United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
TMI Holding Corporation
(Name of small business issuer in its charter)
Utah "applied for"
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2801 Brandt Avenue, Nampa, Idaho 83687
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (208)-463-0063 Fax: (208)-463-7601
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
N/A N/A
Securities registered under 12(g) of the Exchange Act:
COMMON STOCK
<PAGE>
INFORMATION REQUIRED IN REGISTRATION
STATEMENT
Part I
Item 1. Description of Business.
TMI Holding Corporation ("TMI") was incorporated December 21,1999, under
the laws of the State of Utah, for the initial purpose of holding records and
documents of historical production from oil and gas wells (which would need to
be rehabilitated and/or restored to production) related to the "Altus Field
Rehabilitation Project" (approximately 1450 acres of oil and gas leases located
in Jackson County, Oklahoma), and to engage in any other lawful business. The
records and documents assets resulted from earlier oil and gas exploration and
development projects by Temple Mountain Industries, Inc.a Utah corporation, and
were acquired in exchange for 2,789,500 shares of TMI common stock, which was
distributed to all of Temple Mountain Industries, Inc. stockholders of record on
December 31, 1999, proportionately, as a partial liquidating dividend.
TMI entered into an Agreement and Plan of Reorganization with Environmental
Oil Processing Technology, Inc., an Idaho corporation, ("EOPT"), and the
stockholders of EOPT effective February 7, 2000, as a result of which TMI agreed
to acquire all of the outstanding stock of EOPT, and as of the date of February
14, 2000, has acquired in excess of 80% of the outstanding common stock of EOPT.
Management of TMI presently intends that its sole business activity is to be the
holding parent of EOPT and to continue the business operations of EOPT.
EOPT Business. EOPT is an Idaho corporation with offices and plant located
at 2801 Brandt Avenue, Nampa, Idaho 83687. The location is approximately 16
miles West of Boise, Idaho. The primary business of the Company is to design,
fabricate and market processing plants that will re-refine waste lubricating oil
into petroleum products naphtha (gasoline) and diesel for fuel to power motors,
and residuum to be used in asphalt products and as burner fuel. The on site
pilot plant started test operations in December of 1999 and is presently
refining used motor lubricating oil as designed. Management intends to operate
the present processing plant as a pilot project, and to fabricate additional
plants to lease and license nationally and internationally, on customer order.
Ancillary to the processing plant and in order to develop a feed source of used
lubricating oil, the Company, and its predecessors, have developed a used
lubricating oil gathering and collecting system which it has been operating
since 1994.
Management's intent and the design of the processing plant is to produce useful
petroleum based products from used motor lubricating oil that is now considered
an environmental problem in most parts of the developed world. The resulting
petroleum products will (a) fuel diesel and gasoline engines, (b) provide burner
fuel to generate heat for many applications including the
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production of electrical energy in co-generating systems, (c) add usable
ingredients to different asphalt applications, and (d) eliminate any
environmental hazard from the accumulation and processing of used lubricating
oil. Management intends to lease and license fabricated plants to customers who
are located in both in the continental United States and in foreign countries
who have access to used lubricating oil. To assist in the fabrication and
installation of new plants, the Company acquired Project Development Industries,
L.L.C., ("PDI") a project development firm located in Denver, Colorado, who is
internationally known for their expertise in the gasoline production and
refining industries. (See "Development Subsidiary: Project Development
Industries, LLC ("PDI") page 6). The Company has been approached by several
continental and international firms who have expressed interest in leasing and
licensing the processing plant once the production of petroleum products is
demonstrated. The operation of the pilot plant is in its preliminary and testing
stages, and presently Management cannot guarantee that the plant will
successfully operate and produce, on a continuous long term basis, the petroleum
products that it is designed to refine, however, Management has retained who it
believes are the most experienced independent specialists and engineers in the
oil refining industry to design and assist in the operation of the processing
system and at the present time Management is not aware of any reason that the
plant will not be successful on a continuous basis.
History of Business: EOPT's initial predecessor in business, Environmental
Oil Services Company, LLC, was organized and financed in 1994 for the purpose of
(i) locating in Southwestern Idaho a processing plant for processing used
lubricating oil, and (ii) establishing a gathering system to generate the used
oil feed for such a plant, with the intent of re-refining the used lubricating
oil into marketable petroleum products. In 1994 the said predecessor company (i)
purchased four vacuum tank trucks, installed a tank farm to contain, separate
and circulate the used oil and began gathering used oil throughout southern
Idaho, eastern Oregon and eastern Washington, and (ii) purchased a processing
plant from a manufacturing company in the East, which was installed at the
present location. Notwithstanding several weeks of continuous efforts by the
manufacturer and the predecessor company, the plant was unable to perform
according to the manufacturer's claims, and, after months of effort and
experimentation, and evaluation by petroleum engineers, the refining plant was
demolished and removed. While considering alternatives for a processing plant,
and in order to maintain its sources for used lubricating oil, the predecessor
company continued the waste oil gathering business, and marketed the oil to
local and coastal used-oil consumers, even though operating at a loss.
In early 1995 the predecessor company retained Jacobs Engineering Group in
Denver, Colorado, to design and develop a plant to process and re-refine used
lubricating oil into petroleum products. Following Jacob's design and subsequent
"on site" construction inspections, the predecessor company constructed the
presently existing processing plant compliant with all EPA and other
governmental regulations. The plant conducted initial test runs in April and May
of 1997, and established that the production of naphtha, diesel and other
by-products was feasible. After evaluating the estimated cost of completing and
implementing the post- refinement process equipment for producing diesel fuel
meeting road specifications, along with
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the market potential at that time, the then current management elected to
discontinue the completion of the plant.
In December of 1997, the predecessor company Environmental Oil Services,
Inc., ("EOS") organized and owned by Mr. N. Tod Tripple, acquired all of the
existing business of Environmental Oil Services Company, LLC, with the issuance
of its stock. During the calendar year 1998, EOS continued the business
activities of the predecessor Environmental Oil Services Company, including the
gathering of used lubricating oil and the handling of related hazardous waste
materials, and continued the evaluation of the processing plant with the intent
of producing marketable petroleum products. In March of 1999 EOS merged with
EOPT, (also principally owned by N. Tod Tripple) the Company, that is presently
operating the business and completing the processing plant.
Presently the processing plant is a fully "permitted plant" meeting all the
requirements of the EPA and all Federal and Sate air quality requirements and
all other governmental agencies. The final operating procedures are under the
supervision of Project Development Industries, L.L.C., a wholly owned subsidiary
of the Company ("PDI").
Description of Current Business. The Company currently continues to gather
used lubricating oil, and has expanded the gathering to include used oil
filters, collecting waste water for treatment, and collecting antifreeze for
recycling through other processors. The gathering system operates in the
geographical areas commonly known as southwestern and southeastern Idaho, the
tri-cities area of eastern Washington, and eastern Oregon. Presently the Company
gathers in excess of 2,300,000 gallons of used-oil annually, and maintains in
storage in excess of 800,000 gallons of waste oil for inventory of feed fuel for
the anticipated operation of the processing plant. The used oil that is gathered
is cleaned, dewatered, and resold to customers who are able to burn clean
used-oil, namely asphalt manufacturing plants and other remote construction
products manufacturers who require heat in their production processes, and some
fuel has been marketed to western coastal areas for use as bunker fuel in the
ocean shipping industry. In October of 1999, the Company completed the
installation of a reconditioned water cleaning plant to purify the water from
the processing plant operation, as well as other contaminated water collected
from customers for treatment. The treated water is then of a quality acceptable
for introduction into the local sewer system.
The present intent of management is to complete the testing of the plant
and be operational by the end March, 2000. The plant is designed to refine in
excess of 5,000,000 gallons of used-oil annually, and to produce in excess of
3,500,000 gallons of naphtha, diesel and residuum (burner) fuels. The plant uses
the non liquid gasses that are produced in the process of refining for the
purposes of generating the heat required in operating the processing plant. In
the event and at such time as the processing plant is operational, the Company
will commence expanding its gathering system and enter into arrangements to
acquire used motor lubricating oil from other commercial gatherers. Management
is of the present opinion that it will be able to acquire the additional feed
oil necessary to operate the processing plant on a full time basis,
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which is approximately eleven months out of the year.
Re-refining Plant Description. The process plant is designed to re-refine
used lubricating oil into naphtha, diesel fuel, and a residuum product. The used
oil which feeds the processing plant is primarily used motor oil with some
lubricating and hydraulic oils. The plant operating parameters can be adjusted,
to some extent, to handle other waste hydrocarbons.
Used lubricating oil is collected from various used-oil generators (collectors)
and delivered by vacuum tank trucks to the Tank Farm storage tanks which are
located adjacent to the processing plant. The collected oil is dewatered by
heating and chemical treatment, and blended with other stored used oil to make a
consistent source of feed, and once the water content is below 1%, the feed oil
can be delivered to the processing plant. Contaminated water that is picked up,
excess water from the waste oil, and the water generated from the processing
plant is processed through the water treatment unit to remove all hydrocarbons
and metals so that it can be discharged into the municipal sewer system.
In the process plant the used oil is refined by heating it in a gas-fired
furnace to a prescribed temperature to induce thermal cracking. The hot oil is
then directed to a "fractionating column" where the naphtha, diesel and residuum
products separate and are bled off into separate lines and containers.
In the fractionating column,
1. naphtha is vaporized and drawn off the top of the column along with the
light hydrocarbon gases formed during the cracking process. The naphtha is
then passed through an air cooler to condense the naphtha. Part of the
naphtha stream is used as reflux for the column, and the rest is stabilized
to reach the desired vapor pressure by heating it in a reboiler to remove
any entrained light ends. The stabilized naphtha is then cooled in an air
cooler and routed to product storage. The light hydrocarbon gases that do
not condense in the column overhead air cooler, are combined with the
hydrocarbon gases that come out of the stabilized naphtha. These
hydrocarbon gases are used as fuel gas for the cracking furnace, and any
excess gas is burned in the flare.
2. Diesel is drawn off the column as a liquid side stream from a tray near the
middle of the fractionating column, which is then cooled in an air cooler
and routed to product storage. Some of the heat in this stream is recovered
by using it as the heat source in the naphtha reboiler. The diesel that is
refined is "off-road" diesel, meaning that it does not meet the regulations
for road travel, but is usable in all off-road diesel equipment.
3. The fractionater column "bottoms" are made up of residuum and unconverted
gas oil. The gas oil is separated from the residuum in a vacuum flash
separator in which the gas oil is vaporized. The residuum, which remains a
liquid, is cooled in an air cooler and then routed to product storage to be
marketed principally to asphalt companies. The gas oil vapor is condensed
in an air cooler and recycled to the front end of the process where it is
combined with the fresh feed oil. This recycling maximizes process
efficiency and
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enables complete conversion of the oil into the various by products.
Development Subsidiary: Project Development Industries, LLC ("PDI").
In August, 1999, The Company acquired PDI, a wholly owned subsidiary as a
Colorado limited liability company, who is a development firm located at 555
Zang Street, Suite 302, Lakewood, Colorado, 80228.
PDI is a full services development company which includes engineering,
design, procurement, fabrication and installation services. The core staff
generally ranges between 25 and 30 employees including 6 engineers (depending on
the contracted work). The remaining employees are designers, estimating &
installation personnel, staff, management and supervisory personnel. PDI
specializes in processing, compression, storage and transportation facilities
for the oil refining/natural gas, pipeline, chemical, mineral, and power
generation industries. Their experience includes block mounted, skid mounted,
and offshore facilities, and compliance with environmental and regulatory
requirements of OSHA, PSM, HAZOP, Clear Air Act, environmental assessments and
permitting. Grayson M. Evans is the CEO and President of PDI.
The purchase was consummated with 3,500,000 shares of common stock and a
promissory note in the amount of $6,000,000 payable $2,000,000 each year
commencing in March of 2000, provided that the annual payment is reduced by the
percentage that PDI does not generate $600,000 in profits for the preceding 12
months. The overall purchase price is reduced by the percentage that PDI fails
to generate profits of $1,800,000 during the preceding 36 months on the due date
of the third anniversary payment.
Item 2. Management's Discussion and Analysis or Plan of Operation
Management's present plan is to (i) complete the testing of the processing
plant and continue operating the processing plant and the used oil gathering
system as a Research and Development facility, and (ii) immediately commence
marketing and fabricating additional processing plants to lease and license to
users nationally and internationally. At such time as a commitment is made for a
processing plant, PDI will supervise essentially all of the preliminary site
work, design, fabrication, installation of the plant, and supervision of the
personnel who will be responsible for operating the plant.
Management is of the opinion that it has the cash resources to meet
operating expenses for the next three months, by which time Management
anticipates that the processing plant will be operating at full capacity. When
operating at full capacity, Management's present projections establish that the
revenues generated will carry the operations of the Company, and that no
additional capital will be required for the pilot plant.
