<PAGE>
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10K-SB

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

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002


        [ ] 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)


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


                   1601 Westpark Dr. #4C Little Rock, AR 72204
                 ----------------------------------------------
               (Address of principal executive offices)(Zip Code)

                                 (501) 661-9100
                           (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 REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES [X]  NO [ ]


<PAGE>

         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-KSB
OR ANY AMENDMENT TO THIS FORM 10-KSB. [ ]


         STATE ISSUER'S REVENUES FOR ITS MOST RECENT FISCAL YEAR.   $2,756,193


         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 MARCH 12, 2003 WAS APPROXIMATELY $1,489,788.

         STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASS OF
COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE. AS OF MARCH 12, 2003,
5,818,056 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.












<PAGE>


                                TABLE OF CONTENTS



<TABLE>
<S>                                                                           <C>
FORWARD-LOOKING STATEMENT......................................................1

PART I   ......................................................................1

ITEM 1.  DESCRIPTION OF BUSINESS...............................................1
ITEM 2.  DESCRIPTION OF PROPERTY...............................................7
ITEM 3.  LEGAL PROCEEDINGS.....................................................7
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................8

PART II .......................................................................8

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS...............8
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..............9
            Financial Condition and Results of Operations................... ..9
ITEM 7. FINANCIAL STATEMENTS..................................................10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.........................10

PART III......................................................................10

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT....................10

ITEM 10. EXECUTIVE COMPENSATION...............................................10
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......11
             Security Ownership of Certain Beneficial Owners..................11
             Security Ownership of Management ................................11
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................12
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.....................................12


</TABLE>


                                       i


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                           FORWARD-LOOKING STATEMENTS

         This document includes "forward looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements other than statements of historical fact
contained in this document, including, without limitation, the statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Liquidity and Sources of Capital" regarding the Company's
strategies, plans, objectives, expectations, and future operating results are
forward-looking statements. Such statements also 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. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable at this time, it can give no
assurance that such expectations will prove to have been correct. Actual results
could differ materially based upon a number of factors including, but not
limited to, risks attending litigation and government investigation, inability
to raise additional capital or find strategic partners, leverage and debt
service, governmental regulation, dependence on key personnel, competition,
including competition from other manufacturers of gun locks, costs and risks
attending manufacturing, expansion of operations, market acceptance of the
Company's products, limited public market and liquidity, shares eligible for
future sale, the Company's common stock ("Common Stock") being subject to penny
stock regulation and other risks detailed in the Company's filings with the
United States Securities and Exchange Commission ("SEC" or "Commission").





                                       1
<PAGE>

                                     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 March 2002, we sold an aggregate of 5,763,956
shares of our Common Stock to approximately 40 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
$724,400 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, consolidation, or purchase or sale of a
significant amount of assets not in the ordinary course of business.

         Our primary business is gun safety. The American Firearms Industry, a
trade association, estimates that there are 60-65 million handguns and 30-35
million handgun owners in the United States. According to the February 2000
COMMERCE IN FIREARMS IN THE UNITED STATES published by the U.S. Bureau of
Alcohol, Tobacco and Firearms and the Department of Commerce, an estimated two
million new and two million second-hand handguns are sold in the United States
annually.

(b)      Business Plan

         2002 SUMMARY

         The year 2002 may very well prove to be a breakout year for DAC
Technologies. After years of stagnant sales growth, the Company has experienced
a 39% increase in revenues over the prior year and recorded its first $1,000,000
in quarterly gross sales during the fourth quarter of 2002. This increase in
sales and a 21% decrease in operating expenses has resulted in the Company's
return to profitability in 2002.

         Significant to the sales growth were two new products introduced in
2002: the DAC SportSafe, a portable, quick-access, digital safe has accounted
for approximately 17% of our revenues this year, and the Sportsman Lighter, a
wind-proof, water-resistant butane lighter accounts for about 11%. Both of these
new products have done well across the Company's entire customer base.


                                       2
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         While there was no increase in the sales of the Company's line of gun
locks, gun locks continue to be the backbone of the Company's product line,
accounting for 42% of the Company's total sales in 2002. Our gun locks are
presently compatible with most brands and models. The Company believes that the
greatest demand for our gun locks will come from those who use handguns for
guarding their households or for personal protection. This includes both
individual consumers among the general public and professionals in the law
enforcement community. The Company believes that the law enforcement community
presents a substantial market for our gun locks. According to the Department of
Justice, the more than 700 general purpose State and local law enforcement
agencies that employ 100 or more full-time sworn personnel collectively employ
more than 381,000 such personnel. Former U.S. Housing Secretary, Andrew Cuomo
estimates that governments at all levels together buy more than 500,000 police
guns annually. In addition, the consumer segment of our potential market
consists of non-law enforcement handgun owners who use guns for home defense and
self- protection. It is estimated that these individuals collectively own more
than sixty-five million handguns, and purchase over two million more each year,
from licensed firearms dealers in the United States.


         During 2002, the gun lock market has also seen a shift in emphasis, as
more and more gun manufacturers are providing gun locks with each of the
firearms they sell. Maryland was the first state to enact mandatory gun lock
requirements fro handguns. California has also enacted similar provisions. DAC
Technologies has been able to secure gun lock business from several major
firearm manufacturers. The Company currently has nine gun locks and five safes
approved by the California Department of Justice for sale in the state of
California for the safety storage of firearms.

         The Company continues to strive aggressively towards diversifying its
product line and customer base, as well as reducing operating costs, while
operating in an ever increasing competitive marketplace.

         CORE BUSINESS

         We are in the business of developing, marketing and outsourcing the
manufacture of various consumer products, patented and non-patented, designed to
enhance and provide security for the consumer and for his property. We have
placed particular emphasis on gun safety because it continues to be a prominent
national issue due to the rash of school and workplace violence. In particular,
our products consist of gun locks, trigger locks, security safes, specialty
safes, personal protection devices and items for the health care industry.
During 2002, we introduced a new product line of windproof, water resistant
butane lighters, ideal for camping, hunting and boating.

          A significant portion of our business is with mass market retailers
such as Wal Mart, Walgreens and Kmart. However, initiatives to develop a
nationwide cadre of manufacturer's representatives has allowed us to penetrate
the sporting goods market, which consists of thousands of smaller gun shops and
sporting goods stores and distributors. We have also begun selling our products
into many other markets consisting of safe retailers, jewelry stores, truck
stops, alarm companies, RV retailers and computer retailers. We have
significantly increased our sales to firearm manufacturers. Developing these
markets and continuing to focus attention on potential new ones will allow us to
reduce our dependence on our mass merchant customers.

         The majority of our products are manufactured and imported from
mainland China and shipped to a central location in Little Rock, Arkansas for
distribution.





                                       3
<PAGE>

         The Company's business plan and strategy for growth focuses on:

                  o        increased penetration of our existing markets
                  o        aggressive targeting and penetration of other
                           markets, i.e. sporting goods retailers
                  o        diversification of products and services to provide a
                           base for continued growth
                  o        adoption of new technologies for safety and security
                           products
                  o        adoption of new product lines
                  o        identification and recruitment of effective
                           manufacturer's representatives to actively market
                           these products on a national and international basis
                  o        aggressive cost containment

         The principal key to increasing the rate of the Company's growth is the
availability of capital to maintain additional inventory, develop or acquire new
products and secure motivated professional employees. In this regard, the
Company began efforts in August 2001 to raise $1.5 million in capital through
the private placement of its common stock. Funds generated from this offering
were used for the reduction of debt and increase inventory, marketing
activities, research and development and for operating capital. The offering
expired March 31, 2002, and raised $415,000.

