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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER 000-29211
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
(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 DRIVE #4C LITTLE ROCK, AR 72204
--------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(501) 661-9100
--------------------------
(ISSUER'S TELEPHONE NUMBER)
Check whether the Issuer (1) has filed all reports required to be filed
by the 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.
(1) Yes [x] No [ ] (2) Yes [x] No [ ]
State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest practicable date. As of August 10, 2001,
5,348,956 shares of Common Stock are issued and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [x]
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TABLE OF CONTENTS
PART I..........................................................................................3
ITEM 1. FINANCIAL STATEMENTS....................................................................3
PART F/S.......................................................................................10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
PLAN OF OPERATION.....................................................................11
Background............................................................................11
Financial Condition and Results of Operations.........................................13
Liquidity and Capital Resources.......................................................13
Trends................................................................................14
PART II........................................................................................14
ITEM 1. LEGAL PROCEEDINGS......................................................................14
ITEM 2. CHANGES IN SECURITIES..................................................................14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES........................................................14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................14
ITEM 5. OTHER INFORMATION......................................................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................................................15
SIGNATURES.....................................................................................16
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PART I
ITEM 1. FINANCIAL STATEMENTS
Our financial statements are contained in pages 4 through 9 following.
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
JUNE 30, 2001
Unaudited
ASSETS
Current assets
Cash $ 12,491
Accounts receivable 543,716
Inventories 454,099
Advances to employees 103,989
Prepaid expenses 96,036
-----------
Total current assets 1,210,331
-----------
Property and equipment
Furniture and fixtures 109,754
Molds, dies, and artwork 413,544
-----------
523,298
Accumulated depreciation (239,516)
-----------
Net property and equipment 283,782
-----------
Other assets
Patents and trademarks, net of
accumulated amortization of $11,762 129,095
Other 130,205
-----------
Total other assets 259,300
-----------
Total assets $ 1,753,413
===========
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
JUNE 30, 2001
Unaudited
Liabilities and Stockholders' Equity
Current liabilities
Due to factor $ 244,547
Notes payable 590,585
Accounts payable-trade 139,457
Accrued payroll tax withholdings 161,212
Accrued expenses-other 12,883
Income taxes payable 2,283
-----------
Total current liabilities 1,150,967
-----------
Long-term debt, less current maturities 0
-----------
Stockholders' equity
Common stock, $.001 par value; authorized
50,000,000 shares; issued and outstanding
5,344,656 shares 5,345
Preferred stock, $.001 par value; authorized
10,000,000 shares; none issued and outstanding
Additional paid-in capital 817,431
Retained earnings (deficit) (220,330)
-----------
Total stockholders' equity 602,446
-----------
Total liabilities and stockholders' equity $ 1,753,413
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC
STATEMENTS OF OPERATIONS (CONSOLIDATED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
Unaudited
June 30, June 30,
2001 2000
----------- -----------
Net sales $ 979,448 $ 1,226,608
Cost of sales 448,299 708,060
----------- -----------
Gross profit 531,149 518,548
----------- -----------
Operating expenses
Selling 185,441 125,749
General and administrative 365,426 251,322
----------- -----------
Total operating expenses 550,867 377,071
----------- -----------
Income from operations (19,718) 141,477
----------- -----------
Other income (expense)
Interest expense (38,797) (45,035)
----------- -----------
Income (loss) before income tax expense (58,515) 96,442
Provision for income taxes -- --
----------- -----------
Net income (loss) $ (58,515) $ 96,442
=========== ===========
Numerator - net income (loss) $ (58,515) $ 96,442
Denominator - weighted average number of shares outstanding 5,307,951 5,082,637
----------- -----------
