UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C. 20549

                         Form 10-KSB

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934

            For the Fiscal Year Ended March 31, 1997

                               OR

       [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934

                Commission file number 33-49854-A

                       INTILE DESIGNS, INC.
(Exact name of small business issuer as specified in its charter)

       DELAWARE                               13-3625325
(State  of Incorporation)         (I.R.S. Employer Identification No.)

9716 Old Katy Road, Suite 110
Houston, Texas                                              77055
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code:  (713) 468-8400

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  None

Check whether the registrant (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act
during  the past 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.   Yes    No X

Check if disclosure of delinquent filers in response to Item  405
of Regulation S-B is not contained in this form, and
no   disclosure  will be contained, to the best  of  registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or  any
amendment to this Form 10-KSB [  ].

Registrant's revenues for its most recent fiscal year: $15,936,681

The  aggregate market value of voting stock held by nonaffiliates
of  the  registrant  at  April 30,  1998  was  approximately
$1,056,213 (at $.25).  As of April 30, 1998, 4,777,079 shares  of
the   registrant's  Common  Stock,  $.0001   par   value,   were
outstanding.

              DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated parts of this report:  None.

<PAGE>

The  aggregate  market value of Common Stock, $0.001  par  value,
held by non-affiliates of the registrant as of April 30, 1998 was
derived  by (i) considering all members of the Board of Directors
of the registrant as of March 31, 1997 and all persons who became
members of the new Board of Directors of the registrant on August
1,   1997,  as  a  group,  to  constitute  an  affiliate  of  the
registrant, (ii) totaling all shares of Common Stock beneficially
owned   by  such  members  of  the  Board  of  Directors,   (iii)
multiplying such total by $.25, the average bid and asked  prices
of  such  stock  as  of April 30, 1998 and (iv)  subtracting  the
resulting  figure from the dollar amount derived  by  multiplying
the total amount of issued and outstanding shares of Common Stock
of the registrant as of April 30, 1998 by $.25.


                       TABLE OF CONTENTS


ITEM NUMBER AND CAPTION                                      PAGE



Part I

  1. Business                                                 3-6
  2. Properties                                                 6
  3. Legal Proceedings                                          7
  4. Submission of Matters to a Vote of
      Security Holders                                          7

Part II
  5. Market for Registrant's Common Equity
       and Related Stockholder Matters                        7-8
  6. Management's Discussion and Analysis
       of Financial Condition and Results
       of Operations                                         8-12
  7. Financial Statements                                      12
  8. Changes in and Disagreements with Accountants
       on Accounting and Financial Disclosure                  13

Part III
  9. Directors and Executive Officers of Registrant         14-15
  10. Executive Compensation                                   15
  11. Security Ownership of Certain Beneficial Owners
       and Management                                          16
  12. Certain Relationships and Related Transactions        16-17
  13. Exhibits and reports on Form 8-K                      18-19
  21. List of Subsidiaries                                     18

<PAGE>

                     INTILE DESIGNS, INC.


                             PART 1

Item 1. Business

General

      Intile  Designs,  Inc.  (Company  or  Intile),  a  Delaware
company, is a direct importer and distributor of foreign  ceramic
tile,   marble,  swimming  pool  tile  and  related  home  design
products.  The Company is also a distributor of domestic  ceramic
tile, marble and other related home design/building products. The
Company's products are distributed to a diverse and varied retail
and  wholesale  customer base through ten (10) showroom/warehouse
facilities  and  three (3) retail showrooms in  six  (6)  states.
Subsequent  to March 31, 1997, the Company elected to  close  two
(2)  showroom/warehouse  facilities  located  in  California  and
Arizona.

      The  Company markets its products to at least five  general
customer  bases:  new home builders, residential  and  commercial
remodeling  contractors, architects and designers, swimming  pool
contractors, and do-it-yourself consumers.  Generally,  marketing
to  the  contractor trade is accomplished as retail sales to  the
ultimate   consumer  through  the  retail  showrooms.    Trained,
experienced sales personnel work out of and process sales through
the showroom facilities.

      The  method  by  which  merchandise is  distributed  varies
depending  upon the warehouse support structure for a  particular
sales location.  Where a warehouse is attached to a showroom, the
customer   may   obtain  products  immediately,  depending   upon
availability.  Where the showroom has no warehouse facility,  the
customer  may  wait  only  as long as two  days  to  receive  the
merchandise.   However, in cases of special orders,  or  where  a
particular  location or warehouse is out of stock,  the  delivery
time  may  exceed  two  weeks.   Generally,  a  customer  or  his
contractor  picks  up  the  products  at  one  of  the  Company's
warehouse  facilities or showrooms.  Only a small number  of  the
orders are shipped directly to customers.

     There are other companies and firms selling tile and related
products  that  have  greater financial and managerial  resources
than   the  Company.   The  Company  competes  with  these  other
businesses on the basis of product quality, selection, price  and
service.

      The  Company  is supplied by a diversified  group  of  both
domestic  and international companies.  Generally, purchases  are
made  from the various countries as follows:  Italy - 40%,  Japan
-  30%,  United  States - 10% and 20% from  a  variety  of  other
countries.   No  single foreign or domestic source provides  over
10% of all the Company's purchases.   No single customer accounts
for  10% or more of the Company's revenues.  Although many of the
Company's  customers purchase substantial quantities of  product,
the Company is not dependent on one or a few major customers.

     There are 80 employees in the Company, all of which are full
time  employees.   The  Company engages  individuals  to  perform
specified functions from time to time, when needed, on a contract
basis.

Forward looking statements

      This Form 10-KSB for the year ended March 31, 1997 as  well
as other public documents of the Company contains forward-looking
statements  which involve known and unknown risks,  uncertainties
and other factors which may cause the actual results, performance
or achievement of the Company to be materially different from any
future  results, performance or achievements expressed or implied
by  such  forward  looking statements.  Such statements  include,
without  limitation, the Company's expectations and estimates  as
to  future  financial  performance, cash flows  from  operations,
capital   expenditures  and  the  availability  of   funds   from
refinancing  of  indebtedness.  Readers  are  urged  to  consider
statements  which use the terms "believes", "intends," "expects,"
"plans,"  "estimates,"  "anticipated," or  "anticipates,"  to  be
uncertain and forward looking.  In addition to other factors that
may be discussed in the Company's filings with the Securities and
Exchange   Commission,  including  this  report,  the   following
factors, among others could cause the Company's actual results to
differ materially.

History

      The Company, then known as IV Ventures Ltd., was formed  in
July  1991  for the purpose of conducting a public  offering  and
seeking  out an operating entity to acquire.  In July  1993,  the
Company successfully completed a public offering and sold  66,667
shares  of  Common Stock for proceeds of $550,000.   The  Company
then acquired Intile Designs, Inc. (IDI), a Texas corporation, in
a  merger  in  November 1993 by issuing 1,186,667 shares  of  its
restricted  Common Stock, par value $.0001, to the former  owners
of  IDI.   Immediately following the merger, the Company  changed
its name to Intile Designs, Inc.

      IDI  was  formed  in 1976 as a division of  Texas  Building
Centers, Inc. and was subsequently spun off in May 1980.  At  the
time,  IDI  was primarily an importer and distributor of  ceramic
tile,  marble and related products.  Swimming pool tile and brick
coping   were   added  as  product  lines  in  1983   and   1985,
respectively, and wall coverings were added to selected showrooms
in 1988.  In 1993, a division was formed to produce swimming pool
depth marker tiles and specialty signage products.

Expansion and development

       Effective   November   2,  1994,  the   Company   acquired
substantially  all of the assets of International Tile  &  Supply
Corp.  (International).   The Company, through  its  wholly-owned
subsidiary,  Intile Designs of Los Angeles, Inc.,  purchased  the
assets  of  International  by  payment  of  cash  at  closing  of
$1,050,000.   The assets acquired had a book value of  $1,659,265
and the Company assumed liabilities of $609,265.

      Additionally,  the  Company agreed to pay  to  the  allowed
general  unsecured creditors of International an amount equal  to
10% of the net operating profits generated from the operations of
the  business  acquired  for a period of  four  years  after  the
closing,   with  maximum  payments  in  the  aggregate   totaling
$100,000.   There  have been no amounts paid in  accordance  with
this  arrangement.   The  funding of  the  cash  at  closing  was
accomplished  through  a  private  placement  of  debt   totaling
$1,000,000.    The   Company  issued   a   $650,000   convertible
subordinated  note,  a  $350,000 short-term  bridge  note  and  a
warrant  to purchase 38,333 shares of Common Stock at an exercise
price of $3.25 per share to Retail Associates Management Company,
L.P.  (RAMCO). Simultaneous with the acquisition of TCM  Holdings
Corporation (see below), RAMCO converted the $650,000 convertible
subordinated  note payable into 33,334 shares  of  the  Company's
common  stock.   The Company has accounted for the  International
acquisition as a purchase and post purchase operating results  of
International  have been included in the accompanying  statements
of income.

      Effective February 21, 1995, the Company acquired  100%  of
the  Common Stock of TCM Holdings Corporation (TCM).  The Company
acquired  the  stock  of TCM from RAMCO in exchange  for  107,380
shares  of Intile's Common Stock.  The agreement provides for  an
additional  40,000 shares to be placed in escrow  for  subsequent
distribution  after the final price adjustment is  determined  in
accordance  with  the provisions of the agreement.   The  Company
currently estimates that all escrowed shares will be returned  to
the  Company.    The transaction has been accounted  for  by  the
Company as a purchase and post purchase operating results of  TCM
have been included in the accompanying statements of income.

       Effective   February  21,  1995,  the   Company   acquired
substantially all of the assets of the Orlando showroom (Orlando)
of  P&M Tile, Inc. (P&M).  The Company acquired Orlando by a cash
payment of $140,113 at closing and the issuance of a noninterest-
bearing  note to P&M for $257,517, which was paid in full  during
the  year  ended  March  31,  1996.   The  transaction  has  been
accounted  for  by  the  Company as a purchase;  therefore,  post
purchase operating results of Orlando have been included  in  the
accompanying statements of income.

      Due  to recurring losses, the management of TCM elected  in
August  1995,  to cease operations and to abandon all  facilities
other  than  the  central  warehouse.   Prior  to  the  Company's
acquisition of TCM stock, TCM had confirmed a Chapter 11 Plan  of
Reorganization in December 1994.  Pursuant to the  terms  of  the
plan,  all property of TCM was to vest in the reorganized  entity
emerging  from  bankruptcy.  In October 1995,  the  U.S.  Trustee
petitioned  the  bankruptcy court to  convert  TCM's  Chapter  11
filing  to  a  Chapter  7  under the U.S.  Bankruptcy  Code.   On
November  7,  1995,  the  U.S.  Bankruptcy  Court,  District   of
Massachusetts,  Eastern Division issued an order  converting  the
case  to  Chapter  7.   The Company entered  into  a  consignment
agreement  with  TCM  and  NationsBank  to  provide  an   orderly
liquidation of the bank's collateral through the sales efforts of
Global   Tile   Distributors,  Inc.  (Global),   a   wholly-owned
subsidiary   of  the  Company.   Inventory  with   a   value   of
approximately $258,000 remains on hand as of March 31, 1997.   An
additional allowance for losses of unconsolidated Investee in the
amount  of  $100,000 was provided in the fiscal year ended  March
31, 1997.  The Company's management believes that the liquidation
will  be  accomplished  with  no  significant  additional  losses
accruing  to  the Company.  Management also believes  that  as  a
result  of  the  liquidation,  the  Company  will  recover   some
previously  recognized losses since certain recorded  liabilities
are not anticipated to be paid by TCM's bankruptcy estate.

      The  Company  believes that the liquidation  value  of  the
assets  of TCM, as the reorganized entity, will be less than  the
value  of  the recorded liens against such assets, of  which  the
Company   is   the  primary  lienholder.   Accordingly,   it   is
anticipated  that  the unsecured creditors  under  the  confirmed
plan,  or  otherwise,  will not receive  any  proceeds  from  the
Chapter 7 liquidation.  During the year ended March 31, 1996,  as
a  result of the bankruptcy filing, TCM wrote down certain assets
to  their  net  realizable values.  The  writedown  reported  was
$2,280,791.  In addition, the Company accrued $150,000  to  cover
additional costs related to the closure of TCM.

