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 SEPTEMBER 30, 2002
[ ] 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 NOVEMBER 8, 2002,
5,817,956 SHARES OF COMMON STOCK ARE ISSUED AND OUTSTANDING.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: YES [ ] NO [X]
TABLE OF CONTENTS
PART I.....................................................................3
ITEM 1. FINANCIAL STATEMENTS..............................................3
PART F/S...................................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Background..............................................10
Financial Condition and Results of Operations...........12
Liquidity and Capital Resources.........................13
Trends..................................................14
PART II ..................................................................14
ITEM 1. LEGAL PROCEEDINGS ...............................................14
ITEM 2. CHANGES IN SECURITIES ...........................................15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES .................................15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .............15
ITEM 5. OTHER INFORMATION ...............................................15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................15
SIGNATURES ...............................................................16
2
PART I
ITEM 1. FINANCIAL STATEMENTS
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
September 30, 2002
Unaudited
ASSETS
Current assets
Cash $ 21,659
Accounts receivable 642,747
Inventories 553,460
Advances to related parties 108,046
Prepaid expenses 111,644
Current deferred income tax benefit 15,150
-----------
Total current assets 1,452,706
-----------
Property and equipment
Furniture and fixtures 121,677
Molds, dies, and artwork 451,864
-----------
573,541
Accumulated depreciation (310,104)
-----------
Net property and equipment 263,437
-----------
Other assets
Patents and trademarks, net of
accumulated amortization of $27,160 124,088
Notes receivable 41,713
Deferred income tax benefit 233,450
-----------
Total other assets 399,251
-----------
Total assets $ 2,115,394
===========
3
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
September 30, 2002
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Due to factor $ 444,594
Notes payable 424,643
Notes payable - stockholders 200,000
Accounts payable-trade 231,162
Accrued payroll tax withholdings 131,462
Accrued expenses-other 18,930
-----------
Total current liabilities 1,450,791
-----------
Stockholders' equity
Common stock, $.001 par value; authorized
50,000,000 shares; issued and outstanding
5,817,956 shares 5,818
Preferred stock, $.001 par value; authorized
10,000,000 shares; none issued and outstanding
Additional paid-in capital 1,236,216
Retained earnings (deficit) (577,431)
-----------
Total stockholders' equity 664,603
-----------
Total liabilities and stockholders' equity $ 2,115,394
===========
4
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (CONSOLIDATED)
For the Nine Months Ended September 30, 2002 and 2001
Unaudited
Sept. 30 Sept. 30
2002 2001
----------- -----------
Net sales $ 1,739,530 $ 1,536,521
Cost of sales 921,803 737,449
----------- -----------
Gross profit 817,727 799,072
----------- -----------
Operating expenses
Selling 297,238 387,758
General and administrative 502,395 532,348
----------- -----------
Total operating expenses 799,633 920,106
----------- -----------
Income from operations 18,094 (121,034)
----------- -----------
Other income (expense)
Other income 46,713 --
Interest expense (75,758) (64,663)
----------- -----------
Total other income (expense) (29,045) (64,663)
----------- -----------
Income (loss) before income tax expense (10,951) (185,697)
Provision for income taxes -- --
----------- -----------
Net income (loss) $ (10,951) $ (185,697)
=========== ===========
Numerator - net income (loss) $ (10,951) $ (185,697)
Denominator - weighted average number of shares outstanding 5,769,864 5,323,844
----------- -----------
Basic earnings (loss) per share $ (0.00) $ (0.03)
=========== ===========
5
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (CONSOLIDATED)
For the Nine Months Ended September 30, 2002 and 2001
Unaudited
Sept. 30 Sept. 30
2002 2001
--------- ---------
Cash flows from operating activities
Net income (loss) $ (10,951) $(185,697)
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 32,866 76,460
Depreciation 46,405 42,750
Amortization 8,223 2,250
Changes in assets and liabilities
Accounts receivable (231,090) (166,430)
Inventories (138,344) (189,166)
Advances to employees (4,642) (44,598)
Prepaid expenses (32,438) (86,970)
Other assets (41,713) (106,450)
Accounts payable - trade 150,207 73,322
Accrued payroll tax withholdings (37,025) 39,884