Basic earnings (loss) per share $ (0.01) $ 0.02
=========== ===========
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (CONSOLIDATED)
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
Unaudited
June 30, June 30,
2001 2000
--------- ---------
Cash flows from operating activities
Net income (loss) $ (58,515) $ 96,442
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 68,505
Depreciation 28,500 25,583
Amortization 1,500 970
Changes in assets and liabilities
Accounts receivable (79,520) (129,867)
Inventories (90,830) (40,107)
Advances to employees (41,416) (44,664)
Prepaid expenses (66,044) (49,549)
Other assets (108,803) (4,711)
Accounts payable - trade 53,640 (19,395)
Accounts payable - related party 0 (19,368)
Accrued payroll tax withholdings 55,673 38,602
Accrued expenses other (4,800) (2,891)
--------- ---------
Net cash provided by (used in) operating activities (183,595) (245,397)
--------- ---------
Cash flows from investing activities
Purchases of property and equipment (26,048) (20,641)
Proceeds from sale of property & equipment 19,750
Purchases of patents and trademarks (26,189)
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Net cash provided by (used) in investing activities (32,487) (20,641)
--------- ---------
Cash flows from financing activities
Increase (decrease) in due to factor (37,319) 138,542
Payments on long-term debt (24,966) (63,837)
Net change in notes payable 322,940
Proceeds from issuance of common stock 109,175
Payments on stock subscriptions receivable 2,632
--------- ---------
Net cash provided by (used in) financing activities 260,655 186,512
--------- ---------
Increase (decrease) in cash (13,942) 16,916
Cash - beginning of period 26,433 14,434
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Cash - end of period $ 12,491 $ 31,350
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENT OF OPERATIONS (CONSOLIDATED)
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
Unaudited
June 30, June 30,
2001 2000
----------- -----------
Net sales $ 494,608 $ 645,230
Cost of sales 226,899 365,765
----------- -----------
Gross profit 267,709 279,465
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Operating expenses
Selling 122,963 74,401
General and administrative 184,429 125,502
----------- -----------
Total operating expenses 307,392 199,903
----------- -----------
Income from operations (39,683) 79,562
----------- -----------
Other income (expense)
Interest expense (19,979) (21,974)
----------- -----------
Income (loss) before income tax expense (59,662) 57,588
Provision for income taxes -- --
----------- -----------
Net income (loss) $ (59,662) $ 57,588
=========== ===========
Numerator - net income (loss) $ (59,662) $ 57,588
Denominator - weighted average number of shares outstanding 5,366,599 5,128,412
----------- -----------
Basic earnings (loss) per share $ (0.01) $ 0.01
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DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS (CONSOLIDATED)
FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000
Unaudited
June 30, June 30,
2001 2000
--------- ---------
Cash flows from operating activities
Net income (loss) $ (59,662) $ 57,588
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 60,579
Depreciation 14,250 13,153
Amortization 750 485
Changes in assets and liabilities
Accounts receivable 61,802 (74,425)
Inventories (65,478) (60,366)
Advances to employees (3,555) (25,604)
Prepaid expenses (33,557) (36,502)
Other assets (67,489) (4,711)
Accounts payable - trade (10,298) 26,055
Accounts payable - related party 0 1,180
Accrued payroll tax withholdings 35,811 21,776
Accrued expenses other (8,272) (7,024)
--------- ---------
Net cash provided by (used in) operating activities (15,457) (145,983)
--------- ---------
Cash flows from investing activities
Purchases of property and equipment (8,062) (6,023)
Proceeds from sale of property & equipment 19,751
Purchases of patents and trademarks (25,289)
--------- ---------
Net cash provided by (used) in investing activities (13,600) (6,023)
--------- ---------
Cash flows from financing activities
Increase (decrease) in due to factor (106,242) 103,816
Payments on long-term debt (25,182) (20,866)
Net change in notes payable 208,178
Proceeds from issuance of common stock 34,175
--------- ---------
Net cash provided by (used in) financing activities 76,754 117,125
--------- ---------
Increase (decrease) in cash (11,965) 22,707
Cash - beginning of period 24,456 8,643
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Cash - end of period $ 12,491 $ 31,350
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PART F/S
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
SELECTED NOTES TO FINANCIAL STATEMENTS
- - Nature of Business
Dac Technologies Group International, Inc. (the "Company"), a
Florida corporation, is in the business of developing, manufacturing
and marketing various consumer products, patented and unpatented, which
are designed to provide security for the consumer and their property.