      Due  to  recurring losses, management elected as of January
20,  1997 to cease operations of International and to abandon all
facilities.  An allowance for losses relating to International in
the  amount  of  $692,985 has been provided by a  charge  against
earnings  in  the  fiscal year ended March 31, 1997.   A  reserve
against  inventory  has  also been  provided  in  the  amount  of
$268,905,  and  is included in cost of sales in the  fiscal  year
ended March 31, 1997.  The charge to inventory reflects the  full
disposal  of the inventory in an auction in December, 1997.   The
Company also recorded a charge to expense for fiscal 1997 in  the
amount  of $532,118 for the net present value of remaining  lease
commitments of International.

       As  a  part  of  new  management's  (See  Item  4  herein)
preliminary implementation of its turnaround strategy, management
elected   to   withdraw  operations  from  the  western   region,
principally  California and Arizona. Operations  in  the  Phoenix
store  were ceased as of November 30, 1997 and operations in  the
Anaheim  store  were  ceased as of December  31,  1997.   Certain
products  included  in the Company's current  product  line  were
relocated to the Houston warehouse or other locations that had  a
need   for   the   product.   The  remaining   inventories   were
consolidated  in  Anaheim  for  liquidation.  Lease   termination
agreements,  which provide for the full release  of  the  Company
have  been obtained from the landlords of the Phoenix and Anaheim
landlords.

      Internal  expansion  by  the  Company  during  fiscal  1996
included the opening of new showroom/warehouses in The Woodlands,
Texas (Houston) and Denver, Colorado.  A showroom in Plano, Texas
was  leased  and  leasehold improvements made during  the  fourth
quarter of fiscal 1997 and opened in April 1997.

Capitalization

     On May 1, 1995, the Company authorized a 2 for 1 stock split
that  was  effected  in the form of a 100% stock  dividend.   All
share information reflects this transaction.

      On  August  5,  1996, the Company authorized a  one-for-two
reverse stock split.  Shareholders received one new share of  the
Company's  common stock for each two shares they then held.   All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  March  31, 1997, the Company authorized a one-for-three
reverse stock split.  Shareholders received one new share of  the
Company's common stock for each three shares they then held.  All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  August  23,  1997,  the Company  issued  $1,600,000  of
convertible notes payable with private investors that resulted in
net proceeds of $1,347,272.  The Company paid $1,000,000 from the
proceeds  to the primary lender and the balance was retained  for
working  capital.  The investors were issued warrants to purchase
up  to  800,000 shares of the Company's common stock at $.25  per
share  and the underwriter was issued warrants to purchase up  to
80,000 shares at the same price.  As of March 31, 1997, notes  in
the amount of $1,400,000 were converted into 1,400,041 shares  of
the  Company's  common stock.  Each holder retains  the  warrants
associated  with  the Notes.  The conversion of  the  Notes  into
shares  of  common stock occurred subsequent to the one-for-three
reverse stock split on March 31, 1997.  Notes in a face amount of
$100,000 were converted into common stock subsequent to March 31,
1997.

      On March 31, 1997, the Company sold 47 Units at a price  of
$50,000  per  Unit (See Note 8).  Each Unit consisted  of  50,000
shares of the Company's common stock totaling 2,350,000 shares of
common stock. The sale of the common stock occurred subsequent to
the  one-for-three reverse stock split on March  31,  1997.   The
Company received net proceeds of $2,010,998 from the sale of  the
common  stock of which $1,000,000 was paid to the primary  lender
and the balance was retained in working capital.

       The  Company  has  issued  various  common  stock  warrant
agreements entitling the holders to acquire the Company's  common
stock.  There are 952,820 warrants outstanding at March 31,  1997
and all warrants are exercisable.

Operations

       The  Company  strives  to  organize  its  business  on   a
centralized   supply  point  concept  with  a  central   regional
warehouse  in a selected city and facilities located  within  the
area  around  this site.  These are either showrooms  with  small
warehouses or stand-alone showrooms.  The Company has established
a  showroom in the main warehouse facility in Houston to sell its
closeouts and odd lots.

      Intile  maintains  a large inventory in  its  approximately
80,000  square  foot warehouse in Houston, Texas.  The  warehouse
does  sell to the public through its contained showroom; however,
the  primary  market  is  to wholesale customers.   Material  and
services  are also provided through this warehouse to  the  other
showroom  facilities.  The  showrooms/warehouses  sell  to   both
wholesale  and  retail  markets, while the stand-alone  showrooms
sell primarily to retail customers and remodeling contractors.

      The Company intends to develop other regional operations to
support expansion plans and activities, thereby furthering growth
and expansion of the centralized supply point structure.

Item 2.  Properties

      At  April 30, 1998, The Company has operations in eight (8)
showroom/warehouse facilities and three (3) retail  showrooms  in
four (4) states.  These locations are in Houston (2 including the
main central warehouse location), Austin, Corpus Christi, Dallas,
The  Woodlands  and  Webster, Texas; Atlanta,  Georgia;  Orlando,
Florida;  and  Denver, Colorado.  The retail showroom  in  Plano,
Texas  was opened in April 1997.  All facilities are leased  with
lease terms ranging from tenant at will (month-to-month) to five-
year leases with expiration terms through 2001.

      Locations in Phoenix, Arizona and Anaheim, California  were
closed  on November 30, 1997 and December 31, 1997, respectively.
The  leases  for  these locations have been  terminated  and  the
Company  has  been  released of any future obligations  on  these
leases.   The Company continues to be obligated on the  locations
associated  with  the  closure  of the  Los  Angeles,  California
(International)  locations.   The  financial  statements   herein
include  a  charge  to expense in fiscal 1997 in  the  amount  of
$532,118  for  the  net present value of the  lease  payments  of
International over the remaining terms of the leases.  Also,  the
Company  remains obligated on a lease for a facility  in  Boston,
Massachusetts  that ceased operations during  fiscal  1997.   The
financial statements herein include a charge to expense in fiscal
1997  in the amount of $178,412 for the net present value of  the
lease payments over the remaining term of the Boston lease.   All
leasehold  improvements  in  the  closed  facilities  have   been
abandoned  and inventories have been sold or relocated  to  other
locations, primarily Houston.

     The following table lists the ranges in size and lease costs
of  the  showrooms.  A  typical showroom/warehouse  operation  is
approximately 12,000 square feet with an annual cost of  as  much
as  $50,000, while a typical retail showroom (without  warehouse)
is  approximately  4,000 square feet with an  annual  cost  of  a
similar amount ($50,000).

                               Size Range (S.F.)     Monthly Rate/s.f.

      Showroom/warehouse        5,620 - 18,000       $  3.50  -  $ 9.00

      Showroom  only            1,400 - 5,980        $  8.00  -  $32.76

Item 3.   Legal Proceedings

      The  Company  is a defendant in various lawsuits  resulting
from  disputes  arising  in the day-to-day  operations  to  which
management believes the outcome based upon information  currently
available,  in  the aggregate, would not have a material  adverse
effect on the Company's financial position, results of operations
or cash flows.

      A  subsidiary  of  the Company (TCM) filed  for  Chapter  7
Bankruptcy during August 1995.  As discussed in Item 1 above  and
Note  1 of the Notes to Consolidated Financial Statements herein,
TCM's  commitments  and  obligations  are  not  included  in  the
financial  statements as of March 31, 1997 and 1996.   Management
believes  that  the  Company will not be  responsible  for  TCM's
commitments  or  any potential outstanding liabilities  that  may
arise.

Item 4.   Submission of Matters to a Vote of Security Holders

      On  or about July 31, 1997, stockholders holding a majority
of  the  issued  and  outstanding common  stock  of  the  Company
executed written consents pursuant to section 228 of the  General
Corporation  Law  of  Delaware for the  purpose  of  removing  C.
William Cox, Edward Paul and Walter Rae, as current directors  of
the  Company.  This action was taken in response to the  property
tax  matters  disclosed in the Company's Form 8-K  filings  dated
July  22  and August 1, 1997.  The shareholders then elected  new
directors  by  written  consent.  The new directors  elected  are
George C. Siller, Jr., Barry Feiner and Sidney Dworkin.   The new
directors  executed  a  unanimous written  consent  removing  the
President  and  Secretary  of  the Company  and  electing  a  new
President  and  Secretary  of  the Company.   The  new  President
elected  is  George  C. Siller, Jr. who was  also  elected  Chief
Executive  Officer and Secretary.  (See Form 8-K dated August  1,
1997 for disclosure of these shareholder actions.) (Also see Part
III,  Item  9  herein  and  Notes 11  and  12  of  the  Notes  to
Consolidated Financial Statements contained herein.)

      During  the  fourth quarter of fiscal 1997, no  matter  was
submitted  to  a  vote of security holders,  either  through  the
solicitation of proxies or otherwise.

                           Part II

Item 5. Market for Common Equity and Related Stockholder Matters

     On May 1, 1995, the Company authorized a 2 for 1 stock split
that  was  effected  in the form of a 100% stock  dividend.   All
share information reflects this transaction.

      On  August  5,  1996, the Company authorized a  one-for-two
reverse stock split.  Shareholders received one new share of  the
Company's  common stock for each two shares they then held.   All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  March  31, 1997, the Company authorized a one-for-three
reverse stock split.  Shareholders received one new share of  the
Company's common stock for each three shares they then held.  All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  August  23,  1997,  the Company  issued  $1,600,000  of
convertible cotes payable with private investors that resulted in
net proceeds of $1,347,272.  The Company paid $1,000,000 from the
proceeds  to  the  Company's primary lender and the  balance  was
retained for working capital.  The investors were issued warrants
to  purchase up to  800,000 shares of the Company's common  stock
at  $.25  per  share and the underwriter was issued  warrants  to
purchase up to 80,000 shares at the same price.  As of March  31,
1997,  notes  in  the  amount of $1,400,000 were  converted  into
1,400,041  shares  of the Company's common  stock.   Each  holder
retains  the warrants associated with the Notes.  The  conversion
of  the Notes into shares of common stock occurred subsequent  to
the  one-for-three reverse stock split on March 31, 1997.   Notes
in  a  face  amount of $100,000 were converted into common  stock
subsequent to March 31, 1997.

      On March 31, 1997, the Company sold 47 Units at a price  of
$50,000  per  Unit (See Note 8).  Each Unit consisted  of  50,000
shares of the Company's common stock totaling 2,350,000 shares of
common stock. The sale of the common stock occurred subsequent to
the  one-for-three reverse stock split on March  31,  1997.   The
Company received net proceeds of $2,010,998 from the sale of  the
common  stock  of  which  $1,000,000 was paid  to  the  Company's
primary lender and the balance was retained in working capital.

     The Company's Common Stock is traded in the over-the-counter
market  on  the OTC Electronic Bulletin Board under  the  trading
symbol  IDES.  The following tables set forth the range  of  high
and low bid information for the Company's Common stock by quarter
for fiscal years 1997 and 1996.  The bid information was obtained
from  the  National Quotation Bureau, Inc. and has been  adjusted
proforma  to  reflect all stock splits and reverse stock  splits.
The  following  quotations reflect inter-dealer  prices,  without
retail  mark-up,  markdown or commission and  may  not  represent
actual transactions.

                                              OTC Electronic
    Fiscal Year Ended March 31,               Bulletin Board

                                             High          Low
     1997
       First Quarter                         2-1/4          1-1/2
       Second Quarter                        3-3/4          1-1/2
       Third Quarter                         3-3/4          1-1/2
       Fourth Quarter                        1-7/8          1-1/8

     1996
       First Quarter                        34-1/2         27-3/4
       Second Quarter                       33             26-1/4
       Third  Quarter                       30                3/10
       Fourth Quarter                        4-1/2          1-1/2

      At  April 30, 1998 there were 136 holders of record of  the
Company's common stock.

     The Company has paid no dividends on its Common Stock during
the  past  two years and no such payment is contemplated  in  the
foreseeable  future.   The  terms  of  the  Company's  bank  loan
agreements  contain  provisions,  which  presently  prohibit  the
payment of cash dividends by the Company on its common stock.

Item  6.    Management's  Discussion and  Analysis  of  Financial
Condition and Results of Operations

      The  discussion  which  follows  summarizes  the  Company's
financial  position as of March 31, 1997 and the results  of  its
operations for the twelve month periods ended March 31, 1997  and
1996,  and  should  be  read in conjunction  with  the  Company's
Consolidated Financial Statements and Notes thereto  included  in
this Form 10-KSB.

