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KIT digital Reports Third Quarter 2008 Results
(Marketwire Via Acquire Media NewsEdge) DUBAI, UNITED ARAB EMIRATES, November 17 / MARKET WIRE/ --
KIT digital, Inc. (OTCBB: KITD), a global provider of IP-based video enablement technologies and
video-centric interactive marketing solutions, reported financial results
for the third quarter ended September 30, 2008.
Q3 2008 Financial Results
Financial results in this release are quoted in U.S. dollars, although a
material portion of the company's revenue is earned in other currencies.
For the third quarter of 2008, revenue totaled $5.4 million, as compared to
$5.5 million in the previous quarter and $3.4 million in the same quarter a
year ago. The company's revenues include software license and maintenance
fees, streaming and data fees, technical and creative service charges,
software set-up fees, and advertising-related income.
During the third quarter, the U.S. dollar appreciated versus the other
currencies in which the company generates revenues. On a like currency
basis, KIT digital increased revenues during the quarter. The company
employs a "natural hedging" strategy in which management endeavors to match
revenue generated in a given currency against the associated client
delivery costs denominated in the same currency. This strategy results in
approximately neutral cash-flow impact from foreign exchange movements,
despite changes in reported gross revenues.
The net loss for the quarter was $2.6 million or ($0.02) per basic and
diluted share, compared to a loss of $3.3 million or ($0.04) per basic and
diluted share in the previous quarter and a loss of $8.2 million or ($0.21)
per basic and diluted share in the third quarter of 2007.
The net loss for the quarter reflects several non-cash items, including
$188,000 in stock-based compensation, compared to $73,000 in the previous
quarter and $1.2 million in the same year ago quarter. Additionally, the
net loss included restructuring charges of $162,000 relating to employee
termination and facility closing costs, as compared to $146,000 in the
previous quarter and none in the third quarter of 2007.
For the third quarter, operating EBITDA, a non-GAAP term, was a loss of
$1.57 million, as compared to a loss of $2.24 million in the previous
quarter and a loss of $6.64 million in third quarter of 2007. Operating
EBITDA is defined by the company as the loss before non-cash stock based
compensation, restructuring and non-recurring costs, impairment of property
and equipment and depreciation and amortization. Management reports the
company is turning operating EBITDA positive during the course of the
current fourth quarter, and is optimistic that the company will turn free
cash-flow positive by the end of this year or in beginning of the first
quarter of 2009.
The weighted average common shares outstanding for the quarter totaled
114,557,722, as compared to 82,800,972 in the previous quarter and
38,907,293 in the third quarter of 2007. The common shares outstanding at
November 14, 2008 totaled 114,609,788.
At the end of the third quarter of 2008, the company had a cash position of
$6.1 million. Management believes the company possesses more than
sufficient cash to finance its organic growth plan through to
profitability, as well as to make selective acquisitions.
On October 5, 2008, subsequent to the end of the third quarter of 2008, the
company acquired 100% of the capital stock of IP-based video enablement
company Visual Connection, a.s., the purchase of which included a $2.5
million upfront cash payment. On November 12, 2008, the company received
$1.4 million in straight (non-convertible) debt financing from Genesis
Merchant Partners, L.P., secured by accounts receivable, inventory and
other assets. The proceeds of this debt facility may be used for general
corporate purposes. As of November 14, 2008, KIT digital had a cash
position of $5.2 million.
Even after accounting for an additional 20%+ strengthening of the U.S.
dollar since September 30, 2008 versus the Czech koruna, the Australian
dollar and other currencies in which KIT digital does business,
consolidated fourth quarter 2008 revenues are estimated to be at least $8.5
million. In the absence of the strong U.S. dollar, management estimates
that fourth quarter 2008 revenues would have been more than $10 million.
Management Commentary
"The third quarter represented substantial progress across the board," said
Kaleil Isaza Tuzman, chairman and chief executive officer of KIT digital.
"Despite the generally slow Summer period, a faltering economy, a strong
U.S. dollar and the ongoing rationalization of acquired assets, we grew our
underlying business on a local currency basis versus a banner second
quarter, and ended the third quarter with a September monthly operating
EBITDA loss of approximately $195,000 -- versus well over $2 million of
monthly burn at the beginning of the year. We are crossing over to positive
monthly operating EBITDA during the current fourth quarter, just as we
committed to our shareholders at the beginning of this year."
