United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
Commission file number : 0-29509
Environmental Oil Processing Technology Corporation
(formerly TMI Holding Corporation)
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(Exact name of business issuer in its charter)
Utah 82-0520055
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2801 Brandt Avenue, Nampa, Idaho 83687
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (208)-463-0063 Fax:(208) 463-7601
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(Former Address)
The number of shares of common stock outstanding as of September 30, 2000, is
71,910,116.
Transitional Small Business Disclosure Format. Yes ___, No X.
TMI Holding Corporation
10-QSB (Sept.30, 2000)
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The following financial statements are filed as part of this report:
The Consolidated Financial Statements of the Company for the three months
and nine months ended of September 30, 2000, reviewed by HJ & Associates,
certified public accountants.
Item 2. Management's Discussion and Plan of Operation:
Management of Environmental Oil Processing Technology, Inc. (EOPT) focused
their activity in the first three quarters of year 2000 in developing operating
procedures for the oil refining plant, testing the operating parameters of the
plant, exploring the adjustments needed for producing diesel and naphtha more
efficiently and in general experimenting with the refinery. Management has
established that the plant will operate at an efficiency level of 85% or above
with respect to the percentage of usable product that can be produced from the
feed-oil, and has established a market for all of the product that the plant
will produce. With the potential of producing "spec" fuel, the revenue
projections are substantially higher and Management is changing its operating
plan from the sale-lease of refining plants to other customers to constructing
domestic plants for company operation. Management is developing a detailed
business plan incorporating the construction of domestic company owned plants
and the leasing plants to international customers.
Changes in Financial Condition:
The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere herein for
September 30, 2000, and December 31, 1999.
The balance of current assets at September 30, 2000, was $883,835 compared
to a balance of $613,068 at December 31, 1999. The balance of current
liabilities was $2,279,379 and 1,406,814 for the same periods respectively. The
resulting current ratio at September 30 is .3:1. The current ratio at December
31, 1999, was .4:1.
The increase of current assets at September 30, 2000, over December 31,
1999, is due primarily to the increase in cash from $193,007 to 609,663 an
increase of $416,656 or 316%.
The increase in current assets at September 30, 2000, over December 31,
1999, also included a decrease in accounts receivable from $404,056 at December
31, 1999, to $251,879 at September 30, 2000.
The balance of current liabilities at September 30, 2000, is $2,279,379 and
at December 31, 1999, is $1,406,814. The increase of $872,565 or 62% is due
primarily to an increase in the notes payable to related parties of 217,000 and
$650,000 of notes payable to related parties which were reclassified from
long-term to current.
At September 30, 2000, the Company had insufficient cash flow from
operations to meet its current cash obligations.
TMI Holding Corporation
10-QSB (Sept.30, 2000)
2
Results of Operations.
For the nine months ended September 30, 2000, and September 1999.
Sales for the nine months ended September 30, 2000, were 3,074,173 compared
to $618,671 for the same period in 1999, resulting in an increase of $2,455,502
or 497%.
Operating expenses include primarily depreciation and amortization expense
and general and administrative expenses. Depreciation and amortization expenses
for the nine months ended September 30, 2000, were $596, 225. Selling, general
and administrative expenses were $5,130,987 or 167% of sales for the nine months
ended September 30, 2000, and $6,219,543 or 1005% of sales for the same period
in 1999, resulting in a decrease of $1,088,556 or 18%. The decrease is due
primarily to the increase in sales.
For the three months ended September 30, 2000, and September 30, 1999.
Sales for the three months ended September 30, 2000, were $680,911 compared
to $146,255 for the same period in 1999, resulting in an increase of $534,656 or
366%.
Operating expenses include primarily depreciation and amortization expenses
and general and administrative expenses. Selling, general and administrative
expenses were $1,590,895 or 234% of sales for the three months ended September
30, 2000, and $5,606,926 or 3834% of sales for the same period in 1999.
Funding and Capital Resources:
Management presently anticipates that revenues from the sale of refinery
product and from the licensing of refining plants will generate the revenues for
profitable operations and continued activity of EOPT. Management has consummated
an alliance with Emerson Electric as reported by Form 8K filed November 3, 2000,
(see Item 6 herein) to construct on skids the refining plants, and to finance up
to 80% of the cost of the development and fabrication of the refining plants for
both domestic company operated operations and the lease of international
refining plant facilities.
Plan of Operation:
Management presently plans to pursue the completion of what it believes to
be the last major modifications of the pilot refining plant to enable continuous
refining operations and production of petroleum products during the 4th quarter.
Concurrently, PDI is presently investigating sites for constructing domestic
company owned facilities and Management is continuing negotiations for the lease
of facilities in other countries. In addition, the refining capacity of the
pilot plant is approximately double the capacity of the present oil collecting
facilities, and Management has located sources and is negotiating the purchase
of additional used lubricating oil for meeting the requirements of the refining
plant.
