Gross revenues up 57%, operating loss down 69%, net loss down 69% from Q1
Acquisition of Kamera and corporate consolidaton completed
Company on track to achieve cash flow positivity during Q4

DUBAI - August 14, 2008 - KIT digital, Inc. (OTCBB: KITD), a global provider of IPTV enablement technology and video-centric interactive marketing solutions, announced today financial results for the quarter ended June 30, 2008. All figures below are quoted in U.S. dollars.

For the quarter ended June 30, 2008, revenue was $5.5 million compared to $3.5 million for Q1 2008 and $3.6 million in the prior year Q2 period. The Company’s revenue includes software set-up fees, software license and maintenance fees, technical and creative service charges, streaming and data fees, and advertising-related income.

The net loss for the quarter ended June 30, 2008 was $3.3 million, or $0.04 per basic and diluted share, compared to $10.6 million, or $0.27 per basic and diluted share in Q1 2008 and $7.4 million, or $0.22 per basic and diluted share, in the prior year Q2 period.

The net loss for the quarter ended June 30, 2008 reflects several non-cash items, including $73,000 in stock-based compensation, compared to $4.0 million in Q1 2008 and $1.2 million in the prior year Q2 period. Additionally, the net loss included restructuring charges of $146,000 relating to severance and facility closing compared to $2.7 million in Q1 2008 and zero for the prior year Q2 period.

Operating EBITDA loss for the quarter ended June 30, 2008 was $2.2 million, compared to a loss of $3.4 million in Q1 2008 and a loss of $6.1 million in the prior year Q2 period. Operating EBITDA as defined here is the loss before non-cash stock based compensation, restructuring and non-recurring costs, impairment of property and equipment and depreciation and amortization.  

Management remains confident that the Company will cross over to a cash-flow positive position during the course of the fourth quarter of this year.

Weighted average common shares outstanding for the three months ended June 30, 2008 was 82,800,972 compared to 38,936,039 in Q1 2008 and 33,899,002 for prior year Q2 period. The weighted average common shares outstanding at August 13, 2008 were 114,524,313.

On June 30, 2008, the Company had a cash position of $7.3 million. The Company expects an additional $5.0 million forthwith from KIT Media Limited (“KIT Media”), pursuant to the Executive Management Agreement dated December 18, 2007 between KIT Capital Ltd. (“KIT Capital”) and the Company. Certain funds related to KIT Media’s additional $5.0 million investment are currently being held in escrow by the Company, pursuant to the issuance of warrants and certain settlements between KIT Capital and the Company, but are not reflected in the Company’s reported cash balance. KIT Media and KIT Capital are each beneficially controlled by the CEO of the Company, Kaleil Isaza Tuzman.

Management believes the Company possesses cash that is more than sufficient to finance its organic growth plan through to profitability, as well as selective acquisitions.

On May 19, 2008, KIT entered into a definitive Share Purchase Agreement (the “Kamera SPA”) to acquire 100% of the outstanding shares of Kamera Content AB, and took control of the day-to-to-day operations of Kamera’s business on the same date. Cash payments totaling $4.5 million were made to consummate the Kamera acquisition and certain final conditions to the Kamera SPA were completed on June 25, 2008.

Management believes that the Company currently is in compliance with the requirements to be listed on NASDAQ Small Cap or the American Stock Exchange, except for its per share price. As such, the Company is reviewing the possibility of performing a reverse stock split and subsequent listing on one of these exchanges—which would be executed in the context of the Company crossing over to a cash-flow positive operating position. Management believes that a listing on a more prominent exchange would enhance visibility and liquidity for the Company’s common stock, and allow for certain commercial opportunities not currently available to the Company.

