Ladies and gentlemen, thank you for standing by. Welcome to the Mace Security International First Quarter 2023 Earnings Call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. You can ask a question by pressing star one on your telephone keypad. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Mr. Rem Belinkas. Please go ahead, sir. Thank you, Nicole, and good morning, everyone. Joining me on the call today is Sanjay Singh, the Chairman and Chief Executive Officer of Mace. Please visit corp.mace.com under Newsroom, where you can find additional materials, including the Q1 2023 financial statements and the quarterly reports for the first quarter ended March 31, 2023, as well as our Q1 2023 financial overview presentation. Before proceeding, I would like to point out that certain statements and information during this conference call may constitute forward-looking statements and are based on management's expectations and information currently in the possession of management. When used during our conference call, the words or phrases such as will likely result, are expected to, will continue, is anticipated, estimated, projected, and intended to, or similar expressions, are intended to identify forward-looking statements. Such statements are subject to certain risks, known and unknown, and uncertainties, including, but not limited to, economic conditions, limits of capital resources, and disruptions in domestic and international supply chains. Such factors could materially adversely affect Mace's financial performance. It could cause Mace's actual results for the future periods to differ materially from any opinions or statements expressed during this call. I will now turn the call over to Sanjay for some comments about the quarter. Thank you, Rem. Good morning, everyone. The first quarter, while usually a slower quarter revenue-wise, was very challenging. As the quarter progressed, orders declined further by 22% when compared with Q4 of 2022. Half of the decreases came from one customer. Overall, the company's revenues in Q1 2023 were lower by 23% when compared to the same quarter last year. Again, almost half of the decrease was from one customer that has been slow for the last 15 months. Adding to the organic revenue slowdown with other customers due to lower foot traffic, a meaningful amount of our backlog did not ship because of delays from our vendors in Asia. Orders from our larger, price-sensitive customers have also continued to be slower for the entire quarter due to higher levels of inventory. This decline was partially alleviated in Q1 2023, with a 63% growth in our e-commerce platform sales and a 105% increase in sales to private label customers compared with Q1 2022. The inventory levels of this one customer that has caused a 50% drop in our revenues were between $1.2 million-$1.5 million, most of the last 15 months. That has now dropped to half that amount, or roughly $675K now. We have begun to see a slight upward trend in orders from them, but we do not know if we have hit bottom yet. In October 2022, we announced the completion of our restructuring that was initiated in Q1 2022. This involved cost reductions, revenue expansion in specific segments that are relatively less impacted by inflation, increase in operating efficiencies to nullify cost increases, and a targeted working capital reduction. Those actions resulted in a positive adjusted EBITDA in Q3 2023. Revenues in the retail sector declined further, resulting in a loss in Q1 2023. Overall, the adjusted EBITDA loss was $550,000 for the quarter ended March 31st, 2023. We lowered SG&A costs in Q1 2023 by 24% when compared to the same period in the prior year. From a preceding quarter perspective, Mace achieved a 64% growth in e-commerce, 42% in sales to tactical channel customers, and 130% in sales to private label customers versus the fourth quarter of 2022. We shipped our opening order to Dollar General in Q1 of 2023. We expect incremental revenues from the addition of Dollar General, shipments of back-to-school program to Dollar General in June, July. New product expansions at two other existing retailers that were approved in Q4 of 2022. Separately, we expect additional revenues in late Q2 2023 and onwards from a fee-based training new line of business across the USA. From a cost perspective, monthly cost reduction opportunities of $150,000 have been identified. Actions are being taken to increase our EBITDA. From a financing perspective, we are in due diligence with two commercial finance companies to arrange a $2.5 million line of credit facility. We expect to close our extension from Fifth Third Bank, which is our current lender, this week. The company's focus continues to be to get us to a positive EBITDA and continue to land new business. I will now turn the call over to Rem to comment on the first quarter 2023 financial results. Thank you, Sanjay. Our first quarter 2023 net sales were $1.7 million, a 23% decrease from $2.2 million for our first quarter sales of 2022. Retail sales decreased 27%, private label sales increased 