Liquidity and Capital Resources

     In August 1996, the Company issued $1,600,000 of convertible
notes  payable  with  private  investors  that  resulted  in  net
proceeds  of  $1,347,272.  The Company paid $1,000,000  from  the
proceeds  to  the  Company's primary lender and the  balance  was
retained for working capital.  The investors were issued warrants
to  purchase up to  800,000 shares of the Company's common  stock
at  $.25  per  share and the underwriter was issued  warrants  to
purchase up to 80,000 shares at the same price.  As of March  31,
1997,  notes  in  the  amount of $1,400,000 were  converted  into
1,400,041  shares  of the Company's common  stock.   Each  holder
retains the warrants associated with the Notes.

     The  conversion  of the Notes into shares  of  common  stock
occurred  subsequent to the one-for-three reverse stock split  on
March  31,  1997.   Notes  in  a face  amount  of  $100,000  were
converted into common stock subsequent to March 31, 1997.

      In March 1997, the Company consummated the sale of 47 Units
(the  "Units")  at  a  price  of $50,000  per  Unit.   Each  Unit
consisted  of 50,000 shares of the Company's common stock  for  a
total of 2,350,000 shares of common stock. The sale of the common
stock  occurred  subsequent  to the one-for-three  reverse  stock
split  on  March 31, 1997.  The Company received net proceeds  of
$2,010,998  from the sale of the common stock of which $1,000,000
was  paid  to  the Company's primary lender and the  balance  was
retained in working capital.

      The  Company  has  a  bank revolving line  of  credit  that
originally  provided for borrowings up to $6,000,000.   At  March
31,  1997  and 1996, respectively, the amounts outstanding  under
the  terms of this line of credit were $3,780,000 and $5,820,000.
The  Company  is  not  in compliance with the  required  current,
quick,  leverage,  tangible  net worth,  current  maturities  and
interest  coverage  ratios. The bank has not waived  any  of  the
covenant violations.  Furthermore, the bank has sent a Notice  of
Claim  and  Demand for Arbitration dated December 2,  1997.   The
Arbitration  process is specified in the Credit  Agreement  dated
January 20, 1995 and is the agreed upon procedure for the bank to
process  its  demand for payment of the outstanding  balance  and
outstanding  interest.  Pursuant to this demand,  an  Arbitration
hearing  was scheduled for April 9, 1998 and then reset  for  May
19,  1998.  Effective March 19, 1998 the bank and the Company  in
anticipation of possible recapitalization efforts have agreed  to
a  stay  of the arbitration hearing.  The Company cannot  predict
the  actions  of  the bank; however, management anticipates  that
should recapitalization of the Company not be concluded within  a
reasonable  period of time, a new Notice of Claim and Demand  for
Arbitration will be issued by the bank.

      As of March 31, 1997, the Company owed the bank $126,648 in
interest  charges  and this amount remains  unpaid.   The  entire
outstanding balance of the bank line of credit has been  included
in  current  liabilities for the years ended March 31,  1997  and
1996.   The  Company does not currently have  a  line  of  credit
available  to it; therefore, short-term liquidity is provided  by
current operations.

      Subsequent  to  year-end,  the  Company  became  aware  and
reported  to  BDO  Seidman,  LLP ("BDO"),  the  auditors  of  the
Company,  that  property taxes were underpaid by an  undetermined
amount. The underpayment was the result of the underreporting  of
inventory  and personal property values on the personal  property
renditions  filed  annually with the respective county  appraisal
districts.   The underreporting has occurred for at  least  seven
(7)  years and involves the locations in Houston, Corpus Christi,
Dallas and Austin, Texas and Atlanta, Georgia. On July 22,  1997,
BDO  issued  a  report to the Board of directors of  the  company
pursuant  to  the requirements of Section 10A of  the  Securities
Exchange  Act  of  1934  ("Exchange Act") stating  that  BDO  had
determined  that  the  Company had filed deficient  property  tax
reports.  (see Form 8-K dated July 22, 1997 filed with the  SEC.)
The  filing of the deficient reports was a material "illegal act"
within  the  meaning of Section 10A.  Consequently, BDO  withdrew
its  audit  opinion  on  the  March  31,  1996  annual  financial
statements   of  the  Company  and  resigned  as  the   Company's
accounting firm.  Following a change in management of the Company
in August, 1997, BDO was re-engaged as the independent accounting
firm for the Company.

      The  Company has negotiated  settlements of reporting value
with  the applicable appraisal districts having jurisdiction over
each taxed location.  The Houston settlement is limited to a  two
(2) year lookback and the taxing authorities in the various other
jurisdictions  have either followed the precedent established  in
the  Houston settlement or elected to not assess the Company  for
prior  year  underpayments  of  property  taxes.   The  financial
statements  herein reflect a charge to expense  of  approximately
$127,000  for the fiscal year ended March 31, 1997 and a restated
charge to expense to accrue additional personal property taxes of
approximately $213,000 for the fiscal year ended March 31,  1996.
Management  believes the charges to operating results  in  fiscal
years  ended  March  31,  1997 and 1996 adequately  reflects  the
assessments,  penalties, interest and fees  to  be  paid.   Also,
while  the  Company  cannot be certain that  all  of  the  taxing
authorities will do so, there are statutory provisions in some of
the jurisdictions that provide that the taxpayer will be afforded
a  three  year  amortization of past  due  taxes,  penalties  and
interest.   Therefore, the Company's monthly outlay could  be  as
low as $9,500 to $10,000 per month.

     The Company raised capital during fiscal years 1997 and 1996
through  the exercise of stock options totaling 2,347 shares  and
11,746  shares, respectively.  All remaining options have expired
or were cancelled in fiscal 1997.

      At  March 31, 1997, the Company's working capital decreased
$1,147,838  to  a  deficit of $540,690  from  a  working  capital
surplus  of $607,148 at March 31, 1996.  The decrease in  working
capital  is  primarily  due  to the reductions  in  inventory  of
$2,373,127  and  accounts receivable of $189,518  offset  by  the
increase  in  restricted certificates of deposit of $192,500  and
the reduction of $2,000,000 in the bank revolving credit facility
out  of  proceeds  of the sales of convertible  notes  and  stock
subscriptions  discussed above. Also, working  capital  decreased
from an increase in accrued expenses of $1,233,247, including the
accrued provision for closure of International of $692,985.   The
restricted  certificates of deposits are  collateral  on  certain
irrevocable letters of credit; therefore, they are not  available
for  other  uses.    Trade  receivables,  net  of  allowance  for
doubtful  accounts,  decreased due  to  lower  sales  levels  and
increased   provisions   for  doubtful   accounts.    Inventories
decreased  due  to  less  stockpiling of inventory  for  the  new
season, a shift in product mix and the establishment of a reserve
for obsolescence and a writedown to net realizable value totaling
approximately   $1,700,000.    Accrued   liabilities    increased
primarily  due  to the accrual of property taxes,  penalties  and
interest  and  associated legal fees anticipated of approximately
$340,000  and  a  reserve for abandoning leases of  approximately
$532,000.

      Stockholders' equity(capital deficit) decreased  $1,365,504
from  equity  of  $1,276,311 at March 31, 1996 to  a  deficit  of
$89,193 at March 31, 1997, primarily due to the net loss for  the
fiscal  year  of $5,352,967, offset in part by the conversion  of
convertible notes payable with a face value of $1,400,000 and the
net  proceeds  of  sales  of  common stock  of  $2,010,998.   The
increases  to additional paid-in capital are due to the  issuance
of  additional  shares  purchased  in  the  stock  offering,  the
exercise of stock options for 2,347 shares and the conversion  of
notes payable to common stock.

      The  Company  has  suffered significant losses  during  the
fiscal  years  ended March 31, 1997 and 1996 and  has  a  capital
deficit at March 31, 1997.  The Company is not in compliance with
numerous  covenants of its bank financing agreement and the  bank
has  sent  a  Notice  of Claim and Demand for  Arbitration  dated
December 2, 1997.   Accordingly, there is substantial doubt about
the  Company's  ability  to continue  as  a  going  concern.  The
Company's management continues to seek private sources of capital
and alternative financing sources in an endeavor to alleviate the
doubt as to its ability to continue as a going concern.  A number
of  potential  investors  have been  identified  and  discussions
continue  with several of these sophisticated investors regarding
opportunity  that exists with Intile.  The financing alternatives
would  be  enhanced  significantly if the  Company  could  obtain
additional  capital  and thereby reduce the  level  of  financing
required to restructure the existing bank credit line.

      The  Company cannot guarantee success in any of its efforts
to obtain additional capital investment in the Company.  However,
on  April 2, 1998, the Company announced that it signed a  Letter
of Intent ("LOI"), to sell 25,000,000 new shares of Intile Common
Stock  for  $2,000,000, in cash, to Energy  Drilling  Industries,
Inc.  ("EDII").   EDII  is  a  holding company  headquartered  in
Houston,  Texas with diverse interests in five industry segments:
industrial,   financial,   oil   and   gas,   real   estate   and
entertainment.  The purchase will represent approximately 82%  of
the  then  issued shares of common stock.  The LOI is subject  to
certain  conditions,  including due diligence  by  both  parties,
amendment  of the Company's charter to authorize the issuance  of
additional shares of common stock, and preparation and  execution
of  definitive agreements.  The proceeds of the sale will be used
in  the  restructuring of the senior debt on terms more favorable
to  the Company.  One significant condition to the transaction is
negotiating  those  terms  with the Company's  senior  lender  in
advance of closing.

     The Company purchased a new computer system and software for
all  of  its  accounting  applications.   Implementation  of  the
conversion  to  the  new system is nearing completion.   The  new
system  and software has year 2000 processing capabilities  which
was a key factor in the selection of these products.  As of March
31, 1997, all significant costs related to its implementation has
been  incurred or accrued, and in accordance with Emerging Issues
Task  Force issue 96-14 those costs related to year 2000  matters
have been expensed as incurred.

Results of Operations for the Twelve Months Ended March 31, 1997,
Compared with the Twelve Months Ended March 31, 1996

      Sales decreased $2,956,266 (15.6%) to $15,936,681 and  cost
of  sales increased $246,653 (2.1%) to $11,864,464 for the twelve
months  ended  March 31, 1997 compared to the  comparable  period
ended  March  31, 1996, resulting in a decrease of $3,202,919  in
gross  profit for fiscal year 1997.  The reduction  in  sales  is
principally  due to the closing of the Tile Boutique location  in
Houston,  Texas during fiscal 1996, which had no sales  in  1997,
offset  by  general increases in sales at other locations  during
fiscal 1997.  The reduction in sales for Tile Boutique, comparing
fiscal   1997  and  fiscal  1996,  was  $752,247.   In  addition,
International   was   closed  in   January   1997.    Sales   for
International  decreased by approximately $2,200,000  from  1996.
The  reduction  in  gross margin percentage from  38.5%  for  the
twelve  months ended March 31, 1996, to 25.6% for the  comparable
period  ended  March 31, 1997 is due, primarily,  to  charges  to
consolidated  cost  of  goods sold to  establish  a  reserve  for
inventory  obsolescence  and a writedown  of  inventory  totaling
approximately $1,700,000 to net realizable value in fiscal 1997.

      Selling  and administrative expenses decreased $878,263  to
$7,343,768  for  the  fiscal  year  ended  March  31,  1997  from
$8,222,031  for  the  fiscal  year ended  March  31,  1996.   The
decrease  is  primarily  attributable  to  the  reduced  expenses
related to the decreases in sales volume, offset by increases  in
rent expense of $249,765 and bad debt expense of $183,640.

      The  provision for closure of International (Note 3 of  the
Notes to Consolidated Financial Statements herein) for the fiscal
year  ended  March 31, 1997 includes the estimated losses  to  be
recognized from the disposal of net assets of International and a
reserve for abandoning leases of approximately $532,000.

     The increase in rent expense is principally from the accrual
of the net present value of remaining lease payments of the lease
for  a  facility  in  Boston,  Massachusetts  in  the  amount  of
$178,412.  This location has been utilized as a storage  facility
and  limited distribution point since the closure of TCM Holdings
Corporation  (See  Note 3 of the Notes to Consolidated  Financial
Statements herein) and as of April 30, 1998 all inventories  have
been liquidated from the location.  The Company is continuing its
efforts  to  sub-lease the facility or obtain a lease termination
agreement from the landlord on manageable terms.

     The increase in bad debt expense is a result of management's
assessment of the trade accounts receivable and the determination
that  a  higher allowance for doubtful accounts is  necessary  to
reflect  management's current expectation of collections  on  the
accounts.

