SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended February 28, 1999 or

[ ]  Transition  report  pursuant  to  section  13 of  15(d)  of the  Securities
     Exchange Act of 1934 for the transition period from ________ to ________


Commission file number:   0-25104


                   CONTINENTAL INFORMATION SYSTEMS CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)



          New York                                         16-0956508
          --------                                         ----------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
    of incorporation)  
         



45 Broadway Atrium, Suite 1105, New York, New York                      10006
--------------------------------------------------                      -----
    (Address of principal executive offices)                          (Zip Code)


                                 (212) 771-1000
              (Registrant's telephone number, including area code)

                  Indicate by check mark  whether the  registrant  (1) has filed
all  reports  required  to be filed  by  Section  13 or 15(d) of the  Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter  period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No ____

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


                  Indicate by check mark  whether the  registrant  has filed all
documents  and reports  required to be filed by Sections  12, 13 or 15(d) of the
Securities  Exchange Act of 1934  subsequent to the  distribution  of securities
under a plan confirmed by a court. Yes X No ____

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

                  Indicate  the  number  of  shares  outstanding  of each of the
issuer's classes of common stock, as of the latest practicable date: As of March
31, 1999, the registrant  has 6,884,844  shares of common stock,  par value $.01
per share, outstanding.
<PAGE>
                   CONTINENTAL INFORMATION SYSTEMS CORPORATION
                              AND ITS SUBSIDIARIES

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                               Page
                                                                                               Number
                                                                                               ------
<S>               <C>                                                                          <C>
PART I.           FINANCIAL INFORMATION:                                                          3

Item 1.           Unaudited Consolidated Financial Statements                                     3

                  Consolidated Balance Sheets -
                  February 28, 1999 and May 31, 1998                                              3

                  Consolidated Statements of Operations -
                  for the three and nine months ended February 28, 1999 and 1998                  4

                  Consolidated Statements of Cash Flows -
                  for the three and nine months ended February 28, 1999 and 1998                  5

                  Notes to Consolidated Financial Statements                                    6-9

Item 2.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                                9-13


PART II.          OTHER INFORMATION:                                                             14

Item 1.           Legal Proceedings                                                              14

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


SIGNATURES                                                                                       15
</TABLE>
                                      -2-
<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except Number of  Shares)

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                          February 28,             May 31,
                                                                                              1999                  1998
                                                                                              ----                  ----
<S>                                                                                        <C>                   <C>      
Assets:
Cash and cash equivalents                                                                     $5,851             $   3,211
Accounts receivable, net                                                                         987                   636
Notes receivable                                                                               3,386                 6,870
Investment in mortgage participation notes                                                       852                 1,522
Inventory                                                                                      6,185                 3,755
Net investment in direct financing leases                                                      6,083                 4,658
Rental equipment, net (Note 7)                                                                11,429                18,118
Furniture, fixtures and equipment, net                                                           401                   398
Other assets                                                                                     875                   620
Deferred tax assets                                                                            5,414                 5,414
                                                                                           ---------            ----------
           Total assets                                                                    $  41,463             $  45,202
                                                                                           =========             =========
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and other liabilities                                                    $    1,844            $    2,377
Discounted lease rental borrowings                                                               291                 2,594
Note payable to institution -collateralized                                                    6,068                 4,429
Net liabilities of discontinued operations (Note 2)                                              810                   866
Deferred lease revenue                                                                         3,722                 5,976
                                                                                           ---------            ----------
           Total liabilities                                                                  12,735                16,242
                                                                                           ---------             ---------

Shareholders' Equity:
Common stock, $.01 par value; authorized 20,000,000 shares,
       issued 7,101,668 shares                                                                    71                    71
Additional paid-in capital                                                                    35,129                35,129
Accumulated deficit                                                                           (6,017)               (5,834)
                                                                                           ---------            ----------
                                                                                              29,183                29,366
Treasury stock, at cost; 211,810 shares                                                         (455)                 (406)
                                                                                           ---------            ----------

