<PAGE>

                                   SECURITIES
                             AND EXCHANGE COMMISSION
                                   WASHINGTON,
                                   D.C. 20549

                                      FORM
                                     10-QSB

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934


         For the transition period from April 1, 2003 to June 30, 2003.


                                   000-30011
                             COMMISSION FILE NUMBER


                                       TMI
                                 HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)


                    FLORIDA                                65-0309540
        (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                Identification No.)


         11924 FOREST HILL BLVD., SUITE 22-204
                        WELLINGTON, FL                         33414
        (Address of principal executive offices)             (Zip Code)


        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 202-8184


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 [ ].


APPLICABLE  ONLY TO  ISSUERS  INVOLVED  IN  BANKRUPTCY  PROCEEDINGS  DURING  THE
PRECEDING FIVE YEARS

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. Yes [  ] No [ ].


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date.  As of June 30,  2003,  there were
7,564,671 shares of common stock issued and outstanding.

                  TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
                                  (check one):
                                  Yes [ ] No [X]

<PAGE>

                                       TMI
                                 HOLDINGS, INC.


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                               PAGE
                                                                               ----

                                     PART I
<S>                                                                               <C>
   Item 1    Consolidated Financial Statements                                    3

             Consolidated Balance Sheet as of June 30, 2003 (unaudited)           4

             Consolidated Statements of Operations for the Three Months Ended
             June 30, 2003 and June 31, 2002 (unaudited)                          6

             Consolidated Statements of Cash Flows for the Three Months Ended     7

             June 30, 2003 and June 31, 2002 (unaudited)                          9

             Notes to Consolidated Financial Statements (unaudited)

   Item 2    Management's Discussion and Analysis of Financial                   15
             Condition or Plan of Operations

   Item 3    Controls and Procedures                                             18


                              PART II

   Item 1    Legal Proceedings                                                   19

   Item 2    Changes in Securities and Use of Proceeds                           20

   Item 3    Defaults Upon Senior Securities                                     20

   Item 4    Submission of Matters to a Vote of Security Holders                 20

   Item 5    Other Information                                                   20

   Item 6    Exhibits and Reports on Form 8-K                                    20

   Item 7    Subsequent Events                                                   20
</TABLE>


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


                                       2
<PAGE>


                                     PART I

This Quarterly Report includes forward-looking  statements within the meaning of
the Securities  Exchange Act of 1934 (the "Exchange Act").  These statements are
based on  management's  beliefs and  assumptions,  and on information  currently
available to  management.  Forward-looking  statements  include the  information
concerning  possible or assumed  future results of operations of the Company set
forth under the  heading  "Management's  Discussion  and  Analysis of  Financial
Condition  or Plan  of  Operations."  Forward-looking  statements  also  include
statements  in which words such as  "expect,"  "anticipate,"  "intend,"  "plan,"
"believe," "estimate," "consider" or similar expressions are used.

Forward-looking  statements  are not  guarantees  of  future  performance.  They
involve risks,  uncertainties and assumptions.  The Company's future results and
shareholder   values  may  differ  materially  from  those  expressed  in  these
forward-looking  statements.  Readers are cautioned not to put undue reliance on
any forward-looking statements.


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


                                       3
<PAGE>


                                     ITEM 1

                        CONSOLIDATED FINANCIAL STATEMENTS


                        TMI HOLDINGS, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets


                                     ASSETS

                                                   June 30,    December 29,
                                                    2003          2002
                                                  --------      --------
                                                 (Unaudited)

CURRENT ASSETS


   Cash                                           $  2,501      $  4,619
   Prepaid expenses                                     --         3,222
   Investment in related party joint venture       107,850            --
   Construction in progress                        525,866            --
   Deposits                                          3,500            --
                                                  --------      --------

   Total Current Assets                            639,717         7,841
                                                  --------      --------

   FIXED ASSETS, NET                                 3,840            --
                                                  --------      --------

   TOTAL ASSETS                                   $643,557      $  7,841
                                                  ========      ========


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


                                       4
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


<TABLE>
<CAPTION>
                                                          June 30,        December 29,
                                                           2003              2002
                                                        -----------       -----------
                                                        (Unaudited)
CURRENT LIABILITIES
<S>                                                     <C>               <C>
Accounts payable                                        $    64,087       $        --
Accrued expenses                                            311,877            98,944
Related party loans                                          83,224                --
Construction loans                                          670,000                --
Accrued interest payable                                      2,590                --
Notes payable                                                25,848                --
                                                        -----------       -----------


