U. S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D. C.  20549
                        _____________________________

                                 FORM 10-QSB

(Mark One)
        [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the
                       Securities Exchange Act of 1934

                For the quarterly period ended March 31, 1998

                                      or
        [ ]  Transition Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
             For the transition period from ________ to ________

                        Commission File Number 0-3743
                     ___________________________________


                     CONTINENTAL INVESTMENT CORPORATION
            (Exact name of registrant as specified in its charter)


         Georgia                                             58-0705228
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)


                    10254 Miller Road, Dallas, Texas 75238
               (Address of principal executive offices) (Zip Code)
        Registrant's telephone number, including area code: (214) 691-1100


     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the past 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

     As of May 20, 1998, the registrant had outstanding 12,442,938 shares of
its Common Stock, $0.50 par value.

<PAGE>
             Continental Investment Corporation and Subsidiaries

                          FORM 10-QSB REPORT INDEX

                                                                    Page No.

PART I. FINANCIAL INFORMATION
-----------------------------

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

      Condensed Consolidated Balance Sheets as of March 31, 1998
        and December 31, 1997 .....................................     3

      Condensed Consolidated Statements of Operations
        Three months ended March 31, 1998 and 1997 ................     5

      Condensed Consolidated Statement of Stockholders' Equity
        Three months ended March 31, 1998 .........................     6

      Condensed Consolidated Statements of Cash Flows
        Three months ended March 31, 1998 and 1997 ................     7

       Notes to Condensed Consolidated
         Financial Statements .....................................     9

   Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations...................    14


PART II. OTHER INFORMATION

   Item 6. Exhibits and Reports on Form 8-K........................    17

Signatures ........................................................    17

                                     -2-

<PAGE>

PART I.   FINANCIAL INFORMATION.
--------------------------------

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

              Continental Investment Corporation and Subsidiaries

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    March 31,    December 31,
                                                      1998          1997
                                                  ------------  ------------
                  ASSETS                           (Unaudited)    (Audited)

CURRENT ASSETS
   Cash                                           $    94,032   $   217,383
   Note receivable                                  1,484,097     1,484,097
   Receivables - WasteMasters, Inc.                   302,203       433,734
   Accounts receivable, net of allowance
     for doubtful accounts $18,844
     and $17,011                                      580,140       268,793
   Inventories                                         48,963        59,423
   Accrued interest receivable                        119,730        82,628
   Prepaid expenses and deposits                      129,455       156,595
                                                  ------------   -----------
       Total current assets                         2,758,620     2,702,653

PROPERTY AND EQUIPMENT
   Landfill sites under development,
     at cost                                       14,710,622    14,682,572
   Landfills, net of accumulated
     amortization of $475,025 and
     $307,203                                       3,185,426     2,572,500
   Fixtures and equipment, net of
     accumulated depreciation of
     $136,607 and $81,114                             738,348       764,903
                                                  ------------  ------------
       Total property and equipment                18,634,396    18,019,975

INVESTMENT IN WASTEMASTERS, INC.                    6,080,000     6,080,000

INTANGIBLES                                               -0-           -0-
                                                  ------------  ------------

       Total assets                               $27,473,015   $26,802,628
                                                  ===========   ============

     See accompanying notes to unaudited consolidated financial statements.

                                     -3-

<PAGE>
              Continental Investment Corporation and Subsidiaries

               CONDENSED CONSOLIDATED BALANCE SHEETS - Continued

                                                    March 31,    December 31,
                                                      1998          1997
                                                  ------------  ------------ 
                                                   (Unaudited)    (Audited)

    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable, trade                        $   598,908   $   561,090
   Note payable, related party                         95,687        98,707
   Accrued payables                                   160,000       283,350
   Accrued interest payable                            57,696           -0-
   Current portion of long-term
     notes payable                                    530,081       219,032
                                                  ------------  ------------
       Total current liabilities                    1,442,372     1,162,179

LONG-TERM LIABILITIES
   Notes payable                                    1,437,292     1,143,772
   Accrued landfill closure costs                     164,098        10,770
   Deferred income taxes                              747,000       747,000
                                                  ------------  ------------
       Total long-term liabilities                  2,348,389     1,901,542
                                                  ------------  ------------
       Total liabilities                            3,790,762     3,063,721

