912607--3/31/2008--MACE_SECURITY_INTERNATIONAL

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{regulation, government, change}

{product, market, service}

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{stock, price, share}

{gas, price, oil}

{control, financial, internal}

{cost, regulation, environmental}

{provision, law, control}

{loss, insurance, financial}

{competitive, industry, competition}

{loan, real, estate}

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Risks Related to Our Business If we are unable to finance the growth of our business, our stock price could decline. If we fail to manage the growth of our business, our stock price could decline. We have debt secured by mortgages, which can be foreclosed upon if we default on the debt. Our loans with Chase have financial covenants that restrict our operations, and which can cause our loans to be accelerated. We have reported net losses in the past. If we continue to report net losses, the price of our common stock may decline, or we could go out of business. We compete with many companies, some of whom are more established and better capitalized than us. Failure or circumvention of our controls or procedures could seriously harm our business. If we lose the services of our executive officers, our business may suffer. If our insurance is inadequate, we could face significant losses. Risks Related to our Security Segment We could become subject to litigation regarding intellectual property rights, which could seriously harm our business. If our Mace brand name falls into common usage, we could lose the exclusive right to the brand name. The businesses that manufacturer our electronic surveillance products are located in foreign countries, making it difficult to recover damages, if the manufacturers fail to meet their obligations. If our original equipment manufacturers ( OEMs ) fail to adequately supply our products, our security products sales may suffer. If people are injured by our consumer safety products, we could be held liable and face damage awards. If governmental regulations regarding defense sprays change or are applied differently, our business could suffer. Our defense sprays use hazardous materials which if not properly handled would result in our being liable for damages under environmental laws. Risks Related to our Digital Media Marketing Segment Our online marketing business lacks long-term contracts with clients. Our e-commerce brands are not well known. We have a concentration of our e-commerce business in limited products. We compete with many established e-commerce companies that have been in business longer than us. We need to attract and retain a large number of e-commerce customers who purchase our products on a reoccurring basis Our member acquisition costs may increase significantly. Our online marketing business must keep pace with rapid technological change to remain competitive We depend on our merchant and banking relationships, as well as strategic relationships with third parties, who provide us with payment processing solutions. We depend on credit card processing for a majority of our e-commerce business, to include but not be limited to Visa, MasterCard, American Express, and Discover. We are exposed to risks associated with credit card fraud and credit payment. Security breaches and inappropriate internet use could damage our Digital Media Marketing business. Our online marketing business depends on strategic relationships with our partners. Changes in government regulation and industry standards, could decrease demand for our products and services and increase our costs of doing business. Government enforcement actions could result in a decrease demand for our products and services. Our business could be subject to regulation by foreign countries, new unforeseen laws and unexpected interpretations of existing laws, resulting in an increase cost of doing business. If the technology that we currently use to deliver online advertisements is restricted, our expenses would increase. We could lose customers or advertising inventory if we fail to measure impressions, clicks and actions on advertisements in a manner that is acceptable to our advertisers and web publishers. Competition from other internet advertising companies could result in less revenue and smaller margins. We depend on third parties to manufacture all of the products we sell within our e-commerce division, and if we are unable to maintain these manufacturing and product supply relationships or enter into additional or different arrangements, we may fail to meet customer demand and our net sales and profitability may suffer as a result. In addition, shortages of raw ingredients, especially for our Purity mineral cosmetics line, could affect our supply chain and impede current and future sales and net revenues. The quality of our e-commerce products depend on quality control of third party manufacturers. Within our e-commerce division, we manufacture and market health and beauty consumer products that are ingestible or applied topically. These products may cause unexpected and undesirable side effects that could limit their use, require their removal from the market or prevent further development. In addition, we are vulnerable to claims that our products are not as effective as we claim them to be. We also may be vulnerable to product liability claims from their use. Risks Related to our Car and Truck Wash Segment We face a criminal investigation regarding the hiring of undocumented workers at our car washes that could result in fines and penalties. Our car wash work force may expose us to claims that might adversely affect our business, financial condition and results of operations; our insurance coverage may not cover all of our potential liability. Our car wash operations face governmental regulations, including environmental regulations, and if we fail to or are unable to comply with those regulations, our business may suffer. If our car wash equipment is not maintained, our car washes will not be operable. If we sell our Car and Truck Wash Segment, our revenues will decrease and our business may suffer. Risks Related to our Stock Our stock price has been, and likely will continue to be, volatile and your investment may suffer a decline in value. We could lose our listing on the Nasdaq Global Market if our stock price falls below $1.00 for 30 consecutive days, and the loss of the listing would make our stock significantly less liquid and would affect its value. Because we are a Delaware corporation, it may be difficult for a third party to acquire us, which could affect our stock price. If 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 Company. Our policy of not paying cash dividends on our common stock could negatively affect the price of our common stock.

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912607--3/31/2008--MACE_SECURITY_INTERNATIONAL_INC