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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
  o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
     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
    
    72210(Address of principal executive offices)
    
    (Zip Code)
 
  x o x o
  o x




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TABLE OF CONTENTS
 PART I
    
    
    
    
    3ITEM 1.
    
    FINANCIAL STATEMENTS
    
    
    3PART F/S
    
    
    
    
    7ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    8Background
    
    
    9Financial Condition and Results of Operations
    
    
    11Liquidity and Capital Resources
    
    
    13Trends
    
    
    13Gun Legislation
    
    
    13Critical Accounting Estimates
    
    
    13Off-Balance Sheet Arrangements
    
    
    14ITEM 3.
    
    CONTROLS AND PROCEDURES
    
    
    15Evaluation of Disclosure Controls and Procedures
    
    
    15Definition of Disclosure Controls
    
    
    15Limitations on the Effectiveness of Controls
    
    
    15Conclusions
    
    
    15Changes in Internal Controls
    
    
    16Sarbanes-Oxley Section 404 Compliance
    
    
    16PART II
    
    
    
    
    16ITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    16ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    17ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    17ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17ITEM 5.
    
    OTHER INFORMATION
    
    
    17ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    18SIGNATURES
    
    
    18Ex-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
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PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 .
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
Condensed Balance Sheet (Consolidated)
March 31, 2007
 AssetsCurrent assetsCash
    
    $
    80,648Accounts receivable, less allowance for doubtful
accounts of $5,000
    
    
    952,676Due from factor
    
    
    453,859Inventories
    
    
    3,258,520Prepaid expenses and deferred charges
    
    
    133,564Income taxes receivable
    
    
    378,425Current deferred income tax benefit
    
    
    35,815Total current assets
    
    
    5,293,507Property and equipmentLeasehold improvements
    
    
    47,850Furniture and fixtures
    
    
    238,173Molds, dies, and artwork
    
    
    511,233797,256Accumulated depreciation
    
    
    (534,444
    )Net property and equipment
    
    
    262,812Other assetsPatents and trademarks, net of
accumulated amortization of $92,401
    
    
    145,569Deposits
    
    
    18,131Advances to employees
    
    
    36,379Note receivable  long term
    
    
    20,000Note receivable  related party
    
    
    72,518Note receivable  stockholder
    
    
    175,532Total other assets
    
    
    468,129Total assets
    
    $
    6,024,448Liabilities and Stockholders EquityCurrent liabilitiesNotes payable
    
    $
    182,403Accounts payable
    
    
    1,149,781Accrued payroll tax withholdings
    
    
    26,531Accrued expenses  other
    
    
    171,034Total current liabilities
    
    
    1,529,749Deferred income tax liability
    
    
    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 and
6,135,599 shares outstanding
    
    
    6,323Additional paid-in capital
    
    
    1,963,102Treasury stock, at cost
    
    
    (201,333
    )Retained earnings
    
    
    2,693,507Total stockholders equity
    
    
    4,461,599Total liabilities and stockholders equity
    
    $
    6,024,448
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
Condensed Statements of Operations (Consolidated)
For The Three Months Ended March 31, 2007 and 2006
 2007
    
    
    2006Net sales
    
    $
    2,839,625
    
    
    $
    2,763,197Cost of sales
    
    
    2,002,115
    
    
    
    1,792,411Gross profit
    
    
    837,510
    
    
    
    970,786Operating expensesSelling
    
    
    381,040
    
    
    
    340,789General and administrative
    
    
    407,720
    
    
    
    246,269Total operating expenses
    
    
    788,760
    
    
    
    587,058Income from operations
    
    
    48,750
    
    
    
    383,728Other income (expense)Interest expense
    
    
    (73,560
    )
    
    
    (59,735
    )Total other income (expense)
    
    
    (73,560
    )
    
    
    (59,735
    )Income
(loss) before income tax provision (benefit)
    
    
    (24,810
    )
    
    
    323,993Income tax
provision (benefit)
    
    
    (7,608
    )
    
    
    126,811Net income
(loss)
    
    $
    (17,202
    )
    
    $
    197,182Basic and
diluted earnings (loss) per share
    
    $
    (0.00
    )
    
    $
    0.03Weighted average number of common shares:Basic and diluted
    
    
    6,135,599
    
    
    
    6,193,364
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
Condensed Statements of Cash Flows (Consolidated)
For the Three Months Ended March 31, 2007 and 2006
 2007
    
    
    2006Cash flows from operating activitiesNet income
(loss)
    
    $
    (17,202
    )
    
    $
    197,182Adjustments
to reconcile net income (loss) to
net cash used in operating activities:Depreciation
    
    
    11,978
    
    
    
    13,773Amortization
    
    
    3,936
    
    
    
    3,998Changes in operating assets and liabilitiesAccounts receivable
    
    
    (420,648
    )
    
