S-3

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 2004

REGISTRATION STATEMENT NO. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

ACTION PRODUCTS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Florida	59-2095427
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1101 N. Keller Road, Suite E

Orlando, Florida 32810

(407) 481-8007

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Robert L. Burrows, CFO

Action Products International, Inc.

1101 N. Keller Road, Suite E

Orlando, Florida 32810

(407) 481-8007

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

James G. Smith, Esq.

Arthur Zagorsky, Esq.

Tarter Krinsky & Drogin LLP

470 Park Avenue South, 14th Floor

New York, New York 10016

(212) 481-8585

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If the only securities being registered on this form are being offered pursuant to dividend or reinvestment plans, please check the following box: ¨

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: x

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered (1)	Proposed Maximum Offering Price Per Share (2)	Proposed Maximum Aggregate Offering Price (1)	Amount of Registration Fee (2)
Common Shares underlying warrants	5,000,000	$3.50	$17,500,000
Filing Fee Due			$17,500,000	$2,218

(1) In addition to the common shares set forth in the table, the amount to be registered includes an indeterminate number of common shares issuable upon exercise of the warrants, as such number may be adjusted as a result of antidilution provisions in accordance with Rule 416.

(2) For purposes of calculating the registration fee for the common shares underlying the warrants, based on the highest exercise price of the warrants pursuant to Rule 457(g) under the Securities Act.

THIS REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated December 3, 2004

PROSPECTUS

[NUMBER] Common Shares

ACTION PRODUCTS INTERNATIONAL, INC.

On January [    ], 2005, we made a distribution to our shareholders of one warrant for each common share owned on January [    ], 2005. Each warrant you own entitles you to purchase our common shares at an exercise price of $3.00 per share until             , 2005 and $3.50 per share from             , 2005 until             , 2006. As a result of this warrant distribution, we may issue up to [    ] common shares upon exercise of the warrants.

The warrants are exercisable until 5:00 p.m., New York City time, on [    ], 2006. Our common shares are listed on the Nasdaq SmallCap Market under the symbol “APII.” On January [    ], 2005, the last reported sale price of our common shares was $[    ] per share. There is currently no public market for our warrants and we do not anticipate that a public market for our warrants will develop.

Investing in our common shares involves risks. See “ Risk Factors” beginning on page 4.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

THE DATE OF THIS PROSPECTUS IS [DATE], 2004

TABLE OF CONTENTS

	PAGE
Summary	1
Risk Factors	5
Special Note Regarding Forward-Looking Statements	9
Where You Can Find More Information About Us	10
Use of Proceeds	10
The Warrants	11
Experts	15
Legal Matters	15

SUMMARY

You should rely only on the information contained in this prospectus. To understand this offering fully, you should read this entire prospectus and the documents incorporated by reference into this prospectus, including the more detailed information in the financial statements and the accompanying notes contained in our annual report on Form 10-KSB for the year ended December 31, 2003 and our quarterly reports on Form 10-QSB for each of the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, common shares in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common shares.

This summary highlights the key information contained in this prospectus. Because it is a summary, it does not contain all of the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the section titled “Risk Factors.” Throughout this prospectus, the terms “we,” “us,” “our,” “Action Products” and “our company” refer to Action Products International, Inc., a Florida corporation, and, unless the context indicates otherwise, includes our wholly-owned subsidiary, Action Products Canada, Ltd.

Questions and answers about our company

What do we do?

Action Products International, Inc. is a brand-focused, educational toy company. We design, manufacture and market a diversified portfolio of educational, positive and non-violent brands of toy products to various retailing channels such as toy stores, specialty retailers, education outlets, museums and attractions in the United States and throughout the world. We were originally incorporated, and began our operations, in New York in 1977, and relocated and re-incorporated in Florida in 1981 as a distributor of education oriented toys and children’s books, stationery and souvenirs, supplying museum gift shops. In 1996, a new business model was developed and implemented around our toy business. From 1997 through 2003, we successfully developed or acquired and brought to market a core portfolio of proprietary branded product lines to replace sales of divested non-core lines. Our first internally developed proprietary toy brand, Space Voyagers^®, generated approximately $1.0 million in its first full year on the market. During the past seven fiscal years, we have continued to develop other new proprietary products through internal development, licensing and acquisition. In October 2002, we began shipping one of our more recent brands, Jay Jay The Jet Plane^™, based on the PBS television show of the same name. Our business model is based on the expansion of core brands, while developing new brands through internal product development, favorable licensing agreements and prudent acquisitions. Our growth strategy is based on increasing our sales turnover, penetration in existing channels and diversifying distribution channels, while creating and increasing brand equity.

We sell our educational toy product lines under the umbrella name “Action Products^™”. Our marketing and promotion communications focus on our individual brands such as Curiosity Kits^®, Space Voyagers^®, Climb@Tron^™, I Dig Dinosaurs^®, Woodkits^™, Drop Zone Extreme^®, Play & Store^™ and Jay Jay The Jet Plane^™. Products include premium wooden toys, action figures, play-sets, activity kits and various other playthings with a strategic emphasis on non-violent and educational and fun topics such as space, dinosaurs, science and nature.

The EarthLore^® I Dig Dinosaurs^® brand acquired in October 2000 continues to be a strong brand and contributed over $1.1 million to net sales in 2003. Our best brand rollout to date is the new Jay Jay The Jet Plane^™ brand that was introduced in the fourth quarter of 2002. It produced $3.5 million in net sales in 2003. Our other brands including Drop Zone Extreme^™, Space Voyagers^® and Play & Store^™ contributed the remaining $3.6 million net sales in 2003.

In addition to the development of internal brands, we actively pursue prudent acquisition opportunities and licensing arrangements.

• In October 2000, we acquired certain assets of Earth Lore Ltd., an award-winning, privately held Canada-based maker of popular educational excavation kits for children. The acquisition provided us with an appropriate product line extension and channels of distribution that complemented our existing brands.

• In December 2001, we acquired a license agreement with the developers of the PBS children’s show Jay Jay The Jet Plane^™ to develop and launch our new wooden adventure system based on the episodes of this popular children’s series. We launched this product line in the fourth quarter 2002 to popular reception from the trade and consumers.

• In April 2004, we acquired the assets of Curiosity Kits, Inc., the developer, manufacturer and marketer of award-winning craft and activity kits for kids aged 4-14 that are sold primarily to specialty toy and craft retailers and art museums

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throughout North America. Curiosity Kits is recognized within the specialty toy industry as one of the leading developers of activity-based kits for children. Its widely respected products and brands have won numerous industry awards for their ability to offer fun and creative ways for children and their families to discover, share and express their creative interests. Featuring over 140 products divided into eight categories, Curiosity Kits’ top selling products in 2003 included Pottery Wheel, Swirl Master, Official Trickster Kit, Paint a Pair of Mugs, Shrinky Dink Refills, Paint Your Own Chair, Forest Fairies, Kooky Krayon Maker, Glam Girl Vanity and Mega Volcano.

Where are we located?

Our principal executive offices are located at 1101 North Keller Road, Suite E, Orlando, Florida 32810. Our telephone number is (407) 481-8007.

You may find us on the Web at www.apii.com. We do not intend to incorporate by reference any information contained on our website into this prospectus, and you should not consider information contained on our website as part of this prospectus.

Questions and answers about our warrants

What is a warrant?

We have distributed to our shareholders, at no charge, one warrant for each common share owned as of [        ], 2005. Each warrant entitles the holder to purchase one of our common shares at the then-effective exercise price.

When you “exercise” a warrant, you choose to purchase a common share that the warrant entitles you to purchase. You may exercise all or some of your warrants, or you may choose not to exercise any of your warrants.

Why did we make a warrant distribution?

We made the warrant distribution to obtain additional working capital. Instead of selling common shares to outside parties, our board of directors has chosen to give you the opportunity to buy more common shares without diluting your interest while providing us with additional capital.

What is the exercise price?

The exercise price is $3.00 for each warrant exercised on or before [        ], 2005 and $3.50 for each warrant exercised from [        ], 2005 through [        ], 2006.

How did we arrive at the per share exercise price?

In determining the exercise price, our board of directors desired to offer shares at a price that would be attractive to our shareholder base relative to the current trading price of our common shares. Our board also chose to increase the exercise price from $3.00 to $3.50 half way through the term of the warrants as an incentive to holders to exercise early. Our board also considered the following factors, among others, in no particular order of priority:

• our desire to increase working capital at a minimal cost to us;

• the historic and current market price of our common shares;

• general conditions in the securities market;

• alternatives available to us for raising capital;

• the amount of proceeds desired;

• the liquidity of our common shares; and

• the level of risk to our investors.

How do I exercise my warrants?

You must properly complete the exercise notice on the back of your warrant certificate and deliver it to our warrant agent before 5:00 p.m., New York City time, on [        ], 2005, if you want to exercise at $3.00 per common share and [        ], 2006, if you want to exercise at $3.50 per share. Your warrant certificate must be accompanied by proper payment for each share that you wish to purchase.

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How long will I have to exercise my warrants?

You will be able to exercise your warrants only during a limited period. If you do not exercise your warrants before 5:00 p.m., New York City time, on [        ], 2006, your warrants will expire.

After I exercise my warrants, can I change my mind?

No. Once you send in your warrant certificate and payment, you cannot revoke the exercise of your warrant, even if you later learn information about us that you consider to be unfavorable. You should not exercise any of your warrants unless you are certain that you wish to purchase additional common shares at the then-effective exercise price.

Is exercising my warrants risky?

The exercise of your warrants involves substantial risks. Exercising your warrants means buying additional shares of our common shares, and you should carefully consider this purchase as you would other equity investments. Among other things, you should carefully consider the risks described under “Risk Factors”.

Do I have to exercise any of my warrants?

No.

What happens if I choose not to exercise my warrants?

You will retain your current number of common shares even if you do not exercise your warrants. However, if you do not exercise any of your warrants and other holders of warrants do, the percentage of our common shares that you own will diminish, and your voting and other rights will be diluted.

Can I sell or give away my warrants?

Yes. However, we have not listed the warrants on the Nasdaq Stock Market or any other trading market. We cannot assure that any trading market will develop for the warrants.

May the company redeem the warrants?

Yes. On 21 days’ prior written notice, we may redeem all, but not less than all, of the outstanding warrants at a redemption price of $0.001 per warrant.

Has the Board of Directors made a recommendation regarding this offering?

No.

What should I do if I want to exercise my warrants, but my warrants are held in the name of my broker, dealer or other nominee?

If you hold your warrants through a broker, dealer or other nominee (for example, through a custodian bank), then your broker, dealer or other nominee is the record holder of the warrants you own. This record holder must exercise the warrants on your behalf for shares you wish to purchase. Therefore, you will need to have your record holder act for you. If you wish to exercise your warrants, please promptly contact the record holder of your common shares.

What fees or charges apply if I exercise my warrants?

We are not charging you any fee or sales commission to issue common shares to you if you exercise any of your warrants. We may, however, pay a soliciting broker for your exercise of your warrants. If you exercise your warrants through a record holder of your shares, such as a broker, you are responsible for paying any fees that person may charge.

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What are the Federal income tax consequences of exercising my warrants?

The exercise of your warrants is intended to be nontaxable for purposes of federal income tax. However, no ruling from the Internal Revenue Service has been obtained nor an opinion of counsel will be sought. You should seek specific tax advice from your personal tax advisor.

When will I receive my new shares?

If you exercise any of your warrants, you will receive certificates representing the common shares as soon as practicable after the date of exercise.

Subject to state securities laws and regulations, we have the discretion to delay distribution of any shares you may have elected to purchase by exercise of your warrants in order to comply with state securities laws.

How much money will our company receive from the exercise of warrants?

The gross proceeds from the exercise of warrants depend on the number of shares that are purchased and when they are purchased. If all of the warrants are exercised, we will receive gross proceeds of between approximately $[        ] million and $[        ] million.