         Management believes that continued growth will require the Company to
continually innovate and improve its existing line of products and services to
meet consumer, industry and governmental demands. In addition, we must continue
to develop or acquire new and unique products that will appeal to gun owners. To
that end, we have developed a line of security safes that has provided the
Company with a favorable niche in the marketplace. These safes are of strong,
all-steel construction for the storage of handguns, long-guns or valuables. The
line consists of ten floor safes, wall safes and one specialty safe (SportSafe).
These safes are high-quality items offered at reasonable prices. Five of these
safes have been approved by the California Department of Justice for sale in the
State of California for the safety storage of firearms.

         In addition to our traditional products, our management is actively
pursuing initiatives which may add complementary businesses, products and
services. These initiatives are intended to broaden the base of revenues to make
us less dependent on particular products. By developing businesses which focus
on products and services which complement our current line of products,
management hopes to leverage these opportunities to not only develop new sources
or revenue, but to strengthen the demand for our existing products. In line with
these initiatives, the Company introduced in 2002 the Sportsman Lighter, a
refillable butane lighter which has been sold to our mass merchant and sporting
goods customers. In addition, the Company is developing for 2003 a line of gun
cleaning kits and accessories. These items were shown at the 2003 SHOT Show and
received tremendous interest, as the Company is going to be able to offer these
kits at a price 30% to 40% under the existing market. The Company has received
verbal commitments from Wal Mart and several sporting goods retailers for these
items, which will begin shipping during the second quarter of 2003. The Company
is also exploring the production of various hunting and camping accessories.



                                       4
<PAGE>

         We have redesigned our website (www.dactec.com). All of our products
are available via e-commerce on this new site.

         In May 2002, James R. Pledger resigned as our Chairman and Chief
Executive Officer. David A. Collins, our founder and former Chairman and Chief
Executive Officer returned to assume these duties. Mr. Collins' knowledge of the
company and the industry has enabled the Company to significantly increase its
revenues and return the Company to profitability.

         In July, 2002, the Company sold certain assets of its wholly-owned
subsidiary, Summit Training International, Inc., including its name, for
$50,000. Proceeds from this sale included $5,000 cash and a $45,000 note
maturing no later than eighteen months from the date of the note. In connection
with this sale, the Company agreed to a noncompetitive restriction regarding
educational or instructional services in the law enforcement sector for a
four-year period. The Company had discontinued operations of Summit Training in
January, 2002 due to unprofitability.

(c)      Products

         Our products can be grouped into four main categories: (a) gun safety
locks, (b) security safes, (c) automotive and personal security, and (d)
non-security products. 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 products with the assistance of our
Chinese and domestic manufacturers, who are responsible for the tooling,
manufacture and packaging of our products.

(1)      Security Products

         (A)      GUN SAFETY LOCKS. We currently market 20 different gun safety
                  locks, most of which are available in retail packaging (as
                  singles and value packs) or in bulk packaging. These locks
                  range from metal or steel, keyed trigger locks to cable locks.
                  We market a patented gun lock designed specifically for use
                  with Glock handguns. Nine of our gun locks have been approved
                  for sale in the State of California.

         (B)      SECURITY SAFES. We currently market ten security and specialty
                  safes, including the DAC SportSafe, developed for the sporting
                  goods community, first unveiled in February 2002. These safes
                  are of heavy duty all-steel construction and are perfect for
                  firearms, jewelry and other valuables. Most have electronic
                  keypads for easy access. Five of our safes have been approved
                  for sale in the State of California as a gun safety measure.

         (C)      AUTOMOTIVE AND PERSONAL SECURITY. We currently market over 12
                  different electronic security devices designed to protect your
                  automobile or yourself. We also market non-electronic security
                  devices such as pepper spray and tear gas.

         (D)      NON-SECURITY PRODUCTS. We currently market two licensed
                  products, the Clampit Cupholder and Plateholder, as well as
                  the new Sportsman Lighter, a windproof, water resistant,
                  refillable butane lighter.


                                       5
<PAGE>

(d)      Manufacturing and Distribution.

         Through our foreign and domestic manufacturing agents, we manufacture,
design and build our tooling, molds and products. Our administrative offices and
warehouse facilities are located in Little Rock, Arkansas. We contract our
manufacturing for tooling and production primarily in Shanghai, China, and to a
lesser extent, in Little Rock, Arkansas and Sandwich, Illinois. We distribute
the majority of our domestics, and certain of our international business out of
our Little Rock facility. Most of our international business is shipped directly
to our customers direct from the Shanghai, China location. Products are
delivered to our Little Rock facility complete and ready for delivery to our
customers.

         We currently utilize both internal sales personnel and commissioned
independent sales representatives. We have increased our sales promotions and
sales development activities to provide assistance to the independent sales
representatives through the use of brochures, product samples and demonstration
products. We have redesigned our web site WWW.DACTEC.COM which will serve both
as a marketing tool and a platform from which we will be able to provide various
support services fo our independent sales representatives. We have also added
e-commerce capability to our web site. We also utilize trade shows, both on a
regional and national level to promote our products and to attract qualified
sales representatives.

         Our management attempts 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 we place an order with our manufacturers
until the product is received in our distribution center is normally 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. Our products
compete with other competitors lock boxes, trigger locks, cable locks, ring
locks and the evolving smart guns. Many of these products are more widely known
than the Company's products. While we believe that our products are favorably
priced to comparable products on the current market, we nevertheless expect
competitors to attempt development of similar products at similar prices,
possibly reducing the Company's sales or profit margins or both.


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<PAGE>

         Some of our competitors in the business sectors which we operate in
are:

                  o        GUN SAFETY - Master Lock (which presently controls
                           60%-70% of the market), Noble Security, Saf T Lok,
                           and Shot Lock.
                  o        SECURITY SAFES - Sentry Safes, GunLocker and Gun
                           Vault.
                  o        AUTOMOTIVE SECURITY - Bulldog, Rally and Code Alarm.
                  o        PERSONAL SECURITY - competitors are varied and mostly
                           smaller vendors.
                  o        NON-SECURITY PRODUCTS - competitors are various small
                           and large vendors.

         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 and security safes
where our competitors generally are bigger, better known, and have greater
resources including capital and personnel. We realize it is important to achieve
brand name recognition in establishing a 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. The keys to our maintaining a
competitive position is product design, pricing, quality of the product and the
maintenance of favorable relationships with various mass merchandisers.

(f)      Principal Suppliers and Manufacturers

         Since most of our products, in particular our gun locks and security
safes, are manufactured in mainland China, we customarily develop our
manufacturing through trading companies located in China. Our principal agents
are Nimax and MDD Trading, Ltd., which are trading companies/agents that are
responsible for locating manufacturers for our gun safety, security safes and
electronics products. These companies typically provide us with price lists for
the manufacture and tooling of our products, which we may or may not negotiate.
These agents are, in turn, compensated by the manufacturer.

         Domestically, Personal Security Products, a Little Rock, Arkansas
company, manufactures our pepper spray and tear gas products, and Taico Design
Products, located in Sandwich, Illinois, manufactures our Clampit Cupholder and
Plateholder.

         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.

(g)      Customers.

         Although we have numerous customers, we sell on the basis of purchase
orders, primarily to national retail chains such as Wal Mart, Kmart and
Walgreens. In 2002, Wal Mart accounted for 40% of our gross revenues and
Walgreens 11%.

         During 2002, we added a number of firearm manufacturers and sporting
goods distributors to our customer base, and continued to focus our marketing
efforts through our independent sales representatives in this area. Demand for
our security safes have also presented opportunities in other markets consisting
of safe retailers, jewelry stores, truck stops, alarm companies, RV retailers,
computer retailers and many more. By developing these new markets we will be
able to be less dependent on our primary customers.



