FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
Commission File Number: 0-9562
Colonial Industries, Inc.
formerly Impact Energy, Inc.
(Exact name of Registrant as specified in its charter)
Colorado 84-0818655
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
PO Box 980459, Houston Texas 77098-0459
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(713) 526-8224
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None:
Yes[_] No[x] (Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)
Not[X] (Indicate by check mark whether if disclosure of delinquent filers
(ss.229.405) is not and will not to the best of Registrant's knowledge be
contained herein, in definitive proxy or information statements incorporated
herein by reference or any amendment hereto.)
As of December 31, 1998, the aggregate number of shares held by non-affiliates
was approximately 1,802,100 shares. Due to the limited market for the Company
securities, no estimate is being supplied herewith of the market value for such
securities.
As of December 31, 1998, the number of shares outstanding of the Registrant's
Common Stock was 6,802,100.
Exhibit Index is found on page 7
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 1
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PART I
Item 1. Business.
(a) Organization of the Issuer.
Colonial Industries, Inc., formerly Impact Energy, Inc., is a Texas
corporation, originally a Colorado corporation organized April 1, 1980, formed
to engage in exploration for, development and sale of, oil and gas. During March
of 1988, Impact contributed all its producing oil and gas properties to
Southwest Sites, Inc., and distributed the ownership of Southwest to the
shareholders of Impact. After the disposition, Impact began pursuing investment
opportunities in the financial services industry. Impact made public
announcements during 1988 of its intention to pursue the acquisition of failed
Banks and Savings and Loans, in the State of Texas. No acquisitions were made in
1988, although Impact did provide funding with respect to two Texas Banks. The
Company became inactive in 1989 and has remained so to date.
On April 23, 1998, Impact Energy, Inc. (Colorado) moved its place of
incorporation from Colorado to Texas, and changed its name to Colonial
Industries, Inc., and a share for share exchange took place. In November of
1998, pursuant to shareholder approval, the issued and outstanding common stock
was reverse-split 75 shares to 1 share.
(b) The Business of Registrant.
Impact Energy, Inc. was a Colorado corporation organized April 1, 1980,
originally formed to engage in exploration for, development and sale of, oil and
gas. During March of 1988, Impact contributed all its producing oil and gas
properties to Southwest Sites, Inc., and distributed the ownership of Southwest
to the shareholders of Impact. After the disposition, Impact began pursuing
investment opportunities in the financial services industry. Impact made public
announcements during 1988 of its intention to pursue the acquisition of failed
Banks and Savings and Loans, in the State of Texas. No acquisitions were made in
1988, although Impact did provide funding with respect to two Texas Banks. The
Company became inactive in 1989 and has remained so to date.
Accordingly, this Issuer has no business or productive assets and remains
essentially dormant, its activities limited to maintaining its corporate
franchise in Texas, and making required periodic filings and disclosure.
(c) Employees and Facilities.
The Company has no employees or facilities, and enjoys the non-exclusive
office services of its President and Majority Shareholder.
Item 2. Facilities.
The Company has no employees or facilities, and enjoys the non-exclusive
office services of its Officers and Principal Shareholders.
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 2
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Item 3. Legal Proceedings.
There are no legal or other proceedings pending against the Company, as of
the preparation of this Report, and no facts are known or suspected which would
give rise to any anticipation of any such proceedings in the foreseeable future.
Item 4. Submission of Matters to a Vote of Security Holders.
There have been no matters submitted to a vote of shareholders during the
annual period covered by this report.
PART II
Item 5. Market for Common Equity and Stockholder Matters.
(a) Market Information.
The Registrant Company has one class of securities, No Par Common Stock
("Common Stock"). As of the date of this Annual Report, the securities of the
Issuer are not traded over the counter or on any trading exchange. It is
foreseeable that the common stock of this issuer may be traded in the
foreseeable future over the counter. If so shareholders and the public would
experience a young, sporadic and potentially volatile trading market for them.
Quotations for, and transactions in the Securities so traded are capable of
rapid fluctuations, resulting from the influence of supply and demand on
relatively thin volume. There may be buyers at a time when there are no sellers,
and sellers when there are no buyers, resulting in significant variations of bid
and ask quotations by market-making dealers, attempting to adjust changes in
demand and supply. A young market is also particularly vulnerable to "short
selling", sell orders by persons owning no shares of stock, but intending to
drive down the market price so as to purchase the shares to be delivered at a
price below the price at which the shares were sold "short". Such future and
foreseeable trading may not occur. There is no assurance of any future trading
in or of the securities of this Issuer.
