----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**For      the Quarterly Period Ended**
**September      30, 2006**

**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 of           | Number                of shares outstanding  |
|--------------------------------------------|----------------------------------------------|
| common                stock                | as                of the date of this report |
|                                       |                                         |
| **Common                stock, par value** | **16,930,419**                               |
| **$.10                per share**          |                                         |

----

|                                                                                | **INDEX**                                                                                                 |                                                                                  |                                                                                      |
|-------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
| **PART                I    FINANCIAL                INFORMATION**    |                                                                                                      |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                | **Item                1.    Unaudited Financial                Statements**                |                                                                                  |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                |                                                                                                      | Consolidated                Balance Sheet, September 30, 2006                and      |                                                                                      |
|                                                                                |                                                                                                      |                                                                                  | December                31, 2005                                                          | 3 |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                |                                                                                                      | Consolidated                Statement of Operations, Three                and         |                                                                                      |
|                                                                                |                                                                                                      |                                                                                  | Nine                Months Ended September 30, 2006 and September 30,                2005 | 4 |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                |                                                                                                      | Consolidated                Statement of Cash Flows, Nine Months                Ended |                                                                                      |
|                                                                                |                                                                                                      |                                                                                  | September                30, 2006 and September 30,                2005                   | 5 |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                |                                                                                                      | Notes                to Unaudited Consolidated Financial                Statements    | 6                                                                                         |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                | **Item                2.    Management’s Discussion and                Analysis of** |                                                                                  |
|                                                                                |                                                                                                      |  **Financial              Condition and Results of              Operations**     | 12                                                                                        |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                | **Item                3.    Quantitative and Qualitative                Disclosures**      | 15                                                                                    |
|                                                                                |                                                                                                      |  **About              Market Risk**                                              |                                                                                      |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                | **Item                4.    Controls and                Procedures**                       | 15                                                                                    |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
| **PART                II     OTHER                INFORMATION** |                                                                                                      |
|                                                                                |                                                                                                      |                                                                                  |                                                                                      |   |
|                                                                                | **Item                5.    Other                Information**                             | 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**                                                                        |   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   | **September                30,** |   | **December                31,** |   |
|                                                                              |   | **2006** |   | **2005** |   |
|                                                                              |   | ** (Unaudited)** |   |   |   |
| **Current                Assets**                                                 |   |   |   |   |   |
| Cash                                                                              |   | $ | 137,603 |   | $ | 270,987 |   |
| Accounts                receivable                                                |   |   | 649,586 |   |   | 833,916 |   |
| Inventories                                                                       |   |   | 293,088 |   |   | 349,773 |   |
| Refundable                income taxes                                            |   |   | 13,944 |   |   | 21,665 |   |
| Prepaid                expenses and other assets                                  |   |   | 154,477 |   |   | 164,840 |   |
| Deferred                tax asset                                                 |   |   | 171,000 |   |   | 191,000 |   |
| **Total                Current Assets**                                           |   |   | 1,419,698 |   |   | 1,832,181 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Property                and Equipment, Net**                                    |   |   | 168,919 |   |   | 304,294 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Long                Term Note Receivable**                                      |   |   | 164,503 |   |   | — |   |
|                                                                              |   |   |   |   |   |   |   |
| **Capitalized                Software, Net**                                      |   |   | 2,332,124 |   |   | 2,214,901 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Goodwill**                                                                      |   |   | 1,045,015 |   |   | 1,045,015 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Deferred                Tax Asset**                                             |   |   | 758,000 |   |   | 274,000 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Other                Assets**                                                   |   |   | 19,149 |   |   | 35,694 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Total                Assets**                                                   |   | $ | 5,907,408 |   | $ | 5,706,085 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Liabilities                and Stockholders' Equity**                           |
|                                                                              |   |   |   |   |   |   |   |
| **Current                Liabilities**                                            |   |   |   |   |   |   |   |
| Notes                payable                                                      |   | $ | 2,225,000 |   | $ | 1,200,000 |   |
| Current                portion of capitalized lease obligation                    |   |   | — |   |   | 11,116 |   |
| Accounts                payable                                                   |   |   | 211,676 |   |   | 387,516 |   |
| Accrued                expenses                                                   |   |   | 426,952 |   |   | 455,930 |   |
| **Total                Current Liabilities**                                      |   |   | 2,863,628 |   |   | 2,054,562 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Commitments                and Contingencies (Note 9)**                         |   |   |   |   |   |   |   |
|                                                                              |   |   |   |   |   |   |   |
| **Stockholders'                Equity**                                           |   |   |   |   |   |   |   |
| Common                stock:                                                      |   |   |   |   |   |   |   |
| Authorized                100,000,000 shares at $0.10 par value; issued and       |   |   |   |   |   |   |   |
| outstanding                16,930,419 at September 30, 2006 and December 31, 2005 |   |   | 1,693,042 |   |   | 1,693,042 |   |
| Additional                paid-in capital                                         |   |   | 33,093 |   |   | — |   |
| Retained                earnings                                                  |   |   | 1,317,645 |   |   | 1,958,481 |   |
| **Total                Stockholders' Equity**                                     |   |   | 3,043,780 |   |   | 3,651,523 |   |
|                                                                              |   |   |   |   |   |   |   |
| **Total                Liabilities and Stockholders' Equity**                     |   | $ | 5,907,408 |   | $ | 5,706,085 |   |

