<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
----------------------------------
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------------------------------------------------------
SECURITIES EXCHANGE ACT OF 1934
-------------------------------
(X) Quarterly report for the quarterly period ended March 31,
---------
1996
----
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 I.D. No.)
incorporation or organiation)
8000 Maryland Ave., Ste 1040, P.O. Box 16184, St. Louis, MO 63105
- ------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
314-725-6141
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- ------------------------------------------------------------------------------
(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 [ ]
Title of class of Number of Shares
common stock outstanding as of this Report Date
----------------- ----------------------------------
Common stock, par value 15,566,694
$.10 per share
<PAGE> 2
<TABLE>
INDEX
-----
<CAPTION>
PART I FINANCIAL INFORMATION
- ------
<S> <C>
ITEM 1. Financial Statements
-------
Condensed Consolidated Balance Sheet March 31, 1996 3
and December 31, 1995
Condensed Consolidated Statement Of Operations 5
Three Months Ended March 31, 1996 and 1995
Condensed Consolidated Statement Of Cash Flows 6
Three Months Ended March 31, 1996 and 1995
Notes To Condensed Consolidated Financial 7
Statements
ITEM 2. Management's Discussion and Analysis of Financial 8
------- Condition and Results of Operations
PART II OTHER INFORMATION
- -------
ITEM 6. Exhibits And Reports On Form 8-K 10
-------
Signatures 10
- ----------
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
</TABLE>
<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
MARCH 31, 1996 AND DECEMBER 31, 1995
------------------------------------
<CAPTION>
ASSETS
------
DECEMBER 31,
MARCH 31, 1995 (SEE
1996 NOTE BELOW)
------------ ------------
<S> <C> <C>
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 487,122 $ 599,924
Accounts and notes receivable 280,541 178,149
Inventories (Note 3) 175,231 230,236
Prepaid expenses and deposits 323,550 306,423
------------ ------------
TOTAL CURRENT ASSETS 1,266,444 1,314,732
--------------------
PROPERTY, PLANT AND EQUIPMENT (NET OF 354,647 376,599
- -------------------------------------
ACCUMULATED DEPRECIATION OF $1,142,559
- --------------------------------------
AT MARCH 31, 1996 AND $1,111,190 AT
- -----------------------------------
DECEMBER 31, 1995)
- ------------------
INVESTMENTS IN NATURAL RESOURCES 5,101 5,101
- -------------------------------- ------------ ------------
$ 1,626,192 $ 1,696,432
============ ============
<FN>
NOTE: The balance sheet at December 31, 1995 has been taken from the
audited financial statements at that date and condensed.
See accompanying notes to condensed consolidated financial
statements.
</TABLE>
3
<PAGE> 4
<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
(CONTINUED)
-----------
MARCH 31, 1996 AND DECEMBER 31, 1995
------------------------------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
DECEMBER 31,
MARCH 31, 1995 (SEE
1996 NOTE BELOW)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
- -------------------
Notes payable $ 1,000 $ 1,000
Accounts payable 52,989 29,683
Accrued expenses 89,425 81,551
----------- -----------
TOTAL CURRENT LIABILITIES 143,414 112,234
-------------------------
STOCKHOLDERS' EQUITY
- --------------------
Common stock:
Authorized 20,000,000 shares
at $.10 par value; issued
and outstanding 15,566,694
shares 1,556,670 1,556,670
Additional paid-in capital 27,528 27,528
Retained earnings (deficit) (101,420) --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,482,778 1,584,198
-------------------------- ----------- -----------
$1,626,192 $ 1,696,432
=========== ===========
<FN>
NOTE: The balance sheet at December 31, 1995 has been taken from the
audited financial statements at that date and condensed.
See accompanying notes to condensed consolidated financial
statements.
</TABLE>
4
<PAGE> 5
<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUES $ 546,202 $ 642,186
- --------
COST OF PRODUCT SALES 121,989 137,349
- ---------------------
SELLING, GENERAL AND
- --------------------
ADMINISTRATIVE EXPENSES 520,804 508,526
- ----------------------- ----------- -----------
LOSS FROM OPERATIONS (96,591) (3,689)
- -------------------- ----------- -----------
OTHER INCOME (EXPENSE)
- ----------------------
Interest Income 6,008 4,868
Miscellaneous (10,837) (8,829)
----------- -----------
TOTAL OTHER INCOME (EXPENSE) (4,829) (3,961)
---------------------------- ----------- -----------
NET LOSS $ (101,420) $ (7,650)
- -------- =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 15,566,694 15,566,694
- ----------------------------------- =========== ===========
LOSS PER SHARE $ (0.0065) $ (0.0005)
- -------------- =========== ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE> 6
<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
--------------------------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net loss from continuing operations $(101,420) $ (7,650)
Adjustments to reconcile net loss
from continuing operations to net
cash provided by operating activities:
Depreciation 31,368 32,171
Change in assets and liabilities:
Increase in accounts and notes receivable (102,392) (144,496)
(Increase) decrease in inventory 55,005 (188)
Increase in prepaid
expenses and deposits (17,127) (26,502)
Increase in accounts payable and accrued
expenses 31,180 50,352
--------- ---------
NET CASH USED IN OPERATIONS (103,386) (96,313)
- --------------------------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Payments for equipment (9,416) (1,042)
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (9,416) (1,042)
- ------------------------------------- --------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (112,802) (97,355)
- -----------------------------------------
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 599,924 570,191
- ----------------------------------------------- --------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD
- ----------------------------------------- $ 487,122 $ 472,836
========= =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE> 7
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
MARCH 31, 1996 AND 1995
-----------------------
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The condensed consolidated balance sheet as of March 31, 1996, the
condensed consolidated statement of operations for the three-month periods
ended March 31, 1996 and 1995 and the condensed consolidated statement of
cash flows for the three-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 March 31, 1996 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, 1995. The results of operations
for the period ended March 31, 1996 are not necessarily indicative of the
operating results for the full year.