Of the Company's issued and outstanding 6,802,100 shares of Common Stock as
of December 31, 1998, there stands of record 1,802,100 unrestricted
free-trading, and 5,000,000 issued as Restricted Securities.
(b) Holders. Management calculates that the approximate number of holders of the
Company's Common Stock, as of December 31, 1997 was 1,174.
(c) Dividends. No cash dividends have been paid by the Company on its Common
Stock and no such payment is anticipated in the foreseeable future. No other
dividends have been paid or declared by the Issuer and none are anticipated.
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 3
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Item 6. Selected Financial Data.
The following information is provided as of the Date of this Report:
================================================================================
December 31, 1998 1997 1996 1995
================================================================================
Total Assets 0 0 0 0
- --------------------------------------------------------------------------------
Revenues 0 0 0 0
- --------------------------------------------------------------------------------
Operating Expenses 5,538 4,893 4,893 4,893
- --------------------------------------------------------------------------------
Net Earnings or (Loss) (5,538) (4,893) (4,893) (4,893)
- --------------------------------------------------------------------------------
Per Share Earnings
or (Loss) (--) (--) (--) (--)
- --------------------------------------------------------------------------------
Average Common Shares
Outstanding 6,802,434 74,955,530 74,955,530 74,955,530
================================================================================
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations .
(a) Results of Operations.
The Issuer has no current business, and has had no operations in the last
fiscal year. This Issuer has no business or productive assets and remains
essentially dormant, its activities limited to maintaining its corporate
franchise in Texas, and making required periodic filings and disclosure.
(b) Liquidity and Capital Resources.
The Issuer has no capital resource and no liquidity. This Issuer has no
business or productive assets and remains essentially dormant, its activities
limited to maintaining its corporate franchise in Texas, and making required
periodic filings and disclosure.
(c) Plan of Operation. The Company is a candidate for a business combination,
joint venture, or structured acquisition, which, if effective, would create
profitability for the Company and its shareholders.
(d) Reverse Acquisitions. A reverse acquisition is one in which a private
business is acquired by a public corporation in exchange for a transfer of
control of the public company to the owners of the private targeted acquisition
company. The public company acquires the private company, in form, but the
private company acquires the public company in substance. This corporation, by
its very nature and current status, is a potential participant in one or more
reverse acquisition transactions, at some undetermined future time. There are no
present activities, discussions or negotiations, planned or in progress, with
any entity or interest group, for any direct or reverse acquisitions, or
business combinations, of any kind.
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 4
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Item 8. Financial Statements and Supplementary Data.
Auditors Report of December 31, 1998 is filed herewith. Those financial
statements, attached thereto are incorporated herein by this reference as though
fully set forth herein. By virtue of the late filing of this Report, the
Auditors Report includes unaudited information through March 31, 1999.
Item 9. Change of Registrant's Auditor.
Todd D. Chisholm, CPA, and the firm of Crouch, Bierwolf & Chisholm, has
been retained to continue as the Independent Auditor of this Corporation and to
provide, and has provided the current Auditor's report. There has been no
disagreement or dispute of any kind or sort with any auditor as to any matter.
PART III
Item 10. Directors and Executive Officers.
The Directors and Executive Officers of the Company are set forth below.
All Officers and Directors shall serve until the next meeting of shareholders or
until their successors be elected or appointed.
JACK WELLS President/Director
JOE KANE Secretary/Director
Item 11. Executive Compensation.
Officers, Directors and Management of this Issuer presently serve without
compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
COMMON STOCK
To the best of Registrant's knowledge and belief the following disclosure
presents, as of the date of this report, December 31, 1997, the total beneficial
security ownership of all Directors and Nominees, naming them, and by all
Officers and Directors as a group, without naming them, of Registrant, known to
or discoverable by Registrant, and the total security ownership of all persons,
entities and groups, known to or discoverable by Registrant, to be the
beneficial owner or owners of
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 5
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more than five percent of any voting class of Registrant's stock. More than one
person, entity or group could be beneficially interested in the same securities,
so that the total of all percentages may accordingly exceed one hundred percent.
Registrant has only one class of stock, namely Common Voting Equity Shares.
