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Mace® Reports Consolidated Financial Statements and Report of Independent Certified Public Accountants, December 31, 2013 and 2012

Mace Security International Inc., (OTCPINK: MACE) today announced audited financial results for the fourth quarter and year ended December 31, 2013 and unaudited results for the first quarter ended March 31, 2014. Fourth quarter and year end audited results were delayed due to the Company’s decision to save significant audit fees by having the audit commence in mid March.

Financial Results, Fourth Quarter Ended December 31, 2013 and 2012

Net revenues for the fourth quarter of 2013 totaled $2,099, as compared to prior year fourth quarter revenues of $2,146, a decrease of approximately $47 or 2.2%. The decrease is mainly attributed to a $40 decrease in shipments of TG Guard product.

Gross profit for the fourth quarter totaled $714 compared to $802, a decrease of $88 or 11%. The decrease in gross profit can be attributed to the decrease in sales, one time severance costs of manufacturing and warehouse personnel, and higher fourth quarter labor incurred with the overlap of manufacturing and distribution labor during the transition from Bennington, VT to Cleveland, OH.

Selling, general, and administrative expenses for the fourth quarter ended December 31, 2013 and 2012 were $1,902 and $1,779, respectfully. The $123 or 6.9% increase is mainly attributed to $449 in one-time non-recurring charges in 2013.

Loss from continuing operations for the fourth quarter ended December 31, 2013 was $1,311, as compared to a loss from continuing operations of $1,240 in the fourth quarter of 2012. The $71 or 5.7% increased loss is mainly attributed to the decrease in gross profits and increase in selling, general and administrative expenses as mentioned above, offset by a $126 decrease in depreciation expense.

Net income for the quarter ended December 31, 2013 was $613, as compared to a net loss of $1,506 for the same period last year. The $2,119 improvement is mainly attributed to a gain on the sale of the Mace Central Station of $2,340.

"In 2013, we continued our cost cutting efforts, which began in 2012, by further consolidating operations and reducing staff. Our Corporate Headquarters, manufacturing, and distribution operations are now under one roof; reducing costs and positioning the company for growth. We sold the Mace Central Station business in December 2013, eliminating negative cash flow and providing The Company with cash to continue our efforts to grow the Mace® Brand. Given our current strong cash position, our belief in the exceptional value of the Mace® Brand and our commitment to enhance shareholder value, we feel it is an appropriate time to consider a variety of strategic alternatives,” said John J. McCann, President and CEO of Mace.

Financial Results, Year Ended December 31, 2013 and 2012

Net revenues for the year ended December 31, 2013 totaled $8,018, as compared to prior year net revenues of $8,690, a decrease of $672 or 7.7%. The decrease in net revenues is primarily attributed to a $663 decrease in Surveillance Product net revenues.

Gross profit for the years ended December 31, 2013 and 2012 was $3,087 and $3,482, respectfully. The $395 or 11.3% decrease in gross profit is mainly attributed to the decrease in sales, and one-time expenses for severance and other move related expenses.

Selling, general and administrative expenses for the years ended December 31, 2013 and 2012 totaled $6,336 and $6,127, respectfully, an increase of $209 or 3.4%. Both years included significant one-time expenses for severance and relocation.

Loss from continuing operations for the year ended December 31, 2013 was $3,581, as compared to a loss from continuing operations of $3,170 in 2012. The $411 or 13% increased loss is mainly attributed to the decrease in gross profits on lower net revenues and increased selling, general and administrative expenses as mentioned above, offset by a $129 decrease in depreciation expense.

Net loss for the year ended December 31, 2013 was $2,021, as compared to a net loss of $4,023 for the same period last year. The $2,002 improvement is mainly attributed to a gain on the sale of the Mace Central Station business, included in the $1,560 income from discontinued operations compared to an $853 loss from discontinued operations for the year ending December 31, 2012.

