Mace Security International, Inc.

John McCann - President & CEO Carl Smith - Senior VP, Finance

Andrew Shapiro - Lawndale Capital Ken Fell - Fell Capital Management William Rankin - Investor

Thanks a lot, Megan. Thank you for joining the call today and please visit corp.mace.com, Investor Relations, Transcripts and Presentations, as we have loaded a PowerPoint updating the third quarter and full-year results.

Now I'd like to turn it over to Carl Smith, who will read a forward-looking statement.

Certain statements and information during this conference call will constitute forward-looking statements and are based on management's expectation and information currently in the possession of management. When used during our conference call, the words or phrases, will likely result, are expected to, will, continue, is anticipated, estimate, projected, and intended to or similar expressions are intended to identify forward-looking statements.

Such statements are subjected to certain risks, known and unknown and uncertainties including but not limited to, economic conditions, limit of capital resources and the ability of management to effectively manage the business and integrate acquired businesses. 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.

Thanks, Carl and I will comment on the third quarter, and please visit the website, you could download the PowerPoint presentation, I won't go through the presentation but we can answer any questions during Q&A. Brief comments on the quarter and I will try and be brief so we have a longer session of Q&A.

Revenues increased about 22% in the quarter with majority of our partners experiencing strong POS sales in the quarter, we also grew our distribution by 28 new accounts that we landed during the quarter. Most of our major accounts had robust POS which means that point-of-sales through the register was great, which meant replenishment orders and we also had some nice off-shelf placements to keep up with demand.

Our eCommerce strategy has been a factor and we're experiencing double-digit growth in the category. David Happe has done a great job with his team, since [indiscernible] and others on supporting the category and making sure we're enhancing our brand experience in developing strategic advertising plans to continue to support the category.

Note in the quarter that our ROI and our spending was not as great as we would like, so we are reviewing how we go to market in the channel, as we move towards the future, we had great results, we think they can be even better by focusing in on the detail and also the message, the content, and the context of our message and I’ll talk a little bit more about that later on the call. We've opened new categories to sell our products which we're very excited about, we branched out it to some real estate agents how they direct opportunities to sell our products through our trainee program and enhanced brand messaging that we've done with some of our partners.

We also had some nice pipelines still on the quarter with a couple of major retailers we're able to have several placements within one of our sporting goods channel partners and we also had several new placements within the store format of one of our consumer partners. We were very excited about that we also think this direct communication with a lot of our customers directly from the company, can be also a great way to enhance our brand value as we move forward.

On the marketing side, the new website is continuing to perform well. We've launched in late June, we've seen unique visitors up 50%, our page views are up 192%, our page view sessions are up 89%, and our bounce rate is down significantly year-on-year.

Also to note on our website our AUP, our average unit price is up over $40 per unit which is a $10 increase versus a year ago. So we're very pleased about where we're going.

We think the next level for us is engaging a marketing firm on a short-term basis to help us with our content, context, and our messaging to make sure that we reach a larger audience than we are today. Some of the disappointments that I will just highlight briefly in the quarter is our less-lethal our Tactical Division has done well on OCs price and distribution of OCs price but we're still not where we want to be with the distribution of less-lethal munitions that we started off.

We think we have a great opportunity in tactical. That's why we have brought on Paul Hughes to the company.

Paul's joined the company in November; he was 32 months public service role in Arizona, commerce authority under the Governor Doug Ducey. Prior to his role there Paul was the Chief Operating Officer in Guardian 8; he led Human Developers created new devices and several patents that prove these two product design for the security industry.

Prior to Guardian 8, Paul was an Editor. I think a lot of the experience Paul will bring not only from his marine background, his Taser background, and also his Guardian 8 background will solidify some of the branding and messaging now for the focus the company will have within Tactical and throughout the entire company.

On international, based on timing issues with orders, we still saw nice lift in some of our businesses but our traditional business in Europe continues to be slower than we like. We have some remedies for this that we'll see later in the year and especially in the first quarter of next year.

Also there are also several markets that are on our radar that we will continue to work on right now we think focusing on the U.S. along with some of our international current partners is the strategy that we're moving forward with.

Sporting goods is a channel, had a good channel as I reported in the second quarter it was a little bit off, but right now it seems to have stabilized itself, we're in a great position with the leading retailer in the channel and we're continuing to see the channel to be smaller but still very effective for the sale of our products. We do feel that we’ll hit our internal goals in this channel by the end of the year.

