UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

xS ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~THE~~For ~~SECURITIES~~the ~~EXCHANGE~~fiscal ~~ACT~~year OFended ~~1934~~December 31, 2011

~~For~~¨ ~~the~~TRANSITION ~~fiscal~~REPORT ~~year~~PURSUANT ~~ended~~TO ~~December~~SECTION ~~31,~~13 ~~2010~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transaction period from __ to __

Commission File No. 0-22810

MACE SECURITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other Jurisdiction of Incorporation or Organization) 03-0311630 (I.R.S. Employer Identification No.)

Delaware	03-0311630
(State or other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

240 Gibraltar Rd., Suite 220, Horsham, PA 19044

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: (267) 317-4009

Securities Registered Pursuant to Section 12(b) of the Act: None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, par value $0.01 per share

Name of each exchange on which registered: OTCQB

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ £ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ £ No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ x No ¨

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The aggregate market value of the voting stock held by non-affiliates of registrant on June 30, ~~2010~~2011 was approximately $83,~~350~~209,000. Such aggregate market value was computed by reference to the closing price of the common stock as reported on the ~~Nasdaq~~OTCQB ~~Global Market~~ on June 30, ~~2010~~2011. For purposes of determining this amount only, the registrant has defined affiliates as including (a) the executive officers and directors of the Registrant on June 30, ~~2010~~2011 and (b) each stockholder that had informed registrant that it was the beneficial owner of 10% or more of the outstanding common stock of Registrant on June 30, ~~2010~~2011.

The number of shares of Common Stock, par value $0.01 per share, of registrant outstanding as of March 2122, ~~2011~~2012 was 1558,~~735~~946,~~725~~441.

Mace Security International, Inc. and Subsidiaries

Form 10-K

Year Ended December 31, ~~2010~~2011

Contents

		Page	~~Page~~
PART I
Item 1.	Business	~~Business~~3	3
Item 1A.	Risk Factors	~~Risk Factors~~9	9
Item 1B.	Unresolved Staff Comments	~~Unresolved Staff Comments~~14	14
Item 2.	Properties	~~Properties~~14	14
Item 3.	Legal Proceedings	~~Legal Proceedings~~15	15
Item 4.	Mine Safety Disclosures	~~(Removed and Reserved)~~15	16
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	~~Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~16	16
Item 6.	Selected Financial Data	~~Selected Financial Data~~17	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~17	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks	~~Quantitative and Qualitative Disclosures About Market Risks~~29	32
Item 8.	Financial Statements and Supplementary Data	~~Financial Statements and Supplementary Data~~29	32
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~30	32
Item 9A.	Controls and Procedures	~~Controls and Procedures~~30	32
Item 9B.	Other Information	~~Other Information~~30	33
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	~~Directors, Executive Officers and Corporate Governance~~30	33
Item 11.	Executive Compensation	~~Executive Compensation~~34	36
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~39	41
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~Certain Relationships and Related Transactions, and Director Independence~~41	44
Item 14.	Principal Accounting Fees and Services	~~Principal Accounting Fees and Services~~43	45
PART IV
Item 15.	Exhibits, Financial Statement Schedules	~~Exhibits, Financial Statement Schedules~~43	45

PART I

ITEM 1. BUSINESS

GENERAL

Mace Security International, Inc. (the “Company” or “Mace”) was incorporated in Delaware on September 1, 1993. Our operations are currently conducted through one segment, our Security operation.

Our Security Segment designs, manufactures, assembles, markets and sells a wide range of security products. The products include less-than-lethal Mace® defense sprays, ~~intrusion fencing, access control,~~ security cameras, monitors and security digital recorders. The Security Segment also owns and operates an Underwriters Laboratories (“UL”) listed wholesale security monitoring center that monitors video and security alarms for approximately ~~400~~490 security dealer clients with over 4170,~~000~~500 ~~end-user~~monitored accounts. The Security Segment’s electronic surveillance products and components are purchased from Asian and European manufacturers. Many of our products are designed to our specifications. ~~Other~~ ~~products in our Security Segment are monitors, high-end digital and machine vision cameras and professional imaging components.~~ We sell the electronic surveillance products and components primarily to installing dealers, distributors, system integrators and end users. The main marketing channels for our products are industry shows, trade publications, catalogs, the internet, telephone orders, distributors and mass merchants.

We sold our Digital Media Marketing Segment in November 2010. The Digital Media Marketing Segment sold consumer products on third party internet promotional sites and promotional sites which we owned. We also sold third party products on the promotional sites that we owned. The concepts for the products we sold were developed internally and were purchased from third party manufacturers. We used a proprietary software marketing platform to sell the products on the internet promotional sites.

We formerly had a Car Wash Segment. At its largest, the Car Wash Segment consisted of fifty-seven car washes and five truck washes. As of December 31, ~~2010~~2011, we owned three ~~four~~ remaining car washes, ~~two~~one of which ~~were~~was under ~~separate~~an ~~Agreements~~Agreement for Sale. The sale of ~~one~~the ~~of our~~ car ~~washes~~wash ~~under~~pursuant anto ~~Agreement of Sale at December 31, 2010,~~ the ~~Lubbock,~~agreement ~~Texas~~of sale ~~car wash,~~ was completed on ~~March~~February 829, ~~2011~~2012. ~~The sale of the other car wash under an Agreement of Sale is anticipated to close in the second quarter of 2011.~~

Our former Car Wash and Digital Media Marketing Segments have been classified as discontinued operations in the statements of operations and the statements of cash flows with the related assets and liabilities classified as assets and related liabilities held for sale in the December 31, ~~2010~~2011 balance sheet. The car wash operations and the digital media marketing operations are no longer reported as Segments of the Company.

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as filed with the United States Securities and Exchange Commission (the “SEC”), can be accessed through the Company’s website at www.mace.com.

LINES OF BUSINESS

Security Segment. ~~The~~ The Company’s currently operates in one business segment, the Security Segment, which consists of three operating or reporting units: Mace Personal Defense, Inc., which sells aconsumer ~~wide~~safety ~~variety~~and ofpersonal ~~security~~defense products~~. The~~; Mace Security ~~Segment~~Products, ~~also~~Inc., ~~owns~~which sells electronic surveillance equipment and ~~operates~~products; aand ULMace ~~listed~~CSSS, ~~monitoring~~Inc. ~~center~~(“Mace ~~that~~CS”), ~~monitors~~which ~~video~~provides ~~and~~wholesale security monitoring ~~alarms~~services. ~~for~~The ~~approximately~~Company ~~400~~entered the wholesale security ~~dealer~~monitoring ~~clients~~business ~~having~~with ~~over~~its 41acquisition of Central Station Security Systems,~~000~~ ~~end-user~~Inc. ~~accounts~~(“CSSS”) on April 30, 2009. See Note 3. Business Acquisitions and Divestitures. The Company’s Security Segment sells a wide variety of security products. Among the products the Security Segment offers are:

· ~~electronic~~defense ~~surveillance products~~sprays, including ~~analog,~~our ~~digital~~less-than-lethal ~~and~~Mace® IPdefense ~~cameras, digital video recorders, security monitors, and matrix switching equipment for video distribution~~sprays;

· electronic ~~security~~surveillance products, including ~~intrusion~~analog, ~~fencing~~digital and IP cameras, ~~access~~digital ~~control~~video recorders, security monitors, and ~~GPS~~matrix ~~tracking~~switching ~~devices~~equipment for video distribution;

· ~~advanced~~personal ~~imaging~~defense ~~devices~~items, ~~used~~including bypersonal ~~manufacturers~~alarms, ~~including~~home ~~robotic~~security ~~camera~~alarms, ~~dome systems~~whistles, ~~system~~door ~~controls~~jammers, and ~~consoles~~window ~~for~~and ~~system~~door ~~assembly~~lock ~~markets~~alarms;

· ~~defense~~TG ~~sprays~~Guard®, ~~including~~an ~~our~~electronically ~~less-than-lethal~~controlled ~~Mace®~~tear ~~defense~~gas ~~sprays;~~system used in prisons, embassies, and safe rooms.

·Our ~~personal~~electronic ~~defense~~surveillance ~~items,~~products ~~including~~and system ~~personal~~component ~~alarms,~~products ~~home~~are ~~security~~selected ~~alarms,~~and ~~whistles~~sourced by our operating and marketing staff. The products are manufactured by overseas original equipment manufacturers (“OEM”). Our electronic surveillance products and system components are warehoused and shipped from our leased facility in Carrollton, ~~door~~Texas. ~~jammers~~Our defense sprays are manufactured by the Company in our leased Bennington, Vermont ~~window~~facility. Our defense sprays and ~~door~~certain ~~lock~~non-aerosol ~~alarms~~security products are packaged, warehoused, and ~~the~~shipped ~~KinderGard~~from our Bennington, Vermont facility. Our TG Guard® ~~product~~products ~~line~~are ofalso ~~childproof~~assembled ~~security~~in ~~locks;~~our Bennington, Vermont facility.

~~· security literature for the domestic and foreign financial community, state-of-the-art training videos, and crisis response materials; and~~3

·Our TGelectronic ~~Guard®,~~surveillance anproducts ~~electronically~~and components ~~controlled~~are ~~tear~~marketed ~~gas~~through several sales channels, such as dealers, system ~~used~~integrators, incatalogs, ~~prisons~~the internet, ~~embassies~~mass merchants, and by telephone orders. We also sell our products through distributors, exhibitions at national trade shows, and ~~safe~~advertisements in ~~rooms~~trade publications.

~~Our~~Discontinued ~~electronic~~Operations. The ~~surveillance~~Company, ~~products~~through ~~and~~its ~~system~~subsidiaries, ~~component~~owned ~~products~~three ~~are~~car ~~selected~~washes ~~and~~as ~~sourced~~of byDecember ~~our operating and marketing staff in Fort Lauderdale~~31, ~~Florida~~2011. ~~The~~ ~~products~~One ~~are~~of ~~manufactured~~the byremaining ~~overseas~~car ~~original~~washes ~~equipment~~at ~~manufacturers~~December 31, ~~(“OEM”). Our~~2011 ~~electronic~~was ~~surveillance~~sold ~~products~~on ~~and~~February ~~system~~29, ~~components~~2012. ~~are~~As ~~warehoused~~of ~~and~~March ~~shipped~~22, ~~from~~2012, ~~our~~the ~~facility~~Company inoperates ~~Farmers~~two ~~Branch~~car washes, ~~Texas. Our~~both ~~defense~~of ~~sprays~~which are ~~manufactured~~located by in the ~~Company in our Bennington~~Dallas, ~~Vermont~~Texas ~~facility~~area. ~~The~~ ~~KinderGard®~~One ~~product~~of ~~line~~the iscar ~~manufactured~~washes byis aowned ~~third~~and ~~party~~the ~~utilizing~~other ~~molds~~is ~~primarily~~leased. ~~owned~~These bycar ~~the~~washes ~~Company. Our~~operate ~~defense~~as ~~sprays~~full ~~and~~service ~~the~~car ~~KinderGard®~~washes which ~~product~~provide ~~line~~exterior ~~are~~washing ~~packaged,~~and ~~warehoused~~drying, ~~and~~vacuuming ~~shipped~~of ~~from~~the ~~our~~interior ~~Bennington,~~of ~~Vermont~~the ~~facility.~~vehicle, ~~Our~~dusting TGof ~~Guard®~~dashboards ~~products~~and ~~are~~door ~~also~~panels, ~~assembled~~and cleaning inof ~~our~~all ~~Bennington,~~windows ~~Vermont~~and ~~facility~~glass.

3In the fourth quarter of 2011, the Company completed the sale of certain assets and liabilities related to its Industrial Vision Source (“IVS”) division which sold high-end digital and machine vision camera and professional imaging components. With the sale of IVS completed, the Company exited the business of selling high-end digital and machine vision camera and components.

~~Our~~The ~~electronic~~Digital ~~surveillance~~Media ~~products~~Marketing Segment was an e-commerce and ~~components~~online ~~are~~marketing ~~marketed~~business which had two business divisions: (1) e-commerce, the sale of products to consumers through ~~several~~promotional ~~sales~~websites ~~channels~~and (2) online marketing, ~~such~~which aspublished ~~dealers~~promotional websites that offered our products and third party products for sale. This segment used proprietary technologies and software to sell products on the internet. Linkstar, ~~system~~the e-commerce ~~integrators~~division, ~~catalogs~~was sold on November 22, ~~the~~2010. ~~internet~~Promopath, ~~mass~~which ~~merchants~~was not sold but was shut down in conjunction with the sale of Linkstar, ~~and~~was byan ~~telephone~~online ~~orders~~marketer that located customers or leads for third party clients who hired Promopath. We ~~also~~The ~~sell~~advertising clients ~~our~~who ~~products~~hired ~~through~~Promopath ~~distributors~~paid us based on a set fee per customer, ~~exhibitions~~prospect ator ~~national~~lead ~~trade~~acquired. ~~shows~~The online media marketing industry refers to the arrangement of acquiring customers, ~~and~~prospects ~~advertisements~~or inleads ~~trade~~for ~~publications~~advertisers on a fee basis per customer as the cost-per-acquisition (“CPA”) model.

~~Discontinued~~BUSINESS Operations. The Company, through its subsidiaries, owned four car washes as of December 31, 2010. As of March 9, 2011, the Company owns three car washes, all of which are located in Texas. The remaining car washes are all full service car washes, which provide exterior washing and drying, vacuuming of the interior of the vehicle, dusting of dashboards and door panels, and cleaning of all windows and glass. One of the remaining car washes is subject to an Agreement of Sale and the sale is anticipated to close in the second quarter of 2011.STRATEGIES

Internal Growth. The ~~Digital~~Security ~~Media Marketing~~ Segment ~~was~~designs, anmanufacturers, ~~e-commerce~~markets and ~~online~~sells ~~marketing~~a ~~business~~wide ~~which~~range ~~had~~of ~~two~~security ~~business~~products. ~~divisions:~~For ~~(1) e-commerce,~~ the ~~sale~~year ofended ~~products~~December 31, to2011, ~~consumers~~revenues ~~through~~from ~~promotional~~the ~~websites~~Security ~~and~~Segment ~~(2)~~were ~~online~~$13.9 ~~marketing,~~million. ~~which~~The ~~published~~Company ~~promotional~~began ~~websites~~selling ~~that~~electronic ~~offered~~surveillance ~~our~~ products and system ~~third~~components ~~party~~in ~~products~~August ~~for sale~~2002. ~~This~~Growth ~~segment~~has ~~used~~been ~~proprietary~~principally ~~technologies~~achieved ~~and~~by ~~software~~acquiring tobusinesses ~~sell~~and ~~products~~through oninternal ~~the~~development of ~~internet. Linkstar~~new products, ~~the~~as ~~e-commerce~~well ~~division,~~as ~~was~~expanded ~~sold~~advertising onand ~~November~~marketing ~~22, 2010~~efforts. ~~Promopath~~During 2011, ~~which~~we ~~was~~continued ~~not~~to ~~sold~~update ~~but~~our ~~was~~video ~~shut~~line ~~down,~~of ~~was~~product offerings. anIn ~~online~~the ~~marketer~~second ~~that~~quarter ~~located~~of ~~customers~~2009, orthe ~~leads~~Security ~~for~~Segment ~~third~~acquired ~~party~~a ~~clients~~UL ~~who~~listed ~~hired~~wholesale ~~Promopath~~security monitoring center. The ~~advertising~~monitoring center ~~clients~~currently ~~who~~monitors ~~hired~~video ~~Promopath~~and ~~paid~~security usalarms ~~based~~for onapproximately a490 ~~set~~security ~~fee~~dealer ~~per~~clients ~~customer,~~which ~~prospect~~have orover ~~lead~~70,500 ~~acquired~~monitored accounts. The ~~online~~wholesale ~~media~~alarm ~~marketing~~monitoring ~~industry~~company ~~refers~~offers toour dealers an easy alternative for the ~~arrangement~~monitoring of ~~acquiring~~the ~~customers,~~video ~~prospects~~output of orour ~~leads~~products ~~for~~that ~~advertisers~~the ondealers ainstall. ~~fee~~By ~~basis~~offering ~~per~~video ~~customer~~monitoring, aswe hope to be able to increase the ~~cost-per-acquisition~~loyalty ~~(“CPA”)~~and ~~model~~number of our dealers.

~~BUSINESS~~The ~~STRATEGIES~~Company sells its defense sprays in the consumer market under its Mace® brand. Defense sprays are sold in the law enforcement market under the brand name of TakeDown®. The Mace Trademark Corporation, a subsidiary of the Company, manages the correct use of the Mace® trademark by the Company and Armor Holdings, Inc. (See also Trademarks and Patents, page 6). Armor Holdings, Inc has the exclusive right to use the Mace® brand when selling aerosol defense sprays to the law enforcement market, pursuant to an agreement dated July 1998. We believe that the total domestic consumer defense spray market is approximately $18 million to $20 million in annual revenues and that the domestic law enforcement market is approximately $5 million in annual revenues. Our Pepper Gel®, developed in 2004, has increased sales in Law Enforcement and Consumer markets.

~~Internal~~Throughout ~~Growth. The~~2010 ~~Security~~and ~~Segment designs~~2011, ~~manufacturers,~~we ~~markets~~continued to ~~and~~implement ~~sells~~cost asavings ~~wide~~measures, ~~range~~including ofa ~~security~~reduction ~~products. For~~in ~~the~~employees ~~year~~throughout ~~ended~~the ~~December 31~~Company, ~~2010,~~and ~~revenues~~further ~~from~~consolidation ~~the~~of our Security Segment’s ~~were $18.4 million. The Company began selling~~ electronic surveillance ~~products~~equipment ~~and~~operations ~~system components~~ in ~~August~~Florida ~~2002. Revenues from electronic surveillance products~~ and ~~system components have grown from $373,000 of revenue in 2002 to $9~~Texas.9 ~~million~~As inpart ~~2010. Growth has been principally achieved by acquiring businesses and through internal development~~ of ~~new~~this ~~products~~reorganization, aswe consolidated ~~well~~our assecurity ~~expanded~~division’s ~~advertising~~surveillance ~~and~~equipment ~~marketing~~warehousing ~~efforts. During~~operations ~~2009,~~into ~~the~~leased ~~Security~~warehouse ~~Segment~~space ~~added intrusion fencing and access control and~~ in ~~2010 introduced an updated video line to its product offerings. In the second quarter of 2009~~Carrollton, Texas ~~the Security Segment acquired a UL listed monitoring center. The monitoring center monitors video~~ and ~~security~~sold ~~alarms~~our ~~for~~Farmers ~~approximately 400 security dealer clients which have over 41~~Branch,~~000~~ ~~end-user~~Texas ~~accounts~~warehouse. ~~The~~Our ~~wholesale~~electronic ~~alarm~~surveillance ~~monitoring~~equipment ~~company~~security ~~offers~~sales ~~our~~and ~~dealers~~administrative anpersonnel operate ~~easy~~in ~~alternative~~Fort ~~for the monitoring of the video output of our products that the dealers install. By offering video monitoring~~Lauderdale, weFlorida ~~hope~~in toa beleased ~~able to increase the loyalty and number of our dealers~~facility.

The Company sells its defense sprays in the consumer market under its Mace® brand. Defense sprays are sold in the law enforcement market under the brand name of TakeDown®. The Mace Trademark Corporation, a subsidiary of the Company, manages the correct use of the Mace® trademark by the Company and Armor Holdings, Inc. (See also Trademarks and Patents, page 6). Armor Holdings, Inc has the exclusive right to use the Mace® brand when selling aerosol defense sprays to the law enforcement market, pursuant to an agreement dated July 1998. We believe that the total domestic consumer defense spray market is approximately $18 million to $20 million in annual revenues and that the domestic law enforcement market is approximately $5 million in annual revenues. Our newly developed Pepper Gel® has increased sales in Law Enforcement and Consumer markets. Pepper Gel® has a patent pending in the U.S. Patent and Trademark Office and in the European Union under the Patent Co-operation Treaty (PCT).4

~~During~~Operating Agreements ~~the~~and ~~six~~Acquisitions. ~~months~~On ~~ended~~April ~~December~~30, 312009, ~~2008~~the ~~and~~Company ~~throughout~~completed ~~2009~~the ~~and~~purchase ~~2010~~of all the outstanding common stock of Central Station Security Systems, weInc. ~~continued~~(“CSSS”) tofrom ~~implement~~CSSS’s ~~cost~~shareholders. ~~savings~~Total ~~measures~~consideration for such purchase was approximately $3.7 million, ~~including~~which aconsisted ~~reduction~~of $1.7 million in ~~employees~~cash ~~throughout~~at ~~the~~closing, ~~Company~~$884,000 ~~and~~paid ~~completed~~subsequent ato ~~consolidation~~closing with potential additional payments of ~~our~~up ~~Security~~to ~~Segment’s~~$400,000 ~~electronic~~upon ~~surveillance~~the ~~equipment~~settlement ~~operations~~of certain contingencies as set forth in ~~Fort~~the ~~Lauderdale,~~Stock ~~Florida~~Purchase Agreement. ~~and~~In ~~Farmers~~May ~~Branch~~2010, ~~Texas. As~~the ~~part~~Company ofadjusted ~~this~~a ~~reorganization~~contingent purchase price payout originally recorded at $276,000 weafter ~~consolidated~~determining that ~~our~~acquired ~~security~~recurring ~~division~~monthly revenue (“RMR”) calculated at the acquisition’s ~~surveillance~~one ~~equipment~~year ~~warehouse~~anniversary ~~operations~~date ~~into~~was less ~~our~~than ~~Farmers~~the ~~Branch,~~required ~~Texas~~amount ~~facility~~as ~~and~~defined ~~sold~~in ~~our~~the ~~Fort~~Stock ~~Lauderdale~~Purchase Agreement. Accordingly, ~~Florida~~the ~~warehouse.~~Company ~~Our~~recorded ~~professional~~a ~~security~~reduction ~~sales~~in selling, general and administrative ~~team~~(“ ~~has~~SG&A”) ~~remained~~expenses induring ~~Fort~~the ~~Lauderdale~~second quarter ended June 30, ~~Florida~~2010 inof $276,000 and reduced a ~~rented~~portion ~~facility. Our~~of ~~security~~the ~~catalog~~previously ~~sales~~recorded ~~team~~contingent ~~was~~liability ~~relocated~~at tothe ~~Florida~~date inof the ~~rented~~acquisition ~~facility~~of CSSS and the assumption of approximately $590,000 of liabilities. The ~~goals~~remaining contingent purchase price liability of ~~the~~$400,000 ~~reorganization~~is ~~were~~recorded toat ~~align~~a ~~our~~discounted ~~electronic~~value ~~surveillance~~as ~~equipment~~a ~~sales~~non-current liability ~~teams~~at toDecember ~~achieve~~31, ~~sales~~2011. ~~growth~~CSSS, ~~gain~~which ~~efficiencies~~was byrenamed ~~sharing~~Mace ~~redundant~~CS, ~~functions~~is reported within ~~our~~the Company’s Security Segment, and is a national wholesale security ~~operations~~monitoring company located in Anaheim, ~~such~~California. asMace ~~warehousing~~CS’s primary assets are accounts receivable, equipment, customer ~~service~~contracts, and ~~accounting~~its ~~services,~~business ~~and~~methods. ~~streamline~~The ~~our~~acquisition ~~organization~~of ~~structure~~Mace ~~and~~CS ~~management~~enables ~~team~~the ~~for~~Company ~~improved~~to ~~long~~expand the marketing of its security products through cross-~~term~~marketing ~~growth~~of the Company’s surveillance equipment products to Mace CS’s dealer base as well as offering monitoring services to the Company’s current customers.

4Additionally, on March 31, 2011, the Company completed the purchase of all of the outstanding common stock of The Command Center, Inc. (“TCCI”) from TCCI’s stockholders. Total consideration was approximately $1.36 million, consisting of approximately $1.23 million in cash and the assumption of approximately $127,000 of liabilities. TCCI’s operations have been combined with the operations of Mace CS in Anaheim, California. TCCI was formerly located in Corona, California. TCCI has approximately 70 security dealer clients and approximately 22,500 monitored accounts. Mace CS, combined with TCCI, monitors over 70,500 monitored accounts through approximately 490 security dealer clients. TCCI’s primary assets were accounts receivable, equipment, customer contracts, and its business methods. The acquisition of TCCI provides growth to the Company’s wholesale security monitoring services division and expands the ability to market its security products through cross-marketing of the Company’s surveillance equipment products to Mace CS’s dealer base as well as offering the Company’s current customers monitoring services.

~~Operating~~We ~~Agreements~~regularly ~~and~~evaluate ~~Acquisitions. On~~potential ~~April 30, 2009, the Company completed the purchase of all the outstanding common stock of Central Station Security Systems, Inc. (“CSSS”) from CSSS’s shareholders. Total consideration~~ acquisitions for ~~such purchase was approximately $3.7 million, which consisted of $1.7 million in cash at closing, $224,000 paid subsequent to closing, potential additional payments of up to $1.2 million upon~~ the settlement of certain contingencies as set forth in the Stock Purchase Agreement, $951,000 of which is recorded in accrued expenses and other current liabilities at December 31, 2010, and the assumption of approximately $590,000 of liabilities. CSSS, which was renamed Mace CS, is reported within the Company’s Security Segment, ~~and~~to isdetermine aif ~~national~~they ~~wholesale~~provide ~~monitoring~~an ~~company~~advantageous ~~located in Anaheim, California, with approximately 400 security dealer clients~~opportunity. ~~Mace~~In CSevaluating ~~owns~~potential ~~and operates a UL-listed monitoring center that currently services over 41~~acquisitions,~~000~~ ~~end-user~~we accounts. Mace CS’s primary assets are accounts receivable, equipment, customer contracts, and its business methods. The acquisition of Mace CS enables the Company to expand the marketing of its security products through cross-marketing of the Company’s surveillance equipment products to Mace CS’s dealer base as well as offering monitoring services to the Company’s current customers. The purchase price was allocated as followsconsider: ~~approximately~~ (i) ~~$19,000~~our ~~for~~ cash; ~~(ii)~~position ~~$112,000 for accounts receivable; (iii) $63,000 for prepaid expenses~~ and ~~other assets; (iv) $443,000 for fixed assets and capital leased assets; (v)~~ the ~~assumption~~availability of ~~$590,000~~financing ofat ~~liabilities,~~favorable ~~and~~terms; (viii) the ~~remainder,~~potential or $3.04 million, allocated to goodwill and other intangible assets. Within the $3.04 million of acquired intangible assets, $1.98 million was assigned to goodwill, which is not subject to amortization expense. The amount assigned to goodwill was deemed appropriate based on several factors, including: (i) multiples paid by market participants for ~~businesses~~operating incost ~~the security monitoring business~~reductions; (~~ii) levels of Mace CS’s current and future projected cash flows; (~~iii) ~~the Company’s strategic business plan, which included cross-~~ marketing ~~the~~advantages ~~Company’s~~by ~~surveillance~~adding ~~equipment~~new products toor ~~Mace CS’s dealer base as well as offering the Company’s current customers monitoring~~ services, ~~thus~~to ~~potentially increasing~~ the ~~value~~Mace® ofbrand ~~its existing business segment~~name; ~~and~~ (iv) ~~the~~market ~~Company’s~~penetration ~~plan to substitute for the cash flows~~ of ~~the~~existing ~~Car~~products or ~~Wash~~services; ~~Segment, which the Company is exiting. The remaining intangible assets were assigned to customer contracts~~ and ~~relationships~~(v) ~~for~~other ~~$940,000,~~relevant ~~trade name for $70,000, and a non-compete agreement for $50,000~~factors. ~~Customer relationships, trade name and the non-compete agreement were assigned a life of fifteen, three, and five years, respectively.~~

WeAs ~~regularly~~consideration ~~evaluate~~for ~~potential~~ acquisitions, ~~for~~we ~~the~~may use ~~Security~~combinations ~~Segment~~of tocommon ~~determine~~stock, ifwarrants, ~~they~~cash, ~~provide~~and anindebtedness. ~~advantageous~~The ~~opportunity. In~~consideration ~~evaluating~~for ~~potential~~each ~~acquisitions,~~future weacquisition ~~consider:~~will ~~(i)~~vary ~~our~~on a ~~cash~~case-by-case ~~position~~basis ~~and~~depending ~~the~~on ~~availability~~our offinancial ~~financing~~interests, atthe ~~favorable~~historic ~~terms;~~operating ~~(ii)~~results of the ~~potential~~acquisition ~~for~~target, ~~operating~~and ~~cost~~the ~~reductions;~~growth potential ~~(iii)~~of ~~marketing~~the ~~advantages~~business byto ~~adding~~be ~~new~~acquired. ~~products~~We orexpect ~~services~~ to finance the ~~Mace®~~cash ~~brand~~portion ~~name;~~of ~~(iv)~~future ~~market~~acquisitions ~~penetration~~through ofour ~~existing~~cash ~~products~~reserves, funds orprovided ~~services;~~by operations, loans, and ~~(v)~~the ~~other~~proceeds ~~relevant~~of ~~factors~~possible future equity sales.

AsDiscontinued consideration for acquisitions, we may use combinations of common stock, warrants, cash, and indebtedness. The consideration for each future acquisition will vary on a case-by-case basis depending on our financial interests, the historic operating results of the acquisition target, and the growth potential of the business to be acquired. We expect to finance the cash portion of future acquisitions through our cash reserves, funds provided by operations, loans, and the proceeds of possible future equity sales.Operations

~~Discontinued~~We ~~Operations~~acquired our car and truck washes between May 1999 and December 2000 and had reported their results as the Company’s Car Wash Segment. From December 2005 to March, 2012, we sold all but two car washes.

We ~~acquired~~currently ~~our~~operate two car ~~and truck~~ washes ~~between~~as of ~~May~~March ~~1999~~22, ~~and~~2012, ~~December~~both ~~2000~~located ~~and~~in ~~had reported their results as the Company’s Car Wash Segment~~Texas. ~~From~~ ~~December~~One ~~2005~~car towash ~~March~~is 9,owned ~~2011,~~and wethe ~~sold~~other ~~all~~is ~~but three car washes~~leased.

WeThe ~~currently~~Digital ~~own~~Media ~~three~~Marketing ~~car~~Segment ~~washes~~Operations were asdiscontinued ofand ~~March~~sold ~~9, 2011, all located~~ in ~~Texas~~2010. One of these remaining car washes is subject to an Agreement of Sale. We are considering offers for our car washes and are evaluating offers based on whether the purchase price would be sufficient to retire all debt related to the car washes and provide sufficient capital for the growth of our Security Segment.

MARKETING

Our electronic surveillance products and components are marketed through several sales channels, such as ~~catalogs,~~ the internet, mass merchants and telephone orders. Our other products are sold through direct marketing, the use of distributors as well as exhibitions at national trade shows and advertisements in trade publications.

Our Mace® self defense sprays are available for purchase at mass merchant/department stores, gun shops, sporting goods stores, hardware stores, auto stores, convenience stores, drug stores and through the internet. In the law enforcement market, our defense sprays, including Pepper Gel®, are sold through direct marketing, the use of independent sales representatives and distributors as well as at exhibitions at national trade shows and advertisements in trade publications.

We have a diverse customer base within the Security Segment with no single customer accounting for 10% or more of our consolidated revenues for the fiscal year ended December 31, 2010 or 2009. We do not believe that the loss of any single Security Segment customer would have a material adverse effect on our business or results of operations.5

5We have a diverse customer base within the Security Segment with no single customer accounting for 10% or more of our consolidated revenues for the fiscal year ended December 31, 2011 or 2010. We do not believe that the loss of any single Security Segment customer would have a material adverse effect on our business or results of operations.

PRODUCTION AND SUPPLIES

Our electronic surveillance products and system component requirements are established at our Fort Lauderdale, Florida facility and are manufactured principally in Korea, China, Taiwan, Israel and United Kingdom by OEMs. The electronic surveillance products and components meeting our requirements are labeled, packaged, and shipped ready for sale to our ~~warehouse in Farmers Branch~~Carrollton, Texas warehouse.

Substantially all of the manufacturing processes for our defense sprays are performed at our leased Bennington, Vermont facility. Defense spray products are manufactured on anseveral aerosol filling ~~machine~~machines. Most products are packaged in sealed, tamper-resistant "clamshells." ~~KinderGard ®, a product line of childproof locks, and~~ TG Guard®, an electronic tear gas security system, ~~are~~is primarily manufactured by unrelated companies and ~~are~~is assembled and packaged on-site at our Vermont facility. There are numerous potential suppliers of the components and parts required in the production process. We have developed strong long-term relationships with many of our suppliers, including the following: Moldamatic, ~~Inc.~~LLC, Amber International, Inc., and ~~Springfield~~SPC ~~Printing,~~Marcom ~~Inc~~Studio. In addition, we purchase for resale a variety of products produced by others, including whistles and window and door alarms.

COMPETITION

Our video systems and security products components face competition from many larger ~~companies~~company brands such as ~~Sony~~Speco, ~~Panasonic~~EverFocus, ~~Security~~Bosch, ~~Equipment~~Samsung, ~~Corp.~~Q-See, and others. A number of these competitors have significantly greater financial, marketing, and other resources than us. Additionally, our foreign manufacturers of electronic surveillance products also sell directly to our customer base. We also compete with numerous well-established, smaller, local or regional firms. Increased competition from these companies could have an adverse effect on our electronic surveillance products sales.

Our security monitoring company is in a highly competitive industry. Monitoring accounts are difficult to obtain, as there is a natural resistance by dealers to move their end user accounts. There are many national and local monitoring companies that compete aggressively on price.

There continues to be a number of companies marketing personal defense sprays to civilian consumers, such as Armor Holdings, Inc. We continue to offer defense spray products that we believe distinguish themselves through brand name recognition and superior product features and formulations. This segment experienced increased sales in aerosols in each of the ~~three~~two years ending December 31, ~~2010,~~2011 ~~2009~~ and ~~2008~~2010. We attribute the increased sales to improved marketing, including improvements in our website, and development of new products such as ~~our~~ Mace Pepper Gun®, ~~our Mace~~ Pepper Gel®, ~~our~~ Hot Pink Mace Defense Spray™® and ~~our~~ Night Defender ~~Pepper Gel Defense Spray™~~®.

TRADEMARKS AND PATENTS

We began marketing products in 1993 under the Mace® brand name and related trademarks pursuant to an exclusive license for sales of defense sprays to the consumer market in the continental United States and a non-exclusive license for sales to the consumer market worldwide. We subsequently purchased outright the Mace® brand name and related trademarks (Pepper Mace®, Chemical Mace®, Mace . . . Just in Case®™, CS MaceÔ and Magnum MaceÔ). In conjunction with this purchase, we acquired a non-exclusive worldwide license to promote a patented pepper spray formula in both the consumer and law enforcement markets. We ~~have patents pending for our new less-than-lethal gel products in the United States and also in several foreign jurisdictions.~~ We have recently obtained trademarks for ~~Mace Pepper Gel® and have filed trademark applications for~~ Hot Pink Mace Defense Spray™,® ~~Night~~and Night Defender Pepper ~~Gel Defense Spray™ and the Sportsman Scent System~~®. Additionally, we have been issued a patent on the locking mechanism for our Mark VI defense spray unit and have ~~recently~~ received a patent internationally for a non-irritant gel formulation.

In July 1998, in connection with the sale of our Law Enforcement Division, we transferred our Mace® brand trademark and all related trademarks, and a patent (No. 5,348,193) to our wholly-owned subsidiary, Mace Trademark Corp. The purchaser of our Law Enforcement division received a 99-year license to use the Mace® brand, certain other such trademarks and the patents in the law enforcement market only.

We also have various other patents and trademarks for the devices we sell, including trademarks and/or patents for the Big Jammer® door brace, Screecher®, Peppergard®, Mace (Mexico)®, ~~Viper~~Pen Defender®, ~~defense~~Mace ~~spray~~Keyguard Self Defense Spray®, KinderGard®, TG Guard®, Take Down®, Muzzle®, Pepper Mace®, MSI and Design®, Mace® Community (European Union) Trademark, Pepper Gel®, and Take Down Extreme®. We also license the pending patent for our new Pepper Gun product.

Additional trademarks used in our Security Segment are: ~~SecurityandMore.com®, Industrial Vision Source®,~~ Easy Watch®, ~~Focus Vision 4 Observation System (Stylized)~~SmartChoice®, ~~SmartChoice~~MaceLock®, ~~MaceLockÔ, MaceTrac™~~ and ~~MaceVision™~~MaceTrac®.

~~The Company has expanded the Mace® trademark to cover new electronic surveillance products.~~6

6The Company has expanded the Mace® trademark to cover new electronic surveillance products.

We believe these Mace-related trademarks provide us with a competitive advantage.

GOVERNMENT REGULATION/ENVIRONMENTAL COMPLIANCE

The distribution, sale, ownership, and use of consumer defense sprays are legal in some form in all fifty states and the District of Columbia. However, in some states, sales to minors are prohibited and in several states (MA, MI, NY and WI, for example) sales are highly regulated. Among the typical regulations are the following, which list is not all inclusive: Massachusetts requires both the seller and possessor to be licensed; Michigan does not allow the sale of combinations of tear gas and pepper sprays; and New York requires sellers to be licensed firearms dealers or pharmacists. There are often restrictions on sizes, labeling and packaging that may vary from state to state. We have been able to sell our defense sprays consistent with the requirements of state laws. We believe we are in material compliance with all federal, state, and local laws that affect the sale and marketing of our defense spray business. There can be no assurance, however, that broader or more severe restrictions will not be enacted that would have an adverse impact on the sale of defense sprays. Additionally, certain states require licenses for the sale of our security equipment. We have obtained all required licenses.

During ~~January~~ 2008, the ~~United~~Company ~~States Environmental Protection Agency (the “EPA”)~~ conducted a ~~site~~remediation of ~~investigation~~certain athazardous ~~the~~wastes ~~Company’s~~at its Bennington, Vermont ~~location~~facility ~~and~~under ~~the~~an ~~building~~Administrative ~~within~~Consent ~~which~~Order ~~the~~entered ~~facility~~into isbetween ~~located. The~~ the Company ~~leases 33~~,~~476~~ ~~square feet of~~ the ~~building~~United ~~from~~States ~~Vermont~~Environmental ~~Mill~~Protection ~~Properties,~~Agency ~~Inc.~~ (~~“Vermont~~the ~~Mill~~“EPA”)~~. The site investigation was focused on whether hazardous substances were being improperly stored. After the site investigation~~, ~~the EPA notified the Company~~ and ~~the building owner,~~ Benmont Mill Properties, Inc. (“"Benmont”"), ~~that remediation of certain hazardous wastes was required. Vermont Mill and Benmont are both owned and controlled by Jon Goodrich,~~ the ~~President~~owner of the ~~Company’s defense spray division~~facility. The EPA, ~~the~~accepted ~~Company, and~~ the building owner entered into an Administrative Consent Order under which the hazardous materials and waste were remediated. All remediation required by the Administrative Consent Order was completed within the time allowed by the EPA and a final report ~~regarding~~of the remediation ~~was submitted to the EPA~~ in ~~October 2008, as required by the Administrative Consent Order. On September 29,~~ 2009~~, the EPA accepted the final report~~. On ~~February~~April 238, 2010, the ~~EPA issued the~~ Company anpaid ~~invoice for $240,096 representing~~ the ~~total of the~~ EPA's ~~oversight costs that the Company and Benmont were obligated to pay under the Administrative Consent Order. On April 8~~$216,086 ~~2010,~~as ~~the~~an ~~Company negotiated a reduction in the~~ oversight cost reimbursement ~~and, on April 13, 2010, the Company paid a negotiated amount of $216,086 to the EPA~~. During the quarter ended September 30, 2010, Benmont reimbursed the Company 15% of the amount paid to the EPA, or $32,413. A ~~total~~Total ~~estimated~~costs ~~cost~~relating to the remediation of approximately $786,000 ~~relating~~were torecorded through the ~~remediation~~quarter ended December 31, ~~which~~2009, ~~includes~~and included disposal costs of the waste materials, as well as expenses incurred to engage environmental engineers and legal counsel and reimbursement of the EPA’s costs~~, has been recorded through December 31, 2010~~.

~~The~~On November 16, 2010, the United States Attorney for the District of Vermont (the “U.S. Attorney”) conducted an investigation of the Company relating to possible violations of the Resource Conservation and Recovery Act (“RCRA”) at the Company’s Bennington, Vermont location. On November 16, 2010, the U.S. Attorney filed a one count indictment charging ~~the~~Mace ~~Company~~Security International, Inc. and Jon Goodrich with a felony of storing hazardous waste without a permit under 42 U.S.C. Section 6928(d)(2)(A) at the Company’s Bennington, Vermont location. Mr. Goodrich iswas the President of Mace Personal Defense, Inc., the Company's defense spray division located in Bennington, Vermont. ~~The~~Mr. Goodrich is also the owner of Benmont, the owner of the Bennington, Vermont facility and the owner of Vermont Mills Properties, Inc., the entity that rents the Bennington, Vermont facility to the Company. ~~has~~The ~~resolved~~Company resolved the indictment against the Company, through a Plea Agreement entered into between the Company's subsidiary, Mace Personal Defense, Inc., and the U.S. Attorney. The Plea Agreement was ~~made~~accepted ~~under~~by ~~Fed.~~the R.Federal ~~Crim.~~District P.Court ~~11(c)(1)(C),~~for ~~and~~Vermont ~~provides~~on inMay ~~part~~26, ~~for~~2011. ~~(i)~~ Mace Personal Defense, Inc., topled ~~plead~~ guilty toof one count of violating 42 U.S.C. § 6928(d)(2)(A) (Storage of Hazardous Waste Without a Permit); and ~~(ii)~~was ~~Mace~~fined ~~Personal Defense, Inc. to pay a fine of~~ $100,000 (the "Fine"). ~~and~~The ~~a court assessment of $400, the~~ Fine towas befully paid ~~$34,000~~during on2011. ~~sentencing,~~In ~~and two additional installments of $33~~addition,~~000~~ ~~each, at six months and twelve months from January 4, 2011; (iii)~~ the Company toincurred ~~guarantee~~legal ~~the payment~~ expenses of ~~the Fine; (iv) the United States to dismiss the indictment against the Company at time of sentencing of Mace Personal Defense~~$61,300 ~~Inc.;~~ and ~~(v) the United States not to prosecute Mace Personal Defense~~$82,300 Inc. (excluding the guilty plea) or the Company for any criminal offenses known to the United States Attorney's Office of Vermont as of the date of signing of the Plea Agreement committed by the Company or Mace Personal Defense, Inc. in the ~~District~~years ofended ~~Vermont~~December ~~relative to the storage~~31, ~~shipment,~~2011 ~~handling~~and ~~or disposal of hazardous waste~~2010, ~~including any associated record keeping or reporting offenses. The Plea Agreement is not final until it is accepted by the Court. A hearing date for sentencing has been scheduled for May 26~~respectively, ~~2011. In addition to the Company incurring $83,000 in legal expenses in 2010~~ relating to this matter~~, the Company has recorded an accrual of $100,000 at December 31, 2010 as a result of its agreement to pay a $100,000 Fine as part of the Plea Agreement~~.

~~Car~~The ~~Washes~~indictment ~~Held~~charging ~~for~~Jon ~~Sale. We~~Goodrich ~~are~~was resolved ~~subject~~with toa ~~various~~guilty ~~local,~~plea ~~state~~accepted by the Federal District Court in January, ~~and~~2012. ~~federal~~Mr. ~~laws~~Goodrich ~~regulating~~pled ~~the~~guilty ~~discharge~~to a felony of ~~pollutants~~storing hazardous ~~into~~waste ~~the~~without ~~environment. We~~a ~~believe~~permit ~~that~~under ~~our~~42 ~~operations~~U.S.C. ~~are~~§ in6928(d)(2)(A) ~~compliance~~at the Company’s Bennington, inVermont ~~all~~location ~~material~~and ~~respects~~agreed to a fine of $100,000. ~~with~~Mr. ~~applicable~~Goodrich ~~environmental~~is ~~laws~~scheduled ~~and~~to ~~regulations~~be sentenced on May 2, 2012. ~~Three~~The ~~major~~Company ~~areas~~has ofto ~~regulation~~date ~~facing~~advanced usMr. ~~are~~Goodrich the ~~disposal~~cost of ~~lubrication~~his ~~oil~~defense atunder ~~our~~the ~~oil~~provisions ~~change~~of ~~centers,~~Article 6 of the ~~compliance~~Company's ~~with~~Bylaws. ~~all~~The ~~underground~~advancements ~~storage~~through ~~tank~~December ~~laws~~31, 2011 were $83,178, which is included in ~~connection~~the ~~with~~legal ~~our~~expense ~~gasoline~~amounts ~~sales,~~disclosed ~~and~~in the ~~proper~~above ~~recycling~~paragraph. ~~and~~The ~~disposal~~Company ofand ~~water~~Mr. ~~used~~Goodrich inhave ~~our~~entered into ~~car~~an ~~washes. We~~Agreement ~~use~~("Indemnity ~~approved~~Agreement") ~~waste-oil~~on ~~haulers~~January to12, ~~remove~~2012 ~~our~~providing ~~oil~~that ~~and~~the ~~lubricant~~Company ~~waste. Our~~would ~~underground~~not ~~storage~~pay ~~tanks~~any ~~are~~portion inof a ~~compliance~~fine ~~with~~imposed ~~all~~on ~~legal~~Mr. ~~requirements~~Goodrich. WeThe ~~recycle~~Indemnity ~~our~~Agreement ~~waste~~also ~~water~~set ~~and,~~a ~~where~~maximum welimit ~~have~~to ~~proper~~future ~~permits,~~advancements itand isindemnity ~~disposed~~claims of $25,000 ~~into~~with ~~sewage~~regard ~~drains~~to any costs incurred by Mr. ~~Approximately~~ ~~70%~~Goodrich ofafter ~~the~~November ~~water~~9, ~~used~~2011. inIn ~~the~~exchange ~~car~~for ~~wash~~Mr. isGoodrich ~~recycled~~limiting atfuture indemnity ~~sites~~claims ~~where~~and agreeing to a ~~built~~five year non-incompete ~~reclaim~~agreement ~~system~~with ~~exists~~the Company, the Company agreed not to seek recovery of any advancements it paid.

7Car Washes Held for Sale. We are subject to various local, state, and federal laws regulating the discharge of pollutants into the environment. We believe that our operations are in compliance, in all material respects, with applicable environmental laws and regulations. Three major areas of regulation facing us are disposal of lubrication oil at our oil change centers, the compliance with all underground storage tank laws in connection with our gasoline sales, and the proper recycling and disposal of water used in our car washes. We use approved waste-oil haulers to remove our oil and lubricant waste. Our underground storage tanks are in compliance with all legal requirements. We recycle our waste water and, where we have proper permits, it is disposed of into sewage drains. Approximately 70% of the water used in the car wash is recycled at sites where a built-in reclaim system exists.

~~RESEARCH AND DEVELOPMENT~~7

~~The~~RESEARCH ~~staff~~AND in our Fort Lauderdale, Florida facility determines the requirements of various electronic surveillance products and components in conjunction with OEM manufacturers. We also have an on-site laboratory at our Vermont facility where research and development is conducted to maintain our reputation in the defense spray industry. We are continually reviewing ideas and potential licensing arrangements to expand our product lines. Our research and development expense was not material in 2010 or 2009.DEVELOPMENT

~~INSURANCE~~The staff in our Fort Lauderdale, Florida facility determines the requirements of various electronic surveillance products and components in conjunction with OEM manufacturers. We also have an on-site laboratory at our Vermont facility where research and development is conducted to maintain our reputation in the defense spray industry. We are continually reviewing ideas and potential licensing arrangements to expand our product lines. Our research and development expense was not material in 2011 or 2010.

WeINSURANCE maintain various insurance policies for our assets and operations. These policies provide property insurance including business interruption protection for each location. We maintain commercial general liability coverage in the amount of $1 million per occurrence and $2 million in the aggregate with an umbrella policy which provides coverage of up to $25 million. We also maintain workers’ compensation policies in every state in which we operate. Commencing July 2002, as a result of increasing costs of the Company’s insurance program, including auto, general liability, and workers’ compensation coverage, we are insured through participation in a captive insurance program with other unrelated companies. Workers’ compensation coverage for non-car wash employees was transferred to an occurrence-based policy in March 2009 through May 2010. The Company maintains excess coverage through occurrence-based policies. With respect to our auto, general liability, and certain workers’ compensation policies, we are required to set aside an actuarially determined amount of cash in a restricted “loss fund” account for the payment of claims under the policies. We expect to fund these accounts annually as required by the captive insurance company. Should funds deposited exceed claims incurred and paid, unused deposited funds are returned to us with interest upon the captive insurance company deciding a distribution is appropriate, but no earlier than the fifth anniversary of the policy year-end. The captive insurance program is further secured by a letter of credit in the amount of $303,886 at December 31, 2010. The Company records a monthly expense for losses up to the reinsurance limit per claim based on the Company’s tracking of claims and the insurance company’s reporting of amounts paid on claims plus an estimate of reserves for possible future losses on reported claims and claims incurred but not reported. There can be no assurance that our insurance will provide sufficient coverage in the event a claim is made against us, or that we will be able to maintain in place such insurance at reasonable prices. An uninsured or under insured claim against us of sufficient magnitude could have a material adverse effect on our business and results of operations.

UWe maintain various insurance policies for our assets and operations.S These policies provide property insurance including business interruption protection for each location. We ~~BASED~~maintain ~~BUSINESS~~commercial general liability coverage in the amount of $1 million per occurrence and $2 million in the aggregate with an umbrella policy which provides coverage of up to $25 million. We also maintain workers’ compensation policies in every state in which we operate. Commencing July 2002, as a result of increasing costs of the Company’s insurance program, including auto, general liability, and workers’ compensation coverage, we are insured through participation in a captive insurance program with other unrelated companies. Workers’ compensation coverage for non-car wash employees was transferred to an occurrence-based policy in March 2009 through May 2010. The Company maintains excess coverage through occurrence-based policies. With respect to our auto, general liability, and certain workers’ compensation policies, we are required to set aside an actuarially determined amount of cash in a restricted “loss fund” account for the payment of claims under the policies. We expect to fund these accounts annually as required by the captive insurance company. Should funds deposited exceed claims incurred and paid, unused deposited funds are returned to us with interest upon the captive insurance company deciding a distribution is appropriate, but no earlier than the fifth anniversary of the policy year-end. The captive insurance program is further secured by a letter of credit in the amount of $145,712 at December 31, 2011. The Company records a monthly expense for losses up to the reinsurance limit per claim based on the Company’s tracking of claims and the insurance company’s reporting of amounts paid on claims plus an estimate of reserves for possible future losses on reported claims and claims incurred but not reported. There can be no assurance that our insurance will provide sufficient coverage in the event a claim is made against us, or that we will be able to maintain in place such insurance at reasonable prices. An uninsured or under insured claim against us of sufficient magnitude could have a material adverse effect on our business and results of operations.

~~Our electronic surveillance products are manufactured in Korea, China, Taiwan, United Kingdom and Israel~~U. ~~All of our property and equipment is located in the United States~~S. WeBASED do not believe we are currently subject to any material risks associated with any foreign operations. Approximately 11.2%, (or $2.1 million) and 3.6%, (or $676,000) of the 2010 and 2009 revenues, respectively, from our ongoing Security Segment were derived from customers outside of the United States.BUSINESS

~~EMPLOYEES~~Our electronic surveillance products are manufactured in Korea, China, Taiwan, United Kingdom and Israel. All of our property and equipment is located in the United States. We do not believe we are currently subject to any material risks associated with any foreign operations. Approximately 4.7%, (or $654,000) and 11.2%, (or $2.1 million) of the 2011 and 2010 revenues, respectively, from our ongoing Security Segment were derived from customers outside of the United States.

As of March 21, 2011, we had approximately 197 employees, of which approximately 88 were employed in our discontinued car wash business, 94 employed in the Security Segment, 13 in our corporate accounting, finance, marketing and information technology departments, and two in executive management. None of our employees are covered by a collective bargaining agreement.EMPLOYEES

~~AVAILABLE~~As ~~INFORMATION~~of March 22, 2012, we had approximately 164 employees, of which approximately 52 were employed in our discontinued car wash business, 99 employed in the Security Segment, 11 in our corporate accounting, finance, marketing, administrative and information technology departments, and two in executive management. None of our employees are covered by a collective bargaining agreement.