“With all the challenges facing the company during the year, we were still able to achieve a lot with more to achieve. We as a management team feel good about the future prospects of the company as we continue to position Mace® as the number one brand in safety and security,” said John J. McCann, President and CEO of Mace.

Financial Results, First Quarter Ended March 31, 2014 and 2013

Net revenues for the first quarter of 2014 totaled $1,682, as compared to prior year first quarter revenues of $2,192, a decrease of $510 or 23.3%. The decrease is mainly attributed to year on year timing of sales to some of our larger customers sold through our Consumer and Sporting channels, and the overall impact the harsh winter had at retail nationwide.

Gross profit for the first quarter totaled $563 compared to $981, a decrease of $418 or 42.6%. The decrease in gross profit can be attributed to the decrease in sales, unfavorable overhead variances due to timing of expenditures, and lower production.

Selling, general, and administrative expenses for the first quarter ended March 31, 2014 and 2013 were $1,405 and $1,460, respectfully. The $55 or 3.8% decrease is mainly attributed to a $186 decrease in legal, professional and audit fees offset by a $73 increase in non-cash stock option expense and increased advertising expenditures.

Loss from continuing operations for the first quarter ended March 31, 2014 was $791, as compared to a loss from continuing operations of $564 in the first quarter of 2013. The $227 or 40.2% increased loss is mainly attributed to the decrease in gross profits mentioned above, offset by lower selling, general and administrative expenses and a $104 increase in other income.

Net loss for the quarter ended March 31, 2014 was $794, as compared to a net loss of $649 for the same period last year.

“We as an organization are disappointed in the slow start to 2014, but we remain steadfast in moving the company closer to profitability. The weather throughout the nation forced our retail partners to lose many shopping days which had a negative impact on our sales but we did experience some positives in the first quarter– the Hardware and Tactical division performed well. We also recorded sales in the quarter to several school systems through our secure my campus initiative- www.securemycampus.com” – stated John McCann President and CEO of Mace Security International.

Conference Call

Mace will conduct a conference call on Wednesday, April 30, 2014 at 1:00 PM EDT, 10:00 AM PDT to discuss its 2013 fourth quarter, 2013 year end, and 2014 first quarter financial results, provide an update on the business, and respond to questions. Please submit any investor question(s) via email to [email protected] by 3:00 PM EDT on Tuesday, April 29th, 2014. All appropriate questions, timely submitted, will be read and answered during the call. Please include your name and company with your questions. The participant conference call number is (877) 719-8065, conference ID: 36962659. Presentation materials for the conference call will be available Wednesday, April 30, on Mace’s website under Investor Relations, Shareholder Transcripts & Presentations. There will also be access to a digital recording of the teleconference by calling (855) 859-2056 and entering the conference ID: 36962659. This will be available from two hours following the teleconference until May 30, 2014.

About Mace® Brand

Mace Security International, Inc. (OTCPINK: MACE) is the manufacturer of personal defense products and markets such products and electronic surveillance products under the well known brand name Mace®. www.mace.com.

Contact Information: Mace Security International, Inc., 4400 Carnegie Avenue, Cleveland, OH 44139. Email to: [email protected] . John J. McCann, President and Chief Executive Officer, 440-424-5322.

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.

   
Mace Security International, Inc.
Condensed Consolidated Balance Sheets

(Amounts in thousands)

 
December 31, December 31,
ASSETS 2013 2012
Current assets: (Audited) (Audited)
Cash and cash equivalents $ 4,923 $ 2,065
Restricted cash 127 440
Short-term investments 2,597 2,397
Accounts receivable, net 1,732 1,288
Inventories, net 1,578 2,121
Prepaid expenses and other current assets 1,419 1,242
Current assets of business held for sale   -   290
Total current assets 12,376 9,843
 
