-----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, Azxa+z4clOwkRo1QuNW3dbTj2VswslySzjcyjIBgFPhLgEnjC+RPPkXbDeu+sTpE WkswVaogxobHlBOXSiEhWA== 0000747435-97-000001.txt : 19970402 0000747435-97-000001.hdr.sgml : 19970402 ACCESSION NUMBER: 0000747435-97-000001 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 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: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-13118 FILM NUMBER: 97571920 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 10KSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB (Mark One) [ X ] Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] OR [ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the fiscal year ended December 31, 1996Commission file number 0-13118 For the transition period from _________________ to ___________________ ACTION PRODUCTS INTERNATIONAL, INC. (Name of Small Business Issuer in Its Charter) Florida 59-2095427 State or other jurisdiction of (IRS 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 (352) 687-2202 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share (Title of Class) Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.[ ] State issuer's revenues for its most recent fiscal year: $ 5,574,746 The aggregate market value of the voting stock held by the non-affiliates of the Registrant was $1,943,032 based on the average bid and asked price reported March 4, 1997 (based on 887,229 shares). Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of March 4, 1997 Class Outstanding Common Stock, $.001 1,549,926 DOCUMENTS INCORPORATED BY REFERENCE NONE PART I ITEM 1. BUSINESS: Description of Business The Company, and its divisions Action Snacks, Action Publishing, and Logo America, design, manufacture, and market toys, gifts, books, freeze dried snack foods, and other products in an extensive line of creative merchandise. The Company also sells and imprints wearables such as t-shirts and caps and other promotional products, gifts, and souvenirs. The Company's products are sold to edutainment specialty retailers, museums, zoos, aquariums, theme parks, attractions and toy stores in the United States and worldwide. Educational Toys and Other Products - "Action Products" The Company sells an educational toy and gift product line with an emphasis on nature, space and dinosaurs. The Company's products are derived from approximately 50 sources. About 50% of the products are manufactured for the Company outside the United States, primarily in Taiwan, Hong Kong and increasingly, China, and are directly imported by the Company. Freeze Dried Snack Foods - "Action Snacks"{r} The Company domestically manufactures freeze dried snack foods including ice cream and ice cream sandwiches, frozen yogurt, fruit and pizza. Produced using a process developed by NASA for the Apollo program, they are sold primarily as novelty foods to space and science-related shops. The freeze dried products are sold under the protected registered trademark "Action Snacks." Publishing - "Action Publishing" The Company publishes a line of educational books under the name "Action Publishing." The line of books includes children's activity, coloring and sticker books on such topics as nature, science, dinosaurs and aerospace. Its books are published both domestically and overseas. Promotional Products - "Logo America" The Company sells "Activewear" such as t-shirts, jackets, and hats upon which the Company prints original designs, as well as corporate and other promotional logos. The Company maintains an in-house screen printing plant with two computerized presses which produce the garments for sale. The Company uses state of the art printing equipment together with computer graphic systems to obtain a high-quality reproduction of photographic realism. It has developed processes which allow photographs to be used as primary sources of artwork and is introducing new lines of photographic t-shirts. The Company also sells other promotional products such as pens, pencils, lapel pins, coffee mugs, mouse pads, and other stationery items imprinted with corporate logos, promotional logos, and original designs. The Company markets its promotional products through its "Logo America" division. Customers The Company currently sells to approximately 2,000 museum stores throughout the United States out of a market of over 6,000 stores. The museum gift shop market includes natural history, science, zoos, nature centers, aquariums, history and space-related facilities (NASA Base shops). The Company is increasingly selling outside its established niche to toy stores, gift stores and other types of specialty retailers. No single customer accounts for more than 3% of sales and no single product accounts for more than 6% of sales. The Company has customers in every state in the United States, as well as the District of Columbia. The Company exports to more than 20 foreign countries and regions including Canada, Europe, South and Central America, Saudi Arabia, Finland, Germany, Japan, Hong Kong, Korea, New Zealand, Denmark, Sweden and Australia. Marketing and Sales The Company markets its products through its full color catalogs, newsletters, client visits, and telephone contact and solicitation. The Company also exhibits its products and services at museum, gift, toy, and other trade shows, as well as showrooms located across the country staffed by manufacturers' sales representatives. The Company continues to emphasize its own proprietary products and trade names through aggressive advertising and extensive package redesign. Inside sales representatives sell the Company's products directly to key accounts by telephone and other personal contact. This sales method has permitted the Company to have continuing contact with the Company's customers, allowing the Company to identify new markets quickly and to respond promptly to individual customer needs. National sales coverage is supplemented by a network of manufacturers' representative companies. The Company's product lines are presented to customers through full color catalogs which were completely redesigned for 1997. The catalogs segregate the Company's product lines by division. The catalogs are designed to permit buyers to select and purchase products and play an important role in the generation of new customers and leads. Customers are encouraged to place orders from the catalog through the Company's toll-free telephone number and by toll-free fax. Sales invoices are posted to the financial records on day of shipment, which is usually the same day as the order is entered. No interest is charged during the first 30 days following posting of an invoice. After 30 days, unpaid invoices are deemed overdue and late charges of one and one half percent per month are applied to the unpaid balance. A small number of orders are prepaid, paid C.O.D. or paid by credit card. The Company requires a deposit of 50% or more for most custom design or imprinting orders. A computerized perpetual inventory is maintained. Customers must request approval for credits in writing. Credits are processed and approved by the accounting department. Returned merchandise is inspected for damage and is generally subject to a reasonable restocking charge. Credit memos must generally be used against future purchases. Sales are netted in the month the credit memo is issued. Historically, credits and adjustments have been less than 2% of sales. The Company believes that its sales, inventory and credit policies reflect standard industry practices. Less than 15% of the Company's sales are made on terms other than regular terms as noted above. In a limited number of