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 September 30, 1998

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

                         Commission File Number 0-3743
                      __________________________________

                      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 November 19, 1998, the registrant had outstanding 12,278,745 shares
of Common Stock.

                                     -1-

<PAGE>
                 Continental Investment Corporation and Subsidiaries

                              FORM 10-QSB REPORT INDEX


                                                                    Page No.
PART I. FINANCIAL INFORMATION

   Item 1.   Financial Statements

             Consolidated Balance Sheets as of
               September 30, 1998 and December 31, 1997 ...........    3

             Consolidated Statements of Operations
               For the periods ended September 30, 1998
               and 1997 ...........................................    5

             Consolidated Statement of Stockholders' Equity
               Nine months ended September 30, 1998 ...............    6

             Consolidated Statements of Cash Flows
               Nine months ended September 30, 1998
               and 1997 ...........................................    7

             Notes to Consolidated Financial Statements ...........   10


   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 .......................   19


Signature ........................................................    19

                                     -2-

<PAGE>

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

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

              Continental Investment Corporation and Subsidiaries

                          CONSOLIDATED BALANCE SHEETS

                                                September 30,  December 31,
                                                    1998          1997
                                                ------------   ------------
                                                (Unaudited)     (Audited)
            ASSETS

CURRENT ASSETS
  Cash                                          $  133,181     $  217,383
  Note receivable                                1,548,497      1,484,097
  Receivables - WasteMasters, Inc.                 177,679        433,734
  Accounts receivable, net of
    allowance for doubtful accounts
    $96,634 and $17,011                            727,305        268,793
  Inventories                                       54,191         59,423
  Accrued interest receivable                      213,261         82,628
  Prepaid expenses and deposits                    169,021        156,595
                                               -----------    -----------
          Total current assets                   3,023,135      2,702,653

PROPERTY AND EQUIPMENT
  Landfill sites under development,
    at cost                                     11,961,582     14,682,572
  Landfills, net of accumulated
    amortization/depreciation of
    $879,654 and $307,203                        2,779,847      2,572,500
  Fixtures and equipment, net of
    accumulated depreciation of
    $250,965 and $81,114                           674,239        764,903
                                               -----------    -----------
          Total property and equipment          15,415,668     18,019,975

INVESTMENT IN WASTEMASTERS, INC.                 7,774,000      6,080,000

INTANGIBLES                                            -0-            -0-       
                                               -----------    -----------
          Total assets                         $26,212,803    $26,802,628
                                               ===========    ===========

See the accompanying notes to unaudited consolidated financial statements.

                                     -3-

<PAGE>
              Continental Investment Corporation and Subsidiaries

                   CONSOLIDATED BALANCE SHEETS - Continued

                                                September 30,  December 31,
                                                   1998           1997
                                                ------------   ------------
                                                (Unaudited)     (Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES                                           
  Accounts payable, trade                      $   543,333    $   561,090
  Accrued expenses                                 565,635        283,350
  Note payable, related party                       51,331         98,707
  Short-term notes payable                         484,823            -0-
  Accrued interest payable                          88,590            -0-
  Current portion of long-term
    note payable                                   538,850        219,032
                                               -----------    -----------
          Total current liabilities              2,272,562      1,162,179

LONG-TERM LIABILITIES
  Note payable                                     822,931      1,143,772
  Accrued landfill closure costs                   239,043         10,770
  Deferred income taxes                            747,000        747,000
                                               -----------    -----------
            Total long-term liabilities          1,808,974      1,901,542
                                               -----------    -----------
            Total liabilities                    4,081,536      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;
    12,278,745 shares issued and
    outstanding at September 30, 1998;
    12,367,055 shares issued and
    outstanding at December 31, 1997             3,265,374      3,309,528
  Additional contributed capital                23,077,284     24,881,497
  Accumulated deficit                           (4,211,391)    (4,452,118)
                                               -----------    -----------
            Total stockholders' equity          22,131,267     23,738,907
                                               -----------    -----------
            Total liabilities and
              stockholders' equity             $26,212,803    $26,802,628
                                               ===========    ===========


See the accompanying notes to unaudited consolidated financial statements.

