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BEACON EQUITY RESEARCH

Analyst: Lisa Springer, CFA


Initial Report
September 4th, 2008

MLKNA daily 09/02/08


2.00

1.75

1.50

1.25

1.00

0.75

MedLink International Inc. 0.50


11 Oval Drive Suite 200B,
volume
Islandia, NY 11749
400

Thousands
Phone: (631) 342-8800 300

Fax: (631) 342-8819 200

100
info@medlinkus.com
www. medlinkus.com 0
Jul Aug

Market Data
Symbol / Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . OTC .. BB: MLKNA
Current Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1.45
Price Targe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3.00 .
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Speculative
. . . . . . . . . . . . Buy
Outstanding Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.2M
Market Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.2M
Average 3M Volume. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,265

Company Introduction
MedLink International Inc. (OTCBB: MLKNA) provides doctors, hospitals,
medical imaging centers, labs and patients with software products and ser-
vices for creating, managing and sharing critical medical information. This
information is delivered via MedLink’s Virtual Private Network (VPN), which
sets the industry standard for secure HIPAA compliant communications. The
Company’s flagship product, MedLink TotalOffice EHR software, provides
physicians with one solution to handle all practice management needs, from
scheduling to medical billing, all in one user-friendly application. MedLink’s
software and services are made available to both large and small healthcare
institutions at an affordable price.

MedLink is creating a digital backbone for the delivery of enhanced medical


services through its integrated suite of networking, communications, man-
agement and financial products delivered via the MedLink VPN.

Please carefully read the risks and disclaimer section at the end of this report.
Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Its current product offerings include: MedLink TotalOffice EHR, a complete practice management, billing and
health record solution for physician’s offices; MedLink TV, which delivers medical education, news and adver-
tising via flat screen TVs in physicians’ waiting rooms; MyMedLinkChart, a complete personal health record for
patients and their families; and MedLink Remote PACs, which allow imaging centers to quickly and efficiently
deliver images and reports to the physician’s desktop.

The Company markets its products and services through partnerships with medical societies, imaging centers
and hospitals. In April 2008, MedLink announced an endorsement agreement with the Texas Medical Associa-
tion, the nation’s largest state medical society. TMA will offer MedLink TV to its 32,000 physician members across
Texas as a free benefit of their association membership. The Company also recently announced an endorsement
and advertising agreement with St. Luke’s Cornwall Hospital, a clinical affiliate of The Mount Sinai Hospital and
one of the mid-Hudson Valley’s premier health care providers. In addition, MedLink has partnered with Life
Point Informatics, a leader in electronic ordering and delivery of lab results. More than 43,000 physicians use the
Life Point system each month. This partnership will enable MedLink to expand its customer base and product
line.

During the second quarter of 2008, MedLink recorded its fourth consecutive quarter of growth. Second-quarter
highlights include a strategic alliance with Microsoft HealthVault; endorsement by St. Luke’s Hospital in New
York; sponsorship of its TotalOffice EHR product by Piedmont Medical Laboratory to its referring physician
base; the retention of Shattuck Hammond Partners for investment banking and financial advisory services; roll-
out of MedLink TV in the Dallas metro market; and the Company’s application for 2008 CCHIT certification.
CCHIT is a not-for-profit agency defining industry standards and the key functional components of EHRs (elec-
tronic health records).

In the mid-1990s, MedLink was founded by three physicians; with the creation of its virtual private network
(VPN), the company emerged as a healthcare information technology company in 2003. MedLink VPN allows
physicians, imaging centers, hospitals and labs to communicate effectively while adhering to HIPAA privacy
laws. The Company’s shares trade on the OTC Bulletin Board and on the Frankfurt Stock Exchange under the
tickers (OTCBB: MLKNA) and (Frankfurt: WM6B.F), respectively.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 2


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Investment Highlights

MedLink addresses a $6.9 billion Healthcare Information Technology (HIT) market

Americans spent more than $2.3 trillion on healthcare in 2007, and spending is forecast to reach $4.3 trillion by
2025. Information technology has emerged as one of the few tools that may help curb rising healthcare costs. A
Rand Corp. study estimates widespread adoption of HIT could reduce healthcare costs by as much as 10%.

HIT spending was estimated at $6.9 billion in 2007, and is expected to increase to $10.8 billion by 2012. MedLink
thinks the HIT market could grow to $28 billion by 2014 as a result of “pay for performance” initiatives by Medi-
care and Medicaid. Pay for performance programs require compliance with new evidence-based guidelines and
are more readily accomplished with an HIT system.

Government initiatives drive HIT market growth

Medical record-keeping is not yet fully automated. Large numbers of clinics have yet to convert paper to elec-
tronic records. While the federal government is leveraging its position as the nation’s leading purchaser of health-
care products and services to promote HIT use, experts estimate that only about 15% of the 600,000 physicians in
the United States keep electronic records; the remaining 80% continue to rely on paper documents. To increase
these numbers, Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG)
are allowing acute care organizations to assist referring physicians with hardware, software, training and the
support necessary for implementing e-prescribing and interoperable electronic medical record systems.

