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<CONFORMED-NAME>CONTINENTAL INFORMATION SYSTEMS CORP
<CIK>0000024071
<ASSIGNED-SIC>5045
<IRS-NUMBER>160956508
<STATE-OF-INCORPORATION>NY
<FISCAL-YEAR-END>0531
</COMPANY-DATA>
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<ACT>34
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<FILM-NUMBER>03873589
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<BUSINESS-ADDRESS>
<STREET1>45 BROADWAY ATRIUM
<STREET2>SUITE 1105
<CITY>NEW YORK
<STATE>NY
<ZIP>10006
<PHONE>212 514 23000
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<TYPE>10-K
<SEQUENCE>1
<FILENAME>cis10k03.txt
<DESCRIPTION>ANNUAL REPORT FOR CIS CORP.  FOR MAY 31, 2003
<TEXT>
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 ---------------

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                 ---------------

For the Fiscal Year Ended May 31, 2003            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)


7 Mikve Israel, # 36351, Tel Aviv  Israel                   61362
-----------------------------------------                   -----
(Address of principal executive offices)                 (Zip Code)

                                 (972) 66-394451
                                 ---------------
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act:  NONE

          Securities registered pursuant to Section 12(g) of the Act:

                      Common Stock, par value $.01 per share

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
                          -----                  -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ X ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

                      Yes                     No   X
                          -----                  -----

The number of the registrant's shares of Common Stock outstanding on June 30,
2003 was 3,991,212. As of November 29, 2002 the aggregate market value of the
shares of Common Stock held by non-affiliates of the registrant was
approximately $362,929.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of Continental Information Systems Corporation's Notice of Annual
Meeting of Stockholders and Proxy Statement, to be filed within 120 days after
the end of the registrant's fiscal year, are incorporated by reference into Part
III of this Annual Report.

   * Excludes 1,246,861 shares deemed to be held by officers and directors, and
stockholders whose ownership exceeds ten percent of the shares outstanding at
November 29, 2002. Exclusion of shares held by any person should not be
construed to indicate that any such person possesses the power, directly or
indirectly, to direct or cause the direction of the management or policies of
the registrant, or that any such person is controlled by or under common control
with the registrant.

                                     - 1 -
<PAGE>

                   CONTINENTAL INFORMATION SYSTEMS CORPORATION

                         2003 ANNUAL REPORT ON FORM 10-K



                                TABLE OF CONTENTS

                                                                            Page

PART I

Item 1.   Business                                                           3-5

Item 2.   Properties                                                           5

Item 3.   Legal Proceedings                                                    6

Item 4.   Submission of Matters to a Vote of Security Holders                  6


PART II

Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters                                                  7

Item 6.   Selected Financial Data                                            7-8

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                         9-14

Item 7a.  Quantitative and Qualitative Disclosures About Market Risk          14

Item 8.   Financial Statements and Supplementary Data                         15

Item 9.   Changes In and Disagreements with Accountants on Accounting
          and Financial Disclosure                                            36


PART III

Item 10.  Directors and Executive Officers of the Registrant                  36

Item 11.  Executive Compensation                                              36

Item 12.  Security Ownership of Certain Beneficial Owners and Management      36

Item 13.  Certain Relationships and Related Transactions                      36

Item 14   Controls and Procedures                                             36


PART IV

Item 15.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K    37

                                     - 2 -
<PAGE>

FORWARD LOOKING STATEMENTS

       All statements contained herein that are not historical facts, including
but not limited to, statements regarding anticipated future capital
requirements, Continental Information Systems Corporation's with its
subsidiaries (the "Company") future development plans, the Company's ability to
obtain additional debt, equity or other financing, and the Company's ability to
generate cash from operations and further savings from existing operations, 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 the following: the availability of sufficient capital to finance
the Company's business plan on terms satisfactory to the Company and the
potential impact on asset realization; risks associated with collecting on the
Company's notes receivable arising out of various settlements in the aviation
business; risks attendant to the Company's finance activities generally,
including the risks of leverage, risks of borrower default, general economic and
real estate market conditions, and pricing pressures which could affect the
value of the Company's assets; general business, economic and regulatory
conditions; and the other risk factors described from time to time in the
Company's reports filed with the Securities and Exchange Commission ("SEC"). The
Company cautions readers not to place undue reliance on any such forward looking
statements, which are made pursuant to the Private Securities Litigation Reform
Act of 1995 and, as such, speak only as of the date made. The Company undertakes
no obligation to update such forward-looking statements.

                                     PART I

ITEM 1.   BUSINESS

INTRODUCTION AND HISTORY

          Continental Information Systems Corporation is a New York Corporation
that was organized in 1968. The Company was a specialized financial services
company that engaged in the leasing, sales and management of commercial aircraft
and engines, among other assets, and was also engaged in other financing
activities, including commercial real estate financing. In August 1999, the
Company ceased entering into new equipment leases and sold a substantial portion
of its remaining lease portfolio. Since then, the Company has disposed of the
balance of its remaining lease portfolio. In July 2000, one of the Company's
subsidiaries, CIS Air Corporation, a Delaware corporation, ("CIS Air") exited
the aviation business.

          In August 1999, the Company changed its focus to the development and
commercialization of a Web-enabled electronic securities processing software
platform using proprietary technology. The subsidiary that was formed to engage
in this line of business is T1Xpert Corp. ("T1Xpert").

          T1Xpert had begun developing a suite of middle and back office
brokerage products and solutions. The products and solutions were designed to
serve as a software platform for risk reduction for the next generation of real
time systems and in preparation for settling trades in one day referred to as
"T+1" as opposed to three days. T1Xpert expended approximately $6.2 million from
its inception in August 1999 through May 31, 2003.

          Prior to September 11, 2001, T1Xpert had begun work on a software
development project for a global investment bank. This project was canceled as a
result of the terrorist attacks of September 11, 2001 against the United States
of America which had a negative effect on the U.S. securities industry and
T1Xpert.

          On December 27, 2001, the Company ceased active operations and
additional funding of product development at T1Xpert for several reasons. The
Company made claims under its existing policies of insurance for compensation in
order to continue operations. The Company believed it had sufficient coverage to
allow it to continue development and installation under its existing contract
and sufficient funding to locate a substitute investment banking customer to
replace the cancelled contract had it received sufficient insurance proceeds.
Efforts to collect under the Company's insurance policies resulted in the
Company reaching a settlement agreement with its insurance company. In exchange
for a release, certain representations, and assignment of certain rights of its
subsidiary T1Xpert Corp., the Company received settlement proceeds, which leaves
the Company with insufficient resources to recommence its operations as
previously established. The Company announced that it had appointed Mr. Guy
Zahavi of Tel Aviv, Israel, a specialist in brokerage technology and business
operations, to attempt to maximize the value, if any, of T1Xpert's remaining
assets. Under current conditions the Company believes that it is unlikely that
any significant value will be realized from the remaining T1Xpert assets.

                                     - 3 -
<PAGE>

          The financial statements contained herein have been prepared by
management in accordance with accounting principles generally accepted in the
United States of America, which contemplate continuation of the Company as a
going concern. However, the Company has ceased active operations and has ceased
additional funding of T1Xpert, has sustained substantial operating losses and
has used substantial amounts of working capital in its operations.

          In view of these matters, realization of the assets of the Company is
dependent upon the Company's ability to meet its financing requirements and the
success of future operations. The financial statements do not include
adjustments relating to the recoverability and classification of recorded asset
amounts and classification of liabilities that might be necessary should the
Company be unable to continue in existence. The financial statements contained
herein do not include any adjustments that might result from the outcome of this
uncertainty.

CUSTOMERS AND MARKETING

          The Company having ceased operations has no customers.

COMPETITION

          The Company having ceased operations has no competitors.

PROPRIETARY RIGHTS

          The Company having ceased operations and disbanded its management team
decided that it was imprudent and unable to pursue any patent applications. The
Company retains ownership of its software which is proprietary to the Company
but which in the opinion of the Company is not likely to realize significant
value.

DISCONTINUED OPERATIONS

          The Company has two subsidiaries that have previously discontinued
their operations.

          Through its wholly owned subsidiary, CIS Air, the Company participated
in the worldwide market for the sale and leasing of used, commercial aircraft
and aircraft engines. In recent periods, CIS Air's activities consisted
primarily of acquiring aircraft engines and then selling, leasing or selling
them subject to lease. CIS Air financed its portfolio acquisitions with cash
flows from operations or through borrowings under CIS Air's revolving credit
facility.

          In July 2000, the Company sold a portion of its engine portfolio and
began to liquidate the balance of its engine portfolio and other aviation
assets. The proceeds of the sales were used to pay down CIS Air's existing
credit facility with its lender. As of June 21, 2001, the balance on the credit
facility was fully paid. The Company reflected the aviation business as a
discontinued operation with appropriate disclosure and valuation under
accounting principles generally accepted in the United States of America.

          As of May, 2002, the majority of the assets and liabilities relating
to CIS Air's business have been sold or settled. Therefore, any remaining assets
or liabilities have not been accounted for as discontinued operations.

          In February 2001, a subsidiary of CIS Air, CIS Aircraft Partners Inc.,
ceased operations.

          In August 1999, the Company's subsidiary, CIS Corporation, ceased
entering into new equipment leases and sold a substantial portion of its
remaining lease portfolio.

          The Consolidated Balance Sheets and Statements of Operations for all
periods presented have been reclassified to report the results of discontinued
operations separately from those of continuing operations.

OTHER FINANCE ACTIVITIES

          In July 1997, the Company entered into a Joint Investment Agreement
with Emmes Investment Management Co. LLC to provide up to $8 million in
high-yield, short-term funding for commercial real estate transactions. The
Company has ceased making additional investments under the Agreement and has no
obligation to make any additional investments under the Agreement. At May 31,
2003, the Company's sole remaining investment in such transactions was
approximately $165,287, net of a reserve for loss on investment of $324,447.

                                     - 4 -
<PAGE>

          The Company has made loans or loan guarantees to borrowers with
profiles that did not meet the requirements of traditional lending institutions.
Based on the unique nature of the loans, the Company received fees, equity
interests or other forms of remuneration in addition to traditional interest.
The Company made loans to high technology companies during the fiscal year ended
May 31, 2000.

          In recognition of weak market conditions and based on management's
assessment of the probability of collection, the Company wrote down its
investments in all its high technology companies by $1.3 million in the fiscal
year ended May 31, 2001. During the fiscal year ended May 31, 2003 the Company
recovered $120,000 of the amount previously written off. The Company believes
there will be no further recoveries.

FINANCING

          The Company's financing strategy had been primarily to use its own
capital, except in the aviation subsidiary where the Company also had a
collateralized, revolving loan agreement with an institution to provide lease
and inventory financing for aircraft engines for CIS Air in the amount of
$10,000,000. The facility bore interest at prime plus 1/4% and expired in
December 2000. The Company arranged for several extensions with its lender. On
June 21, 2001, the debt was fully paid with proceeds from the sale of the
engines.

          Going forward the Company does not expect to seek or obtain, nor does
believe it currently has the ability to obtain, any outside financing.

CONCENTRATION OF CREDIT RISK

          The Company's notes receivable balance of $649,000 is owed by one
customer in the aviation business. Thus, the Company is directly affected by the
well being of this one company and the airline industry in general. The events
of September 11, 2001, negatively impacted the airline industry. The credit risk
associated with this customer is mitigated by the note being collateralized;
however a substantial portion of such collateral is outside the United States,
thereby creating potential difficulties for the recovery of collateral in case
of default. Further, it is estimated that the value of the underlying collateral
is below the carrying value of the note. The customer during the year requested
temporary postponements of certain payments, which the Company granted. When
making payments the customer has not been timely in its payments.

EMPLOYEES

          As of June 30, 2003, the Company has one full-time and one part-time
employee. These employees work in administration and are not employed under a
collective bargaining agreement.


ITEM 2. PROPERTIES

          The Company's previous executive offices were located in downtown
Manhattan. The Company occupied office space under a lease which was in the
aggregate approximately 6,000 square feet, for an aggregate monthly rental of
approximately $14,000.

          On February 26, 2002, the Company entered into a lease termination
agreement with its landlord for the remaining three years of its lease rental
obligations. This agreement released the Company from its lease obligation on
the premises. Such obligation was estimated to be $501,000 of base rent plus
additional utilities and operating expenses. In connection with this agreement,
the Company incurred a loss on disposal of fixed assets in the amount of
$48,000, incurred two months' rental expense and incurred estimated moving costs
of approximately $14,500.

          On August 29, 2002, the Company entered into another agreement for a
new office space in Manhattan. This agreement requires the Company to pay
monthly rent through August 31, 2004. The aggregate monthly rent will be $3,338
through the period August 31, 2003 and $3,927 through August 31, 2004.

          On August 15, 2003 the Company moved its executive offices to Tel
Aviv, Israel for a nominal rental. It remains liable for the office space
previously contracted for in Manhattan.

                                     - 5 -
<PAGE>

ITEM 3.   LEGAL PROCEEDINGS

          On November 8, 2002 the claim asserted by Dallas Aerospace against the
Company was resolved with a ruling in favor of the Company granting the
Company's summary judgment motion and dismissing all claims raised by Dallas
Aerospace. This judgment was entered in the United States District Court for the
Southern District of New York. Dallas Aerospace has filed an appeal with the
Second Circuit Court of Appeals in New York on November 12, 2002. The parties
are awaiting delivery of oral arguments in the case.

          On April 24, 2000 CIS Air filed suit in the United States District
Court for the Northern District of New York against American Air Ventures, Inc.
("American Air"), a Florida corporation. The suit seeks reimbursement in
connection with losses incurred in joint venture agreements between the parties
for the purchase and sale of engines. The suit further seeks indemnification
from American Air should CIS Air be found liable to Dallas AeroSpace, because
CIS Air purchased the engine sold to Dallas AeroSpace from American Air. The
parties settled their lawsuit under the joint venture agreement, but left open
all issues related to the Dallas matter. If the Company prevails in the Dallas
AeroSpace litigation CIS Air's claim for indemnification from American Air would
be moot. There can also be no certainty that should the Company need to do so,
that it will prevail on its indemnification claim, nor that if it should prevail
on such claim American Air will have the financial resources to meet such
indemnification.

          On March 7, 2000 CIS Air filed suit against Express One International,
Inc. ("Express One"), a Delaware corporation, in the Supreme Court, State of New
York, County of New York. The suit seeks damages of approximately $118,000 in
unpaid rent and repair charges. Express One filed for bankruptcy in March 2002
shortly after CIS filed its motion for summary judgment. An automatic stay in
connection with the bankruptcy proceeding prevents further action at this time.
CIS Air filed a claim in the bankruptcy court action against Express One, but
does not anticipate any material recovery.

          In July 2001 CIS Air filed suit in State Court of Florida, Broward
County against Aviation Systems International ("ASI") and the TIMCO division of
Aviation Sales Company relating to damage sustained by a CIS Air aircraft. The
aircraft was parked at TIMCO's maintenance facility when it was struck and
severely damaged by two other aircraft owned by ASI. CIS Air has been reimbursed
for a portion of the damages by its insurance carrier, and was seeking to
recover the $500,000 deductible and other unpaid costs from TIMCO and ASI. To
avoid a lengthy trial and litigation process the Company agreed to settle the
suit with the Company receiving its deductible, less payment of certain legal
expenses.

          The Bankruptcy Trustee in the bankruptcy case of Sky Trek
International, a former lessee of aircraft engines of CIS Air, filed a claim
against CIS Air seeking to obtain the return of $116,000 in security deposits on
two aircraft engines that were returned to CIS Air prior to the lease
expirations. The claim has been settled by the parties, and this settlement was
approved by the Court ,with CIS Air returning $17,500 of the deposit received
from Sky Trek to the Trustee.

          On June 3, 2002 the Company commenced an action in the Southern
District of New York against its insurer, Federal Insurance Company, seeking
reimbursement for losses under its insurance policy associated with the
September 11, 2001 terrorist attack in downtown Manhattan. In July 2003 the
Company settled with its insurer. In exchange for a release, certain
representations, and assignment of certain rights of its subsidiary T1Xpert
Corp., the Company received settlement proceeds, net of legal expenses, of
approximately $375,000.

