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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
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
incorporation or organization) Identification Number)
708 Third Avenue, New York, New York 10017
------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 682-8300
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock-$.01 par value National Market System of NASDAQ
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 an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes __ No _X_
The aggregate market value of the voting stock held by non-affiliates of the
registrant amounted to $14,502,307, computed by reference to the price at which
the voting common stock was last sold as of the last business day of the
registrant's most recently completed second quarter.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of business on March 26, 2004: Common Stock -
5,983,049.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Definitive Proxy Statement for the 2004 Annual
Meeting of Stockholders, to be held on June 10, 2004, to be filed pursuant to
Regulation 14A within 120 days after the Registrant's fiscal year ended December
31, 2003 are incorporated by reference in Part II, Item 5 and Part III of this
report.
MEDIALINK WORLDWIDE INCORPORATED
FORM 10-K
YEAR ENDED DECEMBER 31, 2003
TABLE OF CONTENTS
Page
PART I
Item 1. Business 2
Item 2. Properties 9
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
PART II
Item 5. Market for the Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk 24
Item 8. Financial Statements and Supplementary Data 25
Item 9. Changes in and Disagreements With Accountants
On Accounting and Financial Disclosure 26
Item 9A. Controls and Procedures 26
PART III
Item 10. Directors and Executive Officers of the Registrant 26
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial Owners
and Management 26
Item 13. Certain Relationships and Related Transactions 26
Item 14. Principal Accountant Fees and Services 27
PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 27
SIGNATURES Chief Executive Officer, President and Chief Financial
Officer
Directors
Reports of Independent
Auditors F-1
Financial Statements F-3
FORWARD LOOKING STATEMENTS
With the exception of the historical information contained in this Form 10-K,
the matters described herein contain certain "forward-looking statements" that
are made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements in this Form 10-K are
not promises or guarantees and are subject to risks and uncertainties that could
cause our actual results to differ materially from those anticipated. These
statements are based on management's current expectations and are naturally
subject to uncertainty and changes in circumstances. We caution you not to place
undue reliance upon any such forward-looking statements, which speak only as of
the date made. Actual results may vary materially from those expressed or
implied by the statements herein. Such statements may relate, among other
things, to our ability to respond to economic changes and improve operational
efficiency, the benefits of our products to be realized by our customers, or our
plans, objectives, and expected financial and operating results. Forward-looking
statements may also include, without limitation, any statement relating to
future events, conditions or circumstances or using words such as: will,
believe, anticipate, expect, could, may, estimate, project, plan, predict,
intend or similar expressions that involve risk or uncertainty. These risks and
uncertainties include, among other things, our recent history of losses; our
ability to achieve or maintain profitability; worldwide economic weakness;
geopolitical conditions and continued threats of terrorism; effectiveness of our
cost reduction programs; our ability to develop new services and market
acceptance of such services, such as Teletrax(TM); the volume and importance of
breaking news which can have the effect of crowding out the content we produce
and deliver to broadcast outlets on behalf of our clients; our ability to
develop new products and services that keep pace with technology; our ability to
develop and maintain successful relationships with critical vendors; the
potential negative effects of our international operations on the Company;
future acquisitions or divestitures may adversely affect our operations and
financial results; the absence of long term contract with customers and vendors;
and increased competition may have an adverse effect on pricing, revenues, gross
margins and our customer base. More detailed information about these risk
factors is set forth in filings by Medialink Worldwide Incorporated with the
Securities and Exchange Commission, including the Company's registration
statement, most recent quarterly report on Form 10-Q, and other publicly
available information regarding the Company. Medialink Worldwide Incorporated is
under no obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements whether as a result of new information,
future events or otherwise.
ITEM 1. BUSINESS.
GENERAL
Medialink Worldwide Incorporated ("Medialink") is the leading global provider of
creative and distribution services to corporations and other organizations
seeking to communicate with the public through the news media. Medialink is
based in New York, with offices in the United States and an international hub in
London. The Company uniquely blends its creative and production expertise with
established news media credibility, proprietary databases, an electronic
distribution infrastructure and the first truly global electronic video tracking
solution to provide its clients with the ability to create, distribute and
measure their communications. Medialink is a publicly traded company (Nasdaq:
MDLK).
Medialink offers the counsel, skills and infrastructure to reach television
viewers, radio listeners, newspaper readers and Internet users through newscasts
or news columns. The Company also tracks and measures the impact of client
communications across all major media. Clients ranging from General Motors to
General Mills, Siemens to Symbol Technologies rely on Medialink to generate news
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coverage of their new products, innovations, mergers, acquisitions and other
corporate initiatives and then to determine the value of that media exposure.
For example, when the European Space Agency (ESA) wanted to raise public
awareness of its Mars Express space mission prior to the projected Christmas Day
arrival on the planet, Medialink created and distributed a video news package
that captured worldwide attention in dozens of countries throughout Europe,
China, the Middle East and the United States. In addition, within 24 hours of
the reopening of Baghdad International Airport and immediately following the
fall of Baghdad, Medialink scheduled and produced two groups of live interviews
for Science Applications International Corporation on behalf of the United
States Air Force (USAF). The satellite interviews originated from Kuwait and
Qatar between active duty USAF pilots and major market U.S. television stations,
and helped Americans to understand the role of the Air Force during pivotal
events in the war in Iraq.
In another example, when cosmetics giant Mary Kay Inc. wanted to promote the
40th anniversary of its founding, Medialink provided television, print and
Internet newsrooms with video and still photos of events from the celebration in
Dallas. Morgan Stanley employed Medialink's radio production and distribution
service as a means to educate listeners regarding personal finance issues on a
weekly basis. Organizations and government agencies, such as the National
Association of Realtors and the U.S. Department of Energy, commonly rely on
Medialink's U.S. Newswire division to provide electronic distribution of press
releases and related materials to the news media.
By leveraging relationships with news organizations, Medialink rapidly alerts
and disseminates clients' news to every major newsroom in the United States.
Similarly, international distribution relationships enable Medialink to reach
virtually any audience, in any country, through any news medium. Each year,
Medialink generates tens of thousands of broadcast news airings worldwide
reaching billions of viewers, listeners and readers on media as diverse as CNN,
The New York Times, ABC, Sky News, The Washington Post, BBC, Bloomberg Radio,
AOL, Yahoo! and China Central Television, the national television station of the
People's Republic of China. For example, 1.2 billion viewers worldwide saw the
video of ESA's Mars Express mission.
Medialink works with clients to create communications programs designed to reach
audiences primarily through its unique links to the media. On behalf of its
clients, Medialink creates and distributes news to broadcast, print and online
newsrooms around the world, for their free and unrestricted use. Unlike its
competitors, Medialink combines this content production and distribution
expertise with complete qualitative and quantitative communications monitoring,
research and analysis services. For FedEx, Medialink aggregates and analyzes the
company's media coverage on three continents, producing reports that measure the
value of the exposure and often prove the superior return on investment of
public relations over advertising.
Clients use Medialink because of its cost-effective and comprehensive array of
services, the extensive depth and breadth of its distribution and its
long-established reputation as a trusted advisor. The Company's proprietary news
collection and analytics capabilities provide it with powerful, exclusive
advantages in measuring client communications.
The Company's success is apparent in its rich and diverse client base, which
includes Accenture, Altria Group, American Association for Retired Persons,
AT&T, Bayer, DIAGEO, Disney, European Space Agency, Ford, GE Financial, General
Motors, GlaxoSmithKline, Intel, Jaguar, Miramax, McDonald's, Morgan Stanley,
Nasdaq, National Association of Realtors, Royal Philips Electronics, Siemens and
Visa International. Clients also include virtually every major PR firm in the
United States and the United Kingdom.
3
In 2003, the Company expanded the monitoring network of its subsidiary,
Teletrax(TM), the broadcast industry's first global digital video watermarking
and tracking solution, into the U.S. marketplace following its formal launch in
Europe in 2002. Initial clients include Reuters Television and NBC News Channel,
which entered into multi-year agreements to utilize this unique content asset
management tool to track and monitor the usage of their video content. In 2004,
Teletrax(TM) reached additional agreements with Tribune Entertainment, Universal
Domestic Television, Media Review International and Internet Broadcasting
Systems. Medialink also uses the Teletrax(TM) system to track and monitor the
worldwide usage of its client video distributed by the Company. Teletrax(TM)
offers Medialink the potential new revenue sources outside of its core broadcast
services, such as copyright management, advertising proof-of-performance,
sponsorship evaluation, verification of airings for network and syndicated
programming, and intellectual property rights management.
STRATEGY
From its inception, the Company has been at the vanguard as public relations has
evolved from being print-focused to embracing video, audio and the Internet.
Medialink's strategy is to enable its clients to effectively and efficiently
communicate news to audiences through all mediums. The Company achieves this by:
(i) creating and producing compelling content; (ii) distributing content through
the Company's unmatched infrastructure; (iii) monitoring distribution
effectiveness and providing analytical feedback; and (iv) providing customized
research to gauge the effectiveness of clients' communications efforts.
The Company believes it is the market share leader in each of its primary
service offerings. Medialink has identified several avenues that should further
support the Company's growth, including: (i) leveraging client relationships
through cross-marketing; (ii) developing new products and services; and (iii)
broadening the sales force and client base.
Operational Overview
Medialink offers its comprehensive range of services through the following
divisions:
Media Communications Services
Broadcast Services Group ("BSG")--Through BSG, the Company provides its
content creation, production, distribution and electronic broadcast
monitoring services. BSG's principal products and services include video
news releases, live event broadcasts (including satellite media tours,
videoconferences and webcasting), audio news releases and radio media tours,
in formats that are suitable for all broadcast news media. BSG distributes
its clients' news stories directly to targeted television and radio, through
its comprehensive distribution platform, and on-line media outlets
worldwide, through Newstream.com, its joint venture with Business Wire. BSG
also monitors and statistically analyzes the extent to which content is
aired, thereby providing valuable feedback to the client. BSG utilizes a
variety of methods to track and monitor video usage, including its exclusive
offering of Teletrax(TM), providing it with the only truly global electronic
video tracking solution.
U.S. Newswire ("USN")--USN is a leading press release wire service for
domestic governmental, public affairs and non-profit organization news
sources. Its clients rely on it to provide immediate and simultaneous
electronic distribution of their news releases, media advisories and press
statements to the media and on-line services worldwide. The division
distributes news releases via a direct wire service feed, as well as through
e-mail, satellite, the Internet and broadcast fax. USN also provides still
photography services.
4
Media Research Services
Delahaye Medialink--This division is a global leader in providing analysis
of public relations and corporate communications activities on behalf of
corporate and other clients. Delahaye combines qualitative and quantitative
research techniques, proprietary technologies and its own media and
communications expertise to help companies and other organizations plan and
evaluate their internal and external public relations programs. Using data
compiled from a variety of sources, including electronic monitoring and
press clipping services, the division employs sophisticated statistical
analyses to measure the quality and quantity of the client's print,
broadcast and Internet news coverage. Delahaye also offers interpretive
analyses that can provide: (i) an overall appraisal of the efficiency and
impact of a client's communications efforts; (ii) a comparison of the
client's news coverage with that of its competitors; and (iii) a gauge of
the client's return on investment for its communications programs.
Video Watermarking Services
Teletrax(TM) --Teletrax(TM) is the broadcast industry's first global
electronic video watermarking and tracking solution. Using Teletrax(TM),
owners of video content - the motion picture industry, news organizations,
advertising agencies, and program syndicators to name a few - "embed" an
imperceptible and indelible digital watermark into their material whenever
it is edited, broadcast or duplicated. A global network of decoders, or
"detectors," then captures every broadcast incident of the embedded video
whether via satellite, cable or terrestrially. The Teletrax(TM) service then
generates tracking reports for the original content owners. The system
provides proof of performance reports and alerts copyright owners instantly
to any violations, even down to single second clips. As a key asset
management tool for content owners seeking to protect and leverage their
video property, Teletrax(TM) will help drive the financial performance of
its clients, enabling them to efficiently and effectively leverage their
video content. Teletrax(TM) is built upon Medialink's extensive monitoring
network and technology developed by Royal Philips Electronics.
A summary of the Company's operations by major geographic location are as
follows for the years ended December 31,
2003 2002 2001
---- ---- ----
US UK US UK US UK
-- -- -- -- -- --
Revenues:
External clients $39,594,783 $4,458,801 $40,188,739 $7,175,981 $40,397,272 $8,022,861
Inter-segment 192,000 249,000 917,000 727,000 330,000 636,000
------------ ----------- ------------ ---------- ------------ ----------
Total revenues $39,786,783 $4,707,801 $41,105,739 $7,902,981 $40,067,272 $8,658,861
========== ========= ========== ========= ========== =========
Total assets $32,987,950 $3,723,935 $37,482,424 $3,599,910 $38,243,355 $2,569,198
========== ========= ========== ========= ========== =========
Service Offering
Medialink offers clients a unique combination of creative content production,
global media distribution, research and analysis and video watermarking, which
enables clients to communicate their news efficiently and effectively. Through
its BSG division, the Company provides a complete range of customized production
and distribution services to corporations and other organizations to help them
build public recognition, launch new products, manage crisis situations and meet
other communications objectives. Utilizing its electronic monitoring
capabilities, BSG also measures distribution reach and evaluates results.
Through Delahaye's research and analysis, Medialink helps companies evaluate
their media communications programs and public image. Through USN, the Company
provides news release distribution for governmental, public affairs and
non-profit organizations. Through Teletrax(TM), Medialink offers the only truly
global video tracking solution available to the broadcast, advertising and
entertainment industries. Medialink's ability to offer the comprehensive
services that its clients demand makes it the partner of choice for leading
corporations, organizations and PR firms worldwide.