Gavin Campion, president of KIT digital, commented: "At KIT digital, we
take a financially disciplined and bottom-line approach. We generally
leave the small and medium-size enterprise (SME) market to our competitors,
while we go after higher-margin, enterprise clients, frequently in emerging
markets. During the third quarter, we won a number of key new accounts and
made great progress on the integration of our product lines and acquired
businesses -- activities which take time to develop and will bear financial
fruit in future quarters."
"We started 2008 at an annualized revenue run-rate of approximately $12
million," continued Campion. "Even after the appreciation of the dollar in
recent months, we are currently operating at an annualized revenue level of
approximately $35 million. Looking forward to 2009, we will continue to
leverage our first-mover advantage as the only truly device-agnostic IP
video solutions provider, able to deliver and manage video on the browser,
the mobile device and the IPTV-enabled set-top box or game-box."
Q3 2008 Operational Highlights
-- Signed over 20 new enterprise clients across major geographies --
Asia/Pacific, Europe, the Middle East & Africa (EMEA), and the Americas;
-- Acquired Morpheum, one of Asia's leading providers of web-based
content management systems -- which is already in the process of being
integrated with the KIT digital's "VX" video management platform;
-- Created a critically acclaimed, custom-built Web environment for TV
innovator Seth MacFarlane and his new collection of web shorts, titled
'Seth MacFarlane's Cavalcade of Cartoon Comedy';
-- Launched a North American IPTV set-top box deployment for TV2Moro, a
new company created by leading players in Arab media production and
distribution;
-- RCN, a leading broadcaster in Latin America, choose KIT digital to
provide a broad range of streaming media initiatives;
-- An estimated 91% of KIT digital revenue in the third quarter of 2008
was generated in the Asia/Pacific and EMEA geographies, and approximately
9% from the Americas.
Conference Call
KIT digital will hold a conference call to discuss Q3 2008 results at 10:00
a.m. Eastern time on Tuesday, November 18, 2008. To participate in the
call, please dial +1 (800) 288-8968 (North America) or +1 (612) 332 0725
(outside of North America). Note that the call-in numbers have changed
since the company's last press release; the previously disseminated call-in
numbers will be answered and forwarded to the numbers above.
Please dial into the call five minutes prior to the scheduled start time.
If you have any difficulty connecting to the conference call, please
contact the Liolios Group at +1 (949) 574-3860.
For interested individuals unable to join the live conference call, a
replay of the call will be available an hour after the conclusion of the
live call through December 2, 2008 by dialing into +1 (800) 475-6701 (North
America) or +1 (320) 365-3844 (outside of North America). The access code
for this replay is 970370. In addition, an online archive of the call will
be available for 30 days afterwards through the Investor Relations section
of the Company's website at www.kitd.com.
About KIT digital
KIT digital, Inc. (OTCBB: KITD) 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, China Mobile, General Motors,
IMG, Kmart, NASDAQ, News Corp, RCS, Telefonica and Verizon. KIT digital has
principal offices in Dubai, Melbourne (Australia), Prague, Stockholm, New
York and London. For additional information, visit www.kit-digital.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 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.
