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 March 31, 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)

        8135 Forsyth Blvd., Ste 206, 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

                                        1

<PAGE>

                                      INDEX


PART I    FINANCIAL INFORMATION

Item 1.   Financial Statements

          Condensed Consolidated Balance Sheet March 31,
          1998 and December 31, 1997                                       3

          Condensed Consolidated Statement Of Operations
          Three Months Ended March 31, 1998 and March 31, 1997             4

          Condensed Consolidated Statement Of Cash Flows Three
          Months Ended March 31,1998 and March 31, 1997                    5

          Notes To Condensed Consolidated Financial                        6
          Statements

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


                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS

                      SIBONEY CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEET

                                     Assets
                                     ------
                                                                   DECEMBER 31,
                                                MARCH 31,           1997 (SEE
                                                   1998             NOTE BELOW)
Current Assets
 Cash and cash equivalents                    $   149,648         $    289,752
 Investment                                        24,000               27,500
 Accounts and notes receivable                    345,191              206,682
 Inventories (Note 2)                             176,155              169,274
 Prepaid expenses and deposits                    136,759              106,646
                                              -----------         ------------
  Total Current Assets                            831,753              799,854

Property, Plant and Equipment (Net of             193,954              133,989
accumulated depreciation of $524,593 at
March 31, 1998 and $510,186 at December
31, 1997)
Investments in Natural Resources                    5,101                5,101
                                              -----------         ------------
                                              $ 1,030,808         $    938,944
                                              ===========         ============


                      Liabilities and Stockholders' Equity
                      ------------------------------------
Current Liabilities               
 Note payable (Note 3)                         $   44,000         $        --
 Accounts payable                                 166,881               76,634
 Accrued expenses                                 109,174              111,683
 Current Portion Long Term Debt                    12,381                   --
                                               ----------          -----------
  Total Current Liabilities                       332,436              188,317

Long Term Debt                                     36,047                   --
                                               ----------          -----------
    Total Liabilities                             368,483              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 holding gain on 
      investment                                   24,000               27,500
 Additional paid-in capital                           300                  300
 Retained earnings (deficit)                   (1,013,810)            (929,008)
                                              ------------           ----------
    Total Stockholders' Equity                    662,325              750,627
                                              ------------           ----------
                                              $ 1,030,808          $   938,944
                                              ============          ===========

NOTE:    The balance sheet at December 31, 1996 has been taken from the audited
         financial statements at that date and condensed.

      See accompanying notes to condensed consolidated financial statements.

                                        3

<PAGE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS



                                                        THREE MONTHS ENDED
                                                             MARCH 31,

                                                    1998                1997
                                                    ----                ----

Revenues                                          521,682              530,623

Cost of Product Sales                              75,655               89,203

Selling, General and
Administrative Expenses                           529,153              592,187
                                                ----------           ----------
Loss from Operations
                                                  (83,126)            (150,767)
                                               -----------          -----------
Other Income (Expense)
 Interest Income (Expense) - Net                     (398)               4,796
 Miscellaneous Expense                             (1,278)              (8,593)
                                                 ---------          -----------
Total Other Income (Expense)                       (1,676)              (3,797)
                                               -----------          -----------

Net Loss                                       $  (84,802)          $ (154,564)
                                               ===========          ===========

Weighted Average Shares 
  Outstanding                                  16,432,844           15,766,694
                                               ===========          ===========
Basic and Diluted Loss per 
  Common Share                                    $ (.005)             $ (.010)
                                               ===========          ===========



     See accompanying notes to condensed consolidated financial statements.


