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 June 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)

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, June 30,
         1998 and December 31, 1997                                          3

         Condensed Consolidated Statement Of Operations,
         Three Months and Six Months Ended June 30, 1998 and
         June 30, 1997                                                       4

         Condensed Consolidated Statement Of Cash Flows, Six
         Months Ended June 30, 1998 and June 30, 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,
                                                  June 30,           1997 (SEE
                                                   1998              NOTE BELOW)
                                                  --------          ------------
Current Assets
--------------
 Cash and cash equivalents                    $   212,107          $    289,752
 Investment                                        23,000                27,500
 Accounts and notes receivable                    427,306               206,682
 Inventories (Note 2)                             187,835               169,274
 Prepaid expenses and deposits                     89,648               106,646
                                              -----------          -------------
  Total Current Assets                            939,896               799,854
  --------------------
Property, Plant and Equipment (Net of             185,378               133,989
-----------------------------        
accumulated depreciation of $541,691 at
June 30, 1998 and $510,186 at December
31, 1997)
Investments in Natural Resources                    5,101                 5,101
--------------------------------              -----------          -------------
                                              $ 1,130,375          $    938,944
                                              ===========          =============


                      Liabilities and Stockholders' Equity
                      ------------------------------------
Current Liabilities
-------------------
 Note payable (Note 3)                        $    94,000           $        --
 Accounts payable                                  70,976                76,634
 Accrued expenses                                 108,909               111,683
 Current Portion Long Term Debt                    12,588                    --
                                              ------------          ------------
  Total Current Liabilities                       286,473               188,317
  -------------------------
Long Term Debt                                     32,821                    --
--------------                                ------------          ------------
    Total Liabilities                             319,294               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             23,000                27,500
 Additional paid-in capital                           300                   300
 Retained earnings (deficit)                     (864,054)             (929,008)
                                              ------------          ------------
    Total Stockholders' Equity                    811,081               750,627
    --------------------------                ------------          ------------
                                              $ 1,130,375           $   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.

                                        3
<PAGE>
<TABLE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

<CAPTION>



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


Revenues                    $1,322,326       1,149,222           800,644           618,599
Cost of Product Sales          176,239         177,372           100,584            88,169
Selling, General and
Administrative Expenses      1,066,791       1,120,881           537,638           528,694
                            -----------     -----------       -----------       -----------
Income (Loss) from
Operations                      79,296        (149,031)          162,422            (1,736)
                            -----------     -----------       -----------       -----------
Other Income (Expense)
 Interest Income 
   (Expense) - Net              (3,418)          8,676            (3,020)            3,880
 Miscellaneous                 (10,924)        (17,128)           (9,646)           (8,535)
                              ---------     -----------       -----------       -----------
Total Other Income 
  (Expense)                    (14,342)         (8,452)          (12,666)           (4,655)
                            -----------     -----------       -----------       -----------

Net Income (Loss)           $   64,954      $ (157,483)       $  149,756        $   (2,919)
                            -----------     ===========       ===========       ===========
Weighted Average Shares
Outstanding                 16,517,193      15,978,108        16,517,193        15,978,108
                            ===========     ===========       ===========       ===========
Basic and Diluted Income
(Loss) per Common Share     $     .004       $   (.010)       $     .009        $     .000
                            ===========     ===========       ===========       ===========

</TABLE>


See accompanying notes to condensed consolidated financial statements.


                                        4

<PAGE>
<TABLE>

                      SIBONEY CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

<CAPTION>


                                                                       1998                  1997
                                                                       ----                  ----
<S>                                                             <C>                   <C> 
Cash Flows from Operations
    Net income (loss) from continuing operations                   $  64,954             $(157,483)
    Adjustments to reconcile net income (loss) from
      continuing operations to net cash provided by
      continuing operations:
        Depreciation                                                  31,505                30,371
        Change in assets and liabilities:
          Increase in accounts and notes                            (220,624)             (131,428)
          receivable
          (Increase) decrease in inventory                           (18,561)                4,568
          Decrease in prepaid expenses
          and deposits                                                16,998                11,345
          Decrease in accounts payable
          and accrued expenses                                        (8,432)              (46,843)
                                                                   ----------            ----------
Net Cash Used in Operations                                         (134,160)             (289,470)
                                                                   ----------            ----------

