UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-KSB

[x]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
                           For the fiscal year ended December 31, 1999
                                                     -----------------

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

               For the transition period from________to __________


                        Commission File Number 000-29211
                                               ---------

                   DAC Technologies Group International, Inc.
                    -----------------------------------------
                 (Name of Small Business Issuer in its charter)

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             Florida                                                             65-0847852
             -------                                                             ----------
<S>                                                                 <C>
(State or other jurisdiction of incorporation or organization)     (I.R.S. Employer Identification No.)


3200 N. Ocean Blvd., Suite 1006, Ft. Lauderdale, FL                                   33308
---------------------------------------------------                                  ------
(Address of principal executive offices)                                           (Zip Code)
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                                 (954) 375-0119
                           (Issuer's telephone number)

              Securities registered under Section 12(b) of the Act:
                                      None
                                      ----

                    Name of each exchange on which registered
                                 Not applicable
                                 --------------

              Securities registered under Section 12(g) of the Act:
                         Common Stock, par value $0.001
                         ------------------------------


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was


<PAGE>



required to file such reports), and (2)has been subject to such filing
requirements for the past 90 days. Yes [ ] No [x]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSBor any amendment to this Form 10-KSB. [x]

         State issuer's revenues for its most recent fiscal year.   $2,136,887
                                                                    ----------

         State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days. The aggregate market value of the voting stock held by
non-affiliates as of April 1, was approximately $-0-.

            State the number of shares outstanding of each of the issuer's class
of common equity, as of the latest practicable date. As of April 1, 2000,
5,054,500 shares of Common Stock are issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB into which the document
is incorporated: (1) any annual report to security holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) of
the Securities Act of 1933 ("Securities Act"). Not Applicable.
                                               ---------------
                                       ii

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                                                 TABLE OF CONTENTS

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FORWARD-LOOKING STATEMENTS.......................................................................1

ITEM 1.  DESCRIPTION OF BUSINESS.................................................................1
                  History and Business Development...............................................1
                  Business Plan  ................................................................2
                  Products ......................................................................2
                  Competition....................................................................6
                  Principal Suppliers and Manufacturers..........................................7
                  Customers......................................................................9
                  Intellectual Property..........................................................9
                  Governmental Regulations......................................................10
                  Research and Development......................................................11
                  Environmental Laws............................................................11
                  Employees.....................................................................11
                  Reports to Security Holders...................................................11

ITEM 2.  DESCRIPTION OF PROPERTY................................................................12

ITEM 3.  LEGAL PROCEEDINGS......................................................................12

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................12

PART II. .......................................................................................12

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED
                  STOCKOLDER MATTERS............................................................12

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
                  OR PLAN OF OPERATION..........................................................13
                  Background....................................................................14
                  Financial Condition and Results of Operations.................................15

ITEM 7.  FINANCIAL STATEMENTS...................................................................19

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS..........................................19

PART III .......................................................................................20


                                      iii

<PAGE>

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT......................................20

ITEM 10. EXECUTIVE COMPENSATION.................................................................21

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT.............................................................................22
                  Security Ownership of Certain Beneficial Owners...............................23
                  Security Ownership of Management..............................................23

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................23
                  Acquisition of Our Predecessor's Assets and Liabilities.......................23
                  DAC Arkansas..................................................................24
                  Contractual Relationships.....................................................24
                  Promoters and Founders........................................................25
                  Factoring Agreement...........................................................25
                  Line of Credit/ Loans.........................................................26

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8K.......................................................26

          SIGNATURES............................................................................27

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                                       iv
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         This discussion in this Annual Report regarding our company and its
business and operations contains "forward-looking statements." Such statements
consist of any statement other than a recitation of historical fact and can be
identified by the use of forward-looking terminology such as "may," "expect,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. The reader is cautioned that all
forward-looking statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or results to differ
materially from those referred to in such forward looking statements. We do not
have a policy of updating or revising forward- looking statements and thus it
should not be assumed that silence by its management over time means that actual
events are bearing out as estimated in such forward-looking statements.


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)      History and Business Development.

         We were incorporated as a Florida corporation in July 1998, under the
name DAC Technologies of America, Inc. for the purpose of succeeding to the
interest of DAC Technologies of America, Inc., an Arkansas corporation ("DAC
Arkansas"). In September 1998, we purchased substantially all of the assets of
DAC Arkansas. DAC Arkansas, formed as an Arkansas corporation in 1993, may be
deemed to be a predecessor of our company. DAC Arkansas commenced operations
with the manufacture of various safety products, which were eventually acquired
by us. Our principal owners and management held similar positions with DAC
Arkansas. We have continued the operations of DAC Arkansas without any
significant changes. In July 1999, we changed our name to DAC Technologies Group
International, Inc.

         Between July 1998 and April 1999, we sold an aggregate of 5,054,500
shares of our Common Stock to approximately 30 accredited or otherwise
sophisticated investors with whom we had pre-existing relationships and who had
access to relevant information concerning the Company in a series of
transactions exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"). We received gross proceeds of approximately
$234,400 from these transactions. The funds have been used to fund our business
plan and we anticipate needing additional capital to complete the plan.

         We have not been involved in any bankruptcy, receivership or similar
proceeding. Except as set forth herein, we have not been involved in any
material reclassification, merger,

                                       1

<PAGE>

consolidation, or purchase or sale of a significant amount of assets not in the
ordinary course of business.

(b) Business Plan

         We are in the business of developing, marketing and outsourcing the
manufacture of various consumer products, patented and unpatented, designed to
enhance and provide security for the consumer and for his property. We have
placed particular emphasis on gun safety because it has become a prominent
national issue due to the recent rash of school and workplace violence. We
believe that there will be a continual public mandate for our federal, state and
local governments to pass gun safety legislation on all guns manufactured. With
over 220 million firearms in the U.S. alone, we believe we will be a major
presence in the gun lock market. With respect to all our products we:

     o   develop and design
     o   out source the manufacturing to unaffiliated third parties
     o   distribute and market
     o   use our private label

         In addition, we have developed a wide range of security and
non-security products for the home, automobile and person including various
plastic injection and leather products. We primarily sell to mass market
retailers such as Wal-Mart, Walgreens and K-Mart. The majority of our products
had been manufactured and imported from mainland China and shipped to a central
location for distribution in Little Rock, Arkansas. We have recently entered
into a manufacturing contract with a domestic company, which we expect will
significantly increase the volume of our products manufactured in the U.S.

         In order to build a database from which we might select products to
market and distribute, we presently anticipate that we will solicit proposals
from inventors who have substantially completed their product development but
lack the expertise or capital to market or distribute it. We expect that we will
utilize advertisements in trade and other publications, networking, referrals
from persons with whom we may have pre-existing relationships and our Web site
as methods of soliciting these proposals. We may also acquire existing
businesses with complimentary operations as a method of expanding our business
and operations.

(c)  Products

         (1)  Security Products

         Our products can be grouped into three main categories (a) home, auto
and personal

                                       2



<PAGE>
security, (b) gun safety locks, and (c) non-security devices. In developing
these products, we focus on developing features, establishing patents, and
formulating pricing to obtain a competitive edge. We currently design and
engineer our safety products with the assistance of our Chinese and domestic
manufacturers, who are also responsible for the tooling, manufacture and
packaging of the products.

                  (A)  Gun Safety. We currently market four gun safety products:

                       o   "Trigger Lock Value Pack," a patented product, which
                           contains three ABS plastic trigger locks with metal
                           locking device and keys. This lock fits virtually all
                           handguns and prevents unwanted or accidental
                           discharge of the firearm.

                       o   "Lever Hammer Lock," constructed of ABS plastic with
                           a metal locking device and key, is designed to
                           prevent cocking of lever action rifles.

                       o   "Gun Lock," a steel lock with keyed locking device,
                           that fits over the entire trigger guard of virtually
                           all handguns.

                       o   "Metal Trigger Lock," is similar to our Trigger Lock
                           Value Pack, but is made of metal instead of plastic
                           with a more secure locking system. The lock is
                           available at the retail level in a three-piece value
                           pack and as a single unit. It is also available in
                           bulk without retail packaging for gun manufacturers.
                           We have a patent pending on this product.

                  (B) Personal Security. We carry a wide range of electronic
                  alarms designed to protect the consumer and personal property.

                           o               "Body Alarm," a 130-decibel alarm, is
                           designed to be carried or worn whenever the user
                           faces the possibility of attack. An original product
                           of DAC Arkansas, it has been redesigned to include a
                           built-in flashlight and accessories so it can be used
                           as a door or window alarm.

                           o               "Key Alert," a patented product, is
                           a small, 120 decibel alarm with key chain and
                           built-in flashlight. This unit, easily activated by a
                           push button, will enhance protection any time its
                           user feels threatened.

                           o               "Pepper Spray," packaged in an
                           attractive leather holster with key ring, this
                           canister contains 14 grams of 5% oleoresin capsicum
                           red pepper, and will debilitate an attacker on
                           contact with his eyes.

                           o               "Protect All," a vibration activated,
                           130 decibel alarm, this unit can be attached to
                           virtually anything, i.e. television, stereo,
                           microwave. Not much larger than a beeper, this alarm
                           can protect personal property at home, office or
                           virtually any location.

                           o               "Patient Alert," designed
                           specifically for the health care industry, this alarm
                           is similar to our Body Alarm, but with attachments to
                           mount the unit onto a bed or wheelchair and the pull
                           strap to the patient. Decibel level of this alarm is

                                       3
<PAGE>

                           only 100-105, as its intended use is not to scare off
                           an attacker but to alert nursing staff when a patient
                           attempts to get out of bed or wheelchair.

                  (C)  Automotive Safety.  We currently offer the following car
                  alarms:

                           o               "SWAT Steering Wheel Alarm," a
                           patented product, is a 130-decibel alarm which mounts
                           to virtually any vehicle steering wheel. Locking the
                           alarm to the steering wheel arms the alarm, and a
                           delay timer allows the driver 15 seconds to exit the
                           vehicle without activating the alarm. Vibration
                           activated, this alarm has an automatic reset,
                           sensitivity settings, and a blinding strobe light.
                           Selling for $25-$30 at the retail level, this alarm
                           is perfect for consumers who do not want to invest in
                           more expensive vehicle alarms. The SWAT Steering
                           Wheel Alarm is also manufactured with remote control
                           for arming and disarming.