105%, our e-commerce platform sales increased 64%, compared with the same period in 2022. Gross profit for the first quarter 2023 decreased $489,000, or 54%, from our first quarter 2022 results. Our margin rate in the first quarter 2023 was 25%, down 17 points from margin rate of 42% for the same quarter of 2022. Margins decreased in the first quarter 2023 over the first quarter of 2022 due to decreased sales volume, unfavorable channel sales mix, higher freight and component costs due to inflation, and lower plant efficiencies. The effect of which was partially offset by lower manufacturing overhead. SG&A expenses for the first quarter of 2023 decreased by $345,000 to $1.1 million, or 64% of net sales. The decrease in SG&A expense is attributable to a $36,000 reduction in research and development expenses, a $34,000 decrease in advertising expense, and a decrease of $29,000 in legal and professional expenses. First quarter 2022 SG&A expense included $220,000 of severance expense, which did not repeat in 2023. Our lower sales volume and higher manufacturing costs resulted in a net loss for the quarter of $747,000, which was down from our net loss of $584,000 in the first quarter of 2022. First quarter adjusted EBITDA was a loss of $550,000, down $359,000 from a loss of $191,000 in the first quarter of 2022. The decline in the bottom line is primarily attributable to lower revenues. Our borrowings increased during the first quarter of 2023 to $1.5 million, from $515,000, drawn against the company's line of credit at December 31st, 2022. Cash increased to $431,000 at March 31st, 2023, compared with cash of $62,000 at December 31st, 2022. As mentioned previously, with the supply chain delays experienced in 2021, early 2022, we had inventory orders that were in progress and could not be halted without a financial cost or implications on future inventory order fulfillment. We currently have a lot of our cash tied up in convertible and salable inventory. We have manufactured and assembled products for our typically high-volume movers and continue utilizing targeted promotions for our slower-moving and higher inventory positions. The supply chain challenges leading to our higher inventory level have better positioned us for timely order fulfillment as our sales increase. We have successfully scaled back future purchase orders. During Q1, 2022, our inventory increased 106,000 in relation to inventory at December 31st, 2022, primarily in support of Dollar General. I will now turn the call back to Sanjay for some additional comments before we take questions. Thank you, Rem. Clearly, our focus is to execute actions to reduce costs. We'll be focusing on landing new business and securing a new lender. These are the key areas of focus. A quick reminder, we will not address or respond to any questions pertaining to our ongoing strategic alternatives project. The company has retained financial and legal advisors to assist with this process. At this time, I will stop and open the lines for questions. I would ask each caller to limit themselves to one question with one follow-up, to allow everyone a chance to participate. If we have additional time, we'll try to get you back on the queue. Please open the line for questions. Again, if anyone would like to ask a question, press star one on your telephone keypad. Andrew Shapiro, your line is open. Hi, I have several questions. I'll ask two or follow up and back out. You gave a little bit of an update on the financing status. I want to flush that out a little bit. From your recent call, only 10 days ago, you said you had a term sheet from and were in due diligence with a commercial lender who'd replace Fifth Third. Today, on this call, you mentioned now you're in discussions with two commercial lenders, and 10 days ago, you thought that that first commercial lender would be able to close in about four weeks, five weeks then, four weeks now. With the second commercial lender here in the path and providing all these people their own individual due diligence, et cetera, can you give us a little bit better handle on where you stand with each lender and the timing that you expect to have that resolved? We get a feel for my follow-up question, which is going to get to the duration of the Fifth Third extension. The first lender that I referenced on our last call 10 days ago, they are going through their due diligence. They also paid us a visit at our facilities here in Cleveland. We had a good discussion. There are a few more steps that they need to go through. The timing is in that same range, 4-6 weeks. Meanwhile, we started discussions with another lender, and they have due diligence information is being provided to them as well, and the timing for that is approximately the same. Okay, good. In terms of... Perhaps you have a competitive process. In terms of- Okay ... The extension. In terms of the extension from Fifth Third, that is a 60-day extension. Okay. With this, when, and when was it that you expect to have that extension signed and disclosed? All the board members and our new