-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SApmSx+hF7FopWaagsnDJsqrcxulskc+ytnEPmaAV4JtqXjUYnkhZUeKgrptxXdV VKneU9RN3XxScaaycxCltg== /in/edgar/work/0000950144-00-013918/0000950144-00-013918.txt : 20001115 0000950144-00-013918.hdr.sgml : 20001115 ACCESSION NUMBER: 0000950144-00-013918 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAC TECHNOLOGIES GROUP INTERNATIONAL INC CENTRAL INDEX KEY: 0001102750 STANDARD INDUSTRIAL CLASSIFICATION: [3420 ] IRS NUMBER: 650847852 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29211 FILM NUMBER: 767787 BUSINESS ADDRESS: STREET 1: 3200 NORTH OCEAN BLVD CITY: FT LAUDERDALE STATE: FL ZIP: 33308 BUSINESS PHONE: 9543750119 MAIL ADDRESS: STREET 1: 3200 NORTH OCEAN BLVD CITY: FT LAUDERDALE STATE: FL ZIP: 33308 10QSB 1 g65401e10qsb.txt DAC TECHNOLOGIES GROUP INT'L 10QSB 09/30/00 1 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, 2000 [ ] 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.) 3200 N. OCEAN BLVD., SUITE 1006, FT. LAUDERDALE, FL 33308 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (954) 375-0119 (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 [ ] No [x] 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, 2000, 5,143,000 shares of Common Stock are issued and outstanding. Transitional Small Business Disclosure Format: Yes [ ] No [x] 2 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........12 Liquidity and Capital Resources......................12 Trends...............................................12 PART II .............................................................13 ITEM 1. LEGAL PROCEEDINGS.............................................13 ITEM 2. CHANGES IN SECURITIES.........................................13 ITEM 3. DEFAULTS UPON SENIOR SECURITIES...............................13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........13 ITEM 5. OTHER INFORMATION.............................................13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..............................13 SIGNATURES............................................................14 2 3 PART I ITEM 1. FINANCIAL STATEMENTS Our financial statements are contained in pages 4 through 9 following. 3 4 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. BALANCE SHEET SEPTEMBER 30, 2000 Unaudited ASSETS Current assets Cash $ 5,139 Accounts receivable, less allowance for doubtful accounts of $19,649 420,113 Inventories 391,021 Prepaid expenses 110,553 ----------- Total current assets 926,826 ----------- Property and equipment Furniture and fixtures 108,871 Molds, dies, and artwork 355,173 Vehicles 34,709 ----------- 498,753 Accumulated depreciation (212,879) ----------- Net property and equipment 285,874 ----------- Other assets Patents and trademarks, net of accumulated amortization of $3,983 31,062 Other 10,411 ----------- Total other assets 41,473 ----------- Total assets $ 1,254,173 =========== 4 5 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. BALANCE SHEET SEPTEMBER 30, 2000 Unaudited LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Due to factor $ 268,222 Accounts payable-trade 66,581 Accrued payroll tax withholdings 114,431 Accrued expenses-other 18,949 Current maturities of long-term debt 48,675 ----------- Total current liabilities 516,858 ----------- Long-term debt, less current maturities 115,672 ----------- Stockholders' equity Common stock, $.001 par value; authorized 10,000,000 shares; issued and outstanding 5,143,000 shares 5,143 Additional paid-in capital 722,876 Retained earnings (deficit) (106,376) ----------- Total stockholders' equity 621,643 ----------- Total liabilities and stockholders' equity $ 1,254,173 =========== 5 6 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Unaudited
September 30, September 30, 2000 1999 ------------- ------------- Net sales $ 1,726,523 $ 1,655,405 Cost of sales 962,518 944,829 ----------- ----------- Gross profit 764,005 710,576 ----------- ----------- Operating expenses Selling 116,170 146,307 General and administrative 453,719 388,106 ----------- ----------- Total operating expenses 569,889 534,413 ----------- ----------- Income from operations 194,116 176,163 ----------- ----------- Other income (expense) Interest expense (63,898) (61,543) ----------- ----------- Income (loss) before income tax expense 130,218 114,620 Provision for income taxes -- -- ----------- ----------- Net income (loss) $ 130,218 $ 114,620 =========== =========== Numerator - net income (loss) $ 130,218 $ 114,620 Denominator - weighted average number of shares outstanding 5,101,934 4,954,602 ----------- ----------- Basic earnings (loss) per share $ 0.03 $ 0.02 =========== ===========
6 7 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Unaudited