                           o               "SWAT II Talking Car Alarm," a more
                           traditional, under the hood car alarm, can easily be
                           installed by the consumer. The alarm can be mounted
                           under the hood by screws , tape, or simply strapped
                           to the car battery, all provided. Alligator clips
                           allow for easy attachment to battery for power. Two
                           remote controls come with the unit, which are used to
                           arm and disarm the alarm, as well as set sensitivity
                           levels and spoken warnings in both English and
                           Spanish. Alarm has nine voice commands programmed,
                           car finder, and a panic button. Retailing in the
                           $80-$100 range, this alarm is less expensive than
                           most competitors models, and does not require
                           professional installation.

                           o               "Warning Module," is a simple battery
                           operated device that mounts on the dashboard, with
                           two red LED lights that flash when activated. Sold
                           separately, it is also included in the packaging with
                           the SWAT II Talking Car Alarm.

                  (D) Home Safety. We carry a full line of home security alarms,
                  packaged both as a complete unit, and with individual pieces
                  to add on.

                           o        "Strobe Alarm Security System," is a
                                    complete, wireless, motion detection home
                                    security package. Wall mounted motion
                                    detector with 120E radius, emits a
                                    120 decibel alarm and sends RF signal to an
                                    outside alarm as well. Two remote controls
                                    included. Companion pieces include:

                                    o       The Glass/Window Alert
                                    o       Mini-Magnetic Door/Window alarm
                                    o       Glass Breakage Commander
                                    o       Magnetic Sensor Commander
                                    o       Additional Remote Controls


                                       4
<PAGE>

                  (2)  Non Security Products.

                  We out source the manufacture and market the following
                  non-security consumer products:

                           o               "Clampit Cupholder", a licensed
                           product, designed as a plastic, adjustable cupholder,
                           with a unique clamping arm that allows the user to
                           attach to virtually anything. Perfect for lawn
                           chairs. The cupholder clamp can be adjusted so that
                           the holder is always upright.

                           o               "Clampit Plateholder", a licensed
                           product, designed as a plastic holder for paper or
                           plastic plates, has the same patented clamp as the
                           Cupholder, allowing user to attach to almost anything
                           and at any angle. Perfect for lawn chairs so you no
                           longer have to hold your plate in your lap.

                           o               "Horizontal Phone Case", patent
                           pending, is a uniquely designed, leather cell phone
                           case that attaches to a user's belt horizontally.
                           User no longer has to worry about getting jabbed in
                           the side by cell phone when sitting down. Available
                           in three sizes.

(d)   Manufacturing and Distribution.

         We, through our foreign and domestic manufacturing agents, manufacture,
design and build our tooling, molds and products. Our administrative offices are
located in Little Rock, Arkansas and Ft. Lauderdale, Florida. Additionally, we
have a distribution facility in Hong Kong, provided to us as an accommodation by
one of our suppliers. We sub-contract our manufacturing for tooling and
production in Shenchen, China, Temple City, California and Sandwich, Illinois.
We distribute all of the domestic and certain of our international business out
of our Little Rock facility, most international business is shipped directly to
the customer from our Hong Kong location. We believe we can provide low-cost
quality products because labor-intensive products are manufactured in China,
where labor costs are lower. Our plastic injection and gun lock products can be
manufactured competitively in the U.S. due to automation. Our central warehouse
facility is in Little Rock where following manufacture, with the exception of
our international business as previously noted, products are delivered complete
and ready for delivery to our customers.

         Our distribution strategy includes direct selling and marketing. We do
not currently utilize commissioned independent sales representatives. We
anticipate that we will develop sales promotion and sales development activities
which will be directed towards giving selling assistance to the independent
sales representatives through aids such as brochures, product samples and
demonstration products. We will establish a Web site which will serve both as an
additional marketing tool, and will provide a platform from which we will be
able to provide various support services to our independent sales

                                       5
<PAGE>

representatives. We also anticipate that we will seek to motivate our
independent sales representatives through the use of special incentive programs
that reward superior sales performance. We also anticipate utilizing trade
shows, both on a local and national level to promote our products and to attract
qualified sales representatives.

         Our management will attempt to maintain sufficient inventory levels to
meet customer's demands but there can be no assurance that we will be successful
in doing so. Turnaround time from the date an order is placed until received in
our distribution center normally is between four to six weeks. This quick
turnaround time allows us to maintain minimum inventory levels. However since we
out source our manufacturing, a good portion of which is done in China, it is
difficult to predict the efficiency of our vendors.

(e)  Competition.

         We operate in a very competitive industry, dominated by national and
international companies with well-established brands all of whom are better
capitalized, have more experience in our industry and have established varying
degrees of consumer loyalty. There are no assurances we will ever be successful
in establishing our brands or penetrating our target markets. Some of our
competitors in the business sectors which we will be operating in are:

              o   Gun safety competitors include: Master Lock (which presently
                  controls 60-70% of the market), Noble Security and Shot Lock.

              o   Automotive security competitors include:  Bulldog, Rally and
                  Code Alarm.

              o   Personal security competitors are varied and mostly smaller
                  vendors.

              o   Non-security product competitors include: various small and
                  large vendors participate in this field.

         We are subject to competition that is expected to intensify in the
future because we believe that the number of competitors is increasing. There
are no significant barriers to entry into our markets. We feel our greatest
difficulties in competing come in areas such as gun safety where our competitors
are bigger, better known, and have greater resources including capital and
personnel. We realize it is important to achieve brand name recognition in
establishing market share, which, in turn generates additional market share
giving consumers preferences for brand names. We believe that while brand names
operate effectively in mainstream product distribution, there is significant
opportunity for lesser known names with specific products and solutions that
appeal to consumers.

         It is critical for us to be selective in the products we select to
bring to market, and management has been effective in developing products that
can be priced advantageously and obtain consumer acceptance as well as approval
from the mass merchandisers whose relationships we have, over the years,
cultivated. In addition, we believe that impulse buying is more prominent when

                                       6
<PAGE>

products are sold below the $20 threshold. We believe that consumers have
responded favorably to our lower priced products. Accordingly, the keys to our
maintaining a competitive position are product design, pricing quality of
product and the maintenance of favorable relationships with various mass
merchandisers.

(f)  Principal Suppliers and Manufacturers.

         Our principal suppliers and manufacturers are:

              o   Uni Skit Technologies, Inc., a Chinese company which
                  manufactures our auto and body alarm systems.

              o   Uni Tat International, Inc., a Chinese company which
                  manufactures the gun locks and auto alarm systems.

              o   Security Limited, a Little Rock,  Arkansas company,
                  manufactures the Pepper Spray.

              o   Taico Designs, a company located in Chicago, Ill. manufactures
                  the cup and plateholder.

              o   Emsal Tekin a company located in Istanbul, Turkey,
                  manufactures the horizontal phone case.

              o   Nimax Los Angeles Corporation, a Temple City, California
                  company which manufactures gun locks.

         The Company derived the following percentage of products from each of
the named suppliers for the period January 1, 1999 to March 1, 2000, as follows:

                           Uni Skit Technologies, Inc. - 41%
                           Uni Tat International, Inc. - 46%
                           Security Limited            -  7%
                           Taico Designs               -  6%

         With the exception of Nimax Los Angeles Corporation and Uni Skit
Technologies, Inc., we have no contractual relationship with our manufacturers.
For the past two years Uni Skit and Uni Tat have supplied approximately 80% of
our products. We believe our relationships with our suppliers and manufacturers
is satisfactory, however should any of them cease providing for us, we believe
they can be replaced within 30 days, without difficulty and at competitive cost.

         On May 12, 1997, we contracted with Uni Skit to manufacture certain of
our products, and to share ownership rights, research and development costs with
respect to all products developed on a joint basis. The contract provides for
the following:

                                    the parties will equally share ownership
                                    rights and related project costs

                                    Uni Skit shall have the exclusive right of
                                    manufacture, subject to competitive pricing

                                       7
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                                    DAC has exclusive rights to market and sell
                                    in North and South America

                                    Uni Skit has exclusive rights to market and
                                    sell in Asia and the Pacific Rim; except
                                    that Uni Skit may not solicit DAC's existing
                                    customers in Japan

                                    the parties may otherwise solicit business
                                    anywhere not otherwise excluded; except that
                                    Uni Skit shall honor DAC's existing
                                    exclusive contracts in Germany and England

                                    Neither party may solicit the other's
                                    customers as they may exist at the time of
                                    the agreement

                                    all intellectual property rights developed
                                    for the products subject to this agreement,
                                    are considered owned by both parties

         Because we did not conduct any material business activities in the
areas in which Uni Skit has exclusivity, and because Uni Skit is precluded from
interfering with our existing customers, we do not believe that this arrangement
has cut off any former sources of revenue.

          The products currently being offered by us and which are subject to
the Uni Skit Agreement are the following:

              o   Strobe Alarm Products
              o   Key Alert
              o   Body Alarm
              o   Protect All
              o   SWAT Auto Alarm
              o   SWAT II Talking Car Alarm
              o   SWAT II Non-Talking Car Alarm
              o   Warning Module

         Our manufacturing arrangements with Uni Tat, Taico Design, and Security
Limited are all on a fixed-priced, per unit basis. With Uni Tat, we own all of
the gun-lock tooling and molds. We have no written arrangements with these
manufacturers.

         In March 2000, we negotiated an agreement with Nimax Los Angeles
Corporation, to manufacture our gun lock products. The prices negotiated will
permit us to realize savings over the costs paid to our current manufacturer.
The terms of the agreement include:

         o     DAC will pay for and own all tooling and molds which will be used
               exclusively for DAC's products;

         o     Nimax will not manufacture any product which infringes on DAC's
               patents or patent's pending; or which are identical to, derived
               from, or copies of DAC's gun locks;

                                       8
<PAGE>


         o     Nimax may continue to manufacture gun locks for Shot Lock, a
               DAC competitor, and DAC agrees not to contest any patent
               infringement action against Shot Lock;

         o     the agreement may be renegotiated every two years;

         o     the agreement may be terminated after six months of business
               inactivity, although Nimax will continue to honor DAC's patent
               rights.

         We expect to begin receiving product from Nimax in July 2000.