Cash Flows from Investing Activities
 Payments for equipment                                              (29,544)              (10,001)
                                                                   ----------            ----------

Cash Flows from Financing Activities
 Borrowing under line-of-credit agreement                             94,000                    --
 Proceeds from issuance of common stock                                   --                19,593
 Repayment on leases                                                  (7,941)                   --
                                                                   ----------            ----------
Net Cash Provided by Financing Activities                             86,059                19,593
                                                                   ----------            ----------

Net Decrease in Cash and Cash Equivalents                            (77,645)             (279,878)

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

Cash and Cash Equivalents - End of Period                          $ 212,107             $ 495,952
                                                                   ==========            ==========


Supplemental Disclosure of Cash Flow Information
 Interest Paid                                                     $   5,625             $     ---
                                                                  ----------             ---------
 Non cash investing activities for the 6 months
 ended June 30, 1998 included 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

                             JUNE 30, 1998 AND 1997


1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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


2.  INVENTORIES

    Inventories consist of the following:


                                  JUNE 30, 1998              DECEMBER 31, 1997
                                  -------------              -----------------
    Raw materials                    $ 92,009                     $ 104,561
    Finished goods                     95,826                        64,713
                                      -------                      --------
                                     $187,835                     $ 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, 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 June 30, 1998 there was  $94,000  outstanding  under the
     line of credit  agreement.  As of December 31, 1997 no loan was outstanding
     under the agreement.  Subsequent to the end of the quarter, the Company has
     repaid the line-of-credit balance in full.

                                        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,  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 drastically accelerated its product development through internal
development and through licensing  transactions.  During the first six months of
1998, the Company has released 28 new Windows titles,  1 new Macintosh title and
33 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  product  offerings  in two
curricular areas which are growing in importance.  In March the Company signed a


                                        7

<PAGE>


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

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.

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.

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 JUNE 30, 1998 vs. JUNE 30, 1997

Total revenues  increased 29.4% during the three month period ended June 30,1998
compared  to the same  period in 1997,  reflecting  higher  sales at the Siboney
Learning Group/Gamco  division.  Sixty percent of Siboney Learning Group's sales
were generated by products  developed in the past year. In addition,  sales were
favorably  impacted by new  distribution  channels and the  establishment  of an
Inside Sales force.

Cost of product  sales  increased  during the quarter  compared to the  previous
year's quarter due to higher revenues; however, as a percentage of revenue, cost
of product  sales was  reduced  to 12.6%  compared  to 14.4% in the prior  year.
Siboney  Learning  Group/Gamco  is selling more expensive  high-margin  licenses
versus single title products and expects to continue to do so in the future.  In
addition, the Company has ceased selling low-margin nonproprietary products.

The  Company's  net  income for the second  quarter of 1998,  primarily  for the
reasons above, was $149,756,  compared to a loss of $2,919 in the second quarter
of 1997.

                SIX MONTHS ENDED JUNE 30, 1998 vs. JUNE 30, 1997

Revenues  increased  18.8%  during  the six month  period  ended  June 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 twelve 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  curriculum-based
solutions  in addition to the single  program  titles  historically  sold by the
Company through catalogs.

Coal lease  royalties  earned by Siboney Coal Company  decreased  during the six
months ended June 30, 1998 compared to the same period in 1997.

                                        8

<PAGE>



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


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 six months ended June 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
title  products.  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 16.4% in the prior
period.

Selling,  general and  administrative  expenses  decreased  during the six month
period ended June 30, 1998 compared to the same period in 1997, primarily due to
lower costs associated with outsourcing product conversion.

The  Company's  net income  for the six month  period  ended  June 30,  1998 was
$64,954 compared to a loss of $157,483 for the same period in 1997.

                         LIQUIDITY AND CAPITAL RESOURCES

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

Note  payable  increased  at June 30, 1998  compared  to December  31, 1997 as a
result of the  Company  drawing  down on its  line-of-credit  to meet  increased
working  capital  requirements  associated  with higher  sales during the second
quarter.  The Company has repaid the line-of-credit in full since the end of the
second quarter.

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

The net worth of the Company at June 30, 1998 was $811,081  compared to $750,627
at December 31, 1997,  as a result of the  retention of earnings  during the six
month period.

                                 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.

                                        9

<PAGE>



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

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.



                           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 June 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: July 31, 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