          Total shareholders' equity                                                          28,728                28,960
                                                                                           ---------            ----------
          Total liabilities and shareholders' equity                                       $  41,463             $  45,202
                                                                                           =========             =========
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       -3-
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries
(In Thousands except per share amounts)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           For the Three                   For the Nine
                                                                           Months Ended                    Months Ended
                                                                           February 28,                    February 28,
                                                                       1999           1998              1999          1998
<S>                                                                   <C>            <C>               <C>           <C>   
Revenues:
Equipment sales                                                       $2,221         $2,171            $5,423        $7,697
Equipment rentals                                                      1,657          1,071             5,285         2,834
Income from direct financing leases                                      322            190               761           559
Gain from sale of equipment subject to lease                             318              0               318            78
Interest, fees and other income                                          253            507             1,117         1,586
                                                                      ------         ------            ------        ------

                                                                       4,771          3,939            12,904        12,754
                                                                      ------         ------            ------        ------
Costs and Expenses:
Cost of sales                                                          2,014          2,005             4,900         6,663
Depreciation of rental equipment                                       1,315            542             4,125         1,404
Interest expense                                                         156            141               456           398
Other operating expenses                                                 268            132               792           640
Selling, general and administrative expense                            1,008            951             2,926         3,004
                                                                      ------         ------            ------        ------
                                                                       4,761          3,771            13,199        12,109
                                                                      ------         ------            ------        ------

Income (loss) from continuing operations before income taxes              10            168              (295)          645

Provision (credit) for income tax                                          4             64              (112)          245
                                                                      ------         ------            ------        ------

Income (loss) from continuing operations                                   6            104              (183)          400

Loss from discontinued operations, net of tax benefit (Note 2)             0            (99)                0          (535)
                                                                      ------         ------            ------        ------

Net Income (loss)                                                     $    6         $    5             ($183)        ($135)
                                                                      ======         ======            ======        ======
Basic and diluted net income (loss) per share (Note 1):
      Income from continuing operations                                    -           0.01             (0.03)         0.06
      Income (loss) from discontinued operations                           -          (0.01)                -         (0.08)
                                                                      ------         ------            ------        ------
           Net Income                                                      -              -             (0.03)        (0.02)
                                                                      ======         ======            ======        ======
      Weighted average number of shares of common stock                6,933          6,990             6,937         6,999
      outstanding                                                     ======         ======            ======        ======
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       -4-
<PAGE>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                              For the Nine Months Ended
                                                                    February 28,
                                                                  1999          1998
                                                                -------       -------
<S>                                                              <C>            <C>   
Cash flows from operating activities:
Net income (loss)                                                ($183)         ($135)
Less: Net income (loss form continuing operations                    0           (535)
                                                                -------       -------
   Net income (loss) form continuing operations                   (183)           400
                                                                -------       -------



Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
   Accrued interest on mortgage participation notes               (180)          (166)
   Gain from sale of equipment subject to lease                   (318)           (78)
   Depreciation and amortization expense                         4,198          1,588
   Effect on cash flows of changes in:                           
     Accounts receivable                                          (351)         1,013
     Notes receivable                                            3,484           (802)
     Inventory                                                  (2,430)         2,537
     Other assets                                                 (259)          (431)
     Accounts payable and other liabilities                       (533)          (264)
     Defered lease revenue                                      (2,254)           888
     Defered tax assets                                              -            (82)
     Other                                                           -            327
                                                                -------       -------
                                                                 1,357          4,530
                                                                -------       -------
Net cash provided by continuing operations                       1,174          4,930
Net cash provided by used in discontinued operations               (56)          (813)
                                                                -------       -------
Net cash provided by (used in) operations                        1,118          4,117
                                                                -------       -------