(g) Customers.

         Although we have numerous customers, we sell on the basis of purchase
orders, primarily to national retail chains such as Wal-Mart, K-Mart, Walgreens,
Pep Boys, Discount Auto, Advance Auto Sales and Radio Shack. In 1998 Wal-Mart
accounted for 14% of our gross revenues and 28% in 1999. In 1999, K-Mart
accounted for 17% of our gross revenues.

         We have entered into a "Blanket Purchase Order" with Savage
Arms(Canada) Inc., a significant national gun manufacturer which provides for
the following:

              o   the contract runs for a period of one year but may be
                  terminated on three months notice.

              o   we are required to maintain an inventory equal to three weeks
                  of requirements relative to the most recent scheduled release.

              o   the contract provides for 90,000 pieces of the trigger lock
                  mechanism.

         In April, 2000 we received a $20,880 Walgreens purchase order for
10,440 Steel Trigger Locks. We are advised by Walgreens that it intends to
distribute this product among all 3000 of its stores.

         In addition, our customer base also includes numerous regional and
national distributors and smaller retailers. We also sell to distributors in
Europe, Asia, South and Central America and the Far East, including the
following:

              o   Germany - SWAT II Talking Car Alarm (speaks German), SWAT
                  Steering Wheel Alarm w/remote, Warning Module and Key Alert.

              o   England - SWAT II Talking Car Alarm, both SWAT Steering
                  Wheel Alarms.

              o   Japan - SWAT Steering Wheel Alarm, Glass/Window Alarm.

(h) Intellectual Property.

                                       9
<PAGE>


         We believe that protection of proprietary rights to our products is
important because, as we are in a highly competitive market, a patent provides
us with a competitive advantage by limiting or eliminating similarly designed
competitive products.

         To this end, we have obtained U.S. patents on certain of our products
as follows:
<TABLE>
<CAPTION>
                  Model                                       Patent No.             Expiration
                  -----                                       ----------             ----------
<S>          <C>                                                   <C>                   <C>
         TVP 095  Trigger Lock Value Pack                     Des. 375,342               2009
         SWA 03  SWAT Steering Wheel Alarm                    Des. 365,774               2009
         KAL 201  Personal Safety Alarm                       Des. 355,863               2008
         Key Chain Alarm                                      5,475,368                  2008
         GWA 001 Glass/Window Alarm                           Des. 371,086               2009
         Defense Spray and Flashlight                         Des. 375,994               2009
</TABLE>

         In addition, we have patents pending on our steel trigger gun lock and
horizontal phone case products. We have entered into a licensing agreement
giving us the exclusive right to sell the patented Clampit Cup and Plate Holder
in the U.S., with certain minor exceptions.

         We intend to register our product names, although we may not be
successful in doing so particularly because of their generic character. As we
develop trademarks, trade names, copyrights or other intellectual property
rights, we may seek to protect these, as well as those related to the products
listed above, by registration in the United States and other countries where
these products may be marketed.

         Depending upon the development of our business, we may also wish to
develop and market products which incorporate patented or patent-pending
formulations, as well as products covered by design patents or other patent
applications.

         While we may seek to protect our intellectual property, in general,
there can be no assurance that our efforts to protect our intellectual property
rights through copyright, trademark and trade secret laws will be effective to
prevent misappropriation of our products. Our failure or inability to protect
our proprietary rights could materially adversely affect our business, financial
condition and results of operations. Moreover, inasmuch as we will often seek to
out source manufacture products which are similar to those being manufactured by
others, it is also critical for us to insure that our manufactured products do
not infringe upon existing patents of others.

(i)  Governmental Regulations.

         We have obtained the required approval from the Federal Communications
Commission for the Rf signals emitted by our remote control units. We are not
aware of any other required governmental approvals on any of our products.


                                       10
<PAGE>

         While not directly affecting our business, there is a likelihood of
governmental regulations requiring trigger locks on guns. If such regulations
are passed, they presumably will serve to increase the demand for our products
and sales in the gun safety area. Government regulations may, however, be
promulgated to regulate these devices.

(j)  Research and Development.

         We do not incur any research and development costs. We develop our
products internally, utilizing the expertise of our manufacturers, and input
from our customers. Any R & D cost incurred by our manufacturers is passed on to
us in the pricing of the tooling and molds. We do not pass such costs on to our
customers. Because of our close relationships with our customers, we are able to
determine the level of interest in a particular product before investing
significant time or capital in its development. Once a potential new product is
identified, we utilize the services of a patent attorney to assure that we do
not infringe upon anyone's patent rights. We also design our own packaging
internally.

         Working closely with our manufacturers' engineers, a final design for a
product and cost estimations are completed. If management determines that a
product can be produced at competitive prices, and the interest level justifies
production, we proceed with having a mold made. We own the molds for all of our
gun-lock products. After pre-production samples are made and approved, full
production begins.

(k)  Environmental Laws.

         We incur no costs and suffer no adverse effects by complying with
environmental laws (federal, state and local).

(l)  Employees.

         We currently employ five employees, all of whom are full-time:
President & Chief Executive Officer, Chief Financial Officer, salesman,
receptionist, & shipping clerk. There are no collective bargaining agreements or
contracts.

(m) Reports to Security Holders

         Copies of this report, including exhibits to the Report and other
materials filed with the SEC that is not included herein, may be inspected and
copied, without charge, at the Public Reference Room,450 Fifth Street, N.W.,
Washington, DC 20549. Information on the operation of the Public Reference Room
may be obtained by calling the Commission at 1-800-SEC-0330. In addition, the
Commission maintains an Internet site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.

                                       11
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

         Our corporate headquarters are located at 3200 N. Ocean Blvd, Suite
1002, Ft. Lauderdale, FL 33308 consisting of 500 square feet, with telephone
number (954) 375-0119. The lease term is month to month at a $1,400 per month
rent.

         We have a 5,000 square foot office/warehouse at 1601 Westpark Dr.,
Suite 4C, Little Rock, AR 72204. Approximately 1,500 square feet is office and
3,500 square feet is warehouse. All of the accounting and shipping functions are
performed out of this location, as well as some sales. This space is leased for
two years, expiring February 1, 2001, with monthly rent of $2,325. There are no
renewal options. We believe there are adequate alternative facilities at
reasonably competitive prices in the event these leases terminate.

ITEM 3.  LEGAL PROCEEDINGS

         We are currently unaware of any pending legal proceeding or any
proceeding contemplated by a governmental authority in which we may be involved.

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

         There were no matters submitted during the fourth quarter of the fiscal
year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.


                                    PART II.

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         There is no public trading market for our common stock. We have no
outstanding options, warrants or other securities that could be converted into
common stock. As of March 31, 2000, there were approximately 29 holders of
record of our 5,024,500 shares of common stock outstanding.

         We have not paid a cash dividend on the common stock since inception.
The payment of dividends may be made at the discretion of our Board of Directors
and will depend upon, among other things, our operations, our capital
requirements and our overall financial condition. Although there is no
restriction to pay dividend, as of the date of this registration statement, we
have no intention to declare dividends.

         On July 31, 1998, we issued 3,630,000 founders' shares of common stock
to principally the same stockholders, and in the same ratio as the ownership
ratio of the DAC Arkansas. Because these persons had a preexisting relationship


                                       12
<PAGE>

with us and access to relevant information concerning us, the issuance of such
securities was exempt from the registration requirements of the Securities Act
pursuant to the exemption set forth in Section 4(2) of the Securities Act..
These shares were issued for our par value, $0.001. These shares may only be
sold in compliance with Rule 144. Of these 5,054,500 shares currently
outstanding, 3,825,000 shares are restricted securities within the meaning of
Rule 144(a)(3) promulgated under the Securities Act of 1933, as amended, because
such shares were issued and sold by the Company in private transactions not
involving a public offering.

         On December 31, 1998, pursuant to an offering, we sold 1,000,000 shares
of our common stock for $200,000 or $0.20 per share to 15 investors who were
either accredited or otherwise sophisticated investors with whom we had
pre-existing relationships and access to relevant information concerning the
Company in a private placement exempt from registration under the Securities Act
in reliance on Rule 504 of Regulation D of the Securities Act. Approximately
500,000 shares of the offering were made to affiliates of the Company. At the
same time, we issued 30,000 shares of common stock for legal services to our
former securities counsel, Atlas, Pearlman, Trop and Borkson, P.A.

         On December 23, 1998, Uni Skit, one of our major suppliers, agreed to
convert $251,936 of its debt to 165,000 of our common shares. The transaction
was made in reliance on Section 4(2) of the Securities Act, as the purchaser was
sophisticated, has full access to all material information and took the shares
for investment purposes.

         In April 1999, pursuant to a private placement, we sold 199,500 shares
of our common stock for $39,500 or $0.20 per share to 3 investors who were
either accredited or otherwise sophisticated and with whom we had a pre-existing
relationship and who had access to all material information. The transaction was
exempt under and Rule 504 of Regulation D of the Securities Act.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following Management Discussion and Analysis of Financial Condition
is qualified by reference to and should be read in conjunction with, our
Financial Statements and the Notes thereto as set forth at the end of this
document. We include the following cautionary statement in this Form 10KSB for
any forward-looking statements made by, or on behalf of, the Company.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, expectations, future events or performances and underlying
assumptions and other statements which are other than statements of historical
facts. Certain statements contained herein are forward-looking statements and,
accordingly, involve risks and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in the forward-looking
statements. The Company's expectations, beliefs and projections are expressed in
good faith and are believed by the Company to have a reasonable basis, including
without limitations, management's examination of historical operating trends,
data contained in the Company's records and other data available from third


                                       13
<PAGE>

parties, but there can be no assurance that management's expectations, beliefs
or projections will result or be achieved or accomplished.

(a) Background

         DAC Arkansas was formed in 1993, and began selling its Body Alarm, a
small, beeper sized, 130 decibel, electronic personal security alarm, which
retails for under $10. In 1994, we brought to market our patented Key Alert, a
110 decibel hand held alarm with key chain and built-in flashlight. Other
products followed over the next few years, including the patented SWAT Steering
Wheel Alarm, SWAT II Talking Car Alarm, and the patented Clampit Cupholder and
Plateholder.