New legislation will drive EHR adoption by requiring Medicare physicians to embrace e-prescribing. Under the
Medicare Electronic Medication and Safety Protection Act, physicians would receive financial incentives to use
e-prescribing systems. Grants would help offset start-up costs and physicians who use the technology would
receive up to a 2% bonus for every claim that includes an e-prescription and per-claim penalties for providers
who don’t comply. The Bush administration has mandated physicians must switch all of their patient records
to electronic form by 2014.

MedLink has key partnerships and endorsements

The Company recently announced an endorsement by the Texas Medical Association, the nation’s largest medi-
cal society, and has initiated a program with two other large medical societies by making its TotalOffice EHR
product available to them at a member benefit price. MedLink has already been endorsed by the New York
County Medical Society, the Bronx County Medical Society, the County of Queens Medical Society, and the
Suffolk County Medical Society, among others. In addition, the Company is in discussions with numerous ad-
ditional county societies and large state societies.

MedLink recently entered into an agreement with Piedmont Medical Laboratory, whereby Piedmont will be
offering MedLink TotalOffice EHR as the Piedmont-sponsored EHR practice management system to select af-
filiated medical practices. Piedmont will subsidize part of the cost of the system, thus enabling Piedmont to
incorporate a powerful electronic ordering and results reporting tool into the care provider’s workflow. Users
will be able to utilize the TotalOffice EHR E-labs tool to connect directly to Piedmont labs, facilitating complete
automation of the lab ordering process from point-of-care to the physician’s office to the lab. The Company has
Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 3


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

begun to realize sales from this physician base and is pursuing similar relationships with regional labs in New
York, New Jersey and Michigan.

In addition, MedLink has partnerships with Access Imaging and Lankmark Imaging in California, Doshi Imag-
ing and Kodak & Medavis for medical imaging products and services, and with Dynatek Media for the launch of
MedLink TV. Already deployed in 300 medical offices and viewed more than 300,000 times a month, MedLink TV
is enjoying enormous success. The Texas Medical Association has commitments for 1,800 MedLink TV screens by
year-end 2008, and MedLink TV programming has received endorsements from nearly a dozen medical societ-
ies. The Company added 4,400 physicians to its network through the 2007 acquisition of Anywhere MD, and has
formed a partnership with Life Point Informatics in 2008 that provides access to a 43,000 physician network.

Integration with HealthVault leverages MedLink’s competitive position

MedLink is completing the integration of its MedLink EHR and MyMedLinkChart products with Microsoft’s
Healthvault. As a result of this integration, consumers will be able to view, save and send clinical information
from within their Healthvault account. With a push of a button, physicians will be able to send the entire patient
record to HealthVault, a convenience that will strengthen the relationship between physician and patient. The
integration of its products with HealthVault also enhances MedLink’s competitive position by driving patient
demand to physicians, which will be driven through an aggressive marketing campaign on MedLink TV.

Application for CCHIT certification

MedLink applied for CCHIT certification in 2008. CCHIT is charged with defining key functional components
of an EHR, including how it should communicate with other systems and how it should protect patient infor-
mation. Of the more than 300 companies that claim to be EHR vendors, less than 3% have applied for CCHIT
certification in 2008 due to the organization’s rigorous criteria. Increasingly stringent certification standards
will likely shrink competition in the EHR market since many EHR buyers are already using CCHIT certifica-
tion as a filtering mechanism. Some physician reimbursement programs and grants are already tied to CCHIT
certification and many payer organization and healthcare information exchanges are also mandating CCHIT
certification. MedLink anticipates demand for its TotalOffice EHR by small and mid-sized practices will increase
dramatically following CCHIT certification since most physician practices can’t afford the high prices of other
CCHIT-certified products.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 4


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Acquisition opportunities in consolidating HIT market

The HIT market is highly fragmented, with about 60% of participants generating less than $10 million in annual
revenues. MedLink has already completed one acquisition that added some 4,400 physicians to its network and
is likely to make additional synergistic acquisitions as it continues to extend its customer base and service offer-
ings.

Strong management team with proven track record

MedLink’s president/CEO, Ray Vuono, has more than 20 years experience as a corporate strategist and marketer
for top-tier companies. He is also the CEO of private venture firm RayvonVC, and led the turnaround of a dis-
tressed company, National Support Systems, to profitability. Executive vice president/CFO Jameson Rose for-
merly served as vice president of finance for Ambassador Capital Group. Executive vice president of sales James
Decker has more than 15 years senior sales experience with leading companies such as MCI and Telstar.

Business Model & Strategy

MedLink intends to create and support a digital backbone for the delivery of enhanced medical services to
healthcare professionals worldwide through its Virtual Private Network (VPN). The Company’s flagship Tota-
lOffice EHR product offers an integrated suite of networking, communications, practice management, financial
and other value-added solutions. By connecting healthcare professionals with vital information, MedLink’s VPN
enhances efficiencies and ensures optimal, real-time delivery of patient information.

Broad-based product portfolio

The Company’s product portfolio includes MedLink TotalOffice EHR, MedLink TV, MyMedLinkChart and
MedLink Remote PACs.

