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 February 28, 1997 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.)

One Northern Concourse, P.O. Box 4785, Syracuse, NY            13221-4785
---------------------------------------------------            ----------
     (Address of principal executive offices)                  (Zip Code)


                                 (315) 455-1900
                                 --------------
              (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 March 31,
1997, the registrant  has 7,014,040  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 -
                                 February 28, 1997 and May 31, 1996             

                        Consolidated   Statements  of  Operations  and  Retained
                               Earnings  (Accumulated  Deficit)  - for the three
                               months and nine months  ended  February  28, 1997
                               and February 29, 1996    

                        Consolidated Statements of Cash Flows -
                               for the nine months ended February 28, 1997 and
                               February 29, 1996                                

                        Notes to Consolidated Financial Statements              

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


PART II.                OTHER INFORMATION:                                      


Item 5.                 Other Information                                       

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 per Share Data)


                                  CONSOLIDATED BALANCE SHEETS
                                          (Unaudited)


                                                                     February 28,      May 31,   
                                                                         1997           1996    
                                                                         ----           ---- 
<S>                                                                  <C>           <C>   
Assets:
Cash and cash equivalents .......................................... $  10,711     $    5,382     
Accounts receivable, net ...........................................     3,857          2,295     
Notes receivable ...................................................     4,568          3,457     
Inventory ..........................................................     6,801          2,875     
Net investment in direct financing leases (Note 2) .................     2,250         15,783     
Rental equipment, net (Note 2) .....................................     3,985         11,148     
Furniture, fixtures and equipment, net .............................       326            625     
Other assets .......................................................     1,129          1,965     
Goodwill, net (Note 3) .............................................     3,606          3,940     
Deferred tax assets ................................................     4,903          6,080     
                                                                     ---------     ----------                                       
          Total assets ............................................. $  42,136     $   53,550     
                                                                     =========     ==========     
Liabilities and Shareholders' Equity:                                                             
Liabilities:                                                                                      
     Accounts payable and other liabilities ........................ $   1,389     $    2,949 
     Net liabilities of discontinued operations (Note 4) ...........       121            106 
     Discounted lease rental borrowings (Note 2) ...................     2,153         14,738 
     Note payable to institution - secured .........................       766              - 
     Notes payable to former owners of acquired company (Note 3) ...     2,304          2,304 
                                                                     ---------     ---------- 
          Total liabilities ........................................     6,733         20,097 
                                                                     ---------     ---------- 
                                                                                              
                                                                                
Shareholders' Equity:                                                       
Common stock, $.01 par value; authorized 10,000,000 shares, issued                            
     and outstanding 7,014,040 and 6,999,040, excluding 960 treasury                          
     shares (Notes 5 and 7) .........................................       70             70 
Additional paid-in capital .........................................    34,959         34,930 
Retained earnings (accumulated deficit) ............................       374         (1,547)
                                                                     ---------     ---------- 
          Total shareholders' equity ...............................    35,403         33,453 
                                                                     ---------     ---------- 
                                                                     
          Total liabilities and shareholders' equity ............... $  42,136     $   53,550 
                                                                     =========     ========== 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except per Share Data)


                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                     AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
                                                     (Unaudited)

                                                                   For the Three                 For the Nine
                                                                   months ended                  months ended
                                                           --------------------------    ----------------------------
                                                           February 28,  February 29,    February 28,    February 29,
                                                              1997          1996            1997            1996
                                                             ------       --------        --------        --------
<S>                                                          <C>          <C>             <C>             <C>
Revenues:
Equipment sales ......................................       $4,962       $  3,717        $ 18,019        $ 12,603
Gain from sale of equipment subject
     to lease (Note 2) ...............................          341           --             2,816            --
Equipment rentals ....................................          564          1,432           3,184           5,083
Income from direct financing leases ..................          131            385           1,020             898
Interest, fees and other income ......................          567            763           1,598           1,921
                                                             ------       --------        --------        --------
                                                              6,565          6,297          26,637          20,505
                                                             ------       --------        --------        --------

