The following discussion reviews our operations for each of the three years in the period ended December 31, 2008, and should be read in conjunction with our Consolidated Financial Statements and related notes thereto included elsewhere herein.

FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS

This report includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Forward-Looking Statements"). All statements other than statements of historical fact included in this report are Forward-Looking Statements. Forward-Looking Statements are statements related to future, not past, events. In this context, Forward-Looking Statements often address our expected future business and financial performance and financial condition, and often contain words such as "expect," "anticipate," "intend," "plan," believe," "seek," or ''will." Forward-Looking Statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties that could cause our actual results to be materially different than those expressed in our Forward-Looking Statements include: the severity and duration of current economic and financial conditions; our success in selling our remaining car washes; the level of demand of the customers we serve for our goods and services, and numerous other matters of national, regional and global scale, including those of a political, economic, business and competitive nature. These uncertainties are described in more detail in Part I, Item 1A. Risk Factors of this Form 10-K Report. The Forward- Looking Statements made herein are only made as of the date of this filing, and we undertake no obligation to publicly update such Forward-Looking Statements to reflect subsequent events or circumstances.

Revenues

Security

Our Security Segment designs, manufactures, markets and sells a wide range of products. The Company's primary focus in the Security Segment is the sourcing and selection of electronic surveillance products and components that it produces and sells, primarily to installing dealers, system integrators, retailers and end users. Other products in our Security Segment include, but are not limited to, less-than-lethal Mace defense sprays, personal alarms, high-end digital and machine vision cameras and imaging components, as well as video conferencing equipment and security monitors. The main marketing channels for our products are industry shows and publications, outside sales representatives, catalogs, internet and sales through telephone orders. Revenues generated for the year ended December 31, 2008 for the Security Segment were comprised of approximately 35% from our professional electronic surveillance operation in Florida, 43 % from our consumer direct electronic surveillance and machine vision camera and video conferencing equipment operation in Texas, and 22% from our personal defense and law enforcement aerosol operation in Vermont.

Digital Media Marketing

Prior to June 2008, our Digital Media Marketing Segment consisted of two business divisions: (1) e-commerce and (2) online marketing. After June 2008 we discontinued the online marketing services to outside customers and our Digital Media Marketing Segment is now essentially an online e-commerce business.

Our e-commerce division is a direct-response product business that develops, markets and sells products directly to consumers through the internet. We reach our customers predominately through online advertising on third party promotional websites. Before discontinuing PromoPath, Linkstar also marketed products on promotional websites operated by PromoPath. Our products include:
Vioderm, an anti-wrinkle skin care product (www.vioderm.com); Purity by Mineral Science, a mineral cosmetic (www.mineralscience.com); TrimDay™, a weight-loss supplement (www.trimday.com); Eternal Minerals, a Dead Sea spa product line (www.eternalminerals.com); ExtremeBriteWhite, a teeth whitening product (www.extremebritewhite.com); Knockout, an acne product (www.knockoutmyacne.com), as well as Mace's pepper sprays and surveillance products. We continuously develop and test product offerings to determine customer acquisition costs and revenue potential, as well as to identify the most efficient marketing programs.

PromoPath, our online affiliate marketing company, secured customer acquisitions or leads for advertising clients principally using promotional internet sites offering free gifts. Promopath was paid by its clients based on the cost-per-acquisition ("CPA") model. PromoPath's advertising clients were typically established direct-response advertisers with well recognized brands and broad consumer appeal such as NetFlix®, Discover® credit cards and Bertelsmann Group. PromoPath generated CPA revenue, both brokered and through co-partnered sites, as well as list management and lead generation revenues. CPA revenue in the digital media marketplace refers to paying a fee for the acquisition of a new customer, prospect or lead. List management revenue is based on a relationship between a data owner and a list management company. The data owner compiles, collects, owns and maintains a proprietary computerized database composed of consumer information. The data owner grants a list manager a non-exclusive, non-transferable, revocable worldwide license to manage, use and have access to the data pursuant to defined terms and conditions for which the data owner is paid revenue. Lead generation is referred to as cost per lead ("CPL") in the digital media marketplace. Advertisers purchasing media on a CPL basis are interested in collecting data from consumers expressing interest in a product or service. CPL varies from CPA in that no credit card information needs to be provided to the advertiser for the publishing source to be paid for the lead.