Total Current Liabilities                                 1,157,626            98,944
                                                        -----------       -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred stock, Series "A" $0.01 par value,
1,500,000 shares authorized; 250,000 shares
 issued and outstanding                                       2,500             2,500

Preferred stock, Series "B" $0.01 par value,
 500,000 shares authorized; 500,000 and -0- issued
 and outstanding, respectively                                5,000                --

Common stock, $0.01 par value, 30,000,000 shares
 authorized; 7,564,671 and 189,671 shares issued
 and outstanding, respectively                               75,647             1,897

Additional paid-in capital                                6,859,239         3,850,664

Deficit accumulated during the development stage         (7,456,455)       (3,946,164)
                                                        -----------       -----------

Total Stockholders' Equity (Deficit)                       (514,069)          (91,103)
                                                        -----------       -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 (DEFICIT)                                              $   643,557       $     7,841
                                                        ===========       ===========
</TABLE>

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


                                       5
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                      Consolidated Statement of Operations
                                   (Unaudited)



<TABLE>
<CAPTION>
                                  For the Three Months Ended            For the Six Months Ended
                                             JUNE 30,                            JUNE 30,
                                  -----------------------------       -----------------------------
                                      2003              2002              2003              2002
                                  -----------       -----------       -----------       -----------
<S>                               <C>               <C>               <C>               <C>
SALES, NET                        $        --       $        --       $        --       $        --
                                  -----------       -----------       -----------       -----------

EXPENSES

  Professional Fees                 2,922,772                --         3,356,359                --
  Salaries and wages                   45,000                --            75,000                --
  General and administrative           15,279            50,228            54,802            88,357
                                  -----------       -----------       -----------       -----------

     Total Expenses                 2,983,051            50,228         3,486,161            88,357
                                  -----------       -----------       -----------       -----------

LOSS FROM OPERATIONS               (2,983,051)          (50,228)       (3,486,161)          (88,357)
                                  -----------       -----------       -----------       -----------

OTHER INCOME
 (EXPENSES)

   Interest income                         --            24,915                --            49,588
   Interest Expense                   (24,130)               --           (24,130)               --
                                  -----------       -----------       -----------       -----------

     Total Other (Income)
      Expenses                        (24,130)           24,915           (24,130)           49,588
                                  -----------       -----------       -----------       -----------

NET LOSS                          $(3,007,181)      $   (25,313)      $(3,510,291)      $   (38,769)
                                  ===========       ===========       ===========       ===========

BASIC LOSS PER SHARE              $     (1.27)      $     (0.08)      $     (2.39)      $     (0.12)
                                  ===========       ===========       ===========       ===========

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING                        2,363,560           325,555         1,469,643           316,626
                                  ===========       ===========       ===========       ===========
</TABLE>


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


                                       6
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Consolidated Statements of Stockholders' Equity




<TABLE>
<CAPTION>
                                Preferred Stock,          Preferred Stock,
                                  Series "A"                 Series "B"             Common Stock          Additional
                             ---------------------  ------------------------  -------------------------     Paid-in     Accumulated
                              Shares     Amount       Shares       Amount       Shares        Amount        Capital       Deficit
                             ---------  ----------  -----------  -----------  -----------   -----------   -----------   -----------
<S>                            <C>      <C>                      <C>              <C>       <C>           <C>           <C>
  Balance at fiscal 2001       250,000  $    2,500           --  $        --      304,721   $     3,047   $ 4,499,513   $(3,322,639)

  Common stock issued               --          --           --           --       41,667           417        24,583            --

  Common stock retired              --          --           --           --     (156,717)       (1,567)     (673,432)           --

  Net loss for fiscal 2002          --          --           --           --           --            --            --      (623,525)
                             ---------  ----------  -----------  -----------  -----------   -----------   -----------   -----------

  Balance, fiscal 2002         250,000       2,500           --           --      189,671         1,897     3,850,664    (3,946,164)

  Series B Preferred Stock
   issued in acquisition of
   Kina'Ole (unaudited)             --          --      500,000        5,000           --            --      (189,776)           --

  Common stock issued for
   professional services at
   $1.50 per share
   (unaudited)                      --          --           --           --      250,000         2,500       372,500            --

  Common stock issued in
   exchange for accounts
   payable at $0.07 per
   share (unaudited)                --          --           --           --    1,050,000        10,500        62,000            --

Common stock issued as
   incentive for debt
   financing at $0.30 per
   share (unaudited)                --          --           --           --       50,000           500        14,500            --
                             ---------  ----------  -----------  -----------  -----------   -----------   -----------   -----------
  Balance Forward              250,000  $    2,500      500,000  $     5,000    1,539,671   $    15,397   $ 4,109,888   $(3,946,164)
                             ---------  ---------  -----------   -----------  -----------   -----------   -----------   -----------