cases, customers are granted an additional 30 to 60 days credit without service charges. Competition The Company competes against toy, educational, scientific and souvenir manufacturers and importers, distributors and book publishers. The Company's ability to compete successfully is based upon its core competencies: its ability to offer a wide range of specialized "theme" products; "same-day" shipment on most orders; and its in-house sales personnel who maintain regular and close contact with the Company's customers. The Company believes its reputation, service, and customer orientation enable it to build and maintain customer loyalty. The Company believes that it can maintain and expand its customer base due to its wide range of products, its customer service abilities, and its experience in the industry. The Company is strongly committed to maintaining and enhancing its advantages in its markets by continually improving the products and services it offers. These services include "value-added" merchandising such as packaging and display materials intended to assist the Company's customers in the sale of the Company's products. In addition, the Company has maintained its focused efforts towards the establishment and extension of proprietary product lines in a move away from distributed lines. Personnel As of December 31, 1996, the Company had 41 full time employees, including three executive positions, twelve sales positions, and the remaining twenty-six positions to fulfill administrative responsibilities in marketing, product development, accounting, logistics, etc. None of the employees are represented by a union. In 1996, the Company offered certain benefits to its employees including life insurance, an Employee Stock Ownership Plan (ESOP), a 401(k) plan, and employee contributed IRC Section 125 health plan. All employees are required to sign a non-compete agreement prohibiting competition with the Company for a period of one year following termination of their employment. The Company believes its employee relations are good. ITEM 2. DESCRIPTION OF PROPERTY: The Company's operations are located in a 35,000 square foot building on 2.5 acres which it owns in an industrial park in Ocala, Florida. Management considers the building adequate to house its operations for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS: NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: NONE PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS: The Company paid an 8% stock dividend in August 1995. The Company has previously distributed warrants as dividends, but has not paid any cash dividends. Any payment of cash dividends in the future will be at the discretion of the Board of Directors and will depend on, among other things, the Company's future earnings, financial condition, capital and other cash requirements, and general business conditions. The Company's Common Stock is traded on The NASDAQ SmallCap Market under the respective symbol APII. The number of holders of the Company's Common Stock as of March 5, 1997, was approximately 500. The high and low bid quotations for each quarter of the fiscal years ended December 31, 1996 and 1995 are follows: Quarter Ended: High Bid Low Bid March 31, 1995 1.75 1 June 30, 1995 3.625 1.375 September 30, 1995 3.375 2.3125 December 31, 1995 3.9375 1.625 March 31, 1996 3.3125 2.875 June 30, 1996 4.25 3 September 30, 1996 3.125 2.75 December 31, 1996 2.8125 2.0625 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: General The Company achieved a marginal sales increase over its record sales in 1995. Management has expressed its dissatisfaction with the rate of its sales growth, but is optimistic about the effects of its current marketing and product development efforts on future sales. During the year ended December 31, 1996, the Company exerted significant energy towards the development of its core management team, creation of new marketing programs, packaging and repositioning of its products, and the development of new concepts and products for sale in future years. Management expects these projects, joined by an emphasis on developing and selling only proprietarily packaged products, to lead to increased market penetration and improved gross profit margins. Sales, marketing, and product development efforts have been focused on developing divisionalized, proprietary lines of products. During 1996, the Company established its network of manufacturers' reps to provide national sales coverage for its new and existing lines of product. The continued recruiting of outside reps supplemented the further development of the Company's inside sales force. The marketing efforts of the Company bridge the gap between sales and product development. It seeks to provide the Company's sales force with the tools and resources necessary to further penetrate the Company's markets. To accomplish this, the Company continues to redesign its product packaging and is working with retailers to develop planagrams and point-of-purchase displays. By improving the presentation of its proprietary products, the Company provides its customers--retail stores--with the means to improve sales to their customers - -the consumers. It addition to sales support, the Company's marketing efforts provide product development research, feedback, and data needed to create and improve product types and mix. Coupled with its efforts in the improvement of the quality of its sales and its marketing efforts, the Company continues its investments in product quality through its product development system. The Company feels the time and resources invested in developing more proprietary products is leading to increased market penetration into its current and expanding customer base. The Company now has in place a network of model makers, pattern makers, designers and product development specialists. This network composes the foundation of the Company's product development system. The Company feels that the resultant proprietary products carry higher perceived values and lay the foundation for the improvement of lasting profit margins. Any statements that are not historical facts contained in this discussion are forward looking statements that involve risks and uncertainties, including but not limited to those relating to product demand, pricing, market acceptance, the effect of economic conditions, intellectual property rights and litigation and the outcome of governmental proceedings, competitive products, risks in product and technology development, the results of financing efforts, the ability to complete transactions, and other risks identified in this and the Company's other Securities and Exchange Commission filings. Results of Operations The financial data included in the following table has been selected by the Company and has been derived from the financial statements. The following financial data should be read in conjunction with the audited financial statements and related notes included elsewhere herein. Twelve (12) Months Ended December 31, 1996 1995 Net Sales $5,574,746 $5,487,015 Cost of Sales 3,651,392 3,575,517 Selling, General & Administrative Exp. 2,226,206* 1,700,258 Net Income (loss) (317,855) 149,878 Net Income (loss) per Common Share (0.21) 0.12 Total Assets 3,872,316 3,734,184 Stockholders' Equity 2,504,142 2,553,997 *Includes charges of $491,662 associated with the discontinuation of distribution activities and a write down of assets. Year Ended December 31 Net sales were $5,574,746 and $5,487,015 in 1996 and 1995, respectively. The Company produced an increase despite a substantial reduction in the total number of available products. Management's