Mace Security International Inc. (MACE, Financial) filed Quarterly Report for the period ended 2010-06-30.
Mace Security International Inc. has a market cap of $9 million; its shares were traded at around $0.5696 with and P/S ratio of 0.3. MACE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Revenues within our Digital Media Marketing Segment for the six months ended June 30, 2010 were approximately $4.5 million, consisting of $4.4 million from our e-commerce division and $71,000 from our online marketing division. Revenues within our Digital Media Marketing Segment for the six months ended June 30, 2009 were approximately $5.8 million, consisting of $5.8 million from our e-commerce division and $12,000 from our online marketing division. The reduction in revenues within our e-commerce division of approximately $1.4 million is 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, partially offset by sales from the introduction of new products during 2009, including Eternal Minerals Dead Sea spa products, Knockout acne product, Biocol colon cleanser, Goji Berry Now antioxidant dietary supplement product and our PetVitamins pet care products. During May 2010, many credit card companies implemented restrictive controls over customer data in response to legislation which negatively impacted our cross sell revenue. Additionally, our ExtremeBriteWhite product, sales were negatively impacted during the second quarter when one of our credit card processors discontinued the processing of payments for this product.
SG&A expenses for the six months ended June 30, 2010 and 2009 were $6.4 million and $7.5 million, respectively. SG&A expenses as a percent of revenues decreased to 49% in the first six months of 2010 as compared to 52% for the same period in 2009 despite the acquisition of CSSS on April 30, 2009 which incurred $435,000 of SG&A expenses in the first six months of 2010 as compared to $208,000 in the period May 1, 2009 to June 30, 2009. These additional SG&A costs were offset by implementation of corporate wide cost savings measures in 2008 and into 2010, including a reduction in employees throughout the entire Company. The cost savings were partially realized from a reduction in costs 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 administrative functions within these operations. SG&A costs decreased within our Florida and Texas electronic surveillance equipment operations by approximately $627,000, or 27%, partially as a result of our consolidation efforts to reduce SG&A expenses as noted above and partially as a result of our reduced sales levels. SG&A expenses of our Digital Media Marketing Segment also decreased from $1.35 million in the first six months of 2009 to $1.3 million in the first six months of 2010. In addition to these cost savings measures, we noted a reduction in stock option non-cash compensation expense from continuing operations from approximately $54,000 in the six months ended June 30, 2009 to $34,000 in the same period of 2010. SG&A expenses also includes costs related to the Arbitration Proceedings with Mr. Paolino of approximately $153,000 and $147,000 in the six months ended June 30, 2010 and 2009, respectively, and $224,000 of severance cost related to employee reductions in 2010. 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.
As noted in Note 11. Asset Impairment Charges, we conduct our annual assessment of goodwill for impairment for our Digital Media Marketing Segment as of June 30 and for our wholesale security monitoring operation as of April 30, or when we believe an impairment indicator exists. We updated our forecasted cash flows of our Digital Media Marketing Segment reporting unit during the second quarter ended June 30, 2009 and 2010 for our annual impairment testing. These updates considered current economic conditions and trends, estimated 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, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value. With the noted potential impairment, 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 which was less than the recorded value of goodwill of $6.9 million; accordingly, we recorded an impairment to write down goodwill of this reporting unit by $1.0 million. Based on the results of our annual assessment of goodwill impairment at June 30, 2010, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value. With the noted potential impairment, we performed the second step of the impairment test to determine the implied fair value of goodwill. The resulting implied goodwill was $2.8 million which was less than the recorded value of goodwill of $5.9 million; accordingly, we recorded an impairment to write down goodwill of this reporting unit by $3.1 million. 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. The budgets and long-term business plans of this reporting unit include only minimal generation of online marketing revenues through our online marketing division, Promopath, and modest growth in e-commerce revenues as a result of recent challenges to our Digital Media Marketing Segment s continuity sales business by credit card processing restrictions and continual changes in credit card regulations that impact our cross sell revenues with third-party companies. These challenges are forecasted to be partially offset through the introduction of new products. With respect to our assessment of goodwill impairment for our wholesale security monitoring business as of April 30, 2010, we determined that there was no impairment in that the fair value for this reporting unit exceeded the book value of its invested capital by approximately $249,000.
As noted in Note 4. Business Acquisitions and Divestitures, in the accompanying financial statements, the agreements of sale related to the three car washes the Company owned in Austin, Texas were amended to modify the sales price to $8.0 million. This amended sale price, less costs to sell, was estimated to result in a loss upon disposal of approximately $175,000. Accordingly, an impairment loss of $175,000 was recorded as of September 30, 2009 and included in the results from discounted operations in the accompanying consolidated statement of operations. The sale of the Austin, Texas car washes was completed on November 30, 2009. During 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 that 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. Lastly, 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 at March 31, 2010. We have determined that due to further reductions in car wash volumes at these sites resulting from increased competition and a deterioration in demographics 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 values.
