##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM
10-QSB/A
 Amendment No. 1
 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
(Address of principal executive offices)
    
    72210
(Zip Code)
 
  þ o þ o
 o þ
  o þ




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##### Table of Contents



TABLE OF CONTENTS
 PART I
    
    
    3ITEM 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
    
    
    19Off-Balance Sheet Arrangements
    
    
    20ITEM 3. CONTROLS AND PROCEDURES
    
    
    20Evaluation of Disclosure Controls and Procedures
    
    
    20Definition of Disclosure Controls
    
    
    20Limitations on the Effectiveness of Controls
    
    
    20Conclusions
    
    
    21Changes in Internal Controls
    
    
    21Sarbanes-Oxley Section 404 Compliance
    
    
    21PART II
    
    
    22ITEM 1. LEGAL PROCEEDINGS
    
    
    22ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    23ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    23ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    23ITEM 5. OTHER INFORMATION
    
    
    23ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
    
    
    23SIGNATURES
    
    
    24EX-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
 EXPLANATORY NOTE
  2




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PART I
 
 ITEM 1. FINANCIAL STATEMENTS
 .
 3




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 June 30, 2006
 (Restated)AssetsCurrent assetsCash
    
    $
    356,024Accounts receivable, less allowance for doubtful
accounts of $5,000
    
    
    1,420,850Due from factor
    
    
    552,638Inventories
    
    
    3,507,054Income taxes receivable
    
    
    99,325Prepaid expenses and deferred charges
    
    
    132,796Current deferred income tax benefit
    
    
    32,943Total current assets
    
    
    6,101,630Property and equipmentLeasehold improvements
    
    
    29,049Furniture and fixtures
    
    
    209,557Molds, dies, and artwork
    
    
    504,283742,889Accumulated depreciation
    
    
    (524,040
    )Net property and equipment
    
    
    218,849Other assetsPatents and trademarks, net of
accumulated amortization of $80,537
    
    
    155,679Deposits
    
    
    1,435Advances to employees
    
    
    27,634Note receivable  related party
    
    
    72,945Note receivable  stockholder
    
    
    102,769Total other assets
    
    
    360,462Total assets
    
    $
    6,680,941
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Balance Sheet (Consolidated)
 June 30, 2006
  (Restated)Liabilities and Stockholders EquityCurrent liabilitiesNotes payable
    
    $
    212,705Accounts payable
    
    
    2,378,674Accrued payroll tax withholdings
    
    
    30,864Accrued expenses-other
    
    
    10,137Total current liabilities
    
    
    2,632,380Deferred 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
    
    
    2,247,369Total stockholders equity
    
    
    4,015,461Total liabilities and stockholders equity
    
    $
    6,680,941
  5




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Operations (Consolidated)
 For The Six Months Ended June 30, 2006 and 2005
  (Restated)2006
    
    
    2005Net sales
    
    $
    5,480,366
    
    
    $
    4,527,240Cost of sales
    
    
    3,724,465
    
    
    
    2,911,277Gross profit
    
    
    1,755,901
    
    
    
    1,615,963Operating expensesSelling
    
    
    659,331
    
    
    
    517,890General and administrative
    
    
    510,112
    
    
    
    443,319Total operating expenses
    
    
    1,169,443
    
    
    
    961,209Income from operations
    
    
    586,458
    
    
    
    654,754Other income (expense)Interest expense
    
    
    (110,871
    )
    
    
    (76,608
    )Total other income (expense)
    
    
    (110,871
    )
    
    
    (76,608
    )Income before income tax provision
    
    
    475,587
    
    
    
    578,146Provision for income taxes
    
    
    186,089
    
    
    
    225,054Net income
    
    $
    289,498
    
    
    $
    353,092Basic and diluted earnings per share
    
    $
    0.05
    
    
    $
    0.06Weighted-average number of sharesBasic
    
    
    6,181,556
    
    
    
    6,186,389Diluted
    
    
    6,181,556
    
    
    
    6,226,146
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Operations (Consolidated)
 For The Three Months Ended June 30, 2006 and 2005
  (Restated)2006
    
    
    2005Net sales
    
    $
    2,717,169
    
    
    $
    2,264,162Cost of sales
    
    
    1,932,054
    
    
    
    1,453,107Gross profit
    
    
    785,115
    
    
    
    811,055Operating expensesSelling
    
    
    318,542
    
    
    
    241,072General and administrative
    
    
    263,843
    
    
    
    234,049Total operating expenses
    
    
    582,385
    
    
    
    475,121Income from operations
    
    
    202,730
    
    
    
    335,934Other income (expense)Interest expense
    
    
    (51,136
    )
    
    
    (30,547
    )Total other income (expense)
    
    
    (51,136
    )
    
    
    (30,547
    )Income before income tax provision
    
    
    151,594
    
    
    
    305,387Provision for income taxes
    
    
    59,278
    
    
    
