----

**UNITED        STATES**

**SECURITIES        AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-Q**

**For        the        Quarterly Period Ended**
**June 30, 2005**

**1-3952**

**SIBONEY        CORPORATION**

|   | **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 **

**314-822-3163**

| Title                  of                  class ofcommon                  stock | Number                  of                  shares outstandingas                  of the                  date of this report |
|----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------|
|                                                                             |                                                                                                                          |
| **Common                  stock, par value****$.10                  per share**  | **17,030,419**                                                                                                                |

----

| **INDEX**                                                                                                                                                                                                                 |   |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
|                                                                                                                                                                                                                      |   |     |
| **PART                      I   FINANCIAL                      INFORMATION**                                                                                                                                    |   |     |
|                                                                                                                                                                                                                      |   |     |
| **Item                      1.   Unaudited Financial                      Statements**                                                                                                                          |   |     |
|                                                                                                                                                                                                                      |   |     |
| Consolidated                      Balance Sheet, June                      30, 2005                      and December 31, 2004                                                                                            |   | 3        |
|                                                                                                                                                                                                                      |   |     |
| Consolidated                      Statement of                      Operations,Three                      and Six Months Ended June 30, 2005                      and June 30, 2004                                       |   | 4        |
|                                                                                                                                                                                                                      |   |     |
| Consolidated                      Statement of Stockholders’                      Equity, Three                      and Six                      Months Ended June 30, 2005                                   |   | 5        |
|                                                                                                                                                                                                                      |   |     |
| Consolidated                      Statement of Cash Flows, Six Months                      Ended June 30, 2005 and June 30,                      2004                                                                |   | 6        |
|                                                                                                                                                                                                                      |   |     |
| Notes                      to Unaudited Consolidated Financial                      Statements                                                                                                                            |   |  7  |
|                                                                                                                                                                                                                      |   |     |
| **Item                      2.   Management’s Discussion                      and Analysis                      of ****Financial** **Condition                      and Results of Operations** |   | 9        |
|                                                                                                                                                                                                                      |   |     |
| **Item** **3.                        Quantitative and Qualitative                      Disclosures** **About                      Market Risk**                                                       |   | 14       |
|                                                                                                                                                                                                                      |   |     |
| **Item                      4.   Controls and                      Procedures**                                                                                                                                 |   | 14       |
|                                                                                                                                                                                                                      |   |     |
| **PART                      II   OTHER                      INFORMATION**                                                                                                                                       |   |     |
|                                                                                                                                                                                                                      |   |     |
| **Item                      2. Unregistered Sales of Equity Securities                      and Use of Proceeds**                                                                                                         |   | 15       |
|                                                                                                                                                                                                                      |   |     |
| **Item                      4. Submission of Matters to a Vote                      of Security Holders**                                                                                                                 |   |  16 |
|                                                                                                                                                                                                                      |   |     |
| **Item                      6.** **Exhibits**                                                                                                                                                                        |   | 16       |
|                                                                                                                                                                                                                      |   |     |
| **SIGNATURES**                                                                                                                                                                                                            |   | 17       |
|                                                                                                                                                                                                                      |   |     |
| **INDEX                      TO EXHIBITS**                                                                                                                                                                                |   | 18       |