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Operations as of year end May 31, 1998, reflected sales of used oil and
services of approximately $280,000 against a cost of sales of approximately
$545,000, and a total loss for the year of $1,040,340. when all other expenses
associated with refitting the processing plant were included. By year end May
31, 1999, Management was able to increase revenues to approximately $319,000,
and decrease the cost of sales, so that there was a gross margin from operations
of approximately $51,000. When all other expenses were considered, including the
work on the processing plant, the total loss for the Company was approximately
$439,000 at year end May 31, 1999. At such time as the Company begins marketing
the plant petroleum products, its revenues will substantially increase and
Management anticipates the plant operations will be profitable.
The design estimates of the processing plant are that the plant will
process approximately 460,000 gallons of feed oil per month, and will result in
approximately 345,000 gallons of petroleum product including an estimated
210,000 gallons of "off-road" diesel), 94,500 gallons of naphtha (gasoline), and
45,500 gallons of residuum (asphalt additives, burner fuel, etc.). The market
price of such products fluctuates during the year, and is dependent on many
factors beyond the control of Management. Based on a projected per gallon
average of $0.759 for diesel, $0.871 for gasoline, and $0.19 for residuum, the
revenues are estimated at $246,376 per month. The cost of feed oil and operation
of the plant are estimated at $129,480 which results in a projected monthly
before tax profit of approximately $116,896. The foregoing production estimates
are design estimates only and the projected sales revenues are only present
estimates of future market values, and Management cannot assure that the actual
results will meet, fall below, or exceed the design estimates and market
projections.
If design estimates are attained in the operation of the process plant, and
projected revenues are realized, it becomes obvious that the operation of the
present R& D pilot plant will not generate sufficient profit by itself to absorb
the investment and losses since the inception of the Company, and that only
through the sale of additional processing plants will there be sufficient
profits to generate a significant return to investors in the Company. Management
is of the opinion that if the process plant approaches the design estimates in
actual operation, there will be sufficient sales and leases of the process
plants to generate the profits required to realize a profitable return to
investors.
Losses through November for the current year are at an increased rate over
the year ended May 31, 1999, as a result of the additional expense in finalizing
all preparations for start- up of the plant and the training of personnel.
Management does not expect that revenues from the operation of the process plant
will result in a profit for the fiscal year ended May 31, 2000. However, if the
plant is successful in meeting its design objectives, Management anticipates
that revenues from sales and leases of the plants and technology will result in
a profit by the end of the fiscal year May 31, 2000.
The financial success and potential of the Company is tied to fabricating
and marketing additional processing plants from which the Company will receive
lease and licensing fees and
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revenues. In response to requests from potential users of a processing plant,
Management has prepared and published an estimated price list which quotes a
price of $6,557,610 for a domestic Model 600 Unit and $7,242,242 for the
domestic Model 1600. The Design Flow Rate is 365 BPD, for the Model 600, and 914
BPD for the Model 1600. Prices for the same units in foreign countries are
priced approximately 13% higher. Several companies have responded to the
announcement of the processing plant operation, and prospective purchasers will
be invited to see the pilot plant commencing in February of 2000.
The principal risks which Management presently recognizes are (i) whether
or not the processing plant will operate at design capacity, which should be
determined by mid calendar year 2000, (ii) whether or not there are inherent
mechanical problems in the plant that may affect production, (iii) whether or
not the product from the processing plant will be marketed at the estimated
prices in order to make the plant profitable and (iv) whether or not the
processing plant will be marketed at the announced prices. Management is of the
present opinion that the processing plant will operate at full capacity, that if
there are any mechanical problems, they will be temporary in nature, and that
there exists sufficient demand so that production from the plant will be
marketed to customers at market rates. Based on comments made by entities who
are being invited to view the operation of the processing plant, Management is
optimistic that deposits will be received by the end of the second fiscal
quarter for at least two processing plants.
Item 3. Description of Property
The Company's administrative offices, oil gathering headquarters, tank farm
and processing plant including ancillary structures, are located on Company
owned property at 2801 Brandt Avenue, Nampa, Idaho, 83687. Nampa is located
about 16 miles West of Boise, Idaho.
In stock recapitalization transactions the Company acquired the property,
buildings and other improvements, tank farm, vacuum tank trucks, office
facilities and waste oil processing plant from predecessor companies who
originally purchased the bare ground and constructed all of the improvements,
tank farm, processing plant, and all ancillary buildings and improvements.
The properties include:
a. The real property consists of 6.09 acres of industrial zoned property
in three industrial lots, with all of the improvements constructed and
presently contained on two of the lots, and the other is unimproved.
There presently remains a purchase money deed of trust in the amount
of $91,635 due the Nampa Industrial Corporation.
b. The administration building includes approximately 3300 square feet
with approximately 1800 square feet of office space on two floors, and
approximately 1400 square feet of shop and warehouse area for storage
and inventory of parts
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and equipment.
c. The tank farm consists of a concrete floor area and retaining walls to
control any spillage, and now has 25 metal storage tanks, together
with piping, pumps and controls for circulating the contents of the
tanks. The present storage area of the tanks is approximately 477,769
gallons and will be used to contain and store used oil, water, diesel,
naphtha, and residuum.
d. The processing plant is the Company's Model 600, which has a design
flow rate of approximately 365 BPD (approximately 15,370 gallons per
day), and is known in the industry as a "thermal cracking vacuum
distillation process plant".
e. The Company's rolling stock (trucks and trailers) consists of four
10-wheeler vacuum trucks, two transport trucks and trailers, one dump
truck and one cargo truck
f. The Company has under lease 5 additional storage tanks located in
different parts of the service area to facilitate the gathering and
storing of waste oil. Four of the tank leases are on a month to month
rental, and the fifth is under a one year extension which expires in
October of 2000. The monthly cost of such tanks is $2,475.
EOPT currently employs 26 full time employees consisting of management, plant
operators, truck drivers, and office personnel.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the shares of common stock of TMI beneficially
owned by (i) each director of the Company, (ii) all officers and directors as a
group, and (iii) each person known by the Company to beneficially own 5% or more
of the outstanding shares of the Company's common stock. "The percentages are
effective upon the exchange of all of the outstanding stock of EOPT."
<TABLE>
<CAPTION>
Name and Address Amount & Nature
of Beneficial Owner of Benef. Owner Catagory Percent
------------------- --------------- -------- -------
<S> <C> <C> <C>
Grayson Evans 3,500,000 Director 10%
555 Zang St, Suite, #302
Lakewood, CO 80228
N. Tod Tripple 6,294,348 Director, Officer 18%
2801 Brandt Ave
Nampa, Idaho 83687
Leo B. (Tony) Tripple 5,722,661 Director 16%
2801 Brandt Ave
Nampa, Idaho 83687
Officers and Directors as a 15,517,009 44%
Group
</TABLE>
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
<TABLE>
<CAPTION>
Name Age Position Date Appointed
----- --- -------- --------------
<S> <C> <C>
Norvin T. (Tod) Tripple Director, President and CEO February14, 2000
Leo B. (Tony) Tripple Director and Vice Pres. February 14, 2000
Marilyn J. Tripple Secretary February 14, 2000
Grayson M. Evans Director February 14, 2000
</TABLE>
The directors of the Company are elected to serve until the next annual
shareholder's meeting or until their respective successors are elected and
qualified. Officers of the Company hold office until the meeting of the Board of
Directors after the next annual shareholders's meeting or until removal by the
Board of Directors. There are no arrangements or understandings among the
Officers and Directors pursuant to which any of them were elected as Officers
and Directors.
Family Relationships:
Tod Tripple and Marilyn Tripple are husband and wife, and Tod Tripple and
Tony Tripple are brothers. .
Business Experience of Officers and Directors:
Norvin T. (Tod) Tripple. Mr. Tod Tripple has been in senior management of the
Company and its predecessors since the latter part of 1994, and has been the
President and CEO of the Company and it immediate predecessor since December
1997. He was Idaho Division Sales Manager for Harbor Oil of Portland from
1992-1994, and President of Touch Technologies, Inc. from 1984-1992.
Leo B. (Tony) Tripple. Mr. Tony Tripple is Vice President and CFO of the Company
and its predecessor effective September of 1999. He was comptroller of Graphic
Arts Publishing of Boise from January 1999 to September 1999. He had a leave of
absence for illness from November 1994 to January of 1999. Mr. Tripple served as
President and CEO of predecessor Environmental Oil Services Company, LLC from
December 1993 to November 1994, and was President of Harbor Oil Co. in Portland
from January 1992 to February 1993. Mr. Tripple is a Certified Public
Accountant, and graduated from BYU with a BS degree in 1965.
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Marilyn J. Tripple . Mrs. Tripple has served as Office Manager and Executive
Secretaryfor the Company and its predecessors since inception in 1994.
Previously she was Office Manager and Secretary for Rangen's, Buhl, Idaho
1993-1994, and for H & A Land & Cattle, Inc., of Dietrich, Idaho from 1988
- -1993.
Grayson M. Evans. Mr. Evans is the Founder, President, and primary owner of
Project Development Industries, LLC (PDI) since September of 1993. He was Vice
President of Engr & Des. For BEI Engineers/Constructors from 1989 - 1992, and
Founder, Presdent and Owner of GE Designs, Inc. from 1984 - 1989. Mr. Evans has
extensive experience since 1967 in engineering, design, fabrication and
construction of oil and gas related facilities and projects including offshore
platforms and other production facilities. His responsibilities included
overseeing projects and the supervision at times of over 100 employees. PDI
specializes in new, modified and refurbished skidded hydrocarbon processing
facilties for applications in both the USA and foreign markets. PDI utilizes
computer engineering and Auto-Cad computer drafting capabilities in all
disciplines.
Item 6. Executive Compensation.
The financial statements do not reflect any executive compensation for N.
Tod Tripple for the fiscal year ended May 31, 1999, nor is there any executive
compensation established for the current year for Mr. Tripple. There has been
cash flow to Mr. Tripple, as required for personal living expenses, and for
payment on personal vehicles in the form of repayment of loans made by Mr.
Tripple to the Company. There was paid to Mr. Tripple in repayment of loans the
sum of $37,500 for the fiscal year ended May 31, 1999.
EOPT did not pay any other executive compensation for the year ended May 31,
1999.
There is no agreement for the payment of any salary or compensation at this
time for the directors of EOPT, or for the executive officers or directors of
TMI Holding, Inc. However, the Company anticipates that any out of pocket
expenses of directors will be paid, and that directors who are not employed by
either the Company or TMI Holding will receive compensation for attendance and
other duties performed as directors.
Item 7. Certain Relationships and Related Transactions.
Management is not aware of any material transaction, or a proposed
transaction, to which the Registrant was or is to be a party, in which any
director, executive officer, nominee for directorship, security-holder or
immediate family member had a direct or indirect material interest as defined by
Rule 404 of Regulation S-B, except for the transaction between Environmental Oil
Processing Technology, Inc. and Grayson Evans in which EOPT acquired PDI as
described in the paragraph entitled "Development Subsidiary: Project Development
Industries, LLC ("PDI")" at page 6.
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Item 8. Description of Securities, including dividend, voting and preemptive
rights.
TMI Holding Corporation presently has one class of capital stock authorized
consisting of 100,000,000 shares of voting Common stock, without par value, as
amended on February 7, 2000.
Effective upon the closing of the agreed exchange of stock with EOPT, there
will be issued and outstanding 35,000,000 shares of TMI Common Stock.
The holders of the Company's Common Stock are entitled to one vote per
share on each matter submitted to vote at any meeting of shareholders. The
shares of Common Stock do not carry cumulative voting rights in the election of
Directors.
Shareholders of the Company have no pre-emptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is not
subject to redemption rights and carries no subscription or conversions rights.
In the event of liquidation of the Company, the share of Common Stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. All shares of the Common Stock now outstanding are fully paid for
and non- assessable.
Dividends:
Holders of Common Stock are entitled to receive such dividends as the Board of
Directors may from time to time declare out of funds legally available for the
payment of dividends. The Company has never paid a dividend, and the present
focus of Management is for growth and expansion of its business through the
reinvestment of profits, if any, and does not anticipate that it will pay
dividends in the foreseeable future.
Holders of Common Stock:
The number of holders of record of the Company's Common Stock upon the
consummation of the agreed stock exchange with EOPT stockholders will be
approximately 4,763, as reported by the Company's transfer agent.
Fiscal Year End:
The Company's fiscal year is December 31.
Transfer Agent:
The Company's transfer agent is American Registrar & Transfer Co., 342 900
South, Salt Lake City, UT 84111, P.O. Box 1798, Salt Lake City, UT 84111, Phone
(801) 363-9065, Fax 801-363-9066.
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Reports to Shareholders:
The Company intends to furnish its shareholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year. In addition, the Company may, in its discretion, distribute
quarterly reports containing unaudited financial statements for each of the
first three quarters of each fiscal year.