In addition, the Company has developed a wide range of security and
non-security products for the home, automobile and individual. The
majority of the Company's products are manufactured and imported from
mainland China and are shipped to the Company's central warehouse
facility in Little Rock, Arkansas. These products, along with other
items manufactured in the United States, are sold primarily to major
retail chains in the United States and Germany.
The Company also, through its wholly-owned subsidiary, Summit
Training International, Inc., provides training and educational
seminars for law enforcement and corporate communities. The
accompanying financial statements reflect the financial condition and
results of operations on a consolidated basis.
- - Organization and Summary of Significant Accounting Policies
- Organization and basis of presentation - The Company was
incorporated as a Florida corporation in July 1998 under the name DAC
Technologies of America, Inc. In July 1999, the Company changed its
name to DAC Technologies Group International, Inc.
- Unaudited interim financial statements - The accompanying
financial statements of the Company for the six months ended June 30,
2001 and 2000 and for the three months ended June 30, 2001 and 2000 are
unaudited, but, in the opinion of management, reflect the adjustments,
all of which are of a normal recurring nature, necessary for a fair
presentation of such financial statements in accordance with generally
accepted accounting principles. The significant accounting policies
applied to these interim financial statements are consistent with those
applied to the Company's December 31, 2000 audited financial statements
included in the Company's Form 10KSB. The results of operations for an
interim period are not necessarily indicative of the results for a full
year.
- - Equity Transactions
On March 29, 2001 and April 11, 2001, the Company issued
19,815 and 22,141 shares (respectively) of common stock to Mr.
James R. Pledger, the Company's President, pursuant to Mr.
Pledger's employment contract with the Company.
On April 4, 2001, the Company issued 75,000 shares of common
stock to Mr. Richard Perkins to purchase exclusive rights to a
patent owned by Mr. Perkins for a new gun lock designed for
Glock handguns.
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On June 1, 2001, the Company issued 34,000 shares of common
stock to Mr. Kenneth Shemin, for legal services to be
performed in connection with the Company's lawsuit filed
against its former manufacturer.
On June 27, 2001, the Company received and retired 55,000
shares of common stock from Joseph Safina. These shares had
previously been issued to Mr. Safina in connection with a
consulting agreement entered into between Mr. Safina and the
Company. The consulting agreement was mutually terminated and
the returned shares represent the unearned portion of the
shares previously issued.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 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 10QSB 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.
(A) Background
We are in the business of developing, marketing and outsourcing the
manufacture of various consumer products, patented and un-patented, designed to
enhance and provide security for the consumer and for his property. We have
placed particular emphasis on gun safety because it has become a prominent
national issue due to the recent rash of school and workplace violence. We
believe that there will be a continued public mandate for federal, state and
local governments to pass gun safety legislation on all guns manufactured. With
an estimated 220 million firearms in the U.S. alone, we believe we will be a
major presence in the gun lock market.
The Company's business model and strategy for growth will focus on:
- increased penetration of our existing markets
- aggressive targeting and penetration of other markets, i.e.
sporting goods retailers
- diversification of products and services to provide a base for
continued growth
- adoption of new technologies for safety and security products
- adoption of new product lines
- identification and recruitment of effective manufacturer's
representatives to actively market these products on a
national and international basis
- aggressive cost containment
We believe that continued growth for the Company will require us to
continually innovate and improve our 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 which will appeal to gun owners.
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To diversify our product offerings while following our core business,
we have identified and developed a line of security safes that we believe will
provide 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. Consistent with our corporate philosophy, these are high-quality
safes offered at reasonable prices.