5
- -----------------------------------------------------------------------------------------------------------------------
MEDIALINK WORLDWIDE INCORPORATED SERVICE OFFERINGS
- -----------------------------------------------------------------------------------------------------------------------
Production and Live Broadcast Distribution Internet Research/Analysis
- -----------------------------------------------------------------------------------------------------------------------
o Video and Audio News o Video and Audio o Cyber Media Tours o News Coverage
Release Production: News Release Analysis
Domestic Distribution and Media Reputation
International Monitoring: Index (MRi)
Domestic Media Compass
International
- -----------------------------------------------------------------------------------------------------------------------
o Live Broadcasts: o Press Release o Webcasting o Competitive
Satellite Media Tours Distribution Analysis
Radio Media Tours
Special Event
Broadcasts
Video Conferences
Audio Conferences
- -----------------------------------------------------------------------------------------------------------------------
o Electronic Press Kits o Still Photography & o Web Releases o Campaign
Digital Distribution Effectiveness
- -----------------------------------------------------------------------------------------------------------------------
o Public o Newstream.com o Performance
Service Benchmarking
Announcements
- -----------------------------------------------------------------------------------------------------------------------
o Corporate Videos o Digital Photo o Syndicated
Distribution Research Studies
- -----------------------------------------------------------------------------------------------------------------------
o Media Audits
- -----------------------------------------------------------------------------------------------------------------------
o Strategic
Communications
Consulting and Crisis
- -----------------------------------------------------------------------------------------------------------------------
CLIENTS
The Company provides its services to more than 3,000 clients. The Company's
clients include corporations such as Accenture, Altria Group, AT&T, Bayer,
DIAGEO, Disney, Ford, GE Financial, General Motors, GlaxoSmithKline, Intel,
Jaguar, Miramax, McDonald's, Morgan Stanley, Nasdaq, National Association of
Realtors, Royal Philips Electronics, Siemens and Visa International;
organizations such as the American Association of Retired Persons, the European
Space Agency and National Association of Realtors; and the world's largest
marketing communications firms such as Burson-Marsteller, Hill & Knowlton,
Ketchum Communications, Edelman Public Relations Worldwide and Weber Shandwick
Worldwide.
DISTRIBUTION AGREEMENTS
The Company has long-standing distribution alliances and powerful relationships
with major news organizations that provide clients unparalleled access to
newsroom decision-makers. Through an agreement with the Associated Press for the
use of its AP Express newswire, Medialink can quickly alert more than 700
television and 400 radio newsrooms to clients' impending video and audio news.
The Company's strong relationships with ABC, CBS and FOX, among others, provide
it access to their network affiliates through their dedicated and highly
6
cost-effective satellite news feeds. Medialink continues to expand its
distribution infrastructure through strategic distribution agreements with
high-profile media companies such as AOL and Yahoo!. Through its Newstream.com
joint venture, the Company has developed a delivery mechanism for multi-media
content to more than 11,000 on-line newsrooms. Due to the Company's extensive
usage of both satellite distribution and electronic broadcast monitoring
services, the Company is able to obtain preferential pricing from its key
suppliers. Medialink's extensive relationships and its reputation as a producer
of newsworthy, broadcast-quality content ensure that clients' video and audio
news productions capture the attention of newsroom decision-makers and thus
their intended audiences.
Background
The Company, founded in 1986 with the mission of developing the world's first
distribution system for video news releases and other video public relations
material, began offering production - in addition to distribution - of video
news releases in 1994 and has since developed a full range of video, audio,
Internet, still photography and print services which it now provides on a global
basis. Medialink enables its clients to reach more than 11,000 newsrooms at
television and radio networks, local stations, cable channels, direct broadcast
satellite systems, as well as more than 11,000 online multimedia newsrooms.
The Company's expanded service offerings have evolved from its core business -
the satellite distribution of video news releases ("VNR") and the electronic
monitoring of their broadcasts on television. A VNR is a television news story
that communicates an entity's public relations or corporate message. It is paid
for by the corporation or organization seeking to announce news and is delivered
without charge to the media. Ultimately, a VNR is the television equivalent of a
printed press release, transforming the printed word into the sound and pictures
television newsrooms can use in programming. Produced in broadcast news style,
VNRs relay the news of a product launch, medical discovery, corporate merger
event, timely feature or breaking news directly to television news
decision-makers who may use the video and audio material in full or edited form.
Most major television stations in the world now use VNRs, some on a regular
basis. The Company offers VNR and Audio News Release ("ANR") production services
worldwide. Working closely with clients, Medialink's team of highly experienced
broadcast and network radio professionals instantly translates clients' messages
into effective video or audio news stories. All aspects of production, including
scripting, editing, narration and sound bites of the news story are custom-built
and designed to reach specifically targeted audiences.
The Company also produces and coordinates live broadcast services include
Satellite Media Tours ("SMT"), Radio Media Tours ("RMT"), audio and video news
conferences and special-event broadcasts. SMTs consist of a sequence of
one-on-one satellite interviews with a series of pre-booked television reporters
across the country or around the world. Typical SMT applications include, among
others, an interview with an author, performer, executive or other spokesperson
promoting an upcoming event, product, movie or book release. SMTs 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. Similar to SMTs,
Medialink offers RMTs targeted to radio stations across the country or around
the world.
The acceptance of digital audio and video media drove the Internet evolution.
Widespread adoption of Internet-based communications continues as companies
leverage the opportunity by creating content-rich Web destinations while
controlling costs. In 1999, Medialink created Newstream.com, a joint venture
with Business Wire, a leading distributor of text-based press releases.
Newstream.com delivers multimedia assets to more than 11,000 online news and
information Web sites that increasingly need streaming video, audio,
7
presentations, and graphics to be competitive. During its fourth year of
operations, Newstream.com continued to experience growth. Newstream.com's
overall membership - including journalists, professional communicators,
financial analysts and members of the general public - stands at nearly 70,000.
The number of registered journalists stood at more than 13,000 as of December
2003. More than 13,000 professional communicators and more than 4,000 financial
analysts were registered on Newstream.com in 2003. Registration among the
general public was recorded at more than 35,000 by December 2003.
In June 1997, the Company acquired certain assets of Corporate TV Group Inc., a
provider of strategic video communications to corporations and other
organizations for internal and external audiences.
In November 1998, Medialink expanded its United Kingdom still photography
service into the United States through the acquisition of WirePix, a New
York-based public relations photo service. The Company's clients have included
corporations such as Hasbro, Colgate-Palmolive, Compaq Computer Corporation and
McDonald's. Public relations firms such as Burson-Marstellar, Cohn & Wolfe,
Fleishman Hillard and Manning Selvage & Lee have also engaged WirePix's
services.
In late 1999, the Company acquired U.S. Newswire LLC. U.S. Newswire, founded in
1986, is a leader in providing wire service, Internet and online distribution of
full-text and multimedia news for government and public policy news sources to
news media and online services - locally, nationally and worldwide. Clients
include Cabinet agencies and the majority of political campaigns, advocacy
groups, trade associations, "think tanks", public affairs firms and other
similar organizations.
The Company continues to diversify its service offerings, and in 1999, the
Company accelerated development of its research group by acquiring the Delahaye
Group, a leading public relations and media analysis firm. During 2000, the
Company successfully integrated it with its own research operations. The
research team has emerged as a leader in helping corporations and organizations
around the world communicate more efficiently and effectively. By providing
media monitoring, analysis, and public relations research, Medialink helps
corporations determine return on investment from their communications efforts.
Contributing to the group's growth were the Company's previous investments in
Infotrend and NewsIQ, both proprietary media tracking tools, enabling Delahaye
to process thousands of pieces of news and provide clients with analytics
relating to the client's overall communications program.
In 2001, the Company introduced the Media Reputation Index (MRi). The MRi
assesses the media's impact on corporate reputation, providing the basis for
understanding and improving a company's perception as covered by the news media.
The index benchmarks the 100 largest U.S.-based companies including The Walt
Disney Company, Microsoft, Wal-Mart, General Motors Corp. and Time Warner,
tracking and evaluating each company's media coverage over time and versus all
100 companies.
In 2002, the Company launched Teletrax(TM), providing Medialink with a unique
selling proposition complementary to its core broadcast service business by
offering a content management tool with the distinctive ability to track video
content whenever and wherever it is broadcast. Teletrax(TM) is expected to
unlock new revenue streams for Medialink outside of its traditional business.
Teletrax(TM) fulfills the needs of a variety of industries, including
advertising, sports, music, film and television syndication. The network of
detectors currently monitors more than 800 television stations in nearly 50
countries, including more than 100 top-ranking markets in the United States.
8
The Company has many competitors in different aspects of its businesses,
although no one competitor competes in all of the Company's businesses. Some of
these competitors or their parent companies may have assets substantially
greater than those of the Company.
Employees
As of December 31, 2003, the Company had 268 employees including 180 in client
services, 55 in sales and marketing and 33 in corporate and administration.
Included in corporate and administration were executives totaling 6. None of the
Company's employees is represented by a labor union. Management believes that
its employee relations are good. The Company also engages on a part-time,
project-by-project basis, independent production crews at various locations
worldwide. These crews have the skills, training and experience that the Company
requires for its production services.
The Company, a Delaware corporation, was incorporated in 1986. Medialink's
website is http://www.medialink.com. The Company makes available free of charge,
on or through its Web site, its annual, quarterly and current reports, and any
amendments to those reports, as soon as reasonably practicable after
electronically filing such reports with the Securities and Exchange Commission
("SEC"). Such reports are also available on the SEC's website,
http://www.sec.gov.
ITEM 2. PROPERTIES.
As of December 31, 2003, the Company's properties are all leased as follows:
Location Gross Square Footage
-------- --------------------
New York 39,368
Boston 1,655
Chicago 1,317
Dallas 1,596
Washington, DC 7,043
San Francisco 1,401
Los Angeles 4,047
Norwalk, CT 24,690
Portsmouth, NH 11,055
London 10,896
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock is traded on the National Market System of the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
under the symbol MDLK. The following table sets forth the high and low closing
sales prices per share of the Company's common stock on the NASDAQ National
Market System for the periods indicated:
Quarter Ended Low High
------------- ----- -----
Quarter ended March 31, 2003 $2.77 $3.52
Quarter ended June 30, 2003 2.60 3.55
Quarter ended September 30, 2003 2.85 4.44
Quarter ended December 31, 2003 2.82 3.48
Quarter ended March 31, 2002 2.50 3.44
Quarter ended June 30, 2002 2.62 4.30
Quarter ended September 30, 2002 3.18 3.99
Quarter ended December 31, 2002 2.89 3.83
As of December 31, 2003, there were approximately 1,343 holders of record of the
Company's common stock.
The Company has not paid, and does not anticipate paying for the foreseeable
future, any dividends to holders of its common stock. The declaration of
dividends by the Company in the future is subject to the sole discretion of the
Company's Board of Directors and will depend upon the operating results, capital
requirements and financial position of the Company, general economic conditions
and other pertinent conditions or restrictions relating to any financing.
Equity Compensation Plan Information
Information regarding the Company's equity compensation plans is set forth in
the section entitled "Executive Compensation - Equity Compensation Plan
Information" in the Company's Definitive Proxy Statement, to be filed within 120
days after Registrant's fiscal year end of December 31, 2003, which information
is incorporated herein by reference.
10
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data have been derived from the
Company's audited consolidated financial statements. The information below
should be read in conjunction with the consolidated financial statements and
related notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Annual Report on Form
10-K.
Certain acquisitions occurring in 1999 have been accounted for under purchase
accounting and accordingly, are only reflected herein for dates and periods on
and after the respective dates of acquisition. Additionally, all of the balances
have been restated to reflect the merger with The Delahaye Group, Inc. which was
accounted for as a pooling. See Note 3 of the Company's Consolidated Financial
Statements.
For the Years Ended December 31,
2003 2002 2001 2000 1999
---- ---- ---- ---- ----
(In thousands, except per share data)
OPERATING DATA:
Revenues $ 44,054 $ 47,365 $ 48,420 $ 56,474 $ 44,614
Gross profit 29,967 31,629 30,722 35,958 29,277
Selling, general and
administrative expenses (a) 29,757 30,490 32,638 31,426 25,924
Loss from joint venture 316 350 728 1,079 234
Operating income (loss) (2,555) (1,817) (6,216) 3,453 3,119
Income (loss) before provision
for income taxes (2,842) (2,015) (6,348) 3,532 3,339
Net income (loss) (2,692) (1,869) (3,773) 2,057 1,992
Earnings (loss) per share $ (0.45) $ (0.32) $ (0.65) $ 0.35 $ 0.34
BALANCE SHEET DATA:
Working capital $ 2,768 $ 4,308 $ 6,085 $ 10,644 $ 11,117
Assets 36,712 40,643 40,813 42,028 36,982
Long-term debt, net 173 217 95 157 233
Stockholders' equity $ 24,798 $ 27,204 $ 29,046 $ 32,570 $ 29,887
(a) 2003 selling, general and administrative expenses ("S, G & A") include
restructuring charges related to the sublease of excess office space of $592.
2002 S, G & A includes advisory charges of $1,300. 2001 S, G & A includes
restructuring charges, loss on sale of subsidiary and advisory charges of $634,
$496, and $805, respectively.
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Summary and Outlook
The year 2003 was a challenging year for the Company. The Public Relations
industry showed few signs of vitality as worries about the state of the U.S
economy continued to put pressure on public relations budgets and consequently
demand for the Company's Media Communications and Media Research services. In
addition, economic pressures in the U.K. and Europe resulted in a significant
reduction in demand for the Company's London-based International services.
Revenues from Media Communications and Media Research services decreased $3.57
million, or 8% as compared to 2002. At the same time, the Company has continued
to invest in its new Teletrax(TM) service, completing the roll-out of its
detection network to nearly 50 countries and over 700 channels by December 31,
2003.