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters.
There presently is no market for the Common Stock.
Item 2. Description of Exhibits.
Exhibit 2A Charter
Exhibit 2B Charter Amendment
Exhibit 2C By Laws
Item 8. Legal Proceedings.
Neither the Registrant nor any of its subsidiaries is involved in legal
proceedings that would have a material adverse effect on the Registrant's
financial condition or results from operations.
Item 3. Changes in and Disagreements with Accountants.
There has not been any change nor disagreement with Accountants.
Item 4. Recent Sales of Unregistered Securities.
Registrant has agreed to issue 32,200,000 shares of its common stock to
acquire all of the issued and outstanding common stock of Environmental Oil
Processing Technology, Inc. (EOPT) pursuant to an Agreement and Plan of
Reorganization effective February 7, 2000. As of February 14, 2000, there has
been issued in excess of 28,000,000 TMI shares for a like number of EOPT shares.
Registrant expects to issue all of the agreed shares under the terms of the
Agreement and Plan or Reorganization. According to the unaudited consolidated
statement of November 30, 1999, the stockholder's equity is $4,406,091.
On or about February 7, 2000, Registrant issued or agreed to issue
26,464,009 shares of its Common Stock in a private placement, exempt from
registration under Paragraph 4(2) of the Securities Act of 1933, to 19
beneficial owners of EOPT stock in exchange for 82% of the outstanding stock of
Environmental Oil Processing Technology, Inc. under the terms of an Agreement
and Plan of Reorganization intended to qualify as a non-tax recognition
transaction under the provisions of the Internal Revenue Code ss.ss.354 and 368,
as amended. Based on the
13
<PAGE>
November 30, 1999, unaudited consolidated financial statement of Environmental
Oil Processing Technology, Inc., 82% of the book value is approximately
$3,612,995.
On or about February 7, 2000, Registrant agreed to issue 5,735,991 shares
of its Common Stock under an exemption from registration allowed by Regulation
D, Rule 504, to shareholders in exchange for 18% of the outstanding stock of
Environmental Oil Processing Technology, Inc. which shareholders also entered
into the Agreement and Plan of Reorganization intended to qualify as a non-tax
recognition transaction. Based on the November 30, 1999, unaudited financial
statements of Environmental Oil Processing Technology, Inc., of the book value
is approximately $793,096.
There was no underwriter involved in any of the foregoing transactions, and
all of the stock issued in both transactions was restricted as that term is
defined in Rule 144, and all certificates for stock bears a legend to that
effect. The consideration received for the stock issued under Rule 504 was less
than $1,000,000.
Item 5. Indemnification of Directors and Officers.
The Company and its affiliates may not be liable to its shareholders for
errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud or a knowing violation of the law, since provisions have been
made in the Articles of Incorporation and By Laws limiting such liability. The
Articles of Incorporation and By Laws also provide for indemnification of the
officers and directors of the Company in most cases for any liability suffered
by them or arising out of their activities as officers and directors of the
Company if they were not engage in intentional misconduct, fraud or a knowing
violation of the law.
Insofar as indemnification for liabilities arising under the federal
securities laws may be permitted to directors and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the law and is, therefore, unenforceable. In the event a demand
for indemnification is made, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the questions whether such indemnification by it is
against public policy as expressed in the law and will be governed by the final
adjudication of such issue.
PART F/S
Included herewith:
(i) the December 31, 1999, audited financial statement of TMI Holding
Corporation
(ii) the May 31, 1999 audited financial statement of Environmental Oil
Processing Technology, Inc.
(iii) the December 31, 1998, audited financial statement of Project
Development Industries, Inc.
(iv) TMI Holding Corporation Consolidated Proforma Financial Statements
14
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 1999
<PAGE>
C O N T E N T S
Independent Auditors' Report................................................. 3
Balance Sheet................................................................ 4
Statement of Operations...................................................... 5
Statement of Stockholders' Equity............................................ 6
Statement of Cash Flows...................................................... 7
Notes to the Financial Statements............................................ 8
<PAGE>
[LETTERHEAD]
JONES, JENSEN & COMPANY, LLC
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
TMI Holding Corporation
Salt Lake City, Utah
We have audited the accompanying balance sheet of TMI Holding Corporation (a
development stage company) as of December 31, 1999 and the related statements of
operations, stockholders' equity and cash flows from inception on December 21,
1999 through December 31, 1999. 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 audit.
We conducted our audit 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.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TMI Holding Corporation (a
development stage company) as of December 31, 1999 and the results of its
operations and its cash flows from inception on December 21, 1999 through
December 31, 1999 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company is a development stage company with no
significant operating revenues to date which together raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
January 7, 2000
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1999
---------
CURRENT ASSETS
Cash $ 400
---------
Total Current Assets 400
---------
TOTAL ASSETS $ 400
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ --
---------
Total Liabilities --
---------
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized at par value of $0.05;
2,800,000 shares issued and outstanding 140,000
Additional paid-in capital (138,833)
Deficit accumulated during the development stage (767)
---------
Total Stockholders' Equity 400
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 400
=========
The accompanying notes are an integral part of these financial statements.
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Statement of Operations
From
Inception on
December 21,
1999 Through
December 31,
1999
-----------
REVENUE $ --
EXPENSES 767
-----------
NET (LOSS) $ (767)
===========
BASIC LOSS PER SHARE $ (0.00)
===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,800,000
===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Statement of Stockholders' Equity
From Inception on December 21, 1999 Through December 31, 1999
Deficit
Accumulated
Common Stock Additional During the
----------------- Paid-In Development
Shares Amount Capital Stage
------ ------ ------- -----
Inception December 21, 1999 -- $ -- $ -- $ --
Common stock issued to acquire
records at predecessor cost 2,789,500 139,475 (139,475) --
Common stock issued for
cash at $0.111 per share 9,000 450 550 --
Common stock issued for
services at $0.111 per share 1,500 75 92 --
Net (loss) from inception
on December 21, 1999 through
December 31, 1999 -- -- -- (767)
--------- --------- --------- ---------
Balance, December 31, 1999 2,800,000 $ 140,000 $(138,833) $ (767)
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Statement of Cash Flows
From
Inception on
December 21,
1999 Through
December 31,
1999
------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (767)
Adjustments to reconcile net loss to net cash (used)
by operating activities:
Common stock issued for services 167
-------
Net Cash (Used) by Operating Activities (600)
-------
CASH FLOWS FROM INVESTING ACTIVITIES --
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock for cash 1,000
-------
Net Cash Provided by Financing Activities 1,000
-------
INCREASE IN CASH AND CASH EQUIVALENTS 400
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD --
-------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 400
=======
SUPPLEMENTAL CASH FLOW INFORMATION
Cash Paid For:
Interest $ --
Income taxes $ --
Non-Cash Financing Activities:
Common stock issued for services $ 167
The accompanying notes are an integral part of these financial statements.
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On December 21, 1999, TMI Holding Corporation (the Company) was
incorporated under the laws of the State of Utah for the purpose of holding
records and documents related to the "Altus Field Rehabilitation Project"
(approximately 1,450 acres of oil and gas leases located in Jackson County,
Oklahoma). The documents include various records and logs of historical
production from existing wells on that project which would need to be
rehabilitated and/or restored to production. The Company was also
incorporated to engage in any other lawful act or business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the accrual method of
accounting.
b. Provision for Taxes
At December 31, 1999, the Company had net operating loss carryforward of
approximately $750 that may be offset against future taxable income through
2019. No tax expense or benefit has been reported in the financial
statements.
c. Cash Equivalents
The Company considers all highly liquid investment with a maturity of three
months or less when purchased to be cash equivalents.
d. Estimates
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 reporting period. Actual results could differ from those
estimates.
<PAGE>
TMI HOLDING CORPORATION
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e. Basic Loss Per Share
From Inception on
December 21, 1999 Through
December 31, 1999
----------------------------------------------------
Loss Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ------
$ (767) 2,800,000 $ (0.00)
The computation of basic loss per share of common stock is based on the
weighted average number of common shares outstanding during the period of
the financial statements. Fully diluted loss per share calculations are not
presented as any stock equivalents are antidilutive in nature.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. The Company has not established revenues sufficient to cover
its operating costs and allow it to continue as a going concern. Management
is committed to covering all operating and other costs until sufficient
revenues are generated.
NOTE 4 - STOCK TRANSACTIONS
On December 31, 1999, the Board of Directors authorized the issuance of
2,789,500 shares of its common stock to acquire all of the rights, title
and interest in certain documents related to the "Altus Field
Rehabilitation Project" (approximately 1450 acres of oil and gas leases
located in Jackson County, Oklahoma.) These shares have been recorded at
predecessor cost of $-0-.
On December 31, 1999, the Board of Directors authorized the issuance of
9,000 shares of its common stock for $1,000 cash consideration and 1,500
shares to directors as compensation for their services valued at $167.
<PAGE>
ENVIRONMENTAL OIL PROCESSING
TECHNOLOGY, INC.
Financial Statements
as of May 31, 1999 and
For the Years Ended
May 31, 1999 and 1998
and Independent Auditors' Report
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Balance Sheet,
May 31, 1999 2
Statements of Operations
for the Years Ended May 31, 1999 and 1998 3
Statements of Stockholders' Equity
for the Years Ended May 31, 1999 and 1998 4
Statements of Cash Flows
for the Years Ended May 31, 1999 and 1998 5-6
Notes to Financial Statements 7-11
<PAGE>
[LETTERHEAD]
FARBER & HASS LLP
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Environmental Oil Processing Technology, Inc.
We have audited the accompanying balance sheet of Environmental Oil Processing
Technology, Inc. (the "Company") as of May 31, 1999 and the related statements
of operations, stockholders' equity and cash flows for the years ended May 31,
1999 and 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the accompanying financial statements present fairly, in all
material respects, the financial position of the Company at May 31, 1999 and the
results of its operations and its cash flows for the years ended May 31, 1999
and 1998 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has insufficient working capital to meet its
current obligations. This condition raises substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to this
matter is also described in Note 8. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Farber & Hass, LLP
July 30, 1999
Oxnard, California
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
BALANCE SHEET
MAY 31, 1999
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash $ 371,365
Trade accounts receivable, less allowance
for doubtful accounts of $10,000 47,937
Inventories 19,674
Other current assets 190
-----------
Total current assets 439,166
-----------
PROPERTY, PLANT AND EQUIPMENT 1,755,588
Less accumulated depreciation (22,467)
-----------
Property, plant and equipment, net 1,733,121
-----------
TOTAL ASSETS $ 2,172,287
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of notes payable $ 45,659
Accounts payable 392,565
Accrued expenses 383,035
-----------
Total current liabilities 821,259
-----------
NOTES PAYABLE, Less current portion 111,552
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, no par value; 50,000,000
shares authorized; 27,802,875 shares
issued and outstanding 2,718,613
Accumulated deficit (1,479,137)
-----------
Total stockholders' equity 1,239,476
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,172,287
===========
See notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MAY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
------------ ------------
NET SALES $ 318,588 $ 279,075
COST OF GOODS SOLD 267,749 824,017
------------ ------------
GROSS MARGIN 50,839 (544,942)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 419,959 429,347
------------ ------------
LOSS FROM OPERATIONS (369,120) (974,289)
OTHER EXPENSE - Interest (69,677) (66,051)
------------ ------------
NET LOSS $ (438,797) $ (1,040,340)
============ ============
BASIC LOSS PER COMMON SHARE $ (0.02) $ (0.08)
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 20,500,282 13,197,688
============ ============
See notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MAY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT DEFICIT EQUITY
------ ------ ------- ------
<S> <C> <C> <C> <C>
BALANCES, JUNE 1, 1997 13,197,688 $ 1,858,973 $ 1,858,973
NET LOSS $ (1,040,340) (1,040,340)
------------ ------------ ------------ ------------
BALANCES, MAY 31, 1998 13,197,688 1,858,973 (1,040,340) 818,633
FORGIVENESS OF NOTE PAYABLE
AS CONTRIBUTION OF CAPITAL 487,077 487,077
STOCK ISSUANCE - Sales of
common stock 14,605,187 372,563 372,563
NET LOSS (438,797) (438,797)
------------ ------------ ------------ ------------
BALANCES, MAY 31, 1999 27,802,875 $ 2,718,613 $ (1,479,137) $ 1,239,476
============ ============ ============ ============
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MAY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (438,797) $(1,040,320)
Adjustments to reconcile net loss to
net cash used by operating
activities:
Depreciation 12,847 9,620
Changes in operating assets and
liabilities:
Accounts receivable (12,934) (34,963)
Inventories (4,365) 24,691
Other assets (2,276) 2,086
Accounts payable and accrued expenses 23,431 623,794
----------- -----------
Net cash used by operating activities (422,094) (415,092)
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES -
Capital expenditures (15,867) (67,099)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 859,640
Borrowings from Company officer 487,077
Payments on long-term debt (50,314) (4,886)
----------- -----------
Net cash provided by financing activities 809,326 482,191
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 371,365 -0-
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR -0- -0-
----------- -----------
CASH AND EQUIVALENTS, END OF YEAR $ 371,365 $ -0-
=========== ===========
(Continued)
<PAGE>
NVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS - Continued
FOR THE YEARS ENDED MAY 31, 1999 AND 1998
- --------------------------------------------------------------------------------
1999 1998
---- ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 3,732 $133,783
Cash paid for taxes $ -0- $ -0-
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
In March 1999, the President of the Company forgave a $487,077 Company note
payable to him as a contribution of capital to the Company.