efforts to streamline the product mix in a directed move away from the distribution of other manufacturer's products resulted in an only slight sales increase of $87,731, up 1.6%. Cost of sales were $3,651,392 and $3,575,517 in 1996 and 1995, respectively. As a percentage of net sales, cost of sales was up slightly 65.5% in 1996 and 65.2% in 1995. Accordingly, gross profit was $1,923,354 and $1,911,498 in 1996 and 1995, respectively. Management placed a strong focus on product and product packaging improvements in 1996 and 1995 which it anticipates will reap benefits in future years. Selling expenses were $775,407 and $659,689 in 1996 and 1995, respectively. As a percentage of net sales, selling expenses were 13.9% and 12.0% in 1996 and 1995, respectively. Selling expenses are primarily related to sales commissions, the Company's representation at industry trade shows, and its efforts to increase the quality of customer contacts. The increase in selling expenses is primarily attributable to an enhanced commission structure for the Company's sales force and the further addition of manufacturers' representative companies. General and Administrative expenses were $959,137 and $1,040,569 in 1996 and 1995, respectively. The decrease in General and Administrative is a result of management's efforts to control costs. Product development and market repositioning expense of $491,662 in 1996 included the costs associated with the development of new proprietary product lines, repackaging and repositioning of existing lines, and a write down of assets associated with discontinued and substantially altered products. These charges resulted from management's efforts to reposition the Company from distributor to manufacturer. Interest expense related to current and long term debt was $55,493 and $67,624 in 1996 and 1995, respectively. (See "Liquidity and Capital Resources") Interest income was $12,376 and $7,668 in 1996 and 1995, respectively, and related primarily to interest earned on temporary cash investments. Other income has historically been insignificant and represented less than one fourth of one percent of net sales in each of the last two years. Liquidity and Capital Resources As of December 31, 1996, current assets were $2,432,785 compared to current liabilities of $768,174 for a current ratio of 3.2:1 from 4.3:1 at December 31, 1995. The Company had negative cash flows from operations of $383,803 primarily due to the investment in other assets subsequently written off as product development and market repositioning expense. Total current assets decreased by $63,436 while total assets increased by $138,132. Accounts receivable decreased by $36,944 due in part to the increase in the allowance for doubtful accounts. Inventories, primarily finished goods, decreased by $106,452 to $1,204,778 at December 31, 1996, from $1,311,230 at December 31, 1995 due primarily to the reduction in the number of products being distributed by the Company and improved inventory turn management. Cash and cash equivalents were down by $136,948 and prepaid assets were up $195,908 due to the timing of cash outlays for short term amortizable assets. Current liabilities were up $187,987 due primarily to borrowings against the Company's revolving line of credit. As of December 31, 1995, the Company's only long-term debt was a convertible promissory note of $600,000 owed to a related party. This note bears interest at 9% per annum, payable monthly, and is convertible into 1,036,800 shares of the Company's Common Stock. During the year ended December 31, 1996, the Company received approximately $268,000 from the collection of stock subscription receivables. In addition, the Company had a stock subscription receivable of $84,000 at year end. The Company has established a revolving line of credit with a financial institution that is secured by accounts receivable and inventory. The borrowing limit as of December 31, 1996 was $300,000, on which the Company had borrowed $175,000. As of March 14, 1997, the Company's financial institution increased the Company's borrowing limit to $700,000. During 1996, the Company recorded normal depreciation of its fixed assets of approximately $111,000 and write downs of approximately $83,000. In addition, the Company invested approximately $196,000 and 88,000 in the acquisition of new assets in 1996 and 1995, respectively. Accordingly, net property, plant and equipment increased by approximately $85,000. Shareholders' equity at December 31, 1996 decreased by approximately $50,000 to $2,504,142. Shareholder equity decreased due to the loss which was offset by the collection of stock subscription receivables. Other Matters The Company's product line historically has not been significantly affected by inflation and inflation has not had a significant effect on gross earnings. The Company's industry is seasonal in nature, reflecting peak sales in the second quarter and slower sales in the fourth quarter. ITEM 7. FINANCIAL STATEMENTS: Financial statements and schedules are submitted in Items 13(1) and (2) on this Form 10-KSB. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: NONE ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT: MANAGEMENT/BOARD OF DIRECTORS Name Age Position Ronald Kaplan 31 Director, President, Chairman of the Board of Directors, Chief Executive Officer Judith Kaplan 58 Director, Chief Financial Officer Warren Kaplan 59 Director Richard Gordon 67 Director Delton G. de Armas 26 Secretary Robert Zumbahlen 40 Treasurer Ronald Kaplan, Director since 1991, was appointed Chairman of the Board on January 1, 1996. He was President ('93-present), Chief Executive Officer ('96- present), Chief Operating Officer ('93-present), and Executive Vice President ('91-'93) of the Company. Judith Kaplan, Director since 1981, served as Chairperson of the Board of Directors of the Company since its formation in 1981 until December 31, 1995. Ms. Kaplan was President ('81-'87), Secretary ('81-present), Chief Executive Officer ('81-'95), Chief Financial Officer ('81-present) and Treasurer ('81-'91) of the Company. She is the wife of Warren Kaplan and mother of Ronald Kaplan. Warren Kaplan, Director since 1987, was President of the Company from 1987 until 1994. Mr. Kaplan now operates Kaplan Asset Management and serves as a consultant to the Company. Richard Gordon, Director since April 1996, is a former Apollo and Gemini Astronaut and has served both as director and officer with other publicly traded companies, including Executive Vice President of the National Football League's New Orleans Saints, Board Director of Scott Science and Technology, Inc., President/CEO of Astro Sciences Corporation, and President of Space Age America, Inc. Delton G. de Armas, Secretary, is a graduate of the University of Central Florida in Orlando, Florida with Bachelor of Science degrees in Accounting (1992) and Finance (1993). Mr. de Armas joined Action Products in 1995 from the Certified Public Accounting firm of Lovelace, Roby & Company, P.A., the Company's auditors. He currently serves as the Company's Controller and Accounting Manager. Robert Zumbahlen has been Treasurer since 1991. He is a graduate of Bentley College in Waltham, Massachusetts (1979) with a Bachelor of Science in accounting. Mr. Zumbahlen joined Action Products in 1984 and is currently the Company's Purchasing Manager. PART III ITEM 10. EXECUTIVE COMPENSATION: The following table sets forth the aggregate compensation paid to Ronald Kaplan (the "Named Executive Officer") by the Company. None of the other executive officers of the Company were paid a total annual salary and bonuses which was $100,000 or more.
