FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(D)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934 (FEE REQUIRED)

                                       OR

     [ ]  TRANSITION  REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 (NO FEE REQUIRED)


                         Commission File Number: 0-9562


                            Colonial Industries, Inc.

                          formerly Impact Energy, Inc.

             (Exact name of Registrant as specified in its charter)


          Colorado                                        84-0818655
(Jurisdiction of Incorporation)             (I.R.S. Employer Identification No.)

     PO Box 980459, Houston Texas                         77098-0459
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code:
(713) 526-8224

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

Securities registered pursuant to Section 12(g) of the Act:     None:

Yes[_] No[x]  (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.)

Not[X]  (Indicate  by check mark  whether if  disclosure  of  delinquent  filers
(ss.229.405)  is not and  will  not to the  best of  Registrant's  knowledge  be
contained  herein,  in definitive proxy or information  statements  incorporated
herein by reference or any amendment hereto.)

As of December 31, 1998, the aggregate  number of shares held by  non-affiliates
was approximately  1,802,100  shares.  Due to the limited market for the Company
securities,  no estimate is being supplied herewith of the market value for such
securities.

As of December 31, 1998, the number of shares  outstanding  of the  Registrant's
Common Stock was 6,802,100.

                                                Exhibit Index is found on page 7

Impact Energy, Inc. December 31, 1998   Form 10-KSB   Exhibit Index is on page 7
                                                               Sequential Page 1


<PAGE>


                                     PART I


                                Item 1. Business.



(a)  Organization of the Issuer.

     Colonial  Industries,  Inc.,  formerly  Impact  Energy,  Inc.,  is a  Texas
corporation,  originally a Colorado corporation  organized April 1, 1980, formed
to engage in exploration for, development and sale of, oil and gas. During March
of  1988,  Impact  contributed  all its  producing  oil and  gas  properties  to
Southwest  Sites,  Inc.,  and  distributed  the  ownership  of  Southwest to the
shareholders of Impact. After the disposition,  Impact began pursuing investment
opportunities   in  the  financial   services   industry.   Impact  made  public
announcements  during 1988 of its intention to pursue the  acquisition of failed
Banks and Savings and Loans, in the State of Texas. No acquisitions were made in
1988,  although Impact did provide funding with respect to two Texas Banks.  The
Company became inactive in 1989 and has remained so to date.

     On April  23,  1998,  Impact  Energy,  Inc.  (Colorado)  moved its place of
incorporation  from  Colorado  to  Texas,  and  changed  its  name  to  Colonial
Industries,  Inc.,  and a share for share  exchange  took place.  In November of
1998, pursuant to shareholder approval,  the issued and outstanding common stock
was reverse-split 75 shares to 1 share.


(b)  The Business of Registrant.

     Impact Energy,  Inc. was a Colorado  corporation  organized  April 1, 1980,
originally formed to engage in exploration for, development and sale of, oil and
gas.  During March of 1988,  Impact  contributed  all its  producing oil and gas
properties to Southwest Sites,  Inc., and distributed the ownership of Southwest
to the  shareholders  of Impact.  After the  disposition,  Impact began pursuing
investment opportunities in the financial services industry.  Impact made public
announcements  during 1988 of its intention to pursue the  acquisition of failed
Banks and Savings and Loans, in the State of Texas. No acquisitions were made in
1988,  although Impact did provide funding with respect to two Texas Banks.  The
Company became inactive in 1989 and has remained so to date.

     Accordingly,  this Issuer has no business or productive  assets and remains
essentially  dormant,  its  activities  limited  to  maintaining  its  corporate
franchise in Texas, and making required periodic filings and disclosure.

(c)  Employees and Facilities.

     The Company has no employees or  facilities,  and enjoys the  non-exclusive
office services of its President and Majority Shareholder.

                               Item 2. Facilities.

     The Company has no employees or  facilities,  and enjoys the  non-exclusive
office services of its Officers and Principal Shareholders.


Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 2

<PAGE>


                           Item 3. Legal Proceedings.

     There are no legal or other proceedings  pending against the Company, as of
the preparation of this Report,  and no facts are known or suspected which would
give rise to any anticipation of any such proceedings in the foreseeable future.

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

     There have been no matters  submitted to a vote of shareholders  during the
annual period covered by this report.

                                     PART II

            Item 5. Market for Common Equity and Stockholder Matters.

(a)  Market Information.

     The  Registrant  Company has one class of  securities,  No Par Common Stock
("Common  Stock").  As of the date of this Annual Report,  the securities of the
Issuer  are not  traded  over the  counter  or on any  trading  exchange.  It is
foreseeable  that  the  common  stock  of  this  issuer  may  be  traded  in the
foreseeable  future over the counter.  If so  shareholders  and the public would
experience a young,  sporadic and potentially  volatile trading market for them.
Quotations  for, and  transactions  in the  Securities  so traded are capable of
rapid  fluctuations,  resulting  from the  influence  of  supply  and  demand on
relatively thin volume. There may be buyers at a time when there are no sellers,
and sellers when there are no buyers, resulting in significant variations of bid
and ask  quotations by  market-making  dealers,  attempting to adjust changes in
demand and supply.  A young  market is also  particularly  vulnerable  to "short
selling",  sell orders by persons  owning no shares of stock,  but  intending to
drive down the market  price so as to purchase  the shares to be  delivered at a
price  below the price at which the shares  were sold  "short".  Such future and
foreseeable  trading may not occur.  There is no assurance of any future trading
in or of the securities of this Issuer.

