form10-q.htm

United States Securities and Exchange Commission Washington, D.C. 20549

				Form 10-Q

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2010


[ ]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	Commission File Number: 1-31771

			MEDLINK INTERNATIONAL, INC.
	(Exact name of registrant as specified in its charter)

Delaware					41-1311718
(State of other jurisdiction of incorporation or organization)					(IRS Employer Identification No.)

	1 Roebling Court, Ronkonkoma, NY 11779 (Address of principal executive offices)

	631-342-8800 (Issuer’s telephone number)

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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
		[ ] Large accelerated filer				[ ] Accelerated filer
		[ ] Non-accelerated filer				[X] Smaller reporting company

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: as of June 30, 2010 there were 36,442,236 Class A and 5,361,876 Class B shares outstanding.

MEDLINK INTERNATIONAL, INC.

FORM 10-Q

INDEX

Item		Page
Part I.	Explanatory Note FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets at June 30, 2010 (unaudited) and December 31, 2009 (audited)	3

	Condensed Consolidated Statements of Operations for the Three months and Six Months ended June 30, 2010 and 2009 (unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2010 and 2009 (unaudited)	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls & Procedures	24

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Default Upon Senior Securities	25

Item 4.	Submission of Matters To a Vote of Security Holders	25

Item 5.	Other Information	25

Item 6.	Exhibits	25

	SIGNATURES	26

Ex. 31.1	Section 302 Certification of Chief Executive Officer
Ex. 31.2	Section 302 Certification Chief Financial Officer
Ex. 32.1	Section 906 Certification Chief Executive Officer
Ex. 32.2	Section 906 Certification of Chief Financial Officer

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MEDLINK INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS	June 30,		December 31,
	2010		2009
	(unaudited)
Current Assets:
Cash		26,911		4,843
Accounts Receivable		1,438,603		289,346
Total current assets		1,465,513		294,189


Office equipment (at cost) net of accumulated depreciation		286,253		186,205
Intangible asset (at cost), net of accumulated amortization		12,453		10,938
Security deposit		12,950		12,950
Other assets		1,316,292		-
Total Assets	$	3,092,961	$	504,281

LIABILITIES AND STOCKHOLDERS’ EQUITY	June 30,			December 31,
	2010			2009
	(unaudited)
Current liabilities:
Accounts payable and accrued expenses		279,188			145,044
Due to related party		904,023			1,002,430
Liabilities from discontinued operations		804,141			804,141

Total current liabilities		1,987,352			1,951,605

Total liabilities		1,987,352			1,951,605

Stockholders' equity:
Common stock Class A $.001 par value; authorized 150,000,000 shares; 36,442,236 and 31,567,236 shares issued as of June 30, 2010 and December 31, 2009, respectively		36,442			31,567
Common stock B Class B $.001 par value; authorized 50,000,000 as of June 30, 2010; 5,361,876 issued and outstanding		5,362			5,362
Additional paid-in capital		22,263,285			20,093,341
Accumulated deficit		(21,068,929	)		(21,447,044	)
Treasury stock		(130,551	)		(130,551	)
Total stockholders' equity/deficit		1,105,509			(1,447,325	)

Total stockholders’ liabilities and stockholder equity	$	3,092,961		$	504,282

See accompanying notes to consolidated financial statements

MEDLINK INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months		For the Six Months
	ended June 30,		Ended
			June 30,
	2010	2009	2010	2009
Sales	$1,610,605	$115,783	$2,215,704	$259,970
Cost of Revenues	303,579	412	488,939	3,496
Gross Profit	1,307,026	115,371	1,726,765	256,474

Operating expenses:
Operating and administrative	256,360	262,062	354,864	720,945
Consulting Expense	199,351	12,750	253,995	62,811
Compensation Expense	479,452	25,974	707,323	25,250
Depreciation and amortization	20,420	10,035	32,467	30,105
Total Operating expenses	947,082	310,821	1,348,150	839,111

Net Profit/(Loss)	$359,443	$(195,450)	$378,115	$(582,637)

Basic and diluted loss per share (Class A)	$0.01	$(0.01)	$0.01	$(0.02)

Basic and diluted loss per share (Class B)	$0.07	$(0.04)	$0.07	$(0.11)

Weighted avg. number of basic shares outstanding (Class A)	36,442,236	26,805,987	36,442,236	26,805,987

Weighted avg. number of basic shares outstanding (Class B)	5,361,876	5,361,876	5,361,876	5,361,876

See accompanying notes to consolidated financial statements

MEDLINK INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
	For the Six Months Ended June 30
Cash flows from operating activities:	2010			2009
Net Income/(Loss)	$	378,115		$	(582,637	)
Adjustment to reconcile net income/(loss) to cash flows used in operating activities:
Share based compensation		21,319			511,267
Shares issued for consulting services		1,703,500
Depreciation		32,467			30,105
Amortization					4,170

Changes in operating assets and liabilities:
Accounts receivable		(1,149,257	)		(27,994	)
Deposits		-
Other assets		(1,316,292	)		(20,704	)
Accounts payable		(70,196	)
Accrued expense and other current liabilities		204,349			34,195
Net Cash used in operating activities		(197,510	)		(51,598	)

Cash flows from investing activities:
Purchase of fixed assets		(132,515	)		(588	)
Adjustment to net fixed assets		-			10,033
Write-down		-			95,674
Net cash provided by (used in) investing activities		(132,515	)		105,119

Cash flows from financing activities:
Proceeds from Private Placement		450,000
Repayment of loans		(98,407	)		(59,140	)
Advanced from officer/shareholders		-			34,476
Net cash flows provided by financing activities		351,593			(24,665	)

NET INCREASE IN CASH		21,568			27,553

CASH-AT BEGINNING OF PERIOD		4,843			(26,834	)

CASH-AT END OF PERIOD		26,411			699

Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	-	$	-
Cash paid for taxes	$	-	$	-

Supplemental disclosure of non-cash financing activities:
Share based compensation	$	21,319	$	511,267

Issuance of common shares for consulting and other services rendered	$	1,703,500	$	-

See accompanying notes to consolidated financial statements

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

MedLink International Inc. (the “Company”) is a healthcare information enterprise system business focused on the physician sector. The Company is in the business of selling, implementing and supporting software solutions that provide healthcare providers with secure access to clinical, administrative and financial data in real-time, allowing them to improve the quality, safety and efficiency in the delivery of healthcare services primarily through the sale of its flagship product the MedLink TotalOffice EHR.

