SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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


(X)      Quarterly report for the quarterly period ended September 30, 1998

                                       OR

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

Commission file number    1-3952

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

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

      34 N. Brentwood Blvd., Ste 211, P.O. Box 16184, St. Louis, MO 63105
                    (Address of principal executive offices)
                                   (Zip Code)

                                  314-725-6141
              (Registrant's telephone number, including area code)


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

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

         Title of class of                           Number of Shares
           common stock                      outstanding as of this Report Date
         -----------------                   ----------------------------------
      Common stock, par value                           16,518,344
      $.10 per share


<PAGE>


                                      INDEX


PART I   FINANCIAL INFORMATION

Item 1.  Financial Statements

     Condensed Consolidated Balance Sheet, September 30,
     1998 and December 31, 1997                                               3

     Condensed Consolidated Statement of Operations,
     Three Months and Nine Months Ended September 30, 1998
     and September 30, 1997                                                   4

     Condensed Consolidated Statement of Cash Flows,
     Nine Months Ended September 30, 1998 and
     September 30, 1997                                                       5

     Notes to Condensed Consolidated Financial
     Statements                                                               6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                                   7


PART II  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K                                    10

Signatures                                                                   10

Exhibit Index                                                                11


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                      SIBONEY CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET


                                     Assets

                                                                    DECEMBER 31,
                                            September 30,            1997 (SEE
                                                 1998                NOTE BELOW)
Current Assets                              -------------           ------------
--------------
 Cash and cash equivalents                  $   196,576            $    289,752
 Investment                                       8,500                  27,500
 Accounts and notes receivable                  364,622                 206,682
 Inventories (Note 2)                           193,042                 169,274
 Prepaid expenses and deposits                  112,683                 106,646
                                            -----------            ------------
  Total Current Assets                          875,423                 799,854
  --------------------
Property, Plant and Equipment (Net of           193,375                 133,989
-----------------------------        
accumulated depreciation of $556,482 at
September 30, 1998 and $510,186 at
December 31, 1997)
Investments in Natural Resources                  5,101                   5,101
--------------------------------            -----------            ------------
                                            $ 1,073,899            $    938,944
                                            ===========            ============


                      Liabilities and Stockholders' Equity

Current Liabilities
-------------------
 Accounts payable                            $   134,363                 76,634
 Accrued expenses                                117,178                111,683
 Current Portion Long Term Debt                   12,805                     --
                                             -----------            -----------
  Total Current Liabilities                      264,346                188,317
  -------------------------
Long Term Debt                                    29,548                     --
--------------                               -----------            -----------
    Total Liabilities                            293,894                188,317
    -----------------

Stockholders' Equity
--------------------
 Common stock:
   Authorized 20,000,000 shares 
   at $0.10 par value; issued 
   and outstanding 16,518,344 shares           1,651,835              1,651,835
 Unrealized gain on investment                     8,500                 27,500
 Additional paid-in capital                          300                    300
 Retained earnings (deficit)                    (880,630)              (929,008)
                                             ------------           ------------
    Total Stockholders' Equity                   780,005                750,627
    --------------------------               ------------           -----------
                                             $ 1,073,899            $   938,944
                                             ============           ===========

NOTE:     The balance sheet at December 31, 1997 has been taken from the audited
          financial statements at that date and condensed.

      See accompanying notes to condensed consolidated financial statements

<PAGE>

<TABLE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

<CAPTION>

                                        NINE MONTHS ENDED               THREE MONTHS ENDED
                                          SEPTEMBER 30,                  SEPTEMBER 30,
                                 ---------------------------     ---------------------------
                                      1998           1997             1998           1997
                                      ----           ----             ----           ----
<S>                            <C>             <C>              <C>             <C> 

Revenues                         $1,918,734       1,561,480         596,408         412,258
Cost of Product Sales               260,708         261,103          84,469          83,731
Selling, General and
Administrative Expenses           1,589,080       1,639,361         522,289         518,480
                                 -----------     -----------     -----------     ----------
Income (Loss) from
Operations                           68,946        (338,984)        (10,350)       (189,953)
                                 -----------     -----------     -----------     -----------
Other Income (Expense)
 Interest Income (Expense)           (3,592)         13,120            (174)          4,444
 Miscellaneous                      (16,976)        (24,107)         (6,052)         (6,979)
                                   ---------     -----------     -----------     -----------
Total Other Income (Expense)        (20,568)        (10,987)         (6,226)         (2,535)
                                 -----------     -----------     -----------     -----------