     Of the Company's issued and outstanding 6,802,100 shares of Common Stock as
of  December  31,  1998,   there   stands  of  record   1,802,100   unrestricted
free-trading, and 5,000,000 issued as Restricted Securities.

(b) Holders. Management calculates that the approximate number of holders of the
Company's Common Stock, as of December 31, 1997 was 1,174.

(c)  Dividends.  No cash  dividends  have been paid by the Company on its Common
Stock and no such payment is anticipated  in the  foreseeable  future.  No other
dividends have been paid or declared by the Issuer and none are anticipated.


Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 3
<PAGE>


                        Item 6. Selected Financial Data.


The following information is provided as of the Date of this Report:

================================================================================
  December 31, 1998                          1997           1996           1995
================================================================================

Total Assets                     0              0              0              0
--------------------------------------------------------------------------------

Revenues                         0              0              0              0
--------------------------------------------------------------------------------

Operating Expenses           5,538          4,893          4,893          4,893
--------------------------------------------------------------------------------

Net Earnings or (Loss)      (5,538)        (4,893)        (4,893)        (4,893)
--------------------------------------------------------------------------------

Per Share Earnings
  or (Loss)                    (--)           (--)           (--)           (--)
--------------------------------------------------------------------------------

Average Common Shares
  Outstanding            6,802,434     74,955,530     74,955,530     74,955,530
================================================================================


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

(a)  Results of Operations.

     The Issuer has no current  business,  and has had no operations in the last
fiscal  year.  This  Issuer has no  business  or  productive  assets and remains
essentially  dormant,  its  activities  limited  to  maintaining  its  corporate
franchise in Texas, and making required periodic filings and disclosure.

(b)  Liquidity and Capital Resources.

     The Issuer has no capital  resource  and no  liquidity.  This Issuer has no
business or productive assets and remains  essentially  dormant,  its activities
limited to maintaining  its corporate  franchise in Texas,  and making  required
periodic filings and disclosure.

(c) Plan of Operation.  The Company is a candidate  for a business  combination,
joint venture,  or structured  acquisition,  which,  if effective,  would create
profitability for the Company and its shareholders.

(d)  Reverse  Acquisitions.  A  reverse  acquisition  is one in which a  private
business  is  acquired by a public  corporation  in  exchange  for a transfer of
control of the public company to the owners of the private targeted  acquisition
company.  The public  company  acquires the private  company,  in form,  but the
private company acquires the public company in substance.  This corporation,  by
its very nature and current  status,  is a potential  participant in one or more
reverse acquisition transactions, at some undetermined future time. There are no
present activities,  discussions or negotiations,  planned or in progress,  with
any  entity or  interest  group,  for any  direct or  reverse  acquisitions,  or
business combinations, of any kind.


Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 4
<PAGE>


              Item 8. Financial Statements and Supplementary Data.

     Auditors  Report of December 31, 1998 is filed  herewith.  Those  financial
statements, attached thereto are incorporated herein by this reference as though
fully  set forth  herein.  By virtue  of the late  filing  of this  Report,  the
Auditors Report includes unaudited information through March 31, 1999.

                     Item 9. Change of Registrant's Auditor.

     Todd D.  Chisholm,  CPA, and the firm of Crouch,  Bierwolf & Chisholm,  has
been retained to continue as the Independent  Auditor of this Corporation and to
provide,  and has  provided  the  current  Auditor's  report.  There has been no
disagreement or dispute of any kind or sort with any auditor as to any matter.

                                    PART III

                   Item 10. Directors and Executive Officers.

     The Directors  and  Executive  Officers of the Company are set forth below.
All Officers and Directors shall serve until the next meeting of shareholders or
until their successors be elected or appointed.

                   JACK WELLS                 President/Director

                   JOE KANE                   Secretary/Director

                        Item 11. Executive Compensation.

     Officers,  Directors and Management of this Issuer  presently serve without
compensation.

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

                                  COMMON STOCK

     To the best of Registrant's  knowledge and belief the following  disclosure
presents, as of the date of this report, December 31, 1997, the total beneficial
security  ownership of all  Directors  and  Nominees,  naming  them,  and by all
Officers and Directors as a group, without naming them, of Registrant,  known to
or discoverable by Registrant,  and the total security ownership of all persons,
entities  and  groups,  known  to or  discoverable  by  Registrant,  to  be  the
beneficial owner or owners of


Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 5
<PAGE>


more than five percent of any voting class of Registrant's  stock. More than one
person, entity or group could be beneficially interested in the same securities,
so that the total of all percentages may accordingly exceed one hundred percent.
Registrant has only one class of stock, namely Common Voting Equity Shares.

           SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS AND 5% OWNERS

<TABLE>
<CAPTION>
=============================================================================================
      NAME AND ADDRESS OF BENEFICIAL OWNER                   AMOUNT AND NATURE       PERCENT
                                                                OF OWNERSHIP         OF CLASS
---------------------------------------------------------------------------------------------
<S>                                <C>                              <C>               <C>
Jack Wells  (1)                    president/director               5,000,000         73.51
PO Box 980459
Houston Texas 77098-0459
---------------------------------------------------------------------------------------------
Joe Kane  (1)                      secretary/director               5,000,000         73.51
PO Box 980459
Houston Texas 77098-0459
=============================================================================================
All Officers and Directors as a Group  (1)                          5,000,000         73.51
=============================================================================================
---------------------------------------------------------------------------------------------
ACX Industries Inc.  (1)                                            5,000,000         73.51
PO Box 980459
Houston Texas
=============================================================================================
Total Shares Issued and Outstanding                                 6,802,100        100.00
=============================================================================================
</TABLE>

(1) The  shares  owned by ACX are  treated as if owned by the  Officers  of this
Issuer,  by reason of their affiliation with that principal  shareholders.  They
are the same 5,000,000 shares.