----

Index

**SIBONEY      CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENT OF OPERATIONS      (Unaudited)**

|                                                                                                 |   | **Three                Months Ended September 30,** |       |     | **Nine                Months Ended September 30,** |       |
|------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|----------|----------------------------------------------------|------------|
|                                                                                                 |   | **2006**                                            |       | **2005** |                                               |       | **2006** |   | **2005** |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |
| **Revenues**                                                                                         |   | $                                                   | 1,289,135  |     | $                                                  | 1,435,446  |   |   | $ | 5,018,318 |   | $ | 6,008,948 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Cost                of Product Sales**                                                             |   |                                                | 444,039    |     |                                               | 529,364    |   |   |   | 1,384,122 |   |   | 1,502,260 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Gross                Profit**                                                                      |   |                                                | 845,096    |     |                                               | 906,082    |   |   |   | 3,634,196 |   |   | 4,506,688 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Selling,                General and Administrative**                                               |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Expenses**                                                                                         |   |                                                | 1,353,443  |     |                                               | 1,616,200  |   |   |   | 4,612,358 |   |   | 5,619,100 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Loss                From Operations**                                                              |   |                                                | (508,347   | )        |                                               | (710,118   | ) |   |   | (978,162 | ) |   | (1,112,412 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Other                Income (Expense)**                                                            |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| Interest                expense, net                                                                 |   |                                                | (46,768    | )        |                                               | (10,751    | ) |   |   | (118,262 | ) |   | (21,725 | ) |
| Loss                on sale and disposition of asset                                                 |   |                                                | (14,960    | )        |                                               | —    |   |   |   | (16,401 | ) |   | — |   |
| Miscellaneous                                                                                        |   |                                                | 94         |     |                                               | 136        |   |   |   | 990 |   |   | 1,535 |   |
| **Total                Other Expense**                                                               |   |                                                | (61,634    | )        |                                               | (10,615    | ) |   |   | (133,673 | ) |   | (20,190 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Loss                Before Income Taxes**                                                          |   |                                                | (569,981   | )        |                                               | (720,733   | ) |   |   | (1,111,835 | ) |   | (1,132,602 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Income                Tax Benefit**                                                                |   |                                                | 221,000    |     |                                               | 174,000    |   |   |   | 471,000 |   |   | 421,000 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Net                Loss**                                                                          |   | $                                                   | (348,981   | )        | $                                                  | (546,733   | ) |   | $ | (640,835 | ) | $ | (711,602 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Loss                Per Common Share - Basic**                                                     |   | $                                                   | (0.02      | )        | $                                                  | (0.03      | ) |   | $ | (0.04 | ) | $ | (0.04 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Loss                Per Common Share - Diluted**                                                   |   | $                                                   | (0.02      | )        | $                                                  | (0.03      | ) |   | $ | (0.04 | ) | $ | (0.04 | ) |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Weighted                Average Number of Common**                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Shares                Outstanding - Basic**                                                        |   |                                                | 17,094,350 |     |                                               | 17,030,419 |   |   |   | 17,094,350 |   |   | 17,149,291 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Weighted                Average Number of Common**                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| **Shares                Outstanding - Diluted**                                                      |   |                                                | 17,094,350 |     |                                               | 17,244,960 |   |   |   | 17,094,350 |   |   | 17,556,828 |   |
|                                                                                                 |   |                                                |       |     |                                               |       |   |   |   |   |   |   |   |   |
| See                accompanying notes to unaudited consolidated financial                statements. |   |                                                |       |     |                                               |       |   |   |   |   |