Just touching briefly on gross profit there was an increase of 16% during the quarter with strong mix of sales and products to a variety of customers, we did have a slight dip in the overall percentage from roughly 46% to 44%, but we continue to see some opportunities through SKU rationalization, product mix, product kits, and some other testing of higher AUP products that we feel will be very effective in the future. Then in the quarter, we achieved a run rate of 10% in EBITDA, a lot of it was through operational efficiencies.

We feel there is a lot of more operational efficiencies we can squeeze out of the facility. We look at our allocation of resources, so we can optimize our effort and increase our long-term sustainable double-digit EBITDA.

We have some expenses in the quarter, namely our website software that we would not it was obsolete and would not go forward with our new operating package. So you saw $32,000 hit in that segment that we took in a quarter as we move towards the new platform.

And when I talk about the website, we look at it two ways, you have the front-end of the website, the store side, you also have the back office of the website which is actually the conversion side, and as I mentioned earlier, our web conversion percentage is up tremendously versus prior and that's some of the test software that we had with the road operating platform, that our new platform just wasn't up to-date. So here we go we went to [indiscernible].

Just touching briefly on inventory and you can see on the slide deck that it is 115 days at the end of the quarter which is 33% improvement from year-end. We do have the proper amount of inventory on time with some opportunities on inventory that were moving and we’re constantly tracking any issues that we have with Asia.

Currently, we have not been hit with any tariff issues but we’re very mindful of the fact that there is a lot going on in the world and we’re always looking at how we source and where we source. Overall, our acquisitions have helped tremendously with the company revenue range we still seen a lot of organic growth, we’re pretty bullish about what we’ve been able to do both organically and with our acquisition.

Our sales pipeline was good through October, we're seeing a little softening on that pipeline as Christmas seems to be put off a little bit with some of our consumers but we’re still bullish on a positive EBITDA in the fourth quarter, as we continuously look at improvements and alignment of our resources to make sure that we are in a position to be customer centric and customer-based and as we move towards the future. Lastly, I just want to read something that came to me just recently from a friend of mine.

Basically it's a very nice story to end this little brief introduction. A friend of mine is a bond trader on the Floor of the New York Stock Exchange.

His eldest daughter left for his first year college this summer. He went out bought a couple cans of Mace brand of pepper spray.

So she and he could both feel safe. In order to having to be ready and prepare he set up the target NDR and create a situation for her to respond.

She was able to deploy her pepper spray in seconds telling her father I got this and I'm ready to go to school. That's what we're really doing here as a company.

Your safety is our mission. So with that, as I said I'd be brave, we can open up to questions, Megan.

And so we will turn over to you Megan, you can fire up the questions.

Thank you for taking my question, John, and a good quarter. I noticed the last five to six quarters we've shown positive EBITDA and recently we've shown positive cash flow, Mace, as we all agree with has a low valuation in the market and limited investors.

Would it not make sense to be and be accretive to have a stock buyback in place and would this not add to the daily stock liquidity, sustained buyback would be value-added, accretive and create liquidity of course at the right price, why not do this now?

Thurman, excellent question, and thanks. You are right by the last six quarters, we have seen positive EBITDA and we've also seen nice sales growth throughout the past couple of years.

Your question is very valid and it has been brought up at the board level and at the board level there are ongoing conversations of when the right time is and how we would do it. I think the strategies that will be in place soon and we'll be able to answer that question more directly.

Thank you very much for your question.

All right. Can I have one follow-up?

Yes, sir.

It relates to marketing and I know we continuously a point to promotion, promotion, promotion and a branding story. I want to talk about targeting communications and wonder if TV is a part of our media plan which does not promote sales and make new investors a part of a targeted market.

TV would motivate sales, gain new investors to buy I think we spend 95% of our time growing the company and only 5% on promoting fans in the stands. So isn't -- shouldn't TV be a part of our medium plan like the Naftal [ph] or the retractable hose or the new EK drilling machine that was just approved by the FDIC and if I could add to that, if you have any upcoming investor conferences or non-deal Road Show activity?

So a couple of questions in that. As I mentioned in the press release before we put out the earnings, Paul Hughes has joined the organization and we have done a deep dive into a long-term partner in strategy with a marketing firm to discuss what is the best medium in order to get the Mace brand name out there.