Cash flows from investing activities:
Proceeds from sale of equipment subject to lease                 2,498          4,321
Proceeds from sales of other leased equipment                      586          1,248
Proceeds from sales of telecommunications assets                     -            895
Purchase of rental equipment                                    (2,692)       (15,330)
Collections of rentals on direct financing leases net of
amortization of unearned income                                  1,069          1,175
Net proceeds from (invested in) mortgage participation notes       850         (1,524)
Purchase of property and equipment                                 (76)          (356)
                                                                -------       -------
     Net cash provided by (used in) investing activities         2,235         (9,571) 
                                                                -------       -------
Cash flows from financing activites:                            
Proceeds from lease, bank and institution financings            13,443         7,957   
Payments on lease, bank and institution financings             (14,107)       (5,433)  
Proceeds from excercise of stock options                             0           137   
Purchase of treasury stock                                         (49)         (313)  
                                                               -------       -------   
     Net cash provided by (used in) financing activites           (713)        2,348   
                                                               -------       -------   
     Net increase (decrease) in cash and equivlents              2,640        (3,106)  
Cash and cash equivalents at beginning of period                 3,211         8,968   
Cash and cash equivalents at end of period                      $5,851         5,862   
                                                               =======       =======
</TABLE>
  
                                                               

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

                                       -4-
<PAGE>
Continental Information Systems Corporation
and its Subsidiaries

1.    Basis of Presentation

      The   accompanying   unaudited   consolidated   financial   statements  of
      Continental  Information  Systems  Corporation and its  subsidiaries  (the
      "Company")   contain  all  adjustments   which  are,  in  the  opinion  of
      management,  necessary  for a fair  statement  of results  for the interim
      periods  presented.  While certain  information  and footnote  disclosures
      normally  included in financial  statements  prepared in  accordance  with
      generally accepted  accounting  principles have been condensed or omitted,
      the Company believes that the disclosures  herein are adequate to make the
      information not misleading.  The results of operations for the nine months
      ended February 28,1999, 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, 1998, appearing in the Company's Form 10-K.

2.    Discontinued Operations

      On May 29, 1998,  the Company  announced its decision to  discontinue  and
      liquidate its LaserAccess laser printing business.  The Company recorded a
      provision of $4,955,000 in the quarter ended May 31, 1998, relative to the
      disposal of LaserAccess' assets,  including the write-off of goodwill,  in
      the amount of $3,258,000,  and other charges related to the discontinuance
      of the business unit.

      The Company is currently  engaged in litigation with the former owners and
      executives of its discontinued  LaserAccess  business.  In March 1998, the
      Company prepaid remaining amounts due to the former owners and exercised a
      right  to  set-off  approximately  $1.1  million  against  amounts  due on
      promissory  notes in  connection  with the  purchase of  LaserAccess.  The
      Company has also  terminated  these  individuals  under  their  employment
      agreements.  On April 7, 1998,  the former  owners  filed suit in Superior
      Court of  California,  County of San Diego,  seeking  to  recover  damages
      allegedly arising from the Company's set-off of amounts due. Additionally,
      the former owners are seeking to recover approximately $733,000 in damages
      arising from the Company's termination of their employment contracts.  The
      complaint,  as amended, seeks damages for various other claims,  including
      defamation.  The  Company  has  asserted  crossclaims  and  is  vigorously
      contesting these actions.

      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):
<PAGE>
<TABLE>
<CAPTION>
                                                                            For the Nine Months Ended
                                                                                    February 28,
                                                                              1999                 1998
                                                                           --------              --------
<S>                                                                       <C>                    <C>     
                  Revenues                                                $       -              $  3,662
                  Costs and expenses                                              -                 4,524
                                                                           --------              --------
                  Loss from discontinued operations                               -                  (862)

                  Income tax benefit                                              -                  (327)
                                                                           --------              --------

                  Net loss from discontinued operations                    $      -                 ($535)
                                                                           ========              ========  
</TABLE>

                                      -6-
<PAGE>
The  Consolidated  Balance  Sheets as of February 28, 1999 and May 31, 1998 have
been reclassified to report the net assets of discontinued operations separately
from the assets  and  liabilities  of  continuing  operations.  A summary of the
assets and liabilities of discontinued operations follows (in thousands):
<TABLE>
<CAPTION>
                                                          February 28,               May 31,
                                                              1999                    1998
                                                            ---------               ---------
<S>                                                         <C>                     <C>     
      Assets:
      Cash and cash equivalents                             $     59                $     19
      Accounts receivable, net                                    12                     198
      Inventory                                                   65                     779
      Furniture, fixtures and equipment, net                       -                      12
      Other assets                                                 -                      58
                                                            ---------               ---------
            Total assets                                         136                   1,066
                                                            ---------               ---------