Exhibit 1: Medline business model

Products Services

MedLink To talOffice MyMedLinkChart MedLink TV MedLink remote MedLink Data Center


EHR Software PACs

• Integrates scheduling, • Creates and manages • Provides patients with • Allows imaging center • Provides storage and
patient registration, patients’personal thought provoking, to quickly and back up of patient
billing, document health records. entertaining and efficiently deliver records .
management, messag- informative healthcare images & reports
ing, e-Prescribing and related program. directly to the
e-labs physician’s desktop.
• Centralizes patient
medical records and
streamlines the
diagnostic and
treatment processes.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 5


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Strong and robust flagship product

MedLink TotalOffice EHR, the Company’s flagship product, integrates scheduling, patient registration, bill-
ing, document management, messaging, encounter notes, e-prescribing and e-lab records into a single practical
solution. This product centralizes medical records and ensures a streamlined treatment process and seamless
management of patient information. MedLink TotalOffice EHR also allows physicians to better manage patient
insurance and co-payment information and establish a simple workflow for generating and submitting accurate
bills, thus dramatically reducing insurance company rejections.

Exhibit 2: MedLink TotalOffice EHR

MedLink TotalOffice EHR

Scheduling Patient Registration Patient Chart Billing Others


and Demographics

• Color Coding - easy to • All demographic • Patient Histor y • Single interface for • Fully integrated
track information • Records of visits and managing claims from document management
• Integrated with patient • Scanned pertinent complaints beginning to end • Quick prescription
records documents • Allergies and alerts • Receivable manage - creation
• Integrates multiple • Create insurance • Immunization records ment for optimal • Convenient manage-
physicians at multiple information • History of laboratory recover y ment of patient
locations • Create contact list results • Complete integration laboratory reports
• Ability to set • Care plans for chronic with HER • HIPPA compliant
physicians schedule illness • Complete tracking and communication
reporting tools • All records backed in
secure data facility

Source: Company reports

Client training and data security


The Company provides continuing education and on-site training for its healthcare professional custom-
ers, creating a roadmap for practices that helps them achieve their goals regarding electronic health records,
e-prescribing, document management and HIPAA compliance while ensuring normal workflow. Information
flow takes place over a secure virtual private network using SSL technology to create a VPN tunnel over the
public internet that ensures data security. The MedLink VPN utilizes communication over the HTTP protocol
and is compatible with virtually every other network environment.

The cost benefits associated with the MedLink TotalOffice EHR are numerous and include the following:
• Minimize record keeping and storage costs;
• Reduce staffing required to support medical record activities;
• Reduce spending on supplies, courier services and physical space;
• Improve reimbursement via access to detailed documentation and a complete medical record;
• Accelerate cash recovery via faster access to medical records and better AR tools;
• Reduce HIPAA compliance costs;
• Minimize order entry and report handling costs;
Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 6


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

• Eliminate inaccurate insurance information and test codes; and


• Collect information required for secondary and tertiary insurance coverage and provide easy tools for
cross-over and re-bill.

The Company’s existing data center, located in Atlantic Telecom Center’s 750,000-square-foot facility in New
York, offers state-of-the-art facilities and connectivity to multiple major fiber providers, including Verizon,
AT&T, MFN, WorldCom, Williams, ConEd Communications and Telergy. MedLink has selected Vastnet’s Mel-
ville collocation facility on Long Island as the site for a second data center which will provide ample storage
for the medical records of MedLink’s growing customer base.

MedLink TV
MedLink TV is a private medical communication network, through which healthcare content and information
are delivered right to the physician’s waiting room and displayed on a 40” or 32’’ flat screen TV. The Company
created MedLink TV as a product that medical societies could offer free to their members, providing tangible
membership benefits while creating a direct link for disseminating information to members. The service is
available at no cost to members of endorsing medical societies.
The benefits physicians realize by entertaining their waiting room patients with MedLink TV include a 50%
perceived reduction in wait time. Other benefits physicians enjoy include:

• Control content and deliver positive message;


• Increase revenues by marketing specific services;
• Inform patients of office hours and policies;
• Direct patients to practice Web site;
• Encourage communication with patient; and
• Increase practice value.

There are currently more than 300 MedLink TVs installed, and viewership exceeds 300,000 per month. Since
the launch of MedLink TV in Texas in early May 2008, the Company has averaged nearly 100 install agreements
per week in Texas alone. The Texas Medical Association has committed to 1,800 screens by year-end 2008. Based
on these and other commitments, MedLink estimates its TV network will have 3.5 million unique viewers per
month by year-end 2008 and will rival some of the smaller cable channels, while having the added advantage of
a highly valuable advertising demographic. MedLink recently signed a representation agreement with SeeSaw
Networks, the nation’s largest digital signage advertising agency, and has begun to attract national advertisers.
The Company expects to capitalize on significant advertising revenues in the third quarter of 2008 and beyond.
By year-end 2008, MedLink expects to have 2,000 screens generating advertising revenues of as much as $1.0
million per month.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 7


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

MedLink Remote PACs

MedLink’s Remote PACs solution allows imaging centers to quickly and efficiently deliver images and reports
directly to the physician’s desktop. The MedLink VPN allows for secure communication, while MedLink Tota-
lOffice EHR provides the vehicle for viewing images and reports.

The client delivery component of the system runs as a service on the physician’s desktop or local server where it
continuously polls for new files. Downloads of files run 24/7, but bandwidth and processing time are constantly
adjusted so as not to interfere with other processes on the desktop or server. Images may be viewed using the
MedLink DICOM viewer or any third party viewer. In addition, imaging centers can choose to allow physicians
to request appointments and enter orders, thus automating the pre-authorization process.