    
    (842,515
    )Due from factor
    
    
    828,349
    
    
    
    760,892Inventories
    
    
    (127,695
    )
    
    
    128,685Advances to employees
    
    
    (12,272
    )
    
    
    (10,704
    )Prepaid expenses and deferred charges
    
    
    (24,599
    )
    
    
    (94,151
    )Income taxes receivable
    
    
    (7,608
    )
    
    
    Deposits
    
    
    (6,696
    )
    
    
    Accounts payable
    
    
    (490,664
    )
    
    
    37,245Accrued payroll tax withholdings
    
    
    1,587
    
    
    
    (3,928
    )Accrued expenses other
    
    
    123,482
    
    
    
    (5,074
    )Income taxes payable
    
    
    
    
    
    
    (253,189
    )Net cash used in operating activities
    
    
    (138,052
    )
    
    
    (67,786
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (63,182
    )
    
    
    (9,108
    )Payments for patents and trademarks
    
    
    (1,755
    )
    
    
    (3,280
    )Net payments (advances) on notes receivable  stockholder
    
    
    (45,001
    )
    
    
    6,773Net cash
used in investing activities
    
    
    (109,938
    )
    
    
    (5,615
    )Cash flows from financing activitiesPayments on notes payable
    
    
    (10,330
    )
    
    
    (10,907
    )Net cash used in financing activities
    
    
    (10,330
    )
    
    
    (10,907
    )Decrease in cash
    
    
    (258,320
    )
    
    
    (84,308
    )Cash  beginning of period
    
    
    338,968
    
    
    
    130,886Cash  end of period
    
    $
    80,648
    
    
    $
    46,578
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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
  7




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.
 Use
of Estimates
  Inventories
  March 31, 2007Inventories consist of:Finished goods
    
    $
    2,774,570Inventory in transit
    
    
    460,983Parts
    
    
    22,967$
    3,258,520
 Due
from Factor
  March 31, 2007Accounts
receivable factored
    
    $
    2,079,761Amounts
advanced and outstanding
    
    $
    1,625,902Due from factor
    
    $
    453,859
 Earnings per Share: Dilutive Effect
  Accounting
Changes
  Subsequent
event
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  8




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
    
    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 manufacturing and operating costs; and
    
    continued availability of financing, and financial resources on the terms required to
support the Companys future business strategies.
  
 Background
 Summary
  9




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Details
   :
 
    
    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.
    10




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Gun Maintenance.
  Hunting and camping.
 Gun Safety.
 Other Products.
 
 Financial Condition and Results of Operations
 Results of Operations
  renminbi
  11




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Financial Condition
  Mar.31, 2007
    
    
    Dec. 31, 2006Accounts receivable
    
    $
    952,676
    
    
    $
    532,028Due from factor
    
    
    453,859
    
    
    
    1,282,208Inventories
    
    
    3,258,520
    
    
    
    3,130,825Total current assets
    
    
    5,293,507
    
    
    
    5,799,626Accounts payable
    
    
    1,149,781
    
    
    
    1,640,445Total current liabilities
    
    
    1,529,749
    
    
    
    1,905,674Working capital
    
    
    3,763,758
    
    
    
    3,893,952Stockholders equity
    
    
    4,461,599
    
    
    
    4,478,801
  Mar. 31, 2007
    
    
    Dec. 31, 2006Total accounts receivable
    
    $
    3,032,437
    
    
    $
    5,633,811Less: assigned receivables
    
    
    (2,079,761
    )
    
    
    (5,101,783
    )Net accounts receivables
    
    $
    952,676
    
    
    $
    532,028Assigned receivables
    
    $
    2,079,761
    
    
    $
    5,101,783Less: Funds advanced
    
    
    (1,625,902
    )
    
    
    (3,819,575
    )Due from factor
    
    $
    453,859
    
    
    $
    1,282,208
    12




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Liquidity and Capital Resources
  
 Trends
  
 Gun Legislation
    
 Critical Accounting Estimates
  13




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Long-lived Assets
  Inventories.
 Patents and Trademarks.
 
 Off-Balance Sheet Arrangements
   14




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ITEM 3.
    
    CONTROLS AND PROCEDURES
 
 Evaluation of Disclosure Controls and Procedures
  
 Definition of Disclosure Controls
  
 Limitations on the Effectiveness of Controls
   
 Conclusions
  15




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Changes in Internal Controls
  
 Sarbanes-Oxley Section 404 Compliance
   
 PART II
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  16




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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
  
 ITEM 5.
    
    OTHER INFORMATION
  17




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ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
  Exhibits2
    
    
    Acquisition Agreement3
    (i)
    
    Articles of Incorporation3
    (ii)
    
    By-laws
  Exhibits31.1
    
    
    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  18