<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
Commission File Number 0-21989
Medialink Worldwide Incorporated
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-1481284
-------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
708 Third Avenue, New York, New York 10017
------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 682-8300
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of business on August 14, 1998:
Common Stock - 5,297,782
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<S> <C> <C>
ITEM 1. Financial Statements 3
Condensed Consolidated Balance Sheets as of June 30, 1998
and December 31, 1997 3
Condensed Consolidated Statements of Operations
for the six months ended June 30, 1998 and 1997 4
Condensed Consolidated Statements of Operations
for the three months ended June 30, 1998 and 1997 5
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1998 and 1997 6
Notes to Condensed Consolidated Financial Statements 7 - 9
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10 - 14
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 15
ITEM 2. Changes in Securities and Use of Proceeds 15 - 16
ITEM 3. Defaults Upon Senior Securities 16
ITEM 4. Submission of Matters to a Vote of Security Holders 16
ITEM 5. Other Information 16
ITEM 6. Exhibits and Reports on Form 8-K 16
</TABLE>
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 1998 and December 31, 1997
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 11,024,352 $ 11,580,928
Accounts receivable, net 9,471,273 8,243,823
Prepaid expenses and other current assets 1,167,270 634,038
Deferred tax assets 147,000 119,000
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Total current assets 21,809,895 20,577,789
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Property and equipment, net 2,036,342 1,449,901
Goodwill, customer list and other intangibles, net 7,088,462 6,118,677
Deferred tax assets 310,000 200,000
Other assets 351,134 321,347
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Total assets $ 31,595,833 $ 28,667,714
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 122,651 $ 122,651
Accounts payable 2,972,225 2,305,077
Accrued expenses and other current liabilities 3,099,122 2,883,905
Income taxes payable 1,082,539 782,645
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Total current liabilities 7,276,537 6,094,278
Long-term debt, net of current portion 405,153 449,892
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Total liabilities 7,681,690 6,544,170
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Stockholders' Equity:
Common stock. Authorized 15,000,000 shares; issued and outstanding
5,249,257 and 5,182,037 shares in 1998 and 1997, respectively 52,493 51,820
Additional paid-in capital 20,348,818 20,222,255
Retained earnings 3,573,356 1,928,268
Accumulated other comprehensive income (60,524) (78,799)
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Total stockholders' equity 23,914,143 22,123,544
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Total liabilities and stockholders' equity $ 31,595,833 $ 28,667,714
============ ============
</TABLE>
See notes to condensed consolidated financial statements
3
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1998 and 1997
1998 1997
(Unaudited) (Unaudited)
Revenues $20,365,745 $11,062,543
Direct costs 8,434,919 4,218,516
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Gross Profit 11,930,826 6,844,027
General and administrative expenses 9,420,780 5,352,346
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Operating income 2,510,046 1,491,681
Interest and other income, net 225,042 216,124
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Income before income taxes 2,735,088 1,707,805
Provision for income taxes 1,090,000 649,781
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Net income $ 1,645,088 $ 1,058,024
=========== ===========
Net income applicable to common stock $ 1,645,088 $ 1,031,370
=========== ===========
Basic earnings per share $ 0.32 $ 0.23
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Diluted earnings per share $ 0.29 $ 0.21
=========== ===========
See notes to condensed consolidated financial statements
4
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1998 and 1997
1998 1997
---- ----
(Unaudited) (Unaudited)
Revenues $11,454,890 $ 6,639,815
Direct costs 4,800,149 2,529,971
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Gross Profit 6,654,741 4,109,844
General and administrative expenses 4,947,101 3,064,979
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Operating income 1,707,640 1,044,865
Interest and other income, net 109,738 149,174
----------- -----------
Income before income taxes 1,817,378 1,194,039
Provision for income taxes 730,000 465,016
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Net income $ 1,087,378 $ 729,023
=========== ===========
Basic earnings per share $ 0.21 $ 0.14
=========== ===========
Diluted earnings per share $ 0.19 $ 0.13
=========== ===========
See notes to condensed consolidated financial statements
5
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
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(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,645,088 $ 1,058,024
