SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 for the quarterly period ended November 30, 1996 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 December 31,
1996, 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 -
                           November 30, 1996 and May 31, 1996                   

                    Consolidated Statements of Operations and Retained
                           Earnings (Accumulated Deficit) - for the three months
                           and six months ended November 30, 1996 and 1995      

                    Consolidated Statements of Cash Flows -
                           for the six months ended November 30, 1996 and 1995  

                    Notes to Consolidated Financial Statements                  

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


PART II.            OTHER INFORMATION:       

Item 4.             Submission of Matters to a Vote of Security Holders         

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)

                                                                       November 30,   May 31,
                                                                           1996         1996
                                                                           ----         ----
<S>                                                                      <C>         <C>
Assets:
Cash and cash equivalents ..........................................     $11,948     $  5,382

Accounts receivable, net ...........................................       1,918        2,295
Notes receivable ...................................................       5,319        3,457
Inventory ..........................................................       7,102        2,875
Net investment in direct financing leases (Note 2) .................       2,321       15,783
Rental equipment, net (Note 2) .....................................       2,373       11,148
Furniture, fixtures and equipment, net .............................         434          625
Other assets .......................................................         957        1,965
Goodwill, net (Note 3) .............................................       3,706        3,940
Deferred tax assets ................................................       4,972        6,080
                                                                         -------     --------
          Total assets .............................................     $41,050     $ 53,550
                                                                         =======     ========
Liabilities and Shareholders' Equity:
Liabilities:
     Accounts payable and other liabilities ........................     $ 1,471     $  2,949
     Net liabilities of discontinued operations (Note 4) ...........         136          106
     Discounted lease rental borrowings (Note 2) ...................       1,849       14,738
     Notes payable to former owners of acquired company (Note 3) ...       2,304        2,304
                                                                         -------     --------
          Total liabilities ........................................       5,760       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
     share (Notes 5 and 7) .........................................          70           70
Additional paid-in capital .........................................      34,959       34,930
Retained earnings (accumulated deficit) ............................         261       (1,547)
                                                                         -------     --------
          Total shareholders' equity ...............................      35,290       33,453
                                                                         -------     --------
          Total liabilities and shareholders' equity ...............     $41,050     $ 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 Six
                                                                Months ended                Months ended
                                                                November 30,                November 30,
                                                                ------------                ------------
                                                             1996          1995          1996          1995
                                                           --------      --------      --------      --------
<S>                                                        <C>           <C>           <C>           <C>                     
Revenues:
Equipment sales ......................................     $  8,412      $  4,028      $ 13,057      $  8,886
Gain from sale of equipment subject
     to lease (Note 2) ...............................        2,475          --           2,475          --
Equipment rentals ....................................        1,219         1,809         2,620         3,651
Income from direct financing leases ..................          432           247           889           513
Interest, fees and other income ......................          441           544         1,031         1,158
                                                           --------      --------      --------      --------
                                                             12,979         6,628        20,072        14,208
                                                           --------      --------      --------      --------

Costs and Expenses:
Cost of sales ........................................        6,691         2,713        10,129         6,143
Depreciation of rental equipment .....................          756           980         1,606         1,780
Interest expense .....................................          370            86           695           186
Other operating expenses .............................          537           284           903           577
Selling, general and administrative expense ..........        1,835         2,053         3,590         4,377
Amortization of goodwill .............................          100          --             233          --
                                                           --------      --------      --------      --------
                                                             10,289         6,116        17,156        13,063
                                                           --------      --------      --------      --------

Income from continuing operations before taxes .......        2,690           512         2,916         1,145
Provision for income tax .............................        1,022           195         1,108           435
                                                           --------      --------      --------      --------
Income from continuing operations ....................        1,668           317         1,808           710

Loss from discontinued operations,
     net of tax (Note 4) .............................         --            (181)         --            (108)
                                                           --------      --------      --------      --------

Net income ...........................................        1,668           136         1,808           602

Retained earnings (accumulated deficit),
     beginning of period .............................       (1,407)       (1,147)       (1,547)       (1,613)
                                                           --------      --------      --------      --------

Retained earnings (accumulated deficit), end of period     $    261      $ (1,011)     $    261      $ (1,011)
                                                           ========      ========      ========      ========
<PAGE>
<CAPTION>