Net Income (Loss)                $   48,378      $ (349,971)     $  (16,576)     $ (192,488)
                                 ==========      ===========     ===========     ===========
Weighted Average Shares
Outstanding                      16,518,344      16,168,756      16,518,344      16,168,756
                                 ===========     ===========     ===========     ==========
Basic and Diluted Income
(Loss) per Common Share          $     .003      $    (.022)     $   (.001)      $   (.012)
                                 ===========     ===========     ===========     ==========

</TABLE>


      See accompanying notes to condensed consolidated financial statements


<PAGE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

                                                           1998           1997
                                                           ----           ----
Cash Flows from Operations
    Net income (loss) from continuing operations       $  48,378      $(349,971)
    Adjustments to reconcile net income (loss) from
      continuing operations to net cash provided by
      continuing operations:
        Depreciation                                      46,296         44,253
      Change in assets and liabilities:
        Increase in accounts and notes                  (157,940)       (64,572)
          receivable
        Increase in inventory                            (23,768)           (37)
        Increase in prepaid expenses
          and deposits                                    (6,037)        (4,553)
        Increase (decrease) in accounts payable
          and accrued expenses                            63,224        (38,754)
                                                        ---------     ----------
Net Cash Used in Operations                              (29,847)      (336,126)
                                                       ----------     ----------

Cash Flows from Investing Activities
 Payments for equipment                                  (52,332)       (10,964)
                                                       ----------     ----------

Cash Flows from Financing Activities

 Proceeds from issuance of common stock                       --         20,383
 Principal payments on long-term debt                    (10,997)            --
                                                       ----------     ----------
Net Cash Provided by Financing Activities                (10,997)        20,383
                                                       ----------     ----------

Net Decrease in Cash and Cash Equivalents                (93,176)      (326,707)


Cash and Cash Equivalents - Beginning of Period          289,752        775,830
                                                        ---------      ---------

Cash and Cash Equivalents - End of Period              $ 196,576      $ 449,123
                                                       ==========     ==========


Supplemental Disclosure of Cash Flow Information
 Interest Paid                                         $   6,408      $      --
                                                       ----------     ----------
 Non cash investing activities for the 9 months
 ended September 30, 1998 included a capital lease
 for equipment of $53,350



     See accompanying notes to condensed consolidated financial statements


<PAGE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1998 AND 1997


1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    The  condensed  consolidated  balance  sheet as of September  30, 1998,  the
    condensed  consolidated  statement of operations  for the nine-month and the
    three-month  periods  ended  September  30, 1998 and 1997 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, 1998 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, 1997.  The results of  operations
    for the period ended  September 30, 1998 are not  necessarily  indicative of
    the operating results for the full year.


2.  INVENTORIES

    Inventories consist of the following:


                                 SEPTEMBER 30, 1998            DECEMBER 31, 1997
                                 ------------------            -----------------
     Raw materials                    $ 89,261                     $ 104,561
     Finished goods                    103,781                        64,713
                                       -------                      --------
                                      $193,042                     $ 169,274
                                      ========                      ========

3.   NOTE PAYABLE

     The  Company  has a revolving  line of credit  agreement  with a bank which
     provides  funds  based on 75% of  eligible  receivables,  as defined by the
     agreement,  with a maximum  of  $500,000.  The  outstanding  debt is due on
     demand,  and if no demand is made,  then on August 1, 1999.  The agreement,
     secured by accounts receivable,  equipment and inventory,  requires monthly
     interest  payments on the  outstanding  balance at 0.75% above the lender's
     prime rate.  As of  September  30, 1998 and  December  31, 1997 no loan was
     outstanding under the agreement.


<PAGE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

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

The Company's  continuing  operations for the periods  presented  consist of the
following two segments:

1)   The Company is engaged,  through its Siboney  Learning  Group  Division and
     Gamco  Industries,  Inc.  ("Gamco"),  a  wholly-owned  subsidiary,  in  the
     publishing and distribution of educational software. The Company has served
     the educational  market for more than 35 years. The Company's main business
     is  publishing  proprietary  educational  software  in  math,  reading  and
     language  arts for  students and  teachers in grades  kindergarten  through
     grade 12. This software  motivates  students to master key skills which are
     stressed  on  standardized   tests  and  in  textbooks.   Siboney  Learning
     Group/Gamco sells through a network of independent  distributors throughout
     the United  States as well as through  its own  catalogs  and sales  force.
     Popular Gamco software titles include Money  Challenge,  Reading  Concepts,
     Paragraph  Power,  Undersea  Reading  for Meaning  and the  Touchdown  Math
     series. Siboney Learning Group/Gamco publishes over 100 titles for Windows,
     Macintosh, DOS and Apple II operating systems.

