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

Andrew Shapiro: All right. Well, I mean when I searched for it today, literally this morning, I didn’t see it on the Amazon, but I saw it on your website. Didn’t know if you had it in any retailers yet or what your plans or when you were going to do it. Are you using this also as a potential entrée point to get into some of the pet supply verticals as well as offering your K9 Muzzle Spray and getting the hook there?

Sanjay Singh: Yes. Yes to both, yes.

Andrew Shapiro: Okay. On your last call, your distribution agreement with public company SurgePays and it’s a huge network of corner stores, Bodegas, gas stations, et cetera, had yet to generate any orders 90 days later here, what’s the status of this arrangement so far? Are you now in the catalog? Are catalog pass-through orders coming through?

Sanjay Singh: So, they did update their devices to show our products and — but that just happened a couple of weeks ago. And — so it’s been a pretty delayed implementation, but they ran to a technology issue that they’ve been trying to resolve, but I received feedback from our sales team that is now resolved, and it’s being offered.

Andrew Shapiro: Okay. And are you seeing any orders yet? I mean we’re going to be–

Sanjay Singh: Many [ph] orders, yes.

Andrew Shapiro: Yes. I mean we’re going to be dependent on the voting [ph], if any, which I doubt will be the case until we are able to generate demand pull-through through whatever digital marketing and other things you guys choose to do. So, let’s move to some other area where I have seen you try to market it. And that is our US LawShield Legal Heat training initiative. On the last call, you updated your forecast for timing revenues to be ramping up in the current Q4. Here we’re in the middle of Q4, has that occurred yet? And can you provide color on the ramp-up and how the business model and margins will work?

Sanjay Singh: So, US LawShield had an issue with their payment processor, and they were not able to add our courses online until November 1st. And the way the workflow is organized is we produce leads and Legal Heat producers leads. Legal Heat offers in-person training, US LawShield provides online classes. And that’s their platform that is seamless. So, we have turned over every single lead that we have had over to US LawShield or to Legal Heat depending on if it’s an online versus classroom and those training classes are being organized. So, we should start seeing some reporting of some revenues, but that’s kind of where we are at the moment.

Andrew Shapiro: Okay. So, it sounds like it would be high-margin revenue when it comes and pass through to you?

Sanjay Singh: It would be high margin, yes, about 25% EBITDA.

Andrew Shapiro: Okay. Another co-branding partner, F3. On the last call, you summarized delays from initial expected revenues all the way into current Q4, have you been making sales and delivering now the Vehicle Perimeter Defense products in the current Q4, and you had a meaningful year one goal. Do you still feel the market and goals for the first 12 months selling the product are achievable or they need to be scaled back?

Sanjay Singh: We think the product is — we can achieve those targets, but there is quite a bit of work to do. So, we are actually having weekly calls with our partners. We have seen sales of our items online and we’ve had plenty of units sold online, but nowhere close to where we would like it to be. The — we are now targeting larger buys. So, trucking groups, folks like that. And we will also be going back to another retailer that we had talked to about a different product, this is an automotive retailer to gauge their interest in this product.

Andrew Shapiro: Okay. Your press release, you always talk about this, you backed up out. And one of the line items is you have traditional — transition personnel and temporary labor. Except you have transitioned personnel and temporary labor on a recurring basis. So, how transitional and temporary is that SG&A expense? And should it really be pulled out?

Sanjay Singh: Well, so the big one in the transitional expense is our controller role has been open for a while. And we are aiming to fulfill it because Rem wants to retire. So, may be actively looking to fill that role.

Andrew Shapiro: Okay. But arguably, the controller function is an ongoing need in demand and SG&A cost of the company. So, if there’s anything that’s transitional or temporary, it would only be the premium amount, I guess, you may be paying to Rem versus what you would otherwise staff the position for, it wouldn’t be the full salary — conditional?

Sanjay Singh: That is correct. Well, we’ve also had some strategic alternative type related expenses that are in there as well.

Andrew Shapiro: As part of temporary and transitional personnel, is that right?

Sanjay Singh: Rem, which line is that on with the strategic alternative costs?