TMI HOLDING CORP
10SB12G, 2000-04-26
BLANK CHECKS
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                                  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                                                 82-0520055
(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
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

                                       1

<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 2,789,558 shares of TMI common stock, which
was distributed to all of Temple Mountain Industries, Inc. stockholders of
record on December 31, 1999, one share of TMI stock for each two shares of
Temple Mountain, as a partial liquidating stock 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 April 10,
2000, has acquired in excess of 99% 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. In
addition to eliminating any environmental hazard from the

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<PAGE>

accumulation and processing of used lubricating oil the resulting petroleum
products will (a) fuel diesel and gasoline engines, (b) provide burner fuel to
generate heat for many applications including the production of electrical
energy in co-generating systems, and (c) add usable ingredients to different
asphalt applications. 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, some of whom are presently scheduled to
observe the operation of the plant and inspect the resulting products. The
operation of the pilot plant is in its preliminary 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 why 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

                                        3

<PAGE>

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 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 State 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 prepared as plant feed oil. Any residual oil not used
as feed oil, or residual oil that is not processed by the plant is 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. The Company is now
marketing the products from the plant operation, including naphtha, diesel oil,
and residuum. 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.

     Management considers the plant operational, and is presently experimenting
with the optimal operating conditions and volume. 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

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<PAGE>

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, 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

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<PAGE>

     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 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
contingent promissory note in the amount of $6,000,000 payable $2,000,000 each
year commencing in March of 2001, 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. Because the note payable is
contingent it has not been recorded in the financial statement.

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.

     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

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<PAGE>

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. Operations for the seven months ended December
31, 1999, reflected revenues of $287,094, with a cost of sales of $266,087 for a
gross margin from operations of approximately $21,007. When all other expenses
were considered, including the training of plant operators and work on the
processing plant, the total loss from operations was $345,160.

     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
(presently the Company is receiving $1.01/g for diesel and $1.11 for gasoline),
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 gross 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, even though profitable, 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 December of 1999, 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 through the first half of fiscal year 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 December 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

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lease and licensing fees and 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 $85,677 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 information, effective upon the exchange of all
of the outstanding stock of EOPT, regarding 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.

Name and Address              Amount & Nature
of Beneficial Owner           of Benef. Owner      Catagory             Percent
- -------------------           ---------------      --------             -------

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

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Leo B. (Tony) Tripple         5,722,661            Director             16%
2801 Brandt Ave.
Nampa, Idaho 83687


Officers and Directors        15,517,009                                44%
as a Group


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     February 14, 2000
Leo B. (Tony) Tripple               Director  and Vice Pres.        February 14, 2000
Marilyn J. Tripple                  Director and 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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<PAGE>

     Marilyn J. Tripple. Mrs. Tripple has served as Office Manager and Executive
Secretary for 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, President 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
facilities 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 December 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 $36,000 for the seven months ended December 31, 1999, and $64,561 for the
twelve months ended December 31, 1999.

EOPT did not pay any other executive compensation for the year ended December
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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<PAGE>

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 approximately 34,989,558 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 4,785, 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. 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 disagreement with accountants for the Company or its
subsidiaries, however, the Company has changed accountants of the subsidiaries
so that the accountant for the Company will also be the accountant for the
subsidiaries.

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 April 10, 2000, there has been
issued 32,004,050 TMI shares for EOPT shares. Registrant expects to issue all of
the agreed shares under the terms of the Agreement and Plan or Reorganization.
According to the audited consolidated statement of December 31, 1999, the
stockholder's equity is $3,746,958.

     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.

                                       13

<PAGE>

     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.

     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 is the audited consolidated statement of TMI Holding,
Inc. as of December 31, 1999.

                                       14

<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.

                                       15

<PAGE>

Item 2. Description of Exhibits

     Exhibit 2. Charter, Charter Amendments and By Laws.


