Group Led By Former Chairman and CEO Kaleil Isaza Tuzman Revises Acquisition Offer and Raises Concerns Regarding KIT digital

 Group Led By Former Chairman and CEO Kaleil Isaza Tuzman Revises Acquisition
         Offer and Raises Concerns Regarding KIT digital Sale Process

  PR Newswire

  NEW YORK, Feb. 11, 2013

- Believes company is being purposefully driven to a distressed sale by
current insiders

NEW YORK, Feb. 11, 2013 /PRNewswire/ -- Dear KIT digital board of directors:

In an open letter to you on November 23rd, 2012 , a group led by me outlined
our disappointment with the direction you have taken KIT digital, Inc. ("KITD"
or the "Company"), made a preliminary bid to take the Company private, and
offered a detailed operational plan to recover value for shareholders. On
December 5th, 2012 , we revised our contingent bid for the Company in another
open letter to the board—to a range of $1.35 -$1.70 per share—representing a
112% premium to the $0.72 closing price of the Company's shares on December 4,

While you insinuated to KITD shareholders at the time that our bid lacked bona
fide capital support, you have in fact been confidentially aware of two large
private equity firms with whom we have partnered and have known that we
possess the capability to complete this transaction. Nevertheless, during the
course of December 2012 your only meaningful response to our offer was a
requirement that we agree to a two-year standstill in order to engage in any
discussions regarding an acquisition of the Company. We do not believe that
requiring us, or any other party, to execute a standstill as a condition to
initiate discussions regarding a potential acquisition is in the best interest
of shareholders at this juncture. This view is underscored by our knowledge of
other bidding groups who executed standstill agreements in connection with the
Company's previously disclosed strategic transaction process and have been
subsequently unable to obtain general responses and specific due diligence
information from the Company.

We believe your approach of requiring prospective buyers to agree to long-term
standstills and the subsequent unresponsiveness of KITD management represents
a purposeful approach to eliminate open competition for the Company's assets,
thereby eroding the value of the Company and denying shareholders value they
would otherwise receive in a competitive acquisition transaction.

We believe that requiring outside bidders to agree to a long-term standstill
also represents a conscious, structural advantage in the strategic sale
process for the Company's largest shareholder, JEC Capital Partners ("JEC
Capital" or "JEC"). Given KITD's recent announcement of a restatement of
historical financials and its de-listing from NASDAQ, it is very difficult for
outside parties to develop a clear picture of the Company's current financial
and operating condition. In his position as chief executive officer of KITD,
JEC Capital managing partner Peter Heiland has unique access to information
and can rely upon this information in developing a bid for the Company. We
believe JEC has purposefully driven down the value of KITD and is either: (a)
working with an affiliate or entity otherwise "friendly" to JEC to complete a
presumptively arms-length transaction with which JEC could be subsequently
involved, (b) planning to bid immediately after an artificially low-priced
third party transaction is announced—which results in JEC's own standstill
being released, or (c) planning a pre-arranged or pre-packaged bankruptcy
filing in which JEC or a JEC affiliate would be the stalking horse bidder for
the assets of the Company or otherwise materially benefit. We believe any of
these outcomes would provide less value to the Company's shareholders than an
open, competitive and transparent bidding process for the Company's assets.

Mr. Heiland has previously been the benefactor of investing in distressed
situations where information asymmetry and insider positioning can generate
meaningful returns. The case of GSI Group, where by his own description Mr.
Heiland "engineered its recapitalization", closely follows the pattern of
JEC's involvement in KITD. JEC Capital was a large, activist investor in GSI
Group, which also made an open-ended announcement that it would restate its
historical financials, de-listed from NASDAQ and lost the vast majority of its
market capitalization immediately prior to a bankruptcy filing. GSI Group was
put through bankruptcy with Mr. Heiland's leadership, resulting in JEC Capital
materially increasing its stake in the Company and ultimately selling for a
massive profit after GSI Group re-emerged from bankruptcy in 2010.

Our concerns with KITD's current management and sale process extend beyond the
standstill issue and JEC's potential self-dealing. You have also chosen to
keep KIT digital investors in the dark regarding some of the Company's most
troubling challenges and liabilities. For example, on January 2, 2013, Invigor
Group brought legal suit against KIT digital seeking recovery of nearly $15
million it is purportedly owed pursuant to the Company's acquisition of Hyro,
Ltd. in June 2012. Alternatively, we understand there may be over 30 million
shares issuable to Invigor pursuant to the terms of the Hyro acquisition. The
Company has not disclosed the Invigor lawsuit or openly discussed the
contingent share issuance liability with shareholders. We also have reason to
believe the Company has sold off certain assets and/or intellectual property
without fully disclosing these sales to the market.

Finally, you have attempted to undermine our group's bid to acquire the
Company through intimidation: terminating senior managers at the Company
supportive to our group, threatening your existing staff with repercussions
related to potential communication with and support of our group, and
withholding severance payments to senior professionals who have left the
Company and subsequently supported our efforts. The Company's actions in this
area have included a refusal to properly remove executives no longer with the
Company from the Company's foreign subsidiaries' boards—in an apparent effort
to cause these executives to incur expense and potential liability and
discourage our outside bid for the Company.

Your actions overall have demonstrated a blatant disregard for outside
shareholders not represented amongst you on the board. We believe the Company
is being purposefully driven towards an insufficiently competitive, distressed
asset sale—to the advantage of current insiders—possibly to be executed under
federal bankruptcy protection.

We will continue to pursue all available means of delivering value to Company
shareholders. We believe all parties currently subject to standstill
agreements with respect to an acquisition of the Company or its assets should
be immediately released from said agreements. We remain willing to lead an
open-market, take-private bid of the Company. Given the Company's current
stock price, liquidity crisis and need for a significant, primary capital
infusion, our revised offer would be in a range of $0.70-$1.00 per
share—representing, at the midpoint of the range, a 93.2% premium to the $0.44
closing price of the Company's shares on Friday, February 8, 2013. Our offer
is subject to due diligence, your release of certain parties from standstill
agreements, and a mutually acceptable definitive agreement.

Respectfully, Kaleil Isaza TuzmanOn behalf of KIT Capital, Ltd.

Contact: Shelby Johnson-Sapp,, 1-917-428-0611
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