Accrued expenses other (31,096) (4,329)
--------- ---------
Net cash provided by (used in) operating activities (278,647) (363,277)
--------- ---------
Cash flows from investing activities
Purchases of property and equipment (17,423) (32,034)
Proceeds from sale of property & equipment -- 19,750
Purchases of patents and trademarks (2,750) (26,189)
--------- ---------
Net cash provided by (used) in investing activities (20,173) (38,473)
--------- ---------
Cash flows from financing activities
Increase (decrease) in due to factor 167,482 106,218
Payments on long-term debt 0.00 (24,966)
Net change in notes payable (48,685) 471,369
Net change in notes payable-related party 75,000 --
Proceeds from issuance of common stock 40,000 46,463
Payments on stock subscriptions receivable 25,000 --
--------- ---------
Net cash provided by (used in) financing activities 258,797 599,084
--------- ---------
Increase (decrease) in cash (50,974) 11,637
Cash - beginning of period 72,633 26,433
--------- ---------
Cash - end of period $ 21,659 $ 38,070
========= =========
6
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (CONSOLIDATED)
For the Three Months Ended September 30, 2002 and 2001
Unaudited
Sept. 30, Sept. 30,
2002 2001
----------- -----------
Net sales $ 621,670 $ 557,073
Cost of sales 353,129 289,150
----------- -----------
Gross profit 268,541 267,923
----------- -----------
Operating expenses
Selling 83,204 202,317
General and administrative 173,923 166,921
----------- -----------
Total operating expenses 257,127 369,238
----------- -----------
Income from operations 11,414 (101,315)
----------- -----------
Other income (expense)
Other income 46,713 --
Interest expense (35,185) (25,866)
----------- -----------
Total other income (expense) 11,528 (25,866)
----------- -----------
Income (loss) before income tax expense 22,942 (127,181)
Provision for income taxes -- --
----------- -----------
Net income (loss) $ 22,942 $ (127,181)
=========== ===========
Numerator - net income (loss) $ 22,942 $ (127,181)
Denominator - weighted average number of shares outstanding 5,797,304 5,355,104
----------- -----------
Basic earnings (loss) per share $ 0.00 $ (0.02)
=========== ===========
7
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (CONSOLIDATED)
For the Three Months Ended September 30, 2002 and 2001
Unaudited
Sept. 30, Sept. 30,
2002 2001
-------- --------
Cash flows from operating activities
Net income (loss) 22,942 (127,181)
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 32,866 7,955
Depreciation 16,000 14,250
Amortization 2,800 750
Changes in assets and liabilities
Accounts receivable (64,702) (86,910)
Inventories (79,703) (98,336)
Advances to employees (850) (3,182)
Prepaid expenses (16,155) (20,926)
Other assets (41,713) 2,353
Accounts payable - trade 50,257 19,682
Accrued payroll tax withholdings (15,583) (15,789)
Accrued expenses other 2,673 470
-------- --------
Net cash provided by (used in) operating activities (114,110) (179,683)
-------- --------
Cash flows from investing activities
Purchases of property and equipment (1,279) (5,986)
-------- --------
Net cash provided by (used) in investing activities (1,279) (5,986)
-------- --------
Cash flows from financing activities
Increase (decrease) in due to factor 124,287 143,537
Net change in notes payable (20,842) 148,429
Proceeds from issuance of common stock -- 46,463
-------- --------
Net cash provided by (used in) financing activities 103,445 338,429
-------- --------
Increase (decrease) in cash 10,998 25,579
Cash - beginning of period 10,661 12,491
-------- --------
Cash - end of period 21,659 38,070
======== ========
8
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
SELECTED NOTES TO FINANCIAL STATEMENTS
o 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, and fulfillment houses on
the East coast and West coast. These products, along with other items
manufactured in the United States, are sold primarily to mass merchants and
sporting goods retailers throughout the United States and international
locations.
o 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 nine months ended September 30, 2002 and 2001
and for the three months ended September 30, 2002 and 2001 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, 2001 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.
o EQUITY TRANSACTIONS
During the fourth quarter of the year ended December 31, 2001, the
Company initiated a private placement offering of the Company's common stock.
During the first quarter of 2002, the Company issued 40,000 shares of restricted
common stock at $1.00 per share. This offering expired on March 31, 2002.
During the third quarter of 2002, the Company issued 4,000 shares of
restricted common stock to four employees in various amounts in reliance upon
Section 4(2) of the Securities Act for past services.