----

Index

| **PART                    I - FINANCIAL INFORMATION**                                                                                                                                            |   |                                      |      |                                  |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-----------|---------------------------------------|--------|
| **ITEM                      1. UNAUDITED FINANCIAL                      STATEMENTS**                                                                                                                  |   |                                      |      |                                  |   |
|                                                                                                                                                                                                  |   |
| **SIBONEY                      CORPORATION AND SUBSIDIARIES CONSOLIDATED                      BALANCE SHEET**                                                                                         |   |
|                                                                                                                                                                                                  |   |
| **Assets**                                                                                                                                                                                            |   |
|                                                                                                                                                                                                  |   | **June                      30,**         |      | **December                      31,** |   |
|                                                                                                                                                                                                  |   | **2005                      (Unaudited)** |      | **2004**                              |   |
| **Current                      Assets**                                                                                                                                                               |   |                                      |      |                                  |   |
| Cash                                                                                                                                                                                                  |   | $                                         | 176,574   |                                  | $      | 686,642 |   |
| Accounts                      receivable                                                                                                                                                              |   |                                      | 1,945,022 |                                  |   | 1,379,006 |   |
| Inventories                                                                                                                                                                                           |   |                                      | 387,931   |                                  |   | 314,947 |   |
| Refundable                      income taxes                                                                                                                                                          |   |                                      | 281,185   |                                  |   | 620,769 |   |
| Prepaid                      expenses                                                                                                                                                                 |   |                                      | 107,253   |                                  |   | 164,305 |   |
| Deferred                      tax                      asset                                                                                                                                          |   |                                      | 228,000   |                                  |   | 116,000 |   |
| **Total                      Current Assets**                                                                                                                                                         |   |                                      | 3,125,965 |                                  |   | 3,281,669 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Property                      and Equipment, Net**                                                                                                                                                  |   |                                      | 381,638   |                                  |   | 432,500 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Goodwill,                      Net**                                                                                                                                                                |   |                                      | 1,045,015 |                                  |   | 1,045,015 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Other                      Assets**                                                                                                                                                                 |   |                                      | 1,995,041 |                                  |   | 1,627,648 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Total                      Assets**                                                                                                                                                                 |   | $                                         | 6,547,659 |                                  | $      | 6,386,832 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Liabilities                      And Stockholders’                      Equity**                                                                                                              |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Current                      Liabilities**                                                                                                                                                          |   |                                      |      |                                  |   |   |   |
| Notes                      payable                                                                                                                                                                    |   | $                                         | 450,000   |                                  | $      | 6,771 |   |
| Current                      portion of capitalized lease obligation                                                                                                                                  |   |                                      | 24,132    |                                  |   | 25,686 |   |
| Accounts                      payable                                                                                                                                                                 |   |                                      | 127,718   |                                  |   | 173,660 |   |
| Accrued                      bonuses                                                                                                                                                                  |   |                                      | —   |                                  |   | 88,677 |   |
| Accrued                      commissions                                                                                                                                                              |   |                                      | 113,197   |                                  |   | 36,817 |   |
| Accrued                      vacation                                                                                                                                                                 |   |                                      | 124,171   |                                  |   | 87,223 |   |
| Accrued                      royalties                                                                                                                                                                |   |                                      | 189,921   |                                  |   | 311,886 |   |
| Accrued                      severance                                                                                                                                                                |   |                                      | 191,113   |                                  |   | — |   |
| Other                      accrued                      expenses                                                                                                                                      |   |                                      | 84,359    |                                  |   | 48,093 |   |
| Accrued                      litigation liability                                                                                                                                                     |   |                                      | 100,000   |                                  |   | 100,000 |   |
| **Total                      Current Liabilities**                                                                                                                                                    |   |                                      | 1,404,611 |                                  |   | 878,813 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Long-Term                      Liabilities**                                                                                                                                                        |   |                                      |      |                                  |   |   |   |
| Long-term                      litigation liability                                                                                                                                                   |   |                                      | 100,000   |                                  |   | 100,000 |   |
| Capitalized                      lease obligation                                                                                                                                                     |   |                                      | —   |                                  |   | 11,116 |   |
| Deferred                      tax                      liability                                                                                                                                      |   |                                      | 292,000   |                                  |   | 360,000 |   |
| **Total                      Long-Term Liabilities**                                                                                                                                                  |   |                                      | 392,000   |                                  |   | 471,116 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Commitments                      and Contingencies (Note 6)**                                                                                                                                       |   |                                      |      |                                  |   |   |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Stockholders’                      Equity**                                                                                                                                                   |   |                                      |      |                                  |   |   |   |
| Common                      stock:                                                                                                                                                                    |   |                                      |      |                                  |   |   |   |
| Authorized                      100,000,000 shares at $0.10 par value; issued and                                                                                                                     |   |                                      |      |                                  |   |   |   |
| outstanding                      17,030,419 at June 30, 2005 and 17,407,919 at                                                                                                                        |   |                                      |      |                                  |   |   |   |
| December                      31,                      2004                                                                                                                                           |   |                                      | 1,703,042 |                                  |   | 1,740,792 |   |
| Retained                      earnings                                                                                                                                                                |   |                                      | 3,048,006 |                                  |   | 3,296,111 |   |
| **Total                      Stockholders’                      Equity**                                                                                                                        |   |                                      | 4,751,048 |                                  |   | 5,036,903 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| **Total                      Liabilities and Stockholders’                      Equity**                                                                                                        |   | $                                         | 6,547,659 |                                  | $      | 6,386,832 |   |
|                                                                                                                                                                                                  |   |                                      |      |                                  |   |   |   |
| Note:                      The                      balance sheet at December 31, 2004 has been derived from the                      audited                      financial statements at that date. |
| See                      accompanying notes to unaudited consolidated financial                      statements.                                                                                      |   |                                      |      |                                  |   |   |   |