~~For~~AVAILABLE more information about the Company, please visit our website at www.mace.com. Our electronic filings with the SEC (including all annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our website as soon as reasonably practicable after we electronically file them with or furnish them to the SEC.INFORMATION

For more information about the Company, please visit our website at www.mace.com. Our electronic filings with the SEC (including all annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our website as soon as reasonably practicable after we electronically file them with or furnish them to the SEC.

~~ITEM 1A. RISK FACTORS~~8

~~Risks~~ITEM ~~Related~~1A. toRISK ~~Our Business and Common Stock~~FACTORS

IfRisks weRelated ~~are unable~~ to ~~finance our business, our stock price could decline and we could go out of business.~~ Our net losses for 2009 and 2010 were $11.0 million and $18.1 million, respectively. Our net loss for 2010 of $18.1 million included the $4.6 million Arbitration Award to Mr. Paolino and $7.4 million of non-cash impairment charges largely related to our discontinued Digital Media Marketing Segment. We have been funding operating losses by divesting of our car washes and other non-core assets through third party sales. Our capital requirements include working capital for daily operations, including purchasing inventory and equipment. We had cash and cash equivalents of $2.6 million as of December 31, 2010. We estimate that our cash balances will not be sufficient to pay our cash operating requirements through December 31, 2011 unless we are successful in increasing our cash position through pending asset sales or otherwise raising additional capital. The Company plans to raise working capital through a rights offering approved by the Company’s Board of Directors, See Note 2. Liquidity. The current economic climate has made it more difficult to sell our remaining car washes as it is more difficult for buyers to finance the purchase price. A car wash was sold on March 8, 2011 and the sale of one of the three remaining car washes is pending, See Note 4. Business ~~Acquisitions~~ and Divestitures and Note 21. Subsequent Events, for a description of the car wash sale and pending sales. As of March 21, 2011, we had three remaining car washes for sale which we estimate will generate proceeds, net of related mortgages, in the range of approximately $1.7 million to $2.0 million. Our Texas warehouse is also listed for sale. We estimate the sale of the Texas warehouse will generate proceeds, net of related mortgage debt, of approximately $1.0 to $1.2 million. To the extent that these pending sales do not occur during the second or third quarter of 2011 and to the extent we lack cash to meet our future capital needs, we will need to raise additional funds through bank borrowings and additional equity and/or debt financings, which may result in significant increases in leverage and interest expense and/or substantial dilution of our outstanding equity. If we are unable to raise additional capital, we may be forced to substantially reduce the scale of our operations and curtail our business plan.Common Stock

~~Our~~If ~~common~~we ~~stock~~are isunable ~~not~~to ~~listed~~finance onour abusiness, our stock ~~exchange~~price ~~and~~could isdecline ~~traded~~and onwe ~~the~~could ~~OTCQB~~go ~~system~~out of ~~OTC~~business. ~~Market,~~Our ~~Inc.~~net ~~The~~losses ~~Company’s~~for ~~common~~the ~~stock~~years ~~was~~ended ~~transferred~~December ~~from~~31, ~~the~~2010 and ~~NASDAQ~~2011 ~~Global~~were ~~Market~~$18.1 tomillion ~~the~~and ~~OTCQB™~~$5.1 ~~Marketplace~~million, onrespectively. ~~September~~Our ~~30,~~net loss for 2010 of $18. ~~The~~1 ~~OTCQB™~~million ~~market~~included isa ~~operated~~$4.6 bymillion ~~OTC~~Arbitration Award ~~Market,~~to ~~Inc~~Mr. Paolino and is$7.4 ~~only~~million ~~available~~of ~~to Over~~non-~~the-Counter~~cash ~~(“OTC”)~~impairment ~~securities~~charges ~~that~~largely ~~are~~related ~~registered~~to ~~and~~our ~~fully~~discontinued ~~reporting~~Digital ~~with~~Media ~~the~~Marketing Segment. ~~SEC~~We orhave ~~that~~been ~~report~~funding tooperating ~~banking~~losses orby ~~insurance~~divesting ~~regulators. The~~our ~~Company’s~~car ~~common~~washes ~~stock~~and ~~was~~other ~~delisted~~non-core ~~from~~assets ~~the~~through ~~NASDAQ~~third ~~Global~~party ~~Market~~sales and asby athe ~~result~~sale of ~~the~~common ~~Company~~stock ~~not~~through ~~regaining~~a ~~compliance~~Rights ~~with~~Offering and the ~~minimum~~private $1sale of common stock.00 ~~closing~~Our ~~bid~~capital ~~price~~requirements ~~rule~~include working ofcapital ~~the~~for ~~NASDAQ. OTC~~daily ~~listed~~operations, ~~stocks~~including ~~involve~~purchasing ~~risks~~inventory inand ~~addition~~equipment. toWe ~~those~~had ~~associated~~cash ~~with~~and ~~stocks~~cash ~~traded~~equivalents onof a$7.9 ~~national~~million as ~~exchange~~of December 31, 2011. ~~Many~~We ~~OTC~~estimate ~~stocks~~that ~~trade~~our ~~less~~cash ~~frequently~~balances ~~and~~will inbe ~~smaller~~sufficient ~~volumes~~to ~~than~~pay ~~stocks~~our ~~listed~~cash onoperating ~~national~~requirements ~~exchanges. Also~~through December 31, 2012. See the ~~values~~Liquidity section of ~~OTC~~our ~~stocks~~Management’s ~~may~~Discussion beand ~~more~~Analysis ~~volatile~~of ~~than~~Financial ~~stocks~~Condition ~~listed~~and onNote 19. aRelated ~~national~~Party ~~exchange~~Transactions.

~~Many~~We ofmay ~~our~~not ~~customers’~~be ~~spending~~able ~~for~~to ~~our~~raise ~~products~~capital from ~~and~~asset ~~services~~sales. ~~continued~~The tocurrent beeconomic ~~negatively~~climate ~~impacted~~has bymade ~~the~~it ~~2008~~more ~~recession,~~difficult ~~and deterioration~~to insell ~~the credit markets;~~ our ~~customers'~~assets ~~spending~~held ~~may~~for ~~not recover at the same pace as the economy recovers~~sale. ~~Our~~ ~~customers’~~As ~~reduced spending began in 2008 as a result~~ of ~~the recession~~March 22, ~~the credit crisis~~2012, ~~declining~~we ~~consumer~~estimate ~~and business confidence, increased unemployment, and other challenges~~ that ~~affected~~ the ~~domestic~~two ~~economy. Though~~remaining ~~the~~car ~~economy~~washes ~~improved~~could ~~slightly~~generate ~~in 2009 and 2010~~proceeds, ~~the~~net ~~slow improvement has not resulted in our customers increasing their spending on our products and services. Many~~ of ~~our~~related ~~customers~~mortgages, in ~~our electronic surveillance equipment business finance their purchases through cash flow from operations or~~ the ~~incurrence~~range of ~~debt. Additionally~~approximately $300,000 many of our customers in our electronic surveillance equipment and our personal defense products divisions depend on disposable personal income. The combination of a reduction of disposable personal income, a reduction in cash flow of businesses and the difficulty of businesses and individuals to ~~obtain financing has continued to result in decreased spending by our customers. During 2010, our revenues from continuing operations declined~~ $~~196~~500,000,. orSee ~~1%,~~Note ~~from our revenues from continuing operations in 2009~~3. To ~~the~~Business ~~extent~~Acquisitions ~~our~~and ~~customers do not increase their spending in 2011, the reduced revenue level could have a material adverse effect on our operations~~Divestitures. If ~~our~~There ~~revenues~~is dono ~~not~~assurance ~~recover~~that orwe ~~there~~will isbe aable ~~further~~to complete ~~deterioration in~~ the ~~economy,~~sale ~~our results~~ of ~~operations,~~our ~~financial~~remaining ~~position,~~car ~~and cash flows will be materially adversely affected~~washes.

WeMany ~~have~~of ~~reported~~our ~~net~~customers’ ~~losses~~spending for inour ~~the~~products ~~past. If~~and weservices ~~continue~~continued to ~~report~~be ~~net~~negatively ~~losses,~~impacted by the ~~price~~weak ofeconomy; our ~~common~~customers' ~~stock~~spending may ~~decline,~~not orrecover at wethe ~~could~~same gopace ~~out~~as ofthe ~~business~~economy. We ~~reported~~Our ~~net~~customers ~~losses~~reduced ~~and~~their ~~negative~~overall ~~cash~~spending ~~flow~~beginning ~~from~~in ~~operating~~2008, ~~activity~~as ~~from~~a ~~continuing~~result ~~operations~~of inthe ~~each~~recession, the ofcredit ~~the~~crisis, ~~five~~increased ~~years~~unemployment, ~~ended~~declining ~~December~~housing 31starts, ~~2010. Although~~and aother ~~portion~~challenges ofthat affected the ~~reported~~economy. ~~losses~~Though inthe domestic ~~past~~economy ~~years~~improved ~~related~~slightly toin ~~the~~2010 ~~Arbitration~~and ~~Award~~2011, tothe ~~Mr.~~slow ~~Paolino~~improvement ~~and~~has ~~related~~not ~~legal~~resulted ~~costs~~in ~~expended,~~our ~~non-cash~~customers ~~impairment~~increasing ~~charges~~their ofspending on ~~intangible~~our ~~assets~~products and ~~non-cash~~services. ~~stock-based~~Many ~~compensation~~of ~~expense,~~our wecustomers ~~may~~in ~~continue~~our toelectronic ~~report~~surveillance ~~net~~equipment ~~losses~~business ~~and~~finance ~~negative~~their purchases through cash flow infrom operations or the ~~future~~incurrence of debt. ~~Our~~ ~~net~~Additionally, ~~loss~~many ~~for~~of ~~the~~our ~~year~~customers ~~ended~~in ~~December~~our ~~2010~~electronic ~~was~~surveillance ~~$18.1~~equipment and ~~million~~our personal defense products divisions depend on disposable personal income. ~~Additionally~~ The combination of a reduction of disposable personal income, ~~accounting~~a ~~pronouncements~~reduction ~~require~~in ~~annual~~cash ~~fair~~flow ~~value~~of ~~based~~businesses ~~impairment~~and ~~tests~~the difficulty of ~~goodwill~~businesses and ~~other~~individuals ~~intangible~~to ~~assets~~obtain ~~identified~~financing ~~with~~has continued ~~indefinite~~to ~~useful~~result ~~lives~~in decreased spending by our customers. As aDuring ~~result~~2011, weour ~~may~~revenues befrom ~~required~~continuing tooperations ~~record~~declined ~~additional~~$4.5 million, ~~impairments~~or 24%, from our revenues from continuing operations in 2010. To the ~~future~~extent our customers do not increase their spending in 2012, ~~which~~the reduced revenue level could ~~materially~~have ~~reduce~~a ~~our~~material ~~earnings~~adverse ~~and~~effect ~~equity~~on our operations. If weour ~~continue~~revenues todo ~~report~~not ~~net~~recover ~~losses~~or ~~and~~there is ~~negative~~a ~~cash~~further ~~flows~~deterioration in the economy, our ~~stock~~results ~~price~~of isoperations, ~~likely~~financial toposition, and cash flows will be ~~adversely~~materially ~~impacted~~adversely affected.

9We have reported net losses in the past. If we continue to report net losses, the price of our common stock may decline. We reported net losses and negative cash flow from operating activity from continuing operations in each of the five years ended December 31, 2011. Although a portion of the reported losses in past years related to the Arbitration Award to Mr. Paolino and related legal costs expended, non-cash impairment charges of intangible assets and non-cash stock-based compensation expense, we may continue to report net losses and negative cash flow in the future. Our net loss for the years ended December 31, 2010 and 2011 were $18.1 million and $5.1 million, respectively. Additionally, accounting pronouncements require annual fair value based impairment tests of goodwill and other intangible assets identified with indefinite useful lives. As a result, we may be required to record additional impairments in the future, which could materially reduce our earnings and equity. If we continue to report net losses and negative cash flows, our stock price is likely to be adversely impacted.

We compete with many companies, some of whom are more established and better capitalized than us. We compete with a variety of companies on a worldwide basis. Some of these companies are larger and better capitalized than us. There are also few barriers tofor entry in into our markets and thus above average profit margins will likely attract additional competitors. Our competitors may develop products and services that are superior to, or have greater market acceptance than, our products and services. For example, many of our current and potential competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger customer bases than ours. These factors may allow our competitors to respond more quickly than we can to new or emerging technologies and changes in customer requirements. Our competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to offer superior products and services.

Failure or circumvention of our controls or procedures could seriously harm our business. An internal control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no system of controls can provide absolute assurance that all control issues, mistakes and instances of fraud, if any, within the Company have been or will be detected. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions. Any failure of our controls and procedures to detect error or fraud could seriously harm our business and results of operations.

IfOur wecommon ~~lose~~stock is not listed on a stock exchange and is traded on the ~~services~~OTCQB system of ~~our~~OTC ~~executive officers~~Market, ~~our~~Inc. The ~~business~~Company’s ~~may~~common ~~suffer. If~~stock wewas ~~lose~~transferred from the ~~services~~NASDAQ ofGlobal ~~one~~Market orto ~~more~~the ofOTCQB™ ~~our~~Marketplace ~~executive~~on ~~officers~~September 30, 2010. The OTCQB™ market is operated by OTC Market, Inc. and dois ~~not~~only ~~replace~~available ~~them~~to Over-the-Counter (“OTC”) securities that are registered and fully reporting with the ~~experienced~~SEC ~~personnel,~~or that ~~loss~~report ofto ~~talent~~banking ~~and~~or ~~experience~~insurance ~~will~~regulators. ~~make~~Investing ~~our~~in ~~business~~OTC ~~plan,~~- ~~which~~listed isstocks ~~dependent~~involve risks in addition to those associated with stocks traded on ~~active~~a ~~growth~~national exchange. Many OTC stocks trade less frequently and ~~management~~in smaller volumes than stocks listed on national exchanges. Also, ~~more~~the ~~difficult~~values toof ~~implement~~OTC ~~and~~stocks ~~could~~may ~~adversely~~be ~~impact~~more ~~our~~volatile ~~operations~~than stocks listed on a national exchange.

If our insurance is inadequate, we could face significant losses. We maintain various insurance coverage for our assets and operations. These coverages include property coverage including business interruption protection for each location. We maintain commercial general liability coverage in the amount of $1 million per occurrence and $2 million in the aggregate with an umbrella policy which provides coverage of up to $25 million. We also maintain workers’ compensation policies in every state in which we operate. Since July 2002, as a result of increasing costs of the Company’s insurance program, including auto, general liability, and certain of our workers’ compensation coverage, we have been insured as a participant in a captive insurance program with other unrelated businesses. Workers’ compensation coverage for non-car wash employees was temporarily transferred to an occurrence-based policy from March 2009 to May 2010. The Company maintains excess coverage through occurrence-based policies. With respect to our auto, general liability, and certain workers’ compensation policies, we are required to set aside an actuarially determined amount of cash in a restricted “loss fund” account for the payment of claims under the policies. We expect to fund these accounts annually as required by the insurance company. Should funds deposited exceed claims incurred and paid, unused deposited funds are returned to us with interest after the fifth anniversary of the policy year-end. The captive insurance program is further secured by a letter of credit from the Company in the amount of $303,886 at December 31, 2010. The Company records a monthly expense for losses up to the reinsurance limit per claim based on the Company’s tracking of claims and the insurance company’s reporting of amounts paid on claims plus an estimate of reserves for possible future losses on reported claims and claims incurred but not reported. There can be no assurance that our insurance will provide sufficient coverage in the event a claim is made against us, or that we will be able to maintain in place such insurance at reasonable prices. An uninsured or under insured claim against us of sufficient magnitude could have a material adverse effect on our business and results of operations.9

~~Our~~If ~~stock~~we ~~price~~do ~~has~~not ~~been,~~maintain ~~and~~continuity with ~~likely~~our ~~will~~executive ~~continue~~officers, toour ~~be,~~business ~~volatile~~may ~~and~~suffer. anThe ~~investment~~lack inof continuity of our ~~common~~executive ~~stock~~officers may ~~suffer~~have aan ~~decline~~adverse impact inon ~~value~~the Company. ~~The~~Additionally, if ~~market~~we ~~price~~lose the services of one or more of our ~~common~~executive ~~stock~~officers ~~has~~and indo ~~the~~not replace ~~past~~them ~~been~~with experienced personnel, ~~and~~that isloss ~~likely~~of totalent ~~continue~~and inexperience ~~the~~will ~~future~~make toour bebusiness plan, ~~volatile. That~~which ~~volatility~~is ~~depends~~dependent ~~upon~~on active ~~many~~growth ~~factors~~and management, ~~some~~more ofdifficult ~~which~~to ~~are~~implement ~~beyond~~and ~~our~~could ~~control,~~adversely ~~including:~~impact our operations.

·If ~~announcements~~our ~~regarding~~insurance is inadequate, we could face significant losses. We maintain various insurance policies for our assets and operations. The insurance policies include property coverage, including business interruption protection for each location. We maintain commercial general liability coverage in the ~~results~~amount of ~~expansion~~$1 ormillion ~~development~~per ~~efforts~~occurrence and $2 million in the aggregate, with an umbrella policy which provides coverage of up to $25 million. We also maintain workers’ compensation policies in every state in which we operate. Since July 2002, as a result of increasing costs of the Company’s insurance program, including auto, general liability, and certain of our workers’ compensation coverage, we have been insured as a participant in a captive insurance program with other unrelated businesses. Workers’ compensation coverage for non-car wash employees was temporarily transferred to an occurrence-based policy from March 2009 to May 2010. The Company maintains excess coverage through occurrence-based policies. With respect to our auto, general liability, and certain workers’ compensation policies, we are required to set aside an actuarially determined amount of cash in a restricted “loss fund” account for the payment of claims under the policies. We expect to fund these accounts annually as required by the insurance company. Should funds deposited exceed claims incurred and paid, unused deposited funds are returned to us with interest after the fifth anniversary of the policy year-end. The captive insurance program is further secured by a letter of credit from the Company in the amount of $145,712 at December 31, 2011. The Company records a monthly expense for losses up to the reinsurance limit per claim based on the Company’s tracking of claims and the insurance company’s reporting of amounts paid on claims plus an estimate of reserves for possible future losses on reported claims and claims incurred but not reported. There can be no assurance that our insurance will provide sufficient coverage in the event a claim is made against us, or that we will be able to maintain in place such insurance at reasonable prices. An uninsured or under insured claim against us of sufficient magnitude could have a material adverse effect on our ~~competitors;~~business and results of operations.

·Our ~~announcements~~stock ~~regarding~~price ~~the~~has ~~acquisition~~been, and likely will continue to be, volatile and an investment in our common stock may suffer a decline in value. The market price of our ~~businesses~~common orstock ~~companies~~has byin usthe orpast been, and is likely to continue in the future to be, volatile. That volatility depends upon many factors, some of which are beyond our ~~competitors;~~control, including:

· announcements regarding the ~~disposition~~results of ~~the~~expansion ~~remaining~~or ~~assets~~development ~~that~~efforts ~~comprise~~by ~~our~~us ~~former Car Wash Segment, which may~~ or ~~may~~our ~~not be on favorable terms~~competitors;

· ~~technological~~announcements ~~innovations~~regarding orthe ~~new~~acquisition ~~commercial~~of ~~products~~businesses ~~developed~~or companies by us or our competitors;

· ~~changes~~announcements inregarding the disposition of the remaining assets that comprise our former Car Wash Segment, which may or ~~our~~may ~~suppliers’~~not ~~intellectual~~be ~~property~~on ~~portfolio~~favorable terms;

· ~~issuance~~technological ofinnovations ~~new~~ or ~~changed~~new ~~securities~~commercial ~~analysts’~~products ~~reports~~developed ~~and/or~~by ~~recommendations applicable to~~ us or our competitors;

· ~~additions~~changes orin ~~departures~~our ofor our ~~key~~suppliers’ ~~personnel~~intellectual property portfolio;

· ~~operating~~issuance ~~losses~~of bynew ~~us;~~or changed securities analysts’ reports and/or recommendations applicable to us or our competitors;

· ~~actual~~additions or ~~anticipated~~departures ~~fluctuations in our quarterly financial and operating results and degree~~ of ~~trading liquidity in~~ our ~~common~~key ~~stock.~~personnel;

10· operating losses by us; and

~~One~~· actual or ~~more~~anticipated offluctuations ~~these factors could cause a decline~~ in our ~~revenues~~quarterly financial and ~~income~~operating orresults inand ~~the~~degree ~~price~~ of ~~our~~trading ~~common~~liquidity ~~stock, thereby reducing the value of an investment~~ in our ~~Company~~common stock.

~~Because~~One weor ~~are~~more aof ~~Delaware~~these ~~corporation,~~factors ~~it may be difficult for a third party to acquire us, which~~ could ~~affect our stock price. We are governed by Section 203 of the Delaware General Corporation Law, which prohibits~~ cause a ~~publicly~~decline ~~held Delaware corporation from engaging~~ in aour ~~“business~~revenues ~~combination”~~and ~~with~~income anor ~~entity who is an “interested stockholder” (as defined~~ in ~~Section~~the ~~203,~~price ~~an owner~~ of ~~15%~~our orcommon ~~more of the outstanding~~ stock, ofthereby reducing the ~~corporation)~~value ~~for a period~~ of ~~three years following the stockholder becoming~~ an ~~“interested~~investment ~~stockholder,” unless approved~~ in ~~a prescribed manner. This provision of Delaware law may affect~~ our ~~ability to merge with, or to engage in other similar activities with, some other companies~~Company. ~~This means that we may be a less attractive target to a potential acquirer who otherwise may be willing to pay a premium for our common stock above its market price.~~

IfBecause we ~~issue~~are ~~our~~a ~~authorized~~Delaware ~~preferred stock~~corporation, it ~~the rights of the holders of our common stock~~ may be ~~affected~~difficult ~~and~~for ~~other~~a ~~entities~~third ~~may~~party ~~be discouraged from seeking~~ to acquire ~~control~~us, ofwhich ~~our~~could ~~Company. Our~~affect ~~certificate~~our ~~of incorporation authorizes the issuance of up to 10 million shares of “blank check” preferred~~ stock ~~that~~price. ~~could~~We beare ~~designated~~governed ~~and issued~~ by ~~our~~Section ~~board~~ 203 of ~~directors to increase~~ the ~~number~~Delaware ofGeneral ~~outstanding~~Corporation ~~shares~~Law, ~~and~~which ~~thwart~~prohibits a ~~takeover~~publicly ~~attempt. No~~held ~~shares~~Delaware ofcorporation ~~preferred~~from ~~stock~~engaging ~~are~~in ~~currently~~a ~~outstanding. It~~“business combination” iswith ~~not~~an ~~possible~~entity towho ~~state~~is ~~the~~an ~~precise~~“interested ~~effect~~stockholder” of(as ~~preferred~~defined ~~stock~~in ~~upon~~Section ~~the rights of the holders of our common stock until the board of directors determines the respective preferences~~203, ~~limitations,~~an ~~and~~owner ~~relative rights~~ of ~~the~~15% ~~holders of one~~ or more ~~series or classes~~ of the ~~preferred~~outstanding stock~~. However,~~ ~~such effect might include: (i) reduction~~ of the ~~amount~~corporation) ~~otherwise available~~ for ~~payment~~a period of ~~dividends~~three onyears ~~common~~following ~~stock, to~~ the ~~extent~~stockholder ~~dividends~~becoming ~~are~~an ~~payable on any issued shares of preferred stock~~“interested stockholder,” ~~and~~unless ~~restrictions~~approved onin ~~dividends~~a onprescribed ~~common~~manner. ~~stock~~This ifprovision ~~dividends on the preferred stock are in arrears, (ii) dilution~~ of ~~the~~Delaware ~~voting~~law ~~power~~may ofaffect ~~the~~our ~~common~~ability ~~stock~~ to ~~the~~merge ~~extent that the preferred stock has voting rights~~with, or ~~and (iii) the holders of common stock not being entitled~~ to ~~share~~engage in ~~our~~other ~~assets~~similar ~~upon~~activities ~~liquidation~~with, ~~until~~some ~~satisfaction~~other ~~of any liquidation preference granted to the holders of our preferred stock~~companies. ~~The~~ ~~“blank~~This ~~check”~~means ~~preferred~~that ~~stock~~we may be ~~viewed~~a asless ~~having~~attractive ~~the~~target ~~effect of discouraging an unsolicited attempt by another entity~~ to ~~acquire~~a ~~control~~potential acquirer ofwho usotherwise ~~and~~ may ~~therefore have an anti-takeover effect. Issuances of authorized preferred stock can~~ be ~~implemented,~~willing ~~and have been implemented by some companies in recent years, with voting or conversion privileges intended~~ to ~~make~~pay ~~an acquisition of~~ a ~~company~~premium ~~more~~for ~~difficult~~our orcommon ~~costly. Such~~stock anabove ~~issuance,~~its ormarket the perceived threat of such an issuance, could discourage or limit the stockholders’ participation in certain types of transactions that might be proposed (such as a tender offer), whether or not such transactions were favored by the majority of the stockholders, and could enhance the ability of officers and directors to retain their positionsprice.

Our policy of not paying cash dividends on our common stock could negatively affect the price of our common stock. We have not paid in the past, and do not expect to pay in the foreseeable future, cash dividends on our common stock. We expect to reinvest in our business any cash otherwise available for dividends. Our decision not to pay cash dividends may negatively affect the price of our common stock.10

~~Risks~~If ~~Related~~we issue our authorized preferred stock, the rights of the holders of our common stock may be affected and other entities may be discouraged from seeking to acquire control of our ~~Security~~Company. ~~Segment~~Our certificate of incorporation authorizes the issuance of up to 10 million shares of “blank check” preferred stock that could be designated and issued by our board of directors to increase the number of outstanding shares and thwart a takeover attempt. No shares of preferred stock are currently outstanding. It is not possible to state the precise effect of preferred stock upon the rights of the holders of our common stock until the board of directors determines the respective preferences, limitations, and relative rights of the holders of one or more series or classes of the preferred stock. However, such effect might include: (i) reduction of the amount otherwise available for payment of dividends on common stock, to the extent dividends are payable on any issued shares of preferred stock, and restrictions on dividends on common stock if dividends on the preferred stock are in arrears; (ii) dilution of the voting power of the common stock to the extent that the preferred stock has voting rights; and (iii) the holders of common stock not being entitled to share in our assets upon liquidation until satisfaction of any liquidation preference granted to the holders of our preferred stock. The “blank check” preferred stock may be viewed as having the effect of discouraging an unsolicited attempt by another entity to acquire control of us and may therefore have an anti-takeover effect. Issuances of authorized preferred stock can be implemented, and have been implemented by some companies in recent years, with voting or conversion privileges intended to make an acquisition of a company more difficult or costly. Such an issuance, or the perceived threat of such an issuance, could discourage or limit the stockholders’ participation in certain types of transactions that might be proposed (such as a tender offer), whether or not such transactions were favored by the majority of the stockholders, and could enhance the ability of officers and directors to retain their positions.

WeOur ~~could~~policy ~~become~~of ~~subject~~not topaying ~~litigation~~cash ~~regarding~~dividends on ~~intellectual~~our ~~property~~common ~~rights,~~stock ~~which~~ could ~~seriously~~negatively ~~harm~~affect ~~our business. Although we have not been~~ the ~~subject~~price of ~~any~~our ~~such~~common ~~actions,~~stock. ~~third~~We ~~parties~~have ~~may~~not paid in the ~~future assert against us infringement claims or claims that we have violated a patent or infringed upon a copyright~~past, ~~trademark or other proprietary right belonging to them. We provide the specifications for most of our security products~~ and ~~contract~~do ~~with~~not ~~independent suppliers~~ expect to ~~engineer~~pay ~~and manufacture those products and deliver them to us. Certain of these products contain proprietary intellectual property of these independent suppliers. Third parties may~~ in the ~~future~~foreseeable ~~assert claims against our suppliers that such suppliers have violated a patent or infringed upon a copyright~~future, ~~trademark~~cash ordividends ~~other~~on ~~proprietary right belonging to them. If such infringement by~~ our ~~suppliers~~common ~~or us were found to exist, a party could seek an injunction preventing the use of their intellectual property~~stock. In ~~addition,~~We ifexpect ~~an infringement by us were found~~ to ~~exist,~~reinvest wein ~~may attempt to acquire a license or right to use such technology or intellectual property. Some of~~ our ~~suppliers~~business ~~have agreed to indemnify us against~~ any ~~such~~cash ~~infringement~~otherwise available ~~claim,~~for ~~but~~dividends. ~~any~~Our ~~infringement~~decision ~~claim, even if~~ not ~~meritorious~~to ~~and/or~~pay ~~covered~~cash bydividends anmay ~~indemnification~~negatively ~~obligation,~~affect ~~could result in~~ the ~~expenditure~~price of ~~a significant amount of~~ our ~~financial~~common ~~and managerial resources, which would adversely affect our operations and financial results~~stock.

IfRisks ~~our~~Related ~~Mace brand name falls into common usage, we could lose the exclusive right~~ to ~~the brand name. The Mace registered name and trademark is important to~~ our ~~security business and defense spray business. If we do not defend the Mace name or allow it to fall into common usage, our security segment business could be adversely affected.~~Business

11We could become subject to litigation regarding intellectual property rights, which could seriously harm our business. Although we have not been the subject of any such actions, third parties may in the future assert against us infringement claims or claims that we have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to them. We provide the specifications for most of our security products and contract with independent suppliers to engineer and manufacture those products and deliver them to us. Certain of these products contain proprietary intellectual property of these independent suppliers. Third parties may in the future assert claims against our suppliers that such suppliers have violated a patent or infringed upon a copyright, trademark or other proprietary right belonging to them. If such infringement by our suppliers or us were found to exist, a party could seek an injunction preventing the use of their intellectual property. In addition, if an infringement by us were found to exist, we may attempt to acquire a license or right to use such technology or intellectual property. Some of our suppliers have agreed to indemnify us against any such infringement claim, but any infringement claim, even if not meritorious and/or covered by an indemnification obligation, could result in the expenditure of a significant amount of our financial and managerial resources, which would adversely affect our operations and financial results.

If our ~~original~~Mace ~~equipment~~brand ~~manufacturers~~name ~~(“OEMs”)~~falls ~~fail~~into common ~~to adequately supply our products~~usage, ~~our~~we ~~security~~could ~~products~~lose ~~sales~~the ~~may~~exclusive ~~suffer. Reliance~~right ~~upon~~to ~~OEMs, as well as industry supply conditions, generally involves several additional risks, including~~ the ~~possibility~~brand ofname. ~~defective~~The ~~products~~Mace ~~(which~~registered ~~can~~name ~~adversely affect our reputation for reliability), a shortage of components~~ and ~~reduced~~trademark ~~control~~is ~~over~~important to ~~delivery schedules (which can adversely affect~~ our ~~distribution~~security ~~schedules),~~business and ~~increases~~defense inspray ~~component costs (which can adversely affect our profitability)~~business. WeIf ~~have~~we ~~some~~do ~~single-sourced manufacturer relationships, either because alternative sources are~~ not ~~readily~~defend ~~or economically available or because~~ the ~~relationship~~Mace isname ~~advantageous due to performance, quality, support, delivery, capacity,~~ or ~~price~~allow ~~considerations. If~~it ~~these sources are unable or unwilling~~ to ~~manufacture~~fall ~~our~~into ~~products~~common ~~in a timely and reliable manner~~usage, ~~we could experience temporary distribution interruptions, delays, or inefficiencies adversely affecting our results of operations. Even where alternative OEMs are available, qualification of~~ the business ~~alternative manufacturers and establishment~~ of ~~reliable~~our ~~suppliers~~Security ~~could~~Segment ~~result in delays and a possible loss of sales, which~~ could ~~affect~~be ~~operating results~~ adversely affected.

~~The~~If ~~loss of~~ our ~~distributorship~~OEMs ~~for~~fail ~~Sony~~to ~~Electronics’~~adequately ~~Visual~~supply our ~~Imaging~~products, ~~Products~~our ~~will~~security ~~adversely~~products ~~impact~~sales ~~the~~may ~~sales~~suffer. ~~within~~Reliance ~~our~~upon ~~high-end~~OEMs, ~~digital~~as ~~and~~well ~~machine~~as ~~vision~~industry ~~camera~~supply ~~operation~~conditions, ~~IVS.~~generally involves ~~IVS~~several ~~recorded~~additional ~~total~~risks, ~~net~~including ~~revenues~~the possibility of ~~$4.6~~defective ~~million~~products ~~for~~(which ~~the~~can ~~year~~adversely ~~ended~~affect ~~December~~our 31reputation for reliability), ~~2010~~a shortage of ~~which~~components ~~approximately~~and ~~60%~~reduced ofcontrol ~~the~~over ~~net~~delivery ~~revenues~~schedules ~~were~~(which ~~derived~~can ~~from~~adversely ~~the~~affect ~~sale~~our ofdistribution schedules), ~~Visual~~and ~~Imaging~~increases ~~Products~~in ofcomponent ~~Sony~~costs ~~Electronics,~~(which ~~Inc.~~can ~~(“Sony~~adversely ~~Products”~~affect our profitability). We have ~~been~~some ~~notified~~single-sourced bymanufacturer relationships, ~~Sony~~either ~~Electronics,~~because ~~Inc.~~alternative ~~that~~sources ~~our~~are ~~distributorship~~not ~~for~~readily ~~Sony~~or ~~Products~~economically ~~will~~available ~~end~~or onbecause ~~March~~the 27relationship is advantageous due to performance, ~~2011~~quality, support, delivery, capacity, or price considerations. If wethese sources are unable or unwilling to manufacture ~~replace~~our ~~Sony~~products ~~Products~~in ~~sales~~a ~~with~~timely ~~other~~and ~~sales~~reliable manner, ~~the~~we ~~net~~could ~~revenues~~experience oftemporary ~~our~~distribution ~~IVS~~interruptions, ~~business~~delays, ~~will~~or inefficiencies ~~decline~~adversely affecting our results of operations. WeEven ~~are~~where ~~considering~~alternative ~~alternatives,~~OEMs ~~such~~are asavailable, ~~selling~~qualification of the ~~IVS~~alternative manufacturers ~~business~~and establishment of reliable suppliers could result in delays and ~~obtaining~~a ~~other~~possible ~~products~~loss toof ~~sell~~sales, which could affect operating results adversely.

Many states have laws, and other states have stated an intention to enact laws, requiring manufacturers of certain electronic products to pay annual registration fees and have recycling plans in place for electronic products sold at retail, such as televisions, computers, and monitors (“electronic recycling laws”). If the electronic recycling laws are applied to us, the sale of monitors by us may become prohibitively expensive. Our Security Segment sells monitors as part of the video security surveillance packages we market. The video security surveillance packages consist of cameras, digital video recorders and video monitors. We have taken the position with many states that our monitors are security monitors and are not subject to the laws they have enacted which generally refer to computer monitors. If we have to pay registration fees and have recycling plans for the monitors we sell, it may be prohibitively expensive to offer monitors as part of our security surveillance packages. The inability to offer monitors at a competitive price will place us at a competitive disadvantage.

The businesses that manufacture our electronic surveillance products are located in foreign countries, making it difficult to recover damages if the manufacturers fail to meet their obligations. Our electronic surveillance products and many non-aerosol personal protection products are manufactured on an OEM basis. Most of the OEM suppliers we deal with are located in Asian or European countries and are paid a significant portion of an order in advance of the shipment of the product. If any of the OEM suppliers defaulted on their agreements with the Company, it would be difficult for the Company to obtain legal recourse because of the suppliers’ assets being located in foreign countries.11

IfThe ~~people~~businesses ~~are~~that ~~injured~~manufacture by our electronic ~~consumer~~surveillance ~~safety~~ products, ~~we could be held liable and face damage awards. We face claims of injury allegedly resulting from our defense sprays, which we market as less-than-lethal. For example, we~~ are ~~aware~~located ~~of allegations that defense sprays used by law enforcement personnel resulted~~ in ~~deaths~~foreign ofcountries, ~~prisoners~~making ~~and~~it ofdifficult ~~suspects in custody. In addition~~ to ~~use~~recover ordamages ~~misuse~~if ~~by law enforcement agencies,~~ the ~~general~~manufacturers fail ~~public may pursue legal action against us based on injuries alleged~~ to ~~have~~meet ~~been~~their ~~caused by our products~~obligations. WeOur ~~may also face claims by purchasers of our~~ electronic surveillance ~~systems~~products ifand ~~they~~many ~~fail~~non-aerosol topersonal ~~operate~~protection ~~properly~~products are ~~during~~manufactured ~~the~~on ~~commission~~an ofOEM ~~a crime~~basis. AsMost ~~the use~~ of ~~defense sprays and electronic surveillance systems by~~ the ~~public~~OEM ~~increases,~~suppliers we ~~could~~deal bewith ~~subject~~are tolocated ~~additional~~in ~~product~~Asian ~~liability~~or ~~claims. We~~European ~~currently~~countries ~~have~~and are paid a ~~$25,000~~significant ~~deductible~~portion onof ~~our~~an ~~consumer~~order ~~safety~~in ~~products~~advance ~~insurance~~of ~~policy, meaning that all such lawsuits, even unsuccessful ones and ones covered by insurance, cost~~ the ~~Company~~shipment ~~money. Furthermore,~~of ~~if our insurance coverage is exceeded, we will have to pay~~ the ~~excess liability directly~~product. ~~Our~~ ~~product~~If ~~liability~~any ~~insurance provides coverage~~ of $1the ~~million~~OEM ~~per~~suppliers ~~occurrence~~defaulted ~~and~~on $2their ~~million~~agreements with in the ~~aggregate~~Company, ~~with~~it anwould ~~umbrella~~be ~~policy~~difficult ~~which~~for ~~provides~~the ~~coverage~~Company ~~of up~~ to ~~$25~~obtain ~~million.~~legal ~~However,~~recourse ifbecause ~~we are required to directly pay a claim in excess~~ of ~~our~~the ~~coverage,~~suppliers’ ~~our~~assets ~~income~~being ~~will be significantly reduced, and~~ located in ~~the~~foreign ~~event of a large claim, we could go out of business~~countries.

If ~~governmental~~people ~~regulations~~are ~~regarding~~injured ~~defense~~by ~~sprays~~our ~~change~~consumer safety orproducts, ~~are~~we ~~applied~~could ~~differently,~~be ~~our~~held ~~business~~liable ~~could~~and ~~suffer~~face damage awards. ~~The~~We ~~distribution~~face claims of injury allegedly resulting from our defense sprays, ~~sale~~which we market as less-than-lethal. For example, ~~ownership~~we ~~and~~are ~~use~~aware of ~~consumer~~allegations that defense sprays ~~are~~used ~~legal~~by inlaw ~~some~~enforcement personnel ~~form~~resulted in ~~all~~deaths 50of ~~states~~prisoners and ~~the~~of ~~District~~suspects ofin ~~Columbia~~custody. ~~Restrictions~~ In addition to use or misuse by law enforcement agencies, the general public may pursue legal action against us based on injuries alleged to have been caused by our products. We may also face claims by purchasers of our electronic surveillance systems if they fail to operate properly during the ~~manufacture~~commission orof a crime. As the use of ~~consumer~~ defense sprays ~~may~~and electronic surveillance systems by the public increases, we could be ~~enacted~~subject to additional product liability claims. We currently have a $25,000 ~~which~~deductible ~~would~~on ~~severely~~our ~~restrict~~consumer safety products insurance policy, meaning that all such lawsuits, even unsuccessful ones and ones covered by insurance, cost the ~~market~~Company ~~for~~money. Furthermore, if our ~~products~~insurance orcoverage is ~~increase~~exceeded, we will have to pay the excess liability directly. Our product liability insurance provides coverage of $1 million per occurrence and $2 million in the aggregate with an umbrella policy which provides coverage of up to $25 million. However, if we are required to directly pay a claim in excess of our ~~costs~~coverage, our income will be significantly reduced, and in the event of a ~~doing~~large claim, we could go out of business.

~~Our~~If governmental regulations regarding defense sprays ~~use~~change ~~hazardous~~or ~~materials~~are ~~which,~~applied ~~if not properly handled~~differently, ~~would result in~~ our ~~being~~business ~~liable~~could ~~for damages under environmental laws~~suffer. ~~Our~~ ~~consumer~~The ~~defense~~distribution, ~~spray manufacturing operation currently incorporates hazardous materials~~sale, ~~the~~ownership ~~use~~ and ~~emission~~ use of ~~which~~consumer ~~are~~defense ~~regulated~~sprays byare ~~various~~legal ~~state~~in ~~and~~some ~~federal~~form ~~environmental~~in ~~protection~~all ~~agencies,~~50 ~~including~~states and the ~~EPA.~~District Ifof weColumbia. ~~fail~~Restrictions toon ~~comply~~the ~~with~~manufacture or ~~any~~use ~~environmental~~of ~~requirements,~~consumer ~~these~~defense ~~changes~~sprays ~~or failures~~ may ~~expose~~be usenacted, towhich ~~significant liabilities that~~ would ~~have~~severely arestrict ~~material~~the ~~adverse~~market ~~effect~~for on our ~~business~~products ~~and~~or ~~financial~~increase ~~condition. The EPA conducted a site investigation at~~ our ~~Bennington, Vermont facility in January 2008 and found the facility in need~~ costs of ~~remediation. See~~doing ~~Note 18~~business. ~~Commitments and Contingencies.~~

12Our defense sprays use hazardous materials which, if not properly handled, would result in our being liable for damages under environmental laws. Our consumer defense spray manufacturing operation currently incorporates hazardous materials, the use and emission of which are regulated by various state and federal environmental protection agencies, including the EPA. If we fail to comply with any environmental requirements, these changes or failures may expose us to significant liabilities that would have a material adverse effect on our business and financial condition. The EPA conducted a site investigation at our Bennington, Vermont facility in January 2008 and found the facility in need of remediation. See Note 17. Commitments and Contingencies.

Our monitoring business relies on third party providers for the software systems and communication connections we use to monitor alarms and video signals; any failure or interruption in products or services provided by these third parties could harm our ability to operate our business. Our central station utilizes third party software and third party phone and internet connections to monitor alarm and video signals. Any financial or other difficulties our providers face may have negative effects on our business.

Our monitoring business can lose customers due to customers' cancelling land-line telecommunications services. Certain elements of our operating model rely on our customers' selection and continued use of traditional, land-line telecommunications services, which we use to communicate with our monitoring operations. In order to continue to service existing customers who cancel their land-line telecommunications services and to service new customers who do not subscribe to land-line telecommunications services, some customers must upgrade to alternative and often more expensive wireless or internet based technologies. Higher costs may reduce the market for new customers of alarm monitoring services, and the trend away from traditional land-lines to alternatives may mean more existing customers will cancel service with us. Continued shifts in customers' preferences regarding telecommunications services could continue to have an adverse impact on our earnings, cash flow and customer attrition.

Our monitoring business faces ~~continued~~ continued competition and pricing pressure from other companies in the industry and, if we are unable to compete effectively with these companies, our sales and profitability could be adversely affected. We compete with a number of major domestic security monitoring companies, as well as a large number of smaller, regional competitors. We believe that this competition is a factor in our customer attrition, limits our ability to raise prices, and, in some cases, requires that we lower prices. Some of our monitoring competitors, either alone or in conjunction with their respective parent corporate groups, are larger than we are and have greater financial resources, sales, marketing or operational capabilities than we do. In addition, opportunities to take market share using innovative products, services and sales approaches may attract new entrants to the field. We may not be able to compete successfully with the offerings and sales tactics of other companies, which could result in the loss of customers and, as a result, decreased revenue and operating results.

Loss of customer accounts by our monitoring business could materially adversely affect our operations. Our contracts can be terminated on 60 day notice by our customers. We could experience the loss of accounts as a result of, among other factors:12

·Loss ~~relocation~~ of customer accounts by our monitoring business could materially adversely affect our operations. Our contracts can be terminated on 60 days notice by our customers;. We could experience the loss of accounts as a result of, among other factors:

· ~~customers'~~relocation ~~inability~~of ~~or unwillingness to pay our charges~~customers;

· ~~adverse~~customers' ~~financial~~inability ~~and~~or ~~economic~~unwillingness ~~conditions,~~to ~~the~~pay ~~impact of which may be particularly acute among~~ our ~~small business customers~~charges;

· ~~the~~adverse ~~customers'~~financial ~~perceptions~~and economic conditions, the impact of ~~value~~which may be particularly acute among our small business customers;

· ~~competition~~the ~~from~~customers' ~~other~~perceptions ~~alarm~~of ~~service companies~~value; ~~and~~

· ~~the~~competition ~~purchase~~from ofother ~~our~~alarm ~~dealers~~service bycompanies; ~~third parties who choose to monitor elsewhere.~~and

~~Loss~~· ofthe apurchase ~~large dealer customer could result in a significant reduction in recurring monthly revenue. Net losses~~ of ~~customer~~our ~~accounts~~dealers ~~could~~by ~~materially~~third ~~and~~parties ~~adversely~~who ~~affect~~choose ~~our~~to ~~business,~~monitor ~~financial condition and results of operations~~elsewhere.

~~Increased~~Loss ~~adoption~~ of ~~"false~~a ~~alarm"~~large ~~ordinances~~dealer bycustomer ~~local~~could ~~governments~~result in ~~may~~a ~~adversely~~significant ~~affect~~reduction ~~our~~in ~~monitoring~~recurring ~~business~~monthly revenue. AnNet ~~increasing~~losses ~~number~~ of ~~local~~customer ~~governmental~~accounts ~~authorities~~could ~~have~~materially ~~adopted,~~and oradversely ~~are~~affect our ~~considering the adoption of~~business, ~~laws,~~financial ~~regulations~~condition orand ~~policies~~results ~~aimed at reducing the perceived costs to municipalities~~ of ~~responding to false alarm signals~~operations. ~~Such measures could include:~~

·Increased ~~requiring~~adoption ~~permits~~of ~~for~~"false alarm" ~~the~~ordinances ~~installation~~by ~~and~~local ~~operation~~governments may adversely affect our monitoring business. An increasing number of ~~individual~~local governmental ~~alarm~~authorities ~~systems~~have ~~and~~adopted, or are considering the ~~revocation~~adoption of, ~~such~~laws, ~~permits~~regulations ~~following~~or apolicies ~~specified~~aimed ~~number~~at reducing the perceived costs to municipalities of responding to false ~~alarms;~~alarm signals. Such measures could include:

· requiring permits for the installation and operation of individual alarm systems and the revocation of such permits following a specified number of false alarms; imposing limitations on the number of times the police will respond to alarms at a particular location after a specified number of false alarms;

requiring further verification of an alarm signal before the police will respond; and

subjecting alarm monitoring companies to fines or penalties for transmitting false alarms.

Enactment of these measures could adversely affect our future business and operations. For example, concern over false alarms in communities adopting these ordinances could cause a decrease in the timeliness of police response to alarm activations and thereby decrease the propensity of consumers to purchase or maintain alarm monitoring services. In addition, our costs to service affected accounts could increase.

13Due to a concentration of monitoring customers in California, we are susceptible to environmental incidents that may negatively impact our results of operations. Approximately 85% of the monitoring businesses’ recurring monthly revenue at December 31, 2011 was derived from subscribers located in California. A major earthquake, or other environmental disaster in California where our facilities are located, could disrupt our ability to serve customers or render customers uninterested in continuing to retain us to provide alarm monitoring services.

~~Due~~We could face liability for our failure to arespond ~~concentration~~adequately to alarm activations. The nature of the monitoring ~~customers~~services inwe ~~California,~~provide wepotentially ~~are~~exposes ~~susceptible~~us to greater ~~environmental~~risks ~~incidents~~of ~~that~~liability ~~may~~for ~~negatively~~employee ~~impact~~acts ~~our~~or ~~results~~omissions ofor ~~operations. Approximately~~system ~~92%~~failures ofthan ~~the~~may ~~monitoring~~be inherent in other businesses’. ~~recurring~~In ~~monthly~~an ~~revenue~~attempt to atreduce ~~December~~this 31risk, ~~2010~~our ~~was~~alarm ~~derived~~monitoring ~~from~~agreements ~~customers~~and ~~located~~other inagreements ~~California. A~~pursuant ~~major~~to ~~earthquake,~~which orwe ~~other~~sell ~~environmental~~our ~~disaster~~products inand ~~California~~services ~~where~~contain provisions limiting our ~~facilities~~liability ~~are~~to ~~located,~~customers ~~could~~and ~~disrupt~~third ~~our~~parties. ~~ability~~In the event of litigation with respect to ~~serve~~such ~~customers~~matters, orhowever, these ~~render~~limitations ~~customers~~may ~~uninterested~~not inbe ~~continuing~~enforced. toIn ~~retain~~addition, usthe tocosts ~~provide~~of ~~alarm~~such ~~monitoring~~litigation ~~services~~could have an adverse effect on us.

WeFuture government regulations or other standards could ~~face~~have ~~liability~~an ~~for~~adverse effect on our ~~failure~~operations. toOur ~~respond~~monitoring ~~adequately~~operations toare ~~alarm~~subject ~~activations.~~to ~~The~~a ~~nature~~variety of ~~the~~laws, regulations ~~monitoring~~and ~~services~~licensing werequirements ~~provide~~of ~~potentially~~federal, ~~exposes~~state usand tolocal ~~greater~~authorities. ~~risks~~In ofcertain ~~liability~~jurisdictions, ~~for~~we ~~employee~~are ~~acts~~required orto ~~omissions~~obtain licenses or ~~system~~permits ~~failures~~to ~~than~~comply ~~may~~with bestandards ~~inherent~~governing inemployee ~~other~~selection ~~businesses.~~and Intraining anand ~~attempt~~ to ~~reduce~~meet ~~this~~certain ~~risk,~~standards in the conduct of our ~~alarm~~business. ~~monitoring~~The ~~agreements~~loss ~~and~~of ~~other~~such ~~agreements~~licenses, ~~pursuant~~or tothe ~~which~~imposition weof ~~sell~~conditions ~~our~~to ~~products~~the ~~and~~granting ~~services~~or ~~contain~~retention ~~provisions~~of ~~limiting~~such ~~our~~licenses, ~~liability~~could have toan ~~customers~~adverse ~~and~~effect ~~third~~on ~~parties~~us. In the event ofthat ~~litigation~~these ~~with~~laws, ~~respect~~regulations toand/or ~~such~~licensing ~~matters,~~requirements ~~however~~change, ~~these~~we ~~limitations~~ may ~~not~~ be ~~enforced~~required to modify our operations or to utilize resources to maintain compliance with such rules and regulations. In addition, ~~the~~new ~~costs~~regulations may ofbe ~~such~~enacted ~~litigation~~that could have an adverse effect on us.

~~Future~~The ~~government~~loss ~~regulations~~of orour ~~other~~Underwriter ~~standards~~Laboratories (“UL”) listing could ~~have~~negatively animpact ~~adverse effect on~~ our ~~operations.~~competitive position. Our alarm monitoring ~~operations~~center ~~are~~is ~~subject~~UL tolisted. To aobtain ~~variety of laws, regulations~~ and ~~licensing~~maintain ~~requirements~~a ofUL ~~federal~~listing, ~~state~~an ~~and~~alarm ~~local~~monitoring ~~authorities.~~center Inmust ~~certain~~be ~~jurisdictions,~~located wein ~~are~~a ~~required~~building tomeeting ~~obtain~~UL's ~~licenses~~structural orrequirements, have ~~permits~~back-up toand ~~comply~~uninterruptible ~~with~~power ~~standards~~supplies, ~~governing~~have ~~employee~~secure ~~selection~~telephone ~~and~~lines ~~training~~ and tomaintain ~~meet~~redundant ~~certain~~computer ~~standards~~systems. inUL ~~the~~conducts periodic ~~conduct~~reviews of ~~our~~alarm ~~business.~~monitoring ~~The~~centers ~~loss of such licenses, or the imposition of conditions~~ to ~~the~~ensure ~~granting~~compliance orwith ~~retention~~its ofregulations. ~~such~~Non-compliance ~~licenses,~~ could ~~have~~result anin ~~adverse~~a ~~effect~~suspension of ~~on us. In the event that these laws, regulations and/or licensing requirements change, we may be required to modify~~ our ~~operations~~UL ~~or to utilize resources to maintain compliance with such rules and regulations~~listing. InThe ~~addition,~~loss ~~new~~of ~~regulations~~our ~~may~~UL belisting ~~enacted that~~ could ~~have~~negatively animpact ~~adverse~~our ~~effect~~competitive ~~on us~~position.

