##### 



SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


Form 10-QSB

|           |  |                                                                                   
|---------- |  | ----------------------------------------------------------------------------------
|(Mark One) |  |                                                                                   
|           |  |                                                                                   
|[X]        |  | Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 
|           |  | For the quarter ended March 31, 2003                                              
|           |  |                                                                                   
|or        
|           |  |                                                                                   
|[  ]       |  | Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|           |  | For the transition period from  to                                                

000-13118
(Commission File No.)

ACTION PRODUCTS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)


|                                |  |                                  
|------------------------------- |  | ---------------------------------
|Florida                         |  | 59-2095427                       
|(State or other jurisdiction of |  | (IRS Employer Identification No.)
|incorporation or organization)  |  |                                  

390 N. Orange Ave., Suite 2185, Orlando, Florida, 32801
(Address of principal executive offices, Zip Code)

Registrants telephone number, including area code (407) 481-8007

Check whether the registrant (1) has filed all reports required to be
filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES [X]      NO [  ]

State the number of shares outstanding of each of the issuers classes of
common stock, as of last practicable date.

|                              |  |                               |           | 
|----------------------------- |  | ----------------------------- | --------- | 
|Class                         |  | Outstanding at April 28, 2003
|Common Stock, $.001 par value |  |                               | 3,100,100 | 

Transitional Small Business Disclosure Format (check one): YES [  ] NO [X]

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I N D E X

|                                                                                              |                                                                                                          |  |    |   |  |  |        |  | 
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- |  | -- | - |  |  | ------ |  | 
|                                                                                              |                                                                                                          |  |    |   |  |  | Page  
|                                                                                              |                                                                                                          |  |    |   |  |  | Number
|                                                                                              |                                                                                                          |  |    |   |  |  |       
|PART I. FINANCIAL INFORMATION                                                                 |                                                                                                          |  |    |  
|Item 1. Financial Statements                                                                  |                                                                                                          |  |    |  
|                                                                                              | Condensed Consolidated Balance Sheet at March 31, 2003 (unaudited)                                       |  |    | 3 | 
|                                                                                              | Condensed Consolidated Statements of Operations  Three months
ended March 31, 2003 and 2002 (unaudited) |  |    | 4 | 
|                                                                                              | Condensed Consolidated Statements of Cash Flows  Three months
ended March 31, 2003 and 2002 (unaudited) |  |    | 5 | 
|                                                                                              | Notes to unaudited Condensed Consolidated Financial Statements                                           |  |    | 6 | 
|Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                          |  | 7  |  
|Item 3. Controls and Procedures                                                               |                                                                                                          |  | 8  |  
|PART II. OTHER INFORMATION                                                                    |                                                                                                          |  |    |  
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                                                          |  | 9  |  
|SIGNATURE PAGE                                                                                |                                                                                                          |  | 10 |  