      Liabilities:
      Accounts payable and accruals                              946                   1,504
      Note payable                                                 -                     428
                                                            ---------               ---------
            Total liabilities                                    946                   1,932
                                                            ---------               ---------
                 Net (Liabilities) of
                     Discontinued Operations                $   (810)               $   (866)
                                                            =========               =========
</TABLE>
3.    Net Income Per Share

      In fiscal 1998, the Company adopted Financial  Accounting Standard No. 128
      (SFAS 128),  Earnings Per Share.  SFAS 128  specified  new  standards  for
      computing  and  disclosing  net income per share.  Basic and  diluted  net
      income per share for the nine months ended February 28, 1999 and 1998, was
      computed  based on the weighted  average  number of shares of common stock
      outstanding  during the periods.  As of February 28, 1999, the Company had
      outstanding  options to purchase  421,674 shares of common stock (See Note
      5).  The  potential  dilution  of  these  options  is  immaterial  in  the
      computation of diluted net income per share.

4.    Reclassifications

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

5.    Stock Option Plan

      In 1995, the Board of Directors adopted and the stockholders  approved the
      Continental  Information  Systems Corporation 1995 Stock Compensation Plan
      ("the 1995 Plan").  The 1995 Plan  provides  for  the  issuance of options
      covering up to 1,000,000  shares of common stock and stock grants of up to
      500,000  shares of common stock to  non-employee  directors of the Company
      and,  in the  discretion  of the  Board  of  Directors,  employees  of and
      independent contractors and consultants to the Company.

                                      -7-
<PAGE>
        A summary of the  status of the 1995 Plan as of  February  28,  1999 and
changes since inception is presented below:
<TABLE>
<CAPTION>
                                                                                  Weighted Average
                                                             Number of             Exercise Price
                                                              Options                Per Option
                                                              -------                ----------
<S>                                                            <C>                      <C>   
           Outstanding at
                 May 31, 1995 (none exercisable)               15,000                   $ 3.50
           Granted                                              9,000                   $ 2.50
           Exercised                                             --                     $   --
           Forfeited/expired                                   (9,000)                  $ 3.50
                                                              -------                              
           Outstanding at                                                           
                 May 31, 1996 (6,000 exercisable)              15,000                   $ 2.90
           Granted                                            319,000                   $ 1.97
           Exercised                                          (16,667)                  $ 1.97
           Forfeited/expired                                  (33,333)                  $ 1.97
                                                              -------                              
           Outstanding at                                                           
                 May 31, 1997  (188,337 exercisable)          284,000                   $ 2.02
           Granted                                            190,674                   $ 2.38
           Exercised                                          (70,001)                  $ 1.97
           Forfeited/expired                                  (38,331)                  $ 1.97
                                                              -------                              
           Outstanding at                                                           
                 May 31, 1998 (234,002 exercisable)           366,342                   $ 2.22
           Granted                                             10,000                   $ 1.95
           Forfeited/expired                                   (6,668)                  $ 1.97
                                                              -------                              
           Outstanding at                                                           
                 August 31, 1998 (227,334 exercisable)        369,674                   $ 2.22
                                                              -------                              
           Granted                                             62,000                   $ 1.92
           Exercised                                               --                       --
           Forfeited/expired                                                        
           Outstanding at                                                           
                 November 30, 1998 (239,334 exercisable)      431,674                   $ 2.18
                                                              =======                              
           Granted                                                                  
           Exercised                                               --                       --
           Forfeited/expired                                  (10,000)                  $ 1.97
           Outstanding at                                                           
                 February 28, 1999 (306,675 exercisable)      421,674                   $ 2.18
                                                              =======                              
</TABLE>   
                                      -8-
<PAGE>
6. Share Repurchase

In May 1997,  the Board of  Directors  authorized  a $500,000  share  repurchase
program.  Under the prior program the Company  conducted an odd lot tender which
after  completion  was  followed by  open-market  repurchases.  Continental  has
expended  nearly all funds  previously  authorized  under the  buyback  program,
having  bought  back  203,768  shares,   representing   approximately   2.9%  of
outstanding shares.