See notes to financial statements.
- --------------------------------------------------------------------------------
<PAGE>
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Description - Environment Oil Processing Technology, Inc. (the
"Company" or "EOPTI") is a reseller of waste oil products. The Company's
customer base is in Idaho, Washington and Oregon. The Company is in the
final stages of assembly and testing of a waste oil re-refinery plant that
will produce naphtha and diesel fuel and other petroleum products from
waste oil.
Going Concern - The financial statements have been prepared assuming the
Company will continue to operate as a going concern which contemplates the
realization of assets and the settlement of liabilities in the normal
course of business. As of May 31, 1999, the Company has a working capital
deficiency of approximately $21,200. This condition causes substantial
doubt about the Company's ability to continue as a going concern. No
adjustment has been made to the recorded amount of assets or the recorded
amount or classification of liabilities which would be required if the
Company were unable to continue its operations. As discussed in Note 8,
management has developed an operating plan which they believe will generate
sufficient cash to meet its obligations in the normal course of business.
Merger - In March 1999, the Company acquired substantially all of the
assets and liabilities of Environmental Oil Services, Inc. ("EOS") in
exchange for 2,000,000 shares of the Company's common stock. All of the EOS
shareholders became shareholders in EOPTI. EOPTI had no operations prior to
the acquisition of EOS. These financial statements include the operations
of EOPTI and EOS. The assets and liabilities of EOS were transferred to
EOPTI at their historical cost, except for the refinery facility which was
stated at the appraised liquidation value (which approximates fair value)
at the date that it was acquired by EOS (June 1998).
Pervasiveness of Estimates - 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 reporting period. Actual
results could differ from those estimates.
<PAGE>
Concentration of Credit Risk - Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
cash and trade receivables. The Company places its temporary cash
investments in reputable financial institutions. At May 31, 1999, the
Company had $370,448 on deposit with one financial institution.
The Company routinely assesses the financial strength of its customers. The
Company normally does not require prepayments to support customer orders.
At May 31, 1999, two customers accounted for 45% and 19%, respectively, of
total receivables.
Significant Customer - During the year ended May 31, 1999, one customer
accounted for 22% of the Company's net sales.
Operating Segment Information - The Company predominantly operates in one
industry segment, waste oil products. Substantially all of the Company's
assets and employees are located at the Company's headquarters in Nampa,
Idaho.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. The refinery facility is stated at fair market value as of the date
that it was acquired by EOS, Inc. (June 1998), based upon an independent
third party appraisal. Additions to the refinery facility after June 1998
are stated at cost. Depreciation on property and equipment is calculated on
the straight-line method over the estimated useful lives of the assets.
Revenue Recognition - The Company records revenue upon shipment.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 ("SFAS 109"), which is
an asset and liability method of accounting that requires the recognition
of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between tax bases and financial
reporting bases of accounting.
Fair Value of Financial Instruments - Based on borrowing rates currently
available to the Company for bank loans with similar terms and maturities,
the fair value of the Company's long-term debt approximates the carrying
value. Furthermore, the carrying value of all other financial instruments
potentially subject to valuation risk (principally consisting of accounts
receivable and accounts payable) also approximates fair value.
<PAGE>
Net Loss Per Share - The Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" that
established standards for the computation, presentation and disclosure of
earnings per share ("EPS"), replacing the presentation of Primary EPS with
a presentation of Basic EPS. It also requires dual presentation of Basic
EPS and Diluted EPS on the face of the income statement for entities with
complex capital structures. Basic EPS is based on the weighted average
number of common shares outstanding during the period, which totalled
20,500,282 and 13,197,688 for 1999 and 1998, respectively. The Company did
not present Diluted EPS, as the Company does not have any potentially
dilutive instruments outstanding.
2. INVENTORIES
Inventories at May 31, 1999 consist of unrefined waste oil products.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at May 31, 1999 consist of:
Construction-in-Progress:
Refinery equipment $ 1,362,017
Vehicles 36,949
Land 246,622
Buildings 110,000
-----------
Total property and equipment 1,755,588
Less accumulated depreciation (22,467)
-----------
Property and equipment, net $ 1,733,121
===========
The estimated useful lives used to depreciate property and equipment are as
follows:
Vehicles 10 Years
Buildings 20 Years
The Company has not started depreciating the refinery equipment as it was
under construction at May 31, 1999.
4. OPERATING LEASES
The Company leases various oil storage tanks in Idaho and Washington under
five operating lease agreements.
Four of the five leases are month-to-month requiring 30 days cancellation
notice by either party. The four agreements require monthly payments
totalling $2,125.
<PAGE>
The fifth lease agreement expires in October 1999 and requires monthly
payments of $350. The agreement provides for a one-year option to renew.
Total lease expense under these agreements was $29,700 and $28,315 for the
years ended May 31, 1999 and 1998, respectively.
5. NOTES PAYABLE
Notes payable at May 31, 1999 consists of various notes
to finance companies, payable in monthly installments
aggregating $4,405, plus interest at rates ranging from
8.5% to 27.9%, payable in full at various dates through
December 2006. $157,211
========
Minimum required principal payments on long-term debt as of May 31, 1999
are as follows:
2000 $ 45,659
2001 37,333
2002 11,300
2003 12,100
2004 and thereafter 50,819
--------
Total $157,211
========
6. INCOME TAXES
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at May 31, 1999 is substantially
composed of the Company's net operating loss carryforward, for which the
Company has made a full valuation allowance.
The valuation allowance increased approximately $174,000 in the year ended
May 31, 1999, representing primarily net taxable loss in that year. In
assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred
tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities, projected
future taxable income and tax planning strategies in making this
assessment.
At May 31, 1999, the Company had net operating loss carryforwards for
Federal tax purposes of approximately $1,407,000 which is available to
offset future taxable income, if any, through 2014.
<PAGE>
State income and franchise taxes are immaterial and are included in
selling, general and administrative expenses in the accompanying statement
of operations.
7. LITIGATION
The Company is a defendant in three lawsuits filed in June and July 1998 in
Idaho Judicial Court. Each plaintiff seeks to foreclose on a materialmans
lien alleging unpaid goods or services. The plaintiffs seek $47,465,
$44,847 and $21,732, respectively, plus costs of court. The Company has
filed counterclaims in each matter. The cases are scheduled for trial in
September and October 1999. The Company has made a full provision in the
financial statements for these matters.
8. MANAGEMENT PLANS
The Company has started to market completed waste oil refineries to be
delivered in the year 2000. Management expects that the forecasted higher
sales and cash flow from operations will be adequate to finance the 2000
cash flow requirements. If successful, the Company plans to borrow from
institutional investors. Management has developed contingency plans which
include but are not limited to, private stock placements to accredited
investors.
9. YEAR 2000 COMPLIANCE (UNAUDITED)
The Company utilizes computer hardware and software in its operations. Any
of the Company's programs that recognize a date using "00" as the year 1900
rather than the year 2000 could result in errors or system failures.
The Company has completed an evaluation of its computer hardware and
software and believes that its mission critical systems are Year 2000
compliant.
10. SUBSEQUENT EVENT (UNAUDITED)
In August 1999, the Company entered into an agreement to acquire all of the
outstanding stock of Project Development Industries, LLC ("PDI") in
exchange for 3,500,000 shares of the Company's common stock and a
promissory note for $6,000,000. PDI performs professional engineering,
design, procurement, fabrication and installation services to the oil
refinery, natural gas, pipeline, chemical, minerals and power generation
industries.
- --------------------------------------------------------------------------------
<PAGE>
PROJECT DEVELOPMENT INDUSTRIES, LLC
FINANCIAL STATEMENTS
PERIODS ENDED NOVEMBER 30, 1999, DECEMBER 31, 1998,
AND DECEMBER 31, 1997
Cannon & Schleicher, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
Project Development Industries, LLC
Table of Contents
Periods Ended November 30, 1999, December 31, 1998, and December 31, 1997
Report of Certified Public Accountants
Financial Statements
Balance Sheet
Statement of Operations and Accumulated Deficit
Statement of Cash Flows
Notes to Financial Statements
<PAGE>
[LETTERHEAD]
CANNON & SCHLEICHER, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
Members
Project Development Industries, LLC
Lakewood, Colorado
We have compiled the accompanying balance sheet of Project Development
Industries, LLC as of November 30, 1999 and the related statements of
operations, accumulated deficit, and cash flows for the eleven months then ended
in accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
The December 31, 1998 and 1997 financial statements were audited by us and our
report thereon, dated July 27, 1999, gave an unqualified opinion on them.
/s/ Cannon & Schleicher, P.C.
January 12, 2000
Evergreen, Colorado
<PAGE>
Project Development Industries, LLC
Balance Sheet
November 30, 1999 Unaudited and December 31, 1998
Unaudited
November 30, December 31,
1999 1998
--------- ---------
Assets
Current assets:
Cash $ 70,161 $ 191,074
Accounts receivable (Note 2) 457,881 462,489
Prepaid expenses 6,173 17,473
--------- ---------
534,215 671,036
--------- ---------
Property and equipment (Note 1):
Furniture and equipment 145,916 145,916
Accumulated depreciation (132,073) (113,978)
--------- ---------
13,843 31,938
--------- ---------
$ 548,058 $ 702,974
========= =========
Liabilities and Equity
Current liabilities:
Accounts payable $ 39,091 $ 66,653
Accrued payroll taxes 4,009 7,076
Accrued payroll 117,790 108,394
Note payable - bank (Note 3) 423,288 449,288
Note payable - members 254,838 161,416
--------- ---------
839,016 792,827
--------- ---------
Equity:
Members' capital 433,796 433,796
Accumulated deficit (724,754) (523,649)
--------- ---------
(290,958) (89,853)
--------- ---------
Commitments and contingencies (Note 6)
$ 548,058 $ 702,974
========= =========
See the accompanying notes to financial statements
<PAGE>
Project Development Industries, LLC
Statement of Operations and Accumulated
Deficit Periods Ended November 30, 1999Unaudited,
December 31, 1998, and December 31, 1997
<TABLE>
<CAPTION>
Unaudited
Eleven Months
Ended Year Ended Year Ended
November 30, December 31, December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Consulting income $ 372,498 $ 2,500,443 $ 2,004,277
Project income 1,628,074 506,288 3,416,718
----------- ----------- -----------
2,000,572 3,006,731 5,420,995
----------- ----------- -----------
Expenses:
Salaries 1,645,265 2,056,372 2,291,364
Payroll taxes 117,930 142,628 160,391
Employee benefits (Note 4) 78,946 94,057 117,350
Project costs 15,351 1,921,113
Consultants 53,455 206,684 1,161,643
Rent 86,776 94,397 89,809
Insurance 57,801 44,540 37,607
Travel 26,510 59,930 126,201
Supplies and materials 16,094 36,188 23,465
Depreciation (Note 1) 18,095 19,739 24,747
Bad debt expense 18,000 35,000
Telephone 10,962 12,652 19,079
Professional fees (Note 5) 37,448 157,688 12,106
Interest expense 47,539 52,115 30,160
Other operating expenses 4,856 8,949 40,148
----------- ----------- -----------
2,201,677 3,019,290 6,090,183
----------- ----------- -----------
Net income (loss) (201,105) (12,559) (669,188)
Retained earnings (deficit) - beginning of period (523,649) (511,090) 158,098
----------- ----------- -----------
Accumulated deficit - end of period $ (724,754) $ (523,649) $ (511,090)
=========== =========== ===========
</TABLE>
See the accompanying notes to financial statements
<PAGE>
Project Development Industries, LLC
Statement of Cash Flows
Periods Ended November 30, 1999 Unaudited,
December 31, 1998, and December 31, 1997
<TABLE>
<CAPTION>
Unaudited
Eleven Months
Ended Year Ended Year Ended
November 30, December 31, December 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 2,005,180 $ 2,926,203 $ 5,746,383
Cash paid to suppliers for goods and services (2,145,976) (2,899,961) (6,189,782)
Interest paid (47,539) (43,220) (22,922)
----------- ----------- -----------
Net cash provided (utilized) by operating activities (188,335) (16,978) (466,321)
----------- ----------- -----------
Cash flows from investing activities:
Purchases of equipment (17,089)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds (retirements) of notes payable 67,422 93,399 435,287
----------- ----------- -----------
Net increase (decrease) in cash (120,913) 76,421 (48,123)
Cash - beginning of period 191,074 114,653 162,776
----------- ----------- -----------
Cash - end of period $ 70,161 $ 191,074 $ 114,653
=========== =========== ===========
Reconciliation of Net Income (Loss) to Net Cash Provided
(Utilized) by Operating Activities
Net income (loss) $ (201,105) $ (12,559) $ (669,188)
----------- ----------- -----------
Adjustments to reconcile net income (loss)
to net cash provided (utilized) by operations
Depreciation 18,095 19,739 24,747
Change in assets and liabilities -
Decrease (increase) in accounts receivable 4,608 (62,528) 360,388
Decrease (increase) in prepaid expenses 11,300 5,930 (23,403)
Increase (decrease) in accounts payable (27,562) 38,209 (149,649)
Increase (decrease) in other current liabilities 6,329 (14,664) (16,454)
Increase (decrease) in accrued interest 8,895 7,238
----------- ----------- -----------
Total adjustments 12,770 (4,419) 202,867
----------- ----------- -----------
Net cash provided (utilized) by operating activities $ (188,335) $ (16,978) $ (466,321)
=========== =========== ===========
</TABLE>
See the accompanying notes to financial statements
<PAGE>
Project Development Industries, LLC
Notes to Financial Statements
Periods Ended December 31, 1998, and December 31, 1997
Note 1) Summary of Significant Accounting Policies
a) Nature of Operations - The Company was formed and began operations in
September 1993 as Project Development, Inc. At January 1, 1995 the
Company was reorganized as an LLC. The Company performs professional
engineering, design, procurement, fabrication and installation
services. Services are provided to the oil refining, natural gas,
pipeline, chemical, minerals, and power generation industries.
b) Use of Estimates - 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 reporting period.
