<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION

                            Washington, D.C. 20549

 
                                  FORM 10-QSB
 
(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
    1934

For the quarterly period ended March 31, 1999
 
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
 
For the transition period from        to
 
                         Commission file number 04863
 
                   Southern Investors Service Company, Inc.
       (Exact name of small business issuer as specified in its charter)
 
           Delaware                                      74-1223691
  (State or other jurisdiction                        (I.R.S. Employer  
of incorporation or organization)                    Identification No.) 
                                           
2727 North Loop West, Suite 200, Houston, Texas             77008   
        (Address of principal                             (Zip Code) 
          executive offices)    

                                (713) 869-7800
                           Issuer's telephone number


                ---------------------------------------------
                (Former name, former address and former fiscal
                      year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes [X]  No [_]

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

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes [_]   No [_]

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,168,929 as of May 12, 1999, Common
Stock $1.00 Par Value

Transitional Small Business Disclosure Format (Check One):
 Yes [_]   No [_]
<PAGE>
 
                        PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

  The Consolidated Financial Statements included herein have been prepared by
Southern Investors Service Company, Inc., (the Company), without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.  It is suggested that these Consolidated Financial
Statements be read in conjunction with the Consolidated Financial Statements and
notes thereto included in the Company's latest annual report on Form 10-KSB.  In
the opinion of the management of the Company, all adjustments necessary to
present a fair statement of the results for the interim periods have been made.
<PAGE>
 
           SOUTHERN INVESTORS SERVICE COMPANY, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET
                                MARCH 31, 1999

                            (Thousands of Dollars)
                                  (Unaudited)
 
ASSETS
------
 
RESORT DEVELOPMENT, NET                                  $  2,201
EQUITY IN REAL ESTATE JOINT VENTURES, NET                     510
CASH                                                          211
ACCOUNTS RECEIVABLE                                           241
OTHER ASSETS                                                   16
                                                         --------
                                                         $  3,179
                                                         ========
 
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
 
LIABILITIES:
 Notes payable                                           $  5,515
 Accounts payable and accrued expenses                      2,453
 Other liabilities                                            148
                                                         --------
   Total liabilities                                        8,116
                                                         --------
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' DEFICIT:
  Preferred stock, $1 par, 1,000,000
   shares authorized, none issued                              --
  Common stock, $1 par, 10,000,000 shares authorized,
   3,281,331 shares issued                                  3,281
  Additional paid-in capital                                3,031
  Retained deficit                                        (11,123)

  Less treasury stock, 112,402 shares, at cost               (126)
                                                         -------- 
   Total stockholders' deficit                             (4,937)
                                                         --------
                                                         $  3,179
                                                         ========

        The accompanying notes are an integral part of this statement.
<PAGE>
 
           SOUTHERN INVESTORS SERVICE COMPANY, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME

                            (Thousands of Dollars)
                                  (Unaudited)
 
                                                Three months ended March 31,
                                                ----------------------------
                                                  1999                1998
                                                --------            --------
 
RESORT REVENUES                                 $     686         $      748
REAL ESTATE REVENUES                                   27                325
                                                ---------         ----------
                                                      713              1,073
                                                ---------         ----------
RESORT OPERATING EXPENSES                             685                652
OTHER OPERATING EXPENSES                               25                204
                                                ---------         ----------
                                                      710                856
                                                ---------         ----------
INCOME FROM OPERATIONS                                  3                217
INTEREST EXPENSE                                      (94)               (91)
                                                ---------         ----------
NET INCOME (LOSS)                               $     (91)        $      126
                                                =========         ==========
INCOME (LOSS) PER COMMON SHARE                  $    (.03)        $      .04
                                                ==========        ==========
AVERAGE NUMBER OF SHARES OUTSTANDING             3,168,929         3,168,929
                                                ==========        ==========

       The accompanying notes are an integral part of these statements.
<PAGE>
 
           SOUTHERN INVESTORS SERVICE COMPANY, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                            (Thousands of Dollars)
                                  (Unaudited)

                                                              Three Months
                                                             Ended March 31,
                                                             ---------------
                                                              1999     1998
                                                             ------   ------
Cash flows from operating activities:
 Net income (loss)                                           $ (91)    $126
 Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
    Equity in undistributed (income) loss of real
     estate joint ventures                                      (2)       4
    Distribution from real estate joint ventures                --      190
    Gain from sale of assets                                    --      (94)
    Depreciation and amortization                               48       48
 Change in assets and liabilities:
   Investments in resort development                           (55)     (81)
   Decrease in accounts receivable and other assets             98       12
   Increase in accounts payable, accrued
    expenses and other                                         117      100
                                                             -----     ----
      Net cash provided by operating activities                115      305
                                                             -----     ----
Cash flows from investing activities:
  Proceeds from sale of investments                             --       94
                                                             -----     ----
Cash flows from financing activities:
 Borrowings (payments) on notes payable, net                    55      (76)
                                                             -----     ----
Net increase in cash                                           170      323
Beginning cash                                                  41      154
                                                             -----     ----
Ending cash                                                  $ 211     $477
                                                             =====     ====
 