            Item 13. Certain Relationships and Related Transactions.


                                      None.

Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 6
<PAGE>


                                     PART IV


   Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.


(a)  Financial Statements.      Reference is made to Auditors Report of July 31,
                                1998 and December 31, 1997, and 1996, filed with
                                herewith.  Those financial statements,  attached
                                as Exhibit "F" thereto are  incorporated  herein
                                by this  reference  as  though  fully  set forth
                                herein.

(b)  Form 8-K Reports.          No  Reports  on Form 8-K were  filed  during the
                                last quarter covered by this Annual Report.

(c)  Exhibits.                  Please see Exhibit Index, following.


                                  Exhibit Index

                       Financial Statements and Documents
                    Furnished as a part of this Annual Report

Exhibit A.                      Articles of  Incorporation  and  Certificate  of
                                Amendment

Exhibit F                       Financial    Statements:    March    31,    1999
(audited).                      (unaudited), December 31, 1998 and 1997



Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 7
<PAGE>


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

                 Supplementary Information to be Furnished With
              Reports Filed Pursuant to Section 15(d) of the Act by
                Registrants which Have Not Registered Securities
                       Pursuant to Section 12 of the Act.

      No annual report or proxy material has been sent to security holders.

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

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the individual capacities and on the date indicated.

Dated: June 30, 1999

                               Impact Energy, Inc.
                             A COLORADO CORPORATION


                                       by



/S/ Jack Wells                                               /s/ Joe Kane
------------------                                           -------------------
Jack Wells                                                              Joe Kane
PRESIDENT/DIRECTOR                                           SECRETARY/TREASURER


Impact Energy, Inc.   December 31, 1998  Form 10-KSB  Exhibit Index is on page 7
                                                               Sequential Page 8
<PAGE>


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


                                    Exhibit A

             Articles of Incorporation and Certificate of Amendment


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

<PAGE>

                                [GRAPHIC OMITTED]

                               The State of Texas
                               SECRETARY OF STATE

                            CERTIFICATE OF AMENDMENT
                                       OF

                            COLONIAL INDUSTRIES, INC.
                                    FORMERLY
                               IMPACT ENERGY, INC.

The  undersigned,  as Secretary  of State of Texas,  hereby  certifies  that the
attached  Articles of Amendment for the above named entity have been received in
this office and are found to conform to law.

ACCORDINGLY  the  undersigned,  as  Secretary  of  State,  and by  virtue of the
authority  vested in the  Secretary by law,  hereby issues this  Certificate  of
Amendment.

Dated:         November 19, 1998
Effective:     November 19, 1998

     [SEAL]
THE STATE OF TEXAS


                                                  /s/ Alberto R. Gonzales
                                          --------------------------------------
                                                    Alberto R. Gonzales
                                                    Secretary of State

<PAGE>

                                                                FILED
                                                        In the Office of the
                                                     Secretary of State of Texas
                                                             APR 22 1998
                                                        Corporations Section

                            ARTICLES OF INCORPORATION
                                       OF
                               IMPACT ENERGY, NC.

                                    PREAMBLE

     We, the under signed natural persons,  of the age of eighteen (18) years of
more,  acting  as  incorporators  of a  corporation  under  the  Texas  Business
Corporation  Act, do hereby adopt the following  Articles of  Incorporation  for
such corporation:

                                       I.
                                      NAME

     The name of the corporation is IMPACT ENERGY, INC.

                                       II.
                                    DURATION

     The period of duration of the corporation is perpetual.

                                      III.
                                     PURPOSE

     The purposes for which the  corporation  is organized  are to engage in any
and all lawful business for which  corporations  may be  incorporated  under the
Business Corporation Act of the State of Texas.

                                       IV.
                                     SHARES

     Preferred  Shares  Series "A" with Par Value.  Preferred  Shares Series "B"
with Par Value. And Common Shares without Par Value.

     The  corporation  is  authorized  to issue  four  classes  of  shares to be
designated  respectively  "Preferred Shares Series "A", "Preferred Shares Series
"B",  "Common  Shares".  The total  number of  Preferred  Shares  Series "A" the
corporation is authorized to issue is 150,000,000 and the par value of each such
share is $10.00. The total number of Preferred Shares Series "B" the corporation
is  authorized to issue is  150,000,000  and the par value of each such share is
$10.00. The total number of Common Shares the corporation is authorized to issue
is 75,000,000 and the par value of each such share is $0.00.

                          Dividends on Preferred Shares
                               Series "A" and "B"

     The holders of the preferred shares Series "A" and "B" shall be entitled to
receive  dividends out of any funds legally available  therefor,  at the rate of
ten percent (10%) per annum of par value


                                       1
<PAGE>

thereof,  and no more,  payable in preference and priority to any payment of any
dividend on common shares and payable in cash  quarterly in the months of March,
June, September and December,  or otherwise,  as the Board of Directors may from
time to time  determine.  The right to such dividends on preferred  shares shall
not be  cumulative,  and no right shall  accrue to the holders of such shares by
reason of the Board's failure to pay or declare and set apart dividends  thereon
for any given period as herein provided.

