As Filed with the Securities and Exchange Commission on October 20, 2004.

Commission File No: 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM SB-2

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

1601 Westpark Drive #2
Little Rock, AR 72204
(501) 661-9100

David A. Collins, CEO
1601 Westpark Drive #2
Little Rock, AR 72204
Tel. (501) 661-9100

Copy to:
Allan M. Lerner, Esq.
2888 E. Oakland Park Blvd.
Ft. Lauderdale, FL 33306
Tel. (954) 563-8111
Fax. (954) 563-1457

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to time after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statements for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statements for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE(1)

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED October 20, 2004

The information in this prospectus is not complete and may be changed. The Selling Shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

861,709 Shares of Common Stock

     This Prospectus relates to the 861,709 shares of Common Stock of DAC Technologies Group International, Inc., being offered by certain shareholders. We will not receive any proceeds from the sale of shares by the Selling Shareholders. The Selling Shareholders acquired their shares and warrants or will acquire their shares:

     Our common stock is traded on the NASDAQ OTC:BB under the trading symbol “DAAT”. On October 16, 2004, the closing bid and asked prices for our common stock were $1.85 and $1.98, respectively.

     The Selling Shareholders named under Plan of Distribution-Selling Shareholders, are selling the shares for this offering. We will not receive any of the proceeds from the sale of common stock by the Selling Shareholders. All expenses of registration incurred in connection with this offering are being borne by us, but all selling and other expenses will be borne by the Selling Shareholders.

     The Selling Shareholders may sell the shares in this offering from time to time in transactions in the open market (including any securities exchange or through any inter-dealer quotation system), in negotiated transactions, or by a combination of these methods, at fixed prices related to market prices or at negotiated prices.

     THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT. SEE “RISK FACTORS” BEGINNING ON PAGE 2 FOR A DISCUSSION OF IMPORTANT MATTERS THAT SHOULD BE CONSIDERED BY YOU PRIOR TO INVESTING.

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.

The date of this Prospectus is _________, 2004

TABLE OF CONTENTS

PROSPECTUS SUMMARY

This brief summary highlights selected information from the Prospectus. It does not contain all of the information that is important to you. We urge you to read the entire Prospectus before considering investing in our common stock.

DAC Technologies Group International, Inc. is referred to in this Prospectus as “DAC”, our, we or us.

Business

     We are in the business of developing, marketing and outsourcing the manufacture of various consumer products, patented and non-patented. Our primary business is gun safety and gun maintenance; our target consumer base is sportsmen, hunters and outdoors men, and recreational enthusiasts. Our products have historically been security related, evolving from various personal, home and automotive electronic security devices, to firearm safety devices such as gun and trigger locks, cable locks and safes. In 2003, we expanded our product line to include a line of gun cleaning kits.

     A significant portion of our business is with mass market retailers such as Wal Mart and Kmart. However, we have been able to significantly increase our business with firearm manufacturers, as well as large sporting goods retailers and distributors. Our line of GunMaster gun cleaning kits has enabled us to establish relationships in the sporting goods market which management believes will enable the Company to expand its product line into other areas outside of the gun related items currently marketed.

     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 are in the process of improving and redesigning our website (WWW.DACTEC.COM). All of our products will be available via e-commerce on this new site. Our web site is intended to be the only direct link by the Company to the retail market. Because our products are strictly safety devices, they are not burdened by the politics surrounding gun ownership and gun rights, and can be widely embraced as a solution to unintended gun injuries and death.

     For more information regarding our business, our finances and the risk associated with a purchase of our common stock, see “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors”,

     Our executive offices are located at 1601 Westpark Drive #2 Little Rock, AR 72204; Telephone (501) 661-9100.

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The Offering

Securities Offered by Selling Security Holders

Equity Securities Outstanding Prior to Offering

     The number of shares outstanding does not include warrants to purchase 393,901 shares. These warrants were issued to investors (233,901 warrants), and Keane Securities Co., Inc., as placement agent (160,000 warrants), pursuant to a private placement. Each warrant allows the holder to purchase one share of our common stock at a price of $2.57 per share. The shares sold in the private placement offering and those underlying the warrants are the subject of this Prospectus.

Equity Securities Outstanding After Offering

Trading Symbol

     DAAT

Use of Proceeds

     We will not receive any proceeds from the sale of common stock by the selling Security Holders.

Risk Factors

     An investment in the securities offered hereby involves a high degree of risk. You should review carefully and consider the factors described in “Risk Factors“beginning on page 2.

Forward-Looking Statements

     Except for the historical information contained herein, the matters discussed in this prospectus under “Risk Factors”, in addition to certain statements contained elsewhere in this prospectus or in our filings under the Securities Exchange Act of 1934, (the “Exchange Act”), are “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and are thus prospective. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual future results or trends to differ materially from future results or trends expressed or implied by such forward-looking statements. The most significant of such risks, uncertainties and other factors are discussed in this prospectus under “Risk Factors” and prospective investors are urged to carefully consider such factors. Updated information will be periodically provided by us as required by the Securities Act and the Exchange Act. We, however, undertake no obligation to publicly release the results of any revisions to such forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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RISK FACTORS

     Prospective investors should carefully consider the following Risk Factors, in addition to the other information set forth in this prospectus, in evaluating an investment in the securities offered hereby.

General

     Purchasers of Our Shares Could Suffer Substantial Dilution If All or a Substantial Portion of Outstanding Options, Warrants and Debentures Are Converted. We currently have reserved for issuance 393,901 shares of our common stock in the event of conversion of the outstanding warrants. The issuance of our reserved common stock will increase the number of outstanding shares of common stock by approximately 6% and may cause substantial numerical dilution to purchasers of shares covered by this prospectus.

     Our Common Stock Is Thinly Traded and There Are Substantial Shares Eligible for Public Resale. There are currently approximately 2,953,061 shares of common stock in the public float. There are approximately 70 shareholders of DAC. Our average daily volume for the past three months has been approximately 16,089 shares per day, with the high volume of 87,300 shares and a low volume of 0 shares. If all or a substantial portion of our shares that are eligible for public resale are sold, the market price for our shares may be materially adversely affected. All of the 393,901 shares of our common stock that have been reserved for issuance are being registered with the SEC so that the holders of such shares may resell them publicly. In addition, approximately 1,482,538 shares of our outstanding common stock are restricted securities and after having been held for at least one year may, be publicly resold under Rule 144. If all or a substantial portion of the shares which may be publicly resold become available in the marketplace, the market price of our shares may be adversely affected.

     Potential Lack of Liquidity of Our Common Stock. Our common stock trades on the OTC Electronic Bulletin Board. Stocks trading on the OTC Electronic Bulletin Board generally attract a smaller number of market makers and a less active public market.

     Moreover, since our common stock is traded on the OTC Electronic Bulletin Board, investors may find it difficult to dispose of or obtain accurate quotations as to the value of our common stock.