Summary Compensation Table Long Term Compensation Other Restricted Other Options All Name and Annual Compen- Stock /LTIP Compen- Principal Salary Bonus sation Award(s) SARs Payouts sation Position Year ($) ($) ($)(1) ($) (#) ($) ($) Ronald 1996 $73,370 $6,000 -0- -0- -0- Kaplan 1995 $54,218 $6,000 -0- -0- -0- CEO 1994 $47,335 $6,000 -0- -0- -0- _________________________ (1)Includes value of use of automobile, vacation pay, sick pay.
Ron Kaplan was promoted to Chief Executive Officer and Chairman of the Board of Directors as of January 1, 1996 and continues to serve as President of the Company. Mr. Kaplan's annual salary is $75,000 plus the use of an automobile. The following table sets forth the aggregate of options exercised in the year ended December 31, 1996 and the value of options held at December 31, 1996.
Option Exercises/Option Values Value of Shares Unexercised Unexercised Acquired on Value Options at Options at Name Exercise Realized Year End Year End(1) Ronald Kaplan - - 343,000 $228,420 (1)The market price of the stock at December 31, 1996 was $2.44 per share. The Value of Unexercised options is shown net of the exercise price of $1.50. Based upon the market price at year end, there were 100,000 options with an exercise price of $3.50 that were deemed to have no value.
Paragraph 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than ten percent (10%) of the Company's outstanding common stock to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of common stock. Such persons are required by the SEC Regulation to furnish the Company with copies of all such reports they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, all Section 16(a) filing requirements applicable to officers, directors and greater than ten percent (10%) beneficial owners have been complied with. Employee Stock Ownership Plan On April 23, 1984, the Company adopted an Employee Stock Ownership Plan ("ESOP"). The ESOP qualifies for special tax benefits under the Internal Revenue Code. Under the ESOP, the Company, at the discretion of its Board of Directors, may make an annual contribution to a trust which purchases the Company's stock from the Company for the benefit of the Company's employees who have completed at least 1,000 hours of work during the fiscal year. Employer contributions under the ESOP are allocated to each employee's account on a pro- rata basis according to the total compensation paid to, and the number of years of service by, all eligible employees. An employee becomes 100% vested in the ESOP following 5 years of plan eligibility. As of December 31, 1996, there were 28,215 shares of Common Stock held by the Company's ESOP trust. 401(k) Plan Effective October 3, 1986, the Company adopted a Voluntary 401(k) Plan. All employees are eligible for the plan. Employees who have worked for the Company 18 months are eligible for a 34% match of their subsequent contributions. Benefits are determined annually. The lowest 66% of paid employees may contribute the lesser of 15% of their salary or approximately $9,000. The top 1/3 of employees cannot contribute a percentage greater than 15% of their compensation or 150% of average contributions of the lowest 66% of paid employees to a maximum of approximately $9,000 or applicable maximum allowed by the Internal Revenue Code. Employer contributions vest within three months and all contributions are held in individual employee accounts with an outside company. Stock Option Plan On May 28, 1996 the Board of Directors adopted a stock option plan called the "1996 Stock Option Plan" (the "Plan"). The Board of Directors have determined that the Plan will work to increase the officers', key employees' and consultants' interest in the Company and to align more closely their interests with the interests of the Company's shareholders. The Board of Directors believes that the Plan is in the Company's best interests. Under the Plan, the Company has reserved an aggregate of 900,000 shares of Common Stock for issuance pursuant to options granted under the Plan ("Plan Options"). Plan Options may either be options qualifying as incentive stock options ("Incentive Options") or options that do not qualify ("Non-Qualified Options"). Any Incentive Option granted under the Plan must provide for an exercise price of not less than 100% of the fair market value of the underlying shares on the date of such grant. The exercise price of Non-Qualified Options shall be determined by the Board of Directors or the Committee but shall in no event be less than 5% of the fair market value of the underlying shares on the date of the grant. As of December 31, 1996, there were 509,000 options existing under the plan. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT: The following table sets forth information as of March 4, 1997, with respect to the beneficial ownership of Common Stock by all shareholders known by the Company to be the beneficial owners of more than 5% of its outstanding Common Stock, all directors, and all directors and officers of the Company as a group. Except as noted below, each person has sole voting and investment power with respect to the shares shown. On the above date the Company had 1,549,926 shares of Common Stock outstanding.