As described in Note 4. Business Acquisitions and Divestitures, in the accompanying financial statements, the agreements of sale related to the three car washes the Company owned in Austin, Texas were amended to modify the sales price to $8.0 million. This amended sale price, less costs to sell, was estimated to result in a loss upon disposal of approximatelyRead the The complete Report
Mace Security International Inc. has a market cap of $9 million; its shares were traded at around $0.5696 with and P/S ratio of 0.3. MACE is in the portfolios of Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Revenues were approximately $8.6 million for both the six months ended June 30, 2010 and 2009, respectively. Of the $8.6 million of revenues for the six months ended June 30, 2010, $1.9 million, or 22%, was generated from our professional electronic surveillance operations, $2.7 million, or 32%, from our consumer direct electronic surveillance and high end digital and machine vision cameras and professional imaging components operation, $2.4 million, or 27%, from our personal defense and law enforcement aerosol operations in Vermont, and $1.6 million, or 19%, from our wholesale security monitoring operation in California acquired on April 30, 2009. Of the $8.6 million of revenues for the six months ended June 30, 2009, $2.3 million, or 27%, was generated from our professional electronic surveillance operation, $3.3 million, or 37%, from our consumer direct electronic surveillance and high end digital and machine vision cameras and professional imaging components operation, $2.4 million, or 29%, from our personal defense and law enforcement aerosol operation in Vermont and $594,000, or 7%, from our wholesale security monitoring operation.Revenues within our Digital Media Marketing Segment for the six months ended June 30, 2010 were approximately $4.5 million, consisting of $4.4 million from our e-commerce division and $71,000 from our online marketing division. Revenues within our Digital Media Marketing Segment for the six months ended June 30, 2009 were approximately $5.8 million, consisting of $5.8 million from our e-commerce division and $12,000 from our online marketing division. The reduction in revenues within our e-commerce division of approximately $1.4 million is 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, partially offset by sales from the introduction of new products during 2009, including Eternal Minerals Dead Sea spa products, Knockout acne product, Biocol colon cleanser, Goji Berry Now antioxidant dietary supplement product and our PetVitamins pet care products. During May 2010, many credit card companies implemented restrictive controls over customer data in response to legislation which negatively impacted our cross sell revenue. Additionally, our ExtremeBriteWhite product, sales were negatively impacted during the second quarter when one of our credit card processors discontinued the processing of payments for this product.
SG&A expenses for the six months ended June 30, 2010 and 2009 were $6.4 million and $7.5 million, respectively. SG&A expenses as a percent of revenues decreased to 49% in the first six months of 2010 as compared to 52% for the same period in 2009 despite the acquisition of CSSS on April 30, 2009 which incurred $435,000 of SG&A expenses in the first six months of 2010 as compared to $208,000 in the period May 1, 2009 to June 30, 2009. These additional SG&A costs were offset by implementation of corporate wide cost savings measures in 2008 and into 2010, including a reduction in employees throughout the entire Company. The cost savings were partially realized from a reduction in costs 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 administrative functions within these operations. SG&A costs decreased within our Florida and Texas electronic surveillance equipment operations by approximately $627,000, or 27%, partially as a result of our consolidation efforts to reduce SG&A expenses as noted above and partially as a result of our reduced sales levels. SG&A expenses of our Digital Media Marketing Segment also decreased from $1.35 million in the first six months of 2009 to $1.3 million in the first six months of 2010. In addition to these cost savings measures, we noted a reduction in stock option non-cash compensation expense from continuing operations from approximately $54,000 in the six months ended June 30, 2009 to $34,000 in the same period of 2010. SG&A expenses also includes costs related to the Arbitration Proceedings with Mr. Paolino of approximately $153,000 and $147,000 in the six months ended June 30, 2010 and 2009, respectively, and $224,000 of severance cost related to employee reductions in 2010. 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.
As noted in Note 11. Asset Impairment Charges, we conduct our annual assessment of goodwill for impairment for our Digital Media Marketing Segment as of June 30 and for our wholesale security monitoring operation as of April 30, or when we believe an impairment indicator exists. We updated our forecasted cash flows of our Digital Media Marketing Segment reporting unit during the second quarter ended June 30, 2009 and 2010 for our annual impairment testing. These updates considered current economic conditions and trends, estimated 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, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value. With the noted potential impairment, 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 which was less than the recorded value of goodwill of $6.9 million; accordingly, we recorded an impairment to write down goodwill of this reporting unit by $1.0 million. Based on the results of our annual assessment of goodwill impairment at June 30, 2010, the net book value of our Digital Media Marketing Segment reporting unit exceeded its fair value. With the noted potential impairment, we performed the second step of the impairment test to determine the implied fair value of goodwill. The resulting implied goodwill was $2.8 million which was less than the recorded value of goodwill of $5.9 million; accordingly, we recorded an impairment to write down goodwill of this reporting unit by $3.1 million. 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. The budgets and long-term business plans of this reporting unit include only minimal generation of online marketing revenues through our online marketing division, Promopath, and modest growth in e-commerce revenues as a result of recent challenges to our Digital Media Marketing Segment s continuity sales business by credit card processing restrictions and continual changes in credit card regulations that impact our cross sell revenues with third-party companies. These challenges are forecasted to be partially offset through the introduction of new products. With respect to our assessment of goodwill impairment for our wholesale security monitoring business as of April 30, 2010, we determined that there was no impairment in that the fair value for this reporting unit exceeded the book value of its invested capital by approximately $249,000.
As noted in Note 4. Business Acquisitions and Divestitures, in the accompanying financial statements, the agreements of sale related to the three car washes the Company owned in Austin, Texas were amended to modify the sales price to $8.0 million. This amended sale price, less costs to sell, was estimated to result in a loss upon disposal of approximately $175,000. Accordingly, an impairment loss of $175,000 was recorded as of September 30, 2009 and included in the results from discounted operations in the accompanying consolidated statement of operations. The sale of the Austin, Texas car washes was completed on November 30, 2009. During 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 that 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. Lastly, 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 at March 31, 2010. We have determined that due to further reductions in car wash volumes at these sites resulting from increased competition and a deterioration in demographics 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 values.
As described in Note 4. Business Acquisitions and Divestitures, in the accompanying financial statements, the agreements of sale related to the three car washes the Company owned in Austin, Texas were amended to modify the sales price to $8.0 million. This amended sale price, less costs to sell, was estimated to result in a loss upon disposal of approximatelyRead the The complete Report