                                   SIGNATURES

     In accordance with Section 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 Corporation.
                                              (Registrant)


Date: April __, 2000                      By /s/
                                             -----------------------------------
                                                  N. Tod Tripple, President

                                       16
<PAGE>



                             TMI HOLDING CORPORATION
                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999
<PAGE>









                                 C O N T E N T S



Independent Auditors' Report.................................................  3

Consolidated Balance Sheets..................................................  4

Consolidated Statements of Operations........................................  6

Consolidated Statements of Stockholders' Equity..............................  7

Consolidated Statements of Cash Flows........................................  8

Notes to Consolidated Financial Statements................................... 10
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
TMI Holding Corporation and Subsidiaries
Nampa, Idaho

We have  audited the  accompanying  consolidated  balance  sheets of TMI Holding
Corporation   and   Subsidiaries  as  of  December  31,  1999  and  the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the  seven  months  ended  December  31,  1999.  These  consolidated   financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  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  consolidated  financial  statements  are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting  principles used and significant
estimates  made by management,  as well as evaluating  the overall  consolidated
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial  position of TMI
Holding   Corporation  and   Subsidiaries  as  of  December  31,  1999  and  the
consolidated  results  of their  operations  and their  cash flows for the seven
months ended December 31, 1999 in conformity with generally accepted  accounting
principles.




Jones, Jensen & Company
Salt Lake City, Utah
March 30, 2000
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                                 Balance Sheets


                                     ASSETS

                                                     December 31,      May 31,
                                                        1999            1999
                                                     -----------    ------------

CURRENT ASSETS

   Cash                                              $   193,007    $   371,365
   Trade accounts receivable, less allowance for
     for doubtful accounts of $23,000 and $10,000,
     respectively                                        404,056         47,937
   Inventories                                             6,464         19,674
   Other current assets                                    9,541            190
                                                     -----------    -----------

     Total Current Assets                                613,068        439,166
                                                     -----------    -----------

PROPERTY, PLANT AND EQUIPMENT                          2,204,153      1,755,588
Less accumulated depreciation                           (198,954)       (22,467)
                                                     -----------    -----------

     Property, Plant and Equipment, Net                2,005,199      1,733,121
                                                     -----------    -----------

OTHER ASSETS

   Goodwill, net                                       3,284,912           --
                                                     -----------    -----------

     Total Other Assets                                3,284,912           --
                                                     -----------    -----------

     TOTAL ASSETS                                    $ 5,903,179    $ 2,172,287
                                                     ===========    ===========



The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                        4
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                           Balance Sheets (Continued)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   December 31,      May 31,
                                                       1999           1999
                                                   -----------    -----------

CURRENT LIABILITIES

   Current portion of notes payable                $    45,659    $    45,659
   Accounts payable                                    256,206        392,565
   Accrued expenses                                    443,654        383,035
   Line of credit                                      400,000           --
   Notes payable - related parties                     239,838           --
   Deferred revenue                                     21,457           --
                                                   -----------    -----------

     Total Current Liabilities                       1,406,814        821,259
                                                   -----------    -----------

LONG TERM DEBT

   Notes payable - related parties                     650,000           --
   Notes payable                                        99,407        111,552
                                                   -----------    -----------

     Total Long-Term Debt                              749,407        111,552
                                                   -----------    -----------

       Total Liabilities                             2,156,221        932,811
                                                   -----------    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

   Common stock, $0.05 par value; 50,000,000
    shares authorized; 34,841,935 and 27,802,875
    shares issued and outstanding, respectively      1,742,097      1,390,144
   Additional paid-in capital                        9,701,180      1,328,469
   Stock subscription receivable                      (400,000)          --
   Accumulated deficit                              (7,296,319)    (1,479,137)
                                                   -----------    -----------

     Total Stockholders' Equity                      3,746,958      1,239,476
                                                   -----------    -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 5,903,179    $ 2,172,287
                                                   ===========    ===========


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                        5
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Operations


                                     For the
                                   Seven Months          For the Years Ended
                                      Ended                   May 31,
                                   December 31,    ----------------------------
                                        1999            1999            1998
                                   ------------    ------------    ------------

NET SALES                          $  1,704,092    $    318,588    $    279,075

COST OF GOODS SOLD                       17,265         267,749         824,017
                                   ------------    ------------    ------------

GROSS MARGIN                          1,686,827          50,839        (544,942)

SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES              7,426,351         419,959         429,347
                                   ------------    ------------    ------------

LOSS FROM OPERATIONS                 (5,739,524)       (369,120)       (974,289)
                                   ------------    ------------    ------------

OTHER INCOME (EXPENSE)

   Interest expense                     (83,602)        (69,677)        (66,051)
   Interest income                        5,944            --              --
                                   ------------    ------------    ------------

     Total Other Income (Expense)       (77,658)        (69,677)        (66,051)
                                   ------------    ------------    ------------

INCOME TAX EXPENSE                         --              --              --
                                   ------------    ------------    ------------

