FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549




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

                      For the Quarter ended March 31, 1999

                                       AND

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                                                 SECURITIES EXCHANGE ACT OF 1934



                         Commission File Number: 0-9562



                            Colonial Industries, Inc.

                          formerly Impact Energy, Inc.


             (Exact name of Registrant as specified in its charter)



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

2284 West Holcombe, Houston Texas                                       77030
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code:  (713) 526-8223


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


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

Yes [X] No [ ] (Indicate by check mark whether the  Registrant (1) has filed all
report  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.)

As of March 31,  1999,  the  number of shares  outstanding  of the  Registrant's
Common Stock was 6,802,434.

<PAGE>

                          PART I: FINANCIAL INFORMATION

                          Item 1. Financial Statements

      Attached hereto and incorporated herein by this reference are consolidated
unaudited financial  statements for the Quarter ended March 31, 1999, as Exhibit
QF 99 #3.

                 Item 2. Management's Discussion and Analysis of
                   Financial Condition and Plan of Operations

(a) Management's  Discussion and Analysis of Financial  Condition and Results of
Operations

      The Issuer has no current business,  and has had no operations in the last
fiscal year. The Issuer has no assets or revenue, and has accrued liabilities of
$81,961.  The  Issuer  has  no  present  capital  resource  and  accordingly  no
liquidity.

(b) Plan of Operation

      The Issuer has no alternative but to pursue the possibility of one or more
potential business combinations to achieve profitability for its shareholders.

                           PART II: OTHER INFORMATION

                            Item 5. Other Information

      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.


                    Item 6. Exhibits and Reports on Form 8-K

         Exhibit QF #3 Financial Statements (Un-Audited) March 31, 1999



                                        2

<PAGE>

                                   SIGNATURES


      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Form 10-Qsb Report for the Quarter  ended March 31, 1999,  has been signed below
by the following  person on behalf of the  Registrant and in the capacity and on
the date indicated.


March 31, 1999


                            Colonial Industries, Inc.

                          formerly Impact Energy, Inc.



                                       by



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



                                        3

<PAGE>


                                Exhibit QF 99 #1

                         UN-AUDITED FINANCIAL STATEMENTS

                           for the Three Months Ended

                                 March 31, 1999



                                        4

<PAGE>

<TABLE>
                            COLONIAL INDUSTRIES, INC.
                           BALANCE SHEETS (UNAUDITED)
              for the fiscal years ended December 31, 1997 and 1998
                    and the three months ended March 31, 1999
<CAPTION>

                                                                               December 31,
                                                        March 31,     ----------------------------
                                                          1999            1998            1997
                                                      ------------    ------------    ------------
                                     ASSETS
<S>                                                   <C>             <C>                       <C>
CURRENT ASSETS

       Cash                                           $         57    $         57             -0-

TOTAL CURRENT ASSETS                                            57              57             -0-
                                                      ------------    ------------    ------------

TOTAL ASSETS                                          $         57    $         57             -0-
                                                      ============    ============    ============


                       LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                                   $     48,932    $     48,932    $     48,932
   Accrued interest                                         40,368          39,145          34,252
                                                      ------------    ------------    ------------
       Total Current Liabilities                            89,300          88,077          83,184
                                                      ------------    ------------    ------------

STOCKHOLERS' EQUITY

   Common Stock, no par value; authorized 75,000,000
    shares; issued and outstanding, 6,802,100 shares,   26,976,068      26,976,068         749,555

   Additional paid-in Capital                                    0               0      12,360,560

   Accumulated Surplus (Deficit)                           (65,311)        (64,088)    (13,193,299)
                                                      ------------    ------------    ------------

   Total                                                26,910,757      26,911,980
                                                      ------------    ------------

   Less: Subscriptions receivable                      (27,000,000)    (27,000,000)

Total Stockholders' Equity                                 (89,243)        (88,020)        (83,184)
                                                      ------------    ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $         57    $         57    $          0
                                                      ============    ============    ============
</TABLE>



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

                                    page F-1

<PAGE>

<TABLE>
<CAPTION>
                            COLONIAL INDUSTRIES, INC.
             STATEMENTS OF LOSS AND ACCUMULATED DEFICIT (UNAUDITED)
             for the fiscal years ended December 31, 1997 and 1998
                    and the three months ended March 31, 1999
<CAPTION>

                                                                              December 31,
                                                March 31,       ---------------------------------------      Cumulative
                                                  1999                1998                  1997               Amounts
                                           ------------------   ------------------   ------------------   ------------------
<S>                                        <C>                  <C>                  <C>                  <C>   
REVENUES                                   $             -0-    $             -0-    $             -0-    $             -0-
                                           ------------------   ------------------   ------------------   ------------------
EXPENSES
    Auditor fees                                                              800                                       800
    Incorporation costs (Texas)                                               620                                       620
    Miscellaneous phone, fax, fedex, etc.                                   2,500                                     2,500
    Professional fees                                                       5,470                                     5,470
    SEC filing fees                                                         1,800                                     1,800
    Transfer agency fees                                                   11,268                                    11,268
    Travel                                                                  2,485                                     2,485
    Interest Expense                                   1,223                4,893                4,893               37,933
                                           ------------------   ------------------   ------------------   ------------------

       Total Operating Expense                         1,223               29,836                4,893               62,876
                                           ------------------   ------------------   ------------------   ------------------

NET INCOME (LOSS)                           $          1,223     $         29,836     $          4,893     $         62,876
                                           ==================   ==================   ==================   ==================

NET (LOSS) PER SHARE                        $       (0.00018)    $       (0.00439)    $       (0.00007)    $       (0.00084)
                                           ==================   ==================   ==================   ==================