Table of Beneficial Ownership Amount and Nature of Name and Title Beneficial Percent Address of Class Ownership(1) of Class Ronald S. Kaplan 344 Cypress Road Ocala, FL 34472 Common 364,157 (3) 19.24% Judith Kaplan 344 Cypress Road Ocala, FL 34472 Common 843,302 (2) 44.02% Warren Kaplan 344 Cypress Road Ocala, FL 34472 Common 843,302 (2) 44.02% Richard (Dick) Gordon, Jr. 344 Cypress Road Ocala, FL 34472 Common 20,000 (4) 1.27% All Directors and Officers as a Group (6 persons) Common 1,286,912 (2,3,4) 56.97% ___________________ (1) Nature of ownership is record holder unless otherwise shown. (2) Includes spouse's shares (Judith Kaplan - 318,212; Warren Kaplan - 313,875) plus 28,215 shares held as Trustee of the Company's Employee Stock Ownership Plan Trust. Also includes immediately exercisable options for Warren and Judith Kaplan each to purchase 83,000 shares at $1.50 per share and 100,000 shares at $3.50 per share. Does not include 104,000 options issued to Elissa Kaplan, daughter of Warren and Judith Kaplan, or any shares or options held by Ronald S. Kaplan. Does not include approximately 1,036,800 shares of Common Stock which may be issued upon conversion of certain convertible promissory notes held by Ronald S. Kaplan and Elissa Kaplan. (3) Includes immediately exercisable options to purchase 243,000 shares at $1.50 per share and 100,000 shares at $3.50 per share. Does not include approximately 1,036,800 shares of Common Stock which may be issued upon conversion of certain convertible promissory notes held by Ronald S. Kaplan and Elissa Kaplan. (4) Includes immediately exercisable options to purchase 20,000 shares at $3.50 per share. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS As of December 31, 1996, the Company owed $600,000 to Ronald S. Kaplan and Elissa Kaplan in the amounts of $480,000 and $120,000, respectively, on five year convertible promissory notes. This note bears interest at 9% per annum, payable monthly, and is convertible into approximately 1,036,800 shares of the Company's Common Stock. PART IV ITEM 13. EXHIBITS, LIST: (a) 1. Financial Statements (i) Report of Independent Certified Public Accountants (ii) Balance Sheet - December 31, 1996 (iii) Statements of Operations - Years ended December 31, 1996 and 1995 (iv) Statements of Changes in Stockholders' Equity - Years ended December 31, 1996 and 1995 (v) Statements of Cash Flows - Years ended December 31, 1996 and 1995 (vi) Notes to Financial Statements - Years ended December 31, 1996 and 1995 2. Financial Statement Schedules NONE 3. Exhibits (i) Plan of acquisition, reorganization, arrangement, liquidation or succession NONE (ii) Articles of Incorporation and By-Laws filed as an Exhibit to Form 10-K filed April 12, 1988 (iii) Voting Trust Agreement NONE (iv) Material Contracts (a) Employee Stock Ownership Plan filed as an Exhibit to the Company's Registration Statement on Form S-18, dated April 23, 1984, at pages 154-208 (b) Incentive Stock Option Plan filed as an Exhibit to the Company's Registration Statement on Form S-18 dated September 25, 1984, at pages 210-220 (c) Employment Agreement for Judith Kaplan dated January 1, 1992 as filed as an Exhibit to Form 10-K for the year ended December 31, 1993. (d) Employment Agreement for Warren Kaplan dated January 1, 1992 as filed as an Exhibit to Form 10-K for the year ended December 31, 1993. (e) 401(k) Plan dated October 3, 1986, filed as an Exhibit to Form 10-K filed August 15, 1987 (f) Convertible Promissory Notes dated August 4, 1994 to Ronald S. Kaplan and Elissa Kaplan. (v) Statement re: Computation of Per Share Footnote 1, Page 7 Earnings Financial Statement (vi) Statements re: computation of ratios NONE (vii) Annual Report to security holders, Form 10-Q or quarterly report to security holders NONE (viii) Letter re: Change in Accounting Principles NONE (ix) Previously unfiled Documents NONE (x) Subsidiaries of Registrant NONE (xi) Published Report re: Matters Submitted to Vote of Security Holders NONE (xii) Consents of Experts and Counsel Consent of independent certified public accountants (xiii) Power of Attorney NONE (xiv) Additional Exhibits (a) Amendment to Employee Stock Ownership Plan dated February 8, 1988, filed as an Exhibit to Form 10-K filed March 31, 1989 (b) Amendment to Employee Stock Ownership Plan dated March 10, 1989, filed as an Exhibit to Form 10-K filed March 31, 1989 (xv) Information from reports furnished to state insurance regulatory authorities NONE (b) Reports on Form 8-K NONE SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Action Products International, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACTION PRODUCTS INTERNATIONAL, INC. a Florida corporation Date: March 31, 1997 By: /s/ Ronald Kaplan Ronald Kaplan, Chairman of the Board, Chief Executive Officer, Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Ronald Kaplan Chairman of the Board/ March 31, 1997 Ronald Kaplan President/Chief Executive Officer/ Director /s/ Judith Kaplan Chief Financial Officer/ March 31, 1997 Judith Kaplan Director /s/ Delton de Armas Controller/Secretary March 31, 1997 Delton de Armas
EX-99 2 AUDITED FINANCIAL STATEMENTS ACTION PRODUCTS INTERNATIONAL, INC. FINANCIAL STATEMENTS Years Ended December 31, 1996 and 1995 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors Action Products International, Inc. Ocala, Florida We have audited the accompanying balance sheet of Action Products International, Inc. as of December 31, 1996, and the related statements of operations, changes in shareholders' equity, and cash flows for each of the two years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Action Products International, Inc. as of December 31, 1996, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ Lovelace, Roby & Company, P. A. LOVELACE, ROBY & COMPANY, P. A. Certified Public Accountants Orlando, Florida January 23, 1997, except for Note 7 as to which the date is March 10, 1997
ACTION PRODUCTS INTERNATIONAL, INC. BALANCE SHEET December 31, 1996 ASSETS CURRENT ASSETS Cash and cash equivalents $ 463,137 Accounts receivable, net of an allowance for doubtful accounts of $25,500 517,982 Inventories, net 1,204,778 Prepaid expenses and other assets 225,888 Income taxes refundable 21,000 TOTAL CURRENT ASSETS 2,432,785 PROPERTY, PLANT AND EQUIPMENT Land 67,382 Building and building improvements 986,795 Equipment 737,871 Furniture and fixtures 145,166 1,937,214 Less accumulated depreciation (872,692) NET PROPERTY, PLANT AND EQUIPMENT 1,064,522 OTHER ASSETS 375,009 TOTAL ASSETS $3,872,316
The accompanying notes are an integral part of the financial statements.
