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

                        COMMISSION FILE NUMBER:  0-09562


                            COLONIAL INDUSTRIES, INC.

                          formerly  Impact Energy, Inc.

Texas                                                                 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 (
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, 1999, the aggregate number of shares held by non-affiliates
was  approximately  1,802,434  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, 1999, the number of shares outstanding of the Registrant's
Common  Stock  was  6,802,434.

                        Exhibit Index is found on page 8

                                        1
<PAGE>

--------------------------------------------------------------------------------
                                     PART I
--------------------------------------------------------------------------------


                        ITEM 1.  DESCRIPTION OF BUSINESS.


 (A)  HISTORICAL 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.

     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)  BUSINESS. 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)  FINANCING  PLANS.  For  more  information,  please  see  Item 6 of Part II,
Management's  Discussion  and  Analysis.

(D)  GOVERNMENT  REGULATION. There are no issues of government regulation unique
to  this  Registrant  or  its  business.

(E)  PLANNED  ACQUISITIONS.  There  are  no  planned  acquisitions.

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


                        ITEM 2.  DESCRIPTION OF PROPERTY.

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

                                        2
<PAGE>

                           ITEM 3.  LEGAL PROCEEDINGS.

     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  December  31,  1999.

     There  are no other 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.

             The Remainder of this Page is Intentionally left Blank

                                        3
<PAGE>

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                                     PART II
--------------------------------------------------------------------------------


           ITEM 5.  MARKET FOR COMMON EQUITY AND STOCKHOLDER MATTERS.


(A)  MARKET  INFORMATION. We have 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. There is no
assurance  of  any  future trading in or of the securities of this Issuer. As of
December  31,  1999,  the Company has issued and outstanding 6,802,434 shares of
Common  Stock.  There  stands of record 1,802,434 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,  1999,  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.

(D)  SALES  OF  UNREGISTERED  COMMON  STOCK  1999.  None.


       ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.


 (A)  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. There are no present plans
to  pursue  any  acquisition  at  this  time.

 (B)  RESULTS  OF  OPERATIONS.  We  have  no  current  business, and have had no
operations  in  the  last  two  fiscal  years.  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)  LIQUIDITY  AND  CAPITAL  RESOURCES.  We  have  no capital resources 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.


                         ITEM 7.  FINANCIAL STATEMENTS.

     Auditors  Report  of  December  31, 1999 is filed herewith. These financial
statements, attached thereto are incorporated herein by this reference as though
fully  set  forth  herein.


                                     ITEM 8.
                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE.

                                      None.

             The Remainder of this Page is Intentionally left Blank

                                        4
<PAGE>

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                                    PART III
--------------------------------------------------------------------------------


                                     ITEM 9.
        DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
               COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.


     Jack  Wells,  President/Director,  age  55,  is  also  the president of ACX
Industries,  Inc., the largest shareholder of this reporting corporation. He has
over  twenty  five  years  experience  in all phases of the automobile industry,
including nine years as the owner-operator of one of Houston's largest recycling
operations, and six years as an independent automobile broker. He has served, on
many  occasions, as an automotive consultant to banks and financial institutions
and  as an expert automobile industry witness in court cases. In addition to his
affiliation  with this corporation, he is the owner of Wells Investments, which,
through  its  subsidiaries,  is  a  State  of Texas licensed dealer of motorized
vehicles. He attended South Texas University and the University of Houston, is a
member  of  the  National  Automobile  Dealers  Association  (NADA), the Houston
Automobile  Dealers Association, and the Harris County Used Auto and Truck Parts
Association.

     Joe  Kane,  Secretary/Director,  age 57, is also secretary and treasurer of
ACX Industries. He is an attorney admitted to practice in both State and Federal
Courts, and a member of the bar of the Supreme Court of the United States. He is
currently  serving  as Chief Auditor for a division of a large hotel chain. From
1988  to  1990, he was employed as Director of Operations for a Texas based Life
Insurance  Company.  Previously  he  was  engaged in private practice of law and
small  business  consulting  for  14  years.  He earned his Bachelor of Science,
Business  and  Economics, from the Illinois Institute of Technology, a Master of
Business  Administration  from  Michigan  State University, and his Juris Doctor
from  Loyola  University  School  of  Law.



                        ITEM 10.  EXECUTIVE COMPENSATION.