How will our company use the proceeds from the exercise of the warrants?

We will use any proceeds generated from the exercise of the warrants for additional working capital.

How many shares will be outstanding after the exercise of all of the warrants?

The number of common shares that will be outstanding after the exercise of all of the warrants distributed will be [        ].

What if I have additional questions?

If you have more questions, please contact Investor Relations at (407) 481-8007, extension 723.

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RISK FACTORS

Investing in our common shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below before you purchase our common shares. If any of these risks or uncertainties actually occurs, our business, financial condition or results of operations could be materially adversely affected. In this event, you could lose all or part of your investment.

Risks associated with our business

We incurred significant net losses in fiscal 2003 and 2002. If we continue to incur net losses, our ability to satisfy our cash requirements may be more difficult. We incurred net losses of approximately $0.5 million and $1.3 million in fiscal 2003 and 2002 and a net loss of $388,200 for the first three quarters of 2004. There can be no assurance that we will return to profitability in the future. If we fail to generate operating income and net income, we could have difficulty meeting our working capital requirements.

We have substantial cash requirements and may require additional sources of funds. Additional sources of funds may not be available or available on reasonable terms. We have substantial cash requirements in connection with our operations and debt service obligations. In addition, new product development, which is key to the success of our business, is cash intensive. If the cash we generate from our operations or from our other sources is not available when needed or is insufficient to satisfy our requirements, we may require additional sources of funds. We cannot assure you that additional sources of funds would be available or available on reasonable terms. If we do not generate sufficient amounts of capital to meet our cash requirements at the times and on the terms required by us, our business will be adversely affected.

Changing consumer preferences may negatively impact our product lines. As a result of changing consumer preferences, many toys are successfully marketed for only one or two years, if at all. We cannot assure you that any of our current successful products or product lines will continue to be popular with consumers for any significant period of time, or that new products and product lines will achieve an acceptable degree of market acceptance, or that if such acceptance is achieved, it will be maintained for any significant period of time. Our success is dependent upon our ability to enhance existing product lines and develop new products and product lines. The failure of our new products and product lines to achieve and sustain market acceptance and to produce acceptable margins could have a material adverse effect on our financial condition and results of operations.

Our customers’ inventory management systems may cause us to produce excess inventory that may become obsolete and increase our inventory carrying costs. Most of our largest retail customers utilize an inventory management system to track sales of products and rely on reorders being rapidly filled by us and other suppliers, rather than maintaining large product inventories. These types of systems put pressure on suppliers like us to promptly fill customer orders and therefore shift some of the inventory risk from the retailer to the suppliers. Production of excess inventory by us to meet anticipated retailer demand could result in our carrying obsolete inventory and increasing our inventory carrying costs. Similarly, if we fail to predict consumer demand for a product, we may not be able to deliver an adequate supply of products on a timely basis and will, as a result, lose sales opportunities.

There are risks related to our acquisition strategy. We may, from time to time, evaluate and pursue acquisition opportunities on terms management considers favorable. A successful acquisition involves an assessment of the business condition and prospects of the acquisition target, which includes factors beyond our control. This assessment is necessarily inexact and its accuracy is inherently uncertain. In connection with such an assessment, we perform a review we believe to be generally consistent with industry practices. This review, however, will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the acquisition target to assess fully its deficiencies. We cannot assure you that any such acquisition would be successful or that the operations of the acquisition target could be successfully integrated with our operations. Any unsuccessful acquisition could have a material adverse effect on our financial condition and results of operations.

We are dependent on contracts with manufacturers, most of which are short-term. We conduct substantially all of our manufacturing operations through contract manufacturers, many of which are located in the People’s Republic of China and Hong Kong. We generally do not have long-term contracts with our manufacturers. Foreign manufacturing is subject to a number of risks including, but not limited to:

• transportation delays and interruptions,

• political and economic disruptions,

• the impositions of tariffs and import and export controls, and

• changes in governmental policies.

While we have not experienced any material adverse effects due to such risks to date, we cannot assure you that such events will not occur in the future and possibly result in increases in costs and delays of, or interferences with, product deliveries resulting in losses of sales and goodwill.

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We are dependent on intellectual property rights and cannot ensure that we will be able to successfully protect such rights. We rely on a combination of trademark, copyright, patent and other proprietary rights laws to protect our rights to valuable intellectual property related to our brands. We also rely on license and other agreements to establish ownership rights and to maintain confidentiality. We cannot assure you that such intellectual property rights can be successfully asserted in the future or that they will not be invalidated, circumvented or challenged. In addition, laws of certain foreign countries in which our products are sold, or in which we operate, do not protect intellectual property rights to the same extent as the laws of the U.S. The failure to protect our proprietary information and any successful intellectual property challenges or infringement proceedings against us could have a material adverse affect on our business, financial condition or results of operations.

There are specific risks associated with international sales. We have sold products to customers in the United Kingdom, Canada, Korea, Japan, Spain, Australia and New Zealand. We expect to augment our presence in international markets. Accordingly, our business, and our ability to expand our operations internationally, is subject to various risks inherent in international business activities. We may have difficulty in safeguarding our intellectual property in countries where intellectual property laws are not well developed or are poorly enforced. General economic conditions and political conditions of various countries may be subject to severe fluctuations at any time. Such fluctuations could hinder our performance under contracts in those countries or could hinder our ability to collect for product and services delivered in those countries. However, we generally sell to international customers under terms requiring letters of credit or payment in advance. Unexpected changes in foreign regulatory requirements could also make it difficult or too costly for us to conduct business internationally.

In addition, although we have normally been successful in stipulating that our foreign customers pay in U.S. dollars, any payment provisions involving foreign currencies may result in less revenue than expected due to foreign currency rate fluctuations. Other risks associated with international operations include:

• import and export licensing requirements,

• trade restrictions,

• changes in tariff rates,

• overlapping tax structures,

• transportation delays,

• currency fluctuations,

• potentially adverse tax consequences, and

• compliance with a variety of foreign laws and regulations.

Any of the foregoing factors could have a material adverse effect on our ability to expand our international sales. Increased exposure to international markets creates new areas with which we may not be familiar and could place us in competition with new vendors. We cannot assure you that we will be successful in our efforts to compete in these international markets.

We face potential liability from product safety claims. Products that have been or may be developed or sold by us may expose us to potential liability from personal injury or property damage claims by end-users of such products. We have never been and are not presently a defendant in any product liability lawsuit; however, we cannot assure you that such a suit will not be brought against us in the future. We currently maintain product liability insurance coverage in the amount of $1.0 million per occurrence, with a $2.0 million excess umbrella policy. We cannot assure you that we will be able to maintain such coverage or obtain additional coverage on acceptable terms, or that such insurance will provide adequate coverage against all potential claims. Moreover, even if we maintain adequate insurance, any successful claim could materially and adversely affect our reputation and prospects, and divert management’s time and attention. The U.S. Consumer Products Safety Commission, or CPSC, has the authority under certain federal laws and regulations to protect consumers from hazardous goods. The CPSC may exclude from the market goods it determines are hazardous, and may require a manufacturer to repurchase such goods under certain circumstances. Some state, local and foreign governments have similar laws and regulations. In the event that such laws or regulations change or we are found in the future to have violated any such law or regulation, the sale of the relevant product could be prohibited and we could be required to repurchase such products.

We may become subject to burdensome governmental regulation. In the U.S., we are subject to the provisions of, among other laws, the Federal Consumer Product Safety Act and the Federal Hazardous Substances Act. These acts empower the CPSC to protect the public against unreasonable risks of injury associated with consumer products, including toys and other articles. The CPSC has the authority to exclude from the market articles which are found to be hazardous and can require a manufacturer to repair or repurchase such toys under certain circumstances. Any such determination by the CPSC is subject to court review. Violations of these acts may also result in civil and criminal penalties. Similar laws exist in some states and cities in the U.S. and in many jurisdictions throughout the world. We maintain a quality control program, including the retention of independent testing laboratories, to ensure compliance with applicable laws. We believe we are currently in substantial compliance with these laws. In general, we have not experienced difficulty complying with such regulations, and compliance has not had an adverse effect on our business.

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There are risks related to our customers’ payment terms. The majority of our customers receive trade terms to which payments for products are delayed for up to 30 days and some receive in excess of 90 days, pursuant to various sales promotion programs. The insolvency or business failure of one or more of our customers with large accounts receivable could have a material adverse effect on our future sales.

We depend on key personnel. Our success largely depends on a number of key employees. The loss of services of one or more of these employees could have a material adverse effect on our business. We are especially dependent upon the efforts and abilities of certain of our senior management, particularly Ronald S. Kaplan, our Chief Executive Officer. Currently, we do not maintain key man life insurance on Mr. Kaplan or any other executive officer. We believe that our future success will also depend, in part, upon our ability to attract, retain and motivate qualified personnel. We cannot assure you, however, that we will be successful in attracting and retaining such personnel.

Seasonality may affect our results of operations. Our sales have historically been seasonal in nature, reflecting peak sales in the second and third quarters and slower sales in the first and fourth quarters.

Risks associated with our warrants

The warrants are currently “out-of-the-money”. The warrant exercise price is currently higher than the trading price of our common shares. Since June 2004, our common shares have been trading almost exclusively below $3.00. Our Board of Directors determined the warrant exercise price and approved the distribution of warrants to give our shareholders a fixed opportunity to buy additional shares without brokerage fees. We can give no assurance that the trading price of our common shares will meet or exceed the warrant exercise price and, consequently, whether it will be profitable for the holders of warrants to exercise the warrants. If you exercise your warrants while the trading price of our common share is less than the warrant exercise price, then you will have committed to buy our common shares at a price above the prevailing market price. Once you have exercised your warrants, you may not revoke your exercise. Moreover, you may be unable to sell your common shares at a price equal to or greater than the warrant exercise price you pay.

Your interest in us may be diluted to the extent other warrant holders exercise warrants and you do not. If you do not exercise your warrants in full, your percentage ownership and voting rights will decrease to the extent that warrants are exercised by others. After submitting your warrant certificate and exercise price, you may not revoke your exercise and could be committed to buy shares above the prevailing market price.

The exercise price determined for this offering is not an indication of our value. Our board of directors set the exercise price. The exercise price does not necessarily bear any relationship to the book value of our assets, past operations, cash flows, losses, financial condition or any other established criteria for value. You should not consider the exercise price as an indication of our value.

The exercise price increases during the term of the warrants. You may exercise your warrants at $3.00 per share until [        ], 2005, or earlier if we elect to redeem the warrants prior to [        ], 2005. If you do not exercise all of your warrants on or prior to [        ], 2005, you may exercise your remaining unexercised warrants at $3.50 per share until the warrants expire on [        ], 2006 or earlier if we elect to redeem the warrants prior to [        ], 2006. This means that if you wait to exercise after [        ], 2005, your cost to exercise increases from $3.00 to $3.50 per share.

There has been no prior market for our warrants and a public market for our warrants may not develop or be sustained. We have not applied for listing of our warrants on the Nasdaq Stock Market or any other market or exchange. We can not assure you that a public market for our warrants will ever develop. If a public market for our warrants does not develop, or if a public market does develop but is not sustained, the liquidity of your warrants may be significantly harmed.

Risks associated with investing in us

We expect our stock price to be volatile. The market price of our common shares has been, and will likely continue to be, subject to wide fluctuations in response to several factors, such as:

• actual or anticipated variations in our results of operations,

• new services or product introductions by us or our competitors,

• changes in financial estimates by securities analysts, and

• conditions and trends in the consumer toy industry.

The stock markets generally, and the Nasdaq SmallCap Market in particular, have experienced extreme price and volume fluctuations that have particularly affected the market prices of equity securities of many companies and that often have been unrelated or disproportionate to the operating performance of those companies. These market fluctuations, as well as general

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economic, political and market conditions such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common shares.

