-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DUDBodvnLtu3Mp+Ax9mHLyAD/nFa4CXAitzPp1qU5RTsgcg2reKAHD1dgxFqaR+Y /iGfKffhk4pRGyLdAGaKKQ== 0000747435-95-000002.txt : 19951118 0000747435-95-000002.hdr.sgml : 19951118 ACCESSION NUMBER: 0000747435-95-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTION PRODUCTS INTERNATIONAL INC CENTRAL INDEX KEY: 0000747435 STANDARD INDUSTRIAL CLASSIFICATION: ICE CREAM & FROZEN DESSERTS [2024] IRS NUMBER: 592095427 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13118 FILM NUMBER: 95588634 BUSINESS ADDRESS: STREET 1: 344 CYPRESS RD CITY: OCALA STATE: FL ZIP: 34472-3108 BUSINESS PHONE: 9046872202 MAIL ADDRESS: STREET 1: 344 CYPRESS ROAD CITY: OCALA STATE: FL ZIP: 34472 FORMER COMPANY: FORMER CONFORMED NAME: ACTION PACKETS INC DATE OF NAME CHANGE: 19880818 10QSB 1 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 September 30, 1995 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 of (I.R.S. Employer incorporation or organization) Identification No.) 344 Cypress Road, Ocala, Florida 34472-3108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (904) 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 September 30, 1995. Common Stock, $.001 par value - 1,499,926 shares as of September 30, 1995 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED BALANCE SHEETS ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED)
September 30, 1995 December 31, 1994 Current assets: Cash and cash equivalents $273,260 $287,050 Tax Refund 0 10,000 Accounts receivable, net of allowance of $3,500 at September 30, 1995 and $3,500 at December 31, 1994 672,761 446,812 Inventories, net 1,369,739 1,441,251 Prepaid expenses 77,408 95,954 Total Current Assets 2,393,168 2,281,067 Property, plant and equipment, net of accumulated depreciation of $1,019,407 at September 30, 1995 and $947,164 at December 31, 1994 972,242 984,661 Other assets 255,743 172,690 TOTAL ASSETS 3,621,153 3,438,418 Current liabilities: Accounts payable & accrued expenses 549,988 340,948 Current portion of notes payable to S/H 0 0 Demand Notes payable to shareholders 0 335,320 Deferred income taxes 3,000 3,000 Total Current Liabilities 552,988 679,268 Long term liabilities: Notes payable 600,000 600,000 Deferred income taxes 6,000 6,000 Shareholder's equity: Common stock $.001 par value authorized 7,500,000; 1,499,926 issued and outstanding at September 30,1995 and 1,042,820 shares at December 31, 1994 1,500 1,043 Capital in excess of par value 2,829,242 1,947,577 Stock Subscription Receivable (454,000) 0 Retained earnings 85,423 204,530 Total Shareholders' Equity 2,462,165 2,153,150 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,621,153 3,438,418 See Accompanying Notes to Financial Statements
ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (UNAUDITED)
Three months ended September 30 Nine months ended September 30 1995 1994 1995 1994 Net Sales $1,454,796 $1,275,148 $4,400,500 $3,698,192 Cost of Sales $974,251 $814,158 $2,907,265 $2,355,959 Gross Profit $480,545 $460,990 $1,493,235 $1,342,233 Selling, G&A Expenses $472,187 $405,956 $1,276,927 $1,139,844 Other (expenses) income Other $50,324 $62,556 $72,427 $79,933 Interest expense ($16,243) ($14,276) ($53,692) ($38,716) Legal Settlement $0 ($294,500) $0 ($294,500) Warrants' related costs $0 ($110,000) $0 ($110,000) Total $34,081 ($356,220) $18,735 ($363,283) Income before income taxes $42,439 ($301,186) $235,043 ($160,894) Provision for income taxes $0 $0 $0 $0 Net Income $42,439 $301,186) $235,043 ($160,894) Beginning Retained Earnings $397,134 $585,362 $204,530 $445,070 Stock Dividend ($354,150) $0 ($354,150) $0 Ending Retained Earnings $85,423 $284,176 $85,423 $284,176 Net Income per share $0.03 ($0.29) $0.20 ($0.16) Weighted average number of common shares outstanding 1,395,605 1,042,820 1,161,777 1,019,487 See Accompanying Notes to Financial Statements
ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended Nine months ended September 30 September 30 1995 1994 1995 1994 Cash flows from operating activities: Net income (loss) $42,439 ($301,186) $235,043 ($160,896) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation $23,614 $26,269 $72,243 $81,164 Provision for contribution to ESOP $4,688 $0 $4,688 $0 Change in assets and liabilities: Decrease (increase) in current assets other than cash and cash equivalents $341,542 $111,824 ($125,891) ($150,035) Increase (decrease) in current liabilities other than Employee Stock Ownership Plan liability and related party borrowings ($94,487) ($4,399) $209,039 $7,018 Decrease (increase) in other assets ($38,250) $60,985 ($83,052) ($25,247) Net cash provided by (used in) operating activities $279,546 ($106,507) $312,070 ($247,996) Net cash used in investing activities ($18,434) ($2,512) ($59,824) ($65,675) Cash flows from financing activities: Proceeds from (repayments of) borrowings from related parties,net ($168,321) ($210,345) ($335,320) $235,501 Results of other financing activities $46,784 $0 $69,284 ($15,653) Net cash (used in) provided by fin. activities ($121,537) ($210,345) ($266,036) $219,848 Net increase (decrease) in cash and cash equiv $139,575 ($319,364) ($13,790) ($93,823) Cash and cash equivalents at start of period $133,685 $444,686 $287,050 $219,145 Cash and cash equivalents at end of period $273,260 $125,322 $273,260 $125,322 Supplemental disclosures - cash paid for Interest $16,243 $13,418 $53,692 $37,858 Taxes $0 $0 $0 $0 See Accompanying Notes to Financial Statements
ACTION PRODUCTS INTERNATIONAL, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Condensed consolidated financial statements In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal recurring adjustments necessary to present fairly the financial position of Action Products International, Inc. at September 30, 1995 and the results of its operations and cash flows for the three and nine month periods ending September 30, 1995. 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 for the year ended December 31, 1994. The results of operations for the period ended September 30, 1995 are not necessarily indicative of the operating results for the full year. 2. Shareholders' equity During the three months ending September 30, 1995 shareholders' equity increased $93,910. Net income for the period was $42,439. The Company issued 226,000 shares of its common stock at $1.50 per share on options exercised by qualified employees. 100,000 shares were issued at $1.75 per share on other options exercised. 5000 shares were issued under the Company's Employees' Stock Ownership Trust at $.94 per share. Finally, the Company declared an 8% stock dividend resulting in an additional 111,106 shares issued at $3.1875 on August 18 to all shareholders of record. An outstanding stock subscription receivable for $454,000 is held in the form of promissory notes with no interest, due on demand; these promissory notes are secured by the stock purchased. 3. Income per common share Income per common share is computed based upon the weighted average number of shares outstanding during the period. 4. Other Matters As referred to above, on July 7,1995, the Company declared an 8% stock dividend to shareholders of record on July 28, 1995. The stock dividend was paid on August 18, 1995 and charged to retained earnings. ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: Three months ended September 30, 1995 During the third quarter ended September 30, 1995 revenue increased by 14% to $1,454,796 in 1995 from $1,275,148 in 1994. The third quarter 1995 net income was $42,439 versus a net loss of $301,186 for the 1994 comparable period, an improvement of $343,625, due in part to the increase in sales, as well as the charges in the prior period due to the legal settlement and warrant related costs. Income per share for the third quarter improved to $.03 in 1995 versus a loss of $.29 per share for the same quarter in 1994. The increase in sales is attributable to the improved packaging, merchandising and marketing efforts of the Company's core product lines. Gross profit increased $19,555 to $480,545 from $460,990. As a percent of sales, gross profit was 33% from 36% due to the increased costs of plastic and paper. Selling, General & Administrative Expenses as a percentage of sales decreased from 32% to 29% of gross sales due to results of the continued emphasis on cost containment and other efficiencies and the increase in sales. Nine months ended September 30, 1995 During the nine months ended September 30, 1995 revenue increased by 19% to $4,400,500 in 1995 from $3,698,192 in 1994. The nine months 1995 net income was $235,043 versus a net loss of $160,894 for the 1994 comparable period, an improvement of $395,937, again due in part to the increase in sales, as well as the charges in the prior period due to the legal settlement and warrant related costs. Income per share for the nine months improved to $.20 in 1995 versus a loss of $.18 per share for the same period in 