NET LOSS                           $ (5,817,182)   $   (438,797)   $ (1,040,340)
                                   ============    ============    ============

BASIC LOSS PER COMMON SHARE        $      (0.20)   $      (0.02)   $      (0.08)
                                   ============    ============    ============

WEIGHTED AVERAGE SHARES
 OUTSTANDING                         29,600,169      20,500,282      13,197,688
                                   ============    ============    ============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                        6
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Consolidated Statements of Stockholders' Equity

<TABLE>
<CAPTION>

                                                 Common Stock           Additional       Stock
                                          --------------------------      Paid-In     Subscription   Accumulated      Stockholders'
                                             Shares         Amount        Capital      Receivable       Deficit         Equity
                                          -----------    -----------    -----------    -----------    -----------    -----------

<S>                                        <C>           <C>            <C>            <C>            <C>            <C>
Balance, June 1, 1997                      13,197,688    $   659,884    $ 1,199,089    $      --      $      --      $ 1,858,973

Net loss for the year ended
 May 31, 1998                                    --             --             --             --       (1,040,340)    (1,040,340)
                                          -----------    -----------    -----------    -----------    -----------    -----------

Balance,
 May 31, 1998                              13,197,688        659,884      1,199,089           --       (1,040,340)       818,633

Forgiveness of note payable
 as contribution of capital                      --             --          487,077           --             --          487,077

Common stock issued
 for cash                                  14,605,187        730,259       (357,696)          --             --          372,563

Net loss for the year ended
 May 31, 1999                                    --             --             --             --         (438,797)      (438,797)
                                          -----------    -----------    -----------    -----------    -----------    -----------

Balance,
 May 31, 1999                              27,802,875      1,390,143      1,328,470           --       (1,479,137)     1,239,476

Purchase of subsidiary                      3,500,000        175,000      3,325,000           --             --        3,500,000

Common stock issued
 for cash                                   1,202,810         60,141        969,059       (400,000)          --          629,200

Common stock issued
 for services                               3,996,064        199,802      3,796,262           --             --        3,996,064

Common stock issued
 for debt                                       4,000            200          3,800           --             --            4,000

Common stock issued
 for equipment                                212,500         10,625        201,875           --             --          212,500

Common stock returned and
 canceled by officer                       (4,676,314)      (233,814)       233,814           --             --             --

Common stock issued in
 recapitalization                           2,800,000        140,000       (140,000)          --             --             --

Stock offering costs                             --             --          (17,100)          --             --          (17,100)

Net loss for the
 seven months ended
 December 31, 1999                               --             --             --             --       (5,817,182)    (5,817,182)
                                          -----------    -----------    -----------    -----------    -----------    -----------

Balances,
 December 31, 1999                         34,841,935    $ 1,742,097    $ 9,701,180    $  (400,000)   $(7,296,319)   $ 3,746,958
                                          ===========    ===========    ===========    ===========    ===========    ===========
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                        7
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                           For the
                                                          Seven Months      For the Years Ended
                                                            Ended                 May 31,
                                                          December 31,   --------------------------
                                                              1999           1999           1998
                                                          -----------    -----------    -----------

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                       <C>            <C>            <C>
   Net loss                                               $(5,817,182)   $  (438,797)   $(1,040,320)
   Adjustments to reconcile net loss to net cash
     used by operating activities:
     Depreciation and amortization                            329,081         12,847          9,620
     Common stock issued for services                       3,996,064           --             --
   Changes in operating assets and liabilities:
     Accounts receivable                                       89,158        (12,934)       (34,963)
     Inventories                                               18,545         (4,365)        24,691
     Other assets                                               3,080         (2,276)         2,086
     Accounts payable and accrued expenses                   (202,472)        23,431        623,794
                                                          -----------    -----------    -----------

       Net Cash (Used) by Operating Activities             (1,583,726)      (422,094)      (415,092)
                                                          -----------    -----------    -----------

CASH FLOWS USED IN INVESTING ACTIVITIES

   Cash received in purchase of subsidiary                    204,850           --             --
   Capital expenditures                                       (90,149)       (15,867)       (67,099)
                                                          -----------    -----------    -----------

       Net Cash Provided (Used) by Investing Activities       114,701        (15,867)       (67,099)
                                                          -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Payments of stock offering costs                           (17,100)          --             --
   Issuance of common stock                                   629,200        859,640           --
   Borrowings from Company officer                            239,838           --          487,077
   Payments on long-term debt                                 438,729        (50,314)        (4,886)
                                                          -----------    -----------    -----------