</TABLE>


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



                                       7
<PAGE>


                        TMI HOLDINGS, INC. AND SUBSIDIARY
           Consolidated Statements of Stockholders' Equity (Continued)


<TABLE>
<CAPTION>

                                Preferred Stock           Preferred Stock           Common Stock          Additional
                             ---------------------  ------------------------  -------------------------     Paid-in     Accumulated
                               Shares     Amount       Shares       Amount       Shares        Amount        Capital       Deficit
                             ---------  ----------  -----------  -----------  -----------   -----------   -----------   -----------
<S>                          <C>      <C>                      <C>              <C>       <C>           <C>           <C>
Balance Forward                250,000  $   2,500      500,000   $     5,000    1,539,671   $    15,397   $ 4,109,888   $(3,946,164)

Common stock issued as
 incentive for debt
 financing at $0.36 per
 share (unaudited)                  --         --           --            --       25,000           250         8,750            --

Common stock issued for
 conversion of debt and
 for professional services
 at $0.36 per share
 (unaudited)                        --         --           --            --    3,000,000        30,000     1,050,000            --

Common stock issued for
 conversion of debt and
 for professional services
 at $0.36 per share
 (unaudited)                        --         --           --            --    3,000,000        30,000     1,050,000            --

Warrants issued to
 consultants for
 professional services
 rendered (unaudited)               --         --           --            --           --            --       640,601            --

Net loss for the six months
 ended June 30,
 2003 (unaudited)                   --         --           --            --           --            --            --    (3,510,291)
                             ---------  ---------  -----------   -----------  -----------   -----------   -----------   -----------
Balance, June 30, 2003         250,000  $   2,500      500,000   $     5,000    7,564,671   $    75,647   $ 6,859,239   $(7,456,455)
                             =========  ==========  ===========  ===========  ===========   ===========   ===========   ===========
</TABLE>



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


                                       8
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                          For the Six Months Ended
                                                                                   June 30,
                                                                              2003          2002
                                                                          -----------   -----------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                       <C>           <C>
   Net loss                                                               $(3,510,291)  $   (38,769)
   Adjustments to reconcile net loss to net cash
     used by operations:
   Depreciation expense                                                           151            --
   Common stock issued for services                                         2,485,000        25,000
   Common stock issued as incentive for financing                              24,000            --
   Warrants issued for services                                               640,601            --
Changes in assets and liabilities:
   (Increase) decrease in stockholders interest receivable                         --       (19,761)
   (Increase) decrease in escrow receivable                                        --        25,000
   (Increase) decrease in prepaid expenses and deposits                          (279)        1,744
   (Increase) in construction in progress                                     (41,962)           --
   Increase in accounts payable                                                96,519            --
   Increase (decrease) in accrued expenses                                    149,885       (20,350)
                                                                          -----------   -----------

   Net Cash Used by Operating Activities                                     (156,376)      (27,136)
                                                                          -----------   -----------

   CASH FLOWS FORM INVESTING ACTIVITIES

     Expenditures for the purchase of equipment                                (1,008)           --
     Investment in related party joint venture                                (11,180)           --
     Preferred stock issued in acquisition of Kina Ole Development Corp.       20,000
     Cash acquired in acquisition of Kina Ole Development Corp.                27,847            --
                                                                          -----------   -----------

       Net Cash Provide by Investing Activities                                35,659            --
                                                                          -----------   -----------

   CASH FLOWS FROM FINANCING ACTIVITIES

   Advances from officers                                                      56,167            --
   Repayments of related party advances                                       (13,416)           --
   Proceeds from related party loans                                           50,000            --
   Proceeds from note payable                                                  25,848            --
                                                                          -----------   -----------

   Net Cash Provided by Financing Activities                                  118,599            --
                                                                          -----------   -----------

   NET DECREASE IN CASH                                                        (2,118)      (27,136)

   CASH AT BEGINNING OF PERIOD                                                  4,619        27,799
                                                                          -----------   -----------

   CASH AT END OF PERIOD                                                  $     2,501   $       663
                                                                          ===========   ===========
</TABLE>


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


                                       9
<PAGE>




                        TMI HOLDINGS, INC. AND SUBSIDIARY
                Consolidated Statements of Cash Flows (Continued)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          For the Six Months Ended
                                                                                 June 30,
                                                                             2003         2002
                                                                         -----------   -----------