                                       7
<PAGE>

(h)      Intellectual Property.

         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:

                  MODEL                      PATENT NO.          EXPIRATION
                  -----                      ----------          ----------

         TVP 095 Trigger Lock                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


         In addition, we have entered into licensing agreements giving us the
exclusive right to sell the patented DAC Lok, a gun lock designed specifically
for Glock handguns, and the Clampit Cupholder and Plateholder in the U.S., with
certain minor exceptions.

         We have not to date registered or trademarked any of our product names.

         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 have a material adverse affect on 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
manufactured by others, it is critical for us to insure that our manufactured
products do not infringe upon existing patents of others.

(i)      Governmental Regulations.

         Several federal laws regulate the ownership, purchase and use of
handguns, including the 1968 Gun Control Act and the Brady Bill. There is not,
however, any federal law which requires the use of gunlocks. At least 18 states
and a variety of cities and counties have enacted Children Access Prevention
laws designed to prevent the unsupervised storage of loaded weapons. These "CAP"
laws typically require that guns be safely secured in gun safes or with gun
locks.

         We are not subject to specific governmental regulation or standards,
although the sale of handguns is heavily regulated. However, several states have
considered types of enhanced gun regulation that impact handgun safety locks and
ways to increase gun safety and minimize gun violence. One way of accomplishing
this is to require gun manufacturers to incorporate safety devices similar to
the Company's products into all handguns sold. The first regulation of this kind
was passed by the Maryland state legislature in early April 2000, and signed
into law by Governor Glendening on April 11, 2000. More than half a dozen states
are considering similar laws. Although gun manufacturers have uniformly resisted
this kind of legislation in the past, this view is changing. Should such
regulations materialize, they presumably will serve to increase the demand for
our products and sales in the gun safety area. Such regulations may, however,
also be promulgated to regulate the specifications of the devices. Recently the
federal Consumer Products Safety Council has contracted with the American
Society for Testing and Materials ("ASTM") to set standards and test procedures
for gun locking devices.



                                       8
<PAGE>

         Additionally, the State of California has enacted legislation that
establishes performance standards for "firearm safety devices", "lock-boxes" and
"safes". This legislation requires manufacturers to have their products tested
by an independent testing laboratory in order to be listed as an approved
device. Effective January 1, 2002, this legislation required that every firearm
sold in the state be accompanied by an approved safety device. Effective January
1, 2003, the legislation was expanded in that any firearm safety device sold
within the state must be approved.

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

(j)      Research and Development.

         Research and development costs are expensed as incurred. We develop our
products internally, utilizing the expertise of our manufacturers, input from an
engineering consulting firm and input from our customers. Any R & D cost
incurred by our manufacturers is passed on to us in the pricing of the tooling,
molds and products. We do not pass such costs onto 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 tooling made. We own the molds and tooling
for all of our gunlock products. After pre- production samples are 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, Vice President of
Manufacturing, receptionist/clerk and shipping clerk. There are no collective
bargaining agreements.

(m)      Reports to Security Holders.

         Copies of this report, including exhibits to the Report and other
materials filed with the SEC that are 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.



                                       9
<PAGE>

(n)      Certain Risk Factors.

         If we are to expand our operations, we will need additional capital.
Our ability to timely expand our product operations and, in particular, the
production and marketing of gun locks and safes is largely dependent upon the
acquisition of additional funding. In the event that additional capital is not
obtained, we may be unable to timely complete and/or implement our plans to
expand our operations.

         We have a history of moderate operating profits, and our growth program
and future profitability remains uncertain. We expect our operating expenses to
increase significantly in connection with our proposed growth program and,
accordingly, our future profitability may depend on corresponding increases in
funding or revenues from our expanded business operations. We believe that
operating results will be adversely effected if start-up expenses associated
with our new product lines are incurred without sufficient offsetting funding or
revenues. Moreover, future events, including unanticipated expenses or increased
competition could have an adverse effect on our long-term operating margins and
results of operations. There can be no assurance that our Company's growth
program will result in an increase in the profitability of our operations.

         Our success depends on maintaining relationships with key customers. We
have several customers upon which we depend on for the sale of a large
percentage of our gun lock and security products. Customer orders are dependent
upon their markets and may vary significantly in the future based upon the
demand for our products. The loss of one or more of such customers, or a
declining market in which such customers reduce orders or request reduced
prices, could have a material adverse effect on our business.

         We depend on contract manufacturers for substantially all of our
manufacturing requirements. The inability of our contract manufacturers to
provide us with adequate supplies of high quality products or the loss of any of
our contract manufacturers would have an adverse effect on our business. We have
developed a highly outsourced contract manufacturing capability for the
production of our products. Our primary relationship with our foreign contract
manufacturers has been accomplished through our agents located in Shanghai,
China. We rely on contract manufacturers to procure components, assemble, and
package our products. We believe there are alternative manufacturing companies
available at competitive prices, any interruption in the operations of one or
more of these contract manufacturers or delays in their shipment of products
would adversely affect our ability to meet scheduled product deliveries to our
customers.

         We may be unable to compete favorably in the highly competitive
security products and gun lock industry. The manufacture and sale of security
safes and gun lock products is highly competitive and there are no substantial
barriers to entry into the market. Most of our competitors are large,
well-established companies with considerably greater financial, marketing, sales
and technical resources than those available to us. Additionally, many of our
present and potential competitors have research and development capabilities
that may allow such competitors to develop new or improved products that may
compete with our product lines. These companies may succeed in developing
proposed products that are more effective or less costly than our proposed
products or such companies may be more successful in manufacturing and marketing
their proposed products. An increase in competition could result in a loss of
market share.


                                       10
<PAGE>



         We may not be able to attract and retain the qualified personnel we
need to succeed in the future. Our future success will depend in part on our
ability to attract and retain qualified personnel to manage the development and
future growth of our company. While we believe we have a reliable and effective
core team, there can be no assurance that we will be successful in attracting
and retaining such personnel.

         We anticipate eventual state and federal gun lock legislation and
regulation. While gun locking devices are currently not regulated under federal
or most state statutes or regulations, it is likely that such devices will be
regulated in the future. At the present time, the state of California has
established standards for gun locks which must accompany the sale of any
firearm. Other states are considering such legislation. In an effort to develop
a national standard, the firearms industry is working with the U.S. Consumer
Products Safety Commission to develop reasonable performance standards for gun
locks. There can be no assurances that our devices will meet the requirements of
such future regulations, in which case, sales of such devices by us would be
adversely affected.

ITEM 2.  DESCRIPTION OF PROPERTY

         Our corporate headquarters are located to 1601 Westpark Drive, Suite
4C, Little Rock, Arkansas 72204. This location consists of approximately 1,500
square feet of office space and 3,500 square feet of warehouse space. All of the
administrative, accounting and shipping functions are performed at this
location, as well as some sales. This space is leased for one year, expiring
February 1, 2004, at a monthly rent of $2,730. There are no renewal options. We
believe there are adequate alternative facilities at reasonably competitive
prices in the event this lease is terminated. The Company also maintains an
executive office at 19955 NE 38th Court, Aventura, Florida 33180. This office is
rented from the Company's President at a monthly rental of $1,500. This
arrangement is not the subject of a written lease and can be terminated at any
time.

