SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 1, 2000
SIBONEY CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Maryland 1-3952 73-0629975
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
325 North Kirkwood Road, Suite 310,
P.O. Box 221029, St. Louis, Missouri 63122
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(Address of Principal Executive Offices) (Zip Code)
(314) 822-3163
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(Registrant's telephone number, including area code)
34 North Brentwood Blvd., Suite 211, P.O. Box 16184,
St. Louis, Missouri 63105
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(Former name or former address, if changed since last report.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to Item 7(a)(4) of Form 8-K, the Company did not include the
requisite financial statements with the Report on Form 8-K. Item 7 herein
supplements the earlier filing by providing the required financial statements
and the required pro forma financial information.
ITEM 7. FINANCIAL STATEMENTS
(a) Financial Statements of Business Acquired
The following financial statements of Teacher Support Software, Inc.
are listed below and made a part hereof:
(i) Independent Auditors' Report;
(ii) Balance Sheet at June 30, 2000;
(iii) Statements of Income and Retained Earnings (Deficit) for
the Year Ended June 30, 2000;
(iv) Statement of Cash Flows for the Year Ended June 30, 2000;
and
(v) Notes to Financial Statements.
(b) Pro Forma Financial Information
The following information for the Company is listed below and made a
part hereof:
(i) Statements of Assumptions And Adjustments in Preparation
of Pro Forma Information;
(ii) Pro Forma Consolidated Balance Sheet at June 30, 2000;
(iii) Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 1999, with Note; and
(iv) Pro Forma Consolidated Statement of Operations for the Six
Months Ended June 30, 2000, with Note.
(c) Exhibits
Exhibit 23.1 - Consent of Rubin, Brown, Gornstein & Co., LLP,
filed herewith.
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Independent Auditors' Report
Stockholders and Board of Directors
Teacher Support Software, Inc.
Gainesville, Florida
We have audited the accompanying balance sheet of Teacher Support Software, Inc.
as of June 30, 2000 and the related statements of income, retained earnings
(deficit) and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Teacher Support Software, Inc.
as of June 30, 2000 and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
/s/ Rubin, Brown, Gornstein & Co. LLP
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RUBIN, BROWN, GORNSTEIN & CO. LLP
St. Louis, Missouri
August 7, 2000
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TEACHER SUPPORT SOFTWARE, INC.
BALANCE SHEET
June 30, 2000
Assets
Current Assets
Cash $ 35,889
Accounts receivable, (net of allowance
for doubtful accounts of $5,000) 125,928
Advances to stockholder (Note 7) 69,524
Total Current Assets 231,341
Property And Equipment (Note 3) 9,764
Deferred Tax Asset (Note 6) 16,000
Other Assets 4,511
$261,616
====================
Liabilities And Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable $ 17,981
Accrued expenses 58,818
Note payable (Note 4) 295,000
Due to affiliated company (Note 7) 89,009
Deferred tax liability (Note 6) 10,000
Total Current Liabilities 470,808
Stockholders' Equity (Deficit)
Common stock:
Authorized and issued 15,000 shares of
no par value 1,000
Additional paid-in capital 200,000
Retained earnings (deficit) (149,117)
51,883
Less: Treasury stock (8,333 shares,
at cost) 261,075
Total Stockholders' Equity (Deficit) (209,192)
$261,616
====================
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See the accompanying notes to financial statements. Page 4
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TEACHER SUPPORT SOFTWARE, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)
For the Year Ended June 30, 2000
Statement Of Income
Net Sales $718,730
Cost Of Sales 217,151
Gross Profit 501,579
Selling, General And Administrative Expenses 375,642
Income From Operations 125,937
Other Income (Expense)
Interest expense (19,200)
Miscellaneous 2,160
Total Other Income (Expense) (17,040)
Income Before Provision For Income Taxes 108,897
Provision For Income Taxes (Note 6) 21,000
Net Income $ 87,897
====================
Statement Of Retained Earnings (Deficit)
Balance (Deficit) - Beginning Of Year $ (237,014)
Net Income 87,897
Balance (Deficit) - End Of Year $ (149,117)
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See the accompanying notes to financial statements. Page 5
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TEACHER SUPPORT SOFTWARE, INC.