On  February  19,  1999  the  Company  announced  that its  Board  of  Directors
authorized the  expenditure of an additional  $500,000 for the repurchase of its
common stock.  Under the buyback  program the Company may repurchase  additional
shares  at  prevailing  prices  in the open  market  or in  negotiated  or other
permissible transactions at the discretion of management.

7. Lessee Bankruptcy

As previously  reported,  in October 1998, one of the Company's  largest general
equipment lessees which had previously filed for protection from creditors under
Chapter  11  of  the  U.S.   Bankruptcy   Code  announced   plans  to  terminate
substantially  all of its  operations.  The  leases  had  been  originated  from
February 1997 through August 1997. The Company filed claims in Bankruptcy  Court
against the lessee and ultimately  reached  agreement with the lessee for return
of the equipment. The Company is in possession of all the equipment. The Company
also sold or contracted to sell certain of the repossessed  equipment for a loss
of $169,000 that was included in the second quarter.  Remaining  equipment which
is included in rental  equipment,  amounts to $806,000.  The Company is actively
engaged in trying to sell or lease this  equipment.  In the  interim the Company
continues to depreciate the equipment as well as monitor its reserves. There can
be no assurance that the Company will realize full value in its efforts to lease
or sell the remaining  equipment.  While the Company maintains reserves which it
believes to be  reasonable,  there can be no assurance that the reserves will be
adequate and fully cover any additional losses on disposal of the equipment.

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,
1998, appearing in the Company's Form 10-K.

All statements contained herein that are not historical facts, including but not
limited to, statements regarding anticipated future capital requirements and the
Company's  future  business  plans,  are based on  current  expectations.  These
statements  are  forward  looking  in nature  and  involve a number of risks and
uncertainties.  Actual  results may differ  materially.  Among the factors  that
could cause actual  results to differ  materially  are those set forth below and
the other risk  factors  described  from time to time in the  Company's  reports
filed with the SEC.  The  Company  wishes to caution  readers not to place undue
reliance on any such  forward  looking  statements,  which  statements  are made
pursuant to the Private  Securities  Litigation Reform Act of 1995 and, as such,
speak only as of the date made.

                                      -9-
<PAGE>
                              Results of Operations

Comparison of the Three and Nine Months Ended February 28, 1999 and 1998

Continuing Operations

Revenues
Total revenues increased 21% to $4.7 million for the three months ended February
28, 1999 from $3.9 million for the  comparable  fiscal  quarter in 1998. For the
nine months  ended  February  28,  1999,  total  revenues  increased 1% to $12.9
million from $12.8 million for the comparable fiscal period in 1998. Within this
category,  equipment  sales  increased  2% to $2.2  million for the three months
ended February 28, 1999 from $2.1 million for the  comparable  fiscal quarter in
1998. For the nine months ended February 28,1999,  equipment sales decreased 30%
to $ 5.4 million from $7.7 million for the  comparable  prior year period.  This
decrease  reflects the lower results for the Air Group Business Unit.  Sales and
margins from the Air Group  business  unit will vary quarter to quarter based on
the volume and timing of  transactions.  For the nine months ended  February 28,
1999,  Air Group  business  unit sales  decreased  30% to $4.4 million from $6.3
million  for the  comparable  period.  Equipment  rentals and income from direct
financing  leases  for the  three  and nine  months  ended  February  28,  1999,
increased $718,000 (57%) and $2.7 million (78%) respectively from the comparable
periods in 1998. These increases  reflect the Company's  acquisition and placing
on lease of general  purpose and aircraft rental  equipment  during the previous
and current fiscal years. Interest, fees and other income for the three and nine
months  ended  February  28,1999,  were  $253,000 and  $1,117,000,  respectively
compared to $507,000 and  $1,586,000 for the  corresponding  prior year periods.
The  respective  decreases  of 50%  and  30%  primarily  reflect  a  decline  in
management  fees  received  from  income  funds and fees  generated  by brokered
transactions.
<PAGE>
Costs and Expenses