2)   The holding of interests in certain natural resources,  including coal, oil
     and gas, through several subsidiaries.

                            OVERVIEW OF THE COMPANY

Since its inception in 1995, the Siboney  Learning Group Division has focused on
two  priorities:   1)  increasing  distribution  channels  to  schools  for  its
instructional  software  titles and 2) accelerating  product  development of new
proprietary  titles and new  versions  of  existing  proprietary  titles for new
computer platforms.

In addition to selling its GAMCO  software to K-12  schools  through the leading
national software catalog dealers, other school software dealers and through its
own direct  catalogs,  the Company has set up two new channels to reach  schools
more effectively and  aggressively.  Orchard  Teacher's  Choice Software,  which
offers a comprehensive  curricular solution with universal  management,  is sold
through a network of thirty  dealers with  protected  or  exclusive  territories
whose  sales  representatives  call on  schools.  These  dealers  sell  the more
expensive  Orchard packaged  product to schools and to school districts  looking
for an integrated learning system.

The  Company has also built an Inside  Sales force of six sales  representatives
who focus on selling  software titles to the Company's  12,000 school  customers
and 30,000 additional school prospects.

The Company  has  substantially  accelerated  its  product  development  through
internal development and through licensing  transactions.  During the first nine
months of 1998, the Company has released 30 new Windows titles,  1 new Macintosh
title and 34 new CD-ROMs that can be used on Macintosh and Windows computers. In
addition,  the  Company has signed two new  licensing  agreements  with  outside
developers  that will allow the Company to offer new and tested  products in two
curricular areas which are growing in importance.  In March the Company signed a
licensing  agreement  with ELS,  Inc. to enhance  and publish its Memory  Master
series of software titles that teach phonics,  sight words and spelling to young
learners.  In  May,  the  Company  signed  a  licensing  agreement  with  NECTAR
Foundation to revise and distribute its highly  successful  series of innovative
math  titles  that  reflect the  National  Council of  Teachers of  Mathematics'
Standards.  These two new series will be released in the fourth  quarter of 1998
and first quarter of 1999.

The Company's  revenue growth and success in 1998 can be directly  attributed to
its increased  distribution to schools and its constant stream of new titles and
new  versions  which are  meeting  schools'  needs for  quality  content  on new
computer platforms.

<PAGE>

                              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, 1998 vs. SEPTEMBER 30, 1997

Total  revenues  increased  44.7% during the three month period ended  September
30,1998  compared to the same  period in 1997,  reflecting  higher  sales at the
Siboney  Learning  Group/Gamco  division of more expensive high- margin licenses
versus single computer  licenses.  Increased sales of Orchard  Teachers'  Choice
Software  accounted  for the  majority  of this  increase.  Of Siboney  Learning
Group's  total sales,  77% was  generated  by products  developed in the past 15
months.

Cost of product  sales  remained  constant  during the  quarter  compared to the
previous year's quarter;  however,  as a percentage of revenue,  cost of product
sales was  reduced to 14.2%  compared  to 20.3% in the prior  year.  The Company
expects to  continue  to  emphasize  the sale of  higher-margin  licenses in the
future.  As a part of its strategy,  the Company has ceased  selling  low-margin
non-proprietary products.

The  Company's  net loss for the third  quarter  of 1998  narrowed  to  $16,576,
compared  to a loss of  $192,488  in the third  quarter of 1997  primarily  as a
result of the sales strategy referred to above.

          NINE MONTHS ENDED SEPTEMBER 30, 1998 vs. SEPTEMBER 30, 1997

Revenues  increased  22.9% during the nine month period ended September 30, 1998
compared  to  the  same  period  in  1997.  Higher  sales  at  Siboney  Learning
Group/Gamco  were the result of new products  released in the past 15 months and
new school  distribution  strategies.  The  Company has  repositioned  itself to
deliver  new titles and new  formats  perceived  to be  desirable  by the school
educators it serves.  Siboney  Learning  Group's  newly  established  network of
Orchard  dealers  is  producing   stronger  sales  of  more  expensive   broader
curriculum-based  solutions  in  addition  to the single  Gamco  program  titles
historically sold by the Company through catalogs.