     Interest expense increased to $1,419,512 for the fiscal year
ended  March  31,  1997 from $452,993 for the fiscal  year  ended
March  31, 1996, due to the addition of a note for a new computer
system and the increase in the bank line of credit interest  rate
from  8.5% to 10.75%, offset by the paydown of $2,000,000 of  the
line during the fiscal year ended March 31, 1997.  Also, interest
expense  in  fiscal  1997 includes expenses  and  commissions  of
$223,000  paid to the underwriter of the convertible debt  issue;
and, related to the convertible debt issues, a charge to interest
expense has been made in the amount of $571,395 pursuant  to  the
provisions of Statement of Financial Accounting Standards No. 123
- "Accounting for Stock-Based Compensation".

      The Company has recorded a 100% valuation allowance on  the
deferred  tax  asset since it cannot be determined if  the  asset
would be realized.

New Accounting Pronouncements

      In  March  1997,  the Financial Accounting Standards  Board
issued  Statement  of  Financial Accounting  Standards  No.  128,
Earnings  Per Share ("SFAS 128").  SFAS 128 provides a  different
method  of calculating earnings per share than is currently  used
in  APB  Opinion  15.  SFAS 128 provides for the  calculation  of
basic  and diluted earnings per share.  Basic earnings per  share
includes  no  dilution  and is computed by dividing  income(loss)
available  to common stockholders by the weighted average  number
of  common shares outstanding for the period.  Dilutive  earnings
per share reflect the potential dilution of securities that could
share  in  the  earnings of an entity, similar to existing  fully
diluted  earnings  per share.  The Company is required  to  adopt
SFAS 128 in the third quarter ended December 31, 1997.  Using the
principles set forth in this standard, basic and diluted earnings
per share would not be materially different from that presented.

       Statement  of  Financial  Accounting  Standards  No.  129,
Disclosure  of Information about Capital Structure  ("SFAS  129")
effective for periods ending after December 15, 1997, establishes
standards  for  disclosing information about an entity's  capital
structure.  SFAS 129 requires disclosure of the pertinent  rights
and privileges of various securities outstanding (stock, options,
warrants,   preferred  stock,  debt  and  participating   rights)
including  dividend  and  liquidations  preferences,  participant
rights, call prices and dates, conversion or exercise prices  and
redemption  requirements.  Adoption of  SFAS  129  will  have  no
effect  on  the Company as it currently discloses the information
specified.

      In  June  1997,  the Financial Accounting  Standards  Board
issued  two  new  disclosure standards,  Statement  of  Financial
Accounting Standards (SFAS) 130, "Reporting Comprehensive Income"
and   SFAS   131,  "Disclosure  About  Segments  of  a   Business
Enterprise".   Both  of  these new standards  are  effective  for
financial  statements for periods beginning  after  December  15,
1997 and require comparative information for earlier years to  be
restated.   Management  does  not  anticipate  that  results   of
operations and financial position will be materially affected  by
implementation of these new standards.

      SFAS  130,  "Reporting Comprehensive  Income",  establishes
standards for reporting and display of comprehensive income,  its
components  and  accumulated balances.  Comprehensive  income  is
defined  to include all changes in equity except those  resulting
from  investments by owners and distributions to  owners.   Among
other  disclosures,  SFAS 130 requires that all  items  that  are
required  to be recognized under current accounting standards  as
components  of  comprehensive income be reported in  a  financial
statement  that  is displayed with the same prominence  as  other
financial statements.

       SFAS   131,  "Disclosure  about  Segments  of  a  Business
Enterprise",  establishes  standards  for  the  way  that  public
enterprises report information about operating segments in annual
financial   statements   and  requires  reporting   of   selected
information   about  operating  segments  in  interim   financial
statements  issued to the public.  It also establishes  standards
for disclosures regarding products and services, geographic areas
and  major  customers.  SFAS 131 defines  operating  segments  as
components  of  an  enterprise  about  which  separate  financial
information is available that is evaluated regularly by the chief
operating  decision  maker in deciding how to allocate  resources
and in assessing performance.

Item 7.   Financial Statements

     See Index to Financial Statements on Page F-1.

Item  8.    Changes  in  and Disagreements  with  Accountants  on
Accounting and Financial Disclosure

      On  February 23, 1996, Intile Designs, Inc. dismissed Price
Waterhouse  LLP as its independent accountants.  The  reports  of
Price  Waterhouse  LLP, at the time of issue,  on  the  financial
statements  for  the past two fiscal years contained  no  adverse
opinion  or  disclaimer  of opinion and  were  not  qualified  or
modified  as to uncertainty, audit scope or accounting principle.
The Company's Board of Directors participated in and approved the
decision  to change independent accountants.  In connection  with
its  audits  for  the two most recent fiscal  years  and  through
February  23,  1996,  there  were  no  disagreements  with  Price
Waterhouse  LLP  on  any  matter  of  accounting  principles   or
practices, financial statement disclosure, or auditing  scope  or
procedures,   which  disagreements  if  not   resolved   to   the
satisfaction  of Price Waterhouse LLP would have caused  them  to
make   reference  thereto  in  their  report  on  the   financial
statements  for such years.  Price Waterhouse LLP  furnished  the
Company with a letter addressed to the SEC stating that it agreed
with the above statements, and a copy of such letter, dated March
1,  1996,  was filed as Exhibit 16 to the Form 8-K filed February
28,  1996.   The  Company engaged BDO Seidman, LLP   as  its  new
independent  accountants on March 15, 1996.   During  the  period
prior  to  engagement,  the Company had not  consulted  with  BDO
Seidman, LLP on items which (1) were or should have been  subject
to  SAS 50; or (2) concerned the subject matter of a disagreement
or  reportable  event with the former auditor  (as  described  in
Regulation S-K Item 304(a)(2).

      On  August  20,  1997,  Price Waterhouse  LLP,  the  former
independent  accounting firm for the Company withdrew  its  audit
opinion  on  the March 31, 1995 consolidated financial statements
of  the  Company as a result of the property tax liability  issue
discussed below and elsewhere herein under "Liquidity and Capital
Resources"  and  Note  11  and 12 of the  Notes  to  Consolidated
Financial   Statements   contained  herein.    The   consolidated
financial statements for the fiscal year ended March 31, 1995 are
not  included herein; however, users of the financial  statements
for the fiscal year ended March 31, 1995 should be aware that the
audit  opinion  of Price Waterhouse LLP has been  withdrawn.  The
activity for the year ended March 31, 1995 and the balances as of
the   year   then   ended  in  the  Consolidated   Statement   of
Shareholders'  Equity  have  not been  restated  to  reflect  any
adjustment as a result of the property tax issue.

      Subsequent  to  March 31, 1997, the current  year-end,  the
Company  became aware and reported to BDO Seidman,  LLP  ("BDO"),
the  auditors of the Company, that property taxes were  underpaid
by  an undetermined amount which it believed was material, in the
aggregate,  to  the  financial  position  of  the  Company.   The
underpayment  was the result of the underreporting  of  inventory
and  personal property values on the personal property renditions
filed  annually  with the respective county appraisal  districts.
The  underreporting has occurred for as long as seven  (7)  years
and involved the locations in Houston, Corpus Christi, Dallas and
Austin, Texas and Atlanta, Georgia. On July 22, 1997, BDO  issued
a report to the Board of Directors of the company pursuant to the
requirements of Section 10A of Securities Exchange  Act  of  1934
("Exchange Act") stating that BDO had determined that the Company
had  filed  deficient property tax reports.  (see Form 8-K  dated
July  22,  1997 filed with the SEC)  The filing of the  deficient
reports  was  a  material "illegal act"  within  the  meaning  of
Section 10A.  Consequently, BDO withdrew its audit opinion on the
March  31,  1996 annual financial statements of the  Company  and
resigned as the Company's accounting firm.

       Following  the  change  in  the  Company's  directors  and
management on August 1, 1997,  BDO Seidman, LLP ("BDO")  was  re-
engaged as the accounting firm for the Company.  (See Note 11 and
12  of  the  Notes to Consolidated Financial Statements contained
herein and the Company's Form 8-K dated August 15, 1997)

                          Part III

Item  9.    Directors, Executive Officers, Promoters and  Control
Persons

Executive Officers/Significant Employees of the Registrant

      On  or about July 31, 1997, stockholders holding a majority
of  the  issued  and  outstanding common  stock  of  the  Company
executed written consents pursuant to section 228 of the  General
Corporation  Law  of  Delaware for the  purpose  of  removing  C.
William Cox, Edward Paul and Walter Rae, as current directors  of
the  Company.  This action was taken in response to the  property
tax  matters  disclosed in Note 11 and 12 of  the  Notes  to  the
Consolidated  Financial  Statements  contained  herein  and  also
disclosed  in the Company's Form 8-K filings dated  July  22  and
August 1, 1997.  The shareholders then elected new directors  who
executed  a unanimous written consent removing the President  and
Secretary  of  the  Company  and electing  a  new  President  and
Secretary of the Company.

      The  following  is  a  list of the executive  officers  and
directors of the Company as of the date of this filing:

                                                           Held a Position
                                                            Continuously
Name                     Position                  Age          Since

George C. Siller, Jr.    President                  46           1997
                         Chief Executive Officer
                         Secretary and Director

C. Doyle Smith           Vice President - Finance   50           1997
                         and Administration
                         Chief Financial Officer and
                         Assistant Secretary

Barry Feiner             Director (1)               64           1997

Sidney Dworkin           Director                   77           1997

Peter Boogren            Vice President - Sales     48           1997
                         and marketing

(1) Member of the Audit Committee

      Mr. Siller joined Intile in May 1995 as Vice President  and
General  Manager and became a Director in July  1995.   Prior  to
joining  Intile,  he  was  CFO  of  Air  Dreco,  a  fluid   power
distribution  division  of  Sun Distributors  (a  Master  Limited
Partnership, traded on the NYSE).  From 1988 through 1990 he  was
Group  Controller  for  American Desk, a manufacturer  of  school
furniture   and   stadium  and  theater  seating.    He   was   a
Manufacturing  Engineer  and Manager of Production  Planning  and
Senior Auditor for Texas Instruments from 1983 to 1988.  Prior to
Texas  Instruments, Mr. Siller served in the United States Marine
Corps for ten years where he attained the rank of Captain.

      Mr.  Smith  joined Intile in October 1996.   Prior  thereto
from  September  1995 through September 1996 he was  employed  as
Chief  Financial Officer by Fradigil, Inc. a restaurant  operator
located in Kemah, Texas.  From June 1993 through August 1995  Mr.
Smith  was a business consultant in Houston, Texas.  For  the  13
years  prior thereto he was employed as controller and from  1989
through  1993  as Chief Financial Officer by Kettle  Restaurants,
Inc.  an  operator of family restaurants in the  southern  United
States.

      Mr.  Dworkin is the Chief Executive Officer, Director,  and
controlling  stockholder  of Advanced Modular  Systems,  Inc.,  a
closely  held  corporation he founded  in  1988  engaged  in  the
business  of selling and leasing modular buildings.  Mr.  Dworkin
currently  serves  on the Boards of Directors  of  the  following
publicly  held  companies:  Northern Technologies  International,
Inc.,  CCA  Industries, Inc., Comtrex Systems  Inc.,  Interactive
Technologies  Inc., Viragen, Inc., Marbledge, Inc.,  Consolidated
Health  Care Associates, Inc., Cragar Industries, Inc., and  QEP,
Inc.

      Mr.  Feiner is an attorney in private practice in New  York
City, and has served for the past three and one-half years  as  a
director  of  Fortune Natural Resources Corporation,  a  publicly
held company.

     Mr. Boogren joined Intile in April, 1996 as Vice President -
Sales  and Development and has served as Vice President - Central
Region  since September 1997.  From January 1993 to  April  1996,
Mr.  Boogren  was  employed by Color Tile  Supermarts,  Inc.  and
served  as  Vice  President  - Eastern  Division  and  then  Vice
President - Franchise Operations.

Item 10.   Executive Compensation

      The  following summarizes the compensation for  C.  William
Cox,  the former President, Chairman and Chief Executive  Officer
of  the Company as of March 31, 1997.  No other executive officer
received compensation during fiscal 1997 in excess of $100,000.