TMI Holding Corporation
10-QSB (Sept.30, 2000)
3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities.
a. Effective upon filing an amendment to the Articles of Incorporation,
on July 25th, 2000, the issued and outstanding shares were split 2 for
1, effectively doubling the number of shares of each shareholder.
b. In an offering to accredited investors under the provisions of Rule
506 of Regulation D, from July 31 to September 26, 2000, the Company
sold and issued to six investors 330,000 shares of common stock for
the cash consideration of $300,000 and warrants for 25,250 shares of
common stock exercisable within two years at the price of $6.25 per
share.
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information.
As reported in the June 30, 2000, 10QSB by written action of a majority of
the shareholders effective July 3, 2000, the Articles of Incorporation were
amended (i) to change the name of TMI Holding Corporation to Environmental Oil
Processing Technology Corporation, (ii) to increase the authorized capital of
the Company to 200,000,000 shares of no par common stock, and (iii) to declare a
2 for 1 forward split of the issued and outstanding common stock. The Articles
of Amendment were filed with the Secretary of State, Division of Corporations,
of the State of Utah on July 25, 2000, and became effective on that date. A copy
of the Amended Articles of Incorporation was filed as an exhibit to the June 30,
2000, 10QSB.
Item 6. Exhibits and Reports on form 8-K.
On November 3, 2000, 8K was filed with the following information:
Item 5. Other Events:
On Friday, October 27, 2000, Environmental Oil Processing Technology Corporation
signed an Alliance Agreement with Emerson Performance Solutions/PC & E, Inc. of
Emerson Electric Co. under the terms of which EOPT agrees to purchase products
and services offered through the Alliance on a sole source basis for a period of
not less than three years. Emerson agrees (i) to fabricate on skids all of the
refining plants needed by EOPT at an agreed price, (ii) to provide corporate and
site support on a worldwide basis as EOPT requires on a 24/7 basis, and (iii) to
use its best efforts to finance or cause the financing of at least 80% of each
operating plant (including tank farm, rolling stock, feed stock inventory, site
preparation, skid mounted refining plant, and finished product inventory). The
Alliance gives EOPT cost effective access to the many products manufactured by
Emerson Electric, including Fisher-Rosemont valves, instruments, and control
systems. The Alliance is terminable by either party at will. The Alliance was
finalized after several meetings through the principal efforts of Jon Bowling,
director of Business Development MIV of Emerson Performance Solutions, along
with principals of several subsidiaries of Emerson Electric, and Mr. N. Tod
Tripple, president and CEO, and the staff at EOPT.
TMI Holding Corporation
10-QSB (Sept.30, 2000)
4
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Environmental Oil Processing Technology Corporation
(Formerly TMI Holding Corporation)
(Registrant)
Date: November 13, 2000 By__________/s/____________________
N. Tod Tripple, President and CEO
TMI Holding Corporation
10-QSB (Sept.30, 2000)
5
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000 and December 31, 1999
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Balance Sheets
ASSETS
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash .......................................... $ 609,663 $ 193,007
Trade accounts receivable, less allowance for
for doubtful accounts of $22,358 and $10,000,
respectively ................................ 251,879 404,056
Inventories ................................... 10,499 6,464
Other current assets .......................... 11,794 9,541
----------- -----------
Total Current Assets ........................ 883,835 613,068
----------- -----------
PROPERTY, PLANT AND EQUIPMENT .................... 2,337,181 2,204,153
Less accumulated depreciation .................... (528,653) (198,954)
----------- -----------
Property, Plant and Equipment, Net .......... 1,808,528 2,005,199
----------- -----------
OTHER ASSETS
Goodwill, net ................................. 3,018,386 3,284,912
----------- -----------
Total Other Assets .......................... 3,018,386 3,284,912
----------- -----------
TOTAL ASSETS ................................ $ 5,710,749 $ 5,903,179
=========== ===========
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2000 1999
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Current portion of notes payable ............ $ 38,109 $ 45,659
Accounts payable ............................ 175,696 256,206
Accrued expenses ............................ 558,736 443,654
Line of credit .............................. 400,000 400,000
Notes payable - related parties ............. 1,106,838 239,838
Deferred revenue ............................ -- 21,457
------------ ------------
Total Current Liabilities ................. 2,279,379 1,406,814
------------ ------------
LONG TERM DEBT
Notes payable - related parties ............. -- 650,000
Notes payable ............................... 97,993 99,407
------------ ------------
Total Long-Term Debt ...................... 97,993 749,407
------------ ------------
Total Liabilities ....................... 2,377,372 2,156,221
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, no par value; 200,000,000
shares authorized; 71,910,116 and 69,683,870
shares issued and outstanding, respectively 12,713,211 11,443,277
Stock subscription receivable ............... -- (400,000)
Accumulated deficit ......................... (9,379,834) (7,296,319)
------------ ------------
Total Stockholders' Equity ................ 3,333,377 3,746,958
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,710,749 $ 5,903,179
============ ============