ITEM 3.  LEGAL PROCEEDINGS

         We are the subject of a suit instituted by us against our former
manufacturer SKIT International, Ltd. and Uni-Skit Technologies, Inc. The suit,
commenced in August 2000, alleges breach of a manufacturing contract which
required defendants to manufacture certain of our products with the range of
"competitive pricing", a defined term. We are seeking damages and recission of
165,000 shares of our common stock as part of the compensation paid to the
defendants. The defendants have denied the allegations and have counterclaimed
for an outstanding balance of $182,625, for recission of the manufacturing
agreement and for damage to its business reputation. We have denied, and believe
there is no merit to the counterclaim's material allegations. We have replaced
the defendants as manufacturers of our products. This suit is scheduled to go to
trial in July, 2003.

         We instituted suit along with The Collins Family Trust, our affiliate
in which David Collins, our Chairman claims a beneficial interest, and DAC
Technologies of America, Inc., our predecessor, against Larry Legel, a former
Director and the Trustee of The Collins Family Trust. The suit, commenced in
March 2001 alleged a transfer of 180,000 shares of our common stock for services
which the Defendant did not provide. The suit also alleges that the Defendant
breached an agreement not to sell his shares before certain private investors
had recouped their investment. In October, 2002, the Arkansas Court ordered the
transfer rescinded and the stock returned to David Collins. Mr. Legal has
noticed the appeal of the Court's October Order.

         Subsequent to the Arkansas action, Mr. Legal instituted against the
Company in August, 2001, alleging failure by the Company and its officers to
permit the sale of his shares of the Company, which were the same shares that
were the subject of the Arkansas action. A Motion to Dismiss was filed and
granted. In February,2003, Mr. Legal filed an amended complaint, alleging that
the Company failed to honor his request to sell the shares. The Company has
filed a motion to dismiss or abate the Amended Complaint due to the decision and
pendency of the Arkansas appeal.

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

         There are 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.

                                       11
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         On June 19, 2000, our common stock began trading on the Nasdaq
Over-the-Counter Bulletin Board market under the trading symbol DAAT. The high
and low bid information for each quarter is presented below. These prices
reflect inter-dealer prices, without retail markup, markdown or commission and
may not represent actual transactions.

         QUARTER ENDED              HIGH             LOW
         -------------              ----             -----

         March 31, 2001             $1.58            $0.41
         June 30, 2001              $1.80            $0.48
         September 30, 2001         $2.10            $1.42
         December 31, 2001          $2.10            $1.20
         March 31, 2002             $2.17            $0.80
         June 30, 2002              $1.22            $0.45
         September 30, 2002         $1.00            $0.65
         December 31, 2002          $0.85            $0.60

         As of March 12, 2003, there were approximately 84 holders of record of
our 5,818,056 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.

         During 2002, 4,000 shares of our restricted stock were issued to
various employees as compensation. Because these individuals had a preexisting
relationship 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.

         During 2002, 25,000 shares of our restricted stock were issued as
additional compensation on a note payable to a shareholder. Because this
individual had a preexisting relationship 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.

         During 2002, 25,000 shares of our restricted stock were issued for
services under a consulting agreement entered into by the Company with a certain
individual. Because this individual had a preexisting relationship 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.

         Pursuant to a Private Offering Memorandum dated August 27, 2001, and
expiring March 31, 2002, the Company sold an aggregate of 415,000 shares of
restricted common stock at a price of $1.00 per share, to 12 individual
investors. The transaction was exempt under Rule 504 of Regulation D of the
Securities Act.


                                       12
<PAGE>



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 10K-SB 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
parties, but there can be no assurance that management's expectations, beliefs
or projections will result or be achieved or accomplished.

(b)      YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31,
         2001.

         For the year ended December 31, 2002, the Company had net income of
$12,810 on sales revenues of $2,756,193, as compared to a net loss of $404,665
on sales revenues of $1,984,692 for the year ended December 31, 2001.

         Net sales revenues increased $771,501 during 2002 as compared to 2001,
a 39% increase. This increase was related to the sales of two new products
introduced in 2002, the DAC SportSafe and Sportsman Lighter, sales of which
totaled $471,844 and $312,606, respectively. Sales of our existing products
remained fairly constant across the board, with no significant changes from the
prior year.

         Operating expenses in 2002 were $1,118,500 as compared to $1,434,243
for 2001, a decrease of $315,743. Of this decrease, $236,885 was relating to
Summit Training, whose operations were discontinued in January of 2002. The
remaining decrease of $78,858 is attributable to the operations of DAC
Technologies. The most significant changes were decreases in employee
compensation of $66,837, travel of $20,118 and legal fees of $19,546. These
decreases were offset by an increase in freight cost of $26,528, which was due
to the higher costs of shipping security safes.

         o        Liquidity and Capital Resources

         Our primary source of cash is funds from our operations. We believe
that external sources of liquidity could 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 affect our short term liquidity. For the period ending
December 31, 2002, we owed our factor approximately $735,035.

         On October 31, 2002, the Company refinanced its $180,000 line of credit
with a local bank. The loan bears interest at 7.50% and matures November 1,
2003. On May 7, 2002, the Company borrowed $100,000 from an existing
shareholder. This loan bears interest at 6% and matures May 7, 2003. 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.

                                       13
<PAGE>
         o         Trends

         Even with the election of a new President and the change in the
Administration, handgun safety remains a major concern, and interest may
continue to increase in the next few years, particularly in light of the
accidental and intentional shootings involving children. The focus is expected
to become more one of gun safety rather than one of attempts to ban guns. Gun
safety issues are expected to be moved from the Federal level to the state
level, while those at the federal level are seemingly becoming more rational
with the approach being taken by the Consumer Products Safety Commission to set
measurable standards of performance for gun locking devices. The Company, with
developed products that address preventive handgun safety, anticipates that it
will be in a position to benefit from this trend-although this, of course,
cannot be guaranteed. We believe that the continued focus on handgun safety, the
use of gun locks by law enforcement agencies, the litigation aimed at gun
manufacturers and corresponding about-face regarding gun safety locks begun by
Smith & Wesson, as well as the gun legislation will hopefully will enhance our
product line revenues.

         Moreover, the tragic terrorist attack against the United States on
September 11, 2001, caused many Americans to become concerned about their
personal security. As a result, many people are purchasing firearms to maintain
for home defense purposes. While they are purchasing handguns, many are also
concerned with the safe storage of the firearm in the home and want to purchase
affordable gun safes to increase security. As a result, we have seen an increase
in sales of safes.

         The State of Maryland has passed legislation to require gun
manufacturers to incorporate safety devices similar to the Company's products
into all handguns sold. The State of California enacted legislation to establish
performance standards for "firearm Safety devices," "lock-boxes," and "safes".
These standards permit an attack on the gun lock or safe with hand tools, such
as hammers, screwdrivers, electric drills, screw and hack saws. This legislation
requires manufacturers to have their products tested by an independent testing
laboratory in order to be listed as an approved device. This testing has
resulted in significant expenditures to the company. We anticipate that similar
standards will be adopted throughout the United States in the next few years.

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements are contained in pages F-1 through F-13
following.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

         None





                                       14
<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.

NAME                       AGE        POSITION                     TERM
----                       ---        --------                     ----

David A. Collins           57         President, CEO, Director   2002-2003

Robert C. Goodwin          46         CFO/Director               2002-2003


         David A. Collins is a founder of the Company and it predecessors, and
previously served as its President, CEO and Director from inception in 1993
until July 11, 2001. From July, 2001 until May, 2002, Mr. Collins served as a
consultant to the Company, particularly in the areas of sales and marketing. In
May, 2002, Mr. Collins was reappointed as President, CEO and Chairman upon the
resignation of James R. Pledger.

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

         Walter G. Howard resigned his position on the Board and employment with
the Company in December, 2002 to pursue other endeavors.

         Ford Overton resigned his position on the Board in May, 2002 to be able
to devote more time to his employment.


COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES ACT OF 1934

         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 5 filings that were filed late by the Section 16 Reporting Persons during
fiscal 2002 David A. Collins, Collins Family Trust, and Dan R. Lasater. 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.



                                       15
<PAGE>

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, 2002.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                 SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------------------
                                 ANNUAL COMPENSATION                                  LONG-TERM  COMPENSATION
---------------------------------------------------------------------------------------------------------------------------------
                                                    Award Payouts
---------------------------------------------------------------------------------------------------------------------------------
Name &                                               Other            Restricted       Securities                        All
Principal                                            Annual            Stock           Underlying       LTIP            Other
Position                  Year       Bonus        Compensation         Awards         Options/SAR's    Payouts       Compensation
---------                 ----       -----        ------------        ----------      -------------    -------       ------------
<S>                       <C>        <C>          <C>                <C>              <C>              <C>           <C>

James R. Pledger          2002                      7,500[1]
CEO/ President

Robert C. Goodwin         2002                     58,750
CFO

David A. Collins          2002                    120,000(2)
President CEO(1)


</TABLE>

[1] Mr. Pledger resigned in May 2002 and was replaced by David A. Collins

[2] Pro-Rated for the balance of the year.

Board of Directors.

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

Employment Contracts.

         Following the resignation of James Pledger on May 30, 2002, The Board
of Directors reappointed David A. Collins as Chairman, CEO and President at a
Special Meeting of the Board of Directors dated May 30, 2002. Having previously
served in these capacities under an Employment Agreement dated December 1, 2000,
it was also unanimously approved that this employment agreement be reinstated in
its original terms and conditions. Other than Mr. Collins, all officers and
employees serve at the discretion of the Board of Directors.

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, 2002 by (a) each
person known by us to be the beneficial owner of five (5) 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 5,817,956 shares of common stock
outstanding.



                                       16
<PAGE>



(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>
Common Stock      Dan R. Lasater                              1,220,765          20.9%
                  Little Rock, AR

Common Stock      Lasater Family Limited Partnership            300,388           5.2%
                  Little Rock, Ark.

Common Stock      David A. Collins                              563,000(1)        9.7%
                  Aventura, FL

Common Stock      Collins Childrens Trust                       502,300           8.6%
                  c/o Kimberly Talley
                  Little Rock, AR

Common Stock      Warren Overton                                310,450           5.3%
                  Little Rock, AR


</TABLE>

(1)      Includes 32,000 shares owned by the Collins Family Trust. David Collins
         acknowledges beneficial ownership and control of the shares held in
         this Trust. The beneficiaries of the Collins Family Trust are Payton P.
         Collins and David A. Collins, Jr.

(a)      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      Robert C. Goodwin                 5,000                0.09%
                  Sherwood, AR

Common Stock      David A. Collins                563,000                 9.7%
                  Aventura, FL

</TABLE>



                                       17
<PAGE>

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         None

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

         Form 8-K filed on June 5, 2000 reporting the resignation of James R.
Pledger from the Board of Directors and as the CEO/President of the Company.

         The following documents are incorporated by reference.

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              Employment contract of David A. Collins

23.1*             Consent of Moore Stephens Frost


*Filed herewith

                                   SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.


                                                        Date: March 31, 2003
                                                        By: /s/ Robert Goodwin
                                                           -------------------
                                                        Name: Robert Goodwin
                                                        Title: CFO



                                       18
<PAGE>

CERTIFICATIONS*

I, David A. Collins, CEO/President, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of DAC Technologies
          Group International Inc. (0001102750);

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;


     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:


          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;


          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and c)
               presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;



     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and b) any fraud, whether or not
               material, that involves management or other employees who have a
               significant role in the registrant's internal controls; and


     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether there were significant changes in internal
          controls or in other factors that could significantly affect internal
          controls subsequent to the date of our most recent evaluation,
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.



Date:



/s/ David A Collins
-----------------------
David A. Collins CEO/President

<PAGE>


I, Robert C. Goodwin, CFO, certify that:

     1.   I have reviewed this annual report on Form 10-KSB of DAC Technologies
          Group International Inc. (0001102750);

     2.   Based on my knowledge, this annual report does not contain any untrue
          statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this annual report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this annual report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and c)
               presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent functions):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and b) any fraud, whether or not
               material, that involves management or other employees who have a
               significant role in the registrant's internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether there were significant changes in internal
          controls or in other factors that could significantly affect internal
          controls subsequent to the date of our most recent evaluation,
          including any corrective actions with regard to significant
          deficiencies and material weaknesses.



Date: 3/31/03


/s/ Robert C. Goodwin
----------------------
Robert C. Goodwin CFO




<PAGE>




                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                           DECEMBER 31, 2002 AND 2001

                        CONSOLIDATED FINANCIAL STATEMENTS

                                      WITH

                          INDEPENDENT AUDITORS' REPORT








<PAGE>

                          INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
DAC Technologies Group International, Inc.
Little Rock, Arkansas


         We have audited the accompanying consolidated balance sheets of DAC
Technologies Group International, Inc. as of December 31, 2002 and 2001, and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits 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
audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of DAC
Technologies Group International, Inc. as of December 31, 2002 and 2001, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.






                                                  Certified Public Accountants

                                                  MOORE STEPHENS FROST

Little Rock, Arkansas
February 14, 2003



                                      F-1
<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                           2002             2001
                                                      -----------       -----------
<S>                                                   <C>               <C>
                        Assets
Current assets
  Cash                                                $    13,378       $    72,633
  Accounts receivable, less allowance for doubtful
    accounts of  $5,500 and $21,951 in 2002 and
    2001, respectively                                    992,105           411,657
  Inventories                                             596,767           415,116
  Note receivable                                          42,332                --
  Advances to related parties                             108,121           103,404
  Prepaid expenses and deferred charges                    82,701            79,206
  Current deferred income tax benefit                       8,850            15,150
                                                      -----------       -----------
Total current assets                                    1,844,254         1,097,166
                                                      -----------       -----------

Property and equipment
  Furniture and fixtures                                  123,733           118,107
  Molds, dies, and artwork                                453,470           438,011
                                                      -----------       -----------
                                                          577,203           556,118
  Accumulated depreciation                               (320,380)         (263,699)
                                                      -----------       -----------
Net property and equipment                                256,823           292,419
                                                      -----------       -----------

Other assets
  Patents and trademarks, net of accumulated
    amortization of $26,403 and $18,937 in 2002
    and 2001, respectively                                122,095           129,561
  Deferred income tax benefit                             228,214           233,450
                                                      -----------       -----------
Total other assets                                        350,309           363,011
                                                      -----------       -----------

Total assets                                          $ 2,451,386       $ 1,752,596
                                                      ===========       ===========


</TABLE>




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



                                      F-2
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                           CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                              2002              2001
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
                     Liabilities and Stockholders' Equity

Current liabilities
   Due to factor                                                          $   735,035       $   277,112
   Notes payable                                                              413,546           473,328
   Notes payable - stockholders                                               192,500           125,000
   Accounts payable                                                           272,168            80,955
   Accrued payroll tax withholdings                                           131,511           168,487
   Accrued expenses other                                                      18,261            50,026
                                                                          -----------       -----------
Total current liabilities                                                   1,763,021         1,174,908
                                                                          -----------       -----------

Commitments and Contingencies (Note 11)