          On July 30, 2002, the Company filed suit in the United States District
Court for the Southern District of New York against three stockholders of the
Company and another party alleging that these parties formed an undisclosed
group and wrongfully used material, non-public information concerning the
Company in violation of applicable federal securities laws and state statutes.
The Company settled with one of these stockholders as of September 3, 2002 and
the remaining parties separately on January 31, 2003. As a part of these
settlements, mutual releases of the parties, their officers, directors and
certain affiliates thereof were exchanged, the stockholders and certain
affiliates sold their shares in the Company back to the Company at the
prevailing market price or at a discount from market price and the stockholders
and certain affiliates agreed not to acquire any additional shares in the
Company.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote of the Company's shareholders
during the fourth quarter of the Company's fiscal year.

                                     - 6 -
<PAGE>

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY
          AND RELATED STOCKHOLDER MATTERS

          Until December 2001, the Company's Common Stock traded on the Nasdaq
Small-Cap Market under the symbol CISC. Beginning in January of 2002, the
Company's Common Stock began trading on the Over-the-Counter Bulletin Board
under the symbol CISC. The high and low bid information for the last two fiscal
years is as follows:
<TABLE>
<CAPTION>
                                   August 31       November 30      February 28        May 31
                                --------------   --------------   --------------   --------------
                                 First Quarter   Second Quarter    Third Quarter   Fourth Quarter
                                --------------   --------------   --------------   --------------
                                 Low     High     Low     High     Low     High     Low     High
                                -----   -----    -----   -----    -----   -----    -----   -----
<S>                             <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>
Fiscal year ended
  May 31, 2003                  $ .12   $ .25    $ .12   $ .18    $ .12   $ .14    $ .13   $ .14

Fiscal year ended
  May 31, 2002                  $ .70   $1.06    $ .28   $ .80    $ .19   $ .74    $ .20   $ .25
</TABLE>

          As the trading in the Company's stock has been illiquid, the market
price of the Company's stock may not be indicative of the value of the Company's
stock and further that a shareholder wishing to buy or sell shares of the
Company's stock may not be able to do so at prices consistent with previous
market prices.

          As of June 30, 2003, the Company believes that there were
approximately 393 record holders of the Company's Common Stock. No cash
dividends have been paid on the Common Stock to date and the Company does not
anticipate paying a dividend in the foreseeable future, as the Board of
Directors intends to retain any earnings for use in the business. Any future
determination of dividends will depend upon any dividend restrictions applicable
to the Company, its financial condition, results of operations and such other
factors as the Board of Directors deems relevant.


ITEM 6.   SELECTED FINANCIAL DATA

          The following table sets forth a summary of selected consolidated
financial data for the Company and its Subsidiaries as of the dates and for each
of the years stated.

          This information should be read in conjunction with the Company's
historical consolidated financial statements, the related notes, and the other
information contained herein, including the information set forth in "ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS."
<TABLE>
<CAPTION>
                                                 For the Year Ended May 31,
                            --------------------------------------------------------------------
Period Data                   2003        2002        2001        2000        1999        1998
                            --------    --------    --------    --------    --------    --------
                                       (Dollars in thousands except per share amounts)
<S>                         <C>         <C>         <C>         <C>         <C>         <C>
Total revenues              $    315    $    354    $  1,272    $  8,465    $  8,797    $  6,347
Costs and expenses             1,955       4,366       7,500      10,854      11,720       7,243
                            --------    --------    --------    --------    --------    --------
Loss from continuing
  operations before
  provision (benefit)
  for income taxes            (1,640)     (4,012)     (6,228)     (2,389)     (2,923)       (896)
Provision (benefit) for
  income taxes                     -           -           -           -       5,448        (341)
                            --------    --------    --------    --------    --------    --------
</TABLE>

                                     - 7 -
<PAGE>

<TABLE>
<CAPTION>
                                                 For the Year Ended May 31,
                            --------------------------------------------------------------------
Period Data                   2003        2002        2001        2000        1999        1998
                            --------    --------    --------    --------    --------    --------
                                       (Dollars in thousands except per share amounts)
<S>                         <C>         <C>         <C>         <C>         <C>         <C>
Loss from continuing
  operations                  (1,640)     (4,012)     (6,228)     (2,389)     (8,371)       (555)
Income (loss) from dis-
  continued operations,
  net of taxes                     -           -         743      (5,703)      1,544      (4,818)
                            --------    --------    --------    --------    --------    --------

Net loss                    $ (1,640)   $ (4,012)   $ (5,485)   $ (8,092)   $ (6,827)   $ (5,373)
                            ========    ========    ========    ========    ========    ========

Basic and Diluted Net (Loss)
  Income Per Common Share:
---------------------------

Loss from continuing
  operations                $   (.36)   $   (.72)   $  (1.00)   $  (0.36)   $  (1.21)   $  (0.08)
Income (loss) from dis-
  continued operations             -           -        0.12       (0.85)       0.22       (0.69)
                            --------    --------    --------    --------    --------    --------

Net loss                    $   (.36)   $   (.72)   $  (0.88)   $  (1.21)   $  (0.99)   $  (0.77)
                            ========    ========    ========    ========    ========    ========
</TABLE>


<TABLE>
<CAPTION>
                                                 For the Year Ended May 31,
                            --------------------------------------------------------------------
Balance Sheet Data            2003        2002        2001        2000        1999        1998
                            --------    --------    --------    --------    --------    --------
                                       (Dollars in thousands except per share amounts)
<S>                         <C>         <C>         <C>         <C>         <C>         <C>
Total assets                $  1,777    $  3,522    $  8,815    $ 14,253    $ 25,218    $ 39,861
Liabilities                      574         529       1,413         672       3,142      10,901
Shareholders' equity           1,203       2,993       7,402      13,581      22,076      28,960
</TABLE>

                                     - 8 -
<PAGE>

ITEM 7.   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 which appear elsewhere
in this Form 10-K.


                              RESULTS OF OPERATIONS

CONTINUING OPERATIONS

REVENUES

          For the three fiscal years ended May 31, 2003, total revenues
decreased to $315,000 in fiscal 2003 from $354,000 in fiscal 2002 and from $1.3
million in fiscal 2001. Equipment sales decreased to $-0- in fiscal 2003 and
2002, and from $633,000 in fiscal 2001. With the discontinuation of lease
originations in August 1999 and sale of a substantial portion of the portfolio
in fiscal 2000, there were no equipment sales in fiscal 2003 and 2002.

          Equipment rentals and income from direct financing leases decreased to
$-0- in fiscal 2003 from $34,000 in fiscal 2002, and from $110,000 in fiscal
2001. The decreases are primarily attributable to the sale of the lease
portfolio during the fiscal years 2001 and 2000.

          Interest, fees and other income decreased to $315,000 in fiscal 2003
from $320,000 in fiscal 2002, and from $529,000 in fiscal 2001. The decrease is
primarily the result of lower interest income earned on notes receivable, lower
interest income earned on cash balances, and the loss of income from T1Xpert's
operations offset by the receipt of a World Trade Center business recovery grant
received in 2003. Interest income earned on notes receivable was $138,000 in
2003, compared to $215,000 in 2002 and $235,000 in 2001. Interest income earned
on cash balances was $15,000 in 2003, compared to $43,000 in 2002 and $190,000
in 2001. Lower interest income earned on cash balances was due to lower cash
balances due to the funding of T1Xpert's operations and lower interest rates.
During the 2003 fiscal year the Company received a one time World Trace Center
business recovery grant in the amount of $150,000. The Company's revenues from
T1Xpert's operations were $-0- in 2003 and 2002, compared to $50,000 in 2001.

          Since the Company sold its portfolio of leases, discontinued the
aviation business and ceased the T1Xpert operations, management expects that
there will be no operating revenue in future periods from these operations.

COSTS AND EXPENSES

          Total costs and expenses decreased to $1.9 million in fiscal 2003 from
$4.4 million in fiscal 2002, and from $7.5 million in fiscal 2001. The decrease
is a result of lower cost of sales incurred in the equipment leasing and sales
business, decreases in loss on investments and lower research and development
expenses incurred by T1Xpert, and lower other operating expenses and selling,
general and administrative expenses. Cost of sales decreased to $-0- in fiscal
2003 and 2002 from $1.0 million in fiscal 2001. Loss on investments increased to
$51,000 in 2003 from $31,000 in 2002. The loss on investments in 2001 of $1.45
million was principally due to the Company's write down of its investments in
high technology companies. Other operating expenses decreased to $31,000 in 2003
from $97,000 in 2002, and from $189,000 in 2001.

          Depreciation of rental equipment decreased to $-0- in fiscal 2003 and
2002 from $26,000 in fiscal 2001. These decreases are due to a decrease in the
amounts of owned rental equipment as a result of the sale of the leasing
portfolio.

          Interest expense decreased to $-0- in fiscal 2003 and 2002 from $5,000
in fiscal 2001. The Company having no interest expense is due to the repayment
of the revolving loan agreement on June 21, 2001.

          Loss on investments during the 2003 fiscal year amounted to $51,000 as
compared to a $31,000 loss in 2002 and a $1,450,000 loss in 2001. The 2003
amount represents a write down of $171,000 on its real estate held for sale

                                     - 9 -
<PAGE>

offset by a $120,000 collection received during the year relating to an
investment in a high technology company which was written-down by the Company in
a previous year. The 2002 amount represents a write down of its real estate held
for sale. The 2001 amount principally represents a write down of the Company's
investments in high technology companies.

          Research and development expenses decreased to $-0- in fiscal 2003
from $1.7 million in fiscal 2002 and from $2.8 million in fiscal 2001. The
decreases in fiscal 2003 and 2002 were the result of the cessation of operations
by T1Xpert in December 2001.

          Selling, general and administrative expenses decreased to $1.8 million
in fiscal 2003 from $2.5 million in fiscal 2002, and from $2.0 million in fiscal
2001. In fiscal 2003 the decrease in selling, general and administrative
expenses was principally due to cost containment efforts made by the Company
including, but not limited to, lower legal expenses of approximately $416,000,
lower insurance costs of approximately $166,000, lower rent expenses of
approximately $91,000, and lower lease termination costs of $113,000. In fiscal
2002 the increase in selling, general and administrative expenses was
principally due to costs associated with restructuring of the Company's
operations, including but not limited to increased professional fees in the
amount of $530,000 and lease termination expense in the amount of $113,000. Such
increases were offset by lower salaries in the amount of $79,000 and lower
director fees in the amount of $70,000. The decrease in fiscal 2001 was
principally due to cost containment efforts and staff reduction between the
periods.

          Management expects that general and administrative costs (including
legal and accounting) may increase in future periods because of ongoing
litigation matters. In addition, selling costs will be minimal since the Company
does not expect to resume selling activities.

INCOME TAXES

          The Company's ability to realize any of its deferred tax assets is
dependent on the Company generating future taxable earnings, the income taxes on
which would be offset by the Company's NOL carryforwards. The NOL carryforwards
resulted from the Company's emergence from bankruptcy pursuant to a chapter 11
plan of reorganization in November 1994. The Company provided a full valuation
allowance for these deferred tax assets as of May 31, 2001, 2002 and 2003 since,
in management's opinion, the future realizability of the deferred tax assets is
uncertain in light of its actual operating results since reorganization. This
action itself does not impair the availability of the NOL carryforwards to
offset any future taxable earnings. The Company periodically reviews the
adequacy of the valuation allowance for the remaining NOL carryforwards and will
recognize benefits only if a reassessment indicates that it is more likely than
not that the benefits will be realized.

DISCONTINUED OPERATIONS

          In July 2000, the Company placed its commercial aircraft engine
portfolio up for competitive bid with plans to exit the aviation business. The
Company accounts for the aviation business as a discontinued operation. The
Company recorded a provision for losses on the disposal of discontinued assets
of $4,071,000 in the year ended May 31, 2000, relative to the disposal of CIS
Air assets, including $2,679,000 representing estimated losses on sale of
equipment, and other revenues and charges related to the discontinuance of the
business unit.

          During the year ended May 31, 2001, in the opinion of management,
there was further price erosion in the aviation industry relating to assets
carried by CIS Air, and management recorded an additional provision for costs
and expenses relative to the disposal of CIS Air's assets in the amount of $2.3
million, which includes an inventory valuation allowance of $735,000 and other
revenue and charges related to the discontinuance of the business unit. As a
result of the settlement of legal proceedings against Eastwind Airlines and UM
Holding Inc. (the "Eastwind settlement"), a gain of $3.0 million was recorded by
CIS Air which, when offset by the $2.3 million charge for costs as expenses,
resulted in a gain of $743,000 on the disposal of discontinued assets. This gain
is attributable to activities by CIS Air in connection with its leasing of
engines and aircraft and is accordingly shown in the discontinued operations
section of CIS Air's financial statements.

          As of May, 2002, the majority of the asset and recorded liabilities
relating to the Air Group Business have been sold or settled. Therefore, any
remaining assets or liabilities have not been accounted for as discontinued
operations.

          A summary of the results of operations of the discontinued CIS Air
business unit follows (in thousands):

                                     - 10 -
<PAGE>

<TABLE>
<CAPTION>
                                                                   For the Year Ended May 31,
                                                                --------------------------------
                                                                  2003        2002        2001
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
Revenues                                                        $      -    $      -    $  3,005
Costs and expenses                                                     -           -       2,262
                                                                --------    --------    --------

    Income (loss) from discontinued operations                         -           -         743
    Loss on disposal of discontinued operations                        -           -           -
                                                                --------    --------    --------

    Income (loss) before provision for income taxes                    -           -         743
    Provision for income taxes                                         -           -           -
                                                                --------    --------    --------

    Net income (loss) from discontinued operations              $      -    $      -    $    743
                                                                ========    ========    ========
</TABLE>

EQUIPMENT LEASING BUSINESS

          In August 1999, the Company's subsidiary had sold a substantial
portion of its remaining lease portfolio and ceased entering into new equipment
leases. The Company outsourced the administration of its remaining lease
portfolio, the termination dates of which exceed one year. In October 2000, the
Company sold all but one of the remaining equipment leases to the administrator.
In May 2002, the remaining equipment lease was sold to the administrator for an
immaterial amount.

SELECTED QUARTERLY OPERATIONS DATA

          The following tables set forth selected unaudited statement of
operations data for each of the quarters in the years ended May 30, 2003, 2002
and 2001. This data has been derived from the Company's unaudited financial
statements that have been prepared on the same basis as the audited financial
statements and in the opinion of management, include all adjustments, consisting
of normal recurring adjustments, necessary for a fair presentation of the
information when read in connection with the financial statements and the
related notes. The Company's quarterly operating results have varied
substantially in the past and may vary substantially in the future.

          Conclusions about the Company's future results for any period should
not be drawn from the selected unaudited statement of operations data, either
for any particular quarter or taken as a whole.