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 383,891 Accrued expenses 161,264 Accrued payroll and related 43,519 Accrued interest 4,500 Borrowings under line of credit 175,000 TOTAL CURRENT LIABILITIES 768,174 LONG-TERM LIABILITIES Notes payable to shareholders 600,000 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Common stock - $.001 par value; 7,500,000 shares authorized; 1,549,926 shares issued and outstanding 1,550 Additional paid-in capital 2,904,192 Accumulated deficit (317,600) Stock subscription receivable (84,000) TOTAL SHAREHOLDERS' EQUITY 2,504,142 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,872,316
ACTION PRODUCTS INTERNATIONAL, INC. STATEMENTS OF OPERATIONS Years Ended December 31, 1996 1995 NET SALES $5,574,746 $5,487,015 COST OF SALES 3,651,392 3,575,517 GROSS PROFIT 1,923,354 1,911,498 OPERATING EXPENSES Selling 775,407 659,689 General and administrative 959,137 1,040,569 Product development and market repositioning expense 491,662 - 2,226,206 1,700,258 INCOME (LOSS) FROM OPERATIONS (302,852) 211,240 OTHER INCOME (EXPENSE) Interest expense (55,493) (67,624) Interest income 12,376 7,668 Other income 7,114 12,594 (36,003) (47,362) INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (338,855) 163,878 PROVISION (BENEFIT) FOR INCOME TAXES Current (21,000) 23,000 Deferred - (9,000) (21,000) 14,000 NET INCOME (LOSS) $ (317,855) $ 149,878 INCOME (LOSS) PER SHARE Primary $ (0.21) $ 0.12 Fully diluted $ (0.21) $ 0.11 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Primary 1,524,926 1,421,000 Fully diluted 1,524,926 1,466,600
The accompanying notes are an integral part of the financial statements.
ACTION PRODUCTS INTERNATIONAL, INC. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY COMMON STOCK ADDITIONAL STOCK TOTAL $.001 PAR VALUE PAID-IN ACCUM. SUBS SHRHLDRS' SHARES AMOUNT CAPITAL DEFICIT RECEIVABLE EQUITY BALANCE-12/31/94 1,042,820 $1,043 $1,947,577 $204,527 $ - $2,153,147 ISSUANCE OF 5,000 5 4,683 - - 4,688 COMMON SHARES FOR EMPLOYEE STOCK OWNERSHIP TRUST ISSUANCE OF 341,000 341 522,943 - (277,000) 246,284 COMMON SHARES ON EXERCISE OF OPTIONS ISSUANCE OF 8% 111,106 111 354,039 (354,150) - - STOCK DIVIDEND NET INCOME - - - 149,878 - 149,878 BALANCE - 1,499,926 $1,500 $2,829,242 $255 $(277,000) $2,553,997 DECEMBER 31, 1995 COLLECTION OF - - - - 268,000 268,000 STOCK SUBCRIPTIONS ISSUANCE OF 50,000 50 74,950 - (75,000) - COMMON SHARES ON EXERCISE OF OPTIONS NET LOSS - - - (317,855) - (317,855) BALANCE- 1,549,926 $1,550 $2,904,192 $(317,600) $(84,000) $2,504,142 DECEMBER 31, 1996
The accompanying notes are an integral part of the financial statements.