Kaleil Isaza Tuzman, chairman and chief executive officer of kit digital, commented, “Our Q2 exceeded management expectations. We are experiencing strong momentum across our business. With the right-sizing of kit digital and the acquisitions of Sputnik Agency and Kamera now complete, the company is now squarely focused on achieving positive cash flow by the fourth quarter. Our strong operating and cash position provides us the opportunity to assess selective, accretive acquisitions as appropriate”

Gavin Campion, president of kit digital, commented, “We are pleased at the current pace of revenue and gross profit growth, especially in the context of the significant cost reduction and post-acquisition consolidation activity that took place at kit digital in the first half of the year. Recent client additions in Asia, the Middle East and North America further demonstrate the success of kit’s focus on international markets. Our business model has been further strengthened by the acquisition of Kamera’s mobile capabilities, and we continue to adhere to a disciplined cost structure and a tactical, international growth plan.”

The Company estimates that over 92% of its revenues in the second quarter of 2008 were generated in the Asia/Pacific and Europe and Middle East (EMEA) geographies.

KIT digital’s significant corporate milestones announced during the second quarter of 2008 and since June 30, 2008 include:

• Completion, on May 8, 2008, of a $15 million investment in common stock of the Company by a group of institutional investors, led by a $7.06 million investment by kit Media.
• Completion of the acquisition of 100% ownership interest in Kamera Content, a Stockholm-based mobile content development and distribution company with clients such as Vodafone, Telefónica, MSN and China Mobile;
• Completion of the acquisition of 100% ownership in video-centric interactive online agency Sputnik, and the appointment of Sputnik managing director Gavin Campion to be president of kit digital;
•  OTCBB ticker symbol changed from RGRP to kitD;
• Polkomtel, Poland’s leading mobile services provider, chose kit digital to provide mobile distribution of EuroCup 2008 and Olympics content;
• Stephen O’Farrell and Barak Bar-Cohen appointed to senior management roles in Asia/Pacific and Americas groups, respectively;
• RCN, a leading broadcaster in Latin America, chose kit digital to provide a broad range of streaming media initiatives;
• Media Gateway, a leading international digital media content clearing house, agreed to work with kit digital to provide a broad suite of video content for various mobile TV launches in the Middle East and North Africa (MENA) region;
• Notice that kit Media, an affiliate of kit Capital, is exercising its right to purchase $5 million of common stock at a price of $0.16 per share, with funding into escrow pursuant to Company issuance of warrants.

Conference Call

The Company will host a conference call to discuss Q2 2008 results at 10:30 a.m. ET on Thursday, August 14, 2008. To participate in the call, please dial +1 (800) 766 1337 (North America) or +1 (404) 920 6210 (outside of North America). The passcode for the call is 41935739.  Please dial into the call at least five minutes before the scheduled start time to allow for processing time.

For interested individuals unable to join the live conference call, a replay of the call will be available through August 28, 2008, +1 (800) 766 1337 (North America) or +1 (404) 920 6210 (outside of North America). The passcode for the call is *41935739. An online archive of the webcast will be available on the Company’s website for 30 days following the call at the following link: http://www.kit-digital.com/news/events.aspx

About KIT digital

KIT digital, Inc. (OTCBB: KITD) is a leading, global provider of proprietary IP-based video distribution 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 and mobile networks. The KIT platform allows clients to publish, manage and distribute digital video content, build online/mobile communities and integrate advertising. The Company 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 News Corp., Verizon, IMG, China Mobile, Telefonica, Vodafone, K-Mart, Coles, NASDAQ, Hummer and RCS. KIT digital has principal offices in Dubai, Melbourne (Australia), Stockholm, New York and London. For additional information, please visit www.kit-digital.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 kit digital, 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.

 
Media Contact:
Jonathan Cutler
Verse Communications
818.981.3023
jonathan@verseinc.com

DUBAI, NEW YORK, LOS ANGELES, August 4, 2008 - KIT Capital, an entrepreneur-led special situations merchant bank, MNA Partners, a boutique corporate finance and investment firm focused on the Middle East and North Africa (MENA) region, and River Road Ventures, a US-based early stage venture capital firm, today announced their merger and the resulting formation of

KCP Capital. KCP Capital represents a unique cross-border merchant bank, with principal offices in Dubai, New York and Los Angeles, focused on the increasing business opportunities and capital flows between the Gulf Cooperation Council (GCC) zone, the Americas, and the ascendant emerging markets. KCP Capital will have four major practice areas: (i) Digital Media, led by Kaleil Isaza Tuzman, (ii) Merchant Banking, led by Kamal El-Tayara, (iii) Real Estate, led by Daniel W. Hart, and (iv) Asset Management, led by Irfan Amanat. KCP’s practice areas leverage the core operational and financial expertise of the KCP team, while optimizing for the opportunities and gaps that exist between developed and emerging markets.

