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 August 31, 2001 or

[ ] Transition report pursuant to section 13 of 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 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 August 31, 2001, the
registrant has 5,863,486 shares of common stock, par value $.01 per share,
outstanding.
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
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                                TABLE OF CONTENTS



                                                                            Page

PART I  - FINANCIAL INFORMATION                                                3

Item 1.   Financial Statements
          --------------------

          Consolidated Balance Sheets - August 31, 2001 and May 31, 2001       3

          Consolidated Statements of Operations - Three Months Ended
            August 31, 2001 and 2000                                           4

          Consolidated Statements of Cash Flows - Three Months Ended
            August 31, 2001 and 2000                                         5-6

          Notes to Consolidated Financial Statements                        7-10

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        11-13
          -----------------------------------------------------------


PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                                   14
          -----------------

Item 6.   Exhibits and Reports on Form 8-K                                    14
          --------------------------------


SIGNATURES                                                                    15


                                     - 2 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
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--------------------------------------------------------------------------------


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
         --------------------

CONSOLIDATED BALANCE SHEETS
In Thousands (Except Number of Shares)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          August 31,        May 31,
                                                             2001             2001
                                                        --------------   --------------
<S>                                                        <C>              <C>
ASSETS:
Cash and cash equivalents                                  $  3,243         $  1,545
Accounts receivable, net                                          9                5
Notes receivable, net                                         1,627            1,811
Investment in mortgage participation notes                      197              201
Real estate held for sale, net                                  367              367
Restricted cash                                                   -              900
Net rental equipment                                             11               20
Property, plant and equipment, net                              158              177
Other assets                                                    151              239
Net assets of discontinued operations                           766            3,550
                                                        --------------   --------------

      Total assets                                         $  6,529         $  8,815
                                                        ==============   ==============


LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
  Accounts payable and other liabilities                   $    414         $    513
  Loan guarantee                                                  -              900
                                                        --------------   --------------
      Total liabilities                                         414            1,413
                                                        --------------   --------------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized
  20,000,000 shares, issued and
  outstanding 7,101,668 shares                                   71               71
Additional paid-in capital                                   35,129           35,129
Accumulated deficit                                         (27,499)         (26,238)
                                                        --------------   --------------
                                                              7,701            8,962
Treasury stock, at cost:  1,238,182 shares at
  August 31, 2001 and 1,217,782 shares at
  May 31, 2001                                               (1,586)          (1,560)
                                                        --------------   --------------

      Total shareholders' equity                              6,115            7,402
                                                        --------------   --------------

      Total liabilities and shareholders' equity           $  6,529         $  8,815
                                                        ==============   ==============
                                                        --------------   --------------
</TABLE>


--------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                     - 3 -
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Information)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                   August 31,
                                                        -------------------------------
                                                             2001             2000
                                                        --------------   --------------
<S>                                                        <C>              <C>
REVENUES:
  Equipment sales                                          $      -         $     58
  Equipment rentals                                               8               41
  Income from direct financing leases                             2               21
  Interest, fees and other income                                75              162
                                                        --------------   --------------

                                                                 85              282
                                                        --------------   --------------

COSTS AND EXPENSES:
  Cost of sales                                                   -               50
  Depreciation of rental equipment                                5                9
  Interest expense                                                -                4
  Other operating expenses                                       59               53
  Research and development                                      852              603
  Selling, general and administrative expenses                  430              429
                                                        --------------   --------------

                                                              1,346            1,148
                                                        --------------   --------------

      Net loss                                             $ (1,261)       $    (866)
                                                        ==============   ==============


Basic and diluted net loss
  per share                                                $  (0.21)       $   (0.13)
                                                        ==============   ==============

Weighted average number of shares
  of common stock outstanding                                 5,874            6,576
                                                        ==============   ==============
</TABLE>


--------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                     - 4 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           For the Three Months Ended
                                                                   August 31,
                                                        -------------------------------
                                                             2001             2000
                                                        --------------   --------------
<S>                                                        <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                 $ (1,261)        $   (866)