The loss of our Underwriter Laboratories (“UL”) listing could negatively impact our competitive position. Our alarm monitoring center is UL listed. To obtain and maintain a UL listing, an alarm monitoring center must be located in a building meeting UL's structural requirements, have back-up and uninterruptible power supplies, have secure telephone lines and maintain redundant computer systems. UL conducts periodic reviews of alarm monitoring centers to ensure compliance with its regulations. Non-compliance could result in a suspension of our UL listing. The loss of our UL listing could negatively impact our competitive position.13

ITEM 1B. UNRESOLVED STAFF COMMENTS

AtNot ~~March 21, 2011, there were no unresolved comments from the SEC staff regarding our periodic or current reports~~applicable.

ITEM 2. PROPERTIES

Our corporate headquarters is located in Horsham, Pennsylvania ~~and the office of our Chief Executive Officer is in Walnut Creek, California~~. We rent approximately 5,000 square feet of space at a current annual cost of approximately $116,000 in Horsham, Pennsylvania ~~and approximately 800 square feet of space plus use of common areas at a current annual cost of approximately $51,000 in Walnut Creek, California~~.

Security Segment Properties. The operations of our electronic surveillance product operations are located in Fort Lauderdale, Florida and ~~Farmers Branch~~Carrollton, Texas. The operations of our personal defense and law enforcement aerosol business, including administration and sales, and all of its production facilities are located in Bennington, Vermont. Our wholesale security monitoring operation is located in Anaheim, California.

The Company’s Security Segment leases manufacturing and office space in Bennington, Vermont under a lease between Vermont Mill and the Company. The lease, as extended, expires on ~~November~~May 14, ~~2011~~2012. Vermont Mill is controlled by Jon E. Goodrich, a former director and ~~current~~ employee of the Company. The original lease was entered into in November 1999 ~~for a five year term~~. ~~In November 2004, the Company exercised an option to continue the lease through November 2009 at a rate of $10,576 per month.~~ The Company ~~amended the lease in 2008 to occupy additional space for an additional $200 per month. The Company~~ also leased from November 2008 to May 2009, on a month-to-month basis, approximately 3,000 square feet of temporary inventory storage space at a monthly cost of $1,200. ~~In September 2009,~~ Under the ~~Company~~Lease ~~and~~Extension ~~Vermont~~Agreement ~~Mill extended the term of the lease to November 14, 2010 at a monthly rate of $10,776 per month and modified the square footage rented to 33,476 square feet. The Company~~ entered into ~~a Lease Extension Agreement~~ on December 20, 2010, ~~to extend~~ the lease was extended through November 14, 2011 at a monthly rate of $11,315. ~~and~~The toCompany ~~provide~~exercised an option in November 2011 to further extend the lease to May 14, 2012 at the same monthly rate. Rent expense under this lease was $~~129~~135,~~857~~780 and $~~135~~129,~~318~~857 for the years ended December 31, ~~2010~~2011 and ~~2009~~2010, respectively.

14We lease 7,358 square feet of office space in Fort Lauderdale, Florida for the administrative and sales staff related to our Security Segment’s electronic surveillance products division. This lease is for a three year term expiring on December 31, 2012 at a current rate of $7,143 per month. The lease also provides for a two year renewal option through December 31, 2014.

On December 416, ~~2009~~2011, we sold our ~~Fort Lauderdale~~Farmers Branch, ~~Florida~~Texas ~~building~~warehouse facility for cash consideration of $1.683 million. We ~~had~~ purchased the ~~Fort~~Farmers ~~Lauderdale~~Branch, ~~Florida~~Texas ~~building~~warehouse building in ~~June~~August 2004. The ~~Fort~~facility ~~Lauderdale,~~was ~~Florida~~used ~~building~~to ~~had~~warehouse ~~housed~~our ~~the~~electronic ~~administrative~~surveillance products and ~~sales~~our ~~staff~~high ofend ~~the~~camera ~~Security Segment’s electronic surveillance~~ products ~~division~~. With the sale of this property, we lease 717,~~358~~325 square feet of ~~office~~warehouse space in ~~Fort Lauderdale~~Carrollton, ~~Florida for the administrative and sales staff located in the Fort Lauderdale, Florida area~~Texas. ~~This~~The lease is for a ~~three~~one year term expiring onJanuary ~~December 31~~14, ~~2012~~2013 at a current rate of $76,~~143~~136 per month. The lease ~~also~~contains ~~provides for~~ a ~~two~~sixty ~~year~~day ~~renewal~~cancellation option ~~through December 31, 2014~~.

WeIn ~~own~~connection awith ~~45,000~~our ~~square~~2009 ~~foot~~acquisition of ~~facility in Farmers Branch~~CSSS, ~~Texas~~our ~~that~~wholesale ~~was~~security ~~purchased~~monitoring inoperation, ~~August~~we ~~2004. The~~lease ~~facility~~10,044 issquare ~~used~~feet toof ~~warehouse~~office ~~our~~space ~~electronic~~in ~~surveillance~~Anaheim, ~~products~~California ~~and~~for our administrative ~~high~~staff ~~end~~and ~~camera~~monitoring ~~products~~operations. ~~Additionally,~~The inlease ~~the~~is ~~fourth~~for ~~quarter~~a offour ~~2008,~~year weterm ~~consolidated~~expiring ~~the~~on ~~inventory~~July ~~of our Fort Lauderdale~~31, ~~Florida~~2013 ~~based~~at ~~electronic~~a ~~surveillance~~current ~~equipment~~lease rate ~~operation~~of ~~into our Farmers Branch~~$17,390 ~~Texas~~per ~~facility~~month. The ~~Farmers~~lease ~~Branch,~~also ~~Texas~~provides ~~facility~~for istwo ~~secured~~five byyear arenewal ~~first~~options ~~mortgage~~through ~~loan~~July ~~in the amount of $552,510 at December~~ 31, ~~2010~~2023.

In Car ~~connection~~Wash ~~with~~Properties. ~~our~~As of ~~2009~~December ~~acquisition~~31, ~~of CSSS~~2011, ~~our~~we ~~wholesale~~owned ~~security~~two ~~monitoring~~and ~~operation,~~leased weone ~~lease~~car ~~10,044~~wash ~~square~~facility. ~~feet~~As of ~~office~~March ~~space~~22, ~~in Anaheim~~2012, ~~California~~we ~~for~~own ~~our~~one ~~administrative~~and ~~staff~~lease ~~and~~one ~~monitoring~~car ~~operations~~wash facility. Our ~~The~~remaining ~~lease~~car iswash ~~for~~facilities aare ~~four~~reported ~~year~~under ~~term~~Discontinued ~~expiring~~Operations onand ~~July~~are ~~31,~~being ~~2013~~held atfor asale. ~~current~~We ~~lease~~have ~~rate~~sold of47 ~~$16,370~~car ~~per~~wash facilities ~~month~~and five truck washes since December 31, 2005. The ~~lease~~locations ~~also~~of ~~provides~~our ~~for~~car ~~two~~washes ~~five~~and ~~year~~the ~~renewal~~services ~~options~~offered ~~through~~at ~~July~~the ~~31,~~locations are ~~2023~~in the chart below.

Car Wash Properties. As of December 31, 2010, we owned three and leased one car wash facility. As of March 21, 2011, we own two and lease one car wash facility. Our remaining car wash facilities are reported under Discontinued Operations and are being held for sale. We have sold 45 car wash facilities and five truck washes since December 31, 2005. The locations of our car washes and the services offered at the locations are in the chart below.

Locations (1)	Type of Car Wash	Number of Facilities as of December 31, 2011 (2)	Number of Facilities as of March 22, 2012 (3)

Dallas, Texas Area	Full Service	3	2

Locations (1)	Type of Car Wash	Number of Facilities as of December 31, 2010 (2)	Number of Facilities as of March 21, 2011 (3)
Dallas, Texas Area	Full Service	3	3
Lubbock, Texas	Full Service	1	-

(1)

Two of our locations at December 31, 2011 were owned and one location was leased.

(12) ~~All~~Our oflocations ~~our~~also ~~locations~~offer ~~are~~other ~~owned~~consumer products and related car care services, ~~except~~such ~~for~~as ~~one~~professional ~~location~~detailing inservices ~~the~~(offered ~~Dallas~~at three locations), ~~Texas~~oil ~~area~~and ~~which~~lubrication isservices ~~leased.~~(offered ~~The~~at ~~Lubbock~~three locations), ~~Texas~~gasoline ~~location~~dispensing ~~was~~services ~~sold~~(offered onat ~~March~~one 8location), ~~2011.~~state ~~(See~~inspection ~~Note~~services 4.(offered ~~Business~~at ~~Acquisitions~~three locations), and ~~Divestures~~merchandise ~~and~~store ~~Note~~sales ~~21.~~(offered ~~Subsequent~~at ~~Events~~three locations).

(23) ~~Our~~One ~~locations~~of ~~also~~the ~~offer~~three ~~other consumer products and related car care services~~Dallas, ~~such~~Texas asarea ~~professional detailing services (currently offered at three~~ locations), ~~oil~~was ~~and~~subject ~~lubrication~~to ~~services~~an ~~(currently~~Agreement ~~offered~~of atSale ~~three locations), gasoline dispensing services (currently offered~~ at ~~two~~December ~~locations)~~31, ~~state~~2011 ~~inspection~~and ~~services~~was ~~(currently~~sold ~~offered~~on atFebruary ~~three locations)~~29, ~~and merchandise store sales (currently offered at three locations)~~2012.

~~(3)~~Certain ~~One~~of ~~Dallas,~~our ~~Texas~~car ~~area~~washes ~~location~~are isencumbered by ~~subject~~first tomortgage anloans. ~~Agreement~~Of ofthe ~~Sale.~~three Itcar iswashes ~~anticipated~~owned ~~that~~or ~~the~~leased ~~sale~~by ofus ~~this~~at ~~location~~December ~~will~~31, be2011, ~~consummated~~one inproperty ~~the~~and ~~second~~related ~~quarter~~equipment with ofa ~~2011~~net book value totaling $2.0 million was secured by mortgage loans totaling $542,413.

Certain of our car washes are encumbered by first mortgage loans. Of the four car washes owned or leased by us at December 31, 2010, two properties and related equipment with a net book value totaling $3.7 million secured first mortgage loans totaling $1.4 million and two properties with a net book value totaling $810,000 million were not encumbered.14

ITEM 3. LEGAL PROCEEDINGS

The Company and its former Chief Executive Officer, Louis D. Paolino, Jr., ~~have~~ settled ~~the~~ various legal actions they had filed against each other. The settlement was entered into on October 26, 2010. As part of the settlement, the Company paid Mr. Paolino ~~$2,300,000~~a ontotal ~~November~~of ~~1, 2010 and~~ $24,~~310~~610,000 onin ~~December 29, 2010. With Mace’s final payment under~~ the ~~settlement~~fourth ~~agreement,~~quarter ~~all~~of ~~legal actions between Mr~~2010. ~~Paolino and the Company have been dismissed with prejudice and mutual releases between the Company and Mr. Paolino became effective.~~ As previously disclosed in the Company's filings under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) , an arbitration panel of the American Arbitration Association awarded Mr. Paolino the sum of $4,148,912 on May 4, 2010 as damages and a supplemental award of $738,835 for legal fees in connection with various claims filed by Mr. Paolino in connection with his termination as the Company’s Chief Executive Officer ~~(the “Arbitration Awards”). The Arbitration Awards were confirmed~~ on ~~October~~May 820, ~~2010~~2008 by (the ~~Court of Common Pleas of Philadelphia County. As of the quarter ended March 31, 2010, the Company recorded an accrual of $4,500,000 million for the payment of the~~ “Arbitration Awards~~, increased to $4,600,000 in the quarter ended June 30, 2010~~”). The Court also ruled that Mr. Paolino had until December 8, 2010 to exercise 1,769,682 stock options which were cancelled by the Company upon Mr. Paolino's termination. These stock options were not exercised by Mr. Paolino by December 8, 2010 and accordingly expired and became null and void.

During 2008, the Company conducted a remediation of certain hazardous wastes at its Bennington, Vermont facility under an Administrative Consent Order entered into between the Company, the United States Environmental Protection Agency (the “EPA”), and Benmont Mill Properties, Inc. ("Benmont"), the owner of the facility. The EPA accepted the final report of the remediation in 2009. On April 8, 2010, the Company paid the EPA $216,086 as an oversight cost reimbursement. During the quarter ended September 30, 2010, Benmont reimbursed the Company 15% of the amount paid to the EPA, or $32,413. Total costs relating to the remediation of approximately $786,000 were recorded through the quarter ended December 31, 2009, and included disposal costs of the waste materials, as well as expenses incurred to engage environmental engineers and legal counsel and reimbursement of the EPA’s costs.

~~During~~On ~~January~~November ~~2008~~16, 2010, the United States Attorney ~~Environmental~~for ~~Protection~~the ~~Agency~~District of Vermont (the “~~EPA~~U.S. Attorney”) ~~conducted~~filed a ~~site~~one ~~investigation~~count atindictment ~~the~~charging ~~Company’s~~Mace ~~Bennington~~Security International, Inc. ~~Vermont location~~ and ~~the~~Jon ~~building~~Goodrich ~~within~~with ~~which~~a ~~the~~felony ~~facility~~of isstoring ~~located. The~~hazardous ~~Company~~waste ~~leases~~without ~~33,476~~a ~~square~~permit ~~feet~~under of42 ~~the~~U.S.C. ~~building~~§ ~~from~~6928(d)(2)(A) ~~Vermont~~at ~~Mill~~the ~~Properties~~Company’s Bennington, ~~Inc. (“~~Vermont ~~Mill”)~~location. ~~The~~ ~~site~~Mr. ~~investigation~~Goodrich was ~~focused~~the onPresident ~~whether~~of ~~hazardous~~Mace ~~substances~~Personal ~~were~~Defense, ~~being improperly stored~~Inc. ~~After the site investigation~~, the ~~EPA notified the~~ Company's ~~and~~defense ~~the~~spray ~~building~~division located ~~owner,~~in ~~Benmont Mill Properties~~Bennington, ~~Inc~~Vermont. ~~(“Benmont”), that remediation of certain hazardous wastes was required~~Mr. ~~Vermont~~ ~~Mill~~Goodrich ~~and~~is ~~Benmont~~also ~~are~~the ~~both~~owner ~~owned~~of ~~and controlled by Jon Goodrich~~Benmont, the ~~President~~owner of the ~~Company’s defense spray division. The EPA~~Bennington, ~~the~~Vermont ~~Company,~~facility and the ~~building~~ owner ~~entered~~of ~~into~~Vermont anMills ~~Administrative~~Properties, ~~Consent~~Inc., ~~Order under which~~ the ~~hazardous~~entity ~~materials~~that ~~and~~rents ~~waste~~the ~~were~~Bennington, ~~remediated.~~Vermont ~~All~~facility ~~remediation~~to ~~required by~~ the ~~Administrative~~Company. ~~Consent~~The ~~Order~~Company ~~was completed within~~ resolved the ~~time~~indictment ~~allowed~~against by the ~~EPA~~Company ~~and~~through a ~~final~~Plea ~~report~~Agreement ~~regarding~~entered ~~the~~into ~~remediation~~between ~~was submitted to~~ the ~~EPA~~Company's ~~in October 2008~~subsidiary, asMace ~~required~~Personal ~~by the Administrative Consent Order~~Defense, Inc. ~~On September 29~~, ~~2009,~~and the ~~EPA~~U.S. ~~accepted the final report~~Attorney. OnThe ~~February~~Plea ~~23,~~Agreement ~~2010,~~was ~~the~~accepted ~~EPA~~by ~~issued~~ the ~~Company~~Federal anDistrict ~~invoice~~Court for ~~$240,096~~Vermont ~~representing~~on ~~the~~May ~~total~~26, ~~of the EPA's oversight costs that the Company and Benmont were obligated to pay under the Administrative Consent Order~~2011. On ~~April~~Mace 8Personal Defense, ~~2010,~~Inc. ~~the~~pled ~~Company~~guilty ~~negotiated~~of aone ~~reduction~~count inof ~~the~~violating ~~oversight~~42 ~~cost~~U.S.C. ~~reimbursement~~§ ~~and,~~6928(d)(2)(A) on(Storage ~~April~~of ~~13,~~Hazardous ~~2010,~~Waste ~~the~~Without ~~Company paid~~ a ~~negotiated~~Permit) and ~~amount~~was offined $~~216~~100,~~086~~000 to (the ~~EPA~~"Fine"). ~~During~~ ~~the~~The ~~quarter~~Fine ~~ended~~was ~~September~~fully ~~30,~~paid ~~2010,~~during ~~Benmont~~2011. ~~reimbursed~~In addition, the Company ~~15%~~incurred legal expenses of ~~the amount paid to the EPA or~~ $3261,~~413. A~~300 ~~total~~and ~~estimated cost of approximately~~ $~~786~~82,~~000~~300 ~~relating~~in to the ~~remediation,~~years ~~which~~ended ~~includes~~December ~~disposal of the waste materials~~31, as2011 ~~well as expenses incurred to engage environmental engineers~~ and ~~legal~~2010, ~~counsel and reimbursement of the EPA’s costs~~respectively, ~~has~~relating ~~been~~to ~~recorded~~this ~~through December 31, 2010~~matter.

The ~~U.S.~~indictment ~~Attorney~~charging ~~conducted~~Jon anGoodrich ~~investigation~~was resolved ofwith ~~the Company relating to possible violations of the Resource Conservation and Recovery Act (“RCRA”) at the Company’s Bennington, Vermont location. On November 16, 2010, the U.S. Attorney filed~~ a ~~one~~guilty ~~count~~plea ~~indictment~~accepted inby the Federal District Court ~~for~~in ~~the~~January, ~~District~~2012. ofMr. ~~Vermont~~Goodrich ~~charging~~pled ~~the~~guilty ~~Company~~to ~~and Jon Goodrich with~~ a felony of storing hazardous waste without a permit under 42 U.S.C. ~~Section~~§ 6928(d)(2)(A)~~. Mr.~~ ~~Goodrich~~at is the ~~President of Mace Personal Defense, Inc., the~~ Company'’s ~~defense spray division located in~~ Bennington, Vermont~~. The~~ ~~Company~~location ~~has~~and ~~resolved~~agreed to ~~the indictment through~~ a ~~Plea~~fine ~~Agreement~~of ~~entered into between the Company's subsidiary~~$100, ~~Mace Personal Defense, Inc~~000. ~~and the U~~Mr.S. ~~Attorney. The~~Goodrich ~~Plea~~is ~~Agreement~~scheduled ~~was~~to ~~made~~be ~~under~~sentenced ~~Fed.~~on R.May ~~Crim. P. 11(c)(1)(C)~~2, ~~and provides in part, for (i) Mace Personal Defense, Inc~~2012., toThe ~~plead~~Company ~~guilty~~has to ~~one~~date ~~count~~advanced ~~of violating 42 U~~Mr.~~S.C.~~ §Goodrich the ~~6928(d)(2)(A)~~cost ~~(Storage~~ of ~~Hazardous~~his ~~Waste~~defense ~~Without~~under athe ~~Permit);~~provisions ~~(ii)~~of ~~Mace~~Article ~~Personal~~6 ~~Defense, Inc. to pay a fine~~ of ~~$100,000 (~~the ~~"Fine")~~Company's ~~and~~Bylaws. aThe ~~court~~advancements ~~assessment~~through ofDecember ~~$400~~31, ~~the~~2011 ~~Fine to be paid~~ were $3483,~~000 on sentencing and two additional installments of $33~~178,~~000~~ ~~each, at~~which ~~six~~is ~~months~~included ~~and~~in ~~twelve months from January 4, 2011; (iii)~~ the ~~Company~~legal toexpense ~~guarantee~~amounts ~~the~~disclosed ~~payment~~in of the ~~Fine;~~above ~~(iv)~~paragraph. ~~the~~The ~~United States to dismiss the indictment against the~~ Company atand ~~time~~Mr. ofGoodrich ~~sentencing~~have ofentered into ~~Mace~~an ~~Personal~~Agreement ~~Defense, Inc.; and~~ (v"Indemnity Agreement") ~~the~~on ~~United~~January ~~States not to prosecute Mace Personal Defense~~12, ~~Inc.~~2012 ~~(excluding~~providing ~~the~~that ~~guilty plea) or~~ the Company ~~for~~would ~~any~~not ~~criminal~~pay ~~offenses~~any ~~known~~portion ~~to the United States Attorney's Office~~ of a ~~Vermont~~fine asimposed ofon ~~the~~Mr. ~~date~~Goodrich. ofThe ~~signing~~Indemnity ~~of the Plea~~ Agreement ~~committed~~also byset ~~the~~a ~~Company~~maximum orlimit ~~Mace~~to ~~Personal~~future ~~Defense,~~advancements ~~Inc.~~and inindemnity ~~the~~claims ~~District~~ of $25,000 ~~Vermont~~with ~~relative~~regard to ~~the storage, shipment, handling or disposal of hazardous waste including~~ any ~~associated~~costs ~~record~~incurred ~~keeping~~by ~~or reporting offenses~~Mr. ~~The~~ ~~Plea~~Goodrich ~~Agreement~~after isNovember ~~not~~9, ~~final until it is accepted by the Court~~2011. AIn ~~hearing~~exchange ~~date~~ for ~~sentencing~~Mr. ~~has~~Goodrich ~~been~~limiting ~~scheduled~~future indemnity ~~for~~claims ~~May~~and ~~26,~~agreeing ~~2011. The~~to ~~Company~~a ~~has~~five ~~recorded~~year annon-compete ~~accrual~~agreement ofwith ~~$100,000~~the ~~at December 31~~Company, ~~2010~~the asCompany aagreed ~~result~~not ~~of its agreement~~ to ~~pay~~seek arecovery ~~$100,000 Fine as part~~ of any ~~the~~advancements ~~Plea~~it ~~Agreement~~paid.

The Company is a party to various other legal proceedings related to its ~~normal~~ordinary business activities. In the opinion of the Company’s management, none of these proceedings are material in relation to the Company’s results of operations, liquidity, cash flows, or financial condition.

Additional information regarding our legal proceedings can be found in Note 1817 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.

ITEM 4. ~~(REMOVED~~ ~~AND~~MINE ~~RESERVED)~~SAFETY DISCLOSURES

~~PART~~Not IIapplicable.

~~ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~15

~~(a)~~PART ~~Market Price and Dividends of the Registrant’s Common Equity~~II

~~Our~~ITEM ~~common stock was traded on the NASDAQ Global Market through September 30, 2010 and since September 30, 2010 our stock has been quoted on the OTCQB system of OTC Market, Inc~~5. ~~under~~MARKET ~~the~~FOR ~~trading~~REGISTRANT’S ~~symbol~~COMMON ~~"MACE." Common stock price reflects inter-dealer quotations~~EQUITY, ~~does~~RELATED ~~not~~STOCKHOLDER ~~include~~MATTERS ~~retail~~AND ~~markups,~~ISSUER ~~markdowns~~PURCHASES orOF ~~commissions~~EQUITY ~~and does not necessarily represent actual transactions.~~SECURITIES

16(a) Market Price and Dividends of the Registrant’s Common Equity

~~The~~Our ~~following~~common ~~table~~stock ~~sets~~was ~~forth,~~traded ~~for~~on the ~~quarters~~NASDAQ Global ~~indicated~~Market (“NASDAQ”) through September 30, 2010 and since September 30, 2010 our stock has been quoted on the ~~high~~OTCQB system ~~and~~of ~~low~~OTC ~~sale~~Market, ~~prices~~Inc. ~~per~~under ~~share~~the ~~for~~trading ~~our~~symbol ~~common~~"MACE." Common stock, asprice ~~reported~~reflects byinter-dealer ~~Nasdaq~~quotations, ~~through~~does not ~~September~~include 30retail markups, ~~2010~~markdowns ~~and~~or bycommissions ~~the~~and ~~OTCQB~~does ~~system~~not ~~after~~necessarily ~~September~~represent ~~30,~~actual ~~2010~~transactions.

	HIGH		LOW
Year Ended December 31, 2009
First Quarter	$	0.91	$	0.61
Second Quarter	$	1.29	$	0.65
Third Quarter	$	1.19	$	0.89
Fourth Quarter	$	1.24	$	0.68
Year Ended December 31, 2010
First Quarter	$	1.24	$	0.75
Second Quarter	$	0.96	$	0.56
Third Quarter	$	0.63	$	0.41
Fourth Quarter	$	0.45	$	0.24
Year Ended December 31, 2011
First Quarter, through March 21, 2011	$	0.55	$	0.34

The following table sets forth, for the quarters indicated, the high and low sale prices per share for our common stock, as reported by NASDAQ through September 30, 2010 and by the OTCQB system after September 30, 2010.

The closing price for our common stock on June 30, 2010 was $0.60. For purposes of calculating the aggregate market value of our shares of common stock held by non-affiliates, as shown on the cover page of this report, it has been assumed that all of the outstanding shares were held by non-affiliates except for the shares held by our directors and executive officers and stockholders owning 10% or more of our outstanding shares. However, this should not be deemed to constitute an admission that all such persons are, in fact, affiliates of the Company, or that there are not other persons who may be deemed to be affiliates of the Company. For further information concerning ownership of our securities by executive officers, directors and principal stockholders, see Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

	HIGH		LOW

Year Ended December 31, 2010
First Quarter	$	1.24	$	0.75
Second Quarter	$	0.96	$	0.56
Third Quarter	$	0.63	$	0.41
Fourth Quarter	$	0.45	$	0.24
Year Ended December 31, 2011
First Quarter	$	0.55	$	0.34
Second Quarter	$	0.50	$	0.15
Third Quarter	$	0.25	$	0.15
Fourth Quarter	$	0.20	$	0.12
Year Ended December 31, 2012
First Quarter through March 22, 2012	$	0.19	$	0.15

AsThe ofclosing ~~March~~price 21for our common stock on June 30, 2011 wewas ~~had~~$0.26. 93For ~~stockholders~~purposes of ~~record~~calculating ~~and~~the ~~approximately~~aggregate ~~2,600~~market ~~beneficial~~value ~~owners~~ of our shares of common stock. Weheld ~~did~~by ~~not~~non-affiliates, as ~~pay~~shown ~~dividends~~on in the ~~preceding~~cover ~~two~~page ~~years~~of ~~and~~this doreport, ~~not~~it ~~anticipate~~has ~~paying~~been ~~any~~assumed ~~cash~~that ~~dividends~~all inof the ~~foreseeable~~outstanding ~~future.~~shares Wewere ~~intend~~held toby ~~retain~~non-affiliates ~~all~~except for ~~working~~the ~~capital~~shares ~~and~~held ~~earnings,~~by ifour ~~any,~~directors ~~for~~and ~~use~~executive inofficers ~~our~~and ~~operations~~stockholders ~~and~~owning in10% ~~the~~or ~~expansion~~more of our ~~business~~outstanding shares. ~~Any~~ ~~future~~However, this ~~determination~~should ~~with~~not ~~respect to the payment of dividends will~~ be atdeemed ~~the~~to ~~discretion~~constitute ofan ~~our~~admission ~~Board~~that ofall ~~Directors~~such ~~and~~persons ~~will depend upon~~are, ~~among~~in ~~other things~~fact, ~~our~~affiliates ~~results~~ of ~~operations~~the Company, ~~financial~~or ~~condition~~that ~~and~~there are ~~capital~~not ~~requirements,~~other ~~the~~persons ~~terms~~who ofmay ~~any~~be ~~then~~deemed ~~existing~~to ~~indebtedness,~~be ~~general~~affiliates ~~business~~of ~~conditions,~~the ~~and~~Company. ~~such~~For ~~other~~further ~~factors~~information asconcerning ~~our~~ownership ~~Board~~ of ~~Directors~~our ~~deems~~securities by ~~relevant.~~executive ~~Certain~~officers, ofdirectors ~~our~~and ~~credit~~principal ~~facilities~~stockholders, ~~prohibit~~see orItem ~~limit~~12. ~~the~~Security ~~payment~~Ownership of ~~cash~~Certain ~~dividends~~Beneficial ~~without~~Owners ~~prior~~and Management ~~bank~~and ~~approval~~Related Stockholder Matters.

~~For~~As ~~information~~of ~~regarding~~March ~~our~~22, ~~equity~~2012 ~~compensation~~we ~~plans~~had 81 stockholders of record and approximately 2,300 ~~See~~beneficial ~~Item~~owners 12of our common stock. We did not pay dividends in the preceding two years and do not anticipate paying any cash dividends in the foreseeable future. We intend to retain all working capital and earnings, ~~Security~~if any, ~~Ownership~~for use in our operations and in the expansion of ~~Certain~~our ~~Beneficial~~business. ~~Owners~~Any future determination with respect to the payment of dividends will be at the discretion of our Board of Directors and ~~Management~~will depend upon, among other things, our results of operations, financial condition and ~~Related~~capital ~~Stockholder~~requirements, ~~Matters~~the terms of any then existing indebtedness, general business conditions, and such other factors as our Board of Directors deems relevant. Certain of our credit facilities prohibit or limit the payment of cash dividends without prior bank approval.

~~(c)~~For ~~Recent~~information ~~Sales~~regarding our equity compensation plans, see Item 12. Security Ownership of ~~Unregistered~~Certain ~~Securities~~Beneficial Owners and Management and Related Stockholder Matters.

~~None~~(c) Recent Sales of Unregistered Securities

17On August 2, 2011, the Company issued a total of 20 million shares of common stock to Merlin Partners, LP (“Merlin”) and two assignees pursuant to a Securities Purchase Agreement dated March 25, 2011, for a purchase price of $0.20 per share. The sale of the stock resulted in aggregate net proceeds of $3,750,000 to the Company, net of a $250,000 fee in connection with the purchase.

~~(d) Issuer Purchases of Securities~~16

The ~~following~~securities ~~table~~described ~~summarizes~~above ~~our~~were ~~equity~~issued to ~~security~~“accredited” ~~repurchase~~investors, ~~during~~as such term is defined in Regulation D under the ~~three~~Securities ~~months~~Act ~~ended~~of ~~December~~1933, 31as amended (the “Securities Act”). In reliance upon such accredited investors’ representations, ~~2010:~~among other representations, the offer and issuance of the securities described above are exempt from the registration requirements under the Securities Act, pursuant to Section 4(2) thereof and in reliance upon Rule 506 of Regulation D promulgated by the SEC.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1 to October 31, 2010		-	$	-		-	$	1,226,000
November 1 to November 30, 2010		-	$	-		-	$	1,226,000
December 1 to December 31, 2010		-	$	-		-	$	1,226,000
Total		-	$	-		-

(d) Issuer Purchases of Securities

~~(1)~~The Onfollowing ~~August~~table ~~13,~~summarizes ~~2007,~~our ~~the~~equity security ~~Company’s Board of Directors approved a share~~ repurchase ~~program~~during ~~to allow~~ the ~~Company~~three tomonths ~~repurchase~~ended ~~up to an aggregate $2,000,000 of its common shares in the future if the market conditions so dictate. As of~~ December 31, ~~2010, 747,860 shares had been repurchased under this program at a cost of approximately $774,000.~~2011:

ITEM 6. SELECTED FINANCIAL DATA

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
October 1 to October 31, 2011		-	$	-		-	$	1,226,000
November 1 to November 30, 2011		-	$	-		-	$	1,226,000
December 1 to December 31, 2011		-	$	-		-	$	1,226,000
Total		-	$	-		-

~~The~~(1) On August 13, 2007, the Company’s isBoard of Directors approved a ~~“smaller~~share ~~reporting~~repurchase ~~company”~~program asto ~~defined~~allow bythe ~~Rule~~Company ~~10(f)(1)~~to ofrepurchase ~~Regulation~~up ~~S-K~~to an aggregate $2,000,000 ~~and~~of asits ~~such~~common isshares ~~not~~in ~~required~~the tofuture ~~present~~if the ~~information~~market conditions so dictate. As of December 31, 2011, 747,860 shares had been repurchased under this ~~Item~~program at a cost of approximately $774,000.

ITEM 76. ~~MANAGEMENT'S~~ ~~DISCUSSION~~SELECTED ~~AND ANALYSIS OF~~ FINANCIAL ~~CONDITION AND RESULTS OF OPERATIONS~~DATA

The ~~following~~Company ~~discussion~~is ~~reviews~~a ~~our~~“smaller ~~operations~~reporting company” ~~for~~as ~~each~~defined ofby ~~the~~Rule ~~two~~10(f)(1) ~~years~~of inRegulation ~~the periods ended December 31~~S-K, ~~2010~~ and ~~2009,~~as ~~and~~such ~~should~~is benot ~~read~~required into ~~conjunction~~present ~~with~~the ~~our~~information ~~Consolidated~~under ~~Financial Statements and related notes thereto included elsewhere herein~~this Item.

~~FACTORS~~ITEM ~~INFLUENCING~~7. ~~FUTURE~~MANAGEMENT'S ~~RESULTS~~DISCUSSION AND ~~ACCURACY~~ANALYSIS OF ~~FORWARD-LOOKING~~FINANCIAL ~~STATEMENTS~~CONDITION AND RESULTS OF OPERATIONS

~~This~~The ~~report~~following ~~includes~~discussion ~~forward~~reviews ~~looking~~our ~~statements~~operations for ~~within~~each ~~the meaning~~ of ~~Section 27A of~~ the ~~Securities~~two ~~Act~~years ~~and~~in ~~Section 21E of~~ the ~~Exchange~~periods ~~Act~~ended ~~(“Forward-Looking~~December ~~Statements”). All statements other than statements of historical fact included in this report are Forward-Looking Statements. Forward-Looking Statements are statements related to future~~31, ~~not~~2011 ~~past, events. In this context, Forward-Looking Statements often address our expected future business~~ and ~~financial performance and financial condition~~2010, and ~~often~~should contain words such as "expect," "anticipate," "intend," "plan," believe," "seek," or ''will." Forward-Looking Statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be ~~materially~~read ~~different than those expressed~~ in ~~our~~conjunction ~~Forward-Looking~~with ~~Statements include: the severity and duration of current economic and financial conditions;~~ our ~~success~~Consolidated Financial in selling our remaining car washes; the level of demand of the customers we serve for our goods and services; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties are described in more detail in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. The Forward- Looking Statements ~~made herein are only made as of the date of this filing,~~ and werelated ~~undertake~~notes nothereto ~~obligation~~included toelsewhere ~~publicly update such Forward-Looking Statements to reflect subsequent events or circumstances~~herein.

18FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS

~~Introduction~~This report includes Forward-Looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act (“Forward-Looking Statements”). All statements other than statements of historical fact included in this report are Forward-Looking Statements. Forward-Looking Statements are statements related to future, not past, events. In this context, Forward-Looking Statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," believe," "seek," or ''will." Forward-Looking Statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our Forward-Looking Statements include: the severity and duration of current economic and financial conditions; our success in selling our remaining car washes; the level of demand of the customers we serve for our goods and services; and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties are described in more detail in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K. The Forward-Looking Statements made herein are only made as of the date of this filing, and we undertake no obligation to publicly update such Forward-Looking Statements to reflect subsequent events or circumstances.

~~Revenues~~17

~~Security~~Introduction

Our Security Segment designs, manufactures, assembles, markets and sells a wide range of security products. The products include less-than-lethal Mace® defense sprays, intrusion fencing, access control, security cameras and security digital recorders. The Security Segment also owns and operates a UL listed monitoring center that monitors video and security alarms for approximately 400 security dealer clients with over 41,000 end-user accounts. The Security Segment’s electronic surveillance products and components are purchased from Asian and European manufacturers. Many of our products are designed to our specifications. We sell the electronic surveillance products and components primarily to installing dealers, distributors, system integrators and end-users. Other products in our Security Segment are less-than-lethal Mace® defense sprays and other security devices such as monitors, high-end digital and machine vision cameras and professional imaging components. The main marketing channels for our products are industry shows, trade publications, catalogs, the internet, telephone orders, distributors, and mass merchants. Revenues generated for the year ended December 31, 2010 for the Security Segment were comprised of approximately 22% from our professional electronic surveillance operation, 7% from our consumer direct home and small business electronic surveillance operations, 25% from our machine vision camera and video conferencing equipment operation, 29% from our personal defense and law enforcement aerosol operation in Vermont, and 17% from our wholesale security monitoring operation in California.

~~Cost of Revenues~~Security

Our Security Segment designs, manufactures, assembles, markets and sells a wide range of security products. The products include less-than-lethal Mace® defense sprays and other personal security devices, access control, security cameras, monitors and security digital recorders, and high-end digital and machine vision cameras and professional imaging components. The Security Segment also owns and operates a UL listed wholesale security monitoring center that monitors video and security alarms for approximately 490 security dealer clients with over 70,500 monitored accounts. The Security Segment’s electronic surveillance products and components are purchased from Asian and European manufacturers. Many of our products are designed to our specifications. We sell the electronic surveillance products and components primarily to installing dealers, distributors, system integrators and end-users. The main marketing channels for our products are industry shows, trade publications, catalogs, the internet, telephone orders, distributors, and mass merchants. Revenues generated for the year ended December 31, 2011 for the Security Segment were comprised of approximately 38% from our personal defense and law enforcement aerosol operation, 28% from our wholesale security monitoring operation, 26% from our professional and consumer direct home and small business electronic surveillance operations, and 8% from our machine vision camera and video conferencing equipment operation.

Cost of revenues within the Security Segment consists primarily of costs to purchase or manufacture the security products including direct labor and related taxes and fringe benefits, and raw material costs, and telecommunication costs related to our wholesale monitoring operation. Product warranty costs related to the Security Segment are mitigated in that a portion of customer product warranty claims are covered by the supplier through repair or replacement of the product associated with the warranty claim.Revenues

~~Selling,~~Security ~~General and Administrative Expenses~~

~~Selling,~~Cost ~~general~~of ~~and~~revenues ~~administrative~~within ~~(“SG&A”)~~the ~~expenses~~Security ~~consist~~Segment consists primarily of ~~management,~~costs ~~clerical~~to ~~and~~purchase ~~administrative~~or ~~salaries,~~manufacture ~~professional~~the ~~services~~security products, ~~insurance~~direct ~~premiums~~labor and related taxes and fringe benefits, raw ~~sales~~material ~~commissions~~costs, and ~~other~~telecommunication costs ~~relating~~related to ~~marketing~~our ~~and~~wholesale ~~sales~~monitoring operation. Product warranty costs related to the Security Segment are mitigated in that a portion of customer product warranty claims are covered by the supplier through repair or replacement of the product associated with the warranty claim.

~~We expense direct incremental costs associated with business acquisitions as well as indirect acquisition costs~~Selling, ~~such~~General ~~as executive salaries, corporate overhead, public relations,~~ and ~~other~~Administrative Expenses ~~corporate services and overhead.~~

~~Depreciation~~SG&A expenses consist primarily of management, clerical and ~~Amortization~~administrative salaries, professional services, insurance premiums, sales commissions, and other costs relating to marketing and sales.

~~Depreciation~~We ~~and~~expense ~~amortization~~direct ~~consists~~incremental ~~primarily~~costs ofassociated with ~~depreciation~~business ofacquisitions ~~buildings~~as ~~and~~well ~~equipment,~~as ~~and~~indirect ~~amortization~~acquisition ofcosts, ~~leasehold~~such ~~improvements~~as ~~and~~executive certain intangible assets. Buildings and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of their useful lives or the lease term with renewal options. Intangible assetssalaries, ~~other~~corporate ~~than goodwill or intangible assets with indefinite useful lives~~overhead, ~~are~~public ~~amortized over their useful lives ranging from three to fifteen years~~relations, and ~~using~~other ~~the~~corporate ~~straight-line~~services orand ~~an accelerated method~~overhead.

~~Other~~Depreciation ~~Income~~and Amortization

~~Other~~Depreciation ~~income~~and ~~consists~~amortization consists primarily of ~~gains~~depreciation of buildings and ~~losses~~equipment, onand ~~short~~amortization of leasehold improvements and certain intangible assets. Buildings and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of their useful lives or the lease term ~~investments~~with renewal options. Intangible assets, other than goodwill or intangible assets with indefinite useful lives, are amortized over their useful lives ranging from three to fifteen years, using the straight-line method or an accelerated method.

~~Income~~Other ~~Taxes~~Income

~~Income~~Other ~~tax~~income ~~expense~~generally isconsists ~~derived~~of ~~from~~gains and ~~tax~~losses ~~provisions for interim periods that are based~~ on ~~the Company’s estimated annual effective rate. Currently, the effective rate differs from the federal statutory rate primarily due to state and local income taxes, non~~short-~~deductible~~term ~~costs related to acquired intangibles, and changes to the valuation allowance~~investments.

19Income Taxes

~~Discontinued~~Income ~~Operations~~tax expense is derived from tax provisions for interim periods that are based on the Company’s estimated annual effective rate. Currently, the effective rate differs from the federal statutory rate primarily due to state and local income taxes, non-deductible costs related to acquired intangibles, and changes to the valuation allowance.

~~Digital Media Marketing~~18

~~The~~Discontinued ~~Company’s~~Operations Board of Directors committed to a plan to divest of the Digital Media Marketing Segment and, on November 11, 2010, the Company entered into a Stock Purchase Agreement to sell the e-commerce division of its Digital Media Marketing Segment, Linkstar Corporation. On November 22, 2010, we sold Linkstar Corporation for a sale price of $1.1 million to Silverback Network, Inc. (the “Purchaser”). Under terms of the Stock Purchase Agreement, the Purchaser paid $1.1 million for the stock of Linkstar Corporation, $990,000 of which was received at closing with ten percent (10%) of the purchase price, or $110,000, placed into escrow, which funds will be released to the Company in six months provided there are no unsatisfied indemnity claims under the Stock Purchase Agreement. The results of the Digital Media Marketing Segment’s operations have been classified as assets held for sale and liabilities related to assets held for sale in our balance sheet at December 31, 2010, and as discontinued operations in our statements of operations and our statements of cash flows. Our Digital Media Marketing Segment consisted of two business divisions: (1) e-commerce and (2) online marketing. At December 31, 2010, the results of operations of our previously owned Digital Media Marketing operations are reported as discontinued operations; and accordingly, have been segregated from the revenue and expense discussions below.

~~Linkstar,~~Digital the e-commerce division, was a direct-response product business that developed, marketed and sold products directly to consumers through the internet. We reached our customers predominantly through online advertising on third-party promotional websites. Linkstar also marketed products on promotional websites operated by Promopath, our online marketing division. Promopath, our online affiliate marketing company, secured customer acquisitions or leads for advertising clients principally by using promotional internet sites that offer free gifts.Media Marketing

~~Revenues~~The ~~within~~Company’s ~~our~~Board of Directors committed to a plan to divest of the Digital Media Marketing Segment ~~for~~and, on November 11, 2010, the ~~year~~Company ~~ended~~entered ~~December~~into 31a Stock Purchase Agreement to sell the e-commerce division of its Digital Media Marketing Segment, Linkstar Corporation. On November 22, 2010, ~~were~~we ~~approximately~~sold Linkstar Corporation for a sale price of $51.91 million to Silverback Network, ~~consisting~~Inc. (the “Purchaser”). Under the terms of the Stock Purchase Agreement, the Purchaser paid $51.71 million for the stock of Linkstar Corporation, or$990,000 of 97which was received at closing with ten percent (10%) of the purchase price, ~~from~~or $110,000, placed into escrow, which funds were released to the Company in May 2011 as provided for under the Stock Purchase Agreement. The results of the Digital Media Marketing Segment’s operations have been classified as assets held for sale and liabilities related to assets held for sale in our balance sheet at December 31, 2011 and 2010, and as discontinued operations in our statements of operations and our statements of cash flows. Our Digital Media Marketing Segment consisted of two business divisions: (1) e-commerce ~~division~~and (2) online marketing. The results of operations of our Digital Media Marketing operations for the two years ended December 31, 2011 and ~~$172~~2010 were reported as discontinued operations and,~~000~~ accordingly, orhave ~~3%,~~been segregated from ~~our~~the ~~online~~revenues ~~marketing~~and ~~division~~expenses discussions below.

~~Cost~~Car ofWash revenues within the Digital Media Marketing Segment consisted primarily of amounts we pay to website publishers that are directly related to revenue-generating events, including the cost to enroll new members, fulfillment and warehousing costs, including direct labor and related taxes, fringe benefits and e-commerce product costs. Promopath’s largest expense is the purchasing of internet addresses to which it sends its promotional pages.Services

~~Car~~At ~~Wash~~December ~~Services~~31, 2011, we owned or leased three full service car wash locations in Texas, which are reported as discontinued operations (see Note 4. Discontinued Operations and Assets Held for Sale) and, accordingly, have been segregated from the following revenue and expense discussion. We earn revenues from washing and detailing automobiles; performing oil and lubrication services, minor auto repairs, and state inspections; selling fuel; and selling merchandise through convenience stores within the car wash facilities. The majority of revenues from our car wash operations are collected in the form of cash or credit card receipts, thus minimizing customer accounts receivable. Cost of revenues within the car wash operations consists primarily of direct labor and related taxes and fringe benefits, certain insurance costs, chemicals, wash and detailing supplies, rent, real estate taxes, utilities, car damages, maintenance and repairs of equipment and facilities, as well as the cost of the fuel and merchandise sold.

AtResults ~~December 31, 2010, we owned or leased four full service car wash locations in Texas which are reported as discontinued operations (see Note 5.~~ of ~~the~~Operations ~~Notes~~for ~~to Consolidated Financial Statements); and accordingly, have been segregated from~~ the ~~following~~Two ~~revenue~~Years Ended ~~and~~December ~~expense discussion. We earn revenues from washing and detailing automobiles; performing oil and lubrication services~~31, ~~minor~~2011 ~~auto repairs,~~ and state inspections; selling fuel; and selling merchandise through convenience stores within the car wash facilities. The majority of revenues from our car wash operations are collected in the form of cash or credit card receipts, thus minimizing customer accounts receivable. Cost of revenues within the car wash operations consists primarily of direct labor and related taxes and fringe benefits, certain insurance costs, chemicals, wash and detailing supplies, rent, real estate taxes, utilities, car damages, maintenance and repairs of equipment and facilities, as well as the cost of the fuel and merchandise sold.2010

OnThe ~~December~~following ~~31,~~table ~~2007,~~presents ~~Eagle completed~~ the ~~purchase~~percentage each ofitem ~~the Company’s five truck washes for $1.2 million~~ in ~~consideration, consisting of $280,000 cash and a $920,000 note payable to~~ the ~~Company~~consolidated ~~secured~~statements ~~by mortgages on the truck washes. The $920,000 note, which has a balance~~ of ~~$832,000~~operations atbears ~~December~~to ~~31,~~total ~~2010, has a five-year term, with principal and interest paid on a 15-year amortization schedule.~~revenues:

	Year ended December 31,
	2011			2010

Revenues		100	%		100	%
Cost of revenues		64.6			70.0
Gross Profit		35.4			30.0
Selling, general, and administrative expenses		62.3			52.0
Arbitration award		-			25.1
Depreciation and amortization		3.7			3.2
Asset impairment charges		0.2			2.6
Operating loss		(30.8	)		(52.9	)
Interest expense, net		(2.9	)		(0.2	)
Other income		-			-
Gain on valuation of derivative		0.5			-
Loss from continuing operations before income taxes		(33.2	)		(53.1	)
Income tax (benefit) expense		(0.6	)		0.2
Loss from continuing operations		(32.6	)		(53.3	)
Loss from discontinued operations, net of tax		(4.5	)		(45.1	)
Net loss		(37.1	)%		(98.4	)%

~~Results of Operations for the Two Years Ended December 31, 2010 and 2009~~19

~~The following table presents the percentage each item in the consolidated statements of operations bears to total revenues:~~Revenues

	Year ended December 31,
	2010			2009
Revenues		100	%		100	%
Cost of revenues		70.0			69.9
Selling, general and administrative expenses		52.0			68.3
Arbitration award		25.1			-
Depreciation and amortization		3.2			3.0
Asset impairment charges		2.6			2.5
Operating loss		(52.9	)		(43.7	)
Interest expense, net		(0.2	)		(0.0	)
Other income		-			-
Loss from continuing operations before income taxes		(53.1	)		(43.7	)
Income tax expense		(0.2	)		-
Loss from continuing operations		(53.3	)		(43.7	)
Loss from discontinued operations, net of tax		(45.1	)		(15.2	)
Net loss		(98.4	)%		(58.9	)%

Security

Revenues were approximately $13.9 million and $18.4 million for the years ended December 31, 2011 and 2010, respectively. Of the $13.9 million of revenues for the year ended December 31, 2011, $5.2 million, or 38%, was generated from our personal defense and law enforcement aerosol operations in Vermont, $3.9 million, or 28%, from our wholesale security monitoring operation in California, $3.7 million, or 26%, from our professional and consumer direct home and small business electronic surveillance operations, and $1.1 million, or 8%, from our high-end digital and machine vision cameras and professional imaging components operation. Of the $18.4 million of revenues for the year ended December 31, 2010, $5.3 million, or 29%, was generated from our personal defense and law enforcement aerosol operation in Vermont, $3.2 million, or 17%, from our wholesale security monitoring operations, $5.3 million, or 29%, from our professional and consumer direct home and small business electronic surveillance operation, and $4.6 million, or 25%, from our high-end digital and machine vision cameras and professional imaging components operation.

Overall revenues within the Security Segment decreased $4.5 million, or 24%, in 2011 as compared to 2010, despite an increase in revenues from our wholesale security monitoring operation, which includes the acquisition of a monitoring center, TCCI, on March 31, 2011. See Note 3. Business Acquisitions and Divestitures. Revenues decreased in our professional and consumer direct home and small business electronic surveillance division and in our personal defense operation. The $1.6 million, or 31%, decrease in sales within our consumer direct and professional electronic surveillance operations was 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 impacted by 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. Our personal defense operations sales experienced a slight decrease of approximately $117,000, or 2%, from 2010 to 2011, despite a 6% increase in the sale of our aerosol defense products. This increase in aerosol defense product sales was offset by a decrease in the sales of our TG Guard systems and wireless home security systems. Additionally, the Company’s machine vision camera and video conferencing equipment operation experienced an approximate $3.5 million, or 77%, decrease in sales in 2011 from 2010 as a result of the loss of key sales personnel within this operation, a decrease in product availability resulting from natural disasters in Japan and the loss of one of its largest suppliers, and the ultimate sale of this operation on October 21, 2011.

~~Revenues~~Cost ~~were approximately $18.4 million and $18.6 million for the years ended December 31, 2010 and 2009, respectively. Of the $18.4 million~~ of revenues for the year ended December 31, 2010, $3.9 million, or 22%, was generated from our professional electronic surveillance operations, $1.3 million, or 7%, from our consumer direct home and small business electronic surveillance operations, $4.6 million or 25%, from our high-end digital and machine vision cameras and professional imaging components operation, $5.4 million, or 29%, from our personal defense and law enforcement aerosol operations in Vermont, and $3.2 million, or 17%, from our wholesale security monitoring operation in California acquired on April 30, 2009. Of the $18.6 million of revenues for the year ended December 31, 2009, $4.7 million, or 25%, was generated from our professional electronic surveillance operation, $2.5 million, or 14%, from our consumer direct home and small business electronic surveillance operation, $4.1 million or 22% from our high-end digital and machine vision cameras and professional imaging components operation, $5.0 million, or 27%, from our personal defense and law enforcement aerosol operation in Vermont and $2.3 million, or 12%, from our wholesale security monitoring operation.Revenues

~~Overall revenues within the~~ Security Segment remained constant in 2010, despite increases in revenues from our wholesale security monitoring operation acquired in April 2009, our existing Vermont personal defense operation and from our machine vision operation. Revenues decreased in our consumer direct electronic surveillance division and our professional electronic surveillance operation. The combined $1.9 million, or 26%, decrease in sales within our consumer direct and professional electronic surveillance operations was due to several factors, including the impact on sales of increased competition and a reduction in spending by many of our customers impacted by low housing construction starts. Our Vermont personal defense operations sales increased approximately $328,000, or 7%, from 2009 to 2010, with an increase noted in the sale of aerosol and non-aerosol products and TG Guard systems. Additionally, the Company’s machine vision camera and video conferencing equipment operations experienced an approximate $473,000, or 12%, increase in sales in 2010 over 2009, largely as a result of a focus on vertically integrating products, selling more system solutions, combined with increased sales in international markets.

