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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
 For the transition period from  to
 Commission File Number 000-29211
 DAC Technologies Group International, Inc.
  Florida
    
    65-0847852(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 12120 Colonel Glenn Road, Suite 6200 Little Rock, AR
(Address of principal executive offices)
    
    72210
(Zip Code)
 
  þ o þ o
  Large accelerated filer
o
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  o þ




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TABLE OF CONTENTS
  
 PART I FINANCIAL INFORMATION
    
    3ITEM 1. FINANCIAL STATEMENTS
    
    3PART F/S
    
    7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    10Background
    
    11Financial Condition and Results of
Operations
    
    12Liquidity and Capital
Resources
    
    13Trends
    
    13Gun Legislation
    
    14Critical Accounting Estimates
    
    14Off-Balance Sheet Arrangements
    
    15ITEM 3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    15ITEM 4. CONTROLS
AND PROCEDURES
    
    15ITEM 4T. CONTROLS AND PROCEDURES
    
    16PART II OTHER INFORMATION
    
    16ITEM 1. LEGAL PROCEEDINGS
    
    16ITEM 1A. RISK FACTORS
    
    16ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    16ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    16ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    16ITEM 5. OTHER INFORMATION
    
    17ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    17SIGNATURES
    
    17EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 .
 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 March 31, 2008 and December 31, 2007
 March 31
    
    
    December 312008
    
    
    2007(unaudited)AssetsCurrent assetsCash
    
    $
    64,618
    
    
    $
    402,468Accounts receivable, less allowance for doubtful
accounts of $5,000 in 2008 and 2007
    
    
    552,337
    
    
    
    263,646Due from factor
    
    
    338,978
    
    
    
    765,510Inventories
    
    
    4,977,729
    
    
    
    4,925,275Prepaid expenses and deferred charges
    
    
    181,149
    
    
    
    115,686Income taxes receivable
    
    
    127,209
    
    
    
    153,870Current deferred income tax benefit
    
    
    35,815
    
    
    
    35,815Total current assets
    
    
    6,277,835
    
    
    
    6,662,270Property and equipmentLeasehold improvements
    
    
    55,323
    
    
    
    55,323Furniture and fixtures
    
    
    292,570
    
    
    
    278,322Molds, dies, and artwork
    
    
    514,965
    
    
    
    513,949862,858
    
    
    
    847,594Accumulated depreciation
    
    
    (585,629
    )
    
    
    (573,458
    )Net property and equipment
    
    
    277,229
    
    
    
    274,136Other assetsPatents and trademarks, net of accumulated
amortization of $108,075 and $104,208 in 2008 and 2007
    
    
    129,895
    
    
    
    133,762Deposits
    
    
    17,351
    
    
    
    17,351Advances to employees
    
    
    29,484
    
    
    
    28,925Note receivableLong-term
    
    
    20,000
    
    
    
    20,000Related party
    
    
    72,518
    
    
    
    72,518Shareholder
    
    
    169,263
    
    
    
    178,465Total other assets
    
    
    438,511
    
    
    
    451,021Total assets
    
    $
    6,993,575
    
    
    $
    7,387,427
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 March 31, 2008 and December 31, 2007
 March 31
    
    
    December 312008
    
    
    2007(unaudited)Liabilities and
Stockholders EquityCurrent liabilitiesNotes payable
    
    $
    147,526
    
    
    $
    183,186Accounts payable
    
    
    2,003,580
    
    
    
    2,393,050Accrued payroll tax withholdings
    
    
    25,517
    
    
    
    25,338Accrued expenses-other
    
    
    34,797
    
    
    
    38,872Total current liabilities
    
    
    2,211,420
    
    
    
    2,640,446Deferred income tax liability
    
    
    33,100
    
    
    
    33,100Stockholders equityPreferred stock, $.001 par value; authorized
10,000,000 shares; none issued and outstanding
    
    
    
    
    
    
    Common stock, $.001 par value; authorized
50,000,000 shares; 6,323,364 shares issued at
March 31, 2008 and December 31, 2007; 6,032,899
and 6,041,399 shares outstanding at March 31, 2008
and December 31, 2007, respectively
    
    
    6,323
    
    
    