----

Index

**SIBONEY                CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED                STATEMENT OF OPERATIONS (Unaudited)**

|                                                                    |   | **Three                          Months Ended June 30,** |       | **Six                          Months Ended June 30,** |   |
|-------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|--------------------------------------------------------|--------|
|                                                                    |   | **2005**                                                 |       | **2004**                                               |   | **2005** |   | **2004** |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Revenues**                                                            |   | $                                                        | 2,799,627  |                                                   | $      | 3,648,784 |   | $ | 4,573,502 |   | $ | 6,305,637 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Cost                          of Product Sales**                      |   |                                                     | 529,743    |                                                   |   | 689,477 |   |   | 972,896 |   |   | 1,225,716 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Selling,                          General and Administrative**        |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Expenses**                                                            |   |                                                     | 1,810,578  |                                                   |   | 1,702,207 |   |   | 4,002,900 |   |   | 3,456,513 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Income                          (Loss) From Operations**              |   |                                                     | 459,306    |                                                   |   | 1,257,100 |   |   | (402,294 | ) |   | 1,623,408 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Other                          Income (Expense)**                     |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| Interest                          expense, net                          |   |                                                     | (8,283     | )                                                      |   | 359 |   |   | (10,974 | ) |   | (138 | ) |
| Gain                          on sale of asset                          |   |                                                     | -          |                                                   |   | 219,780 |   |   | — |   |   | 219,780 |   |
| Miscellaneous                                                           |   |                                                     | 411        |                                                   |   | 156 |   |   | 1,399 |   |   | 835 |   |
| **Total                          Other Income (Expense)**               |   |                                                     | (7,872     | )                                                      |   | 220,295 |   |   | (9,575 | ) |   | 220,477 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Income                          (Loss) Before Income Taxes**          |   |                                                     | 451,434    |                                                   |   | 1,477,395 |   |   | (411,869 | ) |   | 1,843,885 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Income                          Tax Benefit (Expense)**               |   |                                                     | (255,000   | )                                                      |   | (573,229 | ) |   | 247,000 |   |   | (715,427 | ) |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Net                          Income (Loss)**                          |   | $                                                        | 196,434    |                                                   | $      | 904,166 |   | $ | (164,869 | ) | $ | 1,128,458 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Earnings                          (Loss) Per Common Share - Basic**   |   | $                                                        | 0.01       |                                                   | $      | 0.05 |   | $ | (0.01 | ) | $ | 0.06 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Earnings                          (Loss) Per Common Share - Diluted** |   | $                                                        | 0.01       |                                                   | $      | 0.05 |   | $ | (0.01 | ) | $ | 0.06 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Weighted                          Average Number of Common**          |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Shares                          Outstanding - Basic**                 |   |                                                     | 17,124,821 |                                                   |   | 17,595,007 |   |   | 17,209,053 |   |   | 17,593,234 |   |
|                                                                    |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Weighted                          Average Number of Common**          |   |                                                     |       |                                                   |   |   |   |   |   |   |   |   |   |
| **Shares                          Outstanding - Diluted**               |   |                                                     | 17,323,781 |                                                   |   | 18,086,423 |   |   | 18,161,161 |   |   | 17,927,144 |   |

