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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
 For the quarterly period ended June 30, 2007
 o
    
    TRANSITION REPORT UNDER 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)12120 Colonel Glenn Road, Suite 6200 Little Rock, AR
    
    72210(Address of principal executive offices)
    
    (Zip Code)
 
  þ o þ o
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  o þ




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TABLE OF CONTENTS
 PART IITEM 1. FINANCIAL STATEMENTS

3PART F/S

10ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

12Background

13Financial Condition and Results of Operations

15Liquidity and Capital Resources

16Trends

17Gun Legislation

17Critical Accounting Estimates

17Off-Balance Sheet Arrangements

18ITEM 3. CONTROLS AND PROCEDURES

18Evaluation of Disclosure Controls and Procedures

18Definition of Disclosure Controls

19Limitations on the Effectiveness of Controls

19Conclusions

19Changes in Internal Controls

19Sarbanes-Oxley Section 404 Compliance

20PART IIITEM 1. LEGAL PROCEEDINGS

20ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

21ITEM 3. DEFAULTS UPON SENIOR SECURITIES

21ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

21ITEM 5. OTHER INFORMATION

21ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

21SIGNATURES

23EX-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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##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 June 30, 2007
 AssetsCurrent assetsCash
    
    $
    78,426Accounts receivable, less allowance for doubtful
accounts of $5,000
    
    
    1,390,991Due from factor
    
    
    322,716Inventories
    
    
    5,159,992Prepaid expenses and deferred charges
    
    
    158,471Income taxes receivable
    
    
    290,810Current deferred income tax benefit
    
    
    35,815Total current assets
    
    
    7,437,221Property and equipmentLeasehold improvements
    
    
    55,323Furniture and fixtures
    
    
    251,753Molds, dies, and artwork
    
    
    511,233818,309Accumulated depreciation
    
    
    (546,489
    )Net property and equipment
    
    
    271,820Other assetsPatents and trademarks, net of
accumulated amortization of $96,401
    
    
    141,569Deposits
    
    
    17,351Advances to employees
    
    
    39,385Note receivable  long term
    
    
    20,000Note receivable  related party
    
    
    72,518Note receivable  stockholder
    
    
    172,784Total other assets
    
    
    463,607Total assets
    
    $
    8,172,648
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 June 30, 2007
 Liabilities and Stockholders equityCurrent liabilitiesNotes payable
    
    $
    252,758Accounts payable
    
    
    3,292,506Accrued payroll tax withholdings
    
    
    25,106Accrued expenses-other
    
    
    20,818Total current liabilities
    
    
    3,591,188Deferred 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
6,113,499 shares outstanding
    
    
    6,323Additional paid-in capital
    
    
    1,963,102Treasury stock, at cost
    
    
    (230,192
    )Retained earnings
    
    
    2,809,127Total stockholders equity
    
    
    4,548,360Total liabilities and stockholders equity
    
    $
    8,172,648
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Operations (Consolidated)
 For The Six Months Ended June 30, 2007 and 2006
 2007
    
    
    2006Net sales
    
    $
    5,579,528
    
    
    $
    5,480,366Cost of sales
    
    
    3,855,627
    
    
    
    3,724,465Gross profit
    
    
    1,723,901
    
    
    
    1,755,901Operating expensesSelling
    
    
    734,616
    
    
    
    659,331General and administrative
    
    
    674,094
    
    
    
    510,112Total operating expenses
    
    
    1,408,710
    
    
    
    1,169,443Income from operations
    
    
    315,191
    
    
    
    586,458Other income (expense)Interest expense
    
    
    (136,766
    )
    
    
    (110,871
    )Total other income (expense)
    
    
    (136,766
    )
    
    
    (110,871
    )Income before income tax provision
    
    
    178,425
    
    
    
    475,587Provision for income taxes
    
    
    80,007
    
    
    
    186,089Net income
    
    $
    98,418
    
    
    $
    289,498Basic and diluted earnings per share
    
    $
    0.02
    
    
    $
    0.05Weighted-average number of sharesBasic and diluted
    
    
    6,130,018
    
    
    