controller and I have signed and executed the documents from our side. We're waiting for Fifth Third to execute theirs. Okay, well, good to know that things are that close. I'll back out. I have additional questions, so please come back. Our next question is coming for Howard Rosencrans with Value Advisory. Hi, guys. I was going to ask about the finances, so thank you in that regard. I was a little confused about your press release. I was just on a few minutes late in the call. Did you guys say there's been an improvement on the international front that's in 2023? In the first quarter of 2023 versus 2022, we were down about $330,000 or so. The reason for that is when we reinvigorated our international play last quarter, last year, in the first quarter, with the COVID restrictions having been lifted and the supply chain issues were not a limiting factor anymore, we got a substantial opening order from two customers. Got it. Those didn't, effectively, repeat. That, there was sort of a catch-up in the channel, and now people got their pepper spray and they don't need anymore. Well, the time- Is that fair to say? Certainly. Is that fair? Yeah, you're right, Howard. The international channel keeps on expanding. We're receiving tons and tons of inquiries from a lot of new countries where they're seeing riots and things like that. We see that channel continuing to expand, but in relationship to those two customers, you are absolutely right, they got their inventory. Okay. It, it seems to me over the past few years, it, there was a vision that we were in a challenged, sort of, social, violent environment. You know, even though the environment remains social and challenged, it seems to me that all of those who felt like they needed Pepper Spray to protect themselves against this environment, it seems to me domestically, they all bought it up in 2020. The rest of the population has no interest in buying Pepper Spray. It, and the international, you know, you had the pent-up demand and all the people who were concerned about the social violence, et cetera, et cetera, bought it once. I, it, you know, I, that's my view of what's transpired. I mean, we can talk about the macro environment and reduced retail and reduced impulse spending, but at, you know, all these retailers are not cutting back on everybody's... you know, whatever sells through, if they could sell more pepper spray at the counter, they would still have the pepper spray out there, but they're not. You know, I think your view of the of the addressable market is just misplaced, and I think everything speaks to that. You know, it'll be nice if you guys could be an add online to another player. You know, I think your commentary from the release, but please correct me if I'm wrong, 'cause it feels like you, I don't feel like I got reassurance from the call, but it sounds like, you know, so you did the $1.6 in Q1, but it seems like you're now not in a position financially, even if there's greater interest, you don't have the necessary lines in place or the cutback in advertising, et cetera, et cetera. It doesn't seem to me that there's an ongoing. There may be an improvement in gross margins as you spoke to, but in terms of the top line, I don't feel like based on what you're saying, that there's much of an acceleration or any from the first quarter level. Well, okay, let me just take it point by point. Okay. There was pent-up demand between 2020 and 2021, and that is absolutely true. That's we're seeing that with one of our customers that is accounting for the majority of the decrease. Our view is that in terms of pepper spray, with the channel, the pipeline of retailers that we're speaking to, there's an interest there. Yes, there is a macroeconomic impact of inflation and lower foot traffic. That is also true. In terms of demand for personal protection devices, yes, it may not be a 94% year-over-year increase like we experienced in the fourth quarter of 2020, but there is a market out there. There's the environment of fear still remains. Just based on the people that we are talking to, hence the need for landing new business. That's how we onboarded Dollar General. That's how we onboarded another automotive distributor in the last quarter. In terms of not having the financing, I mean, that's what we're seeking financing for. The way we will do it is by getting us to a break-even positive EBITDA. You know, we're looking at asset-based lending. We have a significant amount of, you know, saleable inventory, you know, $4.4 million or so, and those are the options we're looking at. Just for my own clarity, well, first of all, I'll point out that you talked about 4, 5, 6 retailers as recently as 2 years ago, that were adding your line, and not only, and the sales have only gone, have fallen, I don't know, 50%, 75%, 80% or something from just a couple of years ago, even though you were talking about all of the other retailers that were about to come online, et cetera, et cetera. You can address that or not address that's, that seems to me to be a statement of fact. In terms