KIT digital Acquires the Assets of Broadband TV Provider Narrowstep

Wed Apr 8, 2009 10:33am EDT

* Reuters is not responsible for the content in this press release.

  DUBAI, UNITED ARAB EMIRATES and LONDON, Apr 08 (MARKET
WIRE) -- 
KIT digital, Inc. (OTCBB: KDGL), a leading global provider of Internet
Protocol-based video enablement technologies, has acquired the assets and
assumed certain current liabilities of London-based Narrowstep, Inc., an
Internet TV platform company supporting content providers, broadcasters,
telcos and other corporations. The acquisition expands KIT digital's
client delivery capabilities -- particularly in live-streaming, long-form
delivery and delivery using the Microsoft Silverlight technology.

    Narrowstep's proprietary telvOS Internet TV platform specializes in
long-form video-on-demand and live streaming for enterprise customers,
using Silverlight and its own content delivery network services. KIT
digital management estimates Narrowstep's current, recurring revenues to
be approximately $110,000 per month. The acquisition is expected to be
immediately accretive and pro forma cash flow positive based on synergies
in G&A and variable costs. The transaction includes a transition of
Narrowstep's client relationships to KIT digital, including The Outdoor
Channel, The Paralympics, BBVA, and the Red Cross. As part of the
transaction, KIT digital will also acquire and integrate Narrowstep's
reseller relationships which include Can Communicate, a UK-based digital
agency specializing in creating brand generated content, and Vivocom, a
leading provider of IPTV technology and production services based in
Spain.

    Under the terms of the agreement, KIT digital acquires 100% of
Narrowstep's operating assets and assumes current liabilities in exchange
for 25,000 shares of restricted KIT digital common stock. Concurrently
with the closing, Granahan McCourt Capital, LLC, a shareholder of
Narrowstep, will lend $350,000 to KIT digital in the form of an
interest-free convertible note, which will be used to cover technical and
operational restructuring charges incurred in the acquisition.

    Kaleil Isaza Tuzman, chairman and chief executive officer of KIT digital,
said, "The acquisition and integration of Narrowstep expands our IPTV
delivery capabilities in a couple of key areas, while delivering an
immediate financial contribution without consuming net cash. This further
solidifies our position as the leader in the IP-based video platform
marketplace, as measured by revenues, operating cash flow, geographic
scope, and product suite capabilities. Narrowstep's roster of enterprise
customers and the expertise and capabilities of the Narrowstep team are a
welcome addition to the KIT family."

    David C. McCourt, managing principal of Granahan McCourt Capital, LLC,
commented, "Granahan McCourt is very supportive of this transaction, and
we are happy to be providing low-cost transition financing so that KIT
digital can continue to support Narrowstep's customers and employees
through the period of integration between the businesses. Both parties
thought it important that KIT digital was provided a small cash cushion
in the deal, to effectively transition over Narrowstep's assets,
customers and employees."

    "KIT digital has emerged as the leader in our industry and is the right
home for the Narrowstep assets," added Ellyn Ito, chief administrative
officer of Granahan McCourt and restructuring advisor to Narrowstep. "We
appreciate KIT's discipline around cash flow, and believe that the
synergies between the two businesses creates additional value in the
market and affords the best opportunity for Narrowstep's shareholders,
customers and employees."

    In the context of the transaction, the companies will consolidate staff
locations in London and New York.

    The transaction has been approved by the board and expects approval from a
majority of the shareholders of Narrowstep.

    KIT digital's management team will provide further details of the
Narrowstep acquisition on the company's fourth quarter and year-end 2008
earnings results conference call scheduled for today, Wednesday, April 8,
2009 at 10:30 a.m. Eastern time.

    About Narrowstep

    Narrowstep, Inc. is a provider of Internet TV services supporting content
providers, broadcasters and telecommunications companies. Narrowstep's
proprietary technology platform delivers a TV-like experience available on
the Internet. A pioneer in delivering Internet TV, Narrowstep offers the
expertise and technology to move, manage and monetize video content across
the Internet. Founded in 2002, with over 6 years of experience and
industry knowledge, Narrowstep offers the flexibility to provide video
capabilities to companies wanting to broadcast to anyone, any place and
any time. Narrowstep's telvOS(TM) suite is the only IPTV platform that
can deliver to viewers long-form, full screen programming of true TV-like
viewing experience over the Internet. For additional information, please
visit www.narrowstep.com.

    About KIT digital

    KIT digital, Inc. (OTCBB: KDGL) is a leading, global provider of
proprietary IP-based video enablement technologies and video-centric
interactive marketing solutions. Through its end-to-end platform, KIT
digital works closely with consumer brands, content providers and telcos
to maximize the value of video content via the Internet, mobile networks
and IPTV set-top boxes. The KIT VX platform allows clients to publish,
manage and distribute digital video content, build online/mobile
communities and integrate advertising. KIT offers businesses a full range
of interactive marketing solutions and KIT clients can access
approximately 100 KIT-syndicated channels and 40,000 KIT-syndicated
videos. KIT digital clients include ABC Disney, Associated Press, General
Motors, IMG, Kmart, NASDAQ, News Corp, RCS, Telefonica and Verizon. KIT
digital has principal offices in Dubai, Melbourne (Australia), Prague,
Toronto, New York and London. For additional information, please visit
www.kitd.com.

    Forward-Looking Statements

    This press release contains certain "forward-looking statements" related
to the businesses of KIT digital, Inc. which can be identified by the use
of forward-looking terminology such as "believes," "expects" or similar
expressions. Such forward-looking statements involve known and unknown
risks and uncertainties, including uncertainties relating to product
development and commercialization, the ability to obtain or maintain
patent and other proprietary intellectual property protection, market
acceptance, future capital requirements, regulatory actions or delays,
competition in general and other factors that may cause actual results to
be materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and uncertainties
are or will be described in greater detail in our public filings with the
U.S. Securities and Exchange Commission. KIT digital, Inc. is not under
any obligation to (and expressly disclaims any such obligation to) update
or alter its forward-looking statements whether as a result of new
information, future events or otherwise.

    

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