         In 1994, we developed our patented Trigger Lock, an inexpensive,
plastic trigger lock for handguns. Recognizing the public's and government's
concern for gun safety, we have developed a new Metal Trigger Lock, a steel Gun
Lock, and a Lever Hammer Lock for lever action rifles. All of these gun safety
devices are currently carried by Wal Mart, Walgreens and K Mart. We have devoted
a significant amount of time and effort the past year in establishing ourselves
in the area of gun safety.

              o    Develop a National Sales Force

         We have in the past utilized national and regional manufacturing sales
representatives, with varied success. We believe use of such sales
representatives is a cost-effective method of reaching mid-sized and regional
retail outlets as well as national distributors. To properly monitor and
motivate these sales representatives, we intend to hire a national sales
manager.

              o    Develop New Products.

         Our success has been due, in part, to our ability to continue
developing new consumer products. We currently offer over thirty products in
personal, home and automotive security, gun safety, and non-security products
such as our patented Clampit Cupholder and Plateholder. In addition to the Metal
Trigger Lock, we have also recently completed development of a leather
horizontal cell phone case. This new product will be available early in 2000. We
believe that with our relationships with major retailers such as Wal Mart, K
Mart, and Walgreens, and the capabilities of our manufacturers, we can continue
to identify consumer products that we can produce that are of high quality and
competitively priced.

              o    Internet

         We have entered into an agreement with Anaxis Internet Services,
located in North Little Rock, Arkansas, to develop and design a Web site for our
company. We have acquired the rights to several Internet domain names, most
notably dactec.com and dactechnologies.com.



                                       14
<PAGE>

         We are still in the initial design stages for our Web site, but
anticipate it will include a company profile, product information and E-commerce
capabilities. We have targeted June 30, 2000 for completion of this project.

              o    Direct Mailings

         We have had success in identifying specific target groups and utilizing
mass mailings and faxing. Sales of our Patient Alert, used by nursing homes and
hospitals to alert staff when confined patients attempt to get out of their bed
or wheelchair, has been developed and continues to increase as a result of this
type of advertisement. We have begun similar efforts to leading gun
manufacturers and distributors, as well as police, sheriff and state law
enforcement agencies with regards to our gun safety locks. We intend to continue
to use direct mailings whenever specific target groups can be identified as
potential purchasers of any of our products.

              o    Expansion/Upgrade of Accounting and Management Systems.

         Current accounting and management systems have been satisfactory in
maintaining accurate accounting data and in aiding management decisions. With
anticipated growth in sales and products, it will be necessary to upgrade these
systems to insure accurate data and to properly control costs, manage inventory,
track cash flows, as well as provide timely information required for quarterly
SEC filings.

(b) Financial Condition and Results of Operations .

         Year Ended December 31, 1999 compared to the year ended December 31,
1998.

         At December 31, 1999, the Company had working capital of $124,472 as
compared to $58,931 at December 31, 1998. This increase of $65,541 was due to
the increase in current assets of $290,651, offset by an increase in current
liabilities of $225,110. The significant items causing these increases are as
follows:

Current Assets

         Cash decreased $53,608, from a balance of $68,042 at December 31, 1998
         to a balance of $14,434 at December 31, 1999. As noted in the Notes to
         Financial Statements, the Company factors its receivables. The Company
         funds its cash needs by borrowing from its factor against these
         receivables. The Company typically only borrows sufficient cash funds
         to meet its short-term cash needs, thereby saving interest charges on
         funds borrowed. The December 31, 1998 cash balance was higher than what
         the Company normally maintains due to the $200,000 cash raised in
         December 1998 through the sale of company stock.

         Accounts receivable balances at December 31, 1999 were $453,384 as
         compared to $204,805 at December 31, 1998, an increase of $248,579.
         Payment terms of the Company's customers are typically 30 to 60 days.

                                       15
<PAGE>

         Sales for the last two months of 1999 were $377,264 as compared to
         $247,974 for the last two months of 1998. This increase was primarily
         due to the sales of gun locks, of which the new metal trigger lock was
         first shipped to customers in December 1999.

         Inventories increased $77,515 from $305,924 at December 31, 1998 to
         $383,439 at December 31, 1999. This increase was due to the purchases
         by the Company of its new metal trigger lock for anticipated orders
         during the first quarter of the year 2000.

Current liabilities

         Funds borrowed from our factor increased $146,562. Balances were
         $298,709 and $157,147 at December 31, 1999 and December 31, 1998,
         respectively. This increase was due to the Company's increased cash
         needs to pay for the higher inventory levels, as noted above.

         Current maturities of long-term debt increase $80,191, from $88,191 at
         December 31, 1998 to $168,652 at December 31, 1999. This increase was
         due primarily to the classification of the Company's bank loan, which
         matured February 14, 2000. At December 31, 1998, most of the loan
         balance of $230,029 was classified as a long-term debt, whereas all of
         the balance of $155,492 at December 31, 1999 was classified as
         short-term debt.

         Sales revenues for the year ended December 31, 1999 were $2,136,887 as
compared to $2,044,634 for the year ended December 31, 1998, an increase of
$92,253. Sales revenues for the Company's gun locks increased $645,599 from
$276,448 for the year ended December 31, 1998 to $922,047 for the year ended
December 31, 1999. Sales revenues for the Company's security products decreased
$453,187, from $1,479,808 for the year ended December 31, 1998 to $1,026,621 for
the year ended December 31, 1999. Sales revenues for the Company's non-security
products decreased by $100,159, from $288,378 to $188,219 for the same period.
While overall sales revenues did not change significantly, the changes by
business segments reflects the results of management's decision to concentrate
sales and marketing efforts on its gun lock products.

         Operating expenses were $715,137 for the year ended December 31, 1999
as compared to $777,914 for the year ended December 31, 1998. This decrease of
$62,777 is a result of the Company's efforts to reduce operating expenses in all
areas, without harming its ability to operate efficiently.

         Interest expense was $82,255 for the year ended December 31, 1999 as
compared to $137,604 for the year ended December 31, 1998, a decrease of
$55,349. This decrease was a result of the contribution by Company shareholders
of $348,867 of debt to the capital of the Company on September 30, 1998.

                                       16
<PAGE>

         Net income for the year ended December 31, 1999 was $121,405 as
compared to a net loss of $57,659 for the year ended December 31, 1998, an
increase of $179,064. This increase was a result of the increase in sales and
decreases in operating expenses and interest expense as described above.

         Net income for security products was $829 for the year ended December
31, 1999 as compared to a net loss of $125,671 for the year ended December 31,
1998, an increase of $126,500. This increase was realized despite the $455,187
decrease in sales revenues for security products. The Company allocates
operating expenses to the various business segments based on sales revenues.
Because of the decrease in sales revenues for security products and the increase
in sales revenues for gun locks, a much smaller percentage of operating expenses
have been allocated to security products for the year ended December 31, 1999 as
compared to the year ended December 31, 1998.

         Net income from gun locks was $92,360 for the year ended December 31,
1999 as compared to $34,612 for the year ended December 31, 1998, an increase of
$57,748. This increase is due to the increase in sales revenues for gun locks of
$645,599, offset by the increase in operating expenses allocated to gun locks,
as described above.

         Net income for non-security products was $28,216 for the year ended
December 31, 1999 as compared to $33,400 for the year ended December 31, 1998.
This decrease of $5,184 is a result of the decrease in sales revenues on
non-security products.

         Year Ended December 31, 1998 compared to the year ended December 31,
1997.
         At December 31, 1998, the Company had working capital of $58,931 as
compared to a working capital deficit of $26,584 at December 31, 1997. The
increase in working capital of $85,515 can be attributed to the cash infusion of
$200,000 from the private sale of 1,000,000 shares of the Company's common stock
in December, 1998.

         Sales revenues for the year ended December 31, 1998 were $2,044,634
compared to $2,501,368 for the year ended December 31, 1997, decrease of
$456,734. Sales revenues of security products decreased $785,576 from $2,265,384
for the year ended December 31, 1997 to $1,479,808 for the year ended December
31, 1998. Sales revenues for gun locks increased $61,901, from $214,547 for the
year ended December 31, 1997 to $276,448 for the year ended December 31, 1998.
These changes are result of management's decision to concentrate the Company's
efforts into developing, designing and marketing the Company's line of gun
safety products which significantly affected sales of Company's security
products. The benefits to be realized in future sales of gun locks will not be
fully realized until the year 2000.

         Sales revenues of Non-security products was $288,378 for the year ended
December 31, 1998 as compared to $21,437 for the year ended December 31, 1997,
an increase of $266,941. The only products in this business segment are the
Clampit Cupholder and Plateholder which were first sold in December 1997. The
year ended December 31, 1998 was the first full year of production and sales of
these products.

                                       17
<PAGE>

         Operating expenses for the year ended December 31, 1998 were $777,913
compared to $730,376 for the year ended December 31, 1997. This increase of
$47,537 was due primarily to an increase in consulting fees

         The Company had a net loss of $57,659 for the year ended December 31,
1998 as compared to net income of $190,245 for the year ended December 31, 1997,
a decrease of $247,904. This decrease is due to the decrease in sales revenues
of $456,734.

         The Company had a net loss on security products of $125,671 for the
year ended December 31, 1998 as compared to net income of $146,831 for the year
ended December 31, 1997. This decrease in net income of $275,502 is due to the
decrease of $785,576 in sales revenues from security products.

         The Company had net income from gun locks of $34,612 for the year ended
December 31, 1998 as compared to net income of $43,242 for the year ended
December 31, 1997, a decrease of $8,630. The Company allocates operating
expenses to its business segments based on sales revenues. Because sales
revenues from security products decreased significantly and sales revenues of
gun locks increased, the percentage of operating expenses allocated to gun locks
increased significantly. This caused net income on gun locks to decrease despite
the increase in sales revenues.