     The  Officers  and  Directors devote an insubstantial amount of time to our
affairs  at  this  time  and  for  the  last  several  years. They serve without
compensation.


    ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

 (A)  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS.  To  the  best  of
Registrant's  knowledge  and  belief the following disclosure presents the total
security ownership of all persons, entities and groups, known to or discoverable
by Registrant, to be the beneficial owner or owners of 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 of some or any
classes.  Please  refer  to  explanatory  notes  if  any,  for  clarification or
additional  information.  The  Registrant  has  only  one class of stock; namely
Common  Stock.

 (B)  SECURITY  OWNERSHIP  OF  MANAGEMENT. To the best of Registrant's knowledge
and  belief  the  following  disclosure represents 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.  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 of some or any classes.

                                        5
<PAGE>

Please  refer  to  explanatory  notes  if  any,  for clarification or additional
information.


<TABLE>
<CAPTION>
<S>                                         <C>           <C>
 Name and Address of Beneficial Owner        Amount        Percent
                                            of Ownership  of Class
------------------------------------------------------------------
Jack Wells  (1)  President/Director            5,000,000     73.50
PO Box 980459
Houston Texas 77098-0459
------------------------------------------------------------------
Joe Kane  (1)  Secretary/Director              5,000,000     73.50
PO Box 980459
Houston Texas 77098-0459
------------------------------------------------------------------
All Officers and Directors as a Group  (1)     5,000,000     73.50
==================================================================
ACX Industries Inc.  (1)                       5,000,000     73.50
PO Box 980459
Houston Texas
------------------------------------------------------------------
Total Shares Issued and Outstanding            6,802,434    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 shareholder. They are
the  same  5,000,000  shares.


            ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                                      None.


   ITEM 13.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.


 (A)  FINANCIAL STATEMENTS. Exhibit F-99 Financial Statements: December 31, 1999
and  1998  (audited).


 (B)  FORM  8-K  REPORTS.  None.


 (C)  EXHIBITS.  Exhibit  F-99  Financial Statements: December 31, 1999 and 1998
(audited).


                 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.


                                        6
<PAGE>

                                   SIGNATURES

     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.

                            COLONIAL INDUSTRIES, INC.
                               A TEXAS CORPORATION
Dated:  June  1,  2000
                                       by


   /s/                   /s/
Jack  Wells            Joe  Kane
President/Director     Secretary/Treasurer

                                        7
<PAGE>

--------------------------------------------------------------------------------
                                  EXHIBIT F-99
                          AUDITED FINANCIAL STATEMENTS:
                           DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------

                                        8
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                        CONSOLIDATED FINANCIAL STATEMENTS
                          December  31,  1999  and  1998

                                        9
<PAGE>

                                 C O N T E N T S

Auditor's  Report                                                  11

Consolidated  Balance  Sheets                                      12

Consolidated  Statements  of  Operations                           13

Consolidated  Statements  of  Stockholders'  Equity                14

Consolidated  Statements  of  Cash  Flows                          15

Notes  to  the  Consolidated  Financial  Statements                16-18

                                       10
<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, 1999 and 1998 and the related consolidated statements
of operations, stockholders' equity and cash flows for  years ended December 31,
1999,  1998,  1997  and  from  inception on January 1, 1990 through December 31,
1999.  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, 1999 and 1998 and the
results of its operations and cash flows for the years ended  December 31, 1999,
1998,  1997  and  from inception on January 1, 1990 through December 31, 1999 in
conformity  with  generally  accepted  accounting  principles.

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
March  22,  2000

                                       11
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>
<S>                                             <C>             <C>
                                                          December 31,
                                                         1999       1998
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash                                            $           0   $      0

Total Current Assets                                        0          0
=========================================================================
Total Assets                                    $           0   $      0
=========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable                                       49,577     49,577
Accrued Interest                                       44,038     39,145
-------------------------------------------------------------------------
Total Current Liabilites                               93,615     88,722
=========================================================================
Stockholders' Equity
Common Stock, authorized
75,000,000 shares of no par value,
issued and outstanding 6,802,434                            0          0
Additional Paid in Capital/(Discount on Stock)        (44,932)   (48,932)
Deficit Accumulated During the
Development Stage                                     (44,683)   (39,790)
-------------------------------------------------------------------------
Total Stockholders' Equity                            (93,615)   (88,722)
=========================================================================
Total Liabilities and Stockholders' Equity      $           0   $      0
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       12
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>
<S>                                   <C>          <C>                   <C>       <C>
                                                                                     Deficit
                                                                                   Accumulated
                                                   For the Years                   during the
                                                   ended December 31,              development
                                            1999                  1998      1997      Stage
------------------------------------------------------------------------------------------------
Revenues:                             $        0   $                 0   $     0   $          0