Our officers and directors control a large percentage of outstanding common shares and may be able to exercise significant control. Our current officers and directors beneficially own approximately 68% of our common shares on a fully diluted basis. As a result, current management will be able to exercise significant influence over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions.

We have implemented anti-takeover provisions. Certain provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects and may delay, defer or prevent a take-over attempt of us. We are subject to the “affiliated transactions” and “control share acquisition” provisions of the Florida Business Corporation Act. These provisions require, subject to certain exceptions, that an “affiliated transaction” be approved by the holders of two-thirds of the voting shares other than those beneficially owned by an “interested shareholder” or by a majority of disinterested directors. Voting rights must also be conferred on “control shares” acquired in specific control share acquisitions. Lastly, our articles of incorporation authorize the issuance of up to 10,000,000 preferred shares with such rights and preferences as may be determined from time to time by our board, of which all shares remain without designation and available for issuance. We include such preferred shares in our capitalization in order to enhance our financial flexibility. However, the issuance of large blocks of preferred shares may have a dilutive effect with respect to existing holders of our common shares.

We do not anticipate paying cash dividends until we are profitable. We expect that we will retain a major portion of available earnings generated by our operations for the development and growth of our business. However, we do anticipate paying cash dividends on our common shares contingent on future profitable operating results.

The issuance of additional common shares or the exercise of outstanding options and warrants will dilute the interests of our shareholders. As of January [        ], 2005, we had [        ] common shares outstanding. Our board has the ability, without further shareholder approval, to issue up to [        ] additional common shares. Such issuance may result in a reduction of the book value or market price of our outstanding common shares. Issuance of additional common shares will reduce the proportionate ownership and voting power of the then existing shareholders. Further, if all our outstanding options and warrants are exercised, including the [        ] warrants distributed to our shareholders on January [        ], 2005, we will have approximately [        ] shares outstanding. Thus, the percentage of shares owned by all existing shareholders will be reduced proportionately as options and warrants are exercised. The table below summarizes our outstanding common shares, options and warrants as of January [        ], 2005:

Common Shares, Options and Warrants		Number of Common Shares	Number of Common Shares underlying Options and Warrants	Total
Common shares	issued	—	—	—
	less treasury shares	(—)	—	(—)
Options	currently exercisable	—	—	—
	currently unexercisable	—	—	—
Warrants (all warrants are currently exercisable)		—	—	—
TOTAL		—	—	—

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the information incorporated by reference herein contain “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. These forward-looking statements include, without limitation, statements regarding:

• expectations as to market acceptance of our products,

• expectations as to revenue growth and earnings,

• the time by which certain objectives will be achieved,

• proposed new products,

• our ability to protect our proprietary and intellectual property rights,

• statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance, and

• statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts.

Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events, and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. Important factors that could cause such differences include, but are not limited to:

• industry competition, conditions, performance and consolidation,

• legislative and/or regulatory developments,

• the effects of adverse general economic conditions, both within the United States and globally,

• any adverse economic or operational repercussions from and any future terrorist activities, war or other armed conflicts, and

• other factors described under “Risk Factors.”

Forward-looking statements speak only as of the date the statements are made. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect thereto or with respect to other forward-looking statements.

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WHERE YOU CAN FIND MORE INFORMATION ABOUT US

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document we file with the SEC at the SEC’s Public Reference Room located at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Please call 1-800-SEC-0330 for further information concerning the Public Reference Room. The SEC also makes these documents and other information available on its web site at http://www.sec.gov.

We have filed with the SEC a registration statement on Form S-3 under the Securities Act of 1933, as amended, relating to the common shares offered by this prospectus. This prospectus is a part of the registration statement but does not contain all of the information in the registration statement and its exhibits. For further information, we refer you to the registration statement and its exhibits.

The SEC allows us to “incorporate by reference” the information we file with it, which means that we can disclose important information to you by referring you to another document we have filed with the SEC. The information incorporated by reference is an important part of this prospectus and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the following:

• our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 filed with the Commission on February 27, 2004;

• our Proxy Statement filed with the Commission on April 29, 2004;

• our Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004 filed with the Commission on October 29, 2004;

• our Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004 filed with the Commission on August 9, 2004;

• our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2004 filed with the Commission on April 22, 2004;

• our Current Report on Form 8-K/A filed with the Commission on June 21, 2004;

• our Current Report on Form 8-K filed with the Commission on June 9, 2004;

• our Current Report on Form 8-K filed with the Commission on May 5, 2004;

• our Current Report on Form 8-K filed with the Commission on April 20, 2004;

• any future filings we make with the Commission until we sell all of the common shares offered by this prospectus.

You may request a copy of these filings, at no cost, by writing or telephoning us at Action Products International, Inc., Attn: Investor Relations, 1101 North Keller Road, Suite E, Orlando, Florida 32810, (407) 481-8007, extension 723.

USE OF PROCEEDS

The maximum net proceeds that we may receive from this offering, assuming payment of 10% of the gross exercise proceeds to broker-dealers for soliciting the exercise, could be up to between approximately $[        ] million and $[        ] million if all warrants are exercised.

However, all of the warrants may not be exercised and no assurance can be given as to when or whether any warrants will be exercised, nor as to the timing of receipt or the amount of proceeds. The warrants are intended to provide shareholders an opportunity to acquire additional common shares. We are not dependent upon, nor do we expect, any material amount of proceeds from the warrants at any given time, if ever. Although there is no accurate way to determine the number of warrants that will be exercised, if any, we will use any net proceeds of the sale of our common shares from this offering for working capital purposes.

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THE WARRANTS

Below is a summary of the material terms of the warrants, as more fully described in the Warrant Agreement by and between our company and the warrant agent. The Warrant Agreement is an exhibit to the registration statement of which this prospectus is a part. A copy of the Warrant Agreement may also be obtained from our company.

General

On January [        ], 2005, we distributed to holders of our common shares, one warrant for each common share that they own on the record date of January [        ], 2005. As a warrant holder, you may purchase our common shares through exercise of your warrants. To purchase our common shares, you must deliver one warrant for each common share you intend to purchase.

Exercising Your Warrants

Each warrant entitles the holder to purchase one of our common shares. You may exercise your warrants by properly completing and signing the exercise notice on the back of your warrant certificate, including, if required, a signature guarantee from an eligible institution and delivering the properly executed warrant certificate to the warrant agent, together with payment of the aggregate warrant exercise price in full. There is no minimum amount of shares that you must purchase. You may exercise your warrants in whole or in part, but no warrants may be exercised for fractional shares. A holder of warrants will not have any rights, privileges or liabilities as a shareholder prior to exercise of the warrants.

Warrant Exercise Price

The exercise price for the warrants is $3.00 per share, if you exercise on or before [        ], 2005 and $3.50 per share if you exercise after [        ], 2005. To exercise your warrants to purchase our common shares, you must deliver a properly completed and signed exercise notice on the back of your warrant certificate together with payment of the aggregate warrant exercise price to the warrant agent prior to expiration.

Warrant Solicitation Agent

We have appointed [        ] to act on a nonexclusive basis as a solicitation agent in connection with the exercise of the warrants pursuant to a Warrant Solicitation Agreement dated [        ] between us and [        ].

Pursuant to the Warrant Solicitation Agreement, we have agreed to pay [        ] a cash fee of 10% of the total proceeds received from exercises of the warrants, if:

• the market price of our common shares on the date the warrants are exercised is greater than the then-current exercise price of the warrants;

• you designate in writing that the exercise of the warrants was solicited by [        ] and the name of the broker-dealer to receive compensation for such exercise;

• the warrants are not held in an account over which [        ] has discretionary authority;

• disclosure of compensation arrangements was made both at the time of the offering and at the time of exercise of the warrants; and

• the solicitation of exercise of the warrant was not in violation of Regulation M promulgated under the Securities Exchange Act of 1934.

We may pay a solicitation fee under certain circumstances to brokers who solicit the exercise of the warrants. If you exercise your warrant, please indicate on the exercise notice whether your exercise was solicited by a broker, and, if so, the name and firm of the broker.

Expiration Time

The warrants will expire at 5:00 p.m., New York City Time, on [        ], 2006, the expiration time. After expiration of the warrants, all unexercised warrants will be null and void and no longer exercisable by the holder. We will not be obligated to honor any purported exercise of warrants received by the warrant agent after the expiration time, regardless of when the documents relating to such exercise were sent.

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Redemption

The warrants are redeemable by us at any time prior to their expiration date. We may redeem the warrants at $0.001 per warrant by giving all of the holders of our warrants 21 days’ prior written notice.

Transfer and Warrant Agent and Registrar

Our transfer and warrant agent and registrar for our securities is Registrar and Transfer Company. The address to which you must make any required deliveries is:

Registrar and Transfer Company

P.O. Box 1010

Cranford, New Jersey 07016-1010

Distribution of Warrants

We have distributed the warrants at no cost to those persons who were holders of our outstanding common shares on January [        ], 2005. No warrants will be exercisable unless at the time of exercise there is a current prospectus covering the common shares issuable upon exercise of such warrants under an effective registration statement filed with the Securities and Exchange Commission and such shares have been qualified for sale or are exempt from qualification under the securities laws of the state or residence of the holder of such warrants. Although we intend to seek to have the common shares so qualified in the states where the warrants are being offered and to maintain a current prospectus relating thereto, until the expiration of the warrants, there can be no assurance that we will be able to do so.

Warrant Payments

You must pay the warrant exercise price in full for all shares you intend to purchase by:

• check or bank draft drawn upon a U.S. bank, or postal, telegraphic or express money order, payable to Registrar and Transfer Company, as warrant agent; or

• wire transfer of immediately available funds to an account which the warrant agent maintains for this purpose. Please contact the warrant agent at (800) 456-0596 to obtain appropriate wiring instructions.

The warrant exercise price will be deemed to have been received by the warrant agent only upon:

• clearance of any uncertified check;

• receipt by the warrant agent of any certified check or bank draft drawn upon a U.S. bank or of a postal, telegraphic or express money order; or

• receipt of good funds in the warrant agent’s account designated in the wiring instructions provided by the warrant agent.

Anti-Dilution Protection

The warrant exercise price and the number of common shares issuable upon exercise of each warrant will be subject to adjustment to protect against dilution in the event of stock dividends, stock splits, combinations, subdivisions, reclassifications, reorganizations, mergers, and similar corporate transactions. However, the warrants are not subject to adjustment for issuance of our common shares (or securities convertible into or exercisable for our common shares) at prices below the exercise price of the warrants. Any adjustment required by the foregoing events will be determined by our Board of Directors.

Warrant Amendments

We reserve the right to make any modification to the terms of the warrants that is not materially adverse to the holders of the warrants. Any such modification will be determined by our Board of Directors and we will cause written notice of any such modification to be sent to all record holders of the warrants which describes the modification and its effective date.

Nominee Holders

Holders on the record date who hold common shares for the account of others, such as brokers, trustees or depositories for securities, should contact the respective beneficial owners of such shares to ascertain the intentions of the beneficial owners of such shares and to obtain instructions with respect to their warrants. If a beneficial owner so instructs, the nominee should promptly

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complete the applicable warrant certificate and submit it to the warrant agent with the proper payment. In addition, beneficial owners of our common shares or warrants held through such nominee should contact the nominee and request the nominee to effect transactions in accordance with the beneficial owner’s instructions.

Ambiguities in Exercise of the Warrants

If you do not specify the number of warrants being exercised on your warrant certificate, or if your payment is not sufficient to pay the total warrant exercise price for all of the shares that you indicate you wish to purchase, you will be deemed to have exercised the maximum number of warrants that could be exercised for the amount of the payment that the warrant agent receives from you.

If your payment exceeds the number of warrants you specify are being exercised on your warrant certificate, you will be deemed to have exercised the maximum number of warrants that could be exercised for the amount of payment the warrant agent receives from you, up to the aggregate number of warrants exercisable by your warrant certificate. Any excess payment remaining after the foregoing allocation will be returned to you by mail as soon as practicable following processing of your warrant certificate, without interest or deduction.