Costs and Expenses:
Cost of sales ........................................        3,811          2,892          13,940           9,035
Depreciation of rental equipment .....................          216            768           1,822           2,548
Interest expense .....................................          137            164             832             350
Other operating expenses .............................          415            362           1,318             939
Selling, general and administrative expense ..........        1,703          1,832           5,293           6,209
Amortization of goodwill .............................          101           --               334            --
                                                             ------       --------        --------        --------
                                                              6,383          6,018          23,539          19,081
                                                             ------       --------        --------        --------

Income from continuing operations before taxes .......          182            279           3,098           1,424
Provision for income tax .............................           69            106           1,177             541
                                                             ------       --------        --------        --------
Income from continuing operations ....................          113            173           1,921             883

Loss from discontinued operations,
     net of tax (Note 4) .............................         --             (140)           --              (248)
                                                             ------       --------        --------        --------

Net income ...........................................          113             33           1,921             635

Retained earnings (accumulated deficit),
     beginning of period .............................          261         (1,011)         (1,547)         (1,613)
                                                             ------       --------        --------        --------

Retained earnings (accumulated deficit), end of period       $  374       $   (978)       $    374        $   (978)
                                                             ======       ========        ========        ========
<PAGE>
<CAPTION>
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                     AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
                                                     (Unaudited)
                                                     (continued)

                                                                   For the Three                 For the Nine
                                                                   months ended                  months ended
                                                           --------------------------    ----------------------------
                                                           February 28,  February 29,    February 28,    February 29,
                                                              1997          1996            1997            1996
                                                             ------       --------        --------        --------
<S>                                                          <C>          <C>             <C>             <C>
Net income per share (Note 5):
      Income from continuing operations ..............       $  .01       $    .02        $    .27        $    .13
      Loss from discontinued operations ..............         --             (.02)           --              (.04)
                                                             ------       --------        --------        --------
                   Net income ........................       $  .01       $   --          $    .27        $    .09
                                                             ======       ========        ========        ========

Weighted average number of shares
      of common stock outstanding ....................        7,014          6,999           7,005           7,000
                                                             ======       ========        ========        ========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands

                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (Unaudited)

                                                                        For the Nine
                                                                        months ended
                                                                -----------------------------
                                                                February 28,     February 29,  
                                                                   1997             1996
                                                                 --------         --------
<S>                                                              <C>              <C>
Cash flows from operating activities:
Net income ..............................................        $  1,921         $    635
Less: Net loss from discontinued operations .............            --               (248)
                                                                 --------         --------
Income from continuing operations .......................           1,921              883
                                                                 --------         --------

Adjustments to reconcile net income to net cash
  provided by operating activities:
Proceeds from sale of equipment subject to lease ........           7,367             --
Gain from sale of equipment subject to lease ............          (2,816)            --
Proceeds from sale of other leased equipment ............           3,684            1,759
Amortization of unearned income .........................          (1,020)            (898)
Collections of rentals on direct financing leases .......           3,058            3,362
Dealer profit from sales-type lease .....................            (142)            --
Depreciation and amortization expense ...................           2,478            2,897
Other ...................................................              29             --
Effect on cash flows of changes in:
     Accounts receivable ................................            (787)            (381)
     Notes receivable ...................................            (550)          (2,446)
     Inventory ..........................................          (3,926)          (1,012)
     Other assets .......................................             836             (120)
     Accounts payable and other liabilities .............            (387)              93
     Deferred tax assets ................................           1,177              389
                                                                 --------         --------
                                                                    9,001            3,643
                                                                 --------         --------

Net cash provided by continuing operations ..............          10,922            4,526

Net cash provided by (used in) discontinued operations ..              15           (1,161)
                                                                 --------         --------

Net cash provided by operations .........................          10,937            3,365
                                                                 --------         --------

Cash flows from investing activities:
Purchase of rental equipment ............................          (5,940)         (16,121)
Purchase of property and equipment ......................             (23)             (39)
Net cash provided by the sale of TLP subsidiaries .......            --                754
                                                                 --------         --------
     Net cash used in investing activities ..............          (5,963)         (15,406)
                                                                 --------         --------
<PAGE>
<CAPTION>
                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (Unaudited)
                                         (continued)