       The accompanying notes are an integral part of these statements.
<PAGE>
 
           SOUTHERN INVESTORS SERVICE COMPANY, INC. AND SUBSIDIARIES
                                        
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (Unaudited)


(1)  CURRENT BUSINESS CONDITIONS

  Net (loss) of Southern Investors Service Company, Inc. and subsidiaries (the
Company) was ($91,000) for the three months ended March 31, 1999, as compared to
net income of $126,000 for the three months ended March 31, 1998.

  The Company has sustained losses from operations for each of the past several
years, and management anticipates that the Company will incur an operating loss
for the remainder of 1999.  Cash flow from operations has not been and will not
be sufficient to meet liquidity needs.  Such losses have depleted the Company's
stockholders' equity.  These factors raise substantial doubt about the Company's
ability to continue as a going concern.

  Debt totaling $4,756,000 has matured and is currently due.  The ability of the
Company to continue as a going concern is dependent upon its ability to settle
or restructure its remaining debt and other obligations and generate positive
cash flow to cover operating expenses and other cash requirements.  Management
is currently reviewing possible options to increase cash flow and settle the
Company's existing liabilities with its limited resources.  These options
include, but are not limited to, continued efforts to reduce operating expenses
(including interest), attempts to increase revenues of the Company's resort
development, continued negotiations with various creditors to settle their
accounts for cash payments at substantially less than the amount due, the
settlement of liabilities through the transfer of assets to creditors in
satisfaction of their claims, and a possible plan of reorganization under
Chapter 11 of the U.S. Bankruptcy Code or liquidation of the Company.  There can
be no assurance that actual events will occur in accordance with any of the
options management is currently reviewing. The consolidated financial statements
do not include any adjustments relating to the recoverability of asset carrying
amounts or the amount of liabilities, which adjustments might be necessary if
the Company is unable to continue as a going concern.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  The accompanying unaudited consolidated financial statements have been
prepared in accordance with the significant accounting policies included in the
notes to the Company's latest annual report on Form 10-KSB.  These consolidated
financial statements should be read in conjunction with those notes.
<PAGE>
 
Item 2.     Management's Discussion and Analysis or Plan of Operation.

Results of Operations

  The net (loss) for the first three months of 1999 was ($91,000) or ($.03) per
share compared to a net income of $126,000 or $.04 per share during the first
quarter of 1998.

  Rental and other revenues from the operation of the Company's resort in west
Texas totaled $686,000 and $748,000 for the three months ended March 31, 1999
and 1998, respectively.  Rental revenue and occupancy statistics for the
Company's resort operations for each of these periods are summarized as follows:
 
                               Three months ended March 31,
                               ----------------------------
                                    1999        1998
                                  ---------   ---------
Hotel rooms:
     % Occupancy                        47%         46%
     Average rate                 $  64.70    $  58.71
     Total revenue                $250,000    $220,000
Condominiums:
     % Occupancy                        34%         35%
     Average rate                 $  64.56    $  53.95
     Total revenue                $ 53,000    $ 46,000
 
Total rental revenue              $303,000    $266,000
Restaurant, bar and
  golf course revenue              234,000     229,000
Other revenues                     149,000     253,000
                                  --------    --------
Total revenues                    $686,000    $748,000
                                  ========    ========
 
The decrease in other revenues is due to the sale of several condominiums during
the first quarter of 1998.
<PAGE>
 
     Real estate revenues were $27,000 for the first three months of 1999
compared to $325,000 last year.  During 1998 and prior years, the Company's
operations included the management of residential developments and two office
buildings owned by others.  During 1998, several of these residential projects
were sold by the owners and therefore the Company no longer is managing these
projects.  Effective January 1, 1999, the Company ceased all management activity
and all employees related to this activity were terminated.  In addition, during
1998, the Company sold its last remaining small tracts of real estate.
Currently the Company's only remaining operations are its resort development in
west Texas.  In addition, during the first quarter of 1998, the Company sold its
12.5% interest in Heritage Park Venture II for a gain of $94,000.

