Mace Reports Financial Results For The Second Quarter And Six Months Ended June 30, 2012

Mace Security International, Inc. ("Mace" or the “Company”) (OTC PINK: MACE) today announced financial results for the second quarter and six months ended June 30, 2012. Please visit http://www.otcmarkets.com/stock/MACE/filings to review Mace’s financial reports.

2012 Second Quarter and Current Highlights
  • Mace filed a Form 15 with the Securities and Exchange Commission on July 26, 2012 to voluntarily suspend its reporting obligations under the Securities and Exchange Act of 1934. With the Form 15 filing, the Company’s common stock, which was traded on the OTCQB™ Marketplace, was transferred to the OTC Pink Marketplace. The Company’s decision to deregister its securities was part of the Company's planned reduction of its operating expenses. The Company will also be making additional headcount reductions and operating location consolidations. The cost reductions will provide the Company with additional resources to accelerate its marketing and sales plan.
  • Mace, through its wholly owned subsidiary, Colonial Full Service Car Wash, Inc. (“Colonial”), entered into a Lease Assignment and Release Agreement (the “Agreement”) effective August 10, 2012 under which Colonial assigned and transferred all of Colonial’s rights, obligations and liabilities under a lease for a Fort Worth, Texas car wash location to the assignee. Colonial paid the landlord a cash payment of $275,000 and transferred certain inventories and equipment having an approximate book value of $70,000, as consideration for the landlord's early release of Colonial to eliminate continued negative cash flow from this operation.
  • Mace, through its wholly owned subsidiary, Colonial, entered into a Lease Agreement on August 29, 2012 to lease the Company’s final owned and operated full service car wash located in Arlington, Texas. The lease is for a one year period at a monthly lease payment to Colonial of $4,000 plus reimbursement for real estate taxes. Simultaneously with the execution of the Lease Agreement, Colonial entered into a Contract of Sale which provides the car wash operator up to one year to purchase the car wash property.
  • Mace announced the hiring of Michael J. Joseph as its Vice President and General Manager of Mace Central Station (“Mace CS”), the Company’s wholesale monitoring station located in Anaheim, California. Mr. Joseph has over 30 years of experience in the security monitoring industry and has previously held the title of Vice President of Operations at a nationally recognized Central Monitoring Station.

John J. McCann, President and CEO of Mace, stated, “Despite slight declines in revenue from the first quarter, the second quarter of 2012 was productive for the Company. We furthered the process of identifying key markets and product offering improvements while continuing with our cost saving initiatives.”

Mr. McCann added, “While many of our cost saving initiatives won’t be completed until the third and fourth quarters, we believe that by the beginning of 2013 we will have positioned the Company in a more effective cost and management structure that will allow us to grow our revenue base both organically and through key business relationships and position us better for profitable results.”

Financial Results, Second Quarter Ended June 30, 2012 and 2011

Total revenues for the second quarter ended June 30, 2012 were $3.0 million, as compared to $3.5 million for the same period in 2011. Despite an increase in revenues from our personal defense operation of $155,000, or 13%, and our wholesale security monitoring operation of $73,000, or 7%, overall revenues declined largely as a result of the absence of $388,000 of sales from IVS, our former high-end digital and machine vision camera operation. IVS was sold in October 2011. Our electronic surveillance division also experienced a reduction in sales of $347,000 due to several factors, including the impact on sales of increased competition, direct sales by Asian manufacturers, the loss of a large customer, a reduction in spending by many of our customers due to the poor economy, and a decision by management to focus on consumer direct home and small business product sales versus high-end professional market products.

Loss from continuing operations for the second quarter of 2012 was approximately $(728,000), or $(0.01) per share, compared to a loss from continuing operations of $(1.0) million, or $(0.07) per share, in the second quarter of 2011. Despite the previously noted reduction of revenues, the decrease in operating loss from continuing operations was attributable to several factors, including: a slight improvement in gross profit margins with the reduction in sales from IVS which provided a significantly lower gross profit margin; a decrease in selling, general, and administrative expenses of approximately $387,000, or 19%; and a decrease in net interest expense of approximately $39,000.

Discontinued operations is comprised of the Company’s car wash operations. The results for these operations are shown as discontinued operations for financial reporting purposes. These operations generated a loss of approximately $(52,000), or $(0.00) per share, for the three months ended June 30, 2012 and income of $26,000, or $0.00 per share, for the same period in 2011.

Net loss for the three months ended June 30, 2012 was approximately $(780,000), or $(0.01) per share, compared to a net loss of approximately $(1.0) million, or $(0.07) per share, for the three months ended June 30, 2011.

Financial Results, Six Months Ended June 30, 2012 and 2011

Total revenues for the six months ended June 30, 2012 were $6.4 million, as compared to $7.1 million for the same period in 2011. Despite a significant increase in revenues in our personal defense operation of $706,000, or 31%, and an increase in revenues within our wholesale monitoring operation of $330,000, or 18%, with the March 2011 acquisition of The Command Center, Inc., (“TCCI”), overall revenues declined largely as a result of the absence of $903,000 of sales of IVS, our former high-end digital and machine vision camera operation. IVS was sold in October 2011. Our electronic surveillance division also experienced a reduction in sales of $802,000 due to several factors as noted above.