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##### 



PART I. FINANCIAL INFORMATION

ITEM  1.   Financial Statements

ACTION PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

|                                                                                      |                                            |                                   |                            |                           |         |           |           | 
|------------------------------------------------------------------------------------- | ------------------------------------------ | --------------------------------- | -------------------------- | ------------------------- | ------- | --------- | --------- | 
|                                                                                      |                                            |                                   |                            |                           |         | March 31,
|                                                                                      |                                            |                                   |                            |                           |         | 2003     
|                                                                                      |                                            |                                   |                            |                           |         |          
|ASSETS                                                                               
|CURRENT ASSETS                                                                        |                                            |                                   |                            |                          
|Cash and cash equivalents                                                             |                                            | $                                 | 439,800                    |                          
|Accounts receivable, net of an
allowance for doubtful accounts
of $101,200            |                                            |                                   | 954,700                    |                          
|Inventories, net                                                                      |                                            |                                   | 1,214,500                  |                          
|Prepaid expenses and other assets                                                     |                                            |                                   | 405,800                    |                          
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            |                                   |                            | TOTAL CURRENT ASSETS      |         |           | 3,014,800 | 
|PROPERTY, PLANT AND EQUIPMENT                                                         |                                            |                                   | 2,153,900                  |                          
|Less accumulated depreciation and amortization                                        |                                            |                                   | (1,199,600                 | )                        
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            | NET PROPERTY, PLANT AND EQUIPMENT |                            |                           | 954,300 |          
|GOODWILL                                                                              |                                            |                                   | 782,400                    |                          
|OTHER ASSETS                                                                          |                                            |                                   | 738,100                    |                          
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            |                                   |                            | TOTAL ASSETS              |         | $         | 5,489,600 | 
|                                                                                      |                                            |                                   |                            |                          
|LIABILITIES AND SHAREHOLDERS EQUITY                                                 
|CURRENT LIABILITIES                                                                   |                                            |                                   |                            |                          
|Current portion of obligation under capital lease                                     |                                            | $                                 | 86,900                     |                          
|Accounts payable                                                                      |                                            |                                   | 486,600                    |                          
|Accrued expenses, payroll and related expenses                                        |                                            |                                   | 63,900                     |                          
|Current portion of mortgage payable                                                   |                                            |                                   | 23,100                     |                          
|Borrowings under lines of credit                                                      |                                            |                                   | 1,247,300                  |                          
|Other Current Liabilities                                                             |                                            |                                   | 25,000                     |                          
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            |                                   |                            | TOTAL CURRENT LIABILITIES |         |           | 1,932,800 | 
|                                                                                      |                                            |                                   |                            |                          
|OBLIGATION UNDER CAPITAL LEASE                                                        |                                            |                                   | 68,400                     |                          
|MORTGAGE PAYABLE                                                                      |                                            |                                   | 644,000                    |                          
|DEFERRED REVENUE                                                                      |                                            |                                   | 93,800                     |                          
|OTHER                                                                                 |                                            |                                   | 14,400                     |                          
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            |                                   |                            | TOTAL LIABILITIES         |         |           | 2,753,400 | 
|                                                                                      |                                            |                                   |                            |                          
|SHAREHOLDERS EQUITY                                                                  |                                            |                                   |                            |                          
|Preferred Stock - 10,000,000 shares authorized,
zero shares issued and outstanding    |                                            |                                   |                           |                          
|Common stock - $.001 par value; 15,000,000 shares
authorized; 3,267,100 shares issued |                                            |                                   | 3,200                      |                          
|Treasury Stock - $.001 par value; 167,000 shares                                      |                                            |                                   | (200                       | )                        
|Additional paid-in capital                                                            |                                            |                                   | 4,313,800                  |                          
|Accumulated Deficit                                                                   |                                            |                                   | (1,580,600                 | )                        
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      |                                            |                                   | TOTAL SHAREHOLDERS EQUITY |                           |         | 2,736,200 |          
|                                                                                      |                                            |                                   |                            |                          
|                                                                                      | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                                   | $                          | 5,489,600                 |        
|                                                                                      |                                            |                                   |                            |                          

See Accompanying Notes

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ITEM  1.   Financial Statements (cont.)

ACTION PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                                      |  |                            |           |      |  |   |           |  
|----------------------------------------------------- |  | -------------------------- | --------- | ---- |  | - | --------- | -
|                                                      |  | Three Months Ended Mar. 31
|                                                      |  |                           
|                                                      |  | 2003                       |           | 2002
|                                                      |  |                            |           |     
|NET SALES                                             |  | $                          | 1,385,100 |      |  | $ | 1,458,100 |  
|COST OF SALES                                         |  |                            | 789,900   |      |  |   | 846,200   |  
|                                                      |  |                            |           |      |  |   |           |  
|GROSS PROFIT                                          |  |                            | 595,200   |      |  |   | 611,900   |  
|OPERATING EXPENSES                                    |  |                            |           |      |  |   |           |  
|Selling                                               |  |                            | 160,100   |      |  |   | 400,200   |  
|General and administrative                            |  |                            | 537,800   |      |  |   | 607,300   |  
|                                                      |  |                            |           |      |  |   |           |  
|TOTAL OPERATING EXPENSES                              |  |                            | 697,900   |      |  |   | 1,007,500 |  
|                                                      |  |                            |           |      |  |   |           |  
|LOSS FROM OPERATIONS                                  |  |                            | (102,700  | )    |  |   | (395,600  | )
|OTHER INCOME (EXPENSE)                                |  |                            |           |      |  |   |           |  
|Interest expense                                      |  |                            | (24,900   | )    |  |   | (38,200   | )
|Other                                                 |  |                            | (2,400    | )    |  |   | 2,600     |  
|                                                      |  |                            |           |      |  |   |           |  
|                                                      |  |                            | (27,300   | )    |  |   | (35,600   | )
|                                                      |  |                            |           |      |  |   |           |  
|LOSS BEFORE BENEFIT FROM INCOME TAXES                 |  |                            | (130,000  | )    |  |   | (431,200  | )
|BENEFIT FROM INCOME TAXES                             |  |                            | 0         |      |  |   | 58,800    |  
|                                                      |  |                            |           |      |  |   |           |  
|NET LOSS                                              |  | $                          | (130,000  | )    |  | $ | (372,400  | )
|                                                      |  |                            |           |      |  |   |           |  
|LOSS PER SHARE                                        |  |                            |           |      |  |   |           |  
|Basic and Diluted                                     |  | $                          | (0.04     | )    |  | $ | (0.17     | )
|                                                      |  |                            |           |      |  |   |           |  
|Weighted average number of common shares outstanding: |  |                            |           |      |  |   |           |  
|Basic and Diluted                                     |  |                            | 3,153,700 |      |  |   | 2,230,800 |  