Cash Compensation of Executive Officers

                                                       long-term Compensation
Name and                                               Restricted      Number
Principal               Fiscal  Amount of   Amount of    Stock           of
Position               Year End  Salary       Bonus      Awards        Options

C. William Cox           1997   $148,388       --          --            --
Former  Chief            1996    165,022       --          --            --
Executive  Officer       1995    173,807       --          --            --
and President

      There  were no stock option grants to any person associated
with  the  Company during the fiscal year ended March  31,  1997.
Furthermore,  all  outstanding options  either  expired  or  were
cancelled during fiscal 1997.

      Mr. C. William Cox, purchased $100,000 of convertible notes
(See  Note 8 of Notes to Consolidated Financial Statements herein
and  Item  5  - Market for Common Equity and Related  Stockholder
Matters,  Liquidity  and Capital Resources, above)  on  the  same
terms  as all other purchasers of the convertible notes including
warrants attached thereto to purchase up to 50,000 shares of  the
Company's common stock at $.25 per share.

Compensation of Directors

      The  Company currently pays its outside directors $500  per
each  Board  meeting  attended  by such  director  plus  expenses
incurred in attending the meeting.

Item  11.    Security Ownership of Certain Beneficial Owners  and
Management

      The  following table sets forth, as of April 30, 1998,  the
aggregate  number of shares of Common Stock of the Company  owned
of  record or beneficially by each person who owned of record, or
is  known by the Company to own beneficially, more than 5% of the
Company's  Common Stock, and the name and shareholdings  of  each
officer and director and all officers and directors as a group:

                                           Amount and
                                            Nature of
Name and Address                           Beneficial          Percent
of Beneficial Owner                        Ownership(1)       of Class

C. William Cox                               502,109            10.5%
10815 Briar Branch
Houston, Texas   77024

J. E. McConnaughy, Jr.                       450,000             9.4%
637 Valley Road
New Canaan, CT   60840

Renaissance Capital Growth
  & Income Fund III, Inc.                    500,000            10.5%
8080 North Central Expressway
Suite 210
Dallas, Texas   75206

Renaissance US Growth
  & Income Trust, PLC                        500,000            10.5%
8080 North Central Expressway
Suite 210
Dallas, Texas   75206

Sidney Dworkin                                50,000             1.1%
2600 South Ocean Blvd. Apt. 12F
Boca Raton, Florida   33432

George C. Siller, Jr.                            883              .0%
9716 Old Katy Rd., #110
Houston, Texas   77055

All current officers and directors
  as a group                                  50,883             1.1%
_____________________
(1) All shares are held beneficially and of record.

Item 12.   Certain Relationships with Related Transactions

      The Company leases certain equipment from entities owned by
C. William Cox, former President of the Company.  Rental payments
under  the  leases were in the aggregate amounts of approximately
$20,000 and $17,000 for the fiscal years ended March 31, 1997 and
1996, respectively.

      Effective  January 1995, Mr. Cox, former President  of  the
Company,  has  provided  his limited personal  guarantee  on  the
Company's bank line of credit up to $1,000,000.  In consideration
of  this  guarantee, the Company paid fees  to  Mr.  Cox  in  the
amounts  of $12,000 in each of the fiscal years ended  March  31,
1997  and 1996, respectively.  Such fees were charged to interest
expense.

      Mr. Ehud D. Laska, a former Director of the Company is  the
Chairman of Coleman and Company Securities, Inc. (Coleman).   Mr.
Laska  resigned  as a Director effective January  20,  1997.   On
August 23, 1996, the Company, through a Placement Agent Agreement
with  Coleman,  issued  with  private  investors  $1,600,000   of
convertible  cotes of which Mr. C. William Cox, former  President
of  the  Company, purchased $100,00 of the Notes  (see  Note  8).
Attached  thereto, Mr. Cox received warrants to  purchase  up  to
50,000 shares of the Company's common stock at $.25 per share and
Coleman  was issued warrants to purchase up to 80,000  shares  at
the  same price.  Mr. Cox's purchase of convertible notes payable
was  on  the same terms and conditions as all other purchases  of
the  convertible notes.  Coleman received for its services a  fee
of  10%  of  the  proceeds of the placement and a non-accountable
expense  reimbursement of 3% of the proceeds  of  the  placement.
Total  costs  of the placement paid to Coleman were approximately
$223,000.

      On  January 31, 1997, the Company entered into a  Placement
Agent  Agreement  with Coleman to act as its exclusive  placement
agent  in connection with the "best efforts" sale by the  Company
of  up  to 47 Units (the "Units") at a price of $50,000 per  Unit
(see  Note  10).  Each Unit consisted of 150,000  shares  of  the
Company's  common stock.  As of March 31, 1997, all of the  Units
were  sold  of  which  Mr. Cox purchased  one  Unit.   Mr.  Cox's
purchase of the Unit was on the same terms and conditions as  all
other  purchases of Units.  Total costs of the placement paid  to
Coleman were approximately $305,500.

Item 13 - Exhibits and Reports on Form 8-K

  (a)  The following exhibits are filed as a part of this report:

    3(i) Articles of Incorporation **

    3(ii) Bylaws of the Company **

    4.1 Form of Subscription  Agreement  and  Investment   Letter
        specifying   terms   of  private  placement   sale   of
        $1,600,000  of 12% Convertible Subordinated  Promissory
        Notes due July 31, 1999.

    4.2 Form  of 12% Convertible Subordinated  Promissory
        Note Due July 31, 1999.

    4.3 Form  of  Conversion Certificate for  surrender  of  12%
        Convertible Subordinated Promissory Notes to convert to
        common stock of the Company.

    4.4 Form  of Warrant to purchase common stock of the Company
        issued  in  conjunction  with  the  $1,600,000  of  12%
        Convertible Subordinated Promissory Notes.

    4.5 Form of Subscription Agreement and Investment Letter
        specifying  terms  of  irrevocable  purchase  of  Units
        consisting  of 150,000 shares of common  stock  of  the
        Company at a price of $50,000 per Unit.

    21   List of subsidiaries as of March 31, 1997

     Intile Designs of Arizona, Inc.      Arizona corporation
     Intile Designs of Dallas, Inc.       Texas corporation
     Austin Tile Designs, Inc.            Texas corporation
     Intile Designs of California, Inc.   California corporation
     Intile Designs of Los Angeles, Inc.  California corporation
     TCM Holdings Corp.                   Massachusetts corporation
     Intile Designs of Orlando, Inc.      Florida corporation
     Intile Designs of Woodlands, Inc.    Texas corporation
     Intile Designs of Denver, Inc.       Colorado corporation
     Global Tile Distributors, Inc.       Massachusetts corporation

     27   Financial Data Schedule

_______________________

**  Incorporated by reference to the Exhibit of the same number
 to the Annual Report on Form 10-KSB of the Company filed with
 the commission for the year ended March 31, 1994.

  (a)   Reports on Form 8-K were filed during the last quarter of
the period covered by this report as follows:

          On  March  17, 1997, the Company filed  a  Form  8-K
     reporting under Item 5 - "Other events" the approval by  a
     majority  of the stockholders of the Company of  a  3-to-1
     reverse  split  in the issued and outstanding   shares  of
     the Company's common stock

     Additionally,  reports on Form 8-K were filed subsequent  to
     the  last  quarter of the period covered by this  report  as
     follows:

          On  July  28,  1997,  the  Company  filed  a  Form  8-K
     reporting under Item 5 - "Other events" the receipt  of  a
     report   from  BDO  Seidman,  LLP  (BDO),  the   Company's
     auditors,   covering  the  determination   that   personal
     property  amounts were under reported on related  property
     tax   renditions  which  could  result  in  a  significant
     underpayment  of personal property taxes.   Also  included
     in  this filing was the notice that BDO had withdrawn  its
     audit  opinion  on  the March 31, 1996,  annual  financial
     statements  of  the  Company  and  had  resigned  as   the
     Company's accounting firm on July 22, 1997.

          On  August  4,  1997,  the Company  filed  a  Form  8-K
     reporting   under  Item  1  -  "Changes  in   control   of
     registrant"  and Item 5 - "Other events" the execution  of
     written  consents by stockholders holding  a  majority  of
     the  issued  and outstanding common stock of  the  Company
     for  the  purpose of removing the directors of the Company
     and   electing  a  new  board  of  directors.    The   new
     directors,  immediately following this action, executed  a
     unanimous  written  consent  removing  the  President  and
     Secretary  of the Company and elected a new President  and
     Secretary of the Company.

          On  August  20,  1997, the Company  filed  a  Form  8-K
     reporting   under  Item  4  -  "Changes  in   registrant's
     certifying  accountant" the re-engagement of  BDO  as  the
     Company's   auditors.   BDO  agreed   to   be   re-engaged
     following  the  change  in  the  Company's  directors  and
     management  on August 1, 1997, and reported on  August  4,
     1997.

          On  August  28,  1997, the Company  filed  a  Form  8-K
     reporting  under Item 5 - "Other events" that due  to  the
     potential  for restatement of the Company's 1995 financial
     statements  as  a result of the underpayment  of  personal
     property   taxes,   Price  Waterhouse  LLP,   the   former
     independent   accounting  firm  for   the   Company,   had
     withdrawn  its  audit  opinion  on  the  March  31,   1995
     consolidated financial statements of the Company.

                           SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of  the
Securities  Exchange Act of 1934, the Registrant has duly  caused
this  report  to  be  signed on its behalf  by  the  undersigned,
thereunto duly authorized.


                    Intile Designs, Inc.

June 12, 1998       By:/s/ George C. Siller, Jr.
                       George C. Siller, Jr.
                       Chief Executive Officer, President,
                       and Secretary

June  12, 1998      By:/s/C. Doyle Smith
                       C. Doyle Smith
                       Vice President - Finance and Administration
                       and Assistant Secretary

      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 capacities and  on
the date indicated.

June  12, 1998      By:/s/George C. Siller, Jr.
                       George C. Siller, Jr.
                       Chief Executive Officer, President,
                       Secretary and Director

June  12, 1998      By:/s/C. Doyle Smith
                       C. Doyle Smith
                       Vice President - Finance and Administration
                       and Assistant Secretary

June  12, 1998      By:/s/Barry Feiner
                       Barry Feiner
                       Director

June  12, 1998      By:/s/Sidney Dworkin
                       Sidney Dworkin
                       Director

<PAGE>

                      INTILE DESIGNS, INC.

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Report of Independent Certified Public Accountants             F-2

Consolidated Balance Sheets as of March 31, 1997 and 1996      F-3

Consolidated Statements of Loss for the years ended
     March 31, 1997 and 1996                                   F-4

Consolidated Statements of Stockholders' Equity (Capital
     Deficit) for the years ended March 31, 1997 and 1996      F-5

Consolidated Statements of Cash Flows for the years ended
     March 31, 1997 and 1996                                   F-6

Notes to Consolidated Financial Statements                     F-7
                                                               Thru
                                                               F-20

<PAGE>

       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



To the Board of Directors and
Stockholders of Intile Designs, Inc.

We  have  audited  the  consolidated  balance  sheets  of  Intile
Designs,  Inc.  at  March 31, 1997 and 1996 and the  consolidated
statements  of loss, stockholders' equity (capital  deficit)  and
cash  flows for the 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  audit 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.

In our opinion, the consolidated financial statements referred to
above  present fairly, in all material respects, the consolidated
financial position of Intile Designs, Inc. at March 31, 1997  and
1996 and the results of their operations and their cash flows for
the  years  then  ended  in  conformity with  generally  accepted
accounting principles.

The  accompanying  consolidated financial  statements  have  been
prepared  assuming  that the Company will  continue  as  a  going
concern.   As  discussed in Note 2 to the consolidated  financial
statements,  the Company has incurred significant losses  in  the
fiscal  years ended March 31, 1997 and 1996 and is in default  of
its  loan agreement, as a result of which the lender may  enforce
its  demand  for  repayment  of the entire  outstanding  balance.
Accordingly,  there  is  substantial doubt  about  the  Company's
ability  to continue as a going concern.  Management's  plans  in
regard  to  these  matters  are also discussed  in  Note  2.  The
consolidated financial statements do not include any  adjustments
that might result from the outcome of this uncertainty.



