KIT digital has entered into a definitive agreement for the acquisition of Stockholm-based Kamera Content AB. The acquisition, which abides by the terms and conditions of the previously announced Letter of Intent between the companies, significantly expands the European and Asian presence of KIT digital, while adding market-leading mobile video capabilities to its product offerings.

Management believes that the combined company, with more than 200 corporate clients and over US$2 million in revenues per month, constitutes the leading device-agnostic provider of B2B, enterprise-class Internet and mobile TV enablement solutions.

Under the terms of the agreement-which were previously announced in general form-KIT digital acquires 100% of Kamera capital stock for approximately US$4.5 million in cash upfront (less $300,000 already paid under a Content Distribution Agreement executed on March 12, 2008 between the companies). Subject to certain performance thresholds, an additional US$6.0 million in KIT digital common stock (or cash, at the election of KIT digital) will be paid to Kamera shareholders, to be priced at future trading prices of shares in KIT digital, and disbursed between months 6 and 21 after closing. Closing of the transaction, which is expected within weeks, is subject to certain corporate filings and administrative matters under Swedish law.

In 2007, on a standalone basis, Kamera generated approximately US$2.9 million of unaudited annual revenues and Kamera management recently projected 2008 standalone revenues of US$5.7 million.

Acquisition Benefits

The combination of KIT digital and Kamera unites two innovating companies, serving media, automotive, financial services, retail and other global brands looking to leverage the power of IPTV.

Key strengths expected from the combination include:

• Expansion into mobile distribution. The addition of Kamera vaults KIT into the mobile TV distribution space, where currently there is no clear leader;
• Increased geographical market presence, with Kamera's clients primarily located in Continental Europe, Middle East and Asia;
• Enhanced cross-selling opportunities to both the existing Kamera and KIT digital web-oriented client bases;
• Kamera's proprietary content management/localization software makes video content locally relevant (through language overlay and editing systems) for distribution partners (both on the mobile and broadband sides);
• Increased revenue growth, profitability and cash flow over time. KIT digital's global business development team expands Kamera's product reach, and Kamera's results support KIT digital's commitment to become cash flow positive during the fourth quarter of 2008;
• Cost synergies for the combined company in content acquisition and ingestion, as well as European operations.
• Seasoned management and business development team at Kamera, rooted in the mobile-savvy Northern European markets, possessing unparalleled experience in mobile TV distribution.