SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934 for the quarterly period ended November 30, 1998 or

[ ] Transition  report  pursuant  to  Section  13  or  15(d) of  the  Securities
    Exchange Act of 1934 for the Transition period from _________ to __________

                        Commission file number: 0-25104


                   CONTINENTAL INFORMATION SYSTEMS CORPORATION
                   -------------------------------------------
             (Exact name of registrant as specified in its charter)


         New York                                             16-0956508
         --------                                             ----------
(State or other jurisdiction                              (I.R.S. Employer
of incorporation)                                          Identification No.)

45 Broadway Atrium, Suite 1105, New York, New York                10006
---------------------------------------------------            ----------
     (Address of principal executive offices)                  (Zip Code)


                                 (212) 771-1000
                                 --------------
              (Registrant's telephone number, including area code)


         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 for 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 [  ]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required to be filed by Sections 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes [ X ] No [  ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

           Indicate  the number of shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest  practicable  date: As of December 31,
1998, the registrant  has 6,939,060  shares of common stock,  par value $.01 per
share, outstanding.
<PAGE>

                   CONTINENTAL INFORMATION SYSTEMS CORPORATION
                              AND ITS SUBSIDIARIES


                                TABLE OF CONTENTS


                                                                                

PART I.             FINANCIAL INFORMATION:                                      

Item 1.             Financial Statements                                        

                    Consolidated Balance Sheets -
                     November 30, 1998 and May 31, 1998                         

                    Consolidated  Statements  of  Operations - for the three and
                    six months ended November 30, 1998 and 1997

                    Consolidated  Statements  of Cash  Flows - for the three and
                    six months ended November 30, 1998 and 1997

                    Notes to Consolidated Financial Statements                  

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


PART II.            OTHER INFORMATION:                                          

Item 1.             Legal Proceedings                                           

Item 6.             Exhibits and Reports on Form 8-K                            


SIGNATURES        

<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except Number of  Shares)

                              CONSOLIDATED BALANCE SHEETS
                                      (Unaudited)
                                                               November 30,    May 31,
                                                                  1998          1998
                                                                --------      --------
<S>                                                             <C>           <C>     
Assets:
Cash and cash equivalents                                       $  4,694      $  3,211
Accounts receivable, net                                           1,091           636
Notes receivable                                                   4,331         6,870
Investment in mortgage participation notes                         1,002         1,522
Inventory                                                          3,712         3,755
Net investment in direct financing leases                          4,857         4,658
Rental equipment, net  (Note 6)                                   15,263        18,118
Furniture, fixtures and equipment, net                               404           398
Other assets                                                         876           620
Deferred tax assets                                                5,414         5,414
                                                                --------      --------

           Total assets                                         $ 41,644      $ 45,202
                                                                ========      ========
Liabilities and Shareholders' Equity:
Liabilities:
      Accounts payable and other liabilities                    $  2,120      $  2,377
      Discounted lease rental borrowings                           2,105         2,594
      Note payable to institution - collateralized                 3,383         4,429
      Net liabilities of discontinued operations (Note 2)            598           866
      Deferred lease revenue                                       4,667         5,976
                                                                --------      --------

           Total liabilities                                      12,873        16,242
                                                                --------      --------
Shareholders' Equity:
Common stock, $.01 par value; authorized 20,000,000 shares,
       issued 7,101,668 shares                                        71            71
Additional paid-in capital                                        35,129        35,129
Accumulated deficit                                               (6,023)       (5,834)
                                                                --------      --------
                                                                  29,177        29,366
Treasury stock, at cost; 162,608 shares                             (406)         (406)
                                                                --------      --------

          Total shareholders' equity                              28,771        28,960
                                                                --------      --------

          Total liabilities and shareholders' equity            $ 41,644      $ 45,202
                                                                ========      ========

</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
(In Thousands)