In order to compensate for the lower revenue levels and to fund the Company's
investment in Teletrax(TM), the Company focused its efforts on creating
operating efficiencies, increasing its gross profit margins, reducing its
headcount, where practicable, and identified further savings in selling general
and administrative expenses ("S, G & A").
Improvements in gross profit margins on 2003 revenue created savings of
$548,000. Excluding costs related to Teletrax(TM), the Company achieved savings
of $715,000 and $952,000 in payroll and S, G & A, respectively, as compared with
2002. Related to these savings the Company incurred termination costs of
$430,000 and a loss on the subletting of excess space of $592,000.
During 2003 the Company continued to invest in the roll-out of the Teletrax(TM)
network, and absorbed $2.50 million of operating losses on the new service. The
Company believes that the Teletrax(TM) network is now of a size that can satisfy
the needs of potential clients. During the fourth quarter of 2003 and in early
2004 a number of potential clients tested the service and Teletrax(TM) has
recently signed several clients including Universal Domestic Television and
Tribune Entertainment under long term contracts. In addition, the service
continues to be tested by a number of companies in the news, entertainment and
advertising industries.
The Company finances its operations from cash generated from operations and from
its line of credit facility. During 2003 the Company was in default on its
tangible net worth covenant under the line of credit and, subsequent to year
end, the bank issued a forbearance requiring the Company to limit its borrowings
to the maximum of $5.00 million. In April 2004, the Bank agreed to extend the
forbearance through January 31, 2005 and required additional reductions in the
maximum line throughout 2004. The Company believes the current line of credit
facility, in conjunction with the costs savings implemented in 2003, will be
adequate to fund the Company during 2004. The Company has agreed to find
additional financing to fund the operations of Teletrax(TM) by January 15, 2005.
12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Fiscal Year 2003 as Compared to Fiscal Year 2002
Revenues decreased by $3.31 million, or 7.0%, from $47.36 million in 2002 to
$44.05 million in 2003. Revenue from the Company's Media Communications Services
decreased by $2.98 million, and the Company's Media Research Services revenue
decreased by $591,000. Additionally, revenue from Teletrax(TM), the Company's
76% owned subsidiary, was $645,000 in 2003, an increase of $261,000, or 68%, as
compared to 2002. During 2003, the Company experienced a decrease in demand from
clients for its Media Communications Services products as a result of the events
leading up to the war in Iraq and the commencement of military action. Events
which dominate news broadcasts, such as the war in Iraq, can cause the Company's
clients to delay the use of, or in some cases not use, the Company's services,
due to concern that the impact of their projects would be adversely affected by
the focus of the media on such news events. Additionally, during 2003 the
Company was negatively affected by the continuing adverse economic conditions,
particularly in the public relations sector.
Direct costs decreased by $1.65 million, or 10.5%, from $15.74 million in 2002
to $14.09 million in 2003. The decrease in direct costs is the result of lower
revenues and increased profit margins in 2003 as compared to 2002. Direct costs
as a percentage of revenue were 32.0% and 33.2%, respectively, in 2003 and 2002.
In spite of the difficult economic environment, the Company was able to improve
its gross profit margin. The increase in the gross profit margin was
attributable to a favorable product mix during 2003 and the result of
adjustments the Company made over the last several quarters to its direct cost
structure, including renegotiating vendor rates and improving the efficiency of
its operating processes. Although the Company experienced a decrease in revenue
of $3.31 million as a result of the Company's improved margins, the decrease in
gross profit was $1.66 million.
Selling, general and administrative ("S, G & A") expenses decreased by $24,000
or less than 1.0%, from $29.19 million in 2002 to $29.17 million in 2003. The
change in S, G & A expenses includes increases in payroll and payroll-related
costs ("Payroll") of approximately $376,000. The increase in Payroll is
substantially the result of termination costs during 2003 ($430,000) and the
increase of Payroll related to Teletrax(TM), the Company's subsidiary, formed in
April 2002, ($661,000), net of savings of $715,000 from the Company's remaining
operations. Additionally, Teletrax(TM) had increases in other S, G & A expenses
of approximately $551,000 in 2003 as compared to 2002. Not including the
increases in S, G & A expenses relating to Teletrax(TM), the Company otherwise
reduced its S, G & A by approximately $952,000 in 2003 as compared to 2002,
including, but not limited to, savings in advertising and marketing, travel and
entertainment, rent and office costs.
In September 2003 the Company entered into an agreement to sublease excess
office space in its Norwalk, CT location. The sublease resulted in a $592,000
restructuring charge to operations in the 3rd quarter of 2003. The transaction
reduces S, G & A expenses by approximately $120,000 per annum through February
2008.
In August 2001 the Company received an unsolicited takeover bid by United
Business Media plc to purchase all of its issued and outstanding common shares.
In connection with this unsolicited offer the Company incurred legal and
financial advisory expenses of approximately $1.30 million for 2002. The
unsolicited offer is no longer active and the Company does not anticipate
incurring any additional costs.
13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Depreciation and amortization expense decreased by $157,000, or 6.0%, from $2.61
million in 2002 to $2.45 million in 2003. In 2002 a customer list, acquired in
conjunction with the acquisition of The Corporate TV Group, Inc. was fully
amortized. As a result, there was a decrease in amortization of $367,000.
Additionally, depreciation and amortization increased approximately $209,000 due
to current year fixed asset additions, substantially related to the roll out of
Teletrax(TM).
As a result of the foregoing, the Company experienced an operating loss of $2.56
million in 2003 as compared to an operating loss of $1.82 million in 2002. The
operating loss in 2003 includes a $592,000 restructuring charge related to the
sublease of excess office space and termination costs of approximately $430,000.
The operating loss in 2002 included advisory charges of $1.30 million.
Additionally, operating losses of $2.49 million and $875,000 in 2003 and 2002,
respectively, from the Company's 76% owned subsidiary, Teletrax(TM) are included
in operating losses. The minority shareholder of Teletrax(TM) has no future
funding obligations and, accordingly, the Company has recorded 100% of the loss
from this subsidiary.
Interest expense increased by $35,000 from $279,000 in 2002 to $314,000 in 2003.
The increase was due to increases in interest rates during 2003 on the Company's
line of credit facility, net of a decrease in interest expense due to lower
balances on the credit line, and interest on the Company's capitalized lease
obligations in 2003.
Income tax benefit was calculated using Medialink's effective tax rates of 41%
in both 2003 and 2002. In 2003 and 2002 the Company was also subject to minimum
state and local taxes and taxes on capital. Additionally, as a result of the
limited historical results of its UK operations, including Teletrax(TM) and
management's limited ability to project its UK future results, the Company has
recorded a valuation allowance of $833,000 related to the foreign deferred tax
asset generated by its UK losses. Recording the additional valuation allowance
and the minimum state and local taxes reduces the effective tax rates to less
than 5.3% and 7.2% in 2003 and 2002, respectively.
Including a loss from a joint venture of $316,000 and restructuring charge of
$592,000, the Company had a net loss of $2.69 million in 2003, as compared to a
net loss of $1.87 million in 2002, which included a loss from a joint venture of
$350,000 and advisory charges of $1.30 million. The net loss in 2003 and 2002
included losses of $2.48 million and $886,000, respectively, from Teletrax(TM).
The minority shareholder has no future funding obligations and, accordingly, the
Company has recorded 100% of the losses from this subsidiary. In 2003 the
Company had basic loss per share of $0.45 compared to basic loss per share of
$0.32 in 2002.
Fiscal Year 2002 as Compared to Fiscal Year 2001
Revenues decreased by $1.06 million, or 2.2%, from $48.42 million in 2001 to
$47.36 million in 2002. Revenue from the Company's Media Communications Services
decreased by $256,000, and the Company's Media Research Services revenue
decreased by $799,000. During 2002 the Company continued to be challenged by a
difficult economic environment, which had an adverse effect on the Company's
clients' spending and communication budgets, resulting in the decrease in
revenue as compared to 2001. Third party statistics, including various public
relations trade magazines, indicate that the overall industry declines in
revenue were greater than what the Company experienced.
14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Direct costs decreased by $1.96 million, or 11.1%, from $17.70 million in 2001
to $15.74 million in 2002. The decrease in direct costs is the result of lower
revenues and increased profit margins in 2002 as compared to 2001. Direct costs
as a percentage of revenue were 33.2% and 36.6%, respectively, in 2002 and 2001.
In spite of the difficult economic environment, the Company was able to improve
its gross profit margin. The increase in the gross profit margin was
attributable to a favorable product mix during 2002 and operating efficiencies
implemented during 2002.
Selling, general and administrative ("S, G & A") expenses decreased by $1.51
million or 4.9%, from $30.70 million in 2001 to $29.19 million in 2002. Included
in the decrease in S, G & A expenses is a decrease in payroll and related costs
of approximately $730,000. In reaction to the difficult economic environment and
the effects of September 11, 2001, the Company reduced its headcount in the 4th
Quarter of 2001 and produced other S, G & A savings, including, but not limited
to, advertising and marketing, travel and entertainment and office costs.
Offsetting these cost reductions, Teletrax(TM), the Company's subsidiary formed
in 2002, incurred $912,000 of S, G & A expenses during 2002.
During 2001 the Company sold a component of its UK photography business and as a
result incurred a loss from the sale of a subsidiary of $496,000.
During 2001 the Company combined its U.S. and international broadcast services
into a Global Broadcast Services unit. The corporate reorganization is designed
to accelerate the growth of its broadcast services business. The Company
incurred a charge of $420,000 as a result of the restructuring. Additionally, in
September 2001 the Company reduced its staff in the UK and US, incurring a
restructuring charge of $214,000.
In August 2001 the Company received an unsolicited takeover bid by United
Business Media plc to purchase all of its issued and outstanding common shares.
In connection with this unsolicited offer the Company incurred legal and
financial advisory expenses of approximately $1.30 million and $805,000, for
2002 and 2001, respectively. The unsolicited offer is no longer active and the
Company does not anticipate incurring any additional costs.
Depreciation and amortization expense decreased by $966,000, or 27%, from $3.57
million in 2001 to $2.61 million in 2002. The decrease was due primarily to the
elimination of amortization of goodwill as a result of the implementation of
SFAS 142, net of additional depreciation and amortization expense arising from
additions in property and equipment and capitalized software. Included in 2001
was amortization of goodwill of $875,000 and none for 2002. Additionally,
amortization on the Company's customer list, acquired in connection with the
acquisition of Corporate Television Group, which became fully amortized during
the 2nd Quarter of 2002, decreased $367,000 from $800,000 in 2001 to $433,000 in
2002.
As a result of the foregoing, the Company experienced an operating loss of $1.82
million in 2002 as compared to operating loss of $6.22 million in 2001. The
operating loss in 2002 included advisory charges of $1.30 million and an
operating loss of $875,000 from the Company's newly formed 76% owned subsidiary,
Teletrax(TM). The minority shareholder of Teletrax(TM) has no future funding
obligations and, accordingly, the Company has recorded 100% of the loss from
this subsidiary. The operating loss in 2001 included loss on sale of a
subsidiary of $496,000, restructuring charges of $634,000 and advisory charges
of $805,000.
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Interest expense increased by $6,000 from $273,000 in 2001 to $279,000 in 2002.
The increase was due to the Company's increased borrowings on its line of credit
during 2002 as compared to 2001, net of reduced interest rates during 2002.
Income tax expense (benefit) was calculated using Medialink's effective tax
rates of 41% in both 2002 and 2001. In 2002 the Company was also subject to
minimum state and local taxes and taxes on capital. Additionally, as a result of
the limited historical results of Teletrax(TM) and management's limited ability
to project Teletrax(TM)'s future results, the Company has recorded a valuation
allowance of $252,000 related to the foreign deferred tax asset generated by
Teletrax(TM)'s loss.
Including a loss from a joint venture of $350,000 and advisory charges of $1.30
million, the Company had a net loss of $1.87 million in 2002, as compared to a
net loss of $3.77 million in 2001, which included a loss from a joint venture of
$728,000, advisory charges of $805,000, loss on the sale of subsidiary of
$496,000 and restructuring charges of $634,000. The net loss in 2002 included a
loss of $886,000 from Teletrax(TM). The minority shareholder has no future
funding obligations and, accordingly, the Company has recorded 100% of the loss
from this subsidiary. In 2002 the Company had basic loss per share of $0.32
compared to basic loss per share of $0.65 in 2001.
Below is a table that presents our contractual obligations and commitments at
December 31, 2003:
Payments Due by Period (in thousands)
- ---------------------------- -------------- -------------- ------------- ------------ ----------------
One Year
Contractual Obligations Total Less than 1-3 years 4-5 years After 5 years
- ---------------------------- -------------- -------------- ------------- ------------ ----------------
Capital lease obligations $269 $96 $173 -- --
- ---------------------------- -------------- -------------- ------------- ------------ ----------------
Operating lease
obligations $17,125 $3,140 $8,947 $3,779 $1,259
- ---------------------------- -------------- -------------- ------------- ------------ ----------------
Total $17,394 $3,236 $9,120 $3,779 $1,259
======= ====== ====== ====== ======
- ---------------------------- -------------- -------------- ------------- ------------ ----------------
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors.
LIQUIDITY AND CAPITAL RESOURCES
Medialink has financed its operations primarily through cash generated from
operations and reliance on its line of credit facility. Cash flow provided by
operating activities amounted to $446,000 million and $3.95 million in 2003 and
2002, respectively. Capital expenditures which are primarily incurred to support
Medialink's sales and operations and the roll-out of the Teletrax(TM) network
were $1.71 million in 2003 and $1.35 million in 2002.