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 756,631 236,936
Equity adjustment for foreign currency translation 18,275 1,623
Deferred income taxes (138,000) --
Increase in accounts receivable (1,227,450) (1,806,708)
(Increase) decrease in other assets (29,787) 2,370
Increase in prepaid expenses and other current assets (533,232) (524,168)
Increase in accounts payable and accrued expenses 1,116,095 829,660
Increase in income taxes payable 299,894 474,715
------------ ------------
Total adjustments 262,426 (785,572)
------------ ------------
Net cash provided by operating activities 1,907,514 272,452
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisitions (1,822,113) (3,837,050)
Advances under short-term loan receivable -- (300,000)
Additions to property and equipment (714,478) (247,483)
------------ ------------
Net cash used in investing activities (2,536,591) (4,384,533)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of employee stock options 117,240 55,875
Payments on long term debt (44,739) (34,743)
Proceeds from issuance of common stock - net of offering costs -- 15,600,747
------------ ------------
Net cash provided by financing activities 72,501 15,621,879
------------ ------------
Net (decrease) increase in cash and cash equivalents (556,576) 11,509,798
Cash and cash equivalents at the beginning of period 11,580,928 675,469
------------ ------------
Cash and cash equivalents at end of period $ 11,024,352 $ 12,185,267
============ ============
</TABLE>
See notes to condensed consolidated financial statements
6
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of presentation
The condensed consolidated financial statements included herein have been
prepared by Medialink Worldwide Incorporated and Subsidiary (collectively, the
"Company" or "Medialink"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. The Company
believes that the disclosures are adequate to make the information presented
not misleading. These condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's Form 10-K filing for the year ended December
31, 1997.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments)
which are, in the opinion of management, necessary to state fairly the results
for the six and three month periods ended June 30, 1998 and 1997. The results
for the six and three month periods ended June 30, 1998 are not necessarily
indicative of the results expected for the full fiscal year.
(2) Merger of Subsidiaries
On January 1, 1998, the Company merged the assets and liabilities of On Line
Broadcasting Limited, a wholly owned subsidiary, into Medialink Worldwide
Incorporated.
On January 1, 1998, the Company merged the assets and liabilities of Medialink
PR Data Corporation, a wholly owned subsidiary, into Medialink Worldwide
Incorporated.
(3) Recent Acquisitions
In June 1998 the Company acquired certain assets of Eye Catchers Press ("Eye
Catchers"), a public relations still photography agency in the United Kingdom.
The initial purchase price of (pound)900,000 (approximately $1.50 million)
plus estimated acquisition costs of $90,000 was paid in cash. Earn-out
provisions allow for additional payments of up to an additional (pound)100,000
per annum based on certain profitability targets over the next three years.
Earn-out amounts will be paid in the form of 80% cash and 20% in Medialink
common stock in year 1, 25% cash and 75% in Medialink common stock in years 2
and 3. The acquisition has been accounted for as a purchase for accounting
purposes, and the results of operations of the acquisition have been included
in the consolidated statement of operations from the date of acquisition. The
estimated purchase price in excess of the estimated fair value of the net
tangible assets acquired has been allocated to goodwill.
7
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In July 1998 the Company acquired all of the outstanding common shares of
Tempest T.V. Limited, d/b/a The London Bureau ("The London Bureau"), a
producer of corporate video for use by British broadcasters. The initial
purchase price of (pound)1.00 million (approximately $1.65 million) was paid
in the form of (pound)620,000 (approximately $1.02 million) in cash and the
issuance of 31,206 shares of the Company's common stock valued at
approximately (pound)380,000 (approximately $628,000). Earn-out provisions
allow for additional payments of purchase price of up to approximately
(pound)2.80 million (approximately $4.61 million), based on certain revenue
and profitability goals of the International Division of Medialink, to be paid
over a period of three years. In connection with this acquisition two of the
shareholders of The London Bureau entered into deeds of covenant with the
Company with terms of three and four years, respectively. In consideration for
the deeds of covenant, the two shareholders received payments aggregating
(pound)295,000 (approximately $485,000).
(4) Earnings per Share
The Company adopted SFAS No. 128, "Earnings per Share", beginning with the
Company's fourth quarter of 1997. All prior period earnings per share data has
been restated to conform to the provisions of this statement.