Interpretation

All questions concerning the timeliness, validity, form and eligibility of any exercise of warrants will be determined by us and our determinations will be final and binding. We reserve the right, in our sole discretion, to waive any defect or irregularity, or permit a defect or irregularity to be corrected within such time as we may determine, or reject the purported exercise of any warrant. Warrants will not be deemed to have been received or accepted until all irregularities have been waived or cured within such time as we determine in our sole discretion. We reserve the right, in our sole discretion, to reject any exercise or related documents or payment not properly submitted or the acceptance of which would, in the opinion of our counsel, be unlawful. Neither we nor the warrant agent will be under any duty to give notification of any defect or irregularity in connection with the exercise of warrant certificates or incur any liability for failure to give such notification.

Risk of Loss on Delivery of Warrant Certificates and Payments

The instructions contained in the warrant certificate should be read carefully and followed in detail. The method of delivery of warrant certificates and payment of the warrant exercise price to the warrant agent will be at the election and risk of the warrant holders but, if sent by mail it is recommended that warrant certificates and payments be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the warrant agent and clearance of payment at or prior to the expiration time. In addition, if you request reissuance of a warrant certificate, the delivery will be at your risk.

Exercise of Less Than All Warrants

If you exercise your warrants for fewer than all of the shares represented by your warrant certificate, you may receive from the warrant agent a new warrant certificate representing the unexercised warrants. A new warrant certificate for the remaining warrants will be issued to you only if the warrant agent receives a properly endorsed warrant certificate from you no later than 5:00 p.m., New York City Time, on the fifth business day prior to the expiration time. The warrant agent will not issue new warrant certificates for partially exercised warrant certificates submitted after that date and time.

Unless you make other arrangements with the warrant agent, a new warrant certificate issued after 5:00 p.m., New York City Time, on the fifth business day before the expiration time will be held for pick-up by you at the offices of the warrant agent.

Transferability of Warrants

In the event you desire to present your warrant certificate for registration of transfer, the assignment form included therein shall be duly endorsed, or be accompanied by a written instrument or instruments of transfer, in form satisfactory to us and the warrant agent, duly executed by you or your attorney-in-fact duly authorized in writing. Moreover, your signature on your warrant certificate must be guaranteed by an Eligible Guarantor Institution. Please see “Signature Guarantees” below for a discussion regarding Eligible Guarantor Institutions and guaranteed signatures. The warrant agent may impose a reasonable service charge against you for any registration of transfer of your warrant certificate. You may also be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such transfer.

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In addition, we do not intend to apply, and are not obligated to apply, for listing of the warrants on any securities exchange, the Nasdaq Stock Market, or any other market.

Signature Guarantees

Signatures on your warrant certificate must be guaranteed to exercise your warrant or to transfer any or all of your warrants. If your warrants are being exercised or are being transferred in a manner permitted, then your signature on each warrant certificate must be guaranteed by an Eligible Guarantor Institution, as defined in Rule 17Ad-15 of the Securities Exchange Act of 1934, and required under the standards and procedures adopted by the warrant agent. Eligible Guarantor Institutions include banks, brokers, dealers, credit unions, national securities exchanges and savings associations.

No Revocation

Once you exercise your warrants, you may not revoke that exercise. Warrants not exercised prior to their expiration will be null and void as of and after such time.

No Board Recommendation

Our Board of Directors does not make any recommendation to you about whether you should exercise any warrants. If you exercise warrants, you risk investment loss on money invested. We cannot assure you that anyone purchasing our common shares will be able to sell those shares in the future at a higher price. An investment in our common shares must be made in accordance with your evaluation of your own best interest.

Issuance of Stock Certificates

Stock certificates for shares purchased in the offering will be issued to you as soon as practicable after you exercise your warrants. Registrar & Transfer Company will deliver payment of the warrant exercise price to us only after the issuance of common share certificates to those exercising warrants.

If you exercise warrants, you will have no rights as a shareholder until certificates representing the shares you purchased are issued. Shares purchased by the exercise of warrants will be registered in the name of the person exercising the warrants.

State and Foreign Securities Law

The warrants may not be exercised by any person, and neither this prospectus nor the warrant certificate shall constitute an offer to sell or a solicitation of an offer to purchase any of our common shares, in any jurisdiction in which such transactions would be unlawful. We believe that no action has been taken in any jurisdiction outside the United States to permit offers and sales of the warrants or the offer, sale or distribution of our common shares outside the United States. Consequently, we may reject the exercise of warrants by any holder of warrants outside the United States. We may also reject the exercise of warrants by holders in jurisdictions within the United States, and we may refuse to distribute warrants to any person, if we should determine that we may not lawfully issue securities to such person. We may do so even if we could qualify the securities for sale or distribution by taking other actions or modifying the terms of the offering or the distribution in such jurisdictions, which we may decline to do in our sole discretion. In such event, warrant holders who are residents of these jurisdictions will not be eligible to exercise the warrants. If you hold your warrants in a nominee account (such as in a brokerage account), the record owner must contact us or the warrant agent prior to exercising to determine if the offer of sale of our common shares is permissible in your state.

Regulatory Limitation

We will not be required to issue shares pursuant to this offering to anyone who, in our opinion, would be required to obtain prior clearance or authorization from any state or federal regulatory authorities to own or control such shares if such clearance or authorization has not been obtained at the expiration of this offering.

Questions or Requests for Assistance

If you have questions about this offering, including questions about the procedure for exercising warrants or requests for additional copies of this prospectus, please contact the warrant agent toll free at (800) 456-0596.

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EXPERTS

Our consolidated balance sheet as of December 31, 2003 and the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2003 have been incorporated by reference in this prospectus and in the registration statement in reliance on the report of Moore Stephens Lovelace, P.A., independent auditors, given upon the authority of that firm as experts in accounting and auditing.

LEGAL MATTERS

Tarter Krinsky & Drogin LLP, counsel to us, will pass on the validity of the issuance of the common shares to be sold by this prospectus.

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PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses in connection with the distribution of the securities being registered, all of which are to be paid by the registrant, are as follows:

Securities and Exchange Commission Registration Fee	$	2,218
Printing		5,500
Legal Fees and Expenses		20,000
Accounting Fees and Expenses		2,000
Miscellaneous Fees and Expenses		5,282
Total	$	35,000

All amounts other than the registration fee are estimates.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 607.0850 of the Florida Business Corporation Act (“FBCA”) generally permits each corporation to indemnify its directors, officers, employees or other agents who are subject to any third-party actions because of their service to the corporation if such persons acted in good faith and in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation. If the proceeding is a criminal one, such person must also have had no reasonable cause to believe his conduct was unlawful. In addition, the corporation may indemnify its directors, officers, employees or other agents who are subject to derivative actions against expenses and amounts paid in settlement which do not exceed, in the judgment of the board of directors, the estimated expense of litigating the proceeding to conclusion, including any appeal thereof, actually and reasonably incurred in connection with the defense or settlement of such proceeding, if such person acted in good faith and in a manner such person reasonably believed to be in, or not opposed to, the best interests of the corporation. To the extent that a director, officer, employee or other agent is successful on the merits or otherwise in defense of a third-party or derivative action, such person will be indemnified against expenses actually and reasonably incurred in connection therewith.

This Section also permits each corporation to further indemnify such persons by other means unless a judgment or other final adjudication establishes that such person’s actions or omissions which were material to the cause of action constitute (1) a crime (unless such person had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe it unlawful), (2) a transaction from which he derived an improper personal benefit, (3) an action in violation of FBCA Section 607.0834 (unlawful distributions to shareholders), or (4) willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of such registrant to procure a judgment in its favor or in a proceeding by or in the right of a shareholder.

Furthermore, FBCA Section 607.0831 provides, in general, that no director shall be personally liable for monetary damages to the corporation or any other person for any statement, vote, decision, or failure to act, regarding corporate management or policy, unless: (a) the director breached or failed to perform his duties as a director; and (b) the director’s breach of, or failure to perform, those duties constitutes (i) a violation of criminal law, unless the director had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe his conduct was unlawful, (ii) a transaction from which the director derived an improper personal benefit, either directly or indirectly, (iii) a circumstance under which the liability provisions of FBCA Section 607.0834 are applicable, (iv) in a proceeding by or in the right of a registrant to procure a judgment in its favor or by or in the right of a shareholder, conscious disregard for the best interest of the corporation, or willful misconduct, or (v) in a proceeding by or in the right of someone other than the corporation or a shareholder, recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property. The term “recklessness”, as used above, means the action, or omission to act, in conscious disregard of a risk: (a) known, or so obvious that it should have been known, to the director; and (b) known to the director, or so obvious that it should have been known, to be so great as to make it highly probable that harm would follow from such action or omission.

Under Article VI of the registrant’s Bylaws, the registrant has agreed to indemnify each director and officer of the registrant who it is empowered to indemnify to the fullest extent permitted by the provisions of the FBCA. The registrant’s Bylaws also provide

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that the indemnification rights provided thereby shall not be deemed to be exclusive of any other rights to which the registrant’s directors and officers may be entitled, including, without limitation, any rights of indemnification to which they may be entitled pursuant to any agreement, insurance policy, or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers and directors under any of the foregoing provisions, the registrant has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

At present, there is no pending litigation or proceeding involving a director, officer or employee of the registrant regarding which indemnification is sought, nor is the registrant aware of any threatened litigation that may result in claims for indemnification.

The registrant has obtained directors’ and officers’ insurance to cover its directors and officers for certain liabilities, including coverage for public securities matters.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

Exhibit No.	Description
5.1	Form of Legal Opinion of Tarter Krinsky & Drogin LLP*
10.1	Form of Warrant Agreement by and between Action Products International, Inc. and Registrar and Transfer Company*
10.2	Form of Warrant Solicitation Agreement*
23.1	Form of Consent of Moore Stephens Lovelace, P.A.*
23.2	Consent of Tarter Krinsky & Drogin LLP (included in Exhibit 5.1)

* Filed herewith.

(b) Financial Statement Schedules

Schedules are omitted because they are either not required, are not applicable or because equivalent information has been included in the financial statements, the notes thereto or elsewhere herein.

ITEM 17. UNDERTAKINGS

a. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and

(c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (1)(a) and (1)(b) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the

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registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as amended) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

b. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment to the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on a Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, State of Florida, on December 1, 2004.

ACTION PRODUCTS INTERNATIONAL, INC.
By:	/s/    RONALD S. KAPLAN
Name:	Ronald S. Kaplan
Title:	President and Chief Executive Officer

Known All Men by These Presents, that each person whose signature appears below does hereby constitute and appoint Ronald S. Kaplan with full power to act as his or her true and lawful attorney-in-fact and agent for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement including without limitation any registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same, as fully, for all intents and purposes, as he or she could or might do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated below on December 1, 2004.

By:	/s/    RONALD S. KAPLAN
	Ronald S. Kaplan
	President, Chief Executive Officer and Director (principal executive officer)

By:	/s/    ROBERT L. BURROWS
	Robert L. Burrows
	Chief Financial Officer (principal financial officer and principal accounting officer)

By:	/s/    WARREN KAPLAN
	Warren Kaplan
	Chairperson of the Board

By:	/s/    JUDITH KAPLAN
	Judith Kaplan
	Director

By:	/s/    NEIL SWARTZ
	Neil Swartz
	Director

By:	/s/    SCOTT RUNKEL
	Scott Runkel
	Director

By:	/s/    ANN E. W. STONE
	Ann E. W. Stone
	Director

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EX-5.1

Exhibit 5.1

TARTER

KRINSKY &

DROGIN LLP

ATTORNEYS AT LAW

470 PARK AVENUE SOUTH

NEW YORK, NY 10016

TEL: (212) 481-8585

FAX: (212) 481-9062

December [    ], 2004

Action Products International, Inc.