Basis of Accounting

The financial statements are prepared using the accrual basis of accounting where revenues and expenses are recognized in the period in which they were incurred. The basis of accounting principles conforms to accounting principles generally accepted in the United States of America.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Interim Financial Statements

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month period ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010. For further information, refer to the financial statements and footnotes thereto included in our Form 10-K Report for the fiscal year ended December 31, 2009.

In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2010, the results of operations for the three months and six months ended June 30, 2010 and 2009, and the cash flows for the six months ended June 30, 2010 and 2009, have been included. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. In accordance with the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification™ (“ASC”) Topic 855, Subsequent Events, or ASC 855, the Company evaluated all events or transactions that occurred after June 30, 2010 through the date of this report, which represents the date the consolidated financial statements were issued. During this period the Company did not have any material recognizable subsequent events, except for events disclosed herein.

Use of Estimates

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

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Depreciation and Amortization

Property and equipment are recorded at cost. Depreciation on equipment, furniture and fixtures and leasehold improvements is computed on the straight-line method over the estimated useful lives of such assets between 3-10 years. Maintenance and repairs are charged to operations as incurred.

Revenue Recognition

MedLink’s revenues are derived from Subscription Contracts (including software license, support and maintenance), Professional Services (including implementation, integration, and training); and the sale of computer hardware.

The Company recognizes revenues in accordance with the provisions of ASC Topic 605, “Revenue Recognition” which requires among other matters, that there be a signed contract evidencing an arrangement exists, delivery has occurred, the fee is fixed or determinable, collectability is probable, and remaining obligations under the agreement are insignificant.

Revenue is recognized as set forth below:

Subscription Contracts

Our subscription contracts typically include the following elements:

o Software license;

o Support;

o Maintenance; and

Software license fees are recognized ratably over the term of the contract, commencing upon the delivery of the software provided that (1) there is evidence of an arrangement, (2) the fee is fixed or determinable and (3) collection of our fee is considered probable. The value of the software is determined using the residual method pursuant to ASC Topic 450, With Respect to Certain Transactions." These contracts contain the rights to unspecified future software within the suite purchased and/or unspecified platform transfer rights that do not qualify for exchange accounting.

Professional Services

Professional services represent incremental services marketed to clients including implementation, consulting, and training services. Professional services revenues, where VSOE is based on prices from stand-alone transactions, and the revenues are recognized as services are performed pursuant to ASC Topic 450.

Goodwill and Indefinite-Lived Purchased Intangible Assets

In accordance with ASC Topic 350, “Goodwill and Other Intangible Assets,” goodwill acquired in business combination is assigned to reporting units that are expected to benefit from the synergies of the combination as of the acquisition date. The Company assesses goodwill and indefinite-lived intangible assets for impairment annually at the end of the fourth quarter, or more frequently if events and circumstances indicate impairment may have occurred in accordance with SFAS No. 142. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference. ASC Topic 350 also requires that the fair value of indefinite-lived purchased intangible assets be estimated and compared to the carrying value. The Company recognizes an impairment loss when the estimated fair value of the indefinite-lived purchased intangible assets is less than the carrying value.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Hardware

Hardware is recognized upon delivery pursuant to ASC Topic 360.

In accordance with EITF 00-10, "Accounting for Shipping and Handling Fees," we have classified the reimbursement by clients of shipping and handling costs as revenue and the associated cost as cost of revenue.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of sales, trade accounts receivable and cash. The Company grants credit to domestic companies located throughout the New York tri-state area. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers.

Long-Lived Assets

The Company’s accounting policy regarding the assessment of the recoverability of the carrying value of long-lived assets, including property and equipment and purchased intangible assets with finite lives, is to review the carrying value of the assets if the facts and circumstances suggest that they may be impaired. If this review indicates that the carrying value will not be recoverable, as determined based on the projected undiscounted future cash flows, the carrying value is reduced to its estimated fair value. Intangible assets that have finite useful lives are amortized by the straight-line method over the remaining useful lives.

Accounting for Stock-Based Compensation

ASC Topic 718 requires compensation costs related to share-based payment transactions to be recognized in the statement of operations. With limited expectations, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. The Company used the black-scholes option pricing model for estimating the fair value of the options granted under the company’s incentive plan.

Discontinued Operations

A business is classified as a discontinued operation when (i) the operations and cash flows of the business can be clearly distinguished and have been or will be eliminated from our ongoing operations; (ii) the business has either been disposed of or is classified as held for sale; and (iii) we will not have any significant continuing involvement in the operations of the business after the disposal transactions. Significant judgments are involved in determining whether a business meets the criteria for discontinued operations reporting and the period in which these criteria are met.

If a business is reported as a discontinued operation, the results of operations through the date of sale, including any gain or loss recognized on the disposition, are presented on a separate line of the income statement. Interest on debt directly attributable to the discontinued operation is allocated to discontinued operations. Gains and losses related to the sale of businesses that do not meet the discontinued operation criteria are reported in continuing operations and separately disclosed if significant.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounts Receivable

Accounts receivable consists of amounts due from our sales of subscription contracts, professional services, and the sale of computer hardware. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off off when it is determined that the amounts are uncollectible. At June 30, 2010 and 2009, the provision for doubtful accounts was $0 and $0, respectively.

Fixed Asset

The Company depreciates its equipment on the straight-line method for financial reporting purposes over a five year period. For tax reporting purposes, the Company uses accelerated methods of depreciation. Expenditures for maintenance, repairs, renewals and betterments are reviewed by management and only those expenditures representing improvements to equipment are capitalized. At the time equipment is retired or otherwise disposed of, the cost and accumulated depreciation accounts are removed from the books and the gain or loss on such disposition is reflected in operations.