KCP Capital’s digital media activities are centered around Dubai-based KIT digital (OTCBB: KITD), the largest investor in which is KCP’s investment vehicle, KIT Media, Ltd. KIT digital is a leading IPTV enablement and marketing solutions company focused on Global 1000 corporate clients in international markets. Kaleil Isaza Tuzman, managing partner of KCP Capital and former president of KIT Capital, serves as chairman & CEO of KIT digital.

Mr. Isaza Tuzman commented, “As a result of KIT Capital’s merger into the larger KCP Capital entity, KIT digital is now backed by greater financial muscle and, as such, is better positioned than ever to continue its path of aggressive organic growth and market consolidation. KIT digital’s shareholders know that I believe today’s turbulent markets provide well-capitalized companies with a unique advantage. This merger strengthens our capital base and allows me to further focus my time on growing KIT digital by transitioning KIT Capital’s other portfolio responsibilities to my new partners in KCP Capital.”

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KCP Capital’s real estate activities are centered around newly formed KCP Emergency Markets, a dedicated private equity fund vehicle focused on frontier emerging markets. The fund’s investment thesis is based on the arbitrage between real and perceived risk in “dislocated” markets, where positive catalysts-e.g., regime change, the end of bellicosity or civil strife, integration into regional trading organizations-may quickly and fundamentally change a country or regional investment landscape. KCP Emergency Markets is managed by KCP managing partner Daniel W. Hart.

Mr. Hart, former managing partner of River Road Ventures, explained, “We have taken proven entrepreneurs, former Goldman Sachs and Salomon Smith Barney executives, and a track record of investment success to create a first-class, cross-border partnership. The KCP Emergency Markets fund is off to a great start, thanks to the strength of this partnership.”

KCP Capital’s asset management practice, led by managing partner Irfan Amanat, is centered around KCP Structural Arbitrage, a global currency and fixed income fund which has been in existence since 2005 and has achieved a 26.8% compounded annual return after fees since inception, with extraordinarily low volatility.

The KCP merchant banking team, led by managing partner Kamal El-Tayara, anchors investment syndicates and provides financial advisory services to corporations and fund vehicles in the real estate, media, retail, transportation, telecommunications and technology industries. Since 1995, KCP principals have raised third-party equity financing in excess of US$2.0 billion in these industries and have completed over 100 transactions in the Americas, MENA, Sub-Saharan Africa and Southeast Asia-including corporate finance advisory services in the MENA region to major establishments such as Tamweel, FORSA (part of Istithmar World) and Villa Moda, as well as significant sell-side advisory mandates for telcos like Telesonique (Switzerland) and Nationlink (Central African Republic).

KCP’s merchant banking practice also manages a successful escrow services practice in the GCC real estate sector.

“Our collective relationships and expertise have been strengthened by this merger,” said Messrs. El-Tayara and Amanat, former managing partners of MNA Partners. “We believe KCP Capital is the first boutique merchant bank of its kind, focused on areas of strength in the U.S. and the GCC respectively.”

KCP Capital principals have served as entrepreneurs, operating executives, fund managers, and investment bankers. The KCP team utilizes a practical, hands-on approach that maximizes value for its investors and portfolio companies. KCP predecessor entities have directly invested in and managed companies including KIT digital (OTCBB: KITD), Silicon Spice, KPE, Nextivity, JumpTV (AIM, TSX: JTV) and Slipgate Ironworks, which have collectively created well over $1.5 billion in market value.

For additional information, please visit KCP Capital’s new website, at www.kcpcapital.com.