  Adjustments to reconcile net loss from continuing
   operations to net cash provided by (used in)
   operating activities:
    Gain from sale of equipment subject to lease                  -               (8)
    Depreciation and amortization expense                        28               30
    Effect on cash flows of changes in:
      Accounts receivable, net                                   (4)             734
      Notes receivable                                          184              142
      Other assets                                               92             (207)
      Accounts payable and other liabilities                    (99)              44
      Other liabilities                                           -               25
                                                        --------------   --------------

                                                                201              760
                                                        --------------   --------------

        Net cash used in continuing operations               (1,060)            (106)
        Net cash provided by discontinued operations          2,784                -
                                                        --------------   --------------

        Net cash provided by (used in)
          operating activities                                1,724             (106)
                                                        --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment                                 -               58
  Purchase of property and equipment                             (4)               -
  Collections of rentals on direct financing
    leases, net of amortized unearned income                      -               85
  Proceeds from investment in mortgage
    participation notes                                           4              516
                                                        --------------   --------------

        Net cash provided by investing activities                 -              659
                                                        --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on leases, bank and institution financing              -              (16)
  Purchase of treasury stock                                    (26)               -
                                                        --------------   --------------

        Net cash used in financing activities                   (26)             (16)
                                                        --------------   --------------

        Net increase in cash and cash equivalents             1,698              537

CASH AND CASH EQUIVALENTS:
  Beginning of period                                         1,545            3,382
                                                        --------------   --------------

  End of period                                            $  3,243         $  3,919
                                                        ==============   ==============
</TABLE>

--------------------------------------------------------------------------------

(Continued)


                                     - 5 -
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
In Thousands
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           For the Three Months Ended
                                                                   August 31,
                                                        -------------------------------
                                                             2001             2000
                                                        --------------   --------------
<S>                                                        <C>              <C>
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
  Inventory arising from transfers of equipment
    that came off-lease                                    $      -         $    449
                                                        ==============   ==============
</TABLE>


--------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.


                                     - 6 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  Basis of Presentation
    ---------------------

The accompanying unaudited consolidated financial statements of Continental
Information Systems Corporation ("Company") have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and in accordance with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months ended August 31, 2001 are not necessarily
indicative of the results that may be expected for the year ending May 31, 2002.
These statements should be read in conjunction with the audited consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended May 31, 2001.

2.  T1Xpert Corp.
    -------------

The Company has changed its focus to the development and commercializing of an
Internet-enabled electronic securities processing software platform which would
use proprietary technology and which would be adapted to changes in the
securities industry including operational changes related to increased volume,
the ability to effect trades through the Internet, Electronic Crossing Networks,
decimalization, expanded trading hours, various rule changes and the shift from
settling trades in three days to settling trades in one day. This latter shift
is commonly referred to as "T+1." The newly created subsidiary that was formed
to engage in this line of business was named T1Xpert Corp. ("T1Xpert").

T1Xpert is developing a suite of middle and back office brokerage products and
solutions. The products and solutions are being designed to serve as a software
platform for risk reduction for the next generation of real time systems and in
preparation for T + 1. The Company's product development strategy is to develop
T1Xpert incrementally, with a series of independent products that, in total,
would constitute a full real-time straight through transaction processing,
balancing, and risk-management system. Each product will build on the functions
and infrastructure of the previous products. T1Xpert has expended approximately
$5.4 million from its inception in August 1999 through August 31, 2001. The
Company completed alpha testing (i.e., internal testing without guidance from a
potential client/licensee) of the first component of its Real-Time Middle Office
Balancing System, the P&S module, in March 2001. Beta, or testing at a potential
client/licensee with its guidance, began in July 2001.

There can be no assurance, however, that the Company's product goals will be met
or, if they are, that the resulting products will meet current expectations. In
addition, there is currently no established market for these services and there
can be no assurance that the Company will be able to create a market for its
products.