Other Assets

Other Assets consists of deferred charges resulting from a consulting advisory agreement dated February 10, 2010.

Deferred Income Taxes

Deferred income taxes are provided based on the provisions of ASC Topic 740, "Accounting for Income Taxes" to reflect the tax effect of differences in the recognition of revenues and expenses between financial reporting and income tax purposes based on the enacted tax laws in effect at December 31, 2009.

The Company, as of June 30, 2010 had available approximately $21,069,730 of net operating loss carry forwards to reduce future Federal income taxes. The Company has operating loss carry forwards which are due to

expire from 2010 through 2023. Since there is no guarantee that the related deferred tax asset will be realized by reduction of taxes payable on taxable income during the carry forward period, a valuation allowance has been computed to offset in its entirety the deferred tax asset attributable to this net operating loss. The amount of valuation allowances are reviewed periodically.

ASC Topic 740 interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax return. ASC Topic 740 and related interpretations are effective for the Company in the first quarter of fiscal 2007.

Earnings Per Common Share of Common Stock

ASC Topic 260 requires two presentations of earnings per share - "basic" and "diluted". Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average number of common shares for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of common shares is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued.

Only basic earnings per share is presented as all common stock equivalents are either anti-dilutive or not material for the period presented. For the period ending June 30, 2010 and December 31, 2009, the weighted average number of shares outstanding for the Company’s Class A Common Stock used in the per share computation was 36,642,236 and 31,567,876, respectively. For the periods ending June 30, 2010 and December 31, 2009, the weighted average number of shares outstanding for the Company’s Class B Common Stock used in the per share computation was 5,361,876 and 5,361,876, respectively.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of its liabilities in the normal course of business. Through June 30, 2010, the Company had incurred cumulative losses of $21,069,730. As of June 30, 2010, the Company has negative working capital of $512,839.

Management plans to take the following steps that it believes will be sufficient to provide the Company with the ability to continue in existence. (i) Management intends to continue to raise additional financing through private equity or debt financing to pay down Company debt and/or reduce the cost of debt service. (ii) Management is also planning to continue to finance the company using their own personal funds or using the equity that they personally own in the company. (iii) Management intends to increase revenues and is actively pursuing additional contracts.

The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 2 – RECENT ACCOUNTING PRONOUNCEMENTS

In March 2010, the FASB issued Accounting Standard Update No. 2010-11 “Derivatives and Hedging” (Topic 815). ASU No. 2010-11 update provides amendments to subtopic 815-15, Derivatives and hedging. The amendments clarify about the scope exception in paragraph 815-10-15-11 and section 815-15-25 as applicable to the embedded credit derivatives. The ASU is effective on the first day of the first fiscal quarter beginning after June 15, 2010. Therefore, for a calendar-year-end entity, the ASU becomes effective on July 1, 2010. Early application is permitted at the beginning of the first fiscal quarter beginning after March 5, 2010

In April 2010, the FASB issued Accounting Standard Update No. 2010-12. “Income Taxes” (Topic 740). ASU No.2010-12 amends FASB Accounting Standard Codification subtopic 740-10 Income Taxes to include paragraph 740-10-S99-4. On March 30, 2010 The President signed the Health Care & Education Affordable Care Act reconciliation bill that amends its previous Act signed on March 23, 2010. FASB Codification topic 740, Income Taxes, requires the measurement of current and deferred tax liabilities and assets to be based on provisions of enacted tax law. The effects of future changes in tax laws are not anticipated.” Therefore, the different enactment dates of the Act and reconciliation measure may affect registrants with a period-end that falls between March 23, 2010 (enactment date of the Act), and March 30, 2010 (enactment date of the reconciliation measure). However, the announcement states that the SEC would not object if such registrants were to account for the enactment of both the Act and the reconciliation measure in a period ending on or after March 23, 2010, but notes that the SEC staff “does not believe that it would be appropriate for registrants to analogize to this view in any other fact patterns.”

In April 2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock Compensation” (Topic 718). ASU No.2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted.

In April 2010, the FASB issued Accounting Standards Update No.2010-14, “Accounting for Extractive Activities – Oil & Gas” (Topic 932). ASU No. 2010-14 amends FASB accounting Standard paragraph 932-10-S99-1 due to SEC release no. 33-8995 [FR 78], Modernization of Oil and Gas Reporting and provides update as to amendments to SEC Regulation S-X, Rule 4-10.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

In April 2010, the FASB issued Accounting Standard Update No. 2010-15. “Financial Services-Insurance” (Topic 944) ASU No.2010-15 gives direction on how investments through separate accounts affect an insurer’s consolidation analysis of those investments. Under the ASU: an insurance entity should not consider any separate account interests held for the benefit of policy holders in an investment to be the insurer's interests and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation, unless the separate account interests are held for the benefit of a related party policy holder as defined in the Variable Interest Entities Subsections of Subtopic 810-10 and those Subsections require the consideration of related parties. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2010. Early adoption is permitted. The amendments in this Update should be applied retrospectively to all prior periods upon the date of adoption.

In April 2010, the FASB issued Accounting Standard Update No. 2010-16. “Entertainment-Casinos” (Topic 924). ASU No.2010-16 addresses diversity in practice regarding whether an entity accrues liabilities for a base jackpot before it is won because they could avoid the payment. The amendments in this update clarify that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. This guidance applies to both base and progressive jackpots. The ASU amendments are effective for fiscal years, and the interim periods within those fiscal years, beginning on or after December 15, 2010.

