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UNITED STATES
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


For the Quarterly Period Ended September 30, 2004



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)
  


325 North Kirkwood Road, Suite 300, St. Louis, MO 63122
(Address of principal executive offices)
(Zip Code)

314-822-3163
(Registrant’s telephone number, including area code)


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 [  ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 
Title of class of
Number of shares outstanding
 
common stock
as of the date of this report
 
 
Common stock, par value
17,462,919
 
$.10 per share
  


 
     
Index
 
INDEX


PART I FINANCIAL INFORMATION
      
     
 
Item 1.   Unaudited Financial Statements
  
       
     
   
     and December 31, 2003
3
       
     
   
     Three Months and Nine Months Ended September 30, 2004 and September 30, 2003
4
       
     
   
     Nine Months Ended September 30, 2004
5
       
     
   
     Nine Months Ended September 30, 2004 and September 30, 2003
6
       
   
7
     
   
 
                Financial Condition and Results of Operations
9
     
 
13
     
 
13
     
PART II OTHER INFORMATION
  
     
 
14
     
 
14
     
 
15
     
15
   
 
16




 
  2  
Index
 
PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

SIBONEY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
Assets

  September 30,  2004

  December 31,   2003 (See Note Below)

  
Current Assets
              
Cash
  
$
1,876,462
  
$
1,102,608
  
Accounts receivable, net of reserve of $58,000 in 2004 and
$63,000 in 2003
    
1,079,795
    
1,534,547
  
Inventories
    
354,059
    
377,382
  
Prepaid expenses
    
227,743
    
153,253
  
Prepaid income taxes
    
437,380
    
—
  
Deferred tax asset
    
—
    
96,400
  
Total Current Assets
    
3,975,439
    
3,264,190
  
               
Property and Equipment, Net
    
411,019
    
422,773
  
Goodwill, Net
    
1,045,015
    
1,045,015
  
Other Assets
    
1,571,520
    
1,637,775
  
   
$
7,002,993
  
$
6,369,753
  
 
Liabilities and Stockholders’ Equity
Current Liabilities
              
Current portion of long-term debt
  
$
27,083
  
$
182,164
  
Current portion of capitalized lease obligation
    
25,344
    
24,344
  
Accounts payable
    
131,810
    
256,878
  
Accrued expenses
    
526,289
    
496,115
  
Accrued litigation liability
    
515,000
    
—
  
Total Current Liabilities
    
1,225,526
    
959,501
  
Long-Term Liabilities
          
 
Long-term debt
    
—
    
6,771
  
Long-term litigation liability
    
100,000
    
—
  
Capitalized lease obligation
    
17,668
    
36,803
  
Deferred tax liability
    
244,000
    
354,200
  
Total Long-Term Liabilities
    
361,668
    
397,774
  
               
               
 Contingencies (Note 5)              
 
Stockholders’ Equity
Common stock:
Authorized 100,000,000 shares at $0.10 par value; issued
and outstanding 17,462,919 in 2004 and 17,591,079 in 2003
    
1,746,292
    
1,759,108
  
Additional paid-in capital
    
2,666
    
50,310
  
Retained earnings
    
3,666,841
    
3,203,060
  
Total Stockholders’ Equity
    
5,415,799
    
5,012,478
  
               
   
$
7,002,993
  
$
6,369,753
  
 
NOTE:    The balance sheet at December 31, 2003 has been derived from the audited financial statements at that date and condensed.
See accompanying notes to unaudited condensed consolidated financial statements.



 
  3  
Index
 
SIBONEY CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

   
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
   
2004
  
2003
  
2004
  
2003
  
Revenues
  
$
1,930,092
  
$
1,548,553
  
$
8,235,729
  
$
6,413,910
  
                           
Cost of Product Sales
    
429,001
    
461,819
   
1,654,717
    
1,469,785
  
                           
Selling, General and
Administrative Expenses
    
2,003,819
    
1,533,845
    
5,460,332
    
4,476,625
  
                           
Litigation Settlement Expense
    
615,000
    
—
    
615,000
    
—
  
                           
Income (Loss) from Operations
    
(1,117,728
)
  
(447,111
)
  
505,680
    
467,500
  
                           
Other Income (Expense)
                          
Interest income (expense), net
    
2,527
    
(3,431
)
  
2,389
    
(17,982
)
Gain on sale of asset
    
—
    
—
    
219,780
    
—
  
Miscellaneous
    
6,331
    
3,938
    
7,166
    
4,919
  
Total Other Income (Expense)
    
8,858
    
507
    
229,335
    
(13,063
)
                           
Income (Loss) Before Income Taxes
    
(1,108,870
)
  
(446,604
)
  
735,015
    
454,437
  
                           
Income Tax Benefit (Expense)
    
444,193
    
172,000
    
(271,234
)
  
(178,000
)
 
Net Income (Loss)
  
$
(664,677
)
$
(274,604
)
$
463,781
  
$
276,437
  
Earnings (Loss) per Common Share - Basic
  
$
(0.04
)
$
(0.02
)
$