Cover Story
CEOCFO
Interview
Index &
Quotes
CEOCFO
Current Issue
Future
Features
Monthly
Analyst
Industry
Review
Analyst
Interviews
and Reports
Corporate
Financials
Archived
CEOCFO
Interviews
About
CEOCFO
interviews.com
Contact
& Ordering |
To view latest news, highlight & left
click here (HPIC - Press Releases)!
Technology
Computer Peripherals
OTC: HPIC
Hot
Products, Inc.com
7625
East Redfield Road
Suite
200
Scottsdale, AZ 85260
Phone: 480-368-9490
www.hotproducts.com
James L. Copland
President and
Chief Executive Officer
Interviewed
conducted by:
Diane Reynolds, Co-Publisher
Brief
company description and Bio for James L. Copland, President/CEO
Hot
Products Inc.com, formerly SC&T International, Inc., previously developed and marketed
accessory and peripheral products for the personal computer and video categories of the
retail market. The Company holds over 20 U.S. registered patents for its engineering
designs. During the1999 time frame, the Company exited these categories and changed its
name to Hot Products Inc.com (HPI) to better reflect its new corporate and product
direction. HPI focused its efforts on new business opportunities which targeted the
emerging NUON technology platform, a powerful media processor that enables an
“All-in-One” digital video concept that enhances DVD Players and Set-Top Box
capabilities for Home Entertainment Systems for Games, Edutianment and Internet
Connectivity, combined with a new products division, which offered a very expansive line
of innovative “Pre-Configured” Road Emergency, Automotive Survival and Outdoor
Survival products.
Mr. Copland has served
as President, Treasurer, and Chairman of the Board since its inception. Mr. Copland has
held numerous senior management positions with major international corporations in both
Canada and the United States, among them, Sharp & Hitachi Electronics of Canada,
producers of a wide range of consumer electronic products, Commodore Computers of Canada,
manufacturers of the infamous Commodore VIC 20 and Commodore 64 home computers, Atari
(U.S.) Corp., a global leader in the video gaming and home computing arena, (at both these
firms, Mr. Copland worked directly for the legendary industry veteran, Jack Tramiel) Aztech Labs, Inc., a manufacturer and marketer of
multimedia sound cards, Bondwell Industrial, Inc., a manufacturer and distributor of
notebook computers and joy sticks, Laser Friendly, U.S. Corp., a desktop publishing firm.
CEOCFOinterviews:
People have seen a little bit about the company itself. However, under the header it says,
"Developer, Manufacturer and Marketer." Please
tell my readers a little bit about that.
Mr. Copland: Essentially, Hot Products is in the business of
identifying lifestyle or niche marketing opportunities.
Once identified, and the decision is made to go forward, the company starts
the design, development and manufacturing process. Once completed it then determines what
markets it will initially target the product (s) for distribution.
CEOCFOinterviews:
Are you doing this through e-commerce?
Mr. Copland:
All of our products are available for sale from the Internet, but it is not our
main channel for generating revenues. HPI utilizes a number of different
channels. Two of them are the OEM, (Original Equipment Manufacturers) and Corporate
Direct, that can be defined as non-retail companies which would encompass the likes of,
Motorola Corp., Harley Davidson, Samsung Electronics, Toyota Motor sales USA Inc., Polaris
Industries etc. These companies would select an existing HPI product, or the Company would
custom design a product in what we refer to as a “Private-Branded” product that
would typically bear that company’s brand logo or slogan.
The next channel
involves the mass-merchant retail category, where we target our products to retailers such
as, Sears, Costco, Target, Wal-Mart, Autozone, Pep Boys, Best Buy, The Good Guys, etc. We
are very flexible. Our standard line would be marketed through this channel. Our products
will either be sold at retail under our own HPI trade names, or by “private
labeling” any one of our products under the prospective retailers own brand name. We
have any number of ways that HPI products can be sold at retail. The name of the game is “to sell
products.”
CEOCFOinterviews:
How do you know if you are fulfilling the needs of your partners?
Mr. Copland: I think that one of
our strongest attributes is in our ability to listen to the customer. We consider ourselves experts in what we do, but
the customer knows best about their own business and emerging needs. It is very important
when discussing an OEM or private label project, to fully understand all of the parameters
required by the customer. OEM projects
involve more than what is expected of retail sales. Who is the ultimate customer, what is
the marketing objective, quality & budgetary issues, appearance and style of the
finished product, different channels that will be used to distribute the product, volume,
delivery requirements and last, but certainly not least, the whole program takes on a much
different twist, when we are informed that the company’s Corporate Logo will be
adhered to every item. Now we have to focus on insuring that the finished product will
properly reflect the best attributes of that Company in the eyes of their customer. This
process differs greatly from a retail sale, where the focus is primarily relegated to
price, co-op advertising allowances; early pay discounts, delivery schedules etc.
