<PAGE>   1
                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-QSB


         (X)      Quarterly report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934. For the quarterly period ended June 30,
                  2001

         ( )      Transition report under Section 13 or 15(d) of the Securities
                  Exchange Act of 1934. For the transition period from _____ to
                  _____


                         Commission File Number 0-18707


                                TBM HOLDINGS INC.

        (Exact Name of Small Business Issuer as Specified in Its Charter)

<TABLE>
<S>                                                                 <C>
                    FLORIDA                                                    59-2824411
(State or Other Jurisdiction of Incorporation)                      (IRS Employer Identification No.)
</TABLE>


                                 136 MAIN STREET
                           WESTPORT, CONNECTICUT 06880
                     (Address of Principal Executive Office)

                                 (203) 227-6140
                (Issuer's Telephone Number, Including Area Code)


         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days.

                               [X] Yes   [ ] No

         The number of shares outstanding of the issuer's Common Stock, $.001
par value per share, as of August 10, 2001, was 5,595,089.


         Transitional Small Business Disclosure Format (check one):
         [ ] Yes  [X] No
<PAGE>   2
                                      INDEX


                                TBM HOLDINGS INC.


<TABLE>
<S>                                                                                              <C>
Part I:  Financial Information

         Item 1.  Consolidated Financial Statements

         Condensed Consolidated Unaudited Balance Sheets
         at June 30, 2001 and December 30, 2000 ...............................................   3

         Condensed Consolidated Unaudited Statements of Operations
         for the three months and six months ended June 30, 2001 and July 1, 2000..............   4

         Condensed Consolidated Unaudited Statement of Stockholders' Equity and
         Comprehensive Loss for the six months ended June 30, 2001.............................   5

         Condensed Consolidated Unaudited Statements of Cash Flows
         for the six months ended June 30, 2001 and July 1, 2000...............................   6

         Notes to Condensed Consolidated Unaudited Financial Statements........................   7

         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations...................................................  17


Part II: Other Information

         Item 3.  Defaults Upon Senior Securities..............................................  23

         Item 4.  Submission of Matters to a Vote of Security Holders..........................  23

         Item 6.  Exhibits and Reports on Form 8-K ............................................  23

Signature......................................................................................  25
</TABLE>


                                       2
<PAGE>   3
                         PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                       TBM HOLDINGS INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                            JUNE 30,     DECEMBER 30,
                                                                              2001          2000
                                                                          ------------  ------------
                                                                          (unaudited)
<S>                                                                       <C>           <C>
                                     ASSETS
Current assets:

      Cash and cash equivalents                                           $      1,169  $      1,833
      Trade accounts receivable, net                                            10,140        12,182
      Inventories, net                                                           9,748        10,211
      Prepaid expenses and other receivables                                       201           252
                                                                          ------------  ------------
          Total current assets                                                  21,258        24,478
      Property, plant and equipment, net                                         9,586        10,248
      Goodwill and other intangibles, net                                       12,185        15,085
      Other assets                                                                 275           357
                                                                          ------------  ------------
          Total assets                                                    $     43,304  $     50,168
                                                                          ============  ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Trade accounts payable                                              $      5,767  $      5,877
      Current portion of long-term liabilities                                  14,921         4,983
      Accrued expenses                                                           2,995         3,543
      Bank overdraft payable                                                       987         1,329
                                                                          ------------  ------------
          Total current liabilities                                             24,670        15,732

Revolving credit loan, excluding current portion                                    --         7,247

Long-term debt, excluding current portion                                        3,153         6,472

Series B Cumulative convertible preferred stock,
      $.001 par value.  Authorized 2,000,000 shares; 944,508 shares
      issued and outstanding at June 30, 2001.  Aggregate liquidation
      preference of $3,088 at June 30, 2001                                      2,971            --

Stockholders' equity:
      Common stock, $.001 par value.  Authorized
          10,000,000 shares; 5,595,089 shares issued and outstanding                 6             6
      Additional paid-in capital                                                42,405        42,262
      Accumulated other comprehensive loss - foreign currency
          translation adjustments                                                   (2)         (100)
      Accumulated deficit                                                      (29,899)      (21,451)
                                                                          ------------  ------------
          Total stockholders' equity                                            12,510        20,717

Commitments and contingencies
                                                                          ------------  ------------
          Total liabilities and stockholders' equity                      $     43,304  $     50,168
                                                                          ============  ============
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                        3
<PAGE>   4
                       TBM HOLDINGS INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF OPERATIONS
                (In thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                 SIX MONTHS ENDED
                                              -----------------------------     -----------------------------
                                                JUNE 30,          JULY 1,         JUNE 30,          JULY 1,
                                                  2001             2000             2001             2000
                                                  ----             ----             ----             ----
<S>                                           <C>              <C>              <C>              <C>
Net sales                                     $     13,843     $     10,243     $     28,953     $     13,898
Cost of sales                                       12,438            8,334           25,218           10,941
                                              ------------     ------------     ------------     ------------
         Gross profit                                1,405            1,909            3,735            2,957

Selling, general and
         administrative expenses                     4,034            2,734            8,196            3,785
Loss on sale of foreign subsidiary                   1,097               --            1,097               --
Loss on impairment of goodwill                       1,843               --            1,843               --
                                              ------------     ------------     ------------     ------------
         Operating loss                             (5,569)            (825)          (7,401)            (828)
Interest expense                                      (421)            (313)            (862)            (412)
Other income (loss), net                                (6)             128              151              260
                                              ------------     ------------     ------------     ------------
         Loss before income taxes                   (5,996)          (1,010)          (8,112)            (980)
Income tax expense                                      44                9              105               31
                                              ------------     ------------     ------------     ------------
         Net loss                                   (6,040)          (1,019)          (8,217)          (1,011)
Convertible preferred stock dividends and
         beneficial conversion feature
         accretion                                     201               --              231               --
                                              ------------     ------------     ------------     ------------
         Net loss available to
         common stockholders                  $     (6,241)    $     (1,019)    $     (8,448)    $     (1,011)
                                              ============     ============     ============     ============

Basic and diluted loss per share:             $      (1.12)    $      (0.23)    $      (1.51)    $      (0.26)
                                              ============     ============     ============     ============

Weighted average shares outstanding              5,595,089        4,517,667        5,595,089        3,908,377
                                              ============     ============     ============     ============
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                        4
<PAGE>   5
                       TBM HOLDINGS INC. AND SUBSIDIARIES
       CONDENSED CONSOLIDATED UNAUDITED STATEMENT OF STOCKHOLDERS' EQUITY
                             AND COMPREHENSIVE LOSS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                              Common Stock      Additional     Other
                                                           -------------------   Paid-in    Comprehensive  Accumulated
                                                            Shares     Amount    Capital        Loss         Deficit      Total
                                                           --------   --------  ----------  -------------  -----------  ---------
<S>                                                        <C>        <C>       <C>         <C>            <C>          <C>
Balances, December 30, 2000                                  5,595    $     6   $   42,262  $       (100)  $  (21,451)  $ 20,717
     Comprehensive loss:
          Net loss                                              --         --           --            --       (8,217)    (8,217)
          Foreign currency translation adjustments              --         --           --           (28)          --        (28)
          Reclassification adjustment - realized
             foreign currency translation loss on
             sale of subsidiary                                 --         --           --           126           --        126
                                                                                                                        ---------
          Total comprehensive loss                                                                                        (8,119)
                                                                                                                        ---------