Actual results could differ from those estimates.
c) Cash and Cash Equivalents - The Company maintains its available cash
in demand checking and money market accounts in federally insured
banks in Evergreen, Colorado. Holdings of highly liquid investments
with maturities of three months or less when purchased are also
considered to be cash equivalents.
d) Equipment and Depreciation - Equipment is recorded at cost.
Depreciation is computed using accelerated methods over the estimated
useful lives of the related assets, ranging from five to seven years.
Depreciation expense was $19,739, and $24,747 for the periods ended
December 31, 1998, and December 31, 1997, respectively.
e) Income Taxes - The Company is organized as a limited liability company
under the laws of the State of Colorado and is treated as a
partnership for Federal and State income tax purposes. Under these
rules, items of income, deduction and credit are reported on the
individual members' tax returns. Therefore, no income taxes have been
provided for in these financial statements.
Note 2) Accounts Receivable
The accounts receivable in the accompanying financial statements represent
amounts due from clients for goods and services provided as of the balance
sheet dates. An allowance for doubtful accounts has been provided as
follows for amounts deemed uncollectible:
November 30 December 31 December 31
1999 1998 1997
-------- -------- --------
Accounts receivable - trade $462,881 $515,489 $434,961
Less allowance for doubtful accounts 5,000 53,000 35,000
-------- -------- --------
$457,881 $462,489 $399,961
======== ======== ========
<PAGE>
Project Development Industries, LLC
Notes to Financial Statements
Periods Ended December 31, 1998, and December 31, 1997
Note 2) Accounts Receivable (continued)
At December 31, 1998, accounts receivable were due for approximately twelve
projects relating to three clients. At December 31, 1997, accounts
receivable were due for approximately twenty-five projects relating to six
clients, two of which accounted for approximately 67% of the total.
Note 3) Note Payable - Bank
The note payable - bank at December 31, 1998 represents a $500,000
revolving line of credit with a bank. This line of credit is collateralized
by the assets of the corporation and carries a variable interest rate of 1%
over the Wall Street Journal prime rate. The interest rate at December 31,
1998, and December 31, 1997, was 7.75% and 8.50%, respectively. The terms
of the revolving line of credit required payment of the outstanding balance
plus accrued interest on September 26, 1999.
Note 4) Retirement Benefits
The Company maintains a participatory profit sharing plan under the rules
of Internal Revenue Code section 401(k). Company contributions for 1997
were approximately $40,022. There have been no Company contributions for
the period ended December 31, 1998.
Note 5) Professional fees
The Company was party to a lawsuit brought during the year ended December 31,
1997, and settled during the year ended December 31, 1998. The suit alleged the
Company overcharged for changes to the original contract that was completed as
agreed. As part of the settlement of the dispute the Company agreed to reduce
their billing for this work. The suit was dismissed with prejudice on January
22, 1999.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of business. It is the opinion of management that the amount of
ultimate liability with respect to any of these actions currently underway or
anticipated will not materially affect the financial position of the Company.
<PAGE>
Project Development Industries, LLC
Notes to Financial Statements
Periods Ended December 31, 1998, and December 31, 1997
Note 6) Commitments and contingencies
The Company leases office space under the terms of an agreement extending
to August 31, 2003. Rental expense for the periods ended December 31, 1998,
and December 31, 1997, was $94,396 and $89,809, respectively. The Company
is committed to future minimum lease payments are as follows:
Year ending December 31, 1999 $ 94,860
Year ending December 31, 2000 101,994
Year ending December 31, 2001 105,975
Year ending December 31, 2002 110,452
Eight months ending August 31, 2003 75,625
--------
$468,054
========
The lease also provides for early termination, at the Company's option, at
the third and fourth anniversaries of the contract. The lease may be
terminated by the lessor in the event of bankruptcy of the Company.
For the period December 31, 1998, the Company's revenues were principally
from one large company. Revenues for the period from that client was
approximately80%. For the year ended December 31, 1997, approximately 80%
of revenues arose from services rendered to two clients.
At December 31, 1998, the Company was involved in discussions with another
corporation who has proposed to acquire the Company. The Company would
continue to operate as a subsidiary of the other corporation.
<PAGE>
TMI HOLDING CORPORATION
CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
<PAGE>
C O N T E N T S
Consolidated Proforma Balance Sheet....................................... 3
Consolidated Proforma Statement of Operations............................. 4
Statement of Assumptions and Disclosures.................................. 5
<PAGE>
TMI HOLDING CORPORATION
Consolidated Proforma Balance Sheet
May 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Environmental
Oil Project Proforma
TMI Processing Development Adjustments
Holding Technologies, Industries Increase Proforma
Corporation Inc. Inc. (Decrease) Consolidated
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash $ 400 $ 371,365 $ 191,074 $ -- $ 562,839
Inventory -- 19,674 -- -- 19,674
Prepaid expenses -- 190 17,473 -- 17,663
Accounts receivable, net -- 47,937 462,489 -- 510,426
----------- ----------- ----------- ----------- -----------
Total Current Assets 400 439,166 671,036 -- 1,110,602
----------- ----------- ----------- ----------- -----------
FIXED ASSETS
Property, plant and equipment -- 1,755,588 145,916 -- 1,901,504
Accumulated depreciation -- (22,467) (113,978) -- (136,445)
----------- ----------- ----------- ----------- -----------
Total Fixed Assets -- 1,733,121 31,938 -- 1,765,059
----------- ----------- ----------- ----------- -----------
OTHER ASSETS
Goodwill -- -- -- 349,099 349,099
----------- ----------- ----------- ----------- -----------
Total Other Assets -- -- -- 349,099 349,099
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $ 400 $ 2,172,287 $ 702,974 $ 349,099 $ 3,224,760
=========== =========== =========== =========== ===========
</TABLE>
See Summary of Assumptions and Disclosures.
<PAGE>
TMI HOLDING CORPORATION
Consolidated Proforma Balance Sheet (Continued)
December 31, 1999
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Environmental
Oil Project Proforma
TMI Processing Development Adjustments
Holding Technologies, Industries Increase Proforma
Corporation Inc. Inc. (Decrease) Consolidated
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
CURRENT LIABILITIES
Accounts payable $ -- $ 392,565 $ 66,653 $ 25,000 $ 484,218
Accrued expenses -- 383,035 115,470 -- 498,505
Current portion of long-term
debt -- 45,659 449,288 -- 494,947
----------- ----------- ----------- ----------- -----------
Total Current Liabilities -- 821,259 631,411 25,000 1,477,670
----------- ----------- ----------- ----------- -----------
NOTE PAYABLE - RELATED
PARTY -- -- 161,416 -- 161,416
----------- ----------- ----------- ----------- -----------
LONG-TERM DEBT -- 111,552 -- -- 111,552
----------- ----------- ----------- ----------- -----------
Total Liabilities -- 932,811 792,827 25,000 1,750,638
----------- ----------- ----------- ----------- -----------
STOCKHOLDERS' EQUITY
Common stock, 50,000,000
shares authorized, no par
value 1,167 2,718,613 433,796 (200,317) 2,953,259
Retained earnings (767) (1,479,137) (523,649) 524,416 (1,479,137)
----------- ----------- ----------- ----------- -----------
Total Stockholders' Equity 400 1,239,476 (89,853) 324,099 1,474,122
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS'
EQUITY $ 400 $ 2,172,287 $ 702,974 $ 349,099 $ 3,224,760
=========== =========== =========== =========== ===========
</TABLE>
See Summary of Assumptions and Disclosures.
<PAGE>
TMI HOLDING CORPORATION
Consolidated Proforma Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Environmental
Oil Project Proforma
TMI Processing Development Adjustments
Holding Technologies, Industries Increase Proforma
Corporation Inc. Inc. (Decrease) Consolidated
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES $ -- $ 318,588 $ 3,006,731 $ -- $ 3,325,319
COST OF SALES -- 267,749 15,351 -- 283,100
----------- ----------- ----------- ----------- -----------
GROSS PROFIT -- 50,839 2,991,380 -- 3,042,219
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
Depreciation and amortization -- 12,847 19,739 174,550 207,136
General and administrative 767 407,112 2,932,085 -- 3,339,964
----------- ----------- ----------- ----------- -----------
Total Operating Expenses 767 419,959 2,951,824 174,550 3,547,100
----------- ----------- ----------- ----------- -----------
OPERATING INCOME (LOSS) (767) (369,120) 39,556 (174,550) (504,881)
----------- ----------- ----------- ----------- -----------
OTHER EXPENSE
Interest expense -- (69,677) (52,115) -- (121,792)
----------- ----------- ----------- ----------- -----------
Total Other Expense -- (69,677) (52,115) -- (121,792)
----------- ----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
INCOME TAXES (767) (438,797) (12,559) (174,550) (626,673)
INCOME (TAXES) BENEFIT -- -- -- -- --
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (767) $ (438,797) $ (12,559) $ (174,550) $ (626,673)
=========== =========== =========== =========== ===========
</TABLE>
See Summary of Assumptions and Disclosures.
<PAGE>
TMI HOLDING CORPORATION
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Organization
The accompanying proforma financial statements are prepared to present the
acquisitions of Environmental Oil Processing Technology, Inc. (EOPT) and
Project Development Industries, Inc. (PDI) by TMI Holding Corporation (TMI)
to aid the user in understanding the acquisitions. The proforma balance is
presented as though the acquisitions took place on May 31, 1999 and the
statement of operations as though the acquisitions took place on April 1,
1998. For EOPT the balance sheet is as of December 31, 1998. The balance
sheet is as of May 31, 1999 for PDI.
TMI Holding Corporation (the Company) was incorporated December 21, 1999,
under the laws of the State of Utah, for the initial purpose of holding
records and documents of historical production from oil and gas wells
(which would need to be rehabilitated and/or restored to production)
related to the "Altus Field Rehabilitation Project" (approximately 1,450
acres of oil and gas leases located in Jackson County, Oklahoma), and to
engage in any other lawful business. The records and documents assets
resulted from earlier oil and gas exploration and development projects by
Temple Mountain Industries, Inc., a Utah corporation, and were acquired in
exchange for 2,789,500 shares of TMI common stock, which was distributed to
all of Temple Mountain Industries, Inc. stockholders of record on December
31, 1999, proportionately, as a partial liquidating dividend.
TMI entered into an Agreement and Plan of Reorganization with Environmental
Oil Processing Technology, Inc., an Idaho corporation, ("EOPT"), and the
stockholders of EOPT effective February 7, 2000, as a result of which TMI
acquired in excess of 80% of the outstanding common stock of EOPT.
Management of TMI presently intends that its sole business activity is to
be the holding parent of EPOT and to continue the business operations of
EOPT.