           Noncumulative and Nonparticipating Liquidation Preferences

     On any voluntary or involuntary liquidation of the corporation, the holders
of the  preferred  shares shall receive an amount equal to the par value of such
shares plus any dividends  declared and unpaid thereon,  and no more, before any
amount shall be paid to the holders of the common  shares.  If the assets of the
corporation   should  be   insufficient  to  permit  payment  to  the  preferred
shareholders of their full  preferential  amounts as herein provided,  then such
assets shall be  distributed  ratably among the  outstanding  preferred  shares.
Subject to such  preferential  rights,  the holders of the common  shares  shall
receive,  ratably,  all remaining assets of the corporation.  A consolidation or
merger of the corporation with or into any other  corporation,  or a sale of all
or  substantially  all of the  assets of the  corporation  shall not be deemed a
liquidation, dissolution, or winding up of the corporation within the meaning of
this paragraph.

                                Redemption Clause

     The corporation,  at the option of the Board of Directors,  may at any time
redeem the whole, or from time to time redeem any part, of the Series "A" and/or
Series  "B"  preferred  shares by paying in cash or  equivalent  property  value
therefor the sum of $10.00 per share,  [plus all dividends  declared but unpaid]
thereon as  provided in this  Article to and  including  the date of  redemption
hereinafter  referred to as the "redemptive price", and by giving to each Series
"A" and/or Series "B" preferred shareholder of record at his last known address,
as shown on the records of the corporation,  at least twenty,  but not more than
fifty,  days prior notice  personally or in writing,  by mail,  postage prepaid,
stating  the class or series or part of any class or series of the  shares to be
redeemed and the date and plan of  redemption,  the  redemptive  price,  and the
place  where the  shareholders  may obtain  payment of the  redemptive  price on
surrender of their respective  certificates,  hereinafter called the "redemptive
notice".  Should  only a part  of  the  outstanding  shares  be  redeemed,  such
redemption  shall be effected by lot, or pro rata, as prescribed by the Board of
Directors;  provided,  however,  that no preferred shares shall have be redeemed
unless all accrued dividends on all outstanding preferred shares shall have been
paid for all past dividend  periods and full dividends for the current period on
all outstanding preferred shares,  except those to be redeemed,  shall have been
paid or  declared  and set apart  for  payment.  On or after the date  fixed for
redemption,  each holder of shares called for redemption shall,  unless he shall
have previously exercised his option to convert his preferred shares as provided
in this Article, surrender his certificate for such shares to the corporation at
the place designated in the redemption notice and shall thereupon be entitled to
receive  payment  of the  redemptive  price.  Should  less  than all the  shares
represented by any surrendered certificate to be redeemed, a new certificate for
the unredeemed  shares shall be issued.  If the redemption  notice is duly given
and if sufficient funds are available therefor on the date fixed for redemption,
then,  whether or not the certificates  evidencing the shoats to be redeemed are
surrendered,  all rights with respect to such shares shall terminate on the date
fixed  for  redemption,  except  for the right of the  holders  to  receive  the
redemption price, without interest, on surrender of their certificate therefor.


                                       2
<PAGE>

     If, on or prior to any date fixed for  redemption  of  preferred  shares as
herein  provided,  the  corporation  deposits  with any bank or trust company in
Texas or any bank or trust  company  in the United  States  duly  appointed  and
acting as transfer agent for the corporation,  as a trust fund, a sum sufficient
to  redeem,  on the date fixed for  redemption  thereof,  the shares  called for
redemption,  with  irrevocable  instructions  and authority to the bank or trust
company to  publish  the  notice of  redemption  thereof,  or to  complete  such
publication  if theretofore  commenced,  and to pay, on and after the date fixed
for  redemption or prior thereto,  the  redemptive  price of the shares to their
respective holders on surrender of their share certificates, then from and after
the date of the  deposit,  even  though such date may be prior to the date fixed
for  redemption,  the  shares so  called  shall be  deemed  to be  redeemed  and
dividends  on those  shares  shall  cease to  accrue  after  the date  fixed for
redemption. The deposit shall be deemed to constitute full payment of the shares
to their  holders and from and after the date of the deposit the shares shall be
deemed to be no longer  outstanding,  and the holders  thereof shall cease to be
shareholders  with  respect  to such  shares  and have no  rights  with  respect
thereto,  except the right to receive from the bank or trust company  payment of
the  redemptive  price of the shares,  without  interest,  on surrender of their
certificates  therefor,  or the right to convert  said shares to common stock as
provided in this  Article.  Any money so deposited on account of the  redemptive
price of preferred  shares  converted  after the making of the deposit  shall be
repaid to the corporation forthwith on the conversion of such preferred shares.

     Shares  redeemed  by the  corporation  shall be  restored  to the status of
authorized but unissued shares of the corporation.

                        Restrictions on Preemptive Rights

     No holder of any shares of any class of stock of the  corporation  shall as
such holder have any preemptive or preferential right to receive,  purchase,  or
subscribe to (1) any unissued or treasury  shares of any class of stock (whether
now or hereafter  authorized) of the corporation (2) any obligations,  evidences
of  indebtedness  or other  securities of the  corporation  convertible  into or
exchangeable for, or carrying or accompanied by any rights to receive,  purchase
or  subscribe  to,  any such  unissued  or  treasury  shares,  (3) any  right of
subscription to or to receive, or any warrant or option for the purchase of, any
of the foregoing securities, (4) any other securities that may be issued or sold
by the  corporation,  other than such (if any) as the Board of  Directors of the
corporation,  in its sole and absolute  discretion,  may determine  from time to
time.

