KIT digital, Inc. Announces Restatement of Prior Period Financial Statements and Postponement of Third Quarter 2012 Results
21 Novembre 2012 - 11:06PM
Marketwired
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 million 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.
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KIT digital Media Contact: Werbayne McIntyre OBE SVP,
Global Marketing and Communications Tel. +44 1904 438000 or +44
7590 554 845 Email Contact KIT digital Investor Contact:
Murray Arenson SVP, Investor Relations & Corporate Initiatives
Tel. +1-646-553-4900 Email Contact
Kit Digital (MM) (NASDAQ:KITD)
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