1101 N. Keller Road, Suite E

Orlando, Florida 32810

Re: Form S-3 Registration Statement

Ladies and Gentlemen:

We have acted as counsel for Action Products International, Inc., a Florida corporation, (the “Corporation”), in connection with the referenced Registration Statement on Form S-3 (the “Registration Statement”) being filed by the Corporation with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and covering [        ] of the Corporation’s common shares, $0.001 par value (the “Common Shares”), that may be issued pursuant to the warrants referenced in the Registration Statement expected to be distributed to the Corporation’s common shareholders on or about January [        ], 2005 (the “Warrants”). This opinion letter is rendered pursuant to Item 16 of Form S-3 and Item 601(b)(5) of Regulation S-K.

We have examined the Articles of Incorporation of the Corporation, as amended, the Bylaws of the Corporation, as amended, records of proceedings of the Board of Directors of the Corporation deemed by us to be relevant to this opinion letter, the Registration Statement and other documents and agreements we deemed necessary for purposes of expressing the opinion set forth herein. We also have made such further legal and factual examinations and investigations, as we deemed necessary for purposes of expressing the opinion set forth herein.

As to certain factual matters relevant to this opinion letter, we have relied upon certificates and statements of officers of the Corporation and certificates of public officials. We have made no independent investigation with regard thereto, and, accordingly, we do not express any opinion as to matters that might have been disclosed by independent verification.

This opinion letter is provided to the Corporation and the Commission for their use solely in connection with the transactions contemplated by the Registration Statement and may not be used, circulated, quoted or otherwise relied upon by any other person or for any other purpose without our express written consent. The only opinion rendered by us consists of those matters set forth in the sixth paragraph hereof, and no opinion may be implied or inferred beyond those expressly stated.

We are admitted to practice law in the State of New York, and we render this opinion only with respect to, and express no opinion herein concerning the application or effect of the laws of any jurisdiction other than, the existing laws of the United States of America, of the State of New York and the Business Corporation Act of the State of Florida, and applicable case law thereunder.

Based on the foregoing, it is our opinion that the [        ] Common Shares covered by the Registration Statement and to be issued pursuant to the Warrants, when issued in accordance with the terms and conditions of the Warrants, will be legally issued, fully paid and non-assessable.

We consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the use of our name wherever appearing in the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

Sincerely,

Tarter Krinsky & Drogin LLP

EX-10.1

Exhibit 10.1

WARRANT AGREEMENT

AGREEMENT, dated this [date] day of [month and year] by and between Action Products International, Inc., a Florida corporation (the “Company”), and Registrar and Transfer Company, as Warrant Agent (the “Warrant Agent”).

WHEREAS, each record holder of the Company’s common shares, $0.001 par value (the “Common Shares”), on the record date of January 7, 2005, or such other date as determined by the Company and the Warrant Agent (the “Record Date”), will receive one (1) warrant (a “Warrant”) to purchase an additional Common Share for each one (1) Common Share held on the Record Date at an exercise price as determined herein; and

WHEREAS, the Warrants shall be exercisable for a one (1) year period from the earlier of (i) the Record Date and (ii) the date the Securities and Exchange Commission declares effective a registration statement under the Securities Act of 1933, as amended, (the “1933 Act”) covering the offer and sale of the Common Shares issuable upon exercise of the Warrants (the “Effective Date”) unless earlier redeemed as provided herein; and

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer and exchange of certificates representing the Warrants and the exercise of the Warrants.

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth and for the purpose of defining the terms and provisions of the Warrants and the certificates representing the Warrants and the respective rights and obligations thereunder of the Company, the holders of certificates representing the Warrants and the Warrant Agent, the parties hereto agree as follows:

1. Definitions. Capitalized terms used herein and not otherwise defined shall have the following meanings, unless the context shall otherwise require:

“Corporate Office” shall mean the office of the Warrant Agent (or its successor) at which at any particular time its principal business shall be administered, which office is located on the date hereof at 10 Commerce Drive, Cranford, New Jersey 07016.

“Exercise Date” shall mean as to any Warrant, the date on which the Warrant Agent shall have received both (a) the Warrant Certificate representing such Warrant, with the Exercise Form thereon duly executed by the Registered Holder hereof with such Registered Holder’s signature guaranteed, and (b) payment in cash or by bank or cashier’s check made payable to the Warrant Agent for the account of the Company, of the amount in lawful money of the United States of America equal to the applicable Exercise Price.

“Exercise Price” shall mean (a) $ 3.00 per Common Share, if the Exercise Date is after the Effective Date but on or before the date six (6) months after the Effective Date, and (b) $3.50 per Common Share, if the Exercise Date is after the date six (6) months after the Effective Date but on or before the Expiration Date, subject to modification and adjustment as provided in Section 8.

“Expiration Date” shall mean, unless the Warrants are redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m. (Eastern time) on the date one (1) year after the Effective Date.

“Registered Holder” shall mean the person in whose name any certificate representing the Warrants shall be registered on the books maintained by the Warrant Agent pursuant to Section 6.

“Warrant Certificate” shall mean a certificate representing each of the Warrants substantially in the form annexed hereto as Exhibit A.

2. Warrants and Issuance of Warrant Certificates.

(a) Each Warrant shall entitle the Registered Holder of the Warrant Certificate representing such Warrant to purchase at the Exercise Price therefor from the Effective Date until the Expiration Date one (1) Common Share upon the exercise thereof, subject to modification and adjustment as provided in Section 8.

(b) From time to time, up to the Expiration Date, the Warrant Agent shall countersign and deliver Warrant Certificates in required denominations of one or whole number multiples thereof to the person entitled thereto in connection with any transfer or exchange permitted under this Agreement. No Warrant Certificates shall be issued except (i) Warrant Certificates initially issued hereunder, (ii) those issued on or after the Effective Date, upon the exercise of fewer than all Warrants represented by any Warrant Certificate, to evidence any unexercised Warrants held by the exercising Registered Holder, (iii) Warrant Certificates issued upon any transfer or exchange of Warrants, (iv) Warrant Certificates issued in replacement of lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7, and (v) at the option of the Company, Warrant Certificates in such form as may be approved by its Board of Directors, to reflect any adjustment or change in the Exercise Price, the number of shares of Common Shares purchasable upon exercise of the Warrants or the redemption price therefor made pursuant to Section 9 hereof.

3. Form and Execution of Warrant Certificates. The Warrant Certificates shall be substantially in the form annexed hereto as Exhibit A and may have such letters, numbers or other marks of identification or designation and such legends, summaries or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or market on which the Warrants may be listed, or to conform to usage. The Warrant Certificates shall be dated the date of issuance thereof (whether upon initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or destroyed Warrant Certificates). Warrant Certificates shall be executed on behalf of the Company by its Chairman of the Board, President or any Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary, by manual signatures or by facsimile signatures printed thereon, and shall have imprinted thereon a facsimile of the Company’s seal. Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company before the date of issuance of the Warrant Certificates or before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificates had not ceased to be such officer of the Company.

4. Exercise.

(a) Warrants may be exercised commencing at any time on or after the Effective Date, but not after the Expiration Date, upon the terms and subject to the conditions set forth herein and

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in the applicable Warrant Certificate. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date, provided that the Warrant Certificate representing such Warrant, with the Exercise Form thereon duly executed by the Registered Holder thereof with such Registered Holder’s signature guaranteed, together with payment in cash or by bank or cashier’s check made payable to the order of the Company, of an amount in lawful money, of the United States of America equal to the applicable Exercise Price, has been received in good funds by the Warrant Agent or the Company. If received by the Company, the Company shall deliver the original Warrant Certificate and Exercise Form to the Warrant Agent as soon as practicable. The person entitled to receive the securities deliverable upon such exercise shall be treated for all purposes as the holder of such securities as of the close of business on the Exercise Date. As soon as practicable on or after the Exercise Date and in any event within five business days after such date, the Warrant Agent on behalf of the Company shall cause to be issued to the person or persons entitled to receive the same a certificate or certificates for the Common Shares deliverable upon such exercise, and the Warrant Agent shall deliver the same to the person or persons entitled thereto. Upon the exercise of Warrants, the Warrant Agent shall promptly notify the Company in writing of such fact and of the number of securities delivered upon such exercise and shall cause all payments of an amount in cash or by check made payable to the order of the Company, equal to the Exercise Price, to be deposited promptly in the Company’s bank account.

(b) If any Warrants are exercised which exercise was solicited by a broker-dealer with whom the Company agreed in writing to pay a solicitation fee for exercise of the Warrant (a “Broker-Dealer”), then the soliciting Broker-Dealer shall be entitled to receive from the Company upon exercise of each of the Warrants so exercised, a fee of not less than six percent (6%) and not greater than ten percent (10%), the exact percentage to be determined by a separate agreement between the Company and the Broker-Dealer, of the aggregate price of the Warrants so exercised (the “Exercise Fee”); provided, that, at the time of exercise, (i) the market price of the Company’s Common Shares is equal to or greater than the Exercise Price, (ii) the Broker-Dealer is a member of the National Association of Securities Dealers, Inc., (iii) the Warrant is not held in a discretionary account, unless prior specific written approval for exercise has been received by the Broker-Dealer from its customer, (iv) disclosure of the compensation arrangement is made in documents provided to the holders of the Warrants, and (v) the solicitation of the Warrant is not in violation of Regulation M promulgated under the Securities Exchange Act of 1934, as amended. Within five (5) days after the end of each month, the Warrant Agent will notify the Company of each Warrant Certificate which has been properly completed for exercise by holders of Warrants during the last month. The Warrant Agent will provide the Company with such information, in connection with the exercise of each Warrant, as the Company shall reasonably request. In the event that an Exercise Fee is paid to a Broker-Dealer with respect to a Warrant which was not properly completed for exercise or in respect of which such Broker-Dealer is not entitled to an Exercise Fee, such Broker-Dealer will return such Exercise Fee to the Company.

(c) The Company shall not be obligated to issue any fractional share interests or fractional warrant interests upon the exercise of any Warrant or Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of fractional interests. Any fractional interest shall be rounded up to the nearest whole figure.

(d) Anything in this Section 4 notwithstanding, no Warrant will be exercisable unless at the time of exercise the Company has filed with the Securities and Exchange Commission, and there shall be then effective, a registration statement under the 1933 Act covering the offer and sale of the Common Shares issuable upon exercise of such Warrant and such offer and sale of the Common Shares have been so registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of such Warrant.

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(e) In addition, if it is required by law and upon instruction by the Company, the Warrant Agent will deliver to each Registered Holder a prospectus that complies with the provisions of Section 5 of the 1933 Act and the Company agrees to supply the Warrant Agent with a sufficient number of prospectuses to effectuate that purpose.

5. Reservation of Shares; Payment of Taxes.

(a) The Company covenants that it will at all times reserve and keep available out of its authorized Common Shares, solely for the purpose of issuance upon exercise of warrants, such number of Common Shares as shall then be issuable upon the exercise of all outstanding Warrants. The Company covenants that all Common Shares which shall be issuable upon exercise of the Warrants shall, at the time of delivery thereof, be duly and validly issued and fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens and charges with respect to the issuance thereof.

(b) The Company shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of Warrants, or the issuance or delivery of any Common Shares upon exercise of the Warrants; provided, however, that if Common Shares are to be delivered in a name other than the name of the Registered Holder of the Warrant Certificate representing any Warrant being exercised, then no such delivery shall be made unless the person requesting the same has paid to the Warrant Agent the amount of transfer taxes or charges incident thereto, if any.

6. Exchange and Registration of Transfer.

(a) Warrant Certificates may be exchanged for other Warrant Certificates representing an equal aggregate number of Warrants or may be transferred in whole or in part. Warrant Certificates to be so exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and, upon satisfaction of the terms and conditions hereof, the Company shall execute and the Warrant Agent shall countersign, issue and deliver in exchange therefor the Warrant Certificate or Certificates which the Registered Holder making the exchange shall be entitled to receive.