In thousands (except per share data)
<TABLE>
<CAPTION>
                                                                For the Quarter Ended
                                                    --------------------------------------------
                                                    Aug. 31,    Nov. 30,    Feb. 28,    May 31,
                                                      2002        2002        2003        2003
                                                    --------    --------    --------    --------
                                                                    (Unaudited)
<S>                                                 <C>         <C>         <C>         <C>
Revenue                                             $     61    $    193    $     37    $     24
Gross profit                                               -           -           -           -
Loss before extraordinary item and income taxes         (474)       (430)       (377)       (359)
Net loss                                                (474)       (430)       (377)       (359)

Basic and diluted loss before extraordinary
  item per common share                                 (.09)       (.09)       (.08)       (.08)
Basic and diluted loss per common share                 (.09)       (.09)       (.08)       (.08)
</TABLE>

                                     - 11 -
<PAGE>

<TABLE>
<CAPTION>
                                                                For the Quarter Ended
                                                    --------------------------------------------
                                                    Aug. 31,    Nov. 30,    Feb. 28,    May 31,
                                                      2001        2001        2002        2002
                                                    --------    --------    --------    --------
                                                                    (Unaudited)
<S>                                                 <C>         <C>         <C>         <C>
Revenue                                             $     85    $     79    $     71    $    119
Gross profit                                               -           -           -           -
Loss before extraordinary item and income taxes       (1,261)     (1,021)     (1,130)       (600)
Net loss                                              (1,261)     (1,021)     (1,130)       (600)

Basic and diluted loss before extraordinary
  item per common share                                (0.21)      (0.17)      (0.21)      (0.13)
Basic and diluted loss per common share                (0.21)      (0.17)      (0.21)      (0.13)
</TABLE>

<TABLE>
<CAPTION>
                                                                For the Quarter Ended
                                                    --------------------------------------------
                                                    Aug. 31,    Nov. 30,    Feb. 28,    May 31,
                                                      2000        2000        2001        2001
                                                    --------    --------    --------    --------
                                                                    (Unaudited)
<S>                                                 <C>         <C>         <C>         <C>
Revenue                                             $    282    $    638    $    130    $    222
Gross profit                                               8           1           -        (381)
Loss before extraordinary item and income taxes         (866)       (999)     (1,153)     (3,210)
Net loss                                                (866)        501      (1,353)     (3,767)

Basic and diluted loss before extraordinary
  item per common share                                (0.13)      (0.15)      (0.20)      (0.52)
Basic and diluted loss per common share                (0.13)       0.08       (0.23)      (0.60)
</TABLE>


                         LIQUIDITY AND CAPITAL RESOURCES

          Net cash used by operations for the year ended May 31, 2003 was
$631,000 as compared to net cash provided by operations for the year ended May
31, 2002 of $348,000 and as compared to net cash used in operations of
$2,147,000 for the year ended May 31, 2001; net cash used in continuing
operations for the year ended May 31, 2003 was $631,000 as compared to
$3,400,000 for the year ended May 31, 2002 and $2,900,000 for the year ended May
31, 2001. Net cash provided by discontinued operations for the year ended May
31, 2003 was $-0-, as compared to net cash provided by discontinued operations
for the year ended May 31, 2002 of $3,800,000, and net cash provided by
discontinued operations for the year ended May 31, 2001 of $717,000. For the
year ended May 31, 2002, cash provided by discontinued operations was primarily
due to the transfer of the discontinued operations assets to current operations.
During the year ended May 31, 2001, the Company received proceeds, net of legal
and other costs, of $3,000,000 from the settlement of the Eastwind claim.

          Net cash used in investing activities for the year ended May 31, 2003
was $45,000 compared to net cash used in investing activities for the year ended
May 31, 2002 of $6,000, and net cash provided by investing activities of
$1,200,000 for the year ended May 31, 2001. During the year ended May 31, 2003,
the Company received $120,000 resulting from a settlement of one of its
investments in a high technology company. In addition, the Company purchased
additional fixed assets in connection with its move to a new office. The
Company's expectations on making future investments will depend on future
settlements of any litigation matters and on sales of its current investments.
The Company's sale of equipment generated no proceeds in the years ended May 31,
2003 and 2002 as compared to $634,000 for the year ended May 31, 2001. The
Company's investment in mortgage participation notes generated $1,000 in
proceeds during the year ended May 31, 2002, as compared to $417,000 in proceeds
during the year ended May 31, 2001. In future periods cash flows from investing
activities will depend on cash collections of the mortgage participation notes
and other investments. The Company does not expect significant proceeds from
equipment sales in future periods.

                                     - 12 -
<PAGE>

          Net cash used in financing activities for the year ended May 31, 2003
was $150,000, compared to $501,000 for the year ended May 31, 2002 and $857,000
for the year ended May 31, 2001. The decrease in the 2003 fiscal year was due to
the lower dollar cost per share of acquisitions of treasury stock. The decrease
in cash used in fiscal 2002 was due to the November 20, 2000 transaction when
the Company completed a repurchase of 607,158 shares of outstanding common stock
from The Chase Manhattan Bank and its wholly owned subsidiaries. The reacquired
shares represented 9.30% of the 6,527,344 shares then outstanding. The shares
were purchased at $ .9882 per share, which was less than the market price.

          Cash used for financing activities for the year ended May 31, 2002 was
primarily due to the December 26, 2001 transaction when the Company completed a
repurchase of 100,800 shares of outstanding common stock from Mark Jaindl. On
that same date, the Company completed a repurchase of 592,534 shares of common
stock from Frederick J. Jaindl, the father of Mark Jaindl (together the "Jaindl
Shares"). The reacquired shares represented approximately 12% of the issued and
outstanding common stock of the Company. The shares were purchased for a total
of $475,000 or $.685 per share, which was greater than the market price. In
connection with the purchase of the Jaindl Shares, Mark and Frederick Jaindl
were granted a 10% passive carried interest in T1Xpert which may result in
additional amounts paid to the Jaindls if the Company makes cash distributions
to shareholders in excess of $2,525,000. The Jaindls have agreed not to purchase
any more shares of the Company. The Company and the Jaindls have executed mutual
releases. The repurchase reduced the number of outstanding shares from 5,859,486
to 5,166,152.

          As of May 31, 2003, the Company had $560,000 in cash and cash
equivalents, as compared to $1.4 million at May 31, 2002. The Company
established the CIS Air Loan Facility with a financing institution to provide
lease and inventory financing for aircraft engines for its operating subsidiary
CIS Air, in the amount of $10,000,000. The facility had a three-year term that
expired in December 2000 and permitted borrowing equal to a percentage of the
appraised value of the aircraft engines financed. The CIS Air Loan Facility bore
interest at prime plus 1/4%. The facility was not renewed, but repayment had
been extended beyond the original expiration date. Substantially all of the
assets of CIS Air were pledged as collateral for the loan. At May 31, 2001,
$765,542 of this facility was being utilized and was paid off in June 2001.

          As of May 31, 2003, 3,110,456 shares had been repurchased by the
Company at an aggregate cost of approximately $2,211,000.

          On August 26, 2002, the Board of Directors authorized the expenditure
of an additional $100,000 for the repurchase of its common stock in market
transactions.

          The Company believes it has sufficient cash on hand to meet current
anticipated administrative needs until various claims against the Company can be
resolved. There can be no assurance that the Company's estimate as to the
validity and valuation of the claims against the Company is accurate, in which
case the Company may be unable to meet claims against it. This may result in the
Company needing to sell off assets at distressed prices or liens filed against
the Company also resulting in distressed asset sales or the Company seeking
bankruptcy protection. Any such distressed asset sales may further diminish the
Company's ability to meet its obligations.

          The Company does not have sufficient funds on hand to develop its
T1Xpert products.

          The Company does not anticipate entering into financing arrangements
with financial institutions, involving collateralizing and/or leveraging the
Company's assets.

          In August 2003 the Company announced that it had appointed Guy Zahavi,
a specialist in brokerage technology and business operations as a Director. Mr.
Zahavi had been serving as a consultant to the Company since July 21, 2003. Mr.
Zahavi holds a B.A. in Economics and Management from The Academic College of Tel
Aviv, of Tel Aviv University. Mr. Zahavi served in the Israeli Air Force
attaining the rank of Major. Mr. Zahavi was also appointed the Chief Executive
Officer of the Company following the resignation of Jonah Meer as a Director and
Officer. Mr. Meer will remain as a consultant to the Company to assist the
Company in winding down its businesses, recovering on its assets and resolving
its litigation.

                                     - 13 -
<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

          In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit
or Disposal Activities", was issued which nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit and Activity (including Certain Costs Incurred
in a Restructuring)". The adoption of SFAS No. 146 had no effect on the
financial position and results of operations of the Company.

          In December 2002, SFAS 148, Accounting for Stock-Based Compensations -
Transition and Disclosure, was issued which is an amendment of SFAS 123 to
provide alternative methods of transition for an entity that voluntarily changes
to the fair value based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of that statement to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. The Company has determined not to adopt SFAS 148 as of May 31,
2003 as the Company has limited stock option activity.

          In November 2002, the FASB issued Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others an Interpretation of SFAS No. 5, 57, and
107, and recession of FASB Interpretation No. 34. The interpretation elaborates
on the disclosures to be made by a guarantor in its financial statements. It
also requires a guarantor to recognize a liability for the fair value of the
obligation undertaken in issuing the guarantee at the inception of a guarantee.
Management does not expect the adoption of this interpretation to have a
significant effect on the financial position and results of operations of the
Company.

          In January 2003, the FASB issued FIN No. 46, Consolidation of Variable
Interest annuities. FIN No. 46 clarifies the application of Accounting Research
Bulletin ("ARB") No. 51, Consolidated Financial Statements, to certain entities
in which equity investors do not have characteristics of controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
The application of the majority voting interest requirement in ARB 51 to certain
types of entities may not identify the party with a controlling financial
interest because the controlling financial interest may be achieved through
arrangements that do not involve a controlling interest. FIN No. 46 applies
immediately to variable interest entities created after January 31, 2003 and to
fiscal years beginning after June 15, 2003 for variable interest entities
acquired before February 1, 2003. Management does not expect the adoption of FIN
No. 46 to have a significant impact on the Company's financial statements.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK DISCLOSURES

          The Company is not exposed to material risks associated with interest
rate changes. The Company does not foresee any significant changes in its
exposure to fluctuations in interest rates in the near future. At May 31, 2003
the Company did not have any outstanding debt.

                                     - 14 -
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                            Page

Report of Independent Accountants - Current                                   16
                                  - Predecessor                               17

Financial Statements:

  Consolidated Balance Sheets
    May 31, 2003 and 2002                                                     18

  Consolidated Statements of Operations
    Years ended May 31, 2003, 2002 and 2001                                   19

  Consolidated Statements of Shareholders' Equity
    Years Ended May 31, 2003, 2002 and 2001                                   20

  Consolidated Statements of Cash Flows
    Years Ended May 31, 2003, 2002 and 2001                                21-22

  Notes to Consolidated Financial Statements                               23-34


Financial Statement Schedule:

  Schedule II - Valuation and Qualifying Accounts                             35

  All other schedules are omitted because they are not applicable or the
    required information is shown in the financial statements or notes thereto.

                                     - 15 -
<PAGE>




                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and Stockholders of
Continental Information Systems Corporation:


In our opinion, the consolidated financial statements listed in the accompanying
index on page 15 present fairly, in all material respects, the consolidated
financial position of Continental Information Systems Corporation and its
subsidiaries (the "Company") at May 31, 2003 and 2002, and the results of their
operations and their cash flows for the years ended May 31, 2003 and 2002 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the accompanying index presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and the financial
statement schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, on December 27, 2001, the Company ceased operations and
ceased additional funding of T1Xpert. The Company is now considering various
strategic alternatives without the use of additional Company funds to continue
T1Xpert's product development. There is currently no demonstrated market for
this product and the Company does not have any contracted clients which raises
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




Lazar Levine & Felix LLP
New York, New York
July 17, 2003

                                     - 16 -
<PAGE>




                        REPORT OF INDEPENDENT ACCOUNTANTS




To the Board of Directors and Stockholders of
Continental Information Systems Corporation:


In our opinion, the consolidated financial statements listed in the accompanying
index on page 15 present fairly, in all material respects, the consolidated
financial position of Continental Information Systems Corporation and its
subsidiaries (the "Company") at May 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
May 31, 2001 in conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and the
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the initial stages of developing its
securities processing software business, the product, T1Xpert, has not yet been
released or tested for functionality. There is currently no demonstrated market
for this product and the Company does not have any contracted clients which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.




PRICE WATERHOUSECOOPERS LLP
New York, New York
August 17, 2001

                                     - 17 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS
In Thousands (Except Share Data)

May 31, 2003 and 2002
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                              2003        2002
                                                                            --------    --------
<S>                                                                         <C>         <C>
ASSETS:
Current assets:
  Cash and cash equivalents                                                 $    560    $  1,386
  Accounts receivable                                                              -          33
  Notes receivable, net of allowance for doubtful accounts
    of $1,000 in 2003 and 2002                                                   600         747
  Investment in mortgage participation notes                                     197         197
  Other investments                                                              126           -
  Other current assets                                                            32         208
                                                                            --------    --------
        Total current assets                                                   1,515       2,571
                                                                            --------    --------
Property, plant and equipment, net (Note 5)                                       48          37
                                                                            --------    --------
Other assets:
  Notes receivable, net of current portion                                        49         577
  Real estate held for sale, net (Note 4)                                        165         337
                                                                            --------    --------
        Total other assets                                                       214         914
                                                                            --------    --------
        Total assets                                                        $  1,777    $  3,522
                                                                            ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
  Accounts payable and other liabilities                                    $    574    $    529
                                                                            --------    --------
        Total current liabilities                                                574         529
                                                                            --------    --------
Commitment and contingencies (Notes 9, 10 and 11)

SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; authorized 20,000,000 shares,
  issued 7,101,668 shares at
  May 31, 2003 and 2002 (Notes 6 and 7)                                           71          71
Additional paid-in capital                                                    35,233      35,233
Accumulated deficit                                                          (31,890)    (30,250)
                                                                            --------    --------
                                                                               3,414       5,054
Treasury stock, at cost:  3,110,456 shares at May 31, 2003 and
  1,935,516 shares atMay 31, 2002 (Note 6)                                    (2,211)     (2,061)
                                                                            --------    --------
        Total shareholders' equity                                             1,203       2,993
                                                                            --------    --------
        Total liabilities and shareholders' equity                          $  1,777    $  3,522
                                                                            ========    ========
</TABLE>
--------------------------------------------------------------------------------

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

                                     - 18 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF OPERATIONS
In Thousands (Except Per Share Data)

Years Ended May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                  2003        2002        2001
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
REVENUES:
  Equipment sales                                               $      -    $      -    $    633
  Equipment rentals                                                    -          30          76
  Income from direct financing leases                                  -           4          34
  Interest, fees and other income                                    315         320         529
                                                                --------    --------    --------
                                                                     315         354       1,272
                                                                --------    --------    --------
COSTS AND EXPENSES:
  Cost of sales                                                        -           -       1,005
  Depreciation of rental equipment                                     -           -          26
  Interest expense                                                     -           -           5
  Other operating expenses                                            31          97         189
  Loss on investments                                                 51          31       1,450
  Research and development                                             -       1,699       2,795
  Selling, general and administrative expenses                     1,873       2,539       2,030
                                                                --------    --------    --------
                                                                   1,955       4,366       7,500
                                                                --------    --------    --------
        Loss from continuing operations before
          provision for income taxes                              (1,640)     (4,012)     (6,228)
  Benefit for income taxes                                             -           -           -
                                                                --------    --------    --------
        Loss from continuing operations (Note 8)                  (1,640)     (4,012)     (6,228)
                                                                --------    --------    --------
  Discontinued operations (Note 3):
    Gain on disposal of discontinued
      operations, net of income taxes                                  -           -         743
                                                                --------    --------    --------
                                                                       -           -         743
                                                                --------    --------    --------
        Net loss                                                $ (1,640)   $ (4,012)   $ (5,485)
                                                                ========    ========    ========
Basic and diluted net loss per share (Note 10):
  Loss from continuing operations                               $   (.36)   $   (.72)   $  (1.00)
  Income (loss) from discontinued operations                           -           -        0.12
                                                                --------    --------    --------

        Net loss per share                                      $   (.36)   $   (.72)   $  (0.88)
                                                                ========    ========    ========
Weighted average number of shares
  of common stock outstanding                                      4,608       5,596       6,222
                                                                ========    ========    ========
</TABLE>
--------------------------------------------------------------------------------

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

                                     - 19 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In Thousands (Except Number of Shares)

Years Ended May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                              Common              Additional                           Treasury
                              Shares     Common     Paid-In   Accumulated  Treasury     Common
                              Issued      Stock     Capital     Deficit      Stock      Shares
                             ---------   ------   ----------  -----------  --------   -----------
<S>                          <C>          <C>      <C>         <C>         <C>          <C>
Balance - May 31, 2000       7,101,668    $ 71     $ 35,129    $(20,753)   $  (866)     (525,424)
  Net loss                           -       -            -      (5,485)         -             -
  Acquisition of treasury
    shares                           -       -            -           -       (694)     (692,358)
                             ---------    ----     --------    --------    -------    ----------
Balance - May 31, 2001       7,101,668      71       35,129     (26,238)    (1,560)   (1,217,782)
  Net loss                           -       -            -      (4,012)         -             -
  Acquisition of treasury
    shares                           -       -            -           -       (501)     (717,734)
  Fair value of officers'
    compensation                     -       -          104           -          -             -
                             ---------    ----     --------    --------    -------    ----------
Balance - May 31, 2002       7,101,668      71       35,233     (30,250)    (2,061)   (1,935,516)
  Net loss                           -       -            -      (1,640)         -             -
  Acquisition of treasury
    shares                           -       -            -           -       (150)   (1,174,940)
                             ---------    ----     --------    --------    -------    ----------
Balance - May 31, 2003       7,101,668    $ 71     $ 35,233    $(31,890)   $(2,211)   (3,110,456)
                             =========    ====     ========    ========    =======    ==========
</TABLE>
--------------------------------------------------------------------------------