                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                                         (Unaudited)
                                                                          For the Three                    For the Six
                                                                           Months Ended                    Months Ended
                                                                            November 30,                    November 30,
                                                                        1998           1997              1998          1997
                                                                      ------         ------            ------        ------
<S>                                                                   <C>            <C>               <C>           <C>   
Revenues:
Equipment sales                                                       $  104         $2,090            $3,202        $5,526
Equipment rentals                                                      1,757            794             3,628         1,763
Income from direct financing leases                                      233            182               439           369
Gain from sale of equipment subject to lease                               -              -                 -            78
Interest, fees and other income                                          361            563               864         1,079
                                                                      ------         ------            ------        ------

                                                                       2,455          3,629             8,133         8,815
                                                                      ------         ------            ------        ------
Costs and Expenses:
Cost of sales                                                            190          1,946             2,886         4,658
Depreciation of rental equipment                                       1,389            382             2,810           862
Interest expense                                                         136             80               300           257
Other operating expenses                                                 224            204               524           508
Selling, general and administrative expense                              998            904             1,918         2,053
                                                                      ------         ------            ------        ------
                                                                       2,937          3,516             8,438         8,338
                                                                      ------         ------            ------        ------

Income (loss) from continuing operations before income taxes            (482)           113              (305)          477

Provision (credit) for income tax                                       (183)            43              (116)          181
                                                                      ------         ------            ------        ------

Income (loss) from continuing operations                                (299)            70              (189)          296

Loss from discontinued operations, net of tax benefit (Note 2)             -            309                 -           436
                                                                      ------         ------            ------        ------

Net Income (loss)                                                      ($299)         ($239)            ($189)        ($140)
                                                                      ======         ======            ======        ======
Basic and diluted net income (loss) per share (Note 1):

      Income from continuing operations                                 (.04)           .01              (.03)          .04
      Income (loss) from discontinued operations                           -           (.04)                -          (.06)
                                                                      ------         ------            ------        ------
           Net Income                                                   (.04)          (.03)             (.03)         (.02)
                                                                      ======         ======            ======        ======

      Weighted average number of shares of common stock                
      outstanding                                                      6,939          6,990             6,939         7,003
                                                                      ======         ======            ======        ======
</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
(In Thousands)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                        For the Six Months Ended
                                                                                November 30,
                                                                        ------------------------
                                                                            1998         1997
                                                                          -------      ------- 
<S>                                                                       <C>          <C>     
Cash flows from operating activities:
Net (loss)                                                                $  (189)     $  (140)
Less:  Net loss from discontinued operations                                    -         (436)
                                                                          -------      ------- 
       Net income (loss) from continuing operations                          (189)         296
                                                                          -------      ------- 

Adjustments to reconcile net income (loss) from continuing operations
To net cash provided by operating activities:
     Proceeds from sale of equipment subject to lease                           -          850
     Gain from sale of equipment subject to lease                               -          (78)
     Proceeds from sale of other leased equipment                             191           58
     Proceeds from sale of telecommunications assets                            -          895
     Amortization of unearned income                                         (439)        (369)
     Collections of rentals on direct financing leases                      1,132        1,210
     Depreciation and amortization expense                                  2,857        1,033
     Effect on cash flows of changes in:
         Accounts receivable                                                 (455)         847
         Notes receivable                                                   2,539        1,593
         Inventory                                                             43         (922)
         Other assets                                                        (256)        (262)
         Accounts payable and other liabilities                              (257)         (54)
         Deferred lease revenue                                            (1,309)          45
      Deferred tax assets                                                       -          (86)
      Other                                                                   (78)         191
                                                                          -------      ------- 
                                                                            3,968        4,951
                                                                          -------      ------- 
      Net cash provided by continuing operations                            3,779        5,247
      Net cash used in discontinued operations                               (268)        (622)
                                                                          -------      ------- 
      Net cash provided by operations                                       3,511        4,625
                                                                          -------      ------- 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                                        For the Six Months Ended
                                                                                November 30,
                                                                        ------------------------
                                                                            1998         1997
                                                                          -------      ------- 
<S>                                                                       <C>          <C>     
Cash flows from investing activities:
Purchase of rental equipment                                               (1,090)      (7,295)
Purchase of property and equipment                                            (53)         (84)
Proceeds from investment in mortgage participation notes                      650       (1,123)
                                                                          -------      ------- 
     Net cash (used in) investing activities                                 (493)      (8,502)
                                                                          -------      ------- 
Cash flows from financing activities:
Proceeds from lease, bank and institution financings                        8,110        1,169
Payments on lease, bank and institution financings                         (9,645)      (1,372)
Proceeds from exercise of stock options                                         -          138
Purchase of treasury stock                                                      -         (236)
                                                                          -------      ------- 