----

Index

**SIBONEY            CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED            STATEMENT OF STOCKHOLDERS’            EQUITY (Unaudited)**

|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |        |      |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|--------|----------------------------------------------------------------------------------------|--------|--------|-----------|
|                                                                                                             |   | **Common                      Stock**                                                                                                                    |       |                     |   |                                                                                   |   |
|                                                                                                             |   |  **Shares                     ****Amount** |       | **Retained****Earnings** |   | **Total                          Stockholders’                          Equity** |   |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |
| **Balance                      - December 31, 2004**                                                             |   |                                                                                                                                                     | 17,407,919 |                     | $      | 1,740,792                                                                              |   | $      | 3,296,111 |   | $ | 5,036,903 |   |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Stock                      Repurchase**                                                                        |   |                                                                                                                                                     | (62,500    | )                        |   | (6,250                                                                                 | )      |   | (19,806   | ) |   | (26,056 | ) |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Net                      Income (Loss)**                                                                       |   |                                                                                                                                                     | —    |                     |   | —                                                                                |   |   | (361,303  | ) |   | (361,303 | ) |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Balance                      - March 31, 2005**                                                                |   |                                                                                                                                                     | 17,345,419 |                     | $      | 1,734,542                                                                              |   | $      | 2,915,002 |   | $ | 4,649,544 |   |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Stock                      Repurchase**                                                                        |   |                                                                                                                                                     | (315,000   | )                        |   | (31,500                                                                                | )      |   | (63,430   | ) |   | (94,930 | ) |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Net                      Income (Loss)**                                                                       |   |                                                                                                                                                     | —    |                     |   | —                                                                                |   |   | 196,434   |   |   | 196,434 |   |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| **Balance                      - June 30, 2005**                                                                 |   |                                                                                                                                                     | 17,030,419 |                     | $      | 1,703,042                                                                              |   | $      | 3,048,006 |   | $ | 4,751,048 |   |
|                                                                                                             |   |                                                                                                                                                     |       |                     |   |                                                                                   |   |   |      |   |   |   |   |
| See                      accompanying notes to unaudited consolidated financial                      statements. |   |                                                                                                                                                     |       |                     |   |                                                                                   |

----

Index

| **SIBONEY                      CORPORATION AND SUBSIDIARIES**                                                    |   |
|------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                      STATEMENT OF CASH FLOWS                      (Unaudited)**                   |
|                                                                                                             |   |   |   |   |   |   |   |
|                                                                                                             |   | **Six Months                      Ended June 30,** |
|                                                                                                             |   |   | **2005** |   |   | **2004** |   |
| **Cash                      Flows From Operating Activities**                                                    |   |   |   |   |   |   |   |
| Net                      income                      (loss)                                                      |   | $ | (164,869 | ) | $ | 1,128,458 |   |
| Adjustments                      to reconcile net income (loss) to net                                           |   |   |   |   |   |   |   |
| cash                      provided                      by (used in) operating activities:                       |   |   |   |   |   |   |   |
| Depreciation                                                                                                     |   |   | 119,178 |   |   | 107,665 |   |
| Amortization                                                                                                     |   |   | 287,663 |   |   | 314,496 |   |
| Deferred                      income taxes                                                                       |   |   | (180,000 | ) |   | 87,200 |   |
| Change                      in                      assets and liabilities:                                      |   |   |   |   |   |   |   |
| Accounts                      receivable                                                                         |   |   | (566,016 | ) |   | (258,289 | ) |
| Inventories                                                                                                      |   |   | (72,984 | ) |   | 62,413 |   |
| Refundable                      income taxes                                                                     |   |   | 339,584 |   |   | (94,187 | ) |
| Prepaid                      expenses                                                                            |   |   | 57,576 |   |   | (32,590 | ) |
| Accounts                      payable and accrued                      expenses                                  |   |   | 84,123 |   |   | 62,942 |   |
| **Net                      Cash Provided By (Used In) Operating Activities**                                     |   |   | (95,745 | ) |   | 1,378,108 |   |
|                                                                                                             |   |   |   |   |   |   |   |
| **Cash                      Flows From Investing Activities**                                                    |   |   |   |   |   |   |   |
| Payments                      for                      equipment                                                 |   |   | (68,316 | ) |   | (124,600 | ) |
| Payments                      for                      software development costs                                |   |   | (655,580 | ) |   | (237,774 | ) |
| **Net                      Cash Used In Investing Activities**                                                   |   |   | (723,896 | ) |   | (362,374 | ) |
|                                                                                                             |   |   |   |   |   |   |   |
| **Cash                      Flows From Financing Activities**                                                    |   |   |   |   |   |   |   |
| Proceeds                      from                      issuance of common stock                                 |   |   | — |   |   | 4,918 |   |
| Payments                      under stock buy back program                                                       |   |   | (120,986 | ) |   | (11,407 | ) |
| Borrowings                      on                      line of credit                                           |   |   | 450,000 |   |   | — |   |
| Principal                      payments on capital lease obligation                                              |   |   | (12,670 | ) |   | (12,009 | ) |
| Principal                      payments on long-term debt                                                        |   |   | (6,771 | ) |   | (141,539 | ) |
| **Net                      Cash Provided By (Used In) Financing Activities**                                     |   |   | 309,573 |   |   | (160,037 | ) |
|                                                                                                             |   |   |   |   |   |   |   |
| **Net                      (Decrease) Increase In Cash**                                                         |   |   | (510,068 | ) |   | 855,697 |   |
|                                                                                                             |   |   |   |   |   |   |   |
| **Cash                      - Beginning of Period**                                                              |   |   | 686,642 |   |   | 1,102,608 |   |
|                                                                                                             |   |   |   |   |   |   |   |
| **Cash                      - End of Period**                                                                    |   | $ | 176,574 |   | $ | 1,958,305 |   |
|                                                                                                             |   |   |   |   |   |   |   |
| **Supplemental                      Disclosure of Cash Flow Information**                                        |   |   |   |   |   |   |   |
| Interest                      paid                                                                               |   | $ | 5,853 |   | $ | 2,419 |   |
| Income                      taxes                      paid                                                      |   | $ | — |   | $ | 696,403 |   |
|                                                                                                             |   |   |   |   |   |   |   |
| See                      accompanying notes to unaudited consolidated financial                      statements. |   |   |   |   |   |   |   |