STATEMENT OF CASH FLOWS
For The Year Ended June 30, 2000
Cash Flows From Operating Activities
Net income $ 87,897
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 5,086
Change in assets and liabilities:
Decrease in accounts receivable 5,772
Decrease in advances to/due from stockholder (37,601)
Decrease in deferred tax asset, net 21,000
Increase in accounts payable and accrued
expenses (45,576)
Net Cash Provided By Operating Activities 36,578
Cash Flows Used In Investing Activities
Payments for equipment (1,600)
Net Increase In Cash 34,978
Cash - Beginning Of Year 911
Cash - End Of Year $ 35,889
=========
Supplemental Disclosure Of Cash Flow Information
Interest paid $ 36,900
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See the accompanying notes to financial statements. Page 6
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TEACHER SUPPORT SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
1. Summary Of Significant Accounting Policies
Estimates And Assumptions
Management uses estimates and assumptions in preparing financial
statements. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results
could differ from those estimates.
Property And Equipment
Property and equipment are carried at cost, less accumulated
depreciation computed primarily using accelerated depreciation methods.
Assets are depreciated over periods ranging from three to seven years.
Advertising
Advertising costs are expensed when incurred. Advertising expense
amounted to $86,363.
Revenue Recognition
Revenue from sales of educational software products is generally
recognized upon product shipment, provided that no significant vendor
obligations or post-contract customer support remain and collection of
the resulting receivable is deemed probable.
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Right Of Return
The Company maintains an "on approval" policy for most products, under
which goods shipped subject to customer approval are not billed for and
can be returned within 30 days. Invoices are sent after the 30 days if
the goods are not returned. The Company also maintains a general
"satisfaction guaranteed" policy under which most products may be
returned within 90 days from the date of sale if the customer is
dissatisfied. All conditions for revenue recognition are met at the
time of sale as defined in Statement of Financial Accounting Standards
No. 48 "Revenue Recognition When Right of Return Exists." While the
Company does not experience significant product returns, "right of
return" is factored in the reserve for the allowance for doubtful
accounts.
Warranty Costs
The Company provides warranties on sales of educational products and
all significant warranty costs are charged to operations when the costs
are probable and estimatable. Management does not anticipate
significant warranty costs subsequent to June 30, 2000.
Income Taxes
The Company reports on the cash basis of accounting for federal and
state income tax purposes. The provision for income taxes reflects the
transactions reported in the financial statements and consists of
deferred taxes relating primarily to the differences between the cash
basis and accrual basis of accounting. The deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will be either taxable or deductible when the asset
and liabilities are recovered or settled.
2. Operations
The Company's operations consist of publishing and distributing
educational software products. Sales are made through catalogs and
independent distributors to customers located in the southeastern
United States.
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TEACHER SUPPORT SOFTWARE, INC.
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Notes to Financial Statements (Continued)
On July 1, 2000, the Company sold the principal, fully amortized,
intangible assets used in its operations. The selling price of $660,000
consists of $310,000 received upon closing of the sale and fourteen
quarterly installments of $25,000 each, through January 2004. In
addition, the Company will receive a 12% royalty on net sales of those
software titles included in the sale agreement and other specified
software sales in excess of $800,000 annually. This royalty agreement
is effective for the calendar years 2001 through 2003.
The Company is expected to remain in existence through January 2004
with its principal activity being the collection and distribution of
funds from the quarterly installment payments and royalties, if any.
3. Property And Equipment
Property and equipment consist of:
Computers and office equipment $ 21,001
Furniture and fixtures 155,132
176,133
Less: Accumulated depreciation 166,369
$ 9,764
====================
Depreciation charged against income amounted to $5,086 in 2000.
4. Note Payable
The note payable consists of a $295,000 note to the majority
stockholder. The note is unsecured, bears interest at 6% annually, and
is due on demand.
