Scroe: What would you say your biggest challenge is? As we continue to grow and obviously as we look to any acquisitions we would have to have additional financing at that point in time but for our present model for 2005 is that our financing is in place at this point in time. We have a significant line of credit in place with National City Bank which is able to fund our working capital needs at this point in time. Hensley: At this point in time we do not. Scroe: Does the Company require any additional financing? Hensley: Yes, if we make acquisitions it would be accretive in nature, acquisitions that compliment what we do in terms of our ability to expand our distribution channels and our product line extensions but they would be accretive in nature from an immediate probability standpoint as its a business that is not a start-up but a business that has mature capabilities but still has growth opportunities with the combination that we put forth. Scroe: Is part of your strategic plan to make appropriate acquisitions? We think by offering the licenses and the distribution that we have added that our business as we go into 2005 should be significantly increased as well and were excited about the penetration we have made both in terms of our product categories as well as our distribution categories. Our bookings at this point in time reflect that. Hensley: We had a record third quarter in terms of our sales and earnings which we just announced. Scroe: How has this translated into financial performance? And so the exponential type of growth like that with our product category expansion, our line extensions weve added to the various products and licenses has allowed us to have additional growth opportunities in all our channels of distribution. With our acquisition last July of Lil Fan, it was able to add four additional departments for us, so suddenly instead of Kohls being only one account now its five accounts. To give you a good example is that two years ago we would go in and sell a Kohls department store for example, and the only channel on distribution and product we had at that point in time was the menswear products. Thats whats been our biggest focus on from the gross standpoint and from an organic standpoint for the last two years, is to expand not only the channels we are doing business but also accounts within those channels of distribution so we have had good exponential growth in both of those. Hensley: I think thats really the key question today because companies that add real value have tremendous distribution channels and are able to leverage their products in several different ways. Scroe: How do you go about getting the distribution channels which was the other part of this equation? We also then what we call have a chase or quick response business which we embellish both screen printing and embroidery and similar like items on a domestic basis and we do that within a five to ten day turn around time.
We source blank apparel items from the Orient as well as we also import embellished apparel items from the Orient. Scroe: Do you outsource your manufacturing?
Those licenses charge us royalties anywhere from 8% to as high as 12% and obviously we consider that to be a value-added product both from an embellishment as well as the value of the brand we are actually representing.
BILL CHASE TRANSCRIPTIONS LICENSE
Hensley: In all categories, we solicit the license for various channels of distribution and various products we want to sell within those channels of distribution and with that then we develop various proprietary graphics, both from an embroidery standpoint as well as a screen print standpoint that we either bring in from the Orient or we embellish domestically and ship to our seven or eight distribution channels. Scroe: How do you make money from licensing or obtaining the license? We obviously do several private label programs as well for certain accounts but licensed promotional products is the biggest part of our business right now.
BILL CHASE TRANSCRIPTIONS PROFESSIONAL
We have over 200 college licenses, we have all the automotive license brands in our stable at this point in time, we are also involved with Professional Bull Riding and just picked up the Three Stooges license as well as a James Dean license and thats become our biggest area of concentration in terms of products. Hensley: Ken, were a licensed promotional products company thats involved with several different license products and licenses as we speak. Scroe: Why dont we start off with some of the history of Next and exactly what it does. Bill is the Chief Executive Officer of Next, Inc., an over-the-counter bulletin board company, trades under the symbol NXTI. Scroe: This is Kenneth Scroe with CEO Cast and my guest today is Bill Hensley.
CEOCast Transcript: Interview with Bill Hensley, CEO, Next, Inc.
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