|SECURITIES
AND EXCHANGE COMMISSIONWashington,
D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

(X)    Quarterly report for the quarterly period ended September 30, 2001


OR

(  )   
Transition Report Pursuant To Section 13 Or 15(d) of The Securities Exchange Act of 1934

Commission file number   1-3952

SIBONEY CORPORATION(Exact name of registrant as specified in its charter)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Maryland
(State or other jurisdiction of 
 incorporation or organization) | 73-0629975
  (I.R.S. Employer I.D. No.)
|------------------------------------------------------------------------- | ---------------------------------------

|325 North Kirkwood Road, Ste 310, P.O. Box 221029, St. Louis, MO 63122
                                      (Address of principal executive offices)
                                                     (Zip Code)
314-822-3163
 (Registrant's telephone number, including area code)

(Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports) and (2) has been subject to such filing requirements for the past
90 days:      YES   [X]        NO   [   ]
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Title of class ofcommon stock | Number of Shares
   outstanding as of this Report Date
|----------------------------- | ------------------------------------------------------

|Common stock, par value
       $.10 per share | 16,740,344
|--------------------------------------------- | ----------

|INDEX
|-----

`PART I  FINANCIAL INFORMATION
-----------------------------

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheet, September 30,
          2001 and December 31, 2000                                           3

          Condensed Consolidated Statement of Operations,
          Three Months and Nine Months Ended September 30, 2001
          and September 30, 2000                                               4

          Condensed Consolidated Statement of Cash Flows, Nine
          Months Ended September 30, 2001 and September 30, 2000               5

          Notes to Condensed Consolidated Financial                            6
          Statements

 Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations                        8

PART II OTHER INFORMATION
-------------------------

Item 6.   Reports on Form 8-K                                                 11

Signatures                                                                    11
----------

Exhibit Index                                                                 12
-------------`

|PART I -
FINANCIAL INFORMATION

ITEM 1.  
FINANCIAL STATEMENTS

SIBONEY CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
|----------------------------------------------------------------------------------------------------------------------------------------

`Assets
                                     ------

                                                                 DECEMBER 31,
                                        SEPTEMBER 30,             2000 (SEE
                                                2001             NOTE BELOW)
                                       --------------            -----------

Current Assets
--------------
 Cash                                    $    757,245         $    626,554
 Investment                                     5,000                4,500
 Accounts receivable                          982,339              699,866
 Inventories (Note 2)                         332,038              224,680
 Prepaid expenses                             136,789               67,381
 Deferred tax asset                           484,000              484,000
                                         ------------         ------------
         Total Current Assets               2,697,411            2,106,981
         --------------------

Property, Plant and Equipment
-----------------------------
(Net of accumulated depreciation
of $570,631 at September 30, 2001
and $472,606 at December 31, 2000)            342,817              271,503

Other Assets (Note 3)                       2,474,599            1,048,628
---------------------                    ------------         ------------

                                          $ 5,514,827           $3,427,112
                                          ===========          ===========

                      Liabilities and Stockholders' Equity
                      ------------------------------------

Current Liabilities
-------------------
 Current portion of long-term debt        $   429,425          $    74,783
 Current portion of capitalized
  lease obligation                             12,216               22,653
 Accounts payable                              50,497              129,978
 Accrued expenses                             484,837              344,177
                                          -----------          -----------
         Total Current Liabilities            976,975              571,591
         -------------------------        -----------          -----------

Long-Term Liabilities
---------------------
 Long-term debt                               587,902              198,685
 Capitalized lease obligation                   4,269               11,613
 Deferred tax liability                       159,000              159,000
                                          -----------          -----------
    Total Long-Term Liabilities               751,171              369,298
    ---------------------------           -----------          -----------

Stockholders' Equity
--------------------
 Common stock:
   Authorized 20,000,000 shares
   at $0.10 par value; issued
   and outstanding 16,740,344 at
   September 30, 2001 and
   16,658,344 at December 31, 2000          1,674,035            1,665,835
 Unrealized holding gain on investment          5,000                4,500
 Additional paid-in capital                    13,369                8,332
 Retained earnings                          2,094,277              807,556
                                         ------------         ------------
    Total Stockholders' Equity              3,786,681            2,486,223
    --------------------------           ------------         ------------

                                           $5,514,827          $ 3,427,112
                                         ============          ===========