    6,323Additional paid-in capital
    
    
    1,963,102
    
    
    
    1,963,102Treasury stock, at cost
    
    
    (313,947
    )
    
    
    (307,147
    )Retained earnings
    
    
    3,093,577
    
    
    
    3,051,603Total stockholders equity
    
    
    4,749,055
    
    
    
    4,713,881Total liabilities and stockholders equity
    
    $
    6,993,575
    
    
    $
    7,387,427
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Operations (Consolidated)
 For The Three Months Ended March 31, 2008 and 2007
 2008
    
    
    2007Net sales
    
    $
    2,715,769
    
    
    $
    2,839,625Cost of sales
    
    
    1,986,908
    
    
    
    2,002,115Gross profit
    
    
    728,861
    
    
    
    837,510Operating expensesSelling
    
    
    315,762
    
    
    
    381,040General and administrative
    
    
    281,587
    
    
    
    407,720Total operating expenses
    
    
    597,349
    
    
    
    788,760Income from operations
    
    
    131,512
    
    
    
    48,750Other income (expense)Interest expense
    
    
    (62,877
    )
    
    
    (73,560
    )Total other income (expense)
    
    
    (62,877
    )
    
    
    (73,560
    )Income before income tax provision
    
    
    68,635
    
    
    
    (24,810
    )Provision for income taxes
    
    
    26,661
    
    
    
    (7,608
    )Net income (loss)
    
    $
    41,974
    
    
    $
    (17,202
    )Basic and diluted earnings per share
    
    $
    0.01
    
    
    $
    0.00Weighted average number of common shares:Basic and diluted
    
    
    6,036,168
    
    
    
    6,135,599
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Cash Flows (Consolidated)
 For the Three Months Ended March 31, 2008 and 2007
 2008
    
    
    2007Cash flows from operating activitiesNet income
    
    $
    41,974
    
    
    $
    (17,202
    )Adjustments to reconcile net income to
net cash used in operating activities:Depreciation
    
    
    12,171
    
    
    
    11,978Amortization
    
    
    3,867
    
    
    
    3,936Changes in operating assets and liabilitiesAccounts receivable
    
    
    (288,691
    )
    
    
    (420,648
    )Due from factor
    
    
    426,532
    
    
    
    828,349Inventories
    
    
    (52,454
    )
    
    
    (127,695
    )Prepaid expenses and deferred charges
    
    
    (65,463
    )
    
    
    (24,599
    )Income taxes receivable
    
    
    26,661
    
    
    
    (7,608
    )Deposits
    
    
    
    
    
    
    (6,696
    )Advances to employees
    
    
    (559
    )
    
    
    (12,272
    )Accounts payable
    
    
    (389,470
    )
    
    
    (490,664
    )Accrued payroll tax withholdings
    
    
    179
    
    
    
    1,587Accrued expenses other
    
    
    (4,075
    )
    
    
    123,482Net cash used in operating activities
    
    
    (289,328
    )
    
    
    (138,052
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (15,264
    )
    
    
    (63,182
    )Payments for patents and trademarks
    
    
    
    
    
    
    (1,755
    )Net payments (advances) on notes receivable  stockholder
    
    
    9,202
    
    
    
    (45,001
    )Net cash used by investing activities
    
    
    (6,062
    )
    
    
    (109,938
    )Cash flows from financing activitiesPayments on notes payable
    
    
    (35,660
    )
    
    
    (10,330
    )Purchase of treasury stock
    
    
    (6,800
    )
    
    
    Net cash used in financing activities
    
    
    (42,460
    )
    
    
    (10,330
    )Net decrease in cash
    
    
    (337,850
    )
    
    
    (258,320
    )Cash  beginning of period
    
    
    402,468
    
    
    
    338,968Cash  end of period
    
    $
    64,618
    
    
    $
    80,648
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PART F/S
 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Nature of Business
    Organization and Summary of Significant Accounting Policies
 Organization and basis of presentation
  Unaudited interim condensed consolidated financial statements
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.
 Use of Estimates
  Inventories
  Mar. 31, 2008
    
    
    Dec. 31, 2007Inventories consist of:Finished goods
    
    $
    4,499,216
    
    
    $
    3,993,949Inventory in transit
    
    
    455,546
    
    
    
