SECOND AMENDMENT TO WARRANT AGREEMENT

Exhibit 10.1

SECOND AMENDMENT TO

WARRANT AGREEMENT

THIS SECOND AMENDMENT TO THE WARRANT AGREEMENT, dated January 31, 2007, (the “Second Amendment”) hereby amends the Warrant Agreement dated June 16, 2006, as amended by the First Amendment dated July 31, 2006, (the “Agreement”) by and between ACTION PRODUCTS INTERNATIONAL, INC., a Florida corporation (the “Company”), and REGISTRAR AND TRANSFER COMPANY, as Warrant Agent (the “Warrant Agent”) as follows:

WHEREAS, on July 20, 2006 (the “Effective Date”), the Securities and Exchange Commission declared effective a registration statement under the Securities Act of 1933, as amended, covering the offer and sale of the Common Shares issuable upon exercise of the Warrants; and

WHEREAS, the Exercise Price of the Warrants under the Agreement, prior to the First Amendment was (a) $3.25 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) $3.75 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 the terms and provisions of the Agreement; and

WHEREAS, the Expiration Date of the Warrants under the Agreement may be erroneously deemed to be 5:00 p.m. (Eastern time) on January 31, 2007, notwithstanding the definition of “Expiration Date” under Section 1 of the Agreement, subject to the terms and provisions of the Agreement; and

WHEREAS, the Company and the Warrant Agent clarified that the Expiration Date is July 20, 2007, the date one (1) year after the Effective Date, as set forth in Section 1, of the Agreement; and

WHEREAS, on January 30, 2007, the Board of Directors of the Company extended the expiration dates of the Warrants such that the Warrants will allow the holders thereof to purchase one common share at an exercise price of $3.25 per share until January 31, 2008 and $3.75 per share from February 1, 2008 until January 31, 2010; and

WHEREAS, the Company and the Warrant Agent desire to amend the Agreement, as amended, to reflect the extension.

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth and for the purpose of amending the Warrants and the Agreement, the Company and the Warrant Agent hereby amend the Agreement as follows:

1. The Second “WHEREAS” clause is hereby amended as follows:

“WHEREAS, the Warrants shall be exercisable from the date the Securities and Exchange Commission declares effective a registration statement

under the Securities Act of 1933, and amended (the “1933 Act”) covering the offer and sale of the Common Shares issuable upon exercise of the Warrants (the “Effective Date”) until January 31, ^2010, unless earlier redeemed as provided herein; and”

2. The definitions of “Exercise Price” and “Expiration Date” in Section 1 are hereby amended as follows:

“Exercise Price” shall mean (a) $ 3.25 per Common Share, if the Exercise Date is after the Effective Date but on or before ^January 31, 2008, and (b) $3.75 per Common Share, if the Exercise Date is after ^January 31, 2008 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 ^January 31, 2010.

2. The Warrant Certificates shall be deemed to be amended such that the Expiration Date is January 31, 2010 in accordance with this Second Amendment, notwithstanding that Warrant Certificates heretofore or hereafter issued may continue to express an Expiration date of January 31, 2007.

3. This Second Amendment is made pursuant to Section 12(ii) of the Agreement not requiring approval of any holders of the Warrants.

4. Section 13 shall be amended such that any notices that shall be sent to the Company shall be copied only as follows: Tarter Krinsky & Drogin LLP, 470 Park Avenue South, 14^th Floor, New York, New York 10016, Attn: James G. Smith, Esq., Phone: (212)  ###-###-####.

5. All other terms, conditions and provisions of the Agreement, except as otherwise amended by this Second Amendment, shall remain in full force and effect. Capitalized terms not otherwise defined herein shall have the meanings as defined in the Agreement.

6. This Second Amendment 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 Second Amendment to be duly executed as of the date first above written.

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