NOTE:  The balance sheet at  December 31, 2000 has been taken from the audited
       financial statements at that date and condensed.  See accompanying notes
       to condensed consolidated financial statements.`

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|SIBONEY CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|----------------------------------------------------------------------------------

`Nine Months Ended         Three Months Ended
                                   September 30,              September 30,
                         -------------------------------------------------------

                                2001          2000           2001          2000
                                ----          ----           ----          ----

Revenues                 $ 6,370,795    $4,292,409     $1,951,063    $1,492,120

Cost of Product Sales      1,044,799       603,059        434,117       255,215

Selling, General and
Administrative Expenses    3,974,002     2,376,929      1,482,095       957,447
                        ------------   -----------    -----------   -----------

Income from Operations     1,351,994     1,312,421         34,851       279,458
                        ------------   -----------    -----------   -----------
Other Income (Expense)
 Interest Income
 (Expense)                   (66,555)          621        (14,838)          679
 Miscellaneous                 1,282         2,936           (978)           94
                        ------------   -----------    ------------- -----------
Total Other Income
(Expense)                    (65,273)        3,557        (15,816)          773
                        ------------   -----------    -----------   -----------

Net Income               $ 1,286,721   $ 1,315,978    $    19,035   $   280,231
                         ============  ===========    ===========   ===========

Weighted Average
Shares Outstanding        16,683,274    16,534,633     16,707,719    16,534,633
                         ===========   ===========    ===========   ===========

Basic and Diluted
Income per
Common Share               $     .08        $  .08        $   .00        $  .02
                           =========     =========     ==========    ==========


See accompanying notes to condensed consolidated financial statements.`

|SIBONEY CORPORATION AND SUBSIDIARIES
                                        CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`2001              2000
                                                        ----              ----
Cash Flows from Operations
--------------------------
    Net income                                     $1,286,721        $1,315,978
    Adjustments to reconcile net
      income to net cash provided
      by continuing operations:

    Depreciation                                       98,025            65,798
    Amortization                                      364,315            57,657

    Change in assets and liabilities:

         Increase in accounts receivable             (282,473)         (560,488)
         Increase in inventory                       (107,358)         (133,270)
         Increase in prepaid expenses
           and deposits                               (44,534)          (11,649)

         Increase in accounts payable
         and accrued expenses                          61,179           167,649
                                                   ----------       -----------

Net Cash Provided by Operations                     1,375,875           901,675
-------------------------------                    -----------      -----------

Cash Flows from Investing Activities
------------------------------------
 Payments for equipment                              (169,339)         (144,600)
 Payments for capitalized
   software development cost                         (375,716)         (239,302)
 Payments to purchase assets
   of unrelated entities                           (1,133,809)         (344,659)
                                                  -----------      ------------

Net Cash Used in Investing Activities              (1,678,864)         (728,561)
-------------------------------------             -----------      ------------

Cash Flows from Financing Activities
------------------------------------
 Proceeds from long-term debt                         725,000                --
 Payments on capital lease obligations                (17,781)          (16,573)
 Principal payments on long-term debt                (286,776)               --
 Proceeds from issuance of common stock                13,237            20,328
                                                 -----------       -----------
Net Cash Provided by
Financing Activities                                  433,680             3,755
--------------------                               ----------        ----------

Net Increase in Cash
 and Cash Equivalents                                 130,691           176,869
---------------------

Cash and Cash Equivalents -
Beginning of Period                                  626,554            383,356
----------------------------                      -----------       -----------

Cash and Cash Equivalents -
End of Period                                       $ 757,245         $ 560,225
----------------------------                       =========          =========

Supplemental Disclosure of
Cash Flow Information
---------------------------
 Interest Paid                                     $ 73,246           $   4,337
                                                  ----------        -----------

See accompanying notes to condensed consolidated financial statements.`

|SIBONEY
CORPORATION AND SUBSIDIARIES

NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30,
2001 AND 2000

1.  CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The
condensed consolidated balance sheet as of September 30, 2001, the condensed
consolidated statement of operations for the nine-month and the three-month
periods ended September 30, 2001 and 2000 and the condensed consolidated
statement of cash flows for the nine-month periods then ended have been prepared
by the Company, without audit. In the opinion of management, all adjustments
(which include only recurring adjustments) necessary to present fairly the
financial position and results of operations at September 30, 2001 and for all
periods have been made.

Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted. These condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Registrants Annual Report on Form 10-K for the year ended December
31, 2000. The results of operations for the period ended September 30, 2001 are
not necessarily indicative of the operating results for the full year.

2.  INVENTORIES

Inventories consist of the following:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`September 30, 2001           December 31, 2000
                          ------------------           -----------------

    Raw materials                $205,791                 $ 163,473

    Finished goods                126,247                    61,207
                                ---------                  --------

                                 $332,038                 $ 224,680
                                 ========                 =========`

|3.  OTHER ASSETS

Other assets consist of:
|------------------------------------------

`September  30, 2001       December 31, 2000
                                    -------------------       -----------------

    Software development costs           $ 1,501,476       $       695,512
    Goodwill                               1,156,100               346,904
    Covenants not to compete                 300,000               100,000
    Deposits                                   1,614                26,488
                                      --------------           -----------
                                           2,959,190             1,168,904
    Less: Accumulated Amortization           484,591               120,276
                                        ------------           -----------
                                          $2,474,599            $1,048,628
                                          ==========            ==========`

|The Company capitalizes
costs associated with the development of computer software for sale. Costs are
capitalized at the point the Company determines that it is technologically
feasible to produce the software title. Such costs are amortized on a modified
declining balance method over a period of four years. Software development
amortization expense charged against earnings amounted to $127,216 for the nine
months ended September 30, 2001 and $54,766 for the year ended December 31,
2000.

Goodwill represents the
purchase price of an acquired companys assets in excess of the fair value
of those net assets at the date of acquisition and is being amortized on a
straight-line basis over five years, which approximates the life of the acquired
assets. Amortization of such goodwill charged to operations amounted to $145,432
for the nine months ended September 30, 2001 and $34,690 for the year ended
December 31, 2000.

Covenants not to compete
are being amortized on a straight-line basis over two years, which is the life
of the covenant agreements. Amortization of these covenants charged to
operations amounted to $91,667 for the nine months ended September 30, 2001and
$25,000 for the year ended December 31, 2000.

4.   BUSINESS
ACQUISITIONS

Effective January 1, 2001,
the Company purchased the stock of an educational software company for $850,000.
The acquisition was paid for with a $550,000 cash payment at closing and a
$300,000 non-interest-bearing note payable in 12 quarterly installments of
$25,000 each. The $550,000 cash payment was provided by funds on hand in
addition to a term loan from the Companys bank for $325,000. The loan
bears interest at 0.25% above the prime rate, with monthly principal and
interest payments of $6,771 and is due in January 2005. The acquisition was
accounted for under the purchase method of accounting.

As part of the term loan
agreement obtained for this acquisition, the Company renegotiated its revolving
line of credit agreement with the bank on January 5, 2001. Under this agreement,
outstanding balances were due on demand, and if no demand was made, then due on
January 5, 2002. The Company also renegotiated the lenders interest rate
from 0.75% above prime rate to prime rate. The agreement is secured by accounts
receivable, inventories and equipment and requires monthly interest payments on
outstanding balances. The Company was required to maintain a minimum net worth
of $2,000,000.

The line of credit
agreement was again renegotiated on October 16, whereby the credit limit was
raised from $500,000 to $1,000,000, the due date was amended to November 1, 2002
and the Company is required to maintain a minimum net worth of $2,500,000. As of
September 30, 2001 there was no outstanding balance due on the line of credit.

Effective May 7, 2001, the
Company purchased the publishing assets of The Denali Project, L.L.C. The
acquisition was paid for with a $540,000 cash payment and a $50,000
non-interest-bearing note payable in full one year after the closing date. The
$540,000 cash payment was provided by funds on hand in addition to a term loan
from the Companys bank for $400,000. The loan had a 7.75% interest rate
with monthly principal and interest payments of $12,511 and was due May 2004.
However, this loan was renegotiated on October 8, 2001 and now bears interest at
0.25% above the prime rate, with monthly principal and interest payments of
$8,025 and remains due in May 2004. The acquisition was accounted for under the
purchase method of accounting.

SIBONEY
CORPORATION AND SUBSIDIARIES

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

The Company is engaged,
through Siboney Learning Group, Inc. (SLG), a wholly-owned
subsidiary, in the publishing and distribution of educational software,
primarily for schools. The Company has 56 full-time employees.