STOCKHOLDERS' EQUITY
   Preferred stock, $1.00 par value;
     1,000,000 shares authorized;
     no shares issued or outstanding                      -0-           -0-
   Common stock, $0.50 par value;
     25,000,000 shares authorized;
     12,382,751 shares issued and
     outstanding at March 31, 1998;
     12,367,055 shares issued and
     outstanding at December 31, 1997             $ 3,317,377   $ 3,309,528
   Additional contributed capital                  24,952,128    24,881,497
   Accumulated deficit                             (4,587,251)   (4,452,118)
                                                  ------------  ------------
       Total stockholders' equity                  23,682,254    23,738,907

       Total liabilities and
         stockholders' equity                     $27,473,015   $26,802,628
                                                  ============  ============

     See accompanying notes to unaudited consolidated financial statements.

                                     -4-


<PAGE>
              Continental Investment Corporation and Subsidiaries

               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                        Three months ended March 31
                                (Unaudited)

                                               1998           1997
                                            ----------     ----------

Revenues                                    $1,101,369     $  204,052

Costs and Expenses
   Cost of revenues                            620,689         78,729
   Selling, general and
     administrative expenses                   629,885        484,462
                                           ------------    -----------
          Operating loss                      (149,205)      (359,139)


Other Income (Expense)
   Interest income                              44,784         57,765
   Interest expense                            (30,713)       (18,353)
                                           -----------     -----------
                                                14,071         39,412
                                           ------------    -----------
          NET LOSS                         $  (135,133)    $ (319,727)
                                           ============    ===========

Per Share Data
   Loss per common share - basic               $(0. 01)        $(0.03)

Weighted average number of
  common shares outstanding                 12,375,160     11,313,008


     See accompanying notes to unaudited consolidated financial statements.

                                     -5-

<PAGE>
              Continental Investment Corporation and Subsidiaries

           CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                      Three months ended March 31, 1998
                                 (Unaudited)


                   Common stock          Additional  
              -----------------------   contributed  Accumulated
                Shares     Par  Value     capital      deficit       Total
              ----------   ----------   -----------  -----------  ------------
Balance,
December 31,
1997          12,367,055   $3,309,528   $24,881,497  $(4,452,118)  $23,738,907

Exercise of
warrants          15,696        7,848        70,632          -0-        78,480

Net Loss             -0-          -0-           -0-     (135,133)     (135,133)

              ----------   ----------   -----------  ------------  -----------
Balance,
March 31,
1998          12,382,751   $3,317,376   $24,952,129  $(4,587,251)  $23,682,254
              ==========   ==========   ===========  ============  ===========
           

      See accompanying notes to unaudited consolidated financial statements.

                                     -6-

<PAGE>
               Continental Investment Corporation and Subsidiaries

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                         Three Months Ended March 31
                                 (Unaudited)

                                                         1998         1997
                                                     -----------   -----------
Cash flows from operating activities:
   Net income (loss)                                  $(135,133)   $ (319,727)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
        Amortization/depreciation expense               223,315        20,925
        Accrual for post-closure expense                 28,328           -0-
        Change in operating assets and liabilities                    
           Accounts receivable - trade                 (188,180)          -0-
           Accrued interest receivable                  (37,102)          -0-
           Other current assets and liabilities         (35,745)       19,576
           Accounts payable trade                       (83,278)      (76,713)
           Accrued interest payable                      57,696           -0-
           Accrued expenses                            (155,350)      (47,021)
                                                      ----------   -----------
           Net cash provided by (used in)
             operating activities                     $(325,449)   $ (402,960)

Cash flows from investing activities:
   Purchases of property and equipment                  (16,887)          -0-
   Partial repayment of note receivable                     -0-     1,048,563
   Cash from acquisition of landfill                      2,531           -0-
                                                      ----------   -----------
           Net cash provided by (used in)
             investing activities                     $ (14,356)   $1,048,563

Cash flows from financing activities:
   Paydown of liabilities                             $ (59,339)   $ (438,481)
   Proceeds from debt                                   275,793           -0-
                                                      ----------   -----------
           Net cash provided by (used in)
             financing activities                     $ 216,454    $ (438,481)


Net increase (decrease) in cash                       $(123,351)   $  207,121

Cash, beginning of period                             $ 217,383    $  841,586

Cash, end of period                                   $  94,032    $1,048,707
                                                    ===========    ==========

     See accompanying notes to unaudited consolidated financial statements.

