Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Jim Barrett – CL King & Associates
Jim Barrett – CL King & Associates
Could you talk a bit about the Sirius deal, first of all what will the company’s incremental working capital be, how should we look at warranty expense from the product that’s already been sold, likewise how should we look at returns for a product that’s already been sold prior to your taking on the business.
Michael Stoehr
Let’s start with the working capital investment, we will be in increments over a period of time putting in probably eight figures which would include accounts receivable and inventory. As for warranty we will be filing an 8-K that has some outline of what the warranty procedure is but basically we have the risk of processing the warranties, the actual treatment and rebuilding and repairing of the warranties go to Sirius.
So you won’t see a large warranty reserve up for sale of B goods or destruction, you’ll see more of handling charges that go from us to bring the product back from customers to the factories. And the third is there is a transition period as we get into this agreement where we are not responsible for the warranty charges which will be passed on to Sirius.
Jim Barrett – CL King & Associates
Can you tell me where the 1% royalty payments from Multi Media device are showing up in the income statement.
Jim Barrett – CL King & Associates
It will be in the gross profit.
Jim Barrett – CL King & Associates
That would be in gross profit.
Michael Stoehr
Yes, its cost of goods.
Jim Barrett – CL King & Associates
Could you talk about considering what’s happened in the world at large what the acquisition pipeline, how it looks at this point.
Patrick Lavelle
Our strategy as we had indicated in the past was to take 2009 physical or 2008 calendar and pull in all the acquisitions that we’ve done and get the synergies out. We are pretty much completed with that and now actively looking at particular opportunities that present themselves to us and are out aggressively seeking. Obviously with the economy the way it is, there is some very good properties that are out there that may be facing some difficult times considering the market conditions.
So based on that we believe there is some good opportunities that we will see during calendar year 2009.
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