         The Company had net income from non-security products of $33,400 for
the year ended December 31, 1998 as compared to net income of $172 for the year
ended December 31, 1997. This increase of $33,228 was due to the increase in
sales of non-security products.

              o   Liquidity and Capital Resources

         Our primary source of cash is funds from our operations. We believe
that external sources of liquidity could easily be obtained in the form of bank
loans, letters of credit etc. We maintain an account receivable factoring
arrangement in order to insure an immediate cash flow. The factor may also, at
its discretion, advance funds prior to the collection of our accounts. Advances
are payable to the factor on demand. Should our sales revenues significantly
decline, it could effect our short term liquidity. For the period ending
December 31, 1999, we owed our factor approximately $298,000. In 1994, DAC
Arkansas' shareholders and the Company obtained a $500,000 line of credit. The
notes reflecting the advances were consolidated and commencing March 1999, we
are required to pay $10,000 for 11 months, with a balloon payment of $137,301,
plus accrued interest due on February 14, 2000. The interest rate is 9.5% and
the loan is collateralized by our inventories and personal guarantees of our
founding stockholders. We believe our revenues will be sufficient to pay these
obligations. If not, we will seek to refinance them or request our shareholders
to pay their guarantees.

                                       18
<PAGE>

              o   Trends

         The recent flurry of publicity involving firearms has caused gun safety
to become a prominent issue nationally. Gun violence, especially in schools has
prompted the President, as well as national and state legislators, to debate
legislation requiring gun safety locks on all firearms. Threatened litigation
against gun manufacturers has caused them to seriously consider placing gun
safety locks on the guns they manufacture. We believe sales revenues in this
area will grow significantly. Sales of our gun locks products for the fiscal
year ending December 3, 1999, totaled $922,047 as compared to $276,448 for the
fiscal year ending December 31,1998. Sales for the first quarter of 2000 were
$317,824.


ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements are contained in pages _____through
________following.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         Sweeney, Gates & Co. advised us on January 6, 2000, that it will
decline reappointment for the upcoming fiscal year. Sweeney, Gates & Co. report
on our financial statements for the past two (2) years has not contained an
adverse opinion or disclaimer of opinion or was qualified or modified, as to
uncertainty, audit, scope, or accounting principals. The decision to change
accountants was not recommended or approved by any audit committee or similar
committee of the Board of Directors or by the Board of Directors. During the two
most recent fiscal years and during any subsequent interim period preceding the
declination, there were no disagreements with Sweeney, Gates & Co. on any manner
of accounting principals or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Sweeney, Gates & Co., would have caused it to make a reference
to the subject matter of the disagreements in connection with its report. The
reason for the declination is that the bulk of our business and administration
is located in Little Rock, Arkansas, as opposed to Fort Lauderdale, Florida, and
as such we have engaged the CPA firm of Moore Stephens Frost, LLP to serve as
our independent accountants and prepare the audited statements included as
Exhibits hereto and for the upcoming fiscal year.




                                       19
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

         The following sets forth the names and ages of our executive officers
and directors. Directors are elected annually at our annual meeting of
stockholders, and serve for the one year term for which they are elected and
until their successors are duly elected and qualified. Our officers are
appointed by the board of directors and serve at the board's discretion.
<TABLE>
<CAPTION>

Name                                   Age       Position                                  Term
----                                   ---       --------                                  ----
<S>                                     <C>                                              <C>  <C>
David A. Collins                        54       President, CEO/Director                 2000-2001

Robert C. Goodwin                       43       CFO/Director                            2000-2001

Larry Legel                             53       Secretary/Director                      2000-2001

John C. Collins                         33       Vice President-Sales                    2000-2001
</TABLE>

         David A. Collins has served as the Company's President and CEO since
its inception in July 1998. From 1992 continuously until September 1998, Mr.
Collins was President and CEO of DAC Arkansas.

         Larry Legel has been a Director of the Company since its inception in
July 1998, as well as a Director of DAC Arkansas. Mr. Legel is an independent
CPA, and has owned and managed a CPA firm, Larry Legal, CPA, continuously since
at least January 1995

         Robert C. Goodwin has served as the Company's CFO since its inception
in July 1998, as well as DAC Arkansas continuously since 1993.

         John C. Collins is the son of David A. Collins and has served as a
regional sales manager of the Company since July 1998, and DAC Arkansas
continuously since 1994.

         Compliance With Section 16(a) of the Securities Act of 1934
         -----------------------------------------------------------

                  Section 16(a) Beneficial Ownership Reporting Compliance Based
upon the Company's review of forms filed by directors, officers and certain
beneficial owners of the Company's common stock (the "Section 16 Reporting
Persons") pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Company has identified the following Form 3
filings that were filed late by the Section 16 Reporting Persons during fiscal
2000

                                       20
<PAGE>

o        David A. Collins

o        Larry Legal

o        Collins Family Trust

o        Dan R. Lasater

o        Gerald E. Hannahs, Jr.

o        Robert C. Goodwin

o        Collins Children's Trust

         The Company is not aware of any failures by the Section 16 Reporting
Persons to file the forms required to be filed by them pursuant to Section 16 of
the Exchange Act.

ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth summary information concerning the
compensation received for services rendered to us during the fiscal year ended
December 31, 1999. Other annual compensation consists of health insurance
premiums paid for by us on behalf of the named officers, and in some cases, the
spouse and dependents of the named officers.

<TABLE>
<CAPTION>
                                                 SUMMARY COMPENSATION TABLE

                               Annual Compensation                      Long-Term Compensation
                               -------------------                      ----------------------
                                                                           Awards        Payouts
 (a)                   (b)    (c)       (d)          (e)                    (f)             (g)            (h)          (i)
Name &                                               Other               Restricted     Securities
Principal                                            Annual                Stock        Underlying        LTIP        All other
Position           Year   Salary($)    Bonus($)   Compensation(5)          Awards         Options        Payouts    Compensation
--------           ----   ------       -----      ---------------          ------         -------        -------    ------------
                               ($)                      ($)                SARs(#)                      ($)                  ($)
<S>                 <C>        <C>      <C>        <C>                    <C>               <C>             <C>           <C>
David A.
Collins, CEO      1999      52,000                    3,827
                            52,000[1]
Robert C.
Goodwin, CFO      1999      54,000                    5,089

John C.
Collins,
VP Sales          1999      36,000     19,175         2,509
</TABLE>

----------
[1] These funds were paid to Telephone Connections Network, Inc., a company
owned by the Collins Family Trust, as consulting fees.

Board Compensation

         Our directors do not receive cash compensation for their services as
Directors.

                                       21
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of our common stock as of December 31, 1999 by (a) each
person known by us to be the beneficial owner of five percent or more of the
outstanding common stock and (b) all executive officers and directors both
individually and as a group. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, we believe that
each of the shareholders named in this table has sole or shared voting and
investment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based upon 5,024,500 shares of common stock
outstanding.

(a) Security Ownership of Certain Beneficial Owners .

<TABLE>
<CAPTION>

                           Name and Address of                Number of Shares          Percent
Title of Class             Beneficial Owner                   Beneficially Owned        of Class
--------------             ----------------                   ------------------        --------
<S>                        <C>                                 <C>       <C>               <C>
Common Stock               Gerald E. Hannahs, Jr.              1,157,500 (1)               23%
                           17710 Leatha Lane
                           Little Rock, AR  72211

Common Stock               Dan R. Lasater                      1,157,500 (1)             24.4%
                           Hinson Rd.
                           Little Rock, AR

Common Stock               David A. Collins                      316,750                  6.3%
                           3200 N. Ocean Blvd #1006
                           Ft. Lauderdale, FL  33308

Common Stock               Ralph Coppess                         316,500 (2)              6.3%
                           1004 Commerce St.
                           Little Rock, AR

Common Stock               Collins Family Trust                  816,750(3)                16%
                           c/o Larry Legel
                           1425 NE 57th Place
                           Ft. Lauderdale, FL  33334

Common Stock               Collins Children's Trust              500,000(3)              9.95%
                           c/o Larry Legel
                           1425 NE 57th Place
                           Ft. Lauderdale, FL  33334
</TABLE>

(1) 88,390 and 205,640 shares are held respectively by H & L Holdings and
Phoenix Mortgage, companies jointly controlled by Gerald Hannahs, Jr. and Dan
Lasater, each has been allocated 1/2 the combined shares or 197,525 shares.

(2) These shares are held by Jasper Marketing, a corporation controlled by Ralph
Coppess.

(3) Larry Legel is the Trustee of both Trusts with full voting power. David
Collins claims neither beneficial ownership nor control of the shares held the
Trusts. The beneficiaries of the Collins Children's Trust are Payton P. Collins
and David A. Collins. Jr. The beneficiaries of the Collins Family Trust are
Payton P. Collins, David A. Collins, Jr. and John Christopher Collins.


                                       22
<PAGE>

(b)      Security Ownership of Management
<TABLE>
<CAPTION>

                           Name and Address of                Number of Shares          Percent
Title of Class             Beneficial Owner                   Beneficially Owned        of Class
--------------             ----------------                   ------------------        --------
<S>                        <C>                                   <C>                      <C>
Common Stock               Larry Legel                           181,500(1)               3.6%
                           1425 NE 57th Place                  1,498,250                 26.2%
                           Ft. Lauderdale, FL  33334

Common Stock               David A. Collins                      316,750                  6.3%
                           3200 N. Ocean Blvd #1006
                           Ft. Lauderdale, FL  33308

Common Stock               Total Officers & Directors            498,250                  9.9%
</TABLE>

----------
(1) Includes 181,500 shares of Common Stock held jointly with wife; 500,000
shares owned by the Collins Children's Trust and 816,750 owned by the Collins
Family Trust, both of which Mr. Legel is the Trustee with full voting power.


         There are no arrangements which may result in a change in control of
the Company.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a)  Acquisition of Our Predecessor's Assets and Liabilities

                       o            On September 30, 1998, and as amended on
                                    September 27, 1999, the Company entered
                                    into an asset purchase agreement, which
                                    included the following provisions:

                       o            we acquired assets of the DAC Arkansas,
                                    totaling $939,150, and assumed liabilities
                                    totaling $1,104,783. Not included in this
                                    transaction was a receivable from David
                                    Collins, certain bridge loans, stockholder
                                    advances, an automobile, certain accounts
                                    payable, accrued commissions and accrued
                                    payroll. The assets included: inventory
                                    valued at approximately $295,000; property,
                                    plant and equipment at approximately
                                    $300,000; accounts receivable valued at
                                    approximately $309,000; patents and misc.
                                    asset $35,000.