The successful and timely completion of the beta stage is dependent, among other
items, upon the Company successfully executing the Company's operating plan,
which can not be assured.

Risks and Uncertainties
-----------------------

The Company anticipates that, to develop and operate past the beta stage, it
will need substantial additional funds to meet its financial needs. The Company
currently believes that it has sufficient funds to fund the development of
T1Xpert products until June 2002. There can be no assurance that the Company
will have sufficient funds to develop its products after June 2002. If the
Company raises funds from third parties for investment in T1Xpert, the effect of
such outside investment on the current shareholders of the Company cannot be
determined, but it may be dilutive, perhaps substantially, to them. In the
interim, the Company has allocated all its available resources to continue
funding T1Xpert. This may result in the Company selling assets at below market
prices in order to raise funds. Without additional funding there can be no
assurance that the Company will be able to meet its financial needs after it
passes the beta stage of development.


                                     - 7 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


The terrorist attacks of September 11, 2001 against the United States of America
had a negative effect on the U. S. securities industry. The impact of these
events on the Company will depend on a number of factors, including the
following: (1) any effect on the immediate need of vendors, brokers and dealers
or other market participants for new approaches to managing real-time
straight-through transaction processing; (2) the implementation of T + 1; (3)
the timely completion and implementation by the Company of customized solutions
for the industry's trade processing needs; (4) the adequacy of the Company's
insurance to cover any losses associated with the terrorist attacks; and (5) the
Company's ability to obtain funds in order to continue to develop past the beta
stage.

T1Xpert had begun work on a software development project for a global investment
bank prior to September 11, 2001. This project has been cancelled as a result of
the events of September 11, 2001. In addition, due to security and safety
measures taken by Federal, State and City authorities, T1Xpert had to suspend
all software development work for approximately two weeks while still having to
meet its payroll obligations. During this two-week period, communication with
T1Xpert's offices was severely compromised. Communication remains difficult. To
conserve cash, on September 24, 2001, 9 employees of T1Xpert were furloughed.
The Company anticipates that many of these employees may not be available if and
when the Company needs additional programmers. This will likely result in the
Company incurring additional fees to hire replacements and additional training
costs to prepare new programmers to develop the T1Xpert products.

At this point, the Company is unable to estimate the impact of the events of
September 11, 2001 on its operations. However, given the magnitude of these
unprecedented events, there has been an adverse impact on the securities
industry and the Company's financial position and operations. The Company is in
the process of reviewing various Federal and State programs to help companies
that were affected by the events of September 11, 2001, as well as coverage
under its policies of insurance.

3.  Net Income Per Share
    --------------------

Earnings per share are calculated in accordance with Financial Accounting
Standard No. 128 (SFAS 128), earnings per share, which specifies standards for
computing and disclosing net income or loss per share. Basic and diluted net
loss per share for the three months ended August 31, 2001 and 2000, was computed
based on the weighted average number of shares of common stock outstanding
during the periods. As of August 31, 2001, the Company had issued and
outstanding options to purchase 164,283 shares of common stock (see Note 6). The
effect of these options is anti-dilutive in the computation of diluted net loss
per share.

4.  Estimates
    ---------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.

5.  Reclassifications
    -----------------

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


                                     - 8 -
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


6.  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, at the discretion of
the Board of Directors, employees of and independent contractors and consultants
to the Company.

In 2000, the Board of Directors of T1Xpert adopted the T1Xpert Corp. Stock
Compensation Plan (the "T1X 2000 Plan"). The T1X 2000 Plan provides for the
issuance of stock options covering up to 2,000,000 shares of common stock to
employees and advisory board members of T1Xpert. Options granted typically do
not become exercisable until at least one year from the date of commencement of
employment and vest ratably over periods of time as provided at the discretion
of the Board of T1Xpert. Option grants expire ten years from date of grant, or
upon termination of the employee's employment with T1Xpert.