EOPT Business
EOPT is an Idaho corporation with offices and plant located at 2801 Brandt
Avenue, Nampa, Idaho 83687. The location is approximately 16 miles west of
Boise, Idaho. The primary business of the company is to design fabricate
and market processing plants that will re-refine waste lubricating oil into
petroleum products naphtha (gasoline) and diesel for fuel to power motors,
and residuum to be used in asphalt products and as burner fuel. The onsite
pilot plant started test operations in December of 1999 and is presently
refining used motor lubricating oil as designed. Management intends to
operate the present processing plant as a pilot project, and to fabricate
additional plants to lease and license nationally and internationally, on
customer order. Ancillary to the processing plant and in order to develop a
feed source of used lubricating oil, the Company has developed a used
lubricating oil gathering and collecting system which it has been operating
since 1994.
<PAGE>
TMI HOLDING CORPORATION
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
a. Business Organization (Continued)
EOPT Business (Continued)
EOPT's initial predecessor in business, Environmental Oil Services Company,
LLC, was organized and financed in 1994 for the purpose of (i) locating in
Southwestern Idaho, a processing plant for processing used lubricating oil,
and (ii) establishing a gathering system to generate the used oil feed for
such a plant, with the intent of re-refining the used lubricating oil into
marketable petroleum products. In 1994, the said predecessor company (i)
purchased four vacuum tank trucks, installed a tank farm to contain,
separate and circulate the used oil and began gathering used oil throughout
southern Idaho, eastern Oregon and eastern Washington, and (ii) purchased a
processing plant from a manufacturing company in the East, which was
installed at the present location. Notwithstanding several weeks of
continuous efforts by the manufacturer's claims, and, after months of
effort and experimentation, and evaluation by petroleum engineers, the
refining plant was demolished and removed. While considering alternatives
for a processing plant, and in order to maintain its sources for used
lubricating oil, the predecessor company continued the waste oil gathering
business, and marketed the oil to local and coastal used-oil consumers,
even though operating at a loss.
In early 1995, the predecessor company retained Jacobs Engineering Group in
Denver, Colorado, to design and develop a plant to process and re-refine
used lubricating oil into petroleum products. Following Jacob's design and
subsequent "onsite" construction inspections, the predecessor company
constructed the presently existing processing plant compliant with all EPA
and other governmental regulations. The plant conducted initial test runs
in April and May of 1997, and established that the production of naphtha,
diesel and other by-products was feasible. After evaluating the estimated
cost of completing and implementing the post-refinement process equipment
for producing diesel fuel meeting road specifications, along with the
market potential at that time, the then current management elected to
discontinue the completion of the plant.
In December of 1997, the predecessor company, Environmental Oil Services,
Inc., (EOS) organized and owned by Mr. N. Tod Tripple, acquired all of the
existing business of Environmental Oil Services Company, LLC, with the
issuance of its stock. During the calendar year 1998, EOS continued the
business activities of the predecessor Environmental Oil Services Company,
including the gathering of used lubricating oil and the handling of related
hazardous waste materials, and continued the evaluation of the processing
plant with the intent of producing marketable petroleum products. In March
of 1999, EOS merged with EOPT, (also owned by N. Tod Tripple) the Company,
that is presently operating the business and completing the processing
plant.
<PAGE>
TMI HOLDING CORPORATION
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
a. Business Organization (Continued)
Acquisition of Project Development Industries, LLC (PDI)
In August 1999, the Company acquired PDI, a wholly-owned subsidiary as a
Colorado limited liability company, who is a development firm located at
555 Zang Street, Suite 302, Lakewood, Colorado, 80228.
PDI is a full services development company which includes engineering,
design procurement, fabrication and installation services. The core staff
generally ranges between 25 and 30 employees including 6 engineers. The
remaining employees are designers, estimating and installation personnel,
staff, management and supervisory personnel. PDI specializes in processing,
compression, storage and transportation facilities for the oil
refining/natural gas, pipeline, chemical, mineral, and power generation
industries. Their experience includes block mounted, skid mounted, and
offshore facilities, and compliance with environmental and regulatory
requirements of OSHA, PSM, HASOP, Clear Air Act, environmental assessments
and permitting.
The purchase was consummated with 3,500,000 shares of common stock of EOPT
and a promissory note in the amount of $6,000,000 payable $2,000,000 each
year commencing in March of 2000, provided that the annual payment is
reduced by the percentage that PDI does not generate $600,000 in profits
for the preceding 12 months. The overall purchase price is reduced by the
percentage that PDI fails to generate profits of $1,800,000 during the
preceding 36 months on the due date of the third anniversary payment. The
acquisition of PDI is accounted for as a purchase. The contingent purchase
price is not recognized in accordance with APB16. The purchase of PDI was
recorded at predecessor cost, which approximates the fair value of the
shares given for PDI. Goodwill will be recorded if this contingent note
payable is issued.
Acquisition of Environmental Oil Processors Technology, Inc. (EOPT)
The Company has agreed to issue 32,200,000 shares of its common stock to
acquire all of the issued and outstanding common stock of Environmental Oil
Processing Technology, Inc. (EOPT) pursuant to an Agreement and Plan of
Reorganization effective February 7, 2000. The acquisition is accounted for
as a recapitalization of EOPT. Accordingly, there is no adjustment to the
carrying value of the assets or liabilities of EOPT because the
shareholders of EOPT controlled the Company after the acquisition.
<PAGE>
TMI HOLDING CORPORATION
Summary of Assumptions and Disclosures
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Proforma Adjustments
1. The proforma financial statements have been prepared as though the
purchases of EOPT occurred on April 1, 1999.
Common stock $ 25,000
Accounts payable (25,000)
---------
$ --
=========
To record the estimated costs of the acquisition
2. Common stock $ 767
Retained earnings (767)
---------
$ --
=========
To eliminate the accumulated deficit of TMI
3. Goodwill $ 523,649
Retained earnings (523,649)
---------
$ --
=========
To record the purchase of PDI for stock of EOPT and
assumption of its debt
4. Goodwill $(174,550)
Amortization expense 174,550
---------
$ --
=========
To record the amortization of the goodwill of PDI over 3 years using the
straight-line method.
<PAGE>
<PAGE>
PART III
Item 1. Index to Exhibits
The exhibits listed and described below in Item 2 are filed as part of this
Registration Statement.
Item 2. Description of Exhibits
Exhibit 2. Charter, Charter Amendments and By Laws.
Exhibit 2A -- Charter Articles of Incorporation
Exhibit 2B -- Charter Amendment
Exhibit 2C -- By Laws
SIGNATURES
In accordance with Secction 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
TMI Holding, Inc.
(Registrant)
Date: February 14, 2000 By /s/ N. Tod Tripple
----------------------------------
N. Tod Tripple, President
15
ARTICLES OF INCORPORATION
OF
TMI Holding Corporation
oooOooo
Pursuant to *16-10a-1007 of the Utah Revised Business Corporation Act ("the
Act" and authorization by the board of directors of Temple Mountain Industries,
Inc. (a Utah corporation hereinafter referred to as "TMII"), the undersigned
incorporator hereby adopts the following Articles of Incorporation, to-wit:
ARTICLE I
The name of this Corporation is "TMI Holding Corporation."
ARTICLE II
The Corporation shall continue in existence perpetually unless sooner
dissolved according to law.
ARTICLE III
The Corporation is organized for the purpose of:
(1) holding, for whatever value the same might have and for the benefit of
the of-record shareholders of TMII as of December 6, 1999, approximately six
boxes of records and documents in respect of the "Altus Field Rehabilitation
Project" (some 1,450 acres of oil and gas leases located in Jackson County,
Oklahoma), and in particular various records and logs of historical production
from existing wells on that Project (which, however, would need to be
rehabilitated and/or restored to production); and also,
(2) to engage in any and all other lawful acts and/or activities for which
corporations may be organized under the Act.
ARTICLE IV
The Corporation is authorized to issue a total of 50,000,000 shares, which
shares are all of the same class, to-wit: $0.05 par value common stock, and when
issued shall all have unlimited voting rights and be entitled to receive the net
assets of the Corporation on dissolution.
<PAGE>
ARTICLE V
The Corporation shall indemnify its directors, officers, employees,
fiduciaries and agents as those terms are defined in, and to the fullest extend
permitted by Part 9 of the Act.
ARTICLE VI
The shareholders of the Corporation shall not have any preemptive right to
acquire and additional shares of the Corporation nor any rights in respect of
its shares.
ARTICLE VII
(a) At filing of these Articles of Incorporation the number of directors
comprising the Corporation's board of directors shall be three, to-wit: Richard
M. Day, M. Alan Syphus and Melissa K. Beebe (who all are residents of Salt Lake
County, Utah); thereafter the number of directors may be increased or decreased
from time to time to any number permissible (taking into account the fact and
content of ~16-10a-803 of the Act) between three and nine by majority vote of
shareholders present at a duly called meeting.
(b) The officers of the Corporation are and shall hereafter be a President,
one or more Vice Presidents (as may be prescribed by the bylaws), a Secretary, a
Treasurer, and such other officers as may hereafter be designated by the board
of directors in a manner not inconsistent with the bylaws.
ARTICLE VIII
The Corporation may take action by the written consent of fewer than all of
the shareholders entitled to vote with respect to the subject matter of an
action in question; provided, however, that in order to be valid any and all
such written consents shall be made and provided in accordance with all
applicable requirements of ~16-10a-704 of the Act and signed by the holders of
not less than a majority of the corporation's outstanding shares (calculated as
of the record date provided for by ~16-10a-704(6)) of that Act.
ARTICLE IX
Shares present in person or by proxy at a duly called shareholders meeting
shall constitute a quorum, and the affirmative vote of the majority of a quorum
<PAGE>
shall constitute the act of shareholders.
###
The address of the Corporation's initial registered office is 342 East 900
South, Salt Lake City, Utah 84111, and its initial registered agent at that
office is American Registrar & Transfer Co. (a Utah corporation).
American Registrar & Transfer Co.
By __________/s/__________________
Richard M. Day
Registered Agent
IN WITNESS WHEREOF, the undersigned Incorporator hereby makes and executes
these Articles of Incorporation on this 20th day of December, 1999.
_____________/s/__________________
Richard M. Day, Incorporator
342 East 900 South
Salt Lake City, UT 84111
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
TMI HOLDING CORPORATION
TMI Holding Corporation hereby amends its Articles of Incorporation as
follows:
(i) the name of the corporation is "TMI Holding Corporation";
(ii) the text of each amendment adopted is:
Article IV is amended to now provide in its entirety:
"The corporation is authorized to issue a total of
100,000,000 shares, which are all of the same class,
to-wit: no par value common stock, and when issued
shall all have unlimited voting rights and be entitled
to receive the net assets of the Corporation on
dissolution."
(iii) the foregoing amendment to Article IV provides for reclassification
of issued shares, however, as the corporation has not yet issued any physical
certificates to represent its issued shares the provisions for implementing said
reclassification are that the corporation will issue certificates reflecting the
capitalization provided for by the foregoing amendment to its existing (and any
and all future) shareholders in the first instance;
(iv) the foregoing amendment was adopted on January 20, 2000;
(v) the foregoing amendment was first proposed by the corporation's board
of directors for submission to its shareholders, recommended by the board to the
shareholders, and then adopted by the corporation's shareholders by unanimous
written consent made and given in accordance with applicable provisions of the
Utah Revised Business Corporation Act;
(vi)(a) the corporation had 2,800,000 shares of common stock issued (and
outstanding) -- which shares were the corporation's only voting group - as of
January 20, 2000; all of said shares were entitled to vote on the foregoing
amendment, and did so by
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joining in the unanimous written consent hereinbefore referred to with the
result;
(b) that 2,800,000 votes were cast for -- and zero votes were against --
the amendment set forth above by the corporation's sole voting group, which
number is all of the corporation's outstanding shares was sufficient for
approval and adoption of the amendment by the corporation's sole voting group.
WHEREFORE, the undersigned officer of TMI Holding Corporation hereby
executes and files these Articles of Amendment pursuant to specific
authorization by its shareholders to do so, on this 7th day of February 2000.
_____________/s/______________
Melissa K. Beebe, Secretary
BY-LAWS
OF
TMI HOLDING CORPORATION
ARTICLE I
OFFICES
Section 1. Business Offices. The principal office of the corporation shall
be located in Salt Lake City, Utah. The corporation may have such other offices,
either within or without Utah, as the board of directors may designate or as the
business of the corporation may require from time to time.
Section 2. Registered Office. The registered office of the corporation
required by the Utah Business Corporation Act, as amended (the "Act"), to be
maintained in Utah may be, but need not be, identical with the principal office
if in Utah, and the address of the registered office may be changed from time to
time by the board of directors.
ARTICLE II
SHAREHOLDERS
Section 1. Annual Meeting. An annual meeting of the shareholders shall be
held during the third month following the corporation's fiscal year, or on such
other date as may be determined by the board of directors, beginning with the
year 2001, for the purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held on the
day designated herein for any annual meeting of the shareholders, or at any
adjournment thereof, the board of directors shall cause the election to be held
at a meeting of the shareholders as soon thereafter as may be convenient.
Failure to hold an annual meeting as required by these by-laws shall not
invalidate any action taken by the board of directors or officers of the
corporation.