Stockholders' equity
   Common stock, $.001 par value; authorized
      50,000,000 shares; issued and outstanding
      5,817,956 and 5,723,956 shares at December 31,
      2002 and 2001, respectively                                               5,818             5,724
   Preferred stock, $.001 par value; authorized
      10,000,000 shares; none issued and outstanding                               --                --
   Additional paid-in capital                                               1,236,217         1,163,444
   Retained earnings (deficit)                                               (553,670)         (566,480)
                                                                          -----------       -----------
                                                                              688,365           602,688
                                                                          -----------       -----------
   Stock subscription receivable                                                   --           (25,000)
                                                                          -----------       -----------
Total stockholders' equity                                                    688,365           577,688
                                                                          -----------       -----------

Total liabilities and stockholders' equity                                $ 2,451,386       $ 1,752,596
                                                                          ===========       ===========


</TABLE>




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



                                      F-3
<PAGE>
                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                            2002              2001
                                                       -----------       -----------
<S>                                                    <C>               <C>
Net sales                                              $ 2,756,193       $ 1,984,692

Cost of sales                                            1,527,352         1,104,962
                                                       -----------       -----------

Gross profit                                             1,228,841           879,730
                                                       -----------       -----------

Operating expenses
   Selling                                                 441,639           455,782
   General and administrative                              676,861           978,461
                                                       -----------       -----------
Total operating expenses                                 1,118,500         1,434,243
                                                       -----------       -----------

Income (loss) from operations                              110,341          (554,513)
                                                       -----------       -----------

Other income (expense)
   Interest expense                                       (111,327)          (96,457)
   Interest expense - stockholder notes                    (22,000)           (7,600)
   Gain on sale of assets                                   46,300             2,931
   Other income                                              1,032                91
                                                       -----------       -----------
Total other income (expense)                               (85,995)         (101,035)
                                                       -----------       -----------

Income (loss) before income tax expense (benefit)           24,346          (655,548)

Provision for income taxes (benefit)                        11,536          (250,883)
                                                       -----------       -----------

Net income (loss)                                      $    12,810       $  (404,665)
                                                       ===========       ===========

Earnings (loss) per share:
   Numerator - net income (loss)                       $    12,810       $  (404,665)

   Denominator - weighted average number of
      shares outstanding                                 5,782,329         5,389,532
                                                       -----------       -----------

Basic and dilutive earnings (loss) per share           $      0.00       $     (0.08)
                                                       ===========       ===========

</TABLE>



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


                                      F-4
<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  FOR THE YEAR ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                        Common Stock               Additional       Retained         Stock
                                   --------------------------        Paid-in        Earnings      Subscription
                                     Shares          Amount          Capital       (Deficit)        Receivable         Total
                                   ----------      ----------      ----------      ----------     ------------       ----------

<S>                                 <C>            <C>             <C>             <C>              <C>              <C>
Balances - December 31, 2000        5,248,000      $    5,248      $  749,023      $ (161,815)      $       --       $  592,456

  Issuance of stock for cash          375,000             375         348,923              --          (25,000)         324,298

  Issuance of stock for services      100,956             101          65,498              --               --           65,599

  Net loss                                 --              --              --        (404,665)              --         (404,665)
                                   ----------      ----------      ----------      ----------       ----------       ----------

Balances - December 31, 2001        5,723,956           5,724       1,163,444        (566,480)         (25,000)         577,688

  Issuance of stock for cash           40,000              40          39,960              --               --           40,000

  Issuance of stock for services       54,000              54          32,813              --               --           32,867

  Collection of stock subscription
    receivable                             --              --              --              --           25,000           25,000

  Net income                               --              --              --          12,810               --           12,810
                                   ----------      ----------      ----------      ----------       ----------       ----------
Balances - December 31, 2002        5,817,956      $    5,818      $1,236,217      $ (553,670)      $       --       $  688,365
                                   ==========      ==========      ==========      ==========       ==========       ==========

</TABLE>



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


                                      F-5
<PAGE>


                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                              2002            2001
                                                              ----            ----
<S>                                                      <C>             <C>
Cash flows from operating activities
  Net income (loss)                                      $  12,810       $(404,665)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities
      Issuance of common stock for services                 32,867          65,599
      Depreciation                                          66,897          52,683
      Amortization                                           6,434           8,675
      Deferred income tax provision (benefit)               11,536        (248,600)
      Gain on sale of assets                               (46,300)         (2,931)
      Changes in operating assets and liabilities
        Accounts receivable                               (580,448)         52,539
        Inventories                                       (181,651)        (51,847)
        Advances to employees                               (4,717)        (40,831)
        Prepaid expenses                                    (3,495)        (49,214)
        Other assets                                            --          21,402
        Accounts payable - trade                           191,213          (4,862)
        Accrued payroll tax withholdings                   (36,976)         62,948
        Accrued expenses other                             (31,765)         32,343
        Income taxes payable                                    --          (2,283)
                                                         ---------       ---------
Net cash provided by (used in) operating activities       (563,595)       (509,044)
                                                         ---------       ---------

Cash flows from investing activities
  Proceeds from sale of STI assets                           5,000              --
  Purchases of property and equipment                      (31,301)        (58,869)
  Proceeds from sale of property and equipment                  --          22,682
  Purchases of patents and trademarks                           --         (33,830)
                                                         ---------       ---------
Net cash provided by (used in) investing activities        (26,301)        (70,017)
                                                         ---------       ---------

Cash flows from financing activities
  Net change in due to factor                              457,923          (4,754)
  Advances on notes payable                                     --         205,683
  Repayments on notes payable                              (59,782)             --
  Advances on notes payable - stockholders                 100,000         125,000
  Repayments on notes payable - stockholders               (32,500)             --
  Payments on long-term debt                                    --         (24,966)
  Proceeds from issuance of common stock                    40,000         324,298
  Collection of stock subscription receivable               25,000              --
                                                         ---------       ---------
Net cash provided by (used in) financing activities        530,641         625,261
                                                         ---------       ---------
Increase (decrease) in cash                                (59,255)         46,200

Cash - beginning of year                                    72,633          26,433
                                                         ---------       ---------
Cash - end of year                                       $  13,378       $  72,633
                                                         =========       =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION

Cash paid for
  Interest                                               $  61,173       $  40,797


</TABLE>


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






                                      F-6
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001

1.   ORGANIZATION AND NATURE OF BUSINESS

          DAC Technologies Group International, Inc. ("DAC") was originally
     incorporated under the name DAC Technologies of America, Inc. In July 1999,
     the Company changed its name to DAC Technologies Group International, Inc.
     DAC is in the business of developing, manufacturing and marketing various
     patented and unpatented consumer products that are designed to provide
     security for the consumer and their property. In addition, DAC has
     developed a wide range of security and non-security products for the home,
     automobile and individual. The majority of DAC's products are manufactured
     and imported from mainland China and are shipped to DAC'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.

          In February 2001, DAC formed a wholly owned subsidiary, Summit
     Training International ("STI"), an Arkansas corporation. STI was formed
     with the primary objective of providing training to law enforcement
     agencies through courses, seminars and conferences. In connection with the
     formation of STI, DAC incurred start-up costs consisting principally of
     direct personnel costs and advertising and marketing expenses. These
     start-up costs, which totaled approximately $107,700, were expensed and
     included in general and administrative expenses in the accompanying
     consolidated financial statements for the year ended December 31, 2001.
     During the early part of 2002, the Company decided not to pursue further
     development of STI due to changes in the perceived market. In July 2002,
     the Company sold certain assets of STI, including its name for $50,000,
     which consisted of $5,000 in cash and a $45,000 note, maturing no later
     than eighteen (18) months from the date of the note. The Company had
     discontinued operations of STI earlier in 2002 due to unprofitability. In
     connection with this sale, the Company has entered into a noncompete
     agreement in regards to educational or instructional services for a four
     year period.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   BASIS OF PRESENTATION - The accompanying consolidated financial
          statements include the accounts of DAC Technologies Group
          International, Inc. and its wholly owned subsidiary, Summit Training
          International (collectively the "Company"). All material intercompany
          accounts and transactions have been eliminated in the consolidation.

     b.   ESTIMATES - The preparation of financial statements in conformity with
          accounting principles generally accepted in the United States of
          America 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. At December 31, 2002 and 2001, the
          Company had no cash equivalents.



