Signature Devices Inc. (SDVI)

[Saredi]

Lack of free cashflow is a problem, as it causes delays and makes you hire cheaper, not-so-good labour and then you end up having to do all the work yourself to fix things up (KH clearly knows this). As they become more profitable (last financial statements show SDVI/Graff are making net income which is good, but cash flow is difficult and A/R's don't pay the bills) from the RR games and the Christmas season (which is really where most games are sold) will give the cashflow needed to keep things up. And of course this is the major reason for the Graffiti IPO as $20 - 50M in liquid funds will go a long way to upping the speed of development, publishing and production. The games will come fast and furious next year if this IPO succeeds. Let the economy of scale deliver.

Brazil is unimportant, 0% of the total business of SD/Graff, so not worth worrying about. Never hurts to have such an office, but I wouldn't bother factoring it into any short term calculations.

Saredi