The Company has served the
educational market for more than 35 years. Since 1986, the Companys main
business has been publishing educational software in reading, language arts,
math and science for students and teachers in grades kindergarten through adult.
The Company is best known for its software which motivates students to master
key skills correlated to state and national objectives and which keeps track of
student progress for teachers to review.

The Companys growing
portfolio of products now includes more than 150 active titles which focus on
teaching basic skills and new concepts while meeting the different learning
needs of all students through time-on-task instruction. Popular titles include
Math Concepts, Phonics Mastery, Reading Concepts, Reading for Critical
Thinking, Process Writing, Money ChallengeandTouchdown Math.

Siboney Learning Group
sells five complementary product lines which are developed, marketed and
supported by the Companys same core team. These product lines allow the
Company to offer a comprehensive product selection to schools and adult
education centers at a variety of budget levels.

GAMCO Educational Software
(GAMCO), the Companys original product line, provides schools
with highly motivating single titles and series. GAMCO titles are sold primarily
through major national and regional school software dealers, the Companys
inside sales force and its direct catalogs. These titles are known for their
effective blend of time-on-task learning with motivational games. In addition,
each GAMCO title includes a management program that tracks student progress and
allows teachers to modify the instruction to meet individual learning needs.

Orchard: Teachers
Choice Software (Orchard) offers schools and school districts a
comprehensive curriculum- and technology-based solution with universal
management and assessment. Orchard is sold through a proprietary network of
dealers and representatives who actively call on schools to sell larger
curriculum- and technology-based learning solutions. The Company believes that
Orchard is now a recognized competitor in the growing Integrated Learning
Systems market as a result of its motivating and balanced content, strong
correlation to major national tests and state objectives, and its cost-effective
pricing structure. The Company expects to introduce its first state-specific
versions of Orchard in 2001 by correlating its content to state-specific
standards and high-stakes state tests.

In July 2000, the Company
acquired the publishing assets of Teacher Support Software (TSS).
TSS is a 20 year old software publisher best known for its popular tools for
teachers, including Worksheet Magic, and its effective and comprehensive
language arts programs, including WordWorks. TSS products are sold
through all of the Companys sales channels.

In January 2001, the Company purchased the stock of Activity Records, Inc.
and in so doing acquired
Educational Activities, Inc.s software product line which is now called
Educational Activities Software (EAS). Educational Activities has
been a leading publisher of software for the middle-school to adult learner
software market for over 20 years. Best known for its Diascriptive® Reading
series, Educational Activities has traditionally sold its products to schools,
community colleges, adult learning centers and correctional facilities through a
network of independent representatives. A substantial part of EAS is adult
education products, a new market for the Company.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)

Effective May 7, 2001, the Company
purchased the publishing assets of The Denali Project, L.L.C. ("Denali").

Denali, based in Lansing,
Michigan, has developed Summit Software, now called Journey - Guided Educational
Software, a comprehensive instructional software program with over 900
integrated lessons for grades 3-8 in reading and mathematics with management and
reporting for teachers. After almost four years of development and testing, the
Company expects to release an upgraded version of the product late in 2001.

The Company has also
generated sales of select products through a direct-to-the-home marketer of
educational software. This alliance allows the Company to reach families in
their homes without going through expensive retail distribution. The Company is
considering using the Internet to distribute its products to the school and home
markets, but has not yet done so. However, it believes that its entry into the
adult education market by the acquisition of EAS may be an area suited to such
distribution by the Company.

The Company also has
certain natural resource interests, including coal, oil and gas, through several
subsidiaries.

RESULTS OF
OPERATION

The following is
managements discussion and analysis of certain significant factors which
have affected the Companys financial position and operating results during
the periods covered by the accompanying condensed consolidated financial
statements.

THREE MONTHS ENDED SEPTEMBER 30, 2001 vs. SEPTEMBER 30, 2000

Total revenues increased
30.8% or $458,943 to $1,951,063 from $1,492,120 during the three month period
ended September 30, 2001 compared to the same period in 2000, reflecting higher
sales of Siboney Learning Group. Sales of Orchard increased 30.3% over the same
period in 2000. Revenues from Siboney Coal Company increased $18,440 to $42,824
for the quarter ended September 30, 2001. After enjoying its best month ever
relative to historical performance and budget projections in August, the Company
experienced a serious slow down in sales in September primarily due to the
tragic and distracting events that occurred on September 11th.

