##### Table of Contents



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 September 30, 2009
 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
    
    (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
 Yes
o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o Yes þ No
  o þ




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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
      
      10Background
      
      11Financial Condition and Results of Operations
      
      12Liquidity and Capital Resources
      
      13Trends
      
      14Gun Legislation
      
      14Critical Accounting Estimates
      
      15Off-Balance Sheet Arrangements
      
      16ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      
      16ITEM 4. CONTROLS AND PROCEDURES
      
      16ITEM 4T. CONTROLS AND PROCEDURES
      
      16PART II OTHER INFORMATION
      
      17ITEM 1. LEGAL PROCEEDINGS
      
      17ITEM 1A. RISK FACTORS
      
      17ITEM 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
      
      17SIGNATURES
      
      18Exhibit 10Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
   1




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Balance Sheet
 September 30, 2009 and December 31, 2008
 Sept. 30,
    
    
    Dec. 31,2009
    
    
    2008(unaudited)AssetsCurrent assetsCash
    
    $
    212,325
    
    
    $
    599,103Accounts receivable, less allowance for doubtful
accounts of $20,000 in 2009 and 2008
    
    
    682,479
    
    
    
    495,718Due from factor
    
    
    4,913
    
    
    
    1,542,918Inventories
    
    
    6,502,796
    
    
    
    2,742,563Prepaid expenses and deferred charges
    
    
    73,095
    
    
    
    72,068Current deferred income tax benefit
    
    
    31,019
    
    
    
    31,019Total current assets
    
    
    7,506,627
    
    
    
    5,483,389Property and equipmentLeasehold improvements
    
    
    57,232
    
    
    
    55,323Furniture and fixtures
    
    
    314,902
    
    
    
    297,356Molds, dies, and artwork
    
    
    555,052
    
    
    
    536,809927,186
    
    
    
    889,488Accumulated depreciation
    
    
    (660,827
    )
    
    
    (623,477
    )Net property and equipment
    
    
    266,359
    
    
    
    266,011Other assetsPatents and trademarks, net of accumulated
amortization of $131,518 and $119,772 in 2009 and 2008
    
    
    121,262
    
    
    
    121,718Deposits
    
    
    17,351
    
    
    
    17,351Advances to employees
    
    
    33,923
    
    
    
    28,617Note receivableLong-term
    
    
    20,000
    
    
    
    20,000Related party
    
    
    72,518
    
    
    
    72,518Shareholder
    
    
    253,263
    
    
    
    170,382Total other assets
    
    
    518,317
    
    
    
    430,586Total assets
    
    $
    8,291,303
    
    
    $
    6,179,986
   2




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Balance Sheet
 September 30, 2009 and December 31, 2008
 Sept. 30,
    
    
    Dec. 31,2009
    
    
    2008(unaudited)Liabilities and Stockholders EquityCurrent liabilitiesNotes payable
    
    $
    417,611
    
    
    $
    104,609Accounts payable
    
    
    2,174,836
    
    
    
    795,136Accrued payroll tax withholdings
    
    
    26,790
    
    
    
    25,519Accrued expenses-other
    
    
    46,948
    
    
    
    92,850Income taxes payable
    
    
    195,625
    
    
    
    89,700Total current liabilities
    
    
    2,861,810
    
    
    
    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
Sept. 30, 2009 and Dec. 31, 2008; 5,793,699
and 5,882,999 shares outstanding at Sept. 30, 2009
and Dec. 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
    
    
    3,794,537
    
    
    
    3,408,297Total stockholders equity
    
    
    5,362,919
    
    
    
    5,005,598Total liabilities and stockholders equity
    
    $
    8,291,303
    
    
    $
    6,179,986
   3




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##### Table of Contents



DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Operations
 For The Three Months Ended September 30, 2009 and 2008
 2009
    
    
    2008Net sales
    
    $
    3,098,202
    
    
    $
    3,920,460Cost of sales
    
    
    2,221,830
    
    
    
    2,999,174Gross profit
    
    
    876,372
    
    
    
    921,286Operating expensesSelling
    
    
    408,310
    
    
    
    409,518General and administrative
    
    
    305,634
    
    
    
    279,278Total operating expenses
    
    
    713,944
    
    
    
    688,796Income from operations
    
    
    162,428
    
    
    
    232,490Other income (expense)Interest expense
    
    
    (41,668
    )
    
    
    (63,893
    )Total other income (expense)
    
    
    (41,668
    )
    
    
    (63,893
    )Income before income tax provision
    
    
    120,760
    
    
    
    168,597Provision for income taxes
    
    
    47,385
    
    
    
    85,113Net income
    
    $
    73,375
    
    
    $
    83,484Basic and diluted earnings per share
    
    $
    0.01
    
    
    $
    0.01Weighted average number of common shares:Basic and diluted
    
    
    5,793,699
    
    
    
    6,032,899
   4




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Operations
 For The Nine Months Ended September 30, 2009 and 2008
 2009
    
    
    2008Net sales
    
    $
    9,774,700
    
    
    $
    9,360,487Cost of sales
    
    
    6,878,764
    
    
    
    7,029,159Gross profit
    
    
    2,895,936
    
    
    
    2,331,328Operating expensesSelling
    
    
    1,253,450
    
    
    
    1,061,411General and administrative
    
    
    882,198
    
    
    