     Intrinsic value of beneficial conversion feature           --         --          143            --         (143)        --
     Convertible preferred stock dividends                      --         --           --            --          (88)       (88)


                                                           --------   --------    --------  -------------   ----------  ---------
Balances, June 30, 2001                                      5,595    $     6     $ 42,405  $         (2)   $ (29,899)  $ 12,510
                                                           ========   ========    ========  =============   ==========  =========
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                        5
<PAGE>   6
                       TBM HOLDINGS INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      SIX MONTHS ENDED
                                                                                ----------------------------
                                                                                  JUNE 30,         JULY 1,
                                                                                    2001            2000
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
Cash flows from operating activities:
     Net loss                                                                   $     (8,217)   $     (1,011)
Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                     1,002             437
     Loss on sale of foreign subsidiary                                                1,097              --
     Loss on impairment of goodwill                                                    1,843              --
Changes in working capital components                                                  1,381          (1,951)
                                                                                ------------    ------------
          Net cash used in operating activities                                       (2,894)         (2,525)
                                                                                ------------    ------------

Cash flows from investing activities:
     Capital expenditures for property, plant and equipment, net                        (452)            (58)
     Payment for acquisition of businesses, net of cash acquired                         (56)        (13,285)
     Proceeds from sale of foreign subsidiary                                            707              --
     Proceeds from sale of fixed assets                                                  129              --
                                                                                ------------    ------------
          Net cash provided by (used in) investing activities                            328         (13,343)
                                                                                ------------    ------------

Cash flows from financing activities:
     Change in bank overdraft payable                                                   (342)           (748)
     Net borrowings (payments) under revolving credit loan                              (321)          2,488
     Borrowings under long-term debt                                                     153              --
     Payments on long-term debt                                                         (460)             --
     Issuance of preferred stock, net of offering costs                                2,875              --
     Issuance of common stock                                                             --           8,000
                                                                                ------------    ------------
          Net cash provided by financing activities                                    1,905           9,740
          Effect of foreign currency translation on cash                                  (3)            (34)
                                                                                ------------    ------------
          Net decrease in cash                                                          (664)         (6,162)
Cash and cash equivalents, beginning of period                                         1,833          12,064
                                                                                ------------    ------------
Cash and cash equivalents, end of period                                        $      1,169    $      5,902
                                                                                ============    ============

Supplemental cash flow disclosure:

     Cash paid for interest                                                     $        691    $        387
     Cash paid for income taxes                                                 $         42    $         --

Supplemental non cash disclosure:
     Common stock issued for acquisition                                        $         --    $      3,000
     Note receivable from sale of foreign subsidiary                            $         76    $         --
     Dividends on preferred stock                                               $         88    $         --
</TABLE>

See accompanying notes to condensed consolidated unaudited financial statements.


                                        6
<PAGE>   7
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


(1) GENERAL; DESCRIPTION OF BUSINESS; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

The condensed consolidated financial statements included herein have been
prepared by TBM Holdings Inc. (the "Company"), without audit, pursuant to rules
and regulations of the Securities and Exchange Commission. The financial
statements reflect all adjustments (consisting of normal recurring accruals),
which are, in the opinion of management, necessary to fairly present such
information. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
rules and regulations. These interim financial statements should be read in
conjunction with the Company's most recently audited consolidated financial
statements included in the Company's Annual Report on Form 10-KSB, as amended by
Form 10-KSB/A, for the fiscal year ended December 30, 2000.

DESCRIPTION OF BUSINESS

The primary business of the Company, through the operations of its wholly-owned
subsidiaries, Long Reach, Inc. ("Long Reach") and Blue Giant Equipment
Corporation ("Blue Giant"), and Long Reach's subsidiary, Presto Lifts, Inc.
("Presto Lifts"), is the manufacturing and marketing of hydraulically activated
material handling equipment in Houston, Texas; Brampton, Ontario, Canada; and
Pawtucket, Rhode Island. The Company markets the majority of its products
through numerous material-handling dealers in the U.S., Canada and other
international locations. The Company's raw materials are readily available, and
the Company is not dependent on a single supplier or only a few suppliers of
common proprietary products and is not dependent on any one customer.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant intercompany transactions have been eliminated
in consolidation.

USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions related
to the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with accounting principles generally accepted in the United States of
America. Actual results could differ from those estimates.

CASH EQUIVALENTS

Cash equivalents for purposes of reporting cash flows consisted of highly liquid
debt instruments purchased with an original maturity of three months or less.
Such accounts are carried at cost plus accrued interest, which approximates
market value.

INVENTORY

Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method.



                                       7
<PAGE>   8
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Equipment under capital leases
is stated at the present value of minimum lease payments at the inception of the
lease.

Depreciation of property, plant and equipment is calculated on the straight-line
method, based on the estimated useful lives of the various assets, as follows:

<TABLE>
<CAPTION>
                                                              Life
                                                              ----
<S>                                                       <C>
              Buildings and improvements                  20 - 30 years
              Machinery and equipment                      3 - 12 years
              Furniture and fixtures                       7 -  8 years
</TABLE>

Equipment held under capital leases is depreciated on a straight-line basis over
the shorter of the lease term or estimated useful life of the asset.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.

GOODWILL, OTHER INTANGIBLES AND DEBT ISSUANCE COSTS

Goodwill is amortized on a straight-line basis over 20 years. Other intangibles
are being amortized on a straight-line basis over five years. Debt issuance
costs are being amortized over the life of the related debt and are included as
a component of interest expense.

IMPAIRMENT OF LONG-LIVED ASSETS

In assessing and measuring the impairment of long-lived assets, the Company
applies the provisions of Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". This Statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If the long-lived asset or identifiable intangible
being tested for impairment was acquired in a purchase business combination, the
goodwill that arose in that transaction is included in the asset grouping in
determining whether an impairment has occurred. If some but not all of the
assets acquired in that transaction are being tested, goodwill is allocated to
the assets being tested for impairment based on the relative fair values of the
long-lived assets and identifiable intangibles acquired at the acquisition date.
If such assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Additionally, where an impairment loss is recognized
for long-lived assets and identifiable intangibles where goodwill has been
allocated to the asset grouping, as described immediately above, the carrying
amount of the allocated goodwill is impaired (eliminated) before reducing the
carrying amounts of impaired long-lived assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.