We feel there is a unique opportunity to change the paradigm. I think if you look at some of the newer investors that come on board have looked at like a retail brand is great.

We feel there's a strong opportunity for the brand to get back into some of the legacy business of tactical which will take some type of advertising and brand promotion or make sure that we differentiate ourselves. And then on the consumer side, yes we feel there's very -- many ways we can do it.

If you look at media today, it's very factionalized. So you have a lot of kids that are online.

You have a lot of kids that never turn on a television and you have radio you have billboards. And what we're looking at is an integrated strategy to promote the brand consistently across all those mediums.

And then look at the best way to do it. But we definitely think there is an opportunity for the company to change the paradigm moving directly to consumers and make Mace like as you were walking out the door with your keys, your purse, your phone, your bag, and your can Mace brand of pepper spray, your Mace brand and alarm.

So I think that's an excellent point and I think Paul will lead that charge as he's really hit the ground running with the new organization and really be able to focus that message, so we maximize the brand, the great brand awareness that we have today. On your second point Sanjay and I -- Vice Chairman of the board and myself will be at Imperial Capital in New York presenting a meeting with opportunity with investors, opportunities to talk to other companies within the same security group, Saif Khan and his predecessor Jeff Kessler have done a great job covering the securities market and we feel that's a great opportunity to do a little bit of networking talk about the brand, talk about the opportunities within the brand and the value of the stock as it sits today as we continue to grow that brand value and also our EBITDA, our sales, and our gross margin.

Thank you very much, Thurman.

Okay, thank you for taking my questions. I will get back in the queue.

Sure.

Thank you. Hi John.

I'm glad to hear you and Sanjay are going to be at Imperial Capital and with that in mind, I didn't know if Sanjay was on the call because as one of the new lead investors here Chuck might be able to better answer this which is I wanted to get their views especially in light of your attendance at that conference and hobnobbing with others in the industry is whether or not they maintain or have views regarding the monetization and licensing of the Mace brand. And it seems like it's a huge high margin opportunity that might accelerate the company's recognition of tax NOLs that are past forays with secure check and select security and other license deals have not yet come to any fruition.

Is either Chuck or Sanjay on the call to give their particular new investment in the company insight or can you convey that if they're not on the call.

They're not on the call. But I can convey two folds of your question.

I think if you look at the enthusiasm that that Chuck and Sanjay had when they made their investment in the company and their continued enthusiasm for the company that we feel that we have a great opportunity within the company expand the brand, beyond the parameters of where we are today especially in the Tactical. And then if you look at this direct to consumer opportunity via eCommerce, via Mace based branded website, and also via the right marketing campaign I think they're very bullish on that segment.

On the other segment we are in negotiations with some with the team for licensing the Mace brand and we will review at a board meeting upcoming very soon. We want to make sure that it’s very consistent with what we’re trying to build out as the number one company in personal safety in the marketplace take that ground and make sure that we can defend ourselves and also make sure that we have the products out in front of the people all the time.

So we will definitely convey, I think they will listen in. If not I will make sure that when we meet that I personally convey your message.

Right. Just because obviously a new any licensing partner is going to put in their own marketing dollars on the brand and we get to leverage the benefit of that in addition of course to 100% royalties, so that will help on the NOL recognition as it starts expiring next year.

Regarding also the same feedback, you’re on the board you can convey as well, on the last call Sanjay and Chuck or Sanjay talked about hardly another 60 to 90 days before they completed the development of their long-term strategic plan. Well, it’s now been 90 days since the call and I wanted to get some insight as to what products and/or segments or channels that they have identified for greater or lesser resource allocation?

So it’s an excellent question and they have done a marvelous job helping management with a longer term strategic plan and when you look at it and as I discussed earlier, really the opportunity in Tactical, the hiring of Paul Hughes who has wealth of experience, he is a marine, you're never former marine, right, so he is in marine, helping, leading the charge there to consolidate, to solidify to increase the focus and also increase the opportunities within the Tactical division has been identified as a tremendous opportunity for the company, as well as what I would call our direct to consumer strategy which includes social media, e-commerce, mace.com websites, partner websites to make sure that we’re in front of people with the right message and the right products on a consistent basis so they don’t have to bumble around or look, some of the research that we reviewed with the board of directors where to buy a product, why you buy your product, we’re incorporating a lot of that into branding messages and we’re working with what I call today two different marketing firms, one of them new, Gray Loon has done a lot of new work on our website to help focus that message to make it very consistent. So I think those are two top priorities that have been identified and we’re taking actions.