    118,737Net income
    
    $
    92,316
    
    
    $
    186,650Basic and diluted earnings per share
    
    $
    0.01
    
    
    $
    0.03Weighted-average number of sharesBasic and diluted
    
    
    6,169,877
    
    
    
    6,191,853
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Cash Flows (Consolidated)
 For the Six Months Ended June 30, 2006 and 2005
  (Restated)2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    289,498
    
    
    $
    353,092Adjustments to reconcile net income to
net cash provided by operating activities:Issuance of common stock for services
    
    
    
    
    
    
    32,625Depreciation
    
    
    27,773
    
    
    
    26,808Amortization
    
    
    8,098
    
    
    
    7,998Deferred income taxes
    
    
    (5,743
    )
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    (728,160
    )
    
    
    (703,103
    )Due from factor
    
    
    760,980
    
    
    
    1,106,817Inventories
    
    
    (802,744
    )
    
    
    (196,653
    )Advances to employees
    
    
    (12,851
    )
    
    
    (17,671
    )Prepaid expenses and deferred charges
    
    
    (63,223
    )
    
    
    (103,984
    )Accounts payable
    
    
    1,397,632
    
    
    
    (151,188
    )Accrued payroll tax withholdings
    
    
    1,401
    
    
    
    1,604Accrued expenses other
    
    
    (20,401
    )
    
    
    (13,212
    )Income taxes payable
    
    
    (480,168
    )
    
    
    (217,946
    )Net cash provided by operating activities
    
    
    372,092
    
    
    
    125,187Cash flows from investing activitiesPurchases of property and equipment
    
    
    (12,595
    )
    
    
    (16,473
    )Payments for patents and trademarks
    
    
    (7,246
    )
    
    
    Net advances on note receivable  related party
    
    
    (427
    )
    
    
    Net advances on note receivable  stockholder
    
    
    (3,238
    )
    
    
    (37,361
    )Purchase of treasury stock
    
    
    (99,933
    )
    
    
    Net cash used by investing activities
    
    
    (123,439
    )
    
    
    (53,834
    )Cash flows from financing activitiesPayments on notes payable
    
    
    (23,515
    )
    
    
    (26,657
    )Net cash used by financing activities
    
    
    (23,515
    )
    
    
    (26,657
    )Increase in cash
    
    
    225,138
    
    
    
    44,696Cash  beginning of period
    
    
    130,886
    
    
    
    167,846Cash  end of period
    
    $
    356,024
    
    
    $
    212,542
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Statements of Cash Flows (Consolidated)
 For the Three Months Ended June 30, 2006 and 2005
  (Restated)2006
    
    
    2005Cash flows from operating activitiesNet income
    
    $
    92,316
    
    
    $
    186,650Adjustments to reconcile net income to
net cash provided by operating activities:Issuance of common stock for services
    
    
    
    
    
    
    32,625Depreciation
    
    
    14,000
    
    
    
    13,536Amortization
    
    
    4,100
    
    
    
    3,999Deferred income taxes
    
    
    (5,743
    )
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    114,355
    
    
    
    (629,336
    )Due from factor
    
    
    88
    
    
    
    332,541Inventories
    
    
    (931,429
    )
    
    
    (230,838
    )Advances to employees
    
    
    (2,147
    )
    
    
    (1,496
    )Prepaid expenses and deferred charges
    
    
    30,928
    
    
    
    (23,665
    )Accounts payable
    
    
    1,360,387
    
    
    
    343,107Accrued payroll tax withholdings
    
    
    5,329
    
    
    
    1,337Accrued expenses other
    
    
    (15,327
    )
    
    
    (13,610
    )Income taxes payable
    
    
    (226,979
    )
    
    
    28,738Net cash provided by operating activities
    
    
    439,878
    
    
    
    43,588Cash flows from investing activitiesPurchases of property and equipment
    
    
    (3,487
    )
    
    
    (10,480
    )Payments for patents and trademarks
    
    
    (3,966
    )
    
    
    Net advances on note receivable  related party
    
    
    (427
    )
    
    
    Net advances on note receivable  stockholder
    
    
    (10,011
    )
    
    
    13,519Purchase of treasury stock
    
    
    (99,933
    )
    
    
    Net cash provided (used) by investing activities
    
    
    (117,824
    )
    
    
    3,039Cash flows from financing activitiesPayments on notes payable
    
    
    (12,608
    )
    
    
    (13,393
    )Net cash used by financing activities
    
    
    (12,608
    )
    
    
    (13,393
    )Increase in cash
    
    
    309,446
    
    
    
    33,234Cash  beginning of period
    
    
    46,578
    
    
    
    179,308Cash  end of period
    
    $
    356,024
    
    
    $
    212,542
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PART F/S
 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 SELECTED NOTES TO 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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Inventories
  (Restated)
June 30,2006Inventories consist of:Finished goods
    
    $
    2,424,352Inventory in transit
    
    
    1,059,735Parts
    
    
    22,967$
    3,507,054
 Restatement
  Inventory cost adjustment, net of tax effect
    