Sept. 30, Sept. 30, 2000 1999 --------- --------- Cash flows from operating activities Net income (loss) $ 130,218 $ 114,620 Adjustments to reconcile net income to net cash provided (used in) operating activities: Depreciation 39,098 30,900 Amortization 1,455 1,100 Changes in assets and liabilities Accounts receivable 33,271 (222,670) Inventories (7,582) 26,084 Prepaid expenses (86,028) (37,111) Other assets (4,711) (6,204) Accounts payable - trade (61,539) (38,861) Accounts payable - related party (52,582) (69,435) Accrued payroll tax withholdings 38,284 18,108 Accrued expenses other (8,150) (22,021) --------- --------- Net cash provided by (used in) operating activities (108,484) (320,110) --------- --------- Cash flows from investing activities Purchases of property and equipment (27,910) (4,458) --------- --------- Net cash provided by (used) in investing activities (27,910) (4,458) --------- --------- Cash flows from financing activities Increase (decrease) in due to factor (30,487) 142,146 Proceeds on long-term debt 16,333 Payments on long-term debt (64,438) (51,343) Proceeds from notes payable, related parties 0 3,000 Proceeds from sale of common stock 89,174 39,900 Payments on stock subscriptions receivable 2,632 999 --------- --------- Net cash provided by (used in) financing activities (3,119) 151,035 --------- --------- Increase (decrease) in cash (9,295) (58,913) Cash - beginning of period 14,434 68,042 --------- --------- Cash - end of period $ 5,139 $ 9,129 ========= =========
7 8 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Unaudited
September 30, September 30, 2000 1999 ------------- ------------- Net sales $ 499,916 $ 642,215 Cost of sales 254,458 352,897 ----------- ----------- Gross profit 245,458 289,318 ----------- ----------- Operating expenses Selling 46,203 62,488 General and administrative 148,415 132,322 ----------- ----------- Total operating expenses 194,618 194,810 ----------- ----------- Income from operations 50,840 94,508 ----------- ----------- Other income (expense) Interest expense (18,863) (20,903) ----------- ----------- Income (loss) before income tax expense 31,977 73,605 Provision for income taxes -- -- ----------- ----------- Net income (loss) $ 31,977 $ 73,605 =========== =========== Numerator - net income (loss) $ 31,977 $ 73,605 Denominator - weighted average number of shares outstanding 5,143,000 5,024,500 ----------- ----------- Basic earnings (loss) per share $ 0.01 $ 0.01 =========== ===========
8 9 DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 Unaudited
Sept. 30, Sept. 30, 2000 1999 --------- --------- Cash flows from operating activities Net income (loss) $ 31,977 $ 73,605 Adjustments to reconcile net income to net cash provided (used in) operating activities: Depreciation 13,515 11,900 Amortization 485 1,100 Changes in assets and liabilities Accounts receivable 163,138 (77,930) Inventories 32,525 39,400 Prepaid expenses (11,815) (15,754) Other assets 0 -- Accounts payable - trade (42,144) (16,170) Accounts payable - related party (33,214) (21,138) Accrued payroll tax withholdings (319) 11,198 Accrued expenses other (5,260) (8,573) --------- --------- Net cash provided by (used in) operating activities 116,911 (75,967) --------- --------- Cash flows from investing activities Purchases of property and equipment (7,269) (3,500) --------- --------- Net cash provided by (used) in investing activities (7,269) (3,500) --------- --------- Cash flows from financing activities Increase (decrease) in due to factor (169,029) 66,215 Payments on long-term debt (601) (69,007) Payments on stock subscriptions receivable 999 Proceeds from issuance of common stock 1,800 0 --------- --------- Net cash provided by (used in) financing activities (167,830) (1,793) --------- --------- Increase (decrease) in cash (26,211) (7,655) Cash - beginning of period 31,350 16,784 --------- --------- Cash - end of period $ 5,139 $ 9,129 ========= =========
9 10 PART F/S DAC TECHNOLOGIES GROUP INTERNATIONAL, INC. SELECTED NOTES TO FINANCIAL STATEMENTS 1. NATURE OF BUSINESS Dac Technologies Group International, Inc. (the "Company"), a Florida corporation, is in the business of developing, manufacturing and marketing various consumer products, patented and unpatented, which are designed to provide security for the consumer and their property. In addition, the Company has developed a wide range of security and non-security products for the home, automobile and individual. The majority of the Company's products are manufactured and imported from mainland China and are shipped to the Company's central warehouse facility in Little Rock, Arkansas. These products, along with other items manufactured in the United States, are sold primarily to major retail chains in the United States and Germany. 2. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. ORGANIZATION AND BASIS OF PRESENTATION - The Company was incorporated as a Florida corporation in July 1998 under the name Dac Technologies of America, Inc. In July 1999, the Company changed its name to Dac Technologies Group International, Inc. b. UNAUDITED INTERIM FINANCIAL STATEMENTS - The accompanying financial statements of the Company for the nine months ended September 30, 2000 and 1999 and for the three months ended September 30, 2000 and 1999 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, 1999 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. 3. LONG-TERM DEBT On July 21, 2000, the Company refinanced its bank loan in the principal amount of $145,473.28. The new note is for a term of five years, with an initial floating interest rate of 9.50%. The note is secured by inventory and personal guarantees. On October 30, 2000, the Company secured a $250,000 working capital line of credit with a local bank. Interest is due monthly at 9.75% on any advances made under the line of credit. Principal is due April 30, 2001. 10 11 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 were incorporated as a Florida corporation in July 1998, under the name DAC Technologies of America, Inc. for the purpose of succeeding to the interest of DAC Technologies of America, Inc. an Arkansas corporation ("DAC Arkansas"). DAC Arkansas was formed in 1993, and sold its first product, the Body Alarm, a small, beeper sized, 130 decibel, electronic personal security alarm, for under $10. In 1994, we brought to market our patented Key Alert, a 110 decibel hand held alarm with key chain and built-in flashlight. Other products followed over the next few years, including the patented SWAT Steering Wheel Alarm, SWAT II Talking Car Alarm, and the patented Clampit Cupholder and Plateholder. In 1994, we developed our patented Trigger Lock, an inexpensive, plastic trigger lock for handguns. Recognizing the public's and government's concern for gun safety, we have developed a new metal Trigger Lock, a steel Gun Lock, a Lever Hammer Lock for lever action rifles, and a cable lock. The new metal trigger locks are currently carried by Wal Mart and K Mart. We have devoted a significant amount of time and effort the past year in establishing ourselves in the area of gun safety. These efforts have included targeting law enforcement agencies and community service and civic groups as gun safety customers. This effort has resulted in the sales of gun locks to over thirty new law enforcement agencies and civic groups such as the Rotary Club. On September 15, 2000, Mr. Jim Pledger joined the Company as President and as a member of the Board of Directors. Mr. Pledger is the former National Sales Manager for Glock, Inc., one of the leading gun manufacturers, and is also a former senior executive for the Federal Bureau of Investigation. The Company believes Mr. Pledger's expertise, experience and contacts in the gun safety industry will be invaluable in enabling the Company to develop a strong presence in the gun safety market. Additional developments include: Internet - The Company's website, WWW.DACTEC.COM, is now operational. This website provides information about the Company and its products, as well as investor and stock information. Negotiations are currently underway with several servers to provide e-commerce capabilities to our website. The Company continues its efforts to develop new and innovative consumer products. Development of several new handgun safes is continuing, with certain models in the final pre-production stage. These safes will combine high security storage capabilities with unique operating features which we believe will be very popular with consumers. Distributor and consumer interest is high for these items which we hope to begin shipping in the first and second quarters of 2001. The Company has also been in negotiations to acquire several new patented gun locks, and, on October 26, 2000, entered into an exclusive licensing agreement for one of these patents. Development of this locking device for semiautomatic pistols is in the final stages and this product is also slated for distribution in the first quarter of 2001. This unique lock has generated considerable interest among law enforcement and civilian customers and we believe this product will generate strong revenues. 