers to supplement our work force during peak periods and
on a project-by-project basis.  We had no employees who were covered
by a collective bargaining agreement.  We believe that our
relationships with our employees are satisfactory.
 
 Geographic
Information
 
 All
revenues from continuing operations are derived from domestic clients and all
long-lived assets are located in the United States.
  5
  Discontinued
Operations
 
 We
transferred our ownership interests in Teletrax, our digital video monitoring
segment, to Philips in August 2008 and report it as a discontinued
operation.  Prior to the transaction, Philips held a 24% ownership
interest in each of the Teletrax entities, and upon closing of the transaction
Philips owned 100% of the Teletrax entities.  In exchange for the
ownership interests in Teletrax, Philips reimbursed the Company approximately
$284 for net operating costs incurred prior to closing and $129 for cash
balances transferred at closing, and the Company reimbursed Philips
approximately $468 representing an adjustment related to working capital,
resulting in a payment by the Company of $55 to Philips, which was paid in
November 2008.
 
 The
Teletrax® service was provided to entertainment companies, news organizations,
television syndicators, direct-response marketing companies, and sports
organizations.  The Teletrax® service enabled owners of video content
to embed an imperceptible and indelible digital watermark into their material
whenever it was edited, transmitted, or duplicated.  A global network
of detectors then captured every broadcast incident of the embedded video
whether via satellite, cable, or terrestrially and generated tracking reports
for the original content owners.  Reports of individual broadcast
airings were delivered online in near real time to each client’s custom-designed
portal or in data file transfers.
 
 We sold
the client list of Medialink UK, our UK-based media communications services
business, to World in October 2008 and subsequently wound down the operation,
which is reported as a discontinued operation.  Under the terms of the
agreement, the Company will receive from World a percentage of the gross profit
derived from certain Medialink UK client revenue for a period of eighteen months
from the closing date.  The services provided by Medialink UK were
similar to those provided by our domestic media communications services business
(see “Services”) and were provided primarily to UK-based and European
clients.
 
 Item
      1A.
              Risk
      Factors.
 
 History of operating losses–
We continue to incur operating losses that are funded with our existing cash
reserves, which may not be sufficient to fund our projected losses in future
periods.  We continue to pursue new service offerings and take cost
cutting measures in an effort to return to profitability.  Failure to
return to profitability will have a material adverse effect on our ability to
continue our operations.
 
 Current economic conditions –
Recent volatility in domestic and international financial markets has resulted
in deteriorating worldwide economic conditions.  Our revenues are
affected by our clients’ marketing communications spending and advertising
budgets.  Demand for the Company’s services has and may continue to
decline in the current economic climate as a result of budget constraints and
financial instability of certain clients.  If economic conditions do
not improve or continue to deteriorate further, there will be a further
significant adverse effect on the Company’s business, results of operations, and
financial condition.
 
 Available capital–
Additional capital for financing may not be available in the current economic
climate.  The Company will need access to additional capital if there
is no improvement in the Company’s operations and current economic conditions do
not improve.  If such additional capital is not available there would
be a significant adverse effect on the Company’s ability to remain a going
concern.
 
 Cost cutting measures – In
response to current economic conditions, the Company continues to take action to
reduce its costs.  Reductions in personnel made in response to the
decline in business may impair the Company’s ability to adequately service its
clients.  The inability of the Company to adequately service its
clients would have a significant adverse effect on the Company’s ability to
remain a going concern.
 
 Going concern – Based on its
recent operating performance, current economic conditions, and the Company’s
most recent projections, the Company has initiated additional cost cutting
measures and is engaged in discussions in an effort to secure additional
financing and investment sources, including from potential buyers.  If
the Company is unable to achieve profitability through its cost cutting measures
or improved operating performance or if the Company is unable to secure
additional financing or find interested investors or buyers, the Company may not
be able to continue as a going concern, which may result in the Company’s
inability to realize the carrying value of its assets and liquidate its
liabilities.
  6
  Financial Stability of
Clients – The recent deterioration in worldwide economic conditions may
adversely affect the creditworthiness and financial stability of certain of the
Company’s clients.  The Company provides credit to its clients on an
uncollateralized basis and any deterioration in the creditworthiness and
financial stability of such clients would have an adverse effect on the
Company’s ability to collect outstanding receivables and may result in a loss of
revenue generated with such clients.  The Company believes that the
inability to collect receivables and the loss of revenue from any single client
would not have a material adverse effect on its business.  However, if
several clients experience financial difficulty as a result of the deterioration
in worldwide economic conditions and the Company were unable to collect
receivables or were to lose revenue from such clients, there would be a material
adverse effect on the Company’s business, operating results, and financial
condition.
 
 Major News Events – Events
that dominate news broadcasts may cause our clients to delay or not use our
services for a particular project as such clients may determine that their
messages may not receive adequate attention in light of the coverage received by
these other news events.  Such circumstances could have a material
adverse effect on our business, operating results, and financial
condition.
 
 Receptiveness of the Media to Our
Services; Changes in Our Marketplace – We are a provider of creative
production 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 continue to 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 content that we distribute, there would be a
material adverse effect on our business, operating results, and financial
condition.
 
 Competition – The markets for
our services are highly competitive.  The principal competitive
factors affecting us are effectiveness, reliability, price, technological
sophistication, and timeliness.  Numerous specialty companies compete
with us in each of our service offerings although few companies compete across
all service lines.  Compared to us, some of our competitors or
potential competitors have longer operating histories, longer client
relationships, and significantly greater financial, management, technological,
sales, marketing, and other resources.  In addition, clients could
perform internally all or certain of the services we provide rather than
outsourcing such services.  We could face competition from companies
in related communications markets, which could offer services that are similar
or superior to those offered by us.  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.  Our ability to maintain and attract clients depends to a
significant degree on the quality of services provided and our reputation among
our clients and potential clients as compared to that of our
competitors.  There can be no assurance that we will not face
increased competition in the future or that such competition will not have a
material adverse effect on our business, operating results, and financial
condition.
 
 New Services – We must
develop new services to remain competitive, maintain or grow market share, and
to operate in new markets.  There can be no assurance that we will be
successful in developing new services, that we will have sufficient capital to
finance the development of such new services, or that those new services will
meet client needs.  Failure to successfully develop and market new
services may have a material adverse effect on our business, operating results,
and financial condition.
 
 General Governmental
Regulations – Changes in governing laws and regulations could, directly
or indirectly, adversely affect our operations.  Limitations,
restrictions, or conditions imposed on us by these laws and regulations or on
the news media could have the effect of reducing the effectiveness of our
services and could have a material adverse effect on our business, operating
results, and financial condition.
 
 Federal Communications Commission
Actions –We provide broadcasters, free of charge, with our clients’
video content, which contains full identification as to the client or ultimate
provider of the video content.  Our narrative marketing offerings are
clearly branded and labeled within the video content
itself.  Broadcasters that choose to air video content in its original
or edited form may do so with the labeling or attribution that we provide or
they may air the video content with either no labeling or attribution or with
their own labeling and attribution.  Actions that the Federal
Communications Commission (“FCC”) may take with regard to broadcasters could
have the effect of reducing the number of broadcasters that air our clients’
material.  Such possible FCC actions include rule enforcement and the
promulgation of new rules and regulations requiring broadcasters to include
labeling and attribution in the aired content.
  7
  Any
labeling or attribution requirement would not preclude broadcasters from
continuing to use the video content that we provide and would not change the
manner in which we currently provide the video content to the broadcasters since
we have always provided the broadcasters with this information.  Any
actions by the FCC on this matter, however, could reduce the effectiveness of
certain of our services and therefore could have a material adverse effect on
our 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 us, even if doing so would be beneficial to our
shareholders.
 
 Other Risk Factors– Other
risk factors include our ability to develop new products and services that keep
pace with technology, and our ability to develop and maintain successful
relationships with critical vendors.  In addition, the absence of
long-term contracts with clients and vendors may adversely affect our operations
and have an adverse effect on our pricing, revenues, operating margins, and
client base.
 
 Item
      1B.
              Unresolved Staff
      Comments.
 
 Not
applicable to smaller reporting companies.
 
 Item
      2.
              Properties.
 
 We rent
our corporate headquarters in New York City under a lease that expires in
November 2010.  This New York City location is also our primary
facility for providing our services.  We also rent various smaller
facilities in Washington, DC, Los Angeles, San Francisco, and Chicago that serve
as satellite sales offices.  We believe that our facilities are
adequate to meet our needs.
 
 Item
      3.
              Legal
      Proceedings.
 
 From time
to time, we become involved in various legal matters that we consider to be in
the ordinary course of business.  While we cannot presently determine
the potential liability, if any, related to any such matters, we believe that no
such matters, individually or in the aggregate, will have a material adverse
effect on our financial position.
 
 Item
      4.
              Submission of Matters to a
      Vote of Security Holders.
 
 There
were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2008.
  8
  EXECUTIVE
OFFICERS OF THE COMPANY
 
 The following table lists the executive
officers of the Company.  Officers are appointed by and serve at the
discretion of the Board of Directors.
 
 Name
                
                Age
                
                PositionLaurence
      Moskowitz
                
                57
                
                Chairman
      of the Board, Chief Executive Officer, and PresidentLawrence
      Thomas
                
                47
                
                Chief
      Operating OfficerKenneth
      G. Torosian
                
                47
                
                Chief
      Financial Officer, Treasurer, and
Secretary
 
 Laurence Moskowitz, a
co-founder of the Company, has served as Chairman of the Board of Directors,
Chief Executive Officer, and President of the Company since its inception in
1986.
 
 Lawrence Thomas has served as
Chief Operating Officer of the Company since September 2005.  From
March 2005 until his appointment as Chief Operating Officer of the Company, Mr.
Thomas served as President of MultiVu, a provider of broadcast and multimedia
production and global distribution services.  Mr. Thomas previously
served at MultiVu as Senior Vice President of Sales and Operations from
September 2003 through March 2005 and as Vice President from April 2002 through
September 2003.  Prior to such time, Mr. Thomas served as Vice
President of Multimedia Services at PR Newswire Association LLC, MultiVu’s
parent company that provides electronic delivery of news releases and
information.
 
 Kenneth G. Torosian has
served as Chief Financial Officer of the Company since August 2005, as Secretary
since March 2006, and as Treasurer since August 2007.  From April 2004
until his appointment as Chief Financial Officer of the Company, Mr. Torosian
served as the principal of Kerop Management Consultants LLC, a consulting
firm.  Through April 2004, Mr. Torosian served in various capacities
at Applied Graphics Technologies, Inc., a provider of digital prepress and asset
management services, including as Corporate Controller from January 1997 until
August 2000, as Vice President of Finance from August 2000 until September 2001,
and as Senior Vice President and Chief Financial Officer from September 2001
until August 2003.
  9
  PART
II
 
 Item
      5.
              Market for Registrant's Common
      Equity, Related Stockholder Matters and Issuer Purchases of Equity
      Securities.
 
 The
Company’s common stock has traded on the Capital Market of the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”) since
July 31, 2008, and traded on the Global Market of NASDAQ prior to such
time.   The Company’s common stock trades under the symbol
MDLK.
 
 In August
2008, the Company received notice from the Nasdaq Stock Market that for a period
of thirty consecutive business days the bid price of the Company’s common stock
had closed below the minimum $1.00 per share requirement for continued listing
in accordance with the Marketplace Rule 4310(c)(4).  In accordance
with Nasdaq Marketplace Rule 4310(c)(8)(D), the Company has been provided with a
grace period of 180 days to regain compliance.  During this grace
period, the Company’s common stock continues to be listed on the Nasdaq Stock
Market.  The Nasdaq Stock Market has temporarily suspended the $1.00
per share minimum bid price requirement for continued listing through July 20,
2009.  Accordingly, the Company’s grace period has been extended
through November 16, 2009.
 
 The
following table sets forth the high and low closing sales prices of the
Company’s
common stock for each period indicated:
 
 2008
                    
                    
                    2007High
                    
                    
                    Low
                    
                    
                    High
                    
                    
                    LowQuarter
      ended March 31
                    
                    $
                    4.25
                    
                    
                    $
                    1.29
                    
                    
                    $
                    7.80
                    
                    
                    $
                    5.15Quarter
      ended June 30
                    
                    $
                    1.70
                    
                    
                    $
                    0.89
                    
                    
                    $
                    5.81
                    
                    
                    $
                    4.28Quarter
      ended September 30
                    
                    $
                    1.08
                    
                    
                    $
                    0.16
                    
                    
                    $
                    5.19
                    
                    
                    $
                    3.80Quarter
      ended December 31
                    
                    $
                    0.22
                    
                    
                    $
                    0.05
                    
                    
                    $
                    4.50
                    
                    
                    $
                    3.71
 
 As of
February 27, 2009, there were approximately 99 registered holders of record of
the Company’s common stock.  No dividends have been paid on the
Company’s common stock.
 
 The
following table sets forth certain information as of December 31, 2008, with
respect to the Company’s equity compensation plans under which securities of the
Company are authorized for issuance.
 