----

Index

**SIBONEY      CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENT OF CASH FLOWS      (Unaudited)**

|                                                                      |   | **Nine                Months Ended September 30,** |      |
|---------------------------------------------------------------------------|--------|----------------------------------------------------|-----------|
|                                                                      |   | **2006**                                           |      | **2005** |   |
| **Cash                Flows From Operating Activities**                   |   |                                               |      |   |   |
| Net                loss                                                   |   | $                                                  | (640,835  | ) | $ | (711,602 | ) |
| Adjustments                to reconcile net loss to net cash              |   |                                               |      |   |   |   |   |
| used                in operating activities:                              |   |                                               |      |   |   |   |   |
| Depreciation                                                              |   |                                               | 142,201   |   |   | 175,265 |   |
| Amortization                                                              |   |                                               | 500,542   |   |   | 465,243 |   |
| Deferred                income taxes                                      |   |                                               | (464,000  | ) |   | (342,000 | ) |
| Allowance                for doubtful accounts, sales credits and returns |   |                                               | 60,325    |   |   | 78,313 |   |
| Reserve                for obsolescence                                   |   |                                               | (500      | ) |   | 13,500 |   |
| Loss                on disposition of assets                              |   |                                               | 16,401    |   |   | — |   |
| Stock-based                compensation                                   |   |                                               | 33,093    |   |   | — |   |
| Change                in assets and liabilities:                          |   |                                               |      |   |   |   |   |
| Accounts                receivable                                        |   |                                               | (40,498   | ) |   | 291,691 |   |
| Inventories                                                               |   |                                               | 57,185    |   |   | (106,464 | ) |
| Refundable                income taxes                                    |   |                                               | 7,721     |   |   | 327,191 |   |
| Prepaid                expenses and other assets                          |   |                                               | 26,908    |   |   | (50,042 | ) |
| Accounts                payable and accrued expenses                      |   |                                               | (204,818  | ) |   | (176,334 | ) |
| **Net                Cash Used In Operating Activities**                  |   |                                               | (506,275  | ) |   | (35,239 | ) |
|                                                                      |   |                                               |      |   |   |   |   |
| **Cash                Flows From Investing Activities**                   |   |                                               |      |   |   |   |   |
| Payments                for equipment                                     |   |                                               | (23,728   | ) |   | (86,758 | ) |
| Payments                for software development costs                    |   |                                               | (617,765  | ) |   | (993,345 | ) |
| Proceeds                from the sale of assets                           |   |                                               | 500       |   |   | — |   |
| **Net                Cash Used In Investing Activities**                  |   |                                               | (640,993  | ) |   | (1,080,103 | ) |
|                                                                      |   |                                               |      |   |   |   |   |
| **Cash                Flows From Financing Activities**                   |   |                                               |      |   |   |   |   |
| Borrowings                on line of credit                               |   |                                               | 1,100,000 |   |   | 725,000 |   |
| Payments                under stock buy back program                      |   |                                               | —   |   |   | (120,986 | ) |
| Principal                payments on capital lease obligation             |   |                                               | (11,116   | ) |   | (19,135 | ) |
| Principal                payments on debt                                 |   |                                               | (75,000   | ) |   | (6,771 | ) |
| **Net                Cash Provided By Financing Activities**              |   |                                               | 1,013,884 |   |   | 578,108 |   |
|                                                                      |   |                                               |      |   |   |   |   |
| **Net                Decrease In Cash**                                   |   |                                               | (133,384  | ) |   | (537,234 | ) |
|                                                                      |   |                                               |      |   |   |   |   |
| **Cash                - Beginning of Period**                             |   |                                               | 270,987   |   |   | 686,642 |   |
|                                                                      |   |                                               |      |   |   |   |   |
| **Cash                - End of Period**                                   |   | $                                                  | 137,603   |   | $ | 149,408 |   |
|                                                                      |   |                                               |      |   |   |   |   |
| **Supplemental                Disclosure of Cash Flow Information**       |   |                                               |      |   |   |   |   |
| Interest                paid                                              |   | $                                                  | 118,555   |   | $ | 22,562 |   |
| Income                taxes paid                                          |   | $                                                  | 6,700     |   | $ | 837 |   |

