ROO Increases Consolidated Revenue by 43% and Online Digital Media Revenue by 78%...

ROO Increases Consolidated Revenue by 43% and Online Digital Media Revenue by
78% in 2007
Company Announces Conversion of Existing Super-Voting Preferred Shares and
Elimination of Preferred Share Class

NEW YORK, March 31 /PRNewswire-FirstCall/ -- ROO Group Inc.
(OTC Bulletin Board: RGRP) today announced financial results for the quarter
and year ended December 31, 2007, the reporting period immediately prior to
the assumption of executive management responsibilities by the KIT Capital
group. The Company also made several key corporate action announcements,
including:
(a) The conversion of all of the Company's outstanding 10 million super-
voting preferred shares into an aggregate of 400,000 common shares, as
well as the extinguishment of all shelf preferred shares, thereby
resulting in the extinguishment of the entire class of preferred
stock;

(b) The concurrent issuance of 8.65 million fully vested warrants to
Messrs. Robert Petty and Robin Smyth as part of restructured
employment agreements, but unrelated to future employment;

(c) The execution of share purchase agreements with selling shareholders
towards acquiring the remaining 49% of Sputnik Agency, ROO's
profitable, interactive online advertising subsidiary, pursuant to the
agreement in principle originally reached on March 16, 2008; and

(d) The corporate re-branding of ROO Group, including re-naming the
Company to 'KIT Digital, Inc.'.