       Net Cash Provided by Financing Activities            1,290,667        809,326        482,191
                                                          -----------    -----------    -----------

NET INCREASE IN CASH AND CASH
 EQUIVALENTS                                                 (178,358)       371,365           --

CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD                                          371,365           --             --
                                                          -----------    -----------    -----------

CASH AND EQUIVALENTS, END OF PERIOD                       $   193,007    $   371,365    $      --
                                                          ===========    ===========    ===========
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                        8
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)


                                        For the
                                      Seven Months     For the Years Ended
                                         Ended                May 31,
                                       December 31,    --------------------
                                          1999            1999       1998
                                       ---------       ---------   --------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:

   Cash paid for interest              $  50,157       $   3,732   $133,783
   Cash paid for taxes                 $    --         $    --     $   --

SUPPLEMENTAL DISCLOSURE OF
 NON-CASH FINANCING ACTIVITIES:

Year ended December 31, 1999:

     The President of the Company forgave a $487,077 note payable to him as a
     contribution of capital to the Company.

Seven months ended December 31, 1999:

     Purchase of subsidiary for common stock valued at $3,500,000.
     Common stock issued for debt valued at $4,000.
     Common stock issued for equipment valued at $212,500.


The accompanying notes are an integral part of these consolidated financial
statements.


                                       9
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   Business Description

     TMI Holding Corporation (the Company) was incorporated in the State of Utah
     on December 21, 1999 for the purpose of holding records and documents
     relating to a specific oil and gas project.

     Environment Oil Processing Technology, Inc. (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 to produce naphtha and diesel fuel and other
     petroleum products from waste oil.

     Project Development Industries, LLC (PDI) was formed and began operations
     in September 1993 as Project Development, Inc. At January 1, 1995, PDI 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.

     On February 7, 2000, TMI Holding Corporation and Environmental Oil
     Processing Technology, Inc. completed an Agreement and Plan of
     Reorganization whereby the Company issued 32,041,935 shares of its common
     stock in exchange for all of the outstanding common stock of EOPTI.
     Immediately prior to the Agreement and Plan of Reorganization, the Company
     had 2,800,000 shares of common stock issued and outstanding.

     The acquisition was accounted for as a recapitalization of EOPTI because
     the shareholders of EOPTI control the Company after the acquisition.
     Therefore, EOPTI is treated as the acquiring entity. There was no
     adjustment to the carrying value of the assets or liabilities of EOPTI in
     the exchange. The Company is the acquiring entity for legal purposes and
     EOPTI is the surviving entity for accounting purposes. Accordingly, the
     historical financial statements of EOPTI are presented as those of the
     Company. The Company has adapted a December 31, year end.

     b.   Merger

     In August 1999, EOPTI acquired substantially all of the assets and
     liabilities of PDI in exchange for 3,500,000 shares of the Company's common
     stock. All of the PDI shareholders became shareholders in EOPTI. The
     acquisiton was accounted for as a purchase. These financial statements
     include the operations of EOPTI from the effective date of the purchase of
     March 31, 1999. The assets and liabilities of PDI are recorded at their
     fair value with the excess recorded as goodwill.

     c.   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.


                                       10
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     d.   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 December 31, 1999, the Company had $12,582 on
     deposit with one financial institution in excess of the amounts insured by
     the FDIC.

     The Company routinely assesses the financial strength of its customers. The
     Company normally does not require prepayments to support customer orders.
     At December 31, 1999, two customers accounted for 35% and 14%,
     respectively, of total receivables.

     e.   Significant Customer

     During the seven months ended December 31, 1999 and the year ended May 31,
     1999, one customer accounted for more than 10% of the Company's net sales.

     f.   Operating Segment Information

     For the seven months ended December 31, 1999 the Company operated in two
     industry segments, (1) waste oil products at the Company's headquarters in
     Nampa, Idaho, and (2) petroleum engineering services at the Company's
     offices in Denver, Colorado. For the years ended May 31, 1999 and 1998 all
     of the Company's operations were in one waste oil products industry.