In April 2010, the FASB issued Accounting Standard Update No. 2010-17. “Revenue Recognition-Milestone Method” (Topic 605) ASU No.2010-17 provides guidance on defining a milestone and determining when it may be

appropriate to apply the milestone method of revenue recognition for research or development transactions. An entity often recognizes these milestone payments as revenue in their entirety upon achieving a specific result from the research or development efforts. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. Determining whether a milestone is substantive is a matter of judgment made at the inception of the arrangement. The ASU is effective for fiscal years and interim periods within those fiscal years beginning on or after June 15, 2010. Early application is permitted. Entities can apply this guidance prospectively to milestones achieved after adoption. However, retrospective application to all prior periods is also permitted.

In April 2010, the FASB issued Accounting Standard Update No. 2010-18. “Receivables” (Topic 310). ASU No.2010-18 provides guidance on accounting for acquired loans that have evidence of credit deterioration upon acquisition. Paragraph 310-30-15-6 allows acquired assets with common risk characteristics to be accounted for in the aggregated as a pool. Upon establishment of the pool, the pool becomes the unit of accounting. When loans are accounted for as a pool, the purchase discount is not allocated to individual loans; thus all of the loans in the pool accrete at a single pool rate (based on cash flow projections for the pool). Under subtopic 310-30, the impairment analysis also is performed on the pool as a whole as opposed to each individual loan. Paragraphs 310-40-15-4 through 15-12 establish the criteria for evaluating whether a loan modification should be classified as a troubled debt restructuring. Specifically paragraph 310-40-15-5 states that “a restructuring of a debt constitutes a troubled debt restructuring for purposes of this subtopic if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider.” The ASU is effective for modification of loans accounted for within pools under subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. The amendments are to be applied prospectively. Early application is permitted.

In May 2010, the FASB issued Accounting Standard Update No. 2010-19 “Foreign Currency”. (“ASU No. 2010-19”). ASU 2010-19, codifies the SEC staff announcement made at the March 18, 2010, EITF meeting. The ASU “provides the SEC staff’s views on certain foreign currency issues related to investments in Venezuela.” These issues relate to Venezuela’s highly inflationary status. The ASU became effective on March 18, 2010.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 3 - PROPERTY AND EQUIPMENT

As of June 30, 2010, a summary of property and equipment and the estimated useful lives used in the computation of depreciation is as follows:

	Estimated Useful Life (years)	Amount
Furniture and fixtures	5	$37,863
Leasehold improvements	3	23,849
Equipment	5	345,296
		407,008
Less accumulated depreciation		187,663
		$219,425

Depreciation expense for the periods ended June 30, 2010 and 2009 was $12,047 and $20,070, respectively. Amounts include amortization expense associated with equipment under capital leases.

NOTE 4- ACCOUNTS RECEIVABLE

As of June 30, 2010, accounts receivable totaled $1,438,603.

Accounts receivable consist of amounts due from our sales of the MedLink TotalOffice EHR and Interface and Integration Services to Imaging Centers and Laboratories and are reported at net realizable value. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible.

NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

As of June 30, 2010, accounts payable and accrued expenses totaled $112,596.

NOTE 6 - LOAN PAYABLE - RELATED PARTIES

The Company, as of June 30, 2010, has loans due to three of its employees/shareholders in the amount of $904,023. These loans are payable on demand and are non-interest bearing.

NOTE 7 – NOTE PAYABLE

The Company purchased 130,000,000 shares of Anywhere MD, Inc.’s stock from the majority shareholder of Anywhere MD., Inc., a discontinued operation, in exchange for a note in the amount of $875,000. As of June 30, 2010 $509,835 was due on demand. This note is non-interest bearing. The holder of the Note is in default of their obligations and the Company is currently pursuing legal action to recover its costs as result of the default including monies paid out on the Note Payable.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010

NOTE 8 - COMMITMENTS AND CONTINGENCIES

In February 2009 the company entered into a rental lease agreement for its corporate headquarters in Ronkonkoma, New York which expires on February 28, 2014.

In May 2010 the company entered into a rental lease agreement for office space in Hyderabad, India which expires on April 30, 2015.

In June 2010 the company entered into a rental lease agreement for an office space in Baltimore, Maryland which expires on June 30, 2012.

Minimum annual lease commitments are as follows:

Year ended December 31,

2010 80,308

2011 148,776

2012 144,224

2013 138,920

2014 15,680

Total $590,364

NOTE 9 - STOCKHOLDERS' EQUITY

Share Based Consultant Services

For the period ending June 30, 2010, the Company issued 3,600,000 shares of Company common stock to various non-employee service providers and has recorded the fair value of shares issued based on the closing market price of stock of $0.35 on the respective measurement date of approximately $1,260,000 as an increase in additional paid-in capital. Stock-based compensation expense is recognized over the requisite service periods

Preferred Stock Series A

For the period ending June 30, 2010, the Company’s board of directors designated 2,200 shares of the Company’s preferred stock into a Preferred Class Series A, each share of preferred series A is convertible into 1000 shares of the Company’s class A common stock. During the period ended June 30, 2010 the company issued 1,000 shares of the Series A Preferred for a total capital contribution of $450,000

NOTE 9 – SUBSEQUENT EVENTS

LabTest Portal Acquisition: In July of 2010, we acquired a 100% ownership interest in a Maryland-based direct-to-consumer laboratory testing company for 400,000 shares of the Company’s Class A Common Stock. LabTestPortal.com (LTP) is a service provider that delivers direct-to-consumer secure and confidential laboratory testing, alleviating the need to spend precious time waiting to see a primary care physician for consumers. LTP provides a Personal Heath Record portal where consumers are able to track their lab testing results as well as store vital healthcare documents and information. LTP is a necessary tool for all consumers to better manage their health through monitoring and education with its service offering available to consumers in all 50 states. The acquisition will be accounted for as a business combination and the acquired company’s results of operations will be consolidated in our financial statements from the date of acquisition.