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

                                                               For the Three                For the Six
                                                                Months ended                Months ended
                                                                November 30,                November 30,
                                                                ------------                ------------
                                                             1996          1995          1996          1995
                                                           --------      --------      --------      --------
<S>                                                        <C>           <C>           <C>           <C>          
Net income per share (Note 5):
      Income from continuing operations ..............     $    .24      $    .04      $    .26      $    .10
      Loss from discontinued operations ..............         --            (.02)         --            (.01)
                                                           --------      --------      --------      --------
                   Net income ........................     $    .24      $    .02      $    .26      $    .09
                                                           ========      ========      ========      ========

Weighted average number of shares
      of common stock outstanding ....................        7,002         7,000         7,001         7,000
                                                           ========      ========      ========      ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)

                                                                     For the Six
                                                                     Months ended
                                                                     November 30,
                                                                     ------------
                                                                 1995          1996
                                                                 ----          ----
<S>                                                           <C>           <C>
Cash flows from operating activities:
Net income ..............................................     $  1,808      $    602
Less: Net loss from discontinued operations .............         --            (108)
                                                              --------      --------
Income from continuing operations .......................        1,808           710
                                                              --------      --------

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 ............       (2,475)         --
Proceeds from sale of other leased equipment ............        3,677         1,692
Amortization of unearned income .........................         (889)         (513)
Collections of rentals on direct financing leases .......        2,736         1,702
Depreciation and amortization expense ...................        2,054         2,017
Other ...................................................           29          --
Effect on cash flows of changes in:
     Accounts receivable ................................          377          (658)
     Notes receivable ...................................       (1,862)       (3,064)
     Inventory ..........................................       (4,227)           71
     Other assets .......................................        1,008           551
     Accounts payable and other liabilities .............         (301)          228
     Deferred tax assets ................................        1,108           368
                                                              --------      --------
                                                                 8,602         2,394
                                                              --------      --------

Net cash provided by continuing operations ..............       10,410         3,104

Net cash provided by (used in) discontinued operations ..           30          (505)
                                                              --------      --------

Net cash provided by operations .........................       10,440         2,599
                                                              --------      --------

Cash flows from investing activities:
Purchase of rental equipment ............................       (2,432)      (13,306)
Purchase of property and equipment ......................          (23)          (34)
                                                              --------      --------
     Net cash used in investing activities ..............       (2,455)      (13,340)
                                                              --------      --------
<PAGE>
<CAPTION>
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (Unaudited)
                                     (continued)
                                                                     For the Six
                                                                     Months ended
                                                                     November 30,
                                                                     ------------
                                                                 1995          1996
                                                                 ----          ----
<S>                                                           <C>           <C>

Cash flows from financing activities:
Payments on note payable to Liquidating Estate ..........         --          (2,422)
Proceeds from lease, bank and institution financings ....        4,631         7,396
Payments on lease, bank and institution financings ......       (6,050)         (772)
                                                              --------      --------
     Net cash provided by (used in) financing activities        (1,419)        4,202
                                                              --------      --------

     Net increase (decrease) in cash and cash equivalents        6,566        (6,539)
Cash and cash equivalents at beginning of period ........        5,382        13,015
                                                              --------      --------
Cash and cash equivalents at end of period ..............     $ 11,948      $  6,476
                                                              ========      ========
</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 six months
       ended  November 30, 1996, 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.

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.  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.

       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 six months
       ended November 30, 1996.
<PAGE>
       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 six
                                                                months ended
                                                             November 30, 1995
                                                              -----------------
      <S>                                                       <C>
      Total revenues ..................................         $   17,006
                                                                ==========

      Income from continuing operations ...............         $      960
                                                                ==========

      Income per share from continuing operations .....         $      .13
                                                                ==========

      Weighted average number of shares outstanding ...          7,000,000
                                                                 =========
</TABLE>
      Note: Reorganization items and income from discontinued operations have
            been excluded from the pro forma results.