     No  shareholder  shall have the right to cumulate his votes at any election
for directors of this corporation.

                              Transfer Restrictions

     Before  there can be a valid sale or  transfer  of any of the shares of the
corporation by any holder thereof,  such holder shall first offer said shares to
the  corporation and then to the other holders of common shares in the following
manner:

     (1) Such offering  shareholder shall deliver a notice in writing by mail or
otherwise, to the


                                       3
<PAGE>

Secretary of the corporation  stating the price,  terms, and conditions of  such
proposed sale or transfer,  the number of shares to be sold or transferred,  and
his  intention  to so sell or  transfer  such  shares.  Within  thirty (30) days
thereafter the corporation shall have the prior right to purchase such shares so
offered  at the  price and on the terms  and  conditions  stated in the  notice;
provided,  however,  that the corporation  shall not at any time be permitted to
purchase all of its outstanding  voting shares.  Should the corporation  fail to
purchase the shares at the  expiration  of the thirty (30) day period,  or prior
thereto decline to purchase the shares,  the Secretary of the corporation shall,
within five (5) days  thereafter,  mail or deliver to each of the other (common)
shareholders  of record a copy of the  notice  given by the  shareholder  to the
Secretary.  Such notice may be delivered to the shareholders personally,  or may
be mailed to them at their last known  address of such address may appear on the
books  of the  corporation.  Within  thirty  (30)  days  after  the  mailing  or
delivering of the copies of the orders to the  shareholders any such shareholder
or shareholders desiring to acquire any part or all of the shares referred to in
the  notice  shall  deliver  by  mail  or  otherwise  to  the  Secretary  of the
corporation a written offer or offers, expressed to be acceptable immediately to
purchase a specific  number of such shares at the price and on the terms  stated
in the  notice.  Each such offer  shall be  accompanied  by the  purchase  price
therefor with authorization to pay such price against delivery of the shares.

     (2) If the total  number  of shares  specified  in the  offers to  purchase
exceeds the number of shares to be sold or transferred each offering shareholder
shall be entitled to purchase  such  proportion  of such shares as the number of
shares of the  corporation  which he holds  bears to the total  number of shares
held by all shareholders desiring to purchase the shares.

     (3) If all the shares to be sold or  transferred  are not disposed of under
such  appointment  each  shareholder  desiring to purchase shares in a number in
excess of his  proportionate  share,  as  provided  above,  shall be entitled to
purchase such  proportion of those shares which remain thus undisposed of as the
total  number of shares  which he holds bears to the total number of shares held
by all of the  shareholders  desiring to  purchase  shares in excess of those to
which they are entitled under such appointment.

     (4) If within said thirty (30) day period,  the offer or offers to purchase
in the aggregate less than the number of shares to be sold or  transferred,  the
shareholder  desiring to sell or transfer  such shares shall not be obligated to
accept any such offer or offers and may dispose of all of the shares referred to
in his notice to any person or persons whomsoever;  provided,  however,  that he
shall  not sell or  transfer  such  shares  at a lower  price  or on terms  more
favorable to the purchaser or transferee  that those  specified in his notice to
the Secretary of the corporation

                                Voting Rights of
                       Preferred Shares Series "A" and "B"

     Preferred  Shares  Series "A" and Series "B" shall not have  voting  rights
except  those  granted  by law.  The  holders  of Common  Stock  shall  have the
exclusive  voting rights and powers,  including the exclusive right to notice of
shareholders meetings.


                                       4
<PAGE>

                                       V.
                                REQUIRED CAPITAL

     The  corporation  will not commence  business until it has received for the
issuance  of its  shares  consideration  of the  value of One  Thousand  Dollars
($1,000.00),  consisting of money,  labor done, or property  actually  received,
which sum is not less than One Thousand Dollars ($1,000.00).

                                       VI.
                           REGISTERED OFFICE AND AGENT

     The  address  of its  registered  office is 2284 West  Holcombe  Suite 209,
Houston,  Texas 77030,  and the name of its registered  agent at such address is
JACK WELLS.

                                      VII.
                    VOTING REQUIREMENTS FOR CORPQRATE ACTIONS

     Subject  to the  Business  Corporation  Act of the  State of  Texas  and as
permitted  by Article  9.08 of such Act,  the  decision  to amend its Article of
Incorporation,  to sell any and all of its  assets,  to enter  into a  corporate
merger or acquisition,  to issue  securities,  to dissolve the corporation or to
take any action  required by  shareholders  in accordance  with such Act, may be
made by the affirmative vote of shareholders  owning at least fifty-one  percent
(51%) of the issued and outstanding shares of Common stock of the corporation at
the time of voting.

                                      VIII.
                             INTERESTED TRANSACTIONS

     Except as may be otherwise provided in the Texas Business  Corporation Act,
no contract,  ad, or transaction of the corporation  with any person or persons,
or firm trust, or  association,  or any other  corporation  shall be affected or
invalidate  the  fact  that  any  Director,  officer,  or  shareholder  of  this
corporation is a party to, or is interested in, any such contract,  act or trust
or  association,  or is a  Director,  officer or  shareholder  of, or  otherwise
interest  in, any such other  corporation,  nor shall any duty to pay damages on
account  of  this  corporation  be  imposed  upon  such  Director,  officer,  or
shareholder  of this  corporation  solely by reason of such fact,  regardless of
whether  the  vote,  action,  or  presence  of any  such  Director  officer,  or
shareholder may be, or may have been, necessary to obligate this corporation on,
or in connection with, such contract, act or transaction, provided that, it such
vote,  action,  or presence is, or shall have been  necessary  such  interest or
connection (other than an interest of a non-controlling  shareholder of any such
other  corporation)  be known or  disclosed  to the Board of  Directors  of this
corporation.