CEOCFOinterviews:
What is Nuon?
Mr. Copland: NUON is a
dynamic new technology that HPI feels will revolutionize the way consumers & families
will interact with both their DVD players and Television Set-Top boxes (provided by either
the telephone or local cable company) however, let me take a minute to separate HPI’s
product grouping. HPI has two primary divisions. One that produces the industry’s
most innovative line of comprehensive road emergency, automotive survival and outdoor
survival products. Our second division (NUON division) develops and markets a full
assortment of NUON peripheral & accessory products directly to all DVD player and Set
Top Box manufacturers who support the NUON platform.
The NUON division
currently has 7 products, with approximately 5 in development, where retail prices range
from $ 20.00 to $ 50.00 and our “non NUON” division currently has about 30
products in its road emergency, auto & outdoor survival categories, with retail prices
that currently range from $ 40.00 to $350.00 Every
HPI product is thoroughly researched and developed, with a strong focus to product quality
and innovation. HPI has little industry competition in either of its two divisions. We
continue to identify and fill serious product voids within the North American and Global
markets, but as our name implies, we are always searching for HOT products that can be
marketed through a wide variety of channels.
As
previously mentioned, NUON is a proprietary chipset technology that has been engineered to
improve the entertainment capabilities for DVD players and Set-Top boxes, and it was
developed by VM Labs Inc., of Mountain View, California. Manufacturers of DVD players who
currently incorporate this technology are Toshiba and Samsung, however, I expect that many
more high profile brand manufacturers will also quickly adopt NUON for their products.
VM’s largest OEM partner for NUON is Motorola Corp., who is the worlds largest
supplier (over 70% market share) of Set-Top Boxes. Motorola’s product line is the
Streamaster Set-Top box system and this product is sold through the leading Telco’s
worldwide. HPI is supplying many of these
companies with various products from its expanding NUON line of peripherals.
CEOCFOinterviews: You mentioned two divisions, how many divisions
do you have all together?
Mr. Copland: Only two
at this point, but as our name suggests, HOT products is open to any product that is
innovative and can make money for the Company. HPI is not limited to any product category.
If we identify a product, that we feel has market potential and we have the ability to
develop and or and market the item, we will do so. We never wear blinkers. We have great
flexibility.
CEOCFOinterviews:
Which one is your largest division in terms of revenue?
Mr. Copland: That’s
a tough question. Currently our line of
road emergency, automotive and outdoor emergency products are being very well received
within the American corporate channel. A major reason for this is that major corporations
are realizing the need to provide emergency and life saving products to their customer
base. Because of the dynamics behind these
line of products, I feel we are in an “industry leading position.” We have
certainly raised the bar as to what constitutes well-researched, high quality,
comprehensive products. All one has to do is look at the companies who we are custom
designing or selling our products to. I see no reason that over the next 3-5 years why
this division could not be generating annual revenues of $ 25-30 million. However, the
long-term revenue expectations, based on the size of the global market for DVD players and
Set-Top boxes is certainly the NUON division. Over
the next 3-5 years, both of these categories have the potential to represent sales
opportunities in the “hundreds of millions” of units for the company. So there
is no doubt that HPI’s NUON division has the greater ability to generate what I refer
to as “telephone book” sales numbers. As
a comparison to our non-NUON products group, I think that HPI’s NUON division has the
long-term ability to generate annual sales that could be 3-4 times larger.
CEOCFOinterviews: I know you are going to be ramping
up the promotion of the Nuon product during next year.
Is this going to be through media, television, and magazines? How are you going to promote this?
Mr. Copland:
Currently HPI is the leading global supplier of NUON Peripherals and
Accessory products, and this is known by both Motorola and the DVD manufacturers. One of the key benefits of our alliance with VM
Labs is that they support their partners. In our case, VM Labs promotes HPI’s
products through in box inserts, CD-Rom inserts, product illustrations on NUON warranty
cards, coupled with programs that feature selected products in print advertisements. As we
expect a large percentage of our revenues to come from the OEM channel, the need to
advertise is not as important as it would be if our entire focus or channel was on the
retail-consumer channel. Yes, HPI will definitely sell its products into the retail
channel under the HPI brand name, and whatever ad or promotional needs are required, we
will implement. However, one must remember that since the NUON technology is a
“proprietary technology” not licensed or available to the world producers, that
our need to “out promote” hundreds of other suppliers is not required, as NUON
is a much more controlled market.