(b) The Warrant Agent shall keep, at its Corporate Office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and the transfer thereof. Upon due presentment for registration of transfer of any Warrant Certificate at such office, the Company shall execute and the Warrant Agent shall issue and deliver to the transferee or transferees a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants.

(c) With respect to any Warrant Certificates presented for registration of transfer, or for exchange or exercise, the Exercise Form or Assignment Form, as the case may be, on the reverse thereof shall be duly endorsed or be accompanied by a written instrument or instruments of transfer and subscription, in form satisfactory to the Company and the Warrant Agent, duly executed by the Registered Holder thereof with such Registered Holder’s signature guaranteed.

(d) A service charge may be imposed by the Warrant Agent for any exchange, registration or transfer of Warrant Certificates.

(e) All Warrant Certificates surrendered for exercise or for exchange shall be promptly canceled by the Warrant Agent.

(f) Prior to due presentment for registration or transfer thereof, the Company and the Warrant Agent may deem and treat the Registered Holder of any Warrant Certificate as the absolute

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owner thereof of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes and shall not be affected by any notice to the contrary.

7. Loss or Mutilation. Upon receipt by the Company and the Warrant Agent of evidence satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and (in the case of loss, theft or destruction) of indemnity satisfactory to them, and (in case of mutilation) upon surrender and cancellation thereof, the Company shall execute and the Warrant Agent shall countersign and deliver in lieu thereof a new Warrant Certificate representing an equal aggregate number of Warrants. Applicants for a substitute Warrant Certificate shall also comply with such other reasonable requests and pay such other reasonable costs and expenses as the Warrant Agent may impose.

8. Adjustments of Number and Kind of Shares Purchasable and Exercise Price. The number and kind of securities or other property purchasable upon exercise of a Warrant shall be subject to adjustment from time to time upon the occurrence, after the date hereof, of any of the following events:

(a) In case the Company shall (i) subdivide its outstanding Common Shares into a greater number of such shares or (ii) combine its outstanding Common Shares into a smaller number of such shares, the total number of Common Shares purchasable upon the exercise of each Warrant outstanding immediately prior thereto shall be adjusted so that the holder of any Warrant Certificate thereafter surrendered for exercise shall be entitled to receive at the same aggregate Exercise Price the number of shares of capital stock (of one or more classes) which such holder would have owned or have been entitled to receive immediately following the happening of any of the events described above had such Warrant been exercised in full immediately prior to the record date with respect to such event. Any adjustment made pursuant to this subsection shall, in the case of a subdivision or combination, be made as of the effective date thereof. If, as a result of an adjustment made pursuant to this subsection, the holder of any Warrant Certificate thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive and shall be evidenced by a Board resolution filed with the Warrant Agent) shall determine the allocation of the adjusted Exercise Price between or among shares of such classes of capital stock.

(b) Whenever the number of Common Shares or other securities purchasable upon exercise of a Warrant is adjusted as provided in this Section, the Company will promptly file with the Warrant Agent a certificate signed by a Chairman or co-Chairman of the Board or the President or a Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth the number and kind of securities or other property purchasable upon exercise of a Warrant, as so adjusted, stating that such adjustments in the number or kind of shares or other securities or property conform to the requirements of this Section, and setting forth a brief statement of the facts accounting for such adjustments. Promptly after receipt of such certificate, the Company, or the Warrant Agent at the Company’s request, will deliver, by first-class, postage prepaid mail, a brief summary thereof (to be supplied by the Company) to the registered holders of the outstanding Warrant Certificates; provided, however, that failure to file or to give any notice required under this subsection, or any defect therein, shall not affect the legality or validity of any such adjustments under this Section.

(c) In case of any consolidation of the Company with, or merger of the Company into, another corporation or entity (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Shares), or in case of any sale or conveyance to

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another corporation or entity of the property of the Company as an entirety or substantially as an entirety, the corporation or entity formed by such consolidation or merger or the corporation or entity which shall have acquired such assets, as the case may be, shall execute and deliver to the Warrant Agent a supplemental warrant agreement providing that the holder of each Warrant then outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, solely the kind and amount of shares of stock and other securities and property (or cash) receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares of the Company for which such Warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section. The above provision of this subsection shall similarly apply to successive consolidations, mergers, sales or transfers. The Warrant Agent shall not be under any responsibility to determine the correctness of any provision contained in any such supplemental warrant agreement relating to either the kind or amount of shares of capital stock or securities or property (or cash) purchasable by holders of Warrant Certificates upon the exercise of their Warrants after any such consolidation, merger, sale or transfer or of any adjustment to be made with respect thereto, but may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, a certificate of a firm of independent certified public accountants (who may be the accountants regularly employed by the Company) with respect thereto.

(d) Irrespective of any adjustments in the number or kind of shares issuable upon exercise of Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrant Certificates initially issuable pursuant to this Agreement.

(e) The Company may retain a firm of independent public accountants of recognized standing, which may be the firm regularly retained by the Company, selected by the Board of Directors of the Company or the Audit Committee of said Board, and not disapproved by the Warrant Agent, to make any computation required under this Section, and a certificate signed by such firm shall, in the absence of fraud or gross negligence, be conclusive evidence of the correctness of any computation made under this Section.

(f) For the purpose of this Section 8, the term “Common Shares” shall mean (i) the Common Shares or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Shares consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time as a result of an adjustment made pursuant to this Section, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock of the Company, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Shares contained in this Section, and all other provisions of this Agreement, with respect to the Common Shares, shall apply on like terms to any such other shares.

(g) Before taking any action that would cause an adjustment pursuant to Section 8 hereof reducing the portion of the Exercise Price required to purchase one share of capital stock below the then par value (if any) of a share of such capital stock, the Company will use its best efforts to take any corporate action which, in the opinion of its counsel, may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such capital stock.

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9. Redemption.

(a) Commencing on the Effective Date, the Company may, on not less than twenty-one (21) days’ prior written notice redeem all the Warrants at $0.001 per Warrant. All Warrants must be redeemed if any are redeemed.

(b) In the event the Company exercises its right to redeem all of the Warrants, it shall give or cause to be given notice to the Registered Holders of the Warrants, by mailing to such Registered Holders a notice of redemption, first class, postage prepaid, not later than the twenty-first (21^st) day before the date fixed for redemption, at their last address as shall appear on the records of the Warrant Agent. Any notice mailed in the manner provided herein shall be conclusively presumed to have been duly given whether or not the Registered Holder receives such notice.

(c) The notice of redemption shall specify (i) the redemption price, (ii) the date fixed for redemption, (iii) the place where the Warrant Certificate shall be delivered and the redemption price shall be paid, and (iv) that the right to exercise the Warrant shall terminate at 5:00 p.m. (New York time) on the business day immediately preceding the date fixed for redemption. The date fixed for the redemption of the Warrants shall be the Redemption Date. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for such redemption. An affidavit of the Warrant Agent or the Secretary or Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(d) From and after the Redemption Date, all rights of the Registered Holders (except the right to receive the redemption price) shall terminate, but only if (i) no later than one day prior to the redemption date the Company shall have irrevocably deposited with the Warrant Agent as paying agent a sufficient amount to pay on the Redemption Date the redemption price for all Warrants called for redemption and (ii) the notice of redemption shall have stated the name and address of the Warrant Agent and the intention of the Company to deposit such amount with the Warrant Agent no later than one day prior to the Redemption Date.

(e) The Warrant Agent shall pay to the holders of record of redeemed Warrants all monies received by the Warrant Agent for the redemption of Warrants to which the holders of record of such redeemed Warrants who shall have surrendered their Warrants are entitled.

(f) Any amounts deposited with the Warrant Agent that are not required for redemption of Warrants may be withdrawn by the Company. Any amounts deposited with the Warrant Agent that shall be unclaimed after three (3) months after the redemption date may be withdrawn by the Company, and thereafter the holders of the Warrants called for redemption for which such funds were deposited shall look solely to the Company for payment. The Company shall be entitled to the interest, if any, on funds deposited with the Warrant Agent and the holders of redeemed Warrants shall have no right to any such interest.

(g) Any right to exercise a warrant shall terminate at 5:00 p.m. (New York time) on the business day immediately preceding the Redemption Date. The redemption price payable to the Registered Holders shall be mailed to such persons at their addresses of record.

10. Concerning the Warrant Agent.

(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity for the Company, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall

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not, by issuing and delivering Warrant Certificates or by any other act hereunder, be deemed to make any representations as to the validity or value or authorization of the Warrant Certificates or the Warrants represented thereby or of any securities or other property delivered upon exercise of any Warrant or whether any stock issued upon exercise of any Warrant is fully paid and nonassessable.

(b) The Warrant Agent shall not at any time be under any duty or responsibility to any holder of Warrant Certificates to make or cause to be made any adjustment to the Warrant provided in this Agreement, or to determine whether any fact exists which may require any such adjustment, or with respect to the nature or extent of any such adjustment, when made, or with respect to the method employed in making the same, it shall not (i) be liable for any recital or statement of fact contained herein or for any action taken, suffered or omitted by it in reliance on any Warrant Certificate or other document or instrument believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties, (ii) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in any Warrant Certificate, or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct.

(c) The Warrant Agent may at any time consult with counsel satisfactory to it (who may be counsel for the Company) and shall incur no liability or responsibility for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel.

(d) Any notice, statement, instruction, request, direction, order or demand of the Company shall be sufficiently evidenced by an instrument signed by the Chairperson of the Board of Directors, Vice-Chairperson or Secretary (unless other evidence in respect thereof is herein specifically prescribed). The Warrant Agent shall not be liable for any action taken, suffered or omitted by it in accordance with such notice, statement, instruction, request, direction, order or demand.

(e) The Company agrees to pay the Warrant Agent reasonable compensation for its services hereunder and to reimburse it for its reasonable expenses hereunder; the Company further agrees to indemnify the Warrant Agent and save it harmless against any and all losses, expenses and liabilities, including judgments, costs and counsel fees, for anything done or omitted by the Warrant Agent in the execution of its duties and powers hereunder except losses, expenses and liabilities arising as a result of the Warrant Agent’s gross negligence or willful misconduct.

(f) The Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder (except liabilities arising as a result of the Warrant Agent’s own negligence or willful misconduct), after giving 60 days prior written notice to the Company. At least 15 days prior to the date such resignation is to become effective, the Warrant Agent shall cause a copy of such notice of resignation to be mailed to the Registered Holder of each Warrant Certificate at the Company’s expense. Upon such resignation the Company shall appoint in writing a new warrant agent. After acceptance in writing of such appointment by the new warrant agent is received by the Company, such new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the warrant agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning Warrant Agent. Not later than the effective date of any such appointment the Company shall file notice thereof with the resigning Warrant Agent and shall forthwith cause a copy of such notice to be mailed to the Registered Holder of each Warrant Certificate.

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(g) Any corporation into which the Warrant Agent or any new warrant agent may be converted or merged, any corporation resulting from any consolidation to which the Warrant Agent or any new warrant agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent or any new warrant agent shall be a successor warrant agent under this Agreement without any further act, provided that such corporation is eligible for appointment as successor to the Warrant Agent under the provisions of the preceding paragraph. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed to the Company and to the Registered Holders of each Warrant Certificate, at the Warrant Agent’s expense.

(h) Except as otherwise provided in this Agreement, if any act or event which is required under this Agreement to otherwise occur on a Saturday, Sunday or any other day the Warrant Agent is not open for business, then such act or event shall occur on the next successive day that is not a Saturday, Sunday or day in which the Warrant Agent is not open for business.

11. Rights of Registered Holders. No Registered Holder, as such, shall have any rights of a shareholder of the Company, either at law or equity, and the rights of the Registered Holders, as such, are limited to those rights expressly provided in this Agreement or in the Warrant Certificates. The Company and the Warrant Agent may treat the registered Registered Holder in respect of any Warrant Certificates as the absolute owner thereof for all purposes notwithstanding any notice to the contrary.

