UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of Report – November 22, 2010
(Date of earliest event reported)

MACE SECURITY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

Delaware

0-22810

03-0311630

(State or other jurisdiction
of incorporation)

(Commission File Number)

(IRS Employer
Identification Number)


240 Gibraltar Road, Suite 220, Horsham, Pennsylvania 19044
(Address of Principal Executive Offices)

Registrant’s Telephone No., including area code:  (267) 317-4009

Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 to Form 8-K):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01.     Completion of Acquisition or Disposition of Assets.

On November 22, 2010, Mace Security International, Inc. (“Mace” or the “Company”), through its subsidiaries, Linkstar Interactive Inc., and Linkstar Corporation, Inc. (the “Subsidiaries”), entered into a Stock Purchase Agreement with Silverback Network, Inc. (the “Purchaser”) for the sale of its e-commerce division of its Digital Media Marketing Segment, Linkstar Corporation, for a sale price of $1.1 million. Under the terms of the Stock Purchase Agreement, the Purchaser paid a purchase price of $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. Costs at closing were approximately $40,000, consisting of broker commissions. As a result of the sale, the Company’s cash increased by $950,000.

 The Stock Purchase Agreement is incorporated by reference as Exhibit 10.1 to this Current Report on Form 8-K. There is no material relationship between the Purchaser of Linkstar Corporation and Mace and subsidiaries other than in connection with the Agreement.


Item 9.01.     Financial Statements and Exhibits.

            (b)       Pro Forma Financial Information.  Pro forma financial information based on the divestiture is being filed with this Current Report on Form 8-K.  The enclosed pro forma financial information is calculated based on the Company’s financial information for its most recent completed fiscal year and quarterly period.

            (d)       Exhibits The following exhibits are being filed:

99.1  Press Release issued by the Company on November 29, 2010.

*10.1

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)

 
* Incorporated by reference.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATENMENTS FOR
MACE SECURITY INTERNATIONAL, INC.

On November 22, 2010, Mace Security International, Inc. (the “Company”) completed the sale of the stock of its e-commerce division of its Digital Media Marketing Segment, Linkstar Corporation, pursuant to a Stock Purchase Agreement with Silverback Network, Inc.  The unaudited pro forma consolidated financial information set forth below is based on audited and unaudited historical financial statements of the Company. The unaudited pro forma financial information presented reflects the estimated pro forma effect of the disposition on the Company.

The unaudited pro forma consolidated financial statements are as follows:

The unaudited pro forma consolidated financial statements include specific assumptions and adjustments related to the disposition. These pro forma adjustments have been made to illustrate the anticipated financial effect of the disposition on the Company. The adjustments are based upon available information and assumptions that the Company believes are reasonable as of the date of this filing. However, actual adjustments may differ materially from the information presented. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated financial statements. The pro forma financial statements, including notes thereto, should be read in conjunction with the historical financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, and the unaudited financial statements included in the Company’s Quarterly Report on Form 10-Q for the nine month period ended September 30, 2010.

The unaudited pro forma consolidated financial information presented herein is for informational purposes only. It is not intended to represent or be indicative of the consolidated results of operations or financial position that would have been reported had the disposition been completed as of the dates presented. The information is not representative of future results of operations or financial position.

Mace Security International, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet

(in thousands)

As of September 30, 2010
       
As Reported Business Pro Forma
September 30, 2010 Disposition (a) September 30, 2010
 
ASSETS
 
Current Assets
Cash and cash equivalents $ 4,133 $ 950 $ 5,083
Short-term investments 753 - 753
Accounts receivable, net 2,289 - 2,289
Inventories, net 4,001 - 4,001
Other current assets 1,752 110 1,862
Assets held for sale   8,228   (1,437 )   6,791
Total current assets   21,156   (377 )   20,779
 
Property and equipment, net 1,709 - 1,709
 
Goodwill 1,982 - 1,982
 
Other intangible assets, net 2,083 - 2,083
 
Other assets   1,577   -     1,577
$ 28,507 $ (377 ) $ 28,130
 
LIABILITIES AND EQUITY
 
Current Liabilities
Current portion of long-term debt and capital lease obligations $ 88 $ - $ 88
Accounts payable and accrued expenses 9,695

-

 

9,695

Other current liabilities 420 - 420
Liabilities related to assets held for sale   2,907   (219 )   2,688
Total current liabilities   13,110  

(219

)  

12,891

 
Long-term debt and capital lease obligations, net of current portion 135 - 135
 
Other liabilities - - -
 
Stockholders' Equity   15,262  

(158

)

 

15,104

$ 28,507 $ (377 ) $ 28,130

Mace Security International, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Consolidated Balance Sheet
At September 30, 2010

(a)

The disposition reflects the net cash proceeds of approximately $950,000, in addition to a receivable for escrowed funds of $110,000 and an estimated loss on the sale of $158,000. Cash proceeds are net of transaction closing costs of approximately $40,000.