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

                                     - 20 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands

Years Ended May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                  2003        2002        2001
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                      $ (1,640)   $ (4,012)   $ (5,485)
  Less: gain from discontinued operations                              -           -         743
                                                                --------    --------    --------
        Loss from continuing operations                           (1,640)     (4,012)     (6,228)
                                                                --------    --------    --------
  Adjustments to reconcile loss from continuing operations
   to net cash provided by (used in) operating activities:
    Loss on sale of equipment                                          -           -         372
    Loss on disposal of fixed assets                                   -          48           -
    Loss on investments                                               51          31       1,450
    Depreciation and amortization expense                             27          99         130
    Fair value of officers' compensation                               -         104           -
    Effect on cash flows of changes in:
      Net accounts receivable                                         33         (29)      1,090
      Notes receivable                                               677         488         328
      Other assets                                                   176         110         (10)
      Accounts payable and other liabilities                          45        (266)          4
                                                                --------    --------    --------
                                                                   1,009         585       3,364
                                                                --------    --------    --------
        Net cash used in continuing operations                      (631)     (3,427)     (2,864)

        Net cash provided by discontinued operations                   -       3,775         717
                                                                --------    --------    --------
        Net cash provided by (used in) operating activities         (631)        348      (2,147)
                                                                --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment                                      -           -         634
  Purchase of property and equipment                                 (39)         (7)        (15)
  Purchase of investments bonds                                     (126)          -           -
  Collections of rentals on direct financing leases, net of
    amortization of unearned income                                    -           -         131
  Proceeds from mortgage participation notes                           -           1         417
  Proceeds from investments recovery                                 120           -           -
                                                                --------    --------    --------
        Net cash provided by (used in) investing activities          (45)         (6)      1,167
                                                                --------    --------    --------
</TABLE>
--------------------------------------------------------------------------------

(Continued)

                                     - 21 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
In Thousands

Years Ended May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                  2003        2002        2001
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on lease, bank and institution financings            $      -    $      -    $   (163)
  Purchase of treasury stock                                        (150)       (501)       (694)
                                                                --------    --------    --------
        Net cash used in financing activities                       (150)       (501)       (857)
                                                                --------    --------    --------
        Net decrease in cash and cash equivalents                   (826)       (159)     (1,837)

CASH AND CASH EQUIVALENTS:
  Beginning of year                                                1,386       1,545       3,382
                                                                --------    --------    --------
  End of year                                                   $    560    $  1,386    $  1,545
                                                                ========    ========    ========

SUPPLEMENTAL CASH FLOW DISCLOSURES:
  Cash paid for interest                                        $      -    $      -    $      5
                                                                ========    ========    ========

SUPPLEMENTAL SCHEDULE OF
 NONCASH ACTIVITIES:
  Inventory arising from transfers of
    equipment that came off-lease                               $      -    $      -    $    685
                                                                ========    ========    ========

  Transfer of inventory from discontinued
    operations to other assets                                  $      -    $     52    $      -
                                                                ========    ========    ========

  Transfer of other assets from discontinued
    operations to other assets                                  $      -    $      5    $      -
                                                                ========    ========    ========

  Transfer of payable from discontinued
    operations to accounts payable                              $      -    $   (282)   $      -
                                                                ========    ========    ========
</TABLE>

--------------------------------------------------------------------------------

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

                                     - 22 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


1.   Summary of Significant Accounting Policies
     ------------------------------------------

       Nature of Operations
       --------------------

       Continental Information Systems Corporation is a New York Corporation
that was organized in 1968. Together with its subsidiaries (the "Company") it
was a specialized financial services company that engaged in the leasing, sales
and management of commercial aircraft and engines, among other assets, and was
also engaged in other financing activities, including commercial real estate
financing. In August 1999, the Company ceased entering into new equipment leases
and sold a substantial portion of its remaining lease portfolio. Since then, the
Company has disposed of the balance of its remaining lease portfolio. In July
2000 the Company's subsidiary, CIS Air Corporation, exited the aviation
business.

       In August 1999, the Company changed its focus to the development and
commercialization of a Web-enabled electronic securities processing software
platform which would use proprietary technology and adapt to changes in the
securities industry including operational changes related to increased volume,
the ability to effect trades through the Internet, Electronic Crossing Networks,
decimalization, expanded trading hours, various rule changes and the shift from
settling trades in three days to settling trades in one day. This latter shift
is commonly referred to as "T+1." The subsidiary that was formed to engage in
this line of business is T1Xpert Corp. ("T1Xpert").

       The terrorist attacks of September 11, 2001 against the United States of
America had a negative effect on the U.S. securities industry and T1Xpert.
T1Xpert had begun work on a software development project for a global investment
bank. This project was canceled as a result of the events of September 11, 2001.

       On December 27, 2001, the Company ceased active operations and any
additional funding of T1Xpert. T1Xpert has expended approximately $6.2 million
from its inception in August 1999 through May 31, 2003.

       The Company made claims under its existing policies of insurance for
compensation in order to continue operations. The Company believed it had
sufficient coverage to allow it to continue development and installation under
its existing contract and sufficient funding to locate a substitute investment
banking customer to replace the cancelled contract had it received sufficient
insurance proceeds. Efforts to collect under the Company's insurance policies
resulted in the Company reaching a settlement agreement with its insurance
company. In exchange for a release, certain representations, and assignment of
certain rights of its subsidiary T1Xpert Corp., the Company received settlement
proceeds, which leaves the Company with insufficient resources to recommence its
operations as previously established. The Company announced that it had
appointed Mr. Guy Zahavi of Tel Aviv Israel, a specialist in brokerage
technology and business operations, to attempt to maximize the value, if any, of
T1Xpert's remaining assets. Under current conditions the Company believes that
it is unlikely that any significant value will be realized from the remaining
T1Xpert assets.

       Consolidation
       -------------

       The accompanying consolidated financial statements include the accounts
of Continental Information Systems Corporation and its wholly owned
subsidiaries. All intercompany accounts have been eliminated in consolidation.

       Cash and Cash Equivalents
       -------------------------

       Cash and cash equivalents include checking and money market accounts and
short term commercial paper with financial institutions having original
maturities of 90 days or less.

       Other Investments
       -----------------
       Other investments consists of investment grade corporate bonds with
maturities in excess of one year.

                                     - 23 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       Reclassification
       ----------------

       In years prior to May 31, 2002, the Company had active leases and
believed that an unclassified balance sheet more appropriately reflected its
leasing activities. In light of the Company's cessation of leasing operations,
the Company believes a classified balance sheet reflects its current status.
Accordingly, the consolidated balance sheet as of May 31, 2002 has been prepared
in a classified format.

       Concentration of Credit Risk
       ----------------------------

       Financial instruments which potentially subject the Company to credit
risk consist principally of cash with financial institutions and notes
receivable. The Company maintains cash deposits with major banks and financial
institutions which may exceed federally insured limits. The Company periodically
assesses the financial condition of the institutions and believes the risk of
any loss is minimal. At May 31, 2003, cash in excess of FDIC limits amounted to
approximately $460,000.

       The Company's notes receivable balance of $649,000 is owed by one
customer in the aviation business. Thus, the Company is directly affected by the
financial condition of this company and the airline industry in general. The
credit risk associated with this customer is somewhat mitigated by the note
being collateralized; however, a substantial portion of such collateral is
outside the United States, thereby creating potential difficulties of recovery
of collateral in case of default. The value of the collateral is estimated to be
below the carrying value of the note. The customer during the year requested
temporary postponements of certain payments, which the Company granted. When
making payments the customer has not been timely.

       Investment in Mortgage Participation Notes
       ------------------------------------------

       Investment in mortgage participation notes represents investments in
high-yield, short-term commercial real estate transactions and are carried at
the lower of cost or market. Interest income on the notes is recorded monthly
using the weighted average estimated yields on these investments. In June 2003
the Company was advised that the mortgage was in arrears, that the Lead Lender
would be taking title to the property and that additional funds would be needed
to be raised from investors. This requires the original loan to be modified on
terms believed to be less favorable to the Company.

       Property, Plant and Equipment
       -----------------------------

       Property, plant and equipment are recorded at cost and are being
depreciated using the straight-line method over the estimated useful lives of
such assets. Leasehold improvements were depreciated over three to seven years
being the lesser of the lease term or useful life of the asset. Computer
equipment and software is depreciated over three to five years and furniture,
fixtures and office equipment over seven years and aircraft engines over seven
years from the date of purchase.

       Income Taxes
       ------------

       The Company accounts for income taxes under the asset and liability
method required by Statement of Financial Accounting Standards No. 109 ("SFAS
109"), Accounting for Income Taxes. SFAS 109 requires the recording of deferred
tax assets and liabilities for the future tax effects of temporary differences
between the bases of all assets and liabilities for financial reporting purposes
and tax purposes. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The Company
periodically reviews the adequacy of the valuation allowance and will recognize
benefits only if reassessment indicates that it is more likely than not that the
benefits will be realized. A valuation allowance for the full amount of deferred
tax assets was provided for in income tax expense in 2003, 2002 and 2001.

                                     - 24 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       Net Income (Loss) Per Share
       ---------------------------

       Earnings per share is calculated in accordance with Statement of
Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per Share, which
specifies standards for computing and disclosing net income (loss) per share.
Basic and diluted net loss per share for the fiscal years ended May 31, 2003,
2002 and 2001, was computed based on the weighted average number of shares of
common stock outstanding during the periods. As of May 31, 2003, the Company had
no issued and outstanding options to purchase shares of common stock (see Note
7).

       Estimates
       ---------

       The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ materially
from those estimates.

       Research and Development Expenditures
       -------------------------------------

       Research and development expenditures in connection with the development
of the T1Xpert securities processing software platform were expensed as
incurred. If the Company were to enter a production environment and
technological feasibility were achieved, future capital costs would be
capitalized in accordance with FASB Statement No. 86, "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed."


2.   T1Xpert Corp.
     -------------

       On December 27, 2001, the Company ceased active operations and additional
funding of product development at T1Xpert for several reasons. The Company made
claims under its existing policies of insurance for compensation due to the
events of September 11, 2001 in order to continue operations. The Company
believed it had sufficient coverage to allow it to continue development and
installation under its existing contract and sufficient funding to locate a
substitute investment banking customer to replace the cancelled contract had it
received sufficient insurance proceeds. Efforts to collect under the Company's
insurance policies resulted in the Company reaching a settlement agreement with
its insurance company. In exchange for a release, certain representations, and
assignment of certain rights of its subsidiary T1Xpert Corp., the Company
received settlement proceeds, which leaves the Company with insufficient
resources to recommence its operations as previously established.

       Risks and Uncertainties
       -----------------------

       On July 23, 2003 the Company announced that it will appoint Mr. Guy
Zahavi of Tel Aviv Israel, a specialist in brokerage technology and business
operations, to attempt to maximize the value, if any, of T1Xpert's remaining
assets. Under current conditions the Company believes that it is unlikely that
any significant value will be realized from the remaining T1Xpert assets.

                                     - 25 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


3.   Discontinued Operations
     -----------------------

       On July 14, 2000, the Company announced that it was offering for sale its
commercial aircraft engine portfolio by competitive bid, that upon completion of
the sale it would exit the aviation business, and that it would account for and
report the Air Group Business as a discontinued operation. In the quarter ended
May 31, 2000, the Company wrote down CIS Air's assets by $4,071,000, including
$2,679,000 representing estimated losses on sale of equipment, and other
revenues and charges related to the discontinuance of the business unit.

       During the year ended May 31, 2001, in the opinion of management, there
was further price erosion in the aviation industry relating to assets carried by
CIS Air and management recorded an additional provision relative to the disposal
of CIS Air's assets in the amount of $2.2 million, which includes an inventory
valuation allowance of $735,276. As a result of the settlement of legal
proceedings against Eastwind Airlines and UM Holding Inc. (the "Eastwind
settlement"), a gain of $3.0 million was recorded by CIS Air. This gain is
included, net of taxes in the discontinued operations section of the Company's
financial statements.

       As of May, 2003, the majority of the assets relating to the Air Group
Business have been sold.

       The Company had a revolving loan agreement (the "CIS Air Loan facility")
with an institution to provide lease and inventory financing for aircraft
engines for CIS Air, in the amount of $10,000,000. The CIS Air Loan facility had
a three-year term and permitted borrowings equal to a percentage of the
appraised value of the aircraft engines financed. Substantially all of the
assets of CIS Air were pledged as collateral for the CIS Air Loan facility. At
May 31, 2001, $765,542 of the CIS Air Loan facility was being utilized. The CIS
Air Loan facility bore interest at prime plus .25% (7.25% and 9.75% at May 31,
2001 and 2000, respectively) and expired in December 2000. The Company arranged
for several extensions of the CIS Air Loan facility so as to allow sufficient
time for an orderly paydown. The Company paid interest related to the CIS Air
Loan facility of $199,516 and $619,000 in fiscal 2001 and 2000, respectively.
Proceeds of sale were used to permanently pay down the CIS Air Loan facility. On
June 21, 2001, the CIS Air Loan facility was completely repaid.

       The Consolidated Statement of Operations for 2001 has been reclassified
to report the results of discontinued operations separately from those of
continuing operations. The income (loss) from and net assets of discontinued
operations reflected on the accompanying Consolidated Financial Statements
consist of the following (in thousands):
<TABLE>
<CAPTION>
                                                                       Year Ended May 31,
                                                                --------------------------------
                                                                  2003        2002        2001
                                                                --------    --------    --------
<S>                                                             <C>         <C>         <C>
      Revenues                                                  $      -    $      -    $      -
      Costs and expenses                                               -           -           -
                                                                --------    --------    --------
            Income (loss) from discontinued operations                 -           -           -

      Gain on disposal of discontinued operations                      -           -         743
                                                                --------    --------    --------
            Income before provision for income taxes                   -           -         743

      Provision for income taxes                                       -           -           -
                                                                --------    --------    --------
            Net income from discontinued operations             $      -    $      -    $    743
                                                                ========    ========    ========
</TABLE>

                                     - 26 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


4.   Real Estate Held for Sale
     -------------------------

       On July 3, 1997, the Company announced that it had entered into a Joint
Investment Agreement with Emmes Investment Management Co. LLC to provide up to
$8 million in high-yield, short-term financing for commercial real estate
transactions. At May 31, 2003, the Company's sole remaining investment in such
transactions was carried at approximately $165,000, net of a reserve for loss on
investment of $324,000. During the year ended May 31, 2001, the underlying
property was foreclosed and is therefore included in real estate held for sale
on the accompanying balance sheet.


5.   Property, Plant and Equipment
     -----------------------------

       Property, plant and equipment consist of the following as of May 31 (in
thousands):
<TABLE>
<CAPTION>
                                                                  2003        2002
                                                                --------    --------
<S>                                                             <C>         <C>
          Computer equipment and software                       $    254    $    254
          Furniture, fixtures and office equipment                    38           -
                                                                --------    --------
                                                                     292         254
          Less accumulated depreciation                              244         217
                                                                --------    --------
                                                                $     48    $     37
                                                                ========    ========
</TABLE>

6.   Common Stock
     ------------

       Each share of common stock entitles the holder to one vote on all matters
submitted to a vote of shareholders. The Company does not anticipate the payment
of dividends on the common stock for the foreseeable future.

       As of May 31, 2003, approximately 3,110,000 shares had been repurchased
by the Company at an aggregate cost of approximately $2,211,000. Subject to
approval from the Board of Directors, the Company may repurchase additional
shares at prevailing prices in the open market or in negotiated or other
transactions. The Company will hold all repurchased shares of common stock in
its treasury.


