Attached files
| file | filename |
|---|---|
| EX-31.4 - MEDIALINK WORLDWIDE INC | v166791_ex31-4.htm |
| EX-31.3 - MEDIALINK WORLDWIDE INC | v166791_ex31-3.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
AMENDMENT
NO. 2
x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
fiscal year ended December 31, 2008
or
¨ TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For the
transition period from to
Commission
File 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
registered
|
|
|
Common
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 x No ¨
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
None
TABLE
OF CONTENTS
|
Page
|
||||
| Explanatory Note |
3
|
|||
| Forward Looking Statements |
4
|
|||
|
PART
I
|
|
|||
|
8
|
Financial
Statements and Supplementary Data
|
|||
|
9A(T)
|
Controls
and Procedures
|
5
|
||
|
PART
IV
|
|
|||
|
15
|
Exhibits,
Financial Statement Schedules
|
6
|
||
|
Signatures
|
7
|
2
EXPLANATORY
NOTE
The
Registrant is filing this Amendment to its annual report on Form 10-K
for the fiscal year ended December 31, 2008, as amended by Amendment No. 1
thereto on Form 10-K/A filed April 30, 2009, to supplement Exhibits 31.1
and 31.2 of that report by adding to the certifications of the Registrant’s
principal executive officer and principal financial officer, statements as to
these officers’ responsibility for internal control over financial reporting and
their participation in the design of such controls. The foregoing
amendments have not resulted in any modification to the consolidated financial
statements included in Item 1 of Part I or the disclosure included in Item 9A(T)
of Part I of this report on Form 10-K/A, or any of the information contained in
Registrant’s Form 10-K, as amended by Amendment No. 1 thereto on Form 10-K/A
filed April 30, 2009, for the fiscal year ended December 31, 2008 except
for the new certifications filed as Exhibits 31.3 and 31.4 to Form
10-K/A.
3
FORWARD LOOKING
STATEMENTS
Certain
statements made in this report on Form 10-K/A 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” of our Form
10-K filed April 15, 2009 for a description of certain factors that might cause
such a difference.
4
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.
5
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:
|
F-2
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|||
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
|
|||
|
Consolidated
Statements of Operations for the years ended December 31, 2008 and
2007
|
F-4
|
|||
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
2007
|
F-5
|
|||
|
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2008
and 2007
|
F-6
|
|||
|
Notes
to consolidated financial statements
|
F-7
|
|||
|
|
2.
|
Financial
Statement Schedules:
|
||
|
Schedule
II – Valuation and Qualifying Accounts for the years ended December 31,
2008 and 2007
|
S-1
|
|||
|
|
3.
|
Exhibits:
|
|
|
|
See
Exhibit Index commencing on page G-1 herein.
|
G-1
|
|||
6
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 INCORPORATED
|
|
|
By:
|
/s/
James K. Lonergan
|
|
James
K. Lonergan
|
|
|
Chief
Executive Officer
|
|
|
Date:
November 18, 2009
|
|
7
INDEX
TO FINANCIAL STATEMENTS
|
Page
|
||||
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|||
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
|
|||
|
Consolidated
Statements of Operations for the years ended December 31, 2008 and
2007
|
F-4
|
|||
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008 and
2007
|
F-5
|
|||
|
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2008
and 2007
|
F-6
|
|||
|
Notes
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
|
2007
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets:
|
||||||||
|
Cash
and cash equivalents