For the quarter ended December 31, 2007, revenue was $3.9 million,
compared to $3.75 million in the prior year period.
The net loss for the quarter ended December 31, 2007 was $12.5 million, or
$0.32 per basic and diluted share, compared to $5.0 million, or $0.23 per
basic and diluted share, in the same period last year. The net loss for the
quarter ended December 31, 2007 includes non-cash items totaling approximately
$1.1 million in stock-based compensation and other compensation payments,
compared to $860,000 in the same period last year, and $4.1 million relating
primarily to the impairment of tangible and intangible assets. Excluding these
non-cash items, net loss for the quarter was $7.3 million. The increase in net
loss for the quarter is attributed to continued investments in building out
our technology platform, the cost of running the RBS business unit, which was
still in the research and development phase, as well as legal fees and costs
associated with headcount reduction. Weighted average common shares
outstanding for the three months ended December 31, 2007 was 38,953,109
compared to 21,920,172 for the same period in the prior year. The RBS business
unit, which was researching peer-to-peer networking technology, was closed
down in January 2008.
For the year ended December 31, 2007, revenue increased 43% to $13.9
million, compared to $9.8 million in 2006. This increase includes a 78%
increase in revenue from the Online Digital Media segment to $9.5 million,
compared to revenues of $5.4 million for the year ended December 31, 2006.
The net loss for the year ended December 31, 2007 was $34.6 million, or
$0.99 per basic and diluted share, compared to $14.6 million, or $0.92 per
basic and diluted share in 2006. The net loss includes non-cash items totaling
approximately $4.7 million in stock-based compensation and other compensation
payments, compared to $2.6 million in 2006, and $4.1 million relating
primarily to the impairment of tangible and intangible assets. Excluding these
non-cash items, net loss for the year was $25.8 million. The increase in net
loss for the year is attributed to the cost of development of the VX Platform,
the acquisition of strategic assets of Wurld Media and the cost of running the
RBS business unit, as well as a ramp up of global operations and sales
personnel. Weighted average common shares outstanding for the year ended
December 31, 2007 was 34,869,325 compared to 15,901,049 for the same period in
the prior year.
Kaleil Isaza Tuzman, chairman and chief executive officer of ROO, stated,
"The financial results for the three months and year ended December 31, 2007,
reported today, pre-date my joining ROO in January 2008. Since January, we
have implemented several material cost-cutting initiatives and repositioned
ROO to be more competitive, with a refocused strategic growth plan. This new
strategy involves the integration of our interactive agency and video player
capabilities, and an all-out commitment to profitability this fiscal year. Our
focus during the first quarter of 2008 was on (a) maintaining revenues, (b)
controlling and cutting costs and (c) simplifying our capital structure."
"Our focus in the second quarter of 2008 will be on building 'smart',
gross contribution-positive revenue through client agreements and strategic
acquisitions. While building the scale of our business will play an important
role in our success, we are more focused on achieving profitability than on
top-line growth -- which we believe will ultimately provide a more stable
foundation for long-term success."
Isaza Tuzman continued, "In the first quarter, we have cut our cash burn
by roughly 45% through a mixture of operating discipline and slightly enhanced
revenue levels -- without losing a single client and while adding one of our
largest clients to date, Italy's RCS Digital. We fully integrated our
subsidiary Sputnik and finally managed to extinguish the onerous preferred
share class without material dilution to common shareholders. We also rotated
the Company more towards higher growth international markets, built a high-
quality independent board of directors and filled out critical management
positions -- like president, chief operating officer, head of engineering,
head of EMEA and head of Latin America. A very productive first quarter in my
opinion."
Preferred Share Conversion and Class Extinguishment
On March 30, 2008, ROO Group reached negotiated settlements with Robert
Petty and Robin Smyth, restructuring their respective employment agreements,
each of which involved one-time cash severance payments. In exchange for
entering into new below-market, "at will" employment agreements, Messrs. Petty
and Smyth will receive upfront cash settlements of $675,000 and $275,000
respectively, as well as an aggregate of 8.65 million fully vested warrants to
purchase ROO common stock, at a strike price equal to $0.133 per share
(representing the 3-day weighted average of closing price of ROO common stock
prior to and including March 28, 2008). These warrants will become exercisable
in 1/12 increments on a monthly basis starting six months from now. Mr.
Smyth's restructured employment agreement involves certain cash and warrant-
based incentives which can be earned-in over a period of 3 years based on
ongoing service to the Company. As part of their respective settlements,
Messrs. Petty and Smyth agreed to vote their preferred shares according to the
Company's designation. Together with certain preferred shares beneficially
voted by the Company on March 30, 2008, these preferred shares -- which
represented a voting majority of all aggregate share classes -- voted for a
statutory conversion of all outstanding preferred shares (10 million in total)
into an aggregate of 400,000 common shares. The preferred shares also voted
for the subsequent extinguishment of the entire class of preferred shares,
such that no preferred shares may be issued by the Company in the future, and
for the renaming of the Corporation to "KIT Digital, Inc." These decisions
will be perfected twenty days after a definitive information statement has
been sent to all of the Company's shareholders.
Following the conversion of the outstanding preferred shares into an
aggregate of 400,000 common shares, ROO will have 39.34 million total shares
outstanding, or a market capitalization of $5.1 million -- based on the $0.13
closing price of ROO common shares on Friday, March 28, 2008. As of March 28,
2008, the Company had an approximate cash position of $5.3 million.
KIT Capital retains a right, pursuant to its Executive Management
Agreement with the Company of December 18, 2007, to purchase $5 million of ROO
common shares at $0.16 per share. KIT Capital has also agreed, subject to
approval by an independent committee of the board of directors, to accept
warrants to purchase 2.0 million shares of ROO common stock at a strike price
equal to $0.13 per share in exchange for surrendering its right to purchase
51% of the outstanding preferred shares of the Company.
"ROO Group has long suffered from the overhang of a 'blank-check'
preferred share class," commented Isaza Tuzman. "While management originally
came forward with a plan to eliminate the preferred shares through a 1-to-3.2
conversion ratio into common shares, it became clear over the last several
weeks that this plan was unacceptable to common shareholders. We see the net
outcome of the settlements reached as being materially positive for common
shareholders-involving less than one-third of the pro forma dilution as the
previously proposed 1-to-3.2 conversion alternative. More importantly, with
only one class of stock, all shareholders are now on a level playing field,
and investors can value ROO transparently and on an apples-to-apples basis
versus others companies in our sector-a comparison that we think will prove
favorable. We appreciate the flexibility shown by Messrs. Petty and Smyth in
arriving at this point."
Integration and Consolidation of Sputnik Agency
On March 30, 2008, ROO executed various individual share purchase
agreements with the shareholders of Sputnik Agency, in a process that once
completed should provide the Company a 100% ownership position in the
subsidiary entity. The all-in cash cost to ROO for the buy-in of Sputnik
(including consummation of the Company's original 51% ownership) will be
approximately $4.0 million, to be paid by April 30, 2008. Sputnik Agency
reported 2007 revenues of $5.2 million and an operating profit of $371,000. As
previously announced, ROO recently appointed Sputnik Agency's managing
director, Gavin Campion, 35, as president. Campion is now responsible for all
of ROO's global operations, client services and business development.
Mr. Campion commented, "The integration of Sputnik and ROO Media Services
will strengthen our operations by bringing our online video enablement and
interactive marketing solutions under one product offering. By offering a
single source solution we will be able to better serve current and prospective
clients. The Sputnik and ROO Media Services teams are in fact already
operating as one, and we have begun to see the positive fruits of this
decision. I bring the profit-focused outlook I have had in building Sputnik to
the overall ROO Group."
Corporate rebranding efforts, including the new name, 'KIT Digital'
On March 30, 2008, the majority of the Company's aggregate shares voted to
change the name of the Company to KIT Digital, Inc. The name change had been
previously authorized by the Board of Directors. The Company will operate
under the new name effective April 7, 2008. The Company will legally change
the name of the Corporation forthwith, as a result of which the Company's
ticker symbol on the Over the Counter Bulleting Board will also be changed.
Until that time, the Company will continue to trade under the ticker symbol
RGRP.
Mr. Isaza Tuzman commented, "The ROO name has served the Company over
time, but the team felt that the integration of Sputnik and ROO Media Services
represented a good time to introduce a fresh, new brand. The 'KIT Digital'
brand underscores my commitment to our success, and reflects in part the
changes made since KIT Capital's involvement in the Company several months
ago.
Mr. Campion continued, "In the coming weeks we will officially launch our
new corporate identity, including a new logo and website. This new brand most
effectively conveys our revamped operations and our focus on a 360 degree
online video monetization model for corporate clients. We will be unveiling
our new branding at the MIPTV conference in Cannes, France on April 7th."
"We are off to a strong start in 2008 as it relates to executing our
plan," concluded Isaza Tuzman. "We are gaining traction delivering our unique
end-to-end IPTV enablement technology to international customers. This is
buttressed by our recent exclusive technology agreements with Abacast, Pando
Networks and Viewdle and our recently announced intent to acquire mobile TV
company Kamera. However, this progress is perhaps best underscored by leading
European media company RCS' decision to deploy ROO's online streaming video
solutions on the web sites of two of Europe's largest newspapers, Corriere
della Sera and La Gazetta dello Sport."
ROO Group's significant corporate milestones since December 31, 2007
include:
-- Conversion of all outstanding 10 million preferred shares into an
aggregate of 400,000 common shares, and subsequent extinguishment of
the entire class of preferred shares;