 Equity
Compensation Plan Information
 
 Plan category
                  
                  Number of securities to
                    be issued upon exercise
                    of outstanding options,
                    warrants and rights
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding options,
                    warrants and rights
                  
                  
                  Number of securities remaining
                    available for future issuance
                    under equity compensation
                    plans (excluding securities
                    reflected in column (a))(a)
                  
                  
                  (b)
                  
                  
                  (c)Equity
      compensation plans approved by security holders
                  
                  
                  708,925
                  
                  
                  $
                  4.47
                  
                  
                  
                  1,398,937
 
 The
Company does not have any equity compensation plans that have not been
authorized by its stockholders.
 
 The
Company has neither sold any unregistered securities nor purchased any of its
equity securities during the year ended December 31, 2008.
 
 Item
      6.
              Selected Financial
      Data.
 
 Not
applicable to smaller reporting companies.
  10
  Item
      7.
              Management's Discussion and
      Analysis of Financial Condition and Results of
      Operations.
 
 In August
2008, the Company transferred its 76% ownership interests in TTX (US) LLC and
TTX Limited (collectively, “Teletrax”), its digital video monitoring services
segment, to Philips Electronics North America Corporation and Koninklijke
Philips Electronics N.V., respectively (collectively, “Philips”).  In
October 2008, the Company sold the client list of Medialink UK Limited
(“Medialink UK”), its UK-based media communications services business, to World
Television Group plc (“World”) and subsequently wound down the
operation.  The consolidated financial statements reflect both
Teletrax and Medialink UK as discontinued operations in all periods
presented.
 
 The
following discussion and analysis should be read in conjunction with the
Company’s consolidated financial statements and notes thereto.
 
 Results
of Operations
 
 Year
ended December 31, 2008, compared with 2007
 
 Revenues
in 2008 decreased by $2,269, or 10.4%, as compared to 2007 as a result of a
decline in the volume of work.  Revenues in the 2008 and 2007 include
$466 and $631, respectively, of service revenues recognized under a minimum
commitment arrangement for which no services were provided.  This
arrangement relates to a services agreement that was entered into in connection
with the sale of U.S. Newswire in 2006 and contains minimum commitments of $750,
$600, and $500 for the fiscal years ended September 30, 2007, 2008, and 2009,
respectively.
 
 Direct
costs decreased by $1,185 in 2008 primarily as a result of a decline in the
volume of work.  As a percentage of revenue, direct costs in 2008
decreased to 40.6% from 41.8% in 2007 primarily as a result of certain cost
cutting initiatives.
 
 Selling,
general, and administrative (“SG&A”) expenses in 2008 decreased by $2,044 as
compared to 2007, and as a percentage of revenue decreased to 72.3% in 2008 from
74.1% in 2007.  SG&A expenses decreased as a result of certain
cost cutting initiatives, including a decline in payroll costs resulting from
headcount reductions, a decrease in occupancy costs as a result of consolidating
certain offices, a reduction in marketing costs, and reduced non-billable travel
and entertainment expenses.   SG&A expenses also decreased
from lower consulting costs incurred in 2008 for Sarbanes-Oxley compliance as a
result of the reduced effort required in the second year of
compliance.
 
 Based on
the Company’s planned actions with regard to Teletrax and Medialink UK at June
30, 2008, and the continued decline in the US-based media communications
services business, the Company determined that its goodwill, all of which
related to the media communications services business, should be tested for
impairment prior to the annual testing date of September 30.  Based on
this goodwill impairment test, the Company determined that the carrying value of
its goodwill exceeded its fair value.  Accordingly, the Company
incurred a goodwill impairment charge of $3,429 as of June 30, 2008, resulting
in no goodwill remaining as of that date.
 
 Based on
the Company’s current and projected cash flow losses resulting from the
continued decline in revenues and the uncertain economic environment, the
Company reviewed its long-lived assets for impairment as of December 31,
2008.  Based on this evaluation, the Company determined that the
carrying value of its long-lived assets was not recoverable and exceeded the
fair value of such assets.  Accordingly, the Company recognized an
impairment charge of $1,118 related to property and equipment as of December 31,
2008, resulting in no net book value of fixed assets remaining as of that
date.
 
 The
Company incurred a charge for exit activities of $170 in 2008, which consisted
of a charge of $147 related to vacating a portion of the Company’s facility in
New York and a charge of $23 related to a change in estimate of the Company’s
future lease obligations associated with vacating a facility in 2006 in
connection with the sale of U.S. Newswire.
  11
  In
October 2008, the Company entered into Amendment and Waiver Agreements (the
“Amendments”) with each of the holders of its variable rate convertible
debentures (the “Debentures”), pursuant to which the Company made a payment of
$2,000, $1,700 of which was applied to principal outstanding and $300 of which
satisfies the Company’s future interest obligations on the Debentures for the
fifteen-month period following the payment date.  The Company incurred
a loss on extinguishment of approximately $116 in connection with the partial
prepayment of principal on the Debentures.
 
 The
Company had an operating loss of $8,298 in 2008 as compared to an operating loss
of $4,386 in 2007.  The operating loss in 2008 includes charges
totaling $4,833 related to goodwill impairment, other impairment charges,
charges for exit activities, and loss on debt
extinguishment.  Exclusive of such charges, the Company’s operating
loss in 2008 was $3,465.
 
 The
Company incurred interest expense, net of interest income, of $465 in 2008 as
compared to net interest expense of $70 in 2007.  This increase in net
interest expense is due primarily to a reduction in interest income earned as a
result of the Company’s declining cash balances and declining interest
rates.
 
 On August
29, 2008, the Company transferred its 76% ownership interests in Teletrax, its
digital video monitoring services business, to Philips.  Prior to the
transaction, Philips held a 24% ownership interest in Teletrax, and upon closing
of the transaction Philips owned 100% of Teletrax.  In exchange for
the ownership interests in Teletrax, Philips reimbursed the Company
approximately $284 for net operating costs incurred prior to closing and $129
for cash balances transferred at closing, and the Company reimbursed Philips
approximately $468 representing an adjustment related to working capital,
resulting in a payment by the Company of $55 to Philips, which was paid in
November 2008.
 
 On
October 1, 2008, the Company sold the client list of Medialink UK, its UK-based
media communications services subsidiary, to World and subsequently wound down
the operation.  Under the terms of the agreement, the Company will
receive from World a percentage of the gross profit derived from certain
Medialink UK client revenue for a period of eighteen months from the closing
date.  In February 2009, the Company received a payment of
approximately $6 related to the fourth quarter of 2008.
 
 In
September 2006, the Company sold the assets of its U.S. Newswire division to PR
Newswire Association, LLC (“PR Newswire”), a wholly-owned subsidiary of United
Business Media plc, for approximately $22,577.  The final sale price
of $22,577 included $3,307 based on the operating performance of U.S. Newswire
for the twelve-month period prior to closing and $270 for additional working
capital.  In February 2007, the Company received additional cash
proceeds of approximately $4,427, of which $3,307 represented additional sale
price received directly from PR Newswire, $1,000 represented the release of the
escrow balance representing deferred purchase price at closing, and $120
represented an adjustment for additional working capital.
 
 The
results of operations for the years ended December 31, 2008, include a loss from
discontinued operations of $6,450, which consisted of a loss from operations of
$5,983 and a loss on disposal of $467.  The loss from operations is
comprised of a loss from operations of $3,738 and $2,245 for Teletrax and
Medialink UK, respectively, and includes impairment charges of $1,808 and $605
for Teletrax and Medialink UK, respectively, and a charge for exit activities of
$635 for Medialink UK.  The loss on disposal is comprised of a
gain on disposal of $412 for Teletrax and a loss on disposal of $879 for
Medialink UK.
 
 The
results of operations for the years ended December 31, 2007, include a loss from
discontinued operations of $892, which consisted of a loss from operations of
$3,495 and a gain on disposal of U.S. Newswire of $2,603.  The loss
from operations is comprised of a loss from operations of $2,994, $488, and $13
for Teletrax, Medialink UK, and U.S. Newswire, respectively.
  12
  Liquidity
and Capital Resources
 
 The
Company continues to finance its operations and capital investment requirements
from its existing cash balances, which totaled $5,354 at December 31,
2008.  Working capital decreased by $7,027 in 2008 primarily as a
result of the Company funding operating losses and capital investments for both
continuing and discontinued operations during the year.
 
 Cash
flows from operating activities of continuing operations improved by $2,479
during 2008 as compared to 2007 due primarily to tax payments made in 2007
associated with the gain on sale of U.S. Newswire.  This increase was
partially offset by the receipt in 2007 of escrow funds associated with the sale
of U.S. Newswire with no comparable cash receipt in 2008.  During 2008
the Company repaid $1,700 of principal on the Debentures, invested $197 in new
equipment and software development for its continuing operations, and incurred
fees of $269 related to the disposal of Teletrax and Medialink UK.
 
 In
October 2008, the Company entered into the Amendments with each of the Debenture
holders.  Under the terms of the Amendments, the Company made a $2,000
payment to the Debenture holders, $1,700 of which was applied to principal
outstanding and $300 of which satisfies the Company’s future interest
obligations on the Debentures for the fifteen-month period following the payment
date.  The Company also amended the exercise price from $3.99 to $0.50
on 524,637 warrants to purchase the Company’s common stock held by the Debenture
holders.  In exchange for the foregoing, the maturity date of the
remaining principal balance of the Debentures of $2,650 was extended to June 30,
2010, and certain definitions relating to events of default under the Debentures
were modified.  In addition, simultaneous with the execution of the
Amendments, the Company and the Debenture holders entered into a Security
Agreement pursuant to which the Company granted the Debenture holders a security
interest in the Company’s assets.
 
 The
Company expects to incur operating losses in 2009 as revenues continue to
decline in the current economic climate.  Revenues in the fourth
quarter of 2008 of $4,938 decreased by $1,283 as compared to the comparable
quarter in 2007, and the Company currently forecasts a decline in revenues in
the first quarter of 2009 of approximately $1,500 from the comparable quarter in
2008.  In addition, during 2009 the Company expects to spend
approximately $350 related to existing severance obligations to terminated
employees that are included as a component of “other liabilities”, $500 related
to vacant real estate obligations, $200 for costs associated with the disposal
of Medialink UK, and $150 for capital improvements for equipment modernization
and replacement.
 
 The
Company is currently pursuing various strategic alternatives, including
obtaining additional financing or investment from potentially interested
third-party investors or buyers.  The Company also continues to take
action to reduce its costs, and has completed, and will continue to initiate,
various measures in an effort to achieve profitability.  If the
Company is not successful in these efforts it may not be able to finance its
operations and commitments with its working capital, and therefore may not be
able to continue as a going concern, which would result in the Company’s
inability to realize the carrying value of its assets and liquidate its
liabilities.
 
 The
Company does not believe that inflation has had a material impact on its
business.
 
 Off-balance
sheet arrangements
 
 The
Company does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on its financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
investors.
 
 Critical
Accounting Policies
 
 Management
must make certain estimates and assumptions in preparing the financial
statements of the Company.  Certain of these estimates and assumptions
relate to matters that are inherently uncertain as they pertain to future
events.  Management believes that the estimates and assumptions used
in preparing the financial statements of the Company were the most appropriate
at that time, although actual results could differ significantly from those
estimates under different conditions.
  13
  Note 2,
“Summary of Significant Accounting Policies,” to the Company’s consolidated
financial statements included in this Annual Report on Form 10-K provides a
detailed discussion of the various accounting policies of the
Company.  We believe that the following accounting policies are
critical since they require subjective or complex judgments that could
potentially affect the financial condition or results of operations of the
Company.
 
 Allowance for Doubtful
Accounts:  The Company assesses the carrying value of its
accounts receivable based on management's assessment of the collectibility of
specific client accounts, which includes consideration of the creditworthiness
and financial condition of those specific clients.  The Company also
assesses the carrying value of accounts receivable balances based on other
factors, including historical experience with bad debts, client concentrations,
the general economic environment, and the aging of such
receivables.  The Company records an allowance for doubtful accounts
to reduce its accounts receivable balance to the amount that is reasonably
believed to be collectible.  Based on the Company’s estimates, an
allowance for doubtful accounts of $84 was established at December 31, 2008,
compared to an allowance of $118 at December 31, 2007.  A change in
the Company’s assumptions, including the creditworthiness of clients and the
default rate on receivables, would result in the Company recovering an amount of
its accounts receivable that differs from its current carrying
value.  Such difference, either positive or negative, would be
reflected as a component of the Company’s SG&A expense in future
periods.
 
 Valuation of Long-Lived
Assets:In assessing the carrying value of its property and
equipment and other long-lived assets in accordance with Statement of Financial
Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets,” the Company reviews such assets for impairment
when events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable.  Recoverability is determined by
comparing the carrying value of the assets to the future undiscounted cash flows
the assets are expected to generate.  If it is determined that the
carrying amount is not recoverable, an impairment charge is recognized equal to
the amount by which the carrying value of the asset exceeds its fair market
value.  Based on the Company’s planned actions with regard to Teletrax
and Medialink UK at June 30, 2008, and other market factors related to both
Teletrax and Medialink UK, the Company determined that the carrying value of the
long-lived assets used in these businesses was not recoverable and exceeded the
fair value of such assets at such time.  Accordingly, the Company
recognized impairment charges totaling $2,413 as of June 30, 2008, which
consisted of an impairment charge of $1,808 related to Teletrax property and
equipment and an impairment charge of $605 related to Medialink UK property and
equipment.  Such impairment charges for Teletrax and Medialink UK are
included as a component of the loss from operations of discontinued
operations.
 