|
$
|
5,354
|
$
|
11,438
|
||||
|
Accounts
receivable, net of allowance for doubtful accounts of $84
and $118
|
2,190
|
2,655
|
||||||
|
Prepaid
expenses
|
264
|
233
|
||||||
|
Prepaid
and refundable taxes
|
627
|
743
|
||||||
|
Deferred
income taxes
|
-
|
169
|
||||||
|
Other
current assets
|
824
|
80
|
||||||
|
Current
assets of discontinued operations
|
-
|
3,901
|
||||||
|
Total
current assets
|
9,259
|
19,219
|
||||||
|
Property
and equipment - net
|
-
|
1,863
|
||||||
|
Goodwill
|
-
|
3,429
|
||||||
|
Deferred
income taxes
|
-
|
217
|
||||||
|
Other
assets
|
211
|
568
|
||||||
|
Non-current
assets of discontinued operations
|
-
|
2,849
|
||||||
|
Total
assets
|
$
|
9,470
|
$
|
28,145
|
||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current
Liabilities:
|
||||||||
|
Accounts
payable
|
$
|
1,221
|
$
|
1,017
|
||||
|
Accrued
expenses and other current liabilities
|
3,172
|
3,625
|
||||||
|
Current
liabilities of discontinued operations
|
-
|
2,684
|
||||||
|
Total
current liabilities
|
4,393
|
7,326
|
||||||
|
Convertible
debentures, net of unamortized discount of $133 and $422
|
2,517
|
3,928
|
||||||
|
Other
long-term liabilities
|
379
|
720
|
||||||
|
Non-current
liabilities of discontinued operations
|
-
|
45
|
||||||
|
Total
liabilities
|
7,289
|
12,019
|
||||||
|
Commitments
and contingencies
|
||||||||
|
Stockholders'
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
|
65
|
||||||
|
Additional
paid-in capital
|
28,765
|
28,490
|
||||||
|
Accumulated
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
|
16,126
|
||||||
|
Total
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
|
2007
|
|||||||
|
Revenues
|
$
|
19,629
|
$
|
21,898
|
||||
|
Operating
expenses:
|
||||||||
|
Direct
costs
|
7,966
|
9,151
|
||||||
|
Selling,
general, and administrative expenses
|
14,185
|
16,229
|
||||||
|
Depreciation
and amortization
|
943
|
904
|
||||||
|
Goodwill
impairment
|
3,429
|
-
|
||||||
|
Other
impairment charges
|
1,118
|
-
|
||||||
|
Charge
for exit activities
|
170
|
-
|
||||||
|
Loss
on debt extinguishment
|
116
|
-
|
||||||
|
Total
operating expenses
|
27,927
|
26,284
|
||||||
|
Operating
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
|
34
|
||||||
|
Comprehensive
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
|
2007
|
|||||||
|
CASH
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
|
904
|
||||||
|
Deferred
income taxes
|
386
|
808
|
||||||
|
Loss
from discontinued operations
|
6,450
|
892
|
||||||
|
Goodwill
impairment
|
3,429
|
-
|
||||||
|
Other
impairment charges
|
1,118
|
-
|
||||||
|
Loss
on extinguishment of debt
|
116
|
-
|
||||||
|
Other
|
726
|
710
|
||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
484
|
897
|
||||||
|
Prepaid
expenses and other assets
|
(468
|
)
|
1,862
|
|||||
|
Prepaid
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
|
)
|
4,513
|
|||||
|
Net
cash used in investing activities of discontinued
operations
|
(384
|
)
|
(1,163
|
)
|
||||
|
Net
cash provided by (used in) investing activities
|
(851
|
)
|
2,780
|
|||||
|
CASH
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
|
-
|
276
|
||||||
|
Net
cash provided by (used in) financing activities
|
(1,700
|
)
|
276
|
|||||
|
Net
decrease in cash and cash equivalents
|
(6,084
|
)
|
(4,628
|
)
|
||||
|
Cash
and cash equivalents at beginning of period
|
11,438
|
16,066
|
||||||
|
Cash
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
Treasury
|
||||||||||||||||
|
Balance
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
|
276
|
||||||||||||||||||
|
Issuance
of 160,494 shares of common stock in connection with conversion of
debentures
|
1
|
537
|
||||||||||||||||||
|
Unrealized
gain from foreign currency
translation adjustments
|
34
|
|||||||||||||||||||