                                       IX.
                                 INDEMNIFICATION

     Each  Director and officer or former  Director or officer or any person who
may have been served at the request of this corporation as a Director or officer
of another corporation in which this corporation owns shares of capital stock or
of which  this  corporation  is a  creditor  (and their  heirs,  executors,  and
administrators)  may be indemnified by the corporation  against reasonable costs
and expenses incurred by him in connection with any action,  suit, or proceeding
to which he may be made a party by  reason  of his  being or  having  been  such
Director or officer, except in relation to any actions,


                                       5
<PAGE>

suits,  or proceedings  in which he has been adjudged  liable because of willful
misfeasance,  bad faith,  gross negligence,  or reckless disregard of the duties
involved  in the conduct of his office,  or in the event of a  settlement,  each
Director  and officer  (and his heirs,  executors,  and  administrators)  may be
indemnified by the corporation against payments made, including reasonable costs
and expenses,  provided that such indemnity shall be conditioned  upon the prior
determination  by a resolution of two-thirds (2/3) of those members of the Board
of Directors of the  corporation  who are not involved in the action,  suit,  or
proceeding  that the  Director or officer has no  liability by reason of willful
misfeasance,  bad faith,  gross negligence,  or reckless disregard of the duties
involved in the conduct of his office, and provided future that if a majority of
the members of the Board of  Directors  of the  corporation  are involved in the
action,  suit,  or  proceedings,  such  determination  shall have been made by a
written  opinion of independent  counsel.  Amounts paid in settlement  shall not
exceed costs,  fees, and expenses which would have been  reasonably  incurred if
the action,  suit,  or  proceeding  had been  litigated  to a  conclusion.  Such
determination  by the Board of Directors,  or by  independent  counsel,  and the
payments of amounts by the  corporation on the basis thereof shall not prevent a
shareholder  from  challenging  such   indemnification   by  appropriate   legal
proceedings  on the  grounds  that the  person  indemnified  was  liable  to the
corporation or its security holders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The foregoing rights and  indemnification  shall not be exclusive of
any other rights to which the officers and Directors  may be entitled  according
to law.

                                       X.
                                    DIRECTORS

     The number of Directors  constituting the initial Board of Directors is one
(1),  and the name and address of the person who is to serve as  Director  until
the first annual meeting of the  shareholders  or until his successor is elected
and qualified is:

                                   Jack Wells
                          2284 West Holcombe Suite #209
                              Houston, Texas 77030

                                       XI.
                                  INCORPORATORS

     The names and  addresses  of the  incorporators  which  includes all of the
initial  subscribers to the corporation's  shares and securities  evidencing the
right to acquire its shares are:

                                   Jack Wells
                          2284 West Holcombe Suite 209
                              Houston, Texas 77030

     IN WITNESS  WHEREOF,  we have executed these Articles of  Incorporation  on
this 22nd day of April, 1998.


                                               /s/ Jack Wells
                                               ---------------------------------
                                               Jack Wells


                                       6







<PAGE>

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


                                    Exhibit F

                              Financial Statements:

                           March 31, 1999 (unaudited),

                      December 31, 1998 and 1997 (audited).


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


<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                        Consolidated Financial Statements
             March 31, 1999 (unaudited), December 31, 1998 and 1997


<PAGE>











                                 C O N T E N T S



Auditor's Report . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .  3

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . .  4

Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . .  5

Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . .  6

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . .  7

Notes to the Consolidated  Financial Statements . . . . . . . . . . . . . . .  8


<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Stockholders of
Colonial Industries, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  Colonial
Industries,  Inc. (a Development Stage Company) formerly known as Impact Energy,
Inc., as of December 31, 1998 and 1997 and the related  consolidated  statements
of operations,  stockholders'  equity and cash flows for years then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards 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.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Colonial Industries,
Inc. (a  Development  Stage  Company)  as of December  31, 1998 and 1997 and the
results of its  operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.

The  accompanying  consolidated  balance sheet of Colonial  Industries,  Inc. (a
Development  Stage Company)  formerly known as Impact Energy,  Inc., as of March
31, 1999 and the related  consolidated  statements of operations,  stockholders'
equity and cash  flows for the three  months  then ended were not  audited by us
and, accordingly, we do not express an opinion on them.

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  has no  assets  and no  operations  and is
dependent upon financing to continue operations. These factors raise substantial
doubt about its ability to continue as a going  concern.  Management's  plans in
regard  to these  matters  are  also  described  in the  Note 2.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


/s/ Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
May 27, 1999


    The accompanying notes are an integral part of these financial statements

                                        3


<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                           Consolidated Balance Sheets

                                     Assets
<TABLE>
<CAPTION>
                                                      March 31,            December 31,
                                                        1999            1998          1997
                                                    ------------    ------------  ------------
                                                     (unaudited)
Current assets
<S>                                                 <C>             <C>           <C>
   Cash                                             $         --    $         --  $         --
                                                    ------------    ------------  ------------

Total Current Assets                                          --              --            --
                                                    ------------    ------------  ------------

      Total Assets                                  $         --    $         --  $         --
                                                    ============    ============  ============