                                     -7-

<PAGE>
              Continental Investment Corporation and Subsidiaries

           CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - Continued

NON-CASH TRANSACTIONS:

     During the three months ended March 31, 1998, $78,480 of Common Stock
purchase warrants were exercised in exchange for consideration consisting of
the cancellation of $78,840 of Company indebtedness.

     As part of the acquisition of Trantex, Inc., effective on
February 18, 1998, accounted for as a purchase, the Company assumed various
assets (subject to certain liabilities) by exchanging shares of Common Stock.
The fair value of assets received and the liabilities assumed are summarized
below:

     Cash                                               $  2,531
     Accounts receivable                                 123,157
     Landfill site under development, at cost             28,050
     Landfill, net of accumulated amortization           779,798
     Equipment, net of accumulated depreciation           13,000
                                                        --------
          Total assets                                   946,547

     Accounts payable and accrued expenses               539,419
     Notes payable                                       175,128
     Obligations to seller                               232,000
                                                        --------
          Total liabilities                              946,547
                                                        --------
          Net of assets acquired over
            liabilities assumed                         $    -0-
                                                        ========

     Of the obligations due to the seller, $32,000 is to be retired upon
issuance of shares of the Company's Common Stock, subsequent to March 31,
1998, and $200,000 represents contingent consideration due to seller upon
achievement of certain performance goals for the landfill. In September 1997,
an initial cost of $275,000 was recorded for the acquisition of Trantex, Inc.
(which owns the Rye Creek landfill in Kirksville, Missouri) upon the issuance
of shares of the Company's Common Stock and warrants.

                                     -8-

<PAGE>
              Continental Investment Corporation and Subsidiaries

         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION
------------------------------
     The accompanying unaudited financial statements have been prepared by
     Continental Investment Corporation (the "Company" or "Continental")
     pursuant to the rules and regulations of the U. S. Securities and
     Exchange Commission. Certain information and disclosures normally
     included in annual financial statements prepared in accordance with
     generally accepted accounting principles have been condensed or omitted
     pursuant to such rules and regulations. In the opinion of management, all
     adjustments and disclosures necessary to a fair presentation of these
     financial statements have been included. Such adjustments consist of
     normal recurring adjustments. This Form 10-QSB Report should be read in
     conjunction with the Form 10-KSB Report of Continental Investment
     Corporation for the fiscal year ended December 31, 1997, as filed with
     the U. S. Securities and Exchange Commission.

     The results of operations for the period ended March 31, 1998 are not
     necessarily indicative of the results that may be expected for the full
     year.

NOTE B - DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
--------------------------------------------------------
     This Quarterly Report on Form 10-QSB includes forward looking statements
     within the meaning of Section 27A of the Securities Act of 1933, as
     amended, and Section 21E of the Securities Exchange Act of 1934, as
     amended ("Forward Looking Statements"). All statements other than
     statements of historical fact included in this report are Forward Looking
     Statements. In the normal course of its business, the Company, in an
     effort to help keep its shareholders and the public informed about the
     Company's operations, may from time to time issue certain statements,
     either in writing or orally, that contain or may contain Forward Looking
     Statements. Although the Company believes that the expectations reflected
     in such Forward Looking Statements are reasonable, it can give no
     assurance that such expectations will prove to have been correct.
     Generally, these statements relate to business plans or strategies,
     projected or anticipated benefits or other consequences of such plans or
     strategies (past and possible future), acquisitions and projected or
     anticipated benefits from acquisitions made by or to be made by the
     Company, or projections involving anticipated revenues, earnings, level
     of capital expenditures or other aspects of operating results. All phases
     of the Company's operations are subject to a number of uncertainties,
     risks and other influences, many of which are outside the control of the
     Company and any one of which, or a combination of which, could materially
     affect the results of the Company's proposed operations and whether
     Forward Looking Statements made by the Company ultimately prove to be
     accurate. Such important factors ("Important Factors") and other factors
     could cause actual results to differ materially from the Company's
     expectations. All prior and subsequent written and oral Forward Looking
     Statements attributable to the Company or persons acting on its behalf

                                     -9-

<PAGE>
               Continental Investment Corporation and Subsidiaries

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE B - DISCLOSURE REGARDING FOREWARD LOOKING STATEMENTS - Continued
---------------------------------------------------------------------
     are expressly qualified in their entirety by the Important Factors
     described below that could cause actual results to differ materially
     from the Company's expectations as set forth in any Forward Looking
     Statement made by or on behalf of the Company.