21Cost of revenues were $8.9 million and $12.9 million, or 64% and 70% of revenues, for the years ended December 31, 2011 and 2010, respectively. The reduction in cost of revenues as a percent of revenues is due to management’s focus on improving margins through enhanced pricing and reduced cost of products and the reduction in sales of the machine vision camera operation which provides a gross profit margin substantially less than the other Security Segment operations. This gross profit margin improvement was partially offset by an additional charge during 2011 of $200,000 to write-down certain inventory which we plan on liquidating within our electronic surveillance equipment division.

~~Cost~~Selling, ofGeneral ~~Revenues~~and Administrative Expenses

~~Security~~SG&A expenses for the years ended December 31, 2011 and 2010 were $8.6 million and $9.6 million, respectively. SG&A expenses as a percentage of revenues increased to 62% in 2011 as compared to 52% for 2010. The increase in SG&A expenses as a percentage of revenue is due to the 24% reduction in revenues as many of these costs are fixed in nature. The overall decrease in SG&A costs was the result of the implementation of corporate wide cost savings measures in 2008 through the fourth quarter of 2011, including a significant reduction in employees throughout the entire Company. The cost savings were partially realized from a reduction in costs within our security division’s surveillance equipment operations. SG&A costs decreased within our electronic surveillance equipment operations by approximately $1.0 million, or 33%, partially as a result of our continued consolidation efforts to reduce SG&A expenses as noted above and partially as a result of our reduced sales levels. SG&A expense reductions were partially offset by increased SG&A expenses related to the acquisition of TCCI on March 31, 2011. SG&A expenses in 2011 also include the recording of a reserve for future payments under an obligation to pay the Company’s former CEO, Dennis Raefield, $375,000 in exchange for Mr. Raefield’s covenant not to compete with the Company for one year following his resignation; a charge for future severance payments to our former President of our Personal Defense Products operation of approximately $73,000; a $105,000 charge related to the termination of a contract with a vendor within the Company’s Personal Defense Products operation; a reserve of $150,000 for future reimbursement of the costs incurred by a stockholder relating to the 2007 annual meeting of stockholders; and a $100,000 executive recruiting fee. SG&A expenses in 2010 includes legal costs related to the 2010 settled arbitration proceedings with Mr. Paolino of approximately $153,000 and severance costs of $224,000 related to employee reductions. Finally, in May 2010, the Company adjusted a contingent purchase price payout originally recorded at $276,000 after determining that acquired recurring monthly revenue (“RMR”) calculated at the acquisition’s one year anniversary date was less than the required amount as defined in the Stock Purchase Agreement. Accordingly, the Company recorded a reduction in SG&A expenses during the second quarter ended June 30, 2010 of $276,000 and reduced a portion of the previously recorded contingent liability at the date of the acquisition of CSSS.

~~Costs of revenues were $12.9 million and $13.0 million or 70% of revenues for 2010 and 2009, respectively.~~20

~~Selling,~~Depreciation ~~General~~ and ~~Administrative Expenses~~Amortization

~~SG&A~~Depreciation ~~expenses for the years ended December 31, 2010~~ and ~~2009~~amortization ~~were~~totaled $~~9.6 million~~ 514,000 and $~~12.7 million~~582,000 ~~respectively. SG&A expenses as a percentage of revenues decreased to 52% in 2010 as compared to 68%~~ for ~~2009. The reduction in SG&A costs were~~ the ~~result~~years ofended ~~implementation~~December of31, ~~corporate~~2011 ~~wide~~and ~~cost savings measures in 2008 through~~ 2010, ~~including a significant reduction in employees throughout the entire Company~~respectively. The ~~cost~~decrease ~~savings were partially realized from a reduction~~ in ~~costs~~depreciation with the consolidation of our security division’s surveillance equipment warehouse operations into our Farmers Branch, Texas facility, as well as the consolidation of customer service, accounting services, and ~~other~~amortization ~~administrative~~expense in ~~functions~~2011 ~~within these operations. SG&A costs decreased within our Florida and Texas electronic surveillance equipment operations by approximately $1.3 million, or 30%, partially~~ as acompared ~~result of our consolidation efforts~~ to ~~reduce~~2010 ~~SG&A~~was ~~expenses~~primarily asrelated ~~noted above and partially as a result of our reduced sales levels. In addition~~ to ~~these cost savings measures, we noted~~ a reduction in ~~stock~~amortization ~~option non-cash compensation~~ expense ~~from~~with ~~continuing operations from approximately $115,000 in 2009 to $66,000 in 2010. SG&A expenses also include legal costs related to~~ the ~~recently~~impairment ~~settled arbitration proceedings with Mr. Paolino of approximately $344,000~~ and ~~$798,000~~write ~~for~~down ~~2010 and 2009, respectively, and $224,000 and $163,000~~ of certain ~~severance~~intangible ~~cost~~assets related to ~~employee reductions in 2010 and 2009, respectively. Finally, in May 2010,~~ the Company ~~adjusted a contingent purchase price payout related to its April 2009 acquisition of the Company~~’s ~~wholesale~~electronic ~~monitoring~~surveillance ~~operation~~equipment ~~originally~~operations ~~recorded at $276,000 after determining that acquired recurring monthly revenue (“RMR”) calculated at the acquisition’s one year anniversary date was less than the required amount as defined~~ in the ~~Stock~~first ~~Purchase~~six ~~Agreement. Accordingly,~~months ~~the Company recorded a reduction in SG&A expenses during the second quarter ended June 30, 2010~~ of ~~$276~~ 2010,~~000~~ ~~and~~partially ~~reduced~~offset aby ~~portion~~amortization ofexpense ~~the~~on ~~previously~~TCCI ~~recorded~~intangible ~~contingent~~assets ~~liability~~acquired aton ~~the~~March ~~date~~31, ~~of the acquisition of CSSS~~2011.

~~Depreciation~~Asset ~~and~~Impairment ~~Amortization~~Charges

~~Depreciation~~Due to continuing challenges in our Mace Security Products, Inc. reporting unit, we performed certain impairment testing of our remaining intangible assets, specifically, the value assigned to customer lists, product lists, and ~~amortization~~trademarks ~~totaled~~as of September 30, 2011, June 30, 2010, and December 31, 2010. We recorded an impairment charge of $~~582~~15,000 to trademarks as of September 30, 2011; $74,000 to customer lists, $81,000 to product lists, and $~~567~~70,000 for trademarks as of June 30, 2010; and ~~2009~~impairment charges of $260,000 ~~respectively~~at December 31, 2010 relating to trademarks, all principally related to our consumer direct electronic surveillance operations and our high end digital and machine vision cameras and professional imaging component operation. ~~The~~On ~~increase~~August in31, ~~depreciation~~2011, the Company entered into a Commercial Contract, which was subsequently amended on October 19, 2011 and ~~amortization~~November ~~expense~~7, in2011, ~~2010~~to sell its Farmers Branch, Texas warehouse for $1,830,000. The net book value of the warehouse at September 30, 2011 was ~~principally~~approximately ~~related~~$1,725,000 with closing costs and broker commissions estimated at $125,000. Accordingly, we recorded an impairment charge of $20,000 relating to ~~amortization~~this ~~expense~~facility as of September 30, 2011. The sale of the warehouse was completed on December 16, 2011. The cash proceeds from the ~~CSSS~~sale ~~acquired~~were ~~intangible~~$1.12 ~~assets~~million, net of paying off existing debt of $494,574 and closing costs. Costs at closing were $120,000, including $109,800 of broker commissions. The sale of the warehouse resulted in a gain of $9,300.

~~Asset~~We ~~Impairment~~conduct ~~Charges~~our annual assessment of goodwill for impairment for our wholesale security monitoring business reporting unit as of April 30 of each year. This is our remaining business reporting unit with recorded goodwill. With respect to our assessment of goodwill impairment as of April 30, 2011, we determined that there was no impairment in that the fair value for this reporting unit exceeded its net book value by approximately $1.0 million or 22%. Our wholesale security monitoring business has recorded goodwill of $2.8 million at April 30, 2011. The determination of the fair value of this reporting unit requires us to make significant estimates and assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions primarily include, but are not limited to, expected future revenues and expense levels, the discount rate, terminal growth rates, operating income before depreciation and amortization and capital expenditures forecasts. We periodically update our forecasted cash flows of the wholesale security monitoring reporting unit considering current economic conditions and trends, estimated future operating results, our views of growth rates, anticipated future economic and relevant regulatory conditions. The key or most significant assumption is our estimate of future recurring revenues. If monthly recurring revenue from security monitoring services within this reporting unit were to be adversely affected by the ongoing economic climate or by other events and we were unable to adjust operating costs to compensate for such revenue loss, this reporting unit would be adversely affected, which would negatively impact the fair value of this business. Based on the Company’s April 30, 2011 assessment, a hypothetical reduction in the annual recurring revenue growth rate from a range of 4% to 5% to an annual recurring revenue growth rate of 1% to 2%, without a corresponding decrease in operating expenses, would result in the fair value for the reporting unit exceeding its net book value at April 30, 2011 by approximately $50,000. Additional events or circumstances that could have a negative effect on estimated fair value of this reporting unit include, but are not limited to, a loss of customers due to competition, pressure from our customers to reduce pricing, the purchase of our dealer customers by third parties who choose to obtain monitoring services elsewhere, the current adverse financial and economic conditions on revenues and costs, inability to continue to employ a competent workforce at current rates of pay, changes in government regulations, accelerating costs beyond management’s control, and management’s inability to control and manage payroll and other operating costs.

In accordance with ASC 360, Impairment or Disposal of Long-Lived Assets, we periodically review the carrying value of our long-lived assets held and used, and assets to be disposed of, for possible impairment when events and circumstances warrant such a review. Assets classified as held for sale are measured at the lower of carrying value or fair value, net of costs to sell.Discontinued Operations

~~Continuing~~During ~~Operations~~the quarter ended December 31, 2009, we wrote down three Arlington, Texas car wash sites for a total of $1.2 million, including a $200,000 write down of a car wash site for which the Company entered into an agreement of sale on January 27, 2010 for a sale price below its net book value; and a $37,000 write down related to a Lubbock, Texas car wash sold on March 10, 2010. In April 2010, we reduced the sale price of a Lubbock, Texas car wash location based on recent offers of $1.7 million for this location and our decision to negotiate a sale of this site at this price, which was below the net book value of $1.85 million. Accordingly, we recorded an impairment charge of $150,000 related to this site on March 31, 2010. Also, in October 2010, we accepted an offer to purchase our Arlington, Texas oil lubrication and self serve car wash facility for a sale price of $340,000, which was below the site’s net book value. Accordingly, we recorded an impairment charge of $53,000 related to this site as of September 30, 2010. In September 2011, we re-evaluated the market value of one of our remaining car wash sites in Arlington, Texas and a site in Fort Worth, Texas with a business broker. Based on our evaluation, we determined that the estimated future proceeds from these sites were below their net book values by $200,000 and $61,000, respectively. Accordingly, we recorded impairment charges of $261,000 related to these two sites at September 30, 2011. With the continued difficulty in selling this remaining Arlington, Texas car wash facility, we re-evaluated our strategy to dispose of this property and accordingly recorded an additional impairment charge of $250,000 at December 31, 2011.

In assessing goodwill for impairment, we first compare the fair value of our final reporting unit containing goodwill, our wholesale monitoring business, with its net book value. We estimate the fair value of the reporting unit using discounted expected future cash flows, supported by the results of various market approach valuation models. If the fair value of the reporting unit exceeds its net book value, goodwill is not impaired, and no further testing is necessary. If the net book value of this reporting unit exceeds its fair value, we perform a second test to measure the amount of impairment loss, if any. To measure the amount of any impairment loss, we determine the implied fair value of goodwill in the same manner as if our reporting unit was being acquired in a business combination. Specifically, we allocate the fair value of the reporting unit to all of the assets and liabilities of that unit, including any unrecognized intangible assets, in a hypothetical calculation that would yield the implied fair value of goodwill. If the implied fair value of goodwill is less than the goodwill recorded on our balance sheet, we record an impairment charge for the difference.21

WePrior ~~performed~~to ~~extensive~~the ~~valuation~~disposition ~~analyses,~~of ~~utilizing~~our ~~both~~Digital Media ~~income~~Marketing ~~and~~Segment ~~market~~in ~~approaches~~the fourth quarter of 2010, inwe conducted our annual assessment of goodwill for impairment for this reporting unit as of June 30 of each year. Based on the results of our assessment ~~process~~of goodwill impairment at June 30, 2010, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value. ~~The~~With ~~following~~the ~~describes~~noted potential impairment at June 30, 2010, we performed the ~~valuation~~second ~~methodologies~~step ~~used~~of the impairment test to ~~derive~~determine the implied fair value of goodwill. The resulting implied goodwill was $2.8 million at June 30, 2010, which was less than the recorded value of goodwill. Accordingly, we recorded an impairment to write down goodwill of this reporting ~~units~~unit by $3.1 million at June 30, 2010. Additionally, during our June 30, 2010 review of intangible assets, we determined that trademarks within our Digital Media Marketing Segment were also impaired by $275,000. Finally, as noted in Note 4. Discontinued Operations and Assets Held for Sale, we entered into an agreement of sale on November 11, 2010 to sell the e-commerce division of our Digital Media Marketing Segment, Linkstar, for a sale price of $1.1 million. Accordingly, an impairment loss of $3.6 million was recorded as of September 30, 2010 and included in the results from discontinued operations in the consolidated statements of operations. The $3.6 million impairment charge included a write-off of the remaining goodwill of the Digital Media Marketing Segment of $2.8 million and $800,000 related to other intangible assets, including software, trademarks, and non-compete agreements. With the closing of the sale of the e-commerce division of our Digital Media Marketing Segment on November 22, 2010, a final loss of $191,000 on disposal was recorded in the fourth quarter of 2010.

·Interest ~~Income Approach: To determine fair value~~Expense, we discounted the expected cash flows of the reporting unit. The discount rate used represents the estimated weighted average cost of capital, which reflects the overall level of inherent risk involved in our reporting units and the rate of return an outside investor would expect to earn. To estimate cash flows beyond the final year of our model, we used a terminal value approach. Under this approach, we used estimated operating income before interest, taxes, depreciation and amortization in the final year of our model, adjusted to estimate a normalized cash flow, applied a perpetuity growth assumption and discounted by a perpetuity discount factor to determine the terminal value. We incorporated the present value of the resulting terminal value into our estimate of fair value.Net

22Interest expense, net of interest income, for the years ended December 31, 2011 and 2010 was $404,000 and $51,000, respectively. Interest expense of $404,000 for the year ended December 31, 2011 includes interest expense paid to Merlin of approximately $129,800 related to two promissory notes, $152,000 of non-cash interest expense for the accretion of the discounts to the Merlin promissory note and debenture for related warrants and a conversion option, and $30,700 of interest expense related to purchase price holdback provisions related to the CSSS acquisition.

·Other ~~Market-Based~~Income Approach: To corroborate the results of the income approach described above, we estimated the fair value of our reporting unit using several market-based approaches, including the value that we derive based on our consolidated stock price as described above. We also used the guideline company method which focuses on comparing our risk profile and growth prospects to select reasonably similar/guideline publicly traded companies.

~~The~~Other ~~determination~~income ofwas ~~the~~$0 ~~fair value of the reporting unit requires us to make significant estimates~~ and ~~assumptions that affect the reporting unit’s expected future cash flows. These estimates and assumptions primarily include~~$5,000 ~~but~~for ~~are not limited to, the discount rate, terminal growth rates, operating income before depreciation~~ 2011 and ~~amortization and capital expenditures forecasts. Due to the inherent uncertainty involved in making these estimates~~2010, ~~actual results could differ from those estimates~~respectively. ~~In addition, changes in underlying assumptions would have a significant impact on either the fair value of the reporting units or the goodwill impairment charge.~~

~~The~~Income allocation of the fair value of the reporting unit to individual assets and liabilities within the reporting unit also requires us to make significant estimates and assumptions. The allocation requires several analyses to determine fair value of assets and liabilities including, among others, customer relationships, non-competition agreements and current replacement costs for certain property, plant and equipment.Taxes

Due to continuing challenges in our Mace Security Products, Inc. reporting unit, we performed certain impairment testing of our remaining intangible assets, specifically, the value assigned to customer lists, product lists, and trademarks as of June 30, 2009, December 31, 2009, June 30, 2010 and December 31, 2010. We recorded anincome ~~impairment~~tax ~~charge~~(benefit) ~~to trademarks~~ expense of ~~approximately~~ $(80,000) and ~~an impairment charge of~~ $~~142~~30,000 tofor ~~customer~~the ~~lists,~~years ~~both~~ended ~~principally~~December ~~related to our consumer direct electronic surveillance operations as of June 30~~31, ~~2009~~2011 and an2010, ~~impairment~~respectively. ~~charge~~Income oftax ~~$30,000~~expense ~~for~~reflects ~~trademarks~~the ~~related~~recording of tostate ~~our~~income ~~high~~taxes. ~~end~~The ~~digital~~effective ~~and~~tax ~~machine~~rates ~~vision~~are ~~cameras~~approximately (1.7)% and ~~professional~~0.3% ~~imaging~~for ~~component~~the ~~operations~~years atended December 31, ~~2009. With~~2011 ~~continuing~~and ~~deterioration in~~ 2010, respectively. weThe ~~recorded~~effective anrate ~~additional~~differs ~~impairment~~from ~~charge~~the offederal ~~$74,000~~statutory torate ~~customer lists, $81,000 to product lists, and $70,000~~ for ~~trademarks~~each asyear ofprimarily ~~June~~due ~~30,~~to ~~2010,~~state and ~~impairment~~local ~~charges of $260~~income taxes,~~000~~ atnon-deductible ~~December~~costs ~~31,~~related ~~2010 relating~~ to ~~trademarks~~intangibles, ~~all~~and ~~principally~~changes ~~related~~ to ~~our~~the ~~consumer~~valuation ~~direct electronic surveillance operations and our high end digital and machine vision cameras and professional imaging component operation~~allowance.

~~Additionally,~~Realization ~~we conduct our annual assessment~~ of ~~goodwill~~the ~~for~~future ~~impairment~~tax ~~for~~benefits related ~~our~~to ~~wholesale~~the ~~security~~deferred ~~monitoring~~tax ~~business~~assets ~~reporting unit as of April 30 of each year. This~~ is ~~our~~dependent ~~remaining~~upon ~~business~~many ~~reporting~~factors, ~~unit~~including ~~with~~the ~~recorded~~Company’s ~~goodwill.~~ability ~~With respect~~ to ~~our~~generate ~~assessment~~taxable ofincome in ~~goodwill~~future ~~impairment~~years. ~~for~~The ~~our~~Company ~~wholesale~~performed ~~security~~a ~~monitoring~~detailed ~~business~~review as of ~~April 30, 2010, we determined that there was no impairment in that~~ the ~~fair~~considerations ~~value~~influencing ~~for~~our ~~this~~ability ~~reporting~~to ~~unit~~realize ~~exceeded~~ the ~~book~~future ~~value~~ benefit of ~~its~~the ~~invested~~net ~~capital.~~operating ~~Our~~losses ~~wholesale security monitoring business has recorded goodwill of $1.98 million~~(“NOLs”), ~~which~~including ~~exceeds~~ the ~~book~~extent ~~value~~ of ~~its~~recently ~~invested~~used ~~capital by $249~~NOLs,~~000,~~ orthe ~~7.8%.~~turnaround ~~Subsequent to our most recent annual testing date~~ of ~~April~~future ~~30,~~deductible temporary ~~2010~~differences, the ~~operating~~duration ~~results~~ of ~~this~~the ~~reporting~~NOL ~~unit~~carryforward ~~have performed at expected levels and no impairment indicators were deemed present at December 31~~period, ~~2010. The determination of the fair value of this reporting unit requires us to make significant estimates~~ and ~~assumptions that affect~~ the ~~reporting unit~~Company’s ~~expected~~ future ~~cash~~projection ~~flows.~~of ~~These~~taxable ~~estimates and assumptions primarily include, but are not limited to, expected future revenues and expense levels, the discount rate, terminal growth rates, operating~~ income ~~before depreciation and amortization and capital expenditures forecasts~~. The WeCompany ~~periodically~~increased ~~update~~its ~~our~~valuation ~~forecasted~~allowance ~~cash~~against ~~flows~~deferred oftax ~~the~~assets ~~wholesale~~by ~~security~~$7.4 ~~monitoring~~million ~~reporting~~in ~~unit~~2011 ~~considering current economic conditions~~ and ~~trends, estimated future operating results, our views of growth rates, anticipated future economic and relevant regulatory conditions~~$3. ~~The~~8 ~~key~~million orin ~~most~~2010 ~~significant~~with a ~~assumption~~total isvaluation ~~our~~allowance ~~estimate~~ of ~~future recurring revenues~~$29.7 Ifmillion ~~monthly~~at ~~recurring~~December ~~revenue~~31, ~~from~~2011 ~~security~~representing ~~monitoring services within this reporting unit were to be adversely affected by~~ the ~~ongoing~~amount ~~economic~~of ~~climate~~its ordeferred byincome ~~other~~tax ~~events~~assets ~~and~~in excess ~~we were unable to adjust operating costs to compensate for such revenue loss, this reporting unit would be adversely affected which would negatively impact the fair value~~ of ~~this business. Based on~~ the Company’s ~~April~~deferred ~~30,~~income ~~2010~~tax ~~assessment,~~liabilities. aThe ~~hypothetical~~valuation ~~reduction~~allowance inwas ~~the~~recorded ~~annual~~because ~~recurring~~management ~~revenue~~was ~~growth rate from a range of 5%~~ unable to 6%conclude tothat anrealization ~~annual recurring revenue growth ratio~~ of 3%the tonet ~~4%,~~deferred ~~without~~income atax ~~corresponding~~asset ~~decrease~~was inmore ~~operating~~likely ~~expenses,~~than ~~would result in an approximate $500,000 impairment charge~~not. ~~Additional~~ ~~events~~This ordetermination ~~circumstances~~was ~~that could have~~ a ~~negative~~result ~~effect on estimated fair value~~ of the ~~this~~Company’s ~~reporting~~continued ~~unit include~~losses, ~~but~~the ~~are~~uncertainty ~~not limited to, a loss~~ of ~~customers due to competition, pressure from our customers to reduce pricing,~~ the ~~purchase~~timing of ~~our~~the ~~dealers~~Company’s bysale ~~third~~of ~~parties~~its ~~who~~remaining ~~choose~~Car toWash ~~obtain monitoring services elsewhere~~operations, and the ~~current~~ultimate ~~adverse~~extent ~~financial and economic conditions on revenues and costs, inability to continue to employ a competent workforce at current rates~~ of ~~pay,~~growth ~~changes~~ in ~~government~~the ~~regulations, and accelerating costs beyond management~~Company’s ~~control~~Security Segment.

In the fourth quarter of 2008, we consolidated the inventory in our Fort Lauderdale, Florida warehouse into our Farmers Branch, Texas facility. Certain of our administrative and sale staff of our Security Segment’s electronic surveillance products division remain in the Fort Lauderdale, Florida building, which we listed for sale with a real estate broker. We performed an updated market evaluation of this property, listing the facility for sale at a price of $1,950,000. We recorded an impairment charge of $275,000 related to this property at December 31, 2008, and additional impairment charges totaling $210,000 in 2009 to write-down the property to our estimate of net realizable value based on updated market valuations of the property. On December 4, 2009, the Company sold the Fort Lauderdale, Florida building, subject to an Agreement of Sale entered into on October 5, 2009, and recorded a loss of $107,000 in the fourth quarter of 2009 after closing costs and broker commissions.22

23Discontinued Operations

~~Discontinued~~Digital ~~Operations~~Media Marketing

AsRevenues ~~noted~~within inour ~~Note~~Digital 4.Media ~~Business~~Marketing Segment ~~Acquisitions~~for ~~and Divestitures, in~~ the ~~accompanying~~year ~~financial~~ended ~~statements,~~December ~~the agreements of sale related to the three car washes the Company owned in Austin~~31, ~~Texas~~2011 were ~~amended to modify the sale price to~~ $8.0 ~~million.~~as ~~This~~a ~~amended sale price, less costs to sell, was estimated to~~ result ~~in a loss upon disposal~~ of ~~approximately~~the ~~$175,000.~~sale ~~Accordingly, an impairment loss~~ of ~~$175,000~~Linkstar ~~was recorded as of September 30, 2009 and included~~ in ~~the~~November ~~results from discounted operations in the accompanying consolidated statement of operations~~2010. ~~The~~Revenues ~~sale~~within ofour Digital ~~the~~Media ~~Austin,~~Marketing ~~Texas~~Segment ~~car~~for ~~washes was completed on November 30, 2009. During~~ the ~~quarter~~year ended December 31, ~~2009,~~2010 wewere ~~wrote~~approximately ~~down three Arlington, Texas car wash sites for a total of~~ $15.29 million, ~~including~~consisting ~~a $200,000 write down~~ of ~~a car wash site for which the Company entered into an agreement of sale on January 27, 2010 for a sale price below its net book value; and a~~ $~~37,000 write down related to a Lubbock, Texas car wash sold on March 10, 2010~~5. ~~In April 2010, we reduced the sale price of a Lubbock, Texas car wash location based on recent offers of $1.~~7 million from ~~for this location and~~ our ~~decision~~e-commerce todivision negotiate a sale of this site at this price, which was below the net book value of $1.85 million. Accordingly, we recorded an impairment charge of $150,000 related to this site at March 31, 2010. Finally, in October 2010, we accepted an offer to purchase our Arlington, Texas oil lubrication and ~~self serve car wash facility for a sale price of~~ $~~340~~172,000, which was below the site’s net book value. Accordingly, we recorded an impairment charge of $53,000 related to this site as of September 30, 2010. We have determined that, due to further reductions in car wash volumes at these sites resulting from ~~increased~~our ~~competition~~online ~~and~~marketing a deterioration in demographic in the immediate geographic areas of these sites, current economic pressures, along with current data utilized to estimate the fair value of these car wash facilities, future expected cash flows would not be sufficient to recover their carrying valuesdivision.

~~Prior~~Cost toof ~~the~~revenues ~~disposition~~within of our Digital Media Marketing Segment ~~in the fourth quarter of 2010, we conducted our annual assessment of goodwill~~ for ~~impairment for this reporting unit as of June 30 of each year. We updated our forecasted cash flows of these reporting units during~~ the ~~second quarter of each~~ year~~. These~~ ~~updates~~ended ~~considered~~December ~~current economic conditions and trends~~31, ~~estimated~~2011 future operating results for the launch of new products as well as non-product revenue growth, and anticipated future economic and regulatory conditions. Based on the results of our assessment of goodwill impairment at June 30, 2009 and June 30, 2010, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value at both measurement dates. With the noted potential impairment at June 30, 2009 and June 30, 2010, we performed the second step of the impairment test to determine the implied fair value of goodwill. The resulting implied goodwill was $5.9 million at June 30, 2009 and $2.8 million at June 30, 2010, which were ~~less than the recorded value of goodwill at these respective dates. Accordingly, we recorded impairments to write down goodwill of this reporting unit by~~ $1.0 million and $3.1 million at June 30, 2009 and June 30, 2010, respectively. Additionally, during our June 30, 2010 review of intangible assets, we determined that trademarks within our Digital Media Marketing Segment were also impaired by $275,000. Finally, as ~~noted~~a inresult ~~Note 5. Discontinued Operations and Assets Held for Sale, we entered into an agreement~~ of ~~sale on November 11, 2010 to sell~~ the ~~e-commerce~~sale ~~division~~ of ~~our Digital Media Marketing Segment,~~ Linkstar, ~~for~~in aNovember ~~sale price of $1.1 million. Accordingly, an impairment loss of $3.6 million was recorded as of September 30,~~ 2010 and ~~included in the results from discontinued operations in the accompanying consolidated statements of operations. The~~ approximately $34.67 million, ~~impairment~~or ~~charge~~79% ~~included a write-off~~ of ~~the remaining goodwill of the Digital Media Marketing Segment of $2.8 million and $800~~revenues,~~000~~ ~~related~~for ~~to other intangible assets, including software, trademarks, and non-compete agreements. With~~ the ~~closing~~year ofended ~~the~~December ~~sale of the e-commerce division of our Digital Media Marketing Segment on November 22~~31, 2010~~, a final loss of $191,000 on disposal was recorded in the fourth quarter of 2010~~.

~~Interest~~Car ~~Expense,~~Wash ~~Net~~Services

~~Interest~~Revenues ~~expense,~~within ~~net~~the ofcar ~~interest~~wash ~~income,~~ operations for the ~~years~~year ended December 31, ~~2010~~2011 ~~and~~were ~~2009~~$3.0 ~~was~~million as compared to $515.1 million for the same period in 2010,~~000~~ ~~and~~a decrease of $~~7,000,~~2.1 million ~~respectively~~or 41%. ~~The~~This ~~increase~~decrease was primarily attributable to a decrease in ~~net~~wash ~~interest~~and ~~expense~~detail isservices, principally due to anthe ~~increase~~sale of incar ~~interest~~washes. ~~expense~~Overall ofcar wash volume declined by approximately ~~$14~~69,000 ~~and~~cars, aor ~~reduction~~41%, in ~~interest~~2011 ~~income~~as compared to 2010. The majority of ~~approximately~~the ~~$30,000~~decrease ~~with~~in overall car wash volume related to the closure and sale of five car wash locations in Texas since January 2010. Additionally, the Company’s ~~decrease~~experienced a slight increase in average ~~cash~~car wash and ~~cash~~detailing ~~equivalent~~revenue ~~balances~~per oncar ~~hand~~from ~~during~~$17.53 in 2010 to $17.87 in 2011.

~~Other~~Cost ~~Income~~of revenues within the car wash operations were $2.75 million, or 92% of revenues, and $4.6 million or 91% of revenues for the years ended December 31, 2011 and 2010, respectively. The slight increase in cost of revenues as a percent of revenues in 2011 as compared to 2010 was the result of the reduction in revenues with certain of these costs fixed in nature.

~~Other~~Liquidity ~~income was $5,000~~ and $0Capital ~~for 2010 and 2009, respectively.~~Resources

24Liquidity

~~Income~~Cash ~~Taxes~~and cash equivalents were $7.9 million at December 31, 2011, including $439,000 of the Company’s cash deposited into a restricted cash account at Chase as security against the Company’s revolving credit facility and certain letters of credit provided by Chase as collateral relating to workers’ compensation insurance policies. The ratio of our total debt to total capitalization, which consists of total debt plus stockholders’ equity, was 8% at December 31, 2011 and 20% at December 31, 2010. As of December 31, 2011, we had working capital, excluded the restricted cash, of approximately $10.7 million. Working capital was approximately $7.0 million at December 31, 2010. Our positive working capital increased by approximately $3.7 million from December 31, 2010 to December 31, 2011, primarily due to the proceeds generated from our recent Rights Offering of our stock and partially offset by our net loss in 2011.

WeThe ~~recorded~~Company ~~income~~conducted a ~~tax~~Rights ~~expense~~Offering to raise working capital. The Rights Offering was completed on August 1, 2011. A total of ~~$30~~22,~~000~~372,616 ~~and~~shares $0of common ~~for~~stock were purchased in the ~~years~~Rights ~~ended~~Offering. ~~December~~Of 31the 22,372,616 ~~2010~~shares of common stock purchased, 16,305,144 were purchased under the basic subscription right and ~~2009~~6,067,472 ~~respectively~~were purchased through the oversubscription privilege. ~~Income~~Net ~~tax~~proceeds, ~~expense~~after expenses from the Rights Offering, were approximately $4.3 million (~~benefit~~the Rights Offering is described in Note 19. Related Party Transactions). On ~~reflects~~August ~~the~~2, ~~recording~~2011, ofMerlin ~~income~~and ~~taxes~~two onassignees ~~loss~~purchased ~~before~~20 ~~income~~million ~~taxes~~shares of the Company's common stock at ~~effective~~a ~~rates~~price of ~~approximately (~~$0.~~3)%,~~20 ~~and~~per share (0the "Additional Stock")%. ~~for~~The sale of Additional Stock resulted in net proceeds to the ~~years~~Company ~~ended~~of ~~December~~$3.75 ~~31,~~million. ~~2010~~The purchasers ~~and~~of ~~2009~~the Additional Stock were paid a fee of $250,000 ~~respectively~~in connection with the purchase. ~~The~~ ~~effective~~Additionally, ~~rate~~shares ~~differs~~registered in ~~from~~the Registration Statement but not sold in the ~~federal~~Rights ~~statutory~~Offering ~~rate~~(the “Available Stock”) were offered for ~~each~~sale ~~year~~by the ~~primarily~~Company ~~due~~during tothe ~~state~~period ~~and~~commencing ~~local~~on ~~income~~August ~~taxes~~2, ~~non-deductible~~2011, ~~costs~~and ~~related~~concluding toon ~~intangibles~~August 15, ~~and~~2011. ~~changes~~The toCompany sold 838,100 shares of the ~~valuation~~offered ~~allowance~~Available Stock generating additional proceeds of $167,620.

~~Realization~~Our ofbusiness ~~the~~requires ~~future~~a ~~tax~~substantial ~~benefits~~amount of ~~related to the deferred tax assets is dependent upon many factors~~capital, ~~including~~most ~~the~~notably ~~Company’s ability~~ to ~~generate~~fund ~~taxable income in future years. The Company performed a detailed review of the considerations influencing~~ our ability to realize the future benefit of the NOLs, including the extent of recently used NOLs, the turnaround of future deductible temporary differences, the duration of the NOL carryforward period, and the Company’s future projection of taxable incomelosses. ~~The~~We ~~Company~~believe increased its valuation allowance against deferred tax assets by $3.8 million in 2010 and $3.4 million in 2009 with a total valuation allowance of $22.2 million at December 31, 2010 representing the amount of its deferred income tax assets in excess of the Company’s deferred income tax liabilities. The valuation allowance was recorded because management was unable to conclude that ~~realization of~~ the ~~net~~proceeds ~~deferred~~from ~~income tax asset was more likely than not. This determination was a result of~~ the ~~Company’s~~Rights ~~continued~~Offering ~~losses,~~and the ~~uncertainty of the timing of the Company’s~~ sale of ~~its~~Additional ~~remaining~~Stock have ~~Car~~provided ~~Wash~~sufficient ~~operations,~~working ~~and~~capital ~~the~~to ~~ultimate~~fund ~~extent~~our ofbusiness ~~growth~~plan infor the ~~Company’s~~next ~~Security~~twelve ~~Segment~~months.

~~Discontinued~~The ~~Operations~~current negative cash flow from operations is approximately $50,000 to $100,000 per month. We plan to use our working capital to fund the negative cash flow until we are able to eliminate the negative cash flow. We have sufficient working capital to meet our future capital and cash operating requirements for at least the next twelve months. If we cannot eliminate the negative cash flow, we will need to raise additional funds through bank borrowings and additional equity and/or debt financings, which may result in significant increases in leverage and interest expense and/or substantial dilution of our outstanding equity. We estimate that our cash balances will be sufficient to pay our estimated cash operating requirements through December 31, 2012. Also see Item 1A. Risk Factors below for Risks Related to Our Business and Common Stock.

~~Digital~~The ~~Media~~Company ~~Marketing~~funded a portion of the settlement payment to Mr. Paolino by borrowing $1.35 million from Merlin on December 28, 2010. The loan's maturity date was extended to August 15, 2011. The Company made a principal payment of $675,000 to Merlin on the loan on March 8, 2011. The $675,000 balance of the loan and accrued interest of $13,950 was paid on August 8, 2011. See Note 19. Related Party Transactions.

Revenues within our Digital Media Marketing Segment for the year ended December 31, 2010 were approximately $5.9 million, consisting of $5.7 million from our e-commerce division and $172,000 from our online marketing division. Revenues within our Digital Media Marketing Segment for the year ended December 31, 2009 were approximately $9.7 million, consisting of $9.6 million from our e-commerce division and $21,000 from our online marketing division. The reduction in revenues within our e-commerce division of approximately $4.0 million is principally related to a reduction in sales in our Purity by Mineral Science cosmetic product line, our ExtremeBriteWhite teeth whitening product, and our cross sell revenue with third-party companies. Additionally, in May 2010, many credit card companies implemented restrictive controls over customer data in response to legislation which negatively impacted our cross sell revenue. Finally, our ExtremeBriteWhite product sales were negatively impacted during the second and third quarter of 2010 as a result of one of our credit card processors discontinuing the processing of payments for this product.23

~~Cost~~On March 30, 2011, we borrowed $1.4 million at an interest rate of ~~revenues~~6% ~~within~~per ~~our~~annum ~~Digital~~from ~~Media~~Merlin ~~Marketing~~to ~~Segment~~fund ~~was~~the ~~approximately~~acquisition $4of a wholesale security monitoring company.7 ~~million,~~The orloan ~~79%~~is ofdue ~~revenues~~March 30, ~~for~~2013; however, Merlin had the ~~year~~right ~~ended~~to ~~December~~call 31the loan commencing on September 27, ~~2010~~2011, forty trading days after the completion of the Company’s Rights Offering and ~~approximately~~Merlin's $6purchase of the Additional Stock ("Call Trigger Event").9 ~~million,~~Merlin's orright ~~72%~~to ofcall ~~revenues~~the loan expired on March 27, ~~for~~2012, ~~the~~six ~~year~~months ~~ended~~from ~~December~~September 27, ~~2009~~2011. ~~The~~ ~~decrease~~Merlin indid ~~cost~~not isexercise ~~due~~their right to acall ~~decline~~the inloan ~~new~~within ~~member~~the ~~acquisitions~~time allowed, ~~partially~~and ~~offset~~accordingly; bythe anloan's ~~increase~~maturity date inwas ~~average~~extended ~~CPA~~to ~~marketing~~March ~~expense~~30, ~~for~~2016. ~~ExtremeBriteWhite~~See ~~customers~~Note 19. ~~CPA~~ ~~marketing~~Related ~~expense~~Party isTransactions ~~recognized~~for atadditional ~~the~~information ~~time~~and athe terms ~~new~~of ~~member~~this isdebt ~~acquired~~instruments.

~~Car~~We ~~Wash~~have ~~Services~~been funding our losses through the sale of assets. In 2010, we generated $3.1 million in cash from the sale of assets, including $990,000 from the sale of Linkstar and $2.1 million from the sale of four car washes, net of related mortgages. In the first quarter of 2011, we generated $975,000 in cash, net of a related mortgage, from the sale of a Lubbock, Texas car wash with $675,000 of the net proceeds used to pay down a promissory note with Merlin. Additionally, in the fourth quarter of 2011, we generated $517,000 in cash from the sale of the Company’s high-end digital and machine vision camera and professional imaging component operation, Industrial Vision Sources, Inc. (“IVS”) on October 21, 2011 and $1.17 million in cash from the sale of our Farmers Branch, Texas warehouse on December 16, 2011, net of a $495,000 mortgage loan and $120,000 of commissions and customary closing costs.

~~Revenues~~As ~~within~~of ~~the car wash operations for the year ended~~ December 31, ~~2010~~2011, ~~were~~we ~~$5.1~~had ~~million~~three asremaining car ~~compared~~washes tofor ~~$10~~sale.6 ~~million~~On ~~for~~February ~~the~~29, ~~same period in 2009~~2012, athe ~~decrease~~Company ofcompleted ~~$5.5~~the ~~million~~sale orone ~~52%.~~of ~~This~~the ~~decrease~~three ~~was~~car ~~primarily~~washes ~~attributable~~for to a ~~decrease~~sale inprice ~~wash~~of ~~and~~$2.1 million. ~~detail~~The ~~services,~~cash ~~principally~~proceeds ~~due~~of to the sale ofwere ~~car~~$1.57 ~~washes~~million, ~~and~~net ~~reduced~~of ~~car~~paying ~~wash~~off ~~volumes~~existing indebt ~~the~~of ~~Texas market. Overall car wash volumes declined by 252~~$512,000 ~~cars,~~and orcertain ~~60%,~~closing incosts. We ~~2010~~estimate ~~as compared to 2009, largely related to~~ the ~~closure~~two ~~and~~remaining ~~divestiture~~car ofwashes 11will ~~car~~generate ~~wash~~proceeds ~~locations~~ in ~~Texas since January 2009. Additionally,~~ the ~~Company~~range ~~experienced~~of aapproximately ~~slight decrease in average car wash and detailing revenue per car from~~ $~~17.89~~300,000 ~~in 2009~~ to $17500,000.~~38 in 2010.~~

~~Cost~~Capital ofexpenditures ~~revenues~~for ~~within~~our ~~the~~Security ~~car~~Segment and ~~wash~~our ~~operations~~corporate division were $~~4.6 million~~165,000 ~~or 91% of revenues,~~ and $~~6.6 million or 88% of revenues~~334,000 for the years ended December 31, ~~2010~~2011 and ~~2009~~2010, respectively. ~~The~~ ~~increase~~Capital expenditures in ~~cost~~our discontinued operations, consisting of ~~revenues~~car aswash aoperations ~~percent~~and ofour ~~revenues~~Digital inMedia ~~2010~~Marketing asbusiness, ~~compared~~were to$4,000 ~~2009~~and ~~was~~$13,000 for the ~~result~~years ofended December 31, 2011 and 2010, respectively. We estimate capital expenditures for the ~~reduction~~Security inSegment ~~car~~at ~~wash~~approximately $200,000 ~~volumes~~to ~~and~~$300,000 afor ~~slight~~2012, ~~increase~~principally inrelated ~~cost~~to oftechnology ~~labor~~improvements aswithin aour ~~percentage~~wholesale ofsecurity ~~car~~monitoring ~~wash~~services operations and ~~detailing~~upgrading ~~revenues~~manufacturing equipment within or personal defense products operations.

~~Liquidity~~On November 16, 2010, the United States Attorney for the District of Vermont (the “U.S. Attorney”) filed a one count indictment charging Mace Security International, Inc. and ~~Capital~~Jon ~~Resources~~Goodrich with a felony of storing hazardous waste without a permit under 42 U.S.C. §6928(d)(2)(A) at the Company’s Bennington, Vermont location. Mr. Goodrich was the President of Mace Personal Defense, Inc., the Company's defense spray division located in Bennington, Vermont. Mr. Goodrich is also the owner of Benmont, the owner of the Bennington, Vermont facility and the owner of Vermont Mills Properties, Inc., the entity that rents the Bennington, Vermont facility to the Company. The Company resolved the indictment against the Company, through a Plea Agreement entered into between the Company's subsidiary, Mace Personal Defense, Inc., and the U.S. Attorney. The Plea Agreement was accepted by the Federal District Court for Vermont on May 26, 2011. Mace Personal Defense, Inc. pled guilty of one count of violating 42 U.S.C. § 6928(d)(2)(A) (Storage of Hazardous Waste Without a Permit) and was fined $100,000 (the "Fine"). The Fine was fully paid during 2011. In addition, the Company incurred legal expenses of $61,300 and $82,300 in the years ended December 31, 2011 and 2010, respectively, relating to this matter.

~~Liquidity~~The Company is a party to various other legal proceedings related to its ordinary business activities. In the opinion of the Company’s management, none of these proceedings are material in relation to the Company’s results of operations, liquidity, cash flows, or financial condition.

~~Cash~~In ~~and~~the ~~cash~~past, ~~equivalents~~we ~~were~~have ~~$2.6~~been ~~million~~successful atin obtaining ~~December~~financing ~~31,~~by ~~2010. The~~selling ~~ratio of~~ our ~~total~~common ~~debt~~stock toand ~~total~~obtaining ~~capitalization,~~mortgage ~~which~~loans. ~~consists~~Our ofability ~~total~~to ~~debt~~obtain ~~plus~~new ~~stockholders’~~financing ~~equity,~~may ~~was~~be ~~20.0%~~adversely impacted atby ~~December~~our ~~31,~~stock ~~2010 and 8~~price.4% ~~at December 31, 2009.~~ Our ~~business~~ability ~~requires~~to aobtain ~~substantial~~new ~~amount~~financing ofwill ~~capital,~~be ~~most~~limited ~~notably~~if ~~to fund~~ our ~~losses. We~~cash ~~plan~~from tooperating ~~meet~~activities ~~these~~does ~~capital~~not improve. ~~needs~~Currently, ~~from~~we ~~various~~cannot ~~financing~~incur ~~sources,~~additional ~~including~~long-term ~~borrowings,~~debt ~~cash~~without ~~generated from~~ the ~~sale~~approval of ~~car~~one ~~washes, and the issuance~~ of ~~common~~our ~~stock~~commercial lenders. ~~Our~~The ~~debt~~Company must ~~covenants~~demonstrate ~~with~~that ~~J.P.~~the ~~Morgan~~cash ~~Chase~~flow ~~Bank,~~benefit ~~N.A.~~from ~~require~~the ususe toof ~~maintain~~new aloan ~~total~~proceeds ~~unencumbered~~exceeds ~~cash~~the ~~and~~resulting ~~marketable~~future ~~securities~~debt ~~balance~~service ~~of $1~~requirements.~~5 million.~~

2524

AsDebt ofCapitalization December 31, 2010, we had working capital of approximately $7.0 million. Working capital was approximately $16.6 million at December 31, 2009. Our positive working capital decreased by approximately $9.6 million from December 31, 2009 to December 31, 2010, principally due to the payment of $4.6 million for the Paolino arbitration award and ~~from~~Other ~~our~~Financing Arrangements 2010 net loss. As described in Note 18. Commitments and Contingencies, the Company and Mr. Paolino settled the various legal actions they had filed against each other in exchange for the Company paying Mr. Paolino $2,300,000 on November 1, 2010 and $2,310,000 on December 29, 2010.

~~The~~At ~~Company~~December ~~funded~~31, a2011, ~~portion~~we ofhad ~~the~~borrowings, including ~~payment~~capital tolease ~~Mr.~~obligations, ~~Paolino~~of byapproximately ~~borrowing~~ $1.3553 million ~~from Merlin Partners~~, LPnet ~~(“Merlin”). The loan which had an original maturity date~~ of ~~March~~unamortized ~~28,~~discounts ~~2011~~for ~~was~~warrants ~~extended~~and toa ~~April~~conversion option ~~28,~~classified ~~2011. The loan was payable~~ in ~~two~~stockholders’ ~~installments~~equity oftotaling $~~675~~549,000 ~~each upon the closing of each of two car washes that were under agreements of sale~~ at December 31, ~~2010. The~~2011 ~~Company~~related ~~made~~to athe ~~payment of~~ $~~675,000~~1.4 tomillion Merlin ~~upon the sale of the Lubbock, Texas car wash on March 8, 2011~~debenture note. ~~The~~See ~~Company~~Note expects to pay the remaining balance owed plus accrued interest from the proceeds generated by the sale of a Dallas, Texas area car wash that is under an agreement of sale and expected to close in the second quarter of 201119. ~~Merlin~~Related isParty ~~a fund managed by Ancora Advisors, a subsidiary of the Ancora Group~~Transactions. ~~Richard~~ We ~~Barone,~~had atwo ~~Company~~letters ~~director, is Chairman~~ of ~~the~~credit ~~Ancora~~outstanding ~~Group. The loan bears interest~~ at aDecember ~~rate~~31, ~~of 12% per annum~~2011, ~~and is secured by second liens on the Dallas~~totaling $149,392, ~~Texas~~as ~~area~~collateral ~~car~~relating ~~wash~~to ~~and~~workers’ acompensation ~~security~~insurance ~~interest in the trade name “Mace”~~policies. As ~~part~~We ~~of the consideration for the financing, Merlin was~~ also ~~granted~~maintain a ~~Common Stock Purchase Warrant (the “Warrant”) to purchase up to 314,715 shares of the Company’s common stock at an exercise price of~~ $~~0.20 per share~~250,000 ~~expiring~~revolving ~~December~~credit facility ~~28,~~to ~~2015. The~~provide ~~Warrant~~financing ~~contains~~for ~~anti-dilution~~additional ~~provisions~~video ~~providing~~surveillance ~~that~~product ~~Merlin~~inventory ~~will~~purchases ~~receive~~and ~~additional~~for ~~warrants~~issuance ~~exercisable into 2%~~ of ~~any~~commercial ~~common stock~~ letters of ~~the~~credit. ~~Company~~There ~~issued~~was byone ~~the~~commercial ~~Company~~letter ~~through December 28, 2011. The exercise price~~ of ~~the~~credit ~~Warrant~~outstanding ~~will~~for beinventory ~~adjusted~~purchases ~~lower~~under ~~to equal~~ the ~~stock~~revolving ~~issuance~~credit ~~price~~facility ~~of any stock issued through~~ at December 2831, 2011 ~~at a price below $0.20. The warrants were accounted~~ for ~~under the equity method with the Black-Scholes fair value of the warrants of~~ $6334,~~274 recorded as a discount to the $1~~698.35 million Merlin loan and as additional paid-in capital. The discount will be charged to interest expense over the three month maturity period of the loan with an offsetting credit to the loan balance.

~~The~~Several ~~Company plans to raise working capital through a rights offering or other sale~~ of ~~securities.~~our Ondebt ~~December 23~~agreements, 2010, the Board of Directors of the Company approved a plan to prepare a rights offering to purchase shares of the Company’s common stock (the “Rights Offering”). On March 25, 2011, the Company and Ancora Securities, Inc. ("Ancora") executed a Placement Agent and Dealer-Manager Agreement, under which Ancora will act as the placement agent for the planned Rights Offering. The basic terms of the Rights Offering being prepared is for each stockholder to be given the right to purchase three shares of common stock for each share of common stock owned as of the record dateamended, contain atcertain anaffirmative ~~exercise price to be established by the Company. The record date~~ and ~~exercise~~negative ~~price~~covenants ~~will be determined~~ and ~~set~~require by the ~~Board~~maintenance of ~~Directors~~certain atlevels ~~a later date near the date~~ of ~~the~~tangible ~~mailing~~net ~~of the prospectus for the Rights Offering. All new shares issued under the Rights Offering will be registered under the Securities Act of 1933~~worth, aslimitations on ~~amended~~capital ~~(the~~spending “Securities Act”). We have also entered into a Securities Purchase Agreement dated March 25, 2011 ("Securities Purchase Agreement") with Merlin, a hedge fund which is under common control with Ancora. In accordance with the Securities Purchase Agreement, Merlin and ~~up to three assignees of Merlin, will purchase $4,000,000 of our common stock, valued at~~ the ~~per~~maintenance ~~share exercise price used in the Rights Offering at the conclusion~~ of ~~the~~certain ~~Rights~~debt ~~Offering. There~~service ~~are~~coverage ~~conditions~~ratios toon Merlin's obligation to purchase, including: (i) that the Rights Offering occur; (ii) the stock sold to Merlin is registered under the Securities Act; and (iii) the Company expand its Board of Directors to seven persons with the two vacancies created by the expansion to be filled with individuals acceptable to Merlin. The Company is currently preparing a ~~registration~~consolidated ~~statement to register the Rights Offering stock and the stock to be sold to Merlin~~level. ~~Richard Barone, a member of our Board of Directors, is a controlling owner of Ancora Securities, Inc and Ancora Advisors, LLC. Ancora Advisors, LLC is the manager of Merlin.~~

The ~~Rights~~Chase ~~Offering~~term isloan ~~expected~~agreements tolimit becapital expenditures ~~made~~annually to ~~stockholders~~$1.0 inmillion and require the ~~first~~Company ~~half~~to ofprovide ~~2011. This~~Chase ~~disclosure~~with an Annual Report on Form 10-K and audited financial statements within 120 days of the ~~Rights~~Company’s ~~Offering~~fiscal ~~does~~year ~~not~~end ~~constitute~~and ana ~~offer~~Quarterly toReport ~~sell~~on orForm ~~the~~10-Q ~~solicitation~~within 60 days after the end of aneach ~~offer~~fiscal toquarter. ~~buy~~A ~~any~~Chase ~~securities,~~term ~~nor~~loan ~~shall~~agreement ~~there~~requirement beto ~~any~~maintain ~~sale~~minimum oftotal ~~any~~unencumbered cash and marketable securities inbalance ~~any~~of ~~state~~$1.5 inmillion ~~which~~was ~~such~~eliminated ~~offer,~~through ~~solicitation,~~an oramendment ~~sale~~to ~~would~~the beterm ~~unlawful~~loan ~~prior~~agreement toeffective ~~registration~~December or31, ~~qualification~~2011. We ~~under~~were in compliance with the ~~securities~~ongoing ~~laws~~covenant requirements as of ~~any~~December ~~such~~31, ~~state~~2011.