    848,629Total operating expenses
    
    
    2,135,648
    
    
    
    1,910,040Income from operations
    
    
    760,288
    
    
    
    421,288Other income (expense)Interest expense
    
    
    (129,987
    )
    
    
    (170,349
    )Other income
    
    
    14
    
    
    
    0Total other income (expense)
    
    
    (129,973
    )
    
    
    (170,349
    )Income before income tax provision
    
    
    630,315
    
    
    
    250,939Provision for income taxes
    
    
    244,075
    
    
    
    117,391Net income
    
    $
    386,240
    
    
    $
    133,548Basic and diluted earnings per share
    
    $
    0.07
    
    
    $
    0.02Weighted average number of common shares:Basic and diluted
    
    
    5,814,802
    
    
    
    6,033,985
   5




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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
 Condensed Consolidated Statements of Cash Flows
 For the Nine Months Ended September 30, 2009 and 2008
 2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    386,240
    
    
    $
    133,548Adjustments to reconcile net income to
net cash used in operating activities:Depreciation
    
    
    37,350
    
    
    
    36,513Amortization
    
    
    11,746
    
    
    
    11,601Deferred income tax liability
    
    
    
    
    
    
    20,000Changes in operating assets and liabilitiesAccounts receivable
    
    
    (186,761
    )
    
    
    (486,369
    )Due from factor
    
    
    1,538,005
    
    
    
    367,265Inventories
    
    
    (3,760,233
    )
    
    
    (523,916
    )Prepaid expenses and deferred charges
    
    
    (1,027
    )
    
    
    7,136Income taxes receivable
    
    
    
    
    
    
    97,391Advances to employees
    
    
    (5,306
    )
    
    
    (1,767
    )Accounts payable
    
    
    1,379,700
    
    
    
    101,657Accrued payroll tax withholdings
    
    
    1,271
    
    
    
    465Accrued expenses other
    
    
    (45,902
    )
    
    
    (6,029
    )Income taxes payable
    
    
    105,925
    
    
    
    Net cash used in operating activities
    
    
    (538,992
    )
    
    
    (242,505
    )Cash flows from investing activitiesPurchases of property and equipment
    
    
    (37,698
    )
    
    
    (40,994
    )Payments for patents and trademarks
    
    
    (11,290
    )
    
    
    (3,520
    )Net payments (advances) on notes receivable  stockholder
    
    
    (82,881
    )
    
    
    4,085Net cash used by investing activities
    
    
    (131,869
    )
    
    
    (40,429
    )Cash flows from financing activitiesNet (payments) proceeds on notes payable
    
    
    313,002
    
    
    
    (66,760
    )Purchase of treasury stock
    
    
    (28,919
    )
    
    
    (6,800
    )Net cash (used) provided by financing activities
    
    
    284,083
    
    
    
    (73,560
    )Net decrease in cash
    
    
    (386,778
    )
    
    
    (356,494
    )Cash  beginning of period
    
    
    599,103
    
    
    
    402,468Cash  end of period
    
    $
    212,325
    
    
    $
    45,974
   6




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




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Organization and Summary of Significant Accounting Policies
 Organization and basis of presentation
  Unaudited interim condensed consolidated financial statements
  Use of Estimates
  Cash and cash equivalents
  Inventories
  Sept. 30, 2009
    
    
    Dec. 31, 2008Inventories consist of:Finished goods
    
    $
    5,865,436
    
    
    $
    2,314,319Inventory in transit
    
    
    596,255
    
    
    
    415,102Parts
    
    
    41,105
    
    
    
    13,142$
    6,502,796
    
    
    $
    2,742,563
  8




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Due from Factor
  Sept. 30, 2009
    
    
    Dec. 31, 2008Accounts receivable factored
    
    $
    1,848,824
    
    
    $
    4,724,918Amounts advanced and outstanding
    
    
    1,843,911
    
    
    
    3,182,000Due from factor
    
    $
    4,913
    
    
    $
    1,542,918
  Fair Value of Financial Instruments
  New Accounting Pronouncements Adopted
 .
  Subsequent Events Evaluation Date
   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 manufacturing and operating costs; and
    
    continued availability of financing, and financial resources on the terms required to
support the Companys future business strategies.
   10




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Gun Maintenance.
 Hunting and camping.
 Gun Safety.
 Household Products.
  11




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Financial Condition
  Sept. 30, 2009
    
    
    Dec. 31, 2008Due from factor
    
    $
    4,913
    
    
    $
    1,542,918Inventories
    
    
    6,502,796
    
    
    
    2,742,563Notes payable
    
    
    417,611
    
    
    
    104,609Accounts payable
    
    
    2,174,836
    
    
    
    795,136
    Results of Operations
       12




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13




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District of Columbia vs. Heller
  Federal Assault Weapons Ban Vitter Amendment
  14




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Long-lived Assets
  Inventories.
 Patents and Trademarks.
  15




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ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
   
 ITEM 4T.
    
    CONTROLS AND PROCEDURES
   16




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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
  
 ITEM 6.
    
    EXHIBITS
  Exhibits2
    
    
    Acquisition Agreement3
    (i)
    
    Articles of Incorporation3
    (ii)
    
    By-laws
  Exhibits10
    
    
    Line of Credit and Commercial Security Agreement & Guarantee31.1
    
    
    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
  17




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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 OfficerDated: November 16, 2009
  18