of Dollar General, what is the price point in the product? Because I know Dollar General or the dollar stores in general, are now selling stuff that's not just $1, but they sell stuff that's maybe $5 or something. What is the product you're selling and what is the price point? It's a smaller pepper spray. It's a $9 item. That was the recommendation from Dollar General for us to come up with a $9 item. That's what we're selling. It's just a smaller volume of pepper spray that comes out of these units. Okay. I guess we'll see. We'll see how it does there. As I said, it doesn't seem to me you've had much success with the four or five other retailers that you advertised so prominently to the investment community two or three years ago. Well, hopefully, Dollar General will prove more lucrative. Thank you. Thank you, Albert. Our next question is coming from Vijay Marolia with Regal Point Capital. Sanjay, can you discuss what do you think would be the best use of the proceeds, or have you already allocated, them to something that you can discuss over the call? Can you repeat the question, Vijay? Sure. We're borrowing money. Yeah, what. I'm sorry, what do you want to do with the money that you're borrowing? Well, part of it is for, you know, just working capital needs, and another part of it is for growing the business, including marketing. Well, yeah, regarding marketing, I guess I'm going to use the inverse Charlie Munger approach. Why would it be a bad idea to use some of the funds to do product placement, which has consistently shown to boost sales, whether it's in a film, whether it's in music, commercial, celebrity endorsement, why would that be a bad idea, or do you think that it would not be a bad idea? That's not a bad idea, it's the dollars. The dollar spend required for that without having an assurance of a return, that's the issue, but that is under evaluation. Okay. The financing in place, then we can proceed with that initiative. Okay, cool. Now, my next question, this will be my last question, then I'll back out. Now, this may not be of immediate relevance today, and it might not be a high priority item today. At the same time, there's a long-term future, hopefully for Mace. In that viewpoint, why is Cleveland the best place for Mace to headquarter? Why not a more, let's call it, tax-friendly, demographically attractive state like Florida, not a better option for Mace to relocate? Well, I think a lot of people would love the idea of Florida weather in Cleveland. At the moment, you know, we have a plant in Cleveland. We've got our plant layout. It's laid out in a way that is, you know, efficient for us. I mean, those are the plans right now. We've got a host of other priorities that we gotta get behind and improve quickly. That- Understood. That's something to think about. Next. Okay, we have a question coming from Andrew Shapiro with Lawndale Capital Management. Okay, thank you. A few follow-ups. Sanjay, you know, Pepper Spray is a perishable item and one that you want to make sure works at the time you use it. What is the shelf life on the Pepper Spray in terms of if we've saturated the market when those who are cognizant of its shelf life would seek replacement? What is that? How many years is that? Well, people who are cognizant of the shelf life, it's 3 years. People lose their sprays. They forget where they've placed it in their home, that we hear about that quite a lot. Okay. There, I just want to get that clarified. As I follow up here on Dollar General, you announced you shipped your first order at the end of March. You just discussed on the prior call how Q1 inventory would not drop as you reloaded inventory for another program, this back-to-school program. Inventory, in fact, did not drop, and that you were expecting to ship this at the end of this present Q2 and early next quarter. Have you already, or when do you expect to be making these incremental shipments? Are you seeing POS data yet from your initial end of March shipment, and what are you seeing? I'll answer it in reverse. We have not seen the POS data yet, but our reps are aware that we are awaiting that information. We, the back to school will ship in the June, July time frame. Okay. The majority of it will probably go out at the end of second quarter, because they need to be in the stores. Right. If that is the case, if you had built up or your inventory levels didn't come down here at the end of March with your first shipment to them, and this is another shipment, and you say the bulk of it's gonna go out before the end of the quarter. Do you expect, here we are at the end of May, do you expect the inventory levels at the end of June, a month from now, to have been brought down a bit and converted into receivables? The inventory levels will probably stay neutral. it's hard to predict when the shipments from, you know, China will show up at our doors. There have been several delays, and that's the part that we are not absolutely certain about until it actually arrives. But in terms of supporting Dollar General, which is, you know, mostly