In June of 2008, the Company discontinued marketing PromoPath's online marketing services to external customers. PromoPath's primary mission is now focused on increasing the distribution of the products of the e-commerce division, Linkstar.

Revenues within our Digital Media Marketing Segment for the year ended December 31, 2008, were approximately $17.3 million; consisting of $15.1 million, or 87.2%, from our e-commerce division and $2.2 million, or 12.8%, from our online marketing division.

Car Wash

At December 31, 2008, we owned full service and self-service car wash locations in Texas. We earn revenues from washing and detailing automobiles; performing oil and lubrication services, minor auto repairs, and state inspections; selling fuel; and selling merchandise through convenience stores within the car wash facilities. Revenues generated for 2008 for the Car and Truck Wash Segment were comprised of approximately 65% from car washing and detailing, 21% from lube and other automotive services, and 14% from fuel and merchandise. Additionally, our Arizona, Florida, Northeast, Lubbock, Texas, and San Antonio, Texas region car washes and our truck washes are being reported as discontinued operations, (see Note 4 of the Notes to Consolidated Financial Statements), and accordingly, have been segregated from the following revenue and expense discussion. Revenues from discontinued operations were $3.4 million, $14.8 million and $26.4 million for the years ended December 31, 2008, 2007 and 2006, respectively. Operating (loss) income from discontinued operations was $(1.6) million, $155,000, and $1.8 million for the years ended December 31, 2008, 2007 and 2006, respectively.

The Company executed a lease-to-sell agreement on December 31, 2005 with Eagle to lease Mace's five truck washes beginning January 1, 2006 for up to two years. Pursuant to the terms of the agreement, Eagle paid Mace $9,000 per month to lease the Company's truck washes, and was responsible for all underlying property expenses. On December 31, 2007 Eagle completed the purchase of the truck washes for $1.2 million consideration, consisting of $280,000 cash and a $920,000 note payable to Mace secured by mortgages on the truck washes. The $920,000 note, which has a balance of $892,000 at December 31, 2008, has a five-year term, with principal and interest paid on a 15-year amortization schedule. As a result, we did not recognize revenue or operating expenses during the term of the lease other than rental income and interest expense.

The majority of revenues from our Car Wash Segment are collected in the form of cash or credit card receipts, thus minimizing customer accounts receivable.

Cost of Revenues

Security

Cost of revenues within the Security Segment consists primarily of costs to purchase or manufacture the security products including direct labor and related taxes and fringe benefits, and raw material costs. Product warranty costs related to the Security Segment are mitigated in that a portion of customer product warranty claims are covered by the supplier through repair or replacement of the product associated with the warranty claim.

Digital Media Marketing

Cost of revenues within the Digital Media Marketing Segment consist primarily of amounts we pay to website publishers that are directly related to revenue-generating events, including the cost to enroll new members, fulfillment and warehousing costs, including direct labor and related taxes and fringe benefits and e-commerce product costs.

Car Wash

Cost of revenues within the Car Wash Segment consists primarily of direct labor and related taxes and fringe benefits, certain insurance costs, chemicals, wash and detailing supplies, rent, real estate taxes, utilities, car damages, maintenance and repairs of equipment and facilities, as well as the cost of the fuel and merchandise sold.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses consist primarily of management, clerical and administrative salaries, professional services, insurance premiums, sales commissions, and other costs relating to marketing and sales.

We capitalize direct incremental costs associated with business acquisitions. Indirect acquisition costs, such as executive salaries, corporate overhead, public relations, and other corporate services and overhead are expensed as incurred.

Depreciation and Amortization

Depreciation and amortization consists primarily of depreciation of buildings and equipment, and amortization of leasehold improvements and certain intangible assets. Buildings and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Leasehold improvements are amortized over the shorter of their useful lives or the lease term with renewal options. Intangible assets, other than goodwill or intangible assets with indefinite useful lives, are amortized over their useful lives ranging from three to fifteen years, using the straight-line or an accelerated method.

Other Income

Other income consists primarily of rental income received on renting out excess space at our car wash facilities and includes gains and losses on short-term investments.

Income Taxes

Income tax expense is derived from tax provisions for interim periods that are based on the Company's estimated annual effective rate. Currently, the effective rate differs from the federal statutory rate primarily due to state and local income taxes, non-deductible costs related to acquired intangibles, and changes to the valuation allowance.

