Mace(R) Security International, a Global Leader in Personal Self-Defense Sprays, Announces 3Q23 Financial Results - Seite 2

Third Quarter 2023 Financial Highlights

Net sales were $1,497,000, down (40%) from the third quarter of 2022 net sales of $2,504,000. The decline from prior year was due to the slowdown in retail sales in several of the Company's large retail customers as impulse sales were impacted by a slowing economy and the highest U.S. inflation rate experienced in decades. Net sales for the third quarter also reflect the impact of the loss of one significant customer which accounted for $306,000 of the sales decrease in the third quarter. The decline was partially alleviated by a 43% increase in sales in the third quarter on the Company's e-commerce platforms.

• Gross profit rate of 30.1% decreased from 38.4% in the same period in 2022. Lower sales, component price increases, and lower labor efficiencies led to the decrease in gross margin.
• Gross profit for the third quarter decreased by $511,000, or 53%, from the third quarter of 2022, primarily due to the decline in sales volume and increased component costs.
• SG&A when adjusted for (a) $104,000 in non-recurring legal, professional and financing expenses, (b) $68,000 related to transition payroll/temporary labor costs associated with the Company optimizing its headcount and (c) non-cash stock compensation expense of $45,000 was $813,000 in the third quarter of 2023, compared to SG&A of $893,000 in the third quarter of 2022 when adjusted for (a) $56,000 in increased legal support primarily related to the Company's announcement in the second quarter 2022 to explore and evaluate potential strategic alternatives for the Company, (b) $97,000 related to transition payroll/temporary labor costs associated with the Company optimizing its headcount and (c) non-cash stock compensation expense of $43,000.
• Net loss of ($771,000) in the third quarter of 2023, compared with net loss of ($233,000) in the same quarter in 2022.
• Cash and cash equivalents increased to $754,000 as of September 30, 2023, an increase of $692,000 over the $62,000 on hand on December 31, 2022. $1,500,000 was drawn against the Company's bank line of credit at September 30, 2023. The Company closed a $590,000 non-brokered private placement of unsecured convertible notes with board members and shareholders on July 27, 2023.
• Working capital decreased by ($1,249,000) compared to December 31, 2022, with an increase in debt of $1,430,000, a decrease of ($382,000) in accounts receivable on lower sales, a decrease of ($130,000) in inventory and an increase of $292,000 in accounts payable and accrued expenses due to timing of payments.
• Adjusted EBITDA for the third quarter 2023 was a loss of ($318,000) and excludes non-recurring legal, professional, and financing expenses, transition payroll/temporary labor costs associated with the Company optimizing its headcount; non-cash stock compensation expense of $45,000 and non-cash loss on derivative liability of $58,000. Adjusted EBITDA for the third quarter 2022 was income of $124,000 and excludes transition legal costs associated with the strategic alternative review process, transition payroll/temporary labor costs associated with the Company optimizing its headcount and non-cash stock compensation expense.

Third Quarter 2023 Operational Highlights