##### Table of Contents



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 September 29, 2002                                  
|      |  |                                                                                    
|[   ] |  | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File No. 000-30011

TMI HOLDINGS, INC.




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


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 65-0309540                          
|                                                               |  |                                     
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)

3141 W. Hallandale Beach Boulevard
Hallandale, Florida 33009




(Address of Principal Executive Offices)


Issuers telephone number, including area code: (954) 985-8430

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.

YES  [X]        NO  [   ]

State the number of shares outstanding of each of the Issuers classes of
common equity as of the latest practical date: At November 14, 2002, there
were outstanding 3,463,877 shares of Common Stock, $.01 par value.

Transitional Small Business Disclosure Format:  YES  [   ]     NO  [X]





---

TABLE OF CONTENTS



|                                                                                             |                               |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- | ----------------------------- |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                              
|Item 1. Financial Statements                                                                
|                                                                                             | BALANCE SHEET                
|                                                                                             | STATEMENTS OF OPERATIONS     
|                                                                                             | STATEMENTS OF CASH FLOWS     
|                                                                                             | NOTES TO FINANCIAL STATEMENTS
|ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|ITEM 3 CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION                                                                 
|ITEM 5 OTHER INFORMATION                                                                    
|ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                                                  
|CERTIFICATIONS                                                                              
|COMPUTATION OF PER SHARE EARNINGS                                                           
|STOCK PURCHASE AGREEMENT DATED 10-28-2002                                                   
|STATEMENTS REQUIRED BY 18 U.S.C. SECTION 1350                                               



---



##### Table of Contents



TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

INDEX TO FORM 10-QSB







|                               |  |                                                                                                                           |       |      |       | 
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------- | ----- | ---- | ----- | 
|                               |  |                                                                                                                           |       | Page
|                               |  |                                                                                                                           |       |     
|PART I  FINANCIAL INFORMATION |  |                                                                                                                           |       |     
|Item 1.                        |  | Financial Statements                                                                                                      |       |      |       | 
|                               |  | Balance Sheet as of September 29, 2002 (unaudited)                                                                        |       |      | 3     | 
|                               |  | Statements of Operations for the Three Months and Nine Months Ended September 29,
2002 and September 30, 2001 (unaudited) |       |      | 4     | 
|                               |  | Statements of Cash Flows for the Nine Months Ended September 29, 2002 and
September 30, 2001 (unaudited)                  |       |      | 5-6   | 
|                               |  | Notes to Financial Statements (unaudited)                                                                                 |       |      | 7-10  | 
|Item 2.                        |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations                                     |       |      | 11-14 | 
|Item 3.                        |  | Controls and Procedures                                                                                                   |       |      | 14    | 
|PART II  OTHER INFORMATION    |  |                                                                                                                           |       |     
|Item 5.                        |  | Other Information                                                                                                         |       |      | 15    | 
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                          |       |      | 15    | 
|Signatures                     |  |                                                                                                                           | 16    |     
|Certifications                 |  |                                                                                                                           | 17-20 |     

2



---



##### Table of Contents






TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

BALANCE SHEET
(Unaudited)

|                                                |                                                                                                     |                                            |           |                    |           | 
|----------------------------------------------- | --------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | ------------------ | --------- | 
|                                                |                                                                                                     |                                            |           | September 29, 2002
|                                                |                                                                                                     |                                            |           |                   
|ASSETS                                          |                                                                                                     |                                            |           |                   
|CURRENT ASSETS:                                 |                                                                                                     |                                            |           |                   
|                                                | Cash and cash equivalents                                                                           |                                            | $         | 19,770             |          
|                                                | Interest receivable  Thrift Ventures                                                               |                                            |           | 3,201              |          
|                                                | Prepaid insurance                                                                                   |                                            |           | 2,269              |          
|                                                |                                                                                                     |                                            |           |                   
|                                                |                                                                                                     | TOTAL CURRENT ASSETS                       |           |                    | 25,240    | 
|NOTE RECEIVABLE  THRIFT VENTURES  NON-CURRENT |                                                                                                     |                                            | 1,175,000 |                   
|                                                |                                                                                                     |                                            |           |                   
|                                                |                                                                                                     | TOTAL ASSETS                               |           | $                  | 1,200,240 | 
|                                                |                                                                                                     |                                            |           |                   
|LIABILITIES AND STOCKHOLDERS EQUITY            |                                                                                                     |                                            |           |                   
|                                                | Accrued expenses                                                                                    |                                            | $         | 52,508             |          
|                                                |                                                                                                     |                                            |           |                   
|                                                |                                                                                                     | TOTAL CURRENT LIABILITIES                  |           |                    | 52,508    | 
|COMMITMENTS AND CONTINGENCIES                   |                                                                                                     |                                            |           |                   
|STOCKHOLDERS EQUITY:                           |                                                                                                     |                                            |           |                   
|                                                | Preferred stock: $.01 par value, authorized 1,500,000
shares, issued and outstanding 250,000 shares |                                            |           | 2,500              |          
|                                                | Common stock: $.01 par value, authorized 15,000,000
shares, issued and outstanding 3,463,877 shares |                                            |           | 34,639             |          
|                                                | Additional paid-in capital                                                                          |                                            |           | 4,492,921          |          
|                                                | Accumulated deficit                                                                                 |                                            |           | (3,382,328         | )        
|                                                |                                                                                                     |                                            |           |                   
|                                                |                                                                                                     | TOTAL STOCKHOLDERS EQUITY                 |           |                    | 1,147,732 | 
|                                                |                                                                                                     |                                            |           |                   
|                                                |                                                                                                     | TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY |           | $                  | 1,200,240 | 
|                                                |                                                                                                     |                                            |           |                   