                                       8
<PAGE>   9
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


With respect to the carrying amounts of goodwill remaining after the testing for
impairment of long-lived assets and identifiable intangibles, the Company
assesses such carrying value for impairment whenever events or changes in
circumstances indicate that the carrying amount of such goodwill may not be
recoverable. The Company assesses the recoverability of this goodwill by
determining whether the amortization of goodwill over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
business. The amount of goodwill impairment, if any, is measured based on
projected discounted operating cash flows compared to the carrying value of such
goodwill.

REVENUE RECOGNITION AND PRODUCT WARRANTY

Revenue is recognized at the time the product is shipped and risk of loss has
passed to the customer. The Company warrants that all manufactured equipment
will be free from defects in workmanship, material and parts. Warranty periods
range from six months to one year from the original date of purchase, depending
on the product. The Company provides for estimated product warranty at the time
of sale.

COMPREHENSIVE LOSS

Statement of Financial Accounting Standards ("SFAS") No. 130 Reporting
Comprehensive Income, establishes standards for reporting and presentation of
comprehensive loss and its components. Comprehensive loss, consisting of net
loss and foreign currency translation adjustments, is presented in the Condensed
Consolidated Unaudited Statement of Stockholders' Equity and Comprehensive Loss.

FOREIGN CURRENCY GAINS AND LOSSES

The foreign-owned assets and liabilities of the Company have been translated to
United States dollars using the exchange rate in effect at the balance sheet
date. Results of foreign operations have been translated using the average
exchange rate during the periods of operation. Resulting translation adjustments
have been recorded as a component of "Accumulated Other Comprehensive Loss" in
the Condensed Consolidated Unaudited Statement of Stockholders' Equity and
Comprehensive Loss. Foreign currency transaction gains and losses are included
in the Condensed Consolidated Unaudited Statements of Operations as they occur.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value estimates are made at discrete points in time based upon relevant
market information. These estimates may be subjective and involve uncertainties
and matters of significant judgment and therefore cannot be determined with
precision. The Company believes that the carrying amounts of its revolving
credit loans and long-term debt approximate the fair value of such items at June
30, 2001.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued Statement No. 141, "Business Combinations", and
Statement No. 142, "Goodwill and Other Intangible Assets". Statement 141
requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001. Statement 142 will require
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 will also require that
intangible assets with definite useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and


                                       9
<PAGE>   10
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


reviewed for impairment in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".

The Company is required to adopt the provisions of Statement 141 immediately,
and Statement 142 effective December 30, 2001. Upon adoption of Statement 142,
the Company will be required to reassess the useful lives and residual values of
all intangible assets acquired in purchase business combinations, and make any
necessary amortization period adjustments by the end of the first interim period
after adoption. In addition, to the extent an intangible asset is identified as
having an indefinite useful life, the Company will be required to test the
intangible asset for impairment in accordance with the provisions of Statement
142 within the first interim period. Any impairment loss will be measured as of
the date of adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period.

As of June 30, 2001, the Company has unamortized goodwill in the amount of
$11,964 which will be subject to the transition provisions of Statements 141 and
142. Amortization expense related to goodwill was $469 and $385 for the year
ended December 30, 2000 and the six months ended June 30, 2001, respectively.
Because of the extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact of adopting
these Statements on the Company's financial statements at the date of this
report, including whether any transitional impairment losses will be required to
be recognized as the cumulative effect of a change in accounting principle.

(2) LIQUIDITY

The Company's business requires substantial amounts of capital and liquidity,
principally for working capital requirements, debt service, the acquisition and
integration of new businesses and the development of new products. To date, the
Company has funded operating losses and capital expenditures with funds raised
during 1999 and 2000 through private placements of common stock, the issuance of
preferred stock in March 2001, and borrowings on its revolving lines of credit.
Most recently, on March 16, 2001, the Company raised $2,875, net of offering
costs, from the issuance of its Series B Preferred Stock (see note 8).
Management projects that the Company will require significant additional funds
for the continued implementation of its business plan, including capital
expenditures and debt service requirements for the remainder of 2001 and beyond.

At June 30, 2001, the Company has negative working capital of $3,412. The
Company is also in default with certain covenants under both the Long Reach
Credit Agreement (as defined in note 5) and the Blue Giant Credit Agreement (as
defined in note 5) at June 30, 2001, for which no waivers have been received. As
a result, the banks can demand payment of this debt at anytime. On July 31,
2001, Long Reach signed Amendment Four to the Long Reach Credit Agreement which
(i) reduced the revolving credit loan commitment from $10,000 to $8,000, (ii)
granted a one-time over advance of $350 to Long Reach which is due and payable
on demand by the bank at any time, (iii) deferred the August payment of interest
totaling $55 from August 1 to August 15, 2001, and (iv) deferred the August
payment of principal on the term loan of $60 to March 31, 2002, the term loan
maturity date. As a result of these defaults, all debt outstanding at June 30,
2001 under the Long Reach Credit Agreement and the Blue Giant Credit Agreement
has been classified as current.

The Company forecasts that it will need to raise additional funds to meet the
capital expenditures and operating needs included in its business plan for 2001.
The Company is actively seeking to raise these funds and is exploring various
alternatives to address its short-term and long-term capital needs. These
alternatives may include raising additional funds through various financing
arrangements, restructuring its existing indebtedness, modifying its


                                       10
<PAGE>   11
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


business plan, sales of assets, or a combination of the foregoing. Many factors,
some of which may be beyond the Company's control, may affect the Company's
ability to resolve its short-term and long-term capital needs. These factors
include the willingness of the holders of the Company's debt securities and the
banks to agree to any restructuring of the Company's indebtedness that the
Company may seek; the availability of sufficient additional financing on terms
acceptable to the Company; prevailing and perceived economic conditions, both in
general and with respect to the Company's industry; and other factors that could
affect the Company's performance. In addition to its estimated 2001 cash
requirements, the Company must raise additional capital or generate sufficient
operating cash flow to satisfy its debt service obligations on the revolving
credit loan under the Long Reach Credit Agreement, which matures on March 31,
2002.

The Company's financial statements have been prepared on a going-concern basis
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. See "Liquidity and Capital Resources" in
Management's Discussion and Analysis of Financial Condition and Results of
Operations in Part I, Item 2 of this Quarterly Report on Form 10-QSB.

(3) ACQUISITIONS

On February 23, 2000, the Company acquired Long Reach Holdings, Inc. (the
"Acquired Corporation") in a merger transaction (the "Long Reach Merger")
pursuant to which the Acquired Corporation merged into Long Reach. The aggregate
consideration in respect of the acquisition was (1) $1,500 of cash, (2) the
issuance of 500,000 shares of the Company's Common Stock valued at $6.00 per
share, (3) Long Reach's issuance of $3,000 of new subordinated notes to
refinance a portion of existing subordinated notes with certain stockholders of
the Acquired Corporation and (4) the assumption by Long Reach of $10,921 of
outstanding bank debt at the date of the acquisition. Upon closing, the Company
paid down $5,338 of the debt assumed. The Long Reach Merger has been accounted
for using the purchase method of accounting, effective at the date of
acquisition.