                                                                        For the Nine
                                                                        months ended
                                                                -----------------------------
                                                                February 28,     February 29,  
                                                                   1997             1996
                                                                 --------         --------
<S>                                                              <C>              <C>
Cash flows from financing activities:
Payments on note payable to Liquidating Estate ..........            --             (3,255)
Proceeds from lease, bank and institution financings ....           7,498            9,893
Payments on lease, bank and institution financings ......          (7,143)          (1,519)
                                                                 --------         --------
     Net cash provided by (used in) financing activities              355            5,119
                                                                 --------         --------

     Net increase (decrease) in cash and cash equivalents           5,329           (6,922)
Cash and cash equivalents at beginning of period ........           5,382           13,015
                                                                 --------         --------
Cash and cash equivalents at end of period ..............        $ 10,711         $  6,093
                                                                 ========         ========

</TABLE>
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries
Notes to the Consolidated Financial Statements


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 nine months
       ended  February 28, 1997, 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, 1996 appearing in the Company's Form 10-K.

2.     Sale of Equipment Subject to Lease

       On  November  30,  1996,  the  Company,   through  certain   wholly-owned
       subsidiaries,  sold a substantial  portion of its leased  equipment to an
       institutional  investor for a sales price of  approximately  $20 million,
       payable in cash of  approximately  $7.4 million and the assumption by the
       investor of the Company's related  outstanding  non-recourse lease rental
       borrowings of approximately $12.5 million. The gain on the transaction of
       approximately  $2.5 million,  exclusive of income  taxes,  is included in
       results from continuing  operations for the fiscal quarter ended November
       30,  1996.  Additionally,  on February  28,  1997,  the  Company  sold an
       additional  portion of its  leased  equipment  to the same  institutional
       investor for a sales price of approximately  $2 million,  payable in cash
       of approximately  $775,000, a short-term note of approximately  $560,000,
       the  assumption  by the  investor of the  Company's  related  outstanding
       non-recourse  lease rental  borrowings of approximately  $343,000 and the
       payment  of the  Company's  related  outstanding  recourse  lease  rental
       borrowings of  approximately  $379,000.  The gain on the  transaction  of
       approximately $341,000, exclusive of income taxes, is included in results
       from  continuing  operations  for the fiscal  quarter ended  February 28,
       1997.

3.     Acquisition

       On March 8, 1996, the Company, through its wholly-owned  subsidiary,  CIS
       Corporation,  acquired  100% of the capital  stock of GMCCCS  Corp.  (dba
       "LaserAccess") for a purchase price of approximately $4,608,000,  payable
       in cash of  approximately  $2,304,000  at  closing  and  the  balance  of
       approximately  $2,304,000  in the form of notes  payable  in three  equal
       annual installments,  commencing March 8, 1997, with interest at the rate
       of 8.25% on the unpaid  principal  balance.  The first  annual  principal
       installment,  plus  accrued  interest,  was  paid on a timely  basis.  In
       addition  to the  purchase  price  to be  paid  in cash  and  notes,  CIS
       Corporation  is  obligated  to pay the sellers an annual earn out payment
       for each of the first four years  following  the March 8, 1996 sale.  The
       earn out payment is based upon the annual pretax  income of  LaserAccess.
       LaserAccess is engaged in the sales and marketing of remanufactured Xerox
       High Speed Laser Printing Systems.
<PAGE>
       The  acquisition  has been  accounted  for using the  purchase  method of
       accounting.  Allocations of the purchase price have been determined based
       upon  preliminary  estimates  of fair market  value and,  therefore,  are
       subject  to  change.  The  excess  of the  purchase  price,  over the net
       tangible assets acquired,  of approximately  $4.0 million,  is considered
       goodwill and is being  amortized on a straight line basis over ten years.
       LaserAccess'  results of  operations  are  included  in the  accompanying
       consolidated  statements of operations of the Company for the nine months
       ended February 28, 1997.

       Unaudited  pro forma data giving effect to the purchase as if it had been
       acquired at the beginning of Fiscal 1996, with adjustments, primarily for
       imputed  interest  charges  attributable  to notes  payable to the former
       owners and amortization of goodwill follows:
<TABLE>
<CAPTION>
                                                        (In thousands, except per share amounts)

                                                                     For the nine
                                                                     months ended
                                                                  February 29, 1996
                                                                  -----------------
<S>                                                                   <C>
Total revenues .............................................          $   22,796
                                                                      ==========

Income from continuing operations ..........................          $    1,161
                                                                      ==========

Income per share from continuing operations ................          $      .17
                                                                      ==========

Weighted average number of shares outstanding ..............           7,000,000
                                                                      ==========

Note:  Reorganization  items and income from  discontinued  operations have been
excluded from the pro forma results.