16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
On August 1, 1999 the Company entered into a joint venture with Business Wire to
form Business Wire/Medialink, LLC, doing business as Newstream.com. Each member
made an initial capital contribution of $2.00 million, plus acquisition costs.
The Company accounts for its interest in Newstream.com under the equity method.
Each member made additional capital contributions of $250,000 each during 2002.
During 2003 and 2002 the Company made various earn-out payments on acquisitions
aggregating $341,000 and $850,000, respectively, in cash. The Company has no
additional earn-out payments on its acquisitions.
In June 1997 Medialink acquired certain assets of CTV. The initial purchase
price of $4.18 million was paid $3.85 million in cash and $333,000 in Medialink
common stock. Included in the cash portion was $300,000 related to the purchase
of a non-compete. Earn-out provisions allowed for up to an additional $6.2
million to be paid through 2002, based upon certain revenue and profitability
targets over the next five years. Assuming the targets are met, the overall
consideration will be in the form of cash and Medialink common stock, as
specified in the agreement. During 2003 and 2002 Medialink made cash payments of
approximately $142,000 and $625,000, respectively, as additional consideration
for the CTV acquisition.
During 1999 the Company made an acquisition of a news-related company. As
consideration for this purchase, the Company paid $1.26 million in cash and
55,348 shares of the Company's common stock valued at $800,000. Earn-out
provisions allowed for additional payments of purchase price of up to $1.50
million, based on reaching certain profitability levels, to be paid in the form
of cash and the Company's common stock as specified in the agreement, over a
period of three years. Through December 31, 2003 $1.50 million of additional
consideration has been recorded under the earn-out provisions.
At December 31, 2003 the Company had no potential additional earn-out provisions
on any of its acquisitions.
The Company has a line of credit facility with a bank, allowing for borrowings
of up to $7.50 million through April 15, 2004. Loans under the Credit Facility
bear interest at the 30-Day LIBOR Rate (1.12% at December 31, 2003) plus 2.25%
through 3.25%, per annum, as defined. Covenants under the line of credit
agreement require the Company to meet certain financial ratios, including
minimum tangible net worth and minimum earnings before interest, taxes,
depreciation, amortization and other charges, as defined in the agreement. At
December 31, 2003 the Company was not in compliance with the minimum tangible
net worth covenant which has been waived by the lender through April 15, 2004
through the issuance of a forbearance. In conjunction with the forbearance, the
lender required the Company pay down its line of credit by $500,000, reduce the
maximum borrowings under the facility to $5.00 million and put into place
minimum cash balance and limits on capital expenditure covenants, as defined.
17
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Subsequent to December 31, 2003 the bank issued an additional forbearance (The
"Forbearance") expiring January 31, 2005. The Forbearance reduces the maximum
line to the lower of $4.00 million, $3.75 million, $3.50 million and $3.00
million at April 15, 2004, July 1, 2004, October 1, 2004 and December 31, 2004,
respectively, or 80% of eligible accounts receivable balances, as defined.
Interest under the Forbearance is payable monthly at the rate of the 30-Day
LIBOR Rate plus 5.5% per annum. Covenants under the Forbearance include limits
on capital expenditures, minimum earnings before interest, taxes, depreciation
and amortization and minimum tangible net worth, as defined in the agreement.
Additionally, the Forbearance requires the Company to obtain financing by
January 15, 2005 to support Teletrax(TM)'s operations.
As of December 31, 2003 Medialink had $3.71 million in cash and cash equivalents
as compared to $6.39 million as at December 31, 2002. As at December 31, 2003
and 2002, long-term debt, including current portion, was $269,000 and $331,000,
respectively.
The Company believes, based upon its 2004 financial forecast, that it has
sufficient capital resources, including availability under its line of credit
facility, alternate sources of funding, and cash flow from operations, to fund
its net cash needs for at least the next twelve months. The Company also
believes that in the event that actual 2004 revenues are lower than its forecast
that the Company's Direct, Selling, General and Administrative costs can be
reduced to minimize the effect on forecasted profit.
RISK FACTORS
Major News Events
Events which dominate news broadcasts, such as the events of September 11th or
the involvement by the United States in a war, may cause the Company's clients
to delay or not use the Company's services for a particular project as such
clients may determine that their messages may not receive adequate attention in
light of the coverage of other news events. Such circumstances could have a
material adverse effect on the Company's business, operating results and
financial condition.
Susceptibility to General Economic Conditions
The Company's revenues are affected by its clients' marketing communications
spending and advertising budgets. The Company's revenues and results of
operations may be subject to fluctuations based upon general economic conditions
in the geographic locations where it offers its services or distributes its
material. If there were to be continued economic downturn or a continued
recession in these geographic locations, then the Company expects that business
enterprises, including its clients and potential clients, could substantially
and immediately reduce their marketing and communications budgets. In the event
of such an economic climate, there would be a material adverse effect on the
Company's business, operating results, financial condition and ability to
refinance its existing line of credit agreement.
18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Competition
The markets for the Company's services are highly competitive. The principal
competitive factors affecting the Company are effectiveness, reliability, price,
technological sophistication and timeliness. Numerous specialty companies
compete with the Company in each of its service lines although no single company
competes across all service lines. Some of the Company's competitors or
potential competitors have longer operating histories, longer client
relationships and significantly greater financial, management, technological,
sales, marketing and other resources than the Company. In addition, clients
could perform internally all or certain of the services provided by the Company
rather than outsourcing such services. The Company could face competition from
companies in related communications markets which could offer services that are
similar or superior to those offered by the Company. In addition, national and
regional telecommunications providers could enter the market with materially
lower electronic delivery costs, and radio and television networks could also
begin transmitting business communications separate from their news programming.
The Company's ability to maintain and attract clients depends to a significant
degree on the quality of services provided and its reputation among its clients
and potential clients as compared to that of its competitors. There can be no
assurance that the Company will not face increased competition in the future or
that such competition will not have a material adverse effect on the Company's
business, operating results and financial condition.
New Services
The Company must develop new services to remain competitive, maintain or grow
market share and to operate in new markets. There can be no assurance that the
Company will be successful in developing new services, or that those new
services will meet customer needs. As a result of the expenses incurred in
developing new services and the potential inability of the Company to market
these services successfully, the Company's operating results may be negatively
affected.
Provisions of Our Charter Documents May Have Anti-takeover Effects that Could
Prevent a Change in Control Even if the Change in Control Would be Beneficial to
our Stockholders Provisions of our amended and restated certificate of
incorporation, by-laws and Delaware law could make it more difficult for a third
party to acquire the Company, even if doing so would be beneficial to our
stockholders.
Line of credit
The Company has a line of credit facility with a bank, allowing for borrowings
of up to $7.50 million through April 15, 2004. Loans under the Credit Facility
bear interest at the 30-Day LIBOR Rate (1.12% at December 31, 2003) plus 2.25%
through 3.25%, per annum, as defined. Covenants under the line of credit
agreement require the Company to meet certain financial ratios, including
minimum tangible net worth and minimum earnings before interest, taxes,
depreciation, amortization and other charges, as defined in the agreement. At
December 31, 2003 the Company was not in compliance with the minimum tangible
net worth covenant which has been waived by the lender through April 15, 2004
through the issuance of a forbearance. In conjunction with the forbearance, the
lender required the Company pay down its line of credit by $500,000, reduce the
maximum borrowings under the facility to $5.00 million and put into place
minimum cash balance and limits on capital expenditure covenants, as defined.
19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Subsequent to December 31, 2003 the bank issued an additional forbearance (The
"Forbearance") expiring January 31, 2005. The Forbearance reduces the maximum
line to the lower of $4.00 million, $3.75 million, $3.50 million and $3.00
million at April 15, 2004, July 1, 2004, October 1, 2004 and December 31, 2004,
respectively, or 80% of eligible accounts receivable balances, as defined.
Interest under the Forbearance is payable monthly at the rate of the 30-Day
LIBOR Rate plus 5.5% per annum. Covenants under the Forbearance include limits
on capital expenditures, minimum earnings before interest, taxes, depreciation
and amortization and minimum tangible net worth, as defined in the agreement.
Additionally, the Forbearance requires the Company to obtain financing by
January 15, 2005 to support Teletrax(TM)'s operations.
While management believes the Company is currently in compliance with the
covenants under the line of credit agreement and related forbearance agreement,
there can be no assurance that the Company will continue to be in compliance in
the future. In that event, the Company may be required to raise additional funds
in order to repay the outstanding balance under the line of credit and there can
be no assurance that, if required, the Company would be able to raise such funds
on favorable terms, if at all.
Capital Requirements
One or more of our businesses could require, or benefit from, additional
investment beyond our current capability. Such additional funding could be
raised by the Company, or one or more of its business units separately, and
could have the effect of diluting shareholders' interests.
Other Risk Factors
Other risk factors include our recent history of losses, our ability to achieve
or maintain profitability, effectiveness of our cost reduction programs, our
ability to develop new services and market acceptance of such services, such as
Teletrax(TM), our ability to develop new products and services that keep pace
with technology, our ability to develop and maintain successful relationships
with critical vendors, the potential negative effects of our international
operations on the Company. In addition, future acquisitions or divestitures and
the absence of long term contracts with customers and vendors may adversely
effect our operations and have an adverse effect on pricing, revenues, gross
margins and our customer base.
CRITICAL ACCOUNTING POLICIES
We have identified the policies below as significant to our business operations
and the understanding of our results of operations. The impact and any
associated risks related to these policies on our business operations is
discussed throughout Management's Discussion and Analysis of Financial Condition
and Results of Operations where such policies affect our reported and expected
financial results. For a detailed discussion on the application of these and
other accounting policies, see Note 1 in the Notes to the Consolidated Financial
Statements in the Company's Form 10-K for the year ended December 31, 2003.
20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Revenue Recognition
Revenue earned from the distribution and monitoring of video news releases and
the distribution of printed news releases is recognized in the period that the
release is distributed. Fees earned for webcasts, satellite media tours and
other live events and the production of video news releases and still
photographs are recognized in the period that the services are performed. Fees
earned from research services are recognized using the percentage of completion
method. Invoices to clients are generated in accordance with the terms of the
applicable contract, which may not be directly related to the performance of
services. Unbilled receivables are invoiced based upon the achievement of
specific events as defined by each agreement including deliverables, timetables
and incurrence of certain costs. Unbilled receivables are classified as a
current asset. Advanced billings to clients in excess of revenue earned are
recorded as deferred revenues and are classified as a current liability.
Allowance for Doubtful Accounts
Management must make estimates of the uncollectibility of the Company's accounts
receivable. Management specifically analyzes accounts receivable, historical bad
debt, customer concentrations, customer creditworthiness and current trends when
evaluating the adequacy of the allowance for doubtful accounts.
Goodwill and Intangible Assets
Goodwill represents the excess of purchase price and related costs over the
value assigned to the net tangible and intangible assets of businesses acquired.
In 2001 and 2000, goodwill was amortized on a straight-line basis over its
expected useful life, not to exceed 40 years, and we periodically reviewed the
recoverability of goodwill and intangible assets. Effective January 1, 2002, we
adopted the provisions of Financial Accounting Standards Board (FASB) Statement
of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible
Assets, which required us to cease amortizing goodwill and to assess goodwill
for impairment at least annually in the absence of an indicator of possible
impairment and immediately upon an indicator of possible impairment. The annual
impairment testing required by SFAS No. 142 also requires the Company to use its
judgment and could require the Company to write down the carrying value of its
goodwill and other intangible assets in future periods.
Other intangible assets, including customer lists and covenants not to compete,
are being amortized on a straight-line basis over the term of the agreement or
the estimated future period of benefit, which ranges from 3 to 7 1/2 years.
The agreements pursuant to which the Company acquired certain companies include
provisions that could require the Company to issue additional cash or shares of
common stock if certain performance targets are met. The value of any such
additional consideration will be added to the goodwill related to such
acquisition.
21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
Long-lived Assets
Long-lived assets, such as property, plant, and equipment, and purchased
intangibles subject to amortization, are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to estimated undiscounted future
cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated future cash flows, an impairment charge is
recognized by the amount by which the carrying amount of the asset exceeds the
fair value of the asset. Assets to be disposed of would be separately presented
in the balance sheet and reported at the lower of the carrying amount or fair
value less costs to sell and are no longer depreciated. The assets and
liabilities of a disposed group classified as held for sale would be presented
separately in the appropriate asset and liability sections of the balance sheet.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and for operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. We
considered all of the available evidence to arrive at our position on the net
deferred tax assets; however, should circumstances change which would alter our
judgment in this regard it may have an impact on future operating results.
EFFECTS OF NEWLY-ISSUED ACCOUNTING STANDARDS
In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities", and amended the interpretation
with FIN 46(R) in December 2003. This interpretation and its amendment set forth
a requirement for an investor with a majority of the variable interests in a
variable interest entity ("VIE") to consolidate the entity and also requires
majority and significant variable interest investors to provide certain
disclosures. A VIE is an entity in which the equity investors do not have a
controlling interest, or the equity investment at risk is insufficient to
finance the entity's activities without receiving additional subordinated
financial support from the other parties. The provisions of FIN 46 were
effective immediately for all arrangements entered into with new VIEs created
after January 31, 2003. The Company has not entered into any arrangements with
VIEs after January 31, 2003. For arrangements entered into with VIEs created
prior to January 31, 2003, the provisions of FIN 46 have been delayed to the
first interim or annual period beginning after December 15, 2003. The Company
has evaluated the impact of adoption of FIN 46(R) for its arrangements created
before January 31, 2003. The adoption of this standard is not expected to impact
the Company's financial statements.