     (1)  Competition:  The waste collection/disposal business and the fabric
     care and treatment business are both highly competitive and require
     substantial amounts of capital. The Company's existing and potential
     facilities do, may or would compete with numerous enterprises, many of
     which have significantly larger operations and greater resources than the
     Company. The Company does, may or would also compete with those counties
     and municipalities that maintain their own waste collection and disposal
     operations. Forward Looking Statements assume that the Company will be
     able to effectively compete with these other entities.

     (2)  Availability of Acquisition Targets:  The Company's planned
     acquisition program is a key element of its expansion strategy. In
     addition, obtaining landfill permits has become increasingly difficult,
     time consuming and expensive. There can be no assurance, however, that
     the Company will succeed in obtaining landfill permits or locating
     appropriate acquisition candidates that can be acquired at price levels
     that the Company considers appropriate.

     (3)  Ongoing Capital Requirements:  In order to satisfy the liquidity
     needs of the Company for the following twelve months, the Company will be
     primarily dependent upon proceeds from the sale of the Company's stock,
     cash flow from the construction and demolition landfill described in
     Note C on page 12 of this report and cash flow generated from the
     operation of its fabric care business. If the Company is unable to obtain
     adequate funds from the sale of its stock in public offerings, private
     placements, the exercise of warrants, or alternative financing
     arrangements, it may be necessary to delay the potential permitting and
     development of its landfill properties and potential landfill properties.
     Because of potential political, legal, bureaucratic, and other factors,
     there can be no assurance that the Company will be able to accomplish any
     of its goals within a reasonable period of time.

     (4)  Economic Conditions:  The Company's existing and potential waste
     disposal businesses may or would be affected by general economic
     conditions. There can be no assurance that an economic downturn would not
     result in a reduction in the potential volume of waste that might be
     disposed of at the Company's facilities and/or the price that the Company
     would charge for its services. Additionally, the demand for FIBER-SEAL's
     services may be adversely affected by an economic downturn.

                                     -10-

<PAGE>
              Continental Investment Corporaton and Subsidiaries

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE B - DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS - Continued
--------------------------------------------------------------------
     (5)  Weather Conditions:  Protracted periods of inclement weather may
     adversely affect the Company's existing and potential operations by
     interfering with collection and landfill operations, delaying the
     development of landfill capacity and/or reducing the volume of waste
     generated by the Company's existing and potential customers. In addition,
     particularly harsh weather conditions may result in the temporary
     suspension of certain of the Company's existing and potential operations.
     The Forward Looking Statements do not assume that such weather conditions
     will occur.

     (6)  Dependence on Senior Management:  The Company is highly dependent
     upon its senior management team. In addition, as the Company continues to
     grow, its requirements for management personnel with franchising and
     waste industry experience will also increase. The future availability of
     such experienced management personnel cannot be predicted. The Forward
     Looking Statements assume that experienced management personnel will be
     available when needed by the Company at compensation levels that are
     within industry norms. The loss of the services of any member of senior
     management or the inability to hire additional management personnel could
     have a material adverse effect on the Company.

