-----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, E6nPtyuAk4f59DfGtSM9Ve+9TgcwjGbS2kOgvGXt9fMXiL6LZAg33Jr1NYxI+Ghx w99AWzQNOm6yoNRr8gXCKw== 0000747435-96-000007.txt : 19960730 0000747435-96-000007.hdr.sgml : 19960730 ACCESSION NUMBER: 0000747435-96-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960729 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: 96600419 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 June 30, 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 of (I.R.S. Employer Identification No.) 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 June 30, 1996. Class Outstanding at June 30, 1996 Common Stock, $.001 par value 1,499,926 Page 2 of 9 I N D E X PART I. FINANCIAL INFORMATION Page Number Item 1. Financial Statements Condensed balance sheets - June 30, 1996 and December 31, 1995 (unaudited) 3 Condensed statements of operations and changes in Retained Earnings - Three and six months ended June 30, 1996 and 1995 (unaudited) 4 Condensed statements of cash flows - Three and six months ended June 30, 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 9 Page 3 of 9 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED BALANCE SHEETS ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY (UNAUDITED)
June 30, 1996 December 31, 1995 Current assets: Cash and cash equivalents $ 196,880 $ 600,085 Accounts receivable, net of allowance of $3,500 at June 30, 1996 and $3,500 at December 31, 1995 824,934 554,926 Inventories, net 1,815,160 1,311,230 Prepaid expenses 127,387 29,980 Total Current Assets 2,964,361 2,496,221 Property, plant and equipment, net of accumulated depreciation of $1,093,586 at June 30, 1996 and $1,040,404 at December 31, 1995 1,038,456 979,385 Other assets 296,863 258,578 TOTAL ASSETS 4,299,680 3,734,184 Current liabilities: Accounts payable & accrued expenses 636,066 569,112 Deferred income taxes 0 11,075 Total Current Liabilities 636,066 580,187 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 June 30,1996 and 1,499,926 shares at December 31, 1995 1,500 1,500 Capital in excess of par value 2,829,242 2,829,242 Stock Subscription Receivable (9,000) (277,000) Retained earnings 241,872 255 Total Shareholders' Equity 3,063,614 2,553,997 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,299,680 $ 3,734,184
Page 4 of 9 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (UNAUDITED)
Three months ended June 30 Six months ended June 30 1996 1995 1996 1995 Net Sales $1,736,182 $1,659,990 $3,173,846 $2,945,705 Cost of Sales 1,155,792 1,109,075 2,071,599 1,933,014 Gross Profit 580,390 550,915 1,102,247 1,012,691 Selling, General & Administrative Expenses 465,631 446,151 851,370 804,740 Other (expenses) income Other 12,234 17,434 18,939 22,103 Interest expense (14,156) (20,700) (28,199) (37,449) Total (1,922) (3,266) (9,260) (15,346) Income before income taxes 112,837 101,498 241,617 192,605 Provision for income taxes 0 0 0 0 Net Income 112,837 101,498 241,617 192,605 Beginning Retained Earnings 129,035 295,636 255 204,529 Ending Retained Earnings $241,872 $397,134 $241,872 $397,134 Net Income per share $0.08 $0.10 0.16 $0.18 Weighted average number of common shares outstanding 1,499,926 1,042,987 1,499,926 1,042,904
Page 5 of 9 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended June 30 Six months ended June 30 1996 1995 1996 1995 Cash flows from operating activities: Net income (loss) $112,837 $101,498 $241,617 $192,605 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 28,036 27,883 53,182 48,629 Change in assets and liabilities: Decrease (increase) in current assets other than cash and cash equivalents (177,864) (5,047) (882,420) (467,434) Increase (decrease) in current liabilities (137,436) 56,232 66,954 303,526 Decrease (increase) in other assets 5,055 (20,152) (38,285) (44,803) Net cash provided by (used in) operating activities ($169,372) $160,414 ($558,952) $32,523 Net cash used in investing activities ($53,472) ($25,478) ($112,253) ($41,390) Cash flows from financing activities: Proceeds from (repayments of) borrowings from related parties, net 0 (60,000) 0 (166,999) Results of other financing activities 0 22,500 268,000 22,500 Net cash (used in) provided by fin. activities $0 ($37,500) $268,000 ($144,499) Net increase (decrease) in cash and cash equiv. ($222,844) $97,436 ($403,205) ($153,366) Cash and cash equivalents at start of period $419,724 $36,248 $600,085 $287,050 Cash and cash equivalents at end of period $196,880 $133,684 $196,880 $133,684 Supplemental disclosures - cash paid for Interest $14,156 $20,700 $28,199 $37,449 Taxes $0 $0 $11,075 $0
Page 6 of 9 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 June 30, 1996 and the results of its operations and cash flows for the three and six month periods ended June 30, 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 June 30, 1996 are not necessarily indicative of the operating results for the full year. 2. Shareholders' equity During the six months ending June 30, 1996 shareholders' equity increased $509,617. Net income for the period was $241,617. The Company collected $268,000 of the outstanding stock subscriptions receivable; $9,000 remains receivable in the form of non-interest bearing promissory notes 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. Related Party Transactions The convertible notes payable to Warren and Judith Kaplan totaling $600,000 were transferred as follows: $480,000 to Ronald Kaplan and $120,000 to Elissa Kaplan. There were no other changes in the terms or conditions of the notes. 