The second key factor
is unlike the video game and PC channel where virtually anyone can develop a PC product or
go to Sony or Nintendo and get a license (for a set royalty fee) to produce any number of
accessory products, this process allows hundreds of companies to market, essentially
identical products, who end up marketing them into the same retail channels, to the same
retail customers. The competition is very fierce, and it ends up costing more to stay
ahead, and more to stay on the retailers shelf.
For NUON, VM
Labs limits the number of licensees, frowns on direct competition from licensed vendors,
and last but very importantly, NUON is a proprietary technology, requiring a proprietary
ASIC chip set that is only available through VM Labs. Therefore, one can only produce NUON
products, if one is licensed to do so, and approved as a strategic partner by VM Labs,
plus there are only two suppliers of NUON ASIC’s, and one has to go through a severe
security check and counter check process. VM Labs has done a stellar job in protecting its
technology, and should be applauded for these efforts.
It’s a long round
about way to answering your question, but by HPI’s decision, three years ago to jump
on the band wagon, we are way ahead of the industry on all aspects of the development
curve with NUON. We have also secured a number of exclusive product licensing agreements
from VM Labs, which further enhances our position in the category. However, the biggest
channel for future revenues will be derived from the OEM channel. This is where the
“Big Revenue Numbers” will be realized. We plan to provide a steady stream of
peripheral products (as we are already doing) to companies like Samsung and Motorola, and
HPI plans to continue this program of co-marketing- OEM projects as other manufacturers
come on board to support the NUON platform.
CEOCFOinterviews:
How many times a year do you come out with new products?
Mr. Copland: The NUON division will
primarily be driven by the technology demands from both our retail and OEM customers, As
it is a new platform we are ramping up as demands warrants, however, our present plans are
to introduce about 3-4 new products over the next twelve months. As access to the web and
Internet are introduced for NUON products, HPI will be there with the required new
products. As for the road emergency, auto & outdoor survival division, we have a
significant line already produced, and will likely average somewhere between five and
seven new products annually.
CEOCFOinterviews: As far as marketing the products, are you global?
Mr. Copland: Presently our NUON efforts are worldwide. We are
negotiating distribution alliances for Europe and the UK, and are also looking for an
alliance partner for the German market. When you look at Germany and the United Kingdom
they account for almost 50% of the buying power within the ECC and UK markets. For our
non-NUON products, HPI is establishing a U.S. presence and this is being done both on a
direct basis and through a system of selected independent manufacturers representatives.
As all of these products are (12 volt etc.) compatible to global markets, HPI will expand
into the international arenas as resources and greater exposure for its products are
realized.
CEOCFOinterviews:
I think I was reading somewhere that within the next two years you will be in about twenty
different countries. Is that correct?
Mr. Copland: Yes,
that is our objective. One thing that you should know is that we evolved from the video
gaming & PC arena. This is what made the
current alliance with VM Labs a viable choice three years ago. We were a major provider of game controllers,
racing wheel and the flight controller devices. While
we were in that segment of the business (which we exited in 1999) our products were sold
in over 25 countries. It’s our corporate
goal, primarily through our NUON division, to once again have our products sold worldwide
and since our OEM business has HPI dealing with many of the worlds largest Telco’s,
we think we can accomplish this quite easily.
CEOCFOinterviews: Is there any one specific partnership more
important than the other as far as the continuing growth of this company?
Mr. Copland: That is an interesting question. We view our continuing partnership with Motorola
who is our largest OEM customer as critical. At
the same point in time, the biggest asset we have for NUON comes from the creators of the
technology itself, VM Labs. We have, what we
believe to be an exceptional relationship, which has been built on trust, engineering
expertise, and with both parties HPI has worked hard to maintain this leadership position.
We have comprehensive contracts with VM Labs, and we feel strongly that unless HPI fails
to deliver the level of service being offered, or is unable to delivery products in a
timely manner, we should have no concerns with either of these two relationships. Both are outstanding companies to work with.
CEOCFOinterviews: Do you see any acquisitions being formed
or is HPI going to be fueled internally?