SECURITY OWNERSHIP OF OFFICERS AND DIRECTORS AND 5% OWNERS
<TABLE>
<CAPTION>
=============================================================================================
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE PERCENT
OF OWNERSHIP OF CLASS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Jack Wells (1) president/director 5,000,000 73.51
PO Box 980459
Houston Texas 77098-0459
- ---------------------------------------------------------------------------------------------
Joe Kane (1) secretary/director 5,000,000 73.51
PO Box 980459
Houston Texas 77098-0459
=============================================================================================
All Officers and Directors as a Group (1) 5,000,000 73.51
=============================================================================================
- ---------------------------------------------------------------------------------------------
ACX Industries Inc. (1) 5,000,000 73.51
PO Box 980459
Houston Texas
=============================================================================================
Total Shares Issued and Outstanding 6,802,100 100.00
=============================================================================================
</TABLE>
(1) The shares owned by ACX are treated as if owned by the Officers of this
Issuer, by reason of their affiliation with that principal shareholders. They
are the same 5,000,000 shares.
Item 13. Certain Relationships and Related Transactions.
None.
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 6
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) Financial Statements. Reference is made to Auditors Report of July 31,
1998 and December 31, 1997, and 1996, filed with
herewith. Those financial statements, attached
as Exhibit "F" thereto are incorporated herein
by this reference as though fully set forth
herein.
(b) Form 8-K Reports. No Reports on Form 8-K were filed during the
last quarter covered by this Annual Report.
(c) Exhibits. Please see Exhibit Index, following.
Exhibit Index
Financial Statements and Documents
Furnished as a part of this Annual Report
Exhibit A. Articles of Incorporation and Certificate of
Amendment
Exhibit F Financial Statements: March 31, 1999
(audited). (unaudited), December 31, 1998 and 1997
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 7
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---------------
Supplementary Information to be Furnished With
Reports Filed Pursuant to Section 15(d) of the Act by
Registrants which Have Not Registered Securities
Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security holders.
---------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the individual capacities and on the date indicated.
Dated: June 30, 1999
Impact Energy, Inc.
A COLORADO CORPORATION
by
/S/ Jack Wells /s/ Joe Kane
- ------------------ -------------------
Jack Wells Joe Kane
PRESIDENT/DIRECTOR SECRETARY/TREASURER
Impact Energy, Inc. December 31, 1998 Form 10-KSB Exhibit Index is on page 7
Sequential Page 8
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- --------------------------------------------------------------------------------
Exhibit A
Articles of Incorporation and Certificate of Amendment
- --------------------------------------------------------------------------------
<PAGE>
[GRAPHIC OMITTED]
The State of Texas
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
COLONIAL INDUSTRIES, INC.
FORMERLY
IMPACT ENERGY, INC.
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Amendment for the above named entity have been received in
this office and are found to conform to law.
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Amendment.
Dated: November 19, 1998
Effective: November 19, 1998
[SEAL]
THE STATE OF TEXAS
/s/ Alberto R. Gonzales
--------------------------------------
Alberto R. Gonzales
Secretary of State
<PAGE>
FILED
In the Office of the
Secretary of State of Texas
APR 22 1998
Corporations Section
ARTICLES OF INCORPORATION
OF
IMPACT ENERGY, NC.
PREAMBLE
We, the under signed natural persons, of the age of eighteen (18) years of
more, acting as incorporators of a corporation under the Texas Business
Corporation Act, do hereby adopt the following Articles of Incorporation for
such corporation:
I.
NAME
The name of the corporation is IMPACT ENERGY, INC.
II.
DURATION
The period of duration of the corporation is perpetual.
III.
PURPOSE
The purposes for which the corporation is organized are to engage in any
and all lawful business for which corporations may be incorporated under the
Business Corporation Act of the State of Texas.
IV.
SHARES
Preferred Shares Series "A" with Par Value. Preferred Shares Series "B"
with Par Value. And Common Shares without Par Value.
The corporation is authorized to issue four classes of shares to be
designated respectively "Preferred Shares Series "A", "Preferred Shares Series
"B", "Common Shares". The total number of Preferred Shares Series "A" the
corporation is authorized to issue is 150,000,000 and the par value of each such
share is $10.00. The total number of Preferred Shares Series "B" the corporation
is authorized to issue is 150,000,000 and the par value of each such share is
$10.00. The total number of Common Shares the corporation is authorized to issue
is 75,000,000 and the par value of each such share is $0.00.