     Net cash used in financing activities                                 (1,535)        (301)
                                                                          -------      ------- 

     Net increase (decrease) in cash and cash equivalents                   1,483       (4,178)
Cash and cash equivalents at beginning of period                            3,211        8,968
                                                                          -------      ------- 

Cash and cash equivalents at end of period                                $ 4,694      $ 4,790
                                                                          =======      =======

</TABLE>
   The accompanying notes are an integral part of these financial statements.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries


1.    Basis of Presentation

      The accompanying unaudited financial statements of Continental Information
      Systems  Corporation  and its  subsidiaries  (the  "Company")  contain all
      adjustments which are, in the opinion of management,  necessary for a fair
      statement  of results for the interim  periods  presented.  While  certain
      information  and  footnote  disclosures  normally  included  in  financial
      statements  prepared in  accordance  with  generally  accepted  accounting
      principles have been condensed or omitted,  the Company  believes that the
      disclosures  herein are adequate to make the  information  not misleading.
      The results of operations for the six months ended November 30, 1998,  are
      not  necessarily  indicative  of the  results  for the  full  year.  These
      statements  should be read in conjunction with the consolidated  financial
      statements and notes thereto  included,  for the fiscal year ended May 31,
      1998, appearing in the Company's Form 10-K.

2.    Discontinued Operations

      On May 29, 1998,  the Company  announced its decision to  discontinue  and
      liquidate its LaserAccess laser printing business.  The Company recorded a
      provision of $4,955,000 in the quarter ended May 31, 1998, relative to the
      disposal of LaserAccess' assets,  including the write-off of goodwill,  in
      the amount of $3,258,000,  and other charges related to the discontinuance
      of the business unit.

      The Company is currently  engaged in litigation with the former owners and
      executives of its discontinued  LaserAccess  business.  In March 1998, the
      Company prepaid remaining amounts due to the former owners and exercised a
      right  to  set-off  approximately  $1.1  million  against  amounts  due on
      promissory  notes in  connection  with the  purchase of  LaserAccess.  The
      Company has also  terminated  these  individuals  under  their  employment
      agreements.  On April 7, 1998,  the former  owners  filed suit in Superior
      Court of  California,  County of San Diego,  seeking  to  recover  damages
      allegedly arising from the Company's set-off of amounts due. Additionally,
      the former owners are seeking to recover approximately $733,000 in damages
      arising from the Company's termination of their employment contracts.  The
      complaint,  as amended, seeks damages for various other claims,  including
      defamation.  The  Company  has  asserted  crossclaims  and  is  vigorously
      contesting these actions.

      The Consolidated  Statements of Operations for all periods  presented have
      been  reclassified  to  report  the  results  of  discontinued  operations
      separately  from  continuing  operations.  A  summary  of the  results  of
      discontinued operations follows (in thousands):
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries
<TABLE>
<CAPTION>
                                                For the Six Months Ended
                                                       November 30,
                                                ------------------------                     
                                                   1998          1997
                                                  -------       -------
<S>                                               <C>           <C>    
        Revenues                                  $    --       $ 1,998
        Costs and expenses                             --         2,701
                                                  -------       -------
        Loss from discontinued operations              --          (703)

        Income tax benefit                             --          (267)
                                                  -------       -------

        Net loss from discontinued operations     $    --       ($  436)
                                                  =======       =======
</TABLE>