Mr. Copland: I think that we are always on the
look out for mergers or acquisitions. I believe strongly in solid partnerships that will
ensure the future of the Company and offer a greater value and return for our
shareholders. Ironically, I think that Hot
Products itself represents a significant value, and could very well be a
“take-over” candidate by some other company. First of all, HPI is a publicly
traded Company, has no long-term debt, our total number of outstanding shares is about 9
million, with less than 2 million in the float. We have a net tax carry over asset of
nearly $7 million dollars and our estimated growth over the next 2-3 years could be
significant. Our share price is very under valued, and with the contracts in place with VM
Labs, (with others under negotiations) coupled with the diversity of products, should HPI
achieve its revenue and profit expectations, then we ourselves could very well be a
perfect candidate. Even today, this Company has a lot to offer someone out there.
CEOCFOinterviews: I was reading where analyst made a comment,
"Grizzled veterans". What does he
mean by that?
Mr. Copland: We have a unique group of
dedicated, hard working people who have expertise in the areas of finance, operations,
marketing, development, manufacturing, engineering and senior management. I've been in the
computer and electronics business since the 60's. Our
vice president has an extensive background in QC and manufacturing, our director of
engineering with electronics and specifically NUON, and our director of finance
understands start-ups. Our personnel has depth and maturity, but just as important, we
also have pride, vision, compassion and commitment for what we do.
We've had a tough haul
since the inception of this Company in 1993, and in 1997 encountered a very devastating
blow during a major growth period, when our original accounting firm walked away from our
annual 10K audit, just 2 weeks before it was due to be filed with the SEC. As a result,
the Company was de-listed from the NASDAQ and now trades on the BB-OTC. This action (which
HPI has filed a damages suit) against this Phoenix accounting firm, is set for trial this
September, ad we are optimistic that we will prevail in our suit. This was a significant blow to the Company.
In 1997 the Company’s net revenues had grown to about $ 7.5 million. The aftermath of
this situation left the Company with a huge dark cloud hanging over it potential investors
and shareholders questioned the actions behind the accounting firms decision to walk away.
There are actions that companies simply cannot explain away, and this was one of them. The
Company was infected with the plague and we were not a great investment opportunity in the
eyes of the market. It caused the Company to lose much needed investment capital, and
forced it into a global restructuring and total reorganization, just to survive. These
were definitely tough times. However, we all pulled together, navigated through these
perilous times, and over the next few years, by our survival and forward actions proved to
the world that we had committed no wrong, so believe me when I say that “management is very seasoned as a result of
this experience.”
We had to
rethink our roles and goals, slice and dice, restructure, start over, which included the
development of entirely new lines that focused on new market opportunities. We have
survived to fight another day, and are well positioned to reach profitability. That is why we are viewed by others in the
business and financial circles as a Company comprised of "Grizzled Veterans".
CEOCFOinterviews: You've been through a lot and are still moving
on. This is exciting to new investors. You hit hard times, moved right through them and
didn’t fold shop as many other companies would do.
Mr. Copland: The net result is that I started
this business with family funds, and we have always viewed the Company as a family
business, and the ideals, principles and ethics by management and our Board of Directors
is of paramount importance to the way we conduct our business affairs. We had a tough
decision to make in 1997. We were ramping
up, our revenues were increasing 100% per year, products were being sold in over 20
countries, and our cash requirements were also rising……… and then we hit a
brick wall at about 250 miles per hour. Don't
think for a minute that there wasn't a lot of outside advice that we should bankrupt the
company and move on.
I have a number of
personal beliefs. This Company started as a family business, but we were now a public (IPO
was 1995) Company, which carried significantly greater responsibilities. Shutting it down,
was NEVER an option for me. It gave nothing to the shareholders and investors. I was the leader, and through this, had built a
Company with the aid of investors, shareholders and suppliers who believed in ME. I had a
personal and moral obligation to make sure that if a chance existed, regardless of how
remote it might be, that every effort had to be made to keep the company going. We simply
had to go forward.
Next point, “There
is no future in quitting” so we embarked on the biggest challenge ever, to once again
start from scratch, and rebuild the Company. Sure, closing the doors would have been the
easy way out, but if you can get up to fight another day, then you must count your
blessings and go for it. We could, and we would, succeed, and I was glad to see that most
of my closest employees supported me in this decision.
That's the daily creed
and working mandate we adhere to, and employ everyday of our lives. It’s been three
years now, but I do believe HPI is in the position to turn the corner. I really think we
are going to see it happen over the next 12-18 months.