                                    The liabilities included: assumption of
                                    accounts payable of $475,000, accrued
                                    interest of $27,000, payroll taxes of
                                    approximately $67,000, approximately
                                    $240,000 in commercial notes; and
                                    approximately $293,000 outstanding balance
                                    of a factoring agreement


                                       23
<PAGE>

                                    Related parties to the transaction included
                                    David Collins, our president; Gerald Hannahs
                                    and Dan Lasater, principal shareholders; and
                                    Larry Legal, our secretary/director.

                                    In the opinion of management, the terms of
                                    the asset purchase agreement were as
                                    favorable as those that could have been
                                    obtained from unrelated parties.

(b)  DAC Arkansas

         In previous periods, the DAC Arkansas had significant related party
transactions, including loans to and from stockholders.

              o Prior to September 23, 1998, DAC Arkansas had loaned a principal
shareholder, the Collins Family Trust and Telephone Connections Network,
Inc.(1), a company wholly-owned by the Collins Family Trust, approximately
$340,000, and David Collins, the company president, approximately $143,000.
During the same period, Gerald Hannahs and Dan Lasater, principal shareholders
of the Company, loaned DAC Arkansas approximately $464,000.

              o On September 23, 1998, Gerald Hannahs and Dan Lasater, the
Company's principal shareholders, purchased, from DAC Arkansas, $174,603 of
notes and accrued interest receivable owed by David Collins, our president, to
DAC Arkansas. The consideration was an equal amount of notes payable to these
stockholders.

              o On September 30, 1998, Gerald Hannahs and Dan Lasater, our
principal shareholders, contributed $348,867 of notes payable and accrued
interest to the capital of the DAC Arkansas. Consulting fees of $52,000 and
$61,500 for the years ended December 31, 1999 and December 31, 1998,
respectively, are payments to Telephone Connections Network, Inc., a Company
consultant, for rendering the consulting services to DAC Arkansas and the
Company. These fees were paid primarily to David Collins, our president, who was
employed by Telephone Connections, Inc., and its only experienced personnel.
Taken along with his salary, in the opinion of management, the services rendered
for this compensation was at least as favorable to the Company as that which
could have been obtained from unrelated parties.

(c)  Contractual Relationships

         We and our predecessor have two major suppliers in China-Uni Skit
Technologies, Inc. and Uni Tat International, Inc.- from whom we purchase, on
average more than 80% of our products. On December 23, 1998, Uni Skit, one of
our major manufacturers and suppliers, agreed to convert $251,936 of its debt to
165,000 of our common shares. The transaction was made in reliance on Section
4(2) of the Securities Act, as the purchaser was sophisticated, has full access
to all material information and took the shares for investment purposes. As of
September 30, 1999, we owe this supplier $26,026. In 1997, we contracted with
Uni Skit to share ownership rights, research and development costs with respect


                                       24
<PAGE>

to all parties developed on a joint basis. Uni Skit also has the exclusive right
of manufacturing certain products providing it can handle our requirements. The
contract also gives us the exclusive right to market and sell our joint products
in North and South America, and gives Uni Skit the same exclusive rights in the
Pacific Rim. The parties have non-exclusive rights to market and sell in other
parts of the world. Our contract with Uni Skit was negotiated arms-length, and
at the time, Uni Skit was an unrelated party.

         On March 1, 1995, DAC Arkansas entered into a consulting agreement with
Telephone Connections Network Inc., a company controlled by the Collins Family
Trust, to provide sales and marketing advice to the Company. The Collins Family
Trust was created for the benefit of members of the family of David Collins, the
Company's president. Mr. Collins disclaims any beneficial interest in the trust.
The trustee of Trust is Larry Legal, the Company's Secretary and a director. The
fees paid under the consulting agreement are subject to agreement between the
parties. The agreement expires on March 1, 2000, but can be terminated on 30
days notice. In the opinion of management, the amount of consulting fees paid
were at least as favorable to the Company as those which would have been paid to
unrelated parties. Telephone Connections Network, Inc. is a Florida corporation
formed on November 8, 1993, by Larry Legel, our Secretary and director. The
original purpose of the company was to invest in multilevel marketing telephone
companies. It, however, did not engage in any such activities and remained
dormant until 1995. In 1995, the corporation through its officers Larry Legel
and David Collins, our president, provided consulting services to the Company,
its sole client. Billings have averaged between $4,000 and $6,000 per month. The
consulting arrangement was terminated on March 1, 2000 and will not be renewed.

(d) Promoters and Founders

         On July 31, 1998 we issued 3,630,000 shares of our common stock to
principally the same shareholders of our predecessor, DAC Arkansas, i.e. Collins
Family Trust, Dan Lasater and Gerald Hannahs, for par value, in the same ratio
of ownership in the latter, in reliance on section 4(2) of the Securities Act.
Although this was a non-arms length transaction, at the time, in the opinion of
management was as favorable as could have been obtained from unrelated parties.

(e)  Factoring Agreement

         On April 10, 1995, DAC Arkansas entered into a factoring agreement that
is renewable annually. By agreement with the factor, CIT Group/Commercial
Services, Inc., we assumed this agreement on October 1,1998. The factoring fees
range from .65% to 1.8% monthly depending on the creditworthiness and location
of an account, i.e. domestic or foreign. An additional fee of .25% is charged
for each 30 day period, or part thereof, when the terms of sale exceed 30 days.
Fees are calculated on the gross face value of each invoice. In addition to the
factoring fees interest is charged on the outstanding funds in use at the
greater of 7% or 1.25% above prime. The amounts borrowed are secured by our
accounts receivable. For the year ending December 31, 1999, we owed our factor
approximately $298,000. This was an arms-length transaction.


                                       25
<PAGE>

(f)  Line of Credit/ Loans

         On April 15, 1994, DAC Arkansas' stockholders entered into note
agreements with the Mercantile Bank in Little Rock, Arkansas for a line of
credit totaling $500,000. On February 12, 1999, several principal shareholders
and the Company jointly borrowed, for the benefit of the Company, $230,722
evidenced by a promissory note whose terms require 11 monthly payments of
$10,000, beginning March 12, 1999, with a balloon payment of $137,301 plus
accrued interest, due on February 14, 2000. The interest rate is 9.5%. The loans
are collateralized by our inventories. This was an arms-length transaction.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

         The following documents are incorporated by reference from the
Registrant's Form 10-SB filed with the Securities and Exchange Commission (the
"Commission") file #000-29211, on January 28, 2000 and not yet declared
effective.

Exhibit           Description
-------           -----------

2                Asset Purchase Agreement
3.1              Articles of Incorporation
3.2              Bylaws
10.1             Consulting Agreement
10.2             Lease
10.3             Factoring Agreement
10.4             Uni-Skit Agreement
16               Declination Letter of Sweeney, Gates & Co.

The following documents are filed as a part of this Report.

10.5             Nimax Los Angeles Corporation Agreement



                                    PART F/S



                                       26
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                     DAC Technologies Group International, Inc.

                                     By:   David A. Collins
                                     ----------------------
                                           President
                                     Date: April 13, 2000

















                                       27


<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                           December 31, 1999 and 1998

                              Financial Statements

                                      With

                          Independent Auditor's Report


<PAGE>

                          Independent Auditor's Report
                          ----------------------------


Board of Directors and Stockholders
DAC Technologies Group International, Inc.
Ft. Lauderdale, Florida


         We have audited the accompanying balance sheet of DAC Technologies
Group International, Inc. as of December 31, 1999 and the related statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements as of December 31, 1998 were audited by
other auditors whose report dated September 30, 1999, expressed an unqualified
opinion on those statements.

         We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of DAC Technologies
Group International, Inc. as of December 31, 1999, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.



                                                    Certified Public Accountants

Little Rock, Arkansas
February 4, 2000

                                      F-1

<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                                 Balance Sheets

                           December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                          Assets                                                      1999             1998
                                          ------                                                   -----------       --------
<S>                                                                                                <C>               <C>
Current assets

Cash                                                                                                  $ 14,434       $  68,042
Accounts receivable, less allowance for doubtful
accounts of  $19,649 and $23,682 in 1999 and
       1998, respectively                                                                              453,384         204,805
Inventories                                                                                            383,439         305,924
Prepaid expenses                                                                                        24,525           6,360
                                                                                                   -----------       ---------
Total current assets                                                                                   875,782         585,131
                                                                                                   -----------       ---------

Property and equipment

Furniture and fixtures                                                                                  99,197          96,643
Molds, dies, and artwork                                                                               336,937         319,906
Vehicles                                                                                                34,709          32,209
                                                                                                   -----------       ---------
                                                                                                       470,843         448,758
Accumulated depreciation                                                                              (173,781)       (124,063)
                                                                                                   -----------       ---------
Net property and equipment                                                                             297,062         324,695
                                                                                                   -----------       ---------

Other assets
Patents and trademarks, net of
   accumulated amortization of $2,528 and $589 in
   1999 and 1998, respectively                                                                          32,516          27,469
     Other                                                                                               5,700              --
                                                                                                   -----------       ---------
Total other assets                                                                                      38,216          27,469
                                                                                                   -----------       ---------

Total assets                                                                                       $ 1,211,060       $ 937,295
                                                                                                   ===========       =========
</TABLE>

                                      F-2


<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                                 Balance Sheets

                           December 31, 1999 and 1998

<TABLE>
<CAPTION>
                          Liabilities and Stockholders' Equity                                        1999             1998
                          ------------------------------------                                     -----------       ---------
<S>                                                                                                <C>               <C>
Current liabilities
     Due to factor                                                                                 $   298,709       $ 152,147
Accounts payable-trade                                                                                 128,120          86,762
Accounts payable-related parties                                                                        52,582          98,186
Accrued payroll tax withholdings                                                                        76,147          56,352
Accrued expenses other                                                                                  27,100          44,562
Current maturities of long-term debt                                                                   168,652          88,191
                                                                                                   -----------       ---------
Total current liabilties                                                                               751,310         526,200
                                                                                                   -----------       ---------



Long-term debt, less current maturities                                                                 60,133         173,781
                                                                                                   -----------       ---------


Stockholders' equity

Common stock, $.001 par value; authorized 10,000,000 shares; issued and
  outstanding 5,024,500 and 4,825,000 shares at December 31, 1999
  and 1998, respectively                                                                                 5,024           4,825
Additional paid-in capital                                                                             633,821         594,120
Stock subscription receivable                                                                           (2,632)         (3,630)
Retained earnings (deficit)                                                                           (236,596)       (358,001)
                                                                                                   -----------       ---------
Total stockholders' equity                                                                             399,617         237,314
                                                                                                   -----------       ---------