WeThe ~~have~~Company’s ~~been~~ongoing ~~funding~~ability ~~our~~to comply ~~losses~~with ~~through~~its ~~the~~debt ~~sale~~covenants ofunder ~~assets. In~~its ~~2010,~~credit wearrangements ~~generated~~and ~~$3.1~~to ~~million~~refinance inits ~~cash~~debt ~~from~~depends largely on the ~~sale~~achievement of ~~assets,~~adequate levels ~~including~~of ~~$990,000~~cash ~~from~~flow. ~~the~~If ~~sale~~our offuture ~~Linkstar~~cash ~~and~~flows ~~$2.1~~are ~~million~~less ~~from~~than ~~the~~expected ~~sale~~or ofour ~~four~~debt ~~car~~service, ~~washes~~including interest expense, ~~net~~increases more ofthan ~~related~~expected, ~~mortgages. As~~causing ofus ~~December~~to ~~31,~~default ~~2010,~~on weany ~~had~~of ~~four~~the ~~remaining~~Chase ~~car~~covenants ~~washes~~in ~~for~~the ~~sale~~future, ~~two~~the ofCompany ~~which~~will ~~were~~need ~~under~~to ~~agreements~~obtain ofamendments or ~~sale~~waivers ~~(See~~from ~~Note 4~~Chase. ~~Business~~Our ~~Acquisitions~~cash ~~and~~flow ~~Divestitures~~has been and ~~Note~~could ~~21.~~continue ~~Subsequent~~to ~~Events).~~be Aadversely ~~car~~affected ~~wash~~by ~~was~~continued ~~sold~~deterioration onin ~~March~~economic conditions 8,and ~~2011~~the ~~with~~requirements to fund the ~~sale~~growth of ~~one~~our ofsecurity business. In the ~~three~~event ~~remaining~~that ~~car~~non-compliance ~~washes~~with ~~pending. As~~the ofdebt ~~March~~covenants should 21occur, ~~2011,~~the weCompany ~~had~~would ~~three~~pursue ~~remaining~~various ~~car~~alternatives ~~washes~~in ~~for~~an ~~sale~~attempt ~~which~~to wesuccessfully ~~estimate~~resolve ~~will~~the ~~generate proceeds~~non-compliance, ~~net~~which ~~of related mortgages~~might include, inamong ~~the~~other ~~range~~things, ofseeking ~~approximately~~additional ~~$1.7~~debt ~~million~~covenant towaivers ~~$2.0~~or ~~million.~~amendments Weor ~~also~~refinancing ~~listed~~debt ~~our~~with ~~Texas~~other ~~warehouse~~financial ~~for~~institutions. There ~~sale~~can inbe ~~August,~~no ~~2010~~assurance ~~with~~that adebt ~~real~~covenant ~~estate~~waivers ~~broker,~~or ~~which~~amendments wewould ~~estimate~~be ~~will~~obtained, ~~generate~~if ~~proceeds~~needed, ~~net~~or ofthat ~~related~~the ~~mortgage~~ debt, ofcould ~~approximately~~be ~~$1.0~~refinanced with ~~million~~other tofinancial ~~$1.2~~institutions ~~million~~on favorable terms.

2625

ToContractual the extent we do not reduce the current negative cash flow from operations of approximately $250,000 per month or generate sufficient cash from the sale of assets, we may not have sufficient cash to operate. To the extent we lack cash to meet our future capital and cash operating requirements, we will need to raise additional funds through bank borrowings and additional equity and/or debt financings, which may result in significant increases in leverage and interest expense and/or substantial dilution of our outstanding equity. We estimate that our cash balances will not be sufficient to pay our estimated cash operating requirements through December 31, 2011 unless we are successful in increasing our cash position through the above noted asset sales or raising additional capital through the sale of securities. There can be no assurance that adequate pending asset sales will take place prior to December 31, 2011 or that we will be successful in selling our securities. If we are unable to raise additional capital, we will need to substantially reduce the scale of operations and curtail our business plans. Additionally, we will not have sufficient funds to meet capital expenditures and cash operating requirements through the next twelve months and will not comply with our debt covenants with JP Morgan Chase, unless we can increase sales and reduce the current levels of negative cash flow from operations as per the Company’s business plan, complete the pending sale of assets and/or raise additional cash from securities sales. Also see Item 1A. Risk Factors above for Risks Related to Our Business and Common Stock.Obligations

IfThe weCompany ~~generate~~is ~~cash~~obligated ~~from~~under ~~the~~various operating ~~successful~~leases, ~~sale~~primarily offor ~~our~~certain ~~remaining~~equipment ~~Car Wash operations~~ and ~~our~~real ~~Texas~~estate ~~warehouse~~within asthe ~~planned,~~Car ~~our~~Wash ~~current~~operations. ~~cash~~Certain ~~and~~of ~~short-term~~these ~~investment~~leases ~~balance~~contain purchase atoptions, ~~December~~renewal 31provisions, ~~2010 of $2.6 million~~ and ~~the~~contingent ~~cash~~rentals ~~proceeds~~for ~~from these asset sales will be sufficient to meet~~ our ~~future~~proportionate ~~capital~~share ~~expenditure~~of ~~and~~taxes, ~~operating~~utilities, ~~funding~~insurance, ~~needs through at least the next twelve months~~ and ~~will~~annual cost ~~allow~~of usliving ~~to continue to satisfy our debt covenant requirement with Chase~~increases.

~~One of our short-term investments in 2008 was in a hedge fund, the Victory Fund, Ltd.~~ The ~~Victory~~following ~~Fund,~~are ~~Ltd.~~summaries ~~was a "Ponzi" scheme operated by Arthur Nadel. Mr. Nadel has been criminally convicted and a receiver was appointed to recover assets~~ of ~~the~~our ~~hedge~~contractual obligations ~~fund on behalf of its investors. We invested $2.0 million in the Victory Fund~~ and ~~were~~other ~~repaid~~commercial ~~$1.0~~commitments ~~million through a redemption on November 5, 2008. We recorded a charge of $2.2 million as an investment loss~~ at December 31, ~~2008~~2011, ~~which~~including ~~included~~capital ~~$1.2~~lease ~~million~~obligations, ~~that~~debt ~~was~~related ~~reported~~to bydiscontinued operations ~~the~~and ~~hedge~~liabilities ~~funds~~related asto ~~profit~~assets onheld ~~the~~for ~~initial~~sale ~~investment. If we recover any of the $1.0 million initial investment loss, such amounts will be recorded as recoveries~~ (in ~~future periods when received.~~thousands):

Capital expenditures for our Security Segment and our corporate division were $348,000 and $430,000 for the years ended December 31, 2010 and 2009, respectively. Capital expenditures in our discontinued operations, consisting of car wash operations and our Digital Media Marketing business, were $13,000 and $64,000 for the years ended December 31, 2010 and 2009, respectively. We estimate capital expenditures for the Security Segment at approximately $150,000 to $200,000 for 2011, principally related to technology and facility improvements for warehouse production equipment.

	Payments Due By Period
Contractual Obligations (1) (2)	Total		Less than One Year		One to Three Years		Three to Five Years		More Than Five Years
Long-term debt (3)	$	1,436	$	1,346	$	90	$	-	$	-
Capital lease obligations		96		74		22		-		-
Minimum operating lease payments		1,688		785		606		297		-
Total	$	3,220	$	2,205	$	718	$	297	$	-

We intend to continue to expend cash for the purchasing of inventory as we grow and introduce new video surveillance and access control products in 2011 and in years subsequent to 2011. We anticipate that inventory purchases will be funded from cash collected from sales and working capital. At December 31, 2010, we maintained a $500,000 revolving credit facility with Chase to provide financing for additional video surveillance and access control product inventory purchases and for issuance of commercial letters of credit.

	Amounts Expiring Per Period
Other Commercial Commitments	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Line of credit (4)	$	35	$	35	$	-	$	-	$	-
Standby letters of credit (5)		149		149		-		-		-
Total	$	184	$	184	$	-	$	-	$	-

~~The~~(1) ~~amount~~Potential ofamounts ~~capital~~for ~~that~~inventory weordered ~~will~~under ~~spend~~purchase inorders ~~2011~~are ~~and~~not inreflected years subsequent to 2011 on all of our businesses is largely dependent on the profitability of our businesses. During the six months ended December 31, 2008, throughout 2009, and into 2010, we implemented Company-wide cost savings measures, including a reduction in ~~employees throughout~~ the ~~entire~~amounts ~~Company,~~above ~~and~~as ~~completed~~they aare ~~consolidation~~typically ~~and~~cancelable ~~reorganization~~prior ofto ~~our~~delivery ~~Security Segment’s electronic surveillance equipment operations in Fort Lauderdale, Florida~~ and ~~Farmers Branch~~, ~~Texas~~if ~~at December 31~~purchased, ~~2008. Our~~would ~~goals~~be ofsold ~~the reorganization were to better align our electronic surveillance equipment sales teams to achieve sales growth, gain efficiencies by sharing redundant functions~~ within ~~our security operations, such as warehousing, customer service, and administrative services, and to streamline our organizational structure and management team for improved long-term growth. During~~ the ~~twelve~~normal ~~months~~business ~~ending December 31, 2010, we incurred approximately $224,000 in severance costs from employee reductions~~cycle.

~~During~~(2) ~~January~~Related ~~2008,~~interest ~~the~~obligations ~~EPA~~have ~~conducted~~been aexcluded ~~site investigation at the Company’s Bennington, Vermont location and the building within which the facility is located. The Company leases 33,476 square feet of the building~~ from ~~Vermont~~this ~~Mill. The~~maturity ~~site investigation was focused on whether hazardous substances were being improperly stored~~schedule. ~~After~~ ~~the~~Our ~~site~~interest ~~investigation,~~payments the EPA notified the Company and the building owner, Benmont, that remediation of certain hazardous wastes was required. Vermont Mill and Benmont are both owned and controlled by Jon Goodrich, the president of the Company’s defense spray division. The EPA, the Company, and the building owner entered into an Administrative Consent Order under which the hazardous materials and waste were remediated. All remediation required by the Administrative Consent Order was completed within the time allowed by the EPA and a final report regarding the remediation was submitted to the EPA in October 2008, as required by the Administrative Consent Order. On September 29, 2009, the EPA accepted the final report. On February 23, 2010, the EPA issued the Company an invoice for ~~$240,096 representing~~ the ~~total~~next oftwelve ~~the~~month ~~EPA's oversight costs that the Company and Benmont were obligated to pay under the Administrative Consent Order. On April 8~~period, ~~2010,~~based ~~the Company negotiated a reduction in the oversight cost reimbursement and,~~ on ~~April~~current ~~13,~~market ~~2010~~rates, ~~the~~are ~~Company~~expected ~~paid a negotiated amount of $216,086~~ to ~~the~~be ~~EPA. During the quarter ended September 30, 2010, Benmont reimbursed the Company 15% of the amount paid to the EPA or $32,413. A total estimated cost of~~ approximately $~~786~~100,000 relating to the remediation, which includes disposal of the waste materials, as well as expenses incurred to engage environmental engineers and legal counsel and reimbursement of the EPA’s costs, has been recorded through December 31, 2010.

27(3) Long-term debt includes the $1.4 million debenture note with Merlin, net of unamortized discounts for warrants and a conversion option totaling $549,000 at December 31, 2011.

The U.S. Attorney conducted an investigation of the Company relating to possible violations of the RCRA at the Company’s Bennington, Vermont location. On November 16, 2010, the U.S. Attorney filed a one count indictment charging the Company and Jon Goodrich with a felony of storing hazardous waste without a permit under 42 U.S.C. Section 6928(d4)~~(2)(A). Mr.~~ ~~Goodrich is the President of Mace Personal Defense, Inc., the Company's defense spray division located in Bennington, Vermont.~~ The Company ~~has~~maintains ~~resolved the indictment through~~ a Plea Agreement entered into between the Company's subsidiary, Mace Personal Defense, Inc. and the U.S. Attorney. The Plea Agreement was made under Fed. R. Crim. P. 11(c)(1)(C), and provides in part, for (i) Mace Personal Defense, Inc., to plead guilty to one count of violating 42 U.S.C. § 6928(d)(2)(A) (Storage of Hazardous Waste Without a Permit); (ii) Mace Personal Defense, Inc. to pay a fine of $~~100~~250,000 ~~(the~~line ~~"Fine") and a court assessment~~ of ~~$400,~~credit ~~the~~with Fine to be paid $34,000 on sentencing, and two additional installments of $33,000 each, at six months and twelve months from January 4, 2011; (iii) the Company to guarantee the payment of the Fine; (iv) the United States to dismiss the indictment against the Company at time of sentencing of Mace Personal Defense, IncChase.; ~~and~~There ~~(v)~~was ~~the~~one ~~United~~commercial ~~States~~letter ~~not to prosecute Mace Personal Defense, Inc. (excluding the guilty plea) or the Company for any criminal offenses known to the United States Attorney's Office~~ of ~~Vermont~~credit asoutstanding of the date of signing of the Plea Agreement committed by the Company or Mace Personal Defense, Inc. in the District of Vermont relative to the storage, shipment, handling or disposal of hazardous waste, including any associated record keeping or reporting offenses. The Plea Agreement is not final until it is accepted by the Court. A hearing date for ~~sentencing~~inventory ~~has~~purchases ~~been~~under ~~scheduled for May 26, 2011. In addition to the Company incurring $83,000 in legal expenses in 2010 relating to~~ this ~~matter,~~line ~~the Company has recorded an accrual~~ of ~~$100,000~~credit at December 31, ~~2010~~2011 asfor ~~a result of its agreement to pay a~~ $~~100~~34,~~000 Fine as part of the Plea Agreement~~698.

~~The~~(5) ~~Company~~Outstanding isletters aof ~~party~~credit ~~to various other legal proceedings related to its ordinary business activities. In the opinion~~ of ~~the Company’s management~~$149,392 ~~none~~represent ofcollateral ~~these~~for ~~proceedings are material in relation to the Company~~workers’s ~~results~~compensation ofinsurance ~~operations, liquidity, cash flows, or financial condition~~policies.

InCash ~~the~~Flows past, we have been successful in obtaining financing by selling our common stock and obtaining mortgage loans. Our ability to obtain new financing can be adversely impacted by our stock price. Our failure to maintain the required debt covenants on existing loans also adversely impacts our ability to obtain additional financing. We are reluctant to sell our common stock at market prices below our per share book value. Our ability to obtain new financing will be limited if our stock price is not above our per share book value and our cash from operating activities does not improve. Currently, we cannot incur additional long term debt without the approval of one of our commercial lenders. The Company must demonstrate that the cash flow benefit from the use of new loan proceeds exceeds the resulting future debt service requirements.

~~Debt~~Operating ~~Capitalization~~Activities. Net cash used in operating activities totaled $2.9 million for the year ended December 31, 2011. Cash used in operating activities in 2011 was primarily due to a net loss from continuing operations of $4.5 million, partially offset by $55,000 of non-cash stock-based compensation charges from continuing operations and ~~Other~~$514,000 ~~Financing~~of ~~Arrangements~~depreciation and amortization expense. Cash was also impacted by a decrease in accounts receivable of $290,000, a combined decrease in accounts payable and accrued expenses of $240,000, a decrease in inventory of $536,000, and a decrease in prepaid expenses and other assets of $470,000.

AtNet ~~December~~cash ~~31,~~used ~~2010,~~in weoperating ~~had~~activities ~~borrowings,~~totaled $10.2 ~~including~~million ~~capital~~for ~~lease~~the ~~obligations,~~year ofended ~~approximately~~December ~~$3.5~~31, ~~million~~2010. WeCash ~~had~~used ~~two~~in ~~letters~~operating ofactivities ~~credit~~in ~~outstanding at December 31,~~ 2010, ~~totaling~~was ~~$307,566,~~primarily asdue ~~collateral~~to ~~relating~~a tonet ~~workers’~~loss ~~compensation~~from continuing ~~insurance~~operations ~~policies~~of $9.8 Wemillion, ~~maintain~~partially aoffset by $~~500~~66,000 ~~revolving~~of ~~credit~~non-cash ~~facility~~stock-based tocompensation ~~provide~~charges ~~financing~~from ~~for~~continuing operations, ~~additional~~$582,000 ~~video~~of ~~surveillance~~depreciation ~~product~~and ~~inventory~~amortization ~~purchases~~expense and ~~for~~$485,000 ~~issuance~~ of ~~commercial~~other ~~letters~~intangible ofasset ~~credit~~impairment charges. ~~There~~ ~~were~~Cash ~~five~~was also ~~commercial~~impacted ~~letters~~by ofan ~~credit~~increase ~~outstanding~~in ~~for~~accounts ~~inventory~~receivable ~~purchases~~of ~~under~~$444,000, ~~the~~a ~~revolving~~decrease ~~credit~~in ~~facility~~accounts atpayable ~~December~~and 31accrual expenses of $886,000, and ~~2010~~a ~~totaling~~decrease in inventory of $~~399~~974,000.

~~Several~~Investing ofActivities. ~~our~~Cash ~~debt~~used in ~~agreements,~~investing asactivities ~~amended~~totaled approximately $286,000 ~~contain~~for ~~certain~~the ~~affirmative~~year ~~and~~ended ~~negative~~December ~~covenants~~31, ~~and~~2011, ~~require~~including ~~the~~cash ~~maintenance~~provided ofby ~~certain~~investing activities ~~levels~~from ofdiscontinued ~~tangible~~operations ~~net~~of ~~worth~~$975,000 ~~maintenance~~related to the sale of ~~certain~~a ~~unencumbered~~car ~~cash~~wash ~~and~~site ~~marketable~~during ~~securities~~the ~~balances~~year ended December 31, ~~limitations~~2011. Investing onactivity also included capital ~~spending~~expenditures of $165,000 related to ongoing operations and $1.8 million related to the acquisition ~~maintenance~~of TCCI and payment of certain ~~debt~~purchase ~~service~~price ~~coverage~~holdbacks ~~ratios~~related onto athe ~~consolidated~~2009 ~~level~~acquisition of Mace CS.

~~The~~Cash ~~Chase~~provided ~~term~~by ~~loan~~investing ~~agreements~~activities ~~limit~~totaled approximately ~~capital expenditures annually to~~ $13.08 million, ~~require~~for the ~~Company~~year toended ~~provide~~December ~~Chase~~31, ~~with~~2010, anwhich ~~Annual~~includes ~~Report~~cash onprovided ~~Form~~by ~~10-K~~investing ~~and~~activities ~~audited~~from ~~financial~~discontinued operations ~~statements~~of ~~within~~$3.0 ~~120~~million ~~days~~related ofto the ~~Company’s~~sale ~~fiscal~~of ~~year~~four ~~end~~car ~~and~~wash asites ~~Quarterly~~and ~~Report~~Linkstar onCorporation ~~Form~~from ~~10-Q~~our ~~within~~former 60Digital ~~days~~Media ~~after~~Marketing Segment in the ~~end~~year ofended ~~each~~December ~~fiscal quarter~~31, ~~and~~2010. ~~require~~Investing ~~the~~activity ~~maintenance~~also ofincluded acapital ~~minimum~~expenditures ~~total~~of ~~unencumbered~~$348,000 ~~cash~~related to ongoing operations and ~~marketable~~proceeds ~~securities~~from ~~balance~~short-term investments of $1.51 million.

The Company’s ongoing ability to comply with its debt covenants under its credit arrangements and to refinance its debt depends largely on the achievement of adequate levels of cash flow. If our future cash flows are less than expected or our debt service, including interest expense, increases more than expected, causing us to default on any of the Chase covenants in the future, the Company will need to obtain further amendments or waivers from Chase. Our cash flow has been and could continue to be adversely affected by continued deterioration in economic conditions, and the requirements to fund the growth of our security business. In the event that non-compliance with the debt covenants should occur, the Company would pursue various alternatives in an attempt to successfully resolve the non-compliance, which might include, among other things, seeking additional debt covenant waivers or amendments or refinancing debt with other financial institutions. If the Company was unable to obtain waivers or amendments in the future, Chase debt currently totaling $1.5 million, would become payable on demand by the financial institution. There can be no assurance that debt covenant waivers or amendments would be obtained or that the debt would be refinanced with other financial institutions at favorable terms.26

28Financing Activities. Cash provided by financing activities was approximately $7.9 million for the year ended December 31, 2011, which includes $1.4 million of borrowings from Merlin, $1.5 million of principal payments on debt from continuing operations, and net proceeds from our completed Rights Offering of our stock of $8.2 million. Financing activities also include $214,000 of routine principal payments on debt related to discontinued operations.

~~The~~Cash ~~Company~~provided isin ~~obligated~~financing ~~under~~activities ~~various~~was approximately ~~operating leases~~$681,000 ~~primarily~~ for ~~certain~~the ~~equipment~~year ~~and~~ended ~~real~~December ~~estate~~31, ~~within~~2010, ~~the~~which ~~Car~~includes ~~Wash operations~~$1. ~~Certain~~4 million of ~~these~~borrowings, ~~leases~~largely ~~contain~~related ~~purchase~~to ~~options,~~a ~~renewal~~$1.35 million ~~provisions~~short term note with Merlin, ~~and~~$136,000 ~~contingent~~of ~~rentals~~routine ~~for~~principal ~~our~~payments ~~proportionate~~on ~~share~~debt offrom ~~taxes,~~continuing ~~utilities~~operations, ~~insurance~~and $178,000 ~~and~~related to ~~annual~~the ~~cost~~purchase of ~~living~~treasury ~~increases~~stock. Financing activities also include $448,000 of routine principal payments on debt related to discontinued operations

~~The~~Seasonality ~~following are summaries of our contractual obligations~~ and ~~other commercial commitments at December 31, 2010, including capital lease obligations, debt related to discontinued operations, and liabilities related to assets held for sale (in thousands):~~Inflation

	Payments Due By Period
Contractual Obligations (1)	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Long-term debt (2)	$	3,341	$	2,165	$	1,016	$	160	$	-
Capital lease obligations		128		58		70		-		-
Minimum operating lease payments		2,359		846		993		462		58
	$	5,828	$	3,069	$	2,079	$	622	$	58

The Company does not believe its operations are subject to seasonality. Inflation and changing prices have not had a material impact on the Company’s net sales and revenues or its income from continuing operations in the two most recent fiscal years.

	Amounts Expiring Per Period
Other Commercial Commitments	Total		Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Line of credit (3)	$	399	$	399	$	-	$	-	$	-
Standby letters of credit (4)		308		308		-		-		-
	$	707	$	707	$	-	$	-	$	-

Summary of Critical Accounting Policies

~~(1)~~Revenue ~~Potential~~Recognition ~~amounts for inventory ordered under purchase orders are not reflected in the amounts above as they are typically cancelable prior to delivery~~ and, Deferred ~~if purchased, would be sold within the normal business cycle.~~Revenue

~~(2)~~The ~~Related~~discussion ~~interest~~and ~~obligations~~analysis of our financial condition and results of operations is based upon the Company's consolidated financial statements, which have been ~~excluded~~prepared ~~from~~in accordance ~~this~~with ~~maturity~~accounting ~~schedule~~principles generally accepted in the United States (“GAAP”). ~~Our~~The ~~interest~~preparation ~~payments~~of ~~for~~these financial statements requires the ~~next~~Company ~~twelve~~to ~~month~~make ~~period,~~estimates ~~based~~and onjudgments ~~current~~that ~~market~~affect ~~rates,~~the ~~are~~reported ~~expected~~amounts toof beassets ~~approximately~~and ~~$93~~liabilities,~~000~~ revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the Company's financial statements. Actual results may differ from these estimates under different assumptions or conditions.

~~(3)~~Critical ~~The~~accounting ~~Company~~policies ~~maintains~~are adefined as ~~$500,000~~those ~~line~~that ofare ~~credit~~reflective ~~with~~of ~~Chase.~~significant ~~There~~judgments ~~were~~and ~~five~~uncertainties, ~~commercial~~and ~~letters~~potentially ofresult ~~credit~~in ~~outstanding~~materially ~~for~~different ~~inventory~~results under ~~purchases~~different ~~under~~assumptions ~~this~~and ~~line~~conditions. ofThe ~~credit~~Company’s atcritical ~~December~~accounting ~~31,~~policies ~~2010~~are ~~totaling~~described ~~$399,000~~below.

~~(4)~~Revenue ~~Outstanding~~Recognition ~~letters~~and Deferred ~~of credit of $308,000 represent collateral for workers’ compensation insurance policies.~~Revenue

~~Cash~~The ~~Flows~~Company recognizes revenue in general when the following criteria have been met: persuasive evidence of an arrangement exists, a customer contract or purchase order exists and the fees are fixed and determinable, no significant obligations remain and collection of the related receivable is reasonably assured. Allowances for sales returns, discounts and allowances are estimated and recorded concurrent with the recognition of the sale and are primarily based on historic return rates.

~~Operating~~Revenues ~~Activities. Net~~from ~~cash~~the ~~used~~Company’s inSecurity Segment ~~operating~~are ~~activities~~recognized ~~totaled~~when ~~$10.2~~shipments ~~million~~are ~~for~~made ~~the~~or ~~year~~security ~~ended~~monitoring ~~December~~services 31are provided, ~~2010. Cash~~or ~~used~~for inexport ~~operating~~sales, ~~activities~~when intitle ~~2010~~has passed. ~~was~~More ~~primarily~~specifically, ~~due~~revenue tois arecognized ~~net~~and ~~loss~~recorded ~~from~~by ~~continuing~~our ~~operations~~electronic ofsurveillance ~~$9.8~~equipment ~~million,~~business ~~partially~~and ~~offset~~personal bydefense spray ~~$66,000~~and ofrelated ~~non-cash~~products ~~stock-based~~business ~~compensation~~when ~~charges~~shipments ~~from~~are ~~continuing~~made ~~operations,~~and ~~$583,000~~title ofhas ~~depreciation~~passed. ~~and~~Revenue ~~amortization~~within ~~expense~~our ~~and~~wholesale ~~$485,000~~security ofmonitoring operation ~~other~~is ~~intangible~~recognized ~~asset~~and ~~impairment~~recorded ~~charges.~~on ~~Cash~~a ~~was~~monthly ~~also~~basis ~~impacted~~as bysecurity anmonitoring ~~increase~~services inare ~~accounts~~provided ~~receivable~~to ofits ~~$444,000,~~dealers aunder ~~decrease~~cancellable contracts inwith ~~accounts~~terms ~~payable~~generally ~~and~~for ~~accrual~~two ~~expenses~~(2) ofto ~~$886,000,~~twenty-four ~~and~~(24) amonths. ~~decrease~~Revenues inare ~~inventory~~recorded net of ~~$974,000~~sales returns and discounts.

~~Net~~The ~~cash~~Company’s ~~used~~discontinued inDigital Media ~~operating~~Marketing ~~activities~~Segment’s ~~totaled~~e-commerce ~~$3.7~~division ~~million~~recognized ~~for~~revenue and the ~~year~~related ~~ended~~product ~~December~~costs ~~31,~~for ~~2009.~~trial ~~Cash~~product ~~used~~shipments after inthe ~~operating~~expiration ~~activities~~of inthe ~~2009~~trial ~~was~~period. ~~primarily~~Marketing ~~due~~costs toincurred aby ~~net~~the ~~loss~~e-commerce ~~from~~division ~~continuing~~were ~~operations~~recognized ofas $8incurred.1 ~~million,~~The online ~~which~~marketing ~~included~~division ~~$115,000~~recognized inrevenue ~~non-cash stock-based compensation charges, $567,000 of depreciation~~ and ~~amortization~~cost ~~expense and $462,000~~ of ~~goodwill~~sales ~~and~~based ~~asset~~on ~~impairment~~the ~~charges. Cash~~gross ~~was~~amount ~~also~~received ~~impacted~~from byadvertisers anand ~~increase~~the inamount paid ~~accounts~~to ~~receivable~~the ofpublishers ~~$487,000,~~placing athe ~~decrease~~advertisements inas ~~inventory~~cost of $1sales.~~5 million and an increase in accounts payable and accrued expenses of $2.0 million.~~

29Revenues from the Company’s discontinued Car Wash operations are recognized, net of customer coupon discounts, when services are rendered or fuel or merchandise is sold. The Company records a liability for gift certificates, ticket books, and seasonal and annual passes sold at its car care locations but not yet redeemed. The Company estimates these unredeemed amounts based on gift certificate and ticket book sales and redemptions throughout the year, as well as utilizing historic sales and tracking of redemption rates per the car washes’ point-of-sale systems. Seasonal and annual passes are amortized on a straight-line basis over the time during which the passes are valid.

Investing Activities. Cash provided by investing activities totaled approximately $3.8 million for the year ended December 31, 2010, which includes cash provided by investing activities from discontinued operations of $3.0 million related to the sale of four car wash sites and Linkstar Corporation from our former Digital Media Marketing Segment in the year ended December 31, 2010. Investing activity also included capital expenditures of $348,000 related to ongoing operations and proceeds from short-term investments of $1.1 million.27

~~Cash~~Fair ~~used~~Value in investing activities totaled approximately $5.2 million for the year ended December 31, 2009, which includes cash used in investing activities from discontinued operations of $6.1. Investing activity in 2009 also included capital expenditures of $430,000 related to ongoing operations and $1.9 million related to the acquisition of CSSS.Measurements

~~Financing~~The ~~Activities. Cash~~Company’s ~~provided~~nonfinancial assets inand ~~financing~~liabilities ~~activities~~that ~~was~~are ~~approximately~~measured ~~$681,000~~at ~~for~~fair ~~the~~value ~~year~~on ~~ended~~a ~~December~~nonrecurring ~~31,~~basis ~~2010~~include goodwill, ~~which~~intangible ~~includes~~assets ~~$1.4~~and ~~million~~long-lived tangible ~~of borrowings~~assets, ~~largely~~including ~~related~~property, toplant aand $1equipment.35 ~~million~~The ~~short~~Company ~~term~~recorded ~~note~~impairment ~~with~~charges ~~Merlin,~~for ~~$136,000~~certain of ~~routine~~these ~~principal~~assets ~~payments~~during the onyears ~~debt~~ended ~~from~~December ~~continuing operations~~31, 2011 and ~~$178,000~~2010. ~~related~~See toNote ~~the~~5. ~~purchase~~Goodwill ofand ~~treasury~~Note ~~stock~~18. ~~Financing~~ ~~activities~~Asset ~~also~~Impairment ~~include $448,000 of routine principal payments on debt related to discontinued operations~~Charges.

~~Cash~~The ~~used~~Company inaccounts for ~~financing~~its ~~activities~~embedded ~~was~~conversion ~~approximately~~features ~~$1.5~~in ~~million~~its ~~for~~convertible ~~the~~debenture ~~year~~in ~~ended~~accordance ~~December~~with ~~31,~~ASC ~~2009~~815-10, “Derivatives and Hedging,” which ~~included~~requires ~~$93~~a periodic valuation of its fair value and a corresponding recognition of a liability associated with such derivatives,~~000~~ and ASC 815-40, “Contracts in Entity’s Own Equity”. The recognition of ~~routine~~a ~~principal~~derivative ~~payments~~liability related to ~~continuing~~the issuance ~~operations~~of convertible debt is recorded as a discount to the related debt at the date of issuance and $1as a derivative liability.0 Any ~~million~~subsequent increase or decrease in the fair value of ~~routine~~the ~~principal~~derivative ~~payments~~liability onis ~~debt~~recognized ~~related~~as “Other expense” or “Other income,” respectively. Additionally, if the embedded conversion features become known in a future reporting period, the initial derivative would no longer meet the criteria to ~~discontinued~~be ~~operations~~recorded as a derivative liability and accordingly the liability would be reclassified to stockholders’ equity as additional paid-in-capital.

~~Seasonality~~Accounts ~~and Inflation~~Receivable

The Company’s ~~does~~accounts receivable are due from trade customers. Credit is extended based on evaluation of customers’ financial condition and, generally, collateral is not ~~believe~~required. ~~that~~Payment terms vary and amounts due from customers are stated in the financial statements net of an allowance for doubtful accounts. Accounts which are outstanding longer than the payment terms are considered past due. The Company determines its ~~operations~~allowance by considering a number of factors, including the length of time trade accounts receivable are ~~subject~~past due, the Company’s previous loss history, the customer’s current ability to ~~seasonality~~pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off accounts receivable when they are deemed uncollectible. Any payments subsequently received on such receivables are credited to the allowance for doubtful accounts. Risk of losses from international sales within the Security Segment are reduced by requiring substantially all international customers to provide either irrevocable confirmed letters of credit or cash advances.

~~Summary of Critical Accounting Policies~~Inventories

~~Revenue~~Inventories ~~Recognition~~are stated at the lower of cost or market. Cost is determined using the first-in first-out (FIFO) method for security and ~~Deferred~~e-commerce ~~Revenue~~products. Inventories at the Company’s car wash locations consist of various chemicals and cleaning supplies used in operations and merchandise and fuel for resale to consumers. Inventories within the Company’s Security Segment consist of defense sprays, child safety products, electronic security monitors, cameras and digital recorders, and various other consumer security and safety products. The Company continually, and at least on a quarterly basis, reviews the book value of slow moving inventory items, as well as discontinued product lines, to determine if inventory is properly valued. The Company identifies slow moving or discontinued product lines by a detail review of recent sales volumes of inventory items as well as a review of recent selling prices versus cost and assesses the ability to dispose of inventory items at a price greater than cost. If it is determined that cost is less than market value, then cost is used for inventory valuation. If market value is less than cost, then an adjustment is made to the Company’s obsolescence reserve to adjust the inventory to market value. When slow moving items are sold at a price less than cost, the difference between cost and selling price is charged against the established obsolescence reserve.

~~The~~Property ~~Company recognizes revenue in general when the following criteria have been met: persuasive evidence of an arrangement exists, a customer contract or purchase order exists~~ and the fees are fixed and determinable, no significant obligations remain and collection of the related receivable is reasonably assured. Allowances for sales returns, discounts and allowances are estimated and recorded concurrent with the recognition of the sale and are primarily based on historic return rates.Equipment

~~Revenues~~Property ~~from~~and ~~the~~equipment ~~Company’s Security Segment~~ are ~~recognized~~stated ~~when~~at ~~shipments are made or security monitoring services are provided, or for export sales, when title has passed~~cost. Depreciation ~~More specifically, revenue~~ is ~~recognized and~~ recorded byusing ~~our~~the ~~electronic~~straight-line ~~surveillance~~method ~~equipment~~over ~~business~~the ~~and~~estimated ~~personal~~useful ~~defense~~lives ~~spray~~of ~~and~~the ~~related~~assets, ~~products~~which ~~business~~are ~~when~~generally ~~shipments~~as ~~are~~follows: buildings ~~made~~ and ~~title~~leasehold ~~has~~improvements ~~passed.~~- ~~Revenue~~15 ~~within~~to of40 ~~our~~years; ~~wholesale~~machinery ~~security monitoring operation is recognized~~ and ~~recorded~~equipment on- a5 ~~monthly~~to ~~basis~~20 asyears; ~~security~~and ~~monitoring~~furniture ~~services~~and ~~are~~fixtures ~~provided~~- 5 to ~~its~~10 ~~dealers~~years. ~~under~~Significant ~~cancellable~~additions ~~contracts~~or ~~with~~improvements ~~terms~~extending ~~generally~~assets' ~~for~~useful ~~two~~lives ~~(2)~~are tocapitalized; ~~twenty-four~~normal ~~(24)~~maintenance ~~months.~~and ~~Revenues~~repair costs are ~~recorded~~expensed ~~net~~as ~~of sales returns and discounts~~incurred.

~~The Company’s discontinued Digital Media Marketing Segment’s e-commerce division recognized revenue~~ Advertising and ~~the related product costs for trial product shipments after the expiration of the trial period.~~ Marketing costs incurred by the e-commerce division were recognized as incurred. The online marketing division recognized revenue and cost of sales based on the gross amount received from advertisers and the amount paid to the publishers placing the advertisements as cost of sales.Costs

~~Revenues~~The ~~from~~Company ~~the~~expenses advertising ~~Company’s~~costs ~~discontinued~~in ~~Car~~its ~~Wash~~Security ~~operations~~Segment ~~are~~and ~~recognized,~~in ~~net~~its ofdiscontinued ~~customer~~Car ~~coupon~~Wash ~~discounts~~operations, ~~when~~including ~~services~~advertising ~~are~~production ~~rendered or fuel or merchandise is sold. The Company records a liability for gift certificates~~cost, as ~~ticket~~the ~~books,~~costs ~~and~~are ~~seasonal~~incurred ~~and~~or ~~annual~~the ~~passes~~first ~~sold~~time atthe ~~its~~advertisement ~~car~~appears. ~~care~~Marketing ~~locations~~costs ~~but~~in ~~not~~the ~~yet redeemed. The~~ Company’s ~~estimates~~discontinued ~~these~~Digital Media ~~unredeemed~~Marketing ~~amounts~~Segment, ~~based~~which onconsisted ~~gift~~of ~~certificate~~the ~~and~~costs ~~ticket~~to ~~book~~acquire ~~sales~~new ~~and~~members ~~redemptions~~for ~~throughout~~its ~~the~~e-commerce ~~year~~business, aswere ~~well~~expensed as ~~utilizing~~incurred rather ~~historic~~than ~~sales~~deferred and ~~tracking~~amortized ofover ~~redemption rates per~~ the ~~car~~expected ~~washes’~~life ~~point-~~of~~-sale~~ ~~systems. Seasonal and annual passes are amortized on~~ a ~~straight-line basis over the time during which the passes are valid~~customer.

~~Fair Value Measurements~~28

~~The~~Impairment ~~Company’s~~of ~~nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis include goodwill, intangible assets and long~~Long-~~lived~~Lived tangible assets including property, plant and equipment. The Company did record impairment charges for certain of these assets during the years ended December 31, 2010 and 2009. See Note 19. Asset Impairment Charges.Assets

30We periodically review the carrying value of our long-lived assets held and used, and assets to be disposed of, when events and circumstances warrant such a review. If significant events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, we determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset group to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded.

~~Accounts Receivable~~Goodwill

~~The~~Goodwill ~~Company’s~~represents ~~accounts~~the ~~receivable~~premium ~~are~~paid ~~due~~over the ~~from~~fair ~~trade~~value ~~customers~~of the net tangible and intangible assets we have acquired in business combinations. ~~Credit~~We isperform ~~extended~~a ~~based~~goodwill impairment test on ~~evaluation~~at least an annual basis for our wholesale security monitoring business, our only reporting unit with recorded goodwill. Application of ~~customers’~~the ~~financial~~goodwill ~~condition~~impairment ~~and~~test requires significant judgments, ~~generally~~including estimation of future cash flows, ~~collateral~~which is dependent ~~not~~on ~~required.~~internal ~~Payment~~forecasts, ~~terms~~estimation ~~vary~~of ~~and~~the ~~amounts~~long-term ~~due~~rate ~~from~~of ~~customers~~growth ~~are~~for ~~stated~~the inbusinesses, the ~~financial~~useful ~~statements~~life ~~net~~over which cash flows will occur and determination of anour ~~allowance~~weighted ~~for~~average ~~doubtful~~cost ~~accounts~~of capital. ~~Accounts~~ ~~which~~Changes ~~are~~in ~~outstanding~~these ~~longer~~estimates ~~than~~and assumptions could materially affect the ~~payment~~determination ~~terms~~of ~~are~~fair ~~considered~~value ~~past~~and/or ~~due~~conclusions on goodwill impairment for each reporting unit. The Company ~~determines~~conducts its annual goodwill impairment test of its ~~allowance~~wholesale bysecurity ~~considering~~monitoring areporting ~~number~~unit as of ~~factors,~~April ~~including~~30 ~~the~~of ~~length~~each ofyear ~~time~~or ~~trade~~more ~~accounts~~frequently if ~~receivable~~indicators ~~are~~of ~~past~~impairment ~~due,~~exist. ~~the~~We ~~Company’s~~periodically ~~previous~~analyze ~~loss~~whether ~~history,~~any ~~the~~such ~~customer’s~~indicators ~~current~~of ~~ability~~impairment toexist. ~~pay~~A ~~its~~significant ~~obligation~~amount of tojudgment ~~the~~is ~~Company,~~involved ~~and~~in ~~the~~determining ~~condition~~if an indicator of ~~the~~impairment ~~general~~has ~~economy~~occurred. ~~and~~Such ~~the~~indicators ~~industry~~may asinclude a ~~whole. The~~sustained ~~Company~~significant decline ~~writes~~in ~~off~~our ~~accounts~~share ~~receivable~~price ~~when~~and ~~they~~market ~~are~~capitalization, ~~deemed~~a ~~uncollectible.~~significant ~~Any~~adverse ~~payments~~change ~~subsequently~~in ~~received~~legal onfactors ~~such~~or ~~receivables~~in ~~are~~the ~~credited~~business toclimate, unanticipated ~~the~~competition ~~allowance~~and/or ~~for~~slower ~~doubtful~~expected ~~accounts~~growth rates, adverse actions or assessments by a regulator, among others. ~~Risk~~The Company compares the fair value of ~~losses~~its ~~from~~reporting ~~international~~unit ~~sales~~to ~~within~~its respective carrying value, including related goodwill. Future changes in the ~~Security~~industry ~~Segment~~could ~~are~~impact ~~reduced~~the byresults ~~requiring~~of ~~substantially~~future ~~all~~annual ~~international~~impairment ~~customers~~tests. toThere ~~provide~~can ~~either~~be ~~irrevocable~~no ~~confirmed~~assurance ~~letters~~that future tests of ~~credit~~goodwill impairment orwill ~~cash~~not ~~advances~~result in impairment charges.

~~Inventories~~Other Intangible Assets

~~Inventories~~Other ~~are~~intangible ~~stated~~assets atconsist ~~the lower~~ primarily of ~~cost or market. Cost is determined using the first~~non-incompete first-out (“FIFO”) method for security and e-commerce products. Inventories at the Company’s car wash locations consist of various chemicals and cleaning supplies used in operations and merchandise and fuel for resale to consumers. Inventories within the Company’s Security Segment consist of defense spraysagreements, ~~child~~customer ~~safety products~~lists, ~~electronic~~product ~~security monitors~~lists, ~~cameras~~patent ~~and digital recorders~~costs, and ~~various~~trademarks. ~~other~~Certain ~~consumer~~of ~~security~~our ~~and~~trademarks ~~safety~~are ~~products.~~considered to ~~The~~have ~~Company~~indefinite ~~continually~~lives, and atas ~~least on a quarterly basis~~such, ~~reviews~~are ~~the~~not ~~book~~subject ~~value~~to ofamortization. ~~slow~~These ~~moving~~assets ~~inventory~~are ~~items,~~tested asfor ~~well~~impairment asusing ~~discontinued~~discounted cash ~~product~~flow ~~lines,~~methodology toannually ~~determine~~and ifwhenever ~~inventory~~there is ~~properly~~an ~~valued~~impairment indicator. ~~The~~Estimating ~~Company~~future ~~identifies~~cash ~~slow~~flows ~~moving~~requires orsignificant judgment ~~discontinued~~and ~~product~~projections ~~lines~~may byvary afrom ~~detail~~cash ~~review~~flows ofeventually ~~recent~~realized. ~~sales~~Several ~~volumes~~impairment ofindicators ~~inventory~~are ~~items~~beyond asour ~~well~~control, ~~as a review of recent selling prices versus cost~~ and determining ~~assesses~~whether ~~the~~or ~~ability~~not tothey ~~dispose~~will ofoccur ~~inventory~~cannot ~~items~~be atpredicted awith ~~price~~any ~~greater than cost~~certainty. IfCustomer itlists, isproduct ~~determined that cost is less than market value~~lists, ~~then cost is used for inventory valuation. If market value is less than cost~~trademarks, ~~then~~patents and annon-compete ~~adjustment~~agreements ~~is made to the Company’s obsolescence reserve to adjust the inventory to market value. When slow moving items~~ are ~~sold~~amortized aton a ~~price~~straight-line ~~less~~or ~~than~~accelerated ~~cost,~~basis ~~the~~over ~~difference~~their ~~between~~respective ~~cost~~assigned ~~and~~estimated ~~selling price is charged against the established obsolescence reserve~~useful lives.

~~Property~~Income ~~and Equipment~~Taxes

~~Property~~Deferred ~~and~~income ~~equipment~~taxes are ~~stated~~determined atbased on ~~cost~~the difference between the financial accounting and tax basis of assets and liabilities. ~~Depreciation~~ isDeferred ~~recorded~~income ~~using~~tax expense (benefit) represents the ~~straight-line~~change ~~method~~during ~~over~~the period in the ~~estimated~~deferred ~~useful~~income ~~lives~~tax ofassets and deferred income tax liabilities. In establishing the provision for income taxes and deferred income tax assets and liabilities, ~~which~~and ~~are~~valuation ~~generally~~allowances asagainst ~~follows:~~deferred ~~buildings~~tax assets, the Company makes judgments and ~~leasehold~~interpretations ~~improvements~~based -on 15enacted tolaws, 40published ~~years;~~tax ~~machinery~~guidance and ~~equipment~~estimates -of 5future toearnings. Deferred 20income ~~years;~~tax assets include tax loss and ~~furniture~~credit carryforwards and ~~fixtures~~are -reduced 5by toa 10valuation ~~years. Significant~~allowance ~~additions~~if, orbased ~~improvements~~on ~~extending~~available evidence, ~~assets'~~it ~~useful~~is ~~lives~~more ~~are~~likely ~~capitalized;~~than ~~normal~~not ~~maintenance~~that ~~and~~some ~~repair~~portion ~~costs~~or ~~are~~all ~~expensed~~of asthe ~~incurred~~deferred income tax assets will not be realized.

~~Advertising~~ITEM ~~and~~7A. ~~Marketing~~QUANTITATIVE ~~Costs~~AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

~~The~~There ~~Company~~has ~~expenses~~been ~~advertising~~no ~~costs~~material change in ~~its~~our exposure ~~Security~~to ~~Segment~~market ~~and~~risks inarising ~~its~~from ~~Car~~fluctuations ~~Wash~~in ~~operations,~~foreign ~~including~~currency ~~advertising~~exchange ~~production cost~~rates, ascommodity ~~the~~prices, ~~costs~~equity ~~are~~prices ~~incurred~~ or ~~the~~market interest ~~first~~rates ~~time~~since ~~the~~December ~~advertisement~~31, ~~appears. Marketing costs in the Company’s Digital Media Marketing Segment~~2010, ~~which~~as ~~consist~~reported ofin ~~the~~our ~~costs~~Annual toReport ~~acquire~~on ~~new~~Form ~~members~~10-K for ~~its e-commerce business, are expensed as incurred rather than deferred and amortized over~~ the ~~expected~~year ~~life~~ended ofDecember a31, ~~customer~~2010.

~~Impairment~~Substantially all of ~~Long-Lived~~our ~~Assets~~variable rate debt obligations at December 31, 2011 are tied to the prime rate, as is our incremental borrowing rate. A one percent increase in the prime rates would not have a material effect on the fair value of our variable rate debt at December 31, 2011. The impact of increasing interest rates by one percent would be an increase in interest expense of approximately $13,000 in 2011.

WeITEM ~~periodically review the carrying value of our long-lived assets held and used, and assets to be disposed of, when events and circumstances warrant such a review~~8. IfFINANCIAL ~~significant~~STATEMENTS ~~events~~AND orSUPPLEMENTARY changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable, we perform a test of recoverability by comparing the carrying value of the asset or asset group to its undiscounted expected future cash flows. Cash flow projections are sometimes based on a group of assets, rather than a single asset. If cash flows cannot be separately and independently identified for a single asset, we determine whether an impairment has occurred for the group of assets for which we can identify the projected cash flows. If the carrying values are in excess of undiscounted expected future cash flows, we measure any impairment by comparing the fair value of the asset group to its carrying value. If the fair value of an asset or asset group is determined to be less than the carrying amount of the asset or asset group, impairment in the amount of the difference is recorded.DATA

~~Goodwill~~The report of independent registered public accounting firm and Consolidated Financial Statements are included in Part IV, Item 15 of this Annual Report on Form 10-K.

Goodwill represents the premium paid over the fair value of the net tangible and intangible assets we have acquired in business combinations. We perform a goodwill impairment test on at least an annual basis for each of our reporting units as previously disclosed. Application of the goodwill impairment test requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. The Company conducts its annual goodwill impairment test as of April 30 of each year for its wholesale security monitoring operation business unit or more frequently if indicators of impairment exist. We periodically analyze whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained, significant decline in our share price and market capitalization, a decline in our expected future cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, among others. The Company compares the fair value of each of its reporting units to their respective carrying values, including related goodwill. Future changes in the industry could impact the results of future annual impairment tests. There can be no assurance that future tests of goodwill impairment will not result in impairment charges.29

31ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~Other Intangible Assets~~None.

~~Other~~ITEM ~~intangible assets consist primarily of deferred financing costs, non-compete agreements, customer lists, software costs, product lists, patent costs, and trademarks~~9A. ~~Our~~ ~~trademarks~~CONTROLS ~~are~~AND considered to have indefinite lives, and as such, are not subject to amortization. These assets are tested for impairment using discounted cash flow methodology annually and whenever there is an impairment indicator. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. Several impairment indicators are beyond our control, and determining whether or not they will occur cannot be predicted with any certainty. Customer lists, product lists, software costs, patents and non-compete agreements are amortized on a straight-line or accelerated basis over their respective assigned estimated useful lives.PROCEDURES

~~Income~~(a) ~~Taxes~~Evaluation of Disclosure Controls and Procedures

~~Deferred~~The ~~income~~Company’s ~~taxes~~management ~~are~~performed an ~~determined~~evaluation ~~based~~under on the ~~difference~~supervision ~~between~~and with the ~~financial~~participation ~~accounting~~of ~~and~~John ~~tax~~J. ~~bases~~McCann, ofthe ~~assets~~Company’s Chief Executive Officer (the “CEO”), and ~~liabilities~~Gregory M. ~~Deferred~~ ~~income~~Krzemien, ~~tax~~Chief ~~expense~~Financial Officer (~~benefit~~the “CFO”), ~~represents~~and ~~the~~completed ~~change~~an ~~during~~evaluation of the effectiveness ~~period~~of in the ~~deferred~~design ~~income~~and ~~tax~~operation ~~assets~~of ~~and~~the ~~deferred~~Company’s ~~income~~disclosure ~~tax~~controls ~~liabilities. In~~and ~~establishing~~procedures ~~the~~(as ~~provision~~that ~~for~~term ~~income~~is ~~taxes~~defined in Rules 13a-15(e) and ~~deferred~~15d-15(e) ~~income~~under ~~tax~~the ~~assets~~Exchange ~~and~~Act) ~~liabilities,~~as ~~and~~of ~~valuation~~December ~~allowances~~31, ~~against~~2011. ~~deferred~~Based ~~tax~~on ~~assets~~that evaluation, the CEO and the CFO concluded that the Company’s ~~makes~~disclosure ~~judgments~~controls and ~~interpretations~~procedures ~~based~~were oneffective ~~enacted~~as ~~laws~~of December 31, ~~published~~2011 ~~tax~~to ~~guidance~~ensure ~~and~~that ~~estimates~~information ofrelating to ~~future~~the ~~earnings.~~Company ~~Deferred~~that ~~income~~is ~~tax~~required ~~assets~~to ~~include~~be ~~tax~~disclosed ~~loss~~in ~~and~~the ~~credit~~reports ~~carryforwards~~that ~~and~~we ~~are~~file ~~reduced~~or bysubmit aunder ~~valuation~~the ~~allowance~~Exchange ifAct is recorded, ~~based~~processed, summarized onand ~~available~~reported ~~evidence~~within the time periods specified in the SEC rules and forms, itand is ~~more~~accumulated ~~likely~~and ~~than~~communicated ~~not~~to ~~that~~management, including ~~some~~the ~~portion~~CEO orand ~~all~~the ofCFO, ~~the~~as ~~deferred~~appropriate ~~income~~to ~~tax~~allow ~~assets~~timely ~~will~~decisions ~~not~~regarding berequired ~~realized~~disclosure.

