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, 2003
[ ] 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
Identification No.) or organization)
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 5, 2003,
5,843,056 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..................................................................10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Summary.................................................11
Financial Condition and Results of Operations...........13
Liquidity and Capital Resources.........................14
Trends..................................................15
PART II ..................................................................16
ITEM 1. LEGAL PROCEEDINGS ...............................................16
ITEM 2. CHANGES IN SECURITIES ...........................................16
ITEM 3. DEFAULTS UPON SENIOR SECURITIES .................................16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .............16
ITEM 5. OTHER INFORMATION ...............................................16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................17
SIGNATURES ...............................................................18
2
PART I
ITEM 1. FINANCIAL STATEMENTS
Our financial statements are contained in pages 4 through 9 following.
3
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
JUNE 30, 2003
Unaudited
ASSETS
Current assets
Cash $ 3,730
Accounts receivable 857,204
Inventories 599,331
Note receivable 43,635
Advances to related parties 100,091
Prepaid expenses 86,286
Current deferred income tax benefit 8,850
-----------
Total current assets 1,699,127
-----------
Property and equipment
Furniture and fixtures 123,733
Molds, dies, and artwork 461,106
-----------
584,839
Accumulated depreciation (349,521)
-----------
Net property and equipment 235,318
-----------
Other assets
Patents and trademarks, net of
accumulated amortization of $38,897 112,351
Deferred income tax benefit 204,048
-----------
Total other assets 316,399
-----------
Total assets $ 2,250,844
===========
4
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
BALANCE SHEET (CONSOLIDATED)
JUNE 30, 2003
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Due to factor $ 593,393
Notes payable 369,926
Notes payable - stockholders 185,275
Accounts payable-trade 229,869
Accrued payroll tax withholdings 110,177
Accrued expenses-other 14,249
-----------
Total current liabilities 1,502,889
-----------
Stockholders' equity
Common stock, $.001 par value; authorized
50,000,000 shares; issued and outstanding
5,843,056 shares 5,843
Preferred stock, $.001 par value; authorized
10,000,000 shares; none issued and outstanding
Additional paid-in capital 1,249,065
Retained earnings (deficit) (506,953)
-----------
Total stockholders' equity 747,955
-----------
Total liabilities and stockholders' equity $ 2,250,844
===========
5
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (CONSOLIDATED)
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
Unaudited
June 30, June 30,
2003 2002
----------- -----------
Net sales $ 1,686,542 $ 1,117,861
Cost of sales 1,007,631 568,674
----------- -----------
Gross profit 678,911 549,187
----------- -----------
Operating expenses
Selling 196,880 214,034
General and administrative 350,350 328,472
----------- -----------
Total operating expenses 547,230 542,506
----------- -----------
Income from operations 131,681 6,681
----------- -----------
Other income (expense)
Other income 1,477 --
Interest expense (62,275) (40,573)
----------- -----------
Total other income (expense) (60,798) (40,573)
----------- -----------
Income (loss) before income tax expense 70,883 (33,892)
Provision for income taxes 24,166 --
----------- -----------
Net income (loss) $ 46,717 $ (33,892)
=========== ===========
Numerator - net income (loss) $ 46,717 $ (33,892)
Denominator - weighted average number of shares outstanding 5,830,479 5,753,597
----------- -----------
Basic earnings (loss) per share $ 0.01 $ (0.01)
=========== ===========
6
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (CONSOLIDATED)
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
Unaudited
June 30, June 30,
2003 2002
----------- -----------
Net sales $ 917,200 $ 634,230
Cost of sales 553,885 337,913
----------- -----------
Gross profit 363,315 296,317
----------- -----------
Operating expenses
Selling 106,709 97,191
General and administrative 187,468 148,100
----------- -----------
Total operating expenses 294,177 245,291
----------- -----------
Income from operations 69,138 51,026
----------- -----------