Dividends on Preferred Shares
Series "A" and "B"
The holders of the preferred shares Series "A" and "B" shall be entitled to
receive dividends out of any funds legally available therefor, at the rate of
ten percent (10%) per annum of par value
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thereof, and no more, payable in preference and priority to any payment of any
dividend on common shares and payable in cash quarterly in the months of March,
June, September and December, or otherwise, as the Board of Directors may from
time to time determine. The right to such dividends on preferred shares shall
not be cumulative, and no right shall accrue to the holders of such shares by
reason of the Board's failure to pay or declare and set apart dividends thereon
for any given period as herein provided.
Noncumulative and Nonparticipating Liquidation Preferences
On any voluntary or involuntary liquidation of the corporation, the holders
of the preferred shares shall receive an amount equal to the par value of such
shares plus any dividends declared and unpaid thereon, and no more, before any
amount shall be paid to the holders of the common shares. If the assets of the
corporation should be insufficient to permit payment to the preferred
shareholders of their full preferential amounts as herein provided, then such
assets shall be distributed ratably among the outstanding preferred shares.
Subject to such preferential rights, the holders of the common shares shall
receive, ratably, all remaining assets of the corporation. A consolidation or
merger of the corporation with or into any other corporation, or a sale of all
or substantially all of the assets of the corporation shall not be deemed a
liquidation, dissolution, or winding up of the corporation within the meaning of
this paragraph.
Redemption Clause
The corporation, at the option of the Board of Directors, may at any time
redeem the whole, or from time to time redeem any part, of the Series "A" and/or
Series "B" preferred shares by paying in cash or equivalent property value
therefor the sum of $10.00 per share, [plus all dividends declared but unpaid]
thereon as provided in this Article to and including the date of redemption
hereinafter referred to as the "redemptive price", and by giving to each Series
"A" and/or Series "B" preferred shareholder of record at his last known address,
as shown on the records of the corporation, at least twenty, but not more than
fifty, days prior notice personally or in writing, by mail, postage prepaid,
stating the class or series or part of any class or series of the shares to be
redeemed and the date and plan of redemption, the redemptive price, and the
place where the shareholders may obtain payment of the redemptive price on
surrender of their respective certificates, hereinafter called the "redemptive
notice". Should only a part of the outstanding shares be redeemed, such
redemption shall be effected by lot, or pro rata, as prescribed by the Board of
Directors; provided, however, that no preferred shares shall have be redeemed
unless all accrued dividends on all outstanding preferred shares shall have been
paid for all past dividend periods and full dividends for the current period on
all outstanding preferred shares, except those to be redeemed, shall have been
paid or declared and set apart for payment. On or after the date fixed for
redemption, each holder of shares called for redemption shall, unless he shall
have previously exercised his option to convert his preferred shares as provided
in this Article, surrender his certificate for such shares to the corporation at
the place designated in the redemption notice and shall thereupon be entitled to
receive payment of the redemptive price. Should less than all the shares
represented by any surrendered certificate to be redeemed, a new certificate for
the unredeemed shares shall be issued. If the redemption notice is duly given
and if sufficient funds are available therefor on the date fixed for redemption,
then, whether or not the certificates evidencing the shoats to be redeemed are
surrendered, all rights with respect to such shares shall terminate on the date
fixed for redemption, except for the right of the holders to receive the
redemption price, without interest, on surrender of their certificate therefor.
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If, on or prior to any date fixed for redemption of preferred shares as
herein provided, the corporation deposits with any bank or trust company in
Texas or any bank or trust company in the United States duly appointed and
acting as transfer agent for the corporation, as a trust fund, a sum sufficient
to redeem, on the date fixed for redemption thereof, the shares called for
redemption, with irrevocable instructions and authority to the bank or trust
company to publish the notice of redemption thereof, or to complete such
publication if theretofore commenced, and to pay, on and after the date fixed
for redemption or prior thereto, the redemptive price of the shares to their
respective holders on surrender of their share certificates, then from and after
the date of the deposit, even though such date may be prior to the date fixed
for redemption, the shares so called shall be deemed to be redeemed and
dividends on those shares shall cease to accrue after the date fixed for
redemption. The deposit shall be deemed to constitute full payment of the shares
to their holders and from and after the date of the deposit the shares shall be
deemed to be no longer outstanding, and the holders thereof shall cease to be
shareholders with respect to such shares and have no rights with respect
thereto, except the right to receive from the bank or trust company payment of
the redemptive price of the shares, without interest, on surrender of their
certificates therefor, or the right to convert said shares to common stock as
provided in this Article. Any money so deposited on account of the redemptive
price of preferred shares converted after the making of the deposit shall be
repaid to the corporation forthwith on the conversion of such preferred shares.