As of May 31, 2001 stock option grants representing 1,357,500 shares had been
issued to employees at an option price of $.0675 per share under the T1X 2000
Plan. During the year ended May 31, 2001, 253,000 options were forfeited/
expired with a weighted average exercise price of $0.675 per share.  The
T1X 2000 Plan is immaterial to the earnings of the Company.  During the period
ended August 31, 2001, there were no options issued, exercised or expired.

A summary of the status of the 1995 Plan as of August 31, 2001:
<TABLE>
<CAPTION>
                                                                    Weighted
                                                 Number of      Average Exercise
                                                  Options       Price Per Option
                                              ---------------   ----------------
<S>                                               <C>                <C>
Outstanding at
  May 31, 2001 (207,616 exercisable)              222,616            $ 2.09
Granted                                                 -            $    -
Exercised                                               -            $    -
Forfeited/expired                                 (58,333)           $ 2.32
                                              ---------------
Outstanding at
  August 31, 2001 (149,283 exercisable)           164,283            $ 2.01
                                              ===============
</TABLE>

7.  Discontinued Operations
    -----------------------

On July 14, 2000, the Company announced that it was offering for sale its
commercial aircraft engine portfolio by competitive bid, that upon completion of
the sale it would be exiting the aviation business, and that it would account
for and report the Air Group Business as a discontinued operation. In August
2001, the Company transferred $3 million dollars from the Company's discontinued
operations to its current operations.

The Consolidated Balance Sheets for all periods presented have been reclassified
to report the results of discontinued operations separately from those of
continuing operations.


                                     - 9 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


A summary of the assets and liabilities of discontinued operations follows (in
thousands):
<TABLE>
<CAPTION>
                                                   August 31,         May 31,
                                                      2001             2001
                                                 --------------   --------------
<S>                                                 <C>              <C>
Assets:
  Cash and cash equivalents                         $   358          $ 3,066
  Accounts receivable                                   441              660
  Inventory                                             115              745
  Net investment in direct financing leases             118              250
  Rental equipment                                        -                -
  Other assets                                            8              119
                                                 --------------   --------------

      Total assets                                    1,040            4,840
                                                 --------------   --------------
Liabilities:
  Accounts payable and costs of discontinuance          274              524
  Note payable to institution                             -              766
                                                 --------------   --------------

      Total liabilities                                 274            1,290
                                                 --------------   --------------

      Net assets of discontinued operations         $   766          $ 3,550
                                                 ==============   ==============
</TABLE>


                                     - 10 -
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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,
2001, appearing in the Company's annual report on 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 Months Ended August 31, 2001 and 2000
-------------------------------------------------------------

Continuing Operations
---------------------

Revenues
--------
For the three months ended August 31, 2001, total revenues decreased to $85,000
from $282,000 for the comparable fiscal quarter in 2000. With the
discontinuation of lease originations in August 1999 and sale of a substantial
portion of the portfolio in fiscal 2000, equipment sales are expected to be
minimal in fiscal 2002. As such, equipment sales decreased to $-0- for the three
months ended August 31, 2001 from $58,000 for the comparable fiscal quarter in
2000.

Equipment rentals and income from direct financing leases decreased to $10,000
for the three months ended August 31, 2001 from $62,000 for the comparable
fiscal quarter in 2000. The decrease is primarily attributable to the sale of
the lease portfolio during the fiscal year 2001 and 2000.

Interest, fees and other income decreased to $75,000 for the three months ended
August 31, 2001 from $162,000 for the comparable fiscal quarter in 2000. The
decrease is the result of lower notes receivable and lower average cash balances
during the period because of the funding of the T1Xpert operations, and lower
interest rates.

Costs and Expenses
------------------
Costs and expenses increased to $1,346,000 for the three months ended August 31,
2001 from $1,148,000 for the comparable fiscal quarter in 2000. The increase is
a result of higher research and development expenses incurred by T1Xpert in the
three-month period which was partly offset by lower costs incurred in the
equipment leasing and sales business.