There will be some more resource allocation as Paul really digs in, Paul has already hit the ground running with the lot of ideas which I think will benefit the company both short term and long-term. And then also looking at the headwinds of where does the consumer tomorrow shop, is it traditional retailer, is it online, is it directly, is it through different means, so we have been challenged with by the board to come up with some different strategies in order to make sure we reach this consumers with the reasonable ROI and also make sure that everybody is aware of the product and everybody has the right product for them given their situation from law enforcement professional to as I’ve mentioned my friend's daughter who just left for college that they know the Mace brand and they know the power of the brand and what that product can do to empower them and makes them safe.

Right, well thank you on that and I’m glad things finally worked out between the company and Paul and since I'd introduced him there in to you guys a few years ago and I’m very excited that things have worked out and he has joined the team, I do think it’s a great opportunity especially in tactical segment that I have been pounding on new guys for a while though had been underperforming and not achieving at least its full potential and so hopefully we’ll see more of that. Can you comment further and I mentioned the marketing team or firm, I guess that was recently hired to just the company and expand a little bit further on I guess and directives you’re giving them and the timing of when you would start seeing tangible output from that firm?

Okay, two fold again, like our partners on our website had done tremendous job as I mentioned we’re pleased but not thrilled with our results on Mace.com, we would really love to see a higher level of consumer involvement on a daily basis, so more visitors to the website because we’ve raised the AUP, we fixed the conversion problem, we've eliminated the bounce problem. So now we just need to make sure that we have more people directed to this site.

And as we're on a short-term basis, Paul and all have -- are working with the firm to kind of work on the context and content, and I’d say right now we're in that preliminary phase of reviewing to make sure that we set ourselves up for a strong partnership. Everything we do have to have a return on investment.

So that's why we're constantly reviewing any documents, anything that's been brought to us we make sure that the return on investment as strong as possible. We do see that e-commerce channel is a huge opportunity with the brand especially as we work out some of the issues with legalities, how we advertise, how we can work with our partners at Google and Amazon and et cetera to make sure that that statement is around safety and around the right products at the right moment.

So right now, I kind of talking a little bit on your question because we are just at the beginning stages of working with the second company, we really want to make sure that we have everything internally to support and then also we make the right decision and we analyze those decisions. And so we move forward very sustainably into the future.

So it sounds like and can confirm if it is known and you agree or it's not yet known that this is perceived to be a messaging issue right now and not one of you just have to give it more time?

So I think the combination, right, so there's 50% of Americans that we show from our research that has not bought a can of pepper spray. So that's a huge opportunity for us right.

But they recognize our brand. So you say it's two-fold that a little bit of time to make sure that they understand that hey this can keep us safe.

This is a less lethal alternative to defend yourself and protect yourself. Then, at the same time you want to make sure that messaging is correct because the world is constantly changing, right.

So 10 years ago Facebook was the highest social media, now Twitter and some other things have happened. So we have to make sure that that messaging is consistent.

So I think it's still a little bit of both. There's some people that we're going to need a little more time to educate them.

And then there's some people that need the right message to hit him in the face so they buy the products. One of the things that we have undertaken in the quarter that was an expense that we think will benefit us in the future is training.

We've been to sororities, we've been to universities. We will be at the Ohio State University on the 18th, training their student alumni council.

There's over 30 young men and women that will be in that class that our lead trainer Matt Schaefer at TDT will be at, he was just at Baldwin Wallace's AGD, which is sorority of Baldwin Wallace, one of the oldest sororities in the country, and he did the training with their group. And at the same time, we've been enhancing our training and our activities within real estate agents because now we're seeing that there's an opportunity there.

But we still have to educate them and then after even the education, we have to make sure that they get with the right brand message. So I think we have a great strategy moving forward.

I think we've been very strategic in this go-to market strategy. We've been adding resources you'll see more resources in the future to make sure that we're forward basing and then that messaging is very consistent.