Plant and equipment, net 565 370
Other intangible assets, net 685 685
Other assets 1,148 1,101
Non-current assets of businesses held for sale   -   4,589
Total assets $ 14,774 $ 16,588
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Current portion of long-term debt and capital lease obligations $ - $ 26
Accounts payable 392 753
Income taxes payable 62 62
Deferred revenue - 15
Accrued expenses and other current liabilities   1,086   981
Total current liabilities 1,540 1,837
 

Long-term debt and capital lease obligations, net of current portion

1,106

981

Other liabilities 230 225
Total stockholders’ equity   11,898   13,545
 
Total liabilities and stockholders’ equity $ 14,774 $ 16,588
 
   
Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended December 31, 2013 and 2012
(Audited)

(Amounts in thousands)

 
2013 2012
 
Net revenues $ 2,099 $ 2,146
Cost of revenues   1,385     1,344  
 
Gross profit 714 802
 
Selling, general, and administrative expenses 1,902 1,779
Depreciation and amortization   42     168  
 
Operating loss (1,230 ) (1,145 )
 
Interest expense, net (36 ) (66 )
Other expense   (44 )   (15 )
 
Loss from continuing operations before income tax provision (1,310 ) (1,226 )
 
Income tax provision   1     14  
 
Loss from continuing operations (1,311 ) (1,240 )
 
Income (loss) from discontinued operations, net of tax   1,924     (266 )
 
Net income (loss) $ 613   $ (1,506 )
 
   
Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Twelve Months Ended December 31, 2013 and 2012
(Audited)

(Amounts in thousands)

 
2013 2012
 
Net revenues $ 8,018 $ 8,690
Cost of revenues   4,931     5,208  
 
Gross profit 3,087 3,482
 
Selling, general, and administrative expenses 6,336 6,127
Depreciation and amortization   161     291  
 
Operating loss (3,410 ) (2,936 )
 
Interest expense, net (161 ) (197 )
Other expense   (9 )   (18 )
 
Loss from continuing operations before income tax provision (3,580 ) (3,151 )
 
Income tax provision   1     19  
 
Loss from continuing operations (3,581 ) (3,170 )
 
Income (loss) from discontinued operations, net of tax   1,560     (853 )
 
Net loss $ (2,021 ) $ (4,023 )
 
   
Mace Security International, Inc.
Condensed Consolidated Balance Sheets

(Amounts in thousands)

 
March 31, December 31,

       ASSETS

2014 2013
Current assets: (Unaudited) (Audited)
Cash and cash equivalents $ 1,038 $ 4,923
Restricted cash 275 127
Short-term investments 5,875 2,597
Accounts receivable, net 1,211 1,732
Inventories, net 1,823 1,578
Prepaid expenses and other current assets   1,316   1,419
Total current assets 11,538 12,376
 
Plant and equipment, net 606 565
Other intangible assets, net 685 685
Other assets   984   1,148
Total assets $ 13,813 $ 14,774
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 397 $ 392
Income taxes payable 61 62
Accrued expenses and other current liabilities   863   1,086
Total current liabilities 1,321 1,540
 

Long-term debt and capital lease obligations, net of current portion

1,138

1,106

Other liabilities 231 230
Total stockholders’ equity   11,123   11,898
 
Total liabilities and stockholders’ equity $ 13,813 $ 14,774
 
   
Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2014 and 2013
(Unaudited)

(Amounts in thousands)

 
2014 2013
 
Net revenues $ 1,682 $ 2,192
Cost of revenues   1,119     1,211  
 
Gross profit 563 981
 
Selling, general, and administrative expenses 1,405 1,460
Depreciation and amortization   44     38  
 
Operating loss (886 ) (517 )
 
Interest expense, net (8 ) (47 )
Other income   104     -  
 
Loss from continuing operations before income tax provision (790 ) (564 )
 
Income tax provision   1     -  
 
Loss from continuing operations (791 ) (564 )
 
Loss from discontinued operations, net of tax   (3 )   (85 )
 
Net loss $ (794 ) $ (649 )

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