    908,359Parts
    
    
    22,967
    
    
    
    22,967$
    4,977,729
    
    
    $
    4,925,275
 Due from Factor
  Mar. 31, 2008
    
    
    Dec. 31, 2007Accounts receivable factored
    
    $
    1,613,066
    
    
    $
    4,508,524Amounts advanced and outstanding
    
    
    1,274,088
    
    
    
    3,743,014Due from factor
    
    $
    338,978
    
    
    $
    765,510
 Earnings per Share: Dilutive Effect
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Accounting Changes
    Treasury Stock Transactions
  9




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    achieving planned revenue and profit growth in each of the Companys business units;
    
    renewal of purchase orders consistent with past experience;
    
    increasing price, products and services competition;
    
    emergence of new competitors or consolidation of existing competitors;
    
    the timing of orders and shipments;
    
    continuing availability of appropriate raw materials and manufacturing relationships;
    
    maintaining and improving current product mix;
    
    changes in customer requirements and in the volume of sales to principal customers;
    
    changes in governmental regulations in the various geographical regions where the
Company operates;
    
    general economic and political conditions;
    
    attracting and retaining qualified key employees;
    
    the ability of the Company to control the purchase cost of its products and operating costs; and
    
    continued availability of financing, and financial resources on the terms required to
support the Companys future business strategies.
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:
 
    
    increased penetration of our existing markets, particularly in the gun cleaning
and accessories market;
    
    development of new products in new markets, such as camping and housewares;
    
    development of new products for the sporting goods market;
    
    identification and development of new markets for gun cleaning kits, i.e.
government, law enforcement and military;
    
    identification and recruitment of effective manufacturers representatives to
actively market these products on a national and international basis; and
    
    aggressive cost containment.
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Gun Maintenance.
 Hunting and camping.
 Gun Safety.
 Household Products.
 
 (b)
    
    Financial Condition and Results of Operations
 Financial Condition
  Mar. 31, 2008
    
    Dec. 31, 2007
    
    % ChangeAccounts receivable
    
    $
    552,337
    
    
    $
    263,646
    
    
    
    109
    %Due from factor
    
    
    338,978
    
    
    
    765,510
    
    
    
    (56
    %)Inventories
    
    
    4,977,729
    
    
    
    4,925,275
    
    
    
    1
    %Total current assets
    
    
    6,277,835
    
    
    
    6,662,270
    
    
    
    (6
    %)Accounts payable
    
    
    2,003,580
    
    
    
    2,393,050
    
    
    
    (16
    %)Total current liabilities
    
    
    2,211,420
    
    
    
    2,640,446
    
    
    
    (16
    %)Working capital
    
    
    4,066,415
    
    
    
    4,021,824
    
    
    
    1
    %Stockholders equity
    
    
    4,749,055
    
    
    
    4,713,881
    
    
    
    1
    %
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Results of Operations
   
 (c)
    
    Liquidity and Capital Resources
  
 (d)
    
    Trends
  13




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District of Columbia vs. Heller
 
   Long-lived Assets
 14




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Inventories.
 Patents and Trademarks.
 
 (g)
    
    Off-Balance Sheet Arrangements
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
  15




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Item 4T. CONTROLS AND PROCEDURES.
  
 PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  16




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ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  Exhibits
 2
    
    Acquisition Agreement3(i)
    
    Articles of Incorporation3(ii)
    
    By-laws
  Exhibits
 31.1
    
    Certification of David A. Collins Pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    Certification of Robert C. Goodwin Pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Certification of David A. Collins Pursuant to Rule 13a-14(b) or Rule
15d-14(c) of the Securities Exchange Act of 1934 and 18U.S.C. Section 135032.2
    
    Certification of Robert C. Goodwin Pursuant to Rule 13a-14(b) or Rule
15d-14(c) of the Securities Exchange Act of 1934 and 18U.S.C. Section 1350
 
 SIGNATURES
  By:
    
    /s/ David A. CollinsDavid A. Collins, Chairman, CEO and Principal Executive OfficerBy:
    
    /s/ Robert C. GoodwinRobert C. Goodwin, Principal Accounting Officer and Principal Financial Officer
  17