<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
-------------------------------
(X) Quarterly report for the quarterly period ended June 30, 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 organization)
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 [ ]
<TABLE>
<CAPTION>
Title of class of Number of Shares
common stock outstanding as of this Report Date
----------------- ----------------------------------
<S> <C>
Common stock, par value 15,566,694
$.10 per share
</TABLE>
<PAGE> 2
INDEX
-----
PART I FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1. Financial Statements
------
Condensed Consolidated Balance Sheet June 30, 1996 3
and December 31, 1995
Condensed Consolidated Statement Of Operations 5
Three Months and Six Months Ended June 30, 1996
and June 30, 1995
Condensed Consolidated Statement Of Cash Flows 6
Six Months Ended June 30, 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 4. Submission of Matters to a Vote of Security Holders 10
------
ITEM 6. Exhibits And Reports On Form 8-K 10
------
Signatures 10
- ----------
EXHIBIT INDEX 11
- -------------
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
<TABLE>
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
------------------------------------
JUNE 30, 1996 AND DECEMBER 31, 1995
-----------------------------------
ASSETS
------
<CAPTION>
DECEMBER 31,
JUNE 30, 1995 (SEE
1996 NOTE BELOW)
-------- ------------
<C> <C>
CURRENT ASSETS
- --------------
Cash and cash equivalents $ 608,250 $ 599,924
Accounts and notes receivable 267,703 178,149
Inventories (Note 3) 209,799 230,236
Prepaid expenses and deposits 222,021 306,423
----------- -----------
TOTAL CURRENT ASSETS 1,307,773 1,314,732
--------------------
PROPERTY, PLANT AND EQUIPMENT (NET OF 336,278 376,599
- -------------------------------------
ACCUMULATED DEPRECIATION OF $1,175,447 AT
- -----------------------------------------
JUNE 30, 1996 AND $1,111,190 AT DECEMBER
- ----------------------------------------
31, 1995)
- ---------
INVESTMENTS IN NATURAL RESOURCES 5,101 5,101
- -------------------------------- ----------- -----------
$ 1,649,152 $ 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)
-----------
JUNE 30, 1996 AND DECEMBER 31, 1995
-----------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
DECEMBER 31,
JUNE 30, 1995 (SEE
1996 NOTE BELOW)
-------- -----------
<C> <C>
CURRENT LIABILITIES
- -------------------
Notes payable $ 1,000 $ 1,000
Accounts payable 44,213 29,683
Accrued expenses 83,274 81,551
----------- ----------
TOTAL CURRENT LIABILITIES 128,487 112,234
-------------------------
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) (63,533) --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,520,665 1,584,198
-------------------------- ----------- -----------
$ 1,649,152 $ 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
----------------------------------------------
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
---------------- ------------------
JUNE 30, JUNE 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<C> <C> <C> <C>
REVENUES $ 1,181,582 1,396,525 635,380 754,339
- --------
COST OF PRODUCT SALES 205,767 294,183 83,778 156,834
- ---------------------
SELLING, GENERAL AND
- --------------------
ADMINISTRATIVE EXPENSES 1,028,936 1,006,197 508,132 497,671
- ----------------------- ------------- ------------- ------------- -------------
INCOME (LOSS) FROM OPERATIONS (53,121) 96,145 43,470 99,834
- ----------------------------- ------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
- ----------------------
Interest Income 11,432 10,223 5,424 5,355
Miscellaneous (21,844) (21,996) (11,007) (13,167)
------------- ------------- ------------- -------------
TOTAL OTHER INCOME (EXPENSE) (10,412) (11,773) (5,583) (7,812)
- ---------------------------- ------------- ------------- ------------- -------------
NET INCOME (LOSS) $ (63,533) $ 84,372 $ 37,887 $ 92,022
- ----------------- ============= ============= ============= =============
WEIGHTED AVERAGE SHARES
- -----------------------
OUTSTANDING 15,566,694 15,566,694 15,566,694 15,566,694
- ----------- ============= ============= ============= =============
INCOME (LOSS) PER SHARE $ (.004) $ .005 $ .002 $ .006
- ----------------------- ============= ============= ============= =============
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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995
-----------------------------------------------
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income (loss) from continuing operations $ (63,533) $ 84,372
Adjustments to reconcile net income (loss)
from continuing operations to net
cash provided by operating activities:
Depreciation 64,256 64,111
Loss on disposition of assets -- 431
Change in assets and liabilities:
Increase in accounts and notes receivable (89,554) (120,749)
(Increase) decrease in inventory 20,437 (9,174)
(Increase) decrease in prepaid 84,402 (22)
expenses and deposits
Increase (decrease) in accounts payable and
accrued expenses 16,253 (8,066)
----------- -----------
NET CASH PROVIDED BY OPERATIONS 32,261 10,903
- ------------------------------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Payments for equipment (23,935) (25,553)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (23,935) (25,553)
- ------------------------------------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,326 (14,650)
- ---------------------------------------------------- ----------- -----------
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 599,924 570,191
- ----------------------------------------------- ----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 608,250 $ 555,541
- ----------------------------------------- =========== ===========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE> 7
SIBONEY CORPORATION AND SUBSIDIARIES
------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------
JUNE 30, 1996 AND 1995
----------------------
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The condensed consolidated balance sheet as of June 30,
1996, the condensed consolidated statement of operations for
the six-month periods and the three-month periods ended June
30, 1996 and 1995 and the condensed consolidated statement
of cash flows for the six-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 operations at June 30, 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 June
30, 1996 are not necessarily indicative of the operating
results for the full year.