5. Credit Line During the quarter, the Company has established a $300,000 revolving line of credit with a financial institution. At June 30, 1996, there were no outstanding borrowings on the line of credit. Page 7 of 9 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: Three months ended June 30, 1996 During the second quarter ended June 30, 1996 revenue increased to $1,736,182 in 1996 from $1,659,990 in 1995, up 5%. The second quarter 1996 net income improved 11% to $112,837 versus $101,498 for the 1995 comparable period, due to the increase in sales. Income per share was $.08 in 1996 versus $.10 per share in 1995 due to the 44% increase in the weighted average number of common shares outstanding. The increase in sales is attributable to the improved packaging, merchandising and marketing efforts of the Company's core product lines and a newly focused effort by sales management which includes the use of outside representatives. Gross profit increased $29,475 to $580,390 from $550,915. As a percent of sales, gross profit was up to 33.43% from 33.19% for the 1995 comparable period. Selling, General & Administrative Expenses as a percentage of sales remained constant at 27% of gross sales due to the results of the continued emphasis on cost containment and other efficiencies, and the increase in sales. Six months ended June 30, 1996 During the six months ended June 30, 1996 revenue increased 8% to $3,173,846 in 1996 from $2,945,705 in 1995. The six months 1996 net income was $241,617 versus $192,605 in 1995, an improvement of over 25%, due to the sales increase. Income per share for the six months was $.16 in 1996 versus $.18 per share in 1995 reflecting the 44% increase in the weighted average number of common shares outstanding. The increase in sales is attributable to the improved packaging, merchandising and marketing efforts of the Company's core product lines and a newly focused effort by sales management which includes the use of outside representatives. Gross profit increased $89,556 to $1,102,247 from $1,012,691. As a percent of sales, gross profit was up to 33.73% from 33.38% for the 1995 comparable period. Selling, General & Administrative Expenses as a percentage of sales remained constant at 27% 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 June 30, 1996, current assets were $2,964,361 compared to current liabilities of $636,066 for a current ratio of 5:1. At June 30, 1996, working capital improved by $412,261 compared to December 31, 1995. The peak period of the Company's business cycle is March through August. Thus, accounts receivable and inventories were $824,934 and $1,815,160, respectively, at June 30, 1996 compared to $554,926 and $1,311,230, respectively, at December 31, 1995. The increase in receivables and inventories are considered normal for the Company and reflect the increased activity in our high volume period. Total current assets increased by $468,140, total assets increased by $565,496 and current liabilities increased by only $55,879. Page 8 of 9 Significant changes in balance sheet from December 31, 1995 included the following: Accounts receivable increased to $824,934 from $554,926, an increase of $270,008, due in part to the increase in sales. Inventories, consisting primarily of finished goods, increased $503,930 to $1,815,160 at June 30, 1996 from $1,311,230 at December 31, 1995. Prepaid expenses increased by $97,407 to $127,387 from $29,980 at December 31, 1995 due to their seasonal nature. Property, plant and equipment, net of depreciation, increased by $59,071 from December 31, 1995 due to various equipment purchases to improve production and technological efficiency. Other assets increased by $38,285 from December 31, 1995, primarily due to dies, molds, designs and prepaid expenses related to new products and packaging. Accounts payable and accrued expenses increased $66,954 to $636,066 at June 30, 1996 from $569,112 at December 31, 1995 due primarily to the seasonal nature of the purchases and the timing of inventory receipts. Cash and cash equivalents were down $403,205 from December 31, 1995 and $222,844 from March 31, 1996. Cash flow used in operations was $169,372 for the three months ended June 30, 1996 as compared to cash flow provided by operations of $160,414 for the comparable period June 30, 1995. This is due to increases in sales and net income and a concerted effort towards earlier inventory purchases. Shareholders' equity at June 30, 1996 increased during the second quarter by $509,617 to $3,063,614 due to earnings and the receipt of stock subscriptions receivable. During the quarter, the Company established a $300,000 line of credit with a lending institution. The stated rate of interest for the line is defined as Prime plus one half of one percent. As of June 30, 1996, the Company had no outstanding borrowings against the line. Page 9 of 9 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: July 24, 1996 By: /s/ Judith Kaplan Judith Kaplan Chief Financial Officer EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 2ND QTR 10-QSB
5 1,000 6-MOS Dec-31-1996 Jan-01-1996 Jun-30-1996 197 0 825 0 1815 2964 2132 (1094) 4300 636 600 1 0 0 3062 4300 3174 3174 2072 2072 832 0 28 242 0 242 0 0 0 242 .16 .16
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