CEOCFOinterviews: I was looking at some of your stuff; the year
2002 is very promising for you. There are a
lot of things rolling out for you and a large extension to make more people aware of you. I think that is important. The company has had a history, but has dusted
itself off and continued. The easy way out
would have been to back out and bankrupt but you chose not to take the easy road.
Mr. Copland: I love a challenge, but this was not what
I had bargained for. We had just seen a longstanding business relationship with this firm
abruptly severed, which by their actions, essentially placed our Company is a position to
die. After a few minutes of wanting to depart
for another planet…shutting down the Company was NOT an option. This would have been the easy way out, but
cowardly and very unethical in the process. It’s the old story, last man standing is
what counts. So one rallies the troops and gets up with pride and goes on. I knew then as
I do today, our Company had committed no wrong.
Last year (our Fiscal
year end is April 30) revenues for HPI will likely be in the $ 800,000 range with lower
than expected losses. Better than the year before, but a far cry from our 97’ high of $ 7.5 million.
As stated, I believe
that over the next fiscal year, HPI has the ability to reach our previous 97’ revenue
level and profitability. This is an optimistic growth expectation, but if one takes a
close look at our current business model, marketing alliances, depth of product and the
major corporations we are attracting to our products, that includes the likes of (we are
only just beginning) Jiffy-Lube, lnternational Inc., Motorola Corp, Samsung Electronics,
VM Labs Inc., Polaris Industries, Harley Davidson, Plow & Hearth, Toyota Motor Sales
USA Inc. and Redenvelope.com etc.
CEOCFOinterviews: The who's who list.
Mr. Copland:
Many of them yes, and we believe many more to come. There are a number that I cannot divulge at
this time, which we are very close to forming relationships with, but the point is, that
HPI should be viewed by the Company we keep, and I know that with the above list, that HPI
is on the right track.
CEOCFOinterviews: Is there anything that you would like to change
regarding your website with the products and so forth?
Mr. Copland: We are constantly tweaking our site. I am
hoping that over the next few months that we will be able to do some major reconstruction,
but everything in time. Our initial objective was to make sure we had a website that would
display all of the products in an informative manner for consumers and prospective
customers, and we have accomplished this. We
would like to simplify the “navigation process” and try to design it so it can
be a more quickly viewed by customers. We have a program starting shortly where every
month the site will be updated to keep it alive and fresh for our customers.
I've looked in
a lot of other sites and obviously, a company that is trying to regroup is limited with
cash and personnel resources. We continue to make improvements, but as we do not rely on
the site for our bottom line revenues, and all improvements that are made are to simplify
and enhance the “navigation experience.”
CEOCFOinterviews: Is
this company financially fit to go forward?
Mr. Copland: We have struggled since the 1997 disaster,
and it has been tough times since that point in time. It’s also been a tough
financial market over the past 9-10 months; however, we are currently in
discussions for a new funding facility. I would say at this point in time, that even
though it has been a tough haul, I am optimistic that the Company will obtain additional
operating capital required to build operations. We are doing well, but we have ongoing
needs for additional funding. If we are successful in these efforts, they should provide
the Company with the resources to move forward and put into play the business plan we have
for the next few years.
CEOCFOinterviews: Are you going to go back on NASDAQ?
Mr. Copland: That is very much an objective for the
Company, and if all goes well, I would like HPI to be relisted within the next 10-12
months. Our objectives this year are to
ensure the shareholders and investors see us as back on track. As a public company,
it’s all about the shareholders. Our
ability to be relisted will be accomplished, only by our ability to turn this Company
around through increased revenues and by reaching profitability. If we stay focused on the
basics, control our expenses, turn profitable and reach these objectives, I think we will
maintain the support of our investors and shareholders. To aid in maintaining an improved
market awareness, keeping shareholders and the market properly informed, HPI is hoping to
implement a long-term investment relations campaign over the next month.
CEOCFOinterviews:
What would you say is the backbone and vision for this company?
Mr. Copland: I think that backbone and vision of
the Company’s personnel is the core for its future success and it goes back to the
passion and commitment we all have to succeed! We
have strong visionaries in this company, and the benchmark we should be judged by is our
staying power, our commitment to our investors and shareholders, the integrity of the
company and it's management and the customers who HPI is attracting. It’s exciting
stuff. I also think as we are already a
public company (it’s an expensive proposition to go public) our accrued tax assets,
current alliances and our unique properties that these points should also be of interest
to your readers.
|