See accompanying notes.

3



---



##### Table of Contents






TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

STATEMENTS OF OPERATIONS
(Unaudited)

|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |       |           |           |  
|------------------------------------------------------ | -------------------------------- | -------- | ------------------------ | ----- | ------------------ | ------- | ----------------- | ----- | ------------- | -------- | ------------- | ----- | --------- | ------- | --------- | ----- | --------- | --------- | -
|                                                       |                                  |          |                          |       | Three Months Ended |         | Nine Months Ended
|                                                       |                                  |          |                          |       |                    |         |                  
|                                                       |                                  |          |                          |       | September 29,      |         | September 30,     |       | September 29, |          | September 30,
|                                                       |                                  |          |                          |       | 2002               |         | 2001              |       | 2002          |          | 2001         
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |              
|Net sales                                              |                                  | $        |                         |       |                    | $       | 1,439,286         |       |               | $        |              |       |           | $       | 6,199,675 |      
|Cost of goods sold                                     |                                  |          |                         |       |                    |         | 880,561           |       |               |          |              |       |           |         | 3,597,942 |      
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|GROSS PROFIT                                           |                                  |          |                         |       |                    |         | 558,725           |       |               |          |              |       |           |         | 2,601,733 |      
|Selling, general and administrative
expenses           |                                  |          | 45,585                   |       |                    |         | 658,759           |       |               |          | 133,942       |       |           |         | 2,839,443 |      
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|                                                       |                                  |          | TOTAL OPERATING EXPENSES |       |                    | 45,585  |                   |       |               | 658,759  |               |       |           | 133,942 |           |       |           | 2,839,443 |  
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|(LOSS) FROM OPERATIONS                                 |                                  |          | (45,585                  | )     |                    |         | (100,034          | )     |               |          | (133,942      | )     |           |         | (237,710  | )    
|Loss on disposal of fixed assets                       |                                  |          |                         |       |                    |         | (1,019            | )     |               |          |              |       |           |         | (138,336  | )    
|Interest expense                                       |                                  |          |                         |       |                    |         | (4,699            | )     |               |          |              |       |           |         | (27,092   | )    
|Interest income                                        |                                  |          | 24,664                   |       |                    |         | 3,220             |       |               |          | 74,251        |       |           |         | 18,838    |      
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|(LOSS) BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM      |                                  |          | (20,921                  | )     |                    |         | (102,532          | )     |               |          | (59,691       | )     |           |         | (384,300  | )    
|Provision for income taxes                             |                                  |          |                         |       |                    |         | (89,000           | )     |               |          |              |       |           |         | (89,000   | )    
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|(LOSS) BEFORE EXTRAORDINARY ITEM                       |                                  |          | (20,921                  | )     |                    |         | (191,532          | )     |               |          | (59,691       | )     |           |         | (473,300  | )    
|Extraordinary gain on convertible
debenture settlement |                                  |          |                         |       |                    |         |                  |       |               |          |              |       |           |         | 408,552   |      
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|                                                       |                                  |          | NET (LOSS)               |       | $                  | (20,921 | )                 |       | $             | (191,532 | )             |       | $         | (59,691 | )         |       | $         | (64,748   | )
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|Basic and diluted earnings (loss) per share:           |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|                                                       | (Loss) before extraordinary item |          | $                        | (0.01 | )                  |         | $                 | (0.06 | )             |          | $             | (0.02 | )         |         | $         | (0.16 | )        
|                                                       | Extraordinary item, net of tax   |          |                          |      |                    |         |                   |      |               |          |               |      |           |         |           | 0.14  |          
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|                                                       |                                  |          | NET (LOSS)               |       | $                  | (0.01   | )                 |       | $             | (0.06    | )             |       | $         | (0.02   | )         |       | $         | (0.02     | )
|                                                       |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|Weighted average number of shares:                     |                                  |          |                          |       |                    |         |                   |       |               |          |               |       |           |         |           |      
|                                                       |                                  | Basic:   |                          |       | 3,463,877          |         |                   |       | 3,047,210     |          |               |       | 3,255,544 |         |           |       | 2,987,210 |          
|                                                       |                                  | Diluted: |                          |       | 3,463,877          |         |                   |       | 3,047,210     |          |               |       | 3,255,544 |         |           |       | 2,987,210 |          

See accompanying notes.