newer units of products, there is not only the back-to-school program, but there are replenishment forecasts that we were provided by Dollar General, and you know, we need to be on time and all that to avoid fines and penalties. There's some inventory replenishment that is taking place, you know, every month with regards to replenishment orders from Dollar General for Q2 and beyond. Okay. When, what's the payment terms? When do you expecting the receivables to be converted to cash? 60 days. Okay. With respect to Dollar General, I note from your slideshow that part of the decline in gross margin was to account for sales allowances. Is that a one-time occurrence or recurs going forward, and for how long? It will be accrued throughout the end of the year. Ram, can you confirm that? That is correct. Okay. Regarding the decrease from the one longtime customer, the sizable decrease, are you experiencing or do you know if you have reduced hooks in their stores, and that is coincident with or a function of the reduced inventory levels that they desire? No, this is simply paring back of inventory. We started seeing a pretty, you know, drastic drop. We launched a new initiative in March. That has caused the trend to reverse. We are beginning to see an upward trend, but it's ever so slight. It's not going backwards, it's improving. Our remarkable and sizable year-over-year revenue decline should stabilize then. Is that correct? From that particular customer, yes. You know, we added Dollar General. If we do the pluses and minuses, we had 1 customer that accounted for 15% of the decrease. There were several other retailers that were not as slow in Q3, say, of last year, but they started, we started seeing some slowdown there as well, and it was lower, you know, foot traffic accounting to lower POS sales. Looking at all those factors, and then you add Dollar General to it still resulted in a double-digit decrease. With regards to that 1 customer, that trend has reversed. When I look at the last 24 months, in terms of trending, trends from that customer, a 2-month trend is not sufficient for us to conclude that, yep, this is going to continue in the right direction. So far, it looks better, and we're happy about it because we see an increase in higher margin and higher dollar value items seeing an uptick, meaning our Bear Sprays. We're happy about that. To answer your question, to summarize, we're seeing a slight uptick. Okay. What's the status of resolving your stun gun supply issues from Asia and also your new domestic supplier? We have two sources, as I indicated on the call 10 days ago. We are actively evaluating other customers. We have thousands of Stun Guns on their way. They were just delayed. We are expecting shipments by the end of May for the first batch. Which should satisfy a significant amount of our back orders, about $75K or so. Okay. Your slide presentation said Q1 e-commerce platform sales were up 64% from prior year. Can you define e-commerce platforms? What is that in addition to mace.com? Is that walmart.com? Is that autozone.com? Is it just Amazon, et cetera? What do you attribute this sizable growth to? It's primarily mace.com and Amazon, our store on Amazon. We made a change in our strategy to increase our presence with our stores about a year ago. You know, as you know, it requires advertising dollars. As we've been going through a process of updating our, you know, product descriptions and our, just our, the visuals, the images, the videos, that's what's driving it. Also, our ability to replenish Amazon FBA orders on a timely basis, that is also driving it. There's just general advertising and our on-time performance from the plants. Those are the 2 factors primarily. When you scale back digital marketing expenditures, where are you scaling that back, and how do you keep the momentum going? The, it's a combination of... When you look at year-over-year, it's a combination of factors. We had, you know, two different agencies last year. One that, you know, was responsible for helping us with our Amazon initiative. The other one was for mace.com, both from an SEO perspective and, you know, from an asset perspective, creating digital assets and promotions. We were spending quite a lot more. We decided to scale it back because that wasn't resulting in the type of increase that we were projecting. If you may recall, Andrew, we've tried to target a 4x ROAS, return on advertising sales. If, so, if we're going to spend $100,000 in advertising, we need to expect about $400,000 in revenues. We weren't seeing that. We scaled those assets back. We're still spending money on those assets. It's just a lower amount. Okay. I have more questions. I'll back out into the queue, but please come back to me. ... next question coming in from Andrew Shapiro. Okay. I just wanted to make sure I let anyone else in here want to ask questions. Your slides, your slideshow says Q1 private label channel sales were more than double than prior year. In prior years, Mace inexplicably let, yet purposefully, de-emphasized private label