----

Index

**SIBONEY        CORPORATION AND SUBSIDIARIES**

**NOTES        TO UNAUDITED CONSOLIDATED        FINANCIAL STATEMENTS**

**JUNE        30,        2005 AND 2004**

| **1.**  | **BASIS                  OF PRESENTATION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|         | Our                  consolidated balance sheet as of December 31, 2004 was obtained                  from the                  Company’s audited balance sheet as of that date, as set forth in our                  Annual Report on Form 10-K for the year ended December 31, 2004.                  All other                  financial statements contained herein are unaudited and, in the                  opinion of                  management, contain all adjustments considered necessary for a                  fair                  presentation. Certain                  information and footnote disclosures normally included in financial                  statements prepared in accordance with generally accepted accounting                  principles have been omitted. These unaudited consolidated financial                  statements should be read in conjunction with the consolidated                  financial                  statements and notes thereto included in the Company’s                  Annual                  Report on Form 10-K for the year ended December 31, 2004. The results                  of                  operations for the three and six months ended June 30, 2005 are                  not                  necessarily indicative of the operating results for the full                  year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **2.**       | **REVENUE                  RECOGNITION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|         | The                  Company                  follows specific and detailed guidelines in determining the proper                  amount                  of revenue to be recorded. The Company recognizes revenues in accordance                  with Statement of Position (“SOP”) 97-2 (Software Revenue Recognition) as                  amended by SOP 98-9 (Modification of SOP 97-2, Software Revenue                  Recognition, With Respect to Certain Transactions). Revenue from                  software                  license agreements is recognized when persuasive evidence of an                  agreement                  exists, delivery of the software has occurred, the fee is fixed                  or                  determinable, and collectibility is probable. In software arrangements                  that include more than one element, the Company allocates the total                  arrangement fee among the elements based on the vendor-specific                  objective                  evidence (“VSOE”) of the relative fair value of each deliverable, using                  the price charged when that element is sold separately. For software                  arrangements in which we do not have VSOE for undelivered elements,                  revenue is deferred until the earlier of when VSOE is determined                  for the                  undelivered elements or when all elements for which we do not have                  VSOE                  have been delivered. The                  Company                  also generates revenue by providing professional services which                  consist of                  consulting, training and implementation support. The revenue for                  these                  services is recognized as the services are performed. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **3.**       | **INVENTORIES**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|  Inventories                  consist of:                   |   |
|------------------------------------------------------------------|--------|
|                                                             |   | **June                  30, 2005** |   | **December                  31, 2004** |   |
|  Raw                  materials                             |   | $ | 313,641 |   | $ | 259,998 |   |
|  Finished                  goods                            |   |   | 122,690 |   |   | 94,549 |   |
|  Reserve                  for                  obsolescence |   |   | (48,400 | ) |   | (39,600 | ) |
|                                                             |   | $ | 387,931 |   | $ | 314,947 |   |

