From the audited financials prepared by BDO and shown here (now deleted):
jstocks.com
As of the close of 1997, EDII was composed of the following companies:
Pitts and Spits
Har-Whit
Brenham O&G
Texas Real Estate
These four companies had combined revenues of $2.5 million in 1997 and the operating LOSS before interest payments for the 4 companies was almost $900 thousand.
The notes from the statements indicated that the Texas Real Estate and and Brenham acquisitions were "related party transactions." That means EDII and the two acquirees had some common ownership or control. Such transactions are "flagged" by auditors because they may be less than "arm's length" deals. Regarding related party transactions see also:
There are only 2 entries in the county records concerning Brenham Oil and Gas, and a number of entries concerning Mr. Daniel Dror and Daniel Dror II Trust. On 1 December 1997, the Daniel Dror II Trust conveyed all of the mineral rights it owned on 2 tracts of land over to Brenham Oil and Gas. The total acreage involved was 24.527 acres, a pittance, and the acreage is leased to Union Pacific Resources for 1/6 royalty interest on a 3 year lease which initiated on 6 April, '95.
exchange2000.com
Look at Intile:
Link for Intile's (IDES) 10K (filed 6/17/98)
edgar-online.com
Intile 8K where they expect $13.5 million revenues for fiscal 1998
edgar-online.com
For the years
ended March 31,
1997 1996
(Restated)
Net sales $15,936,681 $18,892,947
Cost of Sales 11,864,464 11,617,811
Gross profit 4,072,217 7,275,136
Selling and administrative expenses 7,343,768 8,222,031
Equity in losses of Investee -- 3,169,419
Provision for closure of International 692,985 --
8,036,753 11,391,450
Loss from operations (3,964,536) (4,116,314)
Other Income (Expense)
Interest expense (1,419,512) (452,993)
Other income 31,081 5,407
Other expense - net (1,388,431) (447,586)
Loss before income taxes (5,352,967) (4,563,900)
Income taxes benefit -- (105,000)
Net loss $(5,352,967) $(4,458,900)
Net loss per share $ (4.66) $ (4.81)
Weighted average number of
common shares outstanding 1,148,208 926,287
Intile had revenue of $19 and $16 million 96 and 97 respectively. Its 8K filing indicates expected revenue of $13.5 million for fiscal 1998.
Intile's operating loss (Loss from operations) for fiscal year ending 3/31/97, before debt service, was approx 4 million.
Contrast those "official" numbers with this "DD" from KevinL.
Profit margins are very high in this business and US tile manufacturers cannot compete price wise with the foreign imports.. Intile is debt free. It is in the process of acquiring a large Florida importer, which when completed shortly, would make Intile Designs the largest importer and supplier of tiles and brick coping in the United States.
exchange2000.com
High profit margins, debt free??? Not according to their SEC filings.
If therefore, Intile's performance did not materially improve through fiscal 3/31/98 (Note that the purchase offer from EDII did not come till April 98; after the close of Intile's latest fiscal year for which there is no SEC filing), we can infer the following:
(Note also that Intile has done two reverse splits)
For the 4 companies above plus Intile, combined revenue would be approximately $16 million and the operating loss would be approximately $5 million. Add in Intile's and the other four companies interest costs and the loss is even greater. Much of this loss is due to G&A (Geenral & Administrative) expenses , which includes salaries and perks for management.
There is zero, independently verifiable information about the financial performance of Acqueron and Cinema. However, to support EDII's press releases they must have a combined revenue of $95 million dollars. These two, for EDII just to break even, must have at least $5 million of operating profit.
According to the May 29 PR announcing the Cinema deal, we can infer Cinema has approximately 34 mil in revenues.
...Upon completion of these transactions Energy Drilling Industries, Inc. revenues will be approximately $50,000,000 and profitable, with a book value per share increasing by 150 percent.
50-2.5 -13.5 = 34
exchange2000.com
We are still 60 million short; does Acqueren have 60 million in revenue?
Its wholly owned subsidiary, Northeastern Plastics seems to have less than $14 million in revenue
...EDII's marketing strategy is to increase NPI's:
1) automotive after-market account listing to 10% market share with sales of $8 million with a net margin of 18+%.