     Due to the Current Market Price of Our Shares, Additional Sales Practices Imposed Upon Broker-Dealers Could Adversely Effect the Market for Our Shares. Our shares may be subject to Rule 15g-9 under the Exchange Act. That rule imposes additional sales practice requirements on broker-dealers that sell low-priced securities (“penny stock”) to persons other than established customers and institutional accredited investors. The SEC’s regulations define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For transactions covered by this rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. Consequently, the rule may affect the ability of broker-dealers to sell our shares and may effect the ability of holders to sell our shares in the secondary market.

     Our Articles of Incorporation Allow Authorization and Discretionary Issuance of Preferred Stock. Our Articles of Incorporation authorize the issuance of “blank check”, preferred stock. The board of directors is empowered, without stockholder approval, to designate and issue additional series of preferred stock with dividend, liquidation, conversion, voting or other rights, including the right to issue convertible securities with no limitations on conversion. Any such designations and issuances, could:

     The Issuance of “Blank Check” Preferred Stock Could Delay, Deter, or Prevent a Take Over, Merger or Change of Control and May Prevent You From Realizing a Premium Return. Our Articles of Incorporation gives the Board of Directors the sole authority to issue “blank check” preferred stock. The issuance of “blank check” preferred stock could have the effect of delaying, deterring, or preventing a merger, take over or change in control without any action by the shareholders. The Board of Directors, by the issuance of preferred stock, could make it more difficult for a third party to acquire us, even if the acquisition would be beneficial to you. You may not realize the premium return that stockholders may realize in conjunction with corporate takeovers.

     We Are Required to Indemnify Our Officers and Directors in Certain Circumstances for Claims Against Them That May Bear Significant Cost Therefore Reducing Our Profitability and Our Ability to Continue Our Business. Our articles of incorporation and bylaws provide that we will indemnify our officers, directors, employees and agents against liability to the company in any proceeding in which such person wholly prevails on the merits. Generally, we may indemnify our officers and directors against such liability if the officer or director acted in good faith believing his or her actions to be in the best interests of the company. These provisions may limit our recovery for any claims against our officers and directors.

     We May Be Unable to Protect Our Intellectual Property Rights or to Continue Using Intellectual Property That We License From Others. We rely and will rely on a combination of copyright, trademark, service mark, and trade secret laws and contractual restrictions to establish and protect certain of our proprietary rights. We have no patented technology that would bar competitors from our market. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our data or technology.

     No Payment of Dividends. It is not anticipated that we will pay any dividends on our common stock in the future. The Board of Directors intends to follow a policy of retaining earnings, if any, for use in our business operations. As a result, the return on your investment in us will depend upon any appreciation in the market price of the common stock.

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Risks Related to the Business

     If We are to Expand Our Operations, We May Need Additional Capital. Our ability to timely expand our product operations and, in particular, the production and marketing of our products, is largely dependent upon our revenues or the acquisition of additional funding. In the event that additional capital is not obtained or our revenues fall off, we may be unable to timely complete and/or implement our plans to expand our operations. While we believe we have accurately identified strategic and viable business opportunities to pursue, there is no assurance that these will become profitable operations. Technology is a rapidly developing industry and our success is dependent on, among other things, developing commercially acceptable products and pursuing the correct distribution channels. Anti-gun sentiments and a weak economy are potential risk factors.

     We have recently raised approximately $800,000 in a private placement of Units consisting of our common stock and warrants, which we intend to use in reducing our outstanding debt to both third party purveyors and lenders, implement the growth and development of our product lines and for working capital. These funds will create greater liquidity for us and relieve some of the reliance on our factoring arrangement.

     We Have a History of Operating Profits, and Our Growth Program and Future Profitability Remains Uncertain. We believe that operating results will be adversely affected if start-up expenses associated with our new product lines are incurred without sufficient revenues. Moreover, future events, including unanticipated expenses or increased competition could have an adverse effect on our long-term operating margins and results of operations. There can be no assurance that our Company’s growth program will result in an increase in the profitability of our operations. Recent growth has been due to diversifying our product line, particularly by the addition of gun-cleaning kits. Our ability to continue this growth pattern that characterized our operations in prior years is dependent to a large part on our ability to successfully anticipate and respond to changing consumer demands and trends in a timely manner, including the introduction of new or updated products at prices acceptable to customers. We can give you no assurance that the market for our products will continue to grow or that large demand for these products will emerge or be sustainable.

     Our Success Depends on Maintaining Relationships with Key Customers. We have several customers upon which we depend on for the sale of a large percentage of our products. For example, more than 50% of our business is through Wal-Mart. Customer orders are dependent upon their markets and may vary significantly in the future based upon the demand for our products. The loss of one or more of such customers, or a declining market in which such customers reduce orders or request reduced prices, could have a material adverse effect on our business.

     We Depend on Contract Manufacturers for Substantially All of Our Manufacturing Requirements. Currently, the Company purchases at least 94% of its products from one major supplier. The Company is dependent upon this supplier continuing in business and its ability to ship to the United States, but believes that it could replace this supplier, if required to, at similar quality and terms. The inability of our contract manufacturers to provide us with adequate supplies of high quality products or the loss of any of our contract manufacturers would have an adverse effect on our business. We rely on contract manufacturers to procure components, assemble, and package our products. We have developed a highly outsourced contract manufacturing capability for the production of our products. Our primary relationships with our foreign contract manufacturers have been accomplished through our agents located in Shanghai, China. Because our primary manufacturer is located in mainland China, we are exposed to risks of political uncertainty including U.S. foreign trade treaties, foreign laws and currency fluctuations. While we believe there are alternative manufacturing companies available at competitive prices, any interruption in the operations of one or more of these contract manufacturers or delays in their shipment of products would adversely affect our ability to meet scheduled product deliveries to our customers.

     While We Manufacture a Variety of Products, We Rely Primarily on the Sale of Gun Cleaning Kits and Gun-locks as Our Major Source of Revenue. Although we sell a number of different products, we rely primarily on two products–gun cleaning kits and gun locks–which collectively accounts for approximately 73% of our total revenues. Should our sales of either of these products significantly decline due to the loss of customers, or a declining market in which such customers reduce orders or request reduced prices, it could have a material adverse effect on our business.

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

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     We Are Subject to Sales Cycles Beyond Our Control, Which Are Driven Many Times by National Events. The entire gun industry has experienced a surge in demand in the United States since and as a direct result of the terrorist acts which occurred on September 11, 2001. Americans are now focused on their personal security. There has been a decline in recent years concerning the sale of handguns, possibly due to licensing legislation and to the dissipation of fear as we are time-removed from the events of September 11. Our Company, however, is not reliant on persons who own guns for protection as much as we are on hunters and sportsmen, who are less likely to be affected by national or international events.