2. STOCKHOLDERS' EQUITY
--------------------
During the three months ended March 31, 1996, stockholders' equity was
changed solely by the net loss for the period.
3. INVENTORIES
-----------
<TABLE>
Inventories consist of the following:
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Raw materials $ 36,451 $ 128,063
Finished goods 138,780 102,173
-------- --------
$ 175,231 $ 230,236
======== ========
</TABLE>
7
<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 Company is engaged, through its learning group division and Gamco
Industries, Inc. ("Gamco"), a subsidiary, in the production and
distribution of educational software, teaching aids and related supplies.
In 1995, the Company formed the Siboney Learning Group Division and hired a
new Executive Vice President, Ernest R. (Bodie) Marx, as the head of the
division. Mr. Marx has been an executive and proprietor of companies
engaged in the educational software and related products business for more
than 18 years. The Company's purpose for forming the new division was to
take advantage of Mr. Marx's background and experience and expand upon its
interests in the manufacture and sale of educational software and related
products. Such expansion is expected to occur both through Gamco, which
was made part of the new division and reports to Mr. Marx, and by other
internal and external expansion.
The Company has been serving the educational market for more than 35 years.
The Company's proprietary educational software is produced for use on
Macintosh, Apple II, IBM and IBM compatible computers. Of Gamco's total
sales, 80% is generated by proprietary software, and the remainder is
represented by non-proprietary educational software and other related
products. 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, Undersea Reading for Meaning (a new release in 1995) and
--------- -------- ------- --- -------
Touchdown Math-Whole Numbers and Fractions.
--------- ---------- ------- --- ---------
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.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (CONTINUED)
---------------------
THREE MONTHS ENDED MARCH 31, 1996 VS. MARCH 31, 1995
----------------------------------------------------
Revenues decreased during the three month period ended March 31, 1996
compared to the same period in 1995. The Company believes that sales
decreased in the educational segment primarily due to educators' concerns
about the federal budget impasse and its effect on future federal funding for
school expenditures. During April 1996 a federal budget was approved and it
is anticipated that sales at Gamco will improve as the level of certainty as
to federal funding to schools is restored.
In addition, revenue from Apple II software sales decreased due to the
decline in use of Apple II computers in schools. Many 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 product sales decreased as a result of lower sales at Gamco, but
increased as a percentage of sales to 22.33% from 21.39% for the year earlier
period primarily as a result of increases in materials and overhead costs.
Selling, general and administrative expenses increased during the quarter
ended March 31, 1996 compared to the same period in 1995, primarily due to
the costs associated with the formation of the Siboney Learning Group.
Net income decreased during the period in 1996 due to the above mentioned
factors.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash and cash equivalents decreased at March 31, 1996 compared to December
31, 1995 primarily due to higher accounts receivable. Consistent with the
first quarter of 1995, the increase in amounts receivable was due to a larger
sales volume at Gamco during March 1996 compared to December 1995. In
addition, Siboney Coal had a receivable for the annual minimum royalty
payment which was received after the close of the first quarter of fiscal
1996, consistent with terms of the lease.
9
<PAGE> 10
PART II - OTHER INFORMATION
---------------------------
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
March 31, 1996.
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: May 8, 1996 By: /s/ Timothy J. Tegeler
----------------------------------------
Timothy J. Tegeler
President, Chief Executive
Officer and Chief Financial
Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10Q for the quarterly period ended March 31, 1996, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 487,122
<SECURITIES> 0
<RECEIVABLES> 328,616
<ALLOWANCES> 48,075
<INVENTORY> 175,231
<CURRENT-ASSETS> 1,266,444
<PP&E> 1,497,206
<DEPRECIATION> 1,142,559
<TOTAL-ASSETS> 1,626,192
<CURRENT-LIABILITIES> 143,414
<BONDS> 0
<COMMON> 1,556,670
0
0
<OTHER-SE> (73,892)
<TOTAL-LIABILITY-AND-EQUITY> 1,626,192
<SALES> 490,694
<TOTAL-REVENUES> 546,202
<CGS> 121,989
<TOTAL-COSTS> 121,989
<OTHER-EXPENSES> 520,804
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (101,420)
<INCOME-TAX> 0
<INCOME-CONTINUING> (101,420)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (101,420)
<EPS-PRIMARY> (.007)
<EPS-DILUTED> (.007)
</TABLE>