4



---



##### Table of Contents






TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |               |          |          |        | 
|--------------------------------------------------- | ------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | ---------------------- | ----------------- | ------- | ----------------- | -------- | ------------- | -------- | -------- | ------ | 
|                                                    |                                                                                             |                                                                                 |                        |                   |         | NINE MONTHS ENDED
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                  
|                                                    |                                                                                             |                                                                                 |                        |                   |         | SEPTEMBER 29,     |          | SEPTEMBER 30,
|                                                    |                                                                                             |                                                                                 |                        |                   |         | 2002              |          | 2001         
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|Cash flows from operating activities:               |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|                                                    | Net (loss)                                                                                  |                                                                                 | $                      | (59,691           | )       |                   | $        | (64,748       | )       
|                                                    | Adjustments to reconcile net (loss) to
net cash (used in) provided by operating activities: |                                                                                 |                        |                   |         |                   |          |               |         
|                                                    |                                                                                             | Deferred income tax                                                             |                        |                   |        |                   |          |               | 89,000   |         
|                                                    |                                                                                             | Depreciation and amortization                                                   |                        |                   |        |                   |          |               | 96,565   |         
|                                                    |                                                                                             | Loss on disposal of fixed assets                                                |                        |                   |        |                   |          |               | 138,336  |         
|                                                    |                                                                                             | Amortization of prepaid consulting expenses paid
with common stock and warrants |                        |                   |        |                   |          |               | 86,327   |         
|                                                    |                                                                                             | Extraordinary gain on convertible debenture settlement                          |                        |                   |        |                   |          |               | (408,552 | )       
|                                                    |                                                                                             | Stockholders compensation  shares issued                                      |                        |                   | 25,000  |                   |          |               |         |         
|                                                    | Changes in assets and liabilities:                                                          |                                                                                 |                        |                   |         |                   |          |               |         
|                                                    |                                                                                             | Decrease in interest receivable  Thrift Ventures                               |                        |                   | 29,778  |                   |          |               |         |         
|                                                    |                                                                                             | Decrease in merchandise inventory                                               |                        |                   |        |                   |          |               | 68,784   |         
|                                                    |                                                                                             | Decrease in other receivable                                                    |                        |                   | 25,000  |                   |          |               |         |         
|                                                    |                                                                                             | Decrease (increase) in prepaid expenses and other assets                        |                        |                   | 1,745   |                   |          |               | (82,970  | )       
|                                                    |                                                                                             | Increase in accounts payable                                                    |                        |                   |        |                   |          |               | 134,946  |         
|                                                    |                                                                                             | (Decrease) in accrued expenses                                                  |                        |                   | (29,861 | )                 |          |               | (54,383  | )       
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|                                                    |                                                                                             |                                                                                 |                        | Total adjustments |         |                   | 51,662   |               |          |          | 68,053 | 
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES |                                                                                             |                                                                                 | (8,029                 | )                 |         |                   | 3,305    |              
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|Cash flows from investing activities:               |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|                                                    | Purchase of property and equipment                                                          |                                                                                 |                        |                  |         |                   |          | (15,958       | )       
|                                                    | Proceeds from disposal of fixed assets                                                      |                                                                                 |                        |                  |         |                   |          | 8,000         |         
|                                                    | Payment in connection with sale of business units                                           |                                                                                 |                        |                  |         |                   |          | (147,197      | )       
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|NET CASH (USED IN) INVESTING ACTIVITIES             |                                                                                             |                                                                                 |                       |                   |         |                   | (155,155 | )            
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|Cash flows from financing activities:               |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|                                                    | Cash payment  convertible debenture settlement                                             |                                                                                 |                        |                  |         |                   |          | (200,000      | )       
|                                                    | Cash payment  notes                                                                        |                                                                                 |                        |                  |         |                   |          | (30,082       | )       
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|NET CASH (USED IN) FINANCING ACTIVITIES             |                                                                                             |                                                                                 |                       |                   |         |                   | (230,082 | )            
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|                                                    |                                                                                             |                                                                                 | NET (DECREASE) IN CASH |                   |         | (8,029            | )        |               |          | (381,932 | )     
|CASH AND CASH EQUIVALENTS  BEGINNING OF PERIOD     |                                                                                             |                                                                                 | 27,799                 |                   |         |                   | 396,836  |              
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              
|CASH AND CASH EQUIVALENTS  END OF PERIOD           |                                                                                             | $                                                                               | 19,770                 |                   |         | $                 | 14,904   |              
|                                                    |                                                                                             |                                                                                 |                        |                   |         |                   |          |              