ACTION PRODUCTS INTERNATIONAL, INC. STATEMENTS OF CASH FLOWS Years Ended December 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (317,855) $ 149,878 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation 110,415 93,240 Amortization 67,312 54,836 Benefit for deferred income taxes - (9,000) Provision for contribution to Employee Stock Ownership Plan - 4,688 Provision for bad debts 22,000 - Provision for Product development and market repositioning expense 491,662 - Loss on disposal of fixed assets 593 - Decrease (increase) in accounts receivable, net 14,944 (108,855) Decrease in inventories, net 106,452 130,021 (Increase) decrease in prepaid expenses and other current assets (360,255) 66,715 (Increase) decrease in income taxes refundable (21,000) 10,000 Increase in other assets (511,058) (140,726) (Decrease) increase in accounts payable (88,354) 191,290 Increase in accrued expenses 112,416 36,873 (Decrease) increase in income taxes payable (11,075) 11,075 NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (383,803) 490,035 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (196,145) (87,964) CASH FLOWS FROM FINANCING ACTIVITIES Collection of stock subscriptions receivable 268,000 - Net proceeds from issuance of common stock and options - 246,284 Proceeds from borrowings under line of credit 175,000 - Repayments of related-party borrowings - (335,320) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 443,000 (89,036) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (136,948) 313,035 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 600,085 287,050 CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 463,137 $ 600,085
The accompanying notes are an integral part of the financial statements. ACTION PRODUCTS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 1996 and 1995 NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Action Products International, Inc. (the Company) is engaged in the manufacture and sale of toys, books, freeze dried snack foods, and other educational and entertaining products. The Company also sells and imprints promotional products. The Company's products are wholesaled worldwide to educational and leisure industry retailers. Cash and Cash Equivalents For financial presentation purposes, the Company considers short-term, highly liquid investments with original maturities of three months or less to be cash equivalents. Inventories Inventories, which consist primarily of finished goods purchased for resale, are stated at lower of cost (determined by the first-in, first- out method) or market. At December 31, 1996, the Company had approximately $164,000 of work in process inventory. The inventory valuation allowance at December 31, 1996 was approximately $77,000. Property, Plant and Equipment Property, plant and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the various classes of assets, as follows: Building 40 Years Building improvements 6 - 12 Years Furniture and fixtures 5 Years Equipment 5 - 7 Years Revenue Recognition The Company recognizes revenue from the sale of its products to retail establishments as transactions are completed. Transactions are generally considered complete when goods are shipped. Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in its financial statements or tax returns. Deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax bases of liabilities and assets using enacted tax rates in effect for the year in which the differences are expected to reverse. (See Note 4) NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Net Income (Loss) Per Share Net income (loss) per common share and common share equivalents are computed based upon the weighted average number of shares (including ESOP shares) and common share equivalents outstanding during each year. In 1996, common share equivalents were not considered in the earnings per share calculation because the effect would have been anti-dilutive. Primary and fully diluted net income per share in 1995 include common shares assumed to have been issued as a result of the exercise of stock options. Proceeds from the pro-forma exercise of stock options for greater than 300,000 shares, approximately 20 percent of total common shares outstanding at December 31, 1995, were assumed to be used to retire long-term debt bearing interest at nine percent, increasing pro- forma net income accordingly. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Credit Risk and Fair Value of Financial Instruments Financial instruments which potentially subject the Company to concentrations of credit risk at December 31, 1996 include trade receivables and approximately $185,000 of cash deposited in a money market fund. Concentrations of credit risk with respect to trade receivables are limited, in the opinion of management, due to the Company's large number of customers and their geographic dispersion. The carrying values of cash and cash equivalents and the line of credit approximate their fair values. It is not practicable to estimate the fair value of the note payable to related party due to the related party nature and the equity conversion features. Product Development and Market Repositioning Costs During 1996, to reposition itself in its market and enter new markets, the Company consolidated its array of products into distinct, proprietary lines. As a result, expense was recognized for previously deferred costs related to abandoned and substantially altered products. Additionally, costs associated with the development of new products and changes to existing products were charged to operations. NOTE 2 -RELATED-PARTY BORROWINGS At December 31, 1996, the Company had long-term debt payable to shareholders, resulting primarily from working capital loans and the purchase of the Company's facility in prior years, as follows: Unsecured promissory notes payable to related parties, bearing interest at 9% per annum, monthly payments of interest only until September 1, 2002, with 24 monthly payments of principal and interest of $27,411 due thereafter, convertible at any time in whole or in part at the lender's option after May 9, 1995, into common shares of the Company at $.579 per share $600,000 The Company has reserved, from its authorized but unused shares of common stock, 1,036,800 shares for use in the event the long-term debt is converted. Future principal maturities of long-term debt to related parties are approximately as follows: $93,000 in 2002; $295,000 in 2003; and $212,000 in 2004. Cash paid for interest during the years ended December 31, 1996 and 1995 was approximately $55,000 in each year. NOTE 3 -STOCK DIVIDEND At its 1995 annual shareholders' meeting, the Company's Board of Directors declared an 8 percent stock dividend payable to shareholders of record on July 28, 1995. As a result, approximately 111,000 common shares were issued and the Company charged retained earnings approximately $354,000 in 1995 to reflect the capitalization of the dividend shares. NOTE 4 -INCOME TAXES The Company had no foreign operations subject to foreign income taxes. Significant components of the Company's deferred tax liabilities and assets