Shares redeemed by the corporation shall be restored to the status of
authorized but unissued shares of the corporation.
Restrictions on Preemptive Rights
No holder of any shares of any class of stock of the corporation shall as
such holder have any preemptive or preferential right to receive, purchase, or
subscribe to (1) any unissued or treasury shares of any class of stock (whether
now or hereafter authorized) of the corporation (2) any obligations, evidences
of indebtedness or other securities of the corporation convertible into or
exchangeable for, or carrying or accompanied by any rights to receive, purchase
or subscribe to, any such unissued or treasury shares, (3) any right of
subscription to or to receive, or any warrant or option for the purchase of, any
of the foregoing securities, (4) any other securities that may be issued or sold
by the corporation, other than such (if any) as the Board of Directors of the
corporation, in its sole and absolute discretion, may determine from time to
time.
No shareholder shall have the right to cumulate his votes at any election
for directors of this corporation.
Transfer Restrictions
Before there can be a valid sale or transfer of any of the shares of the
corporation by any holder thereof, such holder shall first offer said shares to
the corporation and then to the other holders of common shares in the following
manner:
(1) Such offering shareholder shall deliver a notice in writing by mail or
otherwise, to the
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Secretary of the corporation stating the price, terms, and conditions of such
proposed sale or transfer, the number of shares to be sold or transferred, and
his intention to so sell or transfer such shares. Within thirty (30) days
thereafter the corporation shall have the prior right to purchase such shares so
offered at the price and on the terms and conditions stated in the notice;
provided, however, that the corporation shall not at any time be permitted to
purchase all of its outstanding voting shares. Should the corporation fail to
purchase the shares at the expiration of the thirty (30) day period, or prior
thereto decline to purchase the shares, the Secretary of the corporation shall,
within five (5) days thereafter, mail or deliver to each of the other (common)
shareholders of record a copy of the notice given by the shareholder to the
Secretary. Such notice may be delivered to the shareholders personally, or may
be mailed to them at their last known address of such address may appear on the
books of the corporation. Within thirty (30) days after the mailing or
delivering of the copies of the orders to the shareholders any such shareholder
or shareholders desiring to acquire any part or all of the shares referred to in
the notice shall deliver by mail or otherwise to the Secretary of the
corporation a written offer or offers, expressed to be acceptable immediately to
purchase a specific number of such shares at the price and on the terms stated
in the notice. Each such offer shall be accompanied by the purchase price
therefor with authorization to pay such price against delivery of the shares.
(2) If the total number of shares specified in the offers to purchase
exceeds the number of shares to be sold or transferred each offering shareholder
shall be entitled to purchase such proportion of such shares as the number of
shares of the corporation which he holds bears to the total number of shares
held by all shareholders desiring to purchase the shares.
(3) If all the shares to be sold or transferred are not disposed of under
such appointment each shareholder desiring to purchase shares in a number in
excess of his proportionate share, as provided above, shall be entitled to
purchase such proportion of those shares which remain thus undisposed of as the
total number of shares which he holds bears to the total number of shares held
by all of the shareholders desiring to purchase shares in excess of those to
which they are entitled under such appointment.
(4) If within said thirty (30) day period, the offer or offers to purchase
in the aggregate less than the number of shares to be sold or transferred, the
shareholder desiring to sell or transfer such shares shall not be obligated to
accept any such offer or offers and may dispose of all of the shares referred to
in his notice to any person or persons whomsoever; provided, however, that he
shall not sell or transfer such shares at a lower price or on terms more
favorable to the purchaser or transferee that those specified in his notice to
the Secretary of the corporation
Voting Rights of
Preferred Shares Series "A" and "B"
Preferred Shares Series "A" and Series "B" shall not have voting rights
except those granted by law. The holders of Common Stock shall have the
exclusive voting rights and powers, including the exclusive right to notice of
shareholders meetings.
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V.
REQUIRED CAPITAL
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00), consisting of money, labor done, or property actually received,
which sum is not less than One Thousand Dollars ($1,000.00).
VI.
REGISTERED OFFICE AND AGENT
The address of its registered office is 2284 West Holcombe Suite 209,
Houston, Texas 77030, and the name of its registered agent at such address is
JACK WELLS.