MedLink Remote PACs have been installed in more than 50 radiology centers across New York, New Jersey
and Florida. The Company is pursuing agreements with additional radiology centers in the United States and
expects to have more than 200 radiology centers utilizing a “Lite” version of MedLink TotalOffice EHR to deliver
radiology reports and images to physicians. At present, the referring physician base that can utilize the TotalOf-
fice EHR lite version for radiology reports, images and lab tests is estimated at more than 80,000, or nearly 20%
of all U.S.-based physicians. Lite version users will be encouraged to upgrade to the full TotalOffice EHR version,
which includes billing, practice management, document management and other functionalities.

MyMedLinkChart.com

MedLink’s product for creating personal health records, MyMedLinkChart, encourages the sharing of informa-
tion between physician and patient. More than just static repositories of patient data, these personal health re-
cords combine data, knowledge and software tools which help patients become active participants in their own
care. When personal health records are integrated with physician electronic health records, greater benefits are
realized. For example, quality of care improves since patient information is readily available to the physician at
the point of care. The U.S. Department of Health and Human Services encourages the use of personal health re-
cords. Both the American College of Physicians and the American Academy of Family Physicians have called for
a collaborative effort to bring patient health records, electronic medical records and other technologies together
to support an ongoing physician-patient relationship.

The integration of MyMedLinkChart with Microsoft’s HealthVault will enable consumers to view, save and send
clinical information from within their HealthVault account, thus improving coordination of care. Healthcare
organizations will be able to leverage Healthvault to strengthen the relationship between physician and patient.
With a push of a button, physicians will be able to send the complete patient record to HealthVault. In addition,
integrating its product with HealthVault enhances MedLink’s competitive advantage by driving patient demand
to physicians, which will be supported by an aggressive advertising campaign on MedLink TV.

Business strategy for rapidly gain market share

The Company plans to grow by expanding its suite of innovative software products and services, making acqui-
sitions and forming additional strategic alliances and partnerships.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 8


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Exhibit 3: Business strategy

Developing innovative
products and services

Endorsement agreement with medical Acquisitions and Strategic Alliances-


societies- signed agreement with Texas Partnership with Life Point Informatics
Medical Association and other large and Piedmont Medical Labs
medical associations. Acquisition of Anywhere MD

Customers- includes small and medium


sized hospitals and physician practices.

Source: Beacon Equity Research

Consistent with this strategy, the Company is forging strategic alliances with several major industry players.
For example, MedLink has partnered with Life Point Informatics, a provider of Web-based order-entry and lab
result reporting solutions. The companies have completed the integration of LifePoint’s LabTest system with
MedLink’s TotalOffice EHR. This integration will enable laboratories to offer physicians their own EMR and
HER-enabled practice management system.

Through a partnership agreement with Piedmont Medical Laboratories, TotalOffice EHR will be made avail-
able to affiliated physicians on a shared cost basis. Physicians can utilize TotalOffice EHR to connect directly to
Piedmont labs and completely automate the lab ordering process. The Company has already begun to realize
revenues from this arrangement and is pursuing similar agreements with regional labs in Texas, New Jersey and
Michigan.

In 2007, MedLink acquired Anywhere MD, a provider of technology products for improving healthcare provider
productivity. Anywhere MD’s main expertise is in clinical documentation tools for physicians. It offers a broad
range of products for managing patient information more efficiently, as well as proprietary software for physi-
cian mobile handheld devices. In addition to extending MedLink’s product line with Anywhere MD’s AutoDoc,
this acquisition brought 4,400 new physicians to the MedLink network.

As a part of its marketing strategy for MedLink TV, the Company is pursuing endorsements from leading medi-
cal societies. MedLink has been endorsed by the Texas Medical Association, the New York County Medical
Society, the Bronx County Medical Society and many other county and state medical associations. In June 2008,
MedLink secured an endorsement from and signed an advertising agreement with St. Luke’s Cornwall Hospital,
part of the Mount Sinai Hospital network and one of the mid-Hudson Valley’s premier healthcare providers.
Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 9


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Healthcare Information Technology (HIT) Market

MedLink participates in the Healthcare Information Technology (HIT) market. The cost and efficiency benefits
associated with automating patient records are driving robust growth in healthcare IT spending.

Exhibit 4: Healthcare IT growth drivers

Government
Spending

Growing Healthcare Efficiency


demand for IT and
healthcare Growth Cost
services Divers Savings

Source: Beacon Equity Research

Growing healthcare spending

According to the U.S. Congressional Budget Office, total national spending on healthcare has more than doubled
as a share of gross domestic product (GDP) in the last 30 years. The Budget Office estimates that share will
double again by 2035, with medical spending accounting for some 30% of GDP. Federal spending on Medicare
and Medicaid, currently at 4% of GDP, is forecast to rise to 9% by 2035.

Exhibit 5: NHE estimates of healthcare spending ($ trillion)

4.5 10%

3.6 8%
$ Trillion

2.7 6%
%Growth

1.8 4%

0.9 2%

0.0 0%
2008E
2009E
2010E

2012E
2013E
2014E
2015E
2016E
2017E
2011E
1999
2000
2001
2002
2003
2004
2005
2006
2007

Source: Center for Medicare and Medicaid


services

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 10


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Ageing population drives demand for healthcare services

An aging U.S. population is likely to fuel continued increases in healthcare spending. In addition, healthcare
spending is relatively immune to economic cycles and thus presents steady growth opportunities for healthcare
providers and HIT companies.