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Index

**4.              OTHER ASSETS**

|  Other                  assets consist of:                                                                                                                                         |   |                                     |                                                   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|--------------------------------------------------------|--------|--------|
|                                                                                                                                                                                    |   |  **June                  30, 2005** |  ** ****December                  31, 2004** |   |
|  Software                  development costs, net of accumulated amortization of $2,113,328                  in 2005                  and $1,825,665                  in 2004 |   | $                                        | 1,984,372                                              |   | $      | 1                  ,616,455 |   |
|  Deposits                  and other                                                                                                                                               |   |                                     | 10,669                                                 |   |   | 11,193 |   |
|                                                                                                                                                                                    |   | $                                        | 1,995,041                                              |   | $      | 1,627,648 |   |

**5.              STOCK BASED COMPENSATION**

|                                                                                                                                                                 |   | **Three                  Months Ended June 30,** | **Six                  Months Ended June 30,** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|------------------------------------------------|
|                                                                                                                                                                 |   | **2005**                                         |                                           |  **2004** |   | **2005** |   |  **2004** |   |
| Reported                  net                  income (loss)                                                                                                         |   | $                                                | 196,434                                        |   | $ | 904,166 |   | $ | (164,869 | ) | $ | 1,128,458 |   |
|                                                                                                                                                                 |   |                                             |                                           |   |   |   |   |   |   |   |   |   |   |
| Stock-based                  employee compensation expense determined under the fairvalue                  based                  method, net of related tax effects |   |                                             | (36,473                                        | ) |   | (22,044 | ) |   | (59,710 | ) |   | (44,088 | ) |
|                                                                                                                                                                 |   |                                             |                                           |   |   |   |   |   |   |   |   |   |   |
| Pro                  forma net                  income (loss)                                                                                                        |   | $                                                | 159,961                                        |   | $ | 882,122 |   | $ | (224,579 | ) | $ | 1,084,370 |   |
|                                                                                                                                                                 |   |                                             |                                           |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) per share (basic and diluted):                                                                                                      |   |                                             |                                           |   |   |   |  |   |   |   |   |   |  |
| As                  reported                                                                                                                                         |   |                                             | $0.01                                          |   |   | $0.05 |   |   | $(0.01 | ) |   | $0.06 |   |
| Pro                  forma                                                                                                                                           |   |                                             | $0.01                                          |   |   | $0.05 |   |   | $(0.01 | ) |   | $0.06 |   |

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Index

**6.              COMMITMENTS AND CONTINGENCIES**

** **

**ITEM        2. **
**MANAGEMENT’S        DISCUSSION AND        ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS **

**Overview**

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Index

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Index

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Index

**Results        of        Operations**

**Three        Months Ended June 30, 2005 Compared To June 30, 2004**

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Index

**Six        Months        Ended June 30, 2005 Compared to June 30, 2004**

**Liquidity        and Capital Resources**

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Index

**ITEM        3. QUANTITATIVE AND QUALITATIVE DISCLOSURES        ABOUT MARKET RISK**

**ITEM        4. CONTROLS AND PROCEDURES**

**FORWARD-LOOKING        STATEMENTS**

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Index

**PART        II - OTHER INFORMATION**

**ITEM        2. UNREGISTERED SALES OF EQUITY SECURITIES AND        USE OF PROCEEDS**

**Issuer        Purchases of Equity Securities**

|                                                                                                                                           |                                                                                |                                                                            |                                                                                                                                                                                               |                                                                                                                                                                |
|------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                                                                                                                     | **(a)                  Total****Number                  of****Shares****Purchased** | **(b)****Average****Price                  Paid****per                  Share** | **(c)                  Total Number****of                  Shares****Purchased                  as****Part                  of Publicly****Announced****Plans                  or****Programs**(1) | **(d)                  Maximum Number****of                  Shares that May Yet****Be                  Purchased Under****the                  Plans or Programs** |
| Month                  #1                  (April                  1,                  2005 -April                  30,                  2005) |   315,000                                                                 |   $0.30                                                               |   315,000                                                                                                                                                                                |   1,412,500                                                                                                                                               |
|                                                                                                                                           |                                                                                |                                                                            |                                                                                                                                                                                               |                                                                                                                                                                |
| Month                  #2(May                  1, 2005                  -May                  31,                  2004)                       |   —                                                                 |   —                                                             |   —                                                                                                                                                                                |   —                                                                                                                                                 |
|                                                                                                                                           |                                                                                |                                                                            |                                                                                                                                                                                               |                                                                                                                                                                |
| Month                  #3(June                  1, 2005                  -June                  30,                  2005)                     |   —                                                                 |   —                                                             |   —                                                                                                                                                                                |   —                                                                                                                                                 |
|                                                                                                                                           |                                                                                |                                                                            |                                                                                                                                                                                               |                                                                                                                                                                |
| Total                                                                                                                                          | 315,000                                                                             | $0.30                                                                           | 315,000                                                                                                                                                                                            | 1,412,500                                                                                                                                                           |
|                                                                                                                                           |                                                                                |                                                                            |                                                                                                                                                                                               |                                                                                                                                                                |

|   | (1) | On                  March 8,                  2004, the Board of Directors authorized a stock repurchase program                  under                  which the Company may purchase up to 1,000,000 shares of the Company’s                  common stock from time to time in the open market or in privately                  negotiated transactions. Under this program, the Company                  has                  repurchased a cumulative total of 587,500 shares of the Company's                  common                  stock. On May 11, 2005, the Board of Directors authorized                  the                  purchase of up to an additional 1,000,000 shares of the Company’s common                  stock from time to time in the open market or in privately negotiated                  transactions. No shares will be purchased under the 2005 program                  until the                  2004 program is completed. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Index

**ITEM        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY        HOLDERS**

| Nominee                                                   | Votes                  in                  Favor | Votes                  Withheld | Broker                  Non-votes |
|-----------------------------------------------------------|--------------------------------------------------|---------------------------------|-----------------------------------|
| Rebecca                  M.                  Braddock     | 11,700,050                                       | 208,074                         | 1,902,504                         |
| William                  D.                  Edwards, Jr. | 11,245,246                                       | 663,178                         | 1,902,504                         |
| Alan                  G.                  Johnson         | 11,279,258                                       | 628,866                         | 1,902,504                         |
| John                  J.                  Riffle          | 11,734,072                                       | 174,352                         | 1,902,504                         |
| Lewis                  B.                  Shepley        | 11,735,482                                       | 172,642                         | 1,902,504                         |
| Timothy                  J.                  Tegeler      | 11,244,771                                       | 663,353                         | 1,902,504                         |
| Jerome                  W.                  Thomasson     | 11,734,372                                       | 174,052                         | 1,902,504                         |

**ITEM        6. EXHIBITS **

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Index

**SIGNATURES**

**SIBONEY        CORPORATION**

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Index

**Index        to Exhibits**

**Exhibits**

| 10 | Letter                  Agreement between Siboney Corporation and Earnest A. Marx, dated                  May 16,                  2005, filed as Exhibit 99.1 to Form 8-K filed May 31, 2005 and                  incorporated herein by reference. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Certification                  by Chief Executive Officer pursuant to Rule 13a - 14(a) or Rule                  15d -                  14(a) of the Securities Exchange Act of                  1934 |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification                  by Chief Financial Officer pursuant to Rule 13a - 14(a) or Rule                  15d -                  14(a) of the Securities Exchange Act of                  1934 |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification                  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section                  906 of                  the Sarbanes-Oxley Act of 2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|