                                BDO SEIDMAN, LLP


Houston, Texas
January 19, 1998, except for Note 5 which
   is as of March 19, 1998 and Note 12
   which is as of April 2, 1998

<PAGE>

                      INTILE DESIGNS, INC.
                   CONSOLIDATED BALANCE SHEETS


                                                              March 31,
                                                           1997        1996
                                                                    (Restated)
                 Assets

Current Assets:
 Cash                                                    $179,157     $69,778
 Accounts receivable, less allowance
   for doubtful accounts of $340,315 and $134,602       1,374,656   1,564,174
 Restricted  certificates  of  deposit                    192,500          --
 Inventories                                            6,074,110   8,447,237
 Prepaid  expenses  and  other                            230,451     137,471
      Total Current Assets                              8,050,874  10,218,660

Property and equipment, net of accumulated
   depreciation  and  amortization                        643,937     556,665

Other Assets:
 Organization costs, net of accumulated
      amortization                                         15,935      24,755
 Deposits                                                 233,996     137,415
 Other                                                         --      54,086

      Total  assets                                    $8,944,742 $10,991,581

Liabilities and Stockholders' Equity(Capital Deficit)

Current Liabilities:
  Current  portion  of notes  payable                  $3,973,457  $5,953,907
  Accounts   payable                                    2,943,401   3,216,146
  Accrued  provision  for closure of  International       692,985          --
  Accrued  other  expenses                                981,721     441,459
      Total  Current  Liabilities                       8,591,564   9,611,512

Notes  payable  less  current  portion                    338,613          --
Other                                                     103,758     103,758

      Total   Liabilities                               9,033,935   9,715,270

Commitments and Contingencies
Stockholders' Equity(Capital Deficit):
 Common stock, $.0001 par value;
     10,000,000  shares  authorized                           469          93
 Additional  paid-in  capital                           8,704,974   4,717,887
 Deficit                                               (8,794,636) (3,441,669)
    Total  Stockholders' Equity(Capital  Deficit)         (89,193)  1,276,311
                                                       $8,944,742 $10,991,581

  See accompanying notes to consolidated financial statements.

<PAGE>

                      INTILE DESIGNS, INC.
                CONSOLIDATED STATEMENTS OF LOSS


                                                          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

  See accompanying notes to consolidated financial statements.

<PAGE>

                      INTILE DESIGNS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(CAPITAL DEFICIT)
          For The Years Ended March 31, 1997 and 1996

                                             Additional   Retained
                              Common Stock    Paid-in     Earnings
                            Shares   Amount   Capital     (Deficit)   Total

Balance, at April 1, 1995  915,377   $ 92   $4,696,162   $1,017,231 $5,713,485

Additional issuance costs
  relating to issuance of
  common stock to acquire
  TCM Holdings                  --     --      (68,644)          --    (68,644)

Exercise of stock options   11,746      1       56,691           --     56,692

Issuance of common stock     6,101     --       33,678           --     33,678

Net loss (restated)             --     --           --   (4,458,900)(4,458,900)

Balance, at March
  31, 1996 (restated)      933,224     93    4,717,887   (3,441,669) 1,276,311

Issuance of common stock     2,347      1        5,069           --      5,070

Issuance of common stock 2,350,000    235    2,010,763           --  2,010,998

Conversion of notes payable
  to common stock        1,400,041    140    1,971,255           --  1,971,395

Net loss                        --     --           --   (5,352,967)(5,352,967)

Balance, at March
  31, 1997               4,685,612  $469    $8,704,974  $(8,794,636)  $(89,193)


  See accompanying notes to consolidated financial statements.

<PAGE>

                    INTILE DESIGNS, INC.
             CONSOLIDATED STATEMENTS OF CASH FLOWS

                 Increase (Decrease) in Cash

                                                          For the years
                                                          ended March 31,
                                                        1997          1996
                                                                   (Restated)
Cash flows from operating activities:
  Net loss                                         $(5,352,967)   $(4,458,900)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
    Depreciation  and  amortization                    293,985        150,720
    Noncash interest expense
      -  issuance  of  warrants                        575,937             --
    Equity in net loss of unconsolidated investee           --      3,169,419
    Provision  for  inventory  obsolescenc           1,707,398             --
    Loss on abandonment of leasehold improvements           --          7,236
    Bad   debt  expense                                256,557         93,597
    Deferred   taxes                                        --         77,000
    Changes in assets and liabilities:
      Accounts  receivable                             (67,039)       227,200
      Restricted  certificates  of  deposits          (192,500)            --
      Inventories                                      665,729        549,235
      Prepaid   expenses                              (190,933)       160,533
      Change  in  deposits and other  assets           (80,724)            --
      Accounts  payable  and  accrued  expenses        960,502       (766,202)
      Income  taxes  payable                                --        (32,373)
Net  cash  used  in  operating activities           (1,424,055)      (822,535)
Cash flows from investing activities:
  Purchase  of  equipment                             (236,255)      (311,795)
  Proceeds  from  disposition  of  assets                   --         25,000

Net  cash  used  in  investing activities             (236,255)      (286,795)
Cash flows from financing activities:
  Proceeds  from  debt  issuance                     1,918,677        168,000
  Payments  of  debt                                  (165,056)      (355,050)
  Borrowings  under  line  of  credit                       --      1,225,000
  Payments  on  line  of credit                     (2,000,000)      (105,000)
  Proceeds  from  issuance of  common  stock         2,016,068         33,678
  Exercise  of  stock  options                              --         56,692
  Issuance  costs  on acquisition  of  TCM                  --        (68,644)

Net  cash  provided  by  financing  activities       1,769,689        954,676

Net   increase  (decrease)  in  cash                   109,379       (154,654)
Cash,   beginning  of  year                             69,778        224,432
Cash,  end of year                                $    179,157    $    69,778


  See accompanying notes to consolidated financial statements.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1  -  ORGANIZATION  AND SUMMARY OF  SIGNIFICANT  ACCOUNTING
POLICIES

Business and Basis of Presentation

      The Company is a direct importer and distributor of foreign
ceramic  tile,  marble  and related home  design  products.   The
Company  is also a distributor of domestic ceramic tile,  marble,
swimming   pool  tile  and  other  related  home  design/building
products.   The Company's products are distributed to  a  diverse
and  varied retail and wholesale customer base through  ten  (10)
showroom/warehouse facilities and three (3) retail  showrooms  in
six  (6)  states.   Subsequent to March  31,  1997,  the  Company
elected to close two (2) showroom/warehouse facilities located in
California and Arizona.

      The  consolidated financial statements include the accounts
of Intile Designs, Inc. and its wholly owned subsidiaries, except
where   control  is  deemed  to  be  temporary  (Note  3).    All
significant  intercompany  accounts and  transactions  have  been
eliminated.

     The Company accrued additional property tax expense relating
to  an  underreporting of property tax values in fiscal 1997  and
earlier  years  (Note  11 - Contingencies).   A  portion  of  the
accrual  related to fiscal 1996. Accordingly, the 1996  financial
statements have been restated to reflect a charge to expense  and
an additional liability of approximately $213,000.

Revenue Recognition

      Revenue is recognized upon the sale of swimming pool brick,
ceramic  tile,  marble and related home design  products  and  is
recorded net of discounts and returns.

Inventories

     Inventories consisting of swimming pool brick, ceramic tile,
marble  and related home design products are stated at the  lower
of cost (first-in, first-out) or market.  Inventory costs include
freight and certain handling costs.

Restricted Certificates of Deposit

      Certificates  of  deposit with original maturities  greater
than  90  days are designated as collateral on certain letter  of
credit  and are reserved for such purpose.  Such investments  are
stated at cost, which approximates market.

Property and Equipment, Net

      Property and equipment are stated at cost.  Maintenance and
repairs are charged to expenses as incurred and expenditures  for
major  improvements and leasehold improvements  are  capitalized.
Depreciation  on  equipment is provided  using  the  straightline
method  over  the  estimated useful lives of  the  assets.    For
income tax purposes, depreciation on certain assets is calculated
using  accelerated methods.  Leasehold improvements are amortized
over  the  term  of the leases, not in excess of their  estimated
useful lives.

      The  Company reviews the carrying values of its  long-lived
assets  for  possible impairment whenever events  or  changes  in
circumstances indicate that the carrying amount of the assets may
not be recoverable.  The Company had no significant impairment of
long-lived assets for the year ended March 31, 1997 and 1996.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investment in TCM

      As  discussed  in Note 3, during the year ended  March  31,
1996, TCM entered into Chapter 7 bankruptcy proceedings under the
U.S.  Bankruptcy  Code.  In light of this  event,  the  Company's
control  over TCM is deemed to be temporary in nature.  Generally
Accepted  Accounting  Principles  do  not  permit  the   use   of
consolidation accounting in circumstances where the investor  has
temporary control over an investee.  Accordingly, effective April
1,  1995, the Company's investment in TCM is accounted for  using
the  equity method; therefore, the investment is carried at  cost
and  adjusted for the Company's proportionate share of profit  or
losses.

Organization Costs

      Organization  costs are amortized on a straight-line  basis
over five years.

Employee Stock Option Plan

      The  Company has elected to continue to account  for  stock
options  issued  to  employees in accordance  with  APB  No.  25.
Effective  for the fiscal year ended March 31, 1997, the  Company
was required to adopt the disclosure requirements of SFAS No. 123
-  "Accounting  for  Stock-based Compensation".   This  statement
requires  the  Company to provide proforma information  regarding
net  loss  and  loss per share as if compensation  cost  for  the
Company's  stock options granted to employees had been determined
in accordance with the fair value based method prescribed in SFAS
No.  123.   There  were no options granted for the  fiscal  years
ended  March  31, 1997 and 1996, therefore there is  no  proforma
effect.

Income Taxes

      For  federal  income  tax purposes,  the  Company  files  a
consolidated  tax  return, which includes the operations  of  its
divisions and subsidiaries.

      The  Company recognizes income tax expense (benefit)  using
the  asset and liability method of accounting for deferred income
taxes.   Deferred  tax assets or liabilities are  recorded  based
upon  the  future  tax consequences attributable  to  differences
between  the  tax  basis  of  assets and  liabilities  and  their
respective  carrying  value  for  financial  reporting  purposes.
Deferred  tax  assets and liabilities are measured using  enacted
tax rates expected to be recovered or settled.  The effect of tax
rate changes on deferred tax assets and liabilities is recognized
in income in the period of enactment.

      The  Company  adjusts  the deferred  tax  assets  valuation
allowance  based  on  judgment as to future  realization  of  the
deferred  tax  benefits supported by demonstrated trends  in  the
company's operating results.

Loss Per Share

      Loss  per  share  is calculated using the weighted  average
number  of  outstanding  shares of common and  common  equivalent
shares outstanding, including stock options which have a dilutive
effect.  The loss per share calculation for the year ended  March
31,  1996  has been adjusted to reflect the pro forma application
of the one-for-two reverse stock split effected on August 5, 1997
and  the one-for-three reverse stock split effected on March  31,
1997.   For the fiscal years ended March 31, 1997 and 1996, there
were no dilution effects from common stock equivalents.

<PAGE>

                      INTILE DESIGNS, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Instruments

      The  Company follows the guidance of Statement of Financial
Accounting  Standards  No.  107, "Disclosure  of  Fair  Value  of
Financial  Instruments," which requires the  disclosures  of  the
fair  value of the Company's financial instruments.  Some of  the
information  used  to  determine fair  value  is  subjective  and
judgmental in nature; therefore, fair value estimates  may  vary.
The amounts actually realized or paid upon settlement or maturity
could be significantly different.

      Unless  quoted market price indicates otherwise,  the  fair
values  of  cash,  certificates of deposit, accounts  receivable,
accounts payable and bank debt generally approximate market value
as  the underlying borrowing rates are similar to other financial
instruments with similar maturities and terms.

Year 2000 Plans

     The Company purchased a new computer system and software for
all  of  its  accounting  applications.   Implementation  of  the
conversion  to  the  new system is nearing completion.   The  new
system  and software has year 2000 processing capabilities  which
was  a  key  factor in the selection of these products.    As  of
March   31,   1997,  all  significant  costs   related   to   its
implementation  has been incurred or accrued, and  in  accordance
with  Emerging Issues Task Force issue 96-14 those costs  related
to year 2000 matters have been expensed as incurred.

Management's Estimates and Assumptions

      The  preparation of financial statements in conformity with
generally  accepted accounting principles requires management  to
make  estimates and assumptions that affect the reported  amounts
of assets and liabilities and disclosure of contingent assets and
liabilities  at  the  date of the financial  statements  and  the
reported  amounts  of revenues and expenses during  the  reported
periods.  Actual results could differ from these estimates.

