SearchMedia Holdings Ltd. (AMEX:IDI) dropped more than 20% Friday after announcing its plan to restate financial results from 2007 and 2008 due to a combined overstated revenue of $31 million.

As a result of continued internal analysis of financial statements for the fiscal year 2009, the company’s audit committee concluded that historical financial statements for the 2007 and 2008 fiscal years were overstated by approximately $6 million and $25 million, respectively, leading the company to restate those results.

SearchMedia said it is still evaluating the impact of reported net income during those periods, but noted it expects the restatements to have a positive effect on the previously reported net income for fiscal year 2009, and on the first quarter of this year, according to CFO Wilfred Show.

Shares were further impeded by the company's announcement that it does not expect to meet its full year outlook of $85 million in revenue and $18 million in net income.

The Chinese multi-platform media company reported Friday preliminary second quarter results, expecting $16 million in revenue and $2 million in net income.