See Accompanying Notes

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ITEM  1.   Financial Statements (cont.)

ACTION PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |          |        |          |          |  
|-------------------------------------------------------------------------- | ------------------------------------------------ | ------------ | --------------------------------------------------- | ------------------------------------------- | ------ | -------------------------- | -------- | -------- | ------ | -------- | -------- | -
|                                                                           |                                                  |              |                                                     |                                             |        | Three Months Ended Mar. 31
|                                                                           |                                                  |              |                                                     |                                             |        |                           
|                                                                           |                                                  |              |                                                     |                                             |        | 2003                       |          | 2002    
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |                                                  |              |                                                     |                                             |        |                            |          |         
|Net Loss                                                                   |                                                  | $            | (130,000                                            | )                                           |        | $                          | (372,400 | )       
|Adjustments to reconcile net loss to net cash used in operating activities |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           | Depreciation                                     |              |                                                     | 36,600                                      |        |                            |          | 43,200   |       
|                                                                           | Amortization                                     |              |                                                     | 78,700                                      |        |                            |          | 41,500   |       
|                                                                           | Loss on disposal of property plant and equipment |              |                                                     |                                            |        |                            |          | 56,000   |       
|                                                                           | Provision for bad debts                          |              |                                                     | 7,500                                       |        |                            |          | 23,900   |       
|                                                                           | Deferred income tax provision                    |              |                                                     |                                            |        |                            |          | (58,800  | )     
|Changes in:                                                                |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           | Accounts receivable                              |              |                                                     | (166,400                                    | )      |                            |          | 254,700  |       
|                                                                           | Inventories                                      |              |                                                     | (61,900                                     | )      |                            |          | 13,100   |       
|                                                                           | Prepaid expenses                                 |              |                                                     | (133,800                                    | )      |                            |          | (66,100  | )     
|                                                                           | Other assets                                     |              |                                                     | (18,100                                     | )      |                            |          | (139,400 | )     
|                                                                           | Accounts payable                                 |              |                                                     | 133,000                                     |        |                            |          | 216,800  |       
|                                                                           | Accrued expenses, payroll and related expenses   |              |                                                     | (41,100                                     | )      |                            |          | (178,400 | )     
|                                                                           | Income taxes receivable/ (payable)               |              |                                                     | 8,500                                       |        |                            |          |         |       
|                                                                           | Deferred revenue                                 |              |                                                     | (6,200                                      | )      |                            |          | (6,200   | )     
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           |                                                  |              |                                                     | NET CASH USED IN OPERATING ACTIVITIES       |        |                            | (293,200 | )        |        |          | (172,100 | )
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |                                                  |              |                                                     |                                             |        |                            |          |         
|Acquisition of property, plant and equipment                               |                                                  |              |                                                    |                                             |        |                            | (10,900  | )       
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           |                                                  |              |                                                     | NET CASH USED IN INVESTING ACTIVITIES       |        |                            |         |          |        |          | (10,900  | )
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |                                                  |              |                                                     |                                             |        |                            |          |         
|Purchase of Treasury Stock                                                 |                                                  |              | (135,000                                            | )                                           |        |                            | (39,900  | )       
|Repayment of mortgage principal                                            |                                                  |              | (5,800                                              | )                                           |        |                            | (5,300   | )       
|Repayment of notes payable and obligation under capital lease              |                                                  |              | (21,100                                             | )                                           |        |                            | (41,600  | )       
|Net change in borrowings under line of credit                              |                                                  |              | 331,500                                             |                                             |        |                            | (82,500  | )       
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           |                                                  |              | NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |                                             |        | 169,600                    |          |          |        | (169,300 | )       
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           |                                                  |              |                                                     | NET (DECREASE) IN CASH AND CASH EQUIVALENTS |        |                            | (123,600 | )        |        |          | (352,300 | )
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                           |                                                  |              | 563,400                                             |                                             |        |                            | 482,800  |         
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 |                                                  | $            | 439,800                                             |                                             |        | $                          | 130,500  |         
|                                                                           |                                                  |              |                                                     |                                             |        |                            |          |         
|Supplemental disclosures  cash paid for:                                  |                                                  |              |                                                     |                                             |        |                            |          |         
|                                                                           |                                                  | Interest     |                                                     | $                                           | 24,900 |                            |          | $        | 38,200 |         
|                                                                           |                                                  | Income Taxes |                                                     | $                                           | 0      |                            |          | $        | 0      |         