7.   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, at the discretion of
the Compensation Committee or the Board of Directors, employees of and
independent contractors and consultants to the Company. Options granted to
non-employee directors of the Company in any year become exercisable at the next
annual stockholders' meeting while those granted to employees of and independent
contractors and consultants to the Company are subject to vesting periods
determined by the Compensation Committee or the Board of Directors. Options
granted to employees in fiscal 1999 become exercisable in installments of 33-1/3
percent at the grant date and at each subsequent fiscal year end except for
options granted to two executive officers which become fully exercisable one
year from the grant date. The Company applies APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
the 1995 Plan. Accordingly, no compensation cost has been charged against income
for the stock option plan. Had compensation cost for the 1995 Plan been
determined based on the fair value at the grant dates for awards under the Plan,
consistent with the requirements of FASB Statement No. 123, "Accounting for
Stock-Based Compensation," the Company's net income (loss) and net income (loss)
per share would have reflected the pro forma amounts indicated below:

                                     - 27 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                           (In thousands, except per share amounts)

                                                      2003        2002        2001
                                                    --------    --------    --------

<S>                                                 <C>         <C>         <C>
          Net loss              - as reported       $ (1,640)   $ (4,012)   $ (5,485)
                                - pro forma         $ (1,640)   $ (4,012)   $ (5,507)

          Basic and diluted
            net loss per share  - as reported       $ (.36)     $ (.72)     $ (.88)
                                - pro forma         $ (.36)     $ (.72)     $ (.89)
</TABLE>

       The fair value of each stock option grant has been estimated on the date
of each grant using the Black-Scholes option-pricing model with the following
weighted average assumptions:
<TABLE>
<CAPTION>
                                                      2003        2002        2001
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
          Risk-free interest rate                      -%          -%          5.4%
          Expected life (months)                       -           -          48
          Expected volatility                          -%          -%         68%
          Expected dividend yield                      -           -           -
</TABLE>

       The weighted-average fair value of options granted during fiscal 2001 was
$.58 per share. There were no options granted in fiscal 2003 and 2002.

       A summary of the status of the 1995 Plan as of May 31, 2001, 2002 and
2003, and changes during the years ending on those dates is presented below:
<TABLE>
<CAPTION>
                                                                        Weighted Average
                                                    Number of            Exercise Price
                                                     Options               Per Option
                                                    ---------           ----------------
<S>                                                 <C>                     <C>
          Outstanding at
            May 31, 2000 (302,003 exercisable)       315,283                $  2.18
          Granted                                     15,000                $  1.06
          Exercised                                        -                      -
          Forfeited/expired                         (107,667)               $  2.19
                                                    ---------
          Outstanding at
            May 31, 2001 (207,616 exercisable)       222,616                $  2.09
          Granted                                          -                      -
          Exercised                                        -                      -
          Forfeited/expired                          (67,666)               $  2.27
                                                    ---------
          Outstanding at
            May 31, 2002 (154,950 exercisable)       154,950                $  2.02
          Granted                                          -                      -
          Exercised                                        -                      -
          Forfeited/expired                         (154,950)               $  2.02
                                                    ---------
          Outstanding at
            May 31, 2003 (-0- exercisable)                 -                      -
                                                    =========
</TABLE>

       As of May 31, 2003, there were no options outstanding.

                                     - 28 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       During the year ended May 31, 2003, 154,950 options were forfeited/
expired with a weighted average exercise price of $2.02 per share.

       In 2000, the Board of Directors of TIXpert adopted the TIXpert Corp.
Stock Compensation Plan (the "T1X 2000 Plan"). The T1X 2000 Plan provided for
the issuance of stock options covering up to 2,000,000 shares of common stock to
employees and advisory board members of TIXpert. Options granted typically do
not become exercisable until at least one year from the date of commencement of
employment and vest ratably over periods of time as provided at the discretion
of the Board of TIXpert. Option grants expire ten years from date of grant, or
upon termination of the employee's employment with TIXpert.

       As of May 31, 2003 there were no outstanding stock options in T1X 2000
plan. During the year ended May 31, 2003, 500,000 options were forfeited/expired
with a weighted average exercise price of $0.675 per share under the T1X 2000
Plan. During the year ended May 31, 2002, 1,142,500 options were
forfeited/expired with a weighted average exercise price of $0.675 per share. As
of May 31, 2002 there were 500,000 options outstanding at an option price of
$0.0675. The T1X 2000 Plan was immaterial to the earnings of the Company.

8.   Income Taxes
     ------------

       The components of the provision (benefit) for income taxes from
continuing and discontinuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
                                                           Year Ended May 31,
                                                    --------------------------------
                                                      2003        2002        2001
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
          Current
            Federal                                 $      -    $      -    $      -
            State                                          -           -           -
                                                    --------    --------    --------
          Deferred                                    (1,499)     (2,112)       (102)
          Valuation allowance                          1,499       2,112         102
                                                    --------    --------    --------
                                                    $      -    $      -    $      -
                                                    ========    ========    ========
</TABLE>

       A reconciliation of income tax expense (benefit) at the statutory rate to
reported income tax expense (benefit) for continuing operations follows (in
thousands):
<TABLE>
<CAPTION>
                                                           Year Ended May 31,
                                                    --------------------------------
                                                     2003        2002        2001
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
          U.S. federal statutory rate
            applied to pretax (loss)
            income from continuing
            operations                              $   (656)   $ (1,605)   $ (2,180)
          State income taxes, net of
            federal benefit                                -           -           -
          Other, principally temporary
            differences                                 (843)       (507)      2,078
          Change in the valuation
            allowance                                  1,499       2,112         102
                                                    --------    --------    --------
                                                    $      -    $      -    $      -
                                                    ========    ========    ========
</TABLE>

                                     - 29 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       The income tax effect of the significant temporary differences and
carry-forwards which give rise to deferred tax assets (liabilities) are as
follows as of May 31 (in thousands):
<TABLE>
<CAPTION>
                                                      2003        2002        2001
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
        Assets
          Net operating loss                        $ 25,700    $ 22,953    $ 19,204
          Prepaid lease revenue                            -           -           -
          Discontinued operations                          -         297       1,547
          Deferred expenses                                -         848           -
          Other                                          129         232           2
          Leased assets                                    -           -       1,465
          Valuation allowance                        (25,829)    (24,330)    (22,218)
                                                    --------    --------    --------
                                                    $      -    $      -    $      -
                                                    ========    ========    ========
</TABLE>

       A full valuation allowance was provided for such deferred tax assets
since, in management's opinion, the realizability of such assets was uncertain
in light of the Company's actual operating results since reorganization. The
Company periodically reviews the adequacy of the valuation allowance and will
recognize benefits only if a reassessment indicates that it is more likely than
not that the benefits will be realized. As of May 31, 2003, the Company had net
operating loss carryforwards for future taxable income in the amount of
approximately $61,600,000 which will expire from 2005-2022. Such net operating
capital loss carryforwards are subject to annual limitations as to use. Further
in the event of a change of control, as defined, the operating losses can be
substantially eliminated.


9.   Employee Benefit Plans
     ----------------------

       The Company maintains a defined contribution 401(k) plan covering
substantially all of its employees under which it is obligated to make matching
contributions at the rate of 50% of the first 6% of participant earnings
contributed to the plan and which provides for an annual discretionary
contribution based on participants' eligible compensation. Employees generally
became eligible to participate in the plan after the completion of one full year
of employment. Matching and discretionary contributions made by the Company vest
over a five-year period. Matching Company contributions to the plan for the
fiscal years ended May 31, 2003, 2002 and 2001, were $5,000, $18,500 and
$26,000, respectively. The Company made no discretionary contribution.


10.  Commitments and Contingencies
     -----------------------------

       Rental Commitments
       ------------------

       On February 26, 2002, the Company entered into a lease termination
agreement with its landlord for the remaining three years of its lease rental
obligations. This agreement released the Company from its lease obligation on
the premises. Such obligation was estimated to be $501,000 of base rent plus
additional utilities and operating expenses. In connection with this agreement,
the Company incurred a loss on disposal of fixed assets in the amount of
$48,000, incurred two months rental expense and incurred estimated moving costs
of approximately $23,000. The Company temporarily leased space until it could
find new space.

       On August 29, 2002, the Company entered into an agreement for new office
space in Manhattan. This agreement requires the Company to pay monthly rent
through August 31, 2004. The aggregate monthly rent will be $3,338 through the
period August 31, 2003 and $3,927 through August 31, 2004.

       On August 15, 2003 the Company moved its executive offices to Tel Aviv,
Israel for a nominal rent. It remains liable for the office space previously
contracted for in Manhattan.

                                     - 30 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       Contingencies
       -------------

       Legal Proceedings

       On November 8, 2002 the claim asserted by Dallas Aerospace against the
Company was resolved with a ruling in favor of the Company granting the
Company's summary judgment motion and dismissing all claims raised by Dallas
Aerospace. This judgment was entered in the United States District Court for the
Southern District of New York. Dallas Aerospace has filed an appeal with the
Second Circuit Court of Appeals in New York on November 12, 2002. The parties
are awaiting delivery of oral arguments in the case.

       On April 24, 2000 CIS Air filed suit in the United States District Court
for the Northern District of New York against American Air Ventures, Inc.
("American Air"), a Florida corporation. The suit seeks reimbursement in
connection with losses incurred in joint venture agreements between the parties
for the purchase and sale of engines. The suit further seeks indemnification
from American Air should CIS Air be found liable to Dallas AeroSpace, because
CIS Air purchased the engine sold to Dallas AeroSpace from American Air. The
parties settled their lawsuit under the joint venture agreement, but left open
all issues related to the Dallas matter. If the Company prevails in the Dallas
AeroSpace litigation CIS Air's claim for indemnification from American Air would
be moot. There can also be no certainty that should the Company need to do so,
that it will prevail on its indemnification claim, nor that if it should prevail
on such claim American Air will have the financial resources to meet such
indemnification.

       On March 7, 2000 CIS Air filed suit against Express One International,
Inc. ("Express One"), a Delaware corporation, in the Supreme Court, State of New
York, County of New York. The suit seeks damages of approximately $118,000 in
unpaid rent and repair charges. Express One filed for bankruptcy in March 2002
shortly after CIS filed its motion for summary judgment. An automatic stay in
connection with the bankruptcy proceeding prevents further action at this time.
CIS Air filed a claim in the bankruptcy court action against Express One, but
does not anticipate any material recovery.

       In July 2001 CIS Air filed suit in State Court of Florida, Broward County
against Aviation Systems International ("ASI") and the TIMCO division of
Aviation Sales Company relating to damage sustained by a CIS Air aircraft. The
aircraft was parked at TIMCO's maintenance facility when it was struck and
severely damaged by two other aircraft owned by ASI. CIS Air has been reimbursed
for a portion of the damages by its insurance carrier, and was seeking to
recover the $500,000 deductible and other unpaid costs from TIMCO and ASI. To
avoid a lengthy trial and litigation process the Company agreed to settle the
suit with the Company receiving its deductible, less payment of certain legal
expenses.

       The Bankruptcy Trustee in the bankruptcy case of Sky Trek International,
a former lessee of aircraft engines of CIS Air, filed a claim against CIS Air
seeking to obtain the return of $116,000 in security deposits on two aircraft
engines that were returned to CIS Air prior to the lease expirations. The claim
has been settled by the parties, and this settlement was approved by the Court,
with CIS Air returning $17,500 of the deposit received from Sky Trek to the
Trustee.

                                     - 31 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       On June 3, 2002 the Company commenced an action in the Southern District
of New York against its insurer, Federal Insurance Company, seeking
reimbursement for losses under its insurance policy associated with the
September 11, 2001 terrorist attack in downtown Manhattan. In July 2003 the
Company settled with its insurer. In exchange for a release, certain
representations, and assignment of certain rights of its subsidiary T1Xpert
Corp., the Company received settlement proceeds, net of legal expenses, of
approximately $375,000.

       On July 30, 2002, the Company filed suit in the United States District
Court for the Southern District of New York against three stockholders of the
Company and another party alleging that these parties formed an undisclosed
group and wrongfully used material, non-public information concerning the
Company in violation of applicable federal securities laws and state statutes.
The Company settled with one of these stockholders as of September 3, 2002 and
the remaining parties separately on January 31, 2003. As a part of these
settlements, mutual releases of the parties, their officers, directors and
certain affiliates thereof were exchanged, the stockholders and certain
affiliates sold their shares in the Company back to the Company at the
prevailing market price or at a discount from market price and the stockholders
and certain affiliates agreed not to acquire any additional shares in the
Company.

       The Company commenced an action against a former lessee of equipment and
two guarantors for non-payment of lease payments owed. The Company obtained a
judgment and is pursuing recovery against one of the guarantors. The second
guarantor has filed for bankruptcy and there is no assurance of the amount, if
any, that will be recovered from the non-bankrupt guarantor.

       Tax Claims

       Various state and city taxing jurisdictions have from time to time
asserted tax claims against the Company. The Company is vigorously defending
these claims, but there can be no assurance that the Company will prevail. The
Company, due to the wind down of its operating businesses, has been filing final
returns in various tax jurisdictions as well as withdrawing from doing business
in such states. This may precipitate examinations of the Company's tax
liabilities in such jurisdictions. While the Company on a consolidated basis may
have been unprofitable during recent years, certain subsidiaries of the Company
may have been profitable. Further, certain taxes are imposed without regard to
income or profitability.


11.  Fair Value of Financial Instruments
     -----------------------------------

       The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

       Cash and Cash Equivalents, Notes Receivable and Investment in Mortgage
Participation Notes - The carrying values approximate fair values because of the
short maturity of those instruments.


12.  Segment Financial Data
     ----------------------

       The Company adopted SFAS No. 131, Disclosure About Segments of an
Enterprise and Related Information, as required, in fiscal 2000. The Company's
operating subsidiaries were classified into two principal operating segments on
the basis of the Company's strategic direction and assessment procedures within
the operating subsidiaries, which require different investment and marketing
strategies.

                                     - 32 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


       EQUIPMENT LEASING BUSINESS: The Company's Equipment Leasing Business,
which was conducted through its operating subsidiary CIS Corporation, a New York
Corporation ("CIS"), leased a wide range of equipment, including computers,
printers and telecommunications equipment. The Company participated in the
leasing market principally by originating new leases and financing other
equipment brokers. In August 1999, the Company announced CIS would no longer
enter into new equipment leases. In October 2000, the Company sold off all but
one remaining equipment lease. In May 2002, the remaining equipment lease was
sold to the administrator for an immaterial amount.

       SECURITIES PROCESSING SOFTWARE BUSINESS: The product was being designed
as an electronic securities processing software platform which would use
proprietary technology and which would be adapted to changes in the financial
market place. On December 27, 2001, the Company ceased daily operations and
ceased additional funding of T1Xpert. The Company is now considering various
strategic alternatives without the use of additional Company funds to continue
T1Xpert's product development.

                                     - 33 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

May 31, 2003, 2002 and 2001
--------------------------------------------------------------------------------


                               Operating Segments
                                 (In thousands)
<TABLE>
<CAPTION>
                                                 2003        2002        2001
                                               --------    --------    --------
<S>                                            <C>         <C>         <C>
Revenues
T1Xpert segment                                $      -    $      -    $     50
Equipment leasing segment                             -          34         743
Corporate and other                                 315         320         479
                                               --------    --------    --------
Consolidated                                   $    315    $    354    $  1,272
                                               ========    ========    ========

Operating income (loss)
T1Xpert segment                                $    (15)   $ (1,701)   $ (2,740)
Equipment leasing segment                             -          29        (283)
Corporate and other                              (1,625)     (2,340)     (3,200)
                                               --------    --------    --------
Consolidated                                   $ (1,640)   $ (4,012)   $ (6,223)
                                               ========    ========    ========

Interest expenses
T1Xpert segment                                $      -    $      -    $      -
Equipment leasing segment                             -           -           -
Corporate and other                                   -           -           5
                                               --------    --------    --------
Consolidated                                   $      -    $      -    $      5
                                               ========    ========    ========

Loss from continuing operations
T1Xpert segment                                $    (15)   $ (1,701)   $ (2,740)
Equipment leasing segment                             -          29        (283)
Corporate and other                              (1,625)     (2,340)     (3,205)
                                               --------    --------    --------
Consolidated                                   $ (1,640)   $ (4,012)   $ (6,228)
                                               ========    ========    ========

Depreciation and amortization
T1Xpert segment                                $      -    $      -    $      -
Corporate and other                                  27          99         126
                                               --------    --------    --------
Consolidated                                   $     27    $     99    $    126
                                               ========    ========    ========

Identifiable assets
T1Xpert segment                                $      -    $      -    $      -
Equipment leasing segment                             -           -          20
Corporate and other                               1,777       3,522       8,795
                                               --------    --------    --------
Consolidated                                   $  1,777    $  3,522    $  8,815
                                               ========    ========    ========
</TABLE>

                                     - 34 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                         THREE YEARS ENDED MAY 31, 2003
                                 (In thousands)
<TABLE>
<CAPTION>
                                                   Charged
                                                   to costs   Charged
                                      Beginning       and     to other   Deductions    Ending
                                       balance     expenses   accounts  (recoveries)   balance
                                     -----------   --------   --------   ----------  -----------
<S>                                  <C>             <C>        <C>        <C>       <C>
2001:
  Accounts receivable - allowance
    for doubtful accounts            $      (108)    $(232)     $   -      $ 340     $         -

  Investment valuation               $         -     $(426)     $   -      $   -     $      (426)

  Notes receivable - allowance
    for doubtful accounts            $(1,000,000)    $   -      $   -      $   -     $(1,000,000)

2002:
  Investment valuation               $      (426)    $   -      $   -      $   -     $      (426)

  Note receivable - allowance
    for doubtful accounts            $(1,000,000)    $   -      $   -      $   -     $(1,000,000)

2003:
  Investment valuation               $      (426)    $   -      $ 171      $(120)    $      (477)

  Notes receivable - allowance
    for doubtful accounts            $(1,000,000)    $   -      $   -      $   -     $(1,000,000)
</TABLE>

                                     - 35 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company incorporates herein by reference the information concerning
directors and executive officers to be contained in its Proxy Statement to be
filed within 120 days after the end of the Company's fiscal year (the "2003
Proxy Statement").