On May 16, 2000, the Company, through Long Reach, acquired all of the capital
stock of Lee Engineering Company, Inc. ("Lee Engineering") for $7,466 of cash
(the "Lee Engineering Acquisition"). On May 22, 2000, the Company changed the
name of Lee Engineering to Presto Lifts, Inc. The Lee Engineering Acquisition
has been accounted for using the purchase method of accounting, effective at the
date of the acquisition.

On November 10, 2000, the Company, through Blue Giant, acquired substantially
all of the assets and specific liabilities of Blue Giant Limited ("BG Limited")
and certain intellectual property of Blue Giant Corporation for $8,307 (the
"Blue Giant Acquisition"). The Blue Giant Acquisition was financed by (1) the
Company's issuance of 923,077 shares of common stock to existing shareholders at
$6.50 per share and (2) Blue Giant's obtaining a loan agreement with a bank
which advanced $5,190 at closing. Also at closing, Blue Giant paid down $2,694
of debt of BG Limited. The Blue Giant Acquisition has been accounted for using
the purchase method of accounting, effective at the date of acquisition.

Results for the six months ended July 1, 2000 include the operating results of
Long Reach for the period February 24, 2000 through July 1, 2000, and the
operating results of Presto Lifts for the period May 16, 2000 through July 1,
2000.

Set forth below is certain unaudited summary pro forma combined financial data
of the Company for the six months ended July 1, 2000, based upon historical
information that has been adjusted to reflect the Long Reach Merger, the Lee
Engineering Acquisition and the Blue Giant Acquisition as if such transactions


                                       11
<PAGE>   12
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


occurred at January 1, 2000. The unaudited summary pro forma combined financial
data is based upon certain assumptions and estimates, and therefore does not
purport to be indicative of the results that would have been obtained had the
transactions been completed as of such date or indicative of future results of
operations and financial position.

               Unaudited Summary Pro Forma Combined Financial Data

<TABLE>
<CAPTION>
                                                              Six months ended
                                                                July 1, 2000
                                                                ------------
<S>                                                           <C>
    Net sales                                                     $ 31,492
    Net loss                                                      $ (2,450)
                                                                  =========
    Basic and diluted loss per share                              $  (0.49)
                                                                  =========
    Basic and diluted weighted average shares outstanding         4,978,995
                                                                  =========
</TABLE>

(4)      INVENTORIES, NET

Inventory costs at June 30, 2001 and December 30, 2000 are summarized as
follows:

<TABLE>
<CAPTION>
                                           June 30, 2001      December 30, 2000
                                           -------------      -----------------
<S>                                        <C>                <C>
            Raw materials                     $ 5,975             $ 5,878
            Work in process                     1,241               1,512
            Finished goods                      2,532               2,821
                                              -------             -------
                 Total inventories            $ 9,748             $10,211
                                              =======             =======
</TABLE>

(5)      LONG-TERM DEBT AND REVOLVING CREDIT LOANS

Long-term debt at June 30, 2001 and December 30, 2000 is summarized as follows:

<TABLE>
<CAPTION>
                                                                   June 30, 2001      December 30, 2000
                                                                   -------------      -----------------
<S>                                                                <C>                <C>
     Note payable to bank, due in monthly installments of
         $50 or $60 plus interest at the lender's prime
         rate plus 2.0%, with final payment due
         March 31, 2002                                               $ 2,140              $ 2,500
     Note payable to bank, due in monthly installments
         of $6 plus interest at the lender's prime rate
         plus 1.0%, with final payment due
         November 1, 2020                                               1,391                1,442
     Note payable to bank, due in monthly installments
         of $11 plus interest at the lender's prime rate
         plus 1.0%, with final payment due May 1, 2004                    385                  456
     Notes payable to stockholders, interest at 10%
         through February 23, 2004, and Senior Debt Rate
         plus 2% thereafter until maturity on
         February 23, 2005                                              3,153                3,000
     Long Reach revolving credit loan (see below)                       7,416                7,247
     Blue Giant revolving credit loan (see below)                       3,589                4,057
                                                                      -------              -------

         Total long-term debt                                          18,074               18,702
     Less current portion                                              14,921                4,983
                                                                      -------              -------

         Long-term debt, excluding current portion                    $ 3,153              $13,719
                                                                      =======              =======
</TABLE>

The Long Reach credit agreement includes a revolving credit loan with a
commitment of $8,000, subject to borrowing base availability and other items,
and a term loan of $2,140(the "Long Reach Credit Agreement").

Borrowings under the Long Reach Credit Agreement accrue interest at the bank's
prime rate (6.75% at June 30, 2001) plus 2%. Subject to borrowing base
limitations calculated on eligible inventory and accounts receivable, the
revolving credit loan is due and payable on March 31, 2002. Additionally, a


                                       12
<PAGE>   13
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


one-quarter percent fee per annum is paid to the bank for the unused portion of
the revolving loan commitment. A closing fee of $125 was payable to the bank at
the time of entering into the Long Reach Credit Agreement in connection with the
Long Reach Merger. At June 30, 2001, the borrowing base availability for the
revolving credit loan was determined to be $7,522, of which the Company had
utilized $7,416.

The Long Reach Credit Agreement also provides that the term loan be repaid in
principal installments of $60, payable on the first day of each month beginning
January 1, 2001, and continuing through and including December 1, 2001, and $50,
payable on the first day of each month beginning January 1, 2002, and continuing
through March 31, 2002. The Company is required to meet certain financial
covenants as defined in the Long Reach Credit Agreement. At December 30, 2000,
the Company was in default on two of its financial covenants under the Long
Reach Credit Agreement. On March 31, 2001, the bank issued an amendment to the
Long Reach Credit Agreement, which included a waiver that effectively cured
these defaults. In addition, the bank revised certain financial covenants,
amended the due date of the Long Reach Credit Agreement to March 31, 2002 and
amended the rate at which interest accrues to the bank's prime rate plus 2%,
effective April 1, 2001. As a result of this amendment, the Company will be
required to refinance its Long Reach debt by March 31, 2002. There can be no
assurance that this refinancing can be accomplished. At June 30, 2001, the
Company is in default on four of its financial covenants under the Long Reach
Credit Agreement, as amended, for which no waiver has been received. As a
result, the bank can demand payment of this debt at anytime. As a result of the
defaults, all amounts owing to the bank are classified as current at June 30,
2001. On July 31, 2001, Long Reach signed Amendment Four to the Long Reach
Credit Agreement which (i) reduced the revolving credit loan commitment from
$10,000 to $8,000, (ii) granted a one-time over advance of $350 to Long Reach
which is due and payable on demand by the bank at any time, (iii) deferred the
August payment of interest totaling $55 from August 1 to August 15, 2001, and
(iv) deferred the August payment of principal on the term loan of $60 to March
31, 2002, the term loan maturity date.