KIT DIGITAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands, Except Share Data)
September 30, December 31,
2008 2007 (A)
------------- -------------
(Unaudited)
Assets:
Current assets:
Cash and cash equivalents $ 6,069 $ 10,189
Accounts receivable, net 4,583 3,057
Other current assets 1,690 1,288
Restricted cash - 100
------------- -------------
Total current assets 12,342 14,634
Property and equipment, net 1,621 1,307
Deferred tax assets 254 263
Software, net 2,310 505
Customer list, net 2,212 253
Domain names, net 22 30
Goodwill 9,809 1,123
------------- -------------
Total assets $ 28,570 $ 18,115
============= =============
Liabilities and Stockholders' Equity:
Current liabilities:
Bank overdraft and other obligations $ 260 $ 190
Accounts payable 3,081 3,121
Accrued expenses 2,665 1,616
Income tax payable 188 139
Acquisition liability - Kamera 3,000 -
Liability to KIT Media, Ltd. 2,500 -
Other current liabilities 2,156 1,478
------------- -------------
Total current liabilities 13,850 6,544
Capital lease obligations 207 292
------------- -------------
Total liabilities 14,057 6,836
------------- -------------
Commitments - -
------------- -------------
Minority interest (122) (76)
------------- -------------
Stockholders' equity:
Series A preferred shares, $0.0001 par
value: authorized 0 and 10,000,000
shares; issued and outstanding 0 and
10,000,000 at September 30, 2008 and
December 31, 2007 - 1
Common stock, $0.0001 par value:
authorized 500,000,000 shares; issued
and outstanding 114,602,447 and
38,936,039 at September 30, 2008 and
December 31, 2007, respectively 11 4
Additional paid-in capital 94,846 74,820
Accumulated deficit (80,036) (63,524)
Accumulated other comprehensive (loss)
income (186) 54
------------- -------------
Total stockholders' equity 14,635 11,355
------------- -------------
Total liabilities and stockholders' equity $ 28,570 $ 18,115
============= =============
(A) - Reference is made to the Company's Annual Report on Form 10-KSB for
the year ended December 31, 2007 filed with the Securities and Exchange
Commission in April 2008.
KIT DIGITAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Amounts in Thousands, Except Share and Per Share Data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
----------------------- ----------------------
2008 2007 2008 2007
----------- ---------- ---------- ----------
Revenue $ 5,381 $ 3,434 $ 14,368 $ 10,020
----------- ---------- ---------- ----------
Variable and direct third
party costs:
Hosting, delivery and
reporting 499 509 1,601 1,782
Content costs 866 346 1,685 1,259
Direct third party
creative production
costs 759 777 2,732 2,203
----------- ---------- ---------- ----------
Total variable and
direct third party
costs 2,124 1,632 6,018 5,244
----------- ---------- ---------- ----------
Gross profit 3,257 1,802 8,350 4,776
General and administrative
expenses:
Compensation, travel
and associated costs
(exclusive of non-cash
stock-based
compensation) 3,701 6,621 12,108 18,173
Non-cash stock-based
compensation 188 1,177 4,262 3,656
Legal, accounting, audit
and other professional
service fees 291 783 905 1,313
Office, marketing and
other corporate costs 834 1,042 2,600 3,258
Depreciation and
amortization 434 661 1,033 1,043
Restructuring charges 162 - 3,053 -
Other non-recurring
charges 200 - 845 -
Impairment of property
and equipment - - 228 -
----------- ---------- ---------- ----------
Total general and
administrative
expenses 5,810 10,284 25,034 27,443
----------- ---------- ---------- ----------
(Loss) from operations (2,553) (8,482) (16,684) (22,667)
Interest income 37 262 127 594
Interest expense - other (31) (18) (85) (51)
Other income 8 9 140 29
----------- ---------- ---------- ----------
Net (loss) before
income taxes (2,539) (8,229) (16,502) (22,095)
Income tax
(expense) benefit (1) - (2) 5
----------- ---------- ---------- ----------
Net (loss) before
minority interest (2,540) (8,229) (16,504) (22,090)
Minority interest (15) 17 (8) (11)
----------- ---------- ---------- ----------
Net (loss) available to
common shareholders $ (2,555) $ (8,212) $ (16,512) $ (22,101)
=========== ========== ========== ==========
Basic and diluted net
(loss) per common share $ (0.02) $ (0.21) $ (0.21) $ (0.66)
=========== ========== ========== ==========
Weighted average common
shares outstanding 114,557,722 38,907,293 78,895,542 33,388,117
=========== ========== ========== ==========
Comprehensive (loss):
Net (loss) $ (2,555) $ (8,212) $ (16,512) $ (22,101)
Foreign currency
translation (219) 61 (240) 80
----------- ---------- ---------- ----------
Comprehensive (loss) $ (2,774) $ (8,151) $ (16,752) $ (22,021)
=========== ========== ========== ==========
Investor Relations Contact:
Ron Both
Liolios Group
Tel. +1-949-574-3860Email Contact
Media Contact:
Jonathan Cutler
Verse Communications
Tel. +1.818.981.3023Email Contact
Copyright ? 2008 Marketwire
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