Now, that strategy you're talking about is somewhat grassroots and fairly localized, do you have a plan to roll-out the kind of grassroot strategy on a broader regional and hopefully more national scale?

That is not like you're taking is regional but it's not really like we're in Las Vegas. We've been in different states, in different cities across the country but you can't, it is duplicatable to some extent but really what happens next is that messaging that we can reach people in a quicker timeframe and with a broader message.

So we latched onto a couple of schools that have called us but it's not limited to those schools like we were at several different events, women's safety events in Las Vegas. We're working with the hotel industry, working with service industry.

We've been in Charlottesville, Virginia. We've been in Florida.

So we those are two recent ones that are coming up that I mentioned. But it is very nationwide I would call it.

But along with that, we still need that right messaging, right.

Right, you need social media to make what you're doing more viral?

Correct.

Let me back out, I have plenty of more questions, please come back to me.

I will make sure that these kids that tweet out hey or this person tweets out or through their social media networks to make sure that they know what Mace did for them.

Right, many more questions. Let me back out in the queue but please come back to me.

Sure, thanks.

Good morning gentlemen. Congratulations on another good quarter.

Appreciate you guys having this call. I think it's really important as far as new investors who are able to be on the call or even just read the transcript.

It's a great resource. John, in your comments you briefly touched on the international markets for Mace.

Could you maybe give us little more on that specifically India what's going on there maybe where you’re right now and where you want to be and maybe, how you're going to get there?

Sure. Fell, thank you very much for being and participating, and you're right, we do agree that any communication we give the smaller company with a lot of potential is great.

India specifically we've identified a partner that we have in country. It's been a little slower to develop than we like.

We think it's a huge opportunity. There's a as you know some changes unfortunately with acts between governments and also some changes in the Indian government just recently that have kind of delayed a little bit of our action.

But we do look at the international markets as an opportunity. We look at the domestic market there may be a greater opportunity today not a branding and anything that we've built out some of the other markets but we feel if we can get the messaging right here, we can resonate that messaging across the globe and as but we have like in North America between Canada and Mexico.

We've seen some nice increases especially with some of our animal repellent products, especially our bear spray and different segments in the market we think that that will continue. But we do feel there are certain markets in Europe along with some new packaging that we'll be able to quickly gain some market share within those segments, too.

Thanks.

Great, well thanks for that update. I’ll back out now.

Thanks.

Thank you very much.

Hi, John?

Hi, Bill, how are you, buddy?

I'm doing good, congratulations on good results, very improving. I guess, one of my reactions to it is volume post-announcement yesterday, I think all day traded 515 shares you're about 1200 shares today, stock is down 7%.

You got any feedback you can give on your take on why that occurred and what you guys are doing to get more investors aware of the company and trying to get growing them up by promoting the stock as a good investment for investors?

Bill, thanks for the excellent question, so twofold again I would look at what we're trying to do on our marketing message on the consumer side call it, law enforcement consumers to make sure that we're very consistent there and you're 100% right. We feel we're still a value play within the marketplace and the next step now that we have Paul on board, it kind of alleviate some of the day-to-day from my table for being the board to really investigate to buy our firms, the right messaging that we can do to gain some investors in the market.

We still have and as we've indicated in the past as an investment banking arm of the company, there we're going to have some creative ideas that hopefully in the future will come to fruition. But on the messaging side, I think next phase for us is complete this mission, so the next 60 or 90 days make sure that this initiative we did on our strategic plan identifying the segments that we want to attack, get that communications that marketing matches there but at the same time really start attacking that investment relation opportunities.

Talked with some of the board members earlier today just about that to say okay, now let's work on that phase get Paul fully functional here at 4400 Carnegie in Cleveland. Make sure those operational efficiencies, make sure some of the customer relationship management software that we've implemented that he finishes it down the pipeline.

Look at how, we process today internally on our orders to make sure we're as efficient as possible and I’m really communicating with our investors through the right arm, through the right event that Mace is value play and continually again with sustainable profitability with sustainable EBITDA and with sales growth. So I think that is somewhat the next phase timing is still TBA because we're likely, that with Imperial Capital.

We'll be at that event. We are we are talking to individual investors but hire the right firms they can do a better job than we are today.

I think is next on the drawing board and full disclosure is very helpful with your advice because of your experience and what you've been able to achieve in your life and assisting us in that timeframe. So thank you very much.