See Accompanying Notes

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ACTION PRODUCTS INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



|1. |  | Condensed consolidated financial statements.In the opinion of
management, the accompanying unaudited condensed consolidated
financial statements contain all normal recurring adjustments
necessary to present fairly the financial position of Action Products
International, Inc. and its subsidiary, Action Products Canada Ltd.
(collectively, the Company), at March 31, 2003 and the results of
its (i) operations for the three month periods ended March 31, 2003
and 2002 and (ii) cash flows for the three month periods ended March
31, 2003 and 2002. The financial information included herein is
taken from the books and records of the Company and is unaudited.                                                                                                                                                                                                                                                                                                                                   
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Companys annual
report on Form 10-KSB/A for the year ended December 31, 2002. The
results of operations for the three month period ended March 31, 2003
are not necessarily indicative of the operating results for the full
year. Through March 31, 2003, the Company has been able to meet its
obligations as they come due; however, it is at least reasonably
possible that if the Company continues to incur losses and negative
cash flows, it will have to obtain additional sources of debt or equity
financing to maintain its liquidity. There can be no assurance that
such financing will be available or available on terms acceptable to
the Company if needed.
|  
|2. |  | Line of credit.In March 2001, the Company entered into an
agreement with a financial institution, pursuant to which it provides
a revolving line of credit (the Revolver) for up to $2 million at
the Prime lending rate. The borrowings under the Revolver are
utilized by the Company to finance accounts receivable, inventory and
other operating and capital requirements. The Revolver matures June
30, 2003 and contains covenants relating to the financial condition
of the Company. If the Company fails to maintain compliance with the
financial covenants contained in the Revolver, the maturity date
could be accelerated. The Company is currently in compliance with all
of the covenants.                                                                                                                                                                                                                                                                                                      
|  
|3. |  | Mortgage Payable.In November 1998, the Company borrowed
$750,000 in the form of a mortgage payable. The mortgage is
collateralized by real estate and improvements and contains certain
restrictive covenants, which provide that, among other things, the
Company maintain a minimum working capital, net worth, debt service
coverage and a maximum debt to net worth ratio. If the Company fails
to maintain compliance with the financial covenants contained in the
note, the maturity date could be accelerated. At December 31, 2002,
the Company was not in compliance with the debt service coverage and
debt to net worth covenants. However, the Company has obtained a
waiver of non-compliance from the financial institution for the
twelve month period ending December 31, 2003.                                                                                                                                                                                                                     
|  
|4. |  | Earnings per share.Common stock equivalents were not included
in the computation of diluted earnings per share for the three month
periods ending March 31, 2003 and 2002, as their effect would have
been anti-dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|5. |  | Common Stock and Equity Securities.During the three month
period ended March 31, 2003, the Company repurchased approximately
120,900 of its common shares, at a cost of $135,000. At March 31,
2003, the Company has one stock-based employee compensation
plan. The Company accounts for the plan under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock
Issued to Employees and related Interpretations. No stock-based
employee compensation cost is reflected in net income, as all options
granted under the plan had an exercise price not less than the market
value of the underlying common stock on the date of grant. The effect
on net income and earnings per share if the Company had applied the
fair value recognition provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, to stock-based employee
compensation was not significant.                                                                                                