sales. Is this sizable growth indicative of any meaningful recovery or shift of focus or opportunity for Mace? What do you attribute this sizable growth to? It's the sizable growth was from an existing customer. They were just placing a replenishment order. You know, their order patterns changed in the last 12 to 18 months. You know, they were buying less and less because their overall sales were less. We just got a replenishment order from them, and that's what caused the increase. There is a focus, though, on private label customers. We are getting a lot of requests to fill, and we are evaluating each and every opportunity. It's not less of a focus. It is still a focus when people come to us, and they want us to fill for them. Okay, now, you recently announced a distribution agreement with public company SurgePays to focus on a sector of the market that Mace had not previously had much penetration in. Can you discuss this new agreement and the timing of getting all the EDI done and its network onboarded, et cetera, et cetera, all the different You know, delays that happen with other new distribution arrangements. When do you think initial orders might get received from SurgePays' huge network of corner stores, bodegas, and gas stations? The, the way it works with Surge Pays is all the actions that Mace needed to take have been taken. The products have been uploaded to their portals, by Surge Pays, and we expect to see orders this quarter. Excellent. Okay. You noted that the facility encountered an outbreak of COVID that impacted both production and inventory. Can you expand a little bit about that impact and how much of the, you know, that impact might have contributed to the margin decline? Has anything changed in your company practices to mitigate such risks to the business and margins going forward? Andrew, I'll start with this. We had our operations manager fall sick. He had, you know, he had a health ailment, and it turned out that he was out for the entire quarter. very soon after that, we started seeing lot of absenteeism. I mean, there were days when the plant had one-third of their workforce that was out sick with the flu or COVID. and it not only affected the plant employees, it affected the salaried employees. We had a ton of people out. On top of that, we conducted a physical inventory towards the end of the quarter that tied us up for a bit of time as well. it, the way we offset some of the absenteeism was to, you know, increase the production, the best we could. We offered weekends, you know, a bit of overtime hours to make sure that we could get the products out. On the other hand, what also affected us was the product shortages from our suppliers. It's not like just the absenteeism held back, you know, products going out the door. The product shortages caused a much bigger issue for the quarter. Okay. On your SG&A, Mace's former CEO, your predecessor, has been paid sizable severance through much of 2022 and most of this past Q1. When did the payments end, and how much was included in Q1's SG&A? It ended in Q1 2023. Rem, can you answer the question about the specific amount in Q1? Yeah, nothing hit Q1. Everything was accrued when the severance agreement was signed back in 2022. Yeah. he was getting paid- It was all accrued in a lump sum, so it was just cash out the door? That's correct. wait, no, it was accrued in Q1 of last year, but it was paid through early 2023. Is that correct, Rem? That's correct. It was, it's just a cash... I shouldn't say just, it's a cash impact in Q1 of 2023. Okay. What was that cash impact outflow in Q1 of 2023? Rem? Well, the total expense was $220,000, so it'd be roughly a quarter of that. Okay. The, I do want to do a follow-up on any progress further on Legal Heat and F3 co-branding here. On the last call, you said you thought Legal Heat co-branding initiative would result in initial revenues as early as late this quarter, which was later than you initially hoped for from, you know, March 31st. We're about to enter the last month of Q2. Where do the prospects stand now, and have the delay issues all been addressed? Well, we're actually going to be addressing it this week. The person who's leading the charge has been out of the country for the last couple of weeks. We had requested a call to move it forward because we are anxious to market it so that we can get this going. All the delays at their end were being worked on about the last 2 weeks, so we were going to touch base this week to get a status update. If the revenues do. Cool. this quarter, it'll not be for this quarter, it'll not be a significant amount, you know, in terms of the overall picture. Correct. No, at least it's rolled out versus last quarter when you thought it would roll out. Right. As this new product offering is closer to rollout, can you provide an update and an elaboration on how you see this new co-branded product being marketed? Do you feel this is still a $10 million incremental revenue opportunity for Mace? Why? We feel that the size of the revenue opportunity is based on the discussions