~~ITEM~~(b) ~~7A. QUANTITATIVE~~Changes ~~AND~~in ~~QUALITATIVE~~Internal ~~DISCLOSURES~~Control ~~ABOUT~~over ~~MARKET~~Financial ~~RISKS~~Reporting.

WeThe ~~are~~Company’s ~~not~~management ~~materially~~is ~~exposed~~responsible for toestablishing ~~market~~and ~~risk~~maintaining ~~arising~~adequate ~~from~~internal ~~fluctuations~~control over financial reporting (as that term is defined in ~~foreign~~Rules ~~currency~~13a-15(f) and ~~exchange~~15d-15(f) ~~rates~~under the Exchange Act). To evaluate the effectiveness of the Company’s internal control over financial reporting, the ~~commodity~~Company ~~prices~~uses the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Using the COSO Framework, orthe ~~equity~~Company’s ~~prices~~management, including the CEO and the CFO, evaluated the Company’s internal control over financial reporting and concluded that the Company’s internal control over financial reporting was effective as of December 31, 2011. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K.

~~Nearly~~(c) Changes all of the Company’s debt at December 31, 2010, including debt related to discontinued operations, is at variable rates. Substantially all of our variable rate debt obligations are tied to the prime rate, as is our incremental borrowing rate. A one percent increase in ~~the~~Internal Control ~~prime~~over ~~rates~~Financial ~~would not have a material effect on the fair value of our variable rate debt at December 31, 2010~~Reporting. ~~The impact of increasing interest rates by one percent would be an increase in interest expense of approximately $24,000 in 2010.~~

~~ITEM~~During ~~8. FINANCIAL~~the ~~STATEMENTS~~Company’s ~~AND~~last ~~SUPPLEMENTARY~~quarter, there ~~DATA~~were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~The~~ITEM ~~report of independent registered public accounting firm and Consolidated Financial Statements are included in Part IV, Item 15 of this Annual Report on Form 10-K~~9B. OTHER INFORMATION

~~ITEM 9~~None. ~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~

~~None.~~PART III

ITEM 9A10. ~~CONTROLS~~ DIRECTORS, EXECUTIVE OFFICERS AND ~~PROCEDURES~~CORPORATE GOVERNANCE

~~(a)~~The ~~Evaluation~~below table lists the current directors of ~~Disclosure~~the ~~Controls~~Company. Additionally, Michael E. Smith and ~~Procedures~~Dennis R. Raefield served as directors of the Company during 2011. Mr. Smith served for all of 2011 and resigned as a director on January 2, 2012. Mr. Raefield served as a director during 2011 from January 1, 2011 through August 18, 2011, when he resigned.

The Company’s management performed an evaluation under the supervision and with the participation of Dennis R. Raefield, the Company’s Chief Executive Officer (the “CEO”) and Gregory M. Krzemien, Chief Financial Officer (the “CFO”), and completed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act (“Exchange Act”)) as of December 31, 2010. Based on that evaluation, the CEO and the CFO concluded that the Company’s disclosure controls and procedures were effective to ensure that information relating to the Company that is required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms, and is accumulated and communicated to management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure.DIRECTORS

(b) Management’s Annual Report on Internal Control over Financial Reporting

Name	Age	Position
Richard A. Barone	69	Director, Chairman of the Board
John J. McCann	48	Director, President and Chief Executive Officer
Denis J. Amato	66	Director
Larry Pollock	64	Director
Daniel V. Perella	42	Director

32All of Mace’s directors serve for terms of one year each until their successors are elected and qualified. All of the above directors, with the exception of Daniel V. Perella and John J. McCann were elected by the shareholders on July 14, 2011. Mr. Perella was appointed to the Board of Directors on January 12, 2012 and Mr. McCann was appointed to the Board of Directors on January 10, 2012.

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). To evaluate the effectiveness of the Company’s internal control over financial reporting, the Company uses the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Using the COSO Framework, the Company’s management, including the CEO and the CFO, evaluated the Company’s internal control over financial reporting and concluded that the Company’s internal control over financial reporting was effective as of December 31, 2010. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this Annual Report on Form 10-K.30

~~(c)~~Current ~~Changes in Internal Control over Financial Reporting.~~Directors

~~During~~Richard A. Barone has served as a director since March 31, 2009. From 2001 to present, Mr. Barone has been Chairman of the ~~Company~~Executive Committee for the Ancora Group of Companies. The Ancora Group of Companies includes Ancora Advisors LLC, Ancora Capital, Inc., Ancora Securities, Inc; the Ancora Mutual Funds, and the Ancora Foundation. Mr. Barone also oversees or manages a variety of investment strategies for the Ancora Group, selected clients and the Ancora Group’s ~~last~~Hedge ~~quarter~~Fund, ~~there~~Merlin ~~were~~Partners, noLP. ~~changes~~Mr. Barone is a major shareholder of The Ancora Group, Inc., and has ownership in ~~internal~~Merlin ~~control~~Partners, ~~over~~LP ~~financial~~and ~~reporting~~the ~~that~~Ancora ~~materially~~Funds. ~~affected~~Ancora Securities, orInc. ~~are~~is ~~reasonably~~registered ~~likely~~as toa ~~materially~~broker/dealer with ~~affect~~the SEC and the Financial Industry Regulatory Authority (“FINRA”), formerly known as the NASD. Mr. Barone is Chairman of the Cleveland State University Foundation, Trustee of Cleveland State University, Director of Hospice of the Western Reserve, Director of Brentwood Hospital, Director of Stephan Company’s, ~~internal~~and ~~control~~Chairman ~~over~~of ~~financial~~Evergreen ~~reporting~~Expedition Group.

~~ITEM~~John 9BJ. ~~OTHER~~ ~~INFORMATION~~McCann has served as a director since January 10, 2012, when he was appointed by the Board of Directors as President and Chief Executive Officer of the Company and to fill a vacancy on the Board. From 2009 to December 20, 2011, Mr. McCann served as the President and Chief Executive Officer of Fitness Quest, Inc. a privately owned company that distributes and markets home exercise and fitness products. From 2002 to 2009, Mr. McCann was President and Chief Executive Officer of Saeco USA, Inc., a privately owned company that distributes and markets coffee brewing appliances. From 1999 to 2002, Mr. McCann was the Executive Vice President of Sales for Delonghi America, Inc, a distributor and marketer of small consumer appliances.

~~None~~Denis J. Amato has served as a director since July 14, 2011. From 2006 to the present, Mr. Amato has been Chief Investment Officer of The Ancora Group, Inc. and Ancora Advisors LLC. Mr. Amato is a major shareholder of The Ancora Group, Inc., and has ownership in Merlin Partners, LP and the Ancora Funds. Mr. Amato has also been a Director of the Ancora Group since 2010. From 2001 to 2006, Mr. Amato served as the Chief Investment Officer for the Northeast Ohio region of Fifth Third Bank. Mr. Amato managed both individual and institutional portfolios as well as two of Fifth Third Bank’s Value Mutual Funds. From 1997 to 2001, Mr. Amato was the Chief Investment Officer and the lead equity portfolio strategist for Maxus. At Maxus, Mr. Amato managed individual high net worth client portfolios as well as the Maxus Ohio Heartland Fund, which focused primarily on the buying and selling of securities in Ohio based companies.

~~PART~~Larry ~~III~~Pollock has served as a director since July 14, 2011. From 2005 to the present, Mr. Pollock has been the Managing Partner of Lucky Stars Partners LLC, a private investment firm focusing on early stage businesses, troubled businesses and real estate. From 2000 to 2004, Mr. Pollock was the President and Chief Executive Officer and a Director of the Cole National Corporation, owner of Pearle Vision and Cole Vision optical stores and Things Remembered personalized gift stores. Mr. Pollock presently serves on the Board of Directors of Cardinal Commerce Corporation, a global leader in enabling authenticated payments, secure transactions, and alternative payment brands for both eCommerce and mobile commerce, and Safeguard Properties, LLC, the largest privately-held mortgage field services company in the country.

~~ITEM~~Daniel 10V. ~~DIRECTORS~~ Perella has served as a director since January 12, ~~EXECUTIVE~~2012, ~~OFFICERS~~when ~~AND~~he ~~CORPORATE~~was ~~GOVERNANCE~~appointed by the Board of Directors to fill a vacancy. From June 2002 to the present, Mr. Perella has been the Chief Operating Officer of IdeaStream Consumer Products, LLC, a privately owned company that develops and markets consumer products such as home and office organizational filing products and protective storage cases for files, CDs laptops and other personal items. From May 1992 to May 2002, Mr. Perella was Executive Vice President of Sales of Manco, Inc (now known as Shurtech and Henkel Consumer Adhesives).

~~DIRECTORS~~Former Directors Who Served During 2011

Name	Age	Position
John C. Mallon	75	Director, Chairman of the Board
Dennis R. Raefield	63	Director, President and Chief Executive Officer
Gerald T. LaFlamme	71	Director
Richard A. Barone	68	Director
Michael E. Smith	55	Director

Dennis R. Raefield served as a director from October 16, 2007 to August 18, 2011 and as President and Chief Executive Officer of the Company from August 18, 2008 to August 18, 2011. From April 2007 to August 17, 2008, Mr. Raefield was the President of Reach Systems, Inc. (formerly Edge Integration Systems, Inc.) a manufacturer of security access control systems. From February 2005 to February 2006, Mr. Raefield was President of Rosslare Security Products, Inc., a manufacturer of diverse security products. From February 2004 to February 2005, Mr. Raefield was President of NexVision Consulting. From January 2003 to February 2004, Mr. Raefield was President of Ortega InfoSystems, a software developer. From October 1998 to November 2002, Mr. Raefield was President of Ademco and Honeywell Access Systems, a division of Honeywell, Inc. that manufactured access control systems.

~~All of Mace’s directors serve for terms of one year each until their successors are elected and qualified. All of the above directors were elected on June 18, 2010.~~31

~~Dennis~~Michael RE. ~~Raefield~~Smith ~~has~~ served as a director from ~~since~~June ~~October~~18, 162010 to January 2, ~~2007~~2012 and as interim President and Chief Executive Officer ~~since~~from August 1819, ~~2008.~~2011 ~~From April 2007~~ to ~~August~~January 172, ~~2008, Mr~~2012. From ~~Raefield~~2003 ~~was~~to the ~~President of Reach Systems~~present, ~~Inc~~Mr. ~~(formerly~~Smith ~~Edge~~has ~~Integration~~been ~~Systems,~~an ~~Inc.)~~Independent (aConsultant ~~manufacturer~~and ofManaging ~~security~~and ~~access~~Founding ~~control~~Partner ~~systems).~~of ~~From~~Chesterbrook ~~February~~Growth Partners, ~~2005~~a toconsulting ~~February~~organization ~~2006,~~focused ~~Mr.~~on ~~Raefield~~providing ~~was~~strategic ~~President~~and ofoperational ~~Rosslare~~advice ~~Security~~to ~~Products,~~small ~~Inc.~~to (amedium ~~manufacturer~~size offirms ~~diverse~~in the security, ~~products). From February 2004 to February 2005~~RFID, ~~Mr.~~auto-identification ~~Raefield~~and ~~was~~electronic ~~President~~components ~~of NexVision Consulting (security business consultant)~~industries. From ~~January~~2001 ~~2003~~ to ~~February 2004~~2002, Mr. ~~Raefield~~Smith was the President ofand ~~Ortega~~Chief Executive ~~InfoSystems~~Officer (aof ~~software~~Checkpoint ~~developer)~~Systems, Inc. ~~From~~, ~~October~~a ~~1998~~New toYork ~~November~~Stock ~~2002,~~Exchange ~~Mr.~~listed ~~Raefield~~company ~~was~~in ~~President~~the ofsecurity, ~~Ademco~~auto-identification and electronic ~~Honeywell~~components ~~Access~~industries, ~~Systems~~having (a$650 ~~division~~million ofin ~~Honeywell,~~sales ~~Inc.~~during ~~that~~the ~~manufactured~~2001 ~~access~~to ~~control~~2002 ~~systems)~~period.

~~John~~EXECUTIVE C. Mallon has served as a director since December 14, 2007 and as Chairman of the Board since May 20, 2008. From 1994 to the present, Mr. Mallon has been the Managing Director of Mallon Associates (an investment bank and broker specializing in the security industry). From 1994 to 2006, Mr. Mallon was the Editor and Publisher of Mallon’s Security Investing and Mallon’s Security Report (financial newsletters tracking more than 250 public security companies). Mr. Mallon is a director of and Chairman of the Audit Committee of Good Harbor Partners Acquisition Corporation (a public special purpose acquisition corporation focusing on acquisitions in the global security market). Mr. Mallon is a director of and Chairman of the Board of IBI Armored Services, Inc. (a privately held national armored trucking, and money processing company). Mr. Mallon is also an attorney admitted to practice in the states of New York and Connecticut and before the United States Federal Court.OFFICERS

33The individuals identified in the table below are the current Executive Officers of the Company. Michael E. Smith and Dennis R. Raefield were each President and Chief Executive Officer of the Company during part of 2011. Mr. Raefield was Chief Executive Officer and President from August 18, 2008 to August 18, 2011. Mr. Smith was Chief Executive Officer and President from August 19, 2011 to January 2, 2012.

Gerald T. LaFlamme has served as a director since December 14, 2007. From May 20, 2008 to August 18, 2008, Mr. LaFlamme served as interim Chief Executive Officer of the Company. From 2004 to the present, Mr. LaFlamme has been President of JL Development Company, Inc. (a real estate development and consulting company). From 2001 to 2004, Mr. LaFlamme was Senior Vice President and CFO of Davidson Communities, LLC (a regional home builder). From 1978 to 1997, Mr. LaFlamme was Area Managing Partner for Ernst & Young, LLP, and a predecessor accounting firm in San Diego, CA. Mr. LaFlamme is a director and Chairman of the Audit Committee of Arlington Hospitality Inc. On August 31, 2005, Arlington Hospitality Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code. At the time of the Chapter 11 filing, Mr. LaFlamme was a director of Arlington Hospitality Inc.

Name	Age	Position
John J. McCann	48	President and Chief Executive Officer, since January 10, 2012

Gregory M. Krzemien	52	Chief Financial Officer, Treasurer and Secretary

~~Richard~~Current ~~A. Barone has served as a director since March 31, 2009. From 2001 to present, Mr. Barone has been Chairman of the~~ Executive Committee for the Ancora Group of Companies. The Ancora Group of Companies includes Ancora Advisors LLC, Ancora Capital Inc., Ancora Securities Inc, the Ancora Mutual Funds, and the Ancora Foundation. Mr. Barone also oversees or manages a variety of investment strategies for the Ancora Group, selected clients and the Ancora Group’s Hedge Fund, Merlin Partners, LP. Ancora Securities, Inc. is registered as a broker/dealer with the SEC and the Financial Industry Regulatory Authority (“FINRA”), formerly known as the NASD. Mr. Barone is Chairman of the Cleveland State University Foundation, Trustee of Cleveland State University, Director of Hospice of the Western Reserve, Director of Brentwood Hospital, Director of Stephan Company, and Chairman of Evergreen Expedition Group.Officers

~~Michael~~John EJ. ~~Smith~~McCann has served as Chief Executive Officer and as a director since ~~June~~January 1810, ~~2010~~2012. From ~~2003~~2009 to ~~the~~December ~~present~~20, 2011, Mr. ~~Smith~~McCann ~~has~~was ~~been~~the anPresident ~~Independent Consultant~~ and ~~Managing~~Chief Executive ~~and~~Officer ~~Founding Partner~~ of ~~Chesterbrook~~Fitness ~~Growth Partners~~Quest, Inc. a ~~consulting~~privately ~~organization~~owned ~~focused~~company onthat ~~providing~~distributes ~~strategic~~ and ~~operational~~markets ~~advice~~home toexercise ~~small to medium size firms in the security, RFID, auto-identification~~ and ~~electronic~~fitness ~~components industries~~products. From ~~2001~~2002 to ~~2002~~2009, Mr. ~~Smith~~McCann was ~~the~~ President and Chief Executive Officer of ~~Checkpoint~~Saeco ~~Systems~~USA, Inc., a ~~New~~privately ~~York~~owned ~~Stock~~company ~~Exchange~~that ~~listed~~distributes and ~~company~~markets incoffee ~~the~~brewing ~~security~~appliances. From 1999 to 2002, ~~auto-identification~~Mr. ~~and~~McCann ~~electronic~~was ~~components~~the ~~industries,~~Executive ~~having~~Vice ~~$650~~President ~~million~~of inSales ~~sales~~for ~~during~~Delonghi ~~the~~America, Inc, ~~2001~~a todistributor ~~2002~~and ~~period~~marketer of small consumer appliances.

~~EXECUTIVE~~Gregory ~~OFFICERS~~M. Krzemien has served as the Chief Financial Officer and Treasurer of the Company since May 1999 and as Corporate Secretary since July 13, 2010. From August 1992 through December 1998, he served as Chief Financial Officer and Treasurer of Eastern Environmental Services, Inc. From October 1988 to August 1992, Mr. Krzemien was a senior audit manager with Ernst & Young LLP. Mr. Krzemien received a B.S. degree in Accounting from the Pennsylvania State University.

~~The~~Former ~~individuals below are the current~~ Executive Officers ~~and~~Who ~~were~~Served During ~~the Executive Officers during 2010, except for Robert M. Kramer whose last day as an employee of the Company was February 12, 2010.~~2011

Name	Age	Position
Dennis R. Raefield	63	President and Chief Executive Officer
Robert M. Kramer	58	Executive Vice President, General Counsel and Secretary
Gregory M. Krzemien	51	Chief Financial Officer and Treasurer

Dennis R. Raefield served as President and Chief Executive Officer from August 18, 2008 to August 18, 2011. From April 2007 to August 17, 2008, Mr. Raefield was the President of Reach Systems, Inc. (formerly Edge Integration Systems, Inc.), a manufacturer of security access control systems. From February 2005 to February 2006, Mr. Raefield was President of Rosslare Security Products, Inc. a manufacturer of diverse security products. From February 2004 to February 2005, Mr. Raefield was President of NexVision Consulting. From January 2003 to February 2004, Mr. Raefield was President of Ortega InfoSystems, a software developer. From October 1998 to November 2002, Mr. Raefield was President of Ademco and Honeywell Access Systems, a division of Honeywell, Inc. that manufactured access control systems.

~~Dennis~~Michael RE. ~~Raefield~~Smith ~~has~~ served as interim President and Chief Executive Officer ~~since~~from August 18, ~~2008. From~~2011 ~~April 2007~~ to ~~August~~January 172, ~~2008, Mr~~2012. ~~Raefield~~From ~~was~~2003 to the ~~President of Reach Systems~~present, ~~Inc~~Mr. ~~(formerly~~Smith ~~Edge~~has ~~Integration~~been ~~Systems,~~an Independent ~~Inc.)~~Consultant (aand ~~manufacturer~~Managing ofand ~~security~~Founding ~~access~~Partner ~~control systems). From February 2005 to February 2006, Mr. Raefield was President~~ of ~~Rosslare~~Chesterbrook ~~Security~~Growth ~~Products~~Partners, ~~Inc. (~~a ~~manufacturer~~consulting oforganization ~~diverse~~focused ~~security~~on providing ~~products). From~~strategic ~~February~~and ~~2004~~operational advice to ~~February~~small ~~2005,~~to ~~Mr.~~medium ~~Raefield~~size ~~was~~firms ~~President~~in ofthe ~~NexVision~~security, ~~Consulting~~RFID, ~~(security~~auto-identification ~~business~~and ~~consultant)~~electronic components industries. From ~~January~~2001 ~~2003~~ to ~~February 2004~~2002, Mr. ~~Raefield~~Smith was the President ofand ~~Ortega~~Chief ~~InfoSystems~~Executive (aOfficer ~~software~~of ~~developer). From~~Checkpoint ~~October~~Systems, ~~1998~~Inc., a toNew ~~November~~York ~~2002,~~Stock ~~Mr.~~Exchange ~~Raefield~~listed ~~was~~company ~~President~~in ofthe ~~Ademco~~security, auto-identification and ~~Honeywell~~electronic ~~Access~~components ~~Systems~~industries, (ahaving ~~division~~$650 million ofin ~~Honeywell,~~sales ~~Inc.~~during ~~that~~the ~~manufactured~~2001 ~~access~~to ~~control~~2002 ~~systems)~~period.

~~Robert~~CORPORATE M. Kramer served as Executive Vice President, General Counsel, and Secretary of the Company from May 1999, to February 12, 2010 and as Chief Operating Officer of the Car Wash Segment from July 2000 to July 2006. Mr. Kramer was terminated upon the expiration of his employment contract, effective on February 12, 2010. Mr. Kramer also served as a director of the Company from May 1999 to December 2003. From June 1996 through December 1998, he served as General Counsel, Executive Vice President and Secretary of Eastern Environmental Services, Inc. Mr. Kramer is an attorney and has practiced law since 1979 with various firms, including Blank Rome Comisky & McCauley, Philadelphia, Pennsylvania and Arent Fox Kitner Poltkin & Kahn, Washington, D.C. From 1989 to December 2000, Mr. Kramer had been the sole partner of Robert M. Kramer & Associates, P.C. From December 1989 to December 1997, Mr. Kramer served on the Board of Directors of American Capital Corporation, a registered securities broker dealer. Mr. Kramer received B.S. and J.D. degrees from Temple University.GOVERNANCE

~~Gregory~~Audit M.Committee ~~Krzemien has served as the Chief Financial Officer~~ and ~~Treasurer~~Audit ~~of the Company since May 1999. From August 1992 through December 1998, he served as Chief~~ Committee Financial Officer and Treasurer of Eastern Environmental Services, Inc. From October 1988 to August 1992, Mr. Krzemien was a senior audit manager with Ernst & Young LLP. Mr. Krzemien received a B.S. degree in Accounting from the Pennsylvania State University.Expert

34The Company has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Denis J. Amato (Chairman), Richard A. Barone, Larry Pollock and Daniel V. Perella. The Board of Directors has determined that each member of the Audit Committee is independent within the meaning of Rule 4200(a)(15) of NASDAQ’s listing standards and Rule 10A-3 promulgated under the Securities Exchange Act of 1934. The Board of Directors has determined that Mr. Amato, the Chairman of the Company’s Audit Committee, is an audit committee financial expert as defined in the rules and regulations of the SEC. The Charter of the Audit Committee is posted on our website at www.mace.com under the heading “Investor Relations.”

~~CORPORATE GOVERNANCE~~32

~~Audit~~Section ~~Committee~~16(a) ~~and~~Beneficial ~~Audit~~Ownership ~~Committee Financial Expert~~Reporting Compliance

~~The~~Section ~~Company has~~ 16(a) ~~separately~~of ~~designated~~the ~~standing~~Exchange ~~Audit~~Act ~~Committee~~requires Mace’s ~~established~~directors inand ~~accordance~~executive ~~with~~officers, ~~Section~~as ~~3(a)(58)(A)~~well ofas ~~the~~persons ~~Exchange~~beneficially ~~Act.~~owning ~~The~~more ~~members~~than 10% of ~~the~~Mace’s ~~Audit~~outstanding shares ~~Committee~~of ~~are~~common ~~Messrs.~~stock ~~LaFlamme, Chairman, Smith,~~ and ~~Barone.~~certain ~~The~~other ~~Board~~holders of ~~Directors~~such ~~has~~shares ~~determined~~(collectively, ~~that~~“Covered ~~each~~Persons”), ~~member~~to offile with the SEC, ~~Audit~~within ~~Committee~~specified istime ~~independent~~periods, ~~within~~initial ~~the~~reports ~~meaning~~ of ~~Rule~~ownership, ~~4200(a)(15)~~and subsequent reports of ~~the~~changes ~~National~~in ~~Association~~ownership, of ~~Securities~~common ~~Dealers’~~stock and ~~Nasdaq~~other ~~Global~~equity ~~Market~~securities ~~listing~~of ~~standards~~Mace. ~~and~~Based ~~Rule~~upon ~~10A-3~~Mace’s ~~promulgated~~review ~~under~~of ~~the~~copies ~~Securities~~of ~~Exchange~~such ~~Act~~reports offurnished ~~1934. The~~to ~~Board~~it ofand ~~Directors~~upon ~~has~~representations of ~~determined~~Covered Persons that ~~Mr.~~no ~~LaFlamme,~~other ~~the~~reports ~~Chairman~~were ofrequired, ~~the~~to ~~Company~~Mace’s ~~Audit Committee~~knowledge, isall anof ~~audit~~the ~~committee~~Section ~~financial~~16(a) ~~expert~~filings asrequired ~~defined~~to be made by ~~Item~~the ~~407(d)(5)(ii)~~Covered ofPersons ~~Regulation~~with ~~S-K~~respect ofto ~~the~~2011 ~~Exchange~~were ~~Act.~~made ~~The~~on ~~Charter~~a oftimely ~~the~~basis, ~~Audit~~except ~~Committee~~as isidentified ~~posted~~in onthe ~~our~~chart ~~website at www.mace.com.~~below:

Section 16(a) Beneficial Ownership Reporting Compliance

Name of Person	Number of Late Reports	Number of Transactions Reported Late
Denis J. Amato	Three (one late Form 3 and two late Forms 4)	Two transactions not reported timely
Richard A. Barone	Two (two late Forms 4)	Two transaction not reported timely
Larry Pollock	Three (one late Form 3 and two late Forms 4)	Two transactions not reported timely

~~Section~~Code ~~16(a)~~ of ~~the~~Ethics ~~Exchange Act requires Mace’s directors~~ and ~~executive~~Corporate officers, as well as persons beneficially owning more than 10% of Mace’s outstanding shares of common stock and certain other holders of such shares (collectively, “Covered Persons”), to file with the SEC, within specified time periods, initial reports of ownership, and subsequent reports of changes in ownership, of common stock and other equity securities of Mace. Based upon Mace’s review of copies of such reports furnished to it and upon representations of Covered Persons that no other reports were required, to Mace’s knowledge, all of the Section 16(a) filings required to be made by the Covered Persons with respect to 2010 were made on a timely basis, except that a Form 4 filing related to certain stock options granted to Mr. Krzemien in April 2010, due within two business days of the receipt of the stock options, was filed late.Governance

The Company has adopted a Code of Ethics and Business Conduct for directors, officers (including the chief executive officer and ~~Corporate~~chief ~~Governance~~financial officer), and employees. The Code of Ethics and Business Conduct is posted on our website at www.mace.com.

The ~~Company~~Board of Directors has adopted aCorporate Governance ~~Code~~Guidelines. ofStockholders ~~Ethics~~are ~~and~~encouraged ~~Business~~to ~~Conduct~~review ~~for~~the ~~directors,~~Corporate ~~officers~~Governance ~~(including~~Guidelines ~~the~~at ~~chief~~our ~~executive~~website ~~officer,~~at ~~chief~~www.mace.com for ~~financial~~information ~~officer,~~concerning ~~and~~the ~~employees~~Company’s governance practices. ~~The~~Copies ~~Code~~of the charters of ~~Ethics~~the ~~and~~committees ~~Business~~of ~~Conduct~~the isBoard ~~posted~~are also available on ~~our~~the ~~website~~Company’s ~~at www~~website.~~mace.com.~~

~~The~~Nominating ~~Board~~Committee of Directors has adopted Corporate Governance Guidelines. Stockholders are encouraged to review the Corporate Governance Guidelines at our website at www.mace.com for information concerning the Company’s governance practices. Copies of the charters of the committees of the Board are also available on the Company’s website.

The Nominating Committee is composed of independent directors. The Nominating Committee is currently composed of Daniel V. Perella (Chairman), Richard A. Barone, Denis J. Amato and Larry Pollock. The charter of the Nominating Committee is available for inspection on the Company’s web site, www.mace.com, under the heading “Investor Relations”. The Nominating Committee considers candidates for Board membership suggested by its members, other Board members and management. The Nominating Committee has authority to retain a search firm to assist in the identification of director candidates. In selecting nominees for director, the Nominating Committee considers a number of factors, including, but not limited to:

~~The~~· ~~Nominating~~whether ~~Committee~~a iscandidate ~~composed~~has ofdemonstrated ~~independent~~business ~~directors. The Nominating Committee is currently composed of Messrs. Barone, Chairman, LaFlamme~~ and ~~Mallon. The~~industry ~~charter~~experience ofthat ~~the Nominating Committee~~ is ~~available~~relevant ~~for~~to ~~inspection on~~ the Company~~’s web site~~, ~~www.mace.com, under~~including ~~the~~recent ~~heading~~experience ofat ~~Investor~~the ~~Relations.~~senior ~~The Nominating Committee considers candidates for Board membership suggested by its members, other Board members and~~ management. ~~The~~level ~~Nominating~~(preferably ~~Committee~~as ~~has~~chief ~~authority~~executive toofficer ~~retain~~or ~~a search firm to assist~~ in ~~the~~a ~~identification~~similar position) of ~~director~~a ~~candidates.~~company Inas ~~selecting~~large ~~nominees~~or ~~for~~larger ~~director,~~than the ~~Nominating Committee considers a number of factors, including, but not limited to:~~Company;

· ~~whether~~the a candidate’s ~~has~~ability ~~demonstrated business and industry experience that is relevant~~ to ~~the~~meet ~~Company, including recent experience at~~ the ~~senior~~suitability ~~management~~requirements ~~level (preferably as chief executive officer or in a similar position)~~ of aall ~~company~~relevant asregulatory ~~large or larger than the Company~~agencies;

· the candidate’s ability to ~~meet~~represent ~~the~~interests ~~suitability requirements~~ of ~~all~~the ~~relevant regulatory agencies~~stockholders;

· the candidate’s ~~ability~~independence tofrom ~~represent~~management ~~interests~~and freedom from potential conflicts of interest with the ~~stockholders~~Company;

· the candidate’s ~~independence~~financial ~~from~~literacy, ~~management~~including ~~and~~whether ~~freedom~~the ~~from~~candidate ~~potential~~will ~~conflicts~~meet ofthe ~~interest~~audit ~~with~~committee ~~the~~membership ~~Company~~standards;

· ~~the~~whether a candidate’s ~~financial~~is ~~literacy,~~widely ~~including~~recognized ~~whether~~for ~~the~~his ~~candidate~~or ~~will~~her ~~meet~~reputation, ~~the~~integrity, ~~audit~~judgment, ~~committee~~skill, ~~membership~~leadership ~~standards~~ability, honesty and moral values;

· ~~whether~~the a candidate’s isability ~~widely~~to ~~recognized~~work ~~for~~constructively ~~his~~with orthe ~~her~~Company’s ~~reputation,~~management ~~integrity, judgment, skill, leadership ability, honesty~~ and ~~moral~~other ~~values~~directors; and

· the candidate’s ~~ability~~availability, toincluding ~~work~~the ~~constructively~~number ~~with~~of other boards on which the ~~Company’s~~candidate ~~management~~serves, and ~~other~~his ~~directors;~~or her ability to dedicate sufficient time and energy to his or her board duties.

·During the ~~candidate’s~~process ~~availability,~~of ~~including~~considering ~~the~~a ~~number~~potential nominee, ofthe ~~other~~Committee ~~boards~~may onrequest ~~which~~additional ~~the~~information ~~candidate serves~~concerning, ~~and his~~ or ~~her~~an ~~ability~~interview towith, ~~dedicate~~the ~~sufficient~~potential ~~time and energy to his or her board duties~~nominee.

~~During~~The ~~the~~Nominating Committee ~~process~~will also consider recommendations by stockholders of ~~considering~~nominees afor ~~potential~~directors ~~nominee~~to be elected at the Company’s Annual Meeting of Stockholders, if they are received on or before March 1 of the ~~Committee~~year of the meeting or at such earlier date as may ~~request~~be determined ~~additional~~and ~~information~~disclosed ~~concerning~~by the Company. In evaluating nominations received from stockholders, orthe anCommittee ~~interview~~will apply the same criteria and follow the same process used to evaluate candidates recommended by members of the Nominating Committee. Stockholders wishing to recommend a nominee for director are to submit such nomination in writing, along with any other supporting materials the stockholder deems appropriate, to the ~~potential~~Secretary ~~nominee~~of the Company, Gregory M. Krzemien, at the Company’s corporate offices at 240 Gibraltar Road, Suite 220, Horsham, Pennsylvania 19044.

The Nominating Committee will also consider recommendations by stockholders of nominees for directors to be elected at the Company’s Annual Meeting of Stockholders, if they are received on or before January 15 of the year of the meeting or at an earlier date as may be determined and disclosed by the Company. In evaluating nominations received from stockholders, the Committee will apply the same criteria and follow the same process used to evaluate candidates recommended by members of the Nominating Committee. Stockholders wishing to recommend a nominee for director are to submit such nomination in writing, along with any other supporting materials the stockholder deems appropriate, to the Secretary of the Company at the Company’s offices at 240 Gibraltar Road, Suite 220, Horsham, Pennsylvania 19044.33

35ITEM 11. EXECUTIVE COMPENSATION

~~ITEM 11.~~ EXECUTIVE COMPENSATION TABLES AND NARRATIVES

~~EXECUTIVE~~The ~~COMPENSATION~~following ~~TABLES~~table ~~AND~~provides ~~NARRATIVES~~summary information concerning cash and certain other compensation paid or accrued by Mace to, or on behalf of the Named Executive Officers for the years ended December 31, 2011 and 2010.

The following table provides summary information concerning cash and certain other compensation paid or accrued by Mace to, or on behalf of the Named Executive Officers for the years ended December 31, 2010 and 2009.

SUMMARY COMPENSATION TABLE (1)
							Option		All Other
Name and Principal					Bonus		Awards		Compensation
Position	Year		Salary $		($)		($)(2)		($)(3)(4)(5)		Total

Michael E. Smith
President and Chief		2011	$	110,609	$	-	$	-	$	-	$	110,609
Executive Officer		2010	$	-	$	-	$	-	$	-	$	-

Dennis R. Raefield
President and Chief		2011	$	428,357	$	-	$	26,520	$	10,127	$	465,004
Executive Officer		2010	$	375,000	$	-	$	53,020	$	27,454	$	455,474

Gregory M. Krzemien
Chief Financial Officer		2011	$	230,000	$	-	$	6,683	$	8,400	$	245,083
and Treasurer		2010	$	230,000	$	-	$	5,012	$	8,400	$	243,412

							Option		All Other
(1)	The Company (i) granted no restricted stock awards and (ii) maintained no other long-term incentive plan for any of the Named Executive Officers, in each case during the fiscal years ended December 31, 2011 and 2010. Additionally, the Company has never issued any stock appreciation rights (SARs).
Name and Principal					Bonus		Awards		Compensation
(2)	The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes, including the impact of estimated forfeitures, for the fiscal years ended December 31, 2011 and 2010, for all existing stock option awards and thus include amounts from awards granted in and prior to 2011. Assumptions used in the calculation of this amount are included in Note 2. to the Company’s Audited Financial Statements for the fiscal years ended December 31, 2011 and 2010.
Position		Year	Salary $		($)		($)(2)		($)(3)		Total
(3)	Mr. Raefield received a car at a lease cost of $798 per month beginning in August 2008 through his resignation on August 18, 2011. Additionally, Mr. Raefield was entitled under his employment agreement to receive payment of certain life and disability insurance premiums and funding of certain health reimbursement plans which totaled $4,539 and $17,962 in 2011 and 2010, respectively. Mr. Krzemien received car allowances of $700 per month in 2011 and 2010.
Dennis R. Raefield
(4)	Under the provisions of Mr. Raefield's Employment Agreement, effective with Mr. Raefield's resignation on August 18, 2011, the Company was obligated to pay Mr. Raefield $375,000 in 12 equal monthly installments in exchange for Mr. Raefield's covenant not to compete with the Company for one year. The 2011 amount set forth in "All Other Compensation" does not include the $156,250 total of the monthly installments paid to Mr. Raefield in 2011.
President and Chief		2010	$	375,000	$	-	$	53,020	$	27,454	$	455,474
(5)	Effective on January 3, 2012, the Company appointed Mr. Smith as a consultant for six months at a monthly compensation of $7,500 plus reimbursement for certain benefit and business travel costs. The consulting payments, none of which have been paid in 2011, are not reflected in the "All Other Compensation" category.
Executive Officer		2009	$	375,000	$	-	$	26,520	$	32,059	$	433,579
Robert M. Kramer
Executive Vice		2010	$	84,436	$	-	$	-	$	969	$	85,405
President, General		2009	$	230,000	$	-	$	8,587	$	8,400	$	246,987
Counsel and Secretary
Gregory M. Krzemien
Chief Financial Officer		2010	$	230,000	$	-	$	5,012	$	8,400	$	243,412
and Treasurer		2009	$	230,000	$	-	$	8,587	$	8,400	$	246,987

~~(1)~~Employment Agreements ~~The Company (i) granted no restricted stock awards and (ii) maintained no other long~~-~~term~~ ~~incentive~~Current ~~plan for any of the Named~~ Executive Officers~~, in each case during the fiscal years ended December 31, 2010 and 2009. Additionally, the Company has never issued any stock appreciation rights (SARs).~~

~~(2)~~John The amounts in this column reflect the dollar amount recognized for financial statement reporting purposes, including the impact of estimated forfeitures, for the fiscal years ended December 31, 2010 and 2009, for all existing stock option awards and thus include amounts from awards granted in and prior to 2010J. ~~Assumptions~~McCann Employment ~~used in the calculation of this amount are included in Note 3 to the Company’s Audited Financial Statements for the fiscal year ended December 31, 2010.~~Agreement

~~(3)~~The Company and Mr. ~~Raefield~~McCann ~~received~~are acurrently ~~car~~negotiating atand apreparing ~~lease~~an ~~cost~~employment agreement based on the terms of ~~$791~~an ~~per~~offer ~~month~~letter ~~beginning~~(the in"Offer ~~August~~Letter") ~~2008~~sent to Mr. ~~Additionally~~McCann by the Company and accepted by Mr. McCann. Under the terms of the Offer Letter, Mr. ~~Raefield~~McCann iswill: ~~entitled~~(a) ~~under~~receive ~~his~~an ~~employment~~annual ~~agreement~~salary toof $300,000, payable in accordance with the Company’s normal payroll schedule; (b) receive ~~payment~~an option to purchase 1,000,000 shares of ~~certain~~common ~~life~~stock at a date and ~~disability~~terms ~~insurance~~to ~~premiums~~be ~~and~~agreed ~~funding~~upon; (c) ofa ~~certain~~bonus ~~health~~for ~~reimbursement~~performance ~~plans~~in ~~which~~2012 ~~totaled~~paid ~~$17~~in options to purchase up to 500,~~962~~000 ~~and~~shares ~~$22~~of common stock,~~567~~ based on whether certain stated goals are achieved; (d) a grant of options to purchase common stock equal in ~~2010~~number ~~and~~to ~~2009,~~the ~~respectively.~~common ~~Mr.~~stock ~~Krzemien~~purchased ~~and~~by Mr. McCann ~~Kramer~~in ~~(until~~ the ~~end~~open ofmarket ~~his~~during ~~employment~~2012, onwith ~~February~~a 12maximum limit of 500,000 ~~2010~~shares; (e), ~~received~~a ~~car~~severance ~~allowances~~payment equal to one year's annual salary if Mr. McCann is terminated without cause; and (f) four weeks of ~~$700~~vacation ~~per~~and ~~month~~participation in ~~2010~~the ~~and~~employee ~~2009~~benefit plans offered to executive officers.

~~Dennis R. Raefield Employment Agreement~~34

~~Dennis~~Gregory RM. ~~Raefield serves as the Company’s President and Chief Executive Officer under an~~ Krzemien Employment ~~Contract dated July 29, 2008 and expiring on August 18, 2011 (the “Raefield Employment~~ Agreement~~”). Mr.~~ Raefield’s base salary is $375,000 annually. As a one-time incentive to execute the Raefield Employment Agreement, Mr. Raefield was paid $50,000 and received a reimbursement of legal expenses of $2,812 related to review of his employment contract.

InMace ~~accordance~~currently ~~with~~employs ~~the~~Gregory ~~Raefield~~M. ~~Employment~~Krzemien as its CFO, Treasurer and Corporate Secretary as an employee at will under the Krzemien Agreement dated March 23, 2010. Mr. ~~Raefield~~Krzemien's current ~~received~~annual anbase ~~option~~salary ~~grant~~is on$230,000, ~~July~~plus ~~30,~~a ~~2008~~$700 ~~exercisable~~per ~~into~~month ~~250~~car allowance. The Krzemien Agreement also provided Mr. Krzemien with an option grant to purchase 50,000 shares of common stock aton April 7, 2010 under the Company’s Stock Option Plan at an exercise price of $10.5093, ~~per~~the ~~share~~market (price of the ~~“First~~Company's ~~Option”)~~common stock on the date of the option grant. The ~~First~~option ~~Option~~vests ~~was~~in three ~~issued~~equal ~~fully~~annual ~~vested~~installments on the anniversary dates of the Krzemien Agreement. On ~~July~~Under ~~26,~~the ~~2009~~Krzemien Agreement, Mr. ~~Raefield~~Krzemien is ~~received~~not aentitled ~~second~~to ~~option~~any ~~grant~~change ~~exercisable~~of ~~for~~control ~~250~~payment,~~000~~ ~~shares~~but ~~(the~~is ~~“Second~~entitled ~~Option”). The~~to ~~Second~~a ~~Option~~severance ~~vests~~payment ~~over~~equal ~~two~~to ~~years~~six months of his base salary if he is terminated without “Good Cause,” ~~with~~as defined in the ~~first~~Krzemien ~~125,000~~Agreement. ~~option~~Mr. ~~shares~~Krzemien ~~vesting~~is 12also ~~months~~entitled ~~from~~to the six ~~date~~month ofseverance ~~grant~~payment ~~and~~if he resigns due to the ~~second~~Company ~~125~~materially changing his duties as Chief Financial Officer,~~000~~ ~~option~~relocating his ~~shares~~office ~~vesting~~more 24than ~~months~~25 miles from ~~the~~its ~~date~~present oflocation ~~grant~~or reducing his annual base salary. ~~The~~ ~~Second~~As ~~Option~~defined, ~~grant~~“Good ~~fully~~Cause” to ~~vests~~terminate ~~upon~~Mr. Krzemien without a ~~change~~severance payment generally exists if Mr. Krzemien fails to perform his duties and does not cure such failure within thirty days of ~~control~~being notified of the failure, or commits certain other enumerated actions which harm the Company.

36From February 12, 2007 through February 12, 2010, Mr. Krzemien was employed under an employment contract (the “Former Krzemien Employment Agreement”). In accordance with the Former Krzemien Employment Agreement, Mr. Krzemien received an option grant for 60,000 shares of common stock under the Company’s Stock Option Plan at an exercise price of $2.73, the market price at the close of market on the date of grant. The options were granted on February 12, 2007. The options vested one-third on the date of the grant, one-third on February 12, 2008, and one-third on February 12, 2009.

~~The~~Under ~~Raefield~~the ~~Employment~~Former ~~Agreement~~Krzemien ~~also~~Employment ~~provides that~~ Agreement, Mr. ~~Raefield~~Krzemien ~~and~~would ~~the~~have ~~Company~~received ~~are required to develop~~ a ~~mutually~~one-time ~~acceptable~~retention ~~annual~~payment ~~bonus~~equal ~~plan~~to ~~for~~ Mr. ~~Raefield~~Krzemien’s ~~within~~then ~~forty-five~~annual base compensation (45currently $230,000) ~~days~~upon ~~from~~ the ~~date~~occurrence of ~~the~~both: ~~Employment~~(a) ~~Agreement. No~~a ~~annual~~change ~~bonus~~of ~~plan~~control ~~was~~of ~~agreed~~the ~~upon~~Company ~~for~~and ~~2010. The~~(b) ~~Compensation~~Louis ~~Committee~~D. ~~implemented~~Paolino, aJr. ~~formal~~ceasing ~~2009~~to ~~Incentive~~be ~~Plan~~CEO ~~for~~ of the ~~CEO~~Company ~~based~~(this onevent ~~benchmarks~~occurred ofon ~~achieved~~May ~~earnings~~20, ~~before~~2008). ~~interest,~~If ~~taxes,~~Mr. ~~depreciation~~Krzemien’s ~~and~~employment ~~amortization~~was ~~(“EBITDA”)~~terminated ~~for~~during the ~~year~~term ~~ended~~of ~~2009. Based on~~ the ~~Company’s~~Former Krzemien ~~results~~Employment ~~for~~Agreement ~~2009,~~without ~~Mr.~~cause ~~Raefield~~or ~~did~~if ~~not~~the ~~receive~~Company ~~any~~breached ~~payments under~~ the ~~2009~~Former ~~Incentive~~Krzemien ~~Plan. The Raefield~~ Employment Agreement, ~~further provides that~~ Mr. ~~Raefield~~Krzemien ~~can~~would have bebeen ~~terminated~~entitled byto ~~the~~an ~~Board~~additional ofone-time ~~Directors~~payment ~~for~~equal ~~cause~~to ~~without~~Mr. ~~any~~Krzemien’s ~~severance~~then orannual ~~other~~base ~~payment~~compensation. The ~~Board~~total amount of ~~Directors~~both ~~can~~the ~~also~~retention ~~terminate~~payment ~~Mr.~~and ~~Raefield~~termination ~~without cause, upon a~~ payment ofwas ~~two times Mr~~$460,000. ~~Raefield’s current annual base salary.~~

Mr. ~~Raefield~~Krzemien ~~has~~receives ~~also been provided~~ a ~~Company~~monthly ~~vehicle~~car ~~at a lease cost~~ allowance of ~~approximately~~ $~~791 per month~~700, ~~plus~~which ~~all~~began ~~maintenance~~in ~~costs~~February 2007, and the Company’s standard medical and other employee benefits. Mr. Raefield is prohibited from competing with the Company during his period of employment and for a one year period following a termination of employment. The Company is obligated to pay Mr. Raefield $375,000 in exchange for the one year non-compete obligation if Mr. Raefield is employed through August 18, 2011 and the Company and Mr. Raefield do not enter into a new employment agreement within sixty days after August 18, 2011.

~~Gregory~~Employment Agreements M.- ~~Krzemien~~Former ~~Employment~~Executive ~~Agreement~~Officers Who Served During 2011

~~Mace~~Dennis ~~currently employs Gregory M~~R. ~~Krzemien~~Raefield asEmployment ~~its CFO and Treasurer as an employee at will under the Krzemien~~ Agreement dated March 23, 2010. Mr. Krzemien's current annual base salary is $230,000, plus a $700 per month car allowance. The Krzemien Agreement also provided Mr. Krzemien with an option grant to purchase 50,000 shares of common stock under the Company’s Stock Option Plan at an exercise price of $0.93, the market price of the Company's common stock on the date of the option grant. The option is to vest in three equal annual installments on the anniversary dates of the Krzemien Agreement. Under the Krzemien Agreement, Mr. Krzemien is not entitled to any change of control payment, but is entitled to a severance payment equal to six months of his base salary if he is terminated without “Good Cause,” as defined in the Krzemien Agreement. Mr. Krzemien is also entitled to the six month severance payment if he resigns due to the Company materially changing his duties as Chief Financial Officer, relocating his office more than 25 miles from its present location or reducing his annual base salary. As defined, “Good Cause” to terminate Mr. Krzemien without a severance payment generally exists if Mr. Krzemien fails to perform his duties and does not cure such failure within thirty days of being notified of the failure, or commits certain other enumerated actions which harm the Company.

~~From~~Dennis ~~February~~R. ~~12,~~Raefield ~~2007~~served ~~through~~as ~~February~~the ~~12,~~Company’s President ~~2010,~~and ~~Mr.~~Chief ~~Krzemien~~Executive ~~was~~Officer ~~employed~~ under an ~~Employment~~employment ~~Contract~~contract ~~(the~~dated ~~“Former~~July ~~Krzemien~~29, ~~Employment~~2008 ~~Agreement”). In~~which ~~accordance~~expired ~~with~~on ~~the~~August ~~Former~~18, ~~Krzemien~~2011 (the “Raefield Employment Agreement,”). Mr. ~~Krzemien~~Raefield ~~received~~resigned anon ~~option~~August ~~grant~~18, ~~for~~2011 ~~60,000~~after ~~shares~~the expiration of ~~common~~the ~~stock~~Raefield ~~under~~Employment ~~the~~Agreement. Mr. ~~Company~~Raefield’s ~~Stock~~base ~~Option~~salary ~~Plan~~was ~~at an exercise price of~~ $~~2.73~~375,000 ~~the~~annually. ~~market~~As ~~price~~a atone-time ~~the~~incentive ~~close~~to ofexecute ~~market on~~ the ~~date~~Raefield ofEmployment ~~grant. The options were granted on February 12~~Agreement, ~~2007~~Mr. Raefield ~~The~~was ~~options~~paid ~~vested~~$50,000 ~~one-third~~and onreceived ~~the~~a ~~date~~reimbursement of ~~the~~legal ~~grant,~~expenses ~~one-third~~of ~~on February 12~~$2,812 ~~2008,~~related ~~and~~to ~~one-third~~review onof ~~February~~his ~~12,~~employment ~~2009~~contract.

~~Under~~In ~~the~~accordance ~~Former~~with ~~Krzemien~~the ~~Employment~~Raefield Employment Agreement, Mr. ~~Krzemien~~Raefield ~~would have~~ received aan ~~one-time~~option ~~retention~~grant ~~payment~~on ~~equal~~July to30, ~~Mr.~~2008 ~~Krzemien’s~~exercisable ~~then~~into ~~annual base compensation (currently $230~~250,000) ~~upon~~shares ~~the occurrence~~ of ~~both:~~common ~~(a)~~stock aat ~~change~~an ofexercise price ~~control~~ of ~~the~~$1.50 ~~Company~~per ~~and~~share (b)the ~~Louis~~“First DOption”). ~~Paolino,~~The ~~Jr.~~First ~~ceasing~~Option towas beissued ~~CEO~~fully ofvested. ~~the~~On ~~Company~~July ~~(this~~26, ~~event occurred on May 20~~2009, ~~2008). If~~ Mr. ~~Krzemien’s~~Raefield received ~~employment~~a ~~was~~second ~~terminated~~option ~~during~~grant ~~the~~exercisable ~~term~~for of250,000 ~~the~~shares ~~Former Krzemien Employment Agreement without cause or if~~ (the ~~Company~~“Second ~~breached the Former Krzemien Employment Agreement, Mr~~Option”). ~~Krzemien~~The ~~would~~Second ~~have~~Option ~~been~~vested ~~entitled~~over two toyears anand ~~additional~~is ~~one-time~~now ~~payment~~fully ~~equal~~vested. to Mr. ~~Krzemien’s~~Raefield ~~then~~did ~~annual~~not ~~base~~receive ~~compensation.~~any ~~The~~performance ~~total~~bonus ~~amount~~during ofhis ~~both~~tenure with the ~~retention payment and termination payment was $460,000~~Company.

Mr. ~~Krzemien~~Raefield had ~~receives~~also been provided a ~~monthly~~Company ~~car~~vehicle ~~allowance~~at a lease cost of approximately $~~700,~~798 ~~which~~per ~~began~~month, inplus ~~February~~all ~~2007~~maintenance costs, and ~~the~~ Company’s standard medical and other employee benefits. Mr. Raefield is prohibited from competing with the Company for a one year period following his resignation. In exchange for the agreement not to compete, the Company is obligated to pay Mr. Raefield $375,000 in 12 monthly installments.