      The  Consolidated  Balance Sheets as of November 30, 1998 and May 31, 1998
      have been reclassified to report the net assets of discontinued operations
      separately  from the assets and  liabilities of continuing  operations.  A
      summary of the assets and liabilities of discontinued  operations  follows
      (in thousands):
<TABLE>
<CAPTION>
                                                      November 30,       May 31,
                                                          1998            1998
                                                        -------         -------
<S>                                                     <C>             <C>    
Assets:
Cash and cash equivalents                               $   172         $    19
Accounts receivable, net                                    228             198
Inventory                                                    65             779
Furniture, fixtures and equipment, net                     --                12
Other assets                                               --                58
                                                        -------         -------
      Total assets                                          465           1,066
                                                        -------         -------

Liabilities:
Accounts payable and accruals                             1,063           1,504
Note payable                                               --               428
                                                        -------         -------
      Total liabilities                                   1,063           1,932
                                                        -------         -------
           Net (Liabilities) of
               Discontinued Operations                  $  (598)        $  (866)
                                                        =======         ======= 
</TABLE>
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

3.    Net Income Per Share

      In fiscal 1998, the Company adopted Financial  Accounting Standard No. 128
      (SFAS 128),  EARNINGS PER SHARE.  SFAS 128  specified  new  standards  for
      computing  and  disclosing  net income per share.  Basic and  diluted  net
      income per share for the six months ended  November 30, 1998 and 1997, was
      computed  based on the weighted  average  number of shares of common stock
      outstanding  during the periods.  As of November 30, 1998, the Company had
      outstanding  options to purchase  431,674 shares of common stock (See Note
      5).  The  potential  dilution  of  these  options  is  immaterial  in  the
      computation of diluted net income per share.

4.    Reclassifications

      Certain  prior  period  balances  in the  financial  statements  have been
      reclassified  to  conform  to  the  current  period  financial   statement
      presentation.

5.    Stock Option Plan

      In 1995, the Board of Directors adopted and the stockholders  approved the
      Continental  Information  Systems Corporation 1995 Stock Compensation Plan
      (the "1995  Plan").  The 1995 Plan  provides  for the  issuance of options
      covering up to 1,000,000  shares of common stock and stock grants of up to
      500,000  shares of common stock to  non-employee  directors of the Company
      and,  in the  discretion  of the  Board  of  Directors,  employees  of and
      independent contractors and consultants to the Company.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries
 
            A summary of the status of the 1995 Plan as of November 30, 1998 and
changes since inception is presented below:
<TABLE>
<CAPTION>
                                                                       Weighted Average
                                                           Number of    Exercise Price
                                                            Options       Per Option
                                                            -------       ----------
<S>                                                         <C>            <C>     
Outstanding at
      May 31, 1995 (none exercisable)                        15,000        $   3.50
Granted                                                       9,000        $   2.50
Exercised                                                      --          $    --
Forfeited/expired                                            (9,000)       $   3.50
                                                            -------
Outstanding at
      May 31, 1996 (6,000 exercisable)                       15,000        $   2.90
Granted                                                     319,000        $   1.97
Exercised                                                   (16,667)       $   1.97
Forfeited/expired                                           (33,333)       $   1.97
                                                            -------
Outstanding at
      May 31, 1997  (188,337 exercisable)                   284,000        $   2.02
Granted                                                     190,674        $   2.38
Exercised                                                   (70,001)       $   1.97
Forfeited/expired                                           (38,331)       $   1.97
                                                            -------
Outstanding at
      May 31, 1998 (234,002 exercisable)                    366,342        $   2.22
Granted                                                      10,000        $   1.95
Forfeited/expired                                            (6,668)       $   1.97
                                                            -------
Outstanding at
      August 31, 1998 (227,334 exercisable)                 369,674        $   2.22
                                                            -------
Granted                                                      62,000        $   1.92
Exercised                                                      --               --
Forfeited/expired                                              --               --
Outstanding at
      November 30, 1998 (239,334 exercisable)               431,674        $   2.18
                                                            =======
</TABLE>
6. Lessee Bankruptcy