The $3,153 notes payable to stockholders were recorded at a discount at the Long
Reach Merger date and interest was imputed at 6% using the interest method to
reflect an effective interest rate over the life of the notes. On March 16, 2001
the annual rate of interest on the notes payable to stockholders increased from
6% to 10% effective January 1, 2001.

The notes payable to stockholders and the Long Reach term loan and revolving
credit loan are secured by liens on substantially all of the assets of Long
Reach and Presto Lifts. In addition, the Long Reach Credit Agreement contains
various restrictions, including restrictions relating to entering into certain
activities, payment of dividends, investments, capital leases and purchases and
sales of assets, and also requires compliance with certain financial ratios and
minimum levels of working capital.

The Blue Giant credit agreement includes a revolving credit loan with a
commitment of $4,622, subject to borrowing base availability and other items,
and term loans of $1,391 and $385, respectively (the "Blue Giant Credit
Agreement"). Borrowings under the Blue Giant Credit Agreement accrue interest at
the bank's prime rate (6.25% at June 30, 2001) plus 0.625% or 1.0% for the
revolving credit agreement and the term loans, respectively. Subject to
borrowing base limitations calculated on eligible inventory and accounts
receivable, the revolving credit loan is reviewed on an annual basis.
Additionally, a one-quarter percent fee per annum is paid to the bank for the
unused portion of the revolving loan commitment. In addition, the Blue Giant
Credit Agreement contains certain financial and operating covenants. At June 30,
2001, the borrowing base availability for the revolving credit loan was
determined to be $3,698, of which Blue Giant had utilized $3,589. At December
30, 2000, the Company was in default on one of its financial covenants under


                                       13
<PAGE>   14
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


the Blue Giant Credit Agreement. On March 23, 2001, the bank issued an amendment
to the Blue Giant Credit Agreement, which included a waiver that effectively
cured these defaults and amended certain debt covenants. The Company is also in
default with certain financial covenants under the Blue Giant Credit Agreement
at June 30, 2001, for which no waiver has been received. As a result, the bank
can demand payment of this debt at anytime. As a result of the defaults, all
amounts owing to the bank are classified as current at June 30, 2001.

(6)      ASSET IMPAIRMENT AND RESTRUCTURING CHARGES

In February 2000, the Company acquired Long Reach and recorded goodwill of
approximately $7,500. Since being acquired by the Company in February
2000, Long Reach has recorded operating losses. As a result of Long Reach's
slower than expected ability to restore customer confidence in its
manufacturing capabilities and a downturn in the lift truck industry, Long
Reach continued to operate at a loss for the quarter ended June 30, 2001. The
combination of these events triggered an impairment review of Long Reach's
long-lived assets, including goodwill. A revised operating plan has been
developed including the possible sale of under-performing assets. The revised
business plan provided the basis for measurement of an asset impairment charge
for the three months ended June 30, 2001. The Company compared the expected
undiscounted cash flows from the revised business plan to the carrying value of
the long-lived assets, including goodwill, noting that the carrying value of
the long-lived assets exceeded the expected undiscounted cash flows. The
impairment was determined by comparing the present value of the expected cash
flows to the carrying value of the long-lived assets. Accordingly, in the three
months ended June 30, 2001, the Company recorded an asset impairment charge of
$1,843 for impairment of Long Reach goodwill. This impairment is based on the
estimated cash flows derived from the business plan that exists as of June 30,
2001. Failure to achieve these expected cash flow projections in future
periods, or changes in the business plan could have a negative impact on the
Company and could result in further write-downs of the Company's long-lived
assets.

On October 2, 2000, the Company announced plans to exit its Little Rock,
Arkansas facility. Available capacity at its other manufacturing facilities
eliminated the need for this location. Product line transfers began immediately
and were completed by December 30, 2000. The lessor was notified that the
Company elected to terminate its lease and exit the facility by March 13, 2001.
Certain equipment was disposed of through a February 2001 auction. This exit
plan resulted in the involuntary termination of substantially all of the 82
salaried and hourly employees at Little Rock.

Restructuring expenses of $746 were recorded in the fourth quarter of fiscal
2000. Involuntary termination benefits represented $639 of the total
restructuring charge. The remaining $107 represented costs incurred to manage
the closing process and prepare the facility for exit. As of June 30, 2001, all
amounts had been paid.

(7)      DIVESTITURE OF SUBSIDIARY

On June 1, 2001, the Company sold 100 percent of the shares of stock of Long
Reach Brudi Pacific Pty Ltd, Long Reach's Australian subsidiary, for
approximately $707 in cash and a $76 note receivable. The note receivable will
be collected over four years. As a result of the sale, the Company recorded a
loss on sale of foreign subsidiary totaling $1,097, including $126 realized
foreign currency translation loss, and $700 of goodwill that was allocated to
this subsidiary in the Long Reach Merger based on the relative fair value of the
net assets acquired at the date of acquisition.



                                       14
<PAGE>   15
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)

(8)      CUMULATIVE CONVERTIBLE PREFERRED STOCK

On March 16, 2001, the Company issued 944,508 shares (12% of the Company's fully
diluted capitalization) of 10% Series B Cumulative Convertible Preferred Stock
(the "Series B Preferred Stock"). Proceeds of approximately $2,875, net of
offering costs, were used for working capital and other general corporate
purposes (the "Preferred Stock Investment"). The initial liquidation preference
is approximately $3.18 per share. The excess of the liquidation preference over
the carrying value is being accreted quarterly over a seven-year period ending
March 1, 2008, by direct charge to accumulated deficit. Dividends on the Series
B Preferred Stock are cumulative, compounding quarterly at a rate of 10% per
annum. Accrued and unpaid dividends are payable in cash. All of the Series B
Preferred Stock shall be convertible at any time at the election of the holder
into a unit (a "Conversion Unit") consisting of (i) one share of 10% Series C
Cumulative Redeemable Preferred Stock (the "Series C Preferred Stock") and (ii)
that number of shares of common stock determined by dividing an amount equal to
approximately $3.18 by an amount equal to the adjusted conversion price. The
intrinsic value of the beneficial conversion feature is $3,000 and is being
accreted ratably over the seven-year period ending March 1, 2008. The intrinsic
value of the beneficial conversion feature accreted for the period ended June
30, 2001 amounted to $143. Dividends on the Series C Preferred Stock are
cumulative, compounding quarterly at a rate of 10% per annum. Accrued and
unpaid dividends are payable in cash. At June 30, 2001, none of the Series B
Preferred Stockholders had exercised the conversion rights. The Series B
Preferred Stock and Series C Preferred Stock are equal with respect to dividend
and liquidation rights and are senior to all other equity securities. All of
the Series C Preferred Stock shall be redeemed on the earlier of (i) a
qualified public offering, (ii) March 1, 2008 or (iii) a sale, merger or other
change of control event. As a result of the redemption feature, the Series B
Preferred Stock is excluded from permanent equity.

