Mace Security International : Ty International March 31, 2023 OTCQX Quarterly Report

Mace Security International, Inc.

Quarterly Report

For the Three Months Ended March 31, 2023

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: (440) 424-5321

Fax: (216) 361-9555

Website: www.mace.com

Investor Relations: John DiMare

Phone: (440) 424-5321

Email: jdimare@mace.com

Address: Same as above

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Mace Security International, Inc.

Quarterly Report

For the Three Months Ended March 31, 2023

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

The Company's unaudited interim consolidated financial statements for the three months ended March 31, 2023 and 2022, 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 - Consolidated Financial Statements March 31, 2023 and 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.

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Mace Security International, Inc.

Quarterly Report

For the Three Months Ended March 31, 2023

Three months ended March 31, 2023 compared with three months ended March 31, 2022

Net Sales

Net sales comparative information for the three months ended March 31, 2023 and 2022, respectively, is as follows:

Total net sales decreased for the three months ended March 31, 2023 by 22.9%, compared with net sales for the three months ended March 31, 2022. Net sales to customers in the consumer market decreased ($229), or (13.9%), in the three months ended March 31, 2023, compared with the same period in 2022. 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 continuing 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 March 31, 2023 increased $17, or 32.1%, compared with the three months ended March 31, 2022, primarily due to an increase in sales to existing tactical customers and to new tactical customers.

Sales to International customers decreased ($330), or (90.9%), for the three months ended March 31, 2023, compared with the three months ended March 31, 2022 primarily because sales to International customers for the three months ended March 31, 2022 benefited from 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 increased $48, or 52.7%, for the three months ended March 31, 2023, compared with the three months ended March 31, 2022 as the Company continued to increase sales to non-traditional customers in the healthcare and hospitality industries.

Cost of goods sold

Cost of goods sold decreased for the three months ended March 31, 2023 to $1,252, or 75.3% of net sales, compared with $1,257, or 58.3% of net sales, for the three months ended March 31, 2022, primarily due to the decrease in net sales and an decrease in plant efficiency during the first quarter of 2023 due in part to COVID at the Mace facility affecting production and a physical inventory in March 2023 which halted production for several days.

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Mace Security International, Inc.

Quarterly Report

For the Three Months Ended March 31, 2023

Gross Profit

Gross profit decreased $489, or 54.4%, to $410, or 24.7% of net sales, for the three months ended March 31, 2023, compared with $899, or 41.7% of net sales, for the three months ended March 31, 2022, primarily due to the factors discussed above.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $345 to $1,068, or 64.3% of net sales, for the three months ended March 31, 2023, compared with $1,413 or 65.5% of net sales for the three months ended March 31, 2022. The following table presents the significant expense items accounting for the decrease in selling, general and administrative expenses for the three months ended March 31, 2023, compared with the same period in 2022.

Amortization of intangible assets

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

Interest expense

Interest expense was $24 and $5 for the three months ended March 31, 2023 and March 31, 2022, respectively, primarily related to the Company's debt. The increase in interest expense is attributable to higher net borrowings and higher interest rates in the three months ended March 31, 2023, compared with the same period in 2022.

Net loss

Net loss decreased by ($163) to net loss of ($747) for the three months ended March 31, 2023, compared with a net loss of ($584) in the three months ended March 31, 2022, due primarily to the factors noted above.

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