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 September 30, 1998

                                       AND

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

                         Commission File Number: 0-9562

                               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 [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 September 30, 1998, the number of shares outstanding of the Registrant's
Common Stock was 74,955,530.


<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 September 30, 1998, as
Exhibit QF #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

     Impact Energy, Inc. is 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.


                    Item 6. Exhibits and Reports on Form 8-K

       Exhibit QF #3     Financial Statements (Un-Audited) September 30, 1998


                                        2

<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Qsb Report for the Quarter ended September 30, 1998, has been signed
below by the following person on behalf of the Registrant and in the capacity
and on the date indicated.


September 30, 1998


                               Impact Energy, Inc.
                             A COLORADO CORPORATION


                                       by

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


                                        3


<PAGE>


                                  Exhibit QF #3

                         UN-AUDITED FINANCIAL STATEMENTS

                           for the Three Months Ended

                               September 30, 1998


                                        4


<PAGE>


                               IMPACT ENERGY, INC.
                           BALANCE SHEETS (UNAUDITED)
              for the fiscal years ended December 31, 1996 and 1997
                   and for the period ended September 30, 1998


<TABLE>
<CAPTION>
                                                                                                             December 31,
                                                                               September 30,       --------------------------------
                                                                                   1998                1997                1996
                                                                               ------------        ------------        ------------
<S>                                                                            <C>                 <C>                 <C>         
                                                               ASSETS

CURRENT ASSETS

     Cash                                                                      $        -0-        $        -0-        $        -0-
                                                                               ------------        ------------        ------------

           Total Current Assets

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


                                                 LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

     Accounts payable                                                          $     48,932        $     48,932        $     48,932
     Accrued interest                                                                37,922              34,252              29,359
                                                                               ------------        ------------        ------------
           Total Current Liabilities                                                 86,854              83,184              78,291
                                                                               ------------        ------------        ------------


STOCKHOLDERS' EQUITY

     Common Stock, $0.01 par value; authorized 75,000,000
        shares; issued and outstanding, 74,955,530 shares,                                0             749,555             749,555

     Additional paid-in Capital                                                     (48,932)         12,360,560          12,360,560

     Accumulated Surplus (Deficit)                                                  (37,922)        (13,193,299)        (13,188,406)
                                                                               ------------        ------------        ------------

Total Stockholders' Equity                                                          (86,854)            (83,184)            (78,291)
                                                                               ------------        ------------        ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                     $          0        $          0        $          0
                                                                               ============        ============        ============
</TABLE>


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


                                    page F-1


<PAGE>


                               IMPACT ENERGY, INC.
             STATEMENTS OF LOSS AND ACCUMULATED DEFICIT (UNAUDITED)
              for the fiscal years ended December 31, 1996 and 1997
                   and for the period ended September 30, 1998


<TABLE>
<CAPTION>
                                                              For the    
                                                            Nine Months
                                                              Ended                       December 31,             
                                                           September 30,       --------------------------------         Cumulative
                                                               1998                1997                1996               Amounts
                                                           ------------        ------------        ------------        ------------
<S>                                                        <C>                 <C>                 <C>                 <C>         
REVENUES                                                   $        -0-        $        -0-        $        -0-        $        -0-
                                                           ------------        ------------        ------------        ------------

EXPENSES
     Interest Expense                                             3,670               4,893               4,893              37,933
                                                           ------------        ------------        ------------        ------------

        Total Operating Expense                                   3,670               4,893               4,893              37,933
                                                           ------------        ------------        ------------        ------------

NET INCOME (LOSS)                                          $      3,670        $      4,893        $      4,893        $     37,933
                                                           ============        ============        ============        ============

NET (LOSS) PER SHARE                                       $   (0.00005)       $   (0.00007)       $   (0.00007)       $   (0.00051)
                                                           ============        ============        ============        ============

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


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


                                    page F-2



<PAGE>


                               IMPACT ENERGY, 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, 1996 and 1997
                   and for the period ended September 30, 1998


<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                          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)        (12,311,628)         13,159,047

Net (Loss) for the nine months ended
   September 30, 1998                                                                                                        (3,670)
                                                           ------------        ------------        ------------        ------------

Balance at September 30, 1998                                74,955,530                   0             (48,932)            (37,922)
</TABLE>


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


                                    page F-3


<PAGE>


                               IMPACT ENERGY, INC.
                       STATEMENTS OF CASH FLOW (UNAUDITED)
              for the fiscal years ended December 31, 1996 and 1997
                   and for the period ended September 30, 1998


<TABLE>
<CAPTION>
                                                                     For the  
                                                                   Nine Months
                                                                      Ended                    December 31,         
                                                                   September 30,       --------------------------        Cumulative
                                                                       1998              1997              1996            Amounts
                                                                     --------          --------          --------         --------
<S>                                                                  <C>               <C>               <C>              <C>      
CASH FLOWS FROM OPERATING ACTIVITIES

   Net Income (Loss)                                                 $ (3,670)         $ (4,893)         $ (4,893)        $(37,933)
   Add item not requiring the use of cash                               3,670             4,893             4,893           36,710
                                                                     --------          --------          --------         --------

Net use of cash from operating activities                                   0                 0                 0           (1,223)
                                                                     --------          --------          --------         --------

CASH FLOWS FROM INVESTING ACTIVITIES
   Organization costs

NET INCREASE IN CASH

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

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


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


                                    page F-4



<PAGE>


                               Impact Energy, Inc.
                          (a Development Stage Company)
                 Notes to The Consolidated Financial Statements
                 September 30, 1998, December 31, 1997 and 1996

NOTE I - Summary of Significant Accounting Policies

     a.   Organization

          Impact  Energy,   Inc.,  ("the  Company)  is  a  Colorado  corporation
     organized  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.

     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.


<PAGE>


                               Impact Energy, Inc.
                          (a Development Stage Company)
                 Notes to The Consolidated Financial Statements
                 September 30, 1998, December 31, 1997 and 1996

NOTE I - Summary of Significant Accounting Policies (Continued)


     c.   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, 1997 and December 31, 1997 and 1996.

                                 March 31,                December 31,
                                   1998         1997          1996    
                                 ---------    ---------    ---------
           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.

     g.   Principles of Consolidation

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


<PAGE>


                               Impact Energy, Inc.
                          (a Development Stage Company)
                 Notes to The Consolidated Financial Statements
                 September 30, 1998, December 31, 1997 and 1996

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 September 30, 1998.