22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (continued)
In May 2003, the FASB issued Statement of Financial Accounting Standard No. 150
("SFAS 150"), "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity", which establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity. The provisions of SFAS 150 are effective
immediately for all instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The adoption of this standard did not have an effect on the
Company's financial statements.
INFLATION
Inflation has not had, nor does the Company anticipate it having, a significant
impact on the Company's current and future operations.
FOREIGN CURRENCY
The conversion of various European currencies to the Euro has not had, nor does
the Company anticipate it having, a significant impact on the Company's current
and future operations.
23
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Debt
The Company has a line of credit agreement which exposes the Company to the risk
of earnings or cash flow loss due to changes in market interest rates. At
December 31, 2003, $5.00 million was outstanding on the line of credit. The
interest rate on the facility is based upon the 30-day LIBOR rate (1.12% at
December 31, 2003) plus a margin, as defined. All other Company debt is
fixed-rate and, therefore, does not expose the Company to the risk of earnings
or cash flow loss due to changes in market interest rate.
Foreign Currency Exchange Rate Risk
In the normal course of business, through its UK operations, the Company is
exposed to the effect of foreign exchange rate fluctuations on the United States
dollar value of its foreign subsidiaries' results of operations and financial
condition. At December 31, 2003, the Company's primary foreign currency market
exposure was the British pound.
24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following audited consolidated financial statements and related report are
set forth in this Annual Report on Form 10-K on the following pages:
Independent Auditors' Report F-1
Consolidated Balance Sheets as of December 31, 2003 and F-2
December 31, 2002
Consolidated Statements of Operations for the Years Ended December 31,
2003, December 31, 2002 and December 31, 2001 F-3
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2003, December 31, 2002 and December 31, 2001 F-4
Consolidated Statements of Cash Flows for the Years Ended December 31,
2003, December 31, 2002 and December 31, 2001 F-5
Notes to Consolidated Financial Statements F-6
25
Independent Auditors' Report
----------------------------
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, 2003 and 2002, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
2003. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2003 and 2002, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.
As discussed in note 1, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangibles Assets", as of January 1,
2002.
/S/ KPMG LLP
New York, New York
February 24, 2004, except for note 4, which is as of April 14, 2004
F-1
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2003 and 2002
2003 2002
---- ----
ASSETS
Current Assets:
Cash and cash equivalents ........................................ $ 3,708,130 $ 6,389,650
Accounts receivable, net of allowance for doubtful accounts of
$683,420 and $655,417 .......................................... 7,225,166 6,571,226
Prepaid expenses and other current assets ........................ 2,183,011 2,101,334
Prepaid and refundable taxes ..................................... 690,657 2,269,804
Deferred tax assets .............................................. 199,000 199,000
------------ ------------
Total current assets ......................................... 14,005,964 17,531,014
------------ ------------
Property and equipment, net ......................................... 5,800,070 5,889,840
Goodwill, net of accumulated amortization of $2,467,381 ............. 13,234,051 12,854,121
Customer list and other intangibles,net of accumulated amortization
of $4,440,485 and $4,360,488 ...................................... 59,515 139,512
Investment in joint venture ......................................... 365,483 681,604
Deferred tax assets ................................................. 1,805,000 1,655,000
Other assets ........................................................ 1,441,802 1,892,243
------------ ------------
Total assets ................................................. $ 36,711,885 $ 40,643,334
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of obligations under capital leases and long term
debt ........................................................... $ 96,248 $ 113,773
Borrowings on credit facilities .................................. 5,500,000 6,536,665
Accounts payable ................................................. 1,692,713 2,203,436
Accrued expenses and other current liabilities ................... 3,948,809 4,368,712
------------ ------------
Total current liabilities .................................... 11,237,770 13,222,586
Obligations under capital leases, net of current portion ............ 173,000 217,000
Other long term liabilities ......................................... 503,336 --
------------ ------------
Total liabilities ............................................ 11,914,106 13,439,586
------------ ------------
Stockholders' Equity:
Common stock; $.01 par value. Authorized 15,000,000 shares; issued
6,040,173 shares in 2003 and 5,947,036 shares in 2002 ........ 60,401 59,470
Additional paid-in capital ....................................... 25,047,284 24,768,762
Retained earnings ................................................ 238,477 2,930,754
Accumulated other comprehensive loss ............................. (348,449) (355,304)
------------ ------------
24,997,713 27,403,682
------------ ------------
Less common stock in treasury (at cost, 57,124 shares) ........... (199,934) (199,934)
------------ ------------
Total stockholders' equity ................................... 24,797,779 27,203,748
------------ ------------
Total liabilities and stockholders' equity ................... $ 36,711,885 $ 40,643,334
============ ============
See accompanying notes to consolidated financial statements
F-2
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2003, 2002 and 2001
2003 2002 2001
---- ---- ----
Revenues ................................... $ 44,053,584 $ 47,364,720 $ 48,420,133
Direct costs ............................... 14,086,986 15,735,836 17,697,753
------------ ------------ ------------
Gross Profit .......................... 29,966,598 31,628,884 30,722,380
Operating expenses:
Selling, general and administrative expenses 29,165,257 29,189,674 30,703,302
Depreciation and amortization .............. 2,448,483 2,605,804 3,571,943
Loss from joint venture .................... 316,121 350,000 728,268
Loss on sale of subsidiary ................. -- -- 495,905
Restructuring charges ...................... 592,000 -- 634,000
Advisory charges ........................... -- 1,300,000 804,626
------------ ------------ ------------
Total Operating Expenses ................... 32,521,861 33,445,478 36,938,044
------------ ------------ ------------
Operating loss ........................ (2,555,263) (1,816,594) (6,215,664)
Interest expense ........................... (314,211) (279,206) (273,383)
Interest income ............................ 27,197 81,110 141,568
------------ ------------ ------------
Loss before income taxes .............. (2,842,277) (2,014,690) (6,347,479)
Income tax benefit ......................... (150,000) (145,980) (2,574,000)
------------ ------------ ------------
Net loss .............................. $ (2,692,277) $ (1,868,710) $ (3,773,479)
============ ============ ============
Basic and diluted loss per share ...... $ (0.45) $ (0.32) $ (0.65)
============ ============ ============
See accompanying notes to consolidated financial statements
F-3
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years Ended December 31, 2003, 2002 and 2001
Accumulated Other
Common stock Comprehensive
------------------------------ Additional Loss - Foreign
Number of Paid-In Retained Currency Translation
Shares Par Value Capital Earnings Adjustment
--------------------------------------------------------------------------------------
Balance at January 1, 2001 .............. 5,751,693 $ 57,517 $ 24,138,687 $ 8,572,943 $ (199,474)
Comprehensive income:
Net loss .............................. -- -- -- (3,773,479) --
Foreign currency translation adjustment -- -- -- -- (21,775)
Total comprehensive loss ........... (3,795,254)
Stock options exercised ................. 42,320 423 121,240 -- --
Issuances of common stock in connection
with acquisitions of businesses ...... 26,701 267 149,733 -- --
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2001 ............ 5,820,714 58,207 24,409,660 4,799,464 (221,249)
Comprehensive income:
Net loss .............................. -- -- -- (1,868,710) --
Foreign currency translation adjustment -- -- -- -- (134,055)
Total comprehensive loss ........... (2,002,765)
Stock options exercised ................. 700 7 1,958 -- --
Issuances of common stock in connection
with acquisitions of businesses ...... 125,622 1,256 357,144 -- --
Treasury Stock Transaction .............. -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2002 ............ 5,947,036 59,470 24,768,762 2,930,754 (355,304)
Comprehensive income:
Net loss .............................. -- -- -- (2,692,277) --
Foreign currency translation adjustment -- -- -- -- 6,855
Total comprehensive loss ........... (2,685,422)
Stock options exercised ................. 1,600 16 4,160 -- --
Issuances of common stock in connection
with acquisitions of businesses ...... 91,537 915 274,362 -- --
------------ ------------ ------------ ------------ ------------
Balance at December 31, 2003 ............ 6,040,173 $ 60,401 $ 25,047,284 $ 238,477 $ (348,449)
============ ============ ============ ============ ============
Common Total
Stock in Stockholders'
Treasury Equity
------------------------------
Balance at January 1, 2001 .............. $ -- $ 32,569,673
Comprehensive income:
Net loss .............................. -- (3,773,479)
Foreign currency translation adjustment -- (21,775)
------------
Total comprehensive loss ........... -- --
Stock options exercised ................. -- 121,663
Issuances of common stock in connection
with acquisitions of businesses ...... -- 150,000
------------ ------------
Balance at December 31, 2001 ............ -- 29,046,082
Comprehensive income:
Net loss .............................. -- (1,868,710)
Foreign currency translation adjustment -- (134,055)
------------
Total comprehensive loss ...........
Stock options exercised ................. -- 1,965
Issuances of common stock in connection
with acquisitions of businesses ...... -- 358,400
Treasury Stock Transaction .............. (199,934) (199,934)
------------ ------------
Balance at December 31, 2002 ............ (199,934) 27,203,748
Comprehensive income:
Net loss .............................. -- (2,692,277)
Foreign currency translation adjustment -- 6,855
------------
Total comprehensive loss ...........
Stock options exercised ................. -- 4,176
Issuances of common stock in connection
with acquisitions of businesses ...... -- 275,277
------------ ------------
Balance at December 31, 2003 ............ $ (199,934) $ 24,797,779
============ ============
See accompanying notes to consolidated financial statements
F-4
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2003, 2002 and 2001
2003 2002 2001
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................................ $(2,692,277) $(1,868,710) $(3,773,479)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ........................................... 2,448,483 2,605,804 3,571,943
Allowance for doubtful accounts ......................................... 28,003 299,177 (111,252)
Loss on sale of subsidiary .............................................. -- -- 495,905
Deferred income taxes ................................................... (150,000) 245,000 (900,000)
Equity loss from joint venture .......................................... 316,121 350,000 728,268
Restructuring charge .................................................... 592,000 -- 634,000
Changes in assets and liabilities, net of acquisitions:
Accounts receivable ..................................................... (675,087) 1,255,938 5,254,109
Other assets ............................................................ (119,560) (642,848) (645,199)
Prepaid expenses and other current assets ............................... (81,677) 334,005 (263,908)
Prepaid and refundable income taxes ..................................... 1,579,147 (526,145) (1,743,659)
Accounts payable and accrued expenses ................................... (713,284) 1,895,598 (1,364,740)
Other liabilities ....................................................... (85,664)
Income taxes payable .................................................... -- -- (1,312,628)
----------- ----------- -----------
Net cash provided by operating activities .......................... 446,205 3,947,819 569,360
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid on acquisitions ............................................... (341,231) (850,000) (1,058,600)
Capital contribution in joint venture ................................... -- (250,000) (500,000)
Cash received for sale of subsidiary, net of cash included in assets sold -- -- 29,908
Purchases of property and equipment ..................................... (1,708,714) (1,353,126) (2,187,756)
----------- ----------- -----------
Net cash used in investing activities .............................. (2,049,945) (2,453,126) (3,716,448)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances on line of credit .............................................. 267,389 267,984 4,268,681
Payments on line of credit .............................................. (1,304,054) -- --
Proceeds from the issuance of common stock in connection
with the exercise of stock options .................................... 4,176 1,965 121,663
Repayments of long term debt ............................................ (45,291) (55,067) (105,438)
----------- ----------- -----------
Net cash provided by (used in) financing activities ................ (1,077,780) 214,882 4,284,906
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents ............... (2,681,520) 1,709,575 1,137,818
Cash and cash equivalents at the beginning of year ........................... 6,389,650 4,680,075 3,542,257
----------- ----------- -----------
Cash and cash equivalents at end of year ..................................... $ 3,708,130 $ 6,389,650 $ 4,680,075
=========== =========== ===========
See accompanying notes to consolidated financial statements
F-5
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Description of Business and Basis of Presentation
Medialink Worldwide Incorporated (the "Company") is a provider of worldwide
video and audio production and distribution services and public relations
research services for businesses and other organizations that seek to
communicate and evaluate their news through television, radio, the Internet and
other media. Additionally, through its subsidiary, Teletrax, Ltd., the Company
is deploying a global video tracking, and monitoring system. The Company, a
Delaware corporation formed on September 24, 1986, is headquartered in New York
with offices in the United States and the United Kingdom.
The consolidated financial statements include the accounts of Medialink
Worldwide Incorporated, its wholly owned subsidiaries and its 76% owned
subsidiary, Teletrax, Ltd. All significant intercompany transactions and
balances have been eliminated in consolidation.
Revenue Recognition
Revenue earned from the distribution and monitoring of video news releases and
the distribution of printed news releases is recognized in the period that the
release is distributed. Fees earned for webcasts, satellite media tours and
other live events and the production of video news releases and still
photographs are recognized in the period that the services are performed. Fees
earned from research services are recognized using the percentage of completion
method. Fees earned from Teletrax(TM) are recognized over the period of service.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions by
management related to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities. Actual results could differ from these
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a maturity of
three months or less, to be cash equivalents.
Property and Equipment
Property and equipment, recorded at cost, is depreciated on a straight-line
basis over the estimated useful lives of the assets. Leasehold improvements are
amortized on a straight-line basis over the shorter of the lease term or the
estimated useful life of the asset. The following estimated useful lives are
used for financial statement purposes:
Office equipment 3-5 years
Furniture and fixtures 10 years
Leasehold improvements 5 to 10 years
F-6
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Goodwill and Intangible Assets
Goodwill represents the excess of purchase price and related costs over the
value assigned to the net tangible and intangible assets of businesses acquired.
In 2001, goodwill was amortized on a straight-line basis over its expected
useful life, not to exceed 40 years, and the Company periodically reviewed the
recoverability of goodwill and intangible assets. Effective January 1, 2002, the
Company adopted the provisions of Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, which required us to cease amortizing goodwill and to assess
goodwill for impairment at least annually in the absence of an indicator of
possible impairment and immediately upon an indicator of possible impairment.