12. Modification of Agreement. The Warrant Agent and the Company may by supplemental agreement make any changes or corrections in this Agreement without the approval of any holders of Warrants (i) that they shall deem appropriate to cure any ambiguity or to correct any defective or inconsistent provision or manifest mistake or error herein contained; (ii) that they may deem necessary or desirable and which shall not adversely affect the interests of the holders of Warrant Certificates; or (iii) which may be required by law; provided, however, that this Agreement shall not otherwise be modified, supplemented or altered except with the consent in writing of the Registered Holders representing not less than 50% of the Warrants then outstanding; provided, further, that no change in the number of the securities purchasable upon the exercise of any Warrant, or an increase in the Exercise Price therefor, shall be, made without the consent in writing of the Registered Holder of the Warrant Certificate, other than such changes as are specifically permitted or prescribed by this Agreement as originally executed.

13. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered, with confirmation received, or one business day after deposited with a nationally recognized overnight courier, or five days after mailed first-class postage prepaid, or upon receipt when sent by facsimile, with confirmation received, if to the Registered Holder of a Warrant Certificate, at the address of such holder as shown on the registry books maintained by the Warrant Agent; if to the Company at:

Action Products International, Inc.

1101 North Keller Road, Suite E

Orlando, Florida 32810

Attn: Ronald S. Kaplan

Phone: (407) 481-8007

Facsimile: (407) 481-2781

With a copy to:

Tarter Krinsky & Drogin LLP

470 Park Avenue South, 14^th Floor

New York, NY 10016

Attn: James G. Smith, Esq.

Phone: (212) 481-8585

Facsimile (212) 481-9062

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or at such other address as may have been furnished to the Warrant Agent in writing by the Company, and if to the Warrant Agent, at its Corporate Office.

14. Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida without giving effect to conflicts of laws. In the event the Company, the Warrant Agent or any Registered Holder commences any litigation, proceeding or other legal action in connection with or relating to this Agreement or any matters described or contemplated herein, the Company, the Warrant Agent and the Registered Holders hereby (a) agree under all circumstances absolutely and irrevocably to institute any litigation, proceeding or other legal action in a court of competent jurisdiction located within the County of New York, State of New York, whether a state or federal court; (b) agree that in the event of any such litigation, proceeding or action, such parties will consent and submit to personal jurisdiction in such court; and (c) agree to waive to the full extent permitted by law any objection that they may now or hereafter have to the venue of any such litigation, proceeding or action in any such court or that any such litigation, proceeding or action was brought in an inconvenient forum.

15. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent and their respective successors and assigns and the holders from time to time of Warrant Certificates or any of them. Except as hereinafter stated, nothing in this Agreement is intended or shall be construed to confer upon any other person any right, remedy or claim or to impose upon any other person any duty, liability or obligation.

16. Termination. This Agreement shall terminate at the Expiration Time or such earlier date upon which all Warrants have been exercised or surrendered, except that the Warrant Agent shall account to the Corporation for cash held by it and the provisions of Section 10 hereof shall survive such termination.

17. Integration. As of the date hereof, this Agreement contains the entire and only agreement, understanding, representation, condition, warranty or covenant between the parties hereto with respect to the matters herein, supersedes any and all other agreements between the parties hereto relating to such matters, and may be modified or amended only by a written agreement signed by both parties hereto.

18. Counterparts. This Agreement may be executed in several counterparts, which taken together shall constitute a single document.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

ACTION PRODUCTS INTERNATIONAL, INC.
By:
	Ronald S. Kaplan Chief Executive Officer
REGISTRAR AND TRANSFER COMPANY
By:
	William P. Tatler Vice President

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Exhibit A

No.              VOID AFTER 5:00 PM on [date]

             WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO

PURCHASE COMMON SHARES

ACTION PRODUCTS INTERNATIONAL, INC.

NO.              CUSIP:

THIS CERTIFIES THAT, FOR VALUE RECEIVED                              or registered assigns (the “Registered Holder”) is the owner of the number of Warrants (the “Warrants”) specified above. Each Warrant initially entitles the Registered Holder to purchase, subject to the terms and conditions set forth in this Certificate and the Warrant Agreement (as hereinafter defined), one fully paid and non-assessable Common Share, $0.001 par value, of Action Products International, Inc., a Florida corporation (the “Company”), at any time from [date] and prior to the Expiration Date (as hereinafter defined) upon the presentation and surrender of this Warrant Certificate with the Exercise Form on the reverse hereof duly executed, at the corporate office of Registrar and Transfer Company, as Warrant Agent, or its successor (the “Warrant Agent”), or the Company, accompanied by the Exercise Price (as defined in the Warrant Agreement), in lawful-money of the United States of America in cash or by check made payable to the Warrant Agent for the account of the Company.

This Warrant Certificate and each Warrant represented hereby are issued pursuant to and are subject in all respects to the terms and conditions set forth in the Warrant Agreement (the “Warrant Agreement”), dated November     , 2004, by and between the Company and the Warrant Agent.

In the event of certain contingencies provided for in the Warrant Agreement, the Exercise Price and the number of Common Shares subject to purchase upon the exercise of each Warrant represented hereby are subject to modification or adjustment.

Each Warrant represented hereby is exercisable at the option of the Registered Holder, but no fractional interests will be issued. In the case of the exercise of less than all the warrants represented hereby, the Company shall cancel this Warrant Certificate upon the surrender hereof and shall execute and deliver a new Warrant Certificate or Warrant Certificates of like tenor, which the Warrant Agent shall countersign, for the balance of such Warrants.

The term “Expiration Date” shall mean 5:00 P.M. (New York time) on [date]. If such date shall in the State of New York be a holiday or a day on which the banks are authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York time) the next following day which in the State of New York is not a holiday or a day on which banks are authorized to close.

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Prior to the exercise of any Warrant represented hereby, the Registered Holder shall not be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote or to receive dividends or other distributions, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided in the Warrant Agreement.

Subject to the provisions of the Warrant Agreement, this Warrant may be redeemed at the option of the Company, at a redemption price of $0.001 per Warrant. Notice of redemption shall be given not later than the twenty-first (21^st) day before the date fixed for redemption, all as provided in the Warrant Agreement. On and after the date fixed for redemption, the Registered Holder shall have no rights with respect to this Warrant except to receive the $0.001 per Warrant upon surrender of this Certificate.

Prior to due presentment for registration or transfer hereof, the Company and the Warrant Agent may deem and treat the Registered Holder as the absolute owner hereof and of each Warrant represented hereby (notwithstanding any notations of ownership or writing hereon made by anyone other than a duly authorized officer of the Company or the Warrant Agent) for all purposes and shall not be affected by any notice to the contrary, except as provided in the Warrant Agreement.

This Warrant Certificate shall be governed by and construed in accordance with the laws of the State of Florida without giving effect to conflicts of laws.

This Warrant Certificate is not, valid unless countersigned by the Warrant Agent.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or in facsimile by two of its officers thereunto duly authorized.

Dated:

		ACTION PRODUCTS INTERNATIONAL, INC.
		By:
			Ronald S. Kaplan
			Chief Executive Officer
		By:
			Robert L. Burrows
			Secretary
COUNTERSIGNED:
REGISTRAR AND TRANSFER COMPANY as Warrant Agent
By:
	Authorized Officer

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EXERCISE FORM

To Be Executed by the Registered Holder in Order to Exercise Warrant

The undersigned Registered Holder hereby irrevocably elects to exercise                      Warrants represented by this Warrant Certificate, and to purchase the securities issuable upon the exercise of such Warrants, and requests that certificates for such securities shall be issued in name of

PLEASE INSERT SOCIAL SECURITY

OR OTHER IDENTIFYING NUMBER

(please print or type name and address)

and be delivered to:

(please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for the balance of such Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below.

IMPORTANT: PLEASE CHECK WHICH IS APPLICABLE:

¨ The exercise of this Warrant was solicited by:

(name of individual broker)

(name of firm)

¨ The exercise of this Warrant was not solicited.

Dated:                     , 200	X
		Signature
		Name
	X
		Signature Guaranteed

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ASSIGNMENT FORM

To Be Executed by the Registered Holder in Order to Assign Warrants

FOR VALUE RECEIVED,                                                                  , hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY

OR OTHER IDENTIFYING NUMBER

(please print or type name and address)

                                                                                                                   of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitutes and appoints                                  Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises.

Dated:                     , 200	X
		Signature
	X
		Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE MEDALLION GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST STOCK EXCHANGE OR BOSTON STOCK EXCHANGE, WHO IS A MEMBER OF THE MEDALLION PROGRAM.

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EX-10.2

Exhibit 10.2

WARRANT SOLICITATION AGREEMENT

THIS WARRANT SOLICITATION AGREEMENT (“Agreement”) is dated as of [date], by and between Action Products International, Inc. (the “Company”) and [name] (“Broker”).

RECITALS

WHEREAS, the Company desires to retain Broker to act as a nonexclusive Warrant Solicitation Agent in connection with the solicitation of the exercise of the Company’s publicly traded warrants; and

WHEREAS, as of [date], 2005, the Company had outstanding [number] redeemable common share purchase warrants (the “Public Warrants”) issued pursuant to that Warrant Agreement by and between the Company and Registrar and Transfer Company dated [date], 2005 (the “Warrant Agreement”); and

WHEREAS, each Public Warrant entitles the holder to purchase one of the Company’s Common Shares at the exercise price as described in the Warrant Agreement; and

WHEREAS, the Company desires Broker to act on behalf of the Company, and Broker is willing to do so in connection with the exercise of the Public Warrants;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

1. Appointment of the Solicitation Agent. The Company hereby appoints Broker to act as a nonexclusive Solicitation Agent for the Company in connection with the exercise of the Public Warrants and Broker hereby accepts such appointment. The Broker shall, consistent with its obligations under applicable laws and the rules and regulations of the National Association of Securities Dealers (“NASD”), use its reasonable best efforts to maximize the number of Public Warrants which are exercised, including appropriate communications with the record owners and beneficial owners of the Public Warrants, as well as with said owners’ brokers, agents or other representatives.

2. Warrant Solicitation Fee.

(a) Amount of Solicitation Fee. The Company shall pay Broker a fee consisting of a cash payment equal to [amount] percent of the total proceeds received from the exercise of those Public Warrants for whom Broker was properly designated as the soliciting broker on the Exercise Form of the Warrant Certificate evidencing the Public Warrants exercised (the “Solicitation Fee”).

(b) Conditions to Payment of Solicitation Fee. The Company shall only be obligated to pay the Solicitation Fee to Broker if all of the following conditions are met: (i) the exercise of the Public Warrants are in accordance with the Warrant Agreement, (ii) the actions of Broker in soliciting the exercise of the Public Warrants have been consistent with applicable federal and state securities laws, the guidelines of the NASD and applicable SEC rules and regulations, including Regulation M; and (iii) disclosure of the Company’s compensation arrangement with Broker is made by the Broker in documents provided to the holders of the Public Warrants.

(c) Timing of Payment of Solicitation Fee. Within fifteen (15) days after the end of each month, the Company will deliver a notice to Broker setting forth the number of Public Warrant certificates which have been properly completed for exercise by holders of the Public Warrants for which Broker has solicited in accordance with this Agreement and the Warrant Agreement, together with payment of the Solicitation Fee with respect to the Public Warrants so exercised and any documentation requested by Broker.

(d) Entire Solicitation Fee. The amounts to be paid to Broker under Section 2(a) above represent the entire amount payable by the Company to Broker, its agents, brokers or representatives in connection with the services described under Section 1 of this Agreement and shall also include any amounts which are adjudicated to be owed to any third parties as a result of Broker’s commitments to such third parties.

(e) Broker shall be responsible for compliance with applicable state securities and “blue sky” laws in connection with the solicitation of the Public Warrants. Broker shall notify the Company of the states of residence of holders of the Public Warrants in which Broker intends to solicit the exercise of the Public Warrants.

