<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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[X] Quarterly report for the quarterly period ended September 30, 1995
------------------
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-3952
---------------------------------------------
SIBONEY CORPORATION
- - ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 73-0629975
- - ---------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 Maryland Ave., Suite 1040, P.O. Box 16184, St. Louis, MO 63105
- - ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
314-725-6141
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark 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 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 [ ]
<TABLE>
<CAPTION>
Title of class of Number of Shares
common stock outstanding as of this Report Date
----------------- ----------------------------------
<S> <C>
Common stock, par value
$.10 per share 15,566,694
</TABLE>
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<TABLE>
INDEX
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<S> <C>
PART I FINANCIAL INFORMATION
- - ------ ---------------------
ITEM 1. Financial Statements
------
Condensed Consolidated Balance Sheet 3
September 30, 1995 and December 31, 1994
Condensed Consolidated Statement of Operations 5
Three Months and Nine Months Ended
September 30, 1995 and September 30, 1994
Condensed Consolidated Statement of Cash Flows 6
Nine Months Ended September 30, 1995 and
September 30, 1994
Notes to Condensed Consolidated Financial 7
Statements
ITEM 2. Management's Discussion and Analysis of 8
------ Financial Condition and Results of Operation
PART II OTHER INFORMATION
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ITEM 6. Exhibits and Reports on Form 8-K 10
------
Signatures 10
- - ----------
</TABLE>
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
----------------------------------------
<CAPTION>
ASSETS
------
DECEMBER 31,
SEPTEMBER 30, 1994 (SEE
1995 NOTE BELOW)
------------- ------------
<S> <C> <C>
CURRENT ASSETS
- - --------------
Cash and cash equivalents $ 689,708 $ 570,191
Accounts and notes receivable 161,594 211,132
Inventories (Note 3) 283,704 262,829
Prepaid expenses and deposits 355,819 391,894
----------- -----------
TOTAL CURRENT ASSETS 1,490,825 1,436,046
--------------------
PROPERTY, PLANT AND EQUIPMENT (NET OF 392,688 433,910
- - ------------------------------------
ACCUMULATED DEPRECIATION OF $1,083,264
- - --------------------------------------
AT SEPTEMBER 30, 1995 AND $1,011,984 AT
- - ---------------------------------------
DECEMBER 31, 1994)
- - ------------------
INVESTMENTS IN NATURAL RESOURCES 5,101 5,101
- - --------------------------------
----------- -----------
$ 1,888,614 $ 1,875,057
=========== ===========
NOTE: The balance sheet at December 31, 1994 has been taken from
the audited financial statements at that date and condensed.
See accompanying notes to condensed consolidated financial
statements.
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SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(CONTINUED)
-----------
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
----------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, 1994 (SEE
1995 NOTE BELOW)
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES
- - -------------------
Notes payable $ 1,000 $ 1,000
Accounts payable 36,055 29,120
Accrued expenses 92,630 95,966
----------- -----------
TOTAL CURRENT LIABILITIES 129,685 126,086
-------------------------
STOCKHOLDERS' EQUITY
- - --------------------
Preferred stock:
Authorized 1,366,694 shares at $1 par
value; none outstanding
Common stock:
Authorized 20,000,000 shares at $.10
par value; issued 15,566,694 shares 1,556,670 1,556,670
Additional paid-in capital 6,152,403 6,152,403
Retained earnings (deficit) (5,950,144) (5,960,102)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 1,758,929 $ 1,748,971
-------------------------- ----------- -----------
$ 1,888,614 $ 1,875,057
=========== ===========
NOTE: The balance sheet at December 31, 1994 has been taken from
the audited financial statements at that date and
condensed.
See accompanying notes to condensed consolidated financial
statements.