(9)      EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed by dividing net income (loss)
available to common stockholders by the weighted average number of shares
outstanding during the period. The accretion of the intrinsic value of the
beneficial conversion feature has increased the loss attributable to common
stockholders in the calculation of earnings (loss) per share. If applicable,
diluted income per share is determined on the assumption that outstanding
dilutive stock options, warrants and convertible preferred stock have been
exercised and the aggregate proceeds as defined were used to reacquire common
stock using the average price of such common stock for the period.

At June 30, 2001 and July 1, 2000, 130,146 and 5,630 shares subject to stock
options, respectively, and 1,201,175 shares subject to stock warrants were not
included in the calculation of diluted income (loss) per share, because to do so
would have been anti-dilutive. At June 30, 2001, 944,508 issued shares of Series
B Preferred Stock were not included in the calculation of diluted income (loss)
per share, because to do so would have been anti-dilutive.

(10)     CONTINGENCIES AND COMMITMENTS

The Company is involved in claims and legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate disposition of
these matters will not have a material adverse effect on the Company's
consolidated financial position and results of operations.

Blue Giant has been served with a statement of claim dated March 15, 2001, in an
action brought by Daniel G. Marshall Engineering Corporation ("DGM") pending in
the Ontario Superior Court of Justice. The complaint alleges that DGM entered
into a contract with Blue Giant for professional engineering services in August
1995 and a collateral proposal to redesign certain lift trucks in August 1996.
The prior owner of Blue Giant's assets, and not Blue Giant, was


                                       15
<PAGE>   16
                       TBM HOLDINGS INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                 (In thousands, except share and per share data)


the party to these contracts. DGM claims that Blue Giant no longer has the
authority to use the designs created by DGM or the right to transfer the designs
to Blue Giant's parent company. DGM is claiming damages for breach of contract,
breach of confidential information and unjust enrichment in the aggregate amount
of $2,500, satisfaction of outstanding amounts due under the contracts of
approximately $10, or, in the alternative, an injunction against Blue Giant to
prevent it from using DGM's designs in the manufacture of forklifts. The Company
filed a Statement of Defence on May 11, 2001, denying all causes of action
claimed by DGM. The ultimate outcome of this matter cannot currently be
predicted.


                                       16
<PAGE>   17
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         The following discussion is intended to assist in the understanding of
the Company's financial position and results of operations for the three month
and six month periods ended June 30, 2001 and July 1, 2000. This discussion
should be read in conjunction with consolidated financial statements and notes
thereto included elsewhere herein and the Company's Annual Report on Form
10-KSB, as amended by Form 10-KSB/A, for the fiscal year ended December 30,
2000. See also "Forward-Looking Statements" below.

         The dollar amounts reported in this Part I, Item 2, are reported in
thousands.

Results Of Operations

         During the first half of 2001, the Company experienced incoming new
order bookings rates that were significantly lower than expected. New order
bookings were lower than expectations by 10% to 21% in each of the Company's
operating subsidiaries. The Company believes that the lower-than-expected
bookings are a result of both the fact that it has taken Long Reach longer than
the Company expected to restore customer confidence in its manufacturing
capabilities and the uncertainty in the overall business economy and the
resulting reduction in capital spending for machinery and equipment by
manufacturing and distribution companies. The Company follows forklift industry
data provided by the International Truck Association (ITA) in order to track
industry sales in North America. The ITA reported that orders for new forklifts
booked in the first half of 2001 were 41% less than orders booked during the
comparable period in 2000. Both the Long Reach and Presto Lifts operations have
been significantly negatively impacted by this decline. If booking rates remain
lower than expected in the second half of 2001, this could have an adverse
effect on the Company's operating results and financial performance. Such effect
could further adversely affect carrying values of certain assets such as
goodwill.

         Operating results through February 23, 2000, the date of the
acquisition of Long Reach, reflect interest income generated through the
investment of the proceeds of a private placement of restricted shares of the
Company's Common Stock (the "1999 Private Placement") in short-term government
securities. Operating expenses during such period were costs associated with
search activities required to identify a manufacturing company acquisition,
maintaining a business office and complying with the Company's reporting
obligations as a public company.

         Results for the six months ended July 1, 2000, include the operating
results of Long Reach for the period February 24, 2000 through July 1, 2000, and
the operating results of Presto Lifts for the period May 16, 2000 through July
1, 2000, consolidated with the expenses incurred by the Company associated with
maintaining a business office and complying with its reporting obligations as a
public company.

         The Company generated net sales of $13,843 and $28,953 and net losses
of $6,040 and $8,217 for the three months and six months ended June 30, 2001,
respectively, compared with net sales of $10,243 and $13,898 and net losses of
$1,019 and $1,011 for the comparable periods in 2000. For the three months and
six months ended June 30, 2001, gross profit represented 10.1% and 12.9% of net
sales, respectively, and selling, general and administrative expenses
represented 29.1% and 28.3% of net sales, respectively. For the three months and
six months


                                       17
<PAGE>   18
ended July 1, 2000, gross profit represented 18.6% and 21.3% of net sales,
respectively, and selling, general and administrative expenses represented 26.7%
and 27.2% of net sales, respectively.

         During the three months and six months ended June 30, 2001, the
increase in net sales, cost of sales, and selling, general and administrative
expenses over the corresponding period of the prior year is the result of the
Company's acquisitions of Long Reach on February 23, 2000, the Company's
acquisition of Presto Lifts on May 16, 2000 and its acquisition of Blue Giant on
November 10, 2000 (each of whose results were included for the entire six month
period in 2001). The decline in gross profit % is attributable to lower than
expected net sales in the three months and six months ended June 30, 2001. Since
the Company had not anticipated the extent of the sales decline, fixed expenses
were not reduced enough to maintain gross profit %. See comments above regarding
ITA orders booked.

         Interest expense for the three months and six months ended June 30,
2001 was $421 and $862 compared to $313 and $412 for the three months and six
months ended July 1, 2000, respectively. The increase is due to additional
borrowing incurred as a result of the Long Reach, Presto Lifts and Blue Giant
acquisitions. Other income (loss), net was ($6) and $151 for the three months
and six months ended June 30, 2001, respectively, as compared to $128 and $260
for the three months and six months ended July 1, 2000, respectively. Other
income for the six months ended June 30, 2001 results substantially from foreign
currency transaction gains recognized by Blue Giant while other income for the
three months and six months ended July 1, 2000 results from investment of excess
cash on hand.

         On June 1, 2001, the Company sold its subsidiary located in Adelaide,
Australia for $783 and recognized a loss of $1,097. See footnote 7 to the
condensed consolidated unaudited financial statements included in Part I, Item 1
of this Quarterly Report on Form 10-QSB.

         In the three months ended June 30, 2001, the Company recorded a $1,843
impairment of goodwill. See footnote 5 to the condensed consolidated unaudited
financial statements included in Part I, Item 1 of this Quarterly Report on Form
10-QSB.