3. Representations and Warranties of the Company. The Company represents and warrants as follows:

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida and has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement constitutes the legal, valid and binding agreement and obligation of the Company, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally, including, without limitation laws regarding fraudulent or preferential transfers, or by the principles governing the availability of equitable remedies.

(b) The Company’s Registration Statement (“Registration Statement”) on Form S-3 (File No. 333-[file number]), registering the sale of the Common Shares issuable upon exercise of the Public Warrants (the “Warrant Shares”), was declared effective by the Securities and Exchange Commission (the “Commission”) on [date]. The Commission has not issued any orders preventing or suspending the use of the Prospectus contained in the Registration Statement and the Prospectus (as modified or supplemented by information incorporated by reference into such Prospectus) as well as the Company’s other public filings (the “SEC filings”) conforms, and during the effectiveness of this Agreement will conform, in all material respects with the requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and do not, and during the effectiveness of this Agreement will not, include any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(c) The Warrant Shares have been duly authorized, have been duly reserved for issuance and upon exercise of the Public Warrants and payment to the Company of the exercise price therefor, the Warrant Shares will be validly issued, fully paid and non-assessable.

(d) Neither the execution and delivery of this Agreement by the Company nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any

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breach of any provision of the Articles of Incorporation or Bylaws of the Company, each as amended to date; (ii) require any consent, approval, authorization or permit from, or filing with or notification to, any United States or foreign governmental or regulatory authority or other third party, except for any such consents, approvals, authorizations, permits, filings or notifications, the absence of which would not have a material adverse effect on the Company or the Public Warrants; (iii) result in a breach of the terms, conditions or provisions of, constitute a default (or an event which, upon notice or lapse of time or both, would constitute a default) under or cause, permit or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any material agreement or other material instrument or obligation to which the Company is a party or by which the Company is bound; or (iv) conflict with or result in a violation of any provision of (A) any statute, rule, regulation or ordinance which conflict or violation might have a material adverse impact on the Company or the Public Warrants, or (B) any material order, writ, injunction, judgment, award, decree, permit or license applicable to the Company or any of the Company’s properties or assets.

4. Representations and Warranties of Broker. Broker represents and warrants as follows:

(a) Broker is a corporation or other entity duly organized, validly existing and in good standing under the laws of the state of its organization or incorporation and has full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. All proceedings on the part of Broker necessary to authorize this Agreement and the transactions contemplated hereby have been duly and validly taken. This Agreement has been duly and validly authorized, executed and delivered by Broker, constitutes the legal, valid and binding agreement and obligation of Broker, enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors’ rights generally, including, without limitation laws regarding fraudulent or preferential transfers, or by the principles governing the availability of equitable remedies.

(b) Neither the execution and delivery of this Agreement by Broker nor the consummation of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the governing instruments of Broker, each as amended to date; (ii) require any consent, approval, authorization or permit from, or filing with or notification to, any United States or foreign governmental or regulatory authority or other third party, including the Securities and Exchange Commission, and the National Association of Securities Dealers by Broker; (iii) result in a breach of the terms, conditions or provisions of, constitute a default (or an event which, upon notice or lapse of time or both, would constitute a default) under or cause, permit or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any material agreement or other material instrument or obligation to which Broker is a party or by which Broker is bound; or (iv) conflict with or result in a violation of any provision of (A) any statute, rule, regulation or ordinance which conflict or violation might have a material adverse impact on Broker, including the Rules of the National Association of Securities Dealers and the Rules and Regulations of the Commission or (B) any material order, writ, injunction, judgment, award, decree, permit or license applicable to Broker or any of Broker’s properties or assets.

(c) Broker is familiar with the terms of the Warrant Agreement.

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5. Indemnification.

(a) The Company agrees to indemnify and hold harmless Broker and each person who controls Broker within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified parties or any of them may become subject under the Securities Act, the Exchange Act, or the common law or otherwise, and the Company agrees to reimburse Broker and controlling person for any legal or other expenses incurred by the respective indemnified parties in connection with defending against such losses, claims or liabilities or in connection with any investigation or inquiry of, or other proceeding which may be brought against, the respective indemnified parties, in each case arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (including the Prospectus as part thereof) or any post-effective amendment thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the indemnity agreements of the Company contained in this paragraph (a) shall not apply to any such losses, claims, damages, liabilities or expenses if such statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of Broker.

(b) Broker agrees to indemnify and hold harmless the Company, each of its officers and directors, and each person who controls the Company within the meaning of Section 15 of the Securities Act, from and against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified parties or any of them may become subject under the Securities Act, the Exchange Act, or the common law or otherwise and to reimburse each of them for any legal or other expenses incurred by the respective indemnified parties in connection with defending against any such losses, claims, damages or liabilities or in connection with any investigation of inquiry of, or other proceeding which may be brought against, the respective indemnified parties, in each case arising out of or based upon any untrue statement or alleged untrue statement of a material fact or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made by or on behalf of Broker other than as provided in the Registration Statement and Prospectus.

(c) Each party indemnified under the provision of paragraphs (a) and (b) of this Section 5 agrees that, upon its receipt of written notification of the commencement of any investigation or inquiry of, or proceeding against, it in respect of which indemnity may be sought on account of any indemnity agreement contained in such paragraphs, it will promptly give written notice (the “Notice”) of such notification to the party or parties from whom indemnification may be sought hereunder. No indemnification provided for in such paragraphs shall be available to any party who shall fail so to give the Notice if the party to whom such Notice was not given was unaware of the action, suit, investigation, inquiry or proceeding to which the Notice would have related and was prejudiced by the failure to give the Notice. Any indemnifying party shall be entitled at its own expense to participate in the defense of any action, suit or proceeding against, or investigation or inquiry of, an indemnified party. Any indemnifying party shall be entitled, if it so elects within a reasonable amount of time after receipt of the Notice by giving written notice (herein called the Notice of Defense) to the indemnified party, to assume (alone or in conjunction with any other indemnifying party or parties) the entire defense of such action, suit, investigation, inquiry or proceeding, in which event such defense shall be conducted, at the expense of the indemnifying party or parties, by counsel chosen by such indemnifying party or parties reasonably satisfactory to the indemnified party or parties; provided, however, that (i) if the indemnified party or parties reasonably determine that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action, suit, investigation, inquiry or proceeding or that there may

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be legal defenses available to such indemnified party or parties different from or in addition to those available to the indemnifying party or parties, then counsel for the indemnified party or parties shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party or parties and (ii) in any event, the indemnified party or parties shall be entitled to have counsel chosen by such indemnified party or parties participate in, but not conduct, the defense. If, within a reasonable time after receipt of the Notice, an indemnifying party gives a Notice of Defense and the counsel chosen by the indemnifying party or parties is reasonably satisfactory to the indemnified party or parties, the indemnifying party or parties will not be liable under paragraphs (a) and (b) of this Section 5 for any legal or other expenses subsequently incurred by the indemnified party or parties in connection with the defense of the action, suit, investigation, inquiry or proceeding, except that (A) the indemnifying party or parties shall bear the legal and other expenses incurred in connection with the conduct of the defense as referred to in clause (i) of the proviso to the preceding sentence and (B) the indemnifying party or parties shall bear such other expenses as it or they have authorized to be incurred by the indemnified party or parties. If, within a reasonable time after receipt of the Notice, no Notice of Defense has been given, the indemnifying party or parties shall be responsible for any legal or other expenses incurred by the indemnified party or parties in connection with the defense of the action, suit, investigation, inquiry or proceeding.

(d) No indemnifying party will, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not such indemnified party or any person who controls such indemnified party within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act is a party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of such indemnified party and each controlling person from all liability arising out of such claim, action, suit or proceeding.

6. Termination. Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated by the Company at any time and for any reason effective the close of the Company’s next business day after delivery of written notice of termination to Broker in accordance with Section 7(e) herein. If this Agreement is terminated pursuant to this Section 6, this Agreement shall thereafter have no effect except for (i) the Company’s obligation to pay the Solicitation Fee for exercises of Public Warrants prior to the effectiveness of said termination and (ii) both parties’ indemnification obligations under Section 5 above, all of which shall survive the termination of this Agreement.

7. Miscellaneous.

(a) Survival of Representations and Warranties. The parties’ respective representations and warranties contained in this Agreement shall survive until three years after the termination of this Agreement at which time they shall expire and be deemed terminated and thereafter neither party may claim any damage for breach thereof.

(b) Amendment and Waiver. Any term or provision of this Agreement may be waived at any time by the party which is entitled to the benefits thereof, but only in a writing signed by such party, and this Agreement may be amended or supplemented at any time, but only by written agreement of the Company and Broker. Any such waiver with respect to a failure to observe any such provision shall not operate as a waiver of any subsequent failure to observe such provision unless otherwise expressly provided in such waiver.

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(c) Expenses. Except as otherwise provided in this Agreement, the Company and Broker shall pay their respective fees, commissions, costs, and other expenses, separately incurred in connection with the preparation and execution of this Agreement and the consummation of the transactions contemplated hereby.

(d) Entire Agreement. This Agreement contains the entire agreement between the Company and Broker with respect to the solicitation of the exercise of the Public Warrants and the related transactions and supersedes all prior arrangements or understandings with respect thereto.

(e) Notices. All notices, consents, requests, instructions, approvals and other communications provided for herein shall be validly given, made or served, if in writing and delivered personally or sent by fax (except for legal process) or certified mail, postage prepaid, to:

	Company:
	Action Products International, Inc.
	1101 No. Keller Rd., Suite E
	Orlando, FL 32810
	Attn: Robert L. Burrows, Chief Financial Officer
	Fax No: (419) 781-3805
	With copies to:
	Tarter Krinsky & Drogin LLP
	470 Park Avenue South, 14th Floor
	New York, NY 10016
	Attn: James G. Smith, Esq.
	Fax No: (212) 481-9062
Broker:	[name]
	[address]
	Attn: [name]
	Fax No: [number]

or to such other address or fax number as any party hereto may, from time to time, designate in a written notice given in a like manner. Notice given by fax shall be deemed delivered on the day the sender receives confirmation that such notice was received at the fax number of the addressee, provided that if the faxed notice is transmitted by the sender after 5:00 p.m. (Eastern time), it shall be deemed to have been delivered the following day. Notice given by mail as set out above shall be deemed delivered three calendar days after the date the same is postmarked.

(f) Assignment. Except as provided in the following sentence, this Agreement may not be assigned, by operation of law or otherwise, and any attempt to do so shall be void. This Agreement shall be binding upon and inure to the benefit of successors and assigns of the parties hereto.

(g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to conflicts of laws.

(h) Arbitration. The parties agree that any controversy, claim or dispute arising out of or relating to this Agreement shall be settled by arbitration before a single arbitrator to be in

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the City of New York, State of New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Judgment may be entered on the Arbitrator’s award in any court having jurisdiction, and the parties consent to the jurisdiction of the courts of New York for this purpose.

(i) Construction of Agreement. Each of the parties hereto acknowledges and agrees that no provision in this Agreement is to be interpreted for or against any party because that party or that party’s legal representative drafted the provision.

(j) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

[remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

ACTION PRODUCTS INTERNATIONAL, INC.
By:
Name:	Robert L. Burrows
Title:	CFO

[name]

By:
Name:	[name]
Title:	[title]

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption “Experts” in the Registration Statement of Action Products International, Inc., on Form S-3, for the registration of 5,000,000 of its common shares and to the incorporation by reference therein, and in the related prospectus, of our report dated January 26, 2004, with respect to the consolidated financial statements of Action Products International, Inc. and subsidiary included in its Annual Report on Form 10-KSB for the year ended December 31, 2003, filed with the Securities and Exchange Commission.

Moore Stephens Lovelace, P.A.

Certified Public Accountants

Orlando, Florida

December [    ], 2004