                      Liabilities and Stockholders' Equity

Current Liabilities
   Accounts payable                                       49,577          49,577          48,932
   Accrued interest                                       40,368          39,145          34,252
                                                    ------------    ------------    ------------
       Total Current Liabilities                          89,945          88,722          83,184
                                                    ------------    ------------    ------------

Stockholders' Equity
   Common Stock, authorized
      75,000,000 shares of no par value,
     issued and outstanding 6,802,434, 6,802,434
     999 shares respectively                                  --              --      13,110,115
   Additional Paid in Capital/(Discount on stock)        (48,932)        (48,932)             --
   Deficit Accumulated During the
     Development Stage                                   (41,013)        (39,790)    (13,193,299)
                                                    ------------    ------------    ------------

       Total Stockholders' Equity                        (89,945)        (88,722)        (83,184)
                                                    ------------    ------------    ------------

Total Liabilities and Stockholders' Equity          $         --    $         --    $         --
                                                    ============    ============    ============
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                        4

<PAGE>



                            Colonial Industries, Inc.
                          (a Development Stage Company)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                         For the                                         Deficit
                                      Three Months           For the years             Accumulated
                                          Ended            ended December 31,          during the
                                        March 31,     ----------------------------     development
                                          1999            1998            1997            Stage
                                      -------------   ------------    ------------    ------------
                                       (unaudited)
<S>                                   <C>             <C>             <C>             <C>
Revenues:                             $         --    $         --    $         --    $         --

Expenses:

   Fees                                         --             645              --             645
   Interest Expense                          1,223           4,893           4,893          40,368
                                      ------------    ------------    ------------    ------------

        Total Expenses                       1,223           5,538           4,893          41,013
                                      ------------    ------------    ------------    ------------

Net (Loss)                            $     (1,223)   $     (5,538)   $     (4,893)   $    (41,013)
                                      ============    ============    ============    ============

Net Loss Per Share                    $        (--)   $        (--)   $        (--)   $        (--)
                                      ============    ============    ============    ============

Weighted average shares outstanding      6,802,434       6,802,434      74,955,530      74,955,530
                                      ============    ============    ============    ============

</TABLE>


    The accompanying notes are an integral part of these financial statements

                                        5

<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>
                                                                            Additional        Deficit
                                                                              Paid-in       Accumulated
                                                                              Capital       During the
                                                    Common Stock           (Discount on     Development
                                               Shares         Amount           Stock)          Stage
                                            ------------   ------------    ------------    ------------

<S>              <C>                           <C>         <C>             <C>             <C>
Balance at beginning of development
 stage - January 1, 1990                             999   $ 13,110,115    $         --    $(13,159,047)

Net loss December 31, 1990-1997                       --             --              --         (34,252)
                                            ------------   ------------    ------------    ------------

Balance, December 31, 1997                           999     13,110,115              --     (13,193,299)

Fraction shares from stock split                   1,435             --              --              --

Shares issued for acquisition of Colonial
   Industries and reorganization               6,800,000    (13,110,115)        (48,932)     13,159,047

Net loss December 31, 1998                            --             --              --          (5,538)
                                            ------------   ------------    ------------    ------------

Balance, December 31, 1998                     6,802,434             --         (48,932)        (39,790)

Net loss for the three months ended
 March 31, 1999 (unaudited)                           --             --              --          (1,223)
                                            ------------   ------------    ------------    ------------

Balance, March 31, 1999(unaudited)             6,802,434   $         --    $    (48,932)   $    (41,013)
                                            ============   ============    ============    ============
</TABLE>



    The accompanying notes are an integral part of these financial statements

                                        6

<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                      Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>

                                                                           January 1,
                                     For the                            1990 (inception
                                      Three                                 of the
                                      Months         For the years        development
                                      Ended        ended December 31,      stage) to
                                     March 31,     --------------------     March 31,
                                       1999        1998        1997          1999
                                    -----------    --------    -------- ---------------
                                    (unaudited)                           (unaudited)

Cash Flows form Operating
 Activities
<S>                                  <C>         <C>         <C>           <C>
     Net loss                        $ (1,223)   $ (5,538)   $ (4,893)     $(41,013)
     Adjustments to reconcile
       net loss to net cash
       provided by operations
         Accrued expenses               1,223       5,538       4,893        41,013
                                     --------    --------    --------      --------

Net Cash Flows used in
 Operating Activities                      --          --          --            --
                                     --------    --------    --------      --------

Cash Flows from Investment
 Activities:                               --          --          --            --

Cash Flows from Financing
 Activities:                               --          --          --            --

Net increase (decrease) in cash            --          --          --            --

Cash, beginning of year                    --          --          --            --
                                     --------    --------    --------      --------

Cash, end of year                    $     --    $     --    $     --      $     --
                                     ========    ========    ========      ========


Supplemental Cash Flow Information
   Cash Paid for:
     Interest                        $     --    $     --    $     --      $     --
     Taxes                           $     --    $     --    $     --      $     --
</TABLE>


    The accompanying notes are an integral part of these financial statements

                                        7
<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                 Notes to The Consolidated Financial Statements
             March 31, 1999 (unaudited), December 31, 1998 and 1997

NOTE 1 - Summary of Significant Accounting Policies

     a.   Organization

          Colonial  Industries,  Inc., ("the Company")  formerly known as Impact
     Energy,  Inc.,  (a Colorado  corporation  organized on April 1, 1980),  was
     originally formed to engage in exploration for, and development, production
     and sale of, oil and gas.  During March,  1988 Impact  contributed  all its
     producing oil and gas  properties to Southwest  Sites Inc. and  distributed
     the Ownership of Southwest to Impact's shareholders.  After the disposition
     of  the  oil  and  gas   properties,   Impact  began  pursuing   investment
     opportunities in the financial services industry.