Basic earnings per common share is computed using net income applicable to
common stock and the weighted average number of shares outstanding. Diluted
earnings per common share is computed using the weighted average number of
shares outstanding adjusted for the incremental shares attributed to
outstanding options to purchase common stock. In addition, shares of common
stock issuable upon the conversion of all shares of Series A, Series B and
Series C Preferred Stock into shares of common stock are included in the 1997
diluted calculation as if they were outstanding for all of 1997. The weighted
average number of shares for the six and three months ended June 30, 1998 and
1997 are as follows:
Weighted Average Shares Outstanding
- -----------------------------------
For the six months ended June 30,
---------------------------------
1998 1997
---- ----
Basic 5,209,419 4,482,863
========= =========
Diluted 5,739,241 5,115,560
========= =========
8
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
For the three months ended June 30,
-----------------------------------
1998 1997
---- ----
Basic 5,232,218 5,059,918
========= =========
Diluted 5,786,828 5,442,599
========= =========
(5) Comprehensive Income
The components of comprehensive income consist of the following:
For the six months ended June 30,
---------------------------------
1998 1997
---- ----
Net income $1,645,088 $1,058,024
Other comprehensive income
Foreign currency translation
adjustments 18,275 1,623
---------- ----------
Comprehensive income $1,663,363 $1,059,647
========== ==========
For the three months ended June 30,
-----------------------------------
1998 1997
---- ----
Net income $1,087,378 $ 729,023
Other comprehensive income (loss)
Foreign currency translation
adjustments 22,717 (26,481)
---------- ----------
Comprehensive income $1,110,095 $ 702,542
========== ==========
Accumulated other comprehensive income at June 30, 1998 and December 31, 1997
consists of foreign currency translation adjustments.
9
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MEDIALINK WORLDWIDE INCORPORATED AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six months ended June 30, 1998 compared to six months ended June 30, 1997
Revenues increased by $9.30 million, or 84%, from $11.06 million in the six
months ended June 30, 1997 ("1997") to $20.37 million in the six months ended
June 30, 1998 ("1998"), primarily due to increased sales of production
services, which increased by $4.80 million, distribution services, which
increased by $2.85 million and live broadcast services which increased by
$1.39 million. Included in the increase of total revenue above is revenue of
approximately $7.22 million from the Medialink Corporate Television Division
which acquired certain assets of Corporate TV Group, Inc. ("CTV") on June 17,
1997. In addition to this acquisition, Medialink believes that the increased
revenue resulted from the growth of its sales and marketing team and its
ability to provide clients with a broader array of services as part of its
four-part growth strategy. That strategy includes the development of new
services, leveraging Medialink's existing client base through the
cross-marketing of its services, geographic expansion and growth through
acquisitions and strategic alliances.
Direct costs increased by $4.21 million, or 100%, from $4.22 million in 1997 to
$8.43 million in 1998. Direct costs as a percentage of revenue increased from
38% in 1997 to 41% in 1998 mainly as a result of the increase in the proportion
of revenue from production and live broadcast service projects and revenue from
larger scale projects to total revenue in 1998 as compared to 1997. Revenue on
these projects generally have lower gross profit margins as compared with
revenue on distribution services.
General and administrative expenses increased by $4.07 million or 76%, from
$5.35 million in 1997 to $9.42 million in 1998. General and administrative
expenses as a percentage of revenues were 46% and 48% for 1998 and 1997,
respectively. Salary-related costs increased by $2.50 million in 1998, of
which $961,000 was the result of the acquisition of CTV in June 1997. The
balance of the increase was due primarily to the growth of Medialink's sales
and operations staff in response to increased demand for its services.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $1.54 million, or 89%, from $1.73 million in 1997 to $3.27
million in 1998. As a percentage of revenue, EBITDA was 16% in both 1998 and
1997.
Depreciation and amortization expense, which is included in general and
administrative expenses, increased by $520,000, or 219%, from $237,000 in 1997
to $757,000 in 1998. The increase was due primarily to amortization expense
arising from the acquisition of CTV in June 1997.
As a result of the foregoing, operating income increased by $1.02 million, or
68%, from $1.49 million in 1997 to $2.51 million in 1998. As a percentage of
revenue, operating income in 1998 was 12% as compared to 13% in 1997.
Interest and other income, net, increased by $9,000 from $216,000 in 1997 to
$225,000 in 1998.