     We Extend Credit to Our Customers and Should Our Customers Default on Their Obligations to Us, We May Be Subject to Credit Risk. The Company provides credit in the normal course of business to its customers and performs ongoing credit evaluations of its customers. Approximately 94% of these trade receivables were subject to a factoring agreement. These accounts are factored on a non-recourse basis which reduces the Company’s exposure to credit risk. We also maintain allowances for doubtful accounts and provisions for returns and credits based on factors surrounding the specific customers and circumstances. The Company generally does not require collateral from its customers. Credit risk is considered by management to be limited due to the Company’s customer base and its customer’s financial resources.

     We Have Not to Date Registered or Trademarked Any of Our Product Names. While we may seek to protect our intellectual property, in general, there can be no assurance that our efforts to protect our intellectual property rights through copyright, trademark and trade secret laws will be effective to prevent misappropriation of our products. Our failure or inability to protect our proprietary rights could have a material adverse effect on our business, financial condition and results of operations. Moreover, inasmuch as we will often seek to outsource manufactured products which are similar to those manufactured by others, it is critical for us to insure that our manufactured products do not infringe upon existing patents of others.

     Patent Protection Will Not Eliminate Competition. Although we own U. S. patents on our trigger lock device, and several other patents on other personal safety devices, there can be no assurance that any of these patents will adequately protect us from competitors offering similar devices or that we will have adequate resources to protect ourselves from infringers. We believe our trademarks and other proprietary rights are important to our success and our competitive position. The actions we take to establish and protect our trademarks and other proprietary rights, however, may be inadequate to prevent imitation of our products by others or to prevent others from claiming violations of their trademarks and proprietary rights by us. In addition, others may assert rights in our trademarks and other proprietary rights.

     We May Not Be Able to Attract and Retain the Qualified Personnel We Need to Succeed in the Future. Our future success will depend in part on our ability to attract and retain qualified personnel to manage the development and future growth of our company. While we believe we have a reliable and effective core team, there can be no assurance that we will be successful in attracting and retaining such personnel.

Risks Related to the Industry

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

     The issue of gun control is a highly political issue in the United States. We believe that the National Rifle Association will oppose any legislation that relates to gun control, including any gun lock legislation. Other groups are promoting gun lock legislation at the federal and state levels. However, we cannot rely on, and no assurance can be given regarding, the passage of any type of gun control or gun safety legislation to create a market for our gun locking devices.

     We May Be Affected by Legislation and Regulation over Firearms. The business of all producers and marketers of firearms and firearms parts is subject to thousands of federal, state and local laws and governmental regulations and protocols. The basic federal laws are the National Firearms Act, the Federal Firearms Act, and the Gun Control Act of 1968. The Gun Control Act was subsequently amended with the Violent Crime Control and Law Enforcement Act of 1994, codified at 18 U.S.C. §§921 et seq. The Act included provisions banning the manufacture, sale and transfer of semiautomatic assault weapons and large capacity ammunition devices. The act had a ten-year life and expired on September 13, 2004.These laws generally prohibit the private ownership of fully automatic weapons and place certain restrictions on the interstate sale of firearms unless certain licenses are obtained. From time to time, congressional committees review proposed bills and various states enact laws relating to the regulation of firearms. These proposed bills and enacted state laws generally seek to either restrict or ban the sale and, in some cases, the ownership of various types of firearms. When such laws restrict the ownership of guns, they will have a material adverse effect on our business; on the other hand, if such laws require safety devices to be applied to gun ownership, they will have a positive effect on our business. Such laws, rules, regulations and protocols are subject to change. There can be no assurance that the regulation of firearms will not become more restrictive in the future and that any such restriction would not have a material adverse effect on the business of the Company.

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USE OF PROCEEDS

     We will not receive any proceeds from the sales of the shares by the Selling Shareholders. Also, we will bear the costs of registering the shares covered by this prospectus. Those costs include registration and fees and expenses of our counsel and accountants. However, the Selling Shareholders will be responsible for any underwriting discounts and commissions or expenses incurred by the Selling Shareholders for brokerage services.

PLAN OF DISTRIBUTION

     The Registration Statement of which this Prospectus is a part has been filed in connection with the registration rights included in Subscription Agreement between the Selling Shareholders and us.

     The shares offered by this prospectus may be sold or distributed from time to time by the selling security holder or by pledgees, donees or transferees of, or successors in interest to, the selling security holder. The Selling Security Holder will act independently of us in making decisions with respect to the timing, manner, and size of each sale. Such sale may be made on the OTC Bulletin Board or otherwise, at prevailing prices and terms or at prices related to the then market price, or in negotiated transactions, directly to one or more purchasers (including pledgees) or through brokers, dealers or underwriters who may act solely as agents or may acquire shares as principals, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods:

     In addition, the selling security holder may enter into hedging transactions with broker-dealers who may engage in short sales of shares in the course of hedging the positions they assume with the selling security holder. The selling security holder may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus.

     Brokers, dealers, underwriters or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling security holder and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). The selling security holder and any broker-dealers acting in connection with the sale of the shares hereunder may be deemed to be underwriters within the meaning of Section 2(11) of the Securities Act of 1933, and any commissions received by them and any profit realized by them on the resale of shares as principals may be deemed underwriting compensation under the Securities Act of 1933, as amended. Neither we, nor the selling security holder can presently estimate the amount of such compensation. We know of no existing arrangements between the selling security holder and any other security holder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares.

     We will not receive any proceeds from the sale of the common shares pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal, accounting and registration fees, and such expenses are estimated to be $26,205.26.

     We have informed the Selling Shareholders that certain anti-manipulative rules contained in Regulation M under the Securities Exchange Act of 1934, as amended, may apply to their sales of the common stock and have informed them of the need for delivery of copies of this prospectus.

     The Selling Shareholders may also use Rule 144 under the Securities Act, to sell the shares if they meet the criteria and conform to the requirements of such rule.

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SELLING SHAREHOLDERS

     The following table sets forth the names of the Selling Shareholders, the number of shares of common stock owned beneficially by each Selling Stockholder as of October 19, 2004 and the number of shares that may be offered pursuant to this Prospectus. None of the Selling Shareholders has, or has had during the past three years, any position, office or material relationship with us or any of our predecessors or affiliates. The table has been prepared based upon information furnished to us by or on behalf of the Selling Shareholders. The following table assumes that all shares of the Company’s common stock that are required to be registered pursuant to the March 11, 2004 Registration Rights Agreement (except those subject to the Warrant exercise) have been issued to the respective Selling Shareholders, and details the shares of the respective Selling Shareholders that may be offered by this Prospectus, and by exercise of warrants, and then in the aggregate for each of the respective Selling Shareholders.

     The Selling Shareholders may decide to sell all, some, or none of the shares of common stock listed below. We cannot provide you with any estimate of the number of shares of common stock that any of the Selling Shareholders will hold in the future. For purposes of this table, beneficial ownership is determined in accordance with the rules of the Commission, and includes voting power and investment power with respect to such shares. As explained under “Plan of Distribution,” we have agreed to pay full costs and expenses, incentives to the issuance, offer, sale and delivery of the shares, including but not limited to, all fees and expenses in preparing, filing and printing the registration statement and prospectus and related exhibits, amendments and supplements thereto and mailing of such items. We will not pay selling commissions and expenses associated with any sale by the Selling Shareholders.