</TABLE>

4.     Discontinued Operations

       On April 3, 1996,  the Company  announced its decision to  discontinue an
       operation,   including  its  wholly-owned  subsidiary,   Aviron  Computer
       Technologies,  Inc.  ("Aviron"),  that  purchased  and sold used computer
       equipment and provided related technical  services.  After that date, the
       Company  attempted to locate a buyer for the operation.  On June 5, 1996,
       the Company  announced it had abandoned its efforts to sell the operation
       and would instead  liquidate the assets which  consisted  principally  of
       used computer  equipment  inventories and fixed assets. The net loss from
       discontinued  operations  for the year ended May 31, 1996, was $1,177,000
       (net of $698,000 deferred tax benefit).
<PAGE>
       Additionally,  on May 25,  1995,  the  Board of  Directors  approved  the
       discontinuance  of NC3, Inc.,  the Company's  excess  inventory  business
       unit.  The Company  recorded a provision of  $1,137,000  (net of $763,000
       deferred tax benefit) in the quarter ended May 31, 1995,  relative to the
       disposal of NC3 assets and other charges related to the discontinuance of
       the  business  unit.  As of May 31,  1996,  the  Company  had  exited the
       business and liquidated  substantially all of the assets.  Liabilities of
       the  discontinued  operation  decreased  from $744,000 at May 31, 1995 to
       $99,000 as of February 28, 1997,  due to cash  payments  principally  for
       severance and facilities costs totaling  approximately $315,000 and a net
       reduction of $330,000 to adjust the amounts estimated for the loss on the
       inventories,  receivables,  fixed assets and leased facility obligations.
       The remaining liability of $99,000 as of February 28, 1997 is expected to
       be liquidated by cash payments  extending  through  approximately May 31,
       1997.  The  adjustment  of the  liability  in the amount of $230,000  was
       recorded as a gain from  discontinued  operations,  net of  deferred  tax
       expenses of $87,000 in the quarter  ended August 31, 1995.  An additional
       adjustment  of the liability in the amount of $100,000 was recorded as an
       offset to the loss on disposal of discontinued  operations in the quarter
       ended May 31, 1996.

       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):
<TABLE>
<CAPTION>

                                                             For the nine
                                                             months ended
                                                     February 28,     February 29,
                                                     ------------     ------------
                                                        1997              1996
                                                     ------------       -------
<S>                                                  <C>                <C>
Revenues .....................................       $       --         $ 4,786
Costs and expenses ...........................               --           5,186
                                                     ------------       -------
Loss from discontinued operations ............               --            (400)

Income tax benefit ...........................               --            (152)
                                                     ------------       -------

Net loss from discontinued operations ........       $       --         $  (248)
                                                     ============       =======
</TABLE>
<PAGE>
       The Consolidated Balance Sheets as of February 28, 1997 and May 31, 1996,
       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>

                                                           February 28,  May 31, 
                                                               1997       1996 
                                                               -----      -----
<S>                                                            <C>        <C>
Assets:
Cash and cash equivalents ................................     $--        $ 159
Accounts receivable, net .................................      --           55
Inventory ................................................        13        115
Furniture, fixtures and equipment, net ...................      --           58
Other assets .............................................        16         16
                                                               -----      -----
          Total assets ...................................        29        403
                                                               -----      -----

Liabilities:
Accounts payable and accruals ............................      --           44
Other liabilities ........................................       150        465
                                                               -----      -----
          Total liabilities ..............................       150        509
                                                               -----      -----
               Net Assets (Liabilities) of Discontinued
               Operations ................................     $(121)     $(106)
                                                               =====      =====

</TABLE>
5.     Net Income Per Share

       Net income per share was computed based on the weighted average number of
       shares of common stock outstanding during the periods. As of February 28,
       1997, the Company had outstanding  options to purchase  334,000 shares of
       common  stock (see Note 7). The  potential  dilution of these  options is
       immaterial in the computation of net income per share.