11 12 During this quarter, the Company began to reposition itself away from some of its former suppliers and began relationships with other manufacturers and suppliers to increase the quality of the products and also increase gross margins. This is true for the electronics market as well as for gun locks. In addition, these new suppliers have potential to bring new products to market in a much quicker manner. Additional costs have been incurred this quarter for development expenses of these new products and additional tooling and mold costs. Also, as a result of the repositioning of suppliers to the Company, some sales opportunities and purchase orders were deferred into future quarters to take advantage of the improvement in the quality of various products and the increased operating margins. (b) Financial Condition and Results of Operations. Net income for the nine months ended September 30, 2000 was $130,218, as compared to $114,620 for the same period in the prior year. This increase of $15,598 was due primarily to an increase in net sales of $71,118, offset by a decrease in operating expenses of $35,476. Net income for the three months ended September 30, 2000 was $31,977, as compared to $73,605 for the same period in the prior year. This decrease of $41,628, was due primarily to a decrease in sales due to deferral of certain sales opportunities and purchase orders into the fourth quarter of 2000 and first quarter of 2001, particularly in the Company's electronic safety devices. This deferral was made to take advantage of increased operating margins available from new suppliers now coming online. Sales decreased $142,299 for the same period in 1999 for the reasons previously stated. Gross profit margins increased from 45% to 49% as a result of the Company bringing new suppliers and manufacturers on line for its gun safety products at substantially reduced prices. The Company has just begun to realize a portion of these savings in the third quarter and will see increasing results in subsequent quarters. The improvement in the quality, features and operating margins for existing products, as well as the development and introduction of new products, will put the Company in a very strong competitive position in the marketplace. The Company continues to be responsive to increasing regulation of firearms and the emphasis being place on gun safety in communities nationwide. We are alert for opportunities to provide our products to eliminate or lessen gun violence and the unauthorized use of firearms by children and others. (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 accounts 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, 2000, we owed our factor approximately $268,222. On July 21, 2000, the Company refinanced its bank loan in the principal amount of $145,473.28. The new note is for a five year term with an initial floating interest rate of 9.50%. On October 30, 2000, the Company obtained a $250,000 line of credit with a local bank to help fund its working capital needs. Interest is due monthly at 9.75% on any advances made under the line of credit, with principal due April 30, 2001. As of November 8, 2000, the Company has obtained $70,000 from this line of credit. (d) Trends The recent flurry of publicity involving firearms has caused gun safety to become a prominent issue nationally. Gun violence, especially in schools has prompted the President, as well as national and state legislators, to debate legislation requiring gun safety locks on all firearms. Threatened litigation against gun manufacturers has caused them to seriously consider placing gun safety locks on the guns they manufacture. We continue to believe sales revenues in this area will grow significantly. Sales of our gun safety products for the first nine months of 2000 totaled $979,654 as compared to $662,512 for the first nine months of 1999. 12 13 PART II ITEM 1. LEGAL PROCEEDINGS On August 15, 2000, the Company and its predecessor filed a lawsuit in The Circuit Court of Pulaski County, Arkansas against one of the Company's previous manufacturers. The lawsuit alleges breach of contract, most specifically in the amounts charged to the Company for the manufacture of its products. The complaint seeks rescinding of the transfer of 165,000 shares of the Company's stock to the Defendant and an amount in damages as yet to be determined. ITEM 2. CHANGES IN SECURITIES On June 5, 2000, the Company issued to Allan M. Lerner, P.A. 1,000 shares of restricted common stock as payment for services rendered to the Company. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933. On June 5, 2000, the Company issued 5,000 shares of restricted common stock to Robert C. Goodwin as payment for services rendered to the Company. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933. 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 27 Financial Data Schedule 13 14 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 Date: November 14, 2000 14 EX-27 2 g65401ex27.txt FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-2000 JUN-30-2000 DEC-31-2000 5,139 0 439,762 19,649 391,021 926,826 498,753 212,879 1,254,173 516,858 0 0 0 5,143 616,500 1,254,173 1,726,523 1,726,523 962,518 569,889 0 0 63,898 130,218 0 130,218 0 0 0 130,218 0.03 0.03
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