-----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, IMQzClmuTZI9ssZeFlXO3tLMK+iWMU/DvSpHcko2/RBcI39W5YfkqsGl6vNjA+1n 7hvAs8m0U3Un0mCD1KbzQQ== 0000747435-96-000010.txt : 19961107 0000747435-96-000010.hdr.sgml : 19961107 ACCESSION NUMBER: 0000747435-96-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961106 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: 96654964 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, DC 20549 Form 10-QSB QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 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 (IRS 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) 680-3516 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, 1996. Class Outstanding at September 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 - September 30, 1996 and December 31, 1995 (unaudited) 3 Condensed statements of operations and changes in Retained Earnings - Three and nine months ended September 30, 1996 and 1995 (unaudited) 4 Condensed statements of cash flows - Three and nine months ended September 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) September 30, December 31, 1996 1995 Current assets: Cash and cash equivalents $166,729 $600,085 Accounts receivable, net of allowance of $3,500 at September 30, 1996 and $3,500 at December 31, 1995 708,609 554,926 Inventories, net 1,469,388 1,311,230 Prepaid expenses 189,637 29,980 Total Current Assets 2,534,363 2,496,221 Property, plant and equipment, net of accumulated depreciation of $1,122,127 at September 30, 1996 and $1,040,404 at December 31, 1995 1,069,043 979,385 Other assets 476,475 258,578 TOTAL ASSETS 4,079,881 3,734,184 Current liabilities: Accounts payable & accrued expenses 362,863 569,112 Deferred income taxes 0 11,075 Total Current Liabilities 362,863 580,187 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 September 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 295,276 255 Total Shareholders' Equity 3,117,018 2,553,997 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,079,881 $ 3,734,184
Page 4 of 9 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (UNAUDITED) Three months ended Nine months ended September 30 September 30 1996 1995 1996 1995 Net Sales $ $ $ $ 1,458,827 1,454,796 4,632,673 4,400,500 Cost of Sales 955,156 974,251 3,026,755 2,907,265 Gross Profit 503,671 480,545 1,605,918 1,493,235 Selling, General & Administrative Exp 443,544 472,187 1,294,914 1,276,927 Other (expenses) income Other 6,902 50,324 25,841 72,427 Interest expense (13,625) (16,243) (41,824) (53,692) Total (6,723) 34,081 (15,983) 18,735 Income before 53,404 42,439 295,021 235,043 income taxes Provision for - - - - income taxes Net Income 53,404 42,439 295,021 235,043 Stock Dividend - (354,150) - (354,150) Beginning Retained 241,872 397,134 255 204,530 Earnings Ending Retained $ 295,276 $ 85,423 $ 295,276 $ 85,423 Earnings Net Income per $0.04 $0.03 $0.20 $0.20 share Weighted average number of common shares outstanding 1,395,605 1,499,926 1,499,926 1,161,777
Page 5 of 9 ACTION PRODUCTS INTERNATIONAL, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Three months Nine months ended ended September 30 September 30 1996 1995 1996 1995 Cash flows from operating activities: Net income (loss) $53,404 $42,439 $295,021 $235,043 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 28,541 23,614 81,723 72,243 Provision for contribution to ESOP - 4,688 - 4,688 Change in assets and liabilities: Decrease (increase) in current assets other than cash and cash equivalents 399,847 341,542 (471,498) (125,891) Increase (decrease) in current liab (273,203) (94,487) (217,324) 209,039 Decrease (increase) in other assets (179,612) (38,250) (217,897) (83,052) Net cash provided by (used in) oper act $28,977 $279,546 ($529,975) $312,070 Net cash used in investing activities ($59,128) ($18,434)($171,381) ($59,824) Cash flows from financing activities: Proceeds from (repayments of) borrowings from related parties, net 0 (168,321) 0 (335,320) Results of other financing activities 0 46,784 268,000 69,284 Net cash (used in) provided by fin act $0 ($121,537) $268,000($266,036) Net increase (decrease) in cash and cash equivalents ($30,151) $139,575 ($433,356)($13,790) Cash and cash equivalents at start of period $196,880 $133,685 $600,085 $287,050 Cash and cash equivalents at end of period $166,729 $273,260 $166,729 $273,260 Supplemental disclosures - cash paid for Interest $13,625 $16,243 $41,824 $53,692 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 September 30, 1996 and the results of its operations and cash flows for the three and nine month periods ended September 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 September 30, 1996 are not necessarily indicative of the operating results for the full year. 2. Shareholders' equity During the nine months ending September 30, 1996 shareholders' equity increased $563,021. Net income for the period was $295,021. 