Loss from continuing operations for the six months ended June 30, 2012 was approximately $(1.2) million, or $(0.02) per share, compared to a loss from continuing operations of $(2.2) million, or $(0.14) per share, for the same period in 2011. Despite the previously noted reduction of revenues, the decrease in operating loss from continuing operations was attributable to several factors, including management’s focus on improving gross profit margins from 35% in the six months ended June 30, 2011 to 38% in the same period of 2012 through enhanced pricing, reduced costs of products, and the reduction in sales from IVS which provided a significantly lower gross profit margin; a decrease in selling, general, and administrative expenses of approximately $908,000, or 21%; and a decrease in net interest expense of approximately $104,000.

Discontinued operations is comprised of the Company’s car wash operations. The results for these operations are shown as discontinued operations for financial reporting purposes. These operations generated a loss of approximately $(72,000), or $(0.00) per share, for the six months ended June 30, 2012 and a loss of $(34,000), or $(0.00) per share, for the same period in 2011.

Net loss for the six months ended June 30, 2012 was approximately $(1.3) million, or $(0.02) per share, compared to a net loss of approximately $(2.3) million, or $(0.14) per share, for the six months ended June 30, 2011.

The Company’s net book value was $16.2 million, or $0.28 per share, at June 30, 2012. Mace had $19.9 million in total assets, including $7.7 million of cash and short-term investments at June 30, 2012.

Conference Call

Mace will conduct a conference call on Friday, September 7, 2012 at 10:00 AM EDT, 7:00 AM PDT. The participant conference call number is (877) 719-8065, conference ID: 25552325. There will also be access to a digital recording of the teleconference by calling (800) 585-8367 and entering the conference ID: 25552325. This will be available from two hours following the teleconference until October 7, 2012.

About Mace

Mace Security International, Inc. (OTC PINK: MACE) is a manufacturer of personal defense and electronic surveillance products marketed under the famous brand name Mace®, and the owner and operator of a wholesale central monitoring station. Mace’s web site is www.mace.com.

Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this press release, 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 Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, including but not limited to economic conditions, dependence on management, our ability to compete with competitors, dilution to shareholders, and limited capital resources. A discussion of factors that could materially adversely affect the Company’s financial performance and cause actual results for future periods to differ materially from the statements expressed within this press release, and management's opinions, projections, forecasts, estimates and expectations are contained under the heading “Risk Factors” in Mace’s SEC filings, including its previously filed registration statements and periodic reports on Form 10-K and Form 10-Q.
 
Mace Security International, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share information)
(Unaudited)
   
Three Months Ended June 30,
  2012     2011  
 
Revenues $ 2,960 $ 3,466
Cost of revenues 1,899 2,254
   
 
Gross profit 1,061 1,212
Selling, general, and administrative expenses 1,631 2,018
Depreciation and amortization 112 134
   
Operating loss (682 ) (940 )
 
Interest expense, net (47 ) (86 )
Other income   1     -  
Loss from continuing operations before income taxes (728 )

(1,026
)
 
Income tax expense   -     (10 )
 
Loss from continuing operations (728 )

(1,036
)
 
(Loss) income from discontinued operations, net of tax   (52 )   26  
 
Net loss $ (780 ) $

(1,010
)
 
Per share of common stock (basic and diluted):
Loss from continuing operations $ (0.01 ) $ (0.07 )
Loss from discontinued operations   -     -  
Net loss $ (0.01 ) $ (0.07 )
 
Weighted average shares outstanding:
Basic and Diluted 58,946,441 15,735,725
 
 
Mace Security International, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share information)
(Unaudited)
   
Six Months Ended June 30,
  2012     2011  
 
Revenues $ 6,393 $ 7,062
Cost of revenues 3,984 4,591
   
 
Gross Profit 2,409 2,471
Selling, general, and administrative expenses 3,322 4,230
Depreciation and amortization 226 254
   
Operating loss (1,139 ) (2,013 )
 
Interest expense, net (99 ) (203 )
Other income   2     -  
Loss from continuing operations before income taxes (1,236 ) (2,216 )
 
Income tax expense   (5 )   (20 )
 
Loss from continuing operations (1,241 ) (2,236 )
 
Loss from discontinued operations, net of tax   (72 )   (34 )
 
Net loss $ (1,313 ) $ (2,270 )
 
Per share of common stock (basic and diluted):
Loss from continuing operations $ (0.02 ) $ (0.14 )
Loss from discontinued operations   -     -  
Net loss $ (0.02 ) $ (0.14 )
 
Weighted average shares outstanding:
Basic and Diluted 58,946,441 15,735,725
 
 
Mace Security International, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
   
 
June 30, December 31,
2012 2011
(unaudited)
ASSETS
 
Current Assets:
Cash and cash equivalents $ 5,677 $ 7,871
Short-term investments 2,009 -
Accounts receivable, net 1,381 1,684
Inventories, net 1,972 2,401
Other current assets 1,850 2,087
Assets held for sale   393   2,469
Total current assets   13,282   16,512
 
Property and equipment, net 1,300 1,379
 
Goodwill 2,805 2,805
 
Other intangible assets, net 1,830 1,887
 
Other assets   718   735
Total assets $ 19,935 $ 23,318
 
LIABILITIES AND EQUITY
 
Current Liabilities:
Current portion of long-term debt and capital lease obligations $ 75 $ 957
Accounts payable and accrued expenses 2,344 3,442
Other current liabilities 115 383
Liabilities related to assets held for sale   -   566
Total current liabilities   2,534   5,348
 
Long-term debt and capital lease obligations, net of current portion 923 33
Other liabilities 235 380
 
Stockholders' equity   16,243   17,557
Total liabilities and stockholder's equity $ 19,935 $ 23,318
 

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