VII.
VOTING REQUIREMENTS FOR CORPQRATE ACTIONS
Subject to the Business Corporation Act of the State of Texas and as
permitted by Article 9.08 of such Act, the decision to amend its Article of
Incorporation, to sell any and all of its assets, to enter into a corporate
merger or acquisition, to issue securities, to dissolve the corporation or to
take any action required by shareholders in accordance with such Act, may be
made by the affirmative vote of shareholders owning at least fifty-one percent
(51%) of the issued and outstanding shares of Common stock of the corporation at
the time of voting.
VIII.
INTERESTED TRANSACTIONS
Except as may be otherwise provided in the Texas Business Corporation Act,
no contract, ad, or transaction of the corporation with any person or persons,
or firm trust, or association, or any other corporation shall be affected or
invalidate the fact that any Director, officer, or shareholder of this
corporation is a party to, or is interested in, any such contract, act or trust
or association, or is a Director, officer or shareholder of, or otherwise
interest in, any such other corporation, nor shall any duty to pay damages on
account of this corporation be imposed upon such Director, officer, or
shareholder of this corporation solely by reason of such fact, regardless of
whether the vote, action, or presence of any such Director officer, or
shareholder may be, or may have been, necessary to obligate this corporation on,
or in connection with, such contract, act or transaction, provided that, it such
vote, action, or presence is, or shall have been necessary such interest or
connection (other than an interest of a non-controlling shareholder of any such
other corporation) be known or disclosed to the Board of Directors of this
corporation.
IX.
INDEMNIFICATION
Each Director and officer or former Director or officer or any person who
may have been served at the request of this corporation as a Director or officer
of another corporation in which this corporation owns shares of capital stock or
of which this corporation is a creditor (and their heirs, executors, and
administrators) may be indemnified by the corporation against reasonable costs
and expenses incurred by him in connection with any action, suit, or proceeding
to which he may be made a party by reason of his being or having been such
Director or officer, except in relation to any actions,
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suits, or proceedings in which he has been adjudged liable because of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office, or in the event of a settlement, each
Director and officer (and his heirs, executors, and administrators) may be
indemnified by the corporation against payments made, including reasonable costs
and expenses, provided that such indemnity shall be conditioned upon the prior
determination by a resolution of two-thirds (2/3) of those members of the Board
of Directors of the corporation who are not involved in the action, suit, or
proceeding that the Director or officer has no liability by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office, and provided future that if a majority of
the members of the Board of Directors of the corporation are involved in the
action, suit, or proceedings, such determination shall have been made by a
written opinion of independent counsel. Amounts paid in settlement shall not
exceed costs, fees, and expenses which would have been reasonably incurred if
the action, suit, or proceeding had been litigated to a conclusion. Such
determination by the Board of Directors, or by independent counsel, and the
payments of amounts by the corporation on the basis thereof shall not prevent a
shareholder from challenging such indemnification by appropriate legal
proceedings on the grounds that the person indemnified was liable to the
corporation or its security holders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The foregoing rights and indemnification shall not be exclusive of
any other rights to which the officers and Directors may be entitled according
to law.
X.
DIRECTORS
The number of Directors constituting the initial Board of Directors is one
(1), and the name and address of the person who is to serve as Director until
the first annual meeting of the shareholders or until his successor is elected
and qualified is:
Jack Wells
2284 West Holcombe Suite #209
Houston, Texas 77030
XI.
INCORPORATORS
The names and addresses of the incorporators which includes all of the
initial subscribers to the corporation's shares and securities evidencing the
right to acquire its shares are:
Jack Wells
2284 West Holcombe Suite 209
Houston, Texas 77030
IN WITNESS WHEREOF, we have executed these Articles of Incorporation on
this 22nd day of April, 1998.
/s/ Jack Wells
---------------------------------
Jack Wells
6
<PAGE>
- --------------------------------------------------------------------------------
Exhibit F
Financial Statements:
March 31, 1999 (unaudited),
December 31, 1998 and 1997 (audited).
- --------------------------------------------------------------------------------
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Consolidated Financial Statements
March 31, 1999 (unaudited), December 31, 1998 and 1997
<PAGE>
C O N T E N T S
Auditor's Report . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Stockholders' Equity . . . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 7
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . 8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Colonial Industries, Inc.