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TEACHER SUPPORT SOFTWARE, INC.
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Notes to Financial Statements (Continued)
5. Operating Lease
The Company has a commitment to lease office space through April 2002.
However, prior to June 30, 2000, the Company reached a settlement to
terminate the lease for $17,500, which was paid in July 2000.
6. Income Taxes
The provision for income taxes consists of a decrease in the deferred
income tax asset at June 30, 2000.
The net deferred tax asset and liability includes the following
components at June 30, 2000:
Deferred tax asset $31,000
Deferred tax liability (25,000)
$ 6,000
====================
Shown in the accompanying balance sheet as follows:
Net long-term deferred tax asset $ 16,000
Net current deferred tax liability (10,000)
$ 6,000
====================
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TEACHER SUPPORT SOFTWARE, INC.
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Notes to Financial Statements (Continued)
7. Related Parties
The Company has advanced funds to a minority stockholder. The
receivable is unsecured, non-interest bearing, and is due on demand.
The Company has an agreement with an affiliated entity for the
development of software to be marketed and distributed by the Company.
At June 30, 2000, the Company owed the affiliated entity $89,009 for
related development costs. This amount is unsecured, non-interest
bearing, and is due on demand.
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SIBONEY CORPORATION
PRO FORMA INFORMATION (UNAUDITED)
The following pro forma consolidated balance sheet of the Company at June 30,
2000 gives effect to the subsequent acquisition of assets of Teacher Support
Software, Inc., as if it was effective at June 30, 2000. The statement gives the
effect to the acquisition under the assumptions in the accompanying notes to the
pro forma financial statements.
The following pro forma consolidated statement of operations of the Company for
the six months ended June 30, 2000 and the year ended December 31, 1999 gives
effect to the acquisition as if the effective date of the acquisition was
January 1, 2000 and January 1, 1999, respectively. The statement gives effect to
the acquisition under the assumptions in the accompanying notes to the pro forma
financial statements.
The pro forma adjustments relate to the acquisition of selected assets of
Teachers Support Software, Inc. The consideration for selected assets of
Teachers Support Software, Inc. is: a) $310,000 in cash, and b) a $350,000
promissory note payable in fourteen quarterly installments of $25,000 without
interest. The value of the promissory note is discounted at 8.5% for the pro
forma consolidated balance sheet. The actual valuation of this asset may differ
from this assumption.
The pro forma financial statements may not be indicative of the results that
would have actually occurred if the acquisition had been effective on the dates
indicated or the results that may be obtained in the future. The pro forma
financial statements should be read in conjunction with the consolidated
financial statements of the Company for the year ended December 31, 1999 under
Form 10K and for the six months ended June 30, 2000 under Form 10Q.
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<TABLE>
<CAPTION>
SIBONEY CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 2000
(UNAUDITED)
Assets
As Reported Pro Forma Pro Forma
June 30, Adjustment June 30,
2000 (1) 2000
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 460,624 $(310,000) (2) $ 150,624
Accounts and notes receivable 1,153,011 -- 1,153,011
Inventories 201,588 -- 201,588
Other current assets 214,495 -- 214,495
Total Current Assets 2,029,718 (310,000) 1,719,718
Property, Plant And Equipment
(Net Of Accumulated
Depreciation Of $418,323) 235,883 -- 235,883
Capitalized Software Development Costs 348,471 609,694 (3) 958,165
Total Assets $ 2,614,072 $299,694 $ 2,913,766
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Liabilities And Stockholders' Equity
Current Liabilities
Current portion of capitalized
lease obligation $ 23,229 $ -- $ 23,229
Current portion of note payable -- 76,766 (4) 76,766
Accounts payable 83,985 -- 83,985
Accrued expenses 297,269 -- 297,269
Total Current Liabilities 404,483 76,766 481,249
Note Payable -- 222,928 (4) 222,928
Long Term Portion Of Capitalized
Lease Obligation 20,518 -- 20,518
Shareholders' Equity
Authorized 20,000,000 shares at $0.10
par value; issued and outstanding
16,535,844 at June 30, 2000 and
16,529,844 at December 31, 1999 1,653,585 -- 1,653,585
Unrealized holding gain on investment 8,500 -- 8,500
Additional paid-in capital 1,213 -- 1,213
Retained earnings 525,773 -- 525,773
Total Shareholders' Equity 2,189,071 -- 2,189,071
Total Liabilities And Shareholders' Equity $ 2,614,072 $299,694 $ 2,913,766
===================================================================================================
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<FN>
NOTE: The Pro Forma Consolidated Balance Sheet gives effect to the following pro
forma adjustment:
(1) Represents the acquisition of selected assets of Teachers Support
Software, Inc. as if the acquisition occurred June 30, 2000.