<TABLE>
<CAPTION>

                                            For the
                                          Seven Months
                                             Ended                                             Corporate
                                          December 31,                  PDI          EOPTI    Unallocated          Total
                                          ------------          -----------    -----------    -----------    -----------

<S>                                           <C>               <C>            <C>            <C>            <C>
Net Sales                                     1999              $ 1,422,703    $   281,389    $      --      $ 1,704,092

Operating income (loss)
  Applicable to industry                      1999                 (206,060)    (5,532,697)          (767)    (5,739,524)


General corporate                             1999                     --             --              767            767

Other Income (Expense)                        1999                  (54,501)       (23,157)          --          (77,658)

Operating Assets                              1999                3,758,007      2,144,772            400      5,903,179
</TABLE>

     g.   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.


                                       11
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     h.   Revenue Recognition

     The Company records oil and gas revenue upon shipment. The Company
     recognizes engineering revenues upon completion of the services.

     i.   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.

     j.   Basic 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 totaled 20,500,282 and
     13,197,688 for the years ended May 31, 1999 and 1998, respectively and
     29,600,169 for the seven months ended December 31, 1999. The Company did
     not present diluted EPS, as the Company does not have any potentially
     dilutive instruments outstanding.

     k.   Goodwill

     The excess of the purchase price over the fair value of the assets and
     liabilities acquired in the purchase of PDI of $3,551,256 has been recorded
     as goodwill.

     The goodwill is amortized using the straight-line method over 10 years.
     Amortization expense was $266,344 for the nine months ended December 31,
     1999.

     l.   Principles of Consolidation

     The consolidated financial statements include those of TMI Holding
     Corporation and its wholly-owned subsidiaries. PDI is a wholly-owned
     subsidiary of EOPTI and EOPTI is a wholly-owned subsidiary of TMI Holding
     Corporation. All significant intercompany accounts and transactions have
     been eliminated.

NOTE 2 - INVENTORIES

     Inventories at May 31, 1999 consist of unrefined waste oil products.


                                       12
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment consist of:

                                     December 31,      May 31,
                                         1999           1999
                                     -----------    -----------

     Office equipment                $   147,046    $      --
     Construction-in-Progress                343           --
     Refinery equipment                1,628,193      1,362,017
     Vehicles                             71,949         36,949
     Land                                246,622        246,622
     Buildings                           110,000        110,000
                                     -----------    -----------

     Total property and equipment      2,204,153      1,755,588
     Less accumulated depreciation      (198,954)       (22,467)
                                     -----------    -----------

     Property and equipment, net     $ 2,005,199    $ 1,733,121
                                     ===========    ===========

     The estimated useful lives used to depreciate property and equipment are as
     follows:

                           Office equipment               5-7 years
                           Vehicles and equipment         10 Years
                           Buildings                      20 Years

     The Company recorded depreciation expense of $62,737 for the seven months
     ended December 31, 1999 and $12,847 and $9,620 for the years ended May 31,
     1999 and 1998, respectively.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

     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
     totaling $2,125.

     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 and $20,606 for the seven
     months ended December 31, 1999.


                                       13
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements

NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

     PDI leases office space under the terms of an agreement extending to August
     31, 2003. Rental expense for the years ended December 31, 1999, and
     December 31, 1998, was $94,860 and $94,396, respectively. The Company is
     committed to future minimum lease payments are as follows:

     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
                                                       ----------

                                                       $  394,046
                                                       ==========

     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.

     Litigation

     The Company is a defendant in several lawsuits, none of which are believed
     to be material to the financial statements.

     Retirement Benefits

     PDI maintains a participatory profit sharing plan under the rules of
     Internal Revenue Code section 401 (k). There have been no Company
     contributions for the period ended December 31, 1999.

NOTE 5 - NOTES PAYABLE

     The line of credit at December 31, 1999 represents a $400,000 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, 1999,
     was 9.5%. The terms of the revolving line of credit required payment of the
     outstanding balance plus accrued interest on September 26, 2000.

     Notes payable at December 31, 1999 consists of various notes of
      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.         $  145,066
                                                                      ==========

     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                                                    12,957
                  Thereafter                                              25,717
                                                                      ----------

                  Total                                               $  145,066
                                                                      ==========


                                       14
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements


NOTE 6 - INCOME TAXES

     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets at December 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 $2,100,000 in the seven
     months ended December 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 December 31, 1999, the Company had net operating loss carryforwards for
     Federal tax purposes of approximately $6,824,000 which is available to
     offset future taxable income, if any, through 2019. State income and
     franchise taxes are immaterial and are included in selling, general and
     administrative expenses in the accompanying statement of operations.

NOTE 7 - 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.