                                      F-7
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     d.   ACCOUNTS RECEIVABLE - The majority of the Company's receivables are
          factored pursuant to a factory agreement (Note 4). At December 31,
          2002 and 2001, approximately 98% and 94% of the Company's accounts
          receivable were covered by this agreement. For receivables that are
          not covered under this agreement, the Company evaluates the
          collectibility of these amounts and records an allowance for amounts
          estimated to be uncollectible. Amounts that are determined to be
          uncollectible are written off against this allowance.

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

     f.   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, which range from five to ten
          years. Depreciation expense of $66,897 and $52,683 was recognized
          during the years ended December 31, 2002 and 2001, respectively.

     g.   PATENTS AND TRADEMARKS - Costs incurred in connection with the
          acquisition of patents and trademarks are capitalized and amortized
          over their estimated useful lives, which range from five to seventeen
          years.

     h.   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.

     i.   REVENUE RECOGNITION - The Company records sales when merchandise is
          shipped and title has transferred to the customer. Allowances are
          provided when merchandise is returned.

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

     k.   ADVERTISING - Advertising costs are expensed as incurred. Total
          advertising expenses were approximately $200 and $1,800 for the years
          ended December 31, 2002 and 2001, respectively.

     l.   SHIPPING AND HANDLING - All shipping and handling costs are included
          in selling expense in the accompanying consolidated statement of
          operations. These costs totaled $154,132 and $131,931, respectively,
          for the years ended December 31, 2002 and 2001.

     m.   FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair values of cash and cash
          equivalents, accounts receivables and note payable approximates their
          carrying values due to the short-term nature of the instruments. The
          fair value of the Company's long-term debt approximates its carrying
          value.


                                      F-8
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001



2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     n.   IMPAIRMENT OF LONG-LIVED ASSETS - Statement of Financial Accounting
          Standards No. 121, as amended by No. 144, "Accounting for the
          Impairment or Disposal of Long-Lived Assets" requires that long-lived
          assets and certain identifiables be reviewed for impairment whenever
          events or changes in circumstances indicate that the carrying amounts
          of any asset may not be recoverable. Recoverability of assets to be
          held and used is measured by a comparison of the carrying amount of an
          asset to future net cash flows expected to be generated by the asset.
          If such assets are considered to be impaired, the impairment to be
          recognized is measured by the amount the carrying amount of the assets
          exceeds the fair value of the assets. Based upon management's
          assessment of the Company's assets, no impairment reserve is needed as
          of December 31, 2002.

3.   INVENTORIES

          Inventories consist of:

                                            2002          2001
                                            ----          ----

               Finished goods            $391,898      $372,970
               Inventory in transit       181,901        19,178
               Parts                       22,968        22,968
                                         --------      --------
                                         $596,767      $415,116
                                         ========      ========

4.   FACTORING AGREEMENT

          The Company factors a majority of its receivables under a credit risk
     factoring agreement, which is renewable annually. This agreement 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 .25% 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. Additionally, this agreement provides
     for advances of funds on the factored receivable. Interest is charged a
     greater of 7% or 1.25% above prime (4.25% at December 31, 2002) on the
     outstanding funds in use. The amounts borrowed are collateralized by the
     outstanding accounts receivable.



                                      F-9
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001




5.   NOTES PAYABLE

          Notes payable consist of:

<TABLE>
<CAPTION>
                                                                                     2002            2001
                                                                                     ----            ----
<S>                                                                              <C>             <C>
               $250,000 Line of credit with a bank; interest
                 at 7.50%; matures November 1, 2003;
                 collateralized by the Company's receivables
                 and personal guarantees of the Company's
                 major stockholders                                              $180,000        $180,000

               $150,000 Line of credit with a bank; interest
                 at 7.50%; matures November 12, 2003;
                 collateralized by the Company's receivables
                 and personal guarantees of the Company's
                 major stockholders                                              $149,500        $149,500

               Note payable with a bank; interest at 8.50%;
                 payable on demand or if no demand, April 30,
                 2003; secured by the Company's inventories
                 and personal guarantees of the Company's
                 major stockholders                                                53,138          64,284

               Note payable with a bank; interest at Wall
                 Street Journal Prime Rate (4.25% at
                 December 31, 2002); payable on demand
                 or if no demand is made in thirty-six monthly
                 payments of principal and interest of $4,659
                 through its maturity on July 2, 2003; secured
                 by the Company's inventories and personal
                 guarantees of the Company's major
                 stockholders                                                      30,908          79,544
                                                                                 --------        --------
                                                                                 $413,546        $473,328
                                                                                 ========        ========

</TABLE>

          The weighted average interest rates on short-term borrowings for the
     years ended December 31, 2002 and 2001 were 7.38% and 8.23%, respectively.



                                      F-10
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001




6.   NOTES PAYABLE - STOCKHOLDERS

          During 2002 and 2001, the Company maintained note payable agreements
     with certain stockholders of the Company. Total borrowings and repayments
     under these agreements during 2002 were $100,000 and $32,500, respectively.
     These notes bear interest at rates ranging from 6% to 10% and are payable
     on demand. Total borrowings and repayments under these agreements during
     2001 were $175,000 and $50,000, respectively. At December 31, 2002 and
     2001, outstanding borrowings under these agreements totaled $192,500 and
     $125,000, respectively. During 2002 and 2001, the Company recognized
     interest expense of approximately $22,000 and $7,600, respectively, on
     these notes.

7.   EQUITY

          On September 1, 2002, the Company entered into a one year agreement
     with a consulting firm for services relating to strategic planning and
     operational assistance. As compensation for these services, the Company
     issued 25,000 shares of restricted common stock valued at $14,667.

          On July 7, 2002, the Company issued 25,000 shares of restricted common
     stock valued at $15,000 as additional interest on note payable to a
     stockholder. The value of these shares are being recognized as interest
     expense over the term of note payable of ten months. At December 31, 2002,
     approximately $6,000 of the value of these shares are included in prepaid
     expenses and deferred charges.

          On March 18, 2002, the Company issued 4,000 shares of restricted
     common stock for services valued at $3,196.

          During the first quarter of the year ended December 31, 2002, the
     Company issued 40,000 shares of restricted common stock at $1.00 per share.

          During the fourth quarter of the year ended December 31, 2001, the
     Company initiated a private placement offering of the Company's common
     stock. In connection with this offering, the Company issued a total of
     375,000 shares of restricted common stock at $1.00 per share. Proceeds from
     this offering, net of offering costs, were $348,923.

          On June 27, 2001, the Company retired 55,000 shares of restricted
     common stock that had previously been issued in connection with an
     agreement with a consulting firm. The consulting agreement was mutually
     terminated and the unearned portion of the shares were returned to the
     Company.

          On April 4, 2001, the Company issued a total of 75,700 shares of
     restricted common stock valued at $30,280 in connection with the
     establishment of consulting agreements with certain individuals. On June 1,
     2001, the Company issued additional shares of restricted common stock
     totaling 38,300, which were valued at $32,555 to certain individuals in
     connection with the establishment of service agreements. The value of these
     restricted common shares was based on two-thirds of the value of
     unrestricted shares on that date.

