SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996 Commission File Number
Registration Number 2-93512-A
ACTION PRODUCTS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2095427
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
344 Cypress Road, Ocala, Florida 34472-3108
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (352) 687-2202
Check whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of March 31, 1996.
Class Outstanding at March 31, 1996
Common Stock, $.001 par value 1,499,926
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I N D E X
PART I. FINANCIAL INFORMATION Page
Number
Item 1. Financial Statements
Condensed balance sheets - March 31, 1996
and December 31, 1995 (unaudited) 3
Condensed statements of operations and changes
in Retained Earnings - Three months ended
March 31, 1996 and 1995 (unaudited) 4
Condensed statements of cash flows - Three months
ended March 31, 1996 and 1995 (unaudited) 5
Notes to condensed financial statements 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
SIGNATURE PAGE 8
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ACTION PRODUCTS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 419,724 $ 600,085
Accounts receivable, net
of allowance of $3,500 at March 31,
1996 and $3,500 at December 31, 1995 844,769 554,926
Inventories, net 1,625,022 1,311,230
Prepaid expenses 119,826 29,980
Total Current Assets 3,009,341 2,496,221
Property, plant and equipment, net of
accumulated depreciation of $1,065,550
at March 31, 1996 and $1,040,404 at
December 31, 1995 1,013,020 979,385
Other assets 301,918 258,578
TOTAL ASSETS 4,324,279 3,734,184
Current liabilities:
Accounts payable & accrued expenses 773,502 569,112
Income taxes payable 0 11,075
Total Current Liabilities 773,502 580,187
Long term liabilities:
Notes payable 600,000 600,000
Shareholder's equity:
Common stock $.001 par
value authorized 7,500,000; 1,499,926
issued and outstanding at March 31,1995
and 1,499,926 at December 31, 1995 1,500 1,500
Additional paid-in capital 2,829,242 2,829,242
Retained earnings 129,035 255
Stock Subscription Receivable (9,000) (277,000)
Total Shareholders' Equity 2,950,777 2,553,997
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 4,324,279 $ 3,734,184
</TABLE>
See accompanying notes
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ACTION PRODUCTS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
AND CHANGES IN RETAINED EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
<S> <C> <C>
Net Sales $ 1,437,664 $ 1,285,715
Cost of Sales 915,807 823,939
Gross Profit 521,857 461,776
Selling, General &
Administrative Expenses 385,739 358,589
Other (expenses) income
Other 6,705 4,669
Interest expense (14,043) (16,749)
Total (7,338) (12,080)
Income before income taxes 128,780 91,107
Provision for income taxes 0 0
Net Income $ 128,780 $ 91,107
Beginning Retained Earnings 255 204,529
Ending Retained Earnings $ 129,035 $ 295,636
Net Income per share $ 0.09 $ 0.09
Weighted average number
of common shares outstanding 1,499,926 1,042,820
</TABLE>
See accompanying notes
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ACTION PRODUCTS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 128,780 $ 91,107
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 25,146 24,752
Change in assets and liabilities:
Increase in current assets, other
than cash and cash equivalents (693,481) (462,385)
Increase in current liabilities
and deferred taxes 193,315 247,294
Increase in other assets (43,340) (24,653)
Net cash used in operating activities (389,580) (123,885)
Net cash used in investing activities (58,781) (19,917)
Cash flows from financing activities:
Repayments of borrowings
from related parties, net 0 (107,000)
Results of other financing activities 268,000 0
Net cash provided by (used in)
financing activities 268,000 (107,000)
Net increase (decrease) in cash
and cash equivalents (180,361) (250,802)
Cash and cash equivalents at
beginning of period 600,085 287,050
Cash and cash equivalents at
end of period $ 419,724 $ 36,248
Supplemental disclosures - cash paid for
Interest $ 14,043 $ 16,749
Taxes $ 11,075 $ 0
</TABLE>
See accompanying notes
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ACTION PRODUCTS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Condensed financial statements
In the opinion of management, the accompanying unaudited
condensed financial statements contain all normal recurring
adjustments necessary to present fairly the financial position
of Action Products International, Inc. at March 31, 1996 and
the results of its operations and cash flows for the first
quarter ending March 31, 1996.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be
read in conjunction with the financial statements and notes
thereto included in the Company's report on Form 10-KSB/A for
the year ended December 31, 1995. The results of operations
for the period ended March 31, 1996 are not necessarily
indicative of the operating results for the full year.
2. Shareholders' equity
During the three months ending March 31, 1996, shareholders'
equity increased $396,780. Net income for the period was
$128,780. In addition, payments of $268,000 were received and
applied towards outstanding stock subscriptions receivable.
3. Income per common share
Income per common share is computed based upon the weighted
average number of shares outstanding during the period.
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Page 7 of 8
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations:
During the first quarter ended March 31, 1996, revenues increased
by 12% to $1,437,664 in 1996 from $1,285,715 in 1995. The first
quarter 1996 net income was up 41% to $128,780, versus $91,107
for the 1995 comparable period, due to the increase in sales and
cost containment efforts made by management. The increase in
sales is attributable to the improved packaging, merchandising
and marketing efforts focused on the Company's core product
lines. Income per share for the first quarter remained at $.09
in 1996 compared to the first quarter of 1995 despite the
significant increase in the weighted average number of shares.
Gross profit increased $60,081 to $521,857 from $461,776, up 13%.
As a percent of sales, gross profit remained consistent at 36%.
Selling, General & Administrative Expenses as a percentage of
sales decreased from 28% to 27% due to results of the continued
emphasis on cost containment and other efficiencies and the
increase in sales.
Financial Condition, Liquidity and Capital Resources:
As of March 31, 1996, current assets were $3,009,341 compared to
current liabilities of $773,502 for a current ratio of 4:1. At
March 31, 1996, working capital, the amount of cash readily
available for funding company operations (calculated as total
current assets less total current liabilities), improved by
$319,805 compared to December 31, 1995.
The peak period of the Company's business cycle is March through
August. Thus, accounts receivable and inventories were $844,769
and $1,625,022, respectively, at March 31, 1996, compared to
$554,926 and $1,311,230, respectively, at December 31, 1995.
The increases in receivables and inventories are considered
normal for the Company and reflect the increasing activity in its
high volume period. Total current assets increased by $513,120,
total assets increased by $590,095 and current liabilities
increased by $193,315.
Cash and cash equivalents were down by $180,361, as cash was used
to position the Company for its peak period. Property, plant and
equipment, net of depreciation, increased by $33,635, due to the
purchase of a state-of-the-art screen printing machine and
several desktop computers. Other assets were up $43,340 due to
product development, dies, molds, and designs related to the
Company's core product lines.
Accounts payable and accrued expenses increased $204,390 to
$773,502 at March 31, 1996 from $569,112 at December 31, 1995,
due to the seasonal nature of the purchases and the timing of
inventory receipts.
Cash used in operations was $389,580 for the three months ended
March 31, 1996, as compared to $123,885 for the comparable period
in 1995. This is due in part to an increase in net income and
earlier inventory purchases in preparation for the Company's peak
period.
Shareholders' equity at March 31, 1996 increased by $396,780.
Net income for the period was $128,780. In addition, payments
of $268,000 towards outstanding stock subscriptions receivable
were received.
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Page 8 of 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ACTION PRODUCTS INTERNATIONAL, INC.
Date: April 22, 1996 By: /s/ Judith Kaplan
Judith Kaplan
Chief Financial Officer
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<PERIOD-START> Jan-01-1996
<PERIOD-END> Mar-31-1996
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