                                     -4-

<PAGE>
              Continental Investment Corporation and Subsidiaries

                   CONSOLIDATED STATEMENTS OF OPERATIONS


                             Three months ended        Nine months ended
                               September  30,            September 30,
                          -----------------------  -------------------------
                             1998          1997        1998         1997
                          ----------     --------  -----------   -----------

Revenues                  $1,235,828  $   700,806   $3,469,269   $1,107,625

Costs and Expenses
  Cost of revenues           699,021      272,093    1,886,062      430,246
  Selling, general and
    administrative
    expenses                 893,959      807,930    2,314,229    1,903,601
                          ----------  -----------   ----------   ----------
        Operating loss      (357,152)    (379,217)    (731,022)  (1,226,222)

Other Income (Expense)
  Interest income             42,458       60,371      129,044      179,441
  Interest expense           (30,788)     (17,296)     (95,791)     (48,121)
  Gain on sale of land       944,000          -0-      944,000          -0-
  Miscellaneous income
    (expense)                 (8,745)         -0-       (5,504)     103,869
                          ----------  -----------   ----------   ----------

        NET INCOME
         (LOSS)           $  589,773  $  (336,142)  $  240,727   $ (991,033)
                          ==========  ===========   ==========   ==========
Per Share Data
  Loss per common
    share - basic              $0.05       $(0.03)       $0.02       $(0.08)

Weighted average
  number of common
  shares outstanding      12,393,227   11,980,119   12,383,756   11,841,378


See accompanying notes to unaudited consolidated financial statements.

                                     -5-

<PAGE>
<TABLE>
              Continental Investment Corporation and Subsidiaries

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     Nine months ended September 30, 1998
                                 (Unaudited)
<CAPTION>
                                                        
                    Common stock         Common    Additional
               ----------------------    stock    contributed  Accumulated
                 Shares    Par value   subscribed   capital      deficit       Total
               ----------  ----------  ----------  ----------  -----------  -----------
<S>            <C>         <C>         <C>        <C>          <C>          <C>
Balance,
December 31,                                    
1997           12,367,055  $3,309,528     -0-     $24,881,497  $(4,452,118) $23,738,907

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

Stock issued
in connection
with
acquisition         5,041       2,521     -0-          51,922          -0-       54,443

Stock
cancelled due
to acquisition
reversal         (119,047)    (59,523)    -0-      (1,940,467)         -0-   (1,999,990)

Stock
issued for
compensation       10,000       5,000     -0-          13,700          -0-       18,700

Net income            ---         ---     ---             ---      240,727      240,727
               ----------  ----------  ---------  -----------  -----------  -----------
Balance,
September 30,
1998           12,278,745  $3,265,374     -0-     $23,077,284  $(4,211,391) $22,131,267
               ==========  ==========  =========  ===========  ===========  ===========
<FN>
See accompanying notes to unaudited consolidated financial statements.
</FN>
                                     -6-

</TABLE>
<PAGE>
              Continental Investment Corporation and Subsidiaries

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                        Nine Months Ended September 30
                                 (Unaudited)

                                                        1998         1997
                                                     ---------    ----------
Cash flows from operating activities:
  Net income (loss)                                   $240,727    $ (991,033)
  Adjustments to reconcile net loss to
  net cash provided by (used in) operating
  activities:
    Amortization/depreciation expense                  746,563       178,904
    Allowance for bad debts                             79,623           -0-
    Common stock issued for services                    27,554           -0-
    Gain (loss) on disposition of assets              (947,240)          -0-
    Accrual for closure and post-closure
      expense                                          103,273           -0-
    Change in operating assets and liabilities:
      Accounts receivable - trade                     (414,968)     (326,896)
      Inventories                                        5,232       (10,925)
      Accrued interest receivable                     (130,633)          -0-
      Deposits and prepaid expenses                   (435,469)      (18,074)
      Accounts payable - trade                        (138,852)      260,731
      Accrued interest payable                          88,590        27,216
      Accrued expenses                                 250,285     1,302,363
                                                     ---------    ----------
           Net cash provided by (used in)
             operating activities                     (525,315)      422,286

Cash flows from investing activities:
  Purchase of landfills                                    -0-    (4,143,308)
  Purchases of property and equipment                  (35,653)      (65,968)
  Proceeds from equipment disposition                    6,732           -0-
  Paydown of note receivable                           191,655           -0-
  Short-term investments                                   -0-       805,053
  Accrued interest receivable                              -0-         4,774
  Other expenditures                                    (4,467)          -0-
  Cash from acquisition of Trantex                       2,531           -0-
                                                     ---------    ----------
           Net cash provided by (used in)
             investing activities                      160,798    (3,399,449)