5



---



##### Table of Contents



TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

STATEMENTS OF CASH FLOWSContinued
(Unaudited)

|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                   |  |   |       | 
|---------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | --------------------------------------------------------------------- | ------------ | - | ----------------- | - | ----------------- |  | - | ----- | 
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   | NINE MONTHS ENDED
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                  
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   | SEPTEMBER
29,2002 |   | SEPTEMBER
30,2001
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:         |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|                                                           |                                                                                                                                                                                                                                                                                             | Cash paid during the period for: |                                                                       |              |   |                   |   |                   |  |  
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       | Interest     |   | $                 |  |                   |  | $ | 9,639 | 
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       | Income taxes |   | $                 |  |                   |  | $ |      | 
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:   |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|                                                           | During the nine month period ended September 30, 2001, the
Company sold the common stock of its business units for a note
receivable amounting to $1,175,000 (Note 5). In conjunction with
this transaction, the assets sold, liabilities assumed and
receivables recorded were as follows: |                                  |                                                                       |              |   |                   |   |                   | 
|                                                           |                                                                                                                                                                                                                                                                                             |                                  | Assets sold in connection with the sale of the business units         |              | $ | 1,720,321         |   |                   |  |   |      
|                                                           |                                                                                                                                                                                                                                                                                             |                                  | Liabilities assumed in connection with the sale of
the business units |              |   | (905,910          | ) |                   |  |   |      
|                                                           |                                                                                                                                                                                                                                                                                             |                                  | Receivable  stockholder recorded                                     |              |   | (25,000           | ) |                   |  |   |      
|                                                           |                                                                                                                                                                                                                                                                                             |                                  | Note receivable recorded                                              |              |   | (1,175,000        | ) |                   |  |   |      
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  
|Capital contribution related to sale of the business units |                                                                                                                                                                                                                                                                                             | $                                | (385,589                                                              | )            |   |                   |   |                  
|                                                           |                                                                                                                                                                                                                                                                                             |                                  |                                                                       |              |   |                   |   |                  

See accompanying notes.

6



---



##### Table of Contents






TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)

NOTES TO
FINANCIAL STATEMENTS
(Unaudited)

(1) BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and do not include all of the
information and notes required by accounting principles generally accepted in
the United States of America for complete financial statements. However, such
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.

The results of operations for the three and nine months ended September 29,
2002 and September 30, 2001 are not necessarily indicative of the results to be
expected for the full year.

These statements should be read in conjunction with the financial statements
and notes thereto included in the Form 10-KSB for the year ended December 30,
2001 of TMI Holdings, Inc. (the Company or TMI).

(2)  ORGANIZATION

As a result of the sale of its business units that was completed on August 27,
2001 (see Note 5), the Company no longer has any subsidiaries or active
business operations. The accompanying Statement of Operations for the three
and nine months ended September 29, 2002 do not reflect any of the Companys
former business operations.

(3) STOCKHOLDERS EQUITY

In January 2001, a lawsuit was filed in the United States District Court,
Southern District of New York, against the Company and other unnamed
individuals regarding the Companys alleged failure to register the shares of
the Companys Common Stock issuable upon conversion of a 7% convertible
debenture with a principal amount of $1,000,000 (the Debenture) and failure
to pay the resulting penalties due.

In March 2001, the Company entered into a settlement agreement which provided
for the dismissal of this lawsuit, without prejudice, in exchange for the
payment by the Company of $200,000 cash, the issuance of 200,000 shares of
Common Stock valued at $32,000 (the fair value as of March 16, 2001) and the
delivery of a three-year 10% promissory note in the principal amount of
$300,000 secured by a security interest in the Companys inventory and
guaranteed by the Companys President. As a result of the settlement, the
Debenture was deemed paid in full and satisfied.

In consideration for personally guaranteeing the promissory note, the Companys
Board of Directors granted the President five-year warrants to purchase 500,000
shares of the Companys

7



---



##### Table of Contents



Common Stock at an exercise price of $.0625 per share (the fair value of the
Common Stock as of March 16, 2001).

All remaining capitalized expenses related to the Debenture not amortized
(which totaled $130,410) were included in the calculation of the gain on the
Debenture settlement in the six-month period ended July 1, 2001. Reversal of
the accrued Debenture interest expense in the amount of $70,962 was also
included as part of the calculation of the gain on the Debenture settlement
recorded in the first quarter of 2001. The gain on the Debenture settlement
recorded in the first quarter of 2001 amounted to $408,552.

(4) STOCK OPTION PLAN

During the three months ended September 29, 2002, the Company granted a total
of 10,000 stock options to its directors under the Companys 1996 Stock Option
Plan at exercise prices equal to the fair value of the Common Stock on the date
of the grants. These options vest within the next year and expire no later
than 2007.

(5) SALE OF BUSINESS UNITS

In 2001, the Companys shareholders approved (with all the shares held by the
President and his affiliates voting with the majority of all other outstanding
shares) the sale of substantially all of the assets used by the Company in the
conduct of its retail thrift store and charitable donation collection business
and its web-site in development to Thrift Ventures Inc. (Thrift Ventures), a
corporation owned by Marc Douglas, the Companys principal shareholder. On
August 27, 2001, the Company closed the sale of assets to Thrift Ventures. As
consideration for the purchase of these business units, Thrift Ventures paid to
the Company $1,175,000 in the form of a three-year promissory note bearing
interest at the prime rate plus 1.5% (the Purchase Note). The Purchase Note
is secured by a security interest in the assets sold. The excess of the
purchase price of the business units over the carrying value of such business
units totaled $385,589 and has been accounted for as a capital contribution.