Page 6 of 12



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)



|6. |  | Subsequent Event.On April 25, 2003 the Company announced a
warrant dividend for all shareholders of record as of June 12, 2003.
Shareholders will receive warrants to purchase one share of common
stock for each share owned, as of the record date, at an exercise
price of $2.00 per share.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. |  | Reclassifications.Certain amounts from the prior period have
been reclassified to conform to the current period presentation.                                                                                                                                                                 

ITEM  2.   Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements:

Forward-looking statements in this Form 10-QSB including, without
limitation, statements relating to our plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. All statements made in this report, other than statements of
historical fact, are forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. The
following factors, among others, could cause actual results to differ
materially from those set forth in the forward-looking statements: our
ability to successfully develop our brands and proprietary products
through internal development, licensing and/or mergers and acquisitions.
Additional factors include, but are not limited to the following: the size
and growth of the market for our products, competition, pricing pressures,
market acceptance of our products, the effect of economic conditions,
intellectual property rights, the results of financing efforts, risks in
product development, other risks identified in this report and our other
periodic filings with the Securities and Exchange Commission.

Results of Operations:

Three Months Ended March 31, 2003 Compared With Three Months Ended March 31, 2002

Net salesfor the three months ended March 31, 2003 were $1,385,100,
compared with net sales of $1,458,100 for the three months ended March 31,
2002. Management attributes the $73,000 or 5% decrease in net sales to
the continued weakness in the retail market. Our sales decreased
principally in the museum and international markets, where we experienced
a decrease in sales of our Climb@tron and I Dig product lines.
Increased emphasis is being placed on increasing distribution across
a broader range of channel participants including museums and
attractions. Sales decreases in these channels were partially offset by sales
of our new Jay Jay The Jet Plane brand which was introduced in the
fourth quarter of
2002. Acceptance of this product line has continued to grow; this
growth is expected to continue with exposure from its placement in over 700 Imaginarium sections in Toys R Us
stores in the United States, in the second quarter of 2003.

Gross profitdecreased by $16,700 to $595,200 for the three months ended
March 31, 2003, compared with $611,900 for the three months ended March
31, 2002. The gross profit percentage improved to 43% from 42% for the
three month periods ended March 31, 2003 and 2002 respectively. The
decrease in gross profit is attributable to the decrease in sales
discussed above. The increase in gross profit percentage compared to the
same period in 2002, was mainly attributable to lower product and
importation costs.

Selling, general and administrative (SG&A) expensesdecreased by $309,600
to $697,900 for the three month period ended March 31, 2003 from
$1,007,500 for the three month period ended March 31, 2002. This 31%
decrease in SG&A expenses is due primarily to the following:



| |  |  | Compensation decrease of $197,000 due to reductions in staffing                                                                
| | - |  | -------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Travel and living decrease of $38,700 resulting from reduced international travel                                              
|
| |  |  | Facility cost decrease of $13,700 resulting from the shutdown of the Canadian facility                                         
|
| |  |  | Estimated doubtful accounts decrease of $16,400 due to credit insurance coverage and improved credit and
collections procedures

Page 7 of 12



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ITEM  2.   Managements Discussion and Analysis of Financial Condition and Results of Operations (Continued)

Interest expenserelated to current and long-term debt was $24,900 and
$38,200 for the three month periods ended March 31, 2003 and 2002,
respectively. The decrease of $13,300 is due to lower borrowings under
our line of credit, combined with a lower rate of interest.

Other income and (expense)during the three month periods ended March 31,
2003 and 2002 was ($2,400) and $2,600, respectively. The $5,000 change was
mainly attributable to miscellaneous expense related to the settlement of
a legal claim.

Income before provision for income taxes and net
income:as a result of the
foregoing, the net loss before taxes was $130,000 and the net loss after
taxes was $130,000 for the three months ended March 31, 2003, compared
with a net loss before taxes of $431,200 and net loss after taxes of
$372,400 for the three months ended March 31, 2002.

Financial Condition, Liquidity, and Capital Resources:

As of March 31, 2003, the Company had cash and cash equivalents of
$439,800, representing a decrease of $123,600 compared to December 31,
2002.