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DESCRIPTION OF BUSINESS

History and Business Development

     We were incorporated as a Florida corporation in July 1998, under the name DAC Technologies of America, Inc. for the purpose of succeeding to the interest of DAC Technologies of America, Inc., an Arkansas corporation (“DAC Arkansas”). In September 1998, we purchased substantially all of the assets of DAC Arkansas. DAC Arkansas, formed as an Arkansas corporation in 1993, may be deemed to be a predecessor of our company. DAC Arkansas commenced operations with the manufacture of various safety products, which were eventually acquired by us. Our principal owners and management held similar positions with DAC Arkansas. We have continued the operations of DAC Arkansas without any significant changes. In July 1999, we changed our name to DAC Technologies Group International, Inc.

     Between July 1998 and March 2002, we sold an aggregate of 5,763,956 shares of our Common Stock to approximately 40 accredited or otherwise sophisticated investors with whom we had pre-existing relationships and who had access to relevant information concerning the Company in a series of transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). We received cash proceeds of approximately $724,400 from these transactions.

     We have not been involved in any bankruptcy, receivership or similar proceeding. Except as set forth herein, we have not been involved in any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business.

     Our primary business is gun safety and gun maintenance; our target consumer base is sports men, hunters and outdoors men, and recreational enthusiasts. In 2002, the American Firearms Industry, a trade association, estimated that there are 60-65 million gun owners in the United States according to the February 2000 COMMERCE IN FIREARMS IN THE UNITED STATES published by the U.S. Bureau of Alcohol, Tobacco and Firearms and the Department of Commerce, and an estimated two million new and two million second-hand handguns are sold in the United States annually. The government also reported that a survey done in 1994 indicated that the total number of firearms in private hands exceeded 200 million, of which only 11% are used for protection. Because of the population growth over the decade since the report, it is safe to assume that the number of firearms and firearm owners has substantially increased.

Business Summary

     The most significant event in 2003 was the introduction of the Company’s line of GunMaster gun cleaning kits. This has now replaced gun locks as the Company’s primary growth sector. First sold late in the second quarter, and with only four items in this line, sales of these kits totaled approximately $1,990,000. Sales of these gun cleaning kits enabled the Company to increase its sales 73% over 2002 and increase net income 2,391%.

     In June 2004, the Company shipped six of the new GunMaster gun cleaning kits to Wal-Mart as permanent additions to the gun accessory module. Daily reorders for all of the Company’s items in this module have more than tripled in July and August over second quarter levels. As of the first week in August 2004, the Wal Mart retail sales derived from GunMaster gun cleaning kits have exceeded the Company’s expectations, even though the new module has not been set in all the Wal Mart stores. As the Wal Mart stores continue to come on line, the Company expects retail sales at Wal Mart to increase significantly. In addition to Wal Mart, our gun cleaning accessories also are offered by other retail chains and distributors. Due to the success of the initial four items in its GunMaster line, the Company, in 2004, has added more than thirty new gun accessory items to this category. These new items were introduced at the SHOT Show in February 2004, with tremendous response. Shipments of these new items began in the second quarter of 2004.

     Because the Company’s GunMaster gun cleaning kits are high quality, solid brass, and priced significantly lower than its competition, the Company has not only been able to increase its market share with its existing customers, but has been able to add several of the largest sporting goods retailers, distributors and mail order companies to its customer base, including Dick’s Sporting Goods, RSR Group, Inc., Jerry’s Sport Center, Inc., AcuSport Corp., and Cabela Catalogue Co.

     While management believes there is significant room for growth with its existing product lines, the Company continually looks for new products to bring to market. With its expanded customer base in the sporting goods market, the Company has positioned itself to diversify its product line into other sporting goods, hunting and outdoorsmen products.

Core Business

     We are in the business of developing, marketing and outsourcing the manufacture of various consumer products, patented and non-patented. Our products have historically been security related, evolving from various personal, home and automotive electronic security devices, to firearm safety devices such as gun and trigger locks, cable locks and safes. In 2003, we expanded our product line to include a line of gun cleaning kits.

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     A significant portion of our business is with mass market retailers such as Wal Mart and Kmart. However, we have been able to significantly increase our business with firearm manufacturers, as well as large sporting goods retailers and distributors. Our line of GunMaster gun cleaning kits has enabled us to establish relationships in the sporting goods market which management believes will enable the Company to expand its product line into other areas outside of the gun related items currently marketed.

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

     The Company’s business plan and strategy for growth continues to focus on:

     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, as well as non-gun related products for our expanding sporting goods customer base.

     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 are in the process of improving and redesigning our website (WWW.DACTEC.COM). All of our products will be available via e-commerce on this new site. Our web site is intended to be the only direct link by the Company to the retail market. Because our products are strictly safety devices, they are not burdened by the politics surrounding gun ownership and gun rights, and can be widely embraced as a solution to unintended gun injuries and death.

Products

     Our products can be grouped into four main categories:

     In developing these products, we focus on developing features, establishing patents, and formulating pricing to obtain a competitive edge. We currently design and engineer our products with the assistance of our Chinese and domestic manufacturers, who are responsible for the tooling, manufacture and packaging of our products.

Security Products - Gun Safety.

     We market ten (10) different gun safety locks and five security and specialty safes. The gun locks’ compositions range from plastic to steel, keyed trigger locks to cable locks. The security safes are of heavy duty, all steel construction and are designed for firearms, jewelry and other valuables. Nine of the Company’s gun locks and three safes have been certified for sale consistent with the standards set out by the State of California. These standards have been adopted by other states and by a variety of gun manufacturers.

Gun Maintenance.

     We market more than thirty-five different gun cleaning kits, rod sets, tools and accessories used to clean and maintain virtually any firearm on the market. These kits are solid brass, and consist of “universal” kits designed to fit a variety of firearms, caliber specific kits, as well as replacement brushes, mops, etc. These kits are available in solid wood or aluminum cases, as well as blister packed.

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Personal Security.

     We market more than seven (7) different electronic security devices designed to protect the person. We also market non-electronic security devices such as pepper spray and tear gas.

Non-security Products.

     We market two licensed products, the Clampit Cupholder and Plateholder. We also market through Wal-Mart and other customers nation wide, the Sportsman Lighter, a wind proof, water resistant, refillable butane lighter.

Manufacturing and Distribution

     Through our foreign and domestic manufacturing agents, we manufacture, design and build our tooling, molds and products. Our administrative offices and warehouse facilities are located in Little Rock, Arkansas. We contract our manufacturing for tooling and production (including all of our gun related products) primarily in Shanghai, China, and to a lesser extent, in Little Rock, Arkansas and Sandwich, Illinois. We distribute the majority of our domestic, and certain of our international business out of our Little Rock facility. Most of our international business is shipped directly to our customers direct from the Shanghai, China location. Products are delivered to our Little Rock facility complete and ready for delivery to our customers. Countries outside the U. S. where we have a presence include: Ireland/England, France, Germany, Russia, Canada, New Zealand and Australia.