(6)  INTEREST RECEIVABLE  THRIFT VENTURES

In May 2002, Thrift Ventures agreed to prepay the initial interest payment of
$98,926 on the Purchase Note in four equal monthly installments beginning on
May 31, 2002 and ending on August 27, 2002, the original due date of the
initial interest payment. Thrift Ventures agreed to this prepayment in order
to provide the Company with additional working capital with which to pay its
ongoing expenses from the Companys public company reporting requirements and
other related corporate expenses. In consideration of his agreement to make
the prepayment, the Companys Board of Directors granted to Marc Douglas, the
controlling shareholder of Thrift Ventures and the Companys principal
shareholder, 416,667 shares of the Companys Common Stock, which had a fair
value as of the date of grant (March 15, 2002) of $.06 per share.

8



---



##### Table of Contents



(7) RELATED PARTY TRANSACTIONS

The Board of Directors agreed to begin reimbursing Thrift Ventures for certain
services that had been provided to the Company on a cost-free basis since the
closing of the sale of the business units. These services have to date
included: (a) office space and all related amenities such as telephones,
copiers, facsimile machines and office supplies; (b) all necessary accounting
and bookkeeping services related to the Companys public reporting
requirements; (c) other administrative services, such as receptionist and
bill-paying services; and (d) the assistance of Mr. Douglas in identifying a
possible acquisition candidate for the Company, as well as negotiating a
definitive agreement and completing a transaction with such an acquisition
candidate. In exchange for Thrift Ventures and Mr. Douglas agreement to
continue providing these services to the Company, the Company will reimburse
Thrift Ventures $5,000 per month. During the third quarter of 2002, $15,000 in
reimbursements for these services to the Company were offset against interest
amounts due to the Company from Thrift Ventures.

(8) LIQUIDITY

With the sale of its business units on August 27, 2001, the Company has no
ongoing business operations other than activities undertaken to identify and
complete a transaction involving a sale or other change in control of the
Company and activities necessary to maintain the Companys reporting company
status with the Securities and Exchange Commission. Because the Company has no
active business operations, its current assets with which to pay expenses are
extremely limited. The Company reached an agreement with Thrift Ventures
pursuant to which Thrift Ventures prepaid the initial $98,926 interest payment
on the note given to the Company in the sale of its business units (the
Purchase Note) that would have been due on August 27, 2002, less $20,000 in
reimbursements for services to the Company (see Note 7). As of September 30,
2002, however, the Companys accrued expenses exceeded the remaining balance of
the interest payment received and the amount of the next interest payment due
on November 27, 2002, which will equal approximately $25,000 less $15,000 in
reimbursements for services to the Company. As part of the pending sale of
Marc Douglas Preferred Stock (see Note 9), the purchaser has agreed to pay the
current liabilities of the Company, which currently total approximately
$60,000. If this sale transaction does not close, the Company will be required
to seek additional funding elsewhere and/or delay payment to creditors until
additional payments on the Purchase Note are made. There can be no assurances
that such funding will be available on terms acceptable to the Company, if at
all, or that the Company would be able to negotiate payment schedules with
creditors. If the Company is not able to obtain sufficient additional funding
and/or delay payment of creditors, the Companys ability to continue its status
as a public reporting company is likely to be materially adversely affected.

(9) SUBSEQUENT EVENT

On October 28, 2002, the Companys principal shareholder, Marc Douglas, entered
into a stock purchase agreement pursuant to which Mr. Douglas has agreed to
sell, through a series of transactions, all 250,000 shares of the Companys
Series A Preferred Stock (the Preferred Stock) owned by him in exchange for a
promissory note to Mr. Douglas in the principal amount of $150,000 due 120 days
from the closing. The Preferred Stock to be sold by Mr. Douglas represents
100% of the outstanding Preferred Stock and, after cancellation of the
1,567,167

9



---



##### Table of Contents



shares of Common Stock owned by Mr. Douglas and his affiliates as discussed
below, will represent 56% of the voting control of the Company. The sale of
the Preferred Stock is subject to the satisfaction of various closing
conditions and is expected to close in late November 2002.

In conjunction with the sale of Mr. Douglas Preferred Stock, the current
directors of the Company have agreed to resign from the Board and two designees
of the ultimate purchasers, William Michael Sessions and John W. Meyers, will
be appointed to the Board. In addition, Mr. Sessions will be appointed to
serve as the Companys CEO and Secretary and Mr. Meyers will be appointed to
serve as the Companys COO and Treasurer.