 In
addition, based on the Company’s current and projected cash flow losses
attributable to is sole remaining business, the US-based media communications
services business, the Company reviewed the long-lived assets of this business
for impairment as of December 31, 2008.  Based on this evaluation, the
Company determined that the carrying value of its remaining long-lived assets
was not recoverable and exceeded the fair value of such
assets.  Accordingly, the Company recognized an impairment charge of
$1,118 related to property and equipment as of December 31, 2008, resulting in
no net book value of fixed assets remaining as of that date.
 
 Valuation of
Goodwill:  In assessing the carrying value of goodwill in
accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the
Company compares the carrying value of its reporting units to their fair
values.  The Company is required to test its goodwill for impairment
at least annually, and more frequently if an event occurs or circumstances
change to indicate that an impairment may have occurred.  The
Company’s annual testing date is September 30.  Based on the Company’s
planned actions with regard to Teletrax and Medialink UK at June 30, 2008, and
the continued decline in the US-based media communications services business,
the Company determined that its goodwill, all of which related to the media
communication services business, should be tested for impairment prior to the
annual testing date of September 30.  Based on the Teletrax and
Medialink UK transactions resulting in the Company having a single operating
segment, the determination of fair value for purposes of the goodwill impairment
test was based on quoted market prices for the Company’s common
stock.  Based on this goodwill impairment test, the Company determined
that the carrying value of its goodwill exceeded its fair
value.  Accordingly, the Company incurred a goodwill impairment charge
of $3,429 as of June 30, 2008, resulting in no goodwill remaining as of that
date.
  14
  Stock-Based
Compensation:  The Company adopted the provisions of SFAS No.
123 (Revised 2004), “Share-Based
Payment”
(“SFAS No.
123R”), on
January 1, 2006, and elected to use the modified prospective application for the
transition upon adoption, which requires compensation expense to be recognized
on options granted subsequent to the adoption date as well as on options granted
prior to the adoption date for which the requisite service period had not been
completed as of December 31, 2005.  The Company determines the fair
value of stock options granted subsequent to the adoption of SFAS No. 123R using
a binomial lattice model.  The fair value of stock options granted
prior to the adoption of SFAS No. 123R was determined using the Black-Scholes
option-pricing model.  The Company must make certain assumptions in
determining the fair value of stock options, including the volatility of the
Company’s common stock, the future dividend yield on the Company’s common stock,
and the term over which stock options will remain outstanding, including making
assumptions about the future behavior patterns of the holders of stock options
in regard to exercising stock options prior to their expiration.  In
addition, the Company must make certain assumptions regarding the rate at which
options will be forfeited to estimate the service period that will be completed
by the holders of stock options.  Any deviation in the actual
volatility of the Company’s common stock, the actual dividend yield, and the
actual early exercise behavior of holders of stock options from that assumed in
estimating the fair value of a stock option will not result in a change in the
amount of compensation expense recognized by the Company, but will result in the
actual value realized by the holder of the stock options to be different than
the amount of compensation expense recognized.  Any deviation in the
actual forfeitures of non-vested stock options during the service period from
that assumed will result in a change to the amount of compensation expense
recognized, either as additional compensation expense or a reversal of
previously recognized compensation expense in the period of change.
 
 Income Taxes:In
assessing the recoverability of its deferred tax assets, the Company compared
the carrying value of its deferred tax assets to the tax-effected projections of
its taxable income over future periods in which such assets could be
realized.  In estimating its future taxable income, the Company had to
make various assumptions about its future operating
performance.  Based on the Company’s projection of future taxable
income, which include the effects of recent operating and tax losses, management
believed that it was more likely than not that the benefit associated with the
deferred tax assets will not be fully realized in future
periods.  Accordingly, a valuation allowance was established in the
amount of $7,364 and $5,332 at December 31, 2008 and 2007, respectively, to
reserve against the carrying value of certain of the Company’s deferred tax
assets.  A change in the Company’s assumptions, including better or
worse operating performance than projected, could result in a change in the
amount of deferred tax assets that will be recovered, and therefore could result
in a reduction  or increase to the valuation allowance established at
December 31, 2008.  Such an adjustment would be reflected as a
component of the Company’s provision for income taxes in the period of the
adjustment.
 
 Item
      7A.
              Quantitative and Qualitative
      Disclosures About Market
Risk.
 
 Not
applicable to smaller reporting companies.
 
 Item
      8.
              Financial Statements and
      Supplementary Data.
 
 See Index
to Financial Statements and Financial Statements commencing on page F-1
herein.
 
 Item
      9.
              Changes in and Disagreements
      With Accountants on Accounting and Financial
      Disclosure.
 
 None.
  15
  Item
      9A(T).
              Controls and
      Procedures.
 
 Disclosure Controls and
Procedures:  The Company’s management evaluated, with the
participation of the Company’s principal executive and principal financial
officers, the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) as of December 31,
2008.  Based on their evaluation, the Company’s principal executive
and principal financial officers concluded that the Company’s disclosure
controls and procedures were effective as of December 31, 2008.
 
 Management’s annual report on
internal control over financial reporting:  The Company’s
management is responsible for establishing and maintaining adequate internal
controls over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f)
under the Exchange Act).  The Company designed its internal controls
over financial reporting and assessed such controls in accordance with the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”) in “Internal Control – Integrated Framework.”
 
 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.  Therefore, even those internal
control systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation.  A
deficiency in internal controls over financial reporting exists when the design
or operation of a control does not allow management or employees, in the normal
course of performing their assigned functions, to prevent or detect
misstatements on a timely basis.  A material weakness in internal
controls over financial reporting exists when a deficiency, or a combination of
deficiencies, in internal controls can result in a reasonable possibility that a
material misstatement of the annual or interim financial statements will not be
prevented or detected on a timely basis.  A significant deficiency in
internal controls over financial reporting exists when a deficiency, or a
combination of deficiencies, in internal controls is less severe than a material
weakness, yet important enough to merit attention by those responsible for
oversight of the registrant's financial reporting.
 
 The
Company’s management assessed the effectiveness of the internal controls over
financial reporting as of December 31, 2008.  Based on this
assessment, the Company’s management believes that the internal controls over
financial reporting are effective as of December 31, 2008.
 
 This
annual report on Form 10-K does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting.  Management's report on such controls was not
subject to attestation by the Company's registered public accounting firm
pursuant to temporary rules of the Securities and Exchange Commission that
permit the Company to provide only management's report in this annual
report.
 
 Changes in internal control over
financial reporting:  There have been no changes in the
Company’s internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal
quarter ended December 31, 2008, that have materially affected, or are
reasonably likely to affect, the Company’s internal control over financial
reporting.
 
 Item
      9B.
              Other
      Information.
 
 None.
  16
  PART
III
 
 Item
      10.
              Directors, Executive Officers
      and Corporate Governance.
 
 (a)
              Directors – The
      information with respect to directors required by this item is
      incorporated herein by reference to the Company’s 2009 Definitive Proxy
      Statement to be separately filed with the Securities and Exchange
      Commission by April 30, 2009.
 
 (b)
              Executive Officers–
      The information with respect to officers required by this item is included
      at the end of Part I of this Annual Report on Form 10-K under the heading
      “Executive Officers of the
Company”.
 
 Item
      11.
              Executive
      Compensation.
 
 The
information required by this item is incorporated herein by reference to the
Company’s 2009 Definitive Proxy Statement to be separately filed with the
Securities and Exchange Commission by April 30, 2009.
 
 Item
      12.
              Security Ownership of Certain
      Beneficial Owners and Management and Related Stockholder
      Matters.
 
 Except as
set forth below, the information required by this item is incorporated herein by
reference to the Company’s 2009 Definitive Proxy Statement to be separately
filed with the Securities and Exchange Commission by April 30,
2009.
 
 The
following table sets forth certain information as of December 31, 2008, with
respect to the Company’s equity compensation plans under which securities of the
Company are authorized for issuance.
 
 Equity
Compensation Plan Information
 
 Plan category
                  
                  Number of securities to
                    be issued upon exercise
                    of outstanding options,
                    warrants and rights
                  
                  
                  Weighted-average
                    exercise price of
                    outstanding options,
                    warrants and rights
                  
                  
                  Number of securities remaining
                    available for future issuance
                    under equity compensation
                    plans (excluding securities
                    reflected in column (a))(a)
                  
                  
                  (b)
                  
                  
                  (c)Equity
      compensation plans approved by security holders
                  
                  
                  708,925
                  
                  
                  $
                  4.47
                  
                  
                  
                  1,398,937
 
 The
Company does not have any equity compensation plans that have not been
authorized by its stockholders.
 
 Item
      13.
              Certain Relationships and
      Related Transactions, and Director
  Independence.
 
 The
information required by this item is incorporated herein by reference to the
Company’s 2009 Definitive Proxy Statement to be separately filed with the
Securities and Exchange Commission by April 30, 2009.
 
 Item
      14.
              Principal Accountant Fees and
      Services.
 
 The
information required by this item is incorporated herein by reference to the
Company’s 2009 Definitive Proxy Statement to be separately filed with the
Securities and Exchange Commission by April 30, 2009.
  17
  PART
IV
 
 Item
      15.
              Exhibits, Financial Statement
      Schedules.
 
 (a)
              Listed
      below are the documents filed as part of this
  report:
  1.
              Financial
      Statements and the Report of Independent Registered Public Accounting
      Firm:
  Report
      of Independent Registered Public Accounting
Firm
  Consolidated
      Balance Sheets as of December 31, 2008 and
2007
  Consolidated
      Statements of Operations for the years ended December 31, 2008 and
      2007
  Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
  Consolidated
      Statements of Stockholders’ Equity for the years ended December 31, 2008
      and 2007
  Notes
      to consolidated financial
statements
  2.
              Financial
      Statement Schedules:
  Schedule
      II – Valuation and Qualifying Accounts for the years ended December 31,
      2008 and 2007
  3.
              Exhibits:
  See
Exhibit Index commencing on page G-1 herein.
  18
  SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) 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
      MoskowitzChairman
      of the Board, Chief Executive Officer, and PresidentDate:
      April 15, 2009
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated on April 15, 2009.
 
 Signature
                          
                          TitleBy:
                          /s/ Laurence MoskowitzLaurence
      Moskowitz
                          
                          Chairman
      of the Board, Chief Executive Officer, and President
                            (Principal
      Executive Officer)By:
                          /s/ Kenneth G. TorosianKenneth
      G. Torosian
                          
                          Chief
      Financial Officer, Treasurer, and Secretary (Principal
                            Financial
      Officer and Principal Accounting Officer)By:
                          /s/ Bruce E. BishopBruce
      E. Bishop
                          
                          DirectorBy:
                          /s/ Harold FineltHarold
      Finelt
                          
                          DirectorBy:
                          /s/ John M. GreeningJohn
      M. Greening
                          
                          DirectorBy:
                          /s/ Douglas S. KnopperDouglas
      S. Knopper
                          
                          DirectorBy:
                          /s/ Catherine LugbauerCatherine
      Lugbauer
                          
                          DirectorBy:
                          /s/ James J. O’NeillJames
      J. O’Neill
                          
                          DirectorBy:
                          /s/ Jeffrey StoneJeffrey
      Stone
                          
                          DirectorBy:
                          /s/ Theodore Wm. TashlikTheodore
      Wm. Tashlik
                          
                          Director
  19





INDEX
TO FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
                  
                  
                  F-2Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                  
                  
                  F-3Consolidated
      Statements of Operations for the years ended December 31, 2008 and
      2007
                  
                  
                  F-4Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
                  
                  
                  F-5Consolidated Statements of Stockholders’ Equity for the years
      ended December 31, 2008 and 2007
                  
                  
                  F-6Notes
      to consolidated financial statements
                  
                  
                  F-7


F-1


Report of Independent
Registered Public Accounting Firm




The Board
of Directors


Medialink
Worldwide Incorporated:




We have
audited the accompanying consolidated balance sheets of Medialink Worldwide
Incorporated and subsidiaries as of December 31, 2008 and 2007, and
the related consolidated statements of operations, stockholders’ equity and cash
flows for the years then ended. In connection with our audits of the
consolidated financial statements, we have also audited the consolidated
financial statement schedule included on page S-1. These consolidated financial
statements and the consolidated financial statement schedule are the
responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements and consolidated financial
statement schedule based on our audits.





We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Medialink Worldwide
Incorporated and subsidiaries as of December 31, 2008 and 2007 and the
results of their operations and their cash flows for the years then ended in
conformity with U.S. generally accepted accounting principles. Also in our
opinion, the related consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.