                                     -7-

<PAGE>
              Continental Investment Corporation and Subsidiaries

               CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

                       Nine Months Ended September 30
                                (Unaudited)

                                                       1998          1997
                                                     ---------    ----------   
Cash flows from financing activities:
  Principal payments on notes                        $(233,509)   $ (269,770)
  Principal payments on notes to
    related parties                                   (101,184)          -0-
  Proceeds from sale of stock                              -0-     2,490,000
  Proceeds from debt                                   615,008           -0-
                                                     ---------    ----------
           Net cash provided by (used in)
             financing activities                      280,315     2,220,230

Net increase (decrease) in cash                        (84,202)     (756,933)

Cash, beginning of period                              217,383       841,586

Cash, end of period                                  $ 133,181    $   84,654
                                                     =========    ==========
 
NON-CASH TRANSACTIONS:

     During the quarter ended September 30, 1998, the Company returned to the
seller a 108 acre parcel of land in metropolitan Atlanta, Georgia that it had
acquired during fiscal 1997, in exchange for the 119,047 shares of Company
common stock that it had issued in consideration for such acquisition. This
reversal and nullification of the original transaction had no effect on the
Company's statements of operations.

     During the nine months ended September 30, 1998, $78,480 of common stock
purchase warrants were exercised in exchange for consideration consisting of
the cancellation of $78,480 of Company indebtedness.

     During the nine months ended September 30, 1998, the Company purchased
equipment in exchange for a note payable for $47,474.


See accompanying notes to unaudited consolidated financial statements.

                                    -8-

<PAGE>
              Continental Investment Corportion and Subsidiaries

               CONSOLIDATED STATEMENT OF CASH FLOWS - Continued

                    Nine Months Ended September 30, 1998
                                (Unaudited)


     As part of the acquisition of Trantex, Inc., effective on February 18,
1998, accounted for as a purchase, Continental 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                                  123,167
     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                267,952
     Notes payable                                        446,595
     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 was retired upon issuance
of shares of the Company's common stock during the nine months ended
September 30, 1998, and $200,000 represents contingent consideration due to
the seller upon achievement of certain performance goals for the landfill.
Additional shares of the Company's common stock valued at $22,443 were also
issued during the nine months ended September 30, 1998 in connection with the
Trantex acquisition. 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.


See accompanying notes to unaudited consolidated financial statements.

                                     -9-

<PAGE>
              Continental Investment Corporation and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        September 30, 1998 (Unaudited)


NOTE A - BASIS OF PRESENTATION
------------------------------
  The accompanying unaudited financial statements have been prepared by the
  Company 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/A Report of Continental Investment Corporation (the "Company" or
  "CICG") for fiscal year ended December 31, 1997, as filed with the U. S.
  Securities and Exchange Commission.

  The results of operations for the periods ended September 30, 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

                                    -10-

<PAGE>
NOTE B - DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS - Continued
--------------------------------------------------------------------
  subsequent written and oral Forward Looking Statements attributable to the
  Company or persons acting on its behalf 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) 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, cash flow generated from the operation of its
  fabric care 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,
  there may be delays in the Company's ability to accomplish its long-term
  goals. 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.

  (3) 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.

  (4) 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.

  (5) 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

                                    -11-

<PAGE>
NOTE B - DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS - Continued
--------------------------------------------------------------------
  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.

  (6) 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.

  (7) 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

                                    -12-

<PAGE>
NOTE C - ACQUISITIONS OF OPERATING LANDFILLS - Continued
--------------------------------------------------------
  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 $1,221,547,
  consisting of $307,000 of restricted Company common stock and the assumption
  of approximately $914,547 of liabilities.

  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 nine-month and three-month periods ended September 30, 1998 and
  September 30, 1997.

                          Nine months ended          Three months ended
                            September 30,               September 30,
                      -----------------------     -----------------------
                         1998          1997          1998         1997
                      ---------     ---------     ---------     ---------

  Revenue             3,503,963     1,981,299     1,235,828      848,034

  Net income (Loss)     225,281      (947,354)      589,773     (254,112)

  Net income (loss)
    per common share
    - basic               $0.02        $(0.08)        $0.05       $(0.02)


  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.

                                    -13-

<PAGE>
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 per share amounts.