In connection with the sale of his Preferred Stock, Mr. Douglas has also agreed
to cancel the 1,567,167 shares of the Companys Common Stock and all options
and warrants to acquire the Companys Common Stock owned by him and his
affiliates. Subject to the approval of the Companys new Board of Directors,
the Company will assign to Mr. Douglas and his affiliates $675,000 of the
outstanding principal balance of the $1,175,000 Purchase Note payable to the
Company by an entity controlled by Mr. Douglas. In connection with this
transaction, the Company will also enter into a five-year consulting agreement
with Mr. Douglas whereby he agrees to provide the Company advice regarding
strategies for development and expansion of the Companys business, including
with respect to mergers and acquisitions. As compensation for his services
under the consulting agreement, the Company will assign the remaining $500,000
balance of the Purchase Note to Mr. Douglas over the five-year term of the
consulting agreement.

As a result, if the transaction is completed, it will result in both a change
of voting control of the Company and a change in its management, including its
Board of Directors. The purchaser has advised the Company that it currently
intends to pursue new business opportunities for the Company and to shift the
Companys business focus, although as of the date of this Form 10-QSB, the
purchaser had not identified nor committed to undertake any particular business
activities.

The Company has filed a Schedule 14f-1 with the SEC that describes this
transaction and the change in control of the Company, and has mailed a copy of
this filing to all of the Companys shareholders in accordance with applicable
SEC regulations. For further information regarding the sale of the Preferred
Stock and change in control of the Company, reference is hereby made to the
Schedule 14f-1.

10



---



##### Table of Contents



TMI HOLDINGS, INC.
(FORMERLY THRIFT MANAGEMENT, INC.)




ITEM 2

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following is an analysis of the results of operations of TMI Holdings, Inc.
(the Company), and its liquidity and capital resources. The Company cautions
readers that certain important factors may affect the Companys actual results
and could cause such results to differ materially from any forward-looking
statements that may be deemed to have been made in this Report or that are
otherwise made by or on behalf of the Company. For this purpose, any
statements contained in this Form 10-QSB that are not statements of historical
fact may be deemed to be forward-looking statements which involve risks and
uncertainties. Without limiting the generality of the foregoing, words such as
may, expect, believe, anticipate, intend, could, estimate, or
continue or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. Factors that
may affect the Companys results include, but are not limited to, the
identification and number of possible acquisition candidates; reliance on
current management; general economic conditions; and other factors discussed
herein or from time to time in the Companys other filings with the Securities
and Exchange Commission.

The following discussion and analysis should be read in conjunction with the
financial statements and the related notes thereto of the Company included
elsewhere herein.

GENERAL

Until August 2001, the Company had managed and operated retail outlets known as
thrift stores, which dealt in new and used articles of clothing, miscellaneous
household items, furniture, bric-a-brac and antiques at discounted prices. In
2001, the Company operated six thrift stores, all of which were located in
Florida. These and all of the Companys other business units were sold on
August 27, 2001, in a transaction involving the sale of substantially all of
the Companys assets to Thrift Ventures Inc. (Thrift Ventures), a corporation
controlled by the Companys principal shareholder.

Currently, the Company has no operating business units or subsidiaries. The
Companys sole activities since the sale transaction have been identifying
possible acquisition candidates and attempting to negotiate and complete an
acquisition of an operating business. Although a transaction that will result
in a change in control of the Company is pending (see Recent Developments
below), there can be no assurances that this transaction will close. If it
does not close, there can be no assurances that the Company will be able to
identify other acquisition candidates or that it will be able to successfully
negotiate and complete another acquisition of an operating business.

The sale of the business units described above has not affected any of the
Companys outstanding securities, and the Company intends to continue to use
its best efforts to maintain its

11



---



##### Table of Contents



status as a reporting company and to maintain the listing of its Common Stock
on the OTC Bulletin Board.

RECENT DEVELOPMENTS

On October 28, 2002, the Companys principal shareholder, Marc Douglas, entered
into a stock purchase agreement pursuant to which Mr. Douglas has agreed to
sell, through a series of transactions, all 250,000 shares of the Companys
Series A Preferred Stock (the Preferred Stock) owned by him in exchange for a
promissory note to Mr. Douglas in the principal amount of $150,000.00 due 120
days from the closing. The Preferred Stock to be sold by Mr. Douglas
represents 100% of the outstanding Preferred Stock and, after cancellation of
the 1,567,167 shares of Common Stock owned by Mr. Douglas and his affiliates as
discussed below, will represent 56% of the voting control of the Company. The
sale of the Preferred Stock is subject to the satisfaction of various closing
conditions and is expected to close in late November 2002.

In conjunction with the sale of Mr. Douglas Preferred Stock, the current
directors of the Company have agreed to resign from the Board and two designees
of the ultimate purchasers, William Michael Sessions and John W. Meyers, will
be appointed to the Board. In addition, Mr. Sessions will be appointed to
serve as the Companys CEO and Secretary and Mr. Meyers will be appointed to
serve as the Companys COO and Treasurer.