----

Index

**SIBONEY      CORPORATION AND SUBSIDIARIES**

**NOTES      TO UNAUDITED CONSOLIDATED FINANCIAL      STATEMENTS**

**SEPTEMBER      30, 2006 AND 2005**

**1.        **
**BASIS      OF PRESENTATION**

**2.        GOING CONCERN UNCERTAINTY**

**3.        REVENUE RECOGNITION**

----

Index

**4.         ACCOUNTS RECEIVABLE**

|                                                  |  **September                30, 2006** |   |     | **December                31, 2005** |   |   |
|-------------------------------------------------------|---------------------------------------------|--------|----------|--------------------------------------|--------|--------|
|                                                  |                                        |   |     |                                 |   |   |   |   |   |
| Accounts                receivable                    |                                        | $      | 875,836  |                                 |   | $      | 1,065,108 |   |   |
| Allowance                for doubtful accounts, sales |                                        |   |     |                                 |   |   |  |   |   |
| credits                and returns                    |                                        |   | (226,250 | )                                    |   |   | (231,192 | ) |   |
|                                                  |                                        | $      | 649,586  |                                 |   | $      | 833,916 |   |   |

**5.         INVENTORIES**

|                                    |   |   | **September                30, 2006** |   |   **December                31, 2005** |   |    |
|-----------------------------------------|--------|--------|---------------------------------------|--------|--------------------------------------------------|--------|---------|
|                                    |   |   |                                  |   |                                             |   |    |   |   |
| Raw                materials            |   | $      | 189,038                               |   |                                             | $      | 244,178 |   |   |
| Finished                goods           |   |   | 135,049                               |   |                                             |   | 161,924 |   |   |
| Reserve                for obsolescence |   |   | (31,000                               | )      |                                             |   | (56,329 | ) |   |
|                                    |   | $      | 293,088                               |   |                                             | $      | 349,773 |   |   |

**6.         LONG TERM NOTE RECEIVABLE**

**7.         CAPITALIZED SOFTWARE DEVELOPMENT COSTS**

|                                                  |   |   | **September              30,              2006** |   |   **December                31, 2005** |   |       |
|-------------------------------------------------------|--------|--------|--------------------------------------------------|--------|--------------------------------------------------|--------|------------|
| Software                development in progress       |   | $      | 340,130                                          |   |                                             | $      | 987,575    |   |   |
| Capitalized                software development costs |   |   | 5,069,843                                        |   |                                             |   | 3,804,633  |   |   |
| Accumulated                amortization               |   |   | (3,077,849                                       | )      |                                             |   | (2,577,307 | ) |   |
|                                                  |   | $      | 2,332,124                                        |   |                                             | $      | 2,214,901  |   |   |