Total liabilities and stockholders' equity                                                         $ 1,211,060       $ 937,295
                                                                                                   ===========       =========
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                      F-3

<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                            Statements of Operations

                 For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                                      1999             1998
                                                                                                   -----------     -----------
<S>                                                                                                <C>             <C>
Net sales                                                                                          $ 2,136,887     $ 2,044,634

Cost of sales                                                                                        1,243,695       1,186,775
                                                                                                   -----------     -----------

Gross profit                                                                                           893,192         857,859
                                                                                                   -----------     -----------

Operating expenses

  Selling                                                                                              281,215         383,862
  General and administrative                                                                           433,922         394,052
                                                                                                   -----------     -----------
Total operating expenses                                                                               715,137         777,914
                                                                                                   -----------     -----------

Income from operations                                                                                 178,055          79,945
                                                                                                   -----------     -----------

Other income (expense)
  Interest expense                                                                                     (82,255)       (137,604)
  Other income                                                                                          25,605              --
                                                                                                   -----------     -----------
Total other income (expense)                                                                           (56,650)       (137,604)
                                                                                                   -----------     -----------

Income (loss) before income tax expense                                                                121,405         (57,659)

Provision for income taxes                                                                                  --              --
                                                                                                   -----------     -----------

Net income (loss)                                                                                  $   121,405     $   (57,659)
                                                                                                   ===========     ===========


Numerator - net income (loss)                                                                      $   121,405     $   (57,659)

Denominator - weighted average number of shares outstanding                                          4,975,308       3,644,348
                                                                                                   -----------     -----------

Basic earnings (loss) per share                                                                    $      0.02     $     (0.02)
                                                                                                   ===========     ===========
   The accompanying notes are an integral part of these financial statements.
</TABLE>

                                       F-4

<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                       Statements of Stockholders' Equity

                 For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>

                                                Common Stock             Additional      Stock
                                           ---------------------          Paid-in     Subscription       Retained
                                           Shares          Amount         Capital      Receivable        Earnings          Total
                                           ------          ------        -------       ----------        --------          -----
<S>                                       <C>             <C>          <C>               <C>            <C>             <C>
Balances - December 31, 1997              3,630,000       $ 3,630      $     300         $ (3,630)      $ (300,342)     $ (300,042)

  Contribution of related party
    debt to capital                              --            --        349,067               --               --         349,067

  Assets not acquired                            --            --       (200,488)              --               --        (200,488)

  Conversion of debt to equity              165,000           165        251,771               --               --         251,936

  Issuance of stock for cash              1,000,000         1,000        187,500               --               --         188,500

  Issuance of stock for services             30,000            30          5,970               --               --           6,000

  Net loss                                       --            --             --               --          (57,659)        (57,659)
                                          ---------       -------      ---------         --------       -----------     ----------

Balances - December 31, 1998              4,825,000         4,825        594,120           (3,630)        (358,001)        237,314

  Issuance of stock for cash                199,500           199         39,701               --               --          39,900

  Payments on subscription
    receivable                                   --            --             --              998               --             998

  Net income                                     --            --             --               --          121,405         121,405
                                          ---------       -------      ---------         --------       -----------     ----------

Balances - December 31, 1999              5,024,500       $ 5,024      $ 633,821         $ (2,632)      $ (236,596)     $  399,617
                                          =========       =======      =========         ========       ==========      ==========
</TABLE>


    The accompanying notes are integral part of these financial statements.

                                       F-5

<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                            Statements of Cash Flows

                 For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                                      1999               1998
                                                                                                    ---------          ---------
<S>                                                                                                 <C>                <C>
Cash flows from operating activities
  Net income (loss)                                                                                 $ 121,405          $ (57,659)
  Adjustments to reconcile net income (loss) to
    net cash provided by (used in) operating activities:
      Depreciation                                                                                     49,718             46,642
      Amortization                                                                                      1,939                589
      Changes in assets and liabilities
        Accounts receivable                                                                          (248,579)            10,191
        Inventories                                                                                   (77,515)               465
        Prepaid expenses                                                                              (18,165)            (1,875)
        Other assets                                                                                   (5,700)                --
        Accounts payable - trade                                                                       41,358           (296,432)
        Accounts payable - related party                                                              (45,604)            98,186
        Accrued payroll tax withholdings                                                               19,795             18,196
        Accrued expenses other                                                                        (17,462)           (37,610)
                                                                                                    ---------          ---------
Net cash provided by (used in) operating activities                                                  (178,810)          (219,307)
                                                                                                    ---------          ---------

Cash flows from investing activities
  Purchases of property and equipment                                                                 (22,085)           (92,783)
  Purchases of patents and trademarks                                                                  (6,986)                --
  Increase in notes receivable - related party                                                             --            (17,400)
                                                                                                    ---------           --------
Net cash provided by (used in) investing activities                                                   (29,071)          (110,183)
                                                                                                    ---------          ---------

Cash flows from financing activities
  Increase (decrease) in due to factor                                                                146,562            (69,002)
  Net change in notes payable-related parties                                                           3,000            121,073
  Proceeds on long-term debt                                                                               --            144,687
  Payments on long-term debt                                                                          (36,187)                --
  Proceeds from issuance of common stock                                                               39,900            194,500
  Payments on stock subscription receivable                                                               998                 --
                                                                                                    ---------          ---------
Net cash provided by (used in) financing activities                                                   154,273            391,258
                                                                                                    ---------          ---------

Increase (decrease) in cash                                                                           (53,608)            61,768

Cash - beginning of year                                                                               68,042              6,274
                                                                                                    ---------          ---------
Cash - end of year                                                                                  $  14,434          $  68,042
                                                                                                    =========          =========
</TABLE>
     The accompanying notes are integral part of these financial statements.

                                       F-6

<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998

1. Nature of Business
   ------------------

         DAC Technologies Group International, Inc. (the "Company"), a Florida
   corporation, is in the business of developing, manufacturing and marketing
   various consumer products, patented and unpatented, which are designed to
   provide security for the consumer and their property. In addition, the
   Company has developed a wide range of security and non-security products for
   the home, automobile and individual. The majority of the Company's products
   are manufactured and imported from mainland China and are shipped to the
   Company's central warehouse facility in Little Rock, Arkansas. These
   products, along with other items manufactured in the United States, are sold
   primarily to major retail chains in the United States and Germany.

2. Organization and Summary of Significant Accounting Policies
   -----------------------------------------------------------

   a. Organization and basis of presentation - The Company was incorporated as a
      Florida corporation in July 1998 under the name DAC Technologies of
      America, Inc. In July 1999, the Company changed its name to DAC
      Technologies Group International, Inc. Effective September 30, 1998, the
      Company acquired certain assets from and assumed certain liabilities of a
      related company, DAC Technologies of Arkansas, Inc. ("DAC Arkansas"),
      formerly known as DAC Technologies of America, Inc., an Arkansas
      corporation. On September 17, 1999, DAC Arkansas changed its name to DAC
      Technologies of Arkansas, Inc. The ownership of both companies was the
      same as of the date of the transaction (September 30, 1998). Since the
      companies were under common control, the combination was accounted for in
      a manner similar to a pooling of interest and the companies have been
      shown as combined for all periods presented.

   b. Estimates - The preparation of financial statements in conformity with
      generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities as of the dates of the financial statements and the reported
      amounts of revenues and expenses during the reporting periods. Actual
      results could differ from those estimates.

   c. Cash equivalents - The Company considers all highly liquid investments
      with original maturities of three months or less at the time of purchase
      to be cash equivalents.

   d. Inventories - Inventories are stated at the lower of average cost or
      market. Costs include freight and applicable customs fees.

   e. Property and equipment - Property and equipment are stated at cost.
      Depreciation is provided using the straight-line method over the estimated
      useful lives of the assets that range from five to eleven years.

   f. Patents and trademarks- Costs incurred in connection with the acquisition
      of patents and trademarks are capitalized and amortized over their
      estimated useful lives.

                                      F-7


<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998

2. Organization and Summary of Significant Accounting Policies (cont.)
   -----------------------------------------------------------

   g  Income taxes - The Company utilizes the liability method of accounting for
      deferred income taxes. The liability method requires the recognition of
      deferred tax liabilities and assets for the expected future tax
      consequences of temporary differences between tax basis and financial
      reporting basis of assets and liabilities. A valuation allowance is
      established when necessary to reduce deferred tax assets to the amount
      that is expected to be realized.

      Prior to September 30, 1998, the Company, with the consent of its
      stockholders, had elected to be treated as an "S" Corporation under the
      Internal Revenue Code. Accordingly, all taxable income or loss flowed
      through to the stockholders. No income tax expense or liability was
      recorded in the accompanying financial statements prior to September 30,
      1998.

   h. Revenue recognition - The Company records sales when merchandise is
      shipped to the customer. Allowances are provided when merchandise is
      returned.

   i. Earnings per share - Earnings per share have been calculated using the
      weighted average number of shares outstanding for each year. The Company
      has no dilutive shares or options outstanding.

   j. Advertising - Advertising costs are expensed as incurred. Total
      advertising expenses were approximately $3,300 and $12,725 for the years
      ended December 31, 1999 and 1998, respectively.

   k. Reclassifications - Certain reclassifications have been made to the 1998
      balances in order to conform to the 1999 presentation.

   l. Recent applicable accounting pronouncement - In April 1998, the Accounting
      Standards Executive Committee of the AICPA issued Statement of Position
      98-5, "Reporting on the Costs of Start-up Activities" ("SOP 98-5"). SOP
      98-5 requires that start-up costs, including organization costs, be
      expensed as incurred. The effect of adoption of this pronouncement was
      immaterial.

