Mace Reports Strong Third Quarter 2016 Financial Results

• 2nd consecutive positive Net Income quarter vs. prior year losses
• Highest revenue quarter in over 3 years led by growth in key channels
• Strongest quarterly Gross Profit and EBITDA in over 4 years
• Added 19 new accounts for the quarter, 65 for the year-to-date
• Sale of surveillance business provides on-going royalty opportunity

CLEVELAND--(BUSINESS WIRE)--Mace Security International Inc. (OTCPINK: MACE) today announced unaudited financial results for the third quarter and nine-month period ended September 30, 2016.

“Strong sales to key domestic and international retailers and distributors along with improved operational efficiencies allowed Mace to post back-to-back profitable quarters.” said Richard Barone, Chairman. “Management’s continued focus on growing the top line, while reducing and managing costs in a restructured organization, has positioned the company to deliver sustainable profitable growth for investors.” Mr. Barone added.

Third Quarter/Nine Months 2016 Financial Highlights

• Net revenue up 58.2% for quarter; up 33.8% year-to-date
• Gross profit up 81.9% for quarter; up 39.0% year-to-date
• Key channels of distribution (sporting goods & consumer) net revenues up 65.2% for the quarter; up 32.2% year-to-date
• International net revenues up 218.2% for the quarter; up 137.8% year-to-date
• Selling, general and administrative expenses at 34.7% of net revenue, down from 54.1%
• Net income of $250,000 reported for the quarter
• EBITDA of $272,000 reported for the quarter

Select Consolidated Financial Results, Third Quarter Ended September 30, 2016 and 2015
(in thousands):
	For the Three Months Ended
	Sept 30,		% of Sales		Sept 30,			% of Sales
	2016				2015					$ Chg	% Chg
Net revenue	$	2,706	100.0	%	$	1,710		100.0	%	996	58.2	%
Gross profit		1,166	43.1	%		641		37.5	%	525	81.9	%
Selling, general, and administrative expenses		940	34.7	%		925		54.1	%	15	1.6	%
Operating income (loss)		186	6.9	%		(319	)	-18.7	%	505
Net income (loss)		250	9.2	%		(335	)	-19.6	%	585

Third Quarter 2016 Operational Highlights

All key channels experienced growth. In particular, International is up 218% for the quarter, and is becoming an increasing part of the sales mix. The sporting goods channel also experienced growth, despite the loss of a former major customer that completed its bankruptcy liquidation earlier this year. The Company continued to broaden its customer base, adding another 19 accounts in the third quarter across consumer, tactical and sporting goods channels. “Retailers and distributors see the power of the Mace Brand in the safety and security business segment. This provides Mace with opportunities to continue its top line growth”, said Mace President and CEO John J. McCann.

Mace® recently announced the November 2016 sale of its surveillance business to SecureCheck LLC. The business was sold for a modest amount of cash in excess of the September 30, 2016 net Assets held for sale balance plus an on-going royalty revenue stream. “By partnering with SecureCheck LLC, the Mace® brand will continue to be seen and become advertised nationally. The Mace team can now better focus on expanding the Company’s core business, add complimentary product lines, and look for additional royalty opportunities featuring the Mace Brand,” Mr. McCann added.

Conference Call

Mace® will conduct a conference call on Thursday, November 17, 2016 at 11:00 AM EDT, 8:00 AM PDT to discuss its financial and operational performance for the quarter ended September 30, 2016. The participant conference call number is [phone], conference ID: 20895961. A full set of the consolidated financial statements are available on the Mace website. Presentation materials for the conference call will be available Thursday, November 17, on Mace’s website under Investor Relations, Shareholder Transcripts & Presentations. A digital recording of the teleconference will be available on the Mace website within 24 hours of the teleconference.

About Mace Security International, Inc.

Mace Security International Inc. is a globally recognized leader in personal safety and security. Based in Cleveland, Ohio, the Company has spent more than 40 years designing, manufacturing, and distributing consumer and tactical products for personal defense, security and surveillance under its world-renowned Mace^® Brand – the original trusted brand of pepper spray products. The Company also offers aerosol defense sprays and tactical products for law enforcement and security professionals worldwide through its Mace^® and Take Down^® brands.

Mace Security International distributes and supports Mace^® Brand products and services through mass-market retailers, wholesale distributors, independent dealers, e-commerce marketers and installation service providers. For more information, please visit www.mace.com.

Forward-Looking Statements

Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. When used in this press release, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “projected,” “intend to” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, including but not limited to economic conditions, dependence on management, our ability to compete with competitors, dilution to shareholders, and limited capital resources.

Mace Security International, Inc.
Condensed Consolidated Balance Sheets
(Amounts in thousands)
ASSETS	September 30,		December 31,
	2016		2015
Current assets:	(Unaudited)
Cash and cash equivalents	$	380	$	446
Restricted cash		60		60
Short-term investments		2,134		2,142
Accounts receivable, net		2,084		1,562
Inventories, net		1,665		1,601
Prepaid expenses and other current assets		861		779
Assets held for sale, net		219		430
Total current assets		7,403		7,020
Plant and equipment, net		697		522
Other intangible assets		685		685
Other assets		785		1,034
Total assets	$	9,570	$	9,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	337	$	222
Income taxes payable		59		61
Accrued expenses and other current liabilities		539		695
Total current liabilities		935		978
Other liabilities		24		-
Total stockholders’ equity		8,611		8,283
Total liabilities and stockholders’ equity	$	9,570	$	9,261

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Three Months Ended September 30, 2016 and 2015
(Unaudited)
(Amounts in thousands)
	Three Months Ended September 30,
	2016			2015
Net revenue	$	2,706		$	1,710
Cost of revenue		1,540			1,069
Gross profit		1,166			641
Selling, general, and administrative expenses		940			925
Depreciation		40			35
Operating income (loss)		186			(319	)
Interest expense		(12	)		(13	)
Interest income		30			44
Loss on sale of short-term investments		-			(3	)
Income (loss) from continuing operations before income tax provision		204			(291	)
Income tax provision		-			-
Income (loss) from continuing operations		204			(291	)
Income (loss) from discontinued operations, net of tax		46			(44	)
Net income (loss)	$	250		$	(335	)

Mace Security International, Inc.
Condensed Consolidated Statements of Operations
Nine Months Ended September 30, 2016 and 2015
(Unaudited)
(Amounts in thousands)
	Nine Months Ended September 30,
	2016			2015
Net revenue	$	6,816		$	5,094
Cost of revenue		3,994			3,064
Gross profit		2,822			2,030
Selling, general, and administrative expenses		2,772			2,816
Depreciation		116			107
Operating loss		(66	)		(893	)
Interest expense		(35	)		(38	)
Interest income		102			138
Loss on sale of short-term investments		-			(19	)
Other income		-			312
Income (loss) from continuing operations before income tax provision		1			(500	)
Income tax provision		-			-
Income (loss) from continuing operations		1			(500	)
Income (loss) from discontinued operations, net of tax		129			(77	)
Net income (loss)	$	130		$	(577	)