2) durable electrical consumer retail account listing to 4% market share with sales of $6 million and net margin of 16+%....
exchange2000.com
Remember those are targets, not actuals.
Here Ken M. claims Acqueren is a $25 million a year company
Unlike the aquisition of Intile, Acqueren, Inc and its subsidary NorthEastern plastic were private corperations, not traded on any exchanges, so there were no investment trusts owning 20% of it's stock like Intile had, so when its owners voted to merge with EDII, and accept restricted stocks of EDII for their company, they were betting that the value of the stock would be worth more than the value of their 25 million a year company when the shares become unrestricted,...
exchange2000.com
If we accept Ken M's statement that Acqueren is a $25 million company, we still have a revenue shortfall of $35 million
2.5+13.5+35+25=75.
Unless I've missed something, EDII's $110 million dollar revenue claim cannot be supported based upon the press releases and all the "DD" on the boards.
Note that the purchase price for Acqueren is 3 times higher than Cinema (25 million shares versus 8 million) notwithstanding the fact that the imputed revenue for Cinema is larger. This could be explained by differences in profitability but again, there is no "DD" anywhere stating profit margins or net income for these two companies.
Getting past the raw computation of claimed revenue, how does one explain this
...They become healthy after the resturcturing and some management and financial assistance. Intile (OTB:BB - IDES) is a prime example. Dror reduced bank debt by $2.8 million and interest and bank charges by $600,000 per year and turned a loser into a winner. This was done with $2 million under EDII's line of credit with Western Bank....
exchange2000.com
The Intile deal was announced in April. It HAS NOT closed yet. Maybe Dror can clear up the debt but he still has a $4 million operating loss before debt service to turn around. That is not done in 60 days. Of course, it CAN NOT YET have been done because the deal hasn't closed.
From the same post:
...EDII currently has controlled growth and positive EPS....
exchange2000.com
Since at the time of this post, none of the acquisitions had closed, this statement is wrong based upon the audited financials for calendar 1997, unless there has been a drastic turnaround within the 4 companies (Pitts & Spits, Har-Whit, Texas Oil & Gas and Brenham) in the past 6 months.
From Ken M.
Next we have the different stories between me and jmt, in where I reported that I was told that EDII made 5 million last year, and jmt said he had 1997 financials, which showed that it was'nt 5 million profit but 5 million in revenue's. I don't know, I only reported what I was told by EDII's investor relations told me, but for the sake of an argument, let'd assume jmt was right and it was revenues not profit, what jmt failed to mention and I don't know if it was because he did'nt know, but in 1997 EDII was the proud owners of only 2 companies, Har-Whit Inc and Pitts & Spitts Inc. ....They also aquired Cinema research corp around the same time they got Intile. Then in May, they aquired Acqueren and NorthEastern Plastics.
exchange2000.com
What is interesting about this is:
1. Ken M. misquoted jmt; JMT said 4.8 million net worth, not revenue
see: exchange2000.com
2. Ken M. stated that Brenham and Texas O&G were not included when the notes to the audited financials (now deleted from www.jstocks.com) show these two companies were included in the year end financials;
3. Ken M. wrote in the "present tense", that is the acquisitions of Intile, Cinema, and Acqueren were complete, when they clearly were not and are not still;
4. If Ken M. accurately reported the substance of the "conversation" with IR, he was blatantly lied to. If not...
Please note that EDII has not announced the COMPLETION of the acquisitions of Intile, Cinema, or Acqueren except for the latter which one or the more recent press releases indicated "(closed in escrow)." They may, or may not, close. As of this moment, the only verifiable financial information about EDII is that it is company with 2.5 million in calendar 97 revenues on which they generated a 900 thousand dollar loss before debt service. Intile, as of March 31, 1997 was a disaster. The continued shrinkage in revenues as indicated by the 8K filing is suggests that the situation has not improved; debt restructuring will have no effect on operating loss. The revenue figures for Cinema and Acqueren are in doubt and what revenue information that has been posted for these two companies does not support EDII's claim of a combined $110 million annual revenue operation.
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