In connection with the sale of his Preferred Stock, Mr. Douglas has also agreed
to cancel the 1,567,167 shares of the Companys Common Stock and all options
and warrants to acquire the Companys Common Stock owned by him and his
affiliates. Subject to the approval of the Companys new Board of Directors,
the Company will assign to Mr. Douglas and his affiliates $675,000 of the
outstanding principal balance of the $1,175,000 Purchase Note payable to the
Company by an entity controlled by Mr. Douglas. In connection with this
transaction, the Company will enter into a five-year consulting agreement with
Mr. Douglas whereby he agrees to provide the Company advice regarding
strategies for development and expansion of the Companys business, including
with respect to mergers and acquisitions. As compensation for his services
under the consulting agreement, the Company will assign the remaining $500,000
balance of the Purchase Note to Mr. Douglas over the five-year term of the
consulting agreement.

As a result, if the transaction is completed, it will result in both a change
of voting control of the Company and a change in its management, including its
Board of Directors. The purchaser has advised the Company that it currently
intends to pursue new business opportunities for the Company and to shift the
Companys business focus, although as of the date of this Form 10-QSB, the
purchaser had not identified nor committed to undertake any particular business
activities.

The Company has filed a Schedule 14f-1 with the SEC that describes this
transaction and the change in control of the Company, and has mailed a copy of
this filing to all of the Companys shareholders in accordance with applicable
SEC regulations. For further information regarding the sale of the Preferred
Stock and change in control of the Company, reference is hereby made to the
Schedule 14f-1.

12



---



##### Table of Contents



RESULTS OF OPERATIONS  FOR THE THREE MONTHS ENDED SEPTEMBER 29, 2002 AND
SEPTEMBER 30, 2001

With no business operations during the three months ending September 29, 2002,
the Company had no revenues, as compared to revenues of $1,439,286 generated by
the six stores for the three months ending September 30, 2001. There also was
no gross profit for the three months ending September 29, 2002, as compared to
$558,725 gross profit generated by the six stores for the three months ending
September 30, 2001.

The operating expenses for the three months ending September 29, 2002 amounted
to $45,585 and consisted primarily of professional fees related to the
Companys public reporting obligations and directors liability insurance, as
compared to $658,759 for the three months ending September 30, 2001, which
included expenses related to six stores, the Companys start-up internet
company, and corporate overhead.

RESULTS OF OPERATIONS  FOR THE NINE MONTHS ENDED SEPTEMBER 29, 2002 AND
SEPTEMBER 30, 2001

With no business operations during the nine months ending September 29, 2002,
the Company had no revenues, as compared to revenues of $6,199,675 generated by
the six stores for the nine months ending September 30, 2001. There also was
no gross profit for the nine months ending September 29, 2002, as compared to
$2,601,733 gross profit generated by the six stores for the nine months ending
September 30, 2001.

The operating expenses for the nine months ending September 29, 2002 amounted
to $133,942 and consisted primarily of professional fees related to the
Companys public reporting obligations and directors liability insurance, as
compared to $2,839,443 for the nine months ending September 30, 2001, which
included expenses related to six stores, the Companys start-up internet
company, and corporate overhead.

LIQUIDITY AND CAPITAL RESOURCES

At September 29, 2002, the Company had negative working capital of ($27,268) as
compared to working capital of $7,422 at December 30, 2001.

Cash and cash equivalents at September 29, 2002 totaled $19,770, as compared to
$27,799 at December 30, 2001, a decrease of $8,030. Net cash used in operating
activities totaled $8,029 for the nine months ending September 29, 2002, as
compared to $3,305 net cash provided by operating activities for the nine
months ending September 30, 2001. There were no investing activities for the
nine months ending September 29, 2002 as compared to $155,155 net cash used in
the purchase and sale of property and equipment and payment in connection with
the sales of business units for the nine months ending September 30, 2001.
There were no financing activities in the nine months ending September 30, 2001
as compared to $230,082 net cash used in financing in the nine months ending
September 30, 2001, reflecting a cash payment for the Debenture settlement and
payment of notes.

13



---



##### Table of Contents



With the sale of its business units on August 27, 2001, the Company has no
ongoing business operations other than activities undertaken to identify and
complete a transaction involving a sale or other change in control of the
Company and activities necessary to maintain the Companys reporting company
status with the Securities and Exchange Commission. Because the Company has no
active business operations, its current assets with which to pay expenses are
extremely limited. The Company reached an agreement with Thrift Ventures
pursuant to which Thrift Ventures prepaid the initial $98,926 interest payment
on the note given to the Company in the sale of its business units (the
Purchase Note) that would have been due on August 27, 2002, less $20,000 in
reimbursements for services to the Company (see Note 7 to the Companys
Financial Statements included in Part I, Item 1, of this Form 10-QSB). As of
September 30, 2002, however, the Companys accrued expenses exceeded the
remaining balance of the interest payment received and the amount of the next
interest payment due on November 27, 2002, which will equal approximately $25,000 less
$15,000 in reimbursements for services to the Company. As part of the pending
sale of Marc Douglas Preferred Stock (see Recent Developments, above), the
purchaser has agreed to pay the current liabilities of the Company, which
currently total approximately $60,000. If this sale transaction does not
close, the Company will be required to seek additional funding elsewhere and/or
delay payment to creditors until additional payments on the Purchase Note are
made. There can be no assurances that such funding will be available on terms
acceptable to the Company, if at all, or that the Company would be able to
negotiate payment schedules with creditors. If the Company is not able to
obtain sufficient additional funding and/or delay payment of creditors, the
Companys ability to continue its status as a public reporting company is
likely to be materially adversely affected.