Liquidity and Capital Resources

         At June 30, 2001, the Company owed $11,005 under its revolving credit
facilities and $3,916 under its term loan facilities. Long-term debt outstanding
at June 30, 2001 consisted of $3,153 of notes payable to stockholders.

         In connection with its acquisition of Long Reach (the "Long Reach
Merger"), the Company assumed (and subsequently refinanced) Long Reach's
indebtedness to its lender in the amount of $10,921. Long Reach's credit
agreement (the "Long Reach Credit Agreement"), which includes a revolving credit
loan and a term loan, imposes financial and operating covenants on Long Reach.
Except as specifically permitted under the terms of the credit agreement, Long
Reach is prohibited from borrowing money, guaranteeing loans or permitting liens
to be placed on its assets. Long Reach is restricted in its ability to enter
into certain types of transactions, such as mergers, may not sell a substantial
portion of its assets and, unless specifically permitted by the credit
agreement, may not acquire substantially all of the assets of another party.
Long Reach is prohibited from declaring cash dividends (other than to the
Company in an amount equal to its


                                       18
<PAGE>   19
income tax liability) and, in addition, the credit agreement requires Long Reach
to maintain certain financial ratios, including a leverage ratio and a minimum
fixed charge coverage ratio. Also, Long Reach must maintain a minimum level of
net worth and is limited in the amount of net losses it can sustain during
specified periods. On March 31, 2001, the Long Reach Credit Agreement was
amended. As part of this amendment, effective April 1, 2001, the due date of the
Long Reach Credit Agreement was advanced from March 31, 2003 to March 31, 2002.
As a result of this amendment, the Company will be required to refinance its
Long Reach debt by March 31, 2002. There can be no assurance that this
refinancing can be accomplished.

         At June 30, 2001, the Company is in default on four of its financial
covenants under the Long Reach Credit Agreement, for which no waivers have been
received. As a result, the bank can demand payment of this debt at anytime. As a
result of the defaults, all amounts owing to the bank are classified as current
at June 30, 2001. On July 31, 2001, Long Reach signed Amendment Four to the Long
Reach Credit Agreement which (i) reduced the revolving credit loan commitment
from $10,000 to $8,000, (ii) granted a one-time over advance of $350 to Long
Reach which is due and payable on demand by the bank at any time, (iii) deferred
the August payment of interest totaling $55 from August 1 to August 15, 2001,
and (iv) deferred the August payment of principal on the term loan of $60 to
March 31, 2002, the term loan maturity date. A copy of this amendment has been
filed as Exhibit 10.1 to this Quarterly Report on Form 10-QSB.

         In connection with its acquisition of Blue Giant, the Company assumed
and incurred approximately $5,000 of debt secured by Blue Giant's inventory and
assets. The terms of the Blue Giant credit agreement (the "Blue Giant Credit
Agreement"), as amended on March 23, 2001, impose financial and operating
covenants on Blue Giant, including a ratio of total debt to net worth, a ratio
of senior debt to earnings, and limiting capital expenditures and corporate
distributions. The Company is in default with certain covenants under the Blue
Giant Credit Agreement at June 30, 2001, for which no waivers have been
received. As a result, the bank can demand payment of this debt at anytime. As a
result of the defaults, all debt under this credit agreement has been classified
as current at June 30, 2001. Management believes that third quarter, 2001 Blue
Giant operating results will remedy the covenant defaults under the Blue Giant
Credit Agreement; however, there can be no assurance that such defaults will be
remedied.

         The Company has negative working capital of $3,412 at June 30, 2001.
The Company forecasts that it will need to raise additional funds to meet the
capital expenditures and operating needs included in its business plan for 2001.
The Company is actively seeking to raise these funds and is exploring various
alternatives to address its short-term and long-term capital needs. These
alternatives may include raising additional funds through various financing
arrangements, restructuring its existing indebtedness, modifying its business
plan, sales of assets, or a combination of the foregoing. Many factors, some of
which may be beyond the Company's control, may affect the Company's ability to
resolve its short-term and long-term capital needs. These factors include the
willingness of the holders of the debt securities and the banks to agree to any
restructuring of the Company's indebtedness that the Company may seek; the
availability of sufficient additional financing on terms acceptable to the
Company; and prevailing and perceived economic conditions, both in general and
with respect to the Company's industry. In addition to its estimated 2001 cash
requirements, the Company must raise additional capital or generate sufficient
operating cash flow to satisfy its debt service obligations on its Long Reach
Credit Agreement, which matures on March 31, 2002.


                                       19
<PAGE>   20
         The Company's financial statements have been prepared on a
going-concern basis which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. While management
currently believes it will obtain additional funds, there can be no assurance
that additional capital will be available to the Company on terms that comply
with the Company's credit agreements and indebtedness or on terms that
management finds acceptable. There can be no assurance that the Company's
lenders will not take action to enforce their rights under the credit agreements
or that the Company will be able to generate sufficient cash flow or obtain
sufficient additional financing to meet its debt service requirements, or
continue to operate as a going-concern.

         Net cash used in operating activities was $2,894 for the six months
ended June 30, 2001, compared with $2,525 for the six months ended July 1, 2000.
The net loss for the six months ended June 30, 2001 of $8,217 ($4,275 net of
non-cash expenses), was partially offset by a reduction in working capital
components for such period of $1,381. During the six months ended July 1, 2000,
use of cash in operating activities includes the net loss of $1,011 ($574 net of
non-cash expenses), combined with an increase in the Company's working capital
components of $1,951 substantially due to a $1,175 reduction in payables as the
Company brought suppliers payables current and a $475 decrease in accruals
related to the Long Reach Merger.

         Net cash provided by (used in) investing activities was $328 for the
six months ended June 30, 2001, compared with ($13,343) for the six months ended
July 1, 2000. The cash provided by investing activities in 2001 results
substantially from $707 cash proceeds from the sale of the Adelaide, Australia
subsidiary while the usage in 2000 reflects primarily the acquisitions of Long
Reach on February 23, 2000, and Presto Lifts on May 16, 2000.

         Net cash provided by financing activities was $1,905 for the six months
ended June 30, 2001, as compared to $9,740 for the six months ended July 1,
2000. Net cash provided by financing activities for the six months ended June
30, 2001 reflects primarily the issuance of 10% Series B Cumulative Convertible
Preferred Stock for net cash proceeds of $2,875 offset by a net decrease in the
Company's borrowings of $628 and a $342 reduction in the bank overdraft payable
during the period. Net cash provided by financing activities for the six months
ended July 1, 2000 reflects the issuance of Common Stock of $8,000 in
connection with the 1999 Private Placement and an increase in borrowings of
$2,488 to fund changes in working capital during the period, after giving
effect to the change in bank overdraft payable for the period.

         Cash received from the issuance of Common Stock was $8,000 for the six
months ended July 1, 2000. Issuance of Common Stock for the six months ended
April 1, 2000 reflects the Company's private placement of 916,667 shares of its
Common Stock at $6.00 per share and the exercise of a first call option pursuant
to which a stockholder purchased 500,000 shares of Common Stock at an exercise
price of $5.00 per share, each on February 23, 2000. In the six months ended
July 1, 2000, the Company also issued 500,000 shares of its Common Stock, valued
at $6.00 per share, in connection with its acquisition of Long Reach on February
23, 2000.