MEDLINK INTERNATIONAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JUNE 30, 2010 (UNAUDITED)

NOTE 9- SUBSEQUENT EVENTS (continued)

Health Informatics Acquisition: In August of 2010, we acquired a 51% controlling ownership interest in a New Jersey based, Health Informatics LLC, a provider of cutting edge clinical data digitization technology that simplifies and streamlines the adoption of Electronic Health Records for 250,000 shares of the Company’s Class A Common Stock, with an option to purchase the additional 49% beginning in 2012. The acquisition will be accounted for as a business combination and the acquired company’s results of operations will be consolidated in our financial statements from the date of acquisition.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Business Overview

Introduction

During the period ended June 30, 2010, MedLink realized more than 200% growth over the first quarter of 2010 with revenues of $1.6m and a net profit of $378k. During the second quarter the Company expanded its operations and staff, with several key management hires, the expansion of its IT center in India, and the opening of offices in Baltimore, MD and Hellertown, PA. MedLink’s increased revenues from the second quarter were primarily attributable to increased sales of the MedLink TotalOffice EHR, which were spurred through RHIO’s subsidies of physicians and through the launch of MedLink Lab Portal, a clinical Laboratory ordering and results platform. The Company continues to gain traction and garner significant contracts that will have a positive result on the Company’s operations for the remainder of 2010 and beyond as the health information technology market continues to grow rapidly with double digit annual growth rates. With the Company’s primary target market less than 20% penetrated, MedLink is poised for continued success and growth through the sale and maintenance of its EHR and clinical laboratory product offerings. Significant second quarter highlights included:

·	Selection by the SunCoast RHIO as exclusive EHR Vendor

·	Selected EHR Vendor by the New York Regional Extension Center

·	Launched MedLink Lab- a clinical laboratory orders/results portal.

·	Hired Steward Macis as the Company’s Chief Information Officer

·	Signed three regional clinical laboratory’s that will deploy the MedLink Lab Portal

·	Signed MedLink Lab Portal Licensing agreement with Laboratory Services Company that manages Hospital labs nationwide.

·	Opened new offices in Baltimore, MD and Hellertown, PA

·	Expansion of India IT Operations Center

o	Leased 7,500 square feet

o	Hired more than 20 additional IT Staff

·	Expanded MedLink Revenue Cycle Management Services

·	Executed on synergistic acquisition opportunities/

Company Overview

MedLink sells and supports a proprietary electronic health record (“EHR”) application, including practice management for physician practices. MedLink’s flagship offering is the CCHIT Certified 08 Ambulatory MedLink TotalOffice EHR, a healthcare information enterprise system that provides physician practices with an entire practice management, clinical decision support and EHR solution. MedLink also offers the MedLink Lab Portal, an online ordering and results platform that is integrated with laboratory information systems allowing referring providers of clinical laboratories to order and receive lab results through an online interface. MedLink’s Lab Portal offering provides users with a clear path towards the achievement of ‘meaningful use’. Through the adoption of MedLink’s TotalOffice EHR, physicians may receive a subsidy towards the purchase of the TotalOffice EHR under a Stark anti-kickback exemption from Labs, Hospitals or other physician service providers. The MedLink TotalOffice EHR is only one of seven EHR’s to be qualified by CMS, which provides the Company with a significant competitive advantage as physicians adopting EHR technology to achieve ‘meaningful use’ will qualify for the $44,000 to $64,000 federal subsidy per provider, available to physicians who utilize a ‘Qualified’ EHR and achieve meaningful use through direct reporting to CMS. The Company also offers medical providers with complete revenue cycle management services, hardware and network infrastructure and use of the TotalOffice EHR, all for a fixed fee determined by the practice’s annual billing revenue through MedLink Billing.

MedLink’s business strategy is to build critical mass and develop a national presence among small to medium sized physician practices (1 to 10 physicians) by increasing market penetration of the MedLink Lab Portal and TotalOffice EHR. The small physician practice market segment remains largely unpenetrated for EHRs, with less than 10% of practices in the market having yet to adopt EHR technology. With more than $19 billion in federal incentives and mandates to adopt by 2014, more than 160,000 practices in MedLink key demographic market are expected to adopt EHR in the next 3 years. As part of its growth strategy, MedLink is working with a number of Regional Health Information Networks (“RHIOs”) and is partnering with RHIO’s, radiology centers, hospitals, laboratories and revenue cycle management companies that subsidize the overall cost of the MedLink TotalOffice EHR up to 85% for qualifying practices. MedLink’s strategic partnerships and growing network of value added resellers provides a framework for physician adoption and a captive audience to target a focused sales and marketing plan.

MedLink has strategically positioned itself to execute on all facets of its business plan which the Company expects will result in tremendous growth in 2010.

Recent Business Developments

Acquisition of LabTestPortal.com

In July, MedLink announced the acquisition of LabTestPortal.com, a direct-to-consumer laboratory testing platform. The acquisition provides MedLink with an entry into the direct-to-consumer laboratory testing market which has gained significant traction in the more than $50 billion U.S. laboratory testing market. LabTestPortal is a service provider that delivers direct-to-consumer secure and confidential laboratory testing to consumers, that eliminates the need to see a primary care physician and receive insurance approval for maintenance and advanced lab tests. Through a Personal Heath Record portal, consumers are able to track their lab testing results as well as store vital healthcare documents and information and receive results in most cases in less than 48 hours and is available to consumers in all 50 states.

Acquisition of Health Informatics

In August, MedLink announced the acquisition of Health Informatics a provider of cutting edge clinical data digitization technology that simplifies and streamlines the adoption of Electronic Health Records. The Health Informatics Digital Pen in conjunction with MD Form Manager is the flagship offering of the Company. The Digital Pen looks and feels like a normal ball point pen, however, the Digital Pen contains an integrated infrared digital camera, an advanced image microprocessor and a mobile communications device for wireless connection. The camera records the precise location of ink strokes as it moves over a uniquely constructed grid of microscopic dot patterns. These dots provides the pen with exact co-ordinates of its position, which through MD Form Manager are designed to interface directly with the MedLink EHR to collect discrete data elements that electronically populate the patient chart. The solution provides Doctors and their staff with the traditional documentation approach of pen and paper, but the advanced ability of digitally documenting and capturing the data required to provide ‘meaningful use’ and other quality data reports.