In October,  one of the Company's  largest general  equipment  lessees which had
previously filed for protection from creditor under Chapter 11 of the Bankruptcy
Act announced plans to terminate substantially all of its operations. The leases
had been  originated  from February 1997 through  August 1997. The Company filed
claims in Bankruptcy Court against the lessee and ultimately  reached  agreement
with the lessee for return of the equipment. The Company is in possession of all
the  equipment.  As a result of this  bankruptcy  the Company  failed to receive
lease payments of approximately  $150,000 during the second quarter. The Company
also sold or contracted to sell certain of the repossessed  equipment for a loss
of $169,000 that is included in the second quarter. Remaining equipment which is
included  in rental  equipment,  amounts to  $896,080.  The  Company is actively
trying  to sell or lease  this  equipment.  There can be no  assurance  that the
Company will  realize  full value in its efforts to lease or sell the  remaining
equipment.  While  the  Company  maintains  reserves  which  it  believes  to be
reasonable,  there can be no assurance  that the  reserves  will be adequate and
fully cover any additional losses on disposal of the equipment.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

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

                                  Introduction

The following  discussion and analysis of the financial condition and results of
operations of the Company  should be read in conjunction  with the  consolidated
financial  statements  and the notes  thereto  for the fiscal year ended May 31,
1998, appearing in the Company's Form 10-K.

All statements contained herein that are not historical facts, including but not
limited to, statements regarding anticipated future capital requirements and the
Company's  future  business  plans,  are based on  current  expectations.  These
statements  are  forward  looking  in nature  and  involve a number of risks and
uncertainties.  Actual  results may differ  materially.  Among the factors  that
could cause actual  results to differ  materially  are those set forth below and
the other risk  factors  described  from time to time in the  Company's  reports
filed with the SEC.  The  Company  wishes to caution  readers not to place undue
reliance on any such  forward  looking  statements,  which  statements  are made
pursuant to the Private  Securities  Litigation Reform Act of 1995 and, as such,
speak only as of the date made.


                              Results of Operations

Comparison of the Three and Six Months Ended November 30, 1998 and 1997

Continuing Operations

Revenues

Total revenues decreased 32% to $2.5 million for the three months ended November
30, 1998 from $3.6 million for the  comparable  fiscal  quarter in 1997. For the
six months ended November 30, 1998, total revenues  decreased 8% to $8.1 million
from  $8.8  million  for the  comparable  fiscal  period  in 1997.  Within  this
category,  equipment  sales decreased 95% to $104,000 for the three months ended
November 30, 1998 from $2.1 million for the  comparable  fiscal quarter in 1997.
This decrease is directly attributable to the Air Group business unit closing no
engine sale transactions  during the current quarter compared to $2.0 million of
sales for the prior year fiscal  quarter.  Sales and margins  from the Air Group
business  unit will vary  quarter to  quarter  based on the volume and timing of
transactions.  For  the six  months  ended  November  30,1998,  equipment  sales
decreased  42% to $3.2 million from $5.5 million for the  comparable  prior year
period. This decrease reflects the lower results for the Air Group business unit
and  inclusion  in the prior year period of three months of  operations  for the
telecommunications  business unit, which was sold on August 31, 1997.  Equipment
rentals  and income from  direct  financing  leases for the three and six months
ended  November 30, 1998,  increased  $1.0 million (104%) and $1.9 million (91%)
respectively  from the comparable  periods in 1997. These increases  reflect the
cumulative  effect of the Company's  acquisition of general purpose and aircraft
rental  equipment during the previous and current fiscal years.  Interest,  fees
and other  income for the three and six months ended  November  30,  1998,  were
$361,000 and $864,000,  respectively compared to $563,000 and $1,079,000 for the
corresponding  prior  year  periods.  The  respective  decreases  of 36% and 20%
primarily  reflect a decline in  management  fees received from income funds and
fees generated by brokered transactions.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

