##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 x
  o
 
  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
    
    72210(Address of principal executive offices)
    
    (Zip Code)
 
  x o x o
  Large accelerated filer o
    
    Accelerated filer oNon-accelerated filer o
    
    Smaller reporting company x
 o x
  o x




---



##### 



TABLE OF CONTENTS
 PART I FINANCIAL INFORMATION
    
    
    1ITEM 1.
    
    FINANCIAL STATEMENTS
    
    
    1PART F/S
    
    
    7ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    11Background
    
    
    12Financial Condition and Results of Operations
    
    
    13Liquidity and Capital Resources
    
    
    14Trends
    
    
    14Gun Legislation
    
    
    15Critical Accounting Estimates
    
    
    16Off-Balance Sheet Arrangements
    
    
    16ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    17ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    17ITEM 4T.
    
    CONTROLS AND PROCEDURES
    
    
    17PART II
    
    OTHER INFORMATION
    
    
    18ITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    18ITEM 1A.
    
    RISK FACTORS
    
    
    18ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    18ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    18ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    18ITEM 5.
    
    OTHER INFORMATION
    
    
    18ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
    
    
    19SIGNATURES
    
    
    19EX-31.1EX-31.2EX-32.1EX-32.2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  1




---



##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Balance Sheet
June 30, 2009 and December 31, 2008
 June 30
    
    
    December 312009
    
    
    2008(unaudited)AssetsCurrent assetsCash
    
    $
    69,026
    
    
    $
    599,103Accounts receivable, less allowance for doubtful
accounts of $20,000 in 2009 and 2008
    
    
    610,838
    
    
    
    495,718Due from factor
    
    
    524,170
    
    
    
    1,542,918Inventories
    
    
    5,399,082
    
    
    
    2,742,563Prepaid expenses and deferred charges
    
    
    108,184
    
    
    
    72,068Current deferred income tax benefit
    
    
    31,019
    
    
    
    31,019Total current assets
    
    
    6,742,319
    
    
    
    5,483,389Property and equipmentLeasehold improvements
    
    
    57,232
    
    
    
    55,323Furniture and fixtures
    
    
    311,330
    
    
    
    297,356Molds, dies, and artwork
    
    
    549,530
    
    
    
    536,809918,092
    
    
    
    889,488Accumulated depreciation
    
    
    (648,149
    )
    
    
    (623,477
    )Net property and equipment
    
    
    269,943
    
    
    
    266,011Other assetsPatents and trademarks, net of accumulated
amortization of $127,078 and $119,772 in 2009 and 2008
    
    
    115,202
    
    
    
    121,718Deposits
    
    
    17,351
    
    
    
    17,351Advances to employees
    
    
    35,011
    
    
    
    28,617Note receivableLong-term
    
    
    20,000
    
    
    
    20,000Related party
    
    
    72,518
    
    
    
    72,518Shareholder
    
    
    220,644
    
    
    
    170,382Total other assets
    
    
    480,726
    
    
    
    430,586Total assets
    
    $
    7,492,988
    
    
    $
    6,179,986
  2




---



##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Balance Sheet
June 30, 2009 and December 31, 2008
 June 30
    
    
    December 312009
    
    
    2008(unaudited)Liabilities and Stockholders EquityCurrent liabilitiesNotes payable
    
    $
    80,155
    
    
    $
    104,609Accounts payable
    
    
    1,838,194
    
    
    
    795,136Accrued payroll tax withholdings
    
    
    26,660
    
    
    
    25,519Accrued expenses-other
    
    
    43,621
    
    
    
    92,850Income taxes payable
    
    
    148,240
    
    
    
    89,700Total current liabilities
    
    
    2,136,870
    
    
    
    1,107,814Deferred income tax liability
    
    
    66,574
    
    
    
    66,574Stockholders 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
June 30, 2009 and December 31, 2008; 5,793,699
and 5,882,999 shares outstanding at June 30, 2009
and December 31, 2008, respectively
    
    
    6,323
    
    
    
    6,323Additional paid-in capital
    
    
    1,963,102
    
    
    
    1,963,102Treasury stock, at cost
    
    
    (401,043
    )
    
    
    (372,124
    )Retained earnings
    
    
    3,721,162
    
    
    
    3,408,297Total stockholders equity
    
    
    5,289,544
    
    
    
    5,005,598Total liabilities and stockholders equity
    
    $
    7,492,988
    
    
    $
    6,179,986
  3




---



##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Operations
For The Three Months Ended June 30, 2009 and 2008
 2009
    
    
    2008Net sales
    
    $
    3,143,041
    
    
    $
    2,724,258Cost of sales
    
    
    2,195,174
    
    
    
    2,043,077Gross profit
    
    
    947,867
    
    
    
    681,181Operating expensesSelling
    
    
    399,352
    
    
    
    336,131General and administrative
    
    
    298,514
    
    
    
    287,764Total operating expenses
    
    
    697,866
    
    
    
    623,895Income from operations
    
    
    250,001
    
    
    
    57,286Other income (expense)Interest expense
    
    
    (41,265
    )
    
    
    (43,579
    )Total other income (expense)
    
    
    (41,265
    )
    
    
    (43,579
    )Income before income tax provision
    
    
    208,736
    
    
    
    13,707Provision for income taxes
    
    
    80,170
    
    
    
    5,617Net income
    
    $
    128,566
    
    
    $
    8,090Basic and diluted earnings per share
    
    $
    0.02
    
    
    $
    Weighted average number of common shares:Basic and diluted
    
    
    5,793,699
    
    
    