Exhibit 7: Average annual healthcare costs for Medicare


Exhibit 6: Projections of age demographics in the U.S. enrollees by age group

100 25,000
20,000
75
In Dollars
15,000
Millions

50
10,000
25 5,000
0 0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
2006
2010
2020
2030
2040
2050

Projected 65-74 65 and Over


65 & Over 85 & Over
75-84 85 and Over

Source: US Census Bureau, Decennial Census, Population Estimates and Projections

An aging population should also increase the volume of lab tests performed, creating an expanding market for
MedLink’s Remote PACs solution.
Exhibit 8: Relative number of lab tests performed in 1997-2007.
Relative Number of lab Tests per year

15 Patient Age

12

0
Under 18 18-44 45-54 55-64 65-74 75 years and
years years years years years older

1997 2007

Source: US Census Bureau, Decennial Census, Population Estimates


and Projections

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 11


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Demand for more cost-effective solutions

With healthcare costs spiraling out of control, insurance companies, government agencies and other payers
are demanding new healthcare IT solutions that can improve efficiencies and better control costs. The Centers
for Medicare and Medicaid Services (CMS) and other payers have begun to link medical care payments with
quality and safety through so-called “pay for performance” approaches. Some pay for performance plans offer
additional reimbursement for healthcare providers who demonstrate high levels of quality and safety. CMS re-
cently changed its rules so that there will be instances where providers are not paid for treatment of conditions
acquired in hospital where the condition is deemed reasonably preventable through the application of evidence-
based guidelines. This policy change, effective October 2008, is positive for the HIT industry since compliance
with evidence-based guidelines is easier to prove for organizations with HIT systems.

Exhibit 9: Sources of growth in projected federal spending on Medicare


and Medicaid (Percentage of GDP)

20

15

10
Effect of Cost Growth Faster than GDP
and Aging of Population

Effect of Aging of Population


5

2007 2022 2037 2052 2067 2082

Source: Congressional Budget Office, November 2007

$28 billion healthcare IT market

HIT spending was estimated at $6.9 billion in 2007 and is expected to increase to $10.8 billion by 2012. MedLink
thinks the HIT market opportunity could grow to $28 billion by 2014 as a result of “pay for performance” ini-
tiatives by Medicare and Medicaid and other payers. Revenue management and clinical operations are the two
primary areas of HIT spending.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 12


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Exhibit 10: Healthcare IT market

2,500

Other
2,000
Administration Costs
Lab Testing
Nursing Home & Home Health
1,500
$ Billion

Prescription Drugs

Physician Services Revenue cycle market opportunity~$18bn


1,000
Clinical cycle market opportunity~$9bn

500
Hospital Care

Source: Athena, LabCorp Presentations

HIT industry consolidation

The HIT market is highly fragmented, with some 60% of industry participants generating revenues of less than
$10 million per year. A few stronger players are likely to emerge over time and drive consolidation within the
market over the next several years. With endorsements from leading medical societies and brand awareness
created through its healthcare television network, we think Medlink is well-positioned to emerge as an industry
leader.

Exhibit 11: Profile of the HIT market

8.0%
8.0% 22.0% <$2 Million
$2-$5 Million
6.0% $5-$10 Million
$10-$20 Million
8.0% $20-$50 Million
$50-$100 Million
10.0% 24.0%
$100-$500 Million
14.0% Over $500 Million

Source: QuadraMed Presentation

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 13


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Government initiatives spur demand

The HIT industry is not fully automated; a large number of clinical centers still rely on paper records. At year-
end 2007, only about 15% of the 600,000 physicians nationwide had converted entirely to electronic records.
MedLink expects recent legislation to further drive EHR adoption by requiring physicians to embrace electronic
prescribing. Under the Medicare Electronic Medication and Safety Protection Act, physicians would receive
financial incentives to use e-prescribing systems. Grants would help offset start-up costs, and physicians who
utilize the technology would receive up to a 2% bonus for every claim that includes an e-prescription and per-
claim penalties for providers who don’t comply.

The Bush administration has mandated the conversion of all patient records to electronic form by 2014. This
translates into a potential $28 billion market opportunity, according to MedLink. HIT spending was estimated
at $6.9 billion in 2007 and is forecast to reach $10.8 billion within four years.

Competitive Analysis
Many small companies, as well as divisions of large software companies, compete in the healthcare IT space.
Several of MedLInk’s competitors are described below. MedLink’s competive advantages include a more af-
fordable price for its software. The Company is able to offer TotalOffice EHR at a lower price than competitor
products because of lower development costs, the result of developing all of its software in-house. A lower pur-
chase price for MedLink sotware allows for greater scope of implementation through government grants and a
superior ROI for pharmaceutical, radiology and laboratory product sponsonships.

In addition, MedLink’s software is designed around the latest technology platforms, providing for a simpler user
interface, faster and easier implementation, seamless integration and an acclerated ROI for physiican practices.
Leading state and medical associations recognize the product’s advantages and are endorsing the MedLink
product.