Cost of product sales
increased 70.1% or $178,902 to $434,117 from $255,215 during the quarter
compared to the previous years quarter, primarily due to higher sales. As
a percentage of revenue, cost of product sales increased to 22.3% compared to
17.1% due to higher royalty expenses and an increase in amortized expenses for
product development.

Selling, general and
administrative expenses increased 54.8% or $524,648 to $1,482,095 from $957,447
during the quarter ended September 30, 2001 compared to the same quarter in
2000, primarily due to an increase in salaries and compensation-related expenses
as well as increased amortization expenses from acquisitions. The Company has
increased staffing in both its sales department and product development group.
In addition, the Companys acquisition of Denali, in May 2001 resulted in
increased salaries, rent and miscellaneous operating expenses associated with
this Lansing, Michigan based operation. The Company does not expect to generate
significant revenue from this acquisition until 2002.

Interest expense increased
$14,159 during the third quarter of 2001 compared to the same period in 2000 due
to the loans incurred for the Activity Records and Denali acquisitions.

Net income for the third
quarter of 2001 was $19,035 compared to $280,231 in 2000 for the reasons stated
above.

ITEM  2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF  FINANCIAL
CONDITION AND RESULTS  OF OPERATIONS (Continued)
NINE MONTHS ENDED SEPTEMBER 30, 2001 vs. SEPTEMBER 30, 2000
Total revenues increased
48.4% or $2,078,386 to $6,370,795 from $4,292,409 during the nine month period
ended September 30, 2001 compared to the same period in 2000, primarily due to
higher sales at Siboney Learning Group. Sales of Orchard Teachers Choice
Software were primarily responsible for this growth in sales. During the nine
month period Orchard sales increased 70.6%. Revenue from Siboney Coal Company
was $139,154, a decrease of $41,407 compared to the same period in 2000.

Cost of product sales
increased 73.3% or $441,740 to $1,044,799 from $603,059 compared to the nine
months ended September 30, 2000, primarily due to higher sales. As a percentage
of revenue, cost of product sales increased to 16.4% compared to 14.1% in the
prior year, due to higher royalty expenses from sales of licensed products plus
an increase in amortized expenses for product development.

Selling, general and
administrative expenses increased 67.2% or $1,597,073 to $3,974,002 from
$2,376,929 compared to the same nine month period in 2000, primarily due to
higher salary, commission and other compensation-related expenses. Marketing
expenses associated with higher sales and amortization expenses also increased
during the nine month period. The Company has increased staffing in both its
sales department and product development group. In addition, the Companys
acquisition of Denali, in May 2001 resulted in increased salaries, rent and
miscellaneous operating expenses associated with this Lansing, Michigan based
operation. The Company does not expect to generate significant revenue from this
acquisition until 2002.

Interest expense increased
$65,934 due to the loans incurred for the Activity Records and Denali
acquisitions.

As a result of the above
mentioned reasons, net income for the nine months ended September 30, 2001 was
$1,286,721, a decrease of 2.2% or $29,257compared to the same period in 2000.

LIQUIDITY AND CAPITAL RESOURCES

Sales at Siboney Learning Group
increased during August and September 2001, compared with November and December
2000, consistent with our experience in the previous year. As a result, accounts
receivable increased at September 30, 2001 compared to December 31, 2000.

Long-term debt increased at
September 30, 2001 compared to December 31, 2000 due to the acquisition of
Activity Records and Denali.

The Company has a
line-of-credit available of $1,000,000. There was no balance outstanding at
September 30, 2001 or December 31, 2000.

The net worth of the
Company at September 30, 2001 was $3,786,679 compared to $2,486,223 at December
31, 2000, as a result of the retention of earnings during the nine month period.

PART II -
OTHER INFORMATION


ITEM 6.  
REPORTS ON FORM 8-K
(a)  
Reports on Form 8-K:  A Report on Form 8-K was filed by the Registrant
on July 11, 2001 announcing the appointment of Lewis B. Shepley to the Company's
Board of Directors.

SIGNATURES

Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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| | SIBONEY CORPORATION
| | -------------------

|Date: November 12, 2001 | By:  /s/ Timothy J. Tegeler
                                                   Timothy J. Tegeler
                                                   Chief Executive Officer and
                                                   Chief Financial
                                            Officer
|----------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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