Costs and  expenses  for the three and nine  months  ended  February  28,  1999,
increased  by  $990,000  (26%)  and  $1,090,000  (9%),  respectively,  from  the
comparable periods in 1998. Within this category, cost of sales, as a percentage
of sales,  for the three and nine months ended  February  28, 1999,  was 91% and
90%,  respectively,  as  compared to 92% and 87% for the  comparable  prior year
periods.  This variance is directly  related to the results of operations of the
Air Group  Business  Unit and reflect  the  competitive  conditions  in the used
aircraft/engines  marketplace.  Revenues and earnings from the aircraft business
are likely to continue to vary quarter to quarter, based on a number of factors,
including the volume of  transactions.  Depreciation of rental equipment for the
three and nine months ended February 28, 1999,  increased to approximately  $1.3
million and $4.1 million from $0.5 million and $1.4 million,  respectively,  for
the comparable  periods for 1998.  These  increases are directly  related to the
Company's  acquisition of general purpose and aircraft rental  equipment  during
the previous and current fiscal years.  Interest  expense for the three and nine
months ended  February 28, 1999,  was $156,000 and  $456,000,  respectively,  as
compared  to $141,000  and  $398,000  for the  comparable  periods in 1998.  The
increases of 11% and 15%,  respectively,  reflect the impact of  increased  debt
balances  associated with the increased rental equipment  portfolio and interest
incurred  on the Air  Group's  revolving  loan  facility  which was not in place
during the prior year comparable periods.  Other operating expenses increased by
$136,000 (103%) and $152,000 (24%), respectively,  for the three and nine months
ended February 28, 1999 from the year earlier  periods.  This increase is mainly
due to sub lease expense in the Air Group, for nine months in the current period
as compared to three months in the year earlier  periods.  Selling,  general and
administrative  expenses  for the three months  ended  February  28, 1999,  were
$1,008,000 as compared to $951,000 for the comparable  three months in 1998. The
increase  of $57,000  in the  current  period is  attributable  to new  business
development  costs  relating  to  the  Company's  search  for  acquisitions  and
nonrecurring  expenditures related to the transfer of finance and administrative
functions to the Company's  headquarters  in New York City.  For the nine months
ended  February  28,  1999,  selling,  general and  administrative  expenses was
approximately  $2.9  million as compared to  approximately  $3.0 million for the
prior year comparable period.
                                      -10-
<PAGE>
Income Taxes 
For the three and nine months ended  February 28, 1999, a provision for deferred
income tax expense on income and benefit on loss from continuing  operations was
recorded, at an effective tax rate of 38%, in the amount of $4,000 and $112,000,
respectively. For the three and nine months ended February 28, 1998, a provision
for  deferred  income  tax  expense on income  from  continuing  operations  was
recorded,  at an  effective  rate of 38%, in the amount of $64,000 and  $245,000
respectively.

Discontinued Operations
On May 29, 1998, the Company announced its decision to discontinue and liquidate
its LaserAccess  laser printing  business.  The Company  recorded a provision of
$4,955,000  in the  quarter  ended May 31,  1998,  relative  to the  disposal of
LaserAccess'  assets,  including  the  write-off of  goodwill,  in the amount of
$3,258,000,  and other  charges  related to the  discontinuance  of the business
unit.  See "PART II, Item 1. Legal  Proceedings"  for a discussion of litigation
related to LaserAccess.
A summary of the results of discontinued operations follows (in thousands):
<TABLE>
<CAPTION>
                                                                            For the Nine Months Ended
                                                                                  February 28,
                                                                              1999                 1998
                                                                          ---------           ---------
<S>                                                                       <C>                 <C>     
                  Revenues                                                $       -           $  3,662
                  Costs and expenses                                              -              4,524
                                                                          ---------           ---------
                  Loss from discontinued operations                               -               (862)
                  Income tax benefit                                              -               (327)
                                                                          ---------           ---------
                  Net loss from discontinued operations                   $       -           $   (535)
                                                                          =========           =========
</TABLE>