Cerner Corporation

Cerner Corporation is one of the leading suppliers of healthcare information technology solutions, healthcare
devices and related services. Cerner’s clients include single-doctor practices, hospitals, corporations and gov-
ernment agencies. Software solutions are designed around its proprietary Cerner Millennium architecture. This
customized solution framework combines clinical, financial and management information tools.

Eclipsys Corporation

Eclipsys Corporation is a provider of advanced integrated medical access management software and other pro-
fessional services to healthcare organizations. The company is a pan-American supplier of medical softwares
and has offices in the United States and India. Eclipsys develops and licenses medical software that enables phy-
sicians, nurses and others to place orders and access/share information about patients. The software also facili-
tates patient hospital admissions, appointment scheduling, records maintenance, invoicing, inventory control,
cost accounting, and assessing the profitability of specific medical procedures and personnel.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 14


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Allscripts Healthcare Solutions Inc.

Allscripts Healthcare Solutions Inc. is a provider of clinical software, connectivity and information solutions
that are used by physicians to improve the quality of healthcare. The company’s clients include more than 40,000
physicians in 4,000 clinics and 700 hospitals across the United States. Allscripts operates through three business
segments: software and related services, information services and prepackaged medications.

Streamline Health Solutions Inc.

Streamline Health Solutions Inc. is a healthcare information technology provider that develops and licenses
software for physicians, nurses and other healthcare professionals. It is one of the leading healthcare IT players
in the U.S. market with products that assist medical professionals in automating daily workflow and accessing
information quickly.

Mediware Information Systems Inc.

Mediware Information Systems Inc. develops, markets, licenses, implements and supports clinical management
information software. The company’s software products address the unique requirements of hospital medica-
tion management, blood bank and surgical suites.

Aspyra Inc.

Aspyra Inc. is a healthcare information technology and service provider, specializing in clinical information
systems and diagnostic information systems. Its product offerings include laboratory, anatomic and radiology
information systems, picture archiving communication systems and clinical image management systems.

athenahealth Inc.

athenahealth Inc. provides Internet-based business services for physician practices. The company is a leading
revenue cycle management solution provider. It has integrated its services into three components: Internet-
based software, updated database of payer reimbursement process rules and back-office services which include
administration, billing and clinical data management.

Computer Program & Systems Inc.

Computer Program & System Inc. is a provider of integrated healthcare information technology solutions. This
company designs, develops, markets, installs and supports computerized IT systems that address the needs of
small and mid-sized hospitals. The company provides medical information systems and services that collect,
process, retain and report data across all the primary functional areas of the hospital.

Medavant Healthcare Solutions

Medavant Healthcare Solutions (formerly known as Proxymed Inc.) is an information technology company that
facilitates the exchange of medical claim and clinical information among doctors, hospitals, medical laboratories
and insurance companies. It also enables electronic transmission of laboratory results.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 15


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

MedcomSoft Inc.

MedcomSoft Inc. develops and distributes healthcare IT software solutions in the United States and Canada. The
company provides essential tools for automated medication management, including hospital pharmacy, blood
bank and surgical units. It helps hospitals connect with pharmacies, laboratories, medical suppliers and insur-
ance providers.

Quadramed Corporation

Quadramed Corporation is an industry leader in developing information technology solutions for hospitals
and other healthcare organizations. It provides software solutions for clinical management, patient information
management, revenue cycle management and health information management.

Financial Analysis
MedLink generated revenues of $280,022 in 2007 from sales of MedLink TotalOffice EHR and other products.
Operating expenses increased 180% in 2007 to $2,798,098 from $1,539,094 in the prior year, mainly due to the
opening of an IT development center in India, the hiring of sales and customer support personnel, and increased
marketing spending. MedLink’s net losses rose to $2,462,829 in 2007 from $1,539,094 in 2006 due to higher oper-
ating expenses and R&D expenditure.

Exhibit 13: Selected income statement data


Year ending Year ending Six months ending Six months ending
All figures in $ December 2007 December 2006 June 2008 June 2007

Revenue 280,022 11 ,364 268,51 9 69,397


To tal operating expenses 2,798,098 1,550,458 1,455,644 1,073,349
(excluding loss on impairment of assets)
Operating income/(loss) (2,518,886) (1,539,094) (1,209,568) (1,036,330)
(excluding loss on impairment of assets)
Net income /(loss) (2,462,829) (1,539,094) (1,209,568) (1,036,330)
(excluding loss on impairment of assets)

Source: Company 10-K and 10-Q

The second quarter of 2008 marked MedLink’s fourth consecutive quarter of revenue growth. Revenues for
the first six months of 2008 increased 287% year-over-year to $268,519 from $69,297 in the 2007 six month
period, reflecting sales of MedLink EHR, Anywhere MD’s AutoDoc and integration income from radiology
centers. Operating expenses for the first six months of 2008 increased 36% year-over-year to $1,455,644 from
$1,073,349; net losses widened to $1,209,568 in the first six months of 2008 from $1,036,330 in the first six months
of 2007 as a result of increased staffing and infrastructure commitments, research and development spending
related to MedLink EHR, and stock-based compensation agreements with the Company’s key executives. R

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 16


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Liquidity and capital requirements

As of June 30, 2008, the Company had a working capital deficit of $639,837. While management believes rev-
enues generated from product sales and MedLink TV advertising will be sufficient to fund its operations in the
second half of 2008, there is no guarantee that this will be the case. MedLink may be required to seek outside
financing to fund its 2008/2009 business plan.