The
accompanying consolidated financial statements and consolidated financial
statement schedule have been prepared assuming that the Company will continue as
a going concern. As discussed in note 1 to the consolidated financial
statements, the Company has suffered recurring losses and negative cash flows
from operations and expects to incur operating losses and negative cash flows
from operations in 2009. The Company’s sole source of capital is its working
capital, which may not be sufficient to fund continuing operating losses and
existing obligations. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these
matters are also described in note 1. The consolidated financial statements and
the consolidated financial statement schedule do not include any adjustments
that might result from the outcome of this uncertainty.





(signed)
KPMG LLP


New York,
New York


April 15,
2009


F-2





MEDIALINK
WORLDWIDE INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEETS


(In
thousands of dollars, except share and per-share amounts)





December 31,2008
                  
                  
                  2007ASSETSCurrent
      Assets:Cash
      and cash equivalents
                  
                  $
                  5,354
                  
                  
                  $
                  11,438Accounts
      receivable, net of allowance for doubtful accounts of $84
      and  $118
                  
                  
                  2,190
                  
                  
                  
                  2,655Prepaid
      expenses
                  
                  
                  264
                  
                  
                  
                  233Prepaid
      and refundable taxes
                  
                  
                  627
                  
                  
                  
                  743Deferred
      income taxes
                  
                  
                  -
                  
                  
                  
                  169Other
      current assets
                  
                  
                  824
                  
                  
                  
                  80Current
      assets of discontinued operations
                  
                  
                  -
                  
                  
                  
                  3,901Total
      current assets
                  
                  
                  9,259
                  
                  
                  
                  19,219Property
      and equipment - net
                  
                  
                  -
                  
                  
                  
                  1,863Goodwill
                  
                  
                  -
                  
                  
                  
                  3,429Deferred
      income taxes
                  
                  
                  -
                  
                  
                  
                  217Other
      assets
                  
                  
                  211
                  
                  
                  
                  568Non-current
      assets of discontinued operations
                  
                  
                  -
                  
                  
                  
                  2,849Total
      assets
                  
                  $
                  9,470
                  
                  
                  $
                  28,145LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable
                  
                  $
                  1,221
                  
                  
                  $
                  1,017Accrued
      expenses and other current liabilities
                  
                  
                  3,172
                  
                  
                  
                  3,625Current
      liabilities of discontinued operations
                  
                  
                  -
                  
                  
                  
                  2,684Total
      current liabilities
                  
                  
                  4,393
                  
                  
                  
                  7,326Convertible
      debentures, net of unamortized discount of $133 and $422
                  
                  
                  2,517
                  
                  
                  
                  3,928Other
      long-term liabilities
                  
                  
                  379
                  
                  
                  
                  720Non-current
      liabilities of discontinued operations
                  
                  
                  -
                  
                  
                  
                  45Total
      liabilities
                  
                  
                  7,289
                  
                  
                  
                  12,019Commitments
      and contingenciesStockholders'
      Equity:Series
      A Preferred stock: $.01 par value, authorized 50,000 shares; none issued
      and outstanding
                  
                  
                  -
                  
                  
                  
                  -Common
      stock: $.01 par value, authorized 15,000,000 shares; issued 6,529,180
      shares in 2008 and  2007
                  
                  
                  65
                  
                  
                  
                  65Additional
      paid-in capital
                  
                  
                  28,765
                  
                  
                  
                  28,490Accumulated
      deficit
                  
                  
                  (26,412
                  )
                  
                  
                  (11,826
                  )Accumulated
      other comprehensive income (loss)
                  
                  
                  106
                  
                  
                  
                  (260
                  )Common
      stock in treasury (at cost, 101,121 shares)
                  
                  
                  (343
                  )
                  
                  
                  (343
                  )Total
      stockholders' equity
                  
                  
                  2,181
                  
                  
                  
                  16,126Total
      liabilities and stockholders' equity
                  
                  $
                  9,470
                  
                  
                  $
                  28,145





See notes
to consolidated financial statements


F-3





MEDIALINK
WORLDWIDE INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS


(In
thousands, except per-share amounts)





For the years ended December
      31,2008
                
                
                2007Revenues
                
                $
                19,629
                
                
                $
                21,898Operating
      expenses:Direct
      costs
                
                
                7,966
                
                
                
                9,151Selling,
      general, and administrative expenses
                
                
                14,185
                
                
                
                16,229Depreciation
      and amortization
                
                
                943
                
                
                
                904Goodwill
      impairment
                
                
                3,429
                
                
                
                -Other
      impairment charges
                
                
                1,118
                
                
                
                -Charge
      for exit activities
                
                
                170
                
                
                
                -Loss
      on debt extinguishment
                
                
                116
                
                
                
                -Total
      operating expenses
                
                
                27,927
                
                
                
                26,284Operating
      loss
                
                
                (8,298
                )
                
                
                (4,386
                )Interest
      expense - net
                
                
                (465
                )
                
                
                (70
                )Loss
      from continuing operations before taxes
                
                
                (8,763
                )
                
                
                (4,456
                )Income
      tax benefit
                
                
                (627
                )
                
                
                (747
                )Loss
      from continuing operations
                
                
                (8,136
                )
                
                
                (3,709
                )Loss
      from discontinued operations, net of tax
                
                
                (6,450
                )
                
                
                (892
                )Net
      loss
                
                $
                (14,586
                )
                
                $
                (4,601
                )Net
      loss
                
                $
                (14,586
                )
                
                $
                (4,601
                )Other
      comprehensive income
                
                
                366
                
                
                
                34Comprehensive
      loss
                
                $
                (14,220
                )
                
                $
                (4,567
                )Basic
      and diluted income (loss) per common share:Loss
      from continuing operations
                
                $
                (1.27
                )
                
                $
                (0.58
                )Loss
      from discontinued operations
                
                
                (1.00
                )
                
                
                (0.14
                )Net
      loss
                
                $
                (2.27
                )
                
                $
                (0.72
                )Weighted
      average number of common shares:Basic
      and diluted
                
                
                6,428
                
                
                
                6,392




See notes
to consolidated financial statements
  F-4


MEDIALINK
WORLDWIDE INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(In
thousands of dollars)





For the years ended December
      31,2008
                          
                          
                          2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                          
                          $
                          (14,586
                          )
                          
                          $
                          (4,601
                          )Adjustments
      to reconcile net loss to net cash used in  operating
      activities:Depreciation
      and amortization
                          
                          
                          943
                          
                          
                          
                          904Deferred
      income taxes
                          
                          
                          386
                          
                          
                          
                          808Loss
      from discontinued operations
                          
                          
                          6,450
                          
                          
                          
                          892Goodwill
      impairment
                          
                          
                          3,429
                          
                          
                          
                          -Other
      impairment charges
                          
                          
                          1,118
                          
                          
                          
                          -Loss
      on extinguishment of debt
                          
                          
                          116
                          
                          
                          
                          -Other
                          
                          
                          726
                          
                          
                          
                          710Changes
      in operating assets and liabilities:Accounts
      receivable
                          
                          
                          484
                          
                          
                          
                          897Prepaid
      expenses and other assets
                          
                          
                          (468
                          )
                          
                          
                          1,862Prepaid
      and refundable taxes
                          
                          
                          116
                          
                          
                          
                          (4,241
                          )Accounts
      payable and accrued expenses
                          
                          
                          (41
                          )
                          
                          
                          (1,001
                          )Other
      liabilities
                          
                          
                          (419
                          )
                          
                          
                          (455
                          )Net
      cash used in operating activities of discontinued
    operations
                          
                          
                          (1,787
                          )
                          
                          
                          (3,459
                          )Net
      cash used in operating activities
                          
                          
                          (3,533
                          )
                          
                          
                          (7,684
                          )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchases
      of property and equipment
                          
                          
                          (198
                          )
                          
                          
                          (570
                          )Proceeds
      (expenditures) on sale of businesses
                          
                          
                          (269
                          )
                          
                          
                          4,513Net
      cash used in investing activities of discontinued
    operations
                          
                          
                          (384
                          )
                          
                          
                          (1,163
                          )Net
      cash provided by (used in) investing activities
                          
                          
                          (851
                          )
                          
                          
                          2,780CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayment
      of convertible debentures
                          
                          
                          (1,700
                          )
                          
                          
                          -Proceeds
      from the issuance of common stock in connection with the exercise of stock
      options and warrants
                          
                          
                          -
                          
                          
                          
                          276Net
      cash provided by (used in) financing activities
                          
                          
                          (1,700
                          )
                          
                          
                          276Net
      decrease in cash and cash equivalents
                          
                          
                          (6,084
                          )
                          
                          
                          (4,628
                          )Cash
      and cash equivalents at beginning of period
                          
                          
                          11,438
                          
                          
                          
                          16,066Cash
      and cash equivalents at end of period
                          
                          $
                          5,354
                          
                          
                          $
                          11,438




See notes
to consolidated financial statements




F-5





MEDIALINK
WORLDWIDE INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY


(In
thousands of dollars)





Common
                  Stock
                
                
                Additional
                  Paid-in
                  Capital
                
                
                Retained
                  Earnings
                  (Deficit)
                
                
                Accumulated
      Other
                  Comprehensive
                  Income
      (Loss)
                
                
                Common
                  Stock
      in
                  TreasuryBalance
      at January 1, 2007
                
                $
                63
                
                
                $
                27,327
                
                
                $
                (7,225
                )
                
                $
                (294
                )
                
                $
                (343
                )Issuance
      of 78,700 shares of common stock in connection with exercise of stock
      options and warrants
                
                
                1
                
                
                
                276Issuance
      of 160,494 shares of common stock in connection with conversion of
      debentures
                
                
                1
                
                
                
                537Unrealized
      gain from foreign currency
    translation  adjustments
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                34Compensation
      expense recognized on stock options
                
                
                
                
                
                
                347Income
      tax benefit associated with the exercise of stock options
                
                
                
                
                
                
                3Net
      loss
                
                
                
                
                
                
                
                
                
                
                (4,601
                )Balance
      at December 31, 2007
                
                
                65
                
                
                
                28,490
                
                
                
                (11,826
                )
                
                
                (260
                )
                
                
                (343
                )Unrealized
      loss from foreign currency translation adjustments
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (199
                )Realized
      loss from foreign currency translation
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                565Compensation
      expense recognized on stock options
                
                
                
                
                
                
                265Warrants
      re-priced in connection with debenture modification
                
                
                
                
                
                
                10Net
      loss
                
                
                
                
                
                
                
                
                
                
                (14,586
                )Balance
      at December 31, 2008
                
                $
                65
                
                
                $
                28,765
                
                
                $
                (26,412
                )
                
                $
                106
                
                
                $
                (343
                )




See notes
to consolidated financial statements




F-6


MEDIALINK
WORLDWIDE INCORPORATED


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(In
thousands, except share and per-share amounts)




1.  Organization
and Basis of Presentation





Medialink
Worldwide Incorporated (the “Company”) provides media communications services to
corporations and other organizations.  Through its media
communications operations in the United States, the Company offers news and
marketing media strategies and solutions by providing consultation, production,
distribution, and monitoring services that enable its clients to inform and
educate their intended audiences through various media.





The
Company has a history of operating losses and negative cash flows from
operations, and expects to incur operating losses and have negative cash flows
from operations in 2009 as revenues continue to decline in the current economic
climate.  The Company’s sole source of capital is its working capital,
which may not be sufficient to fund continuing operating losses and existing
obligations.  The Company is currently pursuing various strategic
alternatives, including obtaining additional financing or investment from
potentially interested third-party investors or buyers.  The Company
also continues to take action to reduce its costs, and has completed, and will
continue to initiate, various measures in an effort to achieve
profitability.





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates continuity of operations, realization of assets, and
liquidation of liabilities in the ordinary course of business, and do not
reflect adjustments that might result if the Company were unable to continue as
a going concern.  The Company's ability to continue as a going concern
is dependent on the ability of the Company to achieve profitability or to obtain
other sources of financing.  There can be no assurance that the
Company will be successful in such endeavors.





In August
2008, the Company transferred its 76% ownership interests in TTX (US) LLC and
TTX Limited (collectively, “Teletrax”), its digital video monitoring services
segment, to Philips Electronics North America Corporation and Koninklijke
Philips Electronics N.V., respectively (collectively, “Philips”).  In
October 2008, the Company sold the client list of Medialink UK Limited
(“Medialink UK”), its UK-based media communications services business, to World
Television Group plc (“World”) and subsequently wound down the
operation.  The consolidated financial statements reflect both
Teletrax and Medialink UK as discontinued operations in all periods
presented.





2.  Summary
of Significant Accounting Policies





Principles of
Consolidation:The consolidated financial statements include
the accounts of the Company and all of its subsidiaries.  The Company
consolidates entities in which it owns greater than 50% of the voting equity of
an entity or otherwise is able to exert control.  The Company
consolidated Teletrax and included 100% of the losses from these subsidiaries in
its consolidated results of operations through the date of transfer since the
minority shareholder had no future funding obligations.  All
intercompany accounts and transactions have been eliminated in the consolidated
financial statements.