Acquisition Strategy

MedLink is focused on organic growth, but also is exploring synergistic acquisition opportunities that will enhance the Company’s market share and product offerings. In addition to the acquisition of LabTestPortal and Health Informatics, the Company is exploring two potential acquisition opportunities of two of its EHR competitors, in line with the Company’s acquisition strategy. Each of the opportunities presents MedLink with product offerings that will complement the Company’s current product offering.

MedLink Lab Portal

During the second quarter, the Company launched the MedLink Lab Portal, which provides a web based clinical laboratory ordering, and results platform that is provided to the referring providers of clinical and hospital labs. The Company charges an upfront License fee, an Integration fee to the Laboratory Information System, as well as a monthly maintenance fee per provider, paid by the Laboratory for each enrolled referring provider that accesses the portal to order and retrieve lab results. The lab outreach portal is a natural extension for the Company and its suite of EHR products with the communication of lab results being a key component in Providers achieving ‘meaningful use’. During the 2nd quarter of 2010, three regional clinical laboratories signed with MedLink to utilize the MedLink Lab Portal as well a Laboratory Services company that operates and manages Hospitals Labs nationwide.

MedLink Qualified by the Centers for Medicare and Medicaid Services (CMS)

In January of 2010, MedLink successfully completed the CMS PQRI testing program and achieved “Qualified” vendor status by CMS along with only 6 other EHR vendors for direct PQRI reporting from an EHR, creating a significant market differentiator for MedLink. MedLink’s ability to report directly to CMS should positively influence physicians when deciding among competing EHR vendors to select MedLink. This is another example of how MedLink differentiates itself and puts its technology in the same league as industry leaders such as Allscripts, Epic and NextGen. The CMS Project is significant because of the focus on healthcare cost reduction through technology and preventative care. MedLink will give physicians who use MedLink’s products the ability to directly report Quality Measures directly to CMS. This connection allows those physicians to save time and collect money available for such programs much more efficiently. This is a clear differentiator and will be used as part of MedLink’s marketing across the country.

Interboro RHIO

MedLink was also recently selected by Interboro RHIO after an exhaustive 1 year RFI and selection process. Selection by Interboro is a testament to the MedLink TotalOffice EHR as MedLink was selected above the industry’s market leaders. The Interboro RHIO is a clinical data exchange (“CDE”) serving the County of Queens, northern Brooklyn and surrounding communities which will serve as a hub for the communication of patient information between healthcare providers within the community. Under the contract, the Interboro RHIO will subsidize providers 85% of the cost to purchase and implement the MedLink TotalOffice EHR. Providers that receive the Interboro subsidy will receive: the MedLink TotalOffice License, implementation and customization, three days of on-site implementation assistance, ten months maintenance and support, on-site health IT adoption and support assistance and Interboro RHIO connectivity through 2011. There are an estimated 7,000 physicians who could be eligible for the program in the Interboro RHIO service area. A 5 physician practice, for example, under the Interboro RHIO program subsidy would receive the MedLink TotalOffice EHR and related HIT services of a total cost of $75,830, of which the Interboro RHIO would subsidize $63,946, resulting in a cost to the practice of just $11,885 or less than $2,400 per physician.

Initial interest in the program has been significant and MedLink has increased its sales team to promote the program to medical practices in Queens and Brooklyn. The Interboro RHIO is funded through a current grant of $7.7 million from New York State.

Other RHIO Programs

MedLink is either a finalist or under consideration for inclusion as a preferred vendor in a number of other RHIO programs in New York State, Florida, Connecticut, Georgia and Alabama. RHIOs are quickly becoming key intermediaries to support federal and state financial incentive programs by allocating subsidies and grants to physicians to pay for EHR software and installation.

During the 1st quarter of 2010, MedLink introduced the RHIO financial sustainability Model and signed the SunCoast RHIO in Florida during the second quarter as the first participant. These types of programs will add to the exposure of the MedLink products in the various RHIO areas. The Company has received increased interest from RHIO’s across the country since the announcement of the Sun Coast RHIO and plans to utilize the RHIO financial sustainability model as a key driver for EHR adoption and the sharing of clinical information data through the MedLink Data Aggregator.

RHIO participation represents a key component of MedLink’s growth strategy. MedLink is particularly well positioned in dealing with RHIOs as it is the lowest cost option among competitive offerings and as such, allows the RHIOs to apply their dollars across more physicians. MedLink is positioned to take advantage of these RHIO opportunities as a result of its development process and its adherence to the various standards for handling and transmitting data with networks such as the National Health Information Network and the State Health Information Network of NY. MedLink has already provided data to organizations in various manners and in doing so, has differentiated itself from a technology standpoint which has resulted in various projects becoming available to it in 2010.

New York City Department of Health Contract

The Company signed an agreement with the New York City Department of Health (NYC DOH), the nation’s leading municipality in healthcare IT. The NYC DOH has a number of initiatives underway to promote the adoption of EHRs in order to collect patient data. As a normal part of its business strategy, MedLink has been in active discussions with the NYC DOH to participate in these initiatives and to promote the installation of TotalOffice EHRs as one means for the NYC DOH to accomplish their objectives. MedLink and NYC DOH finalized an agreement in late December 2009 to work together on a number of initiatives, including:

Quality Reporting and Syndromic Surveillance: Syndromic Surveillance is the daily reporting on the conditions or symptoms that would cause someone to go their doctor. Physicians document this as the “Chief Complaint” as part of the patient encounter. MedLink EHR has been approved and was the only EHR to pass NYC DOH reporting standards for Syndromic Surveillance reporting.

Public Health Alert System: NYC DOH is implementing and developing a Public Health Alert Push (i.e., an alert push is an actionable item by physicians to make alerts regarding certain matters of concern, such as a virus that would require reporting, vaccination documentation or orders) in conjunction with MedLink.

MedLink Data Aggregator: MedLink has developed a software application in which it can aggregate data from smaller EHR systems and deliver the data to the NYC DOH for quality reporting requirements. Under the terms of the agreement the MedLink Data Aggregator will be the exclusive gateway for other healthcare IT vendors and systems to deliver patient information to NYC DOH, which will establish MedLink as one of the largest clinical patient database in the country.