Weighted average shares outstanding                6,802,434            6,802,100           74,955,530           74,955,530
                                           ==================   ==================   ==================   ==================
</TABLE>



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

                                    page F-2

<PAGE>

<TABLE>
                           COLONIAL INDUSTRIES, INC.
            STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
   for the period from inception of the Development Stage on January 1, 1990,
           for the fiscal years ended December 31, 1991, through 1998
                  and for the three months ended March 31, 1999
<CAPTION>

                                                                         Additional                              Deficit
                                                                           Paid-in                             Accumulated
                                                                           Capital                              During the
                                               Common Stock             (Discount on       Subscriptions       Development
                                          Shares           Amount           Stock)           Receivable           Stage
                                     ---------------   -------------   ---------------   -----------------  ----------------
<S>                                      <C>           <C>             <C>               <C>                <C>             
Balance at beginning of development      74,955,530    $    749,555    $   12,360,560                       $   (13,159,047)

Net Loss December 31, 1990-1994                                                                                     (19,573)

Net Loss December 31, 1995                                                                                           (4,893)

Net Loss December 31, 1996                                                                                           (4,893)
                                     ---------------   -------------   ---------------   -----------------  ----------------

Balance December 31, 1996                74,955,530         749,555        12,360,560                           (13,188,406)

Net Loss December 31, 1997                                                                                           (4,893)
                                     ---------------   -------------   ---------------   -----------------  ----------------

Balance December 31, 1997                74,955,530         749,555        12,360,560                           (13,193,299)

Reorganization - April 28, 1998                   -        (749,555)      (12,409,492)                           13,159,047

Common shares reverse split
      1 share for 75,000 shares         (74,954,531)

Common shares reserved for
      rounding up to whole shares             1,101

Common shares issued for cash             5,000,000                            25,000

Common shares issued for
      subscriptions receivable            1,800,000                        27,000,000

Shares issued in roundup                        334

Less: subscriptions receivable                                                                (27,000,000)

Net (Loss) for the year ended
     December 31, 1998                                                                                              (29,836)
                                     ---------------   -------------   ---------------   -----------------  ----------------

Balance at December 31, 1998              6,802,434               0    $   26,976,068    $    (27,000,000)  $       (64,088)

Net (Loss) for the period ended
     March 31, 1999                                                                                                  (1,223)
                                     ---------------   -------------   ---------------   -----------------  ----------------

Balance at March 31, 1999                 6,802,434               0    $   26,976,068    $    (27,000,000)  $       (65,311)
</TABLE>



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

                                    page F-3

<PAGE>

<TABLE>
                            COLONIAL INDUSTRIES, INC.
                       STATEMENTS OF CASH FLOW (UNAUDITED)
              for the fiscal years ended December 31, 1997 and 1998
                    and the three months ended March 31, 1999
<CAPTION>

                                                                       December 31,
                                                March 31,       ------------------------       Cumulative
                                                  1999            1998            1997           Amounts
                                                --------        --------        --------        --------
<S>                                             <C>             <C>             <C>             <C>      
CASH FLOWS FROM OPERATING ACTIVITIES

   Net Income (Loss)                            $ (1,223)       $(29,836)       $ (4,893)       $(38,329)
   Add item not requiring the use of cash          1,223           4,893           4,893          38,329
                                                --------        --------        --------        --------

Net use of cash from operating activities              0         (24,943)              0               0
                                                --------        --------        --------        --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Issuance of common stock                                       25,000

NET INCREASE IN CASH

CASH AT BEGINNING OF PERIOD                           57               0             -0-             -0-
                                                --------        --------        --------        --------

CASH AT END OF PERIOD                           $      0        $     57        $      0        $      0
                                                ========        ========        ========        ========
</TABLE>



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

                                    page F-4

<PAGE>

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

NOTE I - Summary of Significant Accounting Policies

         a.  Organization

             Colonial Industries, Inc. ("the Company) was incorporated as Impact
         Energy,  Inc.,  a Colorado  corporation  on April 1,  1980.  Impact 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.

             Impact 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 Impact did
         provide the  financing for the  recapitalization  of one Texas bank and
         provided 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, the Company  merged with Impact  Energy,  Inc. a
         Texas  corporation  organized on April 22, 1998. The Texas  corporation
         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. In October of 1998
         the Company acquired Colonial Industries,  Inc. and changed its name to
         Colonial Industries, Inc.

         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.

<PAGE>

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

NOTE I - Summary of Significant Accounting Policies (Continued)

         d.  Cash and Cash Equivalents

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

         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 and December 31, 1998 and 1997.

                                         March 31,           December 31,

                                           1999           1998          1997
                                        ---------      ---------     ---------
             Deferred tax asset:
               NOL carrryforward       $ 578,000      $ 578,000     $ 578,000
             Valuation allowance        (578,000)      (578,000)     (578,000)
                                        ---------      ---------     ---------
             Total                           -0-            -0-           -0-
                                        =========      =========     =========

         f.  Use of estimates

             The  preparation  of financial  statements  is 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.

<PAGE>

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

NOTE I - Summary of Significant Accounting Policies (Continued)

         g.  Principles of Consolidation

             The  Consolidated  Financial  Statements  include  the  accounts of
         Colonial  Industries,  Inc (formerly  Impact  Energy,  Inc.) a Colorado
         corporation,  its wholly owned subsidiary  Impact Energy,  Inc. a Texas
         corporation and its wholly owned subsidiary Colonial  Industries,  Inc.
         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.

NOTE 4 - Liens and Judgments

           The Company has two tax liens and one outstanding judgment. Taxes are
         owed to the IRS and the  State of Texas in the  amount  of  $9,812.  An
         outstanding  judgment 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  accrued on these
         obligations have also been recorded through March 31, 1999.