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

       Results of Operations
       ---------------------

                     Nine Months Ended September 30, 1998
                Compared to Nine Months Ended September 30, 1997
                ------------------------------------------------
Revenues
--------
     During the nine months ended September 30, 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
($1,884,404) the FIBER-SEAL fabric care and treatment business ($746,838),
the management contract with WasteMasters, Inc. ($450,000), and the municipal
solid waste landfill in Kirksville, Missouri described in Note C on Page 12
of this report ($382,207). Revenues for the nine months ended September 30,
1998 increased $2,361,644 (213.22%) to $3,469,269 from $1,107,625 for the
nine months ended September 30, 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 $81,255 (12.21%) to $746,838 for the
nine months ended September 30, 1998 from $665,583 for the nine months ended
September 30, 1997. Landfill revenues in the nine months ended September 30,
1997 amounted to $429,419.

Cost of Revenues
----------------
     Cost of revenues for the nine months ended September 30, 1998 increased
$1,455,816 (338.37%) to $1,886,062 (representing 54.36% of revenues) from
$430,246 (representing 38.84% of revenues) for the nine months ended
September 30, 1997. The increase in the cost of revenues was primarily a
result of the acquisition of the C&D and MSW landfills.

                                    -14-

<PAGE>

Selling, General and Administrative (SG&A) Expenses
---------------------------------------------------
     Selling, general and administrative (SG&A) expenses for the nine months
ended September 30, 1998 increased $410,628 (21.57%) to $2,314,229 from
$1,903,601 for the nine months ended September 30, 1997. The increase was due
to a variety of factors including increased personnel costs, the rental of
office space in Atlanta, 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 its conversion from a licensing operation
to a franchising operation. While existing licensees will likely remain as
licensees, FIBER-SEAL is on the verge of entering the potentially more
lucrative franchising field.

Operating Loss
--------------
     Operating loss for the nine months ended September 30, 1998 decreased
$495,200 (40.38%) to $731,022 from $1,226,222 for the nine months ended
September 30, 1997. This was due to an increase in revenues for the nine
months ended September 30, 1998 of $2,361,644 (a 213.22% increase) to
$3,469,269 from $1,107,625 for the nine months ended September 30, 1997, an
increase in cost of revenues for the nine months ended September 30, 1998 of
$1,455,816 (a 338.37% increase) to $1,886,062 from $430,246 for the nine
months ended September 30, 1997, and an increase in selling, general and
administrative (SG&A) expenses for the nine months ended September 30, 1998
of $410,628 (21.57%) to $2,314,229 from $1,903,601 for the nine months ended
September 30, 1997.

Interest Income
---------------
     Interest income of $129,044 for the nine months ended September 30, 1998
decreased by $50,397 (28.09%) as compared with the nine months ended
September 30, 1997 during which nine months there was $179,441 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 $95,791 for the nine months ended September 30,
1998, an increase of $47,670 (99.06%) as compared with the nine months ended
September 30, 1997 during which nine months there was $48,121 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.

Gain on Sale of Land
--------------------
     During the three months ended September 30, 1998, the Company sold 253.5
acres of unimproved land in Ellis County, Texas which had been held for
possible development, in exchange for consideration consisting of 1.4 million
shares of common stock of WasteMasters, Inc. Such transaction resulted in an
extraordinary, non-recurring gain of $944,000.

                                    -15-

<PAGE>
                                            
Net Income (Loss)
-----------------
     The Company generated net income of $240,727 during the nine months
ended September 30, 1998 as compared with a net loss of $991,033 during the
nine months ended September 30, 1997. The improved results were primarily due
to the $944,000 extraordinary, non-recurring gain on sale of land realized
during the September 30, 1998 quarter and the significantly increased
revenues and decreased operating loss, offset in part by increased interest
expense and decreased interest income and miscellaneous income.


                    Three Months Ended September 30, 1998
               Compared to Three Months Ended September 30, 1997
               -------------------------------------------------
Revenues
--------
     During the three months ended September 30, 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 ($712,635),
the FIBER-SEAL fabric care and treatment business ($241,522), 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
($125,671). Revenues for the quarter ended September 30, 1998 increased
$535,022 (76.34%) to $1,235,828 from $700,806 for the quarter ended September
30, 1997. The increase in revenues was primarily a result of the acquisitions
of the C&D and MSW landfills, the WasteMasters, Inc. management agreement
offset, in part, by decreased FIBER-SEAL revenues. FIBER-SEAL revenues
decreased $17,242 (6.66%) to $241,522 for the quarter ended September 30,
1998 from $258,764 for the quarter ended September 30, 1997. Landfill
revenues in the quarter ended September 30, 1997 amounted to $429,419.