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

     Our management attempts to maintain sufficient inventory levels to meet customers’ demands, but there can be no assurance that we will be successful in doing so. Turnaround time from the date we place an order with our manufacturers until the product is received in our distribution center is normally between four and six weeks. This quick turnaround time allows us to maintain minimum inventory levels. However, since we outsource our manufacturing, a good portion of which is done in China, it is difficult to predict the efficiency of our vendors. Outsourcing to a foreign country also subjects our manufacturing to the risk of political instability, currency fluctuation and reliability. See, “Risk Factors.”

Competition

     We operate in a very competitive industry, dominated by national and international companies with well-established brands, all of whom are better capitalized, have more experience in our industry and have established varying degrees of consumer loyalty. There are no assurances we will ever be successful in establishing our brands or penetrating our target markets. Our products compete with other competitors gun cleaning kits, lock boxes, trigger locks, cable locks, ring locks and the evolving smart guns. Many of these products are more widely known than the Company’s products. While we believe that our products are favorably priced to comparable products on the current market, we nevertheless expect competitors to develop and market similar products at competitive prices, possibly reducing the Company’s sales or profit margins or both. (See, “Risk Factors”) Some of our competitors in the business sectors which we operate in are:

     We are subject to competition that is expected to intensify in the future because we believe that the number of competitors is increasing. There are no significant barriers to entry into our markets. We feel our greatest difficulties in competing come in areas such as gun maintenance, gun safety and security safes where our competitors generally are bigger, better known, and have greater resources including capital and personnel. We realize it is important to achieve brand name recognition in establishing a market share, which, in turn generates additional market share giving consumers’ preferences for brand names. We believe that while brand names operate effectively in mainstream product distribution, there is significant opportunity for lesser known names with specific products and solutions that appeal to consumers. The keys to our maintaining a competitive position is product design, pricing, quality of the product and the maintenance of favorable relationships with various mass merchandisers.

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Principal Suppliers and Manufacturers

     Currently, at least 94% of our products, in particular our gun locks, cleaning kits, gun accessories, and security safes,are manufactured in mainland China. We customarily develop our manufacturing through trading companies located in China. Our principal agents are Nimax and MDD Trading, Ltd., which are trading companies/agents that are responsible for locating manufacturers for our gun safety, security safes and electronics products. These companies typically provide us with price lists for the manufacture and tooling of our products, which we may or may not negotiate. The products are then purchased by the trading companies and sold to us at marked-up costs.

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

     We believe our relationships with our suppliers and manufacturers are satisfactory. Nonetheless, the Company is dependent upon its primary Chinese supplier continuing in business and its ability to ship to the United States, but believes that it could replace this supplier, if required to, at similar quality and terms. However, should any of them cease providing for us, we believe they can be replaced within 30 days, without difficulty and at competitive cost.

Customers

     Although we have numerous customers, we sell on the basis of purchase orders, rather than fixed contracts primarily to:

     During 2003, we added a number of firearm manufacturers and sporting goods retailers and distributors to our customer base, and continued to focus our marketing efforts through our independent sales representatives in this area.

     Demand for our gun cleaning kits have presented opportunities in the sporting goods market for our existing products and development of new products.

     By developing these new markets we will be able to be less dependent on our primary customers.

Intellectual Property

     We believe that protection of proprietary rights to our products is important because, as we are in a highly competitive market, a patent provides us with a competitive advantage by limiting or eliminating similarly designed competitive products. To this end, we have obtained U.S. patents on certain of our products as follows:

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

     We have not to date registered or trademarked any of our product names. (See, “Risk Factor”)

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     Depending upon the development of our business, we may also wish to develop and market products which incorporate patented or patent-pending formulations, as well as products covered by design patents or other patent applications.

     While we may seek to protect our intellectual property, in general, there can be no assurance that our efforts to protect our intellectual property rights through copyright, trademark and trade secret laws will be effective to prevent misappropriation of our products. See, “Risk Factors”. Our failure or inability to protect our proprietary rights could have a material adverse effect on our business, financial condition and results of operations. Moreover, inasmuch as we will often seek to outsource manufactured products which are similar to those manufactured by others, it is critical for us to insure that our manufactured products do not infringe upon existing patents of others.

Governmental Regulations

     Several federal laws regulate the ownership, purchase and use of handguns, including the 1968 Gun Control Act and the Brady Bill. There is not, however, any federal law which requires the use of gunlocks. In February 2004, the U.S. Senate passed Bill (S.2129) that would require child safety locks on all handguns sold in the U.S., as part of a movement in Congress to immunize gun makers and sellers from lawsuits arising from gun crimes. The Bill must still pass through the House of Representatives and the White House.

     At least 18 states and a variety of cities and counties have enacted Children Access Prevention laws designed to prevent the unsupervised storage of loaded weapons. These “CAP” laws typically require that guns be safely secured in gun safes or with gun locks.

     We are not subject to specific governmental regulation or standards, although the sale of handguns is heavily regulated. However, several states have considered types of enhanced gun regulation that impact handgun safety locks and ways to increase gun safety and minimize gun violence. One way of accomplishing this is to require gun manufacturers to incorporate safety devices similar to the Company’s products into all handguns sold. The first regulation of this kind was passed by the Maryland state legislature in early April 2000, and signed into law by Governor Glendening on April 11, 2000. More than half a dozen states are considering similar laws. Although gun manufacturers have uniformly resisted this kind of legislation in the past, this view is changing. Should such regulations materialize, they presumably will serve to increase the demand for our products and sales in the gun safety area.

     Such regulations may, however, also be promulgated to regulate the specifications of the devices. The Federal Consumer Products Safety Council has contracted with the American Society for Testing and Materials (“ASTM”) to set standards and test procedures for gun locking devices.

     Additionally, the State of California has enacted legislation that establishes performance standards for “firearm safety devices”, “lock-boxes” and “safes”. This legislation requires manufacturers to have their products tested by an independent testing laboratory in order to be listed as an approved device. Effective January 1, 2002, this legislation required that every firearm sold in the state be accompanied by an approved safety device. Effective January 1, 2003, the legislation was expanded in that any firearm safety device sold within the state must be approved. All of our products that are sold in California (nine models of gun locks and three models of gun safes) have been designated as approved devices.

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

Research and Development

     Research and development costs are expensed as incurred. We develop our products internally, utilizing the expertise of our manufacturers, input from an engineering consulting firm and input from our customers. Any R & D cost incurred by our manufacturers is passed on to us in the pricing of the tooling, molds and products. We do not pass such costs onto our customers. Because of our close relationships with our customers, we are able to determine the level of interest in a particular product before investing significant time or capital in its development. Once a potential new product is identified, we utilize the services of a patent attorney to assure that we do not infringe upon anyone’s patent rights. We also design our own packaging internally.