6.     Reclassifications

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

7.     Stock Compensation Plan

       On  July  6,  1995,  the  Board  of  Directors  adopted  the  Continental
       Information  Systems  Corporation 1995 Stock Compensation Plan (the "1995
       Plan").  The 1995 Plan was approved by stockholders at the annual meeting
       held September 27, 1995 in Syracuse, New York. 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
<PAGE>
       directors  of the Company  and,  in the  discretion  of the  Compensation
       Committee,  employees of and  independent  contractors and consultants to
       the Company. As of February 28, 1997, outstanding incentive stock options
       (for shares of common  stock)  that have been  granted to  employees  and
       outstanding non-qualified stock options (for shares of common stock) that
       have been granted to non-employee directors are as follows:
<TABLE>
<CAPTION>
                                                                              Number of       Exercise        Fair Market Value
               Description                           Date Granted              Options          Price          at Date of Grant
               -----------                           ------------              -------          -----          ----------------
<S>                                                 <C>                        <C>               <C>               <C>
        Non-Qualified Stock Options                 May 16, 1995                 6,000           $3.50             $   21,000

        Non-Qualified Stock Options                 September 27, 1995           9,000            2.50                 22,500

        Incentive Stock Options                     July 11, 1996              310,000            1.97                610,700

        Non-Qualified Stock Options                 October 23, 1996             9,000            1.84                 16,560
                                                                               -------                            -----------

             Balance - February 28, 1997                                       334,000                             $  670,760
                                                                               =======                             ==========

</TABLE>
       As of February 28, 1997, options for 118,333 shares were exercisable.

<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,
1996, appearing in the Company's Form 10-K.

All statements contained herein and in "Item 5 - Other Information" 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 in Item 5, 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 and Nine Months
                  Ended February 28, 1997 and February 29, 1996

Continuing Operations

Total  revenues  increased  4.3% to $6.6  million  for the  three  months  ended
February 28, 1997 from $6.3 million for the  comparable  fiscal quarter in 1996.
For the nine months ended February 28, 1997,  total revenues  increased 29.9% to
$26.6  million  from $20.5  million for the  comparable  fiscal  period in 1996.
Equipment sales for the three and nine months ended February 28, 1997, increased
by $1.2 million (33.5%) and $5.4 million (43.0%), respectively,  over comparable
periods in 1996. These increases are principally attributable to the addition of
LaserAccess'  results of  operations  for the current nine month  period,  after
being acquired March 8, 1996. On November 30, 1996, the Company, through certain
wholly-owned subsidiaries, sold a substantial portion of its leased equipment to
an  institutional  investor  for a sales  price of  approximately  $20  million,
payable in cash of approximately $7.4 million and the assumption by the investor
of the Company's  related  outstanding  non-recourse  lease rental borrowings of
approximately  $12.5 million.  The gain on the transaction of approximately $2.5
million,  exclusive  of income  taxes,  is included in results  from  continuing
operations  for the fiscal  quarter ended  November 30, 1996.  Additionally,  on
February  28,  1997,  the  Company  sold an  additional  portion  of its  leased
equipment to the same institutional  investor for a sales price of approximately
$2 million,  payable in cash of  approximately  $775,000,  a short-term  note of
approximately  $560,000, the assumption by the investor of the Company's related
outstanding  non-recourse lease rental borrowings of approximately  $343,000 and
<PAGE>
the  payment  of  the  Company's  related  outstanding   recourse  lease  rental
borrowings  of   approximately   $379,000.   The  gain  on  the  transaction  of
approximately  $341,000,  exclusive of income taxes, is included in results from
continuing  operations  for the fiscal  quarter  ended  February 28,  1997.  The
Company is acquiring additional equipment, subject to lease, which it intends to
sell on an ongoing basis, as market conditions permit. However, it is not likely
that the magnitude of these sales can be replicated  during the remainder of the
current  fiscal year,  since the leased  equipment sold took in excess of twelve
months to accumulate. The Company's future revenue and earnings from the sale of
leased  equipment  will be  affected  by a  number  of  factors,  including  the
Company's ability to identify and market equipment leases to equipment  lessees,
conditions in the secondary market for equipment  leases,  which may be affected
by such factors as the  availability  of  institutional  investment  capital and
interest rates,  and competition from other entities seeking to resell equipment
leases.