    6,032,899
  4




---



##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Operations
For The Six Months Ended June 30, 2009 and 2008
 2009
    
    
    2008Net sales
    
    $
    6,676,498
    
    
    $
    5,440,027Cost of sales
    
    
    4,656,934
    
    
    
    4,029,985Gross profit
    
    
    2,019,564
    
    
    
    1,410,042Operating expensesSelling
    
    
    845,140
    
    
    
    651,893General and administrative
    
    
    576,564
    
    
    
    569,351Total operating expenses
    
    
    1,421,704
    
    
    
    1,221,244Income from operations
    
    
    597,860
    
    
    
    188,798Other income (expense)Interest expense
    
    
    (88,319
    )
    
    
    (106,456
    )Other income
    
    
    14
    
    
    
    0Total other income (expense)
    
    
    (88,305
    )
    
    
    (106,456
    )Income before income tax provision
    
    
    509,555
    
    
    
    82,342Provision for income taxes
    
    
    196,690
    
    
    
    32,278Net income
    
    $
    312,865
    
    
    $
    50,064Basic and diluted earnings per share
    
    $
    0.05
    
    
    $
    0.01Weighted average number of common shares:Basic and diluted
    
    
    5,825,528
    
    
    
    6,034,534
  5




---



##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2009 and 2008
 2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    312,865
    
    
    $
    50,064Adjustments to reconcile net income to
net cash used in operating activities:Depreciation
    
    
    24,672
    
    
    
    24,342Amortization
    
    
    7,306
    
    
    
    7,734Changes in operating assets and liabilitiesAccounts receivable
    
    
    (115,120
    )
    
    
    (311,233
    )Due from factor
    
    
    1,018,748
    
    
    
    462,812Inventories
    
    
    (2,656,519
    )
    
    
    563,691Prepaid expenses and deferred charges
    
    
    (36,116
    )
    
    
    (40,390
    )Income taxes receivable
    
    
    
    
    
    
    32,278Advances to employees
    
    
    (6,394
    )
    
    
    (1,650
    )Accounts payable
    
    
    1,043,058
    
    
    
    (1,009,446
    )Accrued payroll tax withholdings
    
    
    1,141
    
    
    
    13Accrued expenses other
    
    
    (49,229
    )
    
    
    (20,984
    )Income taxes payable
    
    
    58,540
    
    
    
    Net cash used in operating activities
    
    
    (397,048
    )
    
    
    (242,769
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (28,604
    )
    
    
    (29,942
    )Payments for patents and trademarks
    
    
    (790
    )
    
    
    (3,520
    )Net payments (advances) on notes receivable  stockholder
    
    
    (50,262
    )
    
    
    4,743Net cash used by investing activities
    
    
    (79,656
    )
    
    
    (28,719
    )Cash flows from financing activitiesPayments on notes payable
    
    
    (24,454
    )
    
    
    (55,235
    )Purchase of treasury stock
    
    
    (28,919
    )
    
    
    (6,800
    )Net cash used in financing activities
    
    
    (53,373
    )
    
    
    (62,035
    )Net decrease in cash
    
    
    (530,077
    )
    
    
    (333,523
    )Cash  beginning of period
    
    
    599,103
    
    
    
    402,468Cash  end of period
    
    $
    69,026
    
    
    $
    68,945
  6




---



##### Table of Contents



PART F/S
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
SELECTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Forward-Looking Statements
  Nature of Business
    7




---



##### Table of Contents



Organization and Summary of Significant Accounting Policies
 Organization and basis of presentation
  Unaudited interim condensed consolidated financial statements
  Use of Estimates
  Inventories
  June 30, 2009
    
    
    Dec. 31, 2008Inventories consist of:Finished goods
    
    $
    4,476,438
    
    
    $
    2,314,319Inventory in transit
    
    
    898,406
    
    
    
    415,102Parts
    
    
    24,238
    
    
    
    13,142$
    5,399,082
    
    
    $
    2,742,563
 8




---



##### Table of Contents



Due from Factor
  June 30, 2009
    
    
    Dec. 31, 2008Accounts receivable factored
    
    $
    1,940,729
    
    
    $
    4,724,918Amounts advanced and outstanding
    
    
    1,416,559
    
    
    
    3,182,000Due from factor
    
    $
    524,170
    
    
    $
    1,542,918
 
 Earnings per Share: Dilutive Effect
  Fair Value of Financial Instruments
  New Accounting Pronouncements Adopted
  9




---



##### Table of Contents



Treasury Stock Transactions
  10




---



##### Table of Contents



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 manufacturing and operating costs; and
    
    continued availability of financing, and financial resources on the terms required to
support the Companys future business strategies.
  11




---



##### Table of Contents



Gun Maintenance.
 Hunting and camping.
 Gun Safety.
 Household Products.
 12




---



##### Table of Contents



Financial Condition
   Results of Operations
           13




---



##### Table of Contents



14




---



##### Table of Contents



District of Columbia vs. Heller
   15




---



##### Table of Contents



Long-lived Assets
  Inventories.
 Patents and Trademarks.
 
    16




---



##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   
 Item 4T.
    
    CONTROLS AND PROCEDURES.
  17




---



##### Table of Contents



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
  
 ITEM 5.
    
    OTHER INFORMATION
  18




---



##### Table of Contents



ITEM 6.
    
    EXHIBITS
  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 Officer By:
    /s/ Robert C. GoodwinRobert C. Goodwin, Principal Accounting Officer and Principal Financial Officer  19