Just coming under comment I agree you've got to have a good story, you got to have good results. Otherwise, talking to potential investors and trying to get the story out to the investment community, you don't have you can't do the enticement.

You guys certainly have had that with the change on the board, you guys could limit the investment and these results are great compared to the past and everything that good information and getting information in front of new investors, not your existing investors is critical and that's you to pick on the Investor Relations firm someone who's really good at outreach and finding new investors not managing the existing base because their existing base is very small. So thanks for the answer and we'll hear the -- hopefully the call next quarter.

Thanks.

Thank you very much. We agree, I think we're still a great value play and the timing is now and in the future to make sure that that story gets out there.

Okay, Megan back to you.

John. I think Mr.

Y can ask the question that, I wanted to be a little more specific about is when we do plan, can you be a little more specific about when we do plan to hire that right our firm and get new fans in the stands. I noticed that, I was impressed with the college kid.

The real estate kid, the runners kid and could you expand a little bit on how we're going to market with that you did, you commented on visiting various locations. But could you just be a little more specific on how long we think it's going to take because it has been quite some time since we've had the right our firm to get the story out to considering environment that we're in probably has never been better could you be a little more specific about that and how you're going to market with those three new products that I mentioned?

Right. So on an overall basis timing like I'd be lying if I said I exactly knew when we were when this was going to happen.

Part of our overall strategic plan as we talked about is resource allocation internally which something that’s still going on is. Paul taking over a lot of the day-to-day operations, operational activities is something that is happening.

And as that happens we'll be able to focus on IRR to make sure that people see what we're doing, how we're doing it and why we're doing it. I think I enjoy that story.

And we're also very cognizant of being a value play making sure that we don't wait too long for that story to be out when we're no longer a value play. So I think my hope would be with over the next couple weeks and over the next several months we'll see us the reemerge as a lean mean fighting machine organization and we'll be able to then I'll have the free time to go out there and meet with investors, stock investors and really be able to tell that story.

With regard to some of the kids online if you went to amazon.com or if you went to mace.com we are offering many kits because part of it is that once you they're there visiting, there's three or four different reasons why to buy our product and we're trying to make it very easy for you to buy a kit that you might keep a product or you might give a product as another gift and also raise that AUP. So thanks for seeing that.

And we're seeing some things that I think is our messaging improves a little bit more we'll see more success. And it is it's a priority within the next phase of the strategic plan to make sure that we have the right IR firm with the right messaging and be very consistent.

Hope that answers.

Okay Megan.

Yes, hi, few here. The drop in the elevated inventories to more normal levels was that natural seasonal activity or were sustainable improvements or changes implemented?

A little bit of both. There was a reduction we had a build up for the bear season where we had the big year and then just a strategic reduction in inventory overall.

And is that indicative of already narrowing the SKUs or that is still a change to come?

It's a little bit about stuff some more changes that we want to make with our SKUs. We don't feel that we will have the pressure on building up our animal repellent sprays that we had a year ago due to some rulings by EPA.

So there were some products that they were looking at banning and that were off the table now, so we won't have to build up that we had a year ago. So we should see some consistency within our inventory taking last year out is an anomaly but we are constantly working on reducing our inventory and being as just in time as possible with our consumers and with our retailers and we're working on a couple ways to improve that efficiency even greater in the future.

Okay, and then the rise in receivables is that indicative of shipment to new bricks and mortar distribution channels and anticipation of seasonal consumer sales activity or is it something new in terms of revenues and is that growth sustainable or onetime in nature?

So it's sustainable, there's a couple retailers that by requirement that longer dated requirements in order to do business with them. So a little bit of experience with that and then a little bit of an experience of shared risk with a couple partners to get some growth and get into new markets.

We feel we will probably continue to experience to midway through the first quarter and then it should kind of normalize.

Okay, and your slides and your script spoke to strategic channel investment expenditures to derive future sales. Without giving away any competitive advantages, can you highlight or speak of any of these investments in particular yet?

Sure, well when you look at the website and you look at some of the things that we're doing with SEOs, meta data and also with Edward buying and we're also working with a lot of partner e-commerce companies on strategy and with their traditional brick and mortar. We've made some investments into being in more locations within a platform.