     (7)  Influence of Government Regulation: The Company's existing and
     potential operations are and would be subject to and substantially
     affected by extensive federal, state and local laws, regulations, orders
     and permits, which govern environmental protection, health and safety,
     zoning and other matters. These regulations may impose restrictions on
     operations that could adversely affect the Company's results, such as
     limitations on the expansion of disposal facilities, limitations on or
     the banning of disposal of out-of-state waste or certain categories of
     waste or mandates regarding the disposal of solid waste. Because of
     heightened public concern, companies in the waste management business may
     become subject to judicial and administrative proceedings involving
     federal, state or local agencies. These governmental agencies may seek to
     impose fines or to revoke or deny renewal of operating permits or
     licenses for violations of environmental laws or regulations or to
     require remediation of environmental problems at sites or nearby
     properties, or resulting from transportation or predecessors'
     transportation and collection operations, all of which could have a
     material adverse effect on the Company. Liability may also arise from
     actions brought by individuals or community groups in connection with
     the permitting or licensing of operations, any alleged violations of
     such permits and licenses or other matters. The Forward Looking
     Statements assume that there will be no materially negative impact on its
     operations due to governmental regulation.

                                    -11-

<PAGE>
              Continental Investment Corporation and Subsidiaries

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE B - DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS - Continued
--------------------------------------------------------------------
     (8)  Potential Environmental Liability: The Company may incur liabilities
     for the deterioration of the environment as a result of its existing and
     potential operations. Any substantial liability for environmental damage
     could materially adversely affect the operating results and financial
     condition of the Company. Due to the limited nature of insurance coverage
     of environmental liability, if the Company were to incur liability for
     environmental damage, its business and financial condition could be
     materially adversely affected.


NOTE C - ACQUISITIONS OF OPERATING LANDFILLS
--------------------------------------------
     During the third quarter of 1997,  the Company acquired an operating
     construction and demolition ("C&D") landfill in metropolitan Atlanta,
     Georgia in exchange for consideration totaling $2.74 million. The
     purchase price consisted of immediate cash consideration of $2.5 million
     and an obligation to make future cash payments totaling $240,000. A
     construction and demolition landfill may accept building materials and
     rubble resulting from construction, remodeling, repair, and demolition
     operations on commercial buildings, pavements, houses, and other
     structures. Such wastes include, but are not necessarily limited to,
     wood, bricks, metal, concrete, wallboard, paper, and cardboard. The
     acquisition was accounted for as a purchase and the operating results of
     the acquired landfill have been included in the financial statements of
     the Company since the acquisition.

     During February 1998, the Company completed the acquisition of an
     operating municipal solid waste (MSW) landfill in Kirksville, Missouri.
     Municipal solid waste ("MSW") landfills are the primary depository for
     solid waste in North America. A municipal solid waste landfill can accept
     any waste derived from households, including garbage, trash and sanitary
     waste in septic tanks. Household waste includes solid waste from
     single-family and multi-family residences, hotels and motels, bunkhouses,
     campgrounds, picnic grounds, and day-use recreation areas. The term also
     includes commercial solid waste, but does not include solid waste from
     mining, agricultural or forestry operations or industrial processes or
     operations. Total consideration paid for such landfill comprised
     approximately $1,220,190, consisting of $307,000 of restricted Company
     common stock and the assumption of approximately $913,190 of liabilities.

                                    -12-

<PAGE>
              Continental Investment Corporation and Subsidiaries

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - Continued

NOTE C - ACQUISITIONS OF OPERATING LANDFILLS - Continued
--------------------------------------------------------
     The following pro forma information compares the results of operations as
     if the acquisitions had been consummated as of the beginning of each of
     the three month periods ended March 31, 1998 and March 31, 1997.

                                              Three months ended
                                                    March 31,
                                           --------------------------
                                              1998            1997
                                           ----------      ----------
         Revenue                           $1,136063       $ 509,397
         Net Loss                          $(150,580)      $(311,541)
         Loss per common share - basic        $(0.01)         $(0.03)


     The pro forma financial information is presented for informational
     purposes only and is not necessarily indicative of operating results
     that would have occurred had the acquisition been consummated as of the
     beginning of the above periods, nor is it necessarily indicative of
     future operating results.


NOTE D - NEW ACCOUNTING PRONOUNCEMENT
-------------------------------------
    In the fourth quarter of 1997, the Company adopted the provisions of
    Statement of Financial Accounting Standard No. 128, "Earnings Per Share"
    (SFAS 128). In accordance with SFAS 128, the Company computes basic
    earnings per share based on the weighted-average number of common shares
    outstanding during each period presented. Diluted earnings per share is
    computed based on the weighted average number of common shares plus the
    dilutive effect of all potential dilutive securities, principally stock
    options and warrants, outstanding during each period presented. In all
    periods presented, all potential common shares were anti-dilutive.
    Accordingly, the adoption of SFAS 128 had no effect on loss per share
    amounts.