After taking account of non-cash items and other
adjustments, our cash requirements for
operations for the three months ended March 31, 2003 were $293,200. The
principal source of cash from Operating activities for the three months
ended March 31, 2003 was an increase in accounts payable of $133,000 due
to a seasonal increase in inventory. Principal uses of cash from Operating
activities in the first three months of fiscal 2003 were: an increase of
$166,400 in accounts receivable resulting from sales incentive programs
offering extended payment terms, an increase of $133,800 in prepaid
expenses, a seasonal increase in inventories of $61,900 and a decrease in
accrued expenses of $41,100.

To meet a portion of our operating cash requirements, we increased our
borrowing under our line of credit by $331,500. After applying $135,000
to the repurchase of common stock and $26,900 to repayment of mortgage and
capital lease principal, this left net cash from financing activities of
$169,600.

At March 31, 2003, borrowing under our line of credit was $1,247,300, a
decrease of $362,900 from $1,610,200 as of March 31, 2002. Our line of
credit provides for borrowings up to $2,000,000 at the prime rate and
matures June 30, 2003. Under the line of credit agreement, we are subject
to financial covenants relating to certain asset balances and financial
ratios. As of March 31, 2003 we were eligible to borrow $1,390,700 under
our line of credit and were in compliance with our financial covenants.

ITEM  3.   Controls and Procedures

Action Products management, including the Chief Executive Officer and
Chief Financial Officer, have conducted an evaluation of the effectiveness
of disclosure controls and procedures pursuant to Exchange Act Rule
13a-14. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the disclosure controls and procedures
are effective in ensuring that all material information required to be
filed in this quarterly report has been made known to them in a timely
fashion. There have been no significant changes in internal controls, or
in factors that could significantly affect internal controls, subsequent
to the date the Chief Executive Officer and Chief Financial Officer
completed their evaluation.

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---



##### 



PART II. OTHER INFORMATION

ITEM  6.   Exhibits and Reports on Form 8-K



|A. |  | Exhibits
|-- |  | --------

|            |  |                                                                       
|----------- |  | ----------------------------------------------------------------------
|Exhibit No. |  | Description                                                           
|            |  |                                                                       
|99.1        |  | Chief Executive Officer  Sarbanes-Oxley
Act Section 906 Certification
|99.2        |  | Chief Financial Officer  Sarbanes-Oxley
Act Section 906 Certification



|B. |  | Reports on Form 8-K                                                                                    
|-- |  | -------------------------------------------------------------------------------------------------------
|  
|   |  | We have not filed any reports on Form 8-K during the last quarter of the period covered by this report.

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##### 



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ACTION PRODUCTS INTERNATIONAL, INC

|                     |     |  |                                                                                                
|-------------------- | --- |  | -----------------------------------------------------------------------------------------------
|Date: April 29, 2003 | By: |  | /s/ RONALD S. KAPLAN
Ronald Kaplan
Chief Executive Officer (Principal Executive Officer)       
|                     |     |  |                                                                                                
|Date: April 29, 2003 | By: |  | /s/ ROBERT L. BURROWS

Robert L. Burrows
Chief Financial Officer (Principal Accounting Officer)

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##### 



Chief Executive Officer  Sarbanes-Oxley Act Section 302 Certification

I, Ronald S. Kaplan, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Action Products International, Inc.;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)     designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
|
| | (b)     evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c)     presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors
(or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)     all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
|
| | (b)     any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated
in this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |     |  |                                                                    
|-------------------- | --- |  | -------------------------------------------------------------------
|Date: April 29, 2003 | By: |  | /s/ RONALD S. KAPLAN                                               
|                     |     |  | Ronald Kaplan
Chief Executive Officer
(Principal Executive Officer)

Page 11 of 12



---



##### 



Chief Financial Officer  Sarbanes-Oxley Act Section 302 Certification

I, Robert L. Burrows, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of Action Products International, Inc.;                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the registrant and have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)     designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
|
| | (b)     evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c)     presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of registrants board of directors
(or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)     all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
|
| | (b)     any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated
in this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                     |     |  |                                                                                               
|-------------------- | --- |  | ----------------------------------------------------------------------------------------------
|Date: April 29, 2003 | By: |  | /s/ ROBERT L. BURROWS
Robert L. Burrows
Chief Financial Officer
(Principal Accounting Officer)

Page 12 of 12