Cash and Cash
Equivalents:  Cash and cash equivalents include all cash
balances and highly liquid investments having original maturities of three
months or less.





Allowance for
Doubtful Accounts:  The Company recognizes bad debt expense on
trade receivables through an allowance account using estimates based on past
experience, and writes off trade receivables against the allowance account when
the Company believes it has exhausted all available means of
collection.





Property and
Equipment:Property and equipment is stated at cost less any
write downs for impairments.  Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets, which
generally range from three years for certain computer equipment and software to
five years for certain non-desktop computer equipment, certain video equipment,
and furniture and fixtures.  Leasehold improvements are amortized on a
straight-line basis over the shorter of their estimated useful lives or the
terms of the leases.


F-7




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Long-lived
Assets:In accordance with Statement of Financial Accounting
Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of
Long-Lived Assets,” the Company evaluates the recoverability of its long-lived
assets by comparing their carrying value to the expected future undiscounted
cash flows to be generated from such assets when events or circumstances
indicate that an impairment may have occurred.  At December 31, 2008,
the Company’s long-lived assets were fully impaired and had no carrying
value.





Goodwill and
Other Intangible Assets:In accordance with SFAS No. 142,
“Goodwill and Other Intangible Assets,” goodwill and other intangible assets
with indefinite useful lives are not amortized, but rather are subject to an
annual impairment test.  The Company performs its annual impairment
test on September 30 of each year, or more frequently if an event occurs or
circumstances change to indicate that an impairment may have
occurred.  Intangible assets with finite useful lives are amortized
over their useful lives.  At December 31, 2008, the Company’s goodwill
was fully impaired and had no carrying value.





Equity
Investments:The Company accounts for its investments in other
entities under the equity method when it owns between 20% and 50% of the voting
equity and does not have the ability to exercise control over the other entity
or is otherwise not required to consolidate the entity in accordance with
Financial Accounting Standards Board Interpretation No. (“FIN”) 46(R),
“Consolidation of Variable Interest Entities.”  The Company accounts
for its investments in other entities under the cost method when it owns less
than 20% of the voting equity and does not exert significant
influence.  Equity investments are reviewed for impairment whenever
events or changes in circumstances indicate that the fair value of an equity
investment is less than its carrying amount and that such a decline in value is
determined to be other than temporary.  At December 31, 2008 and 2007,
the Company’s equity investments were fully impaired and had no carrying
value.





Revenue
Recognition:Revenue is recognized when the Company has
substantially completed performance and no longer has a consequential obligation
to its clients.  Revenue from the Company’s media communications
services offerings, including the production of video and audio content and the
broadcast of live events, is recognized upon substantial completion of the
services being provided.  Revenue from the distribution and monitoring
of video and audio news releases is recognized upon
distribution.  Revenue from subscription-based services is recognized
ratably over the term of the subscription.





Operating
Costs:Direct costs primarily represent incremental
third-party costs incurred in connection with providing services to clients,
including production costs, as well as incremental costs incurred for
commissions paid to salaried sales personnel.  Selling, general, and
administrative costs include all internal costs, including payroll-related and
other internal costs incurred in connection with providing services to clients,
including all internal production costs.





Advertising
expenses:  Advertising costs are expensed in the period in
which the advertising appears in print or is broadcast.  The Company
incurred advertising expense, exclusive of sales and marketing efforts, of
approximately $61and $155 for the years ended December 31, 2008 and 2007,
respectively.





Income
Taxes:The Company accounts for income taxes under the
provisions of SFAS No. 109, “Accounting for Income Taxes.”  Foreign
subsidiaries are taxed according to the regulations existing in the countries in
which they do business.  Provision has not been made for United States
income taxes on distributions that may be received from foreign subsidiaries,
which are considered to be permanently invested overseas.  A valuation
allowance is recorded if it is more likely than not that some portion or all of
the deferred tax assets will not be realized in future periods.





Foreign Currency
Translation:Assets and liabilities of foreign operations are
translated from the functional currency into United States dollars using the
exchange rate in effect at the balance sheet date.  Revenues and
expenses of foreign operations are translated from the functional currency into
United States dollars using the average exchange rate for the
period.  Adjustments resulting from the translation into United States
dollars are included as a component of “Other comprehensive
income.”


F-8


MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Stock-Based
Compensation:The Company accounts for stock-based
compensation under the provisions of SFAS No. 123 (Revised 2004), “Share-Based
Payment” (“SFAS No. 123R”).  SFAS No. 123R requires that all
share-based payments to employees and non-employee directors, including grants
of stock options, be recognized in the financial statements based on their fair
values on the date of grant.  The Company elected to use the modified
prospective application for the transition upon the adoption of SFAS No. 123R,
which requires compensation expense to be recognized on options granted
subsequent to the adoption date as well as on options granted prior to the
adoption date for which the requisite service period had not been completed as
of December 31, 2005.  The Company has also elected to treat option
grants with graded vesting as a single award and accordingly recognizes the
associated compensation expense ratably over the service period.





Estimates:The
preparation of the Company’s consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  Actual results could differ from those
estimates.





Reclassifications:Certain
prior-period amounts in the accompanying financial statements have been
reclassified to conform to the 2008 presentation.





3.  Discontinued
Operations





On August
29, 2008, the Company transferred its 76% ownership interests in TTX (US) LLC
and TTX Limited, the two subsidiaries that comprised the Company’s digital video
monitoring services business, to Philips.  Prior to the transaction,
Philips held a 24% ownership interest in each of the Teletrax entities, and upon
closing of the transaction Philips owned 100% of the Teletrax
entities.  Upon closing of the transaction, the Company had no further
involvement in the digital video monitoring services business and no further
funding obligations for Teletrax.





In
exchange for the ownership interests in Teletrax, Philips reimbursed the Company
approximately $284 for net operating costs incurred prior to closing and $129
for cash balances transferred at closing, and the Company reimbursed Philips
approximately $468 representing an adjustment related to working capital,
resulting in a payment by the Company of $55 to Philips, which was paid in
November 2008.





On
October 1, 2008, the Company sold the client list of Medialink UK, its UK-based
media communications services subsidiary, to World and subsequently wound down
the operation.  Under the terms of the agreement, the Company will
receive from World a percentage of the gross profit derived from certain
Medialink UK client revenue for a period of eighteen months from the closing
date.  In February 2009, the Company received a payment of
approximately $6 related to such gross profit derived by World in the fourth
quarter of 2008.





In
September 2006, the Company sold the assets of its U.S. Newswire division to PR
Newswire Association, LLC (“PR Newswire”), a wholly-owned subsidiary of United
Business Media plc, for approximately $22,577.  The final sale price
of $22,577 included $3,307 based on the operating performance of U.S. Newswire
for the twelve-month period prior to closing and $270 for additional working
capital.  In February 2007, the Company received additional cash
proceeds of approximately $4,427, of which $3,307 represented additional sales
price received directly from PR Newswire, $1,000 represented the release of the
escrow balance representing deferred purchase price at closing, and $120
represented an adjustment for additional working capital.  The Company
recognized a pre-tax gain of $12,079 on the sale of U.S. Newswire, of which
$7,566 was recognized in 2006 and $4,513 was recognized in
2007.


F-9




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In
connection with the sale of U.S. Newswire, the Company entered into a three-year
services agreement with PR Newswire under which PR Newswire committed to
purchase media communications services aggregating a minimum of $750, $600, and
$500 for the fiscal years ended September 30, 2007, 2008, and 2009,
respectively, and the Company committed to provide PR Newswire with wire and
photography services work aggregating a minimum of $200 for each of the fiscal
years then ended.  Each party is entitled to retain the full
commitment amount for each fiscal year irrespective of the amount of work
performed under the services agreement.  For the years ended December
31, 2008 and 2007, the Company recognized $466 and $631, respectively, of
revenue under this arrangement with PR Newswire for which no services were
provided.





The
operations of Teletrax and Medialink UK are reported as discontinued operations
for all periods presented in the accompanying consolidated financial
statements.  The operating results of Teletrax and Medialink UK are
reflected separately from the results of continuing operations through the dates
of disposal.  The results of operations of Teletrax and Medialink UK,
the gain (loss) on the disposal of Teletrax and Medialink UK, and the additional
gain on the sale of U.S. Newswire are presented as discontinued operations in
the accompanying consolidated statements of operations as follows:





For
      the years ended December 31,2008
                      
                      
                      2007Revenues
                      
                      $
                      5,535
                      
                      
                      $
                      11,507Loss
      from operations before income taxes
                      
                      $
                      (5,995
                      )
                      
                      $
                      (4,685
                      )Income
      tax benefit
                      
                      
                      (12
                      )
                      
                      
                      (1,190
                      )Loss
      from operations
                      
                      
                      (5,983
                      )
                      
                      
                      (3,495
                      )Gain
      (loss) on disposal before income taxes
                      
                      
                      (455
                      )
                      
                      
                      4,513Income
      tax expense
                      
                      
                      12
                      
                      
                      
                      1,910Gain
      (loss) on disposal
                      
                      
                      (467
                      )
                      
                      
                      2,603Loss
      from discontinued operations
                      
                      $
                      (6,450
                      )
                      
                      $
                      (892
                      )





The loss
from operations of $5,983 for the year ended December 31, 2008, is comprised of
a loss from operations of $3,738 and $2,245 for Teletrax and Medialink UK,
respectively, and includes impairment charges of $1,808 and $605 for Teletrax
and Medialink UK, respectively (see Note 5), and a charge for exit activities of
$635 for Medialink UK (see Note 8).  The loss on disposal of $467 for
the year ended December 31, 2008, is comprised of a gain on disposal of $412 for
Teletrax and a loss on disposal of $879 for Medialink UK.  The loss on
disposal of Medialink UK includes employee termination costs, costs incurred for
winding down the operation, and the realization of foreign currency translation
losses previously recognized as cumulative translation adjustments and reported
as a component of stockholders’ equity.





The loss
from operations of $3,495 for the year ended December 31, 2007, is comprised of
a loss from operations of $2,994, $488, and $13 for Teletrax, Medialink UK, and
U.S. Newswire, respectively.   The gain on disposal of $2,603 for
the year ended December 31, 2007, consists entirely of the remaining gain on
disposal of U.S. Newswire recognized in 2007.





4.  Goodwill





The
Company’s intangible assets not subject to amortization under SFAS No. 142
consisted entirely of goodwill, all of which related to the media communications
services segment.  The goodwill was subjected to the Company’s annual
impairment test in 2007, which resulted in no impairment for the year ended
December 31, 2007.





Based on
the Company’s planned actions with regard to Teletrax and Medialink UK at June
30, 2008, and the continued decline in the US-based media communications
services business, the Company determined that its goodwill should be tested for
impairment prior to the annual testing date of September 30.  Based on
the Teletrax and Medialink UK transactions resulting in the Company having a
single operating segment, the determination of fair value for purposes of the
goodwill impairment test was based on quoted market prices for the Company’s
common stock.  Based on this goodwill impairment test, the Company
determined that the carrying value of its goodwill exceeded its fair
value.  Accordingly, the Company incurred a goodwill impairment charge
of $3,429 as of June 30, 2008, resulting in no goodwill remaining as of that
date.


F-10




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


5.  Other
Impairment Charges





Based on
the Company’s planned actions with regard to Teletrax and Medialink UK at June
30, 2008, and other market factors related to both Teletrax and Medialink UK,
the Company determined that the carrying value of the long-lived assets used in
these businesses was not recoverable and exceeded the fair value of such
assets.  In accordance with SFAS No. 144, the Company recognized
impairment charges as of June 30, 2008, totaling $2,413, which consisted of an
impairment charge of $1,808 related to Teletrax property and equipment and an
impairment charge of $605 related to Medialink UK property and
equipment.  Such charges are included as a component of the loss from
operations of discontinued operations (see Note 3).





Based on
the Company’s current and projected cash flow losses attributable to is sole
remaining business, the US-based media communications services business,
resulting from the continued decline in revenues and the uncertain economic
environment, the Company reviewed the long-lived assets of this business for
impairment as of December 31, 2008.  Based on this evaluation, the
Company determined that the carrying value of its remaining long-lived assets
was not recoverable and exceeded the fair value of such
assets.  Accordingly, the Company recognized an impairment charge of
$1,118 related to property and equipment as of December 31, 2008, resulting in
no net book value of fixed assets remaining as of that date.