Costs and Expenses

Costs and  expenses  for the three  and six  months  ended  November  30,  1998,
decreased by $579,000 (16%) and increased by $100,000 (1%),  respectively,  from
the  comparable  periods in 1997.  Within  this  category,  cost of sales,  as a
percentage of sales,  for the three and six months ended November 30, 1998, were
183% and 90%, respectively,  as compared to 93% and 84% for the comparable prior
year periods.  The  percentage  for the three months ended  November 30, 1998 is
directly  attributable to the one time impact of selling  equipment  repossessed
from a  lessee  for an  amount  less  than the then  current  book  value of the
equipment. This transaction, in addition to the results of operations of the Air
Group  business  unit,  also directly  impacts the  percentage  variance for the
comparative six-month periods.  Revenues and earnings from the aircraft business
are  expected  to vary from  quarter  to quarter  based on a number of  factors,
including the volume of  transactions.  Depreciation of rental equipment for the
three and six months ended November 30, 1998,  increased to  approximately  $1.4
million and $2.8 million from $.4 million and $.9 million, respectively, for the
comparable  periods  for 1997.  These  increases  are  directly  related  to the
cumulative  effect of the Company's  acquisition of general purpose and aircraft
rental equipment during the previous and current fiscal years.  Interest expense
for the three and six months ended November 30, 1998, was $136,000 and $300,000,
respectively,  as compared to $80,000 and $257,000 for the comparable periods in
1997.  The  increases  of 70% and  17%,  respectively,  reflect  the  impact  of
increased debt balances associated with the increased rental equipment portfolio
and interest  incurred on the Air Group's  revolving loan facility which was not
in place during the prior year  comparable  periods.  Other  operating  expenses
increased  slightly by $20,000  (10%) and $16,000  (3%),  respectively,  for the
three and six months  ended  November  30, 1998 from the year  earlier  periods.
Selling, general and administrative expenses for the three months ended November
30, 1998, were $998,000 as compared to $904,000 for the comparable  three months
in 1997. The increase is attributable to  nonrecurring  expenditures  related to
the  transfer  of  finance  and   administrative   functions  to  the  Company's
headquarters  in New York City.  For the six months ended November 30, 1998, the
selling,  general and  administrative  expenses  decreased to approximately $1.9
million from  approximately  $2.1 million for the prior year comparable  period.
This  decrease  is  principally  due to cost  containment  and staff  reductions
between the periods.

Income Taxes

For the three and six months ended  November 30, 1998, a provision  for deferred
income tax  benefit  on loss from  continuing  operations  was  recorded,  at an
effective tax rate of 38%, in the amount of $183,000 and $116,000, respectively.
For the three and six months ended  November 30, 1997, a provision  for deferred
income tax expense on income from  continuing  operations  was  recorded,  at an
effective  rate of 38%,  in the amount of  $43,000  and  $181,000  respectively.
Additionally,  for the three and six months ended November 30, 1998, a provision
for  deferred  income  tax  benefit  on loss from  discontinued  operations  was
recorded,  at an  effective  tax rate of 38%,  in the  amount  of  $190,000  and
$267,000 respectively.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

Discontinued Operations

On May 29, 1998, the Company announced its decision to discontinue and liquidate
its LaserAccess  laser printing  business.  The Company  recorded a provision of
$4,955,000  in the  quarter  ended May 31,  1998,  relative  to the  disposal of
LaserAccess'  assets,  including  the  write-off of  goodwill,  in the amount of
$3,258,000,  and other  charges  related to the  discontinuance  of the business
unit.  See "PART II, Item 1. Legal  Proceedings"  for a discussion of litigation
related to LaserAccess.
 