    6,181,556
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Operations (Consolidated)
 For The Three Months Ended June 30, 2007 and 2006
 2007
    
    
    2006Net sales
    
    $
    2,739,903
    
    
    $
    2,717,169Cost of sales
    
    
    1,853,512
    
    
    
    1,932,054Gross profit
    
    
    886,391
    
    
    
    785,115Operating expensesSelling
    
    
    353,576
    
    
    
    318,542General and administrative
    
    
    266,374
    
    
    
    263,843Total operating expenses
    
    
    619,950
    
    
    
    582,385Income from operations
    
    
    266,441
    
    
    
    202,730Other income (expense)Interest expense
    
    
    (63,206
    )
    
    
    (51,136
    )Total other income (expense)
    
    
    (63,206
    )
    
    
    (51,136
    )Income before income tax provision
    
    
    203,235
    
    
    
    151,594Provision for income taxes
    
    
    87,615
    
    
    
    59,278Net income
    
    $
    115,620
    
    
    $
    92,316Basic and diluted earnings per share
    
    $
    0.02
    
    
    $
    0.01Weighted-average number of sharesBasic and diluted
    
    
    6,124,498
    
    
    
    6,169,877
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Cash Flows (Consolidated)
 For the Six Months Ended June 30, 2007 and 2006
 2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    98,418
    
    
    $
    289,498Adjustments to reconcile net income to
net cash provided (used) by operating activities:Depreciation
    
    
    24,023
    
    
    
    27,773Amortization
    
    
    7,936
    
    
    
    8,098Deferred income taxes
    
    
    
    
    
    
    (5,743
    )Changes in operating assets and liabilitiesAccounts receivable
    
    
    (858,963
    )
    
    
    (728,160
    )Due from factor
    
    
    959,492
    
    
    
    760,980Inventories
    
    
    (2,029,167
    )
    
    
    (802,744
    )Advances to employees
    
    
    (15,278
    )
    
    
    (12,851
    )Prepaid expenses and deferred charges
    
    
    (49,506
    )
    
    
    (63,223
    )Income taxes receivable
    
    
    80,007
    
    
    
    Deposits
    
    
    (5,916
    )
    
    
    Accounts payable
    
    
    1,652,061
    
    
    
    1,397,632Accrued payroll tax withholdings
    
    
    162
    
    
    
    1,401Accrued expenses other
    
    
    (26,734
    )
    
    
    (20,401
    )Income taxes payable
    
    
    
    
    
    
    (480,168
    )Net cash
provided (used) by operating activities
    
    
    (163,465
    )
    
    
    372,092Cash flows from investing activitiesPurchases of property and equipment
    
    
    (84,235
    )
    
    
    (12,595
    )Payments for patents and trademarks
    
    
    (1,755
    )
    
    
    (7,246
    )Net advances on note receivable  related party
    
    
    
    
    
    
    (427
    )Net advances on note receivable  stockholder
    
    
    (42,253
    )
    
    
    (3,238
    )Purchase of treasury stock
    
    
    (28,859
    )
    
    
    (99,933
    )Net cash
provided (used) by investing activities
    
    
    (157,102
    )
    
    
    (123,439
    )Cash flows from financing activitiesProceeds from notes payable
    
    
    96,500
    
    
    
    Payments on notes payable
    
    
    (36,475
    )
    
    
    (23,515
    )Net cash
provided (used) by financing activities
    
    
    60,025
    
    
    
    (23,515
    )Increase
(decrease) in cash
    
    
    (260,542
    )
    
    
    225,138Cash  beginning of period
    
    
    338,968
    
    
    
    130,886Cash  end of period
    
    $
    78,426
    
    
    $
    356,024
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Cash Flows (Consolidated)
 For the Three Months Ended June 30, 2007 and 2006
 2007
    