</TABLE>
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<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $1,923,117 $1,831,926 $526,592 $622,875
- - --------
COST OF PRODUCT SALES 429,592 390,863 135,409 155,229
- - ---------------------
SELLING, GENERAL AND
- - --------------------
ADMINISTRATIVE EXPENSES 1,477,067 1,289,282 470,870 448,227
- - ----------------------- ---------- ---------- -------- --------
INCOME FROM OPERATIONS 16,458 151,781 (79,687) 19,419
- - ---------------------- ---------- ---------- -------- --------
OTHER INCOME (EXPENSE)
- - ----------------------
Interest income 18,169 13,807 7,946 5,625
Miscellaneous (24,669) (25,728) (2,673) (8,186)
---------- ---------- -------- --------
TOTAL OTHER INCOME (EXPENSE) (6,500) (11,921) 5,273 (2,561)
---------------------------- ---------- ---------- -------- --------
NET INCOME $ 9,958 $ 139,860 $(74,414) $ 16,858
- - ---------- ========== ========== ======== ========
WEIGHTED AVERAGE SHARES
- - -----------------------
OUTSTANDING 15,566,694 15,566,694 15,566,694 15,566,694
- - ----------- ========== ========== ========== ==========
INCOME PER SHARE $ .001 $ .009 $ (.005) $ .001
- - ---------------- ====== ====== ======= =======
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
-----------------------------------------------------
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- - ------------------------------------
Net income from continuing operations $ 9,958 $ 139,860
Adjustments to reconcile net income from
continuing operations to net cash provided
by operating activities:
Depreciation 96,790 89,603
Loss on disposition of assets 427 1,798
Change in assets and liabilities:
(Increase) decrease in accounts and notes
receivable 49,538 (101,653)
(Increase) decrease in inventory (20,875) 2,794
(Increase) decrease in prepaid expenses
and deposits 36,075 (29,816)
Increase in accounts payable and accrued
expenses 3,599 47,686
--------- ----------
NET CASH PROVIDED BY OPERATIONS 175,512 150,272
- - ------------------------------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
- - ------------------------------------
Payments for equipment (55,995) (119,848)
--------- ----------
NET CASH USED IN INVESTING ACTIVITIES (55,995) (119,848)
- - ------------------------------------- --------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 119,517 30,424
- - -----------------------------------------
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 570,191 591,799
- - ----------------------------------------------- --------- ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 689,708 $ 622,223
- - ----------------------------------------- ========= ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
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SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
SEPTEMBER 30, 1995 AND 1994
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1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The condensed consolidated balance sheet as of September 30,
1995, the condensed consolidated statement of operations for
the nine-month periods and the three-month periods ended
September 30, 1995 and 1994 and the condensed consolidated
statement of cash flows for the nine-month periods then ended
have been prepared by the Company, without audit. In the
opinion of management, all adjustments (which include only
recurring adjustments) necessary to present fairly the
financial position and results of operation at September 30,
1995 and for all periods have been made.
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 consolidated financial statements should be
read in conjunction with the financial statements and notes
thereto included in the Registrant's Annual Report on Form 10-
K for the year ended December 31, 1994. The results of
operations for the period ended September 30, 1995 are not
necessarily indicative of the operating results for the full
year.
2. STOCKHOLDERS' EQUITY
--------------------
During the nine months ended September 30, 1995, stockholders'
equity was changed solely by the net income for the period.
3. INVENTORIES
-----------
<TABLE>
Inventories consist of the following:
<CAPTION>
SEPTEMBER 30, 1995 DECEMBER 31, 1994
------------------ -----------------
<S> <C> <C>
Raw materials $ 116,170 $ 132,700
Finished goods $ 167,534 $ 130,129
---------- ----------
$ 283,704 $ 262,829
========== ==========
</TABLE>
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<PAGE> 8
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- - ------- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
The Company's continuing operations for the periods presented
consist of the following two segments:
1) The production and distribution of educational software,
teaching aids and related supplies. The Company, through
its subsidiary, Gamco Industries, Inc. ("Gamco"), has
been producing teaching aids, such as transparencies,
filmstrips, audio cassettes and reproducible books for
more than 35 years. Educational software is produced for
use on Apple, Macintosh, IBM and IBM compatible
computers. Seventy-five percent of Gamco's sales are
generated by proprietary educational software. Sales are
made to private and public schools, grades 1 through 12,
by a network of independent distributors throughout the
United States, as well as through catalogs published by
Gamco and other educational software distributors.