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 had  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
       $125,000 as of November 30, 1996,  due to cash payments  principally  for
       severance and facilities costs totaling  approximately $289,000 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 $125,000 as of November 30, 1996 is expected
<PAGE>
       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 six
                                                          months ended
                                                           November 30,
                                                     -----------------------
                                                        1996           1995
                                                      -------        -------
<S>                                                   <C>            <C>
       Revenues .................................     $   --         $ 3,247
       Costs and expenses .......................         --           3,422
                                                      -------        -------
       Loss from discontinued operations ........         --            (175)

       Income tax benefit .......................         --             (67)
                                                      -------        -------

       Net loss from discontinued operations ....     $   --         $  (108)
                                                      =======        =======
</TABLE>
<PAGE>
       The Consolidated Balance Sheets as of November 30, 1996 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>
                                                                November 30,       May 31,  
                                                                   1996             1996
                                                                   ----             ----
<S>                                                                <C>             <C>    
       Assets:
       Cash and cash equivalents ................................  $  16           $ 159
       Accounts receivable, net .................................     --              55
       Inventory ................................................     13             115
       Furniture, fixtures and equipment, net ...................     --              58
       Other assets .............................................     16              16
                                                                   -----           -----
                 Total assets ...................................     45             403
                                                                   -----           -----
       Liabilities
       Accounts payable and accruals ............................     --              44
       Other liabilities ........................................    181             465
                                                                   -----           -----
                 Total liabilities ..............................    181             509
                                                                   -----           -----
                     Net Assets (Liabilities) of Discontinued
                     Operations ................................   $(136)          $(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 November 30,
       1996,  the  Company had granted  options to  purchase  343,000  shares of
       common  stock (see Note 7).  Since the  average  exercise  price of these
       options is in excess of the average  market price of the common stock for
       the three and six  months  ended  November  30,  1996,  the  options  are
       considered  anti-dilutive  and are not included 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.
<PAGE>
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
       directors  of the Company  and,  in the  discretion  of the  Compensation
       Committee,  employees of and  independent  contractors and consultants to
       the Company. As of November 30, 1996,  incentive stock options for shares
       of common  stock had been granted to employees  and  non-qualified  stock
       options  for  shares of common  stock had been  granted  to  non-employee
       directors 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                     15,000           $3.50             $    52,500

        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 - November 30, 1996                                            343,000                             $   702,260
                                                                                    =======                              ==========

</TABLE>

       As of November 30, 1996, options for 127,333 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 Six Months
                        Ended November 30, 1996 and 1995

Continuing Operations

Total  revenues  increased  95.8% to $12.9  million for the three  months  ended
November 30, 1996 from $6.6 million for the  comparable  fiscal quarter in 1995.
For the six months ended November 30, 1996,  total revenues  increased  41.3% to
$20.1  million  from $14.2  million for the  comparable  fiscal  period in 1995.
Equipment sales for the three and six months ended November 30, 1996,  increased
by $4.4 million (108.8%) and $4.2 million (46.9%), respectively, over comparable
periods in 1995.  These increases are principally  attributable to a significant
increase in sales in the aircraft  business unit during the current quarter.  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.  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 this  sale can be
replicated  during the  remainder of the current  fiscal year,  since the leased
<PAGE>
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.  Sales and earnings  from the aircraft  business are
likely  to  continue  to  vary  quarter-to-quarter,   based  on  the  volume  of
transactions.

Equipment  rentals  for the  three  and six  months  ended  November  30,  1996,
decreased by $.6 million (32.6%) and $1.0 million  (28.2%),  respectively,  from
comparable periods in 1995. These decreases primarily reflect a "running out" of
the old lease portfolio, developed during the bankruptcy proceeding. Income from
direct  financing  leases for the three and six months ended  November 30, 1996,
increased by $.2 million  (74.9%) and $.4 million  (73.3%),  respectively,  over
comparable  periods in 1995.  These  increases  chiefly  reflect the increase in
lease originations that qualify as "financing leases."