Sales and margins for the Company's laser printing  business have been adversely
impacted,  and may continue to be impacted, as a result of increased activity in
the used high speed printer market by Xerox Corporation, the manufacturer of the
Company's laser printers, and another large leasing company that has entered the
market.  While  margins in the Company's  telecom  equipment  buy/sell  business
remain  stable,  the Company to date has not achieved  significant  increases in
volume from this  business.  The Board of Directors  has decided to seek a buyer
for the Company's telecom equipment buy/sell  business.  Sales and earnings from
the aircraft business are likely to continue to vary  quarter-to-quarter,  based
on the volume of transactions.

Equipment rentals and income from direct financing leases for the three and nine
months  ended  February 28,  1997,  decreased  by $1.1 million  (61.8%) and $1.8
million (29.7%), respectively,  from comparable periods in 1996. These decreases
are  directly  related to the sale of a  substantial  portion  of the  Company's
leased equipment to an  institutional  investor in the second and third quarters
of the current  fiscal year.  Interest,  fees and other income for the three and
nine months ended February 28, 1997,  decreased by $196,000 (25.7%) and $323,000
(16.8%),  respectively,   from  comparable  periods  in  1996.  These  decreases
primarily reflect a decline in management fees received from income funds.

Costs and  expenses  increased  6.1% to $6.4  million for the three months ended
February 28, 1997 from $6.0 million for the comparable  quarter in 1996. For the
nine months ended February 28, 1997, costs and expenses increased 23.4% to $23.5
million from $19.1 million for the  comparable  fiscal  period in 1996.  Cost of
sales,  as a percentage of sales,  for the three and nine months ended  February
28, 1997, were 76.8% and 77.4%, respectively, as compared to 77.8% and 71.7% for
the  comparable  periods in 1996.  These  variances  are primarily the result of
product mix,  with the aircraft  business  unit usually  generating  significant
margins on a relatively few large  transactions and the  telecommunications  and
printing business units generating comparably lesser margins on a greater number
of transactions.  Depreciation of rental equipment for the three and nine months
ended  February  28,  1997,  decreased  by $.6  million  (71.9%) and $.7 million
(28.5%),  respectively,  from  comparable  periods in 1996.  These decreases are
directly related to the sale of a substantial portion of the Company's portfolio
of leased equipment in the second and third quarters of the current fiscal year.
Interest  expense for the nine months ended  February 28,  1997,  increased  $.5
million  (137.7%) to $.8 million from $.3 million for the  comparable  period in
1996.  This increase was  primarily the result of a significant  increase in the
average  debt  outstanding  during the current nine month  period,  prior to the
<PAGE>
assumption  of  approximately   $12.5  million  in  non-recourse   lease  rental
borrowings by an institutional  investor in the second quarter,  relative to the
aforementioned  sale of equipment subject to lease. Other operating expenses for
the three and nine months ended February 28, 1997,  increased by $53,000 (14.6%)
and $379,000  (40.4%),  respectively,  over  comparable  periods in 1996.  These
increases  are  primarily  attributable  to  refurbishment  expenses  related to
LaserAccess's  results of operations  for the current nine month  period,  after
being acquired March 8, 1996. Selling,  general and administrative  expenses for
the three and nine months ended February 28, 1997,  decreased by $129,000 (7.0%)
and $916,000  (14.7%),  respectively,  from  comparable  periods in 1996.  These
decreases were principally due to cost containment  efforts and staff reductions
between the  periods.  Amortization  of  goodwill  for the three and nine months
ended  February 28, 1997, was $101,000 and $334,000,  respectively.  Goodwill of
approximately $4.0 million,  relative to the LaserAccess  acquisition,  is being
amortized on a straight-line basis over 10 years.

See "Item 5 - Other Information" for a discussion of the Company's consideration
of strategic alternatives.

Discontinued Operations

On April  3,  1996,  the  Company  announced  its  decision  to  discontinue  an
operation,  including its wholly-owned subsidiary, Aviron Computer Technologies,
Inc.  ("Aviron"),  that purchased and sold used computer  equipment and provided
related technical  services.  After that date, the Company attempted to locate a
buyer for the operation. On June 5, 1996, the Company announced it had abandoned
its efforts to sell the operation  and would instead  liquidate the assets which
consisted  principally of used computer equipment  inventories and fixed assets.
The net loss from  discontinued  operations for the year ended May 31, 1996, was
$1,177,000 (net of $698,000 deferred tax benefit).