Section 2. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the president or board of directors or by the holders of not less than one-tenth
of all the outstanding shares of the corporation entitled to vote at the
meeting.
Section 3. Place of Meeting. Each meeting of the shareholders shall be held
at such place, either within or without Utah, as may be designated in the
notice, or, if no place is designated
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TMI Holding Corporation 1
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in the notice, at the registered office of the corporation in Utah.
Section 4. Notice of Meeting. Except as otherwise prescribed by statute,
written notice of each meeting of the shareholders stating the place, day and
hour of the meeting, and in the case of a special meeting the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than fifty days before the date of the meeting, either personally or by
first class, certified or registered mail, by or at the direction of the
president or the secretary, or the officer or person calling the meeting, to
each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the United States mail,
addressed to each shareholder at his address as it appears in the stock transfer
books of the corporation, with postage prepaid thereon.
Section 5. Closing or Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of the shareholders or any adjournment thereof, or shareholders entitled
to receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the board of directors may provide
that the stock transfer books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the stock transfer books, the board
of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than fifty
days, and, in case of a meeting of the shareholders, not less than ten days
prior to the date on which the particular action requiring such determination of
shareholders is to be taken. If the stock transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of the shareholders or shareholders entitled to receive
payment of a dividend, the earlier of the date on which notice of the meeting is
mailed or the date on which the resolution of the board of directors declaring
such dividend is adopted shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders is made as provided herein, such determination shall
apply to any adjournment thereof.
Section 6. Voting Record. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least ten days
before each meeting of the shareholders, a complete record of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
For a period of ten days before such meeting this record shall be kept on file
at the registered office of the corporation and shall be subject to inspection
by any shareholder at any time during usual business hours. Such record shall
also be produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such record or transfer books or to
vote at any meeting of the shareholders.
Section 7. Proxies. At each meeting of the shareholders, a shareholder may
vote by proxy executed in writing by the shareholder, or his duly authorized
attorney in fact, provided that
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TMI Holding Corporation 2
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such proxy is an existing, qualified shareholder of the corporation. Such proxy
shall be filed with the secretary of the corporation before or at the time of
the meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
Section 8. Quorum. Except as otherwise required by the Act or the articles
of incorporation, a majority of the outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at each meeting of the shareholders, and the affirmative vote of a majority of
the shares represented at a meeting at which a quorum is present and entitled to
vote on the subject matter shall be the act of the shareholders. If less than a
majority of the outstanding shares are represented at the meeting, a majority of
the shares so represented may adjourn the meeting from time to time for a period
not to exceed sixty days at any one adjournment without further notice other
than an announcement at the meeting. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified.
Section 9. Voting of Shares. Each outstanding share of record, regardless
of class, is entitled to one vote, and each fractional share is entitled to a
corresponding fractional vote on each matter submitted to a vote of the
shareholders either at a meeting thereof or pursuant to Section 11 of this
Article, except to the extent that the voting rights of the shares of any class
or classes are modified, limited or denied by the articles of incorporation as
permitted by the Act.
Section 10. Voting of Shares by Certain Shareholders. Neither treasury
shares nor shares held by another corporation, if a majority of the shares
entitled to vote for the election of directors of such other corporation is held
by this corporation, shall be voted at any meeting or counted in determining the
total number of outstanding shares at any given time.
10.1 Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the by-laws of such corporation may prescribe,
or in the absence of such provision, as the board of directors of such
corporation may determine, provided that such person would otherwise qualify to
be a shareholder of this corporation.
10.2 Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
10.3 Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
is contained in an appropriate order of the court by which such receiver was
appointed.
10.4 A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled
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to vote the shares so transferred.
10.5 On and after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof with irrevocable
instruction and authority to pay the redemption price to the holders thereof
upon surrender of certificates therefor, such shares shall not be entitled to
vote on any matter and shall not be deemed to be outstanding shares.
Section 11. Action By Written Consent. Any action which may be taken at a
meeting of the shareholders may be taken without a meeting if a consent in
writing, setting forth the action so taken shall be signed by the shareholders
entitled to vote on such action as provided in the Articles of Incorporation.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by its board of directors, except as otherwise provided in the
Act, the articles of incor poration, or these by-laws.
Section 2. Number, Tenure and Qualifications. The minimum number of
directors of the corporation shall be three (3), and the current number until
changed shall be four (4). Directors shall be elected at each annual meeting of
the shareholders. Each director shall hold office until the next annual meeting
of the shareholders and thereafter until his successor shall have been elected
and qualified, or until his earlier death, resignation or removal. Directors
shall be removable in the manner provided by the Act.
Section 3. Vacancies. Any director may resign at any time by giving written
notice to the president or to the secretary of the corporation. A director's
resignation shall take effect at the time specified in such notice; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Any vacancy occurring in the board of directors
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum. A director elected to fill a vacancy shall be elected
for the unexpired term of his predecessor in office. Any directorship to be
filled by reason of an increase in the number of directors shall be filled by
the affirmative vote of a majority of the directors then in office or by an
election at a meeting of the shareholders called for that purpose, and a
director so chosen shall hold office for the term specified in Section 2 above.
Section 4. Regular Meetings. A regular meeting of the board of directors
shall be held immediately after and at the same place as the annual meeting of
the shareholders, or as soon as practicable thereafter at the time and place,
either within or without Utah, determined by the board for the purpose of
appointing officers and for the transaction of such other business as may come
before the meeting. The board of directors may provide by resolution the time
and place, either
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TMI Holding Corporation 4
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within or without Utah, for the holding of additional regular meetings.
Section 5. Special Meetings. Special meetings of the board of directors may
be called by or at the request of the president or any two directors. The person
or persons authorized to call special meetings of the board of directors may fix
any place, either within or without Utah, as the place for holding any special
meeting of the board called by them.
Section 6. Notice. Notice of each meeting of the board of directors stating
the place, day and hour of the meeting shall be given to each director at least
five days prior thereto by the mailing of written notice by first class,
certified or registered mail, or at least two days prior thereto by personal
delivery of written notice or by telephonic or telegraphic notice, except that
in the case of a meeting to be held pursuant to Section 11 of this Article,
telephone notice may be given one day prior thereto. (The method of notice need
not be the same to each director.) Notice shall be deemed to be given, if
mailed, when deposited in the United States mail, with postage thereon prepaid,
addressed to the director at his business or residence address; if personally
delivered when delivered to the director; if telegraphed, when the telegram is
delivered to the telegraph company; if telephoned, when communicated to the
director. Any director may waive notice of any meeting. The attendance of a
director at a meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the board of directors need be specified in the notice or waiver of
notice of such meeting unless otherwise required by the Act.
Section 7. Presumption of Assent. A director of the corporation who is
present at a meeting of the board of directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 8. Quorum and Voting. A majority of the number of directors fixed
by Section 2 of this Article, present in person, shall constitute a quorum for
the transaction of business at any meeting of the board of directors, and the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If less than such majority
is present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice other than an announcement at
the meeting, until a quorum shall be present. No director may vote or act by
proxy at any meeting of directors.
Section 9. Compensation. By resolution of the board of directors, any
director may be paid any one or more of (a) his expenses, if any, of attendance
at meetings; (b) a fixed sum for attendance at such meeting or (c) a stated
salary as director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
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TMI Holding Corporation 5
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Section 10. Executive and Other Committees. By one or more resolutions, the
board of directors may designate from among its members an executive committee
and one or more other committees, each of which, to the extent provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors, except as prohibited by statute. The
delegation of authority to any committee shall not operate to relieve the board
of directors or any member of the board from any responsibility imposed by law.
Rules governing procedures for meetings of any committee of the board shall be
established by the committee, or in the absence thereby by the board of
directors.
Section 11. Meetings by Telephone. Members of the board of directors or any
committee thereof may participate in a meeting of the board or committee by
means of conference telephone or similar communications equipment by which all
persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at the meeting.
Section 12. Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the directors or any committee thereof may be taken
without a meeting by a consent in writing setting forth the action so taken and
signed by all of the directors or committee members entitled to vote with
respect to the subject matter thereof. Such consent (which may be signed in
counterparts) shall have the same force and effect as a unanimous vote of the
directors or committee members, and may be stated as such in any articles or
documents filed with the office of the Secretary of State of Utah under the Act,
or any other governmental agency.
ARTICLE IV
OFFICERS AND AGENTS
Section 1. Number and Qualifications. The officers of the corporation shall
be a president, a vice-president, a secretary and treasurer. The board of
directors may also appoint such other officers, assistant officers, including a
chairman of the board, one or more vice- presidents, a controller, assistant
secretaries and assistant treasurers, as they may consider neces sary. One
person may hold any two offices, except that no person may simultaneously hold
the offices of president and secretary.
Section 2. Appointment and Term of Office. The officers of the corporation
shall be appointed by the board of directors annually at the first meeting of
the board held after each annual meeting of the shareholders. If the appointment
of officers shall not be done at such meeting, such appointment shall be done as
soon thereafter as may be convenient. Each officer shall hold office until his
successor shall have been duly appointed, or until his earlier death,
resignation or removal.
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Section 3. Salaries. The salaries of the officers shall be as fixed from
time to time by the board of directors and no officer shall be prevented from
receiving a salary by reason of the fact that he is also a director of the
corporation.
Section 4. Removal. Any officer or agent may be removed by the board of
directors whenever in its judgment the best interest of the corporation will be
served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Appointment of an officer or agent
shall not in itself create contract rights.
Section 5. Vacancies. Any officer may resign at any time, subject to any
rights or obligations under any existing contracts between the officer and the
corporation by giving written notice to the president or to the board of
directors. Any officer's resignation shall take effect at the time specified
therein; the acceptance of such resignation shall not be necessary to make it
effective. A vacancy in any office, however occurring, may be filled by the
board of directors for the unexpired portion of the term.
Section 6. Authority and Duties of Officers. The officers of the
corporation shall have the authority and shall exercise the powers and perform
the duties specified below and as may be additionally specified by the
president, the board of directors or these by-laws, except that in any event
each officer shall exercise such powers and perform such duties as may be
required by law.
(a) President. The president shall, subject to the direction and
supervision of the board of directors, (i) be the chief executive officer of the
corporation and have general and active control of its affairs and business and
general supervision of its officers, agents and employees; (ii) unless there is
a chairman of the board, preside at all meetings of the shareholders and board
of directors; (iii) see that all orders and resolutions of the board of
directors are carried into effect; and (iv) perform all other duties incident to
the office of the president and as from time to time may be assigned to him by
the board of directors.
(b) Vice President. In the absence or disability of the president, the vice
presidents, if any, in order of their rank as fixed by the board of directors,
or if not ranked, the vice president designated by the board of directors shall
perform all the duties of the president and when so acting shall have all the
powers of and be subject to all the restrictions upon the president. The vice
presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the board of directors
or the By-laws.
(c) Secretary. The secretary shall: (i) keep the minutes of the proceedings
of the shareholders, the board of directors and any committees of the board;
(ii) see that all notices are duly given in accordance with the provisions of
these by-laws or as required by law; (iii) be custodian of the corporate records
and of the seal of the corporation; (iv) keep at the corporation's registered
office or principal place of business a record containing the names and
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addresses of all shareholders and the number and class of shares held by each,
unless such a record shall be kept at the office of the corporation's transfer
agent or registrar; (v) have general charge of the stock books of the
corporation unless the corporation has a transfer agent; and (vi) in general
perform all duties incident to the office of secretary and such other duties as
from time to time may be assigned to him by the president or by the board of
directors. Assistant secretaries, if any, shall have the same duties and powers,
subject to supervision by the secretary.
(d) Treasurer. The treasurer shall: (i) be the principal financial officer
of the corporation and have the care and custody of all its funds, securities,
evidences of indebted- ness and other personal property and deposit the same in
accordance with the instructions of the board of directors; (ii) receive and
give receipts and acquittances for moneys paid in on account of the corporation,
and pay out of the funds on hand all bills, payrolls and other just debts of the
corporation of whatever nature upon maturity; (iii) unless there is a
controller, be the principal accounting officer of the corporation and as such
prescribe and maintain the methods and systems of accounting to be followed,
keep complete books and records of account, prepare and file all local, state
and federal tax returns, prescribe and maintain an adequate system of internal
audit, and prepare and furnish to the president and the board of directors
statements of account showing the financial position of the corporation and the
results of its operations; (iv) upon the request of the board, make such reports
to it as may be required at any time; and (v) perform all other duties incident
to the office of the treasurer and such other duties as from time to time may be
assigned to him by the board of directors or the president. Assistant
treasurers, if any, shall have the same powers and duties, subject to the
supervision by the treasurer.
Section 7. Surety Bonds. The board of directors may require any officer or
agent of the corporation to execute a bond in such sums and with such sureties
as shall be satisfactory to the board, conditioned upon the faithful performance
of his duties and for the restoration to the corporation of all books, papers,
vouchers, money and other property of whatever kinds in his possession or under
his control belonging to the corporation.