~~Robert M. Kramer Employment Agreement~~35

~~Mace~~Michael ~~employed Robert M~~E. ~~Kramer~~Smith ~~as its Executive Vice President, General Counsel and Secretary during 2009 through February 12, 2010 under an~~ Employment ~~Contract dated February 12, 2007 and expiring on February 12, 2010 (the “Kramer Employment~~ Agreement”). The Company’s Compensation Committee obtained a compensation study from Compensation Resources, Inc. prior to entering into the Kramer Employment Agreement. The initial base salary under the Kramer Employment Agreement was $230,000. In accordance with the Kramer Employment Agreement, Mr. Kramer received an option grant for 60,000 shares of common stock under the Company’s Stock Option Plan at an exercise price of $2.73, the market price at the close of market on the date of grant. The options were granted on February 12, 2007. The options vested one-third on the date of the grant, one-third on February 12, 2008 and one-third on February 12, 2009.

37Mr. Smith served as the Company's Interim President and Chief Executive Officer from August 18, 2011 to January 2, 2012. The Company and Mr. Smith did not enter into any written or oral employment agreement, except that the Company and Mr. Smith orally agreed that Mr. Smith would serve as Interim President and Chief Executive Officer for $240,000 in base annual compensation, a $5,000 monthly bonus program, plus normal Company benefits. The compensation is described on an annualized basis even though the compensation was earned ratably over the period that Mr. Smith served as President and Chief Executive Officer. The compensation was paid every two weeks in accordance with the normal Company procedures.

~~Under~~Potential ~~the Kramer Employment Agreement, Mr. Kramer would have received a one-time retention payment equal to Mr. Kramer’s then annual base compensation ($230,000)~~ Payments upon ~~the~~Termination occurrence of both: (a) a change of control of the Company and (b) Louis D. Paolino, Jr. ceasing to be CEO of the Company. Mr. Paolino ceased to be CEO of the Company on May 20, 2008. If during the term of the Kramer Employment Agreement, Mr. Kramer’s employment was terminated without cause or ifChange ~~the Company breached the Kramer Employment Agreement, Mr. Kramer would have been entitled to an additional one-time payment equal to Mr. Kramer’s then annual base compensation. The total amount~~ of ~~both~~Control ~~the retention payment and termination payment was $460,000.~~

~~Mr.~~The ~~Kramer~~following tables ~~received~~quantify athe ~~monthly~~amounts ~~car~~payable ~~allowance~~upon ofa ~~$700~~change ~~through~~of ~~February~~control ~~2010,~~or the ~~date~~termination of ~~his~~each ~~termination,~~of ~~and~~ the ~~Company’s~~Named ~~standard~~Executive ~~medical and other employee benefits~~Officers. ~~Mr.~~No ~~Kramer~~change of ~~was~~control ~~prohibited~~arrangement ~~against~~has ~~competing~~yet ~~with~~been ~~the~~entered ~~Company~~into ~~during~~between ~~his~~Mr. ~~period~~McCann ~~of employment~~ and ~~for~~the ~~a three-month period following termination of employment~~Company.

~~Potential~~Change ~~Payments~~of ~~upon~~Control Payment and Termination Payments or– ~~Change~~Dennis ofR. ~~Control~~Raefield, former President and Chief Executive Officer

For a description of compensation that would become payable under existing arrangements in the event of a change of control or termination of each Named Executive Officer’s employment under several different circumstances, see the discussion under “Change of Control Arrangements” in the “Compensation Discussion and Analysis” Section which is part of the Executive Compensation Section of this report.

Event Triggering Payment	Severance Payment		Acceleration of Option Awards(3)
Termination by Company for Cause (1)	$	-	None
Termination by Company without Cause (1)	$	750,000	None
Non-Compete Payment (2)	$	375,000	None
Change of Control		None	None

~~The~~Change ~~following tables quantify the amounts payable upon a change~~ of ~~control~~Control orPayment ~~the~~and ~~termination~~Termination Payments of– ~~each~~Gregory ofM. ~~the~~Krzemien, ~~Named~~Chief ~~Executive~~Financial ~~Officers.~~Officer

Change of Control Payment and Termination Payments – Dennis R. Raefield, Chief Executive Officer

Event Triggering Payment	Severance Payment		Acceleration of Option Awards(3)
Change of Control		None	None
Termination of Mr. Krzemien (4)	$	115,000	None

Event Triggering Payment	Severance Payment		Acceleration of Option Awards(4)
Termination by Company For Cause (1)	$	-	None
Termination by Company without Cause (1)	$	750,000	None
Non-Compete Payment (2)	$	375,000	None
Change of Control (3)	$	-	$	-

(1) Cause was defined in the Raefield Employment Agreement as “(a) Employee committing against the Company fraud, gross misrepresentation, theft or embezzlement, (b) Employee’s conviction of any felony (excluding felonies involving driving a vehicle), (c) Employee’s material intentional violations of Company policies, or (d) a material breach of the provisions of the Raefield Employment Agreement, including specifically the failure of Employee to perform his duties after written notice of such failure from the Company.” The Raefield Employment Agreement provides that Mr. Raefield can be terminated by the Board of Directors for Cause, without any severance or other payment. The Board of Directors could also terminate Mr. Raefield without Cause, upon a payment of two times Mr. Raefield’s then current annual base salary. The termination payment is calculated based on Mr. Raefield’s base salary of $375,000 as of December 31, 2010.

~~Change~~(2) ofMr. ~~Control~~Raefield ~~Payment~~is prohibited from competing with the Company during his period of employment and ~~Termination~~for ~~Payments~~a –one ~~Gregory~~year ~~Krzemien~~period following a termination of employment. Mr. Raefield resigned on August 18, ~~Chief~~2011. ~~Financial~~The ~~Officer~~Company is obligated to pay Mr. Raefield $375,000 in exchange for his one year agreement not to compete.

Event Triggering Payment	Severance Payment		Acceleration of Option Awards(4)
Change of Control	$	-	$	-
Termination of Mr. Krzemien(5)	$	115,000	$	-

(3) Assumes exercise of all in-the-money stock options for which vesting accelerated at $0.18 per share (the closing price of the Company’s common stock on December 31, 2011).

(14) ~~Cause~~ The payment is ~~defined~~due Mr. Krzemien if he is terminated without “Good Cause.” “Good Cause” in the ~~Raefield~~Krzemien ~~Employment~~ Agreement asexists, “if any of the following occur: (ai) Employee’s ~~committing~~refusal ~~against~~to perform his duties or other obligations under this Agreement, or Employee’s intentional or grossly negligent conduct causing material harm to the Company ~~fraud~~as determined by the Company, ~~gross~~on ~~misrepresentation~~fifteen (15) days notice after the Company has provided Employee written notice of such failure to perform and Employee has failed to cure the unsatisfactory performance, ~~theft~~if orcapable ~~embezzlement~~of cure, within thirty (b30) business days; or (ii) Employee’s conviction of ~~any~~a felony, ~~(excluding~~or ~~felonies~~a misdemeanor involving ~~driving~~moral ~~a vehicle)~~turpitude, ~~(c)~~or Employee’s ~~material~~engaging ~~intentional~~in ~~violations~~conduct ofinvolving dishonesty toward the Company ~~policies~~or its customers, or engaging ~~(d)~~in aconduct ~~material~~that ~~breach~~could ofdamage the ~~provisions~~reputation or good will of the ~~Raefield~~Company, ~~Employment~~whether ~~Agreement,~~or ~~including~~not ~~specifically~~occurring in the ~~failure~~workplace; ofor (iii) Employee’s death, or inability with reasonable accommodation to perform his duties ~~after~~under ~~written~~this ~~notice~~Agreement because of illness ~~such~~or ~~failure~~physical ~~from~~or ~~the~~mental ~~Company.” The~~disability ~~Raefield~~or ~~Employment~~other ~~Agreement~~incapacity ~~provides~~which ~~that~~continues ~~Mr.~~for ~~Raefield~~a ~~can~~period beof ~~terminated~~120 consecutive days, as determined by ~~the~~a ~~Board~~medical doctor; or (iv) if Employee engages in any type of ~~Directors~~discrimination, ~~for~~harassment, ~~Cause~~violence or threat thereof, ~~without~~or other behavior toward other employees of the Company, or any ~~severance~~of its subsidiaries or ~~other~~toward ~~payment. The~~third ~~Board~~parties or employees of ~~Directors~~a ~~can~~third ~~also~~party; (v) ~~terminate~~alcohol ~~Mr.~~abuse ~~Raefield~~and/or ~~without~~use ~~Cause~~of controlled substances during employment hours, ~~upon~~or a ~~payment~~positive test for use of ~~two~~controlled ~~times~~substances that ~~Mr.~~are ~~Raefield’s~~not ~~then~~prescribed ~~current~~by ~~annual~~a ~~base~~medical ~~salary. The~~doctor; ~~termination~~or ~~payment~~(vi) isgross ~~calculated~~negligence ~~based~~or willful misconduct with respect to the Company, or any of its affiliates or subsidiaries; or (vii) on ~~Mr.~~fifteen ~~Raefield~~(15) days notice for any other material intentional breach of this Agreement or the Company’s ~~base~~Employee ~~salary~~Manual by Employee not cured within 30 days after Employee’s receipt of ~~$375,000~~written asnotice of the ~~December~~same ~~31,~~from ~~2010~~the Company.

(2) Mr. Raefield is prohibited from competing with the Company during his period of employment and for a one year period following a termination of employment. The Company is obligated to pay Mr. Raefield $375,000 in exchange for his one year agreement not to compete, if Mr. Raefield is employed through August 18, 2011 and the Company and Mr. Raefield do not enter into a new employment agreement within sixty days after August 18, 2011.36

~~(3) A~~Grants ~~Change~~ of Control Event is defined in the Named Executive Officer’s Employment Agreement as any of the events set forth in items (i) through and including (iii) below: (i) the acquisition in one or more transactions by any “Person,” excepting the employee, as the term “Person” is used for purposes of Sections 13(d) or 14(d) of the Exchange Act, of “Beneficial Ownership” (as the term beneficial ownership is used for purposes or Rule 13d-3 promulgated under the Exchange Act) of the fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities (the “Voting Securities”), for purposes of this item (i), Voting Securities acquired directly from the Company and from third parties by any Person shall be included in the determination of such Person’s Beneficial Ownership of Voting Securities; (ii) the approval by the stockholders of the Company of: (A) a merger, reorganization or consolidation involving the Company, if the shareholders of the Company immediately before such merger, reorganization or consolidation do not or will not own directly or indirectly immediately following such merger, reorganization or consolidation, more than fifty percent (50%) of the combined voting power of the outstanding Voting Securities of the corporation resulting from or surviving such merger, reorganization or consolidation in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, reorganization or consolidation, (B) a complete liquidation or dissolution of the Company, or (C) an agreement for the sale or other disposition of 50% or more of the assets of the Company and a distribution of the proceeds of the sale to the stockholders; or (iii) the acceptance by stockholders of the Company of shares in a share exchange, if the stockholders of the Company immediately before such share exchange do not or will not own directly or indirectly following such share exchange own more than fifty percent (50%) of the combined voting power of the outstanding Voting Securities of the corporation resulting from or surviving such share exchange in substantially the same proportion as the ownership of the Voting Securities outstanding immediately before such share exchange.Stock Options

38The following table sets forth certain information concerning individual grants of stock options to the Named Executive Officers during the fiscal year ended December 31, 2011.

~~(4) Assumes~~ GRANTS ~~exercise~~OF ~~of all in~~PLAN-~~the-money~~BASED ~~stock options for which vesting accelerated at $0.39 per share (the closing price of the Company’s common stock on December 31, 2010).~~AWARDS

~~(5) The~~Name ~~payment~~Grant isDate ~~due~~All ~~Mr.~~other ~~Krzemien~~Option ~~if he is terminated without “Good Cause.” “Good Cause” in the Krzemien Agreement exists, if any of the following occur~~Awards: ~~(i) Employee’s~~Number refusal to perform his duties or other obligations under this Agreement, or Employee’s intentional or grossly negligent conduct causing material harm to the Company as determined by the Company, on fifteen (15) days notice after the Company has provided Employee written notice of ~~such~~Securities ~~failure~~Underlying toOptions ~~perform~~Exercise ~~and~~Price ~~Employee has failed to cure the unsatisfactory performance, if capable~~ of ~~cure,~~Option ~~within~~Awards ~~thirty~~per ~~(30)~~Share ~~business~~Grant ~~days;~~Date orFair ~~(ii) Employee’s~~Value ~~conviction~~ of aStock felony, or a misdemeanor involving moral turpitude, or Employee’s engaging in conduct involving dishonesty toward the Company or its customers, or engaging in conduct that could damage the reputation or good will of the Company, whether or not occurring in the workplace; or (iii) Employee’s death, or inability with reasonable accommodation to perform his duties under this Agreement because of illness or physical or mental disability or other incapacity which continues for a period of 120 consecutive days, as determined by a medical doctor; or (iv) If Employee engages in any type of discrimination, harassment, violence or threat thereof, or other behavior toward other employees of the Company, or any of its subsidiaries or toward third parties or employees of a third party; (v) alcohol abuse and~~/or~~ ~~use~~Option ofAwards ~~controlled~~Michael ~~substances~~E. ~~during~~Smith ~~employment~~- ~~hours,~~- or- a- ~~positive~~Dennis ~~test~~R. ~~for~~Raefield ~~use~~- of- ~~controlled~~- ~~substances~~- ~~that~~Gregory ~~are~~M. ~~not~~Krzemien ~~prescribed~~- by- a- medical doctor; or (vi) gross negligence or willful misconduct with respect to the Company, or any of its affiliates or subsidiaries; or (vii) on fifteen (15) days notice for any other material intentional breach of this Agreement or the Company’s Employee Manual by Employee not cured within 30 days after Employee’s receipt of written notice of the same from the Company.-

~~Grants~~On April 7, 2010, as part of the Krzemien Agreement, the Compensation Committee awarded Mr. Krzemien an option grant to purchase 50,000 shares of common stock under the Company’s Stock ~~Options~~Option Plan at an exercise price of $0.93, the market price of the Company’s common stock on the date of the option grant. The option grant is to vest in three equal annual installments on the anniversary dates of the Krzemien Agreement. The Black-Scholes value of the awarded option grant is $28,640.

~~The~~Aggregated ~~following~~Option ~~table~~and ~~sets~~Warrant ~~forth~~Exercises in ~~certain~~Last ~~information~~Fiscal ~~concerning individual grants of stock options to the Named Executive Officers during the fiscal year ended December 31, 2010.~~Year

~~GRANTS~~The OFfollowing ~~PLAN-BASED~~table ~~AWARDS~~sets forth certain information regarding stock options held by the Named Executive Officers during the fiscal year ended December 31, 2011, including the number of exercisable and unexercisable stock options as of December 31, 2011 by grant. No options were exercised by any of the Named Executive Officers during the fiscal year ended December 31, 2011.

Name	Grant Date		All other Option Awards: Number of Securities Underlying Options		Exercise Price of Option Awards per Share		Grant Date Fair Value of Stock and Option Awards
Dennis R. Raefield		-		-		-		-
Gregory M. Krzemien	April 7, 2010			50,000	$	0.93	$	28,640

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

On July 28, 2009, as part of Mr. Raefield’s Employment Agreement, the Compensation Committee awarded Mr. Raefield options for 250,000 shares of the Company’s Common Stock vesting one-half on July 28, 2010 and one-half on July 28, 2011. The options are exercisable at $0.97 per share. The Black Scholes value of the awarded option grant is $151,542. The median long term incentive compensation of chief executive officers, as set forth in the Hay 2007 Report was $243,257. The Compensation Committee believed that the option award was warranted due to the award being below the median of long term incentive compensation granted to chief executive officers, as stated in the Hay 2007 Report, a compensation study for the Chief Executive Officer position from the Hay Group dated December 12, 2007. Mr. Raefield’s total direct compensation under his employment agreement was below the median total direct compensation market consensus for chief executive officers, as set forth in the Hay 2007 Report.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Grant Date		Option Expiration Date
Michael E. Smith	(2)	15,000		-		0.64		6/18/2010		6/18/2015
Dennis R. Raefield	(2)	15,000		-		1.94	1/8/2008		1/8/2018
	(3)	250,000		-		1.50		7/30/2008		7/30/2018
	(4)	250,000		-		0.97		7/28/2009		7/28/2019

Gregory M. Krzemien	(1)	37,500		-		2.36		4/4/2002		4/4/2012
	(1)	150,000		-		1.32		7/14/2003		7/14/2013
	(1)	50,000		-		5.35		11/19/2004		11/19/2014
	(1)	60,000		-		2.40		3/23/2006		3/23/2016
	(1)	60,000		-		2.73		2/12/2007		2/12/2017
	(1)	40,000		-		1.44		3/25/2008		3/25/2018
	(5)	16,667		33,333		0.93		4/7/2010		4/7/2020

On April 7, 2010, as part of the Krzemien Agreement, the Compensation Committee awarded Mr. Krzemien an option grant to purchase 50,000 shares of common stock under the Company’s Stock Option Plan at an exercise price of $0.93, the market price of the Company’s common stock on the date of the option grant. The option grant is to vest in three equal annual installments on the anniversary dates of the Krzemien Agreement. The Black- Scholes value of the awarded option grant is $28,640.37

39(1) Fully vested option.

~~Aggregated~~(2) ~~Option~~Fully vested options granted to Mr. Smith and ~~Warrant~~Mr. ~~Exercises~~Raefield induring ~~Last~~the ~~Fiscal~~period ~~Year~~they served as a Directors.

~~The~~(3) ~~following~~Fully ~~table~~vested ~~sets forth certain information regarding stock~~ options ~~held~~granted byto ~~the~~Mr. ~~Named~~Raefield ~~Executive~~as ~~Officers~~part ~~during~~of ~~the~~Mr. ~~fiscal~~Raefield ~~year~~being ~~ended~~hired ~~December~~as ~~31, 2010, including~~ the ~~number~~Company’s ofPresident ~~exercisable~~ and ~~un-exercisable~~Chief ~~stock options as of December 31, 2010 by grant. No options were exercised by any of the Named~~ Executive ~~Officers during the fiscal year ended December 31, 2010~~Officer.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Grant Date	Option Expiration Date
Dennis R. Raefield	(2)	15,000		-		1.94	1/8/2008	1/8/2018
	(3)	250,000		-		1.50	7/30/2008	7/30/2018
	(4)	125,000	(4)	125,000		0.97	7/28/2009	7/28/2019
Gregory M. Krzemien		50,000		-		1.38	3/30/2001	3/30/2011
		37,500		-		2.36	4/4/2002	4/4/2012
		150,000		-		1.32	7/14/2003	7/14/2013
		50,000		-		5.35	11/19/2004	11/19/2014
		60,000		-		2.40	3/23/2006	3/23/2016
		60,000		-		2.73	2/12/2007	2/12/2017
		40,000		-		1.44	3/25/2008	3/25/2018
		-	(5)	50,000		0.93	4/7/2010	4/7/2020
Robert M. Kramer (1)		50,000		-		1.38	3/30/2001	3/30/2011
		37,500		-		2.36	4/4/2002	4/4/2012
		150,000		-		1.32	7/14/2003	7/14/2013
		37,500		-		4.21	11/2/2004	11/2/2014
		75,000		-		5.35	11/19/2004	11/19/2014
		75,000		-		2.40	3/23/2006	3/23/2016
		60,000		-		2.73	2/12/2007	2/12/2017
		40,000		-		1.44	3/25/2008	3/25/2018

(4)

Options granted on July 28, 2009 vested 125,000 shares on July 28, 2010 and 125,000 shares on July 28, 2011.

(15) ~~Fully~~Options granted on April 7, 2010 vested ~~option~~16,667 shares on April 7, 2011, and will vest 16,667 shares on April 7, 2012 and 16,666 shares on April 7, 2013.

~~(2)~~DIRECTOR ~~Fully vested options granted to Mr. Raefield during the period Mr. Raefield served as a Director.~~COMPENSATION

~~(3)~~The ~~Fully~~following ~~vested~~table ~~options~~provides ~~granted~~summary toinformation concerning ~~Mr.~~cash ~~Raefield~~and ascertain ~~part~~other ofcompensation ~~Mr.~~paid ~~Raefield~~or ~~being~~accrued ~~hired~~by asMace ~~the~~to ~~Company~~or on behalf of Mace’s ~~President~~Directors, ~~and~~other ~~Chief~~than ~~Executive~~Mr. Raefield, ~~Officer~~for the year ended December 31, 2011.

(4) Options granted on July 28, 2009 vest 125,000 shares on July 28, 2010 and 125,000 shares on July 28, 2011.

Name	Fees Earned ($) (1)		Option Awards ($) (2)		All Other Compensation ($)		Total
Richard A. Barone	$	22,000	$	4,735	$	-	$	26,735
Denis J. Amato	$	9,500	$	717	$	-	$	10,217
Larry Pollock	$	9,500	$	717	$	-	$	10,217
Michael E. Smith	$	16,000	$	-	$	-	$	16,000
John C. Mallon	$	10,500	$	-	$	-	$	10,500
Gerald T. LaFlamme	$	7,000	$	-	$	-	$	7,000

(51) ~~Options~~John ~~granted~~C. Mallon served on ~~April~~the 7Board of Directors until the election of our new Directors, ~~2010~~Denis ~~vest~~J. 16Amato and Larry Pollock,~~667~~ ~~shares~~at the Annual Meeting of Stockholders on ~~April~~July 714, 2011,. ~~16,667~~Gerald ~~shares~~T. onLaFlamme ~~April~~resigned 7,from ~~2012~~the ~~and~~Board ~~16,666~~of ~~shares~~Directors on April 718, ~~2013~~2011.

~~DIRECTOR~~(2) ~~COMPENSATION~~The aggregate options outstanding at December 31, 2011 were as follows: John C. Mallon, 45,000 options; Gerald T. LaFlamme, 45,000 options; Richard A. Barone, 130,000 options; Michael E. Smith, 15,000 options; Denis J. Amato, 100,000 options; and Larry Pollock, 100,000 options. Assumptions used in the calculation of these amounts are included in Note 2. to the Company’s Audited Financial Statements for the fiscal year ended December 31, 2011. The amounts in this column reflect the dollar amount recognized, in accordance with GAAP for share-based payments, for financial reporting purposes for the fiscal year ended December 31, 2011. There were no options granted to non-employee directors in 2010, except for Mr. Smith’s initial grant of 15,000 options upon his election to the Board of Directors on June 18, 2010. Options granted to non-employee directors in 2008 were for services on the Board for 2008 and 2009. Options granted to non-employee directors in 2009 were for services on the Board for 2010. For the year 2011, the Board of Directors approved of the following fees to be paid to directors who are not employees of the Company with respect to their calendar year 2011 service: a $1,000 monthly cash retainer fee to be paid quarterly in arrears; a $1,000 fee to each non-employee director for each Board or Committee meeting attended in person; and a $500 fee to each non-employee director for each Board or Committee meeting exceeding thirty minutes in length attended by telephone. Additionally, a grant of 100,000 options for services on the Board for 2011 was granted to each non-employee director, Messers. Amato, Barone, and Pollock, on November 1, 2011. The grants vest at the rate of two percent per month of service on the Board.

The following table provides summary information concerning cash and certain other compensation paid or accrued by Mace to or on behalf of Mace’s Directors, other than Mr. Raefield, for the year ended December 31, 2010.38

40ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Name	Fees Earned or Paid in Cash ($) (1)		Option Awards ($) (2)		All Other Compensation ($)		Total
John C. Mallon	$	27,500	$	-	$	-	$	27,500
Mark S. Alsentzer	$	21,000	$	-	$	-	$	21,000
Gerald T. LaFlamme	$	27,500	$	-	$	-	$	27,500
Richard A. Barone	$	29,500	$	-	$	-	$	29,500
Michael E. Smith	$	15,125	$	2,915	$	-	$	18,040

Securities Authorized for Issuance Under Equity Compensation Plans

~~(1)~~The ~~Mark~~Company Shas two Stock Option Plans that have been approved by the stockholders. ~~Alsentzer~~The ~~served~~plans onare the ~~Board~~1999 Stock Option Plan and the 1993 Stock Option Plan. Stock options are issued under the 1999 Stock Option Plan and the 1993 Stock Option Plan at the discretion of ~~Directors~~the ~~until~~Compensation Committee to employees at an exercise price of no less than the ~~election~~then current market price of ~~our~~the ~~new~~common ~~Director,~~stock ~~Michael~~and Egenerally expire ten years from the date of grant. ~~Smith~~Allocation of available options and vesting schedules are at the discretion of the Compensation Committee and are determined by potential contribution to, or impact upon, the overall performance of the Company by the executives and employees. Stock options are also issued to members of the Board of Directors at the ~~Annual~~discretion ~~Meeting~~of the Compensation Committee. These options may have similar terms as those issued to officers or may vest immediately. The purpose of ~~Stockholders~~both onStock ~~June~~Option 18Plans is to provide a means of performance-based compensation in order to provide incentive for the Company’s employees. Warrants have been issued in connection with the sale of the shares of the Company’s stock, ~~2010~~the purchase and sale of certain businesses, the incurrence of certain debt, and to a director. The terms of the warrants have been established by the Board of Directors of the Company. Certain of the warrants have been approved by stockholders.

~~(2)~~ The ~~aggregate~~following ~~options~~table ~~outstanding~~sets atforth ~~December~~certain information ~~31,~~regarding ~~2010 were as follows: John C. Mallon, 45,000 options; Gerald T. LaFlamme, 45,000 options; Richard A. Barone, 30,000 options; and Michael E. Smith, 15,000 options. Assumptions used in~~ the ~~calculation of these amounts are included in Note 3 to the~~ Company’s ~~Audited~~Stock ~~Financial~~Option ~~Statements~~Plans ~~for~~and ~~the~~warrants ~~fiscal~~as ~~year~~of ~~ended~~ December 31, ~~2010~~2011. The amounts in this column reflect the dollar amount recognized, in accordance with GAAP for share-based payments, for financial reporting purposes for the fiscal year ended December 31, 2010. There were no options granted to non-employee directors in 2010, except for Mr. Smith’s initial grant of 15,000 options upon his election to the Board of Directors on June 18, 2010. Options granted to non-employee directors in 2008 were for services on the Board for 2008 and 2009. Options granted to non-employee directors in 2009 were for services on the Board for 2010.

For the year 2010, the Board of Directors approved of the following fees to be paid to directors who are not employees of the Company with respect to their calendar year 2010 service: a $15,000 annual cash retainer fee to be paid in a lump sum; a $1,000 fee to each non-employee director for each Board or Committee meeting attended in person; a $500 fee to each non-employee director for each Board or Committee meeting exceeding thirty minutes in length attended by telephone. Additionally, a grant of 15,000 options at the close of market on December 18, 2009 for services on the Board for 2010 were granted to each non-employee director, except for Mr. Smith who was granted 15,000 options upon his election to the Board of Directors on June 18, 2010. The grants vested immediately.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
1993 Stock Option Plan		8,250	$	3.82		67,708

1999 Stock Option Plan		3,264,915	$	1.95		3,736,288
Total of both Equity Compensation Plans approved by stockholders		3,273,165	$	1.96		3,803,996
Equity compensation plans not approved by stockholders		1,743,250	$	0.20		N/A
Total		5,016,415	$	1.35		3,803,996

~~ITEM~~Beneficial ~~12. SECURITY~~Ownership ~~OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~

~~Securities~~The ~~Authorized~~following ~~for~~beneficial ~~Issuance~~ownership ~~Under~~table sets ~~Equity~~forth ~~Compensation~~information ~~Plans~~as of February 29, 2012 regarding ownership of shares of Mace common stock by the following persons:

~~The~~· ~~Company~~each ~~has~~person ~~two~~who ~~Stock~~is ~~Option~~known ~~Plans~~to ~~that~~Mace have been approved by the stockholders. The plans are the 1999 Stock Option Plan and the 1993 Stock Option Plan. Stock options are issued under the 1999 Stock Option Plan and 1993 Stock Option Plan at the discretion of the Compensation Committee to ~~employees~~own atbeneficially anmore ~~exercise~~than ~~price~~5% of ~~no less than~~ the ~~then~~outstanding ~~current~~shares ~~market price~~ of ~~the~~Mace common stock and generally expire ten years from the date of grant. Allocation of available options and vesting schedules are at the discretion of the Compensation Committee and are determined by potential contribution to, orbased ~~impact~~ upon, the overall performance of the Company by the executives and employees. Stock options are also issued to members of the Board of Directors at the discretion of the Compensation Committee. These options may have similar terms as those issued to officers or may vest immediately. The purpose of both Stock Option Plans is to provide a means of performance-based compensation in order to provide incentive for the CompanyMace’s ~~employees.~~records ~~Warrants~~or ~~have been issued in connection with~~ the ~~sale~~records of the shares of the Company’s stock, the purchase and sale of certain businesses and to a director. The terms of the warrants have been established by the Board of Directors of the Company. Certain of the warrants have been approved by stockholders.SEC;

~~The~~· ~~following~~each ~~table~~director ~~sets forth certain information regarding the Company’s Stock Option Plans and warrants as~~ of ~~December 31, 2010.~~Mace;

41· each Named Executive Officer; and

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
1993 Stock Option Plan		18,959	$	3.11		56,999
1999 Stock Option Plan		3,133,415	$	2.09		3,867,788
Total of both Equity Compensation Plans approved by stockholders		3,152,374	$	2.07		3,924,787
Equity compensation plans not approved by stockholders		314,715	$	0.20		N/A
Total		3,467,089	$	1.92		3,924,787

all directors and executive officers of Mace, as a group.

~~Beneficial~~Unless ~~Ownership~~otherwise indicated, to Mace’s knowledge, all persons listed on the beneficial ownership table below have sole voting and investment power with respect to their shares of Mace common stock. Shares of Mace common stock subject to options or warrants exercisable within 60 days of February 29, 2012 are considered outstanding for the purpose of computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated, the address of the holder is c/o the Company, 240 Gibraltar Road, Suite 220, Horsham, PA 19044.

~~The following beneficial ownership table sets forth information as of February 28, 2011 regarding ownership of shares of Mace common stock by the following persons:~~39

· each person who is known to Mace to own beneficially more than 5% of the outstanding shares of Mace common stock, based upon Mace’s records or the records of the SEC;

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percentage of Common Stock Owned (1)

Ancora Group
One Chagrin Highlands
2000 Auburn Drive, Suite 300
Cleveland, Ohio 44122		25,450,043	(2)		41.9	%

Lawndale Capital Management, LLC
591 Redwood Highway, Suite 2345
Mill Valley, CA 94941		5,355,400	(3)		9.1	%

Nantahala Capital Management, LLC
100 First Stamford Place, 2^nd Floor
Stamford, CT 06902		3,679,359	(4)		6.2	%

Richard A. Barone		1,173,000	(5)		2.0	%

Denis J. Amato		1,043,600	(6)		1.8	%

Gregory M. Krzemien		531,084	(7)		*

Larry Pollock		214,000	(8)		*

All current directors and executive officers as a group (6 persons)		2,961,684	(9)		5.0	%

·* ~~each~~Less ~~director~~than 1% of the outstanding shares of Mace; common stock.

·(1) Percentage ~~each~~calculation ~~Named~~is ~~Executive~~based on ~~Officer;~~58,946,441 ~~and~~shares outstanding on February 29, 2012.

·(2) The ~~all~~information ~~directors~~in this footnote has been provided to the Company by the Ancora Group. The Ancora Group is a group of affiliated companies which includes: Ancora Group, Inc.; Ancora Capital, Inc.; Ancora Securities, Inc., the main subsidiary of Ancora Capital, Inc.; Ancora Advisors, LLC; Ancora Trust, the master trust for the Ancora Mutual Funds; Ancora Foundation, a private foundation; Merlin Partners, LP an investment limited partnership; and ~~executive~~various ~~officers~~owners and employees of the aforementioned entities. The Ancora Group have aggregate beneficial ownership of 25,450,043 shares, including warrants issued to Merlin Partners, LP to purchase 1,743,250 shares of Mace common stock. Ancora Securities, Inc. is registered as a ~~group~~broker/dealer with the SEC and FINRA. Ancora Advisors, LLC is registered as an investment advisor with the SEC under the Investment Advisors Act of 1940, as amended. The Ancora Trust, which includes Ancora Income Fund, Ancora Equity Fund, Ancora Special Opportunity Fund, and Ancora MicroCap Fund, are registered with the SEC as investment companies under the Investment Company Act of 1940, as amended. Mr. Richard Barone, a director of the Company, is a major shareholder of The Ancora Group, Inc., which is the parent company of Ancora Advisors, LLC, and Ancora Securities, Inc. Mr. Barone owns approximately 2% of Merlin Partners, LP and 20% of the Ancora Group Inc. and is Chairman of and has an ownership interest in the various Ancora Funds. Mr. Denis J. Amato, a director of the Company, is also a major shareholder of the Ancora Group, Inc., and has ownership in Merlin Partners, LP and the Ancora Funds. Ancora Advisors, LLC has the power to dispose of the shares owned by the investment clients, for which it acts as advisor, including Merlin Partners, for which it is also the General Partner, and the Ancora Mutual Funds. Mr. Amato, as Chief Investment Officer of Ancora Advisors, Inc., has ultimate authority over the investments of Merlin Partners, LP and the Ancora Mutual Funds. Ancora Advisors, LLC, disclaims beneficial ownership of such shares, except to the extent of its pecuniary interest therein. Ancora Securities, Inc. acts as the agent for its various clients and has neither the power to vote nor the power to dispose of the shares. Ancora Securities, Inc. disclaims beneficial ownership of such shares. Each of the entities named have disclaimed membership in a Group within the meaning of Section 13(d)(3) of the Exchange Act and the Rules and Regulations promulgated thereunder in Schedule 13D Amendment 5 as filed with the SEC. The 25,450,043 aggregate shares listed for the Ancora Group are represented as owned beneficially, as follows: (a) 17,929,368 by the Ancora Mutual Funds for which Mr. Barone is a portfolio manager; (b) 5,130,462 by investment clients of Ancora Advisors, LLC, over which shares Ancora Advisors LLC has the power of disposition by virtue of an Investment Management Agreement (Ancora Advisors, LLC has disclaimed beneficial ownership of such shares); (c) 646,963 by owners/employees of Ancora Group, excluding Richard A. Barone and Denis J. Amato; and (d) 1,743,250 warrants issued to Merlin Partners, LP to purchase Mace common stock.

Unless otherwise indicated, to Mace’s knowledge, all persons listed on the beneficial ownership table below have sole voting and investment power with respect to their shares of Mace common stock. Shares of Mace common stock subject to options or warrants exercisable within 60 days of February 28, 2011 are considered outstanding for the purpose of computing the percentage ownership of the person holding such options or warrants, but are not deemed outstanding for computing the percentage ownership of any other person.40

42(3) According to the Schedule 13D Amendment 9 filed by Lawndale Capital Management, LLC (“Lawndale”) with the SEC on August 22, 2011, the beneficial ownership consists of 5,355,400 shares to which Lawndale has shared voting and dispositive power. The Schedule 13D was filed jointly by Lawndale, Andrew E. Shapiro and Diamond A Partners, L.P. (“Diamond”). Lawndale is the investment advisor to and the general partner of Diamond, which is an investment limited partnership. Mr. Shapiro is the sole manager of Lawndale. Mr. Shapiro is also deemed to have shared voting and dispositive power with respect to the shares reported as beneficially owned by Lawndale. Diamond has shared voting and dispositive power with respect to 4,486,600 shares of the Company.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership			Percentage of Common Stock Owned (1)
Lawndale Capital Management, LLC		1,638,382	(2)		10.3	%
591 Redwood Highway, Suite 2345
Mill Valley, CA 94941
Ancora Group (3)		1,905,515	(3)		11.9	%
One Chagrin Highlands
2000 Auburn Drive, Suite 300
Cleveland, Ohio 44122
Louis D. Paolino, Jr.		1,040,958	(4)		6.6	%
2626 Del Mar Place
Fort Lauderdale, Florida 33301
Nantahala Capital Management, LLC		788,700	(5)		5.0	%
100 First Stamford Place, 2nd Floor
Stamford, CT 06902
Gregory M. Krzemien		489,417	(6)		3.0	%
Michael E. Smith		15,000	(7)		*
Dennis R. Raefield		401,000	(8)		2.5	%
Richard A. Barone		197,000	(9)		1.3	%
John C. Mallon		55,000	(10)		*
Gerald T. LaFlamme		45,000	(11)		*
All current directors and executive officers as a group (6 persons)		1,202,417	(12)		7.2	%

(4) The 3,679,359 shares listed for Nantahala Capital Management, LLC are owned beneficially according to Schedule 13G filed with the SEC on February 13, 2012.

*(5) Includes ~~Less~~options ~~than~~to 1%purchase of38,000 ~~the outstanding~~ shares ~~of Mace common stock~~.

(16) ~~Percentage~~ Includes ~~calculation~~options isto ~~based~~purchase ~~on 15~~14,~~735,725~~000 shares ~~outstanding on February 28, 2011~~.

(27) ~~According~~ Includes tooptions ~~their Schedule 13D Amendment 8 filed with the SEC on November 30, 2009, consists of 1,638,382 shares~~ to ~~which~~purchase ~~Lawndale Capital Management~~430,834 LLC (“Lawndale”) has shared voting and dispositive power. The Schedule 13D was filed jointly by Lawndale, Andrew E. Shapiro and Diamond A Partners, L.P. (“Diamond”). Lawndale is the investment advisor to and the general partner of Diamond, which is an investment limited partnership. Mr. Shapiro is the sole manager of Lawndale. Mr. Shapiro is also deemed to have shared voting and dispositive power with respect to the shares ~~reported as beneficially owned by Lawndale~~. ~~Diamond has shared voting and dispositive power with respect to 1,415,110 shares of the Company.~~

(38) ~~According~~ Includes tooptions information provided by the Ancora Group, which includes The Ancora Group, Inc., Ancora Capital, Inc.; Ancora Securities, Inc., the main subsidiary of Ancora Capital, Inc.; Ancora Advisors, LLC, Ancora Trust, the master trust for the Ancora Mutual Funds; Ancora Foundation, a private foundation; Merlin Partners, LP an investment limited partnership; and various owners and employees of the aforementioned entities have aggregate beneficial ownership of 1,905,515 shares, including warrants issued to ~~Merlin Partners, LP to~~ purchase ~~314~~14,715 shares of Mace common stock. Ancora Securities, Inc. is registered as a broker/dealer with the SEC and FINRA. Ancora Advisors, LLC is registered as an investment advisor with the SEC under the Investment Advisors Act of 1940, as amended. The Ancora Trust, which includes Ancora Income Fund, Ancora Equity Fund, Ancora Special Opportunity Fund, and Ancora MicroCap Fund, are registered with the SEC as investment companies under the Investment Company Act of 1940, as amended. Mr. Richard Barone, a director of the Company, is the controlling shareholder of The Ancora Group, Inc., which is the parent company of Ancora Advisors, LLC, and Ancora Securities, Inc. Mr. Barone owns approximately 5% of Merlin Partners, LP and 20% of The Ancora Group and is Chairman of and has an ownership interest in the various Ancora Funds. Ancora Advisors, LLC has the power to dispose of the shares owned by the investment clients for which it acts as advisor, including Merlin Partners, for which it is also the General Partner, and the Ancora Mutual Funds. Ancora Advisors, LLC, disclaims beneficial ownership of such shares, except to the extent of its pecuniary interest therein. Ancora Securities, Inc. acts as the agent for its various clients and has neither the power to vote nor the power to dispose of the shares. Ancora Securities, Inc. disclaims beneficial ownership of such shares. Each of the entities named have disclaimed membership in a Group within the meaning of Section 13(d)(3) of the Exchange Act and the Rules and Regulations promulgated thereunder in Schedule 13D Amendment 5 as filed with the SEC. The 1,905,515 aggregate shares listed for the Ancora Group are represented as owned beneficially, as follows: (a) 470,000 ~~by the Ancora Mutual Funds for which Mr. Barone is a portfolio manager; (b) 1,078,800 by investment clients of Ancora Advisors, LLC, over which~~ shares Ancora Advisors LLC has the power of disposition by virtue of an Investment Management Agreement (Ancora Advisors, LLC has disclaimed beneficial ownership of such shares); (c) 42,000 by owners/employees of Ancora Group, including Richard A. ~~Barone; and (d) 314,715 warrants issued to Merlin Partners, LP to purchase Mace common stock.~~

43(9) See Notes 1 and 5 through 8 above.

~~(5) The~~Certain ~~788,700~~Relationships ~~shares~~and ~~listed~~Related Party ~~for Nantahala Capital Management, LLC are owned beneficially according to Schedule 13G filed with the SEC on February 3, 2011.~~Transactions

~~(6) Includes~~The ~~options~~Company’s Security Segment leases manufacturing and office space in Bennington, Vermont under a lease between Vermont Mill and the Company. The lease, as extended, expires on May 14, 2012. Vermont Mill is controlled by Jon E. Goodrich, a former director and employee of the Company. The original lease was entered into in November 1999. The Company also leased from November 2008 to ~~purchase~~May ~~464~~2009,~~167~~ ~~shares~~on a month-to-month basis, approximately 3,000 square feet of temporary inventory storage space at a monthly cost of $1,200. Under the Lease Extension Agreement entered into on December 20, 2010, the lease was extended through November 14, 2011 at a monthly rate of $11,315. The Company exercised an option in November 2011 to further extend the lease to May 14, 2012 at the same monthly rate. Rent expense under this lease was $135,780 and $129,857 for the years ended December 31, 2011 and 2010, respectively.

~~(7) Includes~~The ~~options~~Company funded a portion of the settlement payment to ~~purchase~~Mr. Paolino by borrowing $1.35 million from Merlin on December 28, 2010. Merlin is a fund managed by Ancora Advisors, LLC, an entity within the Ancora Group. Richard A. Barone, Chairman of the Company's Board of Directors, is the Chairman and controlling person of the Ancora Group. Denis J. Amato, a Company Director, is the Chief Investment Officer of Ancora Advisors, LLC, with final authority over the investments made by Merlin. The loan, which had an original maturity date of March 28, 2011, was extended to August 15, 2011. The loan was payable in two installments of $675,000, with each installment payable upon the closing of each of two car washes that were under agreements of sale at December 31, 2010. The Company made a payment of $675,000 to Merlin upon the sale of the Lubbock, Texas car wash on March 8, 2011. On August 8, 2011 the Company paid the remaining balance from the proceeds generated by the Company's Rights Offering. The loan's interest rate was 12% per annum and was secured by a second lien on a Dallas, Texas area car wash, a Lubbock, Texas car wash and a security interest in the tradename “Mace”. As part of the consideration for the financing, Merlin was granted a Common Stock Purchase Warrant to purchase up to 314,715 shares of the Company’s common stock at an exercise price of $0.20 per share, expiring December 28, 2015. The warrant contains anti-dilution provisions providing that Merlin will receive additional warrants exercisable into 2% of any common stock of the Company issued by the Company through December 28, 2011. On August 2, 2011, after the conclusion of the Company’s Rights Offering, a warrant for 847,452 shares was issued to Merlin under the anti-dilution provision. The exercise price of the original warrant and the newly issued warrant were subject to being adjusted lower, if necessary, to equal the stock issuance price of any stock issued through December 28, 2011 at a price below $0.20. The initial warrants were accounted for under the equity method with the Black-Scholes fair value of the warrant of $63,274 and recorded as a discount to the $1.35 million Merlin loan and as additional paid-in capital. The discount was charged to interest expense over the original three month maturity period of the loan with an offsetting credit to the loan balance.

Ancora Securities, Inc. (8"Ancora") ~~Includes~~ was ~~options~~the Placement Agent and Dealer Manager of the Rights Offering pursuant to ~~purchase~~the ~~390~~Placement Agent and Dealer Manager Agreement dated March 25,~~000~~ ~~shares~~2011 executed between Ancora and the Company. Richard A. Barone, Chairman of the Company’s Board of Directors, is a controlling owner of Ancora. Denis J. Amato, a director of the Company, is the Chief Investment Officer of Ancora and a large shareholder.

~~(9) Includes 135,000 shares owned by Mr. Barone, 32,000 shares owned by entities Mr. Barone directly controls and options to purchase 30,000 shares.~~41

On March 30, 2011, the Company borrowed $1.4 million with an interest rate of 6% per annum from Merlin to fund the acquisition of TCCI, a wholesale security monitoring company. The loan is secured by a security interest in the “Mace” name, a pledge of the stock of the Mace CSSS, Inc. (10the “Company’s wholesale monitoring subsidiary) ~~Includes~~ ~~options~~and a security interest in the assets of Mace CSSS, Inc. The loan is due March 30, 2013; however, Merlin had the right to call the loan commencing on September 27, 2011, forty trading days after the completion of the Company’s Rights Offering and Merlin's purchase 45of the Additional Stock (the "Call Trigger Event"). Merlin's right to call the loan expired on March 27, 2012, six months from September 27, 2011. Merlin did not exercise their right to call the loan by March 27, 2012, and accordingly; the maturity date of the loan was extended to March 30, 2016 with Merlin continuing its right to convert the loan into common stock through March 30, 2016, the new maturity date. The conversion right is at a per share price of $0.21 which is equal to the ten day average closing sales price of the common stock, starting with September 14, 2011, the trading day which is 30 trading days after the Call Trigger Event. In accordance with ASC 815, “Derivatives and Hedging,” the Company determined that the conversion feature of the Debenture met the criteria of an embedded derivative, and therefore the conversion feature of this Debenture needed to be bifurcated and accounted for as a derivative. The conversion option is marked-to-market each reporting period, with future changes in fair value reported in earnings. The fair value of the embedded conversion was estimated at $590,000 at the date of issuance of the debenture and each subsequent quarter using the Monte Carlo model with the following assumptions: risk free interest rate: 0.16%; expected life of the option to convert of 4.7 years; and volatility: 48%. With the Call Trigger Event occurring and the conversion price and number of conversion shares known, the fair value of the conversion option was estimated at $516,000 at September 30, 2011 using the Black-Scholes valuation model. Accordingly, for the three and nine months ended September 30, 2011, the Company recorded a gain on valuation of derivative of $74,000 to reflect the reduction in the market value of the derivative. Additionally, with the debenture conversion price and number of conversion shares to be issued upon a conversion known, the initial bifurcated derivative no longer met the criteria to be recorded as a derivative liability. Accordingly, the $516,000 conversion option at September 30, 2011, was reclassified from a liability to stockholder’s equity as additional paid-in-capital and as a discount to the $1.4 million Merlin loan. The conversion option is being accreted as a charge to interest expense over a 60 month period with an offsetting credit to the loan balance.

~~(11) Represents~~As ~~options~~compensation for the $1.4 million loan, Merlin received a five year warrant exercisable into 157,357 shares of common stock at an exercise price of $0.20 per share. The warrant contains an anti-dilution provision that provides that the Company will issue Merlin a warrant equal to ~~purchase~~1% 45percent of any shares issued by the Company for one year after the date the warrant was issued. Any new warrant issued will be exercisable at $0.20 per share. On August 2,~~000~~ 2011, after the completion of the Company’s Rights Offering, a warrant for 423,726 shares was issued to Merlin under the anti-dilution provision. The conversion features of the loan and the warrant may result in additional dilution to stockholders. The initial warrants were accounted for at a Black-Scholes fair value of the warrant of $47,420 recorded as a discount to the $1.4 million Merlin loan and as additional paid-in capital. The discount is being accreted as a charge to interest expense over the initial 24 month maturity period of the loan with an offsetting credit to the loan balance.

~~(12) See~~The ~~Notes~~Rights Offering was completed on August 1, 2011. A total of 22,372,616 shares of common stock were purchased in the Rights Offering. Of the 22,372,616 shares of common stock purchased, 16,305,144 were purchased under the basic subscription right and 6,067,472 were purchased through 11the ~~above~~oversubscription privilege. Net proceeds from the Rights Offering were approximately $4.3 million after expenses of approximately $167,000. The Rights Offering was made pursuant to a Registration Statement filed with the Securities and Exchange Commission (the “SEC”), as declared effective June 29, 2011 (the “Registration Statement”), and under a Prospectus dated June 30, 2011 (the “Prospectus”). The Rights Offering granted the Company's stockholders the right to purchase three shares of common stock for each share of common stock owned on the record date of June 27, 2011 at an exercise price of $0.20 per share. The 22,372,616 shares issued under the Rights Offering were registered under the Securities Act. Additionally, shares registered in the Registration Statement but not sold in the Rights Offering (the “Available Stock”) were offered for sale by the Company during the period commencing on August 2, 2011, and concluding on August 15, 2011. The Company sold 838,100 shares of the offered Available Stock generating additional proceeds of $167,620.

~~ITEM~~Additionally, 13on August 2, 2011, Merlin and two assignees, Mr. ~~CERTAIN~~ ~~RELATIONSHIPS~~Fedeli ~~AND~~and ~~RELATED~~Mr. ~~TRANSACTIONS~~Spitalieri (the “Purchasers”), ~~AND~~purchased ~~DIRECTOR~~20 ~~INDEPENDENCE~~million shares of the Company's common stock at a price of $0.20 per share (the "Additional Stock"). The sale of Additional Stock resulted in net proceeds to the Company of $3.75 million. The Purchasers of the Additional Stock were paid a fee of $250,000 in connection with the purchase under the Securities Purchase Agreement. The Additional Stock was registered for resale by the Purchasers of the Additional Stock under the Securities Act. The Additional Stock was purchased under the terms of a Securities Purchase Agreement dated March 25, 2011 (the "Securities Purchase Agreement") with Merlin.

~~Certain~~The ~~Relationships~~Company’s Audit Committee Charter, Section IV.E (vi), provides that the Audit Committee annually reviews all existing related party transactions or other conflicts of interest that exist between employees and ~~Related~~directors ~~Party~~and ~~Transactions~~the Company. The Audit Committee Charter also requires that the Audit Committee review all proposed related party transactions. As provided in Section IV.E (iv) of the Audit Committee Charter, the Company may not enter into a related party transaction, unless the transaction is first approved by the Audit Committee. The Audit Committee Charter is in writing and is available for review on the Company’s website at www.mace.com, under the Investor Relations heading. The current members of the Audit Committee are Messrs. Amato, Barone, Pollock and Perella. When reviewing related party transactions, the Audit Committee considers the benefit to the Company of the transaction and whether the transaction furthers the Company’s interest. The decisions of the Audit Committee are set forth in writing in the minutes of the meetings of the Audit Committee.