The annual impairment testing required by SFAS No. 142 also requires the Company
to use its judgment and could require the Company to write down the carrying
value of its goodwill and other intangible assets in future periods.
Other intangible assets, including customer lists and covenants not to compete,
are being amortized on a straight-line basis over the term of the agreement or
the estimated future period of benefit, which ranges from 3 to 7 1/2 years.
The agreements pursuant to which the Company acquired certain companies include
provisions that could require the Company to issue additional cash or shares of
common stock if certain performance targets are met. The value of any such
additional consideration will be added to the goodwill related to such
acquisition.
Long-lived Assets
In accordance with SFAS 144, long-lived assets, such as property, plant, and
equipment, and purchased intangibles subject to amortization, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to estimated undiscounted future cash flows expected to be generated by the
asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. Assets to be disposed
of would be separately presented in the balance sheet and reported at the lower
of the carrying amount or fair value less costs to sell and are no longer
depreciated. The assets and liabilities of a disposed group classified as held
for sale would be presented separately in the appropriate asset and liability
sections of the balance sheet.
Major Customers
Revenues from one customer amounted to approximately 14%, 14% and 11% of total
revenues in 2003, 2002 and 2001, respectively.
Investments in Affiliates
The Company accounts for its investments in affiliates in which it owns between
20% and 50% of the voting stock and possesses significant influence over the
affiliate under the equity method. Investments in affiliates are reviewed for
impairment whenever events or changes in circumstances indicate that the fair
value of an investment is less than its carrying amount, and when such a loss in
value is determined to be other than temporary.
F-7
Foreign Currency Translation
The financial position and results of operations of the Company's UK
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of the entities have been translated at exchange rates on
the balance sheet date, and related revenue and expenses have been translated at
average monthly exchange rates. The aggregate effect of translation adjustments
is reflected as a separate component of shareholders' equity in accumulated
other comprehensive loss until there is a sale or liquidation of the underlying
foreign investment.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and for operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
Fair Value of Financial Instruments
The carrying amounts of cash, receivables, accounts payable, accrued liabilities
and borrowings on line of credit facility approximate fair value because of the
short maturity of these instruments. The carrying amounts of long-term debt
approximate fair value as the effective rates for these instruments are
comparable to market rates at year-end.
Reclassifications
For comparability, certain 2002 amounts have been reclassified, where
appropriate, to conform to the financial statement presentation used in 2003.
Earnings per Share
Basic loss per share ("EPS") is computed by dividing net loss attributable to
common stock by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution from the exercise or
conversion of securities to common stock. For the year ended December 31, 2003,
2002 and 2001 the Company had common stock equivalents of 50,083, 64,349 and
32,075, respectively, related to stock options that were not included in the
computation of EPS because they were antidilutive. Weighted average shares
outstanding used for computing EPS for the years ended December 31, 2003, 2002
and 2001 are as follows:
Weighted Average Shares Outstanding 2003 2002 2001
- ----------------------------------- ---- ---- ----
Basic and diluted 5,955,779 5,909,312 5,797,679
F-8
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Stock-Based Compensation
In 2003, 2002, and 2001, the Company had two stock option plans, which are
described more fully in Note 7. As allowed by SFAS No. 123, Accounting for
Stock-Based Compensation, as amended by SFAS No. 148, the Company has retained
the compensation measurement principles of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and its related
interpretations for stock options. Under APB Opinion No. 25, compensation
expense is recognized based upon the difference, if any, at the measurement date
between the market value of the stock and the option exercise price. The
measurement date is the date at which both the number of options and the
exercise price for each option are known.
If the Company had elected to recognize compensation cost at the grant date,
based on the fair value of the options granted, in 2003, 2002 and 2001, as
prescribed by SFAS 123, the Company's net loss and loss per share for the years
ended December 31, 2003, 2002 and 2001 would approximate the pro forma amounts
as indicated below:
For the year ended December 31,
-------------------------------
2003 2002 2001
---- ---- ----
Net loss - as reported $(2,692,277) $(1,868,710) $(3,773,479)
Deduct: total stock-based
employee compensation expense
determined under the fair
value method, net of related tax
effects (259,000) (110,000) (64,200)
----------- ----------- -----------
Net loss - pro forma $(2,951,277) $(1,978,710) $(3,837,679)
=========== =========== ===========
Basic and diluted EPS - as reported $ (.45) $ (.32) $ (.65)
Basic and diluted EPS - pro forma $ (.50) $ (.33) $ (.66)
The fair value of each grant is estimated using the Black-Scholes Option Pricing
Model with the following assumptions: dividend yield of 0% for all grants,
expected volatility of 5% for 2003, 10% for 2002 and 71% for 2001 grants, risk
free interest rates of 4.25% for 2003, 4.25% for 2002 and 4.50% for 2001 grants
and expected lives of 5 years for all grants.
Liquidity
The Company has suffered recurring losses for the three-year period ended
December 31, 2003. At December 31, 2003, the Company was not in compliance with
the minimum tangible net worth covenant under the Company's line of credit
agreement, which was waived by the lender through April 15, 2004 through the
issuance of a forbearance. The forbearance was extended through January 31,
2005. The covenants under the forbearance are discussed further in note 4. Based
on its 2004 projections, management anticipates that it will remain in
compliance with these revised covenants. Should the company be unable to meet
its projections, management will take appropriate measures in the second
quarter, which could include seeking alternative sources of funding, including
the factoring of receivables or headcount reductions.
F-9
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
EFFECTS OF RECENTLY ADOPTED ACCOUNTING STANDARDS
In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations," which is effective January 1, 2003. SFAS 143 addresses the
financial accounting and reporting for obligations and retirement costs related
to the retirement of tangible long-lived assets. The adoption of SFAS 143 did
not have a significant impact on the Company's financial statements.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS
No. 145, which is effective for fiscal years beginning after May 15, 2002,
provides guidance for income statement classification of gains and losses on
extinguishment of debt and accounting for certain lease modifications that have
economic effects that are similar to sale-leaseback transactions. The adoption
of this statement did not have a significant impact on our consolidated
financial statements.
In July 2002, SFAS 146, "Accounting for Costs Associated with Exit or Disposal
Activities" was issued. This Statement addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force Issue ("EITF") 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The principal difference
between SFAS 146 and EITF 94-3 relates to the timing of liability recognition.
Under SFAS 146, a liability for a cost associated with an exit or disposal
activity is recognized when the liability is incurred. Under EITF 94-3, a
liability for an exit cost was recognized at the date of an entity's commitment
to an exit plan. The provisions of SFAS 146 are effective for exit or disposal
activities that are initiated after December 31, 2002. The adoption of this
statement did not have a significant impact on the Company's financial position
or results of operations.
In November 2002, the FASB issued FIN 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others." FIN 45 elaborates on the existing disclosure requirements for most
guarantees, including residual value guarantees issued in conjunction with
operating lease agreements. It also clarifies that at the time a company issues
a guarantee, the company must recognize an initial liability for the fair value
of the obligation it assumes under that guarantee and must disclose that
information in its interim and annual financial statements. The initial
recognition and measurement provisions apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN 45 did not have a
significant impact on our financial position and results of operations.
2. Property and Equipment
Property and equipment, at cost, consists of:
December 31,
2003 2002
---- ----
Office equipment and software $9,573,474 $7,472,254
Furniture and fixtures 1,406,316 1,409,793
Leasehold improvements 3,744,499 3,696,943
14,724,289 12,578,990
Less accumulated depreciation
and amortization (8,924,219) (6,689,150)
---------- ----------
Property and equipment, net $5,800,070 $5,889,840
========== ==========
Depreciation and amortization expense was $2,164,484 and $1,590,951 the years
ended December 31, 2003 and 2002, respectively.
F-10
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. Business Transactions
(a) Acquisitions, Goodwill and Other Intangibles
On June 16, 1997 the Company acquired certain assets of Corporate TV Group, Inc.
("CTV"), a provider of strategic video communications to corporations and other
organizations for internal and external audiences. As consideration for the
purchase, the Company paid $3.55 million in cash and issued 37,037 shares of the
Company's common stock valued at $333,333. Earn-out provisions allow for up to
an additional $6.2 million to be paid based upon certain revenue and
profitability targets through 2002. Assuming the targets are met, the additional
consideration will be paid in the form of cash and the Company's common stock,
as specified in the agreement. Through December 31, 2003 approximately $6.02
million of additional consideration has been recorded under the earn-out
provision. Additionally, in connection with this acquisition, the Company paid
$300,000 to the stockholder of CTV for a non-compete agreement which expires in
2004. This amount has been recorded as an intangible asset and is being
amortized using the straight-line method over the term of the agreement.
During 1999 the Company made an acquisition of a news-related company. As
consideration for this purchase, the Company paid $1.26 million in cash and
55,348 shares of the Company's common stock valued at $800,000. Earn-out
provisions allow for additional payments of purchase price of up to $1.50
million, based on reaching certain profitability levels, to be paid in the form
of cash and the Company's common stock as specified in the agreement, over a
period of three years. Through December 31, 2003 $1.50 million of additional
consideration has been recorded under the earn-out provisions. Additionally, in
connection with acquisition, the Company entered into covenants not to compete
with two of the significant shareholders with terms of five years.
Two executive officers of the Company had an interest in one of the acquisitions
aggregating approximately 20%. In order to avoid an apparent conflict of
interest, an independent member of the Board of Directors and an independent
employee negotiated the agreement.
At December 31, 2003 there were no potential additional earn-out provisions
outstanding on any of the Company's acquisitions.
All of the above acquisitions have been accounted for under the purchase method
of accounting and the results of operations of the acquisitions have been
included in the consolidated statements of operations from the dates of
acquisition. As of December 31, 2003 the aggregate purchase price, including
acquisition costs and amounts paid as a result of earn-out agreements, exceeded
the estimated fair value of the total net assets acquired by $19.70 million for
all of the acquisitions. Of this amount $4 million has been allocated to
customer lists and has been fully amortized and $15.70 million has been
allocated to goodwill.
In March 2001 the Company sold a component of its UK photography business and as
a result incurred a loss from the sale of a subsidiary amounting to
approximately $496,000.
F-11
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company adopted SFAS No. 142, on January 1, 2002. This standard prescribes
the accounting treatment for both identifiable intangibles and goodwill after
initial recognition. Upon adoption of the standard, amortization of goodwill and
indefinite life intangibles ceased and accumulated amortization as of December
31, 2001 reduced the carrying value of these assets. Periodic impairment testing
of these assets is now required. Definite life intangibles continue to be
amortized over their useful lives.
As of January 1, 2002, the date of adoption, the Company had unamortized
goodwill and other intangible assets in the amount of $11.58 million, which was
subject to the transition provisions of SFAS 141 and SFAS 142. Amortization
expense related to goodwill and other intangible assets of continuing operations
was $1.91 million for the year ended December 31, 2001.
The following provides pro-forma information as if the financial statements in
all periods presented were accounted for in accordance with SFAS 142:
For the Year Ended December 31,
------------------------------
2003 2002 2001
---- ---- ----
Reported net loss $(2,692,277) $(1,868,710) $(3,773,479)
Add back: Goodwill amortization -- -- 874,654
----------- ----------- -----------
Adjusted net loss $(2,692,277) $(1,868,710) $(2,898,825)
=========== =========== ===========
Reported basic loss per share $(0.45) $(0.32) $(0.65)
Add back: Goodwill amortization -- -- 0.15
------ ------ ------
Adjusted basic loss per share $(0.45) $(0.32) $(0.50)
====== ====== ======
F-12
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Intangible assets consist of the following:
December 31, 2003 December 31, 2002
---------------------------------- -----------------------------------
(in thousands) (in thousands)
Gross Gross
Amortization Carrying Accumulated Carrying Accumulated
Period Amount Amortization Net Amount Amortization Net
------ ------ ------------ --- ------ ------------ ---
Customer List 5 years $4,000 $(4,000) $ -- $4,000 $(4,000) $ --
Non-competes 4-7.5 years 500 (440) 60 500 (360) 140
------ ------- ----- ------ ------- ------
Total $4,500 $(4,440) $60 $4,500 $(4,360) $ 140
====== ======= ===== ====== ======= ======
Aggregate amortization expense for the years ended December 31, 2003 and 2002
was $79,997 and $490,196, respectively.
Estimated future amortization expense is as follows:
For the year ended December 31, 2004 $60,000
-------
Total estimated amortization $60,000
=======
(b) Joint Venture
On August 1, 1999 the Company entered into a joint venture with Business Wire to
form Business Wire/Medialink, LLC ("Newstream"), for the purpose of connecting
its clients to multimedia Internet news sites as Newstream.com. The Company,
which has a 50% interest in the joint venture, accounts for its interest in
Newstream under the equity method, as it does not have a controlling interest in
the entity. During 2002 and 2001 each member made an additional capital
contribution of $250,000 and $500,000, respectively. No additional contributions
were made in 2003.
F-13
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is selected financial data of Newstream at December 31:
2003 2002 2001
---- ---- ----
Balance Sheet Data:
Total current assets $1,147,000 $1,310,000 $813,000
Total assets 1,764,000 2,350,000 2,277,000
Total current liabilities 1,616,000 1,587,000 1,351,000
Total liabilities and members equity 1,764,000 2,350,000 2,277,000
Operating Data:
Revenues 1,186,000 1,164,000 1,137,000
Operating loss (615,000) (665,000) (1,461,000)
Net loss (614,000) (663,000) (1,457,000)
Approximately $541,000, $501,000 and $497,000 of total revenue for the joint
venture was generated by the Company in 2003, 2002 and 2001, respectively.