3. Inventories
   -----------
          Inventories consist of:

                                            1999                1998
                                            ----                ----

Finished goods                           $ 251,288           $ 222,277
Inventory in transit                       113,882              59,348
Parts                                       18,269              24,299
                                           -------           ---------

                                         $ 383,439           $ 305,924
                                         =========           =========



                                      F-8

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998


4. Factoring Agreement
   -------------------

         On October 1, 1998, the Company assumed a factoring agreement from the
   Predecessor. This agreement, which is renewable annually, provides for
   factoring fees of .65% to 1.8% monthly depending on the creditworthiness and
   location of an account (domestic or foreign). An additional fee of 1/4 of 1%
   is charged for each thirty-day period, or part thereof, when the terms of
   sale exceed ninety-days. Fees are calculated on the gross face value of each
   invoice. In addition to factoring fees, interest is also charged on the
   outstanding funds in use. The interest rate is the greater of 7% or 1.25%
   above prime (8.5% at December 31, 1999). The amounts borrowed are
   collateralized by the Company's accounts receivable.

5. Long-Term Debt
   --------------
          Long-term debt consists of:
<TABLE>
<CAPTION>
                                                                                          1999             1998
                                                                                          ----             ----
<S>                                                                                    <C>              <C>
            Note payable to bank; payable $10,000 monthly, including interest at
               9.5%, with remaining balance due February 2000, secured by
               inventory and by personal guarantees of the Company's
               stockholders.                                                           $ 155,492        $ 230,029

            Note payable to a financing company; payable in monthly installments
               of $524, including interest at 9.75%, with remaining balance due
               November 2001; secured by certain vehicles.                                28,626           31,943

            Note payable to a financing company; payable in monthly installments
               of $9,000, including interest at 16%; with the remaining balance
               due June 2000; secured by equity in factored receivables.                  41,667               --

            Note payable to shareholder; payable on demand, unsecured.                     3,000               --
                                                                                       ---------        ---------

                                                                                         228,785          261,972
            Less current maturities                                                      168,652           88,191
                                                                                       ---------        ---------

            Long-term debt, less current maturities                                    $  60,133        $ 173,781
                                                                                       =========        =========
</TABLE>

                                      F-9

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998


5. Long-Term Debt (cont.)
   --------------

              Aggregate maturities of long-term debt are as follows:

                            Year Ended
                            ----------
                               2000                        $ 168,652
                               2001                           60,133
                                                           ---------
                                                           $ 228,785
                                                           =========


         The Company made interest payments on long-term debt totaling
   approximately $47,600 and $51,400 during the years ended December 31, 1999
   and 1998, respectively.

6. Equity
   ------

         On July 31, 1998, the Company issued 3,630,000 founders' shares of
   common stock to principally the same stockholders, in the same ratio as the
   ownership ratio of DAC Arkansas. Amounts owed on these shares are reflected
   as stock subscriptions receivable in the accompanying financial statements.

         On September 30, 1998, the minority stockholders contributed $349,067
   of notes payable and accrued interest to the capital of the Company.

         On December 23, 1998, one of the Company's major suppliers agreed to
   convert $251,936 of its debt to equity in the Company in exchange for 165,000
   shares of common stock, thereby making it a related party.

         On December 31, 1998, pursuant to a private placement offering, the
   Company raised a net of $188,500 and issued 1,000,000 shares of common stock,
   of which 500,000 shares were to companies affiliated with existing
   stockholders. At the same time, the Company issued 30,000 shares of common
   stock for legal services valued at $6,000 and charged the $6,000, and an
   additional $5,500 of other expenses, against the proceeds of the offering.

         In April 1999, pursuant to a private placement offering, the Company
   issued 199,500 shares of common stock for $39,900 to certain existing
   shareholders.

                                      F-10

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998

7. Income Taxes
   ------------

         Reconciliations of the differences between income taxes computed at the
   Federal statutory tax rates and the provision for income taxes is as follows:
<TABLE>
<CAPTION>
                                                                                            1999            1998
                                                                                          --------        ---------
<S>                                                                                       <C>             <C>
         Income taxes computed at Federal statutory tax rate                              $ 41,277        $ (71,101)
         State tax provision, net of Federal benefits                                        5,208           (8,971)
         Change in valuation allowance                                                     (50,950)          79,627
         Other                                                                               4,465              445
                                                                                          --------        ---------
         Provision for income taxes                                                       $     --        $      --
                                                                                          ========        =========

         Temporary differences that give rise to significant deferred tax assets
   (liabilities) are as follows:

<CAPTION>
                                                                                            1999            1998
                                                                                          --------        ---------
<S>                                                                                       <C>             <C>
         Tax basis in excess of financial basis in intangible
           assets                                                                         $     --        $  62,367
         Net operating loss carryforward                                                    29,122           17,260
                                                                                          --------        ---------
         Total deferred tax assets                                                          29,122           79,627
         Valuation allowance                                                               (29,122)         (79,627)
                                                                                          --------        ---------
Net deferred tax asset                                                                    $     --        $      --
                                                                                          ========        =========
</TABLE>



         At December 31, 1999, the Company had net operating loss carry forwards
   available for Federal and state income tax purposes of approximately $76,000
   which will begin expiring unless utilized in 2018. Based upon the uncertainty
   of the realization of this deferred tax asset, a valuation allowance of
   $29,122 is reflected in the accompanying financial statements for the year
   ended December 31, 1999.

8. Related Party Transactions
   --------------------------

         During its history, the Company had significant related party
   transactions, including loans to and from its president and stockholders.
   Prior to September 23, 1998, the Company had loaned the majority stockholder,
   (The Collins Family Trust, "CFT") and Telephone Connections Network, Inc.
   ("TCN"), wholly owned by CFT, approximately $340,000. The Company had also
   loaned its president approximately $143,000. During the same period, the
   minority stockholders loaned the Company approximately $464,000.


                                      F-11

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998


8. Related Party Transactions (cont.)
   --------------------------

         On September 23, 1998, the minority stockholders purchased from the
   Company, $174,603 of notes and accrued interest receivable owed by the
   president and CFT to the Company. Consideration was an equal amount of notes
   payable to these stockholders.

         On September 30, 1998, and as amended on September 27, 1999, the
   Company entered into an asset purchase agreement, wherein it acquired the
   assets and liabilities of DAC Arkansas (see Note 2). The transaction did not
   include a receivable from a major stockholder and President, certain bridge
   loans, stockholder advances, an automobile, certain accounts payable, accrued
   commissions and accrued payroll totaling $200,488. This amount was eliminated
   from additional paid-in capital when the companies were combined.

         Consulting fees of $52,000 and $61,500 were paid to TCN during the
   years ended December 31, 1999 and 1998, respectively, under the terms of a
   consulting agreement which expired March 1, 2000 and has not been renewed.

9 Commitments and Contingencies
  -----------------------------

         The Company currently leases office and warehouse space under a lease
   that expires on February 1, 2001. Minimum future rental payments under this
   non-cancellable lease as of December 31, 1999 are as follows:

                   2000                            $ 27,900
                   2001                               2,325
                                                   --------

                                                   $ 30,225
                                                   ========

         Rent expense for the years ended December 31, 1999 and 1998 was
   approximately $40,980 and $28,080, respectively.

         In connection with the purchase transaction, if DAC Arkansas' creditors
   were to institute litigation, the Company could be liable to certain of DAC
   Arkansas' unsecured creditors for up to approximately $119,000, representing
   the remaining outstanding liabilities of DAC Arkansas as of September 30,
   1998. No accrual has been made for this contingency.

                                      F-12

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998


10. Major Customers and Suppliers
    -----------------------------

         During the year ended December 31, 1999, the Company had aggregate
   sales to four customers that exceeded ten percent of total net sales. Sales
   to these individual customers were 26.4%, 20.9%, 11.2% and 11.1% of net
   sales. One customer accounted for 14.0% of the Company's sales during the
   year ended December 31, 1998.

         During the year ended December 31, 1999, the Company purchased 46% and
   42%, respectively, of its products from two major suppliers. During the year
   ended December 31, 1998, the Company purchased 79% of its products from one
   major supplier. The Company is dependent upon these suppliers continuing in
   business and their ability to ship to the United States, but believes that
   they could replace these suppliers, if required to, at similar quality and
   terms.

11. Concentration of Credit Risk
    ----------------------------

         Financial instruments which potentially subject the Company to
   concentrations of credit risk consist primarily of trade accounts receivable
   with a variety of customers. The Company provides credit in the normal course
   of business to its customers and performs ongoing credit evaluations of its
   customers. It maintains allowances for doubtful accounts and provisions for
   returns and credits based on factors surrounding the specific customers and
   circumstances. The Company generally does not require collateral from its
   customers. Credit risk is considered by management to be limited due to the
   Company's customer base and its customer's financial resources.

12. Financial Information by Business Segment
    -----------------------------------------

         The Company operates in three primary business segments delineated by
   products. The three segments are security products, gun locks and
   non-security products (cup holders and plate holders). The accounting
   policies of the Company's segments are the same as those described in Note 2.
   Organization and Summary of Significant Accounting Policies. The Company's
   revenues are derived from sales in the United States and Germany. The
   Company's long-lived assets are located in the United States and China.

         Information concerning operations in these segments of business is as
   follows:

                                                    1999                1998
                                                -----------         -----------
          Revenues:
             Security products
                United States                   $   786,596         $ 1,201,957
                Germany                             240,025             277,851
             Gun-locks                              922,047             276,448
             Non-security products                  188,219             288,378
                                                   --------         -----------
            Total                               $ 2,136,887         $ 2,044,634
                                                ===========         ===========

                                      F-13

<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                          Notes to Financial Statements

                           December 31, 1999 and 1998


12. Financial Information by Business Segment (cont.)
    -----------------------------------------
<TABLE>
<CAPTION>
                                                               1999                1998
                                                           -----------          ----------
<S>                                                        <C>                  <C>
          Net income:
             Security products
               United States                               $       589          $ (102,070)
               Germany                                             240             (23,601)
             Gun-locks                                          92,360              34,612
             Non-security products                              28,216              33,400
                                                           -----------          ----------
          Total                                            $   121,405          $  (57,659)
                                                           ===========          ==========

          Identifiable assets:
             Security products
               United States                                   586,298             542,308
               China                                           120,718             141,590
             Gun-locks
               United States                                   340,682              78,864
               China                                            45,897              33,230
             Non-security products                              72,806              66,901
             Corporate                                          44,659              74,402
                                                           -----------          ----------
          Total                                            $ 1,211,060          $  937,295
                                                           ===========          ==========
</TABLE>

         Molds used to manufacture the Company's security products and gun locks
   are located in China (See Note 1).

                                      F-14