KIT digital, Inc. Announces Restatement of Prior Period

KIT digital, Inc. Announces Restatement of Prior Period Financial
Statements and Postponement of Third Quarter 2012 Results 
NEW YORK, NY -- (Marketwire) -- 11/21/12 --  KIT digital, Inc.
(NASDAQ: KITD), a leading video management software and services
company, today announced that, because of errors and irregularities
identified by the Company in its historical financial statements, the
financial statements for (1) the years ended December 31, 2009, 2010
and 2011 and (2) each of the three quarters in 2009, 2010 and 2011
will be restated. As a result of the restatement of these prior
periods, the Company will also restate the quarters ended March 31,
2012 and June 30, 2012. Accordingly, investors should no longer rely
upon the Company's previously issued financial statements for these
periods, any earnings releases or other communications relating to
these periods, or projections or estimates for any future periods. As
a result, the Company will not timely file its Quarterly Report on
Form 10-Q for the three months ended September 30, 2012 and will not
issue an earnings release or host an earnings conference call. 
The accounting errors and irregularities giving rise to the
restatement relate primarily to recognition of revenue related to
certain perpetual software license agreements entered into by the
prior management team in 2010 and 2011. These errors and
irregularities were discovered in connection with the Audit
Committee's previously disclosed investigation of certain
transactions. As part of the restatement, the Company will adjust the
financial statements for errors identified during prior periods,
recording the adjustments in the appropriate historical period.
Because of the Company's ongoing review and investigation of certain
transactions, the Company requires additional time to complete an
analysis of the accounting treatment for the software licenses and to
determine the extent of the corrections that may be required to its
historical financial statements. Other effects on previous financial
statements are also possible. Accordingly, the Company cannot
currently quantify the potential impact of the restatement. 
As of today, the Company has approximately $10.6 million of cash and
cash equivalents, of which approximately $4.0 mi
llion is restricted
cash. The Company also has approximately $11.0 million outstanding
under a secured loan facility and $2.5 million under an unsecured
related party note. The Company is currently up to date with the
principal and interest payments due under those loans, however, as a
result of the restatement discussed above, there is an Event of
Default under the secured loan facility and the Company is in
discussions with the lenders. As previously disclosed, the Company
has also experienced substantial losses this year, including costs
related to previously disclosed litigations and restructuring
expenses and will also incur additional costs related to the
restatement discussed above. As a result of these circumstances, and
based on the Company's forecast, the Company expects to continue to
incur significant cash expenditures. 
As a result of these challenges, the Company is considering a broad
set of strategic alternatives including financing transactions as
well as other strategic transactions including a sale of the Company
or its assets. The Company continues to examine the reduction of
working capital requirements to further conserve cash and may need to
take additional actions in the near-term, which may include
additional personnel reductions and suspension of certain development
activities.  
The above actions may or may not prove to be consistent with the
Company's long-term strategic objectives, which have shifted in the
current year, as the Company discontinued certain non-core assets,
among other things. No assurance can be given that the Company will
be able to enter in to an agreement for a sale of the Company or its
assets or obtain financing on favorable terms, if at all, or to
successfully further reduce costs in such a way that would continue
to allow the Company to operate its business. 
As a result of the restatement, the Company is also cancelling its
2012 Annual Meeting of Stockholders. Under current SEC rules, the
restatement must be complete before the Company may hold an annual
meeting of stockholders. The Company originally scheduled the 2012
Annual Meeting of Stockholders to occur on December 5, 2012. 
About KIT digital, Inc.
 KIT digital (NASDAQ: KITD) is a leading
video management software and services company. Cosmos and Cloud, the
company's video asset management systems, enable leading broadband
media companies to produce, manage and deliver multiscreen
socially-enabled video experiences to audiences wherever they are.
KIT digital services nearly 2,500 clients in 50+ countries including
some of the world's biggest brands, such as Airbus, The Associated
Press, AT&T, BBC, BSkyB, Disney-ABC, Google, HP, Mediaset, MTV, News
Corp, RCS Media Group, Sky Deutschland, Sky Italia, Telecom
Argentina, Telecom Italia, Telefonica O2, Universal Studios, Verizon,
Vodafone, VRT and Volkswagen. KIT digital maintains headquarters in
New York City and offices in more than a dozen countries around the
world. Visit the company at www.kitd.com or follow on Twitter at
www.twitter.com/KITdigital. 
Important Caution Regarding Forward-Looking Statements 
 This release
contains certain "forward-looking statements." These statements can
be identified by the use of words or phrases such as "believes,"
"estimates," "expects," "intends," "anticipates," "projects," "plans"
and variations of these words or similar words. These forward-looking
statements include statements regarding the Company's intent to
restate certain prior period financial statements and the errors that
resulted in the decision that these historical financial statements
could no longer be relied upon. There can be no assurance that the
Company's Board of Directors, Audit Committee, management or
independent registered public accounting firm will not reach
conclusions regarding the impact of the restatement that are
different from management's current estimates or identify additional
issues in connection with the restatement or that these issues will
not require additional corrections to the Company's prior period
financial statements. These statements are subject to risks and
uncertainties which may cause actual results to differ materially
from those stated in this release. These risks and uncertainties
include the risk that additional information may become available in
preparing and auditing the financial statements would require the
Company to make additional corrections, the cost, time and effort
required to complete the restatement of the financial statements, the
ramifications of the Company's potential inability to timely file
periodic and other reports with the Securities and Exchange
Commission, including potential delisting of the Company's common
stock on NASDAQ and the risk of litigation or governmental
investigations or proceedings relating to these matters. Certain
risks and uncertainties related to our business are or will be
described in greater detail in our filings with the Securities and
Exchange Commission. Except as required by applicable law, the
Company is not under obligation to (and expressly disclaims any such
obligation to) update its forward-looking statements whether as a
result of new information, future events or otherwise. 
KIT digital Media Contact:
Werbayne McIntyre 
OBE
SVP, Global Marketing and Communications
Tel. +44 1904 438000 or +44 7590 554 845
werbayne.mcintyre@kit-digital.com  
KIT digital Investor Contact:
Murray Arenson
SVP, Investor Relations & Corporate Initiatives
Tel. +1-646-553-4900
Murray.Arenson@kit-digital.com 
 
 
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