We have audited the accompanying consolidated balance sheets of Colonial
Industries, Inc. (a Development Stage Company) formerly known as Impact Energy,
Inc., as of December 31, 1998 and 1997 and the related consolidated statements
of operations, stockholders' equity and cash flows for years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Colonial Industries,
Inc. (a Development Stage Company) as of December 31, 1998 and 1997 and the
results of its operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.
The accompanying consolidated balance sheet of Colonial Industries, Inc. (a
Development Stage Company) formerly known as Impact Energy, Inc., as of March
31, 1999 and the related consolidated statements of operations, stockholders'
equity and cash flows for the three months then ended were not audited by us
and, accordingly, we do not express an opinion on them.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has no assets and no operations and is
dependent upon financing to continue operations. These factors raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in the Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Crouch, Bierwolf & Chisholm
Salt Lake City, Utah
May 27, 1999
The accompanying notes are an integral part of these financial statements
3
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Consolidated Balance Sheets
Assets
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998 1997
------------ ------------ ------------
(unaudited)
Current assets
<S> <C> <C> <C>
Cash $ -- $ -- $ --
------------ ------------ ------------
Total Current Assets -- -- --
------------ ------------ ------------
Total Assets $ -- $ -- $ --
============ ============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 49,577 49,577 48,932
Accrued interest 40,368 39,145 34,252
------------ ------------ ------------
Total Current Liabilities 89,945 88,722 83,184
------------ ------------ ------------
Stockholders' Equity
Common Stock, authorized
75,000,000 shares of no par value,
issued and outstanding 6,802,434, 6,802,434
999 shares respectively -- -- 13,110,115
Additional Paid in Capital/(Discount on stock) (48,932) (48,932) --
Deficit Accumulated During the
Development Stage (41,013) (39,790) (13,193,299)
------------ ------------ ------------
Total Stockholders' Equity (89,945) (88,722) (83,184)
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ -- $ -- $ --
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Deficit
Three Months For the years Accumulated
Ended ended December 31, during the
March 31, ---------------------------- development
1999 1998 1997 Stage
------------- ------------ ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues: $ -- $ -- $ -- $ --
Expenses:
Fees -- 645 -- 645
Interest Expense 1,223 4,893 4,893 40,368
------------ ------------ ------------ ------------
Total Expenses 1,223 5,538 4,893 41,013
------------ ------------ ------------ ------------
Net (Loss) $ (1,223) $ (5,538) $ (4,893) $ (41,013)
============ ============ ============ ============
Net Loss Per Share $ (--) $ (--) $ (--) $ (--)
============ ============ ============ ============
Weighted average shares outstanding 6,802,434 6,802,434 74,955,530 74,955,530
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Deficit
Paid-in Accumulated
Capital During the
Common Stock (Discount on Development
Shares Amount Stock) Stage
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of development
stage - January 1, 1990 999 $ 13,110,115 $ -- $(13,159,047)
Net loss December 31, 1990-1997 -- -- -- (34,252)
------------ ------------ ------------ ------------
Balance, December 31, 1997 999 13,110,115 -- (13,193,299)
Fraction shares from stock split 1,435 -- -- --
Shares issued for acquisition of Colonial
Industries and reorganization 6,800,000 (13,110,115) (48,932) 13,159,047
Net loss December 31, 1998 -- -- -- (5,538)
------------ ------------ ------------ ------------
Balance, December 31, 1998 6,802,434 -- (48,932) (39,790)
Net loss for the three months ended
March 31, 1999 (unaudited) -- -- -- (1,223)
------------ ------------ ------------ ------------
Balance, March 31, 1999(unaudited) 6,802,434 $ -- $ (48,932) $ (41,013)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
January 1,
For the 1990 (inception
Three of the
Months For the years development
Ended ended December 31, stage) to
March 31, -------------------- March 31,
1999 1998 1997 1999
----------- -------- -------- ---------------
(unaudited) (unaudited)
Cash Flows form Operating
Activities
<S> <C> <C> <C> <C>
Net loss $ (1,223) $ (5,538) $ (4,893) $(41,013)
Adjustments to reconcile
net loss to net cash
provided by operations
Accrued expenses 1,223 5,538 4,893 41,013
-------- -------- -------- --------
Net Cash Flows used in
Operating Activities -- -- -- --
-------- -------- -------- --------
Cash Flows from Investment
Activities: -- -- -- --
Cash Flows from Financing
Activities: -- -- -- --
Net increase (decrease) in cash -- -- -- --
Cash, beginning of year -- -- -- --
-------- -------- -------- --------
Cash, end of year $ -- $ -- $ -- $ --
======== ======== ======== ========
Supplemental Cash Flow Information
Cash Paid for:
Interest $ -- $ -- $ -- $ --
Taxes $ -- $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Notes to The Consolidated Financial Statements
March 31, 1999 (unaudited), December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Colonial Industries, Inc., ("the Company") formerly known as Impact
Energy, Inc., (a Colorado corporation organized on April 1, 1980), was
originally formed to engage in exploration for, and development, production
and sale of, oil and gas. During March, 1988 Impact contributed all its
producing oil and gas properties to Southwest Sites Inc. and distributed
the Ownership of Southwest to Impact's shareholders. After the disposition
of the oil and gas properties, Impact began pursuing investment
opportunities in the financial services industry.
