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 June 30, 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 |_| No |X| (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 June 30, 1999, the number of shares outstanding of the Registrant's Common
Stock was 6,802,100.

<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 June 30, 1999, as Exhibit
QF 99 #2.

                 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,  and most  recent two  quarters of the current  fiscal  year.  Its
recorded  "operating  expenses"  of  $21,709  consist of  corporate  maintenance
expenses,  legal,  professional,  certificate and transfer  agency,  accounting,
auditing  and  interest.  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.  The
Issuer has no assets or revenue.  The Issuer has no present capital resource and
accordingly  no  liquidity.  It has accrued  liabilities  of $108,631,  of which
$67,039 is principal, and $41,592 is accrued interest.

(b) 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.

(c)  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.

                           PART II: OTHER INFORMATION

                    Item 6. Exhibits and Reports on Form 8-K

     Exhibit QF 99 #2   Financial Statements (Un-Audited) June 30, 1999


                                       2
<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Form 10-Qsb Report for the Quarter ended June 30, 1999, has been signed below by
the following  person on behalf of the Registrant and in the capacity and on the
date indicated.

June 30, 1999

                            Colonial Industries, Inc.

                          formerly Impact Energy, Inc.

                                       by


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


                                       3
<PAGE>

                                Exhibit QF 99 #2

                         UN-AUDITED FINANCIAL STATEMENTS

                            for the Six Months Ended

                              June 30, 1999 & 1998


                                       4

<PAGE>

                            COLONIAL INDUSTRIES, INC.
                           BALANCE SHEETS (UNAUDITED)
                 for the six months ended June 30, 1999 and 1998

<TABLE>
<CAPTION>
                                                               June 30,        June 30,
                                                                 1999            1998
                                                            ------------    ------------
<S>                                                         <C>             <C>
                    ASSETS

CURRENT ASSETS

           Cash                                             $        -0-             -0-

TOTAL CURRENT ASSETS                                                 -0-             -0-
                                                            ------------    ------------
TOTAL ASSETS                                                       $ -0-           $ -0-

       LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

     Accounts payable                                       $     67,039    $     48,932
     Accrued interest                                             41,592          34,252
                                                            ------------    ------------
           Total Current Liabilities                             108,631          83,184
                                                            ------------    ------------
STOCKHOLDERS' EQUITY

     Common Stock, no par value; authorized 75,000,000
        shares of no par value, issued and outstanding;                       13,110,115
        6,802,434,  6,802,434 ans 999 shares respectively
     Additional paid-in Capital (Discount on stock)              (47,132)

     Accumulated Surplus (Deficit)                               (61,499)    (13,193,299)
                                                            ------------    ------------
Total Stockholders' Equity                                      (108,631)        (83,184)
                                                            ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ -0-           $ -0-
                                                            ============    ============
</TABLE>

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


                                    page F-1
<PAGE>


                            COLONIAL INDUSTRIES, INC.
             STATEMENTS OF LOSS AND ACCUMULATED DEFICIT (UNAUDITED)
                 for the six months ended June 30, 1999 and 1998






<TABLE>
<CAPTION>

                                        June 30,         June 30,      Cumulative
                                          1999            1998          Amounts
                                      ------------    ------------    ------------

<S>                                   <C>             <C>             <C>
REVENUES                              $        -0-    $        -0-    $        -0-
                                      ------------    ------------    ------------

EXPENSES
     Professional fees                      15,787                          15,787
     Transfer Agent                          2,267                           2,267
     Accountant                              1,208                           1,208
     Interest Expense                        2,447           2,447          40,368
                                      ------------    ------------    ------------

        Total Operating Expense             21,709           2,447          59,630
                                      ------------    ------------    ------------

NET INCOME (LOSS)                     $    (21,709)   $     (2,447)   $    (59,630)
                                      ============    ============    ============

NET (LOSS) PER SHARE                  $   (0.00319)   $   (0.00003)   $   (0.00080)
                                      ============    ============    ============

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


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


                                    page F-2






<PAGE>

                            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 six months ended June 30, 1999

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

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

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

 Balance December 31, 1997                          999     13,110,115            0     (13,193,299)

 Fractional 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)

 Cash received in 1999 as compensation for
    1,800,000 shares issued in 1998 for
    acquisition of Colonial Industries and                                    1,800
    reorganization @ $0.001 each

 Net (Loss) for the period ended
      June 30, 1999                                                                         (21,709)
                                             -----------  -------------  -----------   -------------

 Balance at June 30, 1999                     6,802,434   $          0   $  (47,132)   $    (61,499)
                                             ===========  =============  ===========   =============
</TABLE>

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


<PAGE>


                            COLONIAL INDUSTRIES, INC.
                       STATEMENTS OF CASH FLOW (UNAUDITED)
                 for the six months ended June 30, 1999 and 1998



<TABLE>
<CAPTION>

                                                        June 30,             June 30,            Cumulative
                                                          1999                 1998              Amounts
                                                        --------             --------            ----------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                     <C>                  <C>                  <C>
   Net Income (Loss)                                    $(21,709)            $ (4,893)            $(61,499)
   Add item not requiring the use of cash                  2,447                4,893               42,237
                                                        --------             --------             --------

Net use of cash from operating activities                (19,262)                 -0-              (19,262)
                                                        --------             --------             --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Issuance of common stock                                1,800

   Increase (decrease) in accounts payable                17,462

NET INCREASE IN CASH

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

CASH AT END OF PERIOD                                   $    -0-             $    -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
                             June 30, 1999 and 1998

NOTE I - 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.

          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 with the Texas corporation being the survivor. Then on the same
     date, the Company merged with Colonial Industries, Inc. a Texas corporation
     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.

<PAGE>

                            Colonial Industries, Inc.
                          (a Development Stage Company)
                 Notes to the Consolidated Financial Statements
                             June 30, 1999 and 1998

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 June
     30, 1999 and December 31, 1998 and 1997.

                                       June 30,             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
                             June 30, 1999 and 1998

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 June 30, 1999.