Mace Security International, Inc. and Subsidiaries
Unaudited Pro Forma Statement of Operations
(in thousands, except share and per share data)
For the Nine Months Ended September 30, 2010
 
Business Pro Forma
As Reported Disposition Adjusted
 
Security revenues $ 13,347 $ - $ 13,347
Security cost of revenues 9,377 - 9,377
     
 

Gross profit

3,970 - 3,970
Selling, general, and administrative expenses 7,235 - 7,235
Arbitration award 4,600 - 4,600
Depreciation and amortization 446 - 446
Asset impairment charges 225 - 225
     
Operating loss (8,536 ) - (8,536 )
 
Interest (expense) income, net (34 ) 6 (a) (28 )
Other income   7     -   7  
Loss from continuing operations before income taxes (8,563 ) 6 (8,557 )
 
Income tax expense   65  

 

-   65  
 
Loss from continuing operations (8,628 ) 6 (8,622 )
 
Loss from discontinued operations, net of tax   (7,980 )   7,614

(b)

  (366 )
 
Net loss $ (16,608 ) $ 7,620 $ (8,988 )
 
Per share of common stock (basic and diluted):
Loss from continuing operations $ (0.55 ) $ - $ (0.55 )
Loss from discontinued operations   (0.50 )   0.48   (0.02 )
Net loss $ (1.05 ) $ 0.48 $ (0.57 )
 
Weighted average shares outstanding
Basic and Diluted 15,794,343 - 15,794,343

Mace Security International, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Statement of Income
For the Three Months Ended September 30, 2010

(a) Interest income on net cash proceeds from sale.
(b) Elimination of net loss from discontinued operations.

Mace Security International, Inc. and Subsidiaries

Unaudited Pro Forma Statement of Operations

(in thousands, except share and per share data)
For the Year Ended December 31, 2009
 
Business Pro Forma
As Restated (a) Disposition Adjusted
 
Security revenues $ 18,591 $ - $ 18,591
Security cost of revenues 12,998 - 12,998
     
 

Gross profit

5,593 - 5,593
Selling, general and administrative expenses 12,584 - 12,584
Depreciation and amortization 567 - 567
Asset impairment charges   462     -   462  
 
Operating loss (8,020 ) - (8,020 )
 
Interest (expense) income, net (7 ) 9 (b) 2
Other (loss) income   (108 )   -   (108 )
Loss from continuing operations before income taxes (8,135 ) 9 (8,126 )
 
Income tax expense   -     -   -  
 
Loss from continuing operations (8,135 ) 9 (8,126 )
 

Loss from discontinued operations, net of tax

  (2,816 )   828 (c)   (1,988 )
 
Net loss $ (10,951 ) $ 837 $ (10,114 )
 
Per share of common stock (basic and diluted):
Loss from continuing operations $ (0.50 ) $ - $ (0.50 )

Loss from discontinued operations, net of tax

  (0.18 )   0.05   (0.13 )
Net loss $ (0.68 ) $ 0.05 $ (0.63 )
 
Weighted average shares outstanding
Basic and Diluted 16,202,254 - 16,202,254

Mace Security International, Inc.
Notes to Unaudited Pro Forma Statement of Income
For the Year Ended December 31, 2009

(a) Statement of operations as originally reported and restated to classify the Digital Media Marketing Segment operations as discontinued operations.
(b) Interest income on cash proceeds from sale.
(c) Elimination of net loss from discontinued operations.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:

November 29, 2010

 

Mace Security International, Inc.

 
 

 

 

By:

/s/ Gregory M. Krzemien

Gregory M. Krzemien

 

Chief Financial Officer and Treasurer

EXHIBIT INDEX

Exhibit No.

Description

 
99.l

Press Release issued by the Company dated November 29, 2010.