ARTICLE V
STOCK
Section 1. Issuance of Shares. The issuance or sale by the corporation of
any shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors, except
as otherwise may be provided by the "Act."
Section 2. Certificates. The shares of stock of the corporation shall be
represented by consecutively numbered certificates signed in the name of the
corporation by its president or a vice-president and the secretary or an
assistant secretary, and shall be sealed with the seal of the corporation, or
with a facsimile thereof. The signatures of the corporation's officers on any
certificate may also be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation itself
or an employee of the corporation. In
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case any officer who has signed or whose facsimile signature has been placed
upon such certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of its issue. Certificates of stock shall
be in such form consistent with law as shall be prescribed by the board of
directors. No certificate shall be issued until the shares represented thereby
are fully paid.
Section 3. Consideration for Shares. Shares shall be issued for such
consideration expressed in dollars (but not less than the par value thereof) as
shall be fixed from time to time by the board of directors. Treasury shares
shall be disposed of for such consideration expressed in dollars as may be fixed
from time to time by the board. Such consideration may consist, in whole or in
part, of money, other property, tangible or intangible, or labor or services
actually performed for the corporation, or such other consideration as the Act
allows.
Section 4. Lost Certificates. In case of the alleged loss, destruction or
mutilation of a certificate of stock, the board of directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions in
conformity with law as it may prescribe. The board of directors may in its
discretion require a bond in such form and amount and with such surety as it may
determine, before issuing a new certificate.
Section 5. Transfer of Shares. Provided that the directors have duly
approved the transfer as provided in the Articles of Incorporation, upon
surrender to the corporation or to a transfer agent of the corporation of a
certificate of stock duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the corporation shall issue a
new certificate to the person entitled thereto, and cancel the old certificate.
Every such transfer of stock shall be entered on the stock books of the
corporation.
Section 6. Holders of Record. The corporation shall be entitled to treat
the holder of record of any share of stock as the holder in fact thereof, and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice thereof, except as may be required by the "Act."
Section 7. Transfer Agents, Registrars and Paying Agents. The board of
directors may at its discretion appoint one or more transfer agents, registrars
or agents for making payment upon any class of stock, bond, debenture or other
security of the corporation. They shall have such rights and duties and shall be
entitled to such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION
Section 1. Definitions. For purposes of this Article VI, the following
terms shall have the meanings set forth below:
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(a) "Action" - Any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative;
(b) "Derivative Action" - Any Action by or in the right of the
corporation to procure a judgment in its favor;
(c) "Third Party Action" - Any Action other than a Derivative Action;
and
(d) "Indemnified Party" - Any person who is or was a party or is
threatened to be made a party to any Action by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, including without limitation any employee benefit plan
of the corporation for which any such person is or was serving as trustee,
plan administrator or other fiduciary.
Section 2. Third Party Actions. The corporation shall indemnify any
Indemnified Party against expenses (including attorneys' fees), judgments,
fines, excise taxes and amounts paid in settlement actually and reasonably
incurred by him in connection with any Third Party Action if, as determined
pursuant to Section 5 below, he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action, had no reasonable cause to
believe his conduct was unlawful. The termination of any Third Party Action by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not of itself create either a presumption that the Indemnified
Party did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation or, with respect
to any criminal Action, a presumption that the Indemnified Party had reasonable
cause to believe that his conduct was unlawful.
Section 3. Derivative Actions. The corporation shall indemnify any
Indemnified Party against expenses (including attorneys' fees) actually and
reasonably incurred by him in con nection with the defense or settlement of any
Derivative Action if, as determined pursuant to Section 5 below, he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such person is or has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation unless and only to the extent that the court in which
such action was brought determines upon application that, despite the
adjudication of liability and in view of all circumstances of the case, such
Indemnified Party is fairly and reasonably entitled to indemnification for such
expenses which such court deems proper. If any claim that may be made by or in
the right of the corporation against any person who may seek indemnification
under this Article VI is joined with any claim by any other party against such
person in a single action, the claim by or in the right of the corporation (and
all expenses related thereto) shall nevertheless be deemed the subject of a
separate and distinct Derivative Action for purposes of this Article VI.
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Section 4. Success on Merits or Otherwise. If and to the extent that any
Indemnified Party has been successful on the merits or otherwise in defense of
any action referred to in Section 2 or 3 of this Article VI, or in defense of
any claim, issue, or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith without the necessity of any determination that he has met
the applicable standards of conduct set forth in Section 2 or 3 of this Article
VI.
Section 5. Determination. Except as provided in Section 4, any
indemnification under Section 2 or 3 of this Article VI (unless ordered by a
court) shall be made by the corporation only upon a determination that
indemnification of the Indemnified Party is proper in the circumstances because
he has met the applicable standards of conduct set forth in said Section 2 or 3.
Any indemnification under Section 4 of this Article VI (unless ordered by a
court) shall be made by the corporation only upon a determination by the
corporation of the extent to which the Indemnified Party has been or would have
been successful on the merits or otherwise. Any such determination shall be made
(a) by a majority vote of a quorum of the whole board of directors consisting of
directors who are not or were not parties to the subject action, or (b) upon the
request of a majority of the directors who are not or were not parties to such
action, or if there be none, upon the request of a majority of a quorum of the
whole board of directors, by independent legal counsel (which counsel shall not
be the counsel generally employed by the corporation in connection with its
corporate affairs) in a written opinion, or (c) by the shareholders of the
corporation at a meeting called for such purpose.
Section 6. Payment in Advance. Expenses (including attorneys' fees) or some
part thereof incurred by an Indemnified Party in defending any action, shall be
paid by the corporation in advance of the final disposition of such action if a
determination to make such payment is made on behalf of the corporation as
provided in Section 5 of this Article VI; provided that no such payment may be
made unless the corporation shall have first received a written undertaking by
or on behalf of the Indemnified Party to repay such amount unless it is
ultimately determined that he is entitled to be indemnified by the corporation
as authorized in this Article VI.
Section 7. Other Indemnification. The indemnification provided by this
Article VI shall not be deemed exclusive of any other rights to which any
Indemnified Party or other person may be entitled under the articles of
incorporation, any agreement, by-law (including without limitation any other or
further Section or provision of this Article VI), vote of the shareholders or
disinterested directors or otherwise, and any procedure provided for by any of
the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office.
Section 8. Period of Indemnification. Any indemnification pursuant to this
Article VI shall continue as to any Indemnified Party who has ceased to be a
director, officer, employee, or agent of the corporation or, at the request of
the corporation, was serving as and has since ceased to be a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, including without limitation any employee benefit plan of the
BY LAWS
TMI Holding Corporation 11
<PAGE>
corporation for which any such person served as trustee, plan administrator or
other fiduciary, and shall inure to the benefit of the heirs and personal
representatives of such Indemnified Party. The repeal or amendment of this
Article VI or of any Section or provision thereof which would have the effect of
limiting, qualifying or restricting any of the powers or rights of
indemnification provided or permitted in this Article VI shall not, solely by
reason of such action, eliminate, restrict or otherwise affect the right or
power of the corporation to indemnify any person, or affect any right of
indemnification of such person, with respect to any act or omission which
occurred prior to such repeal or amendment.
Section 9. Insurance. By action of the board of directors, notwithstanding
any interest of the directors in such action, the corporation may purchase and
maintain insurance, in such amounts as the board may deem appropriate, on behalf
of any Indemnified Party against any liability asserted against him and incurred
by him in his capacity of or arising out of his status as an Indemnified Party,
whether or not the corporation would have the power to indemnify him against
such liability under applicable provisions of the law.
Section 10. Right to Impose Conditions to Indemnification. The corporation
shall have the right to impose, as conditions to any indemnification provided or
permitted in this Article VI, such reasonable requirements and conditions as to
the board of directors or shareholders may appear appropriate in each specific
case and circumstances, including but not limited to any one or more of the
following: (a) that any counsel representing the person to be indemnified in
connection with the defense or settlement of any Action shall be counsel
mutually agreeable to the person to be indemnified and to the corporation; (b)
that the corporation shall have the right, at its option, to assume and control
the defense or settlement of any claim or proceeding made, initiated or
threatened against the person to be indemnified; and (c) that the corporation
shall be subrogated to the extent of any payments made by way of
indemnification, to all of the indemnified person's right of recovery, and that
the person to be indemnified shall execute all writings and do everything
necessary to assure all rights of subrogation to the corporation.
ARTICLE VII
RESTRICTION ON TRANSFER OF SHARES
Before there can be a valid sale or transfer of any of the shares of this
Corporation by the holders thereof, the holder of the shares to be sold or
transferred shall first give notice in writing to the secretary of this
Corporation of his or her intention to sell or transfer such shares. Said notice
shall specify the number of shares to be sold or transferred, the price per
share and the terms upon which such holder intends to make such sale or
transfer. The Corporation may elect to purchase the shares or, in the
alternative, the secretary shall within ten (10) days after receipt of the
notice, mail or deliver a copy of said notice to each of the other shareholders
of record of this Corporation. Such notice may be delivered to such shareholders
personally or may be mailed to the last-known addresses of such shareholders, as
the same may appear on the books of
BY LAWS
TMI Holding Corporation 12
<PAGE>
this Corporation. Within twenty (20) days after the mailing or delivery of said
notices to such shareholders, any such shareholder desiring to acquire any part
or all of the shares referred to in said notice shall deliver by mail or
otherwise to the secretary of this Corporation a written offer or offers to
purchase a specified number or numbers of such shares at the price and upon the
terms stated in said notice. If the total number of shares specified in such
offers exceeds the number of shares referred to in said notice, each offering
shareholder shall be entitled to purchase such proportion of the shares referred
to in said notice to the secretary, as the number of shares of this Corporation,
which he or she holds bears to the total number of shares held by all
shareholders desiring to purchase the shares referred to in said notice to the
secretary.
If all of the shares referred to in said notice to the secretary are not
disposed of under such apportionment, each shareholder desiring to purchase
shares in a number in excess of his or her proportionate share, as provided
above, shall be entitled to purchase such proportion of those shares which
remain thus undisposed of, as the total number of shares which he or she holds
bears to the total number of shares held by all of the shareholders desiring to
purchase shares in excess of those to which they are entitled under such
apportionment.
The aforesaid right to purchase the shares referred to in the aforesaid
notice to the secretary shall apply only if all of the shares referred to in
said notice are purchased. Unless all of the shares referred to in said notice
to the secretary are purchased, as aforesaid, in accordance with offers made
within said thirty (30) days, the shareholder desiring to sell or transfer may
dispose of all shares of stock referred to in said notice to the secretary to
any person or persons whomsoever; provided, however, that (i) such a sale must
be consummated within ninety (90) days after giving notice to the secretary, and
(ii) he or she shall not sell or transfer such shares at a lower price or on
terms more favorable to the purchaser or transferee than those specified in said
notice to the secretary.
Any sale or transfer, or purported sale or transfer, of the shares of said
Corporation shall be null and void unless the terms, conditions, and provisions
of this section are strictly observed and followed.
ARTICLE VIII
MISCELLANEOUS
Section 1. Waivers of Notice. Whenever notice is required by law, by the
articles of incorporation, or by these by-laws, a waiver thereof in writing
signed by the director, shareholder or other person entitled to said notice,
whether before or after the time stated therein, or his appearance at such
meeting in person or (in the case of the shareholders meeting) by proxy, shall
be equivalent to such notice.
Section 2. Voting of Securities by the Corporation. Unless otherwise
provided by resolution of the board of directors on behalf of the corporation,
the president or any vice-president shall attend in person or by substitute
appointed by him, or shall executed written
BY LAWS
TMI Holding Corporation 13
<PAGE>
instruments appointing a proxy or proxies to represent the corporation at all
meetings of the shareholders of any other corporation, association or other
entity in which the corporation holds any stock or other securities, and may
execute written waivers of notice with respect to any such meetings. At all such
meetings and otherwise, the president or any vice-president, in person or by
substitute or proxy as aforesaid, may vote the stock or other securities so held
by the corporation and may execute written consents and any other instruments
with respect to such stock or securities and may exercise any and all rights and
powers incident to the ownership of said stock or securities, subject, however,
to the instructions, if any, of the board of directors.
Section 3. Fiscal Year. The fiscal year of the corporation shall be the
calendar year, or as otherwise established by the board of directors.
Section 4. Amendments. Subject to repeal or change by action of the
shareholders, the power to alter, amend or repeal these by-laws and adopt new
by-laws shall be vested in the board of directors.
The undersigned secretary certifies that the foregoing By-Laws of the
corporation were duly adopted by the board of directors on the 7th day of
February, 2000.
/s/ Melissa K. Beebe
---------------------------
Melissa K. Beebe, Secretary
BY LAWS
TMI Holding Corporation 14
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