NOTE 8 - NOTES PAYABLE - RELATED PARTIES

     At December 31, 1999, PDI, has an unsecured note payable to an officer of
     $237,838 which is due upon demand and bears interest at 10% per annum. The
     Company has accrued interest payable of $11,992 at December 31, 1999.

     At December 31, 1999 EOPTI has an unsecured note payable of $600,000 due to
     an officer. The note is due on December 31, 2001. The interest on the note
     payable has been paid to December 31, 1999.


                                       15
<PAGE>


                    TMI HOLDING CORPORATION AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements

NOTE 9 - PURCHASE OF PROJECT DEVELOPMENT INDUSTRIES, LLC

     Effective March 31, 1999, the Company acquired 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 contingent 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.

     The promissory note is to be paid based upon earnings by PDI. PDI recorded
     a loss for the period from April 1, 1999 to December 31, 1999 and the
     Company agreed to defer the implementation of the contingency until the
     year 2000.

                          PROFORMA FINANCIAL STATEMENT

<TABLE>
<CAPTION>

                                                                          Proforma
                                           TMI Holding                   Adjustments
                                           Corporation                     Increase      Proforma
                                          and Subsidiary       PDI       (Decrease)    Consolidated
                                          --------------       ---       ----------    ------------

<S>                                        <C>            <C>            <C>            <C>
REVENUES                                   $ 1,704,092    $   754,624    $      --      $ 2,458,716

COST OF SALES                                   17,265           --             --           17,265
                                           -----------    -----------    -----------    -----------

GROSS MARGIN                                 1,686,827        754,624           --        2,441,451
                                           -----------    -----------    -----------    -----------

OPERATING EXPENSES

   General and administrative                7,426,351        721,362         88,781      8,236,494
                                           -----------    -----------    -----------    -----------
OPERATING (LOSS)                            (5,739,524)        33,262        (88,781)    (5,795,043)
                                           -----------    -----------    -----------    -----------

OTHER INCOME (EXPENSE)

   Interest income                               5,944           --             --            5,944
   Infant expense                              (83,602)       (12,230)          --          (95,832)
                                           -----------    -----------    -----------    -----------

     Total Other Income (Expense)              (77,658)       (12,230)          --          (89,888)
                                           -----------    -----------    -----------    -----------

LOSS BEFORE INCOME TAXES                    (5,817,182)        21,032        (88,781)    (5,884,931)

INCOME TAXES                                      --             --             --             --
                                           -----------    -----------    -----------    -----------

NET LOSS                                   $(5,817,182)   $    21,032    $   (88,781)   $(5,884,931)
                                           ===========    ===========    ===========    ===========

              Proforma Adjustments

              Amortization expense                                                      $    88,781
              Accumulated Amortization                                                      (88,781)
                                                                                        -----------
                                                                                        $      --
                                                                                        ===========
</TABLE>


                                       16



                            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


<PAGE>


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


BY LAWS
TMI Holding Corporation                 1


<PAGE>


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


BY LAWS
TMI Holding Corporation                 2


<PAGE>


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


BY LAWS
TMI Holding Corporation                 3


<PAGE>


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


BY LAWS
TMI Holding Corporation                 4


<PAGE>


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.


BY LAWS
TMI Holding Corporation                 5


<PAGE>


     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.


BY LAWS
TMI Holding Corporation                 6


<PAGE>


     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


BY LAWS
TMI Holding Corporation                 7


<PAGE>


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


BY LAWS
TMI Holding Corporation                 8


<PAGE>


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:


BY LAWS
TMI Holding Corporation                 9


<PAGE>


          (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.


BY LAWS
TMI Holding Corporation                10


<PAGE>


     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


<TABLE> <S> <C>


<ARTICLE>                     5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DECEMBER 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S>                             <C>
<PERIOD-TYPE>                    12-MOS
<FISCAL-YEAR-END>                              DEC-31-1999
<PERIOD-END>                                   DEC-31-1999
<CASH>                                                193,007
<SECURITIES>                                                0
<RECEIVABLES>                                         427,056
<ALLOWANCES>                                          (23,000)
<INVENTORY>                                             6,464
<CURRENT-ASSETS>                                        9,541
<PP&E>                                              2,204,153
<DEPRECIATION>                                       (198,954)
<TOTAL-ASSETS>                                      5,903,179
<CURRENT-LIABILITIES>                               1,416,814
<BONDS>                                                     0
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