In August 2008, MedLink contracted with Shattuck Hammond Partners, a leading investment bank focused on
healthcare services companies, to act as its exclusive financial advisor and investment banker. Shattuck Ham-
mond Partners, a division of Morgan Keegan, has played a prominent role in financial transactions totaling more
than $37 billion.
Exhibit 14: Selected balance sheet data

Year ending Second quarter


All figures in $ December 2007 ending June 2008

Cash & cash equivalents 2,762 0


Net working capital (excluding cash) (1,551,170) (1,197,920)
To tal assets 1,210,394 1,229,209
To tal long term liabilities 2,750 2,750
To tal current liabilities 1,655,426 1,869,046
Stockholders’ equity (deficit ) (477,782) (642,587)

Source: Company 10-K and 10-Q

Revenue outlook

We think MedLink is well-positioned to achieve robust future sales of its TotalOffice EHR product as a result of
increased market demand and the product’s competitive advantages. Demand for HIT systems is projected to
rise significantly over the next six years as government payer organization mandate adoption of EHR through
financial incentives and per-claim penalties for non-adopters. Compared to competitor products, MedLink of-
fers a more cost-effective, affordable EHR solution for physician practices. Its products have already garnered
endorsements from leading state and county medical associations.

We also anticipate a strong, steadily increasing revenue contribution from MedLink TV advertising revenues.
The Company is averaging nearly 100 MedLink TV install agreements per week currently, and expects to have
an installed base of 2,000 screens by year-end 2008 generating advertising revenues approaching $1.0 million
per month.

Based on our discussions with management, we estimate 2008 revenues at approximately $2.0 million, consist-
ing mainly of TotalOffice EHR sales and a sizable revenue contribution from MedLink TV advertising revenues.
We think the Company will gain significant sales traction in 2009 after it secures CCHIT certification since many
payer groups are likely to use CCHIT certification as a tool for screening HIT suppliers.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 17


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

We expect MedLink’s software sales to triple in 2009 to a $6.0 million range and anticipate advertising revenues
from MedLink TV exceeding $12 million. Software sales momentum should continue to build in 2010\2011 as
the 2014 deadline approaches for industry-wide adoption of EHR technology. We estimate MedLink’s revenues
will double again in 2010 to a $32 million range and look for 50% growth and sales approaching $48 million in
2011.

70 Projected Revenues $ in millions


60
50
40
30
20
10
0
Year 2008E 2009E 2010E 2011E 2012E

MedLink plans to significantly ramp up sales and marketing spending over the next two years to capitalize on
the window of opportunity for TotalOffice EHR sales and support the rollout of its MedLink TV platform, so we

Valuation Analysis

don’t anticipate the Company will turn profitable until 2010 despite high gross margins on software sales.

MedLink is a small player in comparison to its competitors. The Company has a current market capitalization of
approximately $44 million. Cerner Corporation is the largest of the peer companies and has a $3.6 billion market
capitalization and Streamline Healthcare Solutions is the smallest, with a $15 million market capitalization.

The HIT industry peer group was recently trading at a 2.5 times Price/Sales multiple and a 2.0 times forward
Price/Sales multiple. We think MedLink warrants a higher valuation than its peers due to the cost advantages
of its product, its endorsement and relationships with leading state and county medical associations and the
significant advertising revenue opportunities associated with MedLink TV. As a result, we value MedLink at a
3.0 times forward Price/Sales multiple.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 18


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Exhibit 15: Valuation

Company Name T Ticker


icker Share Market. Cap. P/E P/S
7/01/2008 Symbol Price
Symbol Price $ Million 2008 2009 2010 2008 2009 2010

Cerner Corporation CERN $45.43 3,660.18 21.99 18.38 15.85 2.20 1.98 1.80
Eclipsys Corporation ECL P $17.99 977.95 17.31 19.93 18.94 1.87 1.68 1.53
Allscripts Healthcare Solutions Inc. MDRX $12.16 693.79 22.62 16.41 13.66 2.09 1.69 1.58
Streamline Health Solutions Inc. STRM $1.63 15.09 N/A N/A N/A N/A N/A N/A
Mediware Information Systems Inc. MEDW $5.78 43.98 N/A N/A N/A N/A N/A N/A
Aspyra Inc. AP Y $0.70 8.71 N/A N/A N/A N/A N/A N/A
athenahealth Inc. ATHN $27.13 878.01
Symbol 69.64
Price 36.42 30.14 6.53 4.86 3.45
Computer Program & Systems Inc. CPSI $17.45 188.94 14.73 12.88 N/A 1.66 1.55 N/A
Medavant Healthcare Solutions PILL $0.30 4.13 N/A N/A N/A N/A N/A N/A
MedcomSoft Inc. MSF $0. 11 8.99 N/A N/A N/A N/A N/A N/A
Quadramed Corporation QD $9.97 89.42 33.23 22.16 N/A 0.61 0.56 N/A
Peer Average 29.92 21.03 19.65 2.49 2.05 2.09

Source: Reuters

We multiply a 3.0 times forward Price/Sales multiple by our $32 million 2010 revenue estimate to derive our
$3.00 price target for MedLink shares. We are thus initiating coverage of MedLink International Inc. with a
Speculative Buy rating and a $3.00 target price.