9
During the third quarter of 2002, the Company issued 50,000 shares of
restricted common stock to a related party who is also a creditor of the Company
pursuant to the terms of a consulting agreement. The payment of 25,000 of these
shares may be deemed additional compensation for this party's loan to the
Company.(1)
o NOTES PAYABLE
On March 12, 2002, the Company extended a line of credit with a local
bank in the principal amount of $149,500. Proceeds of this line of credit was
used to finance the start up costs associated with the Company's wholly-owned
subsidiary, Summit Training International, Inc. The principal balance of this
loan is now due October 12, 2002 and bears interest at 7.75%. This Note is now
past due, however, the Bank has indicated to the Company that it does not intend
to call the loan. The Company is currently in negotiations for renewal of this
loan.
On May 1, 2002, the Company extended its $180,000 inventory line of
credit with a local bank. This line of credit matures October 31, 2002, and
bears interest at 7.75%. This Note is now past due, however, the Bank has
indicated to the Company that it does not intend to call the loan. The Company
is currently in negotiations for renewal of this loan.
On May 7, 2002, the Company obtained a $100,000 loan from an
individual, which matures December 7, 2002 and bears interest at 6%. The Note
was issued to a related party who is also a consultant to the Company.
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.
- --------
(1) The terms of this party's May 7, 2002, Loan are more fully set forth
in the Notes Payable Note to Financial Statements below.
10
(A) SUMMARY
The Company has continued to be active in the research and development
of new security products for sale to our mass merchant, sporting goods and other
customers. As previously reported, the Company introduced and began shipments of
five new products during the second quarter, including all five items being
placed in Wal Mart's gun accessory module. Four of these items have been
approved for sale in the state of California, and are now being marketed toward
firearm manufacturers and national sporting goods chains.
During the third quarter, the Company received and shipped orders for
its California approved cable lock to two large gun manufacturers and received
orders from a third that began shipping during the fourth quarter of this year.
In addition to these items, the Company has completed development of a
new line of windproof/water-resistant butane lighters for the sporting goods
market. The Company has received verbal commitments from a large retailer for
this new item, for shipment in the fourth quarter of 2002, as well as interest
from gun manufacturers under a private label program. We have also begun
redesigning the packaging of our fast access portable safe (SportSafe) for the
automotive industry (Vehicle Vault).
The Company continues to identify and develop new security products for
the gun and sporting goods markets. Our ability to manufacture quality products
at a low cost has enabled us to have competitive pricing in these markets.
The introduction of these new items has enabled the Company to increase
its revenues during the third quarter by 12% over last year. This increase in
revenues and the Company's continued efforts to reduce expenses has resulted a
return to profitability in the second and third quarters.
In July, 2002, the Company sold certain assets of its subsidiary,
Summit Training International, Inc. and Center for Law Enforcement Learning,
Inc., including their names for $50,000, which includes $5,000 in cash and a
$45,000 note, due no later than eighteen (18) months from the date of the Note.
The Company had discontinued operations of these subsidiaries earlier this year
due to unprofitability. The Company has agreed, for a period of four (4) years
from Closing, not to own, manage, participate in (as an employee or otherwise),
advise or otherwise consult with any business that provides instruction or
educational services to law enforcement and/or security agencies, entities or
personnel (collectively "Security Services"), within the United States of
America.
DETAILS
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
11
safety because it has become a prominent national issue due to the rash of
school and workplace violence over the past few years. In particular, our
products consist of gun locks, trigger locks, security safes, specialty safes,
personal protection devices and items for the health care industry. 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 will allow us to penetrate the entire sporting
goods market, which consists of thousands of smaller gun shops and sporting
goods stores. These initiatives have met with moderate success. 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. 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 COMPANY'S BUSINESS PLAN AND STRATEGY FOR GROWTH FOCUSES ON:
o increased penetration of our existing market
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.
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.
With the passage of legislation in California requiring approval from the
California Department of Justice for a firearm safety device to be sold in that
state, many national gun manufacturers and sporting goods retailers looking into
using only California compliant devices. Recognizing this fact, the Company now
has 10 firearm safety devices (including the portable SportSafe) approved by the
California Department of Justice.
We have redesigned our website (www.dactec.com). All of our products
are available via e-commerce on this new site.