     Working closely with our manufacturers’ engineers, a final design for a product and cost estimations are completed. If management determines that a product can be produced at competitive prices, and the interest level justifies production, we proceed with having tooling made. We own the molds and tooling for all of our gunlock products. After pre-production samples are approved, full production begins.

Environmental Laws

     We incur no costs and suffer no adverse effects by complying with environmental laws (federal, state and local).

Employees

     We currently employ six employees, all of whom are full-time: President & Chief Executive Officer, Chief Financial Officer, Vice President of Manufacturing, sales manager, receptionist/clerk and shipping clerk. There are no collective bargaining agreements.

Properties

     Our corporate headquarters are located at 1601 Westpark Drive #2, Little Rock, Arkansas 72204. This location consists of approximately 1,500 square feet of office space and 15,000 square feet of warehouse space. All of the administrative, accounting and shipping functions are performed at this location, as well as some sales. This space is leased at a monthly rent of $5,537 for one year, and expires March 31, 2005. There are two one-year renewal options at $6,436 per month. The Company also maintains an executive office at the residence of its president, David A. Collins, 19955 NE 38th Court, Aventura, Florida 33180. This office and personal residence is rented from the Company’s President at a monthly rental of $3,000, for which there is no lease agreement. This lease arrangement was not the product of arms-length negotiation, however, the Company believes that the rental payment is competitive with other facilities in the same or proximate location.

Reports to Security Holders

     We file reports with the SEC as a small business issuer. Copies of our reports, including exhibits to the reports and other materials filed with the SEC may be inspected and copied, without charge, at the Public Reference Room, 450 Fifth Street, N. W., Washington, D.C. 20549.

     Information on the operation of the Public Reference Room may be obtained by calling the Commission at 1-800-SEC-0330. In addition, the Commission maintains an Internet site on the World Wide Web at HTTP://WWW.SEC.GOV that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

     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 Prospectus 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 limitation, 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.

     Factors that could cause actual results to differ from expectations include, without limitation:

     In evaluating these statements, you should consider various factors, including those summarized above, and, from time to time, in other reports the Company files with the SEC. These factors may cause the Company’s actual results to differ materially from any forward- looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Summary

     The year 2002 was the beginning of a significant turnaround in the Company’s operations, which continued in 2003 at an even greater rate. The key to this success, and continued success in the future, has been management’s ability to identify, develop and bring to market new products of high quality, and at prices at or below its competition. The development of these new products, particularly the Company’s GunMaster line of gun cleaning kits in 2003, has enabled the Company to increase its revenues in 2002 by 39% over 2001 and in 2003 by 73% over 2002. Revenues in 2003 increased by 140% over 2001. At the same time, the Company has been able to reduce its operating expenses over 2001 levels. These results have led to significant increases in income and cash generated from operations, which allowed the Company, without any outside sources of capital, to reduce its debt, fund its operations and develop new products. Sales and profits continue to improve significantly over 2003 figures. For the six months ended June 30, 2004, net sales and net income were $2,957,521 and $311,224, respectively. These figures represent increases of 75% and 566%, respectively, over the same six-month period in 2003.

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     Significant operating items for the past three years and the six months ended June 30 are summarized in the table beginning on the next page:

     These successful operations have improved the overall financial condition of the Company, as summarized below.

     In June 2004, the Company shipped six of the new GunMaster gun cleaning kits to Wal-Mart as permanent additions to the gun accessory module. Daily reorders for all of the Company’s items in this module have more than tripled in July and August over second quarter levels. As of the first week in August 2004, the Wal Mart retail sales derived from GunMaster gun cleaning kits have exceeded the Company’s expectations, even though the new module has not been set in all the Wal Mart stores. As the Wal Mart stores continue to come on line, the Company expects retail sales at Wal Mart to increase significantly. In addition to Wal Mart, our gun cleaning accessories also are offered by other retail chains and distributors.

     In June 2004, the Company completed a private placement offering of its common stock, which raised a total of $800,000 of which sum $714,156 was net to the Company. The Company has used approximately $375,000 of these proceeds to reduce its outstanding debt. The remaining funds will be used for new product development or possible acquisitions. The Company continues to explore through its attorneys and engineers the possibility of entry into the less than lethal electronic standoff device (ESD) market, as well as other new products, to complement its existing product line for the sporting goods and hunting markets.

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SIX MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003

Financial Condition and Results of Operations

     Financial Condition

     As a result of the Company’s continued increases in profits, as well as the $800,000 raised from the private placement offering, the Company’s financial condition is improved greatly as of June 30, 2004 as compared to June 30, 2003. A summary of significant items is presented below:

     The increase in cash is primarily related to the net proceeds from the private placement offering of $714,156.

     The increase in inventories is due to the inventory requirements for the expected increases in sales during the third quarter of 2004. This increase in inventories is also directly responsible for the increase in current liabilities.

     The increase in stockholders’ equity is due to increased profitability since June 30, 2003, and the net proceeds from the offering.

     Results of Operations

     Summary

     A summary of the significant operating items for both the six month and three month periods ended June 30, 2004 as compared to the same periods in 2003 is summarized in the following table:

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Details

     The increases in sales and net income are due primarily to the Company’s GunMaster gun cleaning kits, which were not introduced until late in the second quarter of 2003. Sales of these gun cleaning kits accounted for $1,712,679 of the Company’s total sales for the six months and $792,918 for the three months ended June 30, 2004 or 58% and 49% of total sales respectively.

     Sales volume of the Company’s other major product line, gunlocks, remains stable, accounting for $862,471 of the Company’s total sales for the six months and $413,188 for the three months ended June 30, 2004, or 29% and 26% of total sales, respectively. Thus, while percentage of sales has declined for gunlocks, the dollar value has approximated that for the same periods in 2003.

     The Company’s gross margins continue to hold steady at 38% to 39%, for both the six- month and three-month periods ended June 30, 2004. The primary reason for the increase in operating expenses is the cost associated with increased sales. Variable costs directly related to sales, such as sales commissions, freight costs, insurance and warehouse labor account for 78% of the increase for the six month period and 76% for the three-month period.

TWELVE MONTHS ENDED DECEMBER 31, 2003, DECEMBER 31, 2002

     Significant operating items for the past two years are summarized below:

     The overall financial condition of the Company, is summarized below:

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Details

     Net sales for 2003 totaled $4,756,530, an increase of $2,000,337, or 73% over 2002 net sales of $2,756,193. Of this increase, approximately $1,990,000 was generated from sales of the Company’s new GunMaster line of gun cleaning kits. First sold late in the second quarter of 2003, sales from these new products represent only six months of sales.

     The Company also experienced increases in sales of its gun locks. Net sales of gun locks in 2003 totaled $1,485,253 as compared to $1,144,615 in 2002, an increase of $340,638, or 30%.

     While net sales increased 73%, operating expenses only increased 16%, from $1,118,500 in 2002 to $1,299,235 in 2003. Of this increase, 75% was directly related to increased sales commissions generated from the increased sales, and accounting and legal expenses incurred from complying with the Sarbanes-Oxley Act.