Cost of Revenues
----------------
     Cost of revenues for the quarter ended September 30, 1998 increased
$426,928 (156.91%) to $699,021 (representing 56.56% of revenues) from $272,093
(representing 38.83% of revenues) for the quarter ended  September 30, 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
September 30, 1998 increased $86,029 (10.65%) to $893,959 from $807,930 for
the quarter ended September 30, 1997. The increase was due to a variety of
factors including increased personnel costs, the rental of office space in
Atlanta, 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 its conversion from a licensing operation to a franchising
operation. While existing licensees will likely remain as licensees, FIBER-
SEAL is on the verge of entering the potentially more lucrative franchising
field.

                                    -16-

<PAGE>

Operating Loss
--------------
     Operating loss for the quarter ended September 30, 1998 decreased $22,065
(5.82%) to $357,152 from $379,217 for the quarter ended September 30, 1997.
This was due to an increase in revenues for the quarter ended September 30,
1998 of $535,022 (a 76.34% increase) to $1,235,828 from $700,806 for the
quarter ended September 30, 1997, an increase in cost of revenues for the
quarter ended September 30, 1998 of $426,928 (a 156.91% increase) to $699,021
from $272,093 for the quarter ended September 30, 1997, and an increase in
selling, general and administrative (SG&A) expenses for the quarter ended
September 30, 1998 of $86,029 (a 10.65% increase) to $893,959 from $807,930
for the quarter ended September 30, 1997.

Interest Income
---------------
     Interest income of $42,458 for the quarter ended September 30, 1998
decreased by $17,913 (29.67%) as compared with the quarter ended September 30,
1997 during which quarter there was $60,371 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 $30,788 for the quarter ended September 30, 1998, an
increase of $13,492 (78.01%) as compared with the quarter ended September 30,
1997 during which quarter there was $17,296 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.

Gain on Sale of Land
--------------------
     During the three months ended September 30, 1998, the Company sold 253.5
acres of unimproved land in Ellis County, Texas which had been held for
possible development, in exchange for consideration consisting of 1.4 million
shares of common stock of WasteMasters, Inc. Such transaction resulted in an
extraordinary, non-recurring gain of $944,000.

Net Income (Loss)
-----------------
     The Company generated net income of $589,773 during the three months
ended September 30, 1998 as compared with a net loss of $336,142 during the
three months ended September 30, 1997. The improved results were primarily
due to the $944,000 extraordinary, non-recurring gain on sale of land
realized during the September 30, 1998 quarter and the significantly
increased revenues and decreased operating loss offset in part by increased
interest expense and decreased interest income.

                                    -17-

<PAGE>

     Liquidity and Capital Resources
     -------------------------------

Cash and Note Receivable
------------------------
     Cash and note receivable as of September 30, 1998 were $1,681,678 a
decrease of $19,802 as compared with the cash and note receivable position of
$1,701,480 at December 31, 1997. Such decrease was primarily due to the
$731,022 net operating loss experienced by the Company during the nine months
ended September 30, 1998, offset, in large part, by non-cash expenses (i.e.,
depreciation, amortization, etc.).

Investment in WasteMasters, Inc.
--------------------------------
     As of September 30, 1998, the Company owned various securities of
WasteMasters, Inc., a publicly-traded corporation whose common stock is
traded on the Nasdaq SmallCap Market under the trading symbol WAST. Such
securities consist of 5,900,000 shares of 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 WasteMasters
Common Stock) and an option to exchange up to 1,000,000 shares of Continental
Investment Corporation Common Stock for up to 100,000,000 shares of
WasteMasters Common Stock (as per a fixed exchange ratio of 1 share of
Continental for 100 shares of WasteMasters). Such securities are valued on
the Company's balance sheet at their cost basis of $7,774,000. As per a
management contract between the Company and WasteMasters, Inc., the Company
was paid a monthly fee of $50,000 to manage the affairs and operations of
WasteMasters, Inc. during the nine months ended September 30, 1998.

Capital Expenditures
--------------------

     The Company currently has no material commitments for capital
expenditures.

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 treatment 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, there may be delays in the
Company's ability to accomplish its long-term goals. 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

                                    -18-

<PAGE>

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. $78,840 of common stock purchase warrants were exercised
during the nine months ended September 30, 1998.

     As of September 30, 1998, the Company had working capital of $750,573
and a current ratio of 1.33 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



                                 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 Financial Officer)

DATE: November 19, 1998



                                    -19-