NEW YORK, NY -- (Marketwire) -- 12/10/12 -- KIT digital, Inc. (NASDAQ: KITD), a leading video management software and services company, announced today that it has received notice from The NASDAQ OMX Group ("Nasdaq") that, because the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended September 30, 2012 (the "10-Q") with the Securities and Exchange Commission (the "SEC"), the Company no longer complies with the continued listing requirements under Nasdaq Marketplace Rule 5250(c)(1).
As previously reported by the Company in its Notification of Late Filing on Form 12b-25, filed with the SEC on November 21, 2012, the Company was unable to file the 10-Q within the prescribed period due to restatement of certain historical financial statements. As previously disclosed, the restatement is due to accounting errors and irregularities primarily related 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 that resulted in impairment charges. The Audit Committee has also determined that certain transactions entered into by the Company under the prior management team during fiscal years ended December 31, 2008 through 2011 were related party transactions and that additional disclosure with respect to those transactions should have been included in the footnotes to the relevant financial statements. Because of the timing of the completion of the Audit Committee investigation and 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.
The Company is required to submit a plan to regain compliance with Nasdaq's requirements for continued listing, and, under the discretionary authority under Nasdaq Marketplace Rule 5101, in order to expedite the review process, Nasdaq is requiring that the plan must be submitted no later than December 18, 2012. If Nasdaq accepts the plan submitted by the Company, Nasdaq can grant an exception of up to 180 calendar days from the due date of the 10-Q to regain compliance. The Company intends to submit to Nasdaq, on or before December 18, 2012, a plan to regain compliance with Nasdaq's requirements for continued listing and other requested supplemental information. There can be no assurance that the Company will successfully regain compliance with Nasdaq listing requirements.
If Nasdaq does not accept the Company's plan, Nasdaq will provide notice that the Company's common stock will be subject to delisting. The Company would have the right to appeal a determination to delist its common stock, and the common stock would remain listed on the Nasdaq Global Select Market until the completion of the appeal process.
Important Caution Regarding Forward-Looking Statements
This report 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. Important risks, uncertainties and other important factors that could cause actual results to differ materially include, among others: the risk that additional information may become available in preparing and auditing the financial statements that would require the Company to make additional corrections, the time and effort required to complete the restatement of the financial statements, the ramifications of the Company's potential inability to timely file future periodic and other reports with the SEC, 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 the Company's business are or will be described in greater detail in the Company's filings with the SEC. 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.
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.