<PAGE>
                         Liquidity and Capital Resources

Cash provided by  operations  for the nine months ended  February 28, 1999,  was
$1.1  million as compared to $4.1  million  for the  comparable  period in 1998.
Deferred  lease  revenues had a negative  impact of 2.3 million on cash flows in
the current  period as compared to a positive  cash flow of $0.8  million in the
prior year period. An increase of inventory levels of approximately $2.4 million
in the current period has a negative effect on the cash flow as compared to $2.5
million  positive cash flow in prior year period.  The  Company's  investment in
rental  equipment  varies  from  period to period  based on a number of factors,
including  current market  conditions and the  availability  of adequate  credit
facilities.  Proceeds  from sale of  equipment  subject to lease in the  current
period decreased $1.8 million to $2.5 million as compared to $4.3 million in the
prior year  period.  The Company  received net  proceeds of  approximately  $0.9
million from its investment in mortgage  participation notes under its agreement
with  Emmes  Investment  Management  Co.  LLC.  Proceeds  from  lease,  bank and
institution  financings  for the nine months  ended  February 28, 1999 and 1998,
were $13.4  million  and $7.9  million,  respectively,  while  payments on these
financings  were $14.1  million and $5.4 million for the current  period and the
year  prior  period.  The  significant  increases  for the  current  period  are
primarily  attributable to advances and repayments on the $10,000,000  revolving
loan  facility  of its  operating  subsidiary  CIS Air  Corporation.  This  loan
facility  was not in place  during the prior year  period.  The  facility  has a
three-year  term and permits  borrowing  equal to a percentage  of the appraised
value of the aircraft engines  financed.  Substantially all of the assets of CIS
Air are pledged as collateral for the loan. At February 28, 1999,  $6,068,000 of
this facility was outstanding.

                                      -11-
<PAGE>
As of  February  28,  1999,  the  Company  had  $5.8  million  in cash  and cash
equivalents, as compared to $3.2 million at February 28, 1998.

The Company  announced in October  1998 that it had hired the  merchant  banking
firm of Helix Capital to assist it in identifying  acquisitions and other growth
opportunities.   The  Company  is  reviewing  various  potentional  transactions
introduced by Helix Capital.  The Company has been managing its cash reserves in
order to accumulate funds for potential acquisition  transactions and to finance
internal growth.  The Company is also seeking additional sources of financing to
fund  acquisitions and internal  growth.  The availability of any such financing
will be dependent on a number of factors, including the terms of the transaction
being financed,  the Company's  operating  performance,  and market  conditions.
While  the  Company  believes  that  it has  sufficient  cash  to  fund  certain
acquisition   targets,   the  inability  to  obtain   financing  for  additional
acquisitions and growth may limit the Company's growth strategy. There can be no
assurance that such financing will be available on acceptable terms. The Company
expects that  operations  will  generate  sufficient  cash to meet its operating
expenses and current obligations for the foreseeable future.

The  Company  finances  certain  equipment  leases by  assigning  the rentals to
various  lending  institutions  at a fixed rate on a recourse  and  non-recourse
basis. During the third quarter,  the Company decided not to proceed to close on
a $3,000,000  "warehouse" line of credit that was to cover the Company's general
equipment  leasing  business.  The Company  concluded that this facility was not
needed at this time in light of current activity levels of its leasing business,
and that more  favorable  terms  might be  obtainable  from other  sources.  The
Company  has had  preliminary  discussions  with other  lenders to  structure  a
facility to meet the Company's  anticipated  credit needs. Such facility will be
dependent on the Company's acquisition and growth strategy.

Year 2000
As the year 2000  approaches,  a critical  issue has emerged for all  companies,
including the Company, with respect to whether application software programs and
operating  systems  utilized by a company and the  companies  with which it does
business can accommodate  this date value. In brief,  many existing  application
software  products  in the  marketplace  were  designed  only to  accommodate  a
two-digit date position which  represents the year (e.g.,  "95" is stored on the
system and represents the year 1995).  As a result,  the year 1999 (i.e.,  "99")
could  be the  maximum  date  value  these  systems  will  be  able  to  process
accurately.