6.  Property
and Equipment





The
Company’s property and equipment at December 31, 2008, was fully impaired (see
Note 5), resulting in no net book value as of that date.  Property and
equipment at December 31, 2007, consisted of the following:





Equipment
                  
                  $
                  4,161Furniture
      and fixtures
                  
                  
                  869Licenses
      and software
                  
                  
                  1,535Leasehold
      improvements
                  
                  
                  2,864Total
                  
                  
                  9,429Less:  Accumulated
      depreciation and amortization
                  
                  
                  7,566Net
                  
                  $
                  1,863


F-11




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


7.  Accrued
Expenses





Accrued
expenses and other current liabilities at December 31 consisted of the
following:





2008
                    
                    
                    2007Compensation and
      benefits
                    
                    $
                    647
                    
                    
                    $
                    1,073Direct
      costs
                    
                    
                    654
                    
                    
                    
                    748Client
      prepayments
                    
                    
                    126
                    
                    
                    
                    167Deferred
      revenue
                    
                    
                    639
                    
                    
                    
                    623Other
      taxes
                    
                    
                    -
                    
                    
                    
                    295Professional
      fees
                    
                    
                    275
                    
                    
                    
                    246Exit
      activities
                    
                    
                    407
                    
                    
                    
                    132Other
      accruals
                    
                    
                    424
                    
                    
                    
                    341Total
                    
                    $
                    3,172
                    
                    
                    $
                    3,625





8.  Liabilities
for Exit Activities





The
Company completed a plan in January 2008 to vacate a portion of its facility in
New York (the “2008 Q1 Plan”).  The results of operations for the year
ended December 31, 2008, include a charge of $147 related to the 2008 Q1 Plan,
which consisted entirely of costs associated with a contractual lease
obligation.  In addition, during 2006 the Company initiated and
completed two separate exit activities in connection with the sale of U.S.
Newswire (the “2006 Q3 Plan” and the “2006 Q4 Plan”) and in September 2003
initiated and completed an exit activity relating to one of its office locations
in Norwalk, CT (the “2003 Plan”).





In
connection with the disposal of Medialink UK, the Company completed certain exit
activities in October 2008 (the “2008 Q4 Plan”) that included vacating its
facility in London that served as the headquarters and sole facility of
Medialink UK.  The results of operations of discontinued operations
for the year ended December 31, 2008, include a charge of $635 related to the
2008 Q4 Plan.





The
remaining liability for future payments for these plans and the amounts charged
against the liability were as follows:





Total
                  
                  
                  2003
      Plan
                  
                  
                  2006
      Q3
                    Plan
                  
                  
                  2006
      Q4
                    Plan
                  
                  
                  2008
      Q1
                    Plan
                  
                  
                  2008
      Q4
                    PlanBalance
      at January 1, 2007
                  
                  $
                  448
                  
                  
                  $
                  157
                  
                  
                  $
                  213
                  
                  
                  $
                  78Facility
      closure cost payments
                  
                  
                  (338
                  )
                  
                  
                  (135
                  )
                  
                  
                  (157
                  )
                  
                  
                  (46
                  )Adjustment
      to liability
                  
                  
                  22
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  22Balance
      at December 31, 2007
                  
                  
                  132
                  
                  
                  
                  22
                  
                  
                  
                  56
                  
                  
                  
                  54Charge
      for exit activities
                  
                  
                  782
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  $
                  147
                  
                  
                  $
                  635Facility
      closure cost payments
                  
                  
                  (530
                  )
                  
                  
                  (22
                  )
                  
                  
                  (56
                  )
                  
                  
                  (49
                  )
                  
                  
                  (160
                  )
                  
                  
                  (243
                  )Adjustment
      to liability
                  
                  
                  23
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  23
                  
                  
                  
                  -
                  
                  
                  
                  -Balance
      at December 31, 2008
                  
                  $
                  407
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  28
                  
                  
                  $
                  (13
                  )
                  
                  $
                  392





The
adjustment to the liability for the 2006 Q4 Plan resulted from a change in
estimate of the Company’s future contractual lease
obligations.  All remaining liabilities at December 31, 2008, pertain
to facility closure costs and are included as a component of Other Current
Liabilities.


F-12




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


9.  Long-term
Debt





Long-term
debt at December 31 consisted of the following:





2008
                  
                  
                  2007Convertible
      debentures
                  
                  $
                  2,650
                  
                  
                  $
                  4,350Unamortized
      discount
                  
                  
                  (133
                  )
                  
                  
                  (422
                  )Net
                  
                  $
                  2,517
                  
                  
                  $
                  3,928





In
November 2004, the Company issued variable rate convertible debentures (the
“Debentures”) with a face value of $5,000.  The Debentures had an
original maturity in November 2009 and bear interest at a rate equal to the
higher of 7% or the 6-month LIBOR rate (as defined) plus 4.5% for the first
three years and at an adjustable rate thereafter.  The Debentures
provide each holder with the option to convert the Debentures into shares of the
Company’s common stock at a price of $4.05 per share.  In addition, as
part of the issuance of the Debentures, the holders received detachable warrants
to purchase an aggregate of 582,929 shares of the Company’s common stock at a
price of $3.99 per share.  The Company was able to call the
outstanding Debentures at the end of the first, second, and third years at a
price equal to 115%, 110%, and 100%, respectively, of the face
value.  In addition, the Company can force the Debenture holders to
convert into shares of the Company’s common stock if the market price of the
common stock exceeds $7.09 per share, subject to certain other
conditions.





The gross
proceeds of $5,000 from the issuance of the Debentures and the detachable
warrants were allocated between the two financial instruments based on their
relative fair values at the date of issuance.  The fair value of the
warrants of $1,200 was estimated using the Black-Scholes option pricing model
and the following assumptions:  expected volatility of 81.1%, expected
life of five years, risk free interest rate of 3.51%, and no dividend
yield.  The fair value of the warrants was recorded as additional
paid-in capital and a discount on the Debentures, which is being amortized as a
component of interest expense over the life of the Debentures.  The
remaining gross proceeds of $3,800 were ascribed to the fair value of the
Debentures, which accretes in value as the discount is amortized.





In
October 2008, the Company entered into Amendment and Waiver Agreements (the
“Amendments”) with each of the Debenture holders.  Under the terms of
the Amendments, the Company made a $2,000 payment to the Debenture holders,
$1,700 of which was applied to principal outstanding and $300 of which satisfies
the Company’s future interest obligations on the Debentures for the
fifteen-month period following the payment date.  The Company also
amended the exercise price from $3.99 to $0.50 on 524,637 warrants to purchase
the Company’s common stock held by the Debenture holders.  In exchange
for the foregoing, the maturity date of the remaining principal balance of the
Debentures of $2,650 was extended to June 30, 2010, and certain definitions
relating to events of default under the Debentures were modified.  In
addition, simultaneous with the execution of the Amendments, the Company and the
Debenture holders entered into a Security Agreement pursuant to which the
Company granted the Debenture holders a security interest in the Company’s
assets.  The Company incurred a loss on debt extinguishment of
approximately $116 in connection with the prepayment of principal on the
Debentures.





The
Company recorded deferred financing costs of $256 for fees incurred upon the
original issuance of the Debentures and $10 for fees incurred on behalf of the
Debenture holders in connection with the Amendments.  In addition, the
fair value of $10 associated with the re-pricing of the warrants was recorded as
additional deferred financing costs and an increase in additional paid-in
capital.  The deferred financing costs are being amortized as a
component of interest expense over the term of the
Debentures.  Interest expense for the years ended December 31, 2008
and 2007, included $191 and $213, respectively, from the amortization of the
discount and $41 and $45, respectively, from the amortization of the deferred
financing costs.  The average interest rate on the Debentures was 9.7%
and 9.8% for the years ended December 31, 2008 and 2007,
respectively.


F-13




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


In 2007,
Debentures with an aggregate face value of $650 were converted into 160,494
shares of the Company’s common stock.  In addition, warrants to
purchase 46,200 shares of the Company’s common stock were exercised, generating
proceeds of $184.





10.  Leases





The
Company leases certain property used in its operations under agreements that are
classified as operating leases.  Such agreements generally include
provisions for inflation-based rate adjustments and, in the case of leases for
office space, payments of certain operating expenses and property
taxes.





Future
minimum rental payments required under the operating leases that have initial or
remaining non-cancelable lease terms in excess of one year are as
follows:





2009
                    
                    $
                    1,7302010
                    
                    
                    1,3492011
                    
                    
                    19Total
      minimum lease payments
                    
                    $
                    3,098





The
Company has non-cancelable subleases related to certain properties under which
it will receive minimum sublease rental payments through 2010 totaling
approximately $418.  Total rental expense under operating leases
amounted to $1,694 and $2,151 for the years ended December 31, 2008 and 2007,
respectively.





11.  Preferred
Stock





During
2001, the Company’s Board of Directors approved the adoption of a Preferred
Stock Rights Agreement (the “Rights Agreement”), under which a dividend
distribution of one preferred stock purchase right (the “Purchase Right”) was
declared for each outstanding share of the Company’s common stock, payable to
common stockholders of record at the close of business on August 30,
2001.  Each Purchase Right has an exercise price of $50.00 and
entitles the holder to purchase one one-thousandth of a share of the Company’s
Series A Participating Preferred Stock (the “Series A
Preferred”).  The Purchase Rights continue to be represented by, and
trade with, the Company's common stock certificates unless the Purchase Rights
become exercisable, which will only occur, with certain exceptions, in the event
that a person or group acquires, or announces a tender or exchange offer to
acquire, a beneficial ownership of 15% or more of the Company's common stock
then outstanding.  As of December 31, 2008 and 2007, the Company’s
Board of Directors had authorized 50,000 shares of the Series A Preferred, none
of which was issued or outstanding.


F-14




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


12.  Income
Taxes





The
components of the provision (benefit) for income taxes were as
follows:





2008
                    
                    
                    2007Current:Federal
                    
                    $
                    (1,050
                    )
                    
                    $
                    (1,106
                    )State
      and local
                    
                    
                    37
                    
                    
                    
                    (449
                    )Total
      current
                    
                    
                    (1,013
                    )
                    
                    
                    (1,555
                    )Deferred:Federal
                    
                    
                    386
                    
                    
                    
                    575State
      and local
                    
                    
                    -
                    
                    
                    
                    233Total
      deferred
                    
                    
                    386
                    
                    
                    
                    808Total
      benefit for income taxes
                    
                    $
                    (627
                    )
                    
                    $
                    (747
                    )





The
provision (benefit) for income taxes varied from the Federal statutory income
tax rate due to the following:





2008
                  
                  
                  2007Taxes
      at statutory rate
                  
                  $
                  (2,979
                  )
                  
                  $
                  (1,515
                  )State
      and local income taxes, net of Federal benefit
                  
                  
                  (688
                  )
                  
                  
                  (356
                  )Valuation
      allowance on deferred tax assets
                  
                  
                  3,661
                  
                  
                  
                  377Non-deductible
      expenses and other
                  
                  
                  (621
                  )
                  
                  
                  747Benefit
      for income taxes
                  
                  $
                  (627
                  )
                  
                  $
                  (747
                  )Federal
      statutory rate
                  
                  
                  34.00
                  %
                  
                  
                  34.00
                  %Effective
      rate
                  
                  
                  7.16
                  %
                  
                  
                  16.76
                  %





The
components of the net deferred tax asset at December 31 were as
follows:





2008
                    
                    
                    2007Deferred
      tax assets:Accounts
      receivable
                    
                    $
                    36
                    
                    
                    $
                    14Property
      and equipment
                    
                    
                    728
                    
                    
                    
                    270Goodwill
                    
                    
                    1,596
                    
                    
                    
                    469Other
      intangible assets
                    
                    
                    480
                    
                    
                    
                    614Minority
      interest
                    
                    
                    -
                    
                    
                    
                    341Equity
      investments
                    
                    
                    300
                    
                    
                    
                    300Accrued
      expenses
                    
                    
                    285
                    
                    
                    
                    590Net
      operating loss carryforwards
                    
                    
                    3,939
                    
                    
                    
                    3,120Total
      deferred tax assets before valuation allowance
                    
                    
                    7,364
                    
                    
                    
                    5,718Valuation
      allowance on deferred tax assets
                    
                    
                    7,364
                    
                    
                    
                    5,332Net
      deferred tax asset
                    
                    $
                    -
                    
                    
                    $
                    386


F-15




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The
Company’s losses from continued operations before taxes for the years ended
December 31, 2008 and 2007, were generated entirely in the United
States.  At December 31, 2008, the Company had domestic state net
operating loss carryforwards of approximately $10,949 that expire in 2016
through 2028, and Federal net operating loss carryforwards of approximately
$5,421 that expire in 2028.  The Company established a valuation
allowance to fully reserve its deferred tax assets at December 31, 2008, based
on its projections indicating that it is more likely than not that such benefit
will not be fully realized.  Due to the gain on sale of U.S. Newswire
enabling the Company to realize certain deferred tax assets, the Company
recognized net deferred tax assets totaling $386 at December 31,
2007.  The increase in the valuation allowance of $2,032 for the year
ended December 31, 2008, consists of an increase of $3,661 associated with
continuing operations, which was recognized as additional tax provision for the
period, and a write off of $1,629 associated with the disposal of Teletrax and
Medialink UK.





On
January 1, 2007, the Company adopted the provisions of FIN 48, "Accounting for
Uncertainty in Income Taxes – an interpretation of FASB Statement No.
109."  FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.  Under FIN 48,
a two-step process is used to evaluate a tax position.  The first step
establishes a recognition criterion under which the tax position is recognized
if it is more likely than not that it will be sustained upon
examination.  The second step establishes a measurement criterion
under which the tax position is measured at the largest amount of benefit that
is greater than 50% likely of being realized upon ultimate
settlement.