Other income (expense)
Other income 683 --
Interest expense (29,824) (19,406)
----------- -----------
Total other income (expense) (29,141) (19,406)
----------- -----------
Income (loss) before income tax expense 39,997 31,620
Provision for income taxes 14,715 --
----------- -----------
Net income (loss) $ 25,282 $ 31,620
=========== ===========
Numerator - net income (loss) $ 25,282 $ 31,620
Denominator - weighted average number of shares outstanding 5,842,781 5,763,956
----------- -----------
Basic earnings (loss) per share $ 0.00 $ 0.01
=========== ===========
7
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (CONSOLIDATED)
FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
Unaudited
June 30, June 30,
2003 2002
-------- --------
Cash flows from operating activities
Net income (loss) 46,717 (33,892)
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 12,873 --
Depreciation 29,141 30,405
Amortization 9,744 5,423
Deferred income tax provision (benefit) 24,166 --
Changes in assets and liabilities
Accounts receivable 134,901 (166,388)
Inventories (2,564) (58,641)
Note receivable (1,303) --
Advances to employees 8,030 (3,792)
Prepaid expenses (3,585) (16,284)
Accounts payable - trade (42,299) 99,950
Accrued payroll tax withholdings (21,334) (21,442)
Accrued expenses other (4,012) (33,769)
-------- --------
Net cash provided by (used in) operating activities 143,758 (164,538)
-------- --------
Cash flows from investing activities
Purchases of property and equipment (7,636) (16,144)
Purchases of patents and trademarks -- (2,750)
-------- --------
Net cash provided by (used) in investing activities (7,636) (18,894)
-------- --------
Cash flows from financing activities
Increase (decrease) in due to factor (141,642) 43,195
Net change in notes payable (43,620) (27,843)
Net change in notes payable-stockholders (7,225) 75,000
Proceeds from issuance of common stock -- 40,000
Payments on stock subscriptions receivable -- 25,000
-------- --------
Net cash provided by (used in) financing activities (192,487) 155,352
-------- --------
Increase (decrease) in cash (9,648) (61,972)
Cash - beginning of period 13,378 72,633
-------- --------
Cash - end of period 3,730 10,661
======== ========
8
DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (CONSOLIDATED)
FOR THE THREE MONTHS ENDED JUNE 30, 2003 AND 2002
Unaudited
June 30, June 30,
2003 2002
-------- --------
Cash flows from operating activities
Net income (loss) 25,282 31,620
Adjustments to reconcile net income to
net cash provided (used in) operating activities:
Issuance of common stock for services 12,833 --
Depreciation 14,688 16,000
Amortization 4,872 2,800
Deferred income tax provision (benefit) 14,715 --
Changes in assets and liabilities
Accounts receivable (178,613) (182,257)
Inventories (42,608) 28,656
Note receivable (683) --
Advances to employees (1,020) (3,521)
Prepaid expenses 25,941 10,940
Accounts payable - trade (61,747) (963)
Accrued payroll tax withholdings (7,902) (11,638)
Accrued expenses other (2,072) (30,086)
-------- --------
Net cash provided by (used in) operating activities (221,596) (170,069)
-------- --------
Cash flows from investing activities
Purchases of property and equipment (1,427) (5,292)
Purchases of patents and trademarks -- --
-------- --------
Net cash provided by (used) in investing activities (1,427) (5,292)
-------- --------
Cash flows from financing activities
Increase (decrease) in due to factor 190,878 64,625
Net change in notes payable (17,534) (16,189)
Net change in notes payable-stockholders (7,225) 100,000
Proceeds from issuance of common stock -- --
Payments on stock subscriptions receivable -- --
-------- --------
Net cash provided by (used in) financing activities 166,119 148,436
-------- --------
Increase (decrease) in cash (31,622) 4,695
Cash - beginning of period 35,352 5,966
-------- --------
Cash - end of period 3,730 10,661
======== ========
9
PART F/S
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 non-patented, 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, with an
emphasis on gun safety and gun accessories, 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 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 six months ended June 30, 2003 and 2002 and
for the three months ended June 30, 2003 and 2002 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, 2002 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 second quarter of 2003, the Company issued 25,000 shares of
restricted stock pursuant to Section 4.2(2) of the Securities Act of 1933, as
amended, to CEOcast, Inc. in exchange for financial public relations services.