Additionally,   on  May  25,  1995,   the  Board  of   Directors   approved  the
discontinuance  of NC3, Inc., the Company's excess inventory  business unit. The
Company  recorded a  provision  of  $1,137,000  (net of  $763,000  deferred  tax
benefit)  in the quarter  ended May 31,  1995,  relative to the  disposal of NC3
assets and other charges related to the  discontinuance of the business unit. As
of  May  31,  1996,   the  Company  had  exited  the  business  and   liquidated
substantially  all of the  assets.  Liabilities  of the  discontinued  operation
decreased  from $744,000 at May 31, 1995 to $99,000 as of February 28, 1997, due
to cash  payments  principally  for  severance  and  facilities  costs  totaling
approximately  $315,000  and a net  reduction  of $330,000 to adjust the amounts
estimated for the loss on the inventories,  receivables, fixed assets and leased
facility obligations. The remaining liability of $99,000 as of February 28, 1997
is expected to be liquidated by cash payments  extending  through  approximately
May 31,  1997.  The  adjustment  of the  liability in the amount of $230,000 was
recorded as a gain from discontinued operations, net of deferred tax expenses of
$87,000 in the quarter ended August 31, 1995.  An  additional  adjustment of the
liability  in the amount of  $100,000  was  recorded as an offset to the loss on
disposal of discontinued operations in the quarter ended May 31, 1996.
<PAGE>
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):
<TABLE>
<CAPTION>
                                                           For the nine
                                                           months ended
                                                    February 28,  February 29, 
                                                    ------------  ------------
                                                       1997           1996
                                                     -------       -------
<S>                                                  <C>           <C>
Revenues .....................................       $  --         $ 4,786
Costs and expenses ...........................          --           5,186
                                                     -------       -------
Loss from discontinued operations ............          --            (400)

Income tax benefit ...........................          --            (152)
                                                     -------       -------

Net loss from discontinued operations ........       $  --         $  (248)
                                                     =======       =======


</TABLE>

Income Taxes


For the three and nine months ended  February 28, 1997, a provision for deferred
income tax expense on income from  continuing  operations  was  recorded,  at an
effective rate of 38%, in the amounts of $69,000 and  $1,177,000,  respectively,
as compared to $106,000  and  $541,000 for the  comparable  periods in 1996.  In
addition, for the three and nine months ended February 29, 1996, a provision for
deferred income tax benefit on loss from  discontinued  operations was recorded,
at  an  effective  rate  of  38%,  in  the  amounts  of  $85,000  and  $152,000,
respectively.

                         Liquidity and Capital Resources 

Cash  provided by  operations  for the nine months  ended  February 28, 1997 was
$10.9 million as compared to $3.4 million for the comparable period in 1996. The
increase was primarily  due to the proceeds  generated by two sales of equipment
subject to lease of $7.4  million in the second and third  fiscal  quarters.  In
addition to the cash payments and a short-term note of  approximately  $560,000,
the  buyer  assumed   approximately  $12.8  million  of  the  Company's  related
outstanding  non-recourse lease rental borrowings and approximately  $379,000 of
the Company's  related  outstanding  recourse lease rental  borrowings were paid
off. The sales of this leased  equipment  accelerated the earnings and cash flow
from the leases,  which would have been received over time,  into the second and
third  quarters of the current  fiscal year.  These funds provide the capital to
facilitate  the  expansion  of the  Company's  buy/sell  businesses  and support
alternative strategic directions being considered by the Board of Directors; see
"Item 5 - Other  Information."  Inventory  increased by $3.9 million  during the
nine months ended  February 28, 1997 over the  comparable  period in 1996.  This
<PAGE>
increase  was  primarily  attributable  to  the  acquisition  of  used  aircraft
equipment  and certain  Laser  Printing  systems to support  increased  business
activity in these business  units.  New investment in rental  equipment was $5.9
million for the nine months ended February 28, 1997 as compared to $16.1 million
for the  comparable  period  in  1996.  The  significant  investment  in  rental
equipment in 1996  initiated the  Company's  strategy of  originating  leases on
acquired rental  equipment and  subsequently  selling them to investors,  as was
accomplished in the second and third quarters of the current fiscal year.