The
changes in unrecognized tax positions for the years ended December 31, 2008 and
2007, were as follows:





Unrecognized
      tax positions at January 1, 2007
                    
                    $
                    241Increase
      in unrecognized tax benefits for tax positions taken during the
      year
                    
                    
                    659Unrecognized
      tax positions at December 31, 2007
                    
                    
                    900Increase
      in unrecognized tax benefits for tax positions taken during the
      year
                    
                    
                    20Decrease
      in unrecognized tax benefits for tax positions taken in prior
      periods
                    
                    
                    (835
                    )Unrecognized
      tax positions at December 31, 2008
                    
                    $
                    85





The
unrecognized tax positions at December 31, 2008 and 2007, are reflected as a
reduction of “Prepaid and refundable taxes” in the Company’s balance
sheet.  In 2007, the Internal Revenue Service commenced an examination
of the Company’s Federal income tax returns for the years ended December 31,
2004 and 2005.  There were no proposed adjustments to the Company’s
income tax return for the year ended December 31, 2004.





13.  Stock
Options





Under a
stock option plan covering employees and other eligible participants (the
“Employee Plan”), the Company grants stock options to purchase shares of the
Company’s common stock.  Stock options granted under the Employee Plan
generally become exercisable under two alternative vesting schedules over a
four-year period.  One vesting schedule provides for 20% of the stock
options granted being exercisable on the grant date and an additional 20%
becoming exercisable on the anniversary of the grant date in each of the next
four years.  The second vesting schedule provides for 25% of the stock
options granted becoming exercisable on the anniversary of the grant date in
each of the next four years.  Incentive stock options granted under
the Employee Plan generally have a term of ten years and an exercise price equal
to the fair market value of the Company’s common stock on the grant
date.  Incentive stock options issued to employees who own more than
10% of the voting power of all classes of equity of the Company have a term of
five years and an exercise price equal to at least 110% of the fair market value
of the Company’s common stock on the grant date.  Non-qualified stock
options granted under the Employee Plan can have a term of up to fifteen years
and an exercise price that is determined for each individual grant by a
committee appointed by the Company’s board of directors.  There are
2,270,808 shares of the Company’s common stock reserved for the issuance of
stock options under the Employee Plan.  At December 31, 2008,
1,219,537 shares remained available for the issuance of stock options and
491,725 stock options were outstanding.


F-16




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Under a
stock option plan covering members of its board of directors (the “Directors’
Plan”), the Company grants stock options to non-employee
directors.  Newly appointed non-employee directors are granted 10,000
stock options upon their appointment or election to the board of directors, and
all non-employee directors are granted 3,000 stock options on the first business
day of each year.  Additional grants of stock options may be made at
the discretion of a committee appointed by the Company’s board of
directors.  Stock options granted under the Directors’ Plan generally
vest ratably over a three-year period, have a term of ten years, but cannot have
a term that exceeds fifteen years, and have an exercise price equal to the fair
market value of the Company’s common stock on the grant date.  There
are 430,000 shares of the Company’s common stock reserved for the issuance of
stock options under the Directors’ Plan.  At December 31, 2008,
179,400 shares remained available for the issuance of stock options and 217,200
stock options were outstanding.





The
Company accounts for stock-based compensation associated with stock options in
accordance with the provisions of SFAS No. 123R, which the Company adopted in
January 2006.  The Company uses a binomial lattice model for
determining the fair value of stock options granted subsequent to the adoption
of SFAS No. 123R.  Prior to the adoption of SFAS No. 123R, the Company
valued stock options using the Black-Scholes option-pricing
model.  During 2008, the Company granted 21,000 stock options under
the Employee Plan, of which 15,000 stock options granted to an employee vest
ratably over a four-year period and 6,000 stock options granted to non-employee
directors of the Teletrax subsidiaries vest ratably over a three-year
period.  Also during 2008, the Company granted 24,000 stock options to
non-employee directors of the Company that become exercisable over a three-year
period, with one-third vesting on each anniversary of the grant
date.





The
following weighted average assumptions were used in calculating the fair value
of stock options granted under the Employee Plan and the Directors’ Plan during
the years ended December 31, 2008 and 2007:





2008
                    
                    
                    2007Employee Plan
                    
                    
                    Directors’ Plan
                    
                    
                    Employee Plan
                    
                    
                    Directors’ PlanExpected
      term
                    
                    
                    3.82
                    
                    
                    
                    3.81
                    
                    
                    
                    3.85
                    
                    
                    
                    4.23Expected
      volatility
                    
                    
                    .5818
                    
                    
                    
                    .5630
                    
                    
                    
                    .5891
                    
                    
                    
                    .5969Expected
      dividends
                    
                    
                    0
                    %
                    
                    
                    0
                    %
                    
                    
                    0
                    %
                    
                    
                    0
                    %Risk-free
      interest rate
                    
                    
                    3.00
                    %
                    
                    
                    3.63
                    %
                    
                    
                    4.38
                    %
                    
                    
                    4.48
                    %





The
expected term of stock options is based on historical data used to estimate the
exercise of options prior to their expiration.  Such early exercises
primarily result either from a termination, after which employees and
non-employee directors generally have a period of 90 days and nine months,
respectively, to exercise stock options, or from exercises occurring when the
ratio of the market price of the Company’s common stock to the exercise price of
a stock option is attractive to the holder of the stock option.  The
expected volatility is based on the historical volatility of the Company’s
common stock.  The expected dividends are based on the historical
dividends paid and the dividends the Company expects to pay in future
periods.  The risk-free interest rate is based on the yields of United
States Treasury Notes at the time stock options are
granted.


F-17




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Information
relating to activity in the Employee Plan is summarized in the following
table.  All stock option grants included in the following table had
exercise prices equal to market price on the grant date.





Number
      of
                  shares
                
                
                Weighted
                  Average
                  Exercise
                  Price
                
                
                Weighted
                  Average
                  Fair
                  Value
                
                
                Aggregate
                  Intrinsic
                  Value
                
                
                Weighted
                  Average
                  Remaining
                  Contractual
                  TermOptions
      outstanding at January 1, 2007
                
                
                788,190
                
                
                $
                4.89Options
      granted
                
                
                113,000
                
                
                $
                4.49
                
                
                $
                2.18Options
      exercised
                
                
                (32,500
                )
                
                $
                2.86
                
                
                
                
                
                
                $
                55Options
      forfeited and expired
                
                
                (106,610
                )
                
                $
                5.50Options
      outstanding at December 31, 2007
                
                
                762,080
                
                
                $
                4.83Options
      granted
                
                
                21,000
                
                
                $
                2.86
                
                
                $
                1.32Options
      forfeited and expired
                
                
                (291,355
                )
                
                $
                5.34Options
      outstanding at December 31, 2008
                
                
                491,725
                
                
                $
                4.44
                
                
                
                
                
                
                $
                0
                
                
                
                6.33Options
      exercisable at December 31, 2008
                
                
                312,650
                
                
                $
                4.52
                
                
                
                
                
                
                $
                0
                
                
                
                5.37





Information
relating to options outstanding under the Employee Plan at December 31, 2008, is
summarized as follows:





Outstanding
                    
                    
                    ExercisableRange
      of Exercise Prices
                    
                    Options
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Weighted
                      Average
                      Remaining
                      Life
                    
                    
                    Options
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price$2.61
      – $3.30
                    
                    
                    161,175
                    
                    
                    $
                    2.91
                    
                    
                    
                    4.64
                    
                    
                    
                    147,175
                    
                    
                    $
                    2.90$4.06
      – $5.38
                    
                    
                    301,450
                    
                    
                    $
                    4.48
                    
                    
                    
                    7.81
                    
                    
                    
                    136,375
                    
                    
                    $
                    4.56$11.25
      – $15.00
                    
                    
                    29,100
                    
                    
                    $
                    12.54
                    
                    
                    
                    0.36
                    
                    
                    
                    29,100
                    
                    
                    $
                    12.54





Information
relating to activity in the Directors’ Plan is summarized in the following
table.  All option grants included in the following table had exercise
prices equal to market price on the grant date.





Number
      of
                  shares
                
                
                Weighted
                  Average
                  Exercise
                  Price
                
                
                Weighted
                  AverageFairValue
                
                
                AggregateIntrinsicValue
                
                
                WeightedAverageRemainingContractualTermOptions
      outstanding at January 1, 2007
                
                
                224,600
                
                
                $
                5.39Options
      granted
                
                
                34,000
                
                
                $
                4.92
                
                
                $
                2.52Options
      forfeited and expired
                
                
                (18,000
                )
                
                $
                8.20Options
      outstanding at December 31, 2007
                
                
                240,600
                
                
                $
                5.11Options
      granted
                
                
                24,000
                
                
                $
                4.25
                
                
                $
                1.94Options
      forfeited and expired
                
                
                (47,400
                )
                
                $
                7.25Options
      outstanding at December 31, 2008
                
                
                217,200
                
                
                $
                4.55
                
                
                
                
                
                
                $
                0
                
                
                
                5.80Options
      exercisable at December 31, 2008
                
                
                163,200
                
                
                $
                4.60
                
                
                
                
                
                
                $
                0
                
                
                
                4.95


F-18




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


Information
relating to options outstanding under the Directors’ Plan at December 31, 2008,
is summarized as follows:





Outstanding
                    
                    
                    ExercisableRange
      of Exercise Prices
                    
                    Options
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Weighted
                      Average
                      Remaining
                      Life
                    
                    
                    Options
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price$2.61
      – $3.86
                    
                    
                    112,000
                    
                    
                    $
                    3.37
                    
                    
                    
                    5.30
                    
                    
                    
                    102,667
                    
                    
                    $
                    3.35$4.15
      – $5.22
                    
                    
                    87,200
                    
                    
                    $
                    4.46
                    
                    
                    
                    7.53
                    
                    
                    
                    42,533
                    
                    
                    $
                    4.38$8.06
                    
                    
                    9,000
                    
                    
                    $
                    8.06
                    
                    
                    
                    1.00
                    
                    
                    
                    9,000
                    
                    
                    $
                    8.06$16.50
                    
                    
                    9,000
                    
                    
                    $
                    16.50
                    
                    
                    
                    0.08
                    
                    
                    
                    9,000
                    
                    
                    $
                    16.50





For the
years ended December 31, 2008 and 2007, the Company recognized compensation
expense related to stock options of $265 and $347, respectively, and recognized
a tax benefit related to stock options exercised of $0 and $3,
respectively.  Compensation expense related to non-vested stock
options under both the Employee Plan and the Directors’ Plan that was not
recognized as of December 31, 2008, totaled $383 and is expected to be
recognized over a weighted average period of 2.0 years.  During the
year ended December 31, 2007, the Company received $92 from the exercise of
stock options.  The Company has a policy of issuing new shares of
common stock upon the exercise of stock options.





14.  Earnings
per Share





Basic
earnings (loss) per share of common stock is computed by dividing income (loss)
available to common stockholders by the weighted average number of common shares
outstanding.  There were no reconciling items to net loss to arrive at
loss available to common stockholders for the years ended December 31, 2008 and
2007.  Diluted earnings (loss) per share of common stock is computed
by giving effect to all dilutive potential common shares.  The number
of shares used in the calculation of diluted earnings (loss) per share for the
years ended December 31, 2008 and 2007, excluded 246 and 268,140, respectively,
of incremental shares related to stock options and warrants and excluded 969,136
and 1,086,989, respectively, of incremental shares related to the
Debentures.  Such incremental shares were excluded from the
calculation of diluted earnings (loss) per share due to their antidilutive
effect on income from continuing operations.





15.  Retirement
Plan





The
Company has a defined contribution plan in which eligible employees who have
attained 21 years of age may contribute on both a pretax and after-tax basis up
to a maximum of 15% of their annual salary, subject to annual limits established
by the Internal Revenue Service.  The Company can make discretionary
contributions.  Employees are fully vested at all times in
contributions they make to the plan, and employees who have completed at least
one year of service and are employed with the Company on the last business day
of the year fully vest in Company contributions.  The Company made no
discretionary contributions to its defined contribution plan for the years ended
December 31, 2008 and 2007.





16.  Commitments
and Contingencies





The
Company is contingently liable for transactions arising in the ordinary course
of business and from time to time may become involved in various legal
proceedings in which damages and other remedies are sought.  In the
opinion of Company management, after review with legal counsel, the ultimate
resolution of these matters will not have a material effect on the Company’s
consolidated financial statements.


F-19




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


17.  Guarantees





In
connection with the transfer of its ownership interests in Teletrax, the Company
agreed to indemnify Philips for breaches of certain standard representations and
warranties for a period of eighteen months following closing, except for
indemnification obligations for representations and warranties related to
organization and authorization matters, which survive
indefinitely.  The Company’s potential liability for such
indemnification obligations is not triggered until damages incurred by Philips
from any such breach of representations and warranties exceed $50.  In
such event, the Company will be liable for all such damages incurred, with the
Company’s total liability limited to $1,500 in the aggregate.  The
Company also agreed to indemnify Philips indefinitely for certain tax and
employee matters, for which there is no limit on potential
liability.  No amount has been recognized in connection with such
potential indemnification obligations.