----

Index

**8.         SHARE-BASED COMPENSATION**

----

Index

|                                                                |   | **Three                Months Ended** |     |   | **Nine                Months Ended**  |   |     |
|---------------------------------------------------------------------|--------|---------------------------------------|----------|--------|---------------------------------------|--------|----------|
|                                                                |   | **September                30, 2005** |     |   | **September                30, 2005** |   |     |
|                                                                |   |                                  |     |   |                                  |   |     |   |   |
| Net                loss, as reported                                |   | $                                     | (546,733 | )      |                                  | $      | (711,602 | ) |   |
| Deduct:                total stock-based employee compensation      |   |                                  |     |   |                                  |   |     |   |   |
| expense                determined under the fair value-based method |   |                                  |     |   |                                  |   |     |   |   |
| for                all awards, net of related tax effects           |   |                                  | (18,626  | )      |                                  |   | (44,978  | ) |   |
| Pro                forma net loss                                   |   | $                                     | (565,359 | )      |                                  | $      | (756,580 | ) |   |
|                                                                |   |                                  |     |   |                                  |   |     |   |   |
| Loss                per share (basic and diluted):                  |   |                                  |     |   |                                  |   |     |   |   |
| As                reported                                          |   | $                                     | (0.03    | )      |                                  | $      | (0.04    | ) |   |
| Pro                forma                                            |   | $                                     | (0.03    | )      |                                  | $      | (0.04    | ) |   |

|                                   |                                        | **Three                and Nine Months   ** |                                | **Three                and Nine Months   ** |   |
|----------------------------------------|---------------------------------------------|------------------------------------------------------------|-------------------------------------|------------------------------------------------------------|--------|
|                                   | **Ended                September 30, 2006** | **Ended                September 30, 2005**                |
|                                   |                                        | **Actual   **                               |                                | **Pro                forma  **                   |   |
|                                   |                                        |                                                       |                                |                                                       |   |
| Expected                option life    |                                        |                   2.6 years                      |                                |                     3.1 years               |   |
| Risk-free                interest rate |                                        |                   5.13%                          |                                |                     3.85%              |   |
| Expected                volatility     |                                        |                   1.012%                         |                                |                   62.4%                          |   |
| Expected                dividend yield |                                        |                                                       |                   — |                                                       |   |                   — |   |
|                                   |                                        |                                                       |                                |                                                       |   |   |   |

----

Index

|                                                 |                         |   |   |                                 |   | **Weighted** |   |
|------------------------------------------------------|------------------------------|--------|--------|--------------------------------------|--------|--------------|--------|
|                                                 |                         |   |   |                                 |   | **Average**  |   |
|                                                 | **Number                of** |   |   | **Range                of Exercise** |   | **Exercise** |   |
| **Options**                                          | **Shares**                   |   |   | **Prices**                           |   | **Price**    |   |
| **Outstanding                at December 31, 2005**  | 3,055,080                    |   |   | $0.20                - $0.655        |   | $0.32        |   |
| Granted                                              | ─                      |   |   | ─                              |   | ─      |   |
| Forfeited/Expired                                    | (227,200                     | )      |   | $0.2875                - $0.30       |   | $0.29        |   |
| **Outstanding                at March 31, 2006**     | 2,827,880                    |   |   | $0.20                - $0.655        |   | $0.32        |   |
| Granted                                              | 437,900                      |   |   | $0.165                - $0.1815      |   | $0.17        |   |
| Forfeited/Expired                                    | (392,320                     | )      |   | $0.165                - $0.5665      |   | $0.40        |   |
| **Outstanding                at June 30, 2006**      | 2,873,460                    |   |   | $0.165                - $0.655       |   | $0.28        |   |
| Granted                                              | ─                      |   |   | ─                              |   | ─      |   |
| Forfeited/Expired                                    | (227,400                     | )      |   | $0.165                - $0.655       |   | $0.60        |   |
| **Outstanding                at September 30, 2006** | 2,646,060                    |   |   | $0.165                - $0.42        |   | $0.25        |   |
| **Exercisable                at September 30, 2006** | 2,108,728                    |   |   | $0.165                - $0.42        |   | $0.19        |   |