Because a note payable to the Liquidating Estate was paid in full in March 1996,
there were no  additional  payments  made on the note for the nine months  ended
February 28, 1997 as compared to the comparable  period in 1996 when the Company
made  principal  payments  of  $3.3  million.  Proceeds  from  lease,  bank  and
institution  financings were $7.5 million for the nine months ended February 28,
1997,  as  compared  to $9.9  million  for the  comparable  period in 1996.  The
significant  proceeds  generated in the 1996 period are directly  related to the
increase in rental  equipment  during that period and the  discounting  of lease
rentals associated with such equipment.  Payments on lease, bank and institution
financings  were $7.1  million for the nine months  ended  February  28, 1997 as
compared to $1.5 million for the comparable  period in 1996. The increase in the
current nine month period primarily  represents  accelerated payments on certain
lines of credit and  increased  payments on discounted  lease rental  borrowings
prior to the sale of the related leased equipment.

The Company expects that  operations  will generate  sufficient cash to meet its
operating expenses and current obligations. In April 1996, the Company finalized
a  revolving  loan  agreement  with  an  institution  to  provide   interim  and
recourse/limited  recourse lease financing in the total amount of $5 million. On
March 14,  1997,  the  Company  was  notified  by this  institution  that it was
terminating  the credit line due primarily to minimal use of the  facility.  The
Company  believes that the termination of this facility will not have a material
effect of the Company's  liquidity or ability to finance its current businesses.
In  July  1996,  the  Company  finalized  two  revolving  loan  agreements  with
institutions  to  provide  (1)  warehouse  lease  financing  in the amount of $5
million and (2) inventory financing for LaserAccess and CIS Air in the amount of
$7 million.  At February 28, 1997,  approximately  $1.2 million in loans payable
were outstanding under these lines of credit.
<PAGE>

                           PART II - OTHER INFORMATION 


Item 5.  Other Information

The  Company's  Board of Directors is continuing  its ongoing  evaluation of the
prospects  of  the  Company's  existing  businesses  and  alternative  strategic
directions.  As part of this process, the Board of Directors has decided to seek
a buyer for the Company's telecom equipment buy/sell business.  It is continuing
to pursue a possible  real estate  finance  venture  with a private  real estate
finance company, as previously  disclosed,  but no agreement has been reached to
date,  and  there  can  be  no  assurance  that  any  such  transaction  can  be
consummated.

Effective  April 11, 1997,  Frank J.  Corcoran,  the Company's  Chief  Financial
Officer and Senior Vice  President is leaving the Company  ("Severance  Event").
Pursuant to the terms of a letter  agreement  with the Company dated October 23,
1996, Mr. Corcoran is entitled to receive the following severance benefits:  (i)
a severance  payment of $75,000,  which is equal to six months base salary as in
effect on the date of the Severance  Event,  payable at  Corcoran's  option in a
lump  sum or in six  equal  monthly  installments;  and (ii)  certain  continued
benefits  (life  insurance,   medical,   health  and  accident,  and  disability
arrangements)  until the  earlier of six months  from the date of the  Severance
Event or the  commencement  by  Corcoran  of full  time  employment  by  another
employer.  Bruce W.  Lewis,  Jr.,  Director  of  Accounting  and  Tax,  has been
appointed  Treasurer of the Company,  and James J. Mosher,  Vice  President  and
Controller, has been appointed Secretary of the Company.

Item 6.  Exhibits and Reports on Form 8-K

             (a)     Exhibits - None

             (b)     Reports on Form 8-K - No reports on Form 8-K were filed by
                     the Company during the quarter ended February 28, 1997.

<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:    April 8, 1997                         By:  /s/ Thomas J. Prinzing
                                                    ----------------------
                                                    Thomas J. Prinzing
                                                    President and
                                                    Chief Executive Officer


Date:    April 8, 1997                         By:  /s/ Frank J. Corcoran
                                                    ---------------------
                                                    Frank J. Corcoran
                                                    Senior Vice President,
                                                    Chief Financial Officer,
                                                    Treasurer and Secretary