                                    -13-

<PAGE>

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

        Results of Operations

                       Three Months Ended March 31, 1998
                  Compared to Three Months Ended March 31, 1997

Revenues
--------
     During the three months ended March 31, 1998, revenues of the Company
were derived primarily from the C&D landfill, described in Note C on
Page 12 of this report, which was acquired during the third quarter of 1997
($578,494) the FIBER-SEAL fabric care and treatment business ($239,076), the
management contract with WasteMasters, Inc. ($150,000), and the municipal
solid waste landfill in Kirksville, Missouri described in Note C on Page 12
of this report. Revenues for the quarter ended March 31, 1998 increased
$897,317 (439.75%) to $1,101,369 from $204,052 for the quarter ended
March 31, 1997. The increase in revenues was primarily a result of the
acquisitions of the C&D and MSW landfills, the WasteMasters, Inc. management
agreement and, to a lesser degree, increased FIBER-SEAL revenues. FIBER-SEAL
revenues increased $35,024 (17.16%) to $239,076 for the quarter ended
March 31, 1998 from $204,052 for the quarter ended March 31, 1997. There were
no landfill or WasteMasters, Inc. management revenues in the quarter ended
March 31, 1997. The Company has made a strategic decision to convert its
FIBER-SEAL business from a licensing mode to a franchising operation by
December 31, 1998. Further, the Company intends to institute a program for
the expansion of FIBER-SEAL operations in all unexploited geographic areas in
the U. S. during fiscal year 1998.

Cost of Revenues
----------------
     Cost of revenues for the quarter ended March 31, 1998 increased $541,960
(688.39%) to $620,689  (representing 56.36% of revenues) from $78,729
(representing 38.58% of revenues) for the quarter ended  March 31, 1997. The
increase in the cost of revenues was primarily a result of the acquisition of
the C&D and MSW landfills.

Selling, General and Administrative (SG&A) Expenses
---------------------------------------------------
     Selling, general and administrative (SG&A) expenses for the quarter ended
March 31, 1998 increased $145,422 (30.02%) to $629,884 from $484,462 for the
quarter ended March 31, 1997. The increase was due to a variety of factors
including those related to the development and potential use of the Company's
primary Atlanta, Georgia property as a waste disposal site (e.g., consulting
fees, increased legal fees, increased personnel costs, the rental of office
space in Atlanta, increased travel expenses, etc.), the expenses incurred as
a result of the acquisitions described in Note C on Page 12 of this report,
and additional expenses for FIBER-SEAL related to the development of a plan
to convert from the  current licensing method to a franchise operation.

                                    -14-

<PAGE>

Operating Loss
--------------
     Operating loss for the quarter ended March 31, 1998 decreased $209,935
(58.46%) to $149,204 from $359,139 for the quarter ended March 31, 1997. This
was due to an increase in revenues for the quarter ended March 31, 1998 of
$897,317 (a 439.75% increase) to $1,101,369 from $204,052 for the quarter
ended March 31, 1997, an increase in cost of revenues for the quarter ended
March 31, 1998 of $541,960 (a 688.39% increase) to $620,689 from $78,729 for
the quarter ended March 31, 1997, and an increase in selling, general and
administrative (SG&A) expenses for the quarter ended March 31, 1998 of
$145,422 (a 30.02% increase) to $629,884 from $484,462 for the quarter ended
March 31, 1997.

Interest Income
---------------
     Interest income of $44,784 for the quarter ended March 31, 1998 decreased
by $12,981 (22.47%) as compared with the quarter ended March 31, 1997 during
which quarter there was $57,765 of interest income. Such decrease was due to
the Company's decreased holdings of cash and short-term investments during
the fiscal 1998 period as compared with the fiscal 1997 period.

Interest Expense
----------------
     Interest expense was $30,713 for the quarter ended March 31, 1998, an
increase of $12,360 (67.35%)  as compared with the quarter ended March 31,
1997 during which quarter there was $18,353 of interest expense. Such
increase resulted from certain indebtedness incurred as a result of the
acquisition of the C&D landfill described in Note C on Page 12 of this
report.