 A summary of the results of discontinued operations follows (in thousands):

                                                   For the Six Months Ended
                                                          November 30,
                                                  ------------------------- 
                                                     1998            1997
                                                  -------          -------

        Revenues                                  $    --          $ 1,998
        Costs and expenses                             --            2,701
                                                  -------          -------
        Loss from discontinued operations              --             (703)

        Income tax benefit                             --             (267)
                                                  -------          -------

        Net loss from discontinued operations     $    --          $  (436)
                                                  =======          =======


                         Liquidity and Capital Resources

Cash provided by operations for the six months ended November 30, 1998, was $3.5
million as  compared  to $4.6  million for the  comparable  period in 1997.  The
decrease  was  primarily  due to no  proceeds  being  generated  by the  sale of
equipment  subject to lease in the current  period as compared to  approximately
$.9 million in the prior year  period.  Additionally,  the sale of the assets of
the  Telecommunications  business  unit in the prior year period  generated  $.9
million of proceeds.  Significant  funds were generated in the current period by
net collections of rentals on direct  financing leases of $1.1 million and notes
receivable of $2.5  million.  The Company  purchased  $1.1 million of additional
rental equipment for lease transactions during the current period as compared to
$7.3 million for the  comparable  period in 1997.  The  Company's  investment in
rental  equipment  varies  from  period to period  based on a number of factors,
including  current market  conditions and the  availability  of adequate  credit
facilities.  The Company received net proceeds of approximately $.7 million from
its  investment in mortgage  participation  notes under its agreement with Emmes
Investment  Management  Co.  LLC.  Proceeds  from  lease,  bank and  institution
financings  for the six  months  ended  November  30,  1998 and 1997,  were $8.1
million and $1.2 million, respectively,  while payments on these financings were
$9.6 million and $1.4 million for the current  period and the year prior period.
The significant  increases for the current period are primarily  attributable to
advances  and  repayments  on the  $10,000,000  revolving  loan  facility of its
operating  subsidiary CIS Air  Corporation.  This loan facility was not in place
during the prior year period.  The  facility  has a three-year  term and permits
borrowing equal to a percentage of the appraised  value of the aircraft  engines
financed.  Substantially  all of the assets of CIS Air are pledged as collateral
for the loan. At November 30, 1998, $3,383,000 of this facility was outstanding.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

As of  November  30,  1998,  the  Company  had  $4.7  million  in cash  and cash
equivalents, as compared to $4.8 million at November 30, 1997.

The Company expects that  operations  will generate  sufficient cash to meet its
operating  expenses and current  obligations  for the  foreseeable  future.  The
Company  finances  certain  equipment leases by assigning the rentals to various
lending  institutions at a fixed rate on a recourse and non-recourse  basis. The
Company has finalized the terms of a $3,000,000  "warehouse" line of credit. The
loan agreement  contains various covenants,  including  limitations on incurring
additional  liens and  encumbrances and prohibiting  certain  transactions  with
affiliates or subsidiaries.
 
The Company  announced in October  1998 that it had hired the  merchant  banking
firm of Helix Capital to assist it in identifying  acquisitions and other growth
opportunities.  The  Company  has been  managing  its cash  reserves in order to
accumulate funds for potential acquisition  transactions and to finance internal
growth The  Company is also  seeking  additional  sources of  financing  to fund
acquisitions and internal growth. The availability of any such financing will be
dependent on a number of factors,  including the terms of the transaction  being
financed, the Company's operating performance,  and market conditions. While the
Company  believes that it will be able to obtain  financing for its  acquisition
and  growth  plans,  there  can be no  assurance  that  such  financing  will be
available on acceptable terms.

Year 2000

As the year 2000  approaches,  a critical  issue has emerged for all  companies,
including the Company, with respect to whether application software programs and
operating  systems  utilized by a company and the  companies  with which it does
business can accommodate  this date value. In brief,  many existing  application
software  products  in the  marketplace  were  designed  only to  accommodate  a
two-digit date position which  represents the year (e.g.,  "95" is stored on the
system and represents the year 1995).  As a result,  the year 1999 (i.e.,  "99")
could  be the  maximum  date  value  these  systems  will  be  able  to  process
accurately.