ITEM 11.  EXECUTIVE COMPENSATION

The Company incorporates herein by reference the information concerning
executive compensation to be contained in the 2003 Proxy Statement.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company incorporates herein by reference the information concerning security
ownership of certain beneficial owners and management to be contained in the
2002 Proxy Statement.

The following table sets forth information regarding securities authorized for
issuance under equity compensation plans.
<TABLE>
<CAPTION>
                                                                                        Number of securities
                                                                                      remaining available for
                              Number of securities to                                  future issuance under
                              be issued upon exercise   Weighted-average exercise    equity compensation plans
                              of outstanding options,      price of outstanding        [excluding securities
                                warrants and rights    options, warrants and rights  reflected in column (a)]
       Plan category                    (a)                         (b)                          (c)
----------------------------  -----------------------  ----------------------------  -------------------------
<S>                                      <C>                         <C>                       <C>
Equity compensation plans
approved by security holders            -0-                         -0-                        865,186
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company incorporates herein by reference the information concerning certain
relationships and related transactions to be contained in the 2003 Proxy
Statement.


ITEM 14.  CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon the required evaluation, the Company's Chief Executive Officer and Chief
Financial Officer have concluded that the Company's disclosure controls and
procedures are effective.

There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.

                                     - 36 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


                                     PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

   (a)      The following documents are filed as part of this Annual Report:

            Financial Statements. See "ITEM 8. FINANCIAL STATEMENTS AND
            SUPPLEMENTARY DATA" for Index to Financial Statements and Schedules
            included in this Form 10-K.

Exhibit No.
-----------

    3.1*    Restated Certificate of Incorporation, as amended (Filed as Exhibit
            3.1 to the Company's Form 10-Q for the quarter ended November 30,
            1997 and incorporated herein by reference).

    3.2**   Restated Bylaws as amended through August 26, 2002.

   10.1**   1995 Stock Compensation Plan (Filed as Exhibit 10.1 to the Company's
            Form 10-Q for the quarter ended August 31, 1995 and incorporated
            herein by reference).

   10.2**   Advisory Agreement for Real Estate Related Investments between the
            Company and Emmes Investment Management Co. LLC dated June 30, 1997
            (Filed as Exhibit 10.13 to the Company's Form 10-K for the fiscal
            year ended May 31, 1997 and incorporated herein by reference).

   10.3**   Employment Agreement between the Company and Jonah M. Meer dated
            June 20, 2002.

   10.4     Separation Agreement and Consulting Agreement between the Company
            and Jonah Meer dated August 15, 2003.

   10.5     Employment Agreement between the Company and Guy Zahavi dated
            August 15, 2003.

   21       Subsidiaries of the Registrant:
              CIS Corporation
              CIS Air Corporation
              T1Xpert Corp.

   31.1     Certification of Chief Financial Officer pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002.

   32.1     Certification by Guy Zahavi pursuant to 18 U.S.C. Section 1350, as
            adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

    *       Filed as an exhibit to the Company's amended Form 10 Registration
            Statement (Commission File No. 0-25104), originally filed November
            10, 1994 and incorporated herein by reference.

   **       Incorporated by reference.

   (b)      Reports on Form 8-K.

            On August 15, 2003, the Company announced that it had appointed Guy
            Zahavi, a consultant to the Company, as a Director and as Chief
            Executive Officer of the Company and moved its principal offices to
            7 Mikve Israel, # 36351, Tel Aviv 61362 Israel.

            On July 21, 2003, the Company filed a Form 8-K announcing that it
            had settled its September 11 claim against its insurer, and it had
            retained Guy Zahavi to attempt to maximize T1Xpert's remaining
            assets.

            On November 8, 2002 the Company filed a Form 8-K announcing that
            judgment was entered in its favor dismissing the lawsuit filed by
            Dallas Aerospace, Inc. against the Company. That decision has since
            been appealed.

                                     - 37 -
<PAGE>

CONTINENTAL INFORMATION SYSTEMS CORPORATION
AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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:  August 29, 2003  By:    /s/Guy Zahavi
                               -------------------------------------------------
                        Name:  Guy Zahavi
                        Title: Chief Executive Officer, Chief Operating Officer,
                               Chief Financial Officer and Director



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following person on behalf of the registrant and in
the capacities and on the dates indicated:


Signature      Title                                             Date
---------      -----                                             ----

/s/Guy Zahavi  Chief Executive Officer, Chief Operating Officer,
Guy Zahavi     Chief Financial Officer and Director              August 29, 2003


                                     - 38 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>cis10k03exh10-4.txt
<DESCRIPTION>SEPARATION AND CONSULTING AGREEMENT
<TEXT>


                       SEPARATION AND CONSULTING AGREEMENT
                       -----------------------------------

This SEPARATION AND CONSULTING  AGREEMENT (this  "Agreement") is entered into by
and between CONTINENTAL  INFORMATION  SYSTEMS CORPORATION  ("Company") and JONAH
MEER ("Executive"), as of the 15th day of August 2003 (the "Execution Date").


                                    RECITALS
                                    --------

     WHEREAS,  until the date  hereof,  Executive  was a member of the Boards of
Directors and the Chief  Executive  Officer and Chief  Financial  Officer of the
Company and certain of its subsidiaries; and

     WHEREAS,  the Company is winding down many of its  operations and Executive
will resign from his  position as an officer and director of the Company and its
subsidiaries in order to allow Executive to pursue other business opportunities;
and

     WHEREAS,  Executive  has agreed to assist the Company in winding down these
businesses  which will no longer  operate and in maximizing  the recovery on its
assets to the benefit of the Company and its shareholders; and

     NOW,  THEREFORE,  in consideration of the mutual promises set forth herein,
and other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:


                                    AGREEMENT
                                    ---------

     1.  Termination of  Employment.
         --------------------------   The parties agree that effective on August
15,  2003,   Executive's   employment  with  Company  and  its  subsidiaries  is
terminated,  and Executive  resigns his positions as director and officer of the
Company and its subsidiaries.

     2.  Consulting  Period.
         ------------------   From August 15, 2003 through  August 15, 2005 (the
initial  "Consulting  Period"),  Executive  shall  consult  with and  assist the
Company with respect to any matters  Company may reasonably  request,  including
the on-going maximization of recovery on all of the Company's assets, management
of  its  litigation,  Federal  and  State  tax  issues  and  liquidation  of its
liabilities.   The  Consulting  Period  shall  be  automatically   extended  for
successive  periods  unless notice of  non-renewal is given in writing by either
party at least 90 days before the  expiration  of the then  existing  Consulting
Period.  Company  acknowledges that Executive may be employed in a position with
another  Company  during  the  Consulting  Period or pursue  any other  business
opportunities  of Executive's  choosing,  but Executive shall remain  reasonably
available to assist Company during the Consulting Period.

     3.  Compensation.
         ------------   In consideration of Executive  assisting  Company as set
forth in Paragraph 2 above, the Company  agrees to compensate  the Executive as
follows:


                                       1
<PAGE>


         (a) The  Company  shall  pay  the  Executive  $15,000  per  month  as a
consulting fee.

         (b) The Executive shall be permitted  to  participate  in a  manner  as
heretofore in all medical,  dental, life and disability  insurance benefit plans
applicable  to officers of the  Company and shall  receive a quarterly  bonus as
determined by the Company but not less than $5,000 per calendar quarter.

         (c) The Executive shall  be  permitted  to participate  in a  manner as
heretofore  in all employee  retirement  benefit plans  (401(k)/Profit  Sharing)
applicable to the officers of the Company.

         (d) The Company will continue to reimburse the Executive for all meals,
travel and other business  expenses incurred by the Executive in connection with
the Company's business affairs in accordance with past practice.

         (e) All payments made to the Executive pursuant to this Agreement shall
be net of all  required  federal,  state  and local  withholdings  for taxes and
similar charges and by all  contributions  or payments,  if any,  required to be
made by the Executive in connection with any Company  employment benefit plan in
which he participates.

     4.  Termination by the Company.
         --------------------------

         (a) For Cause.
             ---------  The Company may terminate the Executive's  consulting at
any time upon  written  notice to the  Execution  for  "Cause",  which  shall be
defined as occurrence of any of the following:

             (i)   the Executive's conviction or entrance of a plea of guilty or
no contest to a felony; or

             (ii)  the Executive's  commission  of  any willful  misconduct with
respect to the Company's business or material  properties,  which constitutes an
act of material fraud, embezzlement, misappropriation or theft.

         (b) Upon Death or Disability.
             ------------------------   This   Agreement   shall   automatically
terminate  upon the death of Executive and may be terminated by the Company upon
the disability of Executive the result of which prevents Executive from carrying
out his assigned  duties for any cumulative  period of more than one hundred and
eighty  (180)  days  during  any  three  hundred  sixty-five  (365)  day  period
("Disability").  Termination  by  reason  of  Executive's  Disability  shall  be
effective upon notice to the Executive from the Company.

     5.  Termination by the Executive.
         ----------------------------

         (a) Resignation.
             -----------   Notwithstanding   any   other   provisions   of  this
Agreement,  the Executive shall have the right to resign at any time upon thirty
(30) days' prior written notice to the Company.


                                       2
<PAGE>


         (b) For Good Reason.
             ---------------   The Executive  may  terminate  this Agreement  by
written notice to the Company upon the occurrence of any of the following  (each
constituting "Good Reason"):

             (i)   a material breach of this Agreement by the Company;

             (ii)  a diminution of the responsibilities, or reporting hierarchy,
or scope of authority of Executive, during the term of this Agreement; or

             (iii) the Company shall attempt to terminate this Agreement for any
reason  other  than for Cause,  non-renewal  or the death or  Disability  of the
Executive.

         (c) Change of Control.
             -----------------   The Executive shall have the right to terminate
this  Agreement  upon the  occurrence  of a "Change of Control" of the  Company,
which shall include the occurrence of any of the following events:

             (i)   the sale, lease,  transfer or other disposition, in  one or a
series of transactions, of all or substantially all of the assets of the Company
to any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended),

             (ii)  any such  "person"  or  "group"  shall become the "beneficial
owner(s)"  (as  defined in said Rule 13d-3) of shares of Stock of the Company or
of any parent corporation of the Company that, directly or indirectly,  entitles
the holder  thereof to control more than ten percent  (10%) of all voting rights
with respect to all shares of Stock of the Company;

             (iii) the  approval  by  the  stockholders  of  the  Company of, or
consummation of, a merger,  reorganization,  consolidation,  exchange of shares,
recapitalization,  restructuring  or other  business  combination  in which  the
Company is not the surviving entity;

             (iv)  any  entity  or  person or two or more  entities  or  persons
acting in concert shall acquire  beneficial  ownership,  directly or indirectly,
of, or shall  acquire by contract or  otherwise,  or shall have  entered  into a
contract or arrangement  that,  upon  consummation,  will result in its or their
acquisition  of the right to elect a majority of the Board of  Directors  of the
Company,  or the  current  Board of  Directors  of the  Company  shall no longer
constitute  a majority of the Board of  Directors  (unless the  Executive  shall
consent thereto); or

             (v)   any  transaction  that  results  in the stock of the  Company
no longer being required to be registered under Section 12 of the Exchange Act.

     6.  Effect of Termination on Compensation.
         -------------------------------------

         (a) Termination for Cause; Resignation; Non-Renewal by Executive.
             ------------------------------------------------------------     In
the event that  Executive's  consulting  with the Company is  terminated  by the
Company for Cause, or by the Executive upon his resignation or non-renewal,  the
Executive  shall be entitled to receive his  consulting  payments  and  benefits
accrued through the date of termination or resignation.


                                       3
<PAGE>


         (b) Death.
             -----   In  the  event that  the  Executive's  consulting with  the
Company terminates upon his death, the Executive's annual consulting payment and
benefits  shall  continue to be paid to his estate for  twenty-four  (24) months
after the date of his death.

         (c) Disability.
             ----------   In the event that  the  Executive's   employment  with
the Company  terminates upon his  Disability,  the Executive will continue to be
paid his  annual  consulting  payment  for  twenty-four  (24)  months  after the
effective date of termination,  after which time the Executive shall be entitled
to receive  benefits  for so long as  permitted  under the  Company's  long-term
disability  insurance policy. The Executive shall continue to participate in the
Company's  health  insurance plans as prior to the  Disability,  or may elect to
receive such insurance  benefits  under COBRA,  (in which case the Company shall
reimburse  the  Executive  for an amount equal to the premiums  payable for such
health  insurance  by the  Executive  under  COBRA  minus  any  amount  that the
Executive may have  contributed for such health insurance  immediately  prior to
such Disability).

         (d) Company's Non-Renewal.
             ---------------------  In the event the Executive's consulting with
the  Company is  terminated  by the  Company  for reason of  non-renewal  of the
consulting  term,  the  Executive  shall be  entitled to continue to receive his
Annual Salary (and any incentive  compensation  accrued  through the termination
date) for a period of twelve (12) months from the effective termination date.

         (e) Good Reason or Change of Control.
             --------------------------------   In  the  event  the  Executive's
employment with the Company is terminated by the Executive for Good Reason or by
reason of a Change of Control,  the Executive  shall be entitled to receive,  in
one payment made on or prior to the effective  termination  date, a sum equal to
the greater of (i) his annual consulting  payment multiplied by two (2), or (ii)
the  aggregate  balance of his annual  consulting  payments that would have been
made through the end of the  then-current  term of this  Agreement.  The Company
agrees  that the payment to be made to the  Executive  under this  Section  5(e)
shall not preclude the Executive from asserting any other claims,  or exercising
any other  rights he may have  hereunder,  at law or in equity,  relating to the
circumstances of such termination of employment.

         (f) No Mitigation.
             -------------   The  Company  agrees that no payments to be made to
the  Executive  under  this  Section  5 shall  be  reduced  as a  result  of any
compensation the Executive may receive through  employment with a third party or
any other  source,  and the  Executive  shall have no obligation to mitigate any
payment amount due hereunder by seeking other employment or otherwise.

         (g) Conflicts.
             ---------   In  the  event of any  conflict  between  the  terms of
the  policies  and  programs  of the  Company  as at any time in effect and this
Agreement, the provisions of this Agreement shall control.