Pursuant to the consulting agreement, the Company is to additionally deliver
25,000 cashless warrants to CEOcast.
o NOTES PAYABLE
The Company has a loan with a local bank in the principal amount of
$46,653, which matured April 30, 2003. This Note has been renewed and now
matures on April 30, 2006 and bears interest at 7%.
10
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) SUMMARY
DAC Technologies continues to experience continued sales and profit
growth, recording its fifth consecutive profitable quarter.
The Company anticipates this growth and profitability to continue,
primarily due to our new line of "Gunmaster" gun cleaning kits. These new kits
are being rolled out nationwide to retailers and distributors. Three of these
gun cleaning kits were added as permanent module items in Wal Mart in mid-July.
With the addition of these items, our daily reorders from Wal Mart have already
increased four-fold. In addition, the Company has received a verbal commitment
from WalMart for a significant order of our Deluxe Universal Gun Cleaning Kit to
be run as a Christmas promotion. Scheduled for a November 1st delivery, this
single order, if completed, will generate in excess of $500,000 in gross
revenues.
The Company continues to experience large increased in sales of its
California Department of Justice approved cable locks to large original
equipment ("OEM") gun manufacturers. These locks are being shipped by the gun
manufacturers with each gun they sell nationwide. We have continued to secure
additional business in this market because our manufacturing capabilities have
enabled us to provide the most competitive pricing in the industry among safety
locks of comparable standards.
11
Also significant to the Company's sales growth during the second
quarter has been the addition late last year of our Sportsman's Lighter as a
permanent module item in Wal Mart.
While sales of our "Gunmaster" gun cleaning kits has been flourishing,
we expect sales to increase significantly from present levels as the fall
hunting season approaches. We have also presently identified over thirty new gun
cleaning and gun accessory items which we anticipate will be available in time
for the upcoming hunting season.
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 heavy emphasis on gun safety products for OEM gun manufacturers, gun
cleaning kits and gun accessories. In particular, our products consist of gun
locks, trigger locks, gun cleaning and accessory items, 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, as well as OEM gun manufacturers. With
the addition of our "Gunmaster" gun cleaning kits, we anticipate increasing our
business with sporting goods retailers and distributors.
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 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.
12
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
SIX MONTHS ENDED JUNE 30, 2003
For the six months ended June 30, 2003, the Company had net income of
$46,717 on net sales of $1,686,542, as compared to a net loss of $33,892 on net
sales of $1,117,861 for the same period in 2002.
The increase in net income of $80,609 (and increase in net income
before income taxes of $104,775) was mainly due to the increase in sales. The
increase in net sales of $568,681 represents a 51% increase over the same six
month period of 2002. Sales of the Company's gun locks increased $366,949 mainly
due to increased sales to OEM gun manufacturers. Sales of the Company's
Sportsman's Lighter, first introduced in the fourth quarter of 2002, accounts
for $228,563, or 40% of the increase. The Company's line of Gunmaster gun
cleaning kits, a new product line rolled out in the second quarter of 2003,
accounted for $147,577, or 26% of the increase. Sales of the Company's line of
security safes declined $157,258 from$436,114 to $278,856. This decrease was due
mainly to the fact that the Company first introduced its SportSafe in the second
quarter of 2002, generating significant sales as this item was rolled out
nationwide. Despite this decrease over the previous year, the Company's line of
security safes continues to provide significant revenues to the Company,
accounting for 17% of its sales for the six months ended June 30, 2003.
Gross profit for the six months ended June 30, 2003 was $678,911 as
compared to $549,187 for the prior year, an increase of $129,724. Gross margin
percentages decreased form 50% in 2002 to 41% in 2003. The decrease in gross
margin percentages is directly related to the increase in sales of gun locks to
gun manufacturers. This is a highly competitive market, and gross margins are
significantly lower than for sales to the Company's mass merchant and
distributor customers.
Operating expenses for the six months ended June 30, 2003 were $547,230
as compared to $542,506 for the prior year. This is an increase of only $4,724,
or 1%.
Interest expense for the six months ended June 30, 2003 was $62,275 as
compared to $40,573 for the prior year. This is an increase of $21,702 or 53%.