The Company’s Security Segment leases manufacturing and office space under a lease between Vermont Mill and the Company. The lease, as extended, expires on November 14, 2011. Vermont Mill is controlled by Jon E. Goodrich, a former director and current employee of the Company. The original lease was entered into in November 1999 for a five year term. In November 2004, the Company exercised an option to continue the lease through November 2009 at a rate of $10,576 per month. The Company amended the lease in 2008 to occupy additional space for an additional $200 per month. The Company also leased from November 2008 to May 2009, on a month-to-month basis, approximately 3,000 square feet of temporary inventory storage space at a monthly cost of $1,200. In September 2009, the Company and Vermont Mill extended the term of the lease to November 14, 2010 at a monthly rate of $10,776 per month and modified the square footage rented to 33,476 square feet. The Company entered into a Lease Extension Agreement on December 20, 2010 to further extend the lease through November 14, 2011 at a monthly rate of $11,315 and provides an option to further extend the lease to May 14, 2012 at the same monthly rate. Rent expense under this lease was $129,857 and $135,318 for the years ended December 31, 2010 and 2009, respectively.42

~~The~~Director Company funded a portion of the payment to Mr. Paolino by borrowing $1.35 million from Merlin Partners, LP (“Merlin”). The loan which had an original maturity date of March 28, 2011 was extended to April 28, 2011. The loan was payable in two installments of $675,000 each upon the closing of each of two car washes that were under agreements of sale at December 31, 2010. The Company made a payment of $675,000 to Merlin upon the sale of the Lubbock, Texas car wash on March 8, 2011. The Company expects to pay the remaining balance owed plus accrued interest from the proceeds generated by the sale of a Dallas, Texas area car wash that is under an agreement of sale and expected to close in the second quarter of 2011. Merlin is a fund managed by Ancora Advisors, a subsidiary of the Ancora Group. Richard Barone, a Company director, is Chairman of the Ancora Group. The loan bears interest at a rate of 12% per annum, and is secured by second liens on the Dallas, Texas area car wash and a security interest in the trade name “Mace”. As part of the consideration for the financing, Merlin was also granted a Common Stock Purchase Warrant (the “Warrant”) to purchase up to 314,715 shares of the Company’s common stock at an exercise price of $0.20 per share, expiring December 28, 2015. The Warrant contains anti-dilution provisions providing that Merlin will receive additional warrants exercisable into 2% of any common stock of the Company issued by the Company through December 28, 2011. The exercise price of the Warrant will be adjusted lower to equal the stock issuance price of any stock issued through December 28, 2011 at a price below $0.20.Independence

~~The~~Mace ~~Company’s~~has ~~Audit~~Corporate ~~Committee~~Governance ~~Charter,~~Guidelines. The ~~Section~~Corporate ~~IV.E~~Governance ~~(vi),~~Guidelines ~~provides~~provide that ~~the~~a ~~Audit~~majority ~~Committee annually reviews all existing related party transactions or other conflicts~~ of ~~interest that exist between employees and directors and~~ the Company.’s ~~The~~directors ~~Audit~~should ~~Committee~~be ~~Charter~~independent, ~~also~~as ~~requires that the Audit Committee review all proposed related party transactions. As provided~~ defined in Section IV3.E14 ~~(iv)~~ of the ~~Audit Committee Charter, the~~ Company’s ~~may~~Bylaws. ~~not~~Section ~~enter~~3.14 ~~into~~of ~~a related party transaction, unless~~ the ~~transaction~~Company’s isBylaws ~~first approved by the Audit Committee. The Audit Committee Charter~~ is ~~in writing and is~~ available for review on the Company’s website at www.mace.com, under the Investor Relations heading. The ~~current~~Board ~~members~~has ofdetermined ~~the~~that ~~Audit Committee are~~ Messrs. ~~LaFlamme~~ Barone, ~~Barone~~Amato, Pollock and ~~Smith.~~Perella ~~When~~are ~~reviewing~~independent ~~related~~under ~~party~~these ~~transactions~~rules. In addition, all of the Audit Committee ~~considers~~members are independent under the ~~benefit~~Audit toCommittee ~~the~~independence ~~Company~~standards ofestablished by the ~~transaction~~NASDAQ ~~and~~Global ~~whether~~Market and the ~~transaction~~rules ~~furthers~~promulgated by the ~~Company’s interest~~SEC. The ~~decisions~~Board ofhas ~~the~~an Audit Committee, ~~are~~a ~~set~~Compensation ~~forth~~Committee, ina ~~writing~~Nominating inCommittee ~~the~~and ~~minutes~~an ofEthics and Corporate Governance Committee. The independent directors are the ~~meetings~~sole members of all of the ~~Audit~~named ~~Committee~~committees.

44ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

~~Director~~Audit ~~Independence~~Fees. The Company was billed $268,383 by Grant Thornton LLP for the audit of Mace’s annual financial statements for the fiscal year ended December 31, 2011, and for the review of the financial statements included in Mace’s Quarterly Reports on Form 10-Q filed for each calendar quarter of 2011. The 2011 fees included $33,239 for services rendered in connection with Mace’s S-1 Registration Statement filing and Rights Offering. The Company was billed $304,027 by Grant Thornton LLP for the audit of Mace’s annual financial statements for the fiscal year ended December 31, 2010, and for the review of the financial statements included in Mace’s Quarterly Reports on Form 10-Q for each calendar quarter of 2010.

~~Mace~~Tax ~~has Corporate Governance Guidelines~~Fees. The ~~Corporate Governance Guidelines provide that a majority of the~~ Company’s ~~directors~~was billed ~~should~~$34,940 beand ~~independent~~$49,961 asfor ~~defined~~tax incompliance ~~Section~~services ~~3.14~~rendered ofby ~~the~~Grant ~~Company’s~~Thornton ~~ByLaws. Section~~LLP ~~3.14~~during of2011 ~~the~~and ~~Company’s ByLaws is available for review on the Company’s website at www.mace.com~~2010, ~~under the Investor Relations heading~~respectively. The ~~Board has~~services aided ~~determined that Messrs. LaFlamme, Mallon, Barone and Smith are independent under these rules. In addition, all of~~ the ~~Audit~~Company ~~Committee~~in ~~members are independent under~~ the ~~Audit~~preparation ~~Committee~~of ~~independence standards established by the NASDAQ Global Market and the rules promulgated by the SEC. The Board has an Audit Committee~~federal, astate ~~Compensation Committee, a Nominating Committee~~ and anlocal ~~Ethics~~tax ~~and Corporate Governance Committee~~returns. ~~The independent directors are the sole members of all of the named committees.~~

~~ITEM~~All 14Other Fees. ~~PRINCIPAL~~The ~~ACCOUNTING~~Company did ~~FEES~~not ~~AND~~incur ~~SERVICES~~any other fees from Grant Thornton LLP during 2011 or 2010.

~~Audit~~Other ~~Fees~~Matters. The ~~Company~~Audit ~~was~~Committee ~~billed~~of ~~$274,997~~the byBoard ~~Grant~~of ~~Thornton~~Directors ~~LLP~~has ~~for~~considered whether the provision of financial information systems design and implementation services and other non-audit services is compatible with maintaining the independence of Mace’s ~~annual~~registered public ~~financial~~accountants, ~~statements~~Grant ~~for~~Thornton ~~the~~LLP. ~~fiscal~~The ~~year~~Audit ~~ended~~Committee ~~December~~pre-approves ~~31,~~all ~~2010,~~auditing services and ~~for~~permitted ~~the~~non-audit ~~review~~services (including of the ~~financial~~fees ~~statements~~and ~~included~~terms inthereof) ~~Mace’s~~to ~~Quarterly~~be ~~Reports~~performed onfor ~~Form~~the ~~10-Q~~Company ~~filed~~by ~~for~~its ~~each~~independent ~~calendar~~auditors. ~~quarter~~One hundred percent (100%) of ~~2010.~~auditing ~~The~~services ~~Company~~and ~~was~~permitted ~~billed~~non-audit ~~$361,193~~services byin ~~Grant~~2010 ~~Thornton~~and ~~LLP~~2011 ~~for~~were pre-approved by the ~~audit~~Audit ofCommittee. ~~Mace’s~~The ~~annual~~Audit ~~financial~~Committee may ~~statements~~delegate ~~for~~authority to the ~~fiscal~~chairman, ~~year~~or ~~ended~~in ~~December~~his ~~31,~~or ~~2009~~her absence, ~~and~~a ~~for~~member designated by the ~~review~~chairman to grant pre-approvals of audit ~~the~~and ~~financial~~permitted ~~statements~~non-audit ~~included~~services, inprovided ~~Mace’s~~that ~~Quarterly~~decisions ~~Reports~~of onsuch ~~Form~~person 10or subcommittee to grant pre-Qapprovals ~~for~~shall ~~each~~be presented ~~calendar~~to ~~quarter~~the offull ~~2009~~Audit Committee at its next scheduled meeting.

~~Tax~~PART Fees. The Company was billed $49,961 and $63,771 for tax compliance services rendered by Grant Thornton LLP during 2010 and 2009, respectively. The services aided the Company in the preparation of federal, state and local tax returns.IV

~~All~~ITEM ~~Other Fees~~15. ~~The~~ ~~Company~~EXHIBITS, ~~did~~FINANCIAL ~~not~~STATEMENT ~~incur any other fees from Grant Thornton LLP during 2010 or 2009.~~SCHEDULES

Other Matters. The Audit Committee of the Board of Directors has considered whether the provision of financial information systems design and implementation services and other non-audit services is compatible with maintaining the independence of Mace’s registered public accountants, Grant Thornton LLP. The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditors. One hundred percent of auditing services and permitted non-audit services in 2009 and 2010 were pre-approved by the Audit Committee. The Audit Committee may delegate authority to the chairman, or in his or her absence, a member designated by the chairman to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such person or subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

(a) (1)	Consolidated Financial Statements:
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets as of December 31, 2011 and 2010
	Consolidated Statements of Operations for the years ended December 31, 2011 and 2010
	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011 and 2010
	Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010
	Notes to Consolidated Financial Statements

(a) (2)	The requirements of Schedule II have been included in the Notes to Consolidated Financial Statements. All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.

(a) (3)	Exhibits:

	The following Exhibits are filed as part of this report (exhibits marked with an asterisk have been previously filed with the SEC and are incorporated herein by this reference):
*3.3	Amended and Restated Bylaws of Mace Security International, Inc.
*3.4	Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.4 to the 1999 Form 10-KSB).

~~PART IV~~43

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

*3.5	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.5 to the 2000 Form 10-KSB).
*3.6	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.6 to the 2002 Form 10-K).
*3.7	The Company’s Amended and Restated Certificate of Incorporation (Exhibit 4.1 to the June 16, 2004 Form S-3).
*10.1	1993 Non-Qualified Stock Option Plan. (1)
*10.2	Trademarks. (1)
*10.3	Mace Security International, Inc. 1999 Stock Option Plan. (Exhibit 10.98 to the June 30, 1999 Form 10-QSB dated August 13, 1999).(3)
*10.4	Business Loan Agreement dated January 31, 2000, between the Company, its subsidiary - Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A.; Promissory Note dated February 2, 2000 between the same parties as above in the amount of $400,000 (pursuant to instruction 2 to Item 601 of Regulation S-K, two additional Promissory Notes, which are substantially identical in all material respects except as to the amount of the Promissory Notes) are not being filed in the amount of: $19,643.97 and $6,482; and a Modification Agreement dated as of January 31, 2000 between the same parties as above in the amount of $110,801.55 (pursuant to instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to the amount of the Modification Agreement) are not being filed in the amounts of: $39,617.29, $1,947,884.87, $853,745.73, and $1,696,103.31. (Exhibit 10.124 to the December 31, 1999 Form 10-KSB dated March 29, 2000).
*10.5	Amendment dated March 13, 2001, to Business Loan Agreement between the Company, its subsidiary Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. (pursuant to instruction 2 to Item 601 of Regulation S-K, one additional amendment which is substantially identical in all material respects, except as to the borrower being Eager Beaver Car Wash, Inc., is not being filed). (Exhibit 10.132 to the December 31, 2000 Form 10-KSB dated March 20, 2001).
*10.6	Modification Agreement between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the amount of $2,216,000 (pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to amount and extension date of the Modification Agreement are not being filed in the original amounts of $984,000 (extended to August 20, 2004) and $1,970,000 (extended to June 21, 2004). (Exhibit 10.133 to the June 30, 2001 Form 10-Q dated August 9, 2001).
*10.7	Term Note dated November 6, 2001 between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the amount of $380,000. (Exhibit 10.134 to the September 30, 2001 Form 10-Q dated November 9, 2001).
*10.8	Master Lease Agreement dated June 10, 2002 between the Company, its subsidiary Colonial Full Service Car Wash, Inc., and Banc One Leasing Corporation in the amount of $193,055. (Exhibit 10.140 to the June 30, 2002 Form 10-Q dated August 14, 2002).
*10.9	Lease Schedule and Addendum dated August 28, 2002 in the amount of $39,434 to Master Lease Agreement dated June 10, 2002, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Banc One Leasing Corporation. (Exhibit 10.144 to the September 30, 2002 Form 10-Q dated November 12, 2002).
*10.10	Note Modification Agreement dated February 21, 2003, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc. and Bank One, Texas, N.A. in the amount of $348,100. (Exhibit 10.148 to the December 31, 2002 Form 10-K dated March 19, 2003).
*10.11	Note Modification Agreement and Amendment to Credit Agreement dated January 21, 2004, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc. and Bank One, Texas, N.A. in the amount of $48,725.50. (Exhibit 10.157 to the December 31, 2004 Form 10-K dated March 12, 2004).
*10.12	Credit Agreement dated as of December 31, 2003 between the Company, its subsidiary, Eager Beaver Car Wash, Inc., and Bank One Texas, N.A. (pursuant to instruction 2 to Item 601of Regulation S-K, four additional credit agreements which are substantially identical in all material respects, except as to the borrower being Mace Car Wash - Arizona, Inc., Colonial Full Service Car Wash, Inc., Mace Security Products, Inc. and Mace Security International, Inc., are not being filed.) (Exhibit 10.158 to the December 31, 2004 Form 10-K dated March 12, 2004).
*10.13	Amendment to Credit Agreement dated April 27, 2004, effective March 31, 2004 between Mace Security International, Inc., and Bank One Texas, N.A. (Pursuant to instruction 2 to Item 601 of Regulation S-K, four additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Car Wash-Arizona, Inc., Colonial Full Service Car Wash, Inc. Mace Security Products Inc. and Eager Beaver Car Wash, Inc., are not being filed.) (Exhibit 10.159 to the March 31, 2004 Form 10-Q dated May 5, 2004).
*10.14	Modification Agreement between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the original amount of $984,000 (Pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to amount and extension date of the Modification Agreement, are not being filed in the original amounts of $2,216,000 (extended to August 20, 2009) and $380,000 (extended to October 6, 2009)). (Exhibit 10.167 to the September 30, 2004 Form 10-Q dated November 12, 2004).

(a) (1)	Consolidated Financial Statements:
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets as of December 31, 2010 and 2009
	Consolidated Statements of Operations for the years ended December 31, 2010 and 2009
	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010 and 2009
	Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
	Notes to Consolidated Financial Statements
(a) (2)	The requirements of Schedule II have been included in the Notes to Consolidated Financial Statements. All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.
(a) (3)	Exhibits:

	The following Exhibits are filed as part of this report (exhibits marked with an asterisk have been previously filed with the SEC and are incorporated herein by this reference):
*10.15	Promissory Note dated September 15, 2004 between the Company, its subsidiary, Mace Security Products, Inc., and Bank One, Texas, N.A. in the amount of $825,000. (Exhibit 10.168 to the September 30, 2004 Form 10-Q dated November 12, 2004).
*3.3	Amended and Restated Bylaws of Mace Security International, Inc.
*10.16	Note Modification Agreement dated December 1, 2005 between the Company, its subsidiary Mace Security Products, Inc. and JPMorgan Bank One Bank, N.A. in the amount of $500,000. (Exhibit 10.179 to the December 31, 2005 Form 10-K dated July 14, 2006)
*3.4	Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.4 to the 1999 Form 10-KSB)
	Form 8-K dated March 6, 2006). +
*10.17	Amendment to Credit Agreement dated October 31, 2006, effective September 30, 2006 between Mace Security International, Inc., and JP Morgan Chase Bank, N.A. (Pursuant to Instruction 2 to Item 601 of Regulation S-K, five additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Truck Wash, Inc., Mace Car Wash-Arizona, Inc., Colonial Full Service Car Wash, Inc., Mace Security Products Inc., and Eager Beaver Car Wash, Inc., are not being filed). (Exhibit 10.1 to the September 30, 2006 Form 10-Q dated November 13, 2006).
*10.18	Employment Agreement dated August 21, 2006 between Mace Security International, Inc. and Louis D. Paolino, Jr. (Exhibit 10.1 to the August 21, 2006 Form 8-K dated August 22, 2006). (3)
*10.19	Employment Agreement dated February 12, 2007 between Mace Security International, Inc. and Gregory M. Krzemien (Exhibit 10.1 to the February 8, 2007 Form 8-K dated February 14, 2007). (3)
*10.21	Employment Agreement dated July 29, 2008 between Mace Security International, Inc. and Dennis R. Raefield (Incorporated by reference as Exhibit 10.1 to the July 29, 2008 Form 8-K dated July 31, 2008). (3)
*10.22	Amendment to Credit Agreement dated May 1, 2009, between Mace Security International, Inc., and JP Morgan Chase Bank N.A. (“Chase”). (Pursuant to Instruction 2 to Item 601 of Regulation S-K, two additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Car Wash-Arizona, Inc. and Colonial Full Service Car Wash, Inc. are not being filed). (Incorporated by reference as Exhibit 10.37 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.23	Note Modification Agreement between the Company, its subsidiary-Colonial Full Service Car Wash, Inc. and Chase, in the original amount of $2,216,000 extended to April 20, 2011. (Pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements which are substantially identified in all material respects except to amounts and extension dates of the Modification Agreements, are not being filed in the original amounts of $1,970,000 (extended to April 21, 2011) $984,000 (extended to April 20, 2011 and $380,000 extended to May 6, 2011)). (Incorporated by reference as Exhibit 10.38 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.24	Modification, Renewal, and Extension of Note, Liens and Credit Agreement dated May 8, 2009 between the Company, its subsidiary, Mace Security Products Inc. and Chase. (Incorporated by reference as Exhibit 10.39 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.25	Stock Purchase Agreement dated April 7, 2009, by and among Mace Security International, Inc., CSSS, In Keays, and Bradley Keays and related Amendment 1 to Stock Purchase Agreement dated April (Incorporated by reference as Exhibit 10.40 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.26	Agreements consisting of: (i) Commercial Earnest Money Contract, dated as of January 15, 2009; (ii) Amendment to Commercial Earnest Money Contract dated effective March 16, 2009; (iii) Commercial Earnest Contract, executed as of April 16, 2009; (iv) Amendment to Commercial Earnest Money Contracts, dated as of May 27, 2009, (v) Third Amendment to Commercial Earnest Money Contracts, dated September 1, 2009; (vii) Fifth Amendment to Contracts dated October 9, 2009; and (viii) Assignment of Commercial Earnest Money Contract dated October 12, 2009. (Incorporated by reference as Exhibit 10.1 to the November 30, 2009 Form 8-K dated December 4, 2009).
*10.27	Amendment to Credit Agreement dated December 21, 2009, between Mace Security International, Inc., and JP Morgan Chase Bank N.A. (“Chase”). (Pursuant to Instruction 2 to Item 601 of Regulation S-K, two additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Security Products, Inc. and Colonial Full Service Car Wash, Inc., are not being filed). (Incorporated by reference as Exhibit 10.27 to the December 31, 2009 Form 10-K dated March 24, 2010).
*10.28	Line of Credit Note dated December 12, 2009 between the Company, its subsidiary, Mace Security Products, Inc., and JP Morgan Chase Bank N.A. in the amount of $500,000. (Incorporated by reference as Exhibit 10.28 to the December 31, 2009 Form 10-K dated March 24, 2010).
*10.29	Letter Agreement of Employment dated March 23, 2010 between Mace Security International, Inc. and Gregory M. Krzemien. (3) (Incorporated by reference as Exhibit 10.29 to the December 31, 2009 Form 10-K dated March 24, 2010).
*10.30	Stock Purchase Agreement dated November 11, 2010, by and among Mace Security International, Inc., Linkstar Interactive, Inc., Linkstar Corporation, and Silverback Network, Inc. (Exhibit 10.1 to the September 30, 2010 Form 10-Q filed November 15, 2010).

*3.5	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.5 to the 2000 Form 10-KSB)
*10.31	Promissory Term Note Agreement dated December 28, 2010, between the Company and Merlin Partners, LP in the amount of $1,350,000 and related Security Agreement and Common Stock Purchase Warrant. (Incorporated by reference as Exhibit 10.31 to the December 31, 2010 Form 10-K dated March 30, 2011).
*3.6	Certificate of Amendment of Amended and Restated Certificate of Incorporation of Mace Security International, Inc. (Exhibit 3.6 to the 2002 Form 10-K)
*10.32	Line of Credit Note in the amount of $500,000 and related Amendment to Credit Agreement dated December 17, 2010 between the Company, its subsidiary, Mace Securities Products, Inc., and JP Morgan Chase Bank N.A. (Incorporated by reference as Exhibit 10.32 to the December 31, 2010 Form 10-K dated March 30, 2011).
*3.7	The Company’s Amended and Restated Certificate of Incorporation (Exhibit 4.1 to the June 16, 2004 Form S-3)
*10.33	Securities Purchase Agreement dated March 25, 2011, between the Company and Merlin Partners, LP. (Incorporated by reference as Exhibit 10.33 to the December 31, 2010 Form 10-K dated March 30, 2011).
*10.1	1993 Non-Qualified Stock Option Plan (1)
*10.34	Placement Agent and Dealer-Manager Agreement dated March 25, 2011, between the Company and Ancora Securities, Inc. (Incorporated by reference as Exhibit 10.34 to the December 31, 2010 Form 10-K dated March 30, 2011).
*10.2	Trademarks (1)
*10.35	Debenture Agreement dated March 30, 2011, between the Company and Merlin Partners, LP in the amount of $1,400,000 and related Common Stock Purchase Warrant and Security Pledge Agreement. (Incorporated by reference as Exhibit 99.1 to the April 7, 2011 Form 8-K dated April 7, 2011).
*10.3	Mace Security International, Inc. 1999 Stock Option Plan. (Exhibit 10.98 to the June 30, 1999 Form 10-QSB dated August 13, 1999) (3)
*10.36	Second Note Modification Agreement dated April 29, 2011 to the Promissory Term Note Agreement dated December 28, 2010, between the Company and Merlin Partners, LP in the amount of $1,350,000. (Incorporated by reference as Exhibit 10.36 to the March 30, 2011 Form 10-Q dated May 16, 2011).
*10.4	Business Loan Agreement dated January 31, 2000, between the Company, its subsidiary - Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A.; Promissory Note dated February 2, 2000 between the same parties as above in the amount of $400,000 (pursuant to instruction 2 to Item 601 of Regulation S-K, two additional Promissory Notes, which are substantially identical in all material respects except as to the amount of the Promissory Notes) are not being filed in the amount of: $19,643.97 and $6,482; and a Modification Agreement dated as of January 31, 2000 between the same parties as above in the amount of $110,801.55 (pursuant to instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to the amount of the Modification Agreement) are not being filed in the amounts of: $39,617.29, $1,947,884.87, $853,745.73, and $1,696,103.31. (Exhibit 10.124 to the December 31, 1999 Form 10-KSB dated March 29, 2000)
*10.37	Waiver Letter of Merlin Partners, LP issued with respect to the Securities Purchase Agreement dated March 25, 2011 between the Company and Merlin Partners, LP. (Exhibit 10.37 to Amendment 1 on Form S-1 filed June 7, 2011).
*10.5	Amendment dated March 13, 2001, to Business Loan Agreement between the Company, its subsidiary Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. (pursuant to instruction 2 to Item 601 of Regulation S-K, one additional amendment which is substantially identical in all material respects, except as to the borrower being Eager Beaver Car Wash, Inc., is not being filed). (Exhibit 10.132 to the December 31, 2000 Form 10-KSB dated March 20, 2001)
*10.38	Third Note Modification Agreement dated June 6, 2011 to the Promissory Term Note Agreement dated December 28, 2010, between the Company and Merlin Partners, LP in the amount of $1,350,000. (Exhibit 10.38 to Amendment 1 on Form S-1 filed June 7, 2011).
*10.6	Modification Agreement between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the amount of $2,216,000 (pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to amount and extension date of the Modification Agreement are not being filed in the original amounts of $984,000 (extended to August 20, 2004) and $1,970,000 (extended to June 21, 2004). (Exhibit 10.133 to the June 30, 2001 Form 10-Q dated August 9, 2001)
*10.39	Note Modification Agreement dated April 28, 2011 between the Company, its subsidiary Colonial Full Service Car Wash, Inc. and JP Morgan Chase Bank N.A., in the original amount of $1,970,000, extended to July 21, 2011. (Exhibit 10.39 to Amendment 1 on Form S-1 filed June 7, 2011).
*10.7	Term Note dated November 6, 2001 between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the amount of $380,000. (Exhibit 10.134 to the September 30, 2001 Form 10-Q dated November 9, 2001)
*10.40	Fourth Note Modification Agreement dated July 15, 2011 to the Promissory Term Note Agreement dated December 28, 2010, between the Company and Merlin Partners, LP in the amount of $1,350,000. (Incorporated by reference as Exhibit 10.40 to the June 30, 2011 Form 10-Q filed August 15, 2011).
*10.8	Master Lease Agreement dated June 10, 2002 between the Company, its subsidiary Colonial Full Service Car Wash, Inc., and Banc One Leasing Corporation in the amount of $193,055. (Exhibit 10.140 to the June 30, 2002 Form 10-Q dated August 14, 2002)
*10.41	Line of Credit Note Modification Agreement in the amount of $500,000 dated July 6, 2011 between the Company, its subsidiary, Mace Securities Products, Inc., and JP Morgan Chase Bank N.A. (Incorporated by reference as Exhibit 10.41 to the June 30, 2011 Form 10-Q filed August 15, 2011).
*10.9	Lease Schedule and Addendum dated August 28, 2002 in the amount of $39,434 to Master Lease Agreement dated June 10, 2002, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc., and Banc One Leasing Corporation. (Exhibit 10.144 to the September 30, 2002 Form 10-Q dated November 12, 2002)
*10.42	Note Modification Agreement dated April 21, 2011 between the Company, its subsidiary Colonial Full Service Car Wash, Inc. and JP Morgan Chase Bank N.A., in the original amount of $1,970,000, extended to February 28, 2012. (Incorporated by reference as Exhibit 10.42 to the September 30, 2011 Form 10-Q filed November 14, 2011).
*10.10	Note Modification Agreement dated February 21, 2003, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc. and Bank One, Texas, N.A. in the amount of $348,100. (Exhibit 10.148 to the December 31, 2002 Form 10-K dated March 19, 2003)
10.43	Amendment to Credit Agreement effective December 31, 2011, between Mace Security International, Inc., and JP Morgan Chase Bank N.A. (“Chase”). (Pursuant to Instruction 2 to Item 601 of Regulation S-K, an additional credit agreement which is substantially identical in all material respects, except as to borrower being the Company’s subsidiary, Mace Security Products, Inc. is not being filed).
*10.11	Note Modification Agreement and Amendment to Credit Agreement dated January 21, 2004, between the Company, its subsidiary, Colonial Full Service Car Wash, Inc. and Bank One, Texas, N.A. in the amount of $48,725.50. (Exhibit 10.157 to the December 31, 2004 Form 10-K dated March 12, 2004)
10.44	Line of Credit Note Modification Agreement in the amount of $250,000 effective December 31, 2011 between the Company, its subsidiary, Mace Security Products, Inc., and JP Morgan Chase Bank N.A.
*10.12	Credit Agreement dated as of December 31, 2003 between the Company, its subsidiary, Eager Beaver Car Wash, Inc., and Bank One Texas, N.A. (pursuant to instruction 2 to Item 601of Regulation S-K, four additional credit agreements which are substantially identical in all material respects, except as to the borrower being Mace Car Wash - Arizona, Inc., Colonial Full Service Car Wash, Inc., Mace Security Products, Inc. and Mace Security International, Inc., are not being filed.) (Exhibit 10.158 to the December 31, 2004 Form 10-K dated March 12, 2004.)
*10.13	Amendment to Credit Agreement dated April 27, 2004, effective March 31, 2004 between Mace Security International, Inc., and Bank One Texas, N.A. (Pursuant to instruction 2 to Item 601 of Regulation S-K, four Additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Car Wash-Arizona, Inc., Colonial Full Service Car Wash, Inc. Mace Security Products Inc. and Eager Beaver Car Wash, Inc., are not being filed) (Exhibit 10.159 to the March 31, 2004 Form 10-Q dated May 5, 2004)

11	Statement Regarding Computation of Per Share Earnings.
*14	Code of Ethics and Business Conduct (Exhibit 14 to the December 31, 2003 Form 10-K dated March 12, 2004)
21	Subsidiaries of the Company
23.1	Consent of Grant Thornton LLP
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*99.1	Corporate Governance Guidelines dated October 16, 2007 (Exhibit 99.1 to the October 16, 2007 8-K dated October 16, 2007)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

*10.14	Modification Agreement between the Company , its subsidiary, Colonial Full Service Car Wash, Inc., and Bank One, Texas, N.A. in the original amount of $984,000 (pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements, which are substantially identical in all material respects except to amount and extension date of the Modification Agreement, are not being filed in the original amounts of $2,216,000 (extended to August 20, 2009) and $380,000 (extended to October 6, 2009)). (Exhibit 10.167 to the September 30, 2004 Form 10-Q dated November 12, 2004)
*10.15	Promissory Note dated September 15, 2004 between the Company, its subsidiary, Mace Security Products, Inc., and Bank One, Texas, N.A. in the amount of $825,000. (Exhibit 10.168 to the September 30, 2004 Form 10-Q dated November 12, 2004)
*10.16	Note Modification Agreement dated December 1, 2005 between the Company, its subsidiary Mace Security Products, Inc. and JPMorgan Bank One Bank, N.A. in the amount of $500,000. (Exhibit 10.179 to the December 31, 2005 Form 10-K dated July 14, 2006)
	Form 8-K dated March 6, 2006) +
*10.17	Amendment to Credit Agreement dated October 31, 2006, effective September 30, 2006 between Mace Security International, Inc., and JP Morgan Chase Bank, N.A. (Pursuant to Instruction 2 to Item 601 of Regulation S-K, five additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Truck Wash, Inc., Mace Car Wash-Arizona, Inc., Colonial Full Service Car Wash, Inc., Mace Security Products Inc., and Eager Beaver Car Wash, Inc., are not being filed). (Exhibit 10.1 to the September 30, 2006 Form 10-Q dated November 13, 2006)
*10.18	Employment Agreement dated August 21, 2006 between Mace Security International, Inc. and Louis D. Paolino, Jr. (Exhibit 10.1 to the August 21, 2006 Form 8-K dated August 22, 2006) (3)
*10.19	Employment Agreement dated February 12, 2007 between Mace Security International, Inc. and Gregory M. Krzemien (Exhibit 10.1 to the February 8, 2007 Form 8-K dated February 14, 2007) (3)
*10.21	Employment Agreement dated July 29, 2008 between Mace Security International, Inc. and Dennis R. Raefield
	(Incorporated by reference as Exhibit 10.1 to the July 29, 2008 Form 8-K dated July 31, 2008) (3)
*10.22	Amendment to Credit Agreement dated May 1, 2009, between Mace Security International, Inc., and JP Morgan Chase Bank N.A. (“Chase”). (Pursuant to Instruction 2 to Item 601 of Regulation S-K, two additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Car Wash-Arizona, Inc. and Colonial Full Service Car Wash, Inc. are not being filed). (Incorporated by reference as Exhibit 10.37 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.23	Note Modification Agreement between the Company, its subsidiary-Colonial Full Service Car Wash, Inc. and Chase, in the original amount of $2,216,000 extended to April 20, 2011. (Pursuant to Instruction 2 to Item 601 of Regulation S-K, Modification Agreements which are substantially identified in all material respects except to amounts and extension dates of the Modification Agreements, are not being filed in the original amounts of $1,970,000 (extended to April 21, 2011) $984,000 (extended to April 20, 2011 and $380,000 extended to May 6, 2011)). (Incorporated by reference as Exhibit 10.38 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.24	Modification, Renewal, and Extension of Note, Liens and Credit Agreement dated May 8, 2009 between the Company, its subsidiary, Mace Security Products Inc. and Chase. (Incorporated by reference as Exhibit 10.39 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.25	Stock Purchase Agreement dated April 7, 2009, by and among Mace Security International, Inc., CSSS, In Keays, and Bradley Keays and related Amendment 1 to Stock Purchase Agreement dated April (Incorporated by reference as Exhibit 10.40 to the March 31, 2009 Form 10Q dated May 13, 2009).
*10.26	Agreements consisting of: (i) Commercial Earnest Money Contract, dated as of January 15, 2009; (ii) Amendment to Commercial Earnest Money Contract dated effective March 16, 2009; (iii) Commercial Earnest Contract, executed as of April 16, 2009; (iv) Amendment to Commercial Earnest Monet Contracts, dated as of May 27, 2009, (v) Third Amendment to Commercial Earnest Money Contracts, dated September 1, 2009; (vii) Fifth Amendment to Contracts dated October 9, 2009; and (viii) Assignment of Commercial Earnest money Contract dated October 12, 2009. (Incorporated by reference as Exhibit 10.1 to the November 30, 2009 Form 8-K dated December 4, 2009).
*10.27	Amendment to Credit Agreement dated December 21, 2009, between Mace Security International, Inc., and JP Morgan Chase Bank N.A. (“Chase”). (Pursuant to Instruction 2 to Item 601 of Regulation S-K, two additional credit agreements which are substantially identical in all material respects, except as to borrower being the Company’s subsidiaries, Mace Security Products, Inc. and Colonial Full Service Car Wash, Inc., are not being filed). (Incorporated by reference as Exhibit 10.27 to the December 31, 2009 Form 10-K dated March 24, 2010).
*10.28	Line of Credit Note dated December 12, 2009 between the Company, its subsidiary, Mace Security Products, Inc., and JP Morgan Chase Bank N.A. in the amount of $500,000. (Incorporated by reference as Exhibit 10.28 to the December 31, 2009 Form 10-K dated March 24, 2010).

*Incorporated by reference to the exhibit indicated in parentheses.

47+Schedules and other attachments to the indicated exhibit have been omitted. The Company agrees to furnish supplementally to the SEC upon request a copy of any omitted schedules or attachments.

*10.29	Letter Agreement of Employment dated March 23, 2010 between Mace Security International, Inc. and Gregory M. Krzemien. (3) (Incorporated by reference as Exhibit 10.29 to the December 31, 2009 Form 10-K dated March 24, 2010).
*10.30	Stock Purchase Agreement dated November 11, 2010, by and among Mace Security International, Inc., Linkstar Interactive, Inc., Linkstar Corporation, and Silverback Network, Inc. (Exhibit 10.1 to the September 30, 2010 Form 10-Q filed November 15, 2010).
10.31	Promissory Term Note Agreement dated December 28, 2010, between the Company and Merlin Partners, LP in the amount of $1,350,000 and related Security Agreement and Common Stock Purchase Warrant.
10.32	Line of Credit Note in the amount of $500,000 and related Amendment to Credit Agreement dated December 17, 2010 between the Company, its subsidiary, Mace Securities Products, Inc., and JP Morgan Chase Bank N.A.
10.33	Securities Purchase Agreement dated March 25, 2011, between the Company and Merlin Partners, LP.
10.34	Placement Agent and Dealer-Manager Agreement dated March 25, 2011, between the Company and Ancora Securities, Inc.
11	Statement Regarding Computation of Per Share Earnings.
*14	Code of Ethics and Business Conduct (Exhibit 14 to the December 31, 2003 Form 10-K dated March 12, 2004)
21	Subsidiaries of the Company
23.1	Consent of Grant Thornton LLP
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*99.1	Corporate Governance Guidelines dated October 16, 2007 (Exhibit 99.1 to the October 16, 2007 8-K dated October 16, 2007)

*(1) Incorporated by reference to the exhibit ~~indicated~~of inthe ~~parentheses~~same number filed with the Company's registration statement on Form SB-2 (33-69270) that was declared effective on November 12, 1993.

~~+Schedules~~(2) ~~and~~Incorporated ~~other~~by ~~attachments~~reference to the ~~indicated~~Company's ~~exhibit~~Form ~~have~~10-QSB ~~been~~report ~~omitted~~for the quarter ended September 30, 1994 filed on November 14, 1994. ~~The~~ ~~Company~~It ~~agrees~~should tobe ~~furnish~~noted ~~supplementally~~that toExhibits ~~the~~10.25 ~~SEC~~through ~~upon~~10.34 ~~request~~were apreviously ~~copy~~numbered of10.1 ~~any~~through ~~omitted~~10.10 ~~schedules~~in orthat ~~attachments~~report.

(13) Indicates ~~Incorporated~~a bymanagement contract ~~reference~~or tocompensation ~~the~~plan ~~exhibit~~or ~~of the same number filed with the Company's registration statement on Form SB-2 (33-69270) that was declared effective on November 12, 1993~~arrangement.

(2) Incorporated by reference to the Company's Form 10-QSB report for the quarter ended September 30, 1994 filed on November 14, 1994. It should be noted that Exhibits 10.25 through 10.34 were previously numbered 10.1 through 10.10 in that report.47

~~(3) Indicates a management contract or compensation plan or arrangement.~~SIGNATURES

48Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~SIGNATURES~~MACE SECURITY INTERNATIONAL, INC.

~~Pursuant~~By: to/s/ ~~the~~John ~~requirements~~J. ofMcCann ~~Section~~John 13J. orMcCann ~~15(d)~~President ofand ~~the~~Chief ~~Securities~~Executive ~~Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~Officer

~~MACE~~DATED ~~SECURITY~~the ~~INTERNATIONAL~~28 day of March, ~~INC.~~2012

~~By:~~Pursuant ~~/s/~~to ~~Dennis~~the R.requirements ~~Raefield.~~of ~~Dennis~~the R.Securities Exchange ~~Raefield~~Act ~~President~~of 1934, this report has been signed below by the following persons on behalf of the registrant and ~~Chief~~in ~~Executive~~the ~~Officer~~capacities and on the dates indicated:

DATED the 30 day of March, 2011

Name	Title	Date

/s/ John J. McCann	President, Chief Executive Officer	March 28, 2012
John J. McCann	and Director
(Principal Executive Officer)

/s/ Gregory M. Krzemien	Chief Financial Officer	March 28, 2012
Gregory M. Krzemien	and Treasurer
(Principal Financial Officer and
Principle Accounting Officer)

/s/ Richard A. Barone	Chairman of the Board	March 28, 2012
Richard A. Barone

/s/ Denis J. Amato	Director	March 28, 2012
Denis J. Amato

/s/ Larry Pollock	Director	March 28, 2012
Larry Pollock

/s/ Daniel V. Perella	Director	March 28, 2012
Daniel V. Perella

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:48

Name	Title	Date
/s/ Dennis R. Raefield	President, Chief Executive Officer	March 30, 2011
Dennis R. Raefield.	and Director
(Principal Executive Officer)
/s/ Gregory M. Krzemien	Chief Financial Officer	March 30, 2011
Gregory M. Krzemien	and Treasurer
(Principal Financial Officer and
Principle Accounting Officer)
/s/John C. Mallon	Chairman of the Board	March 30 2011
John C. Mallon
/s/Richard A. Barone	Director	March 30, 2011
Richard A. Barone
/s/Gerald T. LaFlamme	Director	March 30, 2011
Gerald T. LaFlamme
/s/ Michael E. Smith	Director	March 30, 2011
Michael E. Smith

Mace Security International, Inc.

49Audited Consolidated Financial Statements

~~Mace~~Years ~~Security~~ended ~~International~~December 31, ~~Inc.~~2011 and 2010

~~Audited Consolidated Financial Statements~~Contents

Years ended December 31, 2010 and 2009

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	F-3

Consolidated Statements of Operations	F-5

Consolidated Statements of Stockholders’ Equity	F-6

Consolidated Statements of Cash Flows	F-7

Notes to Consolidated Financial Statements	F-8

~~Contents~~Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm		F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-5
Consolidated Statements of Stockholders’ Equity		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8

Board of Directors

~~Report~~Mace ofSecurity ~~Independent~~International, ~~Registered~~Inc. ~~Public~~and ~~Accounting Firm~~Subsidiaries

~~Board~~We have audited the accompanying consolidated balance sheets of ~~Directors~~Mace Security International, Inc. (a Delaware corporation) and Subsidiaries (the Company) as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

~~Mace~~We ~~Security~~conducted ~~International~~our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, ~~Inc~~nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and ~~Subsidiaries~~disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

WeIn ~~have~~our ~~audited~~opinion, the consolidated ~~accompanying~~financial ~~consolidated~~statements ~~balance~~referred ~~sheets~~to above present fairly, in all material respects, the consolidated financial position of Mace Security International, Inc. ~~(a Delaware corporation)~~ and Subsidiaries ~~(the Company)~~ as of December 31, ~~2010~~2011 and ~~2009~~2010, and the ~~related~~ consolidated ~~statements~~results of ~~operations,~~their ~~changes in stockholders’ equity~~ operations and their cash flows for the years then ended~~. These~~, ~~consolidated~~in ~~financial~~conformity ~~statements~~with ~~are~~accounting ~~the~~principles ~~responsibility~~generally ofaccepted in the ~~Company's~~United ~~management.~~States of ~~Our responsibility is to express an opinion on these consolidated financial statements based on our audits~~America.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’/s/ ~~internal~~Grant ~~control~~Thornton ~~over~~LLP ~~financial reporting. Accordingly~~Philadelphia, wePennsylvania ~~express~~March ~~no such opinion. An audit also includes examining~~28, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.2012

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Mace Security International, Inc. and Subsidiaries as of December 31, 2010 and 2009, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.F-2

~~/s/~~Mace ~~Grant~~Security ~~Thornton LLP Philadelphia~~International, ~~Pennsylvania~~Inc. ~~March 30, 2011~~and Subsidiaries

~~F-2~~Consolidated Balance Sheets

~~Mace~~(In ~~Security International~~thousands, ~~Inc.~~except share and ~~Subsidiaries~~par value information)

Consolidated Balance Sheets

ASSETS	December 31,
	2011			2010

Current assets:
Cash and cash equivalents	$	7,871		$	2,564
Accounts receivable, less allowance for doubtful accounts of $281 and $562 in 2011 and 2010, respectively		1,684			2,119
Inventories, less reserve for obsolescence of $1,407 and $1,304 in 2011 and 2010, respectively		2,401			3,273
Prepaid expenses and other current assets		2,087			1,790
Assets held for sale		2,469			6,330
Total current assets		16,512			16,076
Property and equipment:
Buildings and leasehold improvements		512			703
Machinery and equipment		3,464			3,237
Furniture and fixtures		457			459
Total property and equipment		4,433			4,399
Accumulated depreciation and amortization		(3,054	)		(2,754	)
Total property and equipment, net		1,379			1,645
Goodwill		2,805			1,982
Other intangible assets, net of accumulated amortization of $1,407 and $1,675 in 2011 and 2010, respectively		1,887			1,767
Other assets		735			1,554
Total assets	$	23,318		$	23,024

~~(In~~The ~~thousands,~~accompanying ~~except~~notes ~~share~~are ~~and~~an ~~par value information)~~integral

~~ASSETS~~part of these consolidated financial statements.

	December 31,
	2010			2009
Current assets:
Cash and cash equivalents	$	2,564		$	8,289
Short-term investments		-			1,086
Accounts receivable, less allowance for doubtful accounts of $562 and $785 in 2010 and 2009, respectively		2,119			1,939
Inventories, less reserve for obsolescence of $1,304 and $1,379 in 2010 and 2009, respectively		3,273			5,232
Prepaid expenses and other current assets		1,790			2,078
Assets held for sale		6,330			7,180
Total current assets		16,076			25,804
Property and equipment:
Land		-			250
Buildings and leasehold improvements		703			2,213
Machinery and equipment		3,237			3,177
Furniture and fixtures		459			491
Total property and equipment		4,399			6,131
Accumulated depreciation and amortization		(2,754	)		(2,856	)
Total property and equipment, net		1,645			3,275
Goodwill		1,982			7,869
Other intangible assets, net of accumulated amortization of $1,675 and $1,881 in 2010 and 2009, respectively		1,767			3,780
Other assets		1,554			1,630
Total assets	$	23,024		$	42,358

F-3

The accompanying notes are an integral

LIABILITIES AND STOCKHOLDERS’ EQUITY	December 31,
	2011			2010

Current liabilities:
Current portion of long-term debt and capital lease obligations	$	957		$	1,378
Accounts payable		1,701			2,168
Income taxes payable		89			199
Deferred revenue		294			324
Accrued expenses and other current liabilities		1,741			2,905
Liabilities related to assets held for sale		566			2,081
Total current liabilities		5,348			9,055

Long-term debt, net of current portion		11			43
Capital lease obligations, net of current portion		22			70
Other liabilities		380			-

Commitments and contingencies – See Note 17

Stockholders’ equity:
Preferred stock, $.01 par value: authorized shares-10,000,000, issued and outstanding shares-none		-			-
Common stock, $.01 par value: authorized shares-100,000,000, issued and outstanding shares of 58,946,441 in 2011 and 15,735,725 in 2010		589			157

Additional paid-in capital		102,323			93,912
Accumulated deficit		(85,338	)		(80,196	)
		17,574			13,873
Less treasury stock at cost 18,332 shares in 2011 and 2010.		(17	)		(17	)
Total stockholders’ equity		17,557			13,856
Total liabilities and stockholders’ equity	$	23,318		$	23,024

~~part~~The ofaccompanying ~~these~~notes ~~consolidated~~are ~~financial~~an ~~statements.~~integral

~~F-3~~part of these consolidated financial statements.

~~LIABILITIES AND STOCKHOLDERS’ EQUITY~~F-4

	December 31,
	2010			2009
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	1,378		$	109
Accounts payable		2,168			3,436
Income taxes payable		199			206
Deferred revenue		324			319
Accrued expenses and other current liabilities		2,905			3,028
Liabilities related to assets held for sale		2,081			2,123
Total current liabilities		9,055			9,221
Long-term debt, net of current portion		43			568
Capital lease obligations, net of current portion		70			120
Other liabilities		-			461
Commitments and contingencies – See Note 18
Stockholders’ equity:
Preferred stock, $.01 par value: authorized shares-10,000,000, issued and outstanding shares-none		-			-
Common stock, $.01 par value: authorized shares-100,000,000, issued and outstanding shares of 15,735,725 and 15,913,775 in 2010 and 2009, respectively		157			159
Additional paid-in capital		93,912			93,948
Accumulated other comprehensive loss		-			-
Accumulated deficit		(80,196	)		(62,098	)
		13,873			32,009
Less treasury stock at cost 18,332 and 18,200 shares in 2010 and 2009, respectively		(17	)		(21	)
Total stockholders’ equity		13,856			31,988
Total liabilities and stockholders’ equity	$	23,024		$	42,358

Mace Security International, Inc. and Subsidiaries

~~The~~Consolidated ~~accompanying~~Statements ~~notes~~of ~~are an integral~~Operations

~~part~~(In ofthousands, ~~these~~except ~~consolidated~~share ~~financial~~and ~~statements.~~per share information)

F-4

	Year Ended December 31,
	2011			2010

Revenues	$	13,858		$	18,395
Cost of revenues		8,950			12,874

Gross profit		4,908			5,521
Selling, general, and administrative expenses		8,630			9,568
Arbitration award		-			4,610
Depreciation and amortization		514			582
Asset impairment charges		35			485

Operating loss		(4,271	)		(9,724	)

Interest expense, net		(404	)		(51	)
Other income		-			5
Gain on valuation of derivative		74			-
Loss from continuing operations before income taxes		(4,601	)		(9,770	)

Income tax (benefit) expense		(80	)		30
Loss from continuing operations		(4,521	)		(9,800	)
Loss from discontinued operations, net of tax of $0 in 2011 and 2010		(621	)		(8,298	)
Net loss	$	(5,142	)	$	(18,098	)
Per share of common stock (basic and diluted):
Loss from continuing operations	$	(0.13	)	$	(0.62	)
Loss from discontinued operations		(0.02	)		(0.53	)
Net loss	$	(0.15	)	$	(1.15	)

Weighted average shares outstanding:
Basic and diluted		33,643,384			15,749,465

~~Mace~~The ~~Security~~accompanying ~~International,~~notes ~~Inc.~~are ~~and~~an ~~Subsidiaries~~integral

~~Consolidated~~part ~~Statements~~ of ~~Operations~~these consolidated financial statements.

~~(In thousands, except share and per share information)~~F-5

	Year Ended December 31,
	2010			2009
Revenues	$	18,395		$	18,591
Cost of revenues		12,874			12,998
Gross profit		5,521			5,593
Selling, general, and administrative expenses		9,568			12,691
Arbitration award		4,610			-
Depreciation and amortization		582			567
Asset impairment charges		485			462
Operating loss		(9,724	)		(8,127	)
Interest expense, net		51			7
Other income		5			-
Loss from continuing operations before income taxes		(9,770	)		(8,134	)
Income tax expense		30			-
Loss from continuing operations		(9,800	)		(8,134	)
Loss from discontinued operations, net of tax of $0 in 2010 and 2009		(8,298	)		(2,817	)
Net loss	$	(18,098	)	$	(10,951	)
Per share of common stock (basic and diluted):
Loss from continuing operations	$	(0.62	)	$	(0.50	)
Loss from discontinued operations		(0.53	)		(0.18	)
Net loss	$	(1.15	)	$	(0.68	)
Weighted average shares outstanding:
Basic and diluted		15,749,465			16,202,254

Mace Security International, Inc. and Subsidiaries

~~The~~Consolidated ~~accompanying~~Statements ~~notes~~of ~~are an integral~~Stockholders' Equity

~~part~~(In ofthousands, ~~these~~except ~~consolidated~~share ~~financial statements.~~information)

F-5

							Additional
	Common Stock						Paid-in			Accumulated			Treasury
	Shares			Amount			Capital			Deficit			Stock			Total
Balance at December 31, 2009		15,913,775			159			93,948			(62,098	)		(21	)		31,988
Purchase and retirement of treasury stock		(178,050	)		(2	)		(181	)		-			4			(179	)
Stock-based compensation expense (see note 2)		-			-			145			-			-			145
Net loss		-			-			-			(18,098	)		-			(18,098	)
Total comprehensive loss		-			-			-			-			-			(18,098	)
Balance at December 31, 2010		15,735,725		$	157		$	93,912		$	(80,196	)	$	(17	)	$	13,856
Common shares issued for cash		43,210,716			432			7,793			-			-			8,225
Stock-based compensation and issuance of warrants (see notes 2 and 19)		-			-			102			-			-			102
Derivative liability reclass to equity		-			-			516			-			-			516
Net loss		-			-			-			(5,142	)		-			(5,142	)
Total comprehensive loss		-			-			-			-			-			(5,142	)
Balance at December 31, 2011		58,946,441		$	589		$	102,323		$	(85,338	)	$	(17	)	$	17,557

~~Mace~~The ~~Security~~accompanying ~~International,~~notes ~~Inc.~~are ~~and~~an ~~Subsidiaries~~integral part of these consolidated financial statements.

~~Consolidated Statements of Stockholders' Equity~~F-6

~~(In~~Mace ~~thousands~~Security International, ~~except~~Inc. ~~share~~and ~~information)~~Subsidiaries

	Common Stock						Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Treasury
	Shares			Amount			Capital			Income (Loss)			Deficit			Stock			Total
Balance at December 31, 2008		16,285,377		$	163		$	94,161		$	(5	)	$	(51,147	)	$	(5	)	$	43,167
Purchase and retirement of treasury stock		(371,602	)		(4	)		(329	)		-			-			(16	)		(349	)
Stock-based compensation expense (see note 14)		-			-			116			-			-			-			116
Unrealized gain on short-term investments		-			-			-			5			-			-			5
Net loss		-			-			-			-			(10,951	)		-			(10,951	)
Total comprehensive loss		-			-			-			-			-			-			(10,946	)
Balance at December 31, 2009		15,913,775			159			93,948			-			(62,098	)		(21	)		31,988
Purchase and retirement of treasury stock		(178,050	)		(2	)		(181	)		-			-			4			(179	)
Stock-based compensation expense (see note 14)		-			-			145			-			-			-			145
Net loss		-			-			-			-			(18,098	)		-			(18,098	)
Total comprehensive loss		-			-			-			-			-			-			(18,098	)
Balance at December 31, 2010		15,735,725		$	157		$	93,912		$	-		$	(80,196	)	$	(17	)	$	13,856

Consolidated Statements of Cash Flows

The accompanying notes are an integral

(In thousands)	Year Ended December 31,
	2011			2010
Operating activities
Net loss	$	(5,142	)	$	(18,098	)
Loss from discontinued operations, net of tax		(621	)		(8,298	)
Loss from continuing operations		(4,521	)		(9,800	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		514			582
Stock-based compensation		55			66
Provision for losses on receivables		126			170
Gain on sale of property and equipment		(57	)		-
Gain on valuation of derivative		(74	)		-
Amortization of discount on debt		152			-
Goodwill and asset impairment charges		35			485
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		290			(444	)
Inventories		536			974
Prepaid expenses and other assets		470			(268	)
Accounts payable		(429	)		(176	)
Deferred revenue		(3	)		14
Accrued expenses		189			(710	)
Income taxes payable		(15	)		(36	)
Net cash used in operating activities-continuing operations		(2,732	)		(9,143	)
Net cash used in operating activities-discontinued operations		(163	)		(1,040

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