During the third and fourth quarters of 2001, we will be introducing a
number of new products; including the DAC Lok for Glock pistols, a line of wall
safes and several new floor safes. In addition, we also have under development
two unique safes designed for the automotive and recreational markets. During
the second quarter of 2001, we incurred extra expenses related to the research
and development of these products and have also incurred various marketing
expenses, including attendance at several trade shows. These expenses impacted
our profitability during the second quarter of 2001, but were necessary for the
effective rollout of these new products. We anticipate excellent customer
response to these new products during the third and fourth quarters, which
should significantly improve revenues and profits. These additional expenses
were necessary to prepare the Company for the future and to ensure the
opportunity to grow as we introduce these new products.
In addition to firearm and personal safety devices, we are actively
pursuing the expansion of our line of products for the health care industry.
The Company is moving from a business model with a tightly focused line
of products sold primarily through large retailers to a model involving a
significantly diversified line of products and services, marketed and sold
throughout several industries by an active, motivated sales force.
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.
With respect to all our products we:
- develop and design
- outsource the manufacturing to unaffiliated third parties
- distribute and market
- use our private label
We have also developed a wide range of security and non-security
products for the home, automobile, and person including various metal, plastic
injection and leather products. At this time, we primarily sell to mass market
retailers such as Wal-Mart, Walgreens and K-Mart. However, recent initiatives to
develop a nation-wide cadre of manufacturer's representatives will allow us to
penetrate the entire sporting goods market, which consists of many thousands of
smaller gun shops and sporting goods stores. The majority of our products are
manufactured and imported from mainland China and shipped to a central location
in Little Rock, Arkansas for distribution. We have also entered into
relationships with two companies to provide fulfillment services on the East
coast and West coast to reduce freight costs and increase our ability to service
our customers.
In our continuing efforts to provide high quality, low cost products
for consumers, we hired Mr. James Buie in April, 2000, as Head of Manufacturing.
Mr. Buie has extensive manufacturing experience in China, having lived and
worked in China for several years with previous employers, and speaks fluent
Chinese. Through Mr. Buie's efforts, we have established relationships with new
suppliers, at prices for our products significantly lower than our previous
suppliers. Initial efforts in this area concentrated on our gun safety products.
The effect of these lower costs on our gross profit were first realized late in
the 3rd quarter of 2000, and continue into 2001. We have just begun production
of our electronic products
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with our new suppliers in the 1st quarter of 2001, again at significantly lower
costs than with previous suppliers. By retooling almost our entire product line,
we will not only continue to realize significant increases in our gross margins,
but we have positioned ourselves so that we can easily and quickly change
suppliers when future cost savings become available with other suppliers.
In September, 2000, Mr. James R. Pledger joined us as our President. On
July 11, 2001, Mr. Pledger was named Chairman and CEO, due to the resignation of
David A. Collins, the company's founder. Mr. Collins through his consulting
company, DAC Investment & Consultant Corp., will maintain a relationship with
the Company and will continue to handle key accounts, such as Wal Mat, Kmart and
others on a consulting basis.
Immediately prior to joining the Company, Mr. Pledger was the National
Sales Manager and Chief Sales Officer for Glock, Inc., a leading manufacturer of
semi-automatic pistols. Mr. Pledger is also a 30 year veteran with the FBI. We
believe that Mr. Pledger, with his expertise and contacts in law enforcement
will greatly benefit us in terms of executive management, sales and product
development.
In order to build a database from which we might select products to
market and distribute, we presently anticipate that we will solicit proposals
from inventors who have substantially completed their product development but
lack the expertise or capital to market or distribute it. We expect that we will
utilize advertisements in trade and other publications, networking, referrals
from persons with whom we may have pre-existing relationships and our Web site
as methods of soliciting these proposals. We may also acquire existing
businesses with complimentary operations as a method of expanding our business
and operations.
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
of revenue, but to strengthen the demand for our existing products.