-- Execution of definitive share purchase agreements with the shareholders
of ROO's subsidiary Sputnik Agency, towards the purchase of 100% of the
capital stock of Sputnik;

-- Appointment of Gavin Campion as president of ROO Group, effective April
1, 2008;

-- The expansion of the Company's board of directors to seven members,
four of whom are independent. This includes the appointments of Wayne
R. Walker, Kamal El-Tayara, Lars Kroijer, and Daniel W. Hart;

-- Execution of a Letter of Intent and associated Content Distribution
Agreement for the acquisition of 100% of the capital stock of Kamera
Content AB, a Stockholm-based provider of mobile and browser-based IPTV
solutions to corporate customers like Vodafone, MSN, Orange, O2,
Telefonica, Hutchinson, China Mobile and others;

-- Partnered with Abacast and Pando Networks on a semi-exclusive basis to
offer current and future corporate customers peer-to-peer (P2P)
streaming solutions that deliver live streaming and video-on-demand
(VoD) through the ROO Media Player;

-- Partnered with facial recognition-based video search company Viewdle,
whereby Viewdle will integrate its video search capability into the ROO
player to offer a seamless user experience as either a stand-alone
product or integrated with a broader ROO solution for corporate
clients;

-- Rebranding the Company as "KIT Digital", effective April 7, 2008; and

-- Retained Merriman Curhan Ford & Co. to help manage its capital
restructuring initiatives and explore strategic buy-side alternatives.