Results of Operations for the Three Years Ended December 31, 2008, 2007 and 2006

The following table presents the percentage each item in the consolidated
statements of operations bears to total revenues:

                                                            Year ended December 31,
                                                        2008         2007         2006

 Revenues                                                  100 %        100 %        100 %
 Cost of revenues                                         71.3         76.1         76.5
 Selling, general and administrative expenses             40.6         42.0         42.2
 Depreciation and amortization                             2.5          2.9          3.0
 Goodwill and asset impairment charges                    10.7          1.1          0.4
 Operating loss                                          (25.1 )      (22.1 )      (22.1 )
 Interest expense, net                                    (0.2 )       (0.9 )       (1.9 )
 Other income                                             (4.2 )        2.4          2.3
 Loss from continuing operations before income taxes     (29.5 )      (20.6 )      (21.7 )
 Income tax expense                                        0.2          0.2          0.4
 Loss from continuing operations                         (29.7 )      (20.8 )      (22.1 )
 Income from discontinued operations, net of tax           8.8          5.2          3.8
 Net loss                                                (20.9 )%     (15.6 )%     (18.3 )%

Revenues

Security

Revenues were approximately $20.8 million, $22.3 million and $23.4 million for the years ended December 31, 2008, 2007 and 2006, respectively. Of the $20.8 million of revenues for the year ended December 31, 2008, $7.2 million, or 35%, was generated from our professional electronic surveillance operation in Florida, $9.0 million, or 43%, from our consumer direct electronic surveillance and high end digital and machine vision cameras and professional imaging components operation in Texas, and $4.6 million, or 22%, from our personal defense and law enforcement aerosol operation in Vermont. Of the $22.3 million of revenues for year ended December 31, 2007, $7.8 million, or 35%, was generated from our professional electronic surveillance operation in Florida, $9.9 million, or 44%, from our consumer direct electronic surveillance and high end digital and machine vision cameras and professional imaging components operation in Texas, and $4.6 million, or 21%, from personal defense and law enforcement aerosol operations in Vermont. Of the $23.4 million of revenues for the year ended December 31, 2006, $9.1 million, or 39%, was generated from our professional electronic surveillance operations in Florida, $10.8 million, or 46%, from our consumer direct electronic surveillance and high end digital and machine vision cameras and professional imaging components operation in Texas, and $3.5 million or 15%, for our personal defense and law enforcement aerosol operations in Vermont.

The decrease in revenues within the Security Segment in 2008 was due to several factors. The majority of the decrease in sales was from decreases in sales of our consumer direct electronic surveillance division, our professional electronic surveillance operation and our machine vision camera and video conferencing operation. Our Vermont personal defense operations sales remain consistent between years. The decrease in sales of our consumer direct electronic surveillance, machine vision camera and video conference equipment operations, and our professional electronic surveillance operation was due to several factors, including the impact on sales of increased competition and the impact of management's completion of its consolidation of the Security Segment's electronic surveillance equipment operations from Ft. Lauderdale, Florida to the Farmers Branch, Texas warehouse. The consumer direct electronic surveillance and professional electronic surveillance division had a decrease in sales due to a delay in introducing new product lines during 2008. In the latter part of 2008 sales also decreased due to a reduction in spending by certain of our customers impacted by the deteriorating economy. Additionally, the Company's machine vision camera and video conferencing equipment operations continue to be impacted by certain large customers purchasing directly from its main supplier combined with reductions in sales to certain customers with ties to the big three automotive manufacturers. Although revenues within our personal defense operation remained consistent between years, we did experience growth in aerosol and non-aerosol sales largely from the introduction of new products such as a new home security system, our Mace Pepper Gun® and our Mace Pepper Gel™ off set by a decrease in sales of TG Guard, law enforcement and OEM supplied products.

The decrease in revenues within the Security Segment in 2007 as compared to 2006 was due principally to a decrease in sales of our consumer direct electronic surveillance and machine vision camera and video conferencing equipment in Texas and our professional electronic surveillance operation in Florida. The decrease in sales in our professional electronic surveillance operation was partially a result of sales of discontinued and refurbished products at lower selling prices, the inability of some of Mace's vendors to supply high volume products in a timely manner, competitive pressures and the impact on operations and management of the Florida embezzlement investigation. The decrease in sales of our consumer direct electronic surveillance operations in Texas was largely a result of increased competition and inventory shortages of certain components. The Company's machine vision camera and video conferencing equipment operation was impacted by competition and certain large customers purchasing direct from its main supplier. This decrease in revenue was partially offset by a $1.05 million or 30% increase in revenue in our personal defense and law enforcement aerosol operations with a noted increase in sales in our Mace aerosol defense sprays and TG Guard® products.