We have entered into the business of providing training and consulting
services primarily to law enforcement, but also to corporate clients. To
implement this new business in February 2001 we formed a wholly-owned
subsidiary, Summit Training International (STI) an Arkansas corporation. STI's
objective is to provide quality, affordable training on contemporary issues
facing the law enforcement and corporate communities, with a particular focus on
crime in the workplace. Instructional content, communicated through vehicles
such as courses, seminars and conferences, will address issues such as
Recruiting and Retention of Employees, Ethics and Integrity, Racial Profiling,
Hate Crimes, Police and Community Joint Partnerships and Violence in the
Workplace. Other courses and consulting activities will address issues related
to Assessment Centers in Law Enforcement Promotions, and will provide training
for both attendees and assessors of law enforcement assessment centers.
We also have affiliated STI with a non-profit corporation, The Center
for Law Enforcement Learning (CLEL), also incorporated in Arkansas in February
2001. CLEL will service clients, typically law enforcement agencies, who can
only engage non-profit entities to provide training. STI will conduct the
seminars and training programs for CLEL. For these services, CLEL agrees to pay
a fee equal to 75-90% of the per student fee for the training event. STI
entered into a memorandum of understanding with CLEL on April 9, 2001. STI will
also enlist corporate "sponsors", who will pay a fee to exhibit their products
at the various seminars. These "sponsors" see great value in the ability to
exhibit their products to a large group of law enforcement management officials,
many of whom may be decision makers for purchasing matters.
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The STI/CLEL partnership conducted its first training seminars in June,
2001 and will be conducting other training activities on an ongoing basis. The
June seminars covered "The Recruiting and Retention of Law Enforcement and
Corrections Personnel," "Ethics and Integrity," and "Public/Private Partnerships
for Public Safety."
In addition, STI has several pending matters involving bids for
training services with major law enforcement organizations or agreements in
principle where STI or CLEL will provide training services on an ongoing basis.
We are also in the process of developing certain items of police
equipment. We believe that our association with law enforcement through the
presentation of courses, seminars and conferences will provide us with unique
opportunities to present our law enforcement products to a select group of law
enforcement professionals. The synergy to be developed between the training
opportunities and the presentation of our products may provide increased sales
of new and existing products.
We believe that our strategic business plan provides a comprehensive
approach to varied market opportunities and will increase revenues, profits and
shareholder value.
(B) FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
For the six months ended June 30, 2001, the Company had net sales
revenues of $979,448 as compared to $1,226,608 for the six months ended June 30,
2000. For the three months ended June 30, 2001, the Company had net sales
revenues of $494,608 as compared to $645,230 for the three months ended June 30,
2000. These decreases of $247,160 and $150,622, respectively, were caused by a
number of issues, including the general downturn of the U.S. economy, a severe
decline in sales of firearms in the shooting sports industry which impacted gun
lock sales. In addition, the Company obtained new manufacturers and retooled
much of its product line during 2000 to achieve greater margins and improve
quality. These efforts delayed the availability of some of the Company's
electronic alarms due to the development and evolution of these products with
the new manufacturers.
Despite the decrease in sales of $247,160 for the six months ended June
30, 2001, the Company's gross profit increased $12,601 as compared to the same
six month period of 2000. Because of the Company's obtaining new manufacturers
during 2000, which substantially reduced the costs of the Company's products,
gross margins increased from 42% and 43% for the six month and three month
periods ended June 30, 2000, to 54% for both the six month and three month
periods ended June 30, 2001.
Operating expenses for the six months and three months periods ended
June 30, 2001 were $550,867 and $307,392, as compared to $377,071 and $199,903
for the preceding year. These increases are due primarily to an increase in
salaries and additional expenses incurred related to the research and
development of new products, as well as various marketing expenses, including
attendance at several trade shows.
During the third and fourth quarters of 2001, the Company will be
introducing a number of new products, including the DAC Lok for Glock pistols, a
line of wall safes and several new floor safes. In addition, we also have under
development two unique safes designed for the automotive and recreational
markets. The additional expenses incurred during the first and second quarters
of 2001 relating to the development of these new products affected our
profitability during those periods, but were necessary for the effective rollout
of these new products, which should significantly improve revenues and profits.