we've had with our partners about how, you know, how large of a platform this can be. I mean, those were our initial estimates. That's why we decided to get into a co-branding agreement with them. The product rollout will be in retail stores. They currently provide training in 2 large retailers. In terms of firearms training, they're already within stores. The idea is to provide training with some of our other retailers that carry Pepper Spray. The idea is to provide non-lethal and personal safety and situational awareness training. That is 1 platform other than training civilians who want to become certified personal safety, non-lethal experts, as well as providing training to just ordinary civilians through webinars and podcasts, those kinds of forums. Our next question is coming from Mark Greenberg with Private Investors. Hi, Sanjay. I understand you don't want to comment on the strategic initiatives, but in Q3 call, in 2022, you indicated that you anticipated the process would be concluded by the end of Q4 of 2022. I'm just confused and concerned about how much additional legal and professional fees you expect to expend on this strategic initiatives. We were expecting it to close once we were profitable. Our revenues dipped again. There are, you know, other options being looked at by the strategic alternatives group. We are very wary of the costs that are involved, and we're trying to keep it to a minimum. At the moment, there's a group at the board level that, you know, they, we only involve legal counsel if it's absolutely needed and is appropriate. A lot of those discussions are happening at the board level. Thank you. Question again from Andrew Shapiro with Lawndale Capital Management. Yeah. Hi. One last follow-up on Legal Heat. I want to ask about F3. On Legal Heat, do they already have access into, or are you planning to market to the educational market vertical on this certified non-lethal training? I would think that would be a very interesting or desirable demand sector, where someone wants to be certified in non-lethal defense. They are not in that sector. We have a partner who is also a customer of ours and a big cheerleader of the brand, who is very experienced in that in the education sector, and we plan on rolling that out with her assistance. She's going to be one of the instructors that will be on our platform once we roll out this program. We've had those discussions. Okay. That's a, you know, great idea, Andrew. I would think also, SafeDefend would be another one you should talk to about that. On F3, on the last call, you said you had Q1 orders for the vehicular, the perimeter defense system, but they had a component on backlog, and nothing was shipped or booked in Q1 revenue. When was this delay resolved? Are you now shipping and booking revenues in the current quarter on the products? Does this type of delay mean that current orders, current Q2 orders, don't get fulfilled until next quarter? Can you catch up and fulfill the backlog demand all in this quarter? All the outstanding F3 orders are being worked on and being produced, and we're shipping orders. Since our last call, shipments have been going out. We intend on catching up on all of the back orders in this quarter. We have sufficient inventory now to satisfy those demands. There was a part shortage on one of the parts. We found an alternative, and that's what solved the problem. Okay. Do you have any feedback and indications of success on those systems that you have now delivered? Not yet. All this transpired in the last seven, eight days, but we'll start hearing about it pretty soon. Okay. Have you fulfilled the initial order from your large automotive parts distributor partner for the F3 product? Or is that something that's next quarter? No, that's been fulfilled. Just to be completely transparent and so that people don't draw the wrong conclusions, it's a very large potential annual revenue-wise, the first order was a small one. Once it starts moving in their system. Okay. There, yeah, there's a, you know, start selling, and the orders will start ramping up. Okay. Now, I, your product's still being offered in, on both Walmart and walmart.com, and are they still providing orders, and do you feel you've maintained market share, or you've been losing some market share there? We're getting orders from Walmart. We get it every week, we are on walmart.com, and we are just about ready to roll out some new product videos to expand our presence on walmart.com. Our volumes declined, you know, going back to 2020 and 2021, we were in 2 different areas of the store, and in 2021, we were kicked out of 1 of the areas. We're just down to 1 area of the store now. That happened in 2021. Okay. Any reason for that, departure, and, any shot at getting back in there? When I visited the Walmart headquarters, last year, the first quarter of last year, the feedback I got was they were getting down to two brands, and they felt that our pricing was higher than the other brands, and they were looking at a much lower cost solution, just given what was