Depreciation of rental equipment decreased to $5,000 for the three months ended
August 31, 2001 from $9,000 for the comparable fiscal quarter in 2000. This
decrease is due to a decrease in the amount of owned rental equipment.

There was no interest expense for the three months ended August 31, 2001
compared to $4,000 for the fiscal quarter in 2001. These variances reflect the
payment of the debt outstanding during the prior fiscal year.

Selling, general and administrative expenses were $430,000 for the three months
ended August 31, 2001 and $429,000 for the comparable fiscal quarter in 2001.


                                     - 11 -
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As T1Xpert further develops its product, the Company expects that costs will
increase as the Company assembles a marketing and business development program.
Additional costs are expected to be incurred as the Company develops its
products in a production environment and develops additional suites of its
modules. Further unanticipated costs may also arise. General and administrative
costs relating to the Company's prior operations and its continuance as a
publicly traded and reporting company will be subject to certain fixed operating
costs. Further, some Company personnel may serve in functions necessary to
T1Xpert.

Income Taxes
------------
For the three-month period ended August 31, 2001, provision for deferred income
tax benefit on income from continuing operations was not recorded, because, in
management's opinion, the realizability of the deferred tax asset was uncertain
in light of the Company's actual operating results since reorganization.

                         Liquidity And Capital Resources
                         -------------------------------

Net cash provided by operations for the three months ended August 31, 2001 was
$1,724,000 compared to cash used in operations of $106,000 for the comparable
period in 2000; net cash used in continuing operations for the three months
ended August 31, 2001 was $1,060,000 compared to net cash used in continuing
operations in the amount of $106,000 for the comparable period in 2000. Net cash
provided by discontinued operations for the three months ended August 31, 2001
was $2,784,000, compared to net cash used in discontinued operations for the
three months ended August 31, 2000, which was $-0-. The cash provided by
discontinued operations was primarily due to the transfer of $3 million from
discontinued operations to current operations in August 2001.

Net cash provided by investing activities for the three months ended August 31,
2001 was $-0-, compared to $659,000 for the three months ended August 31, 2000.
During the three months ended August 31, 2000, the Company's investment in
mortgage participation notes generated proceeds of $516,000 from mortgage
participation notes.

As of August 31, 2001, the Company had $3,243,000 in cash and cash equivalents,
as compared to $1,545,000 at May 31, 2001. The increase is principally due to
the transfer of funds from the discontinued operations. The Company's CIS Air
Loan Facility with a financing institution was paid in full in June 2001.

On November 20, 2000, the Company completed a repurchase of 607,158 shares of
outstanding common stock from The Chase Manhattan Bank and its wholly owned
subsidiaries. The reacquired shares represented 9.30% of the 6,527,344 shares
then outstanding. The shares were purchased at $ .9882 per share, which was less
than the market price.

As of August 31, 2001, approximately 1,238,200 shares (including the purchase of
the Chase shares) had been repurchased by the Company at an aggregate cost of
approximately $1,581,700 pursuant to authorizations of the Board of Directors.

The Company believes it has sufficient cash on hand to meet current operating
needs until the projected development of its initial products through completion
of the beta stage, which it currently projects to be at the end of the first
calendar quarter of 2002. The successful and timely completion of the beta stage
is dependent, among other items, upon the Company successfully executing the
Company's operating plan, which can not be assured.

The Company anticipates that, to develop and operate past the beta stage, it
will need substantial additional funds. There can be no assurance that the
Company will be able to generate such funds. If the Company raises funds from
third parties for investment in T1Xpert, the effect of such outside investment
on the current shareholders of the Company cannot be determined, but it will be
dilutive, perhaps substantially, to them. In the interim, the Company has
allocated all its available resources to continue funding T1Xpert. This funding
may result in the Company selling assets at below market prices in order to
raise funds. Without additional funding there can be no assurance that the
Company will be able to meet its financial needs after it passes the beta stage
of development.

The Company does not anticipate entering into financing arrangements with
financial institutions, involving collateralizing and/or leveraging the
Company's assets.