          The Company made public  announcements  during 1988 stating its intent
     to pursue the  acquisition  of failed  Banks and  Savings  and Loans in the
     state of Texas. No acquisitions  were made in 1988 although the Company did
     provide  the  financing  for the  recapitalization  of one  Texas  bank and
     provide the capital to refinance the control group of another.

          The Company went inactive in 1989 and has been dormant ever since.

          On April 23, 1998, Impact Energy,  Inc.  (Colorado) merged with Impact
     Energy,  Inc a Texas  corporation,  with the  Texas  corporation  being the
     survivor.  Then  on  the  same  date,  the  Company  merged  with  Colonial
     Industries,  Inc.  a Texas  corporation  organized  on April  22,  1998 and
     changed the name of the Company to Colonial  Industries,  Inc. Colonial has
     75,000,000 no par value shares  authorized,  and a share for share exchange
     took place. A  reorganization  adjustment was made on the books and records
     and the retained deficit was eliminated.

     b.   Accounting Method

          The Company  recognizes  income and  expenses on the accrual  basis of
     accounting.

     c.   Earnings (Loss) Per Share

          The  computation of earnings per share of common stock is based on the
     weighted average number of shares  outstanding at the date of the financial
     statements.

     d.   Cash and Cash Equivalents

          The Company considers all highly liquid investments with maturities of
     three months or less to be cash equivalents.


    The accompanying notes are an integral part of these financial statements


                                        8
<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                 Notes to the Consolidated Financial Statements
             March 31, 1999 (unaudited), December 31, 1998 and 1997

NOTE 1 - Summary of Significant Accounting Policies (Continued)


     e.   Provision for Income Taxes

          No provision  for income taxes has been  recorded due to net operating
     loss carryforwards  totaling  approximately  $1,700,000 that will be offset
     against future taxable income.  These NOL carryforwards  have already begun
     to expire.  No tax benefit has been  reported in the  financial  statements
     because  the  Company  believes  there  is a  50%  or  greater  chance  the
     carryforward will expire unused.

          Deferred tax assets and the  valuation  account is as follows at March
     31, 1999 (unaudited) and December 31, 1998 and 1997.

                                 March 31,             December 31,
                                   1999             1998           1997
                                 ---------       ---------       ---------
                                 (unaudited)
     Deferred tax asset:
        NOL carrryforward        $ 578,000       $ 578,000       $ 578,000
     Valuation allowance          (578,000)       (578,000)       (578,000)
                                 ---------       ---------       ---------
     Total                       $      --       $      --       $      --
                                 =========       =========       =========

     f.   Use of estimates

          The  preparation of financial  statements in conformity with generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that  affect  reported  amounts  of  assets  and  liabilities,
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial statements and revenues and expenses during the reporting period.
     In these financial  statements,  liabilities  involve extensive reliance on
     management's estimates. Actual results could differ from those estimates.

     g.   Principles of Consolidation

          The Consolidated Financial Statements include the accounts of Colonial
     Industries,  Inc. a Colorado  corporation  and its wholly owned  subsidiary
     Colonial Industries,  Inc. a Texas corporation.  All intercompany  accounts
     and transactions have been eliminated in the consolidation.

NOTE 2 - Going Concern

          The accompanying financial statements have been prepared assuming that
     the Company will continue as a going concern. The Company has no assets and
     no  operating   activity  and  is  dependent  upon  financing  to  continue
     operations.  The financial  statements do not include any adjustments  that
     might result from the outcome of this uncertainty.  It is management's plan
     to find an operating  company to merge with providing  necessary  operating
     capital.

NOTE 3 - Development Stage Company

          The Company is a  development  stage  company as defined in  Financial
     Accounting   Standards   Board   Statement  No.  7.  It  is   concentrating
     substantially  all of its  efforts in raising  capital and  developing  its
     business operations in order to generate significant  revenues.  Management
     has  elected  to use  January  1,  1990 as the date the  Company  began the
     development stage.


                                        9

<PAGE>


                            Colonial Industries, Inc.
                          (a Development Stage Company)
                 Notes to the Consolidated Financial Statements
             March 31, 1999 (unaudited), December 31, 1998 and 1997

NOTE 4 - Liens and Judgements

          The Company has two tax liens and one outstanding judgement. Taxes are
     owed  to the IRS and the  State  of  Texas  in the  amount  of  $9,812.  An
     outstanding  judgement of $39,120 is also outstanding on the records of the
     County Clerk of Dallas County,  Texas.  These  liabilities are reflected on
     the records as accounts  payable and  estimated  accrued  interest on these
     obligations  have also been recorded through March 31, 1999 (unaudited) and
     December 31, 1998.

NOTE 5 - Stock Split

          On April 23, 1998, the Company authorized a 1 for 75,000 reverse stock
     split.  These  financial  statements  have been  retroactively  restated to
     reflect the split. The par value has also been retroactively restated.

NOTE 6 - Acquisition of Colonial Industries

          Pursuant to a share exchange and reorganization agreement, the Company
     issued  6,800,000  shares of common stock to the  shareholders  of Colonial
     Industries,  Inc. for all issued and  outstanding  stock of Colonial.  This
     transaction  was  accounted for as a reverse  acquisition  and the retained
     earnings of the Company  were  adjusted to reflect the history of Colonial,
     the accounting acquirer.


                                       10