Coal lease royalties  earned by Siboney Coal Company  decreased  during the nine
months ended  September 30, 1998  compared to the same period in 1997.  Revenues
from its coal lease are  dependent on third party mining  operations,  which are
temporarily suspended from time to time.

Cost of product sales decreased  slightly during the nine months ended September
30, 1998 compared to the same period in 1997. As noted above,  Siboney  Learning
Group/Gamco has begun to sell more expensive  high-margin licenses versus single
computer  licenses.  The Company  expects to continue this trend toward  selling
more high margin versions of its software. In addition,  the Company has stopped
selling low-margin  non-proprietary products. As a result, cost of product sales
as a percentage  of revenue was reduced to 13.6%  compared to 16.7% in the prior
year period.

Selling,  general and  administrative  expenses  decreased during the nine month
period  ended  September  30, 1998  compared  to the same period in 1997.  While
general  expenses  at Siboney  Corporation  were  somewhat  lower,  the  overall
decrease was primarily due to Siboney Learning  Group/Gamco's  decreased catalog
expenses and lower costs associated with outsourcing product conversion.

The Company's net income for the nine month period ended  September 30, 1998 was
$48,378  compared to a loss of $349,971  for the same period in 1997,  primarily
for the reasons cited above.

                         LIQUIDITY AND CAPITAL RESOURCES

Cash  decreased at September 30, 1998,  compared to December 31, 1997.  This was
primarily the result of a higher level of accounts  receivable at the end of the
third  quarter  of  1998,  due  to  larger  sales  volume  at  Siboney  Learning
Group/Gamco  during  August and  September  1998,  compared  with  November  and
December  1997.  This  was  consistent  with  Siboney   Learning   Group/Gamco's
experience in the previous year.

Long-term debt increased at September 30, 1998 compared to December 31, 1997 due
to a capitalized lease incurred for new computer equipment,  accounting software
and a new telephone system.

The net worth of the  Company at  September  30, 1998 was  $780,005  compared to
$750,627 at December 31, 1997, as a result of the  retention of earnings  during
the nine month period.

<PAGE>
                                 YEAR 2000 ISSUE

The Company utilizes computer  technologies  throughout its business to carry on
its day to day operations.  Computer  technologies include hardware and software
used by the Company both in  developing  its product and operating its business.
The Company has  recently  converted  its  operating  and  accounting  system to
software which has been warranted to be Y2K compliant.

The Company is initiating  communications  and  developing a monitoring  program
with all of its  significant  suppliers to determine Y2K  compliance.  While the
Company is not  presently  aware of any  significant  exposure,  there can be no
assurance  that the systems of third parties on which the Company relies will be
converted  in a timely  manner,  or that  failure to convert by another  company
would not have a material adverse effect on the Company.

The cost of  determining  the Company's  exposure to risks  associated  with Y2K
compliance  is estimated  to be less than $1,000 and not deemed  material to its
results of operations for the current quarter or fiscal year.

Software  produced by the  Company's  educational  software  division is used in
conjunction  with  popular  operating  systems,  namely DOS,  Macintosh  and the
Windows  series.  The Company  produces single title programs and multiple title
programs. Single title programs which are operated in DOS have no dates in their
management  systems.  Single  title  programs  which the  Company  produces  for
Macintosh or Windows operating  systems record student  performance by raw score
percentage  followed by date  entered,  which is  automatically  provided by the
underlying  operating system.  Dates used by the Company's single title programs
are  displayed in two digit  (i.e.,  07- 10-98)  configuration.  Storage of this
information  is by most recent entry and is only  displayed  and  retrieved on a
"last  information  entered,  first displayed" basis. It is not sorted on a date
basis and therefore is not subject to the Y2K problem.  Multiple  title programs
use a management system which displays dates in a four digit (i.e.,  07-10-1998)
configuration and thus are not subject to Y2K issues.


                           PART II - OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

        a)  Exhibits: See Exhibit Index on page 11.

        b)  Reports on Form  8-K:  No  reports  on Form  8-K  were  filed by the
            Registrant during the quarter ended September 30, 1998.


                                   SIGNATURES


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


                                  SIBONEY CORPORATION


Date: November 12, 1998           By: /s/ Timothy J. Tegeler
                                      ------------------------------------------
                                      Timothy J. Tegeler
                                      President, Chief Executive Officer and 
                                      Chief Financial Officer



<PAGE>


                                  EXHIBIT INDEX
                                  -------------


Exhibit Number       Description                                         Page
--------------       -----------                                         ----
     27(a)           Financial Data Schedule
                     (Filed in EDGAR version only)