Digital Media Marketing

Revenues within our Digital Media Marketing Segment for the year ended December 31, 2008 were approximately $17.3 million, consisting of $15.1 million from our e-commerce division and $2.2 million from our online marketing division. Revenues within our Digital Media Marketing Segments from the acquisition date, July 20, 2007, through December 31, 2007, were approximately $7.6 million, consisting of $4.2 million from our e-commerce division and $3.4 million from our online marketing division.

Car Wash

Revenues for the year ended December 31, 2008 were $12.8 million as compared to $12.4 million for the year ended December 31, 2007, an increase of $427,000 or 3%. Of the $12.8 million of revenues for the year ended December 31, 2008, $8.3 million or 65% was generated from car wash and detailing, $2.7 million or 21% from lube and other automotive services, and $1.8 million or 14% from fuel and merchandise sales. Of the $12.4 million of revenues for the year ended December 31, 2007, $8.5 million or 69% was generated from car wash and detailing, $2.8 million or 22% from lube and other automotive services, and $1.1 million or 9% from fuel and merchandise sales. The slight decrease in wash and detail revenues in 2008 was principally due to a decrease in average wash and detailing revenue per car. Average wash and detailing revenue per car decreased from $19.22 in 2007 to $18.73 in 2008.This decrease in average wash and detailing revenue per car was partially offset by an increase of 2,000 cars despite a reduction of 5,000 cars from the sale of two Texas car wash sites included in continuing operations since the beginning of 2007. The increase in fuel and merchandise revenues was primarily the result of selling fuel at a higher fuel price.

Revenues for the year ended December 31, 2007 were $12.4 million as compared to $13.6 million for the year ended December 31, 2006, a decrease of $1.2 million or 8.8%. This decrease was primarily attributable to a decrease in wash and detail services. Of the $12.4 million of revenues for the year ended December 31, 2007, $8.5 million or 69% was generated from car wash and detailing, $2.8 million or 22% from lube and other automotive services, and $1.1 million or 9% from fuel and merchandise sales. Of the $13.6 million of revenues for the year ended December 31, 2006, $9.1 million or 67% was generated from car wash and detailing, $3.1 million or 23% from lube and other automotive services, and $1.4 million or 10% from fuel and merchandise sales. The decrease in wash and detail revenues in 2007 was principally due to the sale of car washes and reduced car wash volumes in the Texas market due to unfavorable weather. Overall car wash volumes declined by 95,000 cars, or 18% in 2007 as compared to 2006, 15%, excluding the impact of a car wash volume reduction of approximately 19,300 cars from the closure and divestiture of two car wash locations in Texas since September 2006 included in continuing operations. Partially offsetting this decline in volume, the Company experienced an increase in average car wash and detailing revenue per car, from $17.01 in 2006 to $19.22 in 2007. This increase in average wash and detailing revenue per car was the result of management's continued focus on aggressive selling detailing and additional on-line car wash services. The decrease in fuel and merchandise revenues was primarily the result of selling less volume of fuel as a result of higher fuel prices. The decrease in merchandise sales in our car wash lobbies corresponds with the reduction in our car wash volumes and site traffic.

Cost of Revenues

Security

Costs of revenues were $15.1 million, or 72% of revenues, $16.2 million or 73% of revenues and $17.4 million or 74% of revenues for 2008, 2007 and 2006, respectively. The decrease in cost of revenues as a percentage of revenues is due to a change in customer and product mix and a conscious effort to reduce discounting of list prices and sell products at higher profit margins and partially due to reduced overhead costs from the consolidation of the Ft. Lauderdale, Florida warehouse operations into the Farmers Branch, Texas warehouse in the fourth quarter of 2008. Additionally, the margins within our professional electronic surveillance operation in Florida were negatively impacted in 2007 by an increase in sales of discontinued products, refurbished items and substitute items as a result of the inability of some of Mace's vendors to supply high volume products in a timely manner.

The slight decrease in cost of revenues as a percentage of revenues in 2007 as compared to 2006 is due principally to a change in customer and product mix and a conscious effort to reduce discounting of list prices, offset partially by an increase in sale of discontinued products and refurbished items at lower profit margins.