The Company has been engaged in a review of the software and information systems
it uses in an effort to determine whether it or its operations may be materially
adversely affected by this so-called "Year 2000" conversion. As a result of that
review, the Company upgraded and replaced its hardware systems with systems that
are Year 2000 compliant.  In addition,  the Company has completed  conversion to
the updated release of its vendor's lease billing  software.  It is currently in
the testing and conversion phase to replace its accounting software. The Company
expects that this software will be fully  operational by the middle of 1999. The
Company has inquired of, and generally obtained the assurances of, the providers
of such  software  with respect to its being Year 2000  compliant.  Based on its
review the Company does not presently  believe that Year 2000 compliance  issues
with respect to its  software  and systems will cause any material  disruptions,
malfunctions  or failures of its business.  However,  no assurances can be given
that such  review  uncovered  every  potential  adverse  effect of the Year 2000
conversion in connection with any of such software or systems.
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

With respect to assets other than its  computer  hardware and software  systems,
the  Company is aware  that some of the  equipment  it leases may have  embedded
technology  that is not Year 2000  compliant.  Under  the  terms of the  leases,
however,  the Company is not  responsible for the maintenance and repair of this
equipment,  and the leases  are  non-cancelable.  Failure  to achieve  Year 2000
compliance may materially adversely affect the residual value of such equipment.
No assurance can be given that such decrease in residual  value would not have a
material adverse effect on the Company's business or results of operations.

The  Company  has begun a review of  whether  the  software  and  systems of the
vendors, financing sources,  customers,  equipment manufacturers or distributors
or other  parties  with  which  it  deals  may,  as a  result  of the Year  2000
conversion,  have a materially  adverse effect on the Company or its operations.
As part of this review,  The Company is obtaining  assurances  from each of such
parties,  whose  dealings  with the Company  are  material to the Company or its
operations,  that such party does not and will not  utilize  software or systems
that are or will be important to the  operations  of such party,  that may cause
problems to such party or the  Company as a result of the Year 2000  conversion.
However,  no assurances can be given the information  provided to the Company is
accurate and that such other party will be Year 2000 compliant.
 
The Company  currently  believes  that its systems  will be Year 2000  compliant
during 1999. It nonetheless has begun developing a contingency plan. The Company
will  maintain an ongoing  effort to recognize and evaluate  potential  exposure
relating to the Year 2000 conversion  arising from its use of software  supplied
by other  parties  or its  dealings  with other  parties.  The total cost to the
Company  of these  Year 2000  compliance  activities  has not  been,  and is not
anticipated to be,  material to its financial  position or results of operations
in any given year.
<PAGE>

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

             The  Company is  currently  engaged in  litigation  with the former
             owners and executives of its discontinued  LaserAccess business. In
             March 1998, the Company prepaid remaining amounts due to the former
             owners and exercised a right to set-off  approximately $1.1 million
             against  amounts due on  promissory  notes in  connection  with the
             purchase of  LaserAccess.  The Company  has also  terminated  these
             individuals  under their employment  agreements.  On April 7, 1998,
             the former  owners  filed  suit in  Superior  Court of  California,
             County of San Diego,  seeking to recover damages  allegedly arising
             from the Company's set-off of amounts due. Additionally, the former
             owners are  seeking to recover  approximately  $733,000  in damages
             arising  from  the  Company's   termination  of  their   employment
             contracts.  The  complaint,  as amended,  seeks damages for various
             other  claims,  including  defamation.  The  Company  has  asserted
             crossclaims and is vigorously contesting these actions.



Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits
                  --------
                  27.1  Financial Data Schedule

         (b)      Reports on Form 8-K 
                  -------------------
                  No reports on Form 8-K were  filed by the  Company  during the
                  six months ended November 30, 1998.




<PAGE>



                                   SIGNATURES


Pursuant  to the  requirements  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.

                                      CONTINENTAL INFORMATION SYSTEMS
                                      CORPORATION

Date:    January 14, 1999             By:  /s/ Michael L. Rosen
                                           --------------------
                                           Michael L. Rosen
                                           President, Chief Executive Officer 
                                           and Director



Date:    January 14, 1999             By:  /s/ Jonah M. Meer
                                           -----------------
                                           Jonah M. Meer
                                           Senior Vice President, 
                                           Chief Operating Officer
                                           and Chief Financial Officer