Net Loss
--------
     The net loss for the quarter ended March 31, 1998 decreased $184,594
(57.73%) to $135,133 from $319,727 for the quarter ended March 31, 1997. Such
decrease was primarily due to the significantly increased revenues and
decreased operating loss offset in part by increased interest expense and
decreased interest income.

     Liquidity and Capital Resources
 
Cash and Short-Term Investments
-------------------------------
     Cash and short-term investments as of  March 31, 1998 were $1,578,129 a
decrease of $123,351 as compared with the cash and short-term investments
position of $1,701,480 at December 31, 1997. Such decrease was primarily due
to the $135,133 net loss experienced by the Company during the three months
ended March 31, 1998.

Investment in WasteMasters, Inc.
--------------------------------
     As of May 19, 1998, the Company owned various restricted, unregistered
securities of WasteMasters, Inc., a publicly-traded corporation whose 
registered common stock is traded on the Nasdaq SmallCap Market under the
trading symbol WAST.

                                    -15-

<PAGE>
Such securities consist of 4,500,000 shares of restricted WasteMasters Common
Stock, 5,000,000 shares of WasteMasters Series A Preferred Stock (which are
convertible at the Company's option into 25,500,000 shares of restricted
WasteMasters Common Stock) and an option to exchange up to 1,000,000 shares
of restricted Continental Investment Corporation Common Stock for up to
100,000,000 shares of restricted WasteMasters Common Stock (as per a fixed
exchange ratio of 1 share of Continental for 100 shares of WasteMasters).
Such securities are currently valued on the Company's balance sheet at their
cost basis of $6,080,000.  As per a management contract between the Company
and WasteMasters, Inc., the Company is paid a monthly fee of $50,000 to
manage the affairs and operations of WasteMasters, Inc.

Capital Expenditures
--------------------
     The Company currently has no material commitments for capital
expenditures. The Company expects to continue to explore opportunities to
acquire landfills and related waste disposal industry assets in the future.

Capital Resources
-----------------
     Heretofore, the primary source of capital has been provided by the sale
of shares of common stock of the Company in private sales. In order to
satisfy the liquidity needs of the Company for the following twelve months,
the Company will be primarily dependent upon proceeds from the sale of the
Company's stock, cash flow from the construction and demolition landfill
described in Note C on Page 12 of this report, cash flow generated from the
operation of its FIBER-SEAL fabric care and tretment business and cash flow
from the municipal solid waste landfill described in Note C on Page 12 of
this report. If the Company is unable to obtain adequate funds from the sale
of its stock in public offerings, private placements, the exercise of
warrants, or alternative financing arrangements, it may be necessary to delay
the potential permitting and development of its landfill properties and
potential landfill properties. Because of potential political, legal,
bureaucratic, and other factors, there can be no assurance that the Company
will be able to accomplish any of its goals within a reasonable period of
time. The Company has issued shares of its Common Stock from time to time in
the past to satisfy certain obligations, and expects in the future to also
acquire certain services, satisfy indebtedness and/or make acquisitions
utilizing authorized shares of stock of the Company. $2,720,000 of common
stock purchase warrants were exercised during the fiscal year ended
December 31, 1997. $78,480 of common stock purchase warrants were exercised
during the three months ended March 31, 1998.

     As of March 31, 1998, the Company had working capital of $1,316,248 and
a current ratio of 1.91 to 1.

PART II - OTHER INFORMATION
---------------------------

Item 6. Exhibits and Reports on Form 8-K.
-----------------------------------------
           (a)  Furnish the exhibits required by Item 601 of Regulation S-B.
                None 

           (b)  Reports on Form 8-K.
                None

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<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 INVESTMENT CORPORATION
                                (Registrant)


                                 By: /S/  R. Dale Sterritt, Jr.
                                     -------------------------------------
                                     R. Dale Sterritt, Jr., Chairman,
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)


                                 By: /S/ G. Michael Lawshe
                                     -------------------------------------
                                     G. Michael Lawshe
                                     (Principal Accounting Officer)

DATE: May 20, 1998


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