    $
    113,580Total reduction in quarter ended June 30, 2006 earnings
    
    $
    113,580
   Previously
    
    
    IncreaseReported
    
    
    (Decrease)
    
    
    RestatedInventories
    
    $
    3,691,108
    
    
    $
    (184,054
    )
    
    $
    3,507,054Income taxes receivable
    
    
    28,851
    
    
    
    70,474
    
    
    
    99,325Total current assets
    
    
    6,215,210
    
    
    
    (113,580
    )
    
    
    6,101,630Total assets
    
    
    6,794,521
    
    
    
    (113,580
    )
    
    
    6,680,941Retained earnings
    
    
    2,360,949
    
    
    
    (113,580
    )
    
    
    2,247,369Total stockholders equity
    
    
    4,129,041
    
    
    
    (113,580
    )
    
    
    4,015,461Total
liabilities and stockholders equity
    
    
    6,794,521
    
    
    
    (113,580
    )
    
    
    6,680,941
  Previously
    
    
    IncreaseReported
    
    
    (Decrease)
    
    
    RestatedCost of sales
    
    $
    3,540,411
    
    
    $
    184,054
    
    
    $
    3,724,465Gross profit
    
    
    1,939,955
    
    
    
    (184,054
    )
    
    
    1,755,901Income from operations
    
    
    770,512
    
    
    
    (184,054
    )
    
    
    586,458Income before income tax provision
    
    
    659,641
    
    
    
    (184,054
    )
    
    
    475,587Provision for income taxes
    
    
    256,563
    
    
    
    (70,474
    )
    
    
    186,089Net income
    
    
    403,078
    
    
    
    (113,580
    )
    
    
    289,498Basic and diluted earnings per share
    
    
    0.07
    
    
    
    (0.02
    )
    
    
    0.05
 Earnings per Share
  Three Months Ended
    
    
    Six Months Ended2006
    
    
    2005
    
    
    2006
    
    
    2005(Restated)
    
    
    
    
    
    (Restated)Numerator:Net income
    
    $
    92,316
    
    
    $
    186,650
    
    
    $
    289,498
    
    
    $
    353,092Denominator:Weighted average
common
shares for
basic
calculation
    
    
    6,169,877
    
    
    
    6,191,853
    
    
    
    6,181,556
    
    
    
    6,186,389Weighted average
effect of dilutive
securities:Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,757Denominator for
diluted calculation
    
    
    6,169,877
    
    
    
    6,191,853
    
    
    
    6,181,556
    
    
    
    6,226,146Earnings per share-
basic
    
    $
    0.01
    
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    0.06Earnings per share-
diluted
    
    $
    0.01
    
    
    $
    0.03
    
    
    $
    0.05
    
    
    $
    0.06
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Equity Transactions
  
 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;
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
    
    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
   Details
   :
 
    
    increased penetration of our existing markets, particularly in the gun cleaning
and accessories market;
    
    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;
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
    
    adoption of new technologies for safety and security products and
adoption of new product lines;
    
    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.
 Gun Safety.
 Personal Security.
 Non-Security Products.
 www.dactec.com)
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Results of Operations
       Financial Condition
  (Restated)June 30, 2006
    
    
    Dec. 31, 2005Accounts receivable
    
    $
    1,420,850
    
    
    $
    692,690Due from factor
    
    
    552,638
    
    
    
    1,313,618Inventories
    
    
    3,507,054
    
    
    
    2,704,310Total current assets
    
    
    6,101,630
    
    
    
    4,920,677Accounts payable
    
    
    2,378,674
    
    
    
    981,042Total current liabilities
    
    
    2,632,380
    
    
    
    1,658,106Working capital
    
    
    3,469,250
    
    
    
    3,262,571Stockholders
equity
    
    
    4,015,461
    
    
    
    3,825,896
  15




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Jun 30, 2006
    
    
    Dec. 31, 2005Total accounts receivable
    
    $
    3,423,804
    
    
    $
    5,512,193Less: assigned receivables
    
    
    (2,002,954
    )
    
    
    (4,819,503
    )Net accounts receivables
    
    $
    1,420,850
    
    
    $
    692,690Assigned receivables
    
    $
    2,002,954
    
    
    $
    4,819,503Less: Funds advanced
    
    
    (1,450,316
    )
    
    
    (3,505,885
    )Due from factor
    
    $
    552,638
    
    
    $
    1,313,618
 
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Long-lived Assets
  Inventories.
 Patents and Trademarks.
 19




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ITEM 3. CONTROLS AND PROCEDURES
 
   
   
   20




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PART II
 
 ITEM 1. LEGAL PROCEEDINGS
       22




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Legel v. DAC Technologies Group International, Inc., et al,
 
 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
  Exhibits2
    
    Acquisition Agreement3(i)
    
    Articles of Incorporation3(ii)
    
    By-laws
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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  24