Expenses:
Fees                                           0                   645         0            645
Interest Expense                           4,893                 4,893     4,893         44,038
------------------------------------------------------------------------------------------------
Total Expense                              4,893                 5,538     4,893         44,683
------------------------------------------------------------------------------------------------
Net (Loss)                                (4,893)               (5,538)   (4,893)       (44,683)
------------------------------------------------------------------------------------------------
Net Loss Per Share                    $        0   $                 0    ($4.90)        ($0.03)
------------------------------------------------------------------------------------------------
Weighted Average Shares Outstanding    6,802,434             6,802,434       999      1,512,429
================================================================================================
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       13
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>
<S>                                        <C>           <C>            <C>             <C>
                                                                          Additional        Deficit
                                                                           Paid-In        Accumulated
                                                                           Capital         During the
                                                   Common Stock          (Discount on     Development
                                                Shares        Amount         Stock)          Stage
-----------------------------------------------------------------------------------------------------
Balance at  beginning of development
stage - January 1. 1990                             999  $ 13,110,115   $           0   ($13,159,047)
-----------------------------------------------------------------------------------------------------
Net Loss December 31, 1990-1997                       0             0               0        (34,252)
Balance, December 31, 1997                          999    13,110,115               0    (13,193,299)
-----------------------------------------------------------------------------------------------------
Fraction shares from stock split                  1,435             0               0              0

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                            0             0               0         (5,538)
Balance, December 31, 1998                    6,802,434             0         (48,932)       (39,790)
-----------------------------------------------------------------------------------------------------
Net Loss December 31, 1999                            0             0               0         (4,893)
Balance December 31, 1999                     6,802,434  $          0        ($48,932)      ($44,683)
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       14
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                      Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>
<S>                                 <C>        <C>                   <C>        <C>
                                                                                   January 1,
                                                                                 1990 (inception
                                                                                    of the
                                                                                  development
                                                 For the Years                    stage) to
                                               ended December 31,               December 31,
                                        1999                  1998       1997               1999
-------------------------------------------------------------------------------------------------
Cash Flows from Operating
Activities
-------------------------------------------------------------------------------------------------
Net Loss                             ($4,893)              ($5,538)   ($4,893)          ($44,683)
Adjustments to reconcile
net loss to net cash
provided by operations
Accrued expenses                       4,893                 5,538      4,893             44,683
-------------------------------------------------------------------------------------------------
Net Cash Flows used in
Operating Activities                       0                     0          0                  0
-------------------------------------------------------------------------------------------------
Cash Flows from Investment
Activities:                                0                     0          0                  0
-------------------------------------------------------------------------------------------------
Net increase (decrease) in cash            0                     0          0                  0
-------------------------------------------------------------------------------------------------
Cash, beginning of year                    0                     0          0                  0

Cash, end of year                   $      0   $                 0   $      0   $              0

Supplemental Cash Flow Information
Cash paid for:
Interest                            $      0   $                 0   $      0   $              0
Taxes                               $      0   $                 0   $      0   $              0
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       15
<PAGE>

                            COLONIAL INDUSTRIES, INC.
                          (a Development Stage Company)
                 Notes to The Consolidated Financial Statements
                           December 31, 1999 and 1998

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
                                       16
<PAGE>

                            COLONIAL  INDUSTRIES,  INC.
                         (a  Development  Stage  Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

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 and
are  limited  to  use  based  on ownership changes through acquisitions.  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  December
31,  1999  and  1998:

                                                              December  31,
                                                         1999               1998
--------------------------------------------------------------------------------
     Deferred  tax  asset:
        NOL  carrryforward                        $     578,000    $     578,000
     Valuation  allowance                              (578,000)       (578,000)
--------------------------------------------------------------------------------
     Total                                              $     0          $     0
================================================================================


     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.


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                            COLONIAL INDUSTRIES, INC.
                         (a  Development  Stage  Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998


    The accompanying notes are an integral part of these financial statements
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  December  31,  1999.

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.
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