LIQUIDITY AND CAPITAL RESOURCES

     On an annual basis, cash flow from operations has been negative for the
past several years, and management anticipates that cash flow from operations
will not be sufficient to meet the Company's liquidity needs during 1999.  The
financial condition of the Company indicates that, unless operating results and
cash flow improve, the Company will be required to borrow funds or to continue
to sell assets.  It is unlikely that the Company will be able to arrange to
borrow sufficient funds from other sources and there is no assurance that the
Company could sell sufficient assets to meet its cash needs.

  Debt totaling $4,756,000 has matured and is currently due.  The ability of the
Company to continue as a going concern is dependent upon its ability to settle
or restructure its remaining debt and other obligations and generate positive
cash flow to cover operating expenses and other cash requirements.  Management
is currently reviewing possible options to increase cash flow and settle the
Company's existing liabilities with its limited resources.  These options
include, but are not limited to, continued efforts to reduce operating expenses
(including interest), attempts to increase revenues of the Company's resort
development, continued negotiations with various creditors to settle their
accounts for cash payments at substantially less than the amount due, the
settlement of liabilities through the transfer of assets to creditors in
satisfaction of their claims, and a possible plan of reorganization under
Chapter 11 of the U.S. Bankruptcy Code or liquidation of the Company.  While
management believes that the assumptions relative to the options currently being
considered are reasonable, there is no assurance that actual events will occur
in accordance with such assumptions.  Accordingly, management's assumptions may
need to be revised as actual events occur which differ from such assumptions.
The consolidated financial statements do not include any adjustments relating to
the recoverability of asset carrying amounts or the amount of liabilities, which
adjustments might be necessary if the Company is unable to continue as a going
concern.

     The undeveloped land located at the Company's resort development in west
Texas, is pledged to secure debt. Management believes that in a stable market
the values of the properties would exceed the balances of the loans that they
secure.  If the Company were to sell or dispose of its real estate assets as a
result of the maturity or acceleration of the underlying debt or for reasons
other than those arising in the normal course of business, it is anticipated
that sales prices would be significantly less than the current carrying amount
of the assets and that such sales or dispositions would not generate sufficient
funds to retire the related debt.
<PAGE>
 
THE YEAR 2000 ISSUE

     The year 2000 problem is the result of computer programs being written
using two digits (rather than four) to define the applicable year.  Any of the
Company's programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000.  The Company has conducted a
review of its computer systems to identify the systems that could be affected by
"the year 2000" issue.

     The Company's major systems have all been developed by third party software
providers.  The Company has contacted its major computer service providers and
has received assurances that those services will function properly on January 1,
2000.  Since the Company does not process a large volume of transactions in its
accounting system and does not rely on other automated systems that could not be
processed manually, the Company does not foresee a material financial risk
associated with the year 2000 issue.  The Company will continue to coordinate
with its third party providers to assess the year 2000 issue and develop plans
for compliance.

     The Company does not have a written contingency plan to address the issues
that could arise should the Company or any of its suppliers not be prepared to
accommodate year 2000 issues timely. The Company  believes that in an emergency
it could revert to the use of manual systems that do not rely on computers and
could perform the minimum functions required and provide information reporting
to maintain satisfactory control of the business.  The Company intends to
maintain constant surveillance on this situation and will develop such
contingency plans as are required by the changing environment.

FORWARD LOOKING STATEMENT

     This report contains "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  All statements other than
statements of historical fact included in this section and elsewhere in this
report are forward looking statements and, although the Company believes that
the expectations reflected in such forward looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
The Company's business and financial results are subject to various risks and
uncertainties, including the Company's ability to settle or restructure its
remaining debt and other obligations and to generate positive cash flow to cover
its operating expenses, that may cause actual results to differ materially from
the Company's expectations.  The Company does not intend to provide updated
information other than as otherwise required by applicable law.  All subsequent
written and oral forward looking statements attributable to the Company or
persons acting on its behalf are expressly qualified in their entirety by the
cautionary statements contained in this paragraph and elsewhere in this report.
<PAGE>
 
                          PART II - OTHER INFORMATION

ITEM 1.   Legal Proceedings

None

ITEM 2.   Changes in Securities

None

ITEM 3.   Default upon Senior Securities

None

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

None

ITEM 5.   Other Information

None

ITEM 6.   Exhibits and Reports on Form 8-K

          (27) Financial Data Schedule
 
<PAGE>
 
                                  SIGNATURES

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


                             SOUTHERN INVESTORS SERVICE COMPANY, INC.
      
      
      
                               /s/ Walter M. Mischer, Jr.
                                   -----------------------------------------
                                   WALTER M. MISCHER, JR.
                                   President - Principal Executive Officer
      
      
                                /s/ Eric Schumann
                                    -----------------------------------------
                                    ERIC SCHUMANN
                                    Senior Vice President - Finance
                                    Principal Financial and Accounting Officer


                                    DATE: May 13, 1999