UPDATE: KIT digital Announces Receipt of Notice From NASDAQ
KIT digital (NASDAQ: KITD), a leading video management software and services company, announced today that it has received notice from The NASDAQ OMX Group ("Nasdaq") that, because the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended September 30, 2012 (the "10-Q") with the Securities and Exchange Commission (the "SEC"), the Company no longer complies with the continued listing requirements under Nasdaq Marketplace Rule 5250(c)(1).
As previously reported by the Company in its Notification of Late Filing on Form 12b-25, filed with the SEC on November 21, 2012, the Company was unable to file the 10-Q within the prescribed period due to restatement of certain historical financial statements. As previously disclosed, the restatement is due to accounting errors and irregularities primarily related to recognition of revenue related to certain perpetual software license agreements entered into by the prior management team in 2010 and 2011. These errors and irregularities were discovered in connection with the Audit Committee's previously disclosed investigation of certain transactions that resulted in impairment charges. The Audit Committee has also determined that certain transactions entered into by the Company under the prior management team during fiscal years ended December 31, 2008 through 2011 were related party transactions and that additional disclosure with respect to those transactions should have been included in the footnotes to the relevant financial statements. Because of the timing of the completion of the Audit Committee investigation and the Company's ongoing review and investigation of certain transactions, the Company requires additional time to complete an analysis of the accounting treatment for the software licenses and to determine the extent of the corrections that may be required to its historical financial statements.
The Company is required to submit a plan to regain compliance with Nasdaq's requirements for continued listing, and, under the discretionary authority under Nasdaq Marketplace Rule 5101, in order to expedite the review process, Nasdaq is requiring that the plan must be submitted no later than December 18, 2012. If Nasdaq accepts the plan submitted by the Company, Nasdaq can grant an exception of up to 180 calendar days from the due date of the 10-Q to regain compliance. The Company intends to submit to Nasdaq, on or before December 18, 2012, a plan to regain compliance with Nasdaq's requirements for continued listing and other requested supplemental information. There can be no assurance that the Company will successfully regain compliance with Nasdaq listing requirements.
If Nasdaq does not accept the Company's plan, Nasdaq will provide notice that the Company's common stock will be subject to delisting. The Company would have the right to appeal a determination to delist its common stock, and the common stock would remain listed on the Nasdaq Global Select Market until the completion of the appeal process.
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