|
Compensation
expense recognized on stock options
|
347
|
|||||||||||||||||||
|
Income
tax benefit associated with the exercise of stock options
|
3
|
|||||||||||||||||||
|
Net
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
|
565
|
|||||||||||||||||||
|
Compensation
expense recognized on stock options
|
265
|
|||||||||||||||||||
|
Warrants
re-priced in connection with debenture modification
|
10
|
|||||||||||||||||||
|
Net
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
|
2007
|
|||||||
|
Revenues
|
$
|
5,535
|
$
|
11,507
|
||||
|
Loss
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
|
)
|
4,513
|
|||||
|
Income
tax expense
|
12
|
1,910
|
||||||
|
Gain
(loss) on disposal
|
(467
|
)
|
2,603
|
|||||
|
Loss
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
|
$
|
4,161
|
||
|
Furniture
and fixtures
|
869
|
|||
|
Licenses
and software
|
1,535
|
|||
|
Leasehold
improvements
|
2,864
|
|||
|
Total
|
9,429
|
|||
|
Less: Accumulated
depreciation and amortization
|
7,566
|
|||
|
Net
|
$
|
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
|
2007
|
|||||||
|
Compensation and
benefits
|
$
|
647
|
$
|
1,073
|
||||
|
Direct
costs
|
654
|
748
|
||||||
|
Client
prepayments
|
126
|
167
|
||||||
|
Deferred
revenue
|
639
|
623
|
||||||
|
Other
taxes
|
-
|
295
|
||||||
|
Professional
fees
|
275
|
246
|
||||||
|
Exit
activities
|
407
|
132
|
||||||
|
Other
accruals
|
424
|
341
|
||||||
|
Total
|
$
|
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
Plan
|
|||||||||||||||||||
|
Balance
at January 1, 2007
|
$
|
448
|
$
|
157
|
$
|
213
|
$
|
78
|
||||||||||||||||
|
Facility
closure cost payments
|
(338
|
)
|
(135
|
)
|
(157
|
)
|
(46
|
)
|
||||||||||||||||
|
Adjustment
to liability
|
22
|
22
|
||||||||||||||||||||||
|
Balance
at December 31, 2007
|
132
|
22
|
56
|
54
|
||||||||||||||||||||
|
Charge
for exit activities
|
782
|
-
|
-
|
-
|
$
|
147
|
$
|
635
|
||||||||||||||||
|
Facility
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
|
2007
|
|||||||
|
Convertible
debentures
|
$
|
2,650
|
$
|
4,350
|
||||
|
Unamortized
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
|
$
|
1,730
|
||
|
2010
|
1,349
|
|||
|
2011
|
19
|
|||
|
Total
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
|
2007
|
|||||||
|
Current:
|
||||||||
|
Federal
|
$
|
(1,050
|
)
|
$
|
(1,106
|
)
|
||
|
State
and local
|
37
|
(449
|
)
|
|||||
|
Total
current
|
(1,013
|
)
|
(1,555
|
)
|
||||
|
Deferred:
|
||||||||
|
Federal
|
386
|
575
|
||||||
|
State
and local
|
-
|
233
|
||||||
|
Total
deferred
|
386
|
808
|
||||||
|
Total
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
|
2007
|
|||||||
|
Taxes
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
|
377
|
||||||
|
Non-deductible
expenses and other
|
(621
|
)
|
747
|
|||||
|
Benefit
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
|
2007
|
|||||||
|
Deferred
tax assets:
|
||||||||
|
Accounts
receivable
|
$
|
36
|
$
|
14
|
||||
|
Property
and equipment
|
728
|
270
|
||||||
|
Goodwill
|
1,596
|
469
|
||||||
|
Other
intangible assets
|
480
|
614
|
||||||
|
Minority
interest
|
-
|
341
|
||||||
|
Equity
investments
|
300
|
300
|
||||||
|
Accrued
expenses
|
285
|
590
|
||||||
|
Net
operating loss carryforwards
|
3,939
|
3,120
|
||||||
|
Total
deferred tax assets before valuation allowance
|
7,364
|
5,718
|
||||||
|
Valuation
allowance on deferred tax assets
|
7,364
|
5,332
|
||||||
|
Net
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
|
$
|
241
|
||
|
Increase
in unrecognized tax benefits for tax positions taken during the
year
|
659
|
|||
|
Unrecognized
tax positions at December 31, 2007
|
900
|
|||
|
Increase
in unrecognized tax benefits for tax positions taken during the
year
|
20
|
|||
|
Decrease
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