The Company also allocates certain expenses to the joint venture for personnel
and other direct, general and administrative costs incurred on its behalf. Total
assessments amounted to $781,000, $683,000 and $959,000 in 2003, 2002 and 2001,
respectively. The balance outstanding at December 31, 2003, 2002 and 2001
relating to these assessments amounted to $678,000, $663,000 and $919,000,
respectively and are included in prepaid expenses and other current assets.
4. Line of Credit - Bank
The Company has a line of credit facility with a bank, allowing for borrowings
of up to $7.50 million through April 15, 2004. Loans under the Credit Facility
bear interest at the 30-Day LIBOR Rate (1.12% at December 31, 2003) plus 2.25%
through 3.25%, per annum, as defined.
The Company is subject to a line fee of $37,500 for the period from January 1,
2003 through April 15, 2004.
Covenants under the line of credit agreement require the Company to meet certain
financial ratios, including minimum tangible net worth and minimum earnings
before interest, taxes, depreciation, amortization and other charges, as defined
in the agreement. At December 31, 2003 the Company was not in compliance with
the minimum tangible net worth covenant which has been waived by the lender
through April 15, 2004 through the issuance of a forbearance. In conjunction
with the forbearance, the lender required the Company pay down its line of
credit by $500,000, reduce the maximum borrowings under the facility to $5.00
million and put into place minimum cash balance and limits on capital
expenditure covenants, as defined.
F-14
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Subsequent to December 31, 2003 the bank issued an additional forbearance (The
"Forbearance") expiring January 31, 2005. The Forbearance reduces the maximum
line to the lower of $4.00 million, $3.75 million, $3.50 million and $3.00
million at April 15, 2004, July 1, 2004, October 1, 2004 and December 31, 2004,
respectively, or 80% of eligible accounts receivable balances, as defined.
Interest under the Forbearance is payable monthly at the rate of the 30-Day
LIBOR Rate plus 5.5% per annum. Covenants under the Forbearance include limits
on capital expenditures, minimum earnings before interest, taxes, depreciation
and amortization and minimum tangible net worth, as defined in the agreement.
Additionally, the Forbearance requires the Company to obtain financing by
January 15, 2005 to support Teletrax(TM)'s operations.
The Company is subject to a forbearance fee of $30,000 for the period from April
15, 2004 through January 31, 2005.
Substantially all of the assets of the Company are pledged as collateral under
the credit facility.
5. Long-term Debt:
As of December 31, debt consisted of:
2003 2002
---- ----
Capitalized lease $269,248 $ 285,482
Note payable -- 45,291
Less: current portion 96,248 113,773
-------- ---------
Long-term debt, net of current portion $173,000 $ 217,000
======== =========
The capitalized lease is payable in quarterly installments of $29,666, which
includes principal and interest at the rate of 10.8% per annum through August
2006.
At December 31, 2003 and 2002, the gross amount of the equipment and related
accumulated depreciation recorded under the capital lease was as follows:
2003 2002
---- ----
Equipment $324,443 $324,443
Less accumulated depreciation (64,337) (31,440)
-------- --------
$260,106 $293,003
======== ========
Depreciation of equipment held under the capital lease is included in
depreciation and amortization expense.
The note was payable in quarterly installments of $15,507, which includes
principal and interest at a rate of 8% per annum through July 2003.
F-15
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. Stockholders' Equity:
In 2003, 2002 and 2001 the Company issued 91,537 shares, 125,622 shares and
26,701 shares, respectively, of common stock as consideration for acquisitions.
The fair value of the common stock was determined based on the average trading
price, over various periods, of the Company's common stock at the times of the
respective acquisitions.
During 2001 the Board of Directors implemented a Preferred Stock Rights Plan.
Under the Rights Plan, the Board declared a dividend distribution of one
preferred stock purchase right for each outstanding share of common stock of the
Company, payable to shareholders of record at the close of business on August
30, 2001. The Rights will continue to be represented by, and trade with, the
Company's common stock certificates unless the Rights become exercisable. The
Rights become exercisable (with certain exceptions) only in the event that a
person or group acquires, or announces a tender or exchange offer for, 15
percent or more of the Company's shares outstanding or the total voting power of
the Company.
In July 2002 the Company received 57,124 shares of Medialink common stock as
payment for loan balances due from a former officer of the Company totaling
$199,934. The shares valued at $3.50 per share on the date of the agreement have
been recorded as treasury stock at December 31, 2003 and 2002.
7. Employee Compensation Plans
The Company provides an incentive and nonqualified stock option plan (the "Stock
Option Plan") for employees and other eligible participants. The option price
for all incentive stock options is the fair market value of the Company's common
stock on the date of grant, except for employees owning more than 10% of the
outstanding common stock of the Company. The option price for employees owning
more than 10% of the outstanding common stock of the Company may be no less than
110% of the fair market value of the shares on the date of the option grant. The
stock options vest over a period of four years and have a term of ten years. The
number of options to be granted and option prices are determined by the
Compensation Committee of the Board of Directors in accordance with the terms of
the Stock Option Plan. The Company has reserved 1,670,808 shares of authorized
common stock for issuance under this plan. As of December 31, 2003 the Company
had 343,907 shares available for grant.
F-16
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Activity in the Stock Option Plan is as follows:
Shares Under Weighted Average
Option Exercise Prices
------------ ----------------
Outstanding at January 1, 2001 874,861 $7.78
Granted 336,732 $3.30
Exercised (39,920) $2.91
Canceled (178,407) $8.49
-------
Outstanding at December 31, 2001 993,266 $6.38
=======
Exercisable at December 31, 200
through 2011 634,143 $6.87
=======
Outstanding at January 1, 2002 993,266 $6.38
Granted 293,100 $2.61
Exercised (700) $2.81
Canceled (150,941) $6.65
---------
Outstanding at December 31, 2002 1,134,725 $4.65
=========
Exercisable at December 31, 200
through 2012 702,941 $6.52
=======
Outstanding at January 1, 2003 1,134,725 $4.65
Granted 13,000 $2.79
Exercised (1,600) $2.61
Canceled (107,614) $4.40
---------
Outstanding at December 31, 2003 1,038,511 $5.47
=========
Exercisable at December 31, 2003
through 2013 791,012 $6.28
=======
The Following table summarizes information about stock options outstanding under
the Stock Option Plan at December 31, 2003:
Outstanding Exercisable
--------------------------------------------- --------------------------------------
Weighted Weighted
Range of Average Average Weighted
Exercise Number Remaining Exercise Number Average
Prices Outstanding Life Price Exercisable Exercise Price
----------------------------------------------------------------------------------------------------------
$2.61-8.24 821,186 5.75 years $ 3.46 573,687 $ 3.70
$8.25-13.87 130,000 4.88 years $11.10 130,000 $11.10
$13.88-19.50 87,325 4.57 years $16.00 87,325 $16.00
--------- -------
Outstanding
December 31, 2003 1,038,511 791,012
========= =======
F-17
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company provides a stock option plan for its directors (the "Director Plan")
for the granting of options to non-employee members of the Company's Board of
Directors to purchase shares of the Company's common stock. The Company has
reserved 180,000 shares of authorized common stock for the issuance under this
plan. The option price under the Director Plan shall not be less than the fair
market value of such share of common stock on the date of grant. Under the
Director Plan, options issued vest over a three year period and are exercisable
at such times as determined by the Company but no later than 15 years after the
date of the grant.
Under the Director Plan, options to purchase 28,000 share at exercise prices of
$2.61 and $3.59 and 18,000 shares at the exercise price of $4.38 were issued
during 2002 and 2001, respectively. These options expire 10 years from the date
of grant; however, upon termination of board membership of any director, the
options will expire 12 months after the termination date, but no later than the
expiration date. No options were exercised under the Director Plan during 2003,
2002 or 2001. Non-employee directors are also eligible for additional grants of
3,000 shares per year provided they continue to serve the Company in that
capacity. Such future grants would become exercisable over a three-year period.
Activity in the Stock Option Plan is as follows:
Shares Under Weighted Average
Option Exercise Prices
------------ ----------------
Outstanding at January 1, 2001 134,000 $9.61
Granted 18,000 $4.38
Exercised --
Canceled --
-------
Outstanding at December 31, 2001 152,000 $8.99
=======
Exercisable at December 31, 2001
through 2011 109,333 $9.54
=======
Outstanding at January 1, 2002 152,000 $8.99
Granted 28,000 $7.77
Exercised --
--
-------
Outstanding at December 31, 2002 180,000 $8.05
=======
Exercisable at December 31, 2002
through 2012 136,666 $9.43
=======
Outstanding at January 1, 2003 180,000 $8.05
Granted --
Exercised --
Canceled --
-------
Outstanding at December 31, 2003 180,000 $8.05
=======
Exercisable at December 31, 2003
through 2012 155,333 $8.80
=======
F-18
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes information about stock options outstanding under
the Director Plan at December 31, 2003:
Outstanding Exercisable
-------------------------------------------- --------------------------------
Weighted Weighted
Range of Average Average Weighted
Exercise Number Remaining Exercise Number Average
Prices Outstanding Life Price Exercisable Exercise Price
------------------------------------------------------------------------------------------------------
$2.61-8.20 112,000 10.45 years $ 4.59 87,333 $ 4.77
$8.21-13.79 40,000 8.48 years $11.11 40,000 $11.11
$13.80-19.38 28,000 9.78 years $17.53 28,000 $17.53
-------- --------
Outstanding
December 31, 2003 180,000 155,333
======= =======
8. Commitments
(a) Leases
The Company has various non-cancelable operating leases for office space that
expire in 2010. Future minimum payments under operating leases consisted of the
following at December 31, 2002:
For the year ending December 31,
--------------------------------
2004 3,140,000
2005 3,259,000
2006 3,167,000
2007 2,521,000
2008 2,121,000
Thereafter 2,917,000
-----------
Total minimum lease payments $17,125,000
===========
Rent expense under operating leases amounted to approximately $3,042,000,
$3,211,000 and $3,414,000 for the years ended December 31, 2003, 2002 and 2001,
respectively.
(b) Employment Agreements
The Company has entered into employment agreements with various executives
expiring through December 31, 2003. Future minimum payments, including base
salary and minimum bonuses, related to these agreements, are approximately
$3,138,000 in 2004.
F-19
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(c) Advisory Charges
In August 2001 the Company received an unsolicited takeover bid from United
Business Media plc to purchase all of its issued and outstanding common shares.
In connection with this unsolicited offer the Company retained a financial
advisor and other professionals to assist the Company in analyzing and
considering the unsolicited offer and the various strategic opportunities
available to the Company to maximize shareholder value. The unsolicited offer
has been withdrawn. The terms of the amended agreement provide that the Company
pay the financial advisor $1,600,000 not including expenses. The agreement
expired in August 2002 with no transaction transpiring and, accordingly, the
remaining balance due under the agreement was charged to operations during the
2002. For the years ended December 31, 2002 and 2001, $1,200,000 and $400,000,
respectively, were charged to operations related to this amended agreement and
included in advisory charges.
9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following at
December 31:
2003 2002
---- ----
Production costs $1,278,249 $1,856,785
Deferred revenue 801,981 417,935
Salary and related 741,421 738,027
Selling, general and administrative 292,524 229,868
Professional fees 235,004 224,806
Earn-out provision on acquisition -- 262,000
Other 599,630 639,291
---------- ----------
$3,948,809 $4,368,712
========== ==========
10. Income Taxes:
The provision (benefit) for income taxes consists of the following components:
For the Year Ended December 31,
-------------------------------------
2003 2002 2001
---- ---- ----
Current:
Federal $ -- $(385,000) $(1,558,000)
State and local -- (5,980) (116,000)
--------- --------- -----------
-- (390,980) (1,674,000)
--------- --------- -----------
Deferred:
Federal (185,000) 180,000 (375,000)
State and local 35,000 65,000 (525,000)
--------- --------- -----------
(150,000) 245,000 (900,000)
---------- --------- -----------
$(150,000) $(145,980) $(2,574,000)
========= ========= ===========
F-20
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The difference in income tax benefit between the amount computed using the
statutory federal income tax rate and the Company's effective tax rate is due to
the following:
For the Year Ended December 31,
---------------------------------
2003 2002 2001
---- ---- ----
Income tax benefit at statutory rate $(966,000) $(685,000) $(2,158,000)
Increase (decrease) in income taxes resulting
from:
State and local income taxes, net of Federal
income tax benefit (provision) 23,000 68,000 (423,000)
Valuation allowance on foreign operating
loss carryforward 712,000 252,000 --
Non-deductible expenses and other 81,000 219,020 7,000
--------- --------- -----------
$(150,000) $(145,980) $(2,574,000)
========= ========= ===========
The tax effect of temporary differences that give rise to significant portions
of the deferred tax assets are as follows:
As of December 31,
-----------------------
2003 2002
---- ----
Allowance for doubtful accounts $ 199,000 $ 199,000
Depreciation and amortization of
property and equipment 63,000 63,000
Amortization of intangibles 456,000 992,000
Accrued loss on sublease 161,000
Net operating loss carry forwards 1,889,000 652,000
Capital loss carryforward 200,000 200,000
---------- ---------
Total gross deferred tax assets 2,968,000 2,106,000
Less valuation allowance (964,000) (252,000)
---------- ---------
$2,004,000 $1,854,000
========== ==========
The Company has a US federal net operating loss carry forward approximating
$1,362,000 expiring in 2023. The Company has a capital loss carryforward of
approximately $500,000, expiring in 2006, that can be used to offset future
capital gains. The Company also has net operating loss carryforwards for state
and local tax purposes of approximately $6.8 million expiring through 2018.
