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Microcap & Penny Stocks : American International Industries Inc. OTC BB Symbol EDII -- Ignore unavailable to you. Want to Upgrade?

To: wonk who wrote (1256)	7/17/1998 2:55:00 AM
From: EL KABONG!!!	Respond to of 4814

wireless wonk, Something from last year on Intile. Isn't that one of the recent EDII acquisitions? August 11, 1997 Public firm ousts officers in tax dispute Jennifer Darwin Stockholders of Houston-based Intile Designs Inc. ousted the company's president and board of directors last week after controversy developed over the underreporting and underpayment of taxes. A number of local taxing entities have begun investigating the company's actions, and the repercussions from the discrepancies could force Intile Designs to file for bankruptcy, the firm says. Company shareholders removed all three directors -- company President C. William Cox, Edward Paul and Walter Rae -- and elected three replacements. G.C. Siller Jr., who has been vice president and general manager of Intile Designs for two years, was named a director. According to company information, Siller had been a director from about the time he was hired in 1995 until Feb. 4, 1997, when he resigned the post. The new board's first action was to oust Cox and company secretary Barbara Cernan. Siller was appointed to serve as both president and secretary of the company. Siller would not comment for this story. The executive shakeup was attributed to a recent revelation by Cox to the company's accounting firm, BDO Seidman, that Intile Designs had underreported the taxable value of personal property in Texas and Georgia. After an investigation, BDO Seidman said it found "significant amounts of underreporting of personal property taxes" and detailed them in filings with the U.S. Securities and Exchange Commission. "The BDO Seidman review indicates that inventory was reported in most cases at between 10 percent and 15 percent of its actual value on the property tax returns covering the tax years Dec. 31,1991 through Dec. 31, 1996," BDO Seidman states in an SEC filing submitted last week. A direct importer and distributor of ceramic tile, marble and related home design products, Intile Designs sells those items through a variety of retail and wholesales divisions. The company has nine showroom/warehouse facilities and three retail showrooms in seven states. Area showrooms are located in Houston, The Woodlands and Webster. The BDO Seidman accounting firm estimates that Intile Designs owes $1 million in back taxes and penalties for the six-year period it investigated. "Property tax returns for years prior to 1991 have not yet been reviewed, but there is potential for liability on those returns as well," the report states. In its filings with the SEC, Intile Designs does not dispute BDO Seidman's findings that property tax reports are deficient. The company owes its unpaid taxes to local taxing entities. Jim Robinson, chief appraiser at the Harris County Appraisal District, confirms his office is looking into the issue of underreported taxes. "We are conducting an investigation," Robinson says. "I can confirm that we are aware of the filing and are coordinating looking into this with some other agencies. Beyond that, I can't make any more comments since there is an ongoing investigation." Intile Designs' admission of error has caused a chain reaction that the company says could land it in bankruptcy court. Because of the tax flap, BDO Seidman has resigned as the company's accounting firm and withdrawn its audit opinion for Intile Designs' annual financial statement for the year ending March 31, 1996. Without that audit opinion, the company is not in compliance with SEC reporting rules. Intile Designs also has not yet filed a 1997 annual report. And because it cannot produce audited financial statements, the company is in default on its line of credit with NationsBank. Intile Designs currently owes NationsBank almost $4 million. "The impact of the property tax liability could result in further financial covenant defaults," the SEC filing states. If the bank forecloses on the company's assets, Intile Designs could be forced to seek protection from its creditors, the firm states in the filing. For the fiscal year ending March 31, 1996, the firm showed total revenue of $18.9 million and a net loss of $4.2 million. For the three-month period ending Dec. 31, 1996, sales decreased approximately 8.6 percent to $3.54 million from $3.88 million for the same period the prior year. The company's gross profit fell during the quarter by 7 percent compared to the prior year, to $2.3 million from $2.44 million. Intile Designs attributed the decrease in revenues and profits to the softness in the building construction industry in the company's western region. The company went public in 1993 through a blind pool reverse acquisition and initially traded on the Nasdaq Stock Market. Shares of Intile Designs now trade over the counter. c 1997, Houston Business Journal amcity.com KJC