Economic Stimulus Package Provides Incentives for Physicians to Adopt EHRs

MedLink’s TotalOffice EHR is well-positioned to be a beneficiary of the recently enacted stimulus bill, the American Recovery and Reinvestment Act of 2009 (“ARRA”), which provides incentives for office-based physicians and other providers to adopt electronic health records. Physicians can qualify under either the Medicare or Medicaid provision of ARRA. The Medicare provision includes incentives of up to $44,000 per physician over a 5-year period. The Medicaid provision includes incentives of up to $64,000 per physician over a 6-year period. The funds become available for office-based physicians on January 1, 2011. In order to qualify for incentives, physicians must demonstrate “meaningful use” of a certified EHR. “Meaningful use” is not yet defined, but will likely be defined as measurable results that demonstrate quality, safety and efficiency improvements. The certification requirements, also not yet defined, are likely to be based on the standards adopted by CCHIT and framed around the PQRI data submitted directly to the Centers of Medicare and Medicaid Services (“CMS”).

CMS Incentives: Beginning in 2011, office-based physicians who are “meaningful users” of certified EHRs are entitled to receive $44,000 to $64,000 over 5 years, from 2011 to 2015. To be eligible under this provision, office-based physicians must demonstrate “meaningful use” of a “qualified” EHR by reporting quality measure reports to CMS.

Office-based physicians who do not adopt EHR technology by 2015 will be penalized by seeing their Medicare payments reduced by 1% in 2015, 2% in 2016, 3% in 2017 and beyond. In 2018 and beyond, the HHS Secretary may decrease one additional percentage point per year (maximum of 5%) contingent upon the levels of overall EHR adoption in the market.

Contractual Obligations

We have contractual obligations to maintain operating leases for property. The following table summarizes our long-term contractual obligations and commitments as of June 30, 2010:

Operating lease obligations	Total	Less Than 1 Year	1-3 Years
Operating lease obligations	$590,364	$80,308	$373,308

The commitments under our operating leases shown above consist primarily of lease payments for our Ronkonkoma, New York corporate headquarters.

Off-Balance Sheet Arrangements

As of June 30, 2010 and December 31, 2009, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2010 Compared to Three Months Ended June 30, 2009.

The Company's revenues from continuing operations for the period ending June 30, 2010 and 2009 were $1,610,605 and $115,783, respectively. The increase in revenue is primarily attributable to expanded sales of the MedLink TotalOffice EHR, the MedLink Lab Portal and integration fees with labs and radiology centers.

Expenses for the period ending June 30, 2010 and 2009 were $947,582 and $310,821, respectively. The increase in 2010 is primarily attributable to increased payroll and overhead expenses as the Company has more than tripled its staff and office space from a year ago.

The Company had net profit/(loss) of $359,443 and ($195,450) for the period ending June 30, 2010 and 2009, respectively. The increase in profitability is primarily attributable to increase sales of the MedLink Total Office EHR, MedLink Lab Portal, and Lab and Radiology Integrations fee’s.

Six Months Ended June 30, 2010 Compared to Six Months Ended June 30, 2009.

The Company's revenues from continuing operations for the period ending June 30, 2010 and 2009 were $2,215,704 and $259,970, respectively. The increase in revenue is primarily attributable to expanded sales of the MedLink TotalOffice EHR, the MedLink Lab Portal and integration fees with labs and radiology centers.

Expenses for the period ending June 30, 2010 and 2009 were $1,348,650 and $839,111, respectively. The increase in 2010 is primarily attributable to increased payroll and overhead expenses as the Company has more than tripled its staff and office space from a year ago.

The Company had net profit/(loss) of $378,115 and ($582,637) for the period ending June 30, 2010 and 2009, respectively. The increase in profitability is primarily attributable to increase sales of the MedLink Total Office EHR, MedLink Lab Portal, and Lab and Radiology Integrations fee’s.

Liquidity and Capital Resources

At June 30, 2010, the Company had a working capital deficiency of ($522,339). While the Company believes revenue that will be earned from the sales of the MedLink EHR, MedLink Lab Portal, and integration fees from labs and imaging centers as well as recurring revenue from the maintenance and support of its applications will soon be sufficient to sustain the Company's operations, there can be no guarantee that this will be the case and that the Company will not have to raise additional capital from investors.

The Company expects to experience significant growth over the next several years. As a result of the recent federal stimulus bill, over the next two to five years, an increasing number of physicians will be adopting EHR technology. There will be billions of dollars in public and private initiatives available to facilitate a rapid movement toward adoption. The federal initiative funds will be available to vendors, such as MedLink, who have demonstrated “meaningful use” (such as under CMS PQRI reporting), complied with state EHR requirements and interoperability requirements (such as with NY RHIOs) and have current year CCHIT certification. As part of its ongoing business strategy, MedLink continues to raise additional capital to execute on its business opportunities.

Critical Accounting Policies

We believe there are several accounting policies that are critical to the understanding of our historical and future performance as these policies affect the reported amount of revenues and expenses and other significant areas and involve management’s most difficult, subjective or complex judgments and estimates. On an ongoing basis, management evaluates and adjusts its estimates and judgments, if necessary. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingencies. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be materially different from those estimates. These critical accounting policies relate to revenue recognition, allowance for doubtful accounts, capitalized software development costs, stock-based compensation and income taxes. Please refer to Note 1 of the audited Consolidated Financial Statements for further discussion of our significant accounting policies.

The preparation of financial statements and related disclosures requires management to make judgments, assumptions and estimates that affect the amounts in the Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated Annual Report on Form 10-K for the year ended December 31, 2009 describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Estimates are used for, but not limited to, goodwill impairment and long-lived asset impairments. The following critical accounting policies are impacted significantly by judgments, assumptions and estimates used in the preparation of the Consolidated Financial Statements.