Future Considerations

     As the Company’s product line and revenues continue to grow, the challenges for management grow as well. Management must anticipate future demand for its products in order to maintain an adequate supply of its expanding product line, without tying up too much capital in excess inventory. This will become more difficult as new products are developed.

     Another challenge for management will be to maintain control of operating expenses. Thus far, the Company has been able to significantly increase its product line and revenues without a corresponding increase in expenses. The anticipated increase in revenues and inventory levels in 2004 will require the Company to increase its warehouse facilities, shipping personnel, and support staff for sales and customer service needs. Management has been addressing these issues to ensure these needs are adequately and economically met.

     The Company has benefitted in 2002 and 2003 from the positive effect on cash flow generated from the net operating losses for income tax purposes from losses incurred in prior years. Although the Company has recorded income tax expense on its financial statements of $200,597 and $11,536 for 2003 and 2002, respectively, no income taxes have been paid due to the operating loss carryforward. Based on estimates for 2004, these net operating loss carry forwards will fully utilized in 2004.

Liquidity and Capital Resources

     Liquidity and Capital Resources

     Our primary sources of cash are funds generated from our operations. We believe that external sources of liquidity could be obtained in the form of bank loans, letters of credit or from the issuance of our equity as was recently demonstrated with our private placement. 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, 2004, our factor had advanced us $931,459. We expect to reduce this sum with funds derived from the private placement.

     During 2003, the Company refinanced three demand notes with a local bank. The loans bear interest at 7.00% and mature in 2005 and 2006. The principal balance of these loans on December 31, 2003 totaled $342,581. We believe our revenues will be sufficient to pay these obligations, if not, we will seek to refinance them or request our shareholders to pay their guarantees. For the period ending December 31, 2003, our factor had advanced to us $1,342,814.

Trends

     Handgun safety remains a major concern and interest to the American public, particularly in light of the accidental and intentional shootings involving children. Moreover, the tragic terrorist attack against the United States on September 11, 2001 continues to have many Americans 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 and maintenance of the firearm in the home and want to purchase affordable gun safes to increase security and cleaning kits for gun care.

     The focus continues to be one of gun safety rather than legislative attempts to ban guns possibly due to the strong gun lobby and the nature of politics. Gun safety issues have been moving from the federal level to the state level through the introduction of mandatory gun lock legislation, while those at the federal level are seemingly in accord 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. In March 2000, Smith & Wesson entered into a legal settlement with the federal administration in which it pledged to equip its handguns with safety features on a schedule similar to the one proposed in the Maryland legislation, and specifically to put built-in locks in all of its handguns within the next few years.

     State legislation has been effective in increasing gun safety and minimizing gun violence. One way of accomplishing this is to require gun manufacturers to incorporate safety devices similar to the Company’s products into all handguns sold. The first regulation of this kind was passed by the Maryland state legislature in early April 2000. This legislation required gun manufacturers to incorporate safety devices similar to the Company’s products into all handguns sold. The State of California enacted legislation to establish performance standards for “firearm safety devices”, “lock-boxes”, and “safes”. These standards prevent an attack on the gun lock or safe with hand tools, such as hammers, screwdrivers, electric drills, screw and hack saws. This legislation requires manufacturers to have their products tested by an independent testing laboratory in order to be listed as an approved device. This testing has resulted in significant expenditures to the company. We anticipate that similar standards will be adopted throughout the United States in the next few years.

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Critical Accounting Estimates

     The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The Company’s significant accounting policies are discussed in detail in note 2 to the December 31, 2003 audited consolidated financial statements included in the Company’s Registration Statement on Form SB-2, of which this Prospectus is a part. Certain of these accounting policies as discussed below require management to make estimates and assumptions about future events that could materially affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties. For all of these estimates, we caution that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

     Long-lived Assets. Depreciation expense is based on the estimated useful lives of the underlying property and equipment. Although the Company believes it is unlikely that any significant changes to the useful lives of its property and equipment will occur in the near term, an increase or decrease in the estimated useful lives would result in changes to depreciation expense.

     The Company continually reevaluates the carrying value of its long-lived assets, for events or changes in circumstances, which indicate that the carrying value may not be recoverable. As part of this reevaluation, if impairment indicators are present, the Company estimates the future cash flows expected to result from the use of the asset and its eventual disposal. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset, an impairment loss is recognized to reduce the carrying value of the long-lived asset to the estimated fair value of the asset.

     Patents and Trademarks. Amortization expense is based on the estimated economic useful lives of the underlying patents and trademarks. Although the Company believes it is unlikely that any significant changes to the useful lives of its patents and trademarks will occur in the near term, rapid changes in technology or changes in market conditions could result in revisions to such estimates that could materially affect the carrying value of these assets and the Company’s future consolidated operating results.

LEGAL PROCEEDINGS

     We were the plaintiff in a lawsuit against our former manufacturer SKIT International, Ltd. and Uni-Skit Technologies, Inc. in which we alleged breach of a manufacturing contract which required defendants to manufacture certain of our products with the range of “competitive pricing”, a defined term. We sought damages and recission of 165,000 shares of our common stock as part of the compensation paid to the defendants. The defendants denied the allegations and counterclaimed for an outstanding balance of $182,625, for recission of the manufacturing agreement and for damage to its business reputation.

     In August of 2003, this suit went to trial before a twelve-member jury in the Circuit Court of Pulaski County, Arkansas. The jury awarded the Company damages in the amount of $1,650,560, which includes the value of the returned shares of stock previously issued to the defendants. In addition, all counterclaims of the defendants were dismissed. Pursuant to an order of the Court, the shares issued to the defendants have been cancelled and reissued to the Company. We have not yet been successful in collecting the damage award, thus it has not been provided for in the Company’s financial statements, with the exception of the return of the shares of common stock into the Company’s treasury.

     On October 23, 2003, the Company initiated suit, seeking unspecified damages, in the Circuit Court of Pulaski County, Arkansas against former manufacturers, Uni-Tat International, Inc., Uni-Champion Ltd., and their respective principals, Victor Lee and Arthur Yung, for common law fraud (as to Unit-Tat, Lee and Yung), breach of contract, and violation of the Deceptive Trade Practices Act, and for vicarious liability.

     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, our former CPA, Director and the Trustee of The Collins Family Trust. The suit commenced in March 2001 and alleged a transfer of 180,000 shares of our common stock for services which the Defendant did not provide. The suit also alleged 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 a lawsuit against the Company in August 2001, alleging failure by the Company and its officers to permit the sale of his shares of the Company, which were the same shares that were the subject of the Arkansas action. A Motion to Dismiss was filed and granted. In February 2003, 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.

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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

     The following table sets forth the names and ages of our executive officers and directors. Directors are elected annually at our annual meeting of stockholders, and serve for the one year term for which they are elected and until their successors are duly elected and qualified. Our officers are appointed by the board of directors and serve at the board’s discretion.