<PAGE>
The Company has been engaged in a review of the software and information systems
it uses in an effort to determine whether it or its operations may be materially
adversely affected by this so-called "Year 2000" conversion. As a result of that
review, the Company upgraded and replaced its hardware systems with systems that
are Year 2000 compliant.  In addition,  the Company has completed  conversion to
the updated release of its vendor's lease billing  software.  It is currently in
the testing and conversion phase to replace its accounting software. The Company
expects that this software will be fully  operational by the middle of 1999. The
Company has inquired of, and generally obtained the assurances of, the providers
of such  software  with respect to its being Year 2000  compliant.  Based on its
review the Company does not presently  believe that Year 2000 compliance  issues
with respect to its  software  and systems will cause any material  disruptions,
malfunctions  or failures of its business.  However,  no assurances can be given
that such  review  uncovered  every  potential  adverse  effect of the Year 2000
conversion in connection with any of such software or systems.

With respect to assets other than its  computer  hardware and software  systems,
the  Company is aware  that some of the  equipment  it leases may have  embedded
technology  that is not Year 2000  compliant.  Under  the  terms of the  leases,
however,  the Company is not  responsible for the maintenance and repair of this
equipment,  and the leases  are  non-cancelable.  Failure  to achieve  Year 2000
compliance  may  materially  adversely  affect the value of such  equipment.  No
assurance  can be given that such  decrease  in value  would not have a material
adverse effect on the Company's business or results of operations.



                                      -12-
<PAGE>

The  Company  has begun a review of  whether  the  software  and  systems of the
vendors, financing sources,  customers,  equipment manufacturers or distributors
or other  parties  with  which  it  deals  may,  as a  result  of the Year  2000
conversion,  have a materially  adverse effect on the Company or its operations.
As part of this review,  The Company is obtaining  assurances  from each of such
parties,  whose  dealings  with the Company  are  material to the Company or its
operations,  that such party does not and will not  utilize  software or systems
that are or will be important to the  operations  of such party,  that may cause
problems to such party or the  Company as a result of the Year 2000  conversion.
However,  no assurances can be given the information  provided to the Company is
accurate and that such other party will be Year 2000 compliant.

The Company  currently  believes  that its systems  will be Year 2000  compliant
during 1999. It nonetheless has begun developing a contingency plan. The Company
will  maintain an ongoing  effort to recognize and evaluate  potential  exposure
relating to the Year 2000 conversion  arising from its use of software  supplied
by other  parties  or its  dealings  with other  parties.  The total cost to the
Company  of these  Year 2000  compliance  activities  has not  been,  and is not
anticipated to be material to its financial position or results of operations.

                                      -13-
<PAGE>
                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

             The  Company is  currently  engaged in  litigation  with the former
             owners and executives of its discontinued  LaserAccess business. In
             March 1998, the Company prepaid remaining amounts due to the former
             owners and exercised a right to set-off  approximately $1.1 million
             against  amounts due on  promissory  notes in  connection  with the
             purchase of  LaserAccess.  The Company  has also  terminated  these
             individuals  under their employment  agreements.  On April 7, 1998,
             the former  owners  filed  suit in  Superior  Court of  California,
             County of San Diego,  seeking to recover damages  allegedly arising
             from the Company's set-off of amounts due. Additionally, the former
             owners are  seeking to recover  approximately  $733,000  in damages
             arising  from  the  Company's   termination  of  their   employment
             contracts.  The  complaint,  as amended,  seeks damages for various
             other  claims,  including  defamation.  The  Company  has  asserted
             crossclaims and is vigorously contesting these actions.


Item 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits

               27.1 Financial Data Schedule

          (b)  Reports  on Form 8-K - No  reports  on Form 8-K were filed by the
               Company during the nine months ended February 28, 1999.



                                      -14-
<PAGE>
                                   SIGNATURES


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

                            CONTINENTAL INFORMATION SYSTEMS
                            CORPORATION

Date:  April 15, 1999        By:  /s/ Michael L. Rosen
                                 --------------------
                                 Michael L. Rosen
                                 President, Chief Executive Officer and Director


Date:  April 15, 1999        By:  /s/ Jonah M. Meer
                                 -----------------
                                 Jonah M. Meer
                                 Senior Vice President,  Chief Operating Officer
                                 and Chief Financial Officer