(B) FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company had net income of $22,942 on net sales revenues of $621,670
12
for the three months ended September 30, 2002, as compared to a net loss of
$127,181 on net sales revenues of $557,073 for the three months ended September
30, 2001. This represents an increase in net income of $150,123 over the
preceding year. Revenues increased $64,597 over the preceding year, a 12%
increase.
Operating expenses for the three months ended September 30, 2002 were
$257,127 as compared to $369,238 for the same period in 2001. This decrease of
$112,111 represents a 30% decrease, and is a result of management's continuing
efforts to reduce expenses.
Gross margin percentages decreased from 48% for the three months ended
September 30, 2001 to 43% for the three months ended September 30, 2002. This
decrease is mainly due to competition in the safe business and an increase in
sales of gun locks to gun manufacturers. Sales of the Company's line of security
safes increased from $102,753 for the three months ended September 30, 2001 to
$160,832 for the same three month period in 2002. However, gross margins
decreased for 46% to 40%, respectively. Competition in the security safe
industry has increased dramatically over the past year, which has caused the
Company to reduce its margins to increase its market share for these items.
For the nine months ended September 30, 2002, the Company had a net
loss of $10,951 on net sales revenues of $1,739,530 as compared to a net loss of
$185,697 on net sales revenues of $1,536,521 for the nine months ended September
30, 2001. This represents a decrease in the net loss of $174,746. The increase
in revenues of $203,009 represents an increase of 13% over the previous year.
Operating expenses for the nine months ended September 30, 2002 were
$799,633 as compared to $920,106 for the same period in 2001. This decrease of
$120,473 represents a 13% decrease over the prior year, and is a result of
management's expense cuts made during the first quarter of 2002.
(C) 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
September 30, 2002, we owed our factor approximately $444,594.
In August 2001, the Company began efforts to raise additional capital
through the private placement of the Company's common stock. This offering
expired March 31, 2002. A total of $415,000 in gross proceeds were generated
from this offering.
13
On March 12, 2002, the Company extended a line of credit with a local
bank in the principal amount of $149,500. Proceeds of this line of credit was
used to finance the start up costs associated with the Company's wholly-owned
subsidiary, Summit Training International, Inc. The principal balance of this
loan is now due October 12, 2002 and bears interest at 7.75%. This Note is now
past due, however, the Bank has indicated to the Company that it does not intend
to call the loan. The Company is currently in negotiations for renewal of this
loan.
On May 1, 2002, the Company extended its $180,000 inventory line of
credit with a local bank. This line of credit matures October 31, 2002, and
bears interest at 7.75%. This Note is now past due, however, the Bank has
indicated to the Company that it does not intend to call the loan. The Company
is currently in negotiations for renewal of this loan.
(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.
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,
effective gun locks or gun safes to increase security. As a result, we have seen
an increase in revenue due to additional purchases of our products.
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. A trial date has been set by the court in this matter for April 2,
2003.
In another matter, we instituted suit along with The Collins Family
Trust, in which David Collins, our Chairman and CEO claims a beneficial
interest, and DAC Technologies of America, Inc., our predecessor, against Larry
Legel, our for Certified Public Accountant, Director and the Trustee of The
Collins Family Trust. The suit, commenced in March, 2001 alleges we transferred
14
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. A judgment
has been entered in the Company's favor in this suit.
In a related action, Legal v. DAC Technologies Group International,
Inc., filed in Florida by our former officer and director, Larry Legal and his
wife, alleged the failure by the Company and its officers to permit the sale of
their shares. There is a hearing set in December seeking a dismissal predicated
on the Arkansas decision.
ITEM 2. CHANGES IN SECURITIES
During the third quarter of 2002, the Company issued 4,000 shares of
restricted common stock to four employees in various amounts in reliance upon
Section 4(2) of the Securities Act for past services.
During the third quarter of 2002, the Company issued 50,000 shares of
restricted common stock to a related party who is also a creditor of the Company
pursuant to the terms of a consulting agreement. The payment of 25,000 of these
shares may be deemed additional compensation for this party's loan to the
Company.
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:
15
EXHIBITS
--------
2 Acquisition Agreement
3(i) Articles of Incorporation
3(ii) By-laws
EXHIBITS
--------
10.5 Asset Purchase Agreement
10.6 Consulting Agreement
99.1 Certification of David A. Collins
99.2 Certification of Robert C. Goodwin
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/ David A. Collins
----------------------------------
David A. Collins, Chairman and CEO
November 14, 2002
16