In
connection with the sale of U.S. Newswire in 2006, the Company agreed to
indemnify the purchaser for breaches of certain standard representations and
warranties.  In the event any such indemnification obligation were to
be triggered, the Company may be liable when the damages incurred by the
purchaser exceed $150.  For certain such indemnification obligations,
the Company would be liable for the amount of the damages incurred in excess of
$150, with such damages limited to $5,000 in total.  For certain other
indemnification obligations, the Company would be liable for the full amount of
the damages, including the first $150, with such damages limited to $5,000 in
total.  For still other indemnification obligations, there is no limit
to the damages for which the Company would be ultimately liable.  No
amount has been recognized in connection with such potential
obligations.





In
connection with the sale of Delahaye, the Company’s research services division
that was sold in December 2004, the Company agreed to indemnify the purchaser
for breaches of certain standard representations and warranties.  In
the event any such indemnification obligation were to be triggered, the Company
may be liable when the damages incurred by the purchaser exceed
$100.  The Company would be liable for the full amount of the damages
incurred, including the first $100, with such damages limited to $2,000 in
total.  No amount has been recognized in connection with such
potential liability.





The
Company has entered into subleases with third parties relating to properties no
longer occupied by the Company.  Under an assignment of one of these
subleases, the third party remits payment directly to the landlord, although the
Company remains the primary obligor for the lease payments.  If the
third party ceased to remit payment directly to the landlord, the Company would
be liable for such payments.  The maximum potential amount for which
the Company can be held liable is approximately $42.  No amount has
been recognized in connection with such potential liability.





18.  Concentration
of Credit Risk





Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash equivalents and trade
receivables.  The Company maintains cash balances and cash equivalents
with high credit quality financial institutions.





The
Company provides credit to clients on an uncollateralized basis after evaluating
client creditworthiness.  The Company’s clients are not concentrated
in any specific geographic region, but are concentrated in the automotive,
insurance, pharmaceutical, consumer products, and public relations agency
businesses.  The Company’s five largest clients provided approximately
24.8% and 20.5% of revenues for the years ended December 31, 2008 and 2007,
respectively.  In addition, amounts due from these clients represented
24.3% and 14.2% of trade accounts receivable at December 31, 2008 and 2007,
respectively.  The Company does not believe that a significant
reduction in business from any of its clients would have a material adverse
effect on its results of operations or financial condition since no single
client or group of clients is responsible for a significant portion of the
Company’s revenues or represents a significant portion of the Company’s trade
receivables.


F-20




MEDIALINK
WORLDWIDE INCORPORATED
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


19.  Supplemental
Disclosure of Cash Flow Information





Payments
of interest and income taxes were as follows:





2008
                  
                  
                  2007Interest
      paid
                  
                  $
                  791
                  
                  
                  $
                  327Income
      taxes paid (refunded) – net
                  
                  $
                  (1,077
                  )
                  
                  $
                  1,516





Non-cash
investing and financing activities for the year ended December 31, 2008,
consisted entirely of the fair value of $10 associated with the re-pricing of
the warrants held by the Debenture holders.  Non-cash investing and
financing activities for the year ended December 31, 2007, consisted entirely of
the conversion of $650 of the Debentures into 160,494 shares of the Company’s
common stock.





20.  Fair
Value of Financial Instruments





The
estimated fair values of financial instruments have been determined by the
Company using available market information and appropriate valuation
methodologies.  However, considerable judgment is required in
interpreting market data to develop estimates of fair
value.  Accordingly, the estimates presented herein are not
necessarily indicative of the amounts the Company would realize in a current
market exchange.





The
carrying amounts of cash and cash equivalents and non-trade receivables included
as part of other current assets at December 31, 2008 and 2007, are a reasonable
approximation of their fair values due to the short-term nature of these
instruments.  The Debentures do not have a quoted market price and are
not rated by a credit-rating agency.  Due to the current uncertainty
in the Company’s financial condition, the uncertainty in the global financial
markets, and the difficulty in identifying comparable financial instruments in
the marketplace, it was not practicable to estimate the fair value of the
Debentures.





21.  Comprehensive
Income





Comprehensive
income includes all changes to equity that are not the result of transactions
with shareholders and is comprised of net income and other comprehensive
income.  For the year ended December 31, 2008, other comprehensive
income of $366 consisted of an unrealized loss of $199 for foreign currency
translation adjustments during the year and the reversal of $565 for previously
unrealized losses for foreign currency translation adjustments that were
realized upon the disposal of Medialink UK.  For the year ended
December 31, 2007, other comprehensive income of $34 consisted entirely of
unrealized foreign currency translation adjustments.  At December 31,
2008 and 2007, accumulated other comprehensive income (loss) in the consolidated
balance sheets consisted entirely of foreign currency translation
adjustments.


F-21


EXHIBIT
INDEX





Exhibit No.
                  
                  Description2.1
                  
                  Asset
      Purchase Agreement dated as of September 29, 2006, between Medialink
      Worldwide Incorporated and PR Newswire Association, LLC (Incorporated by
      reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K
      filed on October 5, 2006).2.2
                  
                  Securities
      Purchase Agreement dated as of August 29, 2008, entered into by and among
      Philips Electronics North America Corporation, Koninklijke Philips
      Electronics N.V., and Medialink Worldwide Incorporated (Incorporated by
      reference to Exhibit No. 2.2 of Registrant’s Current Report on Form 8-K
      filed on September 4, 2008).2.3
                  
                  Agreement
      dated as of October 1, 2008, among Medialink UK Limited, World Television
      Group plc, and Medialink Worldwide Incorporated (Incorporated by reference
      to Exhibit No. 2.2 of Registrant’s Current Report on Form 8-K filed on
      October 7, 2008).3.1
                  
                  Amended
      and Restated Certificate of Incorporation of Medialink Worldwide
      Incorporated (Incorporated by reference to Exhibit No. 2.5 of Registrant’s
      Registration Statement on Form 8-A filed on January 16, 1997 (File No.
      000-21989)).3.2
                  
                  Amended
      and Restated By-Laws of Medialink Worldwide Incorporated dated November 8,
      2007 (Incorporated by reference to Exhibit No. 3.2 of Registrant’s Current
      Report on Form 8-K filed on November 13, 2007).4.1
                  
                  Preferred
      Stock Rights Agreement, dated as of August 16, 2001, between Medialink
      Worldwide Incorporated and Mellon Investor Services, LLC, including the
      Certificate of Designation, the form of Rights Certificate and the Summary
      of Rights attached thereto as Exhibits A, B, and C, respectively
      (Incorporated by reference to Exhibit No. 4.1 of Registrant’s Registration
      Statement on Form 8-A filed on August 16, 2001 (File No.
      000-21989)).4.2
                  
                  Form
      of Variable Rate Convertible Debenture due November 9, 2009 (Incorporated
      by reference to Exhibit No. 4.2 of Registrant’s Current Report on Form 8-K
      filed on November 9, 2004).4.3
                  
                  Form
      of Common Stock Purchase Warrant (Incorporated by reference to Exhibit No.
      4.1 of Registrant’s Current Report on Form 8-K filed on November 9,
      2004).4.4
                  
                  Form
      of Registration Rights Agreement, dated as of November 8, 2004
      (Incorporated by reference to Exhibit No. 4.3 of Registrant’s Current
      Report on Form 8-K filed on November 9, 2004).4.5
                  
                  Form
      of Amendment and Waiver Agreement dated as of October 6, 2008
      (Incorporated by reference to Exhibit No. 4.5 of Registrant’s Current
      Report on Form 8-K filed on October 10, 2008).10.1
                  
                  Amended
      and Restated Employment Agreement, dated as of December 31, 2005, by and
      between Medialink Worldwide Incorporated and Laurence Moskowitz
      (Incorporated by reference to Exhibit No. 10.1 of the Registrant’s Annual
      Report on Form 10-K for the fiscal year ended December 31,
      2005).10.3
                  
                  Separation
      Agreement and General Release, dated as of December 30, 2005, by and
      between Medialink Worldwide Incorporated and J. Graeme McWhirter
      (Incorporated by reference to Exhibit No. 10.3 of the Registrant’s Annual
      Report on Form 10-K for the fiscal year ended December 31,
      2005).10.4
                  
                  Asset
      Purchase Agreement, dated December 31, 2004, by and between Medialink
      Worldwide Incorporated and Bacon’s Information Inc. (Incorporated by
      reference to Exhibit No. 10.1 of the Registrant’s Current Report on Form
      8-K/A filed on March 14, 2005).10.5
                  
                  Agreement
      for the Sale and Purchase of Certain Assets of Medialink UK Limited
      forming part of the Delahaye Business, dated December 31, 2004, by and
      between Medialink UK Limited and Romeike Limited (Incorporated by
      reference to Exhibit No. 10.2 of the Registrant’s Current Report on Form
      8-K/A filed on March 14, 2005).10.7
                  
                  Medialink
      Worldwide Incorporated 401(k) Employee Savings Plan (Incorporated by
      reference to Exhibit No. 10.7 of the Registrant’s Quarterly Report on Form
      10-Q for the quarterly period ended September 30,
2006).10.8
                  
                  Medialink
      Worldwide Incorporated Amended and Restated Stock Option Plan
      (Incorporated by reference to Exhibit No. 10.8 of the Registrant’s Annual
      Report on Form 10-K for the fiscal year ended December 31,
      2006).10.9
                  
                  Medialink
      Worldwide Incorporated Amended and Restated 1996 Directors Stock Option
      Plan (Incorporated by reference to Exhibit No. 10.9 of the Registrant’s
      Quarterly Report on Form 10-Q for the quarterly period ended March 31,
      2006).10.12
                  
                  Amended
      and Restated Employment Agreement, dated as of November 12, 2008, by and
      between Medialink Worldwide Incorporated and Kenneth G. Torosian
      (Incorporated by reference to Exhibit No. 10.12 of the Registrant’s
      Quarterly Report on Form 10-Q for the quarterly period ended September 30,
      2008).


G-1





10.13
                
                Employment
      Agreement, dated as of September 9, 2005, by and between Medialink
      Worldwide Incorporated and Lawrence A. Thomas (Incorporated by reference
      to Exhibit No. 10.13 of Registrant’s Quarterly Report on Form 10-Q for the
      quarterly period ended September 30, 2005).10.15
                
                Securities
      Purchase Agreement dated as of November 8, 2004 among Medialink Worldwide
      Incorporated, Iroquois Capital LP, Portside Growth and Opportunity Fund,
      Rockmore Investment Master Fund Ltd., and Smithfield Fiduciary LLC
      (Incorporated by reference to Exhibit No. 10.1 of Registrant’s Current
      Report on Form 8-K filed on November 9, 2004).10.16
                
                Security
      Agreement among Medialink Worldwide Incorporated, Iroquois Master Fund,
      Ltd., Portside Growth and Opportunity Fund, Rockmore Investment Master
      Fund Ltd., and Smithfield Fiduciary LLC (Incorporated by reference to
      Exhibit No. 10.16 of Registrant’s Current Report on Form 8-K filed on
      October 10, 2008).21
                
                Subsidiaries
      of the Registrant.23
                
                Consent
      of KPMG LLP.31.1
                
                Certification
      of the principal executive officer pursuant to Rules 13a-14(a) and
      15d-14(a) of the Securities Exchange Act of 1934, as
    amended.31.2
                
                Certification
      of the principal financial officer pursuant to Rules 13a-14(a) and
      15d-14(a) of the Securities Exchange Act of 1934, as
    amended.32
                
                Certification
      of the principal executive officer and principal financial officer
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of
2002.







MEDIALINK
WORLDWIDE INCORPORATED





SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS


For
the years ended December 31, 2008 and 2007


(In
thousands of dollars)





AdditionsDescription
                  
                  Balance
      at
                    beginning
      of
                    period
                  
                  
                  Charged
      to costs
                    and
      expenses
                  
                  
                  Charged
      to other
                    accounts
      (2)
                  
                  
                  Deductions
      (1)
                  
                  
                  Balance
      at end
                    of
      periodAllowances
      deducted in the balance sheet fromassets
      to which they apply:For
      the year ended December 31, 2008:Allowance
      for doubtful accounts
                  
                  $
                  118
                  
                  
                  $
                  (19
                  )
                  
                  $
                  -
                  
                  
                  $
                  15
                  
                  
                  $
                  84Valuation
      allowance on deferred tax assets
                  
                  $
                  5,332
                  
                  
                  $
                  3,661
                  
                  
                  $
                  -
                  
                  
                  $
                  1,629
                  
                  
                  $
                  7,364For
      the year ended December 31, 2007:Allowance
      for doubtful accounts
                  
                  $
                  245
                  
                  
                  $
                  (27
                  )
                  
                  $
                  -
                  
                  
                  $
                  100
                  
                  
                  $
                  118Valuation
      allowance on deferred tax assets
                  
                  $
                  4,403
                  
                  
                  $
                  929
                  
                  
                  $
                  -
                  
                  
                  $
                  -
                  
                  
                  $
                  5,332








(1)  Represents
amounts written off.


S-1