                                     - 12 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


The terrorist attacks of September 11, 2001 against the United States of America
had a negative effect on the U. S. securities industry. T1Xpert had begun work
on a software development project for a global investment bank prior to
September 11, 2001. This project has been cancelled as a result of the events of
September 11, 2001. In addition, due to security and safety measures taken by
Federal, State and City authorities, T1Xpert had to suspend all software
development work for approximately two weeks while still having to meet its
payroll obligations. During this two-week period, communication with T1Xpert's
offices was severely compromised. Communication remains difficult. To conserve
cash, on September 24, 2001, 9 employees of T1Xpert were furloughed. The Company
anticipates that many of these employees may not be available if and when the
Company needs additional programmers. This will likely result in the Company
incurring additional fees to hire replacements and additional training costs to
prepare new programmers to develop the T1Xpert products.

The impact of these events on the Company will depend on a number of factors,
including the following: (1) the immediate need of vendors, brokers and dealers
or other market participants for creating effective solutions for intelligently
managing real-time straight-through transaction processing and the
implementation of T + 1; (2) the implementation and completion of developing
customized solutions for the Company's customers' trade processing needs; (3)
the adequacy of the Company's insurance to cover any losses associated with the
terrorist attacks; (4) the Company's ability to generate funds in order to
continue to develop past the Beta stage; and (5) the ability of the Company's
management to contain operating costs.

At this point, the Company is unable to estimate the impact on it of the events
of September 11, 2001 and their consequences. However, given the magnitude of
these unprecedented events, there has been an adverse impact on the securities
industry and the Company's financial position and operations. The Company is in
the process of reviewing various Federal and State programs to help companies
that were affected by the events of September 11, 2001, as well as coverage
under its policies of insurance.


                                     - 13 -
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CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


PART II - OTHER INFORMATION


Item 1.   Legal Proceedings
          -----------------

The Company incorporates by reference prior legal matters reported in the
Company's Form 10-K for the fiscal year ended May 31, 2001.


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

Exhibit No.

   3.1*   Restated Certificate of Incorporation, as amended (filed as Exhibit
          3.1 to the Company's Form 10-Q for the quarter ended November 30, 1997
          and incorporated herein by reference).

   3.2    Restated Bylaws as amended through February 10, 2000 (filed as Exhibit
          3.2 to the Company's Form 10-K for the fiscal year ended May 31, 2000
          and incorporated herein by reference).

  10.1**  1995 Stock Compensation Plan (filed as Exhibit 10.1 to the Company's
          Form 10-Q for the quarter ended August 31, 1995 and incorporated
          herein by reference).

  10.2**  Advisory Agreement for Real Estate Related Investments between
          Continental Information Systems Corporation and Emmes Investment
          Management Co. LLC dated June 30, 1997 (filed as Exhibit 10.13 to the
          Company's Form 10-K for the fiscal year ended May 31, 1997 and
          incorporated herein by reference).

  21      Subsidiaries of the Registrant
              CIS Corporation, a Delaware corporation.
              CIS Air Corporation, a Delaware corporation.
              T1Xpert Corp., a Delaware corporation.

   *      Filed as an exhibit to the Company's amended Form 10 Registration
          Statement (Commission File No. 0-25104), originally filed November 10,
          1994 and incorporated herein by reference.

  **      Incorporated by reference.

  99.     Reports on Form 8-K - The Company did not file any reports on Form 8-K
          -------------------
          during the quarter ended August 31, 2001.


                                     - 14 -
<PAGE>


CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


                                   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:  October 15, 2001  By:     /s/ Michael L. Rosen
                                 -----------------------------------------------
                         Name:   Michael L. Rosen
                         Title:  President, Chief Executive Officer and Director



Date:  October 15, 2001  By:     /s/ Jonah M. Meer
                                 -----------------------------------------------
                         Name:   Jonah M. Meer
                         Title:  Senior Vice President, Chief Operating Officer
                                 and Chief Financial Officer


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