Digital Media Marketing

Cost of revenues within our Digital Media Marketing Segment was approximately $10.8 million, or 62% of revenues, for the year ended December 31, 2008. Of this amount, $8.8 million related to our e-commerce division and $1.98 million related to our online marketing division. Cost of revenues within our Digital Media Marketing Segment from July 20, 2007, the date we acquired the segment, through December 31, 2007 were approximately $6.1 million; $2.9 million related to our e-commerce division and $3.2 related to our online marketing division.

Car Wash

Cost of revenues for the year ended December 31, 2008 were $10.4 million, or 82% of revenues, with car washing and detailing costs at 79% of respective revenues, lube and other automotive services costs at 77% of respective revenues, and fuel and merchandise costs at 100% of respective revenues. Cost of revenues for the year ended December 31, 2007 were $9.8 million, or 79% of revenues, with car washing and detailing costs at 79% of respective revenues, lube and other automotive services costs at 77% of respective revenues, and fuel and merchandise costs at 89% of respective revenues. This increase in our fuel and merchandise costs as a percent of revenues in 2008 was due to a loss on the sale of fuel of approximately $44,000 in the fourth quarter of 2008 and an additional write down of fuel of approximately $93,000 at December 31, 2008 to estimated net realizable value with the significant drop in fuel cost and selling prices in the fourth quarter of 2008.

Cost of revenues for the year ended December 31, 2007 were $9.8 million or 79% of revenues with car washing and detailing costs at 79% of respective revenues, lube and other automotive services costs at 77% of respective revenues, and fuel and merchandise costs at 89% of respective revenues. Cost of revenues for the year ended December 31, 2006 was $10.8 million, or 80% of revenues with car wash and detailing costs at 79% of respective revenues, lube and other automotive services costs at 77% of respective revenues, and fuel and merchandise costs at 92% of respective revenues. Cost of revenues, as a percent of revenues, was relatively consistent between 2007 and 2006.

Selling, General and Administrative Expenses

SG&A expenses for the year ended December 31, 2008 were $20.6 million compared to $17.8 million for the same period in 2007, an increase of approximately $2.8 million or 16%. SG&A expenses as a percent of revenues were 40.6% for the year ended December 31, 2008 as compared to 42.0% for the year ended December 31, 2007. The increase in SG&A costs is primarily the result of the acquisition of Linkstar, which represents an increase in SG&A costs of $3.9 million in 2008 as compared to 2007 and an additional charge of approximately $425,000 for the waste remediation at our personal defense operation in Vermont (See Note 17. Commitments and Contingencies). These increases were partially offset by a decrease in costs related to the Northeast car wash region immigration investigation, non-cash compensation expense, reduction in costs within our Florida and Texas operations, and costs of the previously reported Florida security based controller embezzlement. SG&A expenses include $244,000 of legal fees in 2008 relating to the immigration investigation as compared to $674,000 in 2007. SG&A costs also include non-cash compensation expense from continuing operations of approximately $626,000 and $896,000 in 2008 and 2007, respectively. SG&A costs decreased within our Florida and Texas electronic surveillance equipment operations by approximately $360,000, partially as a result of our reduced sales levels and partially as a result of our consolidation efforts to reduce SG&A costs in all areas. In April 2007, we determined that our former Florida security based divisional controller embezzled funds from the Company. The Company conducted an internal investigation, and our Audit Committee engaged an independent consulting firm to conduct an independent forensic investigation. As a result of these investigations, we estimated that the amount embezzled by the employee was approximately $240,000 during fiscal 2006 and $99,000 in the first quarter of fiscal 2007. SG&A expenses for 2007 also include approximately $300,000 of legal, consulting and accounting fees related to the Florida embezzlement investigation.

SG&A expenses for the year ended December 31, 2007 were $17.8 million compared to $15.6 million for the same period in 2006. SG&A expenses as a percent of revenues was 42% for both the years ended December 31, 2007 and 2006. The increase in SG&A expenses is primarily the result of the acquisition of Linkstar which added SG&A expenses of $2.0 million in 2007 and a commission payment related to the Linkstar acquisition which added SG&A expenses of $310,000 in 2007. SG&A expenses for the year ending December 31, 2007 also include an accrual for approximately $285,000 for the waste remediation at our personal defense and law enforcement aerosol operation in Vermont and approximately . . .