Although we think MedLink shares offer strong appreciation potential, we encourage investors to carefully
consider the many risk factors involved in this investment. MedLink has yet to generate meaningful sales and
must compete in a fairly crowded marketplace for HIT products. Several of its competitors have larger R&D
departments, greater sales and marketing budgets and better access to expansion capital. Additional risk factors
are discussed in the next section.

Risk Factors
Healthcare industry is highly regulated

The healthcare industry is highly regulated by local, state and federal government agencies. Failure of the Com-
pany’s customers to comply with applicable laws and regulations regarding reimbursement and patient privacy
could have a material, adverse effect on MedLink’s business.

Business model depends on sales of products and services

Healthcare IT software continues to evolve. The possibility exists that one of the Company’s competitors may
develop superior or lower cost software, thus making MedLink’s offerings less attractive. If the Company fails
to recognize and adapt to evolving technologies or industry standards, its business could suffer. In addition,
MedLink is required to make significant ongoing investments in research and development to maintain its com-
petitive edge.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 19


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Dependence on strategic partnerships

The Company relies on strategic partnerships and endorsements from medical societies to drive brand recogni-
tion and product sales. If any of these partnerships fail, or the Company loses a major medical society endorse-
ment, MedLink’s sales and market share could suffer.

History of operating and net losses

MedLink has a history of operating and net losses which makes assessing its business strategy difficult. The
Company also has negative working capital and a stockholder’s equity deficit. If sales fail to materialize quickly,
MedLink will likely be required to seek outside financing to fund its 2008/2009 business operations.

Dependent on healthcare IT market growth

While the healthcare IT market is expected to grow rapidly, this market is still in an early development stage.
New products and services are continually introduced but demand and market acceptance of many products
and services is still evolving. Slower-than-expected market growth could adversely impact MedLink’s busi-
ness.

Interruption due to uncontrollable reasons

The Company relies on third-party providers for the delivery of its communications and information services.
Service could be interrupted because of a power or telecommunications system failure, software and hardware
errors, computer viruses, fire, flood and other natural disasters. Prolonged service interruptions would adverse-
ly impact MedLink’s reputation and revenues.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 20


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Management

Ray Vuono Ray Vuono has more than 20 years experience as a corporate strate-
Chief Executive Officer& President gist and marketer in the insurance, pharmaceutical and financial sec-
tors. Mr. Vuono has served as the Company’s president/CEO since
2004 and as a consultant to the Company since 2001. Prior to joining
MedLink, he served as CEO of RayvonVC, a private venture capital
firm. His expertise in turnarounds is demonstrated by his accomplish-
ments as president/CEO of National Support Systems, where he led
a distressed company to profitability through brand revitalization.
He holds a Bachelor of Science in economics from the University of
Calgary and played football for the national champion University of
Calgary Dinosaurs.

Jameson Rose Jameson Rose became the Company’s CFO in 2004 and has served
Chief Financial Officer & Executive MedLink in various capacities since 2001. Prior to joining MedLink,
Vice-President- Mr. Rose served as vice president of finance for Ambassador Capital
Group and as an independent consultant in various investment bank-
ing transactions. Mr. Rose holds a Bachelor of Science with honors in
economics from Staffordshire University in the UK.

James Decker has more than 15 years of marketing, sales and gen-
James Decker eral management experience in the telecommunication and software
Executive Vice-President of Sales and development market and has been employed by leading industry
Business Development players such as MCI and Telstar. Mr. Decker is responsible for overall
leadership of MedLink’s sales and service organizations, delivering
profits and providing best-in-class service for the Company’s custom-
ers. Prior to joining MedLink, Mr. Decker co-founded and served as
president of Hudson Street Network. Mr. Decker holds a Bachelor of
Arts in marketing from Hofstra University.

Please carefully read the risks and disclaimer section at the end of this report.

MedLink International Inc. (OTC BB: MLKNA) 21


Analyst: Lisa Springer, CFA
Initial Report
September 4th, 2008

Disclaimer
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We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or
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To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the informa-
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We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://
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All decisions are made solely by the analyst and independent of outside parties or influence.

I, Lisa Springer, CFA, the author of this report, certify that the material and views presented herein represent my personal opinion regarding the content
and securities included in this report. In no way has my opinion been influenced by outside parties, nor has my compensation been either directly or
indirectly tied to the performance of any security listed. I certify that I do not currently own, nor will own and shares or securities in any of the companies
featured in this report.

Lisa Springer, MBA, CFA - Senior Analyst Lisa serves Beacon Research Partners as a research analyst. She brings to the company over 15 years experience
in equity research and investment marketing. Prior to joining Beacon, Lisa worked as an equity analyst for an independent research provider. She has also
held positions as investor relations officer for a NYSE-listed company and director of financial analysis for a large consulting firm. Lisa earned an MBA
from the University of Chicago and is a Chartered Financial Analyst (CFA).

MedLink International Inc. (OTC BB: MLKNA) 22