David A Collins

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

Robert C. Goodwin

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

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EXECUTIVE COMPENSATION

     The following table sets forth summary information concerning the compensation received for services rendered to us during the fiscal year ended December 31, 2003.

Summary Compensation Table

Board of Directors.

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

Employment Contracts

     David A. Collins serves in the capacity of Chairman and CEO under a five-year Employment Agreement dated December 1, 2000. Mr. Collins receives a base salary of $120,000, subject to a 10% increase per year, based on our profitability. Mr. Collins also receives a car allowance of $1,000 per month. In addition, Mr. Collins receives a sales commission ranging from 3-5% of the products sold by him. All other officers and employees serve at the discretion of the Board of Directors.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information regarding the beneficial ownership of our common stock as of October 19, 2004 by (a) each person known by us to be the beneficial owner of five (5) percent or more of the outstanding common stock and (b) all executive officers and directors both individually and as a group. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based upon 6,180,864 shares of common stock outstanding.

Security Ownership of Management

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

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     During the years ended December 31, 2003 and 2002, the Company made periodic advances to certain employees of the Company. As of June 30, 2004, the aggregate outstanding balance of advances to these individuals was $3,325.

     As of June 30, 2004, the Company has a non-interest bearing note receivable of $90,465 from David A. Collins, Chairman and CEO. This note is due December 31, 2004.

     As of June 30, 2004, the Company has a non-interest bearing note receivable of $106,927 from DAC Investment Group, Inc., a company owned by David A. Collins, Chairman and CEO. This note is due December 31, 2004.

     For the year ended December 31, 2002, consulting service fees in the amount of $62,500 were paid to a related party, which is owned by Mr. Collins, Chairman and CEO. Mr. Collins provided consulting services to the Company pursuant to a consulting agreement that terminated on May 30, 2002, which is the date that Mr. Collins became an employee.

     David A. Collins, Chairman and CEO, has personally guaranteed loans obtained by the Company from a local bank. The total of these loans at June 30, 2004 was $319,095. Mr. Collins has also personally guaranteed repayment of funds borrowed by the Company under its factoring agreement. The aggregate amount borrowed under this factoring agreement at June 30, 2004 was $931,459.

     During 2003 and 2002, the Company maintained note payable agreements with Dan R. Lasater, a more than 10% shareholder. These notes bear interest ranging from 8% to 10% and are payable on various dates during 2004. Interest of $10,833 and $11,666 was paid on these notes during 2003 and 2002, respectively. The aggregate balance of these notes at June 30, 2004 was $85,000.

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DESCRIPTION OF SECURITIES

Common Stock

     Subject to the dividend rights of the holders of preferred stock, if any, holders of our common stock are entitled to share, on a ratable basis, such dividends as may be declared by our board of directors, out of funds legally available therefor. Upon our liquidation, dissolution or winding up, after payment to creditors and holders of preferred stock, if any, that may be outstanding, our assets will be divided pro rata on a per share basis among the holders of our common stock.

     Each share of common stock entitles the holder to one vote. Holders of common stock do not have cumulative voting rights, which means that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors if they choose to do so, and, in such event, the holders of the remaining shares will not be able to elect any directors. Our By-Laws require that only a majority of the issued and outstanding shares need be represented to constitute a quorum and to transact business at a shareholders’ meeting. Our common stock has no preemptive, subscription or conversion rights and is not redeemable by us.

Shares Eligible for Future Sale

     As of October 19, 2004, there were 6,180,864 shares of common stock issued and outstanding. Of such shares, 2,953,061 shares comprise the public float, 1,745,265 are deemed control shares and can only be sold pursuant to certain requirements, and 467,808 shares are being registered for sale pursuant to this prospectus. The balance of 1,482,538 shares are “restricted securities” which may be sold in compliance with Rule 144. In general, Rule 144 permits a shareholder who has beneficially owned restricted shares for at least one year to sell without registration, within a three-month period, a number of shares not exceeding the greater of one percent of the then outstanding shares of common stock or, generally, the average weekly trading volume during the four calendar weeks preceding the sale, assuming our compliance with certain reporting requirements of Rule 144. Furthermore, if such shares are held for at least two years by a person not affiliated with us (in general, a person who is not an executive officer, director or principal shareholder during the three-month period prior to resale), such restricted shares can be sold without any volume limitation.

     The public sale of shares under Rule 144 or pursuant to a registration statement, can be expected to have a depressive effect on the market price of our common stock.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

     As of October 19, 2004, there were approximately 70 holders of record, excluding those held in street name, of our 6,180,864 shares of common stock outstanding.

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DIVIDEND POLICY

     We have never declared or paid any cash dividends on our common stock. Any future payment of dividends will be made at the discretion of our Board of Directors based upon conditions then existing, including earnings, financial condition and capital requirements as well as such economic and other conditions as our Board of Directors may deem relevant. It is not anticipated that we will pay any dividends on our common stock in the future. The Board of Directors intends to follow a policy of retaining earnings, if any, for use in our business operations. As a result, the return on your investment in us will depend upon any appreciation in the market price of the common stock.

TRANSFER AND WARRANT AGENT AND REGISTRAR

     Our transfer agent and registrar for the common stock is Florida Atlantic Stock Transfer, Inc. 7130 Nob Hill Road, Tamarac, Florida 33321, telephone number (954) 726-4954.

LEGAL MATTERS

     The validity of the issuance of the securities offered hereby will be passed upon for us by the Law Offices of Allan M. Lerner, Ft. Lauderdale, Florida.

EXPERTS

     Our audited consolidated financial statements have been audited by Moore Stephens Frost, PLC, independent certified public accountants, as indicated in their report with respect thereto, for the periods and to the extent set forth in their report thereon appearing elsewhere herein and in the Registration Statement and are included in reliance upon such report given under the authority of such firm as experts in accounting and auditing.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Florida Business Corporation Act permits the indemnification of directors, employees, officers and agents of a Florida corporation. Our articles of incorporation and bylaws provide that we will indemnify to the fullest extent permitted by the Florida Business Corporation Act any person whom we may indemnify under the act. The provisions of Florida law that authorize indemnification do not eliminate the duty of care of a director, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available. In addition, each director will continue to be subject to liability for actions which are:

     The statute does not affect a director’s responsibilities under any other law, such as the federal securities laws.

     The effect of Florida law, our articles of incorporation and our bylaws is to require us to indemnify our officers and directors for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

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FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS:

F-1

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

Balance Sheet (Consolidated)
June 30, 2004
(Unaudited)

F-2

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

Balance Sheet (Consolidated)
June 30, 2004
(Unaudited)

F-3

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

Statements of Operations (Consolidated)
For The Six Months Ended June 30, 2004 and 2003
(Unaudited)

F-4

DAC TECHNOLOGIES GROUP INTERNATIONAL, INC.

Statements of Operations (Consolidated)
For The Three Months Ended June 30, 2004 and 2003
(Unaudited)