     7.  General Release of Claims by Executive.
         --------------------------------------   As a  material  inducement  to
Company to enter into this  Agreement,  Executive,  for  himself  and his heirs,
executors,  legal  representatives  and assigns, as a knowing and voluntary act,
hereby forever releases and discharges Company and Company's current, former and
future officers, directors, shareholders, employees, trustees, agents, insurers,
attorneys,  predecessors,  successors,  affiliates,  related  companies,  parent
companies,  subsidiaries,  divisions  and  assigns  and all  persons  acting by,
through,  under or in  concert  with any of these  (the  Company  and all of the
foregoing  persons and  entities  are  hereinafter  referred to  separately  and
collectively,  as the "Releasees") from, and covenants not to sue the Releasees;
as follows:


                                       4
<PAGE>


a.   Executive,  on behalf of  himself,  his heirs,  executors,  administrators,
     legal  representatives,  and assigns,  releases and forever  discharges the
     Releasees  from  any  and all  claims,  complaints,  allegations,  demands,
     actions,  suits, debts, dues, sums of money, accounts,  reckonings,  bonds,
     bills,  specialties  covenants,   contracts,   controversies,   agreements,
     promises,   variances,   trespasses,   damages,  judgments,   extends,  and
     executions  or causes of action  of any kind  whatsoever,  whether  at law,
     admiralty,  or in equity,  direct or indirect,  known or unknown,  in tort,
     contract, by statute or any other basis for relief, compensatory, punitive,
     liquidated  or  other  damages,   expenses  (including   attorneys'  fees),
     reimbursements or costs of any kinds ("Claims") which he ever had, now has,
     or hereafter can, shall or may have or assert  against  Releasees,  for any
     matter, cause or thing which may have occurred on or before the date of the
     execution of this General Release.

b.   This General Release specifically includes, but is not limited to:

     (i)    any and  all  Claims  for  wages  and  benefits  (including  without
            limitation  salary,  stock,  commissions,  bonuses,  severance  pay,
            health  and  welfare   benefits,   vacation   pay   and   any  other
            fringe-type  benefits),  provided,   however,  that  nothing  herein
            shall   affect  Executive's  vested  rights   in   any   401K   plan
            maintained by the Company;

     (ii)   any  and  all  Claims  for  wrongful  discharge,  breach of contract
           (whether  written  or oral,  express  or  implied) including  but not
           limited to promissory or equitable  estoppel and implied covenants of
           good faith and fair dealing;

     (iii)  any and all Claims for alleged employment discrimination, harassment
            or retaliation on the  basis  of age,  race,  color,  religion,  sex
            (including  sexual  harassment),  sexual   orientation,   pregnancy,
            ancestry, national origin, veteran status, disability, handicap and/
            or any other protected basis, in violation of any federal, state or

            local statute, ordinance,  judicial  precedent or  executive  order,
            including but not limited  to claims  for  discrimination  under the
            following statutes:  Title VII of the Civil  Rights Act of 1964, the
            Civil Rights Act of 1966, the Civil Rights Act of 1991, the New York
            Human Rights Law,  as amended,  the New York Equal  Rights Law,  the
            Family  and  Medical  Leave  Act, the Immigration Reform and Control
            Act, the Age  Discrimination  in  Employment  Act, as  amended,  the
            Older  Workers  Benefit  Protection  Act, the  Rehabilitation Act of
            1973,  as  amended,  the Rehabilitation Act of 1973, as amended, the
            Americans  with  Disabilities  Act, the  New  York Rights of Persons
            with  Disabilities  Law,  the  New  York  Nondiscrimination  Against
            Genetic  Disorders  Law, the  Equal  Pay  Act and the New York Equal
            Pay Law;

     (iv)   any and all Claims under any federal or state  statute  relating  to
            Executive benefits, including  but  not  limited  to  the  Executive
            Retirement Income Security Act of 1974;


                                       5
<PAGE>


     (v)    any and all Claims in tort (including  but not limited to any Claims
            for misrepresentation, defamation,  interference  with  contract  or
            prospective  economic advantage, intentional infliction of emotional
            distress and negligence);

     (vi)   any and all Claims for additional  compensation  or  damages  of any
            kind;

     (vii)  any and all Claims for retaliation or retaliatory discharge; and

     (viii) any and all Claims for attorney's fees and costs.

c.   This  General  Release  extends  to all of the  aforementioned  Claims  and
     potential  Claims  which  arose on or  before  the date of this  Agreement,
     including pre- and post-employment  causes of action,  whether now known or
     unknown,   suspected  or  unsuspected,   matured  or  unmatured,  and  this
     constitutes an essential term of this Agreement.  This General Release does
     not extend to claims which arise after the Effective Date.

d.   Notwithstanding  anything to the contrary  contained  herein,  this General
     Release  shall not affect  Executive's  right to  indemnification  from the
     Company pursuant to the Company's Certificate of Incorporation and By-laws.

     8.  Release By Company.
         ------------------   For good  and  valuable  consideration, receipt of
which is hereby  acknowledged,  the Company,  on behalf of itself, its officers,
directors and employees,  and shareholders and its direct and indirect  parents,
subsidiaries,  affiliates,  and related  companies (the "CIS RELEASORS")  hereby
releases,  discharges,  and covenants not to sue the Executive, and each and all
of his  respective  past,  present  or future  partners,  employees,  directors,
officers, shareholders, attorneys, representatives, receivers, insurers, agents,
successors,  and assigns  (individually  and collectively the "CIS  RELEASEES"),
from  and  with  respect  to any and all  claims,  demands,  liens,  agreements,
contracts,  covenants,  actions,  suits, causes of action,  wages,  obligations,
debts, expenses, attorneys' fees, damages, judgments, orders, and liabilities of
whatever  kind or nature in law,  equity,  or  otherwise,  whether  now known or
unknown, suspected or unsuspected, and whether or not concealed or hidden, which
any of the CIS RELEASORS now owns or holds or has at any time  heretofore  owned
or held as against the CIS RELEASEES,  or any of them.  This release is intended
to include all possible legal  theories,  including but not limited to any claim
for any  intentional or  unintentional  tort;  fraud or  misrepresentation;  the
violation of any express or implied contract or any public policy; the violation
of any common law or any federal,  state or local law  including but not limited
to federal or state  securities  law; or any claim for  defamation;  intentional
infliction  of emotional  distress;  injury to  reputation;  breach of fiduciary
duty; or any other claim for damages or  compensation of any kind.

     9.  Voluntary; Revocation Rights.
         ----------------------------   Notwithstanding  any  other provision of
this Agreement to the contrary:

     (a)  Executive  agrees  that  this  Agreement  constitutes  a  knowing  and
          voluntary  waiver of all rights or claims  Executive  may have against
          the  Releasees,  or any of them,  including,  but not  limited to, all
          rights or claims  arising under the Age  Discrimination  in Employment
          Act of 1967, as amended ("ADEA"),  including,  but not limited to, all
          claims  of  age   discrimination  in  employment  and  all  claims  of
          retaliation in violation of the ADEA.


                                       6
<PAGE>


     (b)  The Company and Executive  agree that this  Agreement  will not affect
          the  rights  and   responsibilities   of  the  U.S.  Equal  Employment
          Opportunity  Commission  (the  "EEOC") to  enforce  the ADEA and other
          laws,  and  further  agree  that  this  Agreement  will not be used to
          justify interfering with Executive's  protected right to file a charge
          or  participate  in an  investigation  or proceeding  conducted by the
          EEOC.  The  Company  and  Executive   further  agrees  that  Executive
          knowingly  and  voluntarily  waives all rights or claims  (that  arose
          prior to Executive's  execution of this Agreement)  Executive may have
          against  the  Releasees,  or any of them,  to receive  any  benefit or
          remedial relief (including,  but not limited to,  reinstatement,  back
          pay,  front pay,  damages,  and  attorneys'  and  experts'  fees) as a
          consequence  of any charge filed with the EEOC,  and of any litigation
          concerning  any facts alleged in any such charge.

     (c)  The Company and Executive  agree that,  for a period of seven (7) days
          following the execution of this Agreement,  Executive has the right to
          revoke the provisions of this Agreement  other than his resignation by
          giving  notice in  writing  of such  revocation  to the  Company.  The
          Company  and  Executive  further  agree that this  Agreement  will not
          become effective or enforceable (other than the resignation provision)
          until the eighth (8th) day after the execution of this Agreement;  and
          that in the event Executive revokes this Agreement prior to the eighth
          (8th) day after the execution of this Agreement,  this Agreement,  and
          the promises contained in this Agreement,  (other than the resignation
          provision) will automatically be deemed null and void.

     (d)  THE COMPANY HEREBY  ADVISES AND URGES  EXECUTIVE IN WRITING TO CONSULT
          WITH  AN  ATTORNEY  PRIOR  TO  EXECUTING  THIS  AGREEMENT.   EXECUTIVE
          REPRESENTS  AND  WARRANTS  THAT THE  COMPANY  HAS  ADVISED  AND  URGED
          EXECUTIVE  IN  WRITING,   AS  SPECIFICALLY   STATED  IN  THIS  WRITTEN
          AGREEMENT,  TO  CONSULT  WITH AN  ATTORNEY  PRIOR  TO  EXECUTING  THIS
          AGREEMENT.  EXECUTIVE FURTHER REPRESENTS AND WARRANTS THAT THE COMPANY
          GAVE EXECUTIVE A PERIOD OF AT LEAST  TWENTY-ONE  (21) DAYS IN WHICH TO
          CONSIDER THIS AGREEMENT BEFORE EXECUTING THIS AGREEMENT.

     (e)  Executive's  acceptance  of any  of  the  monies  paid  by  and  other
          consideration  from the Company,  at any time more than seven (7) days
          after the execution of this Agreement will  constitute an admission by
          Executive  that  Executive  did not revoke this  Agreement  during the
          revocation  period of seven (7) days;  and will further  constitute an
          admission by Executive  that this  Agreement has become  effective and
          enforceable.

     (f)  If Executive  executed this  Agreement at any time prior to the end of
          at least twenty-one (21) day period that the Company gave Executive in
          which to consider this  Agreement,  such early execution was a knowing
          and voluntary  waiver of Executive's  right to consider this Agreement
          for at least  twenty-one (21) days, and was due to Executive's  belief
          that Executive had ample time in which to consider and understand this
          Agreement, and in which to review this Agreement with an attorney.


                                       7
<PAGE>


     10. No Admissions.
         -------------   It is understood and  agreed that neither the execution
of this  Agreement  by the  Company,  nor the terms of this  Agreement,  nor any
payment made pursuant to this Agreement constitutes an admission of liability by
the Company to  Executive,  inasmuch as the  Company  expressly  denies any such
liability.  It is further  understood  and agreed that no person or entity shall
use this Agreement,  or the consideration  received pursuant hereto, as evidence
of any admission of liability,  as the Company  expressly  denies any liability.
This Agreement  constitutes an offer of valuable  consideration  to compromise a
disputed  claim.  In the event  this  Agreement  does not become  effective  and
enforceable,  it is understood  and agreed that it will not be  admissible  into
evidence, for any purpose whatsoever, in any administrative proceeding, trial or
appeal, irrespective of the forum.

     11. Time to Review.
         --------------   Executive  represents and acknowledges  that Executive
had ample opportunity to review and comment on this Agreement.

     12. Jurisdiction and Venue.
         ----------------------   The Company and Executive agree that any suit,
action or proceeding based on, arising out of or relating to this Agreement,  or
the breach of this Agreement,  shall be brought exclusively in the United States
District  Court for the Southern  District of New York,  or the Supreme Court of
the State of New York,  New York  County;  and not in or before any other court,
agency or other tribunal.  Executive hereby irrevocably consents to the exercise
of personal  jurisdiction  over  Executive  by the  respective  foregoing  forum
courts,  agrees that venue shall be proper in such forum courts, and irrevocably
waives and releases any and all defenses based on lack of personal jurisdiction,
improper venue and/or forum non conveniens.  Executive  further waives any right
Executive may have to a jury trial in any suit,  action or proceeding  based on,
arising out of, or relating to this Agreement, or any breach of this Agreement.

     13. Invalidity.
         ----------   In  the  event  that  any  provision  contained   in  this
Agreement, as between these parties, shall be determined to be invalid,  illegal
or unenforceable  in any respect for any reason,  by a final order of a court of
competent  jurisdiction,  the validity,  legality and enforceability of any such
provision  in  every  other  respect,  and  the  remaining  provisions  of  this
Agreement,  shall not be in any way impaired.  Notwithstanding the foregoing, if
any such provision  determined to be invalid,  illegal or  unenforceable  may be
valid,  legal or enforceable by  modification  thereof,  then the court may make
such  modification  as may be necessary to make such provision  valid,  legal or
enforceable.

     PLEASE READ CAREFULLY.  THIS AGREEMENT HAS IMPORTANT LEGAL CONSEQUENCES.

     14. Dispute Resolution.
         ------------------

         (a) Any  dispute or  controversy  arising under or in  connection  with
this  Agreement  shall be settled  exclusively  by  arbitration  before a single
arbitrator in New York,  New York in  accordance  with the rules of the American
Arbitration  Association  then in  effect.  The  Company  shall  pay  all  costs
(including Executive's reasonable legal fees) arising out of or relating to such
proceeding   regardless  of  the  outcome.   Judgment  may  be  entered  on  the
arbitrator's award in any court having jurisdiction; provided, however, that the
Executive  shall be  entitled to  specific  performance  of his right to be paid
pursuant to the terms hereof  during the pendency of any dispute or  controversy
arising under or in connection with this Agreement.


                                       8
<PAGE>


         (b) In  addition  to  any  rights that Executive may have as an officer
and director of the Company under the Company's  certificate of incorporation or
under any directors and officers  liability  insurance policy  maintained by the
Company,  (i) the Company  shall  indemnify  the Executive and hold him harmless
from any cost,  expense or  liability  arising out of or relating to any acts or
decisions made by him, or in the course of performing services hereunder, within
the scope of his consulting hereunder, (ii) the Company shall bear, or reimburse
the Executive  for, all legal fees  incurred by him in connection  with entering
into this  Agreement,  and shall pay all legal fees and other fees and  expenses
which the  Executive  may incur  with  respect  to  claims  arising  under or in
connection with this Agreement,  whether the Company or the Executive  initiates
an action with respect to this Agreement (regardless of the outcome thereof) and
Executive  shall not be obligated to return any such amounts  regardless  of the
outcome of such  proceeding  and (iii) in the event any suit,  claim,  action or
investigation  shall be  brought  by any  person  or entity  (including  without
limitation, the Company) against Executive in connection with this Agreement the
Company shall pay and advance to the Executive  (on a monthly  basis),  upon his
request  therefor,  all his costs and expenses of  defending  against such suit,
claim, action or investigation, including all attorneys' fees and expenses.

         (c) THE  EXECUTIVE  SHALL  NOT  BE  LIABLE  TO THE COMPANY FOR, AND THE
COMPANY HEREBY WAIVES ANY RIGHT TO CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES
ON ACCOUNT  OF ANY BREACH OR  TERMINATION  OF THIS  AGREEMENT  OR ACCOUNT OF ANY
OTHER  ACTION OR  OMISSION  OF  EXECUTIVE.  IN THE EVENT AN ACTION IS BROUGHT BY
EITHER  PARTY TO  ENFORCE  THIS  AGREEMENT,  THE  COMPANY  SHALL  PAY ALL OF THE
ATTORNEYS' FEES AND OTHER EXPENSES  INCURRED BY THE EXECUTIVE IN THE LITIGATION,
IRRESPECTIVE OF THE OUTCOME OF SUCH LITIGATION.

     15. Binding Effect; Assignment.
         --------------------------   Except  as  hereinafter  set  forth,  this
Agreement  shall be binding upon and inure to the benefit of the  Executive  and
the Company and their respective permitted successors and assigns.  Neither this
Agreement  nor any of the rights or  benefits  hereunder  may be assigned by the
Executive.  In the event the  Company  merges or  consolidates  with or into any
other  corporation  or sells or  otherwise  transfers  substantially  all of its
assets to another corporation, the provisions of this Agreement shall be binding
upon and inure to the benefit of the corporation surviving or resulting from the
merger or consolidation or to which such assets are sold or transferred.

     16. Notices and Demands.
         -------------------   All notices, demands and communications  provided
for in this  Agreement  or made under  this  Agreement  shall be in writing  and
deemed given when actually  delivered  personally,  by  facsimile,  by overnight
courier,  or by registered or certified  mail,  return receipt  requested,  with
postage prepaid, addressed in each case as follows:

         (a) To the Company:

             Continental Information Systems Corporation
             7 Mikve Israel
             Box 36351, Tel Aviv 61362 Israel
             Attention:  Chief Executive Officer


                                       9
<PAGE>


         (b) To the Executive:

             Mr. Jonah Meer
             1488 East 27th Street
             Brooklyn, NY 11210
             Fax No.  508-629-0074

or such other address or fax number as may, after the date of this Agreement, be
designated by the Executive or the Company by notice given to the other party as
the address to which communications under this Agreement shall thereafter be
delivered or mailed.