Revenue Recognition

Revenues are derived from licensing of computer software and professional services (including implementation, integration, and training) and the sale of computer hardware. We evaluate revenue recognition on a contract-by-contract basis as the terms of each arrangement vary. The evaluation of our contractual arrangements often requires judgments and estimates that affect the timing of revenue recognized in our statements of operations. Specifically, we may be required to make judgments about:

•	whether the fees associated with our software and services are fixed or determinable;
•	whether collection of our fees is considered probable;
•	whether professional services are essential to the functionality of the related software;
•	whether we have the ability to make reasonably dependable estimates in the application of the percentage-of-completion method; and
•	whether we have verifiable objective evidence of fair value for our software and services.

Allowance for Doubtful Accounts

In evaluating the collectability of our accounts receivable, we assess a number of factors, including a specific client’s ability to meet its financial obligations to us, as well as general factors such as the length of time the receivables are past due and historical collection experience. Based on these assessments, we record a reserve for specific account balances as well as a reserve based on our historical experience for bad debt to reduce the related receivables to the amount we ultimately expect to collect from clients. If circumstances related to specific clients change, or economic conditions deteriorate such that our past collection experience is no longer relevant, our estimate of the recoverability of our accounts receivable could be further reduced from the levels provided for in the Consolidated Financial Statements.

Goodwill

ASC Topic 350, formerly SFAS No. 142, “Goodwill and Other Intangible Assets,” classifies intangible assets into three categories: (1) intangible assets with definite lives subject to amortization; (2) intangible assets with indefinite lives not subject to amortization; and (3) goodwill. For intangible assets with definite lives, tests for impairment must be performed if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with indefinite lives and goodwill, tests for impairment must be performed at least annually or more frequently if events or circumstances indicate that assets might be impaired. Our acquired technology and other intangible assets determined to have definite lives are amortized over their useful lives. In accordance with SFAS No. 142, if conditions exist that indicate the carrying value may not be recoverable; we review such intangible assets with definite lives for impairment. Such conditions may include an economic downturn in a market or a change in the assessment of future operations. Goodwill is not amortized. We perform tests for impairment of goodwill annually, or more frequently if events or circumstances indicate it might be impaired. We have only one reporting unit for which all goodwill is assigned. Impairment tests for goodwill include comparing the fair value of the company compared to the comparable carrying value, including goodwill.

Use of Estimates

Accounting for Stock-Based Compensation

ASC Topic 505, formerly SFAS 123 (“SFAS 123(R)”) requires compensation costs related to share-based payment transactions to be recognized in the statement of operations. With limited exceptions, the amount of compensation cost is measured based on the grant-date fair value of the equity or liability instruments issued. In addition, liability awards will be re-measured each reporting period. Compensation cost will be recognized over the period that an employee provides service in exchange for the award. In 2009, the Company used the black-scholes option pricing model for estimating the fair value of the options granted under the company’s incentive plan.

Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing earnings available to common shareholders by the weighted-average number of common shares outstanding for the period as required by ASC Topic 260, formerly the Financial Accounting Standards Board (“FASB”). Diluted EPS reflects the potential dilution of securities that could share in the earnings.

Disclosure about Derivative Instruments and Hedging Activities

According to ASC Topic 815, formerly SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities,” the objectives for using derivative instruments must be disclosed in terms of underlying risk and accounting designation.

Determination of the Useful Life of Intangible Assets

ASC Topic 350, formerly FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets,” is used to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of the expected cash flows used to measure the fair value of the asset under FASB 141 (revised 2007) “Business Combinations” and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential impact of FSP FAS 142-3 on its consolidated financial statements.

CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934

The information in this annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their businesses so long as they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than those statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements of MedLink International, Inc., contained herein and in the Company’s annual report for the year ended December 31, 2009 as filed on Form 10-K. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officers evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, these officers concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States Generally Accepted Accounting Principles and the Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending December 31, 2010: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Because of the inherent limitations in all control systems, no evaluation of internal control over financial reporting can provide absolute assurance that all control issues, if any, within our company have been detected and may not prevent or detect misstatements. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Notwithstanding the existence of the material weakness described above, management has concluded that the consolidated financial statements in this Form 10-Q fairly present, in all material respects, the Company’s financial position, results of operations and cash flows for the periods and dates presented.

Changes in Internal Control over Financial Reporting

Since the date of the most recent evaluation of the Company’s internal controls by the Chief Executive Officer and Chief Financial Officer, there have been no changes in the Company’s internal controls or other factors for the period covered by the subject Form 10-Q that materially affected or were likely to materially affect the Company’s internal control over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

In the normal course of business, we are involved in various claims and legal proceedings. While the ultimate resolution of these currently pending matters has yet to be determined, we do not presently believe that their outcome will significantly adversely affect our financial position, results of operations or liquidity.

Item 1A. Risk Factors.

Not applicable.

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

During the second quarter of 2010, the Company issued 900 shares of the Company’s Class A series preferred to one accredited investor for a total contribution of $405,000. The Company will use the net proceeds for working capital purposes.

Item 3. Defaults Upon Senior Securities.

Not applicable.

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

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

No.	Description of Exhibit
31.1	Certification of MedLink International, Inc. Chief Executive Officer, Ray Vuono, required by Rule 13a-14(a) or Rule 15d-14(a), dated August 16, 2010.*
31.2	Certification of MedLink International, Inc. Principal Financial Officer, James Rose, required by Rule 13a-14(a) or Rule 15d-14(a), dated August 16, 2010.*
32.1	Certification of MedLink International, Inc. Chief Executive Officer, Ray Vuono, required by Rule 13a-14(a) or Rule 15d-14(a), dated August 16, 2010.*
32.2	Certification of MedLink International, Inc. Principal Financial Officer, James Rose, required by Rule 13a-14(a) or Rule 15d-14(a), dated August 16, 2010.*
* Filed herewith.

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.

MEDLINK INTERNATIONAL, INC.

Date: August 16, 2010

By: /s/ James Rose

James Rose

Chief Financial Officer