Nunet was acquired from IMG Worldwide, Inc. and is considered a premier global provider in the management and delivery of video on mobile devices, while The FeedRoom is a venture capital-backed, privately-held market leader in live video and digital asset management for corporations.

"Nunet and The FeedRoom complement and substantially expand our client base, core capabilities and our commitment to serving video to the 'three screens' of the mobile device, browser and television through an IP set-top-box," said KIT digital's chairman and CEO, Kaleil Isaza Tuzman. "We expect these acquisitions to be immediately accretive to our financial results and provide substantial synergies in terms of business development, platform technology, geographical footprint and overall growth potential."

The acquisition of Nunet adds a number of major international clients to the KIT digital roster. A wide range of global mobile network operators use its MobileTV digital asset management system, including Mobilkom, Proximus, SFR, Vodacom and Vodafone Group. Nunet also works with major broadcasters and content producers like Discovery Channel, Eurosport International, Fashion TV, IMG Worldwide and MTV Networks.

The FeedRoom dramatically expands KIT digital's presence in North America through the addition of more than 80 enterprise customers, including Barnes & Noble, Best Buy, Bristol-Myers Squibb, BusinessWeek, General Motors, Herbalife, Hewlett Packard, Honeywell, Intel, Metlife and the U.S. Department of Defense.

The FeedRoom acquisition enhances KIT digital's VX IP video management platform through the integration of key features of The FeedRoom's 'Studio' software, including an advanced management, reporting, and analytics console. In turn, The FeedRoom clients will gain access to the advanced software features of VX, including delivery of IP video to mobile devices and IP-enabled TV set-top-boxes, as well as enhanced geographical targeting and search engine optimization tools.

"We see a great opportunity for cross-marketing Nunet's MobileTV asset management capabilities as part of an expanded 'VX2' IP video management offering to our newly combined customer base," notes Gavin Campion, president of KIT digital. "This customer base includes many brands which use IP video as part of their external marketing and merchandising programs, human resources function, corporate communications, and business operations -- all 'back-end' corporate verticals we view as significant growth opportunities in the quarters and years ahead."

Initially, the two acquisitions are expected to add $17.5 million of current, annualized revenues from core IP video-based services, and more than $4.5 million in annualized EBITDA to KIT digital. Over 75% of the newly acquired revenues are recurring and subject to long-term contracts. In January 2009, KIT digital's management said they expected to generate at least $40 million in revenue with approximately 10% operating margin for the year. This guidance was reflective of KIT digital's core business at the time and does not take into account the effect of the acquisitions of Nunet and The FeedRoom.

The acquisitions also involved the appointment of several Nunet and FeedRoom executives to KIT digital's senior management team. Nunet has 56 employees, who will remain based in Cologne under the new ownership. Many of The FeedRoom's 53 employees will join KIT digital's operations in New York City, while The FeedRoom's offices in Seattle and Boston will be added to the KIT digital network.

Isaza Tuzman added: "During our recent registered public stock offering and NASDAQ listing process we made it clear that the net proceeds of the offering would be used for accretive acquisitions that would expand our geographical and customer reach, and further establish our leadership position in IP video management for the enterprise. We fulfilled our promise by completing these acquisitions quickly and efficiently, and have already identified operational synergies, a combined leadership team, and immediate plans for platform technology integration. All of this forms the basis for strong growth, while delivering an enhanced IP video experience to our customers and their end-users."

Aggregate Acquisition Terms (All figures indicated in this release are in U.S. dollars. An exchange rate of 1.457 EUR/USD was used when converting from Euros.)

The aggregate consideration paid for Nunet and The FeedRoom was approximately $20.9 million (based on the closing market price of KIT digital common stock on Friday, October 2, 2009), of which $9.8 million was paid in stock, $7.9 million was paid in cash and $3.3 million of debt was assumed in the form of a convertible promissory note.

In total, KIT digital will issue 1,312,000 shares as a result of the two transactions, comprised of 948,636 shares issued for 100% of the outstanding shares of The FeedRoom, and 363,364 shares issued in exchange for $4.0 million of cash invested in KIT digital common stock by The FeedRoom's controlling shareholders, at an implied price of $11 per share.