2. STOCKHOLDERS' EQUITY
--------------------
During the six months ended June 30, 1996, stockholders'
equity was changed solely by the net loss for the period.
3. INVENTORIES
-----------
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Raw materials $ 70,891 $ 128,063
Finished goods 138,908 102,173
-------- --------
$ 209,799 $ 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 Siboney Learning Group
Division and Gamco Industries, Inc. ("Gamco"), a subsidiary,
in the production and distribution of educational software,
teaching aids and related supplies. 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, approximately 85% 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.
THREE MONTHS ENDED JUNE 30, 1996 vs. JUNE 30, 1995
Revenues decreased during the three month period ended June 30,
1996 compared to the same period in 1995, due to lower sales at
Gamco. The Company believes that sales decreased in the
educational segment primarily due to educators' continuing
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, as anticipated, sales at
Gamco have improved. Revenues during June 1996 increased over
the same month of 1995.
Cost of product sales decreased during the quarter ended June 30,
1996 compared to the same quarter in 1995 as a result of lower
sales at Gamco. However, as a percentage of total revenues, cost
of product sales was reduced to 13.2% in the quarter ended June
30, 1996, compared to 20.8% in the prior year, primarily due to
increased proprietary sales at Gamco. In addition, royalties
earned by Siboney Coal Company increased during the three month
period in 1996.
Net income decreased during the quarter ended June 30, 1996 due
to the above mentioned factors.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS (Continued)
-----------------------------------
SIX MONTHS ENDED JUNE 30, 1996 vs. JUNE 30, 1995
------------------------------------------------
Revenues decreased during the six month period ended June 30,
1996 compared to the same period in 1995. The Company believes
that sales decreased in the educational segment primarily due to
educators' continuing 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, as anticipated, sales at Gamco did improve during June 1996
compared to June 1995.
In addition, revenue from Apple II software sales decreased due
to the decline in the 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. However, as a percentage of total revenues, cost of
product sales was 17.4% in the six month period ended June 30,
1996, compared to 21.1% in the prior year, primarily due to
increased proprietary sales at Gamco. In addition, royalties
earned by Siboney Coal Company increased during the six month
period in 1996.
Selling, general and administrative expenses increased during the
period ended June 30, 1996 compared to the same period in 1995,
primarily due to the costs associated with the formation of the
Siboney Learning Group Division. Additional emphasis is placed
on expanding this portion of the Company's business, including
upgrading and adding existing and new products.
Net income decreased during the six months ended June 30, 1996
due to the above mentioned factors.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Consistent with prior years, accounts receivable increased at
June 30, 1996 compared to December 31, 1995. The increase was
attributable to a larger sales volume at Gamco during May and
June 1996 compared to November and December 1995.
9
<PAGE> 10
PART II - OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
At the Company's annual meeting of stockholders held May 14,
1996, all candidates for director were elected for a term of one
year by the following votes:
<TABLE>
<CAPTION>
SHARES VOTED FOR SHARES WITHHELD
---------------- ---------------
<S> <C> <C>
Rebecca M. Braddock 9,305,624 shares 119,436 shares
James P. Connaughton 9,308,672 shares 116,706 shares
Alan G. Johnson 9,308,122 shares 117,956 shares
Thomas G. Keeton 9,309,447 shares 116,931 shares
Ernest R. Marx 9,310,747 shares 115,531 shares
Timothy J. Tegeler 9,303,842 shares 120,636 shares
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
a) Exhibits: See Exhibit Index on page 11 hereof.
b) Reports on Form 8-K: No reports on Form 8-K were filed by the Registrant
during the quarter ended June 30, 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: August 8, 1996 By: /s/ Timothy J. Tegeler
---------------------------
Timothy J. Tegeler
President, Chief Executive
Officer and Chief Financial
Officer
10
<PAGE> 11
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
Exhibit Number Description Page
- -------------- ----------- ----
<C> <S> <C>
27(a) Financial Data Schedule. 12
(Filed in EDGAR version only)
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Company's
financial statements for and as of the period ending June 30, 1996 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 608,250
<SECURITIES> 0
<RECEIVABLES> 315,864
<ALLOWANCES> 48,161
<INVENTORY> 209,799
<CURRENT-ASSETS> 1,307,773
<PP&E> 1,511,725
<DEPRECIATION> 1,175,447
<TOTAL-ASSETS> 1,649,152
<CURRENT-LIABILITIES> 128,487
<BONDS> 0
<COMMON> 1,556,670
0
0
<OTHER-SE> (36,005)
<TOTAL-LIABILITY-AND-EQUITY> 1,649,152
<SALES> 1,102,162
<TOTAL-REVENUES> 1,181,582
<CGS> 205,767
<TOTAL-COSTS> 205,767
<OTHER-EXPENSES> 1,028,936
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (63,533)
<INCOME-TAX> 0
<INCOME-CONTINUING> (63,533)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,533)
<EPS-PRIMARY> (.004)
<EPS-DILUTED> (.004)
</TABLE>