|                                               |                                | **Weighted                Average** |
|----------------------------------------------------|-------------------------------------|-------------------------------------|
|                                               |                                | **Grant-Date**                      |
| **Nonvested                Shares**                | **Number                of Shares** | **Fair                Value**       |
| **Nonvested                at December 31, 2005**  | 1,053,019                           | $0.27                               |
| Granted                                            | ─                             | ─                             |
| Vested                                             | (73,678)                            | $0.27                               |
| Forfeited                                          | (203,574)                           | $0.29                               |
| **Nonvested                at March 31, 2006**     | 775,767                             | $0.26                               |
| Granted                                            | 124,588                             | $0.17                               |
| Vested                                             | (63,805)                            | $0.38                               |
| Forfeited                                          | (71,055)                            | $0.31                               |
| **Nonvested                at June 30, 2006**      | 765,495                             | $0.21                               |
| Granted                                            | ─                             | ─                             |
| Vested                                             | (68,770)                            | $0.26                               |
| Forfeited                                          | (24,517)                            | $0.03                               |
| **Nonvested                at September 30, 2006** | 672,208                             | $0.21                               |

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Index

|                              | **Outstanding                  Options**                                          |       | **Exercisable                  Options**   |
|-----------------------------------|-----------------------------------------------------------------------------------|------------|--------------------------------------------|
| ** **                        | ** **                                                                        | ** ** | ** Weighted**                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                        | ** **                                                                        | ** ** | ** Average**                          | ** ** | ** Weighted** | ** ** | ** ** | ** ** | ** Weighted** |
| ** Range                Of** | ** Number**                                                                  | ** ** | ** Remaining                  Years** | ** ** | ** Average** | ** ** | ** Number** | ** ** | ** Average** |
| ** Exercise**                | ** of**                                                                      | ** ** | ** Of                  Contractual**  | ** ** | ** Exercise** | ** ** | ** Of** | ** ** | ** Exercise** |
| ** Prices**                  | ** Options**                                                                 | ** ** | ** Life**                             | ** ** | ** Price** | ** ** | ** Options** | ** ** | ** Price** |
|                              |                                                                              |       |                                       |   |   |   |   |   |   |
| $0.165                  - $0.3163 | 2,196,560             |       | 4.0                                        |   | $0.22                                   |   | 1,689,588              |   | $0.22                                  |
| $0.380                  - $0.4200 | 449,500               |       | 1.8                                        |   | 0.39                                   |   | 419,140              |   | 0.39                                  |
|                              |                                                                              |       |                                       |   |   |   |   |   |   |
| $0.165                  - $0.420  | 2,646,060             |       | 2.9                                        |   | $0.25                                   |   | 2,108,728              |   | $0.26                                  |

**9.      COMMITMENTS AND CONTINGENCIES**

** **

**10.      DEBT**

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Index

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

**Overview**

----

Index

----

Index

**Results      of Operations for the Three and Nine Months Ended September 30, 2006 Compared      to      Three and Nine Months Ended September 30, 2005**

**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      5. OTHER INFORMATION**

**%**

**ITEM      6. EXHIBITS**

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Index

**SIGNATURES**

|   | **SIBONEY                CORPORATION**                                                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                   |   |
|   | By:  /s/                William D. Edwards,                Jr.                                      |
|   | William                D. Edwards, Jr.                                                                                                                                                                                 |
|   | Executive                Vice President, Chief Operating Officer and Chief Financial                Officer                                                                                                            |
|   | (Authorized                officer and principal financial officer)                                                                                                                                                    |
|   |                                                                                                                                                                                                                   |   |

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Index

**Index      to Exhibits**

**Exhibits**

| 10.1 | Promissory                Note executed in favor of Southwest Bank of St. Louis by Siboney                Learning                Group Inc. and Siboney Corporation dated November 1,                2006 |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Promissory                Note executed in favor of Southwest Bank of St. Louis by Siboney                Learning                Group Inc. and Siboney Corporation dated November 1,                2006 |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|