    
    2006Cash flows from operating activitiesNet income
    
    $
    115,620
    
    
    $
    92,316Adjustments to reconcile net income to
net cash provided (used) by operating activities:Depreciation
    
    
    12,045
    
    
    
    14,000Amortization
    
    
    4,000
    
    
    
    4,100Deferred income taxes
    
    
    
    
    
    
    (5,743
    )Changes in operating assets and liabilitiesAccounts receivable
    
    
    (438,315
    )
    
    
    114,355Due from factor
    
    
    131,143
    
    
    
    88Inventories
    
    
    (1,901,472
    )
    
    
    (931,429
    )Advances to employees
    
    
    (3,006
    )
    
    
    (2,147
    )Prepaid expenses and deferred charges
    
    
    (24,907
    )
    
    
    30,928Income taxes receivable
    
    
    87,615
    
    
    
    Deposits
    
    
    780
    
    
    
    Accounts payable
    
    
    2,142,725
    
    
    
    1,360,387Accrued payroll tax withholdings
    
    
    (1,425
    )
    
    
    5,329Accrued expenses other
    
    
    (150,216
    )
    
    
    (15,327
    )Income taxes payable
    
    
    
    
    
    
    (226,979
    )Net cash provided (used) by operating activities
    
    
    (25,413
    )
    
    
    439,878Cash flows from investing activitiesPurchases of property and equipment
    
    
    (21,053
    )
    
    
    (3,487
    )Payments for patents and trademarks
    
    
    
    
    
    
    (3,966
    )Net advances on note receivable  related party
    
    
    
    
    
    
    (427
    )Net advances on note receivable  stockholder
    
    
    2,748
    
    
    
    (10,011
    )Purchase of treasury stock
    
    
    (28,859
    )
    
    
    (99,933
    )Net cash used by investing activities
    
    
    (47,164
    )
    
    
    (117,824
    )Cash flows from financing activitiesProceeds from notes payable
    
    
    96,500
    
    
    
    Payments on notes payable
    
    
    (26,145
    )
    
    
    (12,608
    )Net cash
provided (used) by financing activities
    
    
    70,355
    
    
    
    (12,608
    )Increase
(decrease) in cash
    
    
    (2,222
    )
    
    
    309,446Cash  beginning of period
    
    
    80,648
    
    
    
    46,578Cash  end of period
    
    $
    78,426
    
    
    $
    356,024
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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
  June 30, 2007Inventories consist of:Finished goods
    
    $
    3,726,213Inventory in transit
    
    
    1,410,812Parts
    
    
    22,967$
    5,159,992
 Due from Factor
  June 30, 2007Accounts receivable factored
    
    $
    1,951,636Amounts advanced and outstanding
    
    
    1,628,920Due from factor
    
    $
    322,716
 Earnings per Share: Dilutive Effect
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Accounting Changes
  Treasury Stock Transactions
  
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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.
  
  Summary
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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.
    Gun Maintenance.
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Hunting and camping.
 Gun Safety.
 Other Products.
 
  Results of Operations
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Financial Condition
  June 30, 2007
    
    Dec. 31, 2006Accounts receivable
    
    $
    1,390,991
    
    
    $
    532,028Due from factor
    
    
    322,716
    
    
    
    1,282,208Inventories
    
    
    5,159,992
    
    
    
    3,130,825Total current assets
    
    
    7,437,221
    
    
    
    5,799,626Accounts payable
    
    
    3,292,506
    
    
    
    1,640,445Total current liabilities
    
    
    3,591,188
    
    
    
    1,905,674Working capital
    
    
    3,846,033
    
    
    
    3,893,952Stockholders equity
    
    
    4,548,360
    
    
    
    4,478,801
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Long-lived Assets
  Inventories.
 Patents and Trademarks.
 
    
 ITEM 3. CONTROLS AND PROCEDURES
 
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PART II
 
 ITEM 1. LEGAL PROCEEDINGS
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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
  
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8 K
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Exhibits
 2
    
    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
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SIGNATURES
       23