Costs and  expenses  for the three  and six  months  ended  November  30,  1996,
increased by $4.2 million (68.2%) and $4.1 million (31.3%),  respectively,  over
the comparable  periods in 1995. Cost of sales, as a percentage of sales for the
three  and  six  months  ended   November  30,  1996,   were  79.5%  and  77.6%,
respectively, as compared to 67.4% and 69.1% for the comparable periods in 1995.
These variances were primarily the result of product mix. Depreciation of rental
equipment for the three and six months ended November 30, 1996, decreased by $.2
million (22.9%) and $.2 million (9.8%), respectively, from comparable periods in
1995. These decreases are directly  related to the decline in equipment  rentals
on  operating  leases.  Interest  expense  for the  three and six  months  ended
November 30, 1996, increased by $.3 million and $.5 million, respectively,  over
the comparable  periods in 1995. These increases are the result of a significant
increase  in the  average  debt  outstanding  during the  periods,  prior to the
assumption  of  approximately   $12.5  million  in  non-recourse   lease  rental
borrowings by an institutional  investor relative to the aforementioned  sale of
equipment subject to lease.  Other operating  expenses  increased by $.2 million
and $.3 million,  respectively,  over the comparable  periods in 1995.  Selling,
general and administrative  expenses for the three and six months ended November
30,  1996,   decreased  by  $.2  million   (10.6%)  and  $.8  million   (18.0%),
respectively,  from  the  comparable  periods  in  1995.  These  decreases  were
principally due to cost  containment  efforts and staff  reductions  between the
periods.  Amortization  of goodwill for the three and six months ended  November
30,  1996,  was  $.1  million  and  $.2  million,   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.
<PAGE>
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 had 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 $125,000 as of November 30, 1996, due
to cash  payments  principally  for  severance  and  facilities  costs  totaling
approximately  $289,000  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 $125,000 as of November 30,
1996  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 six
                                                          months ended
                                                           November 30,
                                                     -----------------------
                                                       1996           1995
                                                     -------        -------
<S>                                                  <C>            <C>
Revenues .....................................       $   --         $ 3,247
Costs and expenses ...........................           --           3,422
                                                     -------        -------
Loss from discontinued operations ............           --            (175)

Income tax benefit ...........................           --             (67)
                                                     -------        -------

Net loss from discontinued operations ........       $   --         $  (108)
                                                     =======        =======
</TABLE>
<PAGE>
Income Taxes

For the three and six months ended  November 30, 1996, a provision  for deferred
income tax expense on income from  continuing  operations  was  recorded,  at an
effective   rate  of  38%,  in  the  amounts  of  $1,022,000   and   $1,108,000,
respectively, as compared to $195,000 and $435,000 for the comparable periods in
1995.  In  addition,  for the three and six months  ended  November  30, 1995, a
provision for deferred income tax benefit on loss from  discontinued  operations
was  recorded,  at an  effective  rate of 38%, in the  amounts of  $112,000  and
$67,000, respectively.

                         Liquidity and Capital Resources 

Cash provided by operations for the six months ended November 30, 1996 was $10.4
million as  compared  to $2.6  million for the  comparable  period in 1995.  The
increase was  primarily  due to the proceeds  generated by the sale of equipment
subject to lease of $7.4 million.  In addition to this cash  payment,  the buyer
assumed  approximately $12.5 million of the Company's  outstanding  non-recourse
lease  rental  borrowings.  The sale of this leased  equipment  accelerated  the
earnings  and cash flow from the  leases,  which would have been  received  over
time,  into the current  quarter.  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 $4.2 million during the six months
ended  November 30, 1996 over the comparable  period in 1995.  This increase was
primarily attributable to the acquisition of used aircraft equipment and certain
Laser Printing  Systems to support  increased  activity in these business units.
New  investment  in rental  equipment  was $2.4 million for the six months ended
November  30,  1996 as compared to $13.3  million for the  comparable  period in
1995.  The  significant  investment  in rental  equipment in 1995  initiated the
Company's  strategy of  originating  leases on  acquired  rental  equipment  and
subsequently  selling  them to  investors,  as was  accomplished  in the current
quarter.

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 six  months  ended
November 30, 1996, as compared to the comparable period in 1995 when the Company
made  principal  payments  of  $2.4  million.  Proceeds  from  lease,  bank  and
institution  financings  were $4.6 million for the six months ended November 30,
1996,  as  compared  to $7.4  million  for the  comparable  period in 1995.  The
significant  proceeds  generated in the 1995 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 $6.1  million  for the six months  ended  November  30, 1996 as
compared to $.8 million for the  comparable  period in 1995. The increase in the
current period represents  accelerated payments on certain lines of credit and a
full six month payment stream on discounted lease rental borrowings. In the 1995
period,  a majority  of the  borrowings  and  repayments  occurred in the second
fiscal quarter.