10
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MEDIALINK WORLDWIDE INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
Income tax expense was calculated using Medialink's effective tax rates of 40%
in 1998 and 38% in 1997. The increase in the rate reflects changes in state
and local taxes as a result of differences in income earned in certain
jurisdictions and the change in the proportion of tax-free investment income
on investments to total income before taxes.
Net income increased by $587,000 or 55%, from $1.06 million in 1997 to $1.65
million in 1998. Diluted earnings per share increased from $0.21 per share in
1997 to $0.29 per share in 1998.
Three months ended June 30, 1998 compared to three months ended June 30, 1997
Revenues increased by $4.82 million, or 73%, from $6.64 million in the three
months ended June 30, 1997 (the "1997 Quarter") to $11.45 million in the three
months ended June 30, 1998 (the "1998 Quarter"), primarily due to increased
sales of production services, which increased by $2.21 million, distribution
services, which increased by $1.52 million and live broadcast services which
increased by $818,000. Included in the increase of total revenue is revenue of
approximately $3.72 million from the Medialink Corporate Television Division
which acquired certain assets of Corporate TV Group, Inc. ("CTV") on June 17,
1997.
Direct costs increased by $2.27 million, or 90%, from $2.53 million in the 1997
Quarter to $4.80 million in the 1998 Quarter. Direct costs as a percentage of
revenue increased from 38% of revenue in the 1997 Quarter to 42% in the 1998
Quarter mainly as a result of the increase in the proportion of revenue from
production and live broadcast service projects and revenue from larger scale
projects to total revenue in 1998 as compared to 1997. Revenue on these projects
generally have lower gross profit margins as compared with revenue on
distribution services.
General and administrative expenses increased by $1.88 million or 61%, from
$3.06 million in the 1997 Quarter to $4.95 million in the 1998 Quarter.
General and administrative expenses as a percentage of revenues were 43% and
46% for the 1998 Quarter and the 1997 Quarter, respectively. Salary-related
costs increased by $1.22 million in the 1998 Quarter, of which $487,000 was
the result of the acquisition of CTV in June 1997. The balance of the increase
was due primarily to the growth of Medialink's sales and operations staff in
response to increased demand for its services.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $897,000, or 75%, from $1.20 million in the 1997 Quarter to $2.09
million in the 1998 Quarter. As a percentage of revenue, EBITDA was 18% in
both the 1998 Quarter and the 1997 Quarter.
Depreciation and amortization expense, which is included in general and
administrative expenses, increased by $234,000, or 156%, from $150,000 in the
1997 Quarter to $384,000 in the 1998 Quarter. The increase was due primarily
to amortization expense arising from the acquisition of CTV in June, 1997.
11
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MEDIALINK WORLDWIDE INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
As a result of the foregoing, operating income increased by $663,000, or 63%,
from $1.04 million in the 1997 Quarter to $1.71 million in the 1998 Quarter.
As a percentage of revenue, operating income in the 1998 Quarter was 15% as
compared with 16% in the 1997 Quarter.
Interest and other income, net decreased by $39,000 from $149,000 in the 1997
Quarter to $110,000 in the 1998 Quarter. This decrease was primarily due to
the decrease in cash and cash equivalents resulting from the purchase of
various businesses.
Income tax expense was calculated using Medialink's effective tax rates of 40%
in the 1998 Quarter and 39% in the 1997 Quarter. The increase in the rate
reflects changes in state and local taxes as a result of differences in income
earned in certain jurisdictions and the change in the proportion of tax-free
investment income on investments to total income before taxes.
Net income increased by $358,000 or 49%, from $729,000 in the 1997 Quarter to
$1.09 million in the 1998 Quarter. Diluted earnings per share increased from
$0.13 per share in the 1997 Quarter to $0.19 per share in the 1998 Quarter.
LIQUIDITY AND CAPITAL RESOURCES
Medialink has financed its operations primarily through cash generated from
operations. Cash flow from operating activities amounted to $1.91 million in
1998 and $272,000 in 1997. Capital expenditures which are primarily incurred
to support the Company's sales and operations were $714,000 in 1998 and
$247,000 in 1997. Medialink has no capital expenditure plans other than in the
ordinary course of business.