Popular Gamco software titles include Money Challenge,
---------------
Discover Time and Math Football.
------------- -------------
2) The holding of interests in certain natural resources,
including coal, oil and gas, through several
subsidiaries.
The following is management's discussion and analysis of
certain significant factors which have affected the Company's
financial position and operating results during the periods
included in the accompanying condensed consolidated financial
statements.
THREE MONTHS ENDED SEPTEMBER 30, 1995 VS. SEPTEMBER 30, 1994
------------------------------------------------------------
Revenues decreased during the three month period ended
September 30, 1995 compared to the same period in 1994, due to
decreased software sales at Gamco Industries. The entire
educational software industry has reported a significant drop
in sales. The general consensus is that educators' reluctance
to spend reflects their fears about future cuts in federal
spending for education. In addition, revenue from Apple II
software sales has decreased dramatically. This is due to the
decline in use of Apple II computers in schools. Schools have
been updating their equipment with Macintosh and IBM
computers. To offset this decline in revenue, Gamco has
accelerated IBM and Macintosh product development.
Cost of sales decreased as a result of lower sales, but
increased as a percentage of sales to 25.7% from 24.9% for the
year earlier period as a result of increases in materials and
overhead costs.
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<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- - ------- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Selling, general and administrative expenses increased during
the quarter ended September 30, 1995 compared to the same
period in 1994. While these expenses were slightly lower at
Gamco, they were higher at the corporate level as a result of
the hiring of a new officer to expand the market and products
for Gamco, while evaluating other educational product
opportunities which the Company may pursue.
Net income decreased during the period in 1995 due to the
above-mentioned factors.
NINE MONTHS ENDED SEPTEMBER 30, 1995 VS. SEPTEMBER 30, 1994
-----------------------------------------------------------
Revenues increased during the nine month period ended
September 30, 1995 compared to the same period in 1994, due to
increased software sales at Gamco and increased royalties
received by Siboney Coal Co.
Cost of Sales increased during the period ended September 30,
1995, compared to the same period in 1994 as a result of
higher sales and increases in materials and overhead.
Selling, general and administrative expenses increased during
the nine month period ended September 30, 1995 compared to the
same period in 1994, primarily due to higher selling expenses
and research and development expenses at Gamco. The increase
in research and development expense was due to the additional
salary of a research and development director and increased
expenditures for research and development of new programs and
upgrading and adapting existing programs. Gamco operates in
highly competitive markets which are subject to ongoing
technological change and are expected to continue to require
relatively high research and development expenditures.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash and cash equivalents increased at September 30, 1995
compared to December 31, 1994, primarily due to lower accounts
receivable. The decrease in accounts receivable was due to
lower revenues at Gamco during September 1995. The level of
inventories increased during the period, with finished goods
increasing and raw materials declining as a result of lower
than anticipated sales.
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PART II - OTHER INFORMATION
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - -------
a) No Exhibits filed.
b) There were no Reports on Form 8-K filed during the
quarter ended September 30, 1995.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
SIBONEY CORPORATION
Date: November 2, 1995
BY: /s/ Timothy J. Tegeler
-----------------------
Timothy J. Tegeler
President, Chief Executive Officer
and Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q for the quarterly period ended September 30, 1995, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 689,708
<SECURITIES> 0
<RECEIVABLES> 231,844
<ALLOWANCES> 70,250
<INVENTORY> 283,704
<CURRENT-ASSETS> 1,490,825
<PP&E> 1,475,952
<DEPRECIATION> 1,083,264
<TOTAL-ASSETS> 1,888,614
<CURRENT-LIABILITIES> 129,685
<BONDS> 0
<COMMON> 1,556,670
0
0
<OTHER-SE> 202,259
<TOTAL-LIABILITY-AND-EQUITY> 1,888,614
<SALES> 1,855,808
<TOTAL-REVENUES> 1,923,117
<CGS> 429,592
<TOTAL-COSTS> 429,592
<OTHER-EXPENSES> 24,669
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,958
<EPS-PRIMARY> .001
<EPS-DILUTED> .001
</TABLE>