at December 31, 1996 are approximately as follows: Deferred Tax Liabilities Depreciation $ (10,000) Deferred Tax Assets Bad Debt Allowance $ 5,000 Inventories 8,000 Accrued interest and compensation 2,000 Net operating loss carryforwards 62,000 Gross deferred tax assets 77,000 Valuation allowance (67,000) Net deferred tax assets 10,000 Net deferred taxes $ - During 1996, deferred tax asset valuation allowance increased $65,000. The difference between the Company's effective income tax rate and the federal statutory rate is reconciled below: 1996 1995 Federal provision (benefit) expected at statutory rates $ (111,000) $ 55,500 Surtax exemption 4,000 (7,800) Alternative Minimum Tax and other carryback items (21,000) (2,000) Tax effects of net operating loss 107,000 (31,700) Provision (benefit) for income taxes $ (21,000) $ 14,000 At December 31, 1996, net operating losses in the amount of $275,000 are available to carry forward to offset taxable income through the year 2011. Income taxes paid in cash were approximately $12,000 and $10,000 during the years ended December 31, 1996 and 1995, respectively. The Company has received overpayments from the Internal Revenue Service of approximately $112,000. This amount is included in the liabilities of the accompanying balance sheet. NOTE 5 -EMPLOYEE STOCK OWNERSHIP AND OPTION PLANS The Company has an Employee Stock Ownership Plan (the ESOP), which covers substantially all employees. The ESOP provides, among other things, that contributions to the ESOP shall be determined by the Board of Directors prior to the end of the Company's year and that the contributions may be paid in cash, Company stock or other property at any time within the limits prescribed by the Internal Revenue Code. At December 31, 1996, the ESOP held approximately 33,000 shares of the Company's common stock. During 1995, the Company contributed 5,000 of its common shares to the ESOP. As a result, $4,688 was charged to operations in 1995. No shares were contributed in 1996. On May 28, 1996 the Company's Board of Directors adopted the "1996 Stock Option Plan" (the SOP). Under the SOP, the Company has reserved an aggregate of 900,000 shares of Common Stock for issuance pursuant to options. SOP options are issuable at the discretion of the Board of Directors at exercise prices of not less than the fair market value of the underlying shares on the grant date. During 1996, a total of 509,000 options were issued under the SOP at a weighted average exercise price of approximately $3.50 per share. Stock options outstanding at December 31, 1996 expire as follows: 463,000 in 1999, 509,000 in 2001. In the event of a change in the Company's control, the options may not be callable by the Company. The following table summarizes the stock option activity for the years ended December 31, 1995 and 1996: Shares Under Option Outstanding at December 31, 1994 711,000 Exercised during 1995 (341,000) Called during 1995 (5,000) Granted during 1995 110,000 Effect of Stock Dividend 38,000 Outstanding at December 31, 1995 513,000 Exercised during 1996 (50,000) Granted during 1996 509,000 Outstanding at December 31, 1996 972,000 NOTE 5 -EMPLOYEE STOCK OWNERSHIP AND OPTION PLANS (Continued) All stock options not granted under the SOP are exercisable at $1.50 per share. During 1995, 341,000 stock options were exercised, resulting in net proceeds to the Company of approximately $523,000. During 1996, 50,000 stock options were exercised resulting in net proceeds of $75,000. Stock subscriptions receivable from the exercise of options were $84,000 and $277,000 at December 31, 1996 and 1995, respectively. During 1995, the Financial Accounting Standards Board issued FAS 123, "Accounting for Stock-Based Compensation." This pronouncement requires that the Company calculate the value of stock options at the date of grant using an option pricing model. The Company has elected the "pro- forma, disclosure only" option permitted under FAS 123, instead of recording a charge to operations, as shown below: 1996 1995 Net income (loss) As reported (317,855) 149,878 Pro forma (635,487) 114,880 Income (loss) per share Primary As reported (0.21) 0.12 Pro forma (0.42) 0.08 Fully diluted As reported (0.21) 0.11 Pro forma (0.42) 0.07 Because the FAS 123 method of accounting has not been applied to options granted prior to January 1, 1995, the resulting pro forma compensation cost may not be representative of that to be expected in future years. The Company's weighted-average assumptions used in the pricing model and resulting fair values were as follows: 1996 1995 Risk-free rate 6.50% 6.50% Expected option life (in years) 5 5 Expected stock price volatility 45% 45% Grant date value $0.62 $0.32 NOTE 6 -EMPLOYEE BENEFIT PLANS The Company has a 401(k) employee benefit plan, which covers substantially all employees. Under the terms of the 401(k) plan, the Company is to contribute an amount, as determined annually by the Company's Board of Directors, of the participants' voluntary contributions to the plan. The Company has charged approximately $15,500 and $13,100 in 1996 and 1995, respectively, to operations for its contributions to the plan. NOTE 7 -CREDIT LINE During 1996, the Company obtained a line of credit with a financial institution under a revolving loan agreement, which matures May 9, 1997. The borrowing limit as of December 31, 1996 was $300,000. Borrowings are collateralized by all accounts receivable and inventories and interest is payable quarterly at one half of one percent over the financial institution's prime rate (8.25 at December 31, 1996). The agreement provides that, among other things, the Company maintain a minimum working capital and net worth, a maximum debt to net worth ratio, and a 30 day resting requirement, all as defined in the agreement. The agreement also prohibits additional indebtedness in excess of $200,000 in aggregate. At December 31, 1996 the Company had $175,000 of borrowings under the line of credit. As of March 10, 1997, the Company had received a commitment from its financial institution to increase the borrowing limit to $700,000 with no material changes in the covenant requirements. NOTE 8 -INTERNATIONAL SALES Export sales amounted to approximately $325,000 and $455,000 in 1996 and 1995, respectively. EX-23 3 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the Registration Statement of Action Products International, Inc. on Form S-8 and in the related prospectus of our report dated January 23, 1997, except for Note 7 as to which the date is March 10, 1997, with respect to the financial statements of Action Products International, Inc. included in this Annual Report on Form 10-KSB for the years ended December 31, 1996. /s/ Lovelace Roby & Company, P. A. LOVELACE, ROBY & COMPANY, P. A. Certified Public Accountants Orlando, Florida March 31, 1997 EX-27 4 ARTICLE 5 FIN. DATA SCHEDULE FOR ANNUAL 10-KSB
5 1,000 YEAR Dec-31-1996 Jan-01-1996 Dec-31-1996 463 0 518 0 1205 2433 1937 (873) 3872 768 600 2 0 0 2503 3872 5575 5575 3651 3651 2226 0 55 (339) (21) (317) 0 0 0 (317) (.21) (.21)
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