Mace Security International : OTCQX June 30, 2022 Quarterly Report

Mace Security International, Inc.

Quarterly Report

June 30, 2022

Mace Security International, Inc.

Quarterly Report

For the Six Months Ended June 30, 2022

Forward-Looking Statements

Certain statements and information included in this Annual Information and Disclosure Statement constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this Annual Information and Disclosure Statement, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "projected," "intend to" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to several known and unknown risks and uncertainties that may cause our actual results, trends, performance or achievements, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward-looking statements. Those risks and uncertainties may include, but are not limited to, (a) general economic and business conditions, including the impact of the COVID-19 pandemic and other possible pandemics and similar outbreaks; (b) competition; (c) potential changes in customer spending; (d) acceptance of our product offerings and designs; (e) the variability of consumer spending resulting from changes in domestic economic activity; (f) a highly promotional retail environment; (g) any significant variations between actual amounts and the amounts estimated for those matters identified as our critical accounting estimates, as well as other significant accounting estimates made in the preparation of our financial statements; (h) the impact of current and potential hostilities in various parts of the world, including but not limited to the war which resulted from Russia's invasion of Ukraine, as well as other geopolitical or public health concerns; (i) the impact of international supply chain disruptions and delays; (j) the impact on the Company of changes in U.S. Federal and State income tax regulations; and (k) the impact of inflation and the ability of the Company to pass on rising prices to its customers. You are urged to consider all such factors. Because of the uncertainty inherent in such forward-looking statements, you should not consider their inclusion to be a representation that such forward-looking matters will be achieved. Mace Security International, Inc. assumes no obligation for updating any such forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Item 1 The exact name of the issuer and the address of its principal executive offices

Mace Security International, Inc. ("Company") 4400 Carnegie Avenue

Cleveland, OH 44103

Phone: [phone]

Fax: [phone]

Website: www.mace.com

Investor Relations: Sanjay Singh

Phone: [phone]

Email: [e-mail]

Address: Same as above

Mace Security International, Inc.

Quarterly Report

For the Six Months Ended June 30, 2022

Item 2 Shares outstanding

Common Stock

(i)	Period end date:	June 30, 2022	December 31, 2021
(ii)	Number of shares authorized	100,000,000	100,000,000
(iii)	Number of shares outstanding	64,869,879	64,703,965
(iv)	Freely tradable (public float)	41,872,776	38,504,286
(v)	Total number of shareholders of record	94	95

The number of beneficial shareholders of Mace Security International, Inc. owning at least 100 shares exceeds 50.

Preferred Stock

(vi)	Period end date:	June 30, 2022	December 31, 2021
(vii)	Number of shares authorized	10,000,000	10,000,000
(viii)	Number of shares outstanding	-	-
(ix)	Freely tradable (public float)	-	-
(x)	Total number of shareholders of record	-	-

Item 3 Interim financial statements

The Company's unaudited interim consolidated financial statements for the six months ended June 30, 2022 and 2021, including the unaudited interim Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Shareholders' Equity and Consolidated Statements of Cash Flows and Notes to the Consolidated Financial Statements, are filed separately and called Quarterly Report - Second Quarter 2022 and are hereby incorporated by reference into this Quarterly Report.

Item 4 Management's discussion and analysis or plan of operation

A. Plan of operation

This item is not applicable, as the Company has had net sales in each of the last two fiscal years.

1. Management's discussion and analysis of financial condition and results of operations (amounts in thousands, except share and per share amounts)

Mace Security International, Inc. operates in one business segment, the Security Segment, which sells personal safety and security products to retailers, distributors, and individual consumers. The Company also sells tactical spray products and systems to law enforcement, security professionals, correctional institutions, and military markets.

Mace Security International, Inc.

Quarterly Report

For the Six Months Ended June 30, 2022

Three months ended June 30, 2022 compared with three months ended June 30, 2021

Net Sales

Net sales comparative information for the three months ended June 30, 2022 and 2021, respectively, is as follows:

		Three Months Ended
		June 30,
						Increase	% Increase
Net Sales by Type of Customer		2022		2021	(Decrease)	(Decrease)
Consumer	$	1,766	$	3,237	$	(1,471)	(45.4%)
Tactical		54		83		(29)	(34.9%)
International		73		27		46	170.4%
Other		88		49		39	79.6%
Total	$	1,981	$	3,396	$	(1,415)	(41.7%)

Total net sales for the three months ended June 30, 2022, decreased 41.7% to $1,981, compared with net sales of $3,396 for the three months ended June 30, 2021. Net sales to customers in the consumer market decreased $1,471, or 45.4%, in the three months ended June 30, 2022, compared with the same period in 2021. This decrease in net sales was due primarily to an overall decrease in sales to existing brick and mortar retailers and e-commerce channels from declining consumer demand in response to the effect of inflation on the price of household staple products and the corresponding reduction in impulse or discretionary purchases.

Tactical net sales, which include tactical spray products, for the three months ended June 30, 2022, decreased ($29), or (34.9%), compared with the three months ended June 30, 2021, primarily due a decrease in sales to several larger tactical customers.

Sales to International customers for the three months ended June 30, 2022, compared with the three months ended June 30, 2021 increased $46, or 170.4% due primarily to the recovery from the impact of Covid-19 oversees and international freight issues impacting delivery of product in 2021.

Sales to other types of customers for the three months ended June 30, 2022, compared with the three months ended June 30, 2021, increased $39 or 79.6% as the Company increased sales to non-traditional customers in the healthcare and hospitality industries.

Cost of goods sold

Cost of goods sold for the three months ended June 30, 2022, decreased 42.3% to $1,194, or 60.3% of net sales, compared with $2,070, or 61.0% of net sales, for the three months ended June 30, 2021 primarily due to the 41.7% decrease in net sales. Cost of goods sold for the three months ended June 30, 2022 benefited from the Company's continuing efforts to reduce its base operating costs.

Mace Security International, Inc.

Quarterly Report

For the Six Months Ended June 30, 2022

Gross Profit

Gross profit decreased $539, or 40.6%, to $787, or 39.7% of net sales, for the three months June 30, 2022, compared with $1,326, or 39.0% of net sales, for the three months ended June 30, 2021, primarily due to the effect of the factors noted above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $23 to $1,178, or 59.5% of net sales, for the three months ended June 30, 2022, compared with $1,201, or 35.4% of net sales for the three months ended June 30, 2021. The following table presents the significant expense items causing the increase in selling, general and administrative expenses for the three months ended June 30, 2022, compared with the same period in 2021.

Selling, General and Administrative Expense Categories	Decrease
Salaries and related employee benefits expense	$	(57)
Variable commission expense decrease due to lower sales
in 2022		(86)
Professional services expense increase primarily attributable to
digital marketing strategy and increased legal support		132
Other factors, net		(12 )
Net decrease	$	(23)

Amortization of intangible assets

Amortization of intangible assets relates to the intangible assets associated with the Company's acquisitions.

Interest expense

Interest expense was $8 and $6 for the three months ended June 30, 2022 and 2021, respectively, primarily related to the Company's debt.

Other income

In 2021, the Company applied for forgiveness of its Paycheck Protection Program Loan and received complete forgiveness during the three months ended June 30, 2021. As a result, the Company recognized a non-operating gain on forgiveness of debt during the three months ended June 30, 2021 of $625 consisting of forgiven debt and accrued interest.

During the three months ended June 30, 2021, the Company paid off in full the remaining balance on its $1,000 secured note payable to the seller of an acquired business and recognized a non-operating gain on extinguishment of debt of $8.