New Accounting Pronouncements

      In  March  1997,  the Financial Accounting Standards  Board
issued  Statement  of  Financial Accounting  Standards  No.  128,
"Earnings Per Share" ("SFAS 128").  SFAS 128 provides a different
method  of calculating earnings per share than is currently  used
in  APB  Opinion  15.  SFAS 128 provides for the  calculation  of
basic  and diluted earnings per share.  Basic earnings per  share
includes no dilution and is computed by dividing income available
to  common stockholders by the weighted average number of  common
shares  outstanding for the period. Dilutive earnings  per  share
reflect the potential dilution of securities that could share  in
the  earnings  of  an entity, similar to existing  fully  diluted
earnings per share.  The Company is required to adopt SFAS 128 in
the  third quarter ended December 31, 1997.  Using the principles
set  forth in this standard, basic and diluted earnings per share
would not be materially different from that presented.

       Statement  of  Financial  Accounting  Standards  No.  129,
"Disclosure of Information about Capital Structure" ("SFAS  129")
is  effective  for  periods ending after December  15,  1997  and
establishes  standards  for  disclosing  information   about   an
entity's capital structure.  SFAS 129 requires disclosure of  the
pertinent rights and privileges of various securities outstanding
(stock,   options,   warrants,   preferred   stock,   debt    and
participating   rights)  including  dividend   and   liquidations
preferences,   participant  rights,  call   prices   and   dates,
conversion   or  exercise  prices  and  redemption  requirements.
Adoption  of  SFAS 129 will have no effect on the Company  as  it
currently discloses the information specified.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      In  June  1997,  the Financial Accounting  Standards  Board
issued  two  new  disclosure standards,  Statement  of  Financial
Accounting Standards (SFAS) 130, "Reporting Comprehensive Income"
and   SFAS   131,  "Disclosure  About  Segments  of  a   Business
Enterprise".   Both  of  these new standards  are  effective  for
financial  statements for periods beginning  after  December  15,
1997 and require comparative information for earlier years to  be
restated.   Management  does  not  anticipate  that  results   of
operations and financial position will be materially affected  by
implementation of these new standards.

      SFAS  130,  "Reporting Comprehensive  Income",  establishes
standards for reporting and display of comprehensive income,  its
components  and  accumulated balances.  Comprehensive  income  is
defined  to include all changes in equity except those  resulting
from  investments by owners and distributions to  owners.   Among
other  disclosures,  SFAS 130 requires that all  items  that  are
required  to be recognized under current accounting standards  as
components  of  comprehensive income be reported in  a  financial
statement  that  is displayed with the same prominence  as  other
financial statements.

       SFAS   131,  "Disclosure  about  Segments  of  a  Business
Enterprise", establishes standards for the way public enterprises
report  information about operating segments in annual  financial
statements  and requires reporting of selected information  about
operating segments in interim financial statements issued to  the
public.   It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS
131  defines  operating segments as components of  an  enterprise
about  which separate financial information is available that  is
evaluated  regularly  by the chief operating  decision  maker  in
deciding how to allocate resources and in assessing performance.

Reclassifications

     Certain 1996 balances have been reclassified to conform with
1997 financial statement presentations.

NOTE 2 - GOING CONCERN UNCERTAINTY

     The accompanying consolidated financial statements have been
prepared  assuming  that the Company will  continue  as  a  going
concern.  The Company has suffered significant losses during  the
fiscal  years  ended March 31, 1997 and 1996 and  has  a  capital
deficit at March 31, 1997.  The Company is not in compliance with
numerous  covenants of its bank financing agreement and the  bank
has  sent  a  Notice  of Claim and Demand for  Arbitration  dated
December 2, 1997.   Accordingly, there is substantial doubt about
the Company's ability to continue as a going concern.

      The  Company's management continues to seek private sources
of  capital  and alternative financing sources in an endeavor  to
alleviate the going concern uncertainty (Note 12).  There can  be
no assurance that these efforts will be successful.

NOTE 3 - BUSINESS  CLOSURES

TCM Holdings Corporation

      Due  to  recurring losses, the management of TCM (a  wholly
owned  subsidiary of the Company) elected in August 1995 to cease
operations  and to abandon all facilities other than the  central
warehouse.  Prior to the Company's acquisition of TCM stock,  TCM
had  confirmed  a Chapter 11 Plan of Reorganization  in  December
1994.  Pursuant to the terms of the plan, all property of TCM was
to vest in the reorganized entity emerging from

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

bankruptcy.   In  October 1995, the U.S. Trustee  petitioned  the
bankruptcy court to convert TCM's Chapter 11 filing to a  Chapter
7  under the U.S. Bankruptcy Code.  On November 7, 1995, the U.S.
Bankruptcy  Court,  District of Massachusetts,  Eastern  Division
converted  the  case into Chapter 7. The Company entered  into  a
consignment  agreement  with TCM and NationsBank  to  provide  an
orderly  liquidation of the bank's collateral through  the  sales
efforts  of  Global Tile Distributors, Inc. (Global),  a  wholly-
owned  subsidiary  of the Company.  Inventory  with  a  value  of
approximately $258,000 remains on hand as of March 31, 1997.  The
Company's  management  believes  that  the  liquidation  will  be
accomplished  with  no  significant  additional  losses  to   the
Company.    Management  believes  that  as  a   result   of   the
liquidation, the Company will recover some previously  recognized
losses since certain recorded liabilities are not anticipated  to
be paid by TCM's bankruptcy estate.

      The  Company  believes that the liquidation  value  of  the
assets  of TCM, as the reorganized entity, will be less than  the
value  of  the recorded liens against such assets, of  which  the
Company's  bank  is the primary lienholder.  Accordingly,  it  is
anticipated  that  the unsecured creditors  under  the  confirmed
plan,  or  otherwise,  will not receive  any  proceeds  from  the
Chapter 7 liquidation.  During the year ended March 31, 1996,  as
a  result of the bankruptcy filing, TCM wrote down certain assets
totaling  $2,280,791, which is included in the "Equity in  losses
of  investee". Although the Company has a 100% ownership interest
in  TCM,  its  control over TCM is considered to be temporary  in
nature   because  of  TCM's  Chapter  7  bankruptcy   proceeding.
Accordingly, the Company has accounted for its investment in  TCM
using  the  equity method in fiscal 1997 and 1996.  The following
is a summary of the financial position (excluding amounts payable
to  parent), net sales and loss for TCM for the years ended March
31, 1997 and 1996.

                                                         March 31,
                                                     1997           1996

      Current assets                             $  342,225    $   442,225
      Liabilities                                $  430,578    $   430,578
      Equity   (Deficit)                            (88,353)        11,647
                                                 $  342,225    $   442,225
      Sales                                      $       --    $ 1,643,495
      Net   loss                                 $ (100,000)   $(3,169,419)

      The net loss for fiscal 1996 includes a writedown of assets
totaling  $2,280,791  to  their net realizable  values  including
$150,000 to cover additional costs related to the closure of TCM.
The  net loss also includes the writeoff of goodwill relating  to
TCM.  The Company recorded an additional allowance for losses  in
unconsolidated Investee in the amount of $100,000 in  the  fiscal
year  ended March 31, 1997 that is included in cost of  sales  in
the accompanying statement of loss.

Intile Designs of Los Angeles, Inc. ("International")

      Due  to  recurring losses, management elected as of January
20,  1997 to cease operations of International and to abandon all
facilities.  An allowance for losses relating to International in
the  amount  of  $692,985 has been provided by a  charge  against
earnings  in  the fiscal year ended March 31, 1997.  Included  in
the allowance for losses is $532,118 for the net present value of
the remaining lease commitments.  A reserve against inventory has
also been provided in the amount of $268,905, and is included  in
cost  of  sales  in the fiscal year ended March  31,  1997.   The
charge  to  inventory reflects the full disposal of the inventory
in an auction in December, 1997.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - PROPERTY AND EQUIPMENT

     Property and equipment and their useful lives are summarized
as follows:
                                                            March 31,
                                                 Lives   1997        1996

     Leasehold  improvements                      3-5   $623,532   $625,398
     Furniture, fixtures and computer equipment     5    635,069    397,634
     Warehouse equipment                            5    328,133    327,447
     Tractor,  trucks, trailers and automobiles     3    156,446    156,446
     Turnstiles                                   3-5     46,940     46,940
                                                       1,790,120  1,553,865
     Accumulated depreciation and amortization        (1,146,183)  (997,200)
                                                        $643,937   $556,665

NOTE 5 - NOTES PAYABLE

   Notes payable consists of the following:
                                                              March 31,
                                                          1997        1996
 Bank line of credit of $6,000,000 with interest
  at prime plus 2.5% (10.75% at March 31, 1997);
  in default; originally due January 20, 1997;
  secured by inventory and accounts receivable
  and the limited personal guarantee of the
  Company's  former President                          $3,780,000  $5,820,000
 Unsecured note payable to a company, due in
  monthly installments of $25,000 plus interest
  at prime plus 3% (10.75% at March 31, 1997)
  in  default                                             100,000     100,000
 Unsecured private placement convertible notes
  payable, due July, 1999, interest at 14%,
  increasing 2% every six months with 18% maximum         200,000          --
 Other installment notes with interest rates of
  8% to 12.5%; due at various maturity dates;
  secured by transportation equipment                     232,070      33,907
                                                        4,312,070   5,953,907
 Current portion                                       (3,973,457) (5,953,907)
 Notes  payable less current portion                     $338,613      $   --

      The bank line of credit requires the maintenance of certain
financial  covenants. The Company is not in compliance  with  the
required  current, quick, leverage, tangible net  worth,  current
maturities and interest coverage ratios.  The bank has not waived
any of the covenant violations.  Furthermore, the bank has sent a
Notice  of  Claim  and Demand for Arbitration dated  December  2,
1997.   Effective  March 19, 1998 the bank  and  the  Company  in
anticipation of possible recapitalization efforts have agreed  to
a stay of the arbitration hearing.  The Company

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

cannot  predict  the  actions of the  bank;  however,  management
anticipates  that should recapitalization of the Company  not  be
concluded  within a reasonable period of time, a  new  Notice  of
Claim and Demand for Arbitration will be issued by the bank.

      The  unsecured private placement convertible notes  payable
("Notes"), due July 1999, were part of an original issue totaling
$1,600,000 and convertible into common stock at a rate  of  $1.00
per share. The investors were also issued warrants to purchase up
to   800,000  shares of the Company's common stock  at  $.25  per
share  and the underwriter was issued warrants to purchase up  to
80,000 shares at the same price.  Under the accounting provisions
of  Statement  of  Financial  Accounting  Standards  No.  123   -
"Accounting  for Stock-Based Compensation," a charge to  interest
expense of $571,395 has been made in fiscal 1997.  Notes  with  a
face amount of $1,400,000 were converted into common stock as  of
March 31, 1997, subsequent to the reverse stock split effected on
the same date (Note 10).  Notes in a face amount of $100,000 were
converted into common stock subsequent to March 31, 1997.

NOTE 6 - COMMITMENTS

      Future minimum lease payments under noncancelable operating
leases  expiring through 2002 for automobiles, office  space  and
office equipment for years ending March 31, are as follows:

                                                      Amount
        1998                                     $   893,396
        1999                                         641,607
        2000                                         386,445
        2001                                         110,751
        2002                                          35,000
                                                  $2,067,199

      Lease  expenses for all operating leases during  the  years
ended March 31, 1997 and 1996, were approximately $1,025,000  and
$1,645,000,  respectively.  In addition, the Company accrued  the
net  present values of leases on closed locations of $710,530  in
fiscal 1997.

NOTE 7 - INCOME TAXES

      The  provision for income taxes for the fiscal years  ended
March 31, 1997 and 1996 is summarized as follows:

                                                               March 31,
                                                           1997         1996
Current benefit:
      Federal  income  tax                              $     --    $(182,000)
      Deferred  federal  income  tax  expense                 --       77,000
          Total                                         $     --    $(105,000)

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      The  tax  effects  of  the principal temporary  differences
between  financial  reporting and income  tax  reporting  are  as
follows:

                                                              March 31,
                                                          1997         1996
 Current deferred tax asset:
   Capitalized inventory costs                          $391,000    $  34,000
   Inventory   reserve                                   581,000           --
   Receivable   allowance                                 89,000       50,000
                                                       1,061,000       84,000
 Less:  valuation  allowance                          (1,061,000)     (84,000)
 Net current deferred tax asset                         $     --    $      --
 Long-term deferred tax asset:
   Book/tax depreciation differences                    $ 18,000    $  11,000
   Investment  in  subsidiary                            270,000      270,000
   Issuance  costs  of  convertible  debt                220,000           --
   Reserve  for  closure  of  International              236,000           --
   Net  operating  loss  carryforwards                 1,241,000      840,000
                                                        1,985,000   1,121,000
 Less:  valuation  allowance                           (1,985,000) (1,121,000)
 Net long-term deferred tax asset                       $      --  $       --

      The  Company  has recorded a 100% valuation  allowance  for
fiscal  years  ended March 31, 1997 and 1996 on the deferred  tax
asset  since  it  could not be determined if the asset  was  more
likely than not to be realized.