12
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MEDIALINK WORLDWIDE INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
In June 1998 Medialink acquired certain assets of Eye Catchers Press. The
initial purchase price of (pound)900,000 (approximately $1.50 million) plus
acquisition costs of approximately $90,000 was paid in cash. Earn-out
provisions allow for additional payments of purchase price of up to an
additional (pound)100,000 per annum based on certain profitability targets
over the next three years. Earn-out amounts will be paid in the form of 80%
cash and 20% Medialink common stock in year 1 and 25% cash and 75% Medialink
common stock in years 2 and 3.
In July 1998 the Company acquired all of the outstanding common shares of
Tempest T.V. Limited, d/b/a The London Bureau ("The London Bureau"). The
initial purchase price of (pound)1.00 million (approximately $1.65 million)
was paid in the form of (pound)620,000 (approximately $1.02 million) cash and
the issuance of 31,206 shares of the Company's common stock valued at
approximately (pound)380,000 (approximately $628,000). Earn-out provisions
allow for additional payments of purchase price of up to approximately
(pound)2.80 million (approximately $4.61 million), based on certain revenue
and profitability goals of the International Division of Medialink, to be paid
over a period of three years. In connection with this acquisition two of the
shareholders of The London Bureau entered into deeds of covenant with the
Company with terms of three and four years, respectively. In consideration for
the deeds of covenant, the two shareholders received payments aggregating
approximately $485,000.
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. Earn-out provisions allow for up to an additional $6.2
million to be paid 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 80 percent cash and 20 percent in Medialink common
stock. During the six months ended June 30, 1997 Medialink made cash payments
of approximately $232,000 as additional consideration for the CTV acquisition.
As of June 30, 1998 Medialink had $11.02 million in cash and cash equivalents
as compared with $11.58 million as of December 31, 1997. As of June 30, 1998,
long-term debt was $405,000.
The Company believes that it has sufficient capital resources and cash flow
from operations to fund its net cash needs for at least the next twelve
months, including those related to the above-mentioned acquisitions.
13
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MEDIALINK WORLDWIDE INCORPORATED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
The Company relies significantly on computer technology throughout its
business to effectively carry out its day-to-day operations. As the millennium
approaches, the Company is assessing all of its computer systems to ensure
that they are "Year 2000" compliant. In this process the Company may replace
or upgrade certain systems which are not Year 2000 compliant in order to meet
its internal needs and those of its clients. The Company expects its Year 2000
project to be completed on a timely basis. However, there can be no assurance
that the systems of other companies on which the Company may rely will also be
timely converted or that such failure to convert by another company would not
have an adverse effect on the Company's systems. The cost to the Company of
such changes are difficult to estimate but are not expected to have a material
financial impact.
With respect to its internal business systems, the Company is working with
third-party vendors of such systems to ensure that Year 2000 compliance either
exists today or will be achieved via vendor supplied upgrades in a timely
manner. Furthermore, that Company is addressing the potential impact to the
Company of non-compliance by any of its key suppliers or clients. The Company's
programs include communications with the Company's significant vendors to
determine the extent to which the Company is vulnerable to any failures by them
to address the Year 2000 issue. On a case by case basis, where the Company
determines that it may be at a material adverse risk due to non-compliance by
any of its key vendors, the Company may develop contingency plans for an
alternate source of supply. The Company expects to incur internal staff and
engineering costs as well as consulting and other expenses related to the Year
2000 project.
With the exception of the historical information contained in this Form 10-Q,
the matters described herein may contain forward-looking statements that are
made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve various risks and may
cause actual results to differ materially. These risks include, but are not
limited to, the ability of Medialink to grow internally or by acquisition, and
to integrate acquired businesses, changing industry and competitive
conditions, and other risks outside the control of Medialink referred to in
its registration statement and periodic reports filed with the Securities and
Exchange Commission.
14
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MEDIALINK WORLDWIDE INCORPORATED
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
In July 1998 the Company was named as a defendant in a lawsuit filed by a
former employee in New York Supreme Court, County of New York. The plaintiff
is seeking certain compensation as defined in the lawsuit. In July 1998 the
Company filed an answer denying the allegations of the complaint and
containing several defenses and counterclaims for, among other things, breach
of duty and breach of contract. Although the Company has not completed
discovery at this early stage of litigation, the Company believes that there
are meritorious defenses and counterclaims to such action and believes that
any award to the plaintiff would not have a material adverse effect on the
financial condition of the Company.