         Cash received from the issuance of Preferred Stock was $2,875, net of
offering costs, for the six months ended June 30, 2001, which reflects the
Company's private placement of 944,508 shares of its 10% Series B Cumulative
Convertible Preferred Stock on March 16, 2001. As a result of losses incurred
in the year ended December 30, 2000, it was necessary for


                                       20
<PAGE>   21
the Company to raise additional funds for working capital and general business
purposes of the Company and its subsidiaries during the first half of 2001.

         Capital expenditures for property, plant and equipment, net, totaled
$452 for the six months ended June 30, 2001. Total capital expenditures are
currently expected to aggregate $917 for fiscal 2001.

Quantitative And Qualitative Disclosures

         Market Risk. The Company is exposed to market risks. Market risk is the
potential loss arising from adverse changes in market prices and rates. The
Company does not enter into derivative instruments. The Company's market risks
could arise from changes in interest rates and foreign currency exchange rates.

         Interest rate risk. The Company is subject to market risk exposure
related to changes in interest rates. Accordingly, the Company's net income is
affected by changes in interest rates. Assuming the Company's current level of
borrowings, a 100 basis point increase in interest rates under these borrowings
would have increased the Company's net loss for the three months and six months
ended June 30, 2001 by approximately $37 and $75, respectively. In the event of
an adverse change in interest rates, the Company could take action to mitigate
its exposure; however, due to the uncertainty of the actions that would be taken
and their possible effects, this analysis assumes no such actions. Furthermore,
this analysis does not consider the effects of the change in the level of
overall economic activity that could exist in such an environment.

         Foreign exchange currency risk. The Company's earnings are affected by
foreign exchange rate fluctuations. As of June 30, 2001, the Company had foreign
operations in Canada. The translation adjustment during the six months ended
June 30, 2001 was a loss of $28, which was recognized in accumulated other
comprehensive loss in the consolidated balance sheet included herein.

Recent Accounting Pronouncements

         In July 2001, the FASB issued Statement No. 141, "Business
Combinations", and Statement No. 142, "Goodwill and Other Intangible Assets".
Statement 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 as well as all purchase
method business combinations completed after June 30, 2001. Statement 142 will
require that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of Statement 142. Statement 142 will also require
that intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".

         The Company is required to adopt the provisions of Statement 141
immediately, and Statement 142 effective December 30, 2001. Upon adoption of
Statement 142, the Company will be required to reassess the useful lives and
residual values of all intangible assets acquired in purchase business
combinations, and make any necessary amortization period adjustments by the


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<PAGE>   22
end of the first interim period after adoption. In addition, to the extent an
intangible asset is identified as having an indefinite useful life, the Company
will be required to test the intangible asset for impairment in accordance with
the provisions of Statement 142 within the first interim period. Any impairment
loss will be measured as of the date of adoption and recognized as the
cumulative effect of a change in accounting principle in the first interim
period.

         As of June 30, 2001, the Company has unamortized goodwill in the amount
of $11,964 which will be subject to the transition provisions of Statements 141
and 142. Amortization expense related to goodwill was $469 and $385 for the year
ended December 30, 2000 and the six months ended June 30, 2001, respectively.
Because of the extensive effort needed to comply with adopting Statements 141
and 142, it is not practicable to reasonably estimate the impact of adopting
these Statements on the Company's financial statements at the date of this
report, including whether any transitional impairment losses will be required to
be recognized as the cumulative effect of a change in accounting principle.

FORWARD-LOOKING STATEMENTS

         Statements contained in this Form 10-QSB that are not purely historical
are forward-looking statements and are being provided in reliance upon the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may be identified, without limitation, by use of the
words "forecasts," "expects," "anticipates," "believes," "estimates," "intends"
and similar expressions. All forward-looking statements are made as of the date
hereof and are based on current management expectations and information
available to the Company as of such date. The Company assumes no obligation to
update any forward-looking statement. It is important to note that actual
results could differ materially from historical results or those contemplated in
the forward-looking statements. Forward-looking statements involve a number of
risks and uncertainties and may include trend information. Readers are cautioned
not to place undue reliance on any such forward-looking statements.


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<PAGE>   23
Part II:  Other Information

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.

         As of June 30, 2001, the Company was in default with certain financial
covenants under the credit agreements to which Long Reach and Blue Giant
are party. See Notes 2 and 5 to condensed consolidated unaudited financial
statements included in Part I, Item 1 of this Quarterly Report on Form 10-QSB
and "Liquidity and Capital Resources" in Management's Discussion and Analysis
of Financial Condition and Results of Operations in Part I, Item 2 of this
Quarterly Report on Form 10-QSB.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         The Company held its annual meeting of shareholders on May 4, 2001.
Record shareholders of the Company's Common Stock and 10% Series B Cumulative
Convertible Preferred Stock at the close of business on March 16, 2001 were
entitled to vote at the annual meeting.

         The following six directors were elected to serve until the next annual
meeting of shareholders and until their respective successors are duly elected
and qualified: Anand Sharma, William A. Schwartz, Rainer H. Bosselmann, Daniel
A. Levinson, Herbert E. Brown and Michael R. Stone. The number of shares voted
in favor of each of the nominees for director was 4,047,369, which represented a
majority of the outstanding voting stock of the Company. 190,073 shares were
voted to withhold approval of each nominee for director.

         The shareholders also voted to ratify the selection of KPMG LLP as
independent accountants of the Company for the fiscal year ending December 30,
2001. 4,097,382 shares were voted in favor of such proposal, representing a
majority of the outstanding voting stock of the Company. 140,030 votes were cast
against this proposal; 30 votes were cast to abstain.

         The shareholders voted to approve the Company's adoption of its 2000
Stock Option Plan. 4,017,342 shares were voted in favor of such proposal,
representing a majority of the outstanding voting stock of the Company. 195,068
votes were cast against this proposal; 25,032 votes were cast to abstain.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      EXHIBITS

         Exhibit No.       Description
         -----------       -----------

         10.1              Amendment Four to Loan and Security Agreement, dated
                           as of July 31, 2001, between Long Reach, Inc. and
                           Bank One, NA, f/k/a Bank One, Texas, N.A.


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<PAGE>   24
         (b)      REPORTS ON FORM 8-K

                  None.



                                       24
<PAGE>   25
                                    SIGNATURE

         In accordance with the requirements of the Securities Exchange Act of
1934, as amended, the Company has caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                        TBM HOLDINGS INC.


Date:  August 14, 2001                  By: /s/ Patrick H. Peyton
                                            -----------------------------------
                                            Patrick H. Peyton,
                                            Chief Financial Officer and Vice
                                            President-Finance
                                            (Principal Financial Officer)


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