      The  Company has available net operating loss carryforwards
of  $3,651,000 that will expire during 2011 (Note 12).

      For the year ended March 31, 1996, the Company was able  to
carryback $513,559 of its net operating losses, which resulted in
an income tax receivable of $150,000.

      The  provision for income taxes differs from the amount  of
income  tax  determined by applying the statutory federal  income
tax  rate  to  loss  before  income taxes  as  a  result  of  the
following:

                                                            March 31, 
                                                       1997          1996

   Federal   income  tax  statutory  rate         $(1,820,000)   $(1,320,000)
   Change   in   valuation   allowance              1,841,000      1,205,000
   Other                                              (21,000)        10,000
                                                  $        --    $  (105,000)

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - RELATED PARTY TRANSACTIONS

      The  Company has extended certain notes receivable  to  its
affiliates  and employees in the aggregate amount of $42,660  and
$46,900 at March 31, 1997 and 1996, respectively.

      The Company leases certain equipment from entities owned by
C. William Cox, former President of the Company.  Rental payments
under  the  leases were in the aggregate amounts of approximately
$20,000 and $17,000 for the fiscal years ended March 31, 1997 and
1996, respectively.

      Effective  January 1995, Mr. Cox, former President  of  the
Company, provided his limited personal guarantee on the Company's
bank  line of credit up to $1,000,000.  In consideration of  this
guarantee,  the  Company paid fees to Mr. Cox in the  amounts  of
$12,000  in  each of the fiscal years ended March  31,  1997  and
1996. Such fees were charged to interest expense.

      Mr. Ehud D. Laska, a former Director of the Company is  the
Chairman of Coleman and Company Securities, Inc. (Coleman).   Mr.
Laska  resigned  as a Director effective January  20,  1997.   On
August  23, 1996, Coleman acted as placement agent in  a  private
placement  of  $1,600,000 of Convertible Notes of  which  Mr.  C.
William  Cox, former President of the Company, purchased $100,000
of  the  Notes  (Note  10).  Mr. Cox also  received  warrants  to
purchase  up  to 50,000 shares of the Company's common  stock  at
$.25 per share and Coleman was issued warrants to purchase up  to
80,000  shares  at  the  same price.  Coleman  received  for  its
services a fee of 10% of the proceeds of the placement and a non-
accountable  expense reimbursement of 3% of the proceeds  of  the
placement.   Total costs of the placement paid  to  Coleman  were
approximately $223,000.

      On January 31, 1997, Coleman acted as placement agent in  a
private  placement of up to 47 Units (the "Units") at a price  of
$50,000  per  Unit  (Note 10).  Each Unit  consisted  of  150,000
shares of the Company's common stock.  As of March 31, 1997,  all
of  the  Units  were  sold of which Mr. Cox purchased  one  Unit.
Total  costs  of the placement paid to Coleman were approximately
$305,500.

NOTE 9 - STOCK OPTION PLAN

      The  Company  has non-qualified stock option plans  whereby
selected  employees and non-employees under contract are eligible
for  non-qualified stock options.  Under the plans,  the  company
may  grant options for up to 60,307 shares of common stock.   The
maximum  term of the options is three (3) years and  they  become
fully vested and exercisable on the expiration date.

      All options granted during the fiscal years ended March 31,
1996 and 1997 were forfeited, cancelled or not ultimately issued;
therefore, no compensation cost was charged to operations for the
applicable fiscal years.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Following  is  a summary of the status of the non-qualified
stock  option plans during fiscal 1996 and 1997 (All shares  have
been restated to reflect the reverse stock splits and stock split
in fiscal 1997 and 1996):

                                                       Weighted
                                                        Average
                                          Number of    Exercise
                                           Shares        Price

   Options outstanding, April 1, 1995      66,718       $ 6.90

   Granted                                     --           --
   Exercised                              (11,746)        4.50
   Forfeited                              (54,972)        4.48

   Options outstanding, March 31, 1996         --       $ 0.00

NOTE 10 - COMMON STOCK

     On May 1, 1995, the Company authorized a 2 for 1 stock split
that  was  effected  in the form of a 100% stock  dividend.   All
share information reflects this transaction.

      On  August  5,  1996, the Company authorized a  one-for-two
reverse stock split.  Shareholders received one new share of  the
Company's  common stock for each two shares they then held.   All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  March  31, 1997, the Company authorized a one-for-three
reverse stock split.  Shareholders received one new share of  the
Company's common stock for each three shares they then held.  All
share information has been retroactively restated to reflect  the
reverse stock split.

      On  August  23,  1997,  the Company  issued  $1,600,000  of
convertible  notes payable with private investors (Note  8)  that
resulted  in  net  proceeds  of  $1,347,272.   The  Company  paid
$1,000,000 from the proceeds to the Company's primary lender  and
the  balance was retained for working capital.  The holders  were
issued  warrants  to  purchase  up  to   800,000  shares  of  the
Company's  common stock at $.25 per share and Coleman was  issued
warrants  to purchase up to 80,000 shares at the same price.   As
of  March  31,  1997,  notes  in the amount  of  $1,400,000  were
converted  into 1,400,041 shares of the Company's  common  stock.
Each holder retains the warrants associated with the Notes.   The
conversion  of  the  Notes into shares of common  stock  occurred
subsequent to the one-for-three reverse stock split on March  31,
1997.

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      On March 31, 1997, the Company sold 47 Units at a price  of
$50,000 per Unit (Note 8).  Each Unit consisted of 50,000  shares
of the Company's common stock totaling 2,350,000 shares of common
stock.  The sale of the common stock occurred subsequent  to  the
one-for-three reverse stock split on March 31, 1997.  The Company
received  net proceeds of $2,010,998 from the sale of the  common
stock  of  which  $1,000,000 was paid to  the  Company's  primary
lender and the balance was retained in working capital.

       The  Company  has  issued  various  common  stock  warrant
agreements entitling the holders to acquire the Company's  common
stock.  There are 952,820 warrants outstanding at March 31,  1997
and all warrants are exercisable.

     The fair value of each warrant issued during fiscal 1996 and
1997  is  estimated  on  the issue date using  the  Black-Scholes
model.   The  following assumptions were made in estimating  fair
value:

        Dividend yield             0.0%
        Risk-free interest rate    6.8%
        Expected life              3.5yrs
        Expected volatility      120.0%

      Under  the accounting provisions of Statement of  Financial
Accounting  Standards  No.  123  -  "Accounting  for  Stock-Based
Compensation", a charge to interest expense of $571,395 has  been
made in fiscal 1997.

      Following is a summary of the status of the warrants during
fiscal  1996 and 1997 (All shares have been restated  to  reflect
the reverse stock splits in fiscal 1997):

                                                        Weighted
                                                         Average
                                           Number of    Exercise
                                            Shares       Price

   Warrants outstanding, April 1, 1995      72,820      $ 15.96

   Granted                                      --           --
   Exercised                                    --           --
   Forfeited                                    --           --

   Warrants outstanding, March 31, 1996     72,820        15.96

   Granted                                 880,000          .25
   Exercised                                    --           --
   Forfeited                                    --           --

   Warrants outstanding, March 31, 1997    952,820      $  1.45

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      Following  is  a  summary of the status of  fixed  warrants
outstanding at March 31, 1997.

                                      Weighted
                                       Average     Weighted
                        Number        Remaining     Average
        Exercise      Issued and     Contractual   Exercise
       Price Range    Exercisable       Life         Price

        $   .25         880,000        6 years      $   .25
     $19.50-$19.80       72,820        6 years      $ 15.76
     $  .25-$19.80      952,820        6 years      $  1.44

NOTE 11 - CONTINGENCIES

      The  Company  is a defendant in various lawsuits  resulting
from  disputes  arising  in the day-to-day  operations  to  which
management believes the outcome based upon information  currently
available,  in  the aggregate, would not have a material  adverse
effect on the Company's financial position, results or operations
or cash flows.

     A  subsidiary  of  the  Company (TCM) filed  for  Chapter  7
Bankruptcy  during August 1995.  As discussed in  Note  1,  TCM's
commitments  and obligations are not included in the accompanying
financial  statements as of March 31, 1997 and 1996.   Management
believes  that  the  Company will not be  responsible  for  TCM's
commitments  or  any potential outstanding liabilities  that  may
arise.

      Subsequent  to  year-end,  the Company  became  aware  that
property taxes were underpaid by an amount which was material, in
the  aggregate,  to the financial position of the  Company.   The
underpayment  was the result of the underreporting  of  inventory
and  personal property values on the personal property renditions
filed  annually  with the respective county appraisal  districts.
The  underreporting has occurred for at least seven (7) years and
involves  the  locations in Houston, Corpus Christi,  Dallas  and
Austin,  Texas and Atlanta, Georgia.  The Company has  negotiated
settlements  of  reporting  value with the  applicable  appraisal
districts  having  jurisdiction over each  taxed  location.   The
Houston settlement is limited to a two (2) year lookback and  the
taxing authorities in the various other jurisdictions have either
followed  the precedent established in the Houston settlement  or
elected to not assess the Company for prior year underpayments of
property taxes.  The financial statements herein reflect a charge
to  expense  of approximately $127,000 for the fiscal year  ended
March  31,  1997  and  a  restated charge to  expense  to  accrue
additional personal property taxes of approximately $213,000  for
the  fiscal  year ended March 31, 1996.  Management believes  the
charges to operating results in fiscal years ended March 31, 1997
and 1996 adequately reflects the assessments, penalties, interest
and fees to be paid.

     During March 1997, the Company entered into four (4) letters
of   credit  agreements totaling  approximately  $190,000.   The
letters   of   credit,   which  mature   September   1997,   are
collateralized by the restricted certificates of   deposit  (Note
1).

<PAGE>

                      INTILE DESIGNS, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - SUBSEQUENT EVENTS

      On  or about July 31, 1997, stockholders holding a majority
of  the  issued  and  outstanding common  stock  of  the  Company
executed written consents pursuant to section 228 of the  General
Corporation  Law  of  Delaware for the  purpose  of  removing  C.
William Cox, Edward Paul and Walter Rae, as current directors  of
the  Company.  This action was taken in response to the  property
tax  matters disclosed in Note 11 above and also disclosed in the
Company's Form 8-K filings dated July 22 and August 1, 1997.  The
shareholders then elected new directors who executed a  unanimous
written  consent  removing the President  and  Secretary  of  the
Company  and  electing  a  new President  and  Secretary  of  the
Company.

      As  of   November 30, 1997, the Company closed its  Phoenix
location  and  as  of December 31, 1997, the Company  closed  its
Anaheim location due to unacceptable results of operations.

     On April 2, 1998, the Company announced that it has signed a
Letter of Intent ("LOI"), to sell 25,000,000 new shares of Intile
Common   Stock  for  $2,000,000,  in  cash,  to  Energy  Drilling
Industries,   Inc.   ("EDII").   The  purchase   will   represent
approximately 82% of the then issued shares of common stock.  The
LOI is subject to certain conditions, including due diligence  by
both  parties,  amendment of the Company's charter  to  authorize
additional shares of common stock, and preparation and  execution
of  definitive agreements.  The proceeds of the sale will be used
in  the restructuring of the bank debt on terms more favorable to
the  Company.   One significant condition to the  transaction  is
negotiating  those terms with the Company's bank  in  advance  of
closing.   EDII  is a holding company headquartered  in  Houston,
Texas   with   diverse  interests  in  five  industry   segments:
industrial,   financial,   oil   and   gas,   real   estate   and
entertainment.  Management anticipates, depending upon the  final
terms of the definitive agreement, a potential gain of as much as
$1,600,000  that  will be offset by available tax  net  operating
loss  carryforwards.  However, under regulation 382 the remaining
unused  net operating losses available for offset against taxable
income will be significantly limited in future tax years.

NOTE 13 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

                                                       March 31,
                                                   1997         1996

     Interest   paid                             $747,330     $452,993

     During the year ended March 31, 1997,
     non-cash financing activities were as follows:

     Conversion of subordinated debt to
      common stock                             $1,400,000