(2) Represents cash outlay for the purchase of assets of Teachers Support
Software, Inc.
(3) Represents intangible asset acquired under purchase agreement.
(4) Represents a promissory note at discounted value made as part of the
purchase of assets.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
SIBONEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended December 31, 1999
(UNAUDITED)
As Reported Pro Forma Pro Forma
December 31, Adjustments December 31,
1999 (1) 1999
<S> <C> <C> <C>
Revenues $ 3,309,021 $603,913 $ 3,912,934
Cost of Product Sales 476,237 270,549 746,786
Selling, General And
Administrative Expenses 2,517,597 553,171 3,070,768
Income (Loss) From Operations 315,187 (219,807) 95,380
Other Income (Expense)
Interest income (expense) 5,613 (23,235)(2) (17,622)
Gain on sale of disposition of assets 86,758 -- 86,758
Miscellaneous 225 -- 225
Total Other Income (Expense) 92,596 (23,235) 69,361
Net Income (Loss) Before Credit For
Income Taxes 407,783 (243,042) 164,741
Credit For Income Taxes 136,000 -- 136,000
Net Income (Loss) $ 543,783 $ (243,042) $ 300,741
Earnings Per Common Share -
Basic $ 0.03 $ 0.02
Earnings Per Common Share -
Assuming Dilution $ 0.03 $ 0.02
<FN>
NOTE: The Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1999 gives effect to the following pro forma adjustment:
(1) Represents the adjustments necessary to reflect the acquisition of
selected assets of Teachers Support Software, Inc. as of January 1, 1999
by including Teachers Support Software, Inc.'s results of operations.
(2) Represents interest accrued on note made as part of purchase.
</FN>
</TABLE>
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SIBONEY CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For The Six Months Ended June 30, 2000
(UNAUDITED)
As Reported Pro Forma Pro Forma
June 30, Adjustments June 30,
2000 (1) 2000
Revenues $ 2,800,289 $ 480,123 $ 3,280,412
Cost of Product Sales 347,844 97,076 444,920
Selling, General And
Administrative Expenses 1,419,482 217,989 1,637,471
Income From Operations 1,032,963 165,058 1,198,021
Other Income (Expense)
Interest income (expense) (58) (12,430)(2) (12,488)
Miscellaneous 2,842 2,160 5,002
Total Other Income (Expense) 2,784 (10,270) (7,486)
Net Income $ 1,035,747 $ 154,788 $ 1,190,535
Basic and Diluted Income
Per Common Share $ 0.06 $ .07
NOTE: The Pro Forma Consolidated Statement of Operations for the six month
period ended June 30, 2000 gives effect to the following pro forma
adjustments:
(1) Represents the adjustments necessary to reflect the acquisition of
selected assets of Teachers Support Software, Inc. as of January 1, 2000
by including Teachers Support Software, Inc.'s results of operations from
January 1, 2000 through June 30, 2000.
(2) Represents interest accrued on note made as part of purchase.
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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 hereunto duly authorized.
Dated: September 12, 2000
SIBONEY CORPORATION
By: /s/ Rebecca Braddock
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Rebecca Braddock,
Vice President
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EXHIBIT INDEX
Exhibit No. Document
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23.1 Consent of Rubin, Brown, Gornstein & Co., LLP, filed herewith
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