SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 14, 1998
(Date of Earliest Event Reported)
MACE SECURITY INTERNATIONAL, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State of Incorporation)
0-22810
(Commission File Number)
03-0311630
(IRS Employer Identification No.)
160 Benmont Avenue, Bennington, Vermont 05201
(Address of Principal Executive Offices)
(802) 447-1503
(Registrant's Telephone Number)
<PAGE>
Item 1 Not Applicable.
Item 2
On July 14, 1998, the Mace Security International, Inc. (the
"Company") consummated the sale of substantially all of the assets of its Law
Enforcement division to Armor Holdings, Inc., ("AHI"), a NASDAQ listed
company (symbol ABE) with principal executive offices at 13386 International
Parkway, Jacksonville, Florida, 32218, and its wholly owned subsidiary,
Federal Laboratories, Inc.
Pursuant to the terms of the April 2, 1998 Purchase Agreement
executed by the Company with AHI and its subsidiary ("Purchase Agreement"),
the Company sold to AHI all of the inventory, fixed assets and intangibles of
its Law Enforcement division. AHI also received a 99 year paid-up license
(the "License Agreement") to exploit the Mace(R) brand and other related
trademarks in the law enforcement market only, which consists of, generally,
law enforcement, military, correctional and certain governmental agencies.
The assets of the Law Enforcement division constitute a substantial part of
the Company's assets.
The purchase price for the fixed assets and intangibles was the book
value as of December 31, 1997 ($3,117,325) plus an additional amount of
$200,000, which the Company anticipates spending to transport the assets to
AHI. The purchase price for inventory was the book value thereof at the date
of Closing ($1,868,416). AHI also paid $650,000 for the non-refundable,
fully paid License Agreement. The Company retained its cash and accounts
receivable from the Law Enforcement division.The amount of the receivables as
of the closing date was $1,361,109. AHI has agreed to collect such receivables
on behalf of the Company and forward all collections to the Company.
The purchase price was paid in cash at the closing. The transaction
will not result in any material tax implications resulting from the
transaction.
The Company will also receive a commission percentage equal to 25%
of gross profit generated by AHI on all acceptable purchase orders placed but
not filled prior to closing.
In connection with the transaction, the Company also issued to AHI
warrants to purchase 300,000 shares of Common Stock with a term of three
years and an exercise price equal to $1.25 per share. The Company is
obligated to register the shares underlying the warrants within six months of
the closing.
The Company deposited $600,000 of the purchase price into an
escrow account,which will be available to AHI in the event AHI is entitled to
indemnification pursuant to the Purchase Agreement. Generally, the escrow
fund will be in place one year, subject to extension in the event of claims
made. Notwithstanding the foregoing, no escrow funds will be released by AHI
until the Company has registered the shares underlying the warrants
granted to AHI.
There are no material relationship between the Registrant and AHI
except that the Company and AHI are committed to continue to purchase from,
and provide to, the other certain product. In addition, as a condition to the
transaction, a designee of AHI shall be appointed to the six member Board of
Directors of Mace Trademark Corp., a wholly owned subsidiary of the Company,
formed to hold the Mace brand and related trademarks subject to the License
Agreement.
Items 3-6 Not Applicable.
Item 7 Financial Statements and Exhibits.
(a) Not Applicable.
(b) Pro Forma financial information.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information of the Company consists of an unaudited pro forma condensed
consolidated balance sheet as of March 31, 1998, an unaudited pro forma
condensed consolidated statements of income for the three-month periods ended
March 31, 1998, and March 31, 1997, and the year ended December 31, 1997
(collectively, the "Pro Forma Condensed Consolidated Financial Statements").
The Pro Forma Condensed Consolidated Financial Statements are provided for
informational purposes only and assume the sale of substantially all of the
assets of the Company's Law Enforcement division as described above. The pro
forma condensed consolidated balance sheet has been prepared assuming the
transaction occurred on July 14, 1998 and the pro forma condensed
consolidated statements of income have been prepared assuming the transaction
occurred on the first day of January 1998. The Pro Forma Condensed
Consolidated Financial Statements are not necessarily indicative of the
results that would have been reported had the sale of the Company's Law
Enforcement division actually occurred on the dates specified, nor is it
indicative of the Company's future results. The Pro Forma Condensed
Consolidated Financial Statements should be read in conjunction with the
historical consolidated financial statements and the notes thereto of the
Company included in its Annual Report on Form 10-KSB for the year ended
December 31, 1997, as awarded, its Quarterly Report on Form 10-QSB for the
three month period ended March 31, 1998 and its Quarterly Report on Form
10-QSB/A for the three month period ended March 31, 1998 filed June 5, 1998.
<TABLE>
PRO FORMA CONDENSED BALANCE SHEET
<CAPTION>
March 31,
1998
----
<S> <C>
Assets
Cash $ 6,760,552
Other current assets 3,180,900
Property and equipment 1,116,285
Intangibles and other 1,956,946
-----------
$13,014,683
===========
Liabilities and Stockholder's Equity
Current liabilities $ 867,640
Short term portion of
Long-term debt 116,040
Long-term liabilities
Deferred income 650,000
Long-term debt 1,630,427
Stockholders' equity 9,750,576
-----------
$13,014,683
===========
</TABLE>
<PAGE>
<TABLE>
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1998 1997 1997
(3 months) (3 months) (12 months)
---------- ---------- -----------
<S> <C> <C> <C>
Net sales $ 669,413 $ 682,428 $2,912,964
Cost of sales 360,204 350,024 1,600,974
--------- --------- ----------
Gross profit 309,209 332,404 1,331,990
Operating expenses 545,749 335,677 1,647,159
--------- --------- ----------
Operating loss (236,540) (3,273) (335,169)
Other items (1,851) (3,344) 8,448
--------- --------- ----------
Income (loss) before
income taxes (238,391) (6,617) (326,721)
Income tax expense 1,950 1,956 7,800
--------- --------- ----------
Net income (loss) $(240,341) $ (8,573) $ (334,521)
========= ========= ==========
Net income (loss) per
share (.03) nil (.04)
</TABLE>
(a) Exhibits
2.1 Asset Purchase Agreement dated April 2,1998
among Mace Security International, Inc. and Armor
Holdings Inc. and Federal Laboratories, Inc.
(incorporated by reference to the Registrant's Form
10-KSB for the fiscal year ended December 31, 1997,
filed with the Securities and Exchange Commission
April 15, 1998.
2.2 Press Release dated July 16, 1998.
Items 8-9. Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 28, 1998 MACE SECURITY INTERNATIONAL, INC.
By:/s/ Mark Capone, CFO
Mark Capone
Chief Financial Officer and Treasurer