Additionally, the Company has foreign loss carryforwards of approximately
$2,700,000 related substantially to the loss generated by Teletrax(TM), its 76%
owned foreign subsidiary. The foreign loss carryforwards have no expiration
date. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible. Management considers projected future taxable
income and tax planning strategies in making this assessment. Due to the limited
historical results of Teletrax(TM) and management's limited ability to project
future results, the Company has recorded a valuation allowance of $833,000
related to the foreign deferred tax asset generated by its UK tax losses. Based
on the historical taxable income and projections for future taxable income, of
the Company's domestic operations, over the periods that the deferred tax assets
are deductible, management believes it is more likely than not that the Company
will realize the remaining deferred tax assets.
F-21
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
11. Segment Information
Management considers all of the Company's products and services to be included
as a single operating segment, therefore, the disclosure requirements of SFAS
131 consist only of segment information by geographic location.
A summary of the Company's operations by major geographic location are as
follows for the years ended December 31,
2003 2002 2001
---- ---- ----
US UK US UK US UK
-- -- -- -- -- --
Revenues:
External clients $39,594,783 $4,458,801 $40,188,739 $7,175,981 $40,397,272 $8,022,861
Inter-segment 192,000 249,000 917,000 727,000 330,000 636,000
------------ ----------- ----------- ---------- ------------ ----------
Total revenues $39,786,783 $4,707,801 $41,105,739 $7,902,981 $40,067,272 $8,658,861
============ ========== =========== ========== =========== ==========
Total assets $32,987,950 $3,723,935 $37,482,424 $3,599,910 $38,243,355 $2,569,198
============ ========== =========== ========== =========== ==========
12. Supplemental Cash Flow Information:
Cash paid (recieved) for interest and income taxes during the years ended
December 31, 2003, 2002 and 2001 was as follows:
2003 2002 2001
---- ---- ----
Interest $ 314,000 $279,000 $ 273,000
=========== ======== ==========
Income Taxes $(1,580,000) $135,000 $1,378,000
=========== ======== ==========
Non-cash investing and financing activities for the years ended December 31,
2003, 2002 and 2001 were as follows:
2003 2002 2001
---- ---- ----
Common stock issued in connection with
acquisitions $275,000 $358,000 $ 150,000
======= ======= =========
Treasury stock redeemed in connection
with satisfaction of note receivable $ -- $200,000 $ --
======== -------- ==========
Accrued earn-out provision $ -- $262,000 $ 208,000
======== ======== ==========
F-22
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. 401(k) Plan:
The Company maintains a qualified 401(k) plan (the "Plan") covering all eligible
employees. Eligible employees may make elective salary reduction contributions
to the Plan of up to 15% of their annual compensation, subject to a dollar limit
established by law. In addition, the Company may provide, in its discretion, a
matching contribution equal to a percentage of the employee's contribution.
Participants are fully vested at all times in the amounts they contribute to the
Plan. Only participants who have completed a year of service during the Plan
year and are actively employed on the last day of such year are vested in the
Company's matching contributions for such year. The Company's matching
contributions amounted to approximately $128,000 in 2001. There was no matching
contribution made by the Company in 2003 or 2002.
14. Allowance for Doubtful Accounts:
2003 2002
---- ----
Balance at beginning of year $ 655,417 $ 356,240
Direct write-offs (88,248) (18,040)
Additional charges to costs and expenses 116,251 317,217
--------- ---------
Balance at the end of year $ 683,420 $ 655,417
========= =========
15. Quarterly Results of Operations (Unaudited):
(In thousands of dollars, except per share data)
For the Quarter Ended
-----------------------------------------------------------------
March 31, June 30, September 30, December 31,
2003 2003 2003 2003
---- ---- ---- ----
Revenues $10,961 $11,693 $10,321 $11,079
Gross profit 7,412 7,858 7,085 7,613
Operating loss (689) (633) (1,146) (86)
Net loss (678) (598) (1,068) (347)
Basic and diluted loss per share (0.11) (0.10) (0.18) (0.06)
For the Quarter Ended
-----------------------------------------------------------------
March 31, June 30, September 30, December 31,
2002 2002 2002 2002
---- ---- ---- ----
Revenues $11,075 $12,785 $11,376 $12,129
Gross profit 7,195 8,216 7,713 8,505
Operating income (loss) (964) (121) (1,251) 519
Net income (loss) (698) (244) (993) 66
Basic and diluted earnings (loss) per share (0.12) (0.04) (0.17) 0.01
F-23
MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. Restructuring Charges :
In September 2003 the Company entered into an agreement to sublease excess
office space in its Norwalk, CT location. The sublease resulted in a $592,000
restructuring charge to operations in the 3rd quarter of 2003 calculated as
follows:
Present value of current lease obligation $1,010,000
Present value of sublet rental income (491,000)
Costs incurred in connection with agreement 73,000
----------
Net restructuring charge 592,000
Less: utilization during 2003 (36,664)
----------
Balance at December 31, 2003 555,336
Less: current portion (163,000)
----------
Balance at December 31, 2003, net of
current portion $ 392,336
==========
Both the existing lease and sublease expire in February 2008.
In March 2001 the Company combined its U.S. and international broadcast services
into a Global Broadcast Services unit. The corporate reorganization is designed
to accelerate the growth of its broadcast services business. The Company
incurred a charge of $420,000 as a result of the restructuring. Additionally, in
September 2001 the Company reduced its staff in the UK and US incurring a
restructuring charge of $214,000. The total charges aggregating $634,000
included severance and related payments to terminated employees of approximately
$430,000. Through December 31, 2001 approximately $524,000 of the total
restructuring charges have been paid and the remaining balance of approximately
$110,000 was included in accrued expenses. The remaining balance was paid during
2002.
F-24
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our chief executive officer,
principal accounting officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, our chief executive officer, principal
accounting officer and principal financial officer concluded that our disclosure
controls and procedures, as of the date of the evaluation, are effective in
timely alerting them to material information required to be included in our
periodic SEC reports. It should be noted that the design of any system of
controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of
how remote.
In addition, we reviewed our internal controls, and there have been no
significant changes in those controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors of the Company who are standing for reelection
is set forth under "Election of Directors" in the Company's Definitive Proxy
Statement to be filed within 120 days after the Company's fiscal year ended
December 31, 2003 (the "Proxy Statement"), which information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding the Company's compensation of its named executive officers
is set forth under "Executive Compensation" in the Company's Definitive Proxy
Statement, which information is incorporated herein by reference. Information
regarding the Company's compensation of its directors is set forth under
"Directors' Compensation" in the Proxy Statement, which information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding security ownership of certain beneficial owners and
management is set forth under "Common Stock Ownership of Certain Beneficial
Owners and Management" in the Company's Proxy Statement, which information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding certain relationships and related transactions is set
forth under "Certain Relationships and Related Transactions" in the Company's
Proxy Statement, which information is incorporated herein by reference.
26
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this Item 14 regarding the Company's principal
accounting fees and services is incorporated herein by reference from the
information provided under the heading "Proposal 3: Ratification of Independent
Auditors" of the Company's Definitive Proxy Statement anticipated to be dated
April 28, 2004.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits:
31. Certifications pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32. Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Report on Form 8-K:
Report on Form 8-K dated February 29, 2003 regarding expected
losses from its subsidiary Teletrax(TM) for the year ended
December 31, 2003 and expected capital expenditures during the
year ended December, 31, 2003.
Report on Form 8-K dated April 29, 2003 regarding earnings for
the first quarter ended March 31, 2003.
Report on Form 8-K dated July 29, 2003 regarding earnings for
the second quarter ended June 30, 2003.
Report on Form 8-K dated October 28, 2003 regarding earnings
for the third quarter ended September 30, 2003.
27
Page Number
(a) 1. FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF MEDIALINK
WORLDWIDE INCORPORATED AND SUBSIDIARIES
Independent Auditors' Report F-1
Consolidated Balance Sheets as of December 31, 2003 and
December 31, 2002 F-2
Consolidated Statements of Operations for the Years Ended December 31,
2003, December 31, 2002 and December 31, 2001 F-3
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2003, December 31, 2002 and December 31, 2001 F-4
Consolidated Statements of Cash Flows for the Years Ended December 31,
2003, December 31, 2002 and December 31, 2001 F-5
Notes to Consolidated Financial Statements for the Years Ended
December 31, 2003, December 31, 2002 and December 31, 2001 F-6
2. All schedules have been omitted because they are not applicable or
the required information is included in the financial statements or notes
thereto.
28
(c) EXHIBITS
Exhibit Foot
Number Description notes
------ ----------- -----
3.1 Amended and Restated Certificate of Incorporation of
Medialink Worldwide Incorporated (1)
*3.2 Amendment 1 to the Amended and Restated By-Laws of the Medialink
Worldwide Incorporated
4.1 Preferred Stock Rights Agreement, dated as of August 16, 2001 between Medialink
Worldwide Incorporated and Mellon Investor Service, 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 (2)
10.1 Amended and Restated Employment Agreement, dated as of August 28, 2001, by and
between Medialink Worldwide Incorporated and Laurence Moskowitz (3)
10.2 Amended and Restated Employment Agreement, dated as of August 28, 2001, by and
between Medialink Worldwide Incorporated and J. Graeme McWhirter (4)
10.3 Amended and Restated Employment Agreement, dated as of January 1, 2002, by and (5)
between Medialink Worldwide Incorporated and Richard Frisch
10.4 Non-Compete Agreement, dated as of June 16, 1997, by and between Medialink Worldwide
Incorporated, Corporate TV Group, Inc. and Richard Frisch
(6)
10.5 Asset Purchase Agreement, dated as of June 16, 1997, by and among Medialink Worldwide
Incorporated, Corporate TV Group, Inc. and Richard Frisch
(7)
10.6 Registration Rights Agreement, made as of June 16, 1997, by and between Medialink
Worldwide Incorporated and Richard Frisch (8)
10.7 Medialink Worldwide Incorporated 401(k) Tax Deferred Savings Plan (9)
10.8 Amended and Restated Stock Option Plan and form of Stock Option Agreement
(10)
10.9 Medialink Worldwide Incorporated 1996 Directors Stock Option Plan and form of 1996
Directors Stock Option Agreement (11)
*10.10 Form of Indemnification Agreement
*10.11 Forbearance Agreement
*21. Subsidiaries of Medialink Worldwide Incorporated *23. Consent of KPMG LLP
*27. Financial Data Schedule
*31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
*31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
*32 Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
*32 Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
- -----------------------
* Filed herewith
29
(1) Filed as Exhibit 2.5 to Medialink Worldwide Incorporated Form 8-A,
filed on January 16, 1997 (Registration No. 000-21989) and incorporated
herein by reference.
(2) Filed as Exhibit 4.1 to Medialink Worldwide Incorporated Report on Form
8-A dated August 16, 2001 and incorporated herein by reference.
(3) Filed as Exhibit 10.1 to Medialink Worldwide Incorporated Annual Report
on Form 10-K dated March 28, 2002 and incorporated herein by reference
(4) Filed as Exhibit 10.2 to Medialink Worldwide Incorporated Annual Report
on Form 10-K dated March 28, 2002 and incorporated herein by reference.
(5) Filed as Exhibit 10.3 to Medialink Worldwide Incorporated Annual Report
on Form 10-K dated March 31, 2003 and incorporated herein by reference.
(6) Filed as Exhibit 28.2 to Medialink Worldwide Incorporated Current
Report on Form 8-K dated July 1, 1997 and incorporated herein by
reference.
(7) Filed as Exhibit 2.1 to Medialink Worldwide Incorporated Current Report
on Form 8-K dated July 1, 1997 and incorporated herein by reference.
(8) Filed as Exhibit 28.4 to Medialink Worldwide Incorporated Current
Report on Form 8-K dated July 1, 1997 and incorporated herein by
reference.
(9) Filed as Exhibit 10.33 to Medialink Worldwide Incorporated Registration
Statement on Form S-1 (No. 333-14119) dated October 15, 1996 and
incorporated herein by reference.
(10) Filed as Exhibit 10.34 to Medialink Worldwide Incorporated Registration
Statement on Form S-1 (No. 333-14119) dated October 15, 1996 and
incorporated herein by reference.
(11) Filed as Exhibit 10.35 to Medialink Worldwide Incorporated Registration
Statement on Form S-1 (No. 333-14119) dated October 15, 1996 and
incorporated herein by reference.
30
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/ Laurence Moskowitz
- -----------------------------------
Laurence Moskowitz,
Chairman of the Board, Chief Executive Officer and President
By: /s/ J. Graeme McWhirter
- ------------------------------------
J. Graeme McWhirter
Executive Vice President, Secretary and Chief Financial Officer
Dated: April 14, 2004
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 and on the dates indicated.
/s/ Laurence Moskowitz April 14, 2004
- ------------------------------------
Laurence Moskowitz, Chairman
of the Board, Chief Executive Officer and President
/s/ Harold Finelt March 26, 2004
- ------------------------------------
Harold Finelt, Director
/s/ Donald Kimelman March 26, 2004
- ------------------------------------
Donald Kimelman, Director
/s/ James J. O'Neill March 26, 2004
- ------------------------------------
James J. O'Neill, Director
/s/ Theodore Wm. Tashlik March 26, 2004
- ------------------------------------
Theodore Wm. Tashlik, Director
/s/ Paul Sagan March 26, 2004
- ------------------------------------
Paul Sagan, Director
/s/ J. Graeme McWhirter April 14, 2004
- ------------------------------------
J. Graeme McWhirter, Director
Executive Vice President, Secretary and Chief Financial
Officer
/s/ Alain Schibl March 26, 2004
- ------------------------------------
Alain Schibl, Director
/s/ Catherine Lugbauer March 26, 2004
- ------------------------------------
Catherine Lugbauer, Director
/s/ John M. Greening March 26, 2004
- ------------------------------------
John M. Greening, Director
31