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.
Additionally,  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.
<PAGE>
                           PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of  Stockholders,  held on October 23, 1996, the
following directors were elected to the Board of Directors:
<TABLE>
<CAPTION>
                                           Affirmative Votes    Votes Withheld
                                           -----------------    --------------
             <S>                              <C>                   <C>
             Dr. Leon H. Bloom                5,084,084             21,986
             James P. Hassett                 5,043,618             62,452
             Thomas J. Prinzing               5,068,919             37,151
             Michael L. Rosen                 5,084,475             21,595
             Paul M. Solomon                  5,037,600             68,470

</TABLE>
The proposal to increase the number of  authorized  shares from 10 million to 20
million  did not  receive  the  affirmative  vote  of the  holders  of at  least
two-thirds of the outstanding shares of the Company as required by the Company's
Restated Certificate of Incorporation and therefore was not approved.  The votes
were as follows:
<TABLE>
<CAPTION>

     Affirmative Votes          Negative Votes          Abstentions
     -----------------          --------------          -----------
         <S>                       <C>                    <C>
         4,587,487                 299,000                6,713
</TABLE>

The  ratification  of the  selection of Price  Waterhouse  LLP as the  Company's
independent  auditors  for the fiscal  year  ending May 31,  1997  received  the
requisite number of votes as follows:
<TABLE>
<CAPTION>

     Affirmative Votes          Negative Votes          Abstentions
     -----------------          --------------          -----------
         <S>                        <C>                   <C>
         5,043,985                  50,820                5,303

</TABLE>

Item 5.  Other Information

The Company's Board of Directors continues to engage in an ongoing evaluation of
the  prospects  of the  Company's  existing  businesses  and how to  invest  its
available capital resources. Because the Company's current businesses may not be
able  to  generate  sustained  growth  in  sales  and  earnings,  the  Board  is
considering  alternative strategic directions.  At a meeting on January 6, 1997,
the Board considered a proposal by Oscar Gruss & Son Incorporated, a stockholder
of the  Company,  that the Company  enter into the area of real estate  finance.
Oscar Gruss noted that the demand for real estate  acquisition,  development and
redevelopment  projects continues to grow and recommended that the Company enter
this sector by allying  itself  with a  sophisticated,  well-positioned  partner
which is  already  active in this  area.  The  Board  established  an  Executive
<PAGE>
Committee  composed  of  directors  James  P.  Hassett,  Michael  Rosen  (who is
affiliated with Oscar Gruss), and Paul Solomon to evaluate and negotiate a joint
venture with a private real estate finance  company.  The proposed joint venture
would originate high yield bridge and  acquisition  loans and finance such loans
in part through senior debt financing.  At this stage,  the Company has received
only an initial proposal for the venture;  whether this transaction or any other
transaction will be completed will depend on a number of factors,  including the
results of due  diligence,  negotiation  of acceptable  terms and conditions for
such a transaction,  and resolution of certain transitional issues. There can be
no assurance that this or any other transaction can be consummated.

The Board  believes  that the real estate  finance  business  would  represent a
logical  extension  of the  Company's  historic  business  focus and skills as a
financial intermediary for asset-based transactions; however, the Company itself
has no direct experience in real estate.  Accordingly, if the Company implements
such a proposal,  the Company will be  dependent  on the  expertise of its joint
venture  partner  and will need to employ  qualified  management  to oversee the
investment.  The  Company  will also be subject to the risks  attendant  to real
estate  finance  generally,  including the risks of leverage,  risks of borrower
default, general economic and real estate market conditions, and competition for
attractive real estate finance investments.

The Board  expects to consider a final plan for this  strategic  direction  at a
meeting in early April 1997.

Item 6.  Exhibits and Reports on Form 8-K

             (a)     Exhibits

                      10.1  Letter  Agreement  regarding  severance with John R.
                            Campbell dated October 23, 1996.

                      10.2  Letter Agreement  regarding  severance with Frank J.
                            Corcoran dated October 23, 1996.

                      10.3  Letter Agreement  regarding  severance with James J.
                            Mosher dated October 23, 1996.

                      10.4  Letter Agreement  regarding severance with Thomas J.
                            Prinzing dated October 23, 1996.

                      27.1  Financial Data Schedule.

             (b)     Reports on Form 8-K - No reports on Form 8-K were filed  by
                     the Company  during the quarter  ended  November  30, 1996
<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                                CONTINENTAL INFORMATION SYSTEMS
                                                CORPORATION

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


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