Preheat oven to 325 (if your mini donut pan is dark, otherwise 350) and grease your mini donut pan with cooking spray. Set aside.
In a mixing bowl, add cake mix, egg, water and oil. Mix well by hand until all lumps are gone.
Divide batter into three equal portions. Place two portions in a small bowl and one in a sealable bag. Add red and blue food coloring to each bowl to tint the batter. Place batter into sealable bag.
Snip the ends of the sealable bag and pipe the batter into the prepared mini donut pan. You'll want to fill the pan only about half way with batter.
Bake for 7 minutes. Let mini donuts cool in pan for 2 minutes. Remove from pan. Place in white sugar to coat both sides. Cool completely before serving.
Wipe pan with a paper towel and spray with cooking spray in between making each batch of donuts.