                                        4

<PAGE>
<TABLE>
<CAPTION>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

               FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997



                                                                   1998                1997
                                                                   ----                ----
<S>                                                          <C>                 <C>
Cash Flows from Operations

    Net loss from continuing operations                       $ (84,802)            $(154,564)
    Adjustments to reconcile net loss from continuing
      operations to net cash provided by continuing
      operations:
        Depreciation                                             14,407                15,766
        Change in assets and liabilities:
          Increase in accounts and notes                       (138,509)             (124,716)
         receivable
       Increase in inventory                                     (6,881)               (7,188)
           Increase in prepaid expenses
             and deposits                                       (30,113)              (56,514)
           Increase (decrease) in accounts
             payable and accrued expenses                        87,738                (8,968)
                                                              ----------            ----------
Net Cash Used in Operations                                    (158,160)             (336,184)
                                                              ----------            ----------
Cash Flows from Investing Activities
 Payments for equipment                                         (21,022)               (6,958)
                                                              ----------            ----------

Cash Flows from Financing Activities
 Borrowing under line-of-credit agreement                        44,000                    --
 Repayment on leases                                             (4,922)                   --
                                                               ---------            ---------
Net Cash Provided by Financing Activities                        39,078                    --
                                                              ----------            ----------

Net Decrease in Cash and Cash Equivalents                      (140,104)             (343,142)


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

Cash and Cash Equivalents - End of Period                     $ 149,648             $ 432,688
                                                              ==========            =========


Supplemental Disclosure of Cash Flow Information
 Interest Paid                                                $   1,900             $     ---
                                                              ----------            ---------
 Non cash investing activities for the 3 months
 ended March 31, 1998 include a capital lease for
 equipment of $53,350

</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                        5

<PAGE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 1998 AND 1997


1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     The  condensed  consolidated  balance  sheet  as of  March  31,  1998,  the
     condensed  consolidated statement of operations for the three-month periods
     ended March 31, 1998 and 1997 and the condensed  consolidated  statement of
     cash flows for the three-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 March 31, 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 March 31, 1998 are not  necessarily  indicative of the
     operating results for the full year.


2.   INVENTORIES

     Inventories consist of the following:


                                         MARCH 31, 1998       DECEMBER 31, 1997
                                         --------------       -----------------
     Raw materials                           $ 95,145            $ 104,562
     Finished goods                            81,010               64,713
                                              -------             --------
                                             $176,155            $ 169,275
                                             ========             ========

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 June 1,  1998.  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 March 31, 1998 there was $44,000  outstanding  under the
     line of credit  agreement.  As of December 31, 1997 no loan was outstanding
     under the agreement.

                                        6

<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,  Discover  Time,
     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

In 1997,  Siboney  Learning Group expanded its distribution and product offering
by launching Orchard:  Teacher's Choice Software through a network of 25 dealers
to  complement  its  traditional  distribution  strategy  of single  title sales
through  dealer  catalogs  and  its own  catalogs.  Orchard  is a  comprehensive
instructional  software  solution for students who are  struggling to master key
skills.  It  provides  schools  with a universal  management  system that tracks
student   progress  across  all  of  the  Company's  titles  and  a  variety  of
instructional  approaches  that motivate  students to learn.  Orchard allows the
Company to compete in the market for  integrated  learning  systems  which offer
larger and more expensive  curriculum-based software packages to schools needing
to remediate their students.

In late 1997, the Company relocated five of its six person inside sales force to
St. Louis and hired a new manager. The inside sales group focuses on selling the
Company's  proprietary  software to more than 10,000 school customers and 30,000
additional school prospects.

During 1997, Siboney Learning  Group/Gamco  accelerated its conversion of titles
to the Windows,  Macintosh and CD-ROM  platforms,  which are now the predominant
systems  used in schools.  The Company  released its first titles for Windows in
June 1997 and launched its first  CD-ROM  title in  September.  During the first
four months of 1998,  the Company has  converted an  additional  21 products for
Windows, 1 title for Macintosh and produced 26 new CD-ROM titles.

Also in 1997, the Company  entered into a licensing  agreement with  Intentional
Educations to publish 12 early reading  educational  software titles in a hybrid
multimedia CD-ROM format and commenced the sale of such products. The Company is
continuing its efforts to obtain additional licensing agreements in 1998.

                                        7

<PAGE>

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


As a result, the Company's total educational  software product offerings and the
breadth of its educational  coverage expanded  significantly during 1997 and has
continued to do so in 1998. Siboney Learning Group will use Gamco's  established
distribution  channels, as well as new distribution  programs, to sell these new
and improved software programs.