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. The principal maturity date has been extended five years. 5. Credit Line The Company has established a $300,000 revolving line of credit. As of September 30, 1996, no draws had been made on this line. Page 7 of 9 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: Three months ended September 30, 1996 During the third quarter ended September 30, 1996 revenue increased to $1,458,827 in 1996 from $1,454,796 in 1995, up $4,031. The third quarter 1996 net income improved 26% to $53,404 versus $42,439 for the 1995 comparable period. Income per share was $.04 in 1996 versus $.03 per share in 1995. The increase in margins, and hence net income, is attributable to improved terms and conditions of oversees purchases and the further development of proprietary products versus distributed lines. Gross profit increased $23,126 to $503,671 from $480,545. As a percent of sales, gross profit was up to 34.5% from 33.0% for the 1995 comparable period. Selling, General & Administrative Expenses as a percentage of sales decreased to 30% of gross sales from 32% due to the results of the continued emphasis on cost containment and other efficiencies. Nine months ended September 30, 1996 During the nine months ended September 30, 1996 revenue increased 5% to $4,632,673 in 1996 from $4,400,500 in 1995. The nine months 1996 net income was $295,021 versus $235,043 in 1995, an improvement of 26%, due to the improved margins of proprietary products. Income per share for the nine months remained $.20 in 1996, thus absorbing the near 30% 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. The increase in margins is attributable to improved terms and conditions of oversees purchases and the further development of proprietary products versus distributed lines. Gross profit increased $112,683 to $1,605,918 from $1,493,235. As a percent of sales, gross profit was up to 34.7% from 33.9% for the 1995 comparable period. Selling, General & Administrative Expenses as a percentage of sales was down to 28% of gross sales from 29% for the comparable period in 1995 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, 1996, current assets were $2,534,363 compared to current liabilities of $362,863 for a current ratio of 7:1. At September 30, 1996, working capital improved by $255,467 compared to December 31, 1995. The peak period of the Company's business cycle is March through August. Thus, accounts receivable and inventories were $708,609 and $1,469,388, respectively, at September 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 the Company's high volume period. Total current assets increased by $38,142, total assets increased by $345,697 and current liabilities decreased by $217,324. Page 8 of 9 Significant changes in balance sheet from December 31, 1995 included the following: Accounts receivable increased to $708,609 from $554,926, an increase of $153,683, due in part to the increase in sales, but consistent with the comparable period in 1995. Inventories, consisting primarily of finished goods, increased $158,158 to $1,469,388 at September 30, 1996 from $1,311,230 at December 31, 1995 and prepaid expenses increased by $159,657 to $189,637 from $29,980 at December 31, 1995 due to their seasonal nature. Property, plant and equipment, net of depreciation, increased by $89,658 from December 31, 1995 due to various equipment purchases to improve production and technological efficiency. Other assets increased by $217,897 from December 31, 1995, primarily due to product costs and prepaid expenses related to new products and packaging. Accounts payable and accrued expenses decreased $206,249 to $362,863 at September 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 $433,356 from December 31, 1995 and $30,151 from June 30, 1996. Cash flow provided by operations was $28,977 for the three months ended September 30, 1996 as compared to cash flow provided by operations of $279,546 for the comparable period September 30, 1995. This is due to increases in sales and net income, the timing of payments, and a concerted effort towards earlier inventory purchases. Shareholders' equity at September 30, 1996 increased during the nine months by $563,021 to $3,117,018 due to earnings and the receipt of stock subscriptions receivable. 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: October 28,1996 By: /s/ Judith Kaplan Judith Kaplan Chief Financial Officer EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 3RD QTR 10-QSB
5 1,000 9-MOS Dec-31-1996 Jan-01-1996 Sep-30-1996 167 0 709 0 1469 2534 2191 (1122) 4080 363 600 1 0 0 3116 4080 4633 4633 3027 3027 1295 0 41824 295021 0 295021 0 0 0 295021 .20 .20
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