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(C) LIQUIDITY AND CAPITAL RESOURCES
Our primary source of cash is funds from our operations. We believe that
external sources of liquidity could easily be obtained in the form of bank
loans, letters of credit, etc. We maintain an account receivable factoring
arrangement in order to insure an immediate cash flow. The factor may also, at
its discretion, advance funds prior to the collection of our accounts. Advances
are payable to the factor on demand. Should our sales revenues significantly
decline, it could affect our short-term liquidity. For the period ending June
30, 2001, we owed our factor approximately $244,547.
On March 12, 2001, the Company obtained a $150,000 line of credit from a
local bank to be used to fund the startup costs associated with the Company's
wholly-owned subsidiary, Summit Training International, Inc. As of June 30,
2001, the Company had borrowed $125,000 against this line of credit.
(D) TRENDS
Ongoing publicity involving firearms has caused gun safety to become a
prominent issue nationally. Gun violence, especially in schools has prompted the
President, as well as national and state legislators, to debate legislation
requiring gun safety locks on all firearms. Threatened litigation against gun
manufacturers has caused them to seriously consider placing gun safety locks on
the guns they manufacture. We believe sales revenues in this area will grow
significantly.
PART II
ITEM 1. LEGAL PROCEEDINGS
We are the Plaintiff in a legal action instituted by us against our
former manufacturer Skit International, Ltd., Uni-Skit Technologies, Inc. and
Uni-Tat International, Inc. The suit, commenced in August 2000, alleges breach
of a manufacturing contract which required the defendants to manufacture certain
of our products within 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.
In another matter, we instituted suit along with The Collins Family Trust, in
which David Collins, the former Chairman and CEO claims a beneficial interest,
and DAC Technologies of America, Inc., our predecessor, against Larry Legel, our
former Certified Public Accountant, Director and the Trustee of The Collins
Family Trust. The suit, commenced in March, 2001 alleges we transferred 180,000
of our shares of 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. We are
seeking equitable recission, damages, and injunctive relief.
The Company has been made aware of the filing of LEGAL v. DAC, which
was filed in Florida by our former officer and director, Larry Legal, alleging
the failure by the Company and its officers to permit the sale of his shares.
The Company has not yet been served with this action.
ITEM 2. CHANGES IN SECURITIES
On March 29, 2001 and April 11, 2001, the Company issued 19,815 and
22,141 shares (respectively) of common stock to Mr. James R. Pledger,
the Company's President, pursuant to Mr. Pledger's employment contract
with the Company.
On April 4, 2001, the Company issued 75,000 shares of common stock to
Mr. Richard Perkins to purchase exclusive rights to a patent owned by
Mr. Perkins for a new gun lock designed for Glock handguns.
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16
On June 1, 2001, the Company issued 34,000 shares of common stock to
Mr. Kenneth Shemin, for legal services to be performed in connection
with the Company's lawsuit filed against its former manufacturer.
On June 27, 2001, the Company received and retired 55,000 shares of
common stock from Joseph Safina. These shares had previously been
issued to Mr. Safina in connection with a consulting agreement entered
into between Mr. Safina and the Company. The consulting agreement was
mutually terminated and the returned shares represent the unearned
portion of the shares previously issued.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are incorporated by reference from Registrant's
Form 10SB filed with the Securities and Exchange Commission (the "Commission"),
File No. 000-29211, on January 28, 2000:
Exhibits
2 Acquisition Agreement
3(i) Articles of Incorporation
3(ii) By-laws
The following documents are filed herewith:
Exhibits
3(iii) Articles of Amendment to the Articles of Incorporation
3(iv) Amendment to the Articles of Incorporation
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized
DAC Technologies Group International, Inc.
By: /s/ James R. Pledger
----------------------------------
James R. Pledger, Chairman and CEO
Dated: August 13, 2001
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