So yes let's say we're in one department now with three or four major retailers we're in three or four different departments within their platforms which have a cost associated with it but we're experiencing nice ROI. Being 100% honest, we would like to see a higher ROI with our messaging, with our online and here go that's why we're re-evaluating some of the messaging and how we can make that more consistent and also have a higher ROI for the company.

Okay, now obviously with Paul joining in his particular expertise or experience and tactical clearly the company is devoting more resources to have tactical live up to its potential. And there's always been a long runway in terms of RFPs and things like that which you guys have been focusing on for some time.

So even before Paul hits the ground and is gaining traction on this but I wanted to get a feel for it and follow up on where a few of the other past initiatives. One is where was the company as at the end of Q3.

And as it is today, where are you guys on the ability to store and sell an expanded line of less lethal munitions and other consumables or is that an initiative you're now dropped?

So we have all the registrations and all the ATF requirement to store and ship less lethal munitions domestically. And now we're taking on the challenge of making sure that we have the right state department clearances to do international.

Additionally on that side, the CRM initiative that was started when we upgraded our operating software internally and we upgrade our website is now Paul is going to bring that over the finish line I think very effectively and that could be an excellent opportunity to make sure that we can analyze their wins and losses within our tactical division and also be prepared when this come up and know when those bids come up. And lastly, three other data that Paul has already initiated in his brief time here is our professional grade products to make sure that expense over the consumer side, to make sure people understand that this is the same strong product that law enforcement used to de-escalate situation is also enhanced our position with NTOA which is a national organization that will give us more exposure in the law enforcement world that we can branch down into our consumer.

And then also we will have any one of our investors are more than welcome to come to the SHOT show. We will have a nice cocktail party and launch of our less lethal munitions at the SHOT show.

And Paul will be there running that segment and making the investments to get the realization of what we've all been working on for the past three or four years on getting our less lethal munitions out and the folks that need it desperately.

When this year’s SHOT show?

I will get you the exact date because I don’t have in front of me but I believe it's the third week of January in Las Vegas at the Sands Convention Center. I have some email using of you except …

Thank you. Regarding some other vertical initiatives it's a shame, we gather here every three months to have a quarterly call in the three month window there it seems to be at least three to five new mass shootings.

It's horrible. Many of these are in environments where perhaps pepper gel that can go to 25 to 30 feet would not be effective in protecting or knocking down assailants and buying those precious seconds and minutes to save more and more lives.

But we know it's just unfortunately a matter of time, where we're going to see and hear of another school or circumstance of where your Mace brand safety kits could actually save lives. Can you talk about the progress made in the last quarter and the steps being taken to further penetrate and get our product adopted into this I will call it a vertical market opportunity to protect lives and project safety?

Sure, so a couple of things as you’re talking about the licensing side there might be some opportunities for us to look at brand license in that segment and verticals that we're not in today. Secondly, we have some nice penetration with a variety of products on a smaller scale in several states where they are buying our pepper gun which is reusable, replaceable cartridge of Mace brand of pepper spray they can shoot 25 to 30 feet.

But the safety kits is a general. We're working with several companies that are in that space.

It's still very factionalized that unfortunately spent in school level for safety and security often falls into fundraising categories because they have facilities, budgets, they have learning budgets they've put budgets they have educational, computer budgets that it's still very factionalized what I think Paul having up taken an elevated position with the National Tactical Officers Association. I think we'll be able to get that message out a little more consistently that that Mace branded less lethal solutions could be one of those alternatives but 100% honest with you, Andrew, the schools areas is still very fractionalized and it’s a tough goal but we’re not giving up.

But we have made some nice penetrations especially in Texas, Arkansas, Louisiana where there are several school districts that constantly buy our pepper guns and we’re seeing an uptick in our sale of pepper guns both on our ecommerce partners and some of our direct sales initiatives that we think will continue in the future but on a national trend level hasn’t taken off the way we would like it.

I have some ideas for you; would you call in offline about those because for competitive advantage, I don’t want to necessarily pop them out here but I have new ideas…

I have lot of travelling but maybe I will try and find a time between yourself and myself and follow, we could have an offline conversation.

Yes, no, no, I think I have some ideas. Are there any other states where legislation and regulation is pending the better open the markets and where do things stand with respect to that up in Canada as well?

So Canada has got Sam’s Store because you have one hard liner and a woman that brought it up to loosen the laws, so there is no news there. New York is an area where I think we have some opportunities.