ITEM 2. Changes in Securities and Use of Proceeds.
The registrant's initial public offering commenced on January 29, 1997. The
managing underwriters of the offering were Dean Witter Reynolds, Inc. and
Wheat First Union (formerly, Wheat First Butcher Singer). The class of
securities registered was common stock. The registrant registered 2,000,000
shares of common stock; the aggregate price of the offering amount was
$18,000,000; the amount of shares sold was 2,000,000; and the aggregate
offering price was $18,000,000. For the account of selling stockholders, there
were registered 300,000 shares of common stock; the aggregate price of the
offering was $2,700,000; the amount of shares sold was 300,0000; and the
aggregate offering price was $2,700,000.
Through June 30, 1998, the registrant incurred expenses in connection with the
issuance and distribution of the securities registered for underwriting
discounts and commissions of approximately $1,260,000; finders fees of $0;
expenses paid to or for underwriters of $0; other expenses of approximately
$1,160,000; and total expenses of approximately $2,420,000. These were direct
or indirect payments to others. There were expenses of approximately $189,000
for underwriting discounts and commissions in connection with the sale of
shares by selling stockholders, $0 for finders fees, $0 for expenses paid to
or for underwriters and total expenses of approximately $189,000. These
payments were direct or indirect payments to others.
15
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MEDIALINK WORLDWIDE INCORPORATED
The net offering proceeds to the registrant, after deducting the total
expenses described above, were $15,580,000. From January 29, 1997 to June 30,
1998, $6,205,113 of net offering proceeds were used for the acquisition of
other businesses, namely, certain assets of CTV, all of the outstanding shares
of common stock of On Line Broadcasting Limited and certain assets of Eye
Catchers Press. At June 30, 1998 the remaining proceeds were invested in
temporary investments; $3,705,000 in tax free municipals and $5,669,887 in tax
free money market accounts and interest bearing bank accounts. No proceeds
were used for the construction of plant, building and facilities, the purchase
and installation of machinery and equipment, the purchase of real estate, or
the repayment of indebtedness or working capital.
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information.
Pursuant to newly adopted rules of the Securities and Exchange Commission, any
stockholder who intends to present a proposal at the Company's 1999 Annual
Meeting of Stockholders without requesting the Company to include such
proposal in the Company's proxy statement should be aware that he must notify
the Company not later than March 11, 1999 of his intention to present the
proposal. Otherwise, the Company may exercise discretionary voting with
respect to such stockholder proposal pursuant to authority conferred on the
Company by proxies to be solicited by the Board of Directors of the Company
and delivered to the Company in connection with the Meeting.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: Exhibit 27 - Financial Data Schedule
(b) Report on Form 8-K: A report on Form 8-K was filed with the Securities
and Exchange Commission on July 23, 1998 in connection with the
acquisition of Tempest T.V. Limited d/b/a The London Bureau by the
Registrant.
16
<PAGE>
MEDIALINK WORLDWIDE INCORPORATED
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDIALINK WORLDWIDE 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, Assistant Secretary,
Chief Financial Officer and Director
Dated: August 14, 1998
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS IN FORM 10-Q FOR MEDIALINK WORLDWIDE INCORPORATED FOR THE
PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 11,024,352
<SECURITIES> 0
<RECEIVABLES> 9,721,273
<ALLOWANCES> 250,000
<INVENTORY> 0
<CURRENT-ASSETS> 21,809,895
<PP&E> 3,198,045
<DEPRECIATION> 1,161,703
<TOTAL-ASSETS> 31,595,833
<CURRENT-LIABILITIES> 7,276,537
<BONDS> 0
0
0
<COMMON> 52,493
<OTHER-SE> 23,861,650
<TOTAL-LIABILITY-AND-EQUITY> 31,595,833
<SALES> 20,365,745
<TOTAL-REVENUES> 20,365,745
<CGS> 8,434,919
<TOTAL-COSTS> 8,434,919
<OTHER-EXPENSES> 9,420,780
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,796
<INCOME-PRETAX> 2,735,088
<INCOME-TAX> 1,090,000
<INCOME-CONTINUING> 1,645,088
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,645,088
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.29
</TABLE>