The Company finances its cash flow needs through a factoring agreement, wherein
it borrows against its accounts receivable. Because of the record sales in the
fourth quarter of 2002, and higher sales during the first six months of 2003 as
compared to 2002, the Company's borrowing under this factoring agreement during
the first six months of 2003 was significantly higher than in the previous year.
Due to the fact that the Company has been profitable for five
consecutive quarters, the Company's overall financial condition has improved
significantly since June 30, 2002. At June 30, 2003, the Company had net working
capital of $196,238 as compared to a net working capital deficit
13
of $29,701 at June 30, 2002. This is an increase of $225,939. In addition, the
Company's profit of $93,420 for the four quarters since June 30, 2002 caused the
Company's stockholders' equity to increase from $608,795 to $747,955.
THREE MONTHS ENDED JUNE 30, 2003
For the three months ended June 30, 2003, the Company had net income of
$25,282 on net sales of $917,200 as compared to net income of $31,620 on net
sales of $634,230 for the three months ended June 30, 2002.
The increase in net sales of $282,970 represents a 45% increase over
the second quarter of 2002. As discussed above, this increase is due to the
increase in sales of gun locks to OEM gun manufacturers and sales of two new
products, the Sportsman's Lighter and Gunmaster gun cleaning kits.
Net income for the second quarter of 2003 decreased $6,338 from the
second quarter of 2002. However, net income before income taxes increased 26%,
from $31,620 to $39,997. Because the Company had a cumulative loss for the first
two quarters of 2002, there was no income tax expensed for the second quarter of
2002, while the income tax expense of $14,715 for the second quarter of 2003
caused the decrease in net income. The Company currently has approximately
$545,000 in net operating loss carry forwards available for federal and state
income tax purposes.
Gross profit for the three months ended June 30, 2003 was $363,315 as
compared to $296,317 for the three months ended June 30, 2002. This increase was
due to the increase in sales, modestly offset by the decrease in gross margins
from 46% to 40%. The gross margin decrease, as discussed above, was due to the
increase in sales of gun locks to OEM gun manufacturers, where gross margins are
significantly lower than for other products sold by the Company.
Operating expenses for the second quarter of 2003 were $294,177 as
compared to $245,291 for the previous year. This is an increase of $48,886, or
20%. Sales commissions accounts for 30% of this increase as the Company
continues to develop its sales through the use of contract sales
representatives. Consulting fees related to financial public relations services
accounts for 31% of the increase, and legal services related to litigation costs
and a minor amount for patent research on the Company's new products, accounts
for 23% of the increase.
Interest expense increased $10,418 over the second quarter of 2002, a
54% increase. As explained above, the Company's borrowing under its factoring
agreement was significantly higher than in the second quarter of 2002, thereby
increasing interest expense related thereto.
(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
14
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, 2003, we owed our factor approximately $593,393.
(d) 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.
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". 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.
15
PART II
ITEM 1. 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 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. This suit is scheduled to go to
trial in August, 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.
Legel has noticed the appeal of the Court's October Order.
Subsequent to the Arkansas action, Mr. Legel instituted against the
Company in Florida, 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. Legel 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. The Florida Court has granted the
Company's motion to stay the proceeding pending the outcome of the appeal in
Arkansas.
ITEM 2. CHANGES IN SECURITIES
During the second quarter of 2003, the Company issued 25,000 shares of
restricted common stock in exchange for financial public relations services, in
reliance upon Section 4(2) of the Securities Act, as the sale, which was made to
a sophisticated investor, did not involve a public offering of the Company's
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
16
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
3(i) Articles of Incorporation
3(ii) By-laws
EXHIBITS
Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation S-B
31.1 Certification of David A. Collins Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Robert C. Goodwin Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32.1 Certification of David A. Collins Pursuant to 18 U.S.C. Section
1350, Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification of Robert C. Goodwin Pursuant to 18 U.S.C. Section
1350, Section 906 of the Sarbanes-Oxley Act of 2002
17
SIGNATURES
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, August 13, 2003
By:/s/ Robert C. Goodwin
----------------------------------------------------
Robert C. Goodwin, CFO, August 13, 2003
18