<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    September 30, 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 of incorporation            (I.R.S. Employer
                or organization)                        Identification No.)

    2727 North Loop West, Suite 200, Houston, Texas                 77008
--------------------------------------------------------------------------------
        (Address of principal executive offices)                  (Zip Code)


                                (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 November 10,
                                                  ---------------------------
1999, Common Stock $1.00 Par Value
----------------------------------
  Transitional Small Business Disclosure Format (Check One):
    Yes______; No  X
                  ---
<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
                          --------------------------
                              SEPTEMBER 30, 1999
                              ------------------
                            (Thousands of Dollars)
                                  (Unaudited)

<TABLE>
<S>                                                                    <C>
ASSETS
------
RESORT DEVELOPMENT, NET                                                $  2,195
EQUITY IN REAL ESTATE JOINT VENTURES, NET                                   362
CASH                                                                         58
ACCOUNTS RECEIVABLE                                                         250
OTHER ASSETS                                                                 13
                                                                       --------

                                                                       $  2,878
                                                                       ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------

LIABILITIES:
 Notes payable (including $4,772 matured notes)                        $  5,421
 Accounts payable and accrued expenses                                    2,635
 Other liabilities                                                          147
                                                                       --------
   Total liabilities                                                      8,203
                                                                       --------

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                                                       (11,511)
 Less treasury stock, 112,402 shares, at cost                           (   126)
                                                                       --------
   Total stockholders' deficit                                           (5,325)
                                                                       --------

                                                                       $  2,878
                                                                       ========
</TABLE>

        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)

<TABLE>
<CAPTION>
                                                         Three Months Ended                Nine Months Ended
                                                           September 30,                     September 30,
                                                      -----------------------          -----------------------

                                                          1999        1998                1999         1998
                                                      ----------    ---------          ---------     ---------
<S>                                                   <C>           <C>                <C>           <C>
RESORT REVENUES                                        $     419    $     250          $    1,664     $  1,527

REAL ESTATE REVENUES                                          30          115                  64          539
                                                      ----------    ---------           ---------    ---------
                                                             449          365               1,728        2,066
                                                      ----------    ---------           ---------    ---------

RESORT OPERATING EXPENSES                                    627          523               1,988        1,760

OTHER OPERATING EXPENSES                                       4           88                  53          545
                                                      ----------    ---------           ---------    ---------
                                                             631          611               2,041        2,305
                                                      ----------    ---------           ---------    ---------

LOSS FROM OPERATIONS                                        (182)        (246)               (313)        (239)

INTEREST EXPENSE                                             (96)         (93)               (283)        (278)
                                                      ----------    ---------           ---------    ---------

LOSS BEFORE EXTRAORDINARY GAIN                              (278)        (339)               (596)        (517)

EXTRAORDINARY GAIN ON DEBT
  SETTLEMENT  (Net of tax provision
  and operating loss carryforward realization
  of $39 in 1999)                                             --          ---                 116          ---
                                                      ----------    ---------           ---------    ---------

NET LOSS                                              ($     278)   ($    339)          ($    480)   ($    517)
                                                      ==========    =========           =========    =========

BASIC AND DILUTED INCOME (LOSS)
  PER COMMON SHARE
      Loss before extraordinary gain                  ($     .09)   ($    .11)          ($    .19)   ($    .16)
                                                      ==========    =========           =========    ==========

      Extraordinary gain on debt settlement            $     ---     $    ---           $     .04     $    ---
                                                      ==========    =========           =========    ==========

      Net loss                                        ($     .09)   ($    .11)          ($    .15)   ($    .16)
                                                      ==========    =========           =========    =========

AVERAGE NUMBER OF
  SHARES OUTSTANDING                                   3,168,929    3,168,929           3,168,929    3,168,929
                                                      ==========    =========           =========   ==========
</TABLE>

       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)

<TABLE>
<CAPTION>
                                                                      Nine Months
                                                                  Ended September 30,
                                                                ---------------------
                                                                  1999          1998
                                                                -------       -------
<S>                                                             <C>           <C>
Cash flows from operating activities:
 Net loss                                                        ($ 480)      ($ 517)
 Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
    Extraordinary gain on debt settlements                         (116)          ---
    Equity in undistributed (income) loss of real
     estate joint ventures                                           (2)           15
    Distribution from real estate joint ventures                    149           190
    Gain from sale of assets                                        ---           (94)
    Depreciation and amortization                                   143           143
Change in assets and liabilities:
   Investments in resort development                               (145)         (176)
   Decrease in accounts receivable and other assets                  91           (50)
   Increase in accounts payable, accrued
    expenses and other                                              314           258
                                                                  -----       -------

      Net cash (used in) operating activities                       (46)         (231)
                                                                  -----       -------

Cash flows from investing activities:
  Proceeds from sale of investments                                 ---            94
                                                                  -----       -------

Cash flows from financing activities:
 Borrowing on notes payable, net                                    (63)          (39)
                                                                  -----       -------

Net increase (decrease) in cash                                      17           (98)
Beginning cash                                                       41           154
                                                                  -----       -------

Ending cash                                                       $  58        $   56
                                                                  =====       =======
</TABLE>

       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 ($480,000) for the nine months ended September 30, 1999, as
compared to net (loss) of ($517,000) for the nine months ended September 30,
1998. During the second quarter of 1999, the Company settled a note payable with
an outstanding balance of $175,000 for a cash payment of $59,000 and recorded an
extraordinary gain of $116,000. No extraordinary gain was recorded during 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 $4,772,000 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 nine months of 1999 was ($480,000) or ($.15)
per share compared to a net (loss) of ($517,000) or ($.16) per share during the
first nine months of 1998. During the second quarter of 1999, the Company
settled a note payable with an outstanding balance of $175,000 for a cash
payment of $59,000 and recorded an extraordinary gain of $116,000.

     Rental and other revenues from the operation of the Company's resort in
west Texas totaled $1,664,000 and $1,527,000 for the nine months ended September
30, 1999 and 1998, respectively. Rental revenue and occupancy statistics for the
Company's resort operations for each of these periods are summarized as follows:

<TABLE>
<CAPTION>
                             Nine months ended September 30,
                             -------------------------------
                                 1999             1998
                                 ----             ----
<S>                          <C>               <C>
Hotel rooms:
     % Occupancy                      36%              35%
     Average rate             $    61.21       $    56.00
     Total revenue            $  595,000       $  524,000
Condominiums:
     % Occupancy                      22%              22%
     Average rate             $    69.53       $    59.72
     Total revenue            $  114,000       $   95,000

Total rental revenue          $  709,000       $  608,000
Restaurant, bar and
  golf course revenue            494,000          477,000
Other revenues                   461,000          442,000
                              ----------       ----------
Total revenues                $1,664,000       $1,527,000
                              ==========       ==========
</TABLE>

     The increase in revenues is due primarily to increased room rates 1999.
The increase in resort operating expenses during 1999 is due to increased
payroll and related expenses, advertising, maintenance and repairs.
<PAGE>

     Real estate revenues were $64,000 for the first nine months of 1999
compared to $539,000 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. Other operating
expenses decreased $492,000 during the first nine months of 1998 primarily as a
result of the termination of these employees. 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 $4,772,000 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
<PAGE>

than the current carrying amount of the assets and that such sales or
dispositions would not generate sufficient funds to retire the related debt.

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: November 11, 1999