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Consolidated Statements of Operations
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
NET SALES $ 680,911 $ 146,255 $ 3,074,173 $ 618,671
COST OF GOODS SOLD -- -- -- 76,457
------------ ------------ ------------ ------------
GROSS MARGIN 680,911 146,255 3,074,173 542,214
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,590,895 5,606,906 5,130,987 6,219,543
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (909,984) (5,460,651) (2,056,814) (5,677,329)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (14,623) (2,801) (43,869) (6,128)
Interest income 6,022 10,719 17,168 11,325
------------ ------------ ------------ ------------
Total Other Income (Expense) (8,601) 7,918 (26,701) 5,197
------------ ------------ ------------ ------------
INCOME TAX EXPENSE -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (918,585) $ (5,452,733) $ (2,083,515) $ (5,672,132)
============ ============ ============ ============
BASIC LOSS PER COMMON SHARE $ (0.01) $ (0.18) $ (0.03) $ (0.18)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 70,518,670 30,750,424 70,518,670 30,750,424
============ ============ ============ ============
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Consolidated Statements of Stockholders' Equity
Stock
Common Stock Subscription Accumulated Stockholders'
Shares Amount Receivable Deficit Equity
----------- ------------ ------------- ----------- --------------
Balance,
May 31, 1999 55,605,750 $ 2,718,613 $ -- $ (1,479,137) $ 1,239,476
Purchase of subsidiary 7,000,000 3,500,000 -- -- 3,500,000
Common stock issued
for cash 2,405,620 1,029,200 (400,000) -- 629,200
Common stock issued
for services 7,992,128 3,996,064 -- -- 3,996,064
Common stock issued
for debt 8,000 4,000 -- -- 4,000
Common stock issued
for equipment 425,000 212,500 -- -- 212,500
Common stock returned and
canceled by officer (9,352,628) -- -- -- --
Common stock issued in
recapitalization 5,600,000 -- -- -- --
Stock offering costs -- (17,100) -- -- (17,100)
Net loss for the
seven months ended
December 31, 1999 -- -- -- (5,817,182) (5,817,182)
Balance,
December 31, 1999 69,683,870 11,443,277 (400,000) (7,296,319) 3,746,958
Performance on stock
subscription (unaudited) -- -- 400,000 -- 400,000
Fractional shares issued
(unaudited) 116 -- -- -- --
Common stock issued for
cash (unaudited) 2,226,130 1,103,999 -- -- 1,103,999
Forgiveness of note payable
as contribution of capital -- 165,935 -- -- 165,935
Net loss for the nine months
ended September 30, 2000
(unaudited) -- -- -- (2,083,515) (2,083,515)
------------ ------------ ------------ ------------ ------------
Balance, September 30, 2000
(unaudited) 71,910,116 $ 12,713,211 $ -- $ (9,379,834) $ 3,333,377
============ ============ ============ ============ ============
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Consolidated Statements of Cash Flows
(Unaudited)
For the
Nine Months Ended
September 30,
--------------------------
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,083,515) $(5,672,132)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 596,225 276,435
Subscription receivable -- (400,000)
Common stock issued for services -- 3,996,064
Changes in operating assets and liabilities:
Accounts receivable 152,177 (29,405)
Inventories (4,035) 529
Other assets (2,253) --
Accounts payable and accrued expenses 13,115 262,585
----------- -----------
Net Cash (Used) by Operating Activities (1,328,286) (1,565,924)
----------- -----------
CASH FLOWS USED IN INVESTING ACTIVITIES
Capital expenditures (133,028) (7,800)
----------- -----------
Net Cash Provided (Used) by Investing Activities (133,028) (7,800)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from Company officer 797,435 278,929
Payments on long-term debt (23,464) (42,322)
Proceeds from sale of common stock 1,103,999 1,404,763
Proceeds from long-term debt -- 493,513
----------- -----------
Net Cash Provided by Financing Activities 1,877,970 2,134,883
----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS 416,656 561,159
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 193,007 31,044
----------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 609,663 $ 592,203
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 43,869 $ 2,799
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCING ACTIVITIES:
Nine Months ended September 30, 2000:
The President of the Company forgave a $165,935 note payable to him as a
contribution of capital to the Company.
Common stock issued for stock subscription receivable, valued at $69,066.
Note payable - related party converted to common stock, valued at $158,065.
Note payable - related party converted to pay for stock subscription
receivable, valued at $400,000.
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.
ENVIRONMENTAL OIL PROCESSING TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(Formerly TMI Holding Corporation)
Notes to the Consolidated Financial Statements
September 30, 2000 and December 31, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared by
the Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
September 30, 2000 and 1999 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's December 31, 1999 audited consolidated financial statements. The
results of operations for the periods ended September 30, 2000 and 1999 are
not necessarily indicative of the operating results for the full years.
NOTE 2 - MATERIAL EVENTS
On July 25, 2000, the Company's Articles of Incorporation were amended to
increase its authorized shares from 100,000,000 to 200,000,000 of no par
value stock. Simultaneously, the outstanding shares of common stock were
forward split on a 2 shares for 1 share basis. All references to common
stock have been retroactively restated. Additionally, the Company changed
its name from TMI Holding Corporation to Environmental Oil Processing
Technology Corporation.
13