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Related Party Transactions
6 Months Ended
Jun. 30, 2011
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
12.  Related Party Transactions

The Company’s Security Segment leases manufacturing and office space under a lease between Vermont Mill and the Company.  The lease, as extended, expires on November 14, 2011.  Vermont Mill is controlled by Jon E. Goodrich, a former director and current employee of the Company. The original lease was entered into in November 1999 for a five year term. In November 2004, the Company exercised an option to continue the lease through November 2009 at a rate of $10,576 per month. The Company amended the lease in 2008 to occupy additional space for an additional $200 per month. In September 2009, the Company and Vermont Mill extended the term of the lease to November 14, 2010 at a monthly rate of $10,776 per month and modified the square footage rented to 33,476 square feet. The Company entered into a Lease Extension Agreement on December 20, 2010 to extend the lease through November 14, 2011 at a monthly rate of $11,315 and to provide an option to further extend the lease to May 14, 2012 at the same monthly rate.  Rent expense under this lease was $33,945 and $32,330 for the three months ended June 30, 2011 and 2010 and $67,890 and $64,660 for the six months ended June 30, 2011 and 2010, respectively.

The Company funded a portion of the settlement payment to Mr. Paolino by borrowing $1.35 million from Merlin Partners, LP (“Merlin”) on December 28, 2010. Merlin is a fund managed by Ancora Advisors, LLC, an entity within the Ancora Group.  Richard A. Barone, Chairman of the Company's Board of Directors, is the Chairman and controlling person of the Ancora  Group. Denis J. Amato, a Company Director, is the Chief Investment Officer of the Ancora Advisors, LLC. The loan, which had an original maturity date of March 28, 2011, was extended to August 15, 2011.  The loan was payable in two installments of $675,000, with each installment payable upon the closing of each of two car washes that were under agreements of sale at December 31, 2010.  The Company made a payment of $675,000 to Merlin upon the sale of the Lubbock, Texas car wash on March 8, 2011. On August  8, 2011 the Company paid the remaining balance from the proceeds generated by the Company's Rights Offering (see Note 17. Subsequent Events for a description of the Rights Offering). The loan's interest rate was 12% per annum and was secured by a second lien on a Dallas, Texas area car wash, a Lubbock, Texas car wash and a security interest in the tradename “Mace”.  As part of the consideration for the financing, Merlin was  granted a Common Stock Purchase Warrant  to purchase up to 314,715 shares of the Company’s common stock at an exercise price of $0.20 per share, expiring December 28, 2015.  The warrant contains anti-dilution provisions providing that Merlin will receive additional warrants exercisable into 2% of any common stock of the Company issued by the Company through December 28, 2011. On August 2, 2011, after the conclusion of the Company’s Rights Offering, a warrant for 847,452 shares was issued to Merlin under the anti-dilution provision. The exercise price of the original warrant and the newly issued warrant will be adjusted lower, if necessary, to equal the stock issuance price of any stock issued through December 28, 2011 at a price below $0.20. The initial warrants were accounted for under the equity method with the Black-Scholes fair value of the warrant of $63,274 recorded as a discount to the $1.35 million Merlin loan and as additional paid-in capital. The discount was charged to interest expense over the original three month maturity period of the loan with an offsetting credit to the loan balance.
 
Ancora Securities, Inc. ("Ancora") was the Placement Agent and Dealer Manager of the Rights Offering (see Note 17. Subsequent Events ) pursuant to the Placement Agent and Dealer Manager Agreement dated March 25, 2011 executed between Ancora and the Company.  Ancora was reimbursed for approximately $10,000 in expenses in accordance with the provisions of the Placement Agent and Dealer Manager Agreement.  Richard A. Barone, Chairman of the Company’s Board of Directors, is a controlling owner of Ancora.  Denis J. Amato, a director of the Company, is the Chief Investment Officer of Ancora.
 
We entered into a Securities Purchase Agreement dated March 25, 2011 (the "Securities Purchase Agreement") with Merlin.  In accordance with the Securities Purchase Agreement, on August 2, 2011, Merlin and two assignees purchased 20 million shares of the Company's common stock at a price of $0.20 per share (the "Additional Stock"). The sale of Additional Stock resulted in net proceeds to the Company of $3.75 million.  The purchasers of the Additional Stock were paid a fee of $250,000 in connection with the purchase under the Securities Purchase Agreement. The Additional Stock was registered for resale by the purchasers of the Additional Stock under the Securities Act of 1933, as amended (the “Securities Act”).
 
On March 30, 2011, the Company borrowed $1.4 million with an interest rate of 6% per annum from Merlin to fund the acquisition of TCCI, a wholesale security monitoring company.  The loan is due March 30, 2013; however, Merlin has the right to call the loan commencing on August 31, 2011, thirty days after the completion of the Company’s Rights Offering and Merlin's purchase of the Additional Stock ("Call Trigger Event"). Merlin's right to call the loan expires on March 8, 2012, six months and forty business days after the Call Trigger Event.  If Merlin does not call the loan by March 8, 2012, the loan's maturity date becomes extended to March 30, 2016 and Merlin receives the right to convert the loan into common stock through March 30, 2016, the new maturity date.  The conversion right is at a per share price equal to the ten day average closing sales price of the common stock, starting with September 13, 2011, the trading day which is 30 trading days after the Call Trigger Event. In accordance with ASC 815, “Derivatives and Hedging,” the Company determined that the conversion feature of the Debenture met the criteria of an embedded derivative, and therefore the conversion feature of this Debenture needed to be bifurcated and accounted for as a derivative. The fair value of the embedded conversion was estimated at $590,000 at the date of issuance using the Monte Carlo model with the following assumptions: risk free interest rate: 0.16%; expected life of the option to convert of 4.7 years; and volatility: 48%. With the assumptions related to the conversion features being relatively consistent with the initial assumptions, the fair value of the conversion option at June 30, 2011 remains at a value of $590,000 and is recorded as a derivative liability and as a discount to the debt. The conversion option will be marked-to-market each reporting period, with future changes in fair value reported in earnings.

As compensation for the $1.4 million loan, Merlin received a five year warrant exercisable into 157,357 shares of common stock at an exercise price of $0.20 per share.  The warrant contains an anti-dilution provision that provides that the Company will issue Merlin a warrant equal to 1% percent of any shares issued by the Company for one year after the date the warrant was issued.  Any new warrant issued will be exercisable at $0.20 cents per share.  On August 2, 2011, after the completion of the Company’s Rights Offering, a warrant for 423,726 shares was issued to Merlin under the anti-dilution provision. The loan is secured by a security interest in the "Mace" name, a pledge of the stock of Mace CSSS, Inc., (the Company’s wholesale monitoring subsidiary) and a security interest in the assets of Mace CSSS, Inc.  The conversion features of the loan and the warrant may result in additional dilution to stockholders.  The initial warrants were accounted for under the equity method with the Black-Scholes fair value of the warrant of $47,420 recorded as a discount to the $1.4 million Merlin loan and as additional paid-in capital. The discount is being charged to interest expense over the 24 month maturity period of the loan with an offsetting credit to the loan balance.