Mace Security International, Inc. (PNK:MACE) Q3 2023 Earnings Call Transcript

Andrew Shapiro: So, — okay. So, with Dollar General, which is a new one, and you had the sizable back-to-school order in Q2 and all that, okay? You said three months ago, your plan is to be initially in 10,000 of the 18,000 stores. And the ramp-up was nowhere near the number that you had expected. And you’ve just said now, I think you have — you’re only in 40% or 4,000 of the 10,000 you expect or you are 40% more to go. Please clarify that. And–

Sanjay Singh: 40% more to go.

Andrew Shapiro: And then when do you expect a — 4,000 more to go or 6,000 more to go?

Sanjay Singh: 40%, yes, 4,000 stores, more to go.

Andrew Shapiro: More to go. So, you’re in 6,000 of your initial 10,000. Okay. And when do you expect to get into the remaining 4,000? And can you provide your general sell-through experience and restocking order experience from the back-to-school initial stocking you did in the early stores that you got placed in, how is that going?

Sanjay Singh: The restocking orders are nowhere close to our forecast, number one. This was a forecast that we received from Dollar General. Then secondly, what we have found from visits to Dollar General stores in the Cleveland area, what we found from the store managers is that the inventory is sometimes sitting — it’s not even out in the store. It’s sitting in boxes because they are understaffed. The third is we received feedback that there are many, many stores that are being reorganized or that have been hit with not being in compliance with hazardous materials and other types of issues. So, there’s a general focus there with the Dollar General leadership team, they even had a change right at the top. So, that’s the feedback that we are receiving from our reps who work very closely with the buyer.

Andrew Shapiro: Okay. All right. And then with the new product videos for walmart.com get accepted and uploaded by Aspire, which is where you were at three months ago? And was there any impact or improvement in their POS sales from that? And additionally, have you presented your new and different product offerings to Walmart buyers? And what was the feedback or status of that?

Sanjay Singh: We have provided all the images. The status remains unchanged since the last quarter. We are — it’s still in the hands of the buyer, but there has been a buyer change and we are going to be sitting with the buyer hopefully before the end of the year. We’ve asked for a meeting before the end of the year.

Andrew Shapiro: Okay. I have more questions. Back out, but please come back to me.

Operator: As of right now, there are no other questions in the queue. [Operator Instructions] We will take our next question from Andrew Shapiro.

Andrew Shapiro: All right. Okay. I’ll ask you a few more in here before backing out again, it doesn’t look like there are many others speaking out on the call. On this new working capital loan, it’s secured by all the assets of the company. I just wanted to confirm there are no personal guarantees or anything else that were needed to secure this new three-year line of credit. Is that correct?

Sanjay Singh: That’s correct.

Andrew Shapiro: Okay. And what is — I think that you mentioned at least as of September 30th, you had a $1.5 million borrowed under the line. What is the company borrowed under the line at present? And given your working capital balances at the same time, what is the total credit available? Do you have the full $2 million and thus, $500,000 available or is it some number less than $2 million?

Sanjay Singh: The total availability is $1.5 million and then we have Board raised funds, right.

Andrew Shapiro: Okay. So, well, it’s a $2 million credit line on a three-year term, based on your working capital balances right now, you’re at the borrowing limit, is that right?

Sanjay Singh: I’m sorry, can you please repeat that?

Andrew Shapiro: It’s a $2 million line, but it’s based on your working capital balances. So, what I’m trying to confirm is while you have $1.5 million borrowed, do you have $500,000 available or based on your working capital balances, the availability is somewhere less than $2 million.

Sanjay Singh: The availability is less than $2 million at the moment.

Andrew Shapiro: Okay. And what is the availability? Is it at $1.5 million, you’re fully drawn on what’s available right now?

Remigijus Belzinskas: Our availability is day-to-day — and there are days–