                              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 MARCH 31, 1998 vs. MARCH 31, 1997

Revenues  decreased  slightly  during the three month period ended March 31,1998
compared  to the same  period in 1997.  Sales at  Siboney  Learning  Group/Gamco
increased  for the three month period but such increase was offset by a decrease
in coal lease  royalties  earned by Siboney Coal Company for the first  quarter.
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  during the quarter  compared to the  previous
year's  quarter.   Siboney  Learning   Group/Gamco  is  selling  more  expensive
high-margin  licenses  versus  single  title  products.  The Company  expects to
continue  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 15.4%  compared
to 18.9% in the prior year.

Selling,  general  and  administrative  expenses  decreased  during the  quarter
compared to the same period in 1997  primarily due to lower catalog  advertising
expenses and lower costs associated with outsourcing product conversion.

The  Company's  loss for the first  quarter of 1998,  primarily  for the reasons
above,  was $84,802.  For the first quarter of 1997, the Company reported a loss
of $154,564.

                         LIQUIDITY AND CAPITAL RESOURCES

Cash decreased at March 31, 1998 compared to December 31, 1997 due to the impact
of expenses  exceeding  income and due to higher levels of accounts  receivable,
prepaid expenses and inventories.

The increase in accounts  receivable at the end of the first quarter of 1998 was
due to larger sales volume at Siboney Learning  Group/Gamco  during February and
March 1998 compared with November and December 1997,  which was consistent  with
Siboney  Learning  Group/Gamco's  experience in the previous  year. In addition,
Siboney Coal had a receivable for the annual minimum royalty payment,  which was
received  after the close of the first quarter of fiscal 1998,  consistent  with
the terms of the coal lease.

                                        8

<PAGE>



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


Prepaid  expenses  increased  at March 31,  1998,  primarily  due to the cost of
catalog mailings during February 1998.

Notes  payable  increased  at March 31, 1998  compared to December 31, 1997 as a
result of the Company drawing down on its line-of-credit.

Accounts  payable  increased at March 31,  1998,  primarily  due to  outstanding
invoices  for the printing and mailing of the  Company's  Annual  Report and the
printing of catalogs.

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

The Company's  available  cash and cash  equivalents  decreased from $432,688 at
March 31, 1997 to  $149,648  at March 31,  1998.  Cash and cash  equivalents  at
December 31, 1997 were $289,752.

The net worth of the Company at March 31, 1998 was $662,325.  The Company failed
to meet the minimum net worth  covenant in its credit  agreement  of $750,000 at
March 31, 1998. The Company has obtained a waiver of such breech and a reduction
of the minimum net worth covenant to $600,000 through July 1, 1998.

                                 YEAR 2000 ISSUE

The Year 2000 Issue is the result of computer  programs  being written using two
digits,  rather than four,  to define the  applicable  year.  As a result,  when
moving from the year 1999 to 2000, without adjustment, such programs will assume
the year  1900  rather  than  2000,  with  various  potential  adverse  effects.
Consequently,  most computer  programs must be adjusted to assure that they will
go forward and not backward.

Since 1996,  the Company has been in the process of converting  its  educational
products from old software programs to new programs or designing and introducing
new programs.  In doing so, it has taken the Year 2000 Issue into consideration.
Therefore,  the  Company  does not  believe  that the Year 2000  Issue will pose
significant problems for the Company's products.

With respect to the Company's  operating and accounting  computer  systems,  the
Company is  presently  converting  its  systems to new  software  systems.  As a
result,  the Company  also does not  believe  that the Year 2000 Issue will pose
significant operating or accounting problems for the Company.

                                       9
<PAGE>
 
                          PART II - OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K


        a) Exhibits: See Exhibit Index on page 11 hereof.

        b) Reports on Form 8-K: No reports on Form 8-K were filed by the
           Registrant during the quarter ended March 31, 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: May 15,1998                   By: /s/ Timothy J. Tegeler
                                        Timothy J. Tegeler
                                        President, Chief Executive
                                        Officer and Chief Financial Officer


                                       10

<PAGE>

                                  EXHIBIT INDEX



    Exhibit Number           Description                               Page
    --------------           -----------                               ----

       27(a)           Financial Data Schedule
                        (Filed in EDGAR version only)                   12


                                       11