1994. Again, the increase in sales is attributable to the improved packaging,merchandising and marketing efforts of the Company's core product lines. Gross profit increased $137,083 to $1,276,927 from $1,139,844. As a percent of sales, gross profit was 34% from 36% due to the increased costs of plastic and paper. Selling, General & Administrative Expenses as a percentage of sales decreased from 31% to 29% of gross sales 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 September 30, 1995 current assets were $2,393,168 compared to current liabilities of $552,988 for a current ratio of 4.33:1. At September 30,1995 working capital improved by $238,382 compared to December 31, 1994. The peak period of the Company's business cycle is March through August. Thus, accounts receivable and inventories were $667,708 and $1,369,739, respectively, at September 30, 1995 compared to $446,071 and $1,441,251, respectively, at December 31, 1994. The increase in receivables and decrease in inventories are considered normal for the Company and reflect the increased activity in our high volume period. Total current assets increased by $112,101, total assets increased by $182,735 and current liabilities decreased by $126,281. Significant changes in balance sheet from December 31, 1994 included the following: Accounts receivable increased to $667,708 from $446,071, an increase of $221,637, due in part to the increase in sales. Inventories, consisting primarily of finished goods, decreased $71,512 to $1,369,739 at September 30, 1995 from $1,441,251 at December 31, 1994. Prepaid expenses decreased by $18,546 to $77,408 from $95,954 at December 31, 1994. Property, plant and equipment, net of depreciation, decreased by $12,419 from December 31, 1994. Other assets increased by $83,053 from December 31, 1994, primarily due to product development, dies, molds, designs and prepaid expenses related to new packaging. Accounts payable and accrued expenses increased $209,040 to $549,988 at September 30, 1995 from $340,948 at December 31, 1994 due primarily to the seasonal nature of the purchases and the timing of inventory receipts, i.e. large purchases coming in earlier in the year. Cash and cash equivalents were down $13,790 from December 31, 1994 but up $139,575 from June 30, 1995. Cash flow provided by operations was $279,546 for the three months ended September 30, 1995 as compared to cash flow used in operations of $106,507 for the comparable period September 30, 1994, a favorable swing of $386,053. This is due in part to increases sales and net income, timing of purchases, and in the efficiency of operation. The Company does not have a bank line of credit and had relied upon loans from related parties for working capital secured by demand notes. During this quarter, these notes were paid down to $0 from $335,320 at December 31, 1994. Long term debt is unchanged consisting of a $600,000 9% Convertible Note held by related parties. Shareholders' equity at September 30,1995 increased during the 3rd quarter by $93,910 to $2,462,165 in part due to earnings. In addition, during this period the Company issued 326,000 shares of its Common stock, from the exercise of employee and other options. The Company has received $82,500 in cash from the exercise of the options; the balance is held as stock subscriptions receivable in the form of promissory notes collateralized by the stock. Related costs of $13,216 were netted for the purpose of cash flow statement presentation. In August of 1995, the Company paid an 8% stock dividend which amounted to approximately 103,000 shares. As a result, the Company charged retained earnings approximately $354,000 to reflect the permanent capitalization of the dividend shares. For the nine months ended September 30,1995, shareholder's equity increased by $309,015 from $2,153,149 at December 31,1994. PART II - OTHER INFORMATION Item #6 Exhibits and Reports on Form 8-K a. Exhibits Exhibit 27. Financial Data Schedule B. Reports on Form 8-K No reports have been filed on Form 8-K during this quarter. 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. November 10, 1995 Judith Kaplan Date Judith Kaplan (Principal Executive and Financial Officer) EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-QSB
5 1,000 9-MOS Dec-31-1995 Jan-01-1995 Sep-30-1995 273 0 672 0 1370 2393 1992 (1019) 3621 553 600 1 0 0 2460 3621 4400 4400 2907 2907 1277 0 54 235 0 235 0 0 0 235 .20 .20
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