|
2007
|
|||||||||||||||
|
Employee
Plan
|
Directors’
Plan
|
Employee
Plan
|
Directors’
Plan
|
|||||||||||||
|
Expected
term
|
3.82
|
3.81
|
3.85
|
4.23
|
||||||||||||
|
Expected
volatility
|
.5818
|
.5630
|
.5891
|
.5969
|
||||||||||||
|
Expected
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
Term
|
||||||||||||||||
|
Options
outstanding at January 1, 2007
|
788,190
|
$
|
4.89
|
|||||||||||||||||
|
Options
granted
|
113,000
|
$
|
4.49
|
$
|
2.18
|
|||||||||||||||
|
Options
exercised
|
(32,500
|
)
|
$
|
2.86
|
$
|
55
|
||||||||||||||
|
Options
forfeited and expired
|
(106,610
|
)
|
$
|
5.50
|
||||||||||||||||
|
Options
outstanding at December 31, 2007
|
762,080
|
$
|
4.83
|
|||||||||||||||||
|
Options
granted
|
21,000
|
$
|
2.86
|
$
|
1.32
|
|||||||||||||||
|
Options
forfeited and expired
|
(291,355
|
)
|
$
|
5.34
|
||||||||||||||||
|
Options
outstanding at December 31, 2008
|
491,725
|
$
|
4.44
|
$
|
0
|
6.33
|
||||||||||||||
|
Options
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
|
Exercisable
|
|||||||||||||||||||
|
Range 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
Average
Fair
Value
|
Aggregate
Intrinsic
Value
|
Weighted
Average
Remaining
Contractual
Term
|
||||||||||||||||
|
Options
outstanding at January 1, 2007
|
224,600
|
$
|
5.39
|
|||||||||||||||||
|
Options
granted
|
34,000
|
$
|
4.92
|
$
|
2.52
|
|||||||||||||||
|
Options
forfeited and expired
|
(18,000
|
)
|
$
|
8.20
|
||||||||||||||||
|
Options
outstanding at December 31, 2007
|
240,600
|
$
|
5.11
|
|||||||||||||||||
|
Options
granted
|
24,000
|
$
|
4.25
|
$
|
1.94
|
|||||||||||||||
|
Options
forfeited and expired
|
(47,400
|
)
|
$
|
7.25
|
||||||||||||||||
|
Options
outstanding at December 31, 2008
|
217,200
|
$
|
4.55
|
$
|
0
|
5.80
|
||||||||||||||
|
Options
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
|
Exercisable
|
|||||||||||||||||||
|
Range 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
|
2007
|
|||||||
|
Interest
paid
|
$
|
791
|
$
|
327
|
||||
|
Income
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.
|
Description
|
|
|
2.1
|
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. (Incorporated by reference to Exhibit 31.1 of the
Registrant’s Quarterly Report on Form 10-K filed on April 15,
2009)
|
|
|
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. (Incorporated by reference to Exhibit 31.2 of the
Registrant’s Quarterly Report on Form 10-K filed on April 15,
2009)
|
|
|
31.3
|
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.
|
|
|
31.4
|
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. (Incorporated by reference to
Exhibit 32 of the Registrant’s Annual Report on Form 10-K filed on April
15, 2009)
|
G-2
MEDIALINK
WORLDWIDE INCORPORATED
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS
For
the years ended December 31, 2008 and 2007
(In
thousands of dollars)
|
Additions
|
||||||||||||||||||||
|
Description
|
Balance at
beginning of
period
|
Charged to
costs
and expenses
|
Charged to other
accounts (2)
|
Deductions (1)
|
Balance at end
of period
|
|||||||||||||||
|
Allowances
deducted in the balance sheet from assets
to which they apply:
|
||||||||||||||||||||
|
For
the year ended December 31, 2008:
|
||||||||||||||||||||
|
Allowance
for doubtful accounts
|
$
|
118
|
$
|
(19
|
)
|
$
|
-
|
$
|
15
|
$
|
84
|
|||||||||
|
Valuation
allowance on deferred tax assets
|
$
|
5,332
|
$
|
3,661
|
$
|
-
|
$
|
1,629
|
$
|
7,364
|
||||||||||
|
For
the year ended December 31, 2007:
|
||||||||||||||||||||
|
Allowance
for doubtful accounts
|
$
|
245
|
$
|
(27
|
)
|
$
|
-
|
$
|
100
|
$
|
118
|
|||||||||
|
Valuation
allowance on deferred tax assets
|
$
|
4,403
|
$
|
929
|
$
|
-
|
$
|
-
|
$
|
5,332
|
||||||||||
(1) Represents
amounts written off.
S-1