     Notices,  demands and communications  shall be deemed to have been given or
made (a) on the date delivered, if delivered personally or by facsimile;  (b) on
the next  business  day, if  delivered by  overnight  courier,  or (c) three (3)
business days after being sent, if sent by registered or certified mail,  return
receipt requested.

     17. Governing Law.
         -------------   This  agreement  has been executed and delivered in the
State of New York and its validity, interpretation,  performance and enforcement
shall be  governed by the laws of said State  without  regard to  principles  of
conflict of laws.

     18. Entire Agreement; Amendment; Waivers.
         ------------------------------------   This   Agreement,  contains  the
entire  agreement  between the parties relating to the subject matter hereof and
supersedes  any prior or other  understandings,  agreements  or  representations
relating  thereto.  This Agreement may not be amended,  modified or supplemented
except by an agreement in writing  signed by the parties  hereto.  Waiver by any
party or any breach of this  Agreement  shall not operate or be  construed  as a
continuing waiver or as a waiver of any subsequent breach.

     19. Severability.
         ------------   The  invalidity  or  unenforceability  of any particular
provision  of this  Agreement  shall not  affect  the other  provisions  of this
Agreement,  and this  Agreement  shall be  construed  in all respects as if such
invalid or unenforceable provision were omitted.

     20. Headings; Construction.
         ----------------------   The  section  and other headings  contained in
this  Agreement  are for  reference  purposes  only and  shall  not  affect  the
interpretation of this Agreement.  Whenever required by the context,  references
to the singular shall include the plural, and the masculine gender shall include
the feminine gender.

     21. ACKNOWLEDGMENT BY EXECUTIVE.
         ---------------------------    EXECUTIVE     EXPRESSLY    ACKNOWLEDGES,
REPRESENTS,  AND WARRANTS THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT; THAT
EXECUTIVE  FULLY   UNDERSTANDS   THIS   AGREEMENT'S   TERMS,   CONDITIONS,   AND
SIGNIFICANCE;  THAT  EXECUTIVE HAS HAD AMPLE TIME TO CONSIDER AND NEGOTIATE THIS
AGREEMENT;  THAT THE COMPANY HAS ADVISED AND URGED  EXECUTIVE TO CONSULT WITH AN
ATTORNEY CONCERNING THIS AGREEMENT; THAT EXECUTIVE HAS HAD A FULL OPPORTUNITY TO
REVIEW THIS  AGREEMENT  WITH AN ATTORNEY;  AND THAT  EXECUTIVE HAS EXECUTED THIS
AGREEMENT  VOLUNTARILY,  KNOWINGLY,  AND WITH  SUCH  ADVISE OF ANY  ATTORNEY  AS
EXECUTIVE SAW FIT.


                                       10
<PAGE>


     IN WITNESS  WHEREOF,  the parties have duly executed  this  Agreement to be
effective as of the date first above written.

                                           CONTINENTAL INFORMATION SYSTEMS
                                           CORPORATION


                                           By:    /s/ Guy Zahavi
                                                  ------------------------------

                                           Name:  Guy Zahavi
                                                  ------------------------------

                                           Title: Chief Executive Officer
                                                  ------------------------------


                                            EXECUTIVE


                                            By:    /s/ Jonah Meer
                                                   -----------------------------

                                            Name:  Jonah Meer
                                                   -----------------------------


                                       11

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>cis10k03exh10-5.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT
<TEXT>


                              EMPLOYMENT AGREEMENT


     THIS  AGREEMENT,  dated as of August 15, 2003 (the  "Effective  Date"),  is
entered into between  Continental  Information Systems  Corporation,  a New York
corporation  (hereinafter  the  "Company"),  and  Guy  Zahavi  (hereinafter  the
"Executive").

     WHEREAS,  the  Executive  is to be  employed  by the  Company  as its Chief
Executive  Officer  and  will  serve as a  director  on the  Company's  Board of
Directors, and

     WHEREAS,  the Company  wishes to employ the Executive due to his experience
in the software industry, and the Executive will agree to accept employment upon
the following terms and conditions.

     NOW THEREFORE, in consideration of the mutual promises set forth herein and
other good and valuable consideration, it is mutually agreed as follows:


     1.   Employment; Duties; Term; Extent of Services
          --------------------------------------------

          (a)  Employment.
               ----------   The Company hereby employs  the  Executive,  and the
Executive  agrees to serve the  Company as its Chief  Executive  Officer,  Chief
Financial Officer and Secretary, subject to the terms and conditions hereinafter
set forth.

          (b)  Duties.
               ------   In his  capacities  as Chief Executive  Officer,  Chief
Financial  Officer and  Secretary,  the  Executive  will  perform such duties on
behalf  of the  Company  consistent  with  those  positions  of Chief  Executive
Officer,  Chief Financial Officer and Secretary  recognizing that the Company is
in a winding down stage and has no on-going  operation.  The Executive will also
serve as a member of the Board of  Directors  of the Company and agrees to abide
by the rules, regulations, instructions, personnel practices and policies of the
Company  and any  changes  therein  which may be adopted  and  delivered  to the
Executive from time to time by the Board of Directors of the Company.

          (c)  Term.
               ----   The term of employment of  the Executive shall be from the
Effective  Date  until  the  first  anniversary  thereof,   subject  to  earlier
termination upon the terms and conditions hereinafter set forth (such period, as
it  may be  extended,  is  referred  to in  this  Agreement  as the  "Employment
Period").

          (d)  Extent of Services.
               ------------------   During the Employment Period,  the Executive
will devote such amount of his time and  attention  (which will be less than his
full time) to the performance of his duties under this  Agreement,  as Executive
deems necessary or appropriate.  Nothing herein shall prevent the Executive from
holding  other  employment   positions,   serving  charities,   making  personal
investments and pursuing similar  interests of a personal nature,  so long as it
does not materially interfere with his services to the Company.
<PAGE>


     2.   Compensation.
          ------------   The Company agrees to compensate  the Executive for the
services rendered by him during his employment as follows:

          (a)  The Company shall pay the  Executive a monthly  salary of $1,000,
("Monthly  Salary").

In addition, the Executive shall receive 25% of the net revenues received by the
Company  from any sale,  transfer,  joint  venture or other  disposition  of the
Company's subsidiary T1Xpert Corp. or its assets.

          (b)  The Company will also  reimburse  the  Executive  for such meals,
travel and other business  expenses incurred by the Executive in connection with
the  Company's  business  affairs  in  accordance  with the  Company's  standard
practice.

     3.   Termination by the Company.
          --------------------------

          (a)  For Cause.
               ---------   The Company may terminate  the Executive's employment
at any time upon written notice to the Executive.

          (b)  Upon  Death or  Disability.
               --------------------------   This Agreement  shall  automatically
terminate  upon the death of Executive and may be terminated by the Company upon
the disability of Executive the result of which prevents Executive from carrying
out his assigned duties for any cumulative  period of more than ninety (90) days
during any three hundred sixty-five (365) day period ("Disability"). Termination
by  reason of  Executive's  Disability  shall be  effective  upon  notice to the
Executive from the Company.

     4.   Termination by the Executive.
          ----------------------------   Notwithstanding  any  other  provisions
of this Agreement, the Executive shall have the right to resign at any time upon
sixty (60) days' prior written notice to the Company.

     5.   Effect of Termination  on Compensation.
          --------------------------------------   In the event that Executive's
employment  with the Company is terminated  by the Company,  or by the Executive
upon his resignation or non-renewal,  the Executive shall be entitled to receive
his salary and benefits (including any incentive  compensation)  accrued through
the date of termination or resignation.

     6.   Dispute Resolution.
          ------------------

          (a)  Any dispute or controversy  arising under or in  connection  with
this  Agreement  shall be settled  exclusively  by  arbitration  before a single
arbitrator in New York,  New York in  accordance  with the rules of the American
Arbitration  Association then in effect. The Company shall pay all costs arising
out  of or  relating  to  such  proceeding.  Judgment  may  be  entered  on  the
arbitrator's award in any court having jurisdiction; provided, however, that the
Executive  shall be  entitled to  specific  performance  of his right to be paid
pursuant to the terms hereof  during the pendency of any dispute or  controversy
arising under or in connection with this Agreement.


                                       2
<PAGE>


          (b)  In addition to any rights that  Executive  may have as an officer
and director of the Company under the Company's  certificate of incorporation or
under any directors and officers  liability  insurance policy  maintained by the
Company,  (i) the Company  shall  indemnify  the Executive and hold him harmless
from any cost,  expense or  liability  arising out of or relating to any acts or
decisions made by him, or in the course of performing services hereunder, within
the scope of his employment hereunder, (ii) the Company shall bear, or reimburse
the Executive  for, all legal fees  incurred by him in connection  with entering
into this  Agreement,  and shall pay all legal fees and other fees and  expenses
which the  Executive  may incur  with  respect  to  claims  arising  under or in
connection with this Agreement,  whether the Company or the Executive  initiates
an action with respect to this Agreement (regardless of the outcome thereof) and
Executive  shall not be obligated to return any such amounts  regardless  of the
outcome of such  proceeding  and (iii) in the event any suit,  claim,  action or
investigation  shall be  brought  by any  person  or entity  (including  without
limitation, the Company) against Executive in connection with this Agreement the
Company shall pay and advance to the Executive  (on a monthly  basis),  upon his
request  therefor,  all his costs and expenses of  defending  against such suit,
claim, action or investigation, including all attorneys' fees and expenses.

          (c) THE EXECUTIVE SHALL NOT  BE  LIABLE TO  THE  COMPANY  FOR, AND THE
COMPANY HEREBY WAIVES ANY RIGHT TO CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES
ON ACCOUNT  OF ANY BREACH OR  TERMINATION  OF THIS  AGREEMENT  OR ACCOUNT OF ANY
OTHER  ACTION OR  OMISSION  OF  EXECUTIVE.  IN THE EVENT AN ACTION IS BROUGHT BY
EITHER  PARTY TO  ENFORCE  THIS  AGREEMENT,  THE  COMPANY  SHALL  PAY ALL OF THE
ATTORNEYS' FEES AND OTHER EXPENSES  INCURRED BY THE EXECUTIVE IN THE LITIGATION,
IRRESPECTIVE OF THE OUTCOME OF SUCH LITIGATION.

     7.   Binding  Effect;  Assignment.
          ----------------------------   Except as  hereinafter  set forth, this
Agreement  shall be binding upon and inure to the benefit of the  Executive  and
the Company and their respective permitted successors and assigns.  Neither this
Agreement  nor any of the rights or  benefits  hereunder  may be assigned by the
Executive.  In the event the  Company  merges or  consolidates  with or into any
other  corporation  or sells or  otherwise  transfers  substantially  all of its
assets to another corporation, the provisions of this Agreement shall be binding
upon and inure to the benefit of the corporation surviving or resulting from the
merger or consolidation or to which such assets are sold or transferred.

     8.   Notices and Demands.
          -------------------   All notices, demands and communications provided
for in this  Agreement  or made under  this  Agreement  shall be in writing  and
deemed given when actually  delivered  personally,  by  facsimile,  by overnight
courier,  or by registered or certified  mail,  return receipt  requested,  with
postage prepaid, addressed in each case as follows:

          (a)  To the Company:

               7 Mikve Israel
               Box 36351, Tel Aviv 61362 Israel


                                       3
<PAGE>


          (b)  To the Executive:

               Mr. Guy Zahavi
               7 Mikve Israel
               Box 36351, Tel Aviv 61362 Israel

or such other address or fax number as may, after the date of this Agreement, be
designated by the Executive or the Company by notice given to the other party as
the address to which  communications  under this Agreement  shall  thereafter be
delivered or mailed.

     Notices,  demands and communications  shall be deemed to have been given or
made (a) on the date delivered, if delivered personally or by facsimile;  (b) on
the next  business  day, if  delivered by  overnight  courier,  or (c) three (3)
business days after being sent, if sent by registered or certified mail,  return
receipt requested.

     9.   Governing Law.
          -------------   This  agreement has been executed and delivered in the
State of New York and its validity, interpretation,  performance and enforcement
shall be  governed by the laws of said State  without  regard to  principles  of
conflict of laws.

     10.  Entire Agreement; Amendment;  Waivers.
          -------------------------------------   This Agreement,  including its
Schedules,  contains the entire  agreement  between the parties  relating to the
subject  matter  hereof  and  supersedes  any  prior  or  other  understandings,
agreements  or  representations  relating  thereto.  This  Agreement  may not be
amended,  modified or  supplemented  except by an agreement in writing signed by
the parties  hereto.  Waiver by any party or any breach of this Agreement  shall
not  operate  or be  construed  as a  continuing  waiver  or as a waiver  of any
subsequent breach.

     11.  Severability.
          ------------   The invalidity  or  unenforceability  of any particular
provision  of this  Agreement  shall not  affect  the other  provisions  of this
Agreement,  and this  Agreement  shall be  construed  in all respects as if such
invalid or unenforceable provision were omitted.


      12. Headings; Construction.
          ----------------------   The  section  and other headings contained in
this  Agreement  are for  reference  purposes  only and  shall  not  affect  the
interpretation of this Agreement.  Whenever required by the context,  references
to the singular shall include the plural, and the masculine gender shall include
the feminine gender.


                                       4
<PAGE>


     IN WITNESS WHEREOF, the parties have  duly  executed  this  Agreement to be
effective as of the date first above written.


                                     CONTINENTAL INFORMATION SYSTEMS
                                     CORPORATION


                                     By:    /s/Jonah Meer
                                           -------------------------------------

                                     Name:  Jonah Meer
                                            ------------------------------------

                                     Title: Chief Executive Officer
                                            ------------------------------------


                                     EXECUTIVE

                                            /s/Guy Zahavi
                                            ------------------------------------

                                     Name:  Guy Zahavi
                                            ------------------------------------


                                        5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>5
<FILENAME>cis10k03exh31.txt
<DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER
<TEXT>
Exhibit 31.1


                    CERTIFICATION OF CHIEF FINANCIAL OFFICER
                                   PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


     I, Guy Zahavi, certify that:

     1.  I  have reviewed  this  annual  report  on  form  10-K  of  Continental
Information Systems Corporation.

     2.  Based on my knowledge,  this annual  report does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report.

     3.  Based on my knowledge, the financial  statements,  and other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report.

     4.  I am responsible for establishing and maintaining  disclosure  controls
and  procedures  (as  defined in exchange  act rules  13a-14 and 15d-14) for the
registrant and have:

         (a)  designed such  disclosure  controls and  procedures to ensure that
material  information  relating to the  registrant,  including its  consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

         (b)  evaluated  the  effectiveness   of  the   registrant's  disclosure
controls and  procedures as of a date within 90 days prior to the filing date of
this annual report (the "evaluation date"); and

         (c)  presented in this annual report  our  conclusions about the effec-
tiveness of the disclosure controls and procedures based on our evaluation as of
the evaluation date;

     5.  The registrant's other certifying officers and I have disclosed,  based
on our most  recent  evaluation,  to the  registrant's  auditors  and the  audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent functions):

         (a)  all  significant  deficiencies  in  the  design  or  operation  of
internal  controls  which could  adversely  affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         (b)  any fraud,  whether or not material,  that involves  management or
other  employees  who  have a  significant  role  in the  registrant's  internal
controls.

     6.  The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: August 29, 2003

                                               /s/Guy Zahavi
                                               ---------------------------------
                                               Guy Zahavi
                                               Chief Financial Officer

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>6
<FILENAME>cis10k03exh32.txt
<DESCRIPTION>CERTIFICATION OF CHIEF FINANCIAL OFFICER
<TEXT>
Exhibit 32.1


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection  with the Annual Report of  Continental  Information  Systems
Corporation  (the  "Company") on Form 10-K for the period ended May 31, 2003, as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  I, Guy Zahavi,  Chief  Financial  Officer of the  Company,  certify,
pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:

     (1)  the Report fully complies with the  requirements  of Section  13(a) or
          15(d) of the Securities Exchange Act of 1934; and

     (2)  the  information  contained  in  the  Report  fairly  presents, in all
          material respects,  the  financial condition and results of operations
          of the Company.


Date: August 29, 2003

                                               /s/Guy Zahavi
                                               ---------------------------------
                                               Guy Zahavi
                                               Chief Financial Officer

</TEXT>
</DOCUMENT>
</SUBMISSION>