happening at the time with inflation. They felt that they would consider us, we came up with a different offering, and we plan on going back to them with a different offering. Okay. I'll back out. I have a few more questions. Come back to me. Question coming from Andrew Shapiro. Okay. On the call earlier this month, you discussed the status of 3 other co-branding opportunities. I just want to follow up on the one that had a little bit more tangible, and that was that you had had an order placed with vendors, but experienced a 13-week lead time on the product and were working on a second variation of this product as well. When do you expect to have each variation in-house? You previously described this is the product that was to protect or aid people who ride bikes, motorcycle riders, people who go on walks, basically, I guess, some out-outside of the home activities. Since this is a more tangible product now with orders, are you able to provide some additional clarity on what these products are, or is that still a competitive secret? Yeah, I would prefer not to, describe the product on this call until we have a chance to actually market the items and spread the word. We need to have the items. Okay. in our building also. The items are not in our building yet. We expect it this quarter. Again, we are seeing significant delays coming from China. With regards to the variation, that will require some capital expenditures. We will consider that once we get, you know, once we lock in the financing. It's not a significant amount, but at the moment, we're, you know, our focus, like, for this quarter, is to get us, you know, to a break-even black level EBITDA. That is on our list of things to accomplish. Okay. Now, I've heard a variety of answers to my questions, China, China, and supply difficulties. What are the supply difficulties going on here from China? As you know, we're hearing stories that supply chain issues for other companies and other industries are alleviating. Either, you know, what's going on there, and can you not, you know, why can't you onshore, or shall we say at least local shore, some of this supply chain? We are looking at onshoring, Andrew. The issue is the costs. Some of the items that we've looked at, the costs are prohibitive. It's much more expensive to do it in the U.S. in some instances. For example, we have a project to look for, you know, alternative sources for stun devices. We have 4 other items that we're looking at alternative sources because of these supply chain issues. Okay. Some of it has to do with, from the feedback that I have received, is that some of these factories scaled back during COVID, and they just weren't able to ramp up enough. We're talking about specifically our vendors. Not every vendor in China is late. Our alarms vendor is not late. Some of our other pepper spray vendors are not late. They're on time. They have plenty of capacity. There are very specific vendors that are, you know, they're much longer lead times. They tend to be the smaller ones, so we have to look at much vendors with much larger capacities that can have an ability to scale up. Okay. Can you clear up my confusion from the prior conference call? Is the Pocket Hero now called the Pocket Personal, or are they two different products? It's called the Pocket Personal. Okay. Then do you have any retailer placement of... Pardon me? Yes. There, Do you have. It's one, it's one product, Andrew. Sorry, I just wanted to complete my thought there. It's one product, and yes, we AutoZone carries our Pocket Personal at the moment. Okay, they do carry it. You have retailer placement. Is it just online at mace.com, or is it also via Amazon or other online points of sale? It's on mace.com and on Amazon store on Amazon. Okay. Its sales on those two places contribute to your online e-commerce platform growth, and its sales at Amazon, I'm sorry, at AutoZone, are considered in your retail channel. Is there an autozone.com, and does autozone.com qualify as your e-commerce channel, or is that just part of your retail channel? We don't sell on autozone.com, and that's not a big play for AutoZone. Our sales on some of our other online platforms for Sporting Goods and walmart.com are small compared to, you know, mace.com or Amazon Seller Central. Right. Our store on Amazon. Do you consider the sales on those dot coms, even though they're to your retailers, do you consider those sales as part of your e-commerce, year-over-year sales, you know, your e-commerce sales channel, or you consider it part of the retail channel? Rem, can you answer that? I believe the numbers are small enough, but yeah. They're part of retail. Yeah. They're part of retail. Okay, you call that retail. Fine. All right, thank you for those other, filling questions here at the end. I'm done. Yeah. Thank you very much, Andrew. We are at noon. There are no more questions in the queue, so I'll turn it back to you for your closing remarks. Well, thank you very much. This concludes today's call. Thank you for your participation. You may now disconnect. Thank you.