David Carroll and his team could be a great partner for the company but I think that's probably a level three in our strategy because once we have the branding and once we have the awareness and some of the other elements then I think we can attack that market because as we all know New York's probably one of the great cities in the world. But it's also one of the most expensive cities to lobby and work with and make sure we get the consensus that we feel is necessary.

So right now there's really nothing like on the lethal front. We are working with some other manufacturers of less-lethal products to look at what other areas of the country we could improve the recognition of the power and safety of the products to the general public but Canada is standstill and I think New York is the right time.

Just in years of woman legislators perhaps things will become easier. What about in terms of the European Union as well, I think that was some legislative or regulatory barriers and hurdles and are those being overcome?

Yes, those are being overcome nicely, we got to give credit to the Germans for kind of leading this CLP packaging to make some consistencies, we are making sure that we’re CLP-compliant which is you can look up online, all the requirements in it but that has stabilized. They still have some excess inventory that we're looking through but we see that as an opportunity next year, we will be presenting at IWA show, the show in Germany that is really the American version of the SHOT Show where you have both law enforcement, nations participation along with your prevalent retailers in Western Europe present at the event.

Right. I only have a few more questions but I'll be back out into the queue if you have someone else?

All right, Andrew, we can go back to you.

All right, just a few more questions that I have and I'm done. Again, talking about in each during -- since the last call we've had a few major storms hit the United States and Mace I think came up with a creative and useful approach promotion et cetera for its Alert 911 product albeit extraordinarily clumsy execution and late and poor timing.

What I wanted to know from this is your takeaway from identifying this is the use of Mace Alert 911 in terms of its battery operation that would obviously last a lot longer than the problems of power outage fuelling cellular phones recharging them. Was there any uptick are you seeing or where are you seeing uptick in the Mace Alert 911 and are more resources planned to that product line, and of course obviously with a lot more advance notice and promotion than a few days before the storm hits?

Right. So we do have we've worked on some kind of a storm tracking weather grind mix to be a little more effective the next time something like that happened.

Kind of can't really answer a lot of the other questions because we're working with a couple of partners that we could see some significant uptick within the Mace 911 opportunity. So with that one, hopefully if we get some of these partnerships done, I think we'll see a nice benefit to the company with that product line.

Okay. Give me a call on that one as well, I have some ideas.

I think I've shared a few already with you by e-mail but let us chat about that especially on the storm tracker.

Absolutely, I will reach out to Paul, I think he is travelling but we will pick a time, so we can chat and love your ideas.

Okay. And lastly, it hadn't been on the radar because we're doing getting absorbed with the new lead investors that are coming up with a good strategic plan, enhancing the operations.

But you guys are now on a sustained positive cash flow level and growing further. Has there been an evolution a focusing a shift of focus with respect to the new acquisitions in terms of scope for markets that Carleton McKenna and the newly composed board are looking at?

These the right answer without a lot of detail, yes, I think there’s some opportunities that we're constantly reviewing. The board has dynamically chosen a couple of board members to put together a small acquisitions review team we can respond to opportunities in the marketplace dynamically and Carleton McKenna has been carrying the water to make sure they’re messaging consistent with what the company is doing, wants to do in the future and making sure that anything that we would look at fits nicely into those opportunity buckets that we've identified for a strategic plan.

Okay.

And to know the both the acquisitions we've done over the past 24 months were both strategic and both have been very helpful with our longer term planning both on an e-commerce platform and also on an efficiencies platform. So we're pleased with what we've achieved.

We think there's more than we can achieve in that regard.

Yes. And then are investment banks helping you in that area and they seem to I would think they're capable of it but have they been tasked with assisting the board with respect to an investor -- I don't want to call it strategic alternatives per se but more but I think he has even said that before they were retained to do that but more with respect to actions, the company can take to lower its cost of capital by of course achieving a higher valuation multiple in our undervalued stock?

Yes, they have been and very helpful on that regard.

Okay great. Thank you.

Okay, well, Megan, thank you very much for your job, and we thank everybody for being on the call. All the materials will be available on the Web site, if there's any further questions please feel free to email the company.

But we do appreciate everybody's time and consideration that we'll talk to you in the first quarter of 2019. And have a very Happy Thanksgiving.