The Company made public announcements during 1988 stating its intent
to pursue the acquisition of failed Banks and Savings and Loans in the
state of Texas. No acquisitions were made in 1988 although the Company did
provide the financing for the recapitalization of one Texas bank and
provide the capital to refinance the control group of another.
The Company went inactive in 1989 and has been dormant ever since.
On April 23, 1998, Impact Energy, Inc. (Colorado) merged with Impact
Energy, Inc a Texas corporation, with the Texas corporation being the
survivor. Then on the same date, the Company merged with Colonial
Industries, Inc. a Texas corporation organized on April 22, 1998 and
changed the name of the Company to Colonial Industries, Inc. Colonial has
75,000,000 no par value shares authorized, and a share for share exchange
took place. A reorganization adjustment was made on the books and records
and the retained deficit was eliminated.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
The accompanying notes are an integral part of these financial statements
8
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1999 (unaudited), December 31, 1998 and 1997
NOTE 1 - Summary of Significant Accounting Policies (Continued)
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating
loss carryforwards totaling approximately $1,700,000 that will be offset
against future taxable income. These NOL carryforwards have already begun
to expire. No tax benefit has been reported in the financial statements
because the Company believes there is a 50% or greater chance the
carryforward will expire unused.
Deferred tax assets and the valuation account is as follows at March
31, 1999 (unaudited) and December 31, 1998 and 1997.
March 31, December 31,
1999 1998 1997
--------- --------- ---------
(unaudited)
Deferred tax asset:
NOL carrryforward $ 578,000 $ 578,000 $ 578,000
Valuation allowance (578,000) (578,000) (578,000)
--------- --------- ---------
Total $ -- $ -- $ --
========= ========= =========
f. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
In these financial statements, liabilities involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
g. Principles of Consolidation
The Consolidated Financial Statements include the accounts of Colonial
Industries, Inc. a Colorado corporation and its wholly owned subsidiary
Colonial Industries, Inc. a Texas corporation. All intercompany accounts
and transactions have been eliminated in the consolidation.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has no assets and
no operating activity and is dependent upon financing to continue
operations. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty. It is management's plan
to find an operating company to merge with providing necessary operating
capital.
NOTE 3 - Development Stage Company
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating
substantially all of its efforts in raising capital and developing its
business operations in order to generate significant revenues. Management
has elected to use January 1, 1990 as the date the Company began the
development stage.
9
<PAGE>
Colonial Industries, Inc.
(a Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 1999 (unaudited), December 31, 1998 and 1997
NOTE 4 - Liens and Judgements
The Company has two tax liens and one outstanding judgement. Taxes are
owed to the IRS and the State of Texas in the amount of $9,812. An
outstanding judgement of $39,120 is also outstanding on the records of the
County Clerk of Dallas County, Texas. These liabilities are reflected on
the records as accounts payable and estimated accrued interest on these
obligations have also been recorded through March 31, 1999 (unaudited) and
December 31, 1998.
NOTE 5 - Stock Split
On April 23, 1998, the Company authorized a 1 for 75,000 reverse stock
split. These financial statements have been retroactively restated to
reflect the split. The par value has also been retroactively restated.
NOTE 6 - Acquisition of Colonial Industries
Pursuant to a share exchange and reorganization agreement, the Company
issued 6,800,000 shares of common stock to the shareholders of Colonial
Industries, Inc. for all issued and outstanding stock of Colonial. This
transaction was accounted for as a reverse acquisition and the retained
earnings of the Company were adjusted to reflect the history of Colonial,
the accounting acquirer.
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 88,077
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (88,077)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