Conference Call
The Company will host a conference call at 9:00 a.m. ET/ 1:00 p.m. GMT on
Monday, March 31, 2008. To participate in the call, please dial 1 (888) 603-
6873 (domestic) or +1 (973) 582-2706 (international). The passcode for the
call is 40671896. Please dial into the call at least five minutes before the
scheduled start time to allow for processing time.
The conference call will also be available via a live listen-only webcast
and can be accessed through the Investor Relations section of ROO's website,
www.roo.com, or at www.kcsa.com. If using this option, please allow extra time
prior to the call to visit the site and download any necessary software that
may be needed to listen to the Internet broadcast.
For interested individuals unable to join the live conference call, a
replay of the call will be available through April 14, 2008, at 1 (800) 642-
1687 (domestic) or +1 (706) 645-9291 (international). The passcode for the
replay is 40671896. An online archive of the webcast will be available on the
Company's website for 30 days following the call.
About ROO
ROO Group Inc. (OTC Bulletin Board: RGRP), through its 100% subsidiary ROO
Media Corporation, is a global service provider enabling businesses to
leverage their digital media assets and provide an enhanced user experience.
The Company's proprietary platform and content management system, the ROO
Video Exchange, and a suite of related products, allows web sites and their
advertisers to organize video content, target advertising and maximize views.
ROO is the service provider of choice for companies seeking enterprise level
solutions and effective strategies for monetizing digital media assets. The
Company also operates an advertising agency business specializing in a variety
of media services including direct marketing, brand planning and identity,
media buying and packaging. ROO has offices in New York, London, Dubai and
Melbourne, Australia. For additional information, please visit www.roo.com.
Forward-Looking Statements
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995 -- With the exception of historical information, the matters discussed
in this press release are forward-looking statements that involve a number of
risks and uncertainties. The actual future results of ROO Group, Inc. could
differ significantly from those statements. Factors that could cause actual
results to differ materially include risks and uncertainties such as the
inability to finance the company's operations or expansion, inability to hire
and retain qualified personnel, changes in the general economic climate,
including rising interest rates and unanticipated events such as terrorist
activities. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue," the negative of
such terms, or other comparable terminology. These statements are only
predictions. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, such statements should not be
regarded as a representation by the Company, or any other person, that such
forward-looking statements will be achieved. We undertake no duty to update
any of the forward-looking statements, whether as a result of new information,
future events or otherwise. In light of the foregoing, readers are cautioned
not to place undue reliance on such forward-looking statements. For further
risk factors see the risk factors associated with our Company, review our SEC
filings.
Tables Below

ROO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007
(Amounts in Thousands, Except Share and Per Share Data)

Assets:
Current assets:
Cash and cash equivalents $10,189
Accounts receivable, net 3,057
Other current assets 1,288
Restricted cash 100

Total current assets 14,634

Property and equipment, net 1,307
Deferred tax assets 263
Software, net 505
Customer list, net 253
Domain names, net 30
Goodwill 1,123

Total assets $18,115

Liabilities and Stockholders' Equity:
Current liabilities:
Bank overdraft and other obligations $190
Accounts payable 3,121
Accrued expenses 1,616
Income tax payable 139
Other current liabilities 1,478

Total current liabilities 6,544

Capital lease obligations 292
Total liabilities 6,836
Commitments and contingencies --
Minority interest (76)

Stockholders' Equity:
Series A preferred shares, $0.0001 par value: authorized
10,000,000 shares; issued and outstanding 10,000,000 1
Common stock, $0.0001 par value: authorized 500,000,000
shares; issued and outstanding 38,936,039 4
Additional paid-in capital 74,820
Accumulated deficit (63,524)
Accumulated other comprehensive income 54
Total stockholders' equity 11,355

Total liabilities and stockholders' equity $18,115

ROO GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Amounts in Thousands, Except Share and Per Share Data)

Years ended
December 31,
2007 2006

Revenue $13,929 $9,768
Expenses:
Operations 13,541 8,530
Research and development 6,146 2,140
Sales and marketing 7,530 5,318
General and administrative (exclusive
of non-cash compensation) 11,540 6,098
Non-cash compensation 4,748 2,597
Settlement of MVD agreement 500 --
Impairment of property and equipment 788 --
Impairment of intangible assets 3,124 --
Impairment of goodwill 250 --

Total expenses 47,167 24,683

(Loss) from operations (34,238) (14,915)

Interest income 725 166
Interest expense (70) (78)
Other income (expense) (51) --
Registration rights liquidated damages (792) (70)

Net (loss) before income taxes (34,426) (14,897)

Income tax expense (benefit) 125 (92)

Net (loss) before minority interest (34,551) (14,805)

Minority interest (13) 180

Deduct: Preferred shares dividend -- --

Net (loss) available to common
shareholders $(34,564) $(14,625)

Basic and diluted net (loss) per common
share $(0.99) $(0.92)

Weighted average common shares outstanding 34,869,325 15,901,049

Comprehensive (loss):
Net (loss) $(34,564) $(14,625)
Foreign currency translation 46 43

Comprehensive (loss) $(34,518) $(14,582)

SOURCE ROO Group Inc.

Investor Relations, Todd Fromer, +1-212-896-1215, tfromer@kcsa.com, or Public
Relations, Lewis Goldberg, +1-212-896-1216, lgoldberg@kcsa.com, both of KCSA
Strategic Communications for ROO Group Inc.