          On March 29, 2001, the Company issued 19,815 shares of restricted
     common stock valued at $5,350 to an individual pursuant to the terms of an
     employment agreement with the Company. Subsequently, on April 23, 2001, the
     Company issued 22,141 additional shares of common stock valued at $8,414 to
     this individual pursuant to this agreement. The value of these restricted
     common shares was based on two-thirds of the value of unrestricted shares
     on that date.

8.   STOCK OPTION PLAN

              During 2000, the Company adopted the 2000 Equity Incentive Plan
     (the "Plan"), a non-qualified stock option plan. Under the terms of the
     Plan, officers, directors, employees and other individuals may be granted
     options to purchase the Company's common stock at exercise prices
     determined by the Company's Board of Directors. The terms and conditions of
     any options granted


                                      F-11
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001




8.   STOCK OPTION PLAN (CONT.)

     under the Plan, to include vesting period and restrictions or limitations
     on the options, will be determined by the Board of Directors. The maximum
     number of shares that can be granted under this Plan is one million shares
     of stock. At December 31, 2002, the Company had granted no options pursuant
     to this Plan.

9.   INCOME TAXES

          The provision for income taxes (benefit) consists of:

<TABLE>
<CAPTION>
                                                                          2002           2001
                                                                       ---------      ---------
<S>                                                                    <C>            <C>
               Current provision (benefit)                             $      --      $  (2,283)
               Deferred provision (benefit)                               11,536       (248,600)
                                                                       ---------      ---------
                                                                       $  11,536      $(250,883)
                                                                       =========      =========


</TABLE>

          Reconciliations of the differences between income taxes (benefit)
     computed at the federal statutory tax rates and the provision for income
     taxes (benefit) is as follows:

<TABLE>
<CAPTION>
                                                                          2002           2001
                                                                       ---------      ---------
<S>                                                                    <C>            <C>
               Income taxes computed at federal
                 statutory tax rate                                    $   8,278      $(222,886)
               State tax provision, net of federal benefits                1,044        (28,123)
               Nondeductible expenses and other                            2,214             26
                                                                       ---------      ---------
               Provision for income taxes (benefit)                    $  11,536      $(250,983)
                                                                       =========      =========

</TABLE>

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

<TABLE>
<CAPTION>
                                                                          2002           2001
                                                                       ---------      ---------
<S>                                                                    <C>            <C>
               Net operating loss carryforward                         $ 238,611      $ 245,139
               Allowance for doubtful accounts                             2,106          8,405
               Allowance for excess inventory                              6,744          6,744
               Other accrued liabilities                                 (10,397)       (11,688)
                                                                       ---------      ---------
               Net deferred tax asset                                  $ 237,064      $ 248,600
                                                                       =========      =========

</TABLE>


                                      F-12
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001



9.   INCOME TAXES (CONT.)

          During the year ended December 31, 2002, the Company utilized $17,050
     of its net operating loss carryforward to offset its current federal and
     state income tax liability. At December 31, 2002, the Company has a net
     operating loss carryforward available for federal and state income tax
     purposes of approximately $623,000. Unless utilized, this carryforward will
     begin expiring in 2021.


10.  RELATED PARTY TRANSACTIONS

          During the years ended December 31, 2002 and 2001, the Company made
     advances to a stockholder and certain employees of the Company. These
     advances totalled $4,717 and $40,831, respectively. At December 31, 2002
     and 2001, the outstanding balances of advances to these individuals were
     $108,121 and $103,404, respectively.

          Certain stockholders of the Company have personally guaranteed the
     Company's outstanding borrowings with a bank at December 31, 2002 and 2001.

11.  COMMITMENTS AND CONTINGENCIES

          The Company currently leases office and warehouse space under a lease
     that expires on January 31, 2003. The lease will be converted to a month to
     month operating lease upon expiration. Total rent expense for the years
     ended December 31, 2002 and 2001 was approximately $45,000 and $57,000,
     respectively.

          The Company is involved in various legal actions arising in the normal
     course of business. In the opinion of management, the ultimate resolution
     of these matters will not have a material adverse effect on the Company's
     financial position or results of operations.

          During 1998, the Company entered into an asset purchase agreement,
     wherein it acquired certain assets and assumed certain liabilities of DAC
     Technologies of Arkansas, Inc. ("DAC Arkansas") in a combination that was
     accounted for in a manner similar to a pooling of interest. Assets and
     liabilities that were not included in this transaction consisted of 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. The Company could be
     held liable in the event of litigation, for the outstanding balances of
     certain unsecured liabilities of DAC Arkansas totaling approximately
     $119,000. No accrual has been made for this contingency.

12.  MAJOR CUSTOMERS AND SUPPLIERS

          During the year ended December 31, 2002, the Company had aggregate
     sales to two customers that exceeded ten percent of total net sales. Sales
     to these individual customers were approximately $1,127,000 and $298,000,
     respectively. During the year ended December 31, 2001, the Company had
     aggregate sales to three customers that exceeded ten percent of total net
     sales. Sales to these individual customers were approximately $449,000,
     $268,000 and $218,000 of net sales, respectively.




                                      F-13
<PAGE>

                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001



12.  MAJOR CUSTOMERS AND SUPPLIERS (CONT.)

          During the year ended December 31, 2002, the Company purchased 85% of
     its products from one major supplier. During the year ended December 31,
     2001, the Company purchased 61%, 22% and 11%, respectively, of its products
     from three major suppliers. 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.

13.  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. As discussed in Note 4, the Company
     factors a majority of its receivables under a factoring agreement. These
     accounts are factored on a non-recourse basis which reduces the Company's
     exposure to credit risk. Approximately 61% and 59%, respectively, of the
     Company's accounts receivable at December 31, 2002 and 2001 were
     represented by major 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.

14.  FINANCIAL INFORMATION BY BUSINESS SEGMENT

          During the years ended December 31, 2002 and 2001, the Company
     operates in five primary business segments delineated by products or
     services. These segments are security products, gun locks, safes,
     non-security products and training. The accounting policies of the
     Company's segments are the same as those described in Note 2. 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:

<TABLE>
<CAPTION>
                                                                            2002           2001
                                                                       ----------     ----------
<S>                                                                    <C>            <C>
               Revenues
                 Security products                                     $ 435,276      $ 396,552
                 Gun-locks                                             1,144,615      1,196,866
                 Safes                                                   853,233        325,386
                 Non-security products                                   320,744         14,027
                 Training                                                  2,325         51,861
                                                                       ----------     ----------
               Total                                                   $2,756,193     $1,984,692
                                                                       ==========     ==========

</TABLE>


                                      F-14
<PAGE>
                   DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001


14.  FINANCIAL INFORMATION BY BUSINESS SEGMENT (CONT.)


<TABLE>
<CAPTION>
                                                                            2002           2001
                                                                       ----------     ----------
<S>                                                                    <C>            <C>
             Income (loss) before income tax expense (benefit)
               Security products                                       $  11,500      $(174,889)
               Gun-locks                                                 (20,990)      (228,776)
               Safes                                                     (55,389)       (61,773)
               Non-security products                                      45,265            611
               Training                                                   43,960       (190,721)
                                                                       ----------     ----------
               Total                                                   $  24,346      $(655,548)
                                                                       =========      =========

             Identifiable assets
               Security products
                 United States                                         $ 185,246      $ 234,548
                 China                                                    98,186         94,385
               Gun-locks
                 United States                                           309,932        250,854
                 China                                                    54,553         63,623
               Safes
                 United States                                            79,318         60,359
                 China                                                    16,326         18,290
               Non-security products
                 United States                                            27,704         25,218
                 Corporate                                             1,680,121      1,005,319
                                                                       ----------     ----------
               Total                                                   $2,451,386     $1,752,596
                                                                       ==========     ==========


</TABLE>


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



                                      F-15