INFLATION AND SEASONALITY

The Company has sold all business units effective August 27, 2001 and, as a
result, does not expect at this time to be impacted by inflation or
seasonality.




ITEM 3

CONTROLS AND PROCEDURES

The Companys principal executive officer and principal financial and
accounting officer, after evaluating the effectiveness of the Companys
disclosure controls and procedures as of a date within 90 days of the filing of
this Form 10-QSB, have concluded that as of such date the Companys disclosure
controls and procedures were sufficient to ensure that material information
about the Company would be made known to them in order to make timely
disclosures. Such evaluation and the Companys procedures have taken into
account the extremely limited nature of the Companys operations since August
2001. In light of the Companys limited operations, the Company does not
believe that there are significant deficiencies in its internal controls that
could adversely affect its ability to record and report financial data.
Further, the Company does not believe that there have been any changes in its
internal controls or other factors that could significantly affect those
controls after the date of evaluation.

14



---



##### Table of Contents









PART II  OTHER INFORMATION

ITEM 5 OTHER INFORMATION

Marc Douglas, the Companys principal shareholder, has agreed to sell, through
a series of transactions, all of the 250,000 shares of the Companys Preferred
Stock owned by him to William Michael Sessions and John W. Meyers. The Preferred Stock
to be sold by Mr. Douglas represents 100% of the outstanding Preferred Stock
and, after cancellation of the 1,567,167 shares of Common Stock owned by Mr.
Douglas and his affiliates that will also occur as part of the transaction,
will represent 56% of the voting control of the Company. The sale of the
Preferred Stock is subject to the satisfaction of various conditions and is
expected to close in late November 2002. For a more detailed description of
this transaction, please see Managements Discussion and Analysis of Financial
Condition and Results of Operations  Recent Developments under Part I, Item 2
of this Form 10-QSB.




ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

| |  |  |      |  |  |                                                                                                                    
| |  |  | ---- |  |  | -------------------------------------------------------------------------------------------------------------------
| |  |  | 11.1 |  |  | Statement re: computation of per share earnings                                                                    
| |  |  |      |  |  |                                                                                                                    
| |  |  | 99.1 |  |  | Stock Purchase Agreement dated as of October 28,
2002 between Marc Douglas and Matthew P. Dwyer                    
| |  |  |      |  |  |                                                                                                                    
| |  |  | 99.2 |  |  | Statements Required by 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002

(b)  Reports on Form 8-K:



| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | The Company did not file any current reports on Form 8-K during the
quarter ended September 29, 2002.

15



---



##### Table of Contents






SIGNATURES

In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|                        |  |                                                                              
|----------------------- |  | -----------------------------------------------------------------------------
|                        |  | TMI HOLDINGS, INC.                                                           
|                        |  |                                                                              
|                        |  | By: /s/ Jay M. Haft                                                          
|                        |  |                                                                              
|                        |  | Jay M. Haft, Chairman of the Board of Directors
(Principal Executive Officer)
|                        |  |                                                                              
|Date: November 15, 2002 |  | By: /s/ Marc Douglas                                                         
|                        |  |                                                                              
|                        |  | Marc Douglas, Principal Financial and
Accounting Officer                     

16



---



##### Table of Contents






CERTIFICATIONS

I, Jay M. Haft, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of TMI Holdings, Inc.;                                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17



---



##### Table of Contents





| |  | evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
| |  | -------------------------------------------------------------------------------------------------------------

Dated: November 15, 2002

| |  |                                                                                  
| |  | ---------------------------------------------------------------------------------
| |  | /s/ Jay M. Haft                                                                  
| |  | Name: Jay M. Haft                                                                
| |  | Title: Chairman of the Board of Directors
          (Principal Executive Officer)

18



---



##### Table of Contents



I, Marc Douglas, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-QSB of TMI Holdings, Inc.;                                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and



| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19



---



##### Table of Contents





| |  | evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
| |  | -------------------------------------------------------------------------------------------------------------

Dated: November 15, 2002

| |  |                                                            
| |  | -----------------------------------------------------------
| |  | /s/ Marc Douglas                                           
| |  | Name: Marc Douglas                                         
| |  | Title: Principal Financial and
          Accounting Officer

20