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

CASH PAID FOR:
<S>                                                                      <C>           <C>
   Interest                                                              $        --   $        --
   Income taxes                                                          $        --   $        --

NON-CASH FINANCING ACTIVITIES

   Common stock issued for services                                      $ 2,485,000   $    25,000
   Common stock issued as incentive for financing                        $    24,000   $        --
   Common stock issued for accounts payable                              $    72,500   $        --
   Preferred stock issued for acquisition of Kina'Ole Development Corp.  $    20,000   $        --
   Warrants issued for services                                          $   640,601   $        --



   In connection with the acquisition of Kina Ole Development Corp.,
    assets acquired and liabilities assumed are as follows:

     Assets, including cash acquired of $111,477                         $   972,673
     Liabilities                                                          (1,177,449)
                                                                         -----------

     Deficit                                                             $  (204,776)
                                                                         ===========
</TABLE>

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


                                       10
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

         The accompanying  unaudited consolidated financial statements have been
prepared by the Company  pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information and footnote disclosures normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the  United  States  of  America  have  been
condensed  or  omitted  in  accordance  with  such  rules and  regulations.  The
information  furnished in the interim consolidated  financial statements include
normal recurring adjustments and reflects all adjustments, which, in the opinion
of  management,  are  necessary  for  a  fair  presentation  of  such  financial
statements.   Although  management  believes  the  disclosures  and  information
presented are adequate to make the information  not misleading,  it is suggested
that these interim consolidated financial statements be read in conjunction with
the  Company's  most  recent  audited  financial  statements  and notes  thereto
included  in its  December  29,  2002 Annual  Report on Form  10-KSB.  Operating
results for the six months ended June 30, 2003 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2003.

NOTE 2 - ACQUISITION OF KINA'OLE DEVELOPMENT CORPORATION

On January 31, 2003, the Company  acquired 100% of the outstanding  common stock
of Kina'ole  Development  Corporation,  a Hawaii  corporation  ("Kina'ole"),  in
exchange for 500,000  shares of the  Company's  Series B  Convertible  Preferred
Stock.  Kina'ole  is located in Lihue,  Hawaii,  and through  arrangements  with
dealerships on each Hawaiian island,  Kina'ole plans to sell manufactured  homes
to retail  customers.  The Company  acquired  the  Kina'ole  shares from Michael
Sessions and John Meyers, who, at the time of the acquisition, were officers and
directors of the Company.  The 500,000 shares of Series B Preferred  Stock where
considered  to have no  value  based  on the fair  value  of the net  assets  of
Kina'ole  at the  acquisition  date.  The  combination  was  accounted  for as a
purchase,  with the results of operations of Kina'ole  included in the Company's
consolidated statement of operations from the date of acquisition.

The following unaudited condensed proforma consolidated  statement of operations
has been prepared by management.  This proforma  statement may not be indicative
of the results that actually would have occurred if the  consolidation  had been
in  effect on the  dates  indicated  or which  may be  obtained  in the  future.
Kina'ole began  operating  during June 2002. The  information  below assumes the
acquisition occurred as of December 30, 2002.



                                       11
<PAGE>


                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002

                         Proforma Consolidated Financial
                                   Information
                         For the six month period ended
                                  June 30, 2003


Sales                                                  $              --
                                                       ------------------

Gross Profit                                           $              --
                                                       ------------------

Net Loss                                               $       (3,569,295)
                                                       ------------------

Net Loss Per Common Share                              $            (2.43)
                                                       ------------------


NOTE 3 - RELATED PARTY TRANSACTIONS

During  the  period  ended   December  29,  2002,   officers  of  the  Company's
wholly-owned  subsidiary,  Kina'Ole, and significant shareholders of the Company
advanced Kina'Ole $50,144 in cash and property.  The advances are expected to be
repaid upon the  completion  and sale of certain  projects  under  construction,
which is expected  to be within the next  twelve  months.  As the  advances  are
short-term in nature, no interest is being charged or accrued.


During  the  period  ended  December  29,  2002,   the  Company's   wholly-owned
subsidiary,  Kina'Ole,  entered  into a  joint  venture  agreement  with a close
relative of an officer and  significant  shareholder  of the Company.  The joint
venture  agreement  provided for the  construction  of one home on land that had
been contributed to the joint venture by the related party. As of June 30, 2003,
and December 29,  2002,  the  Company's  investment  in the related  party joint
venture was $107,850 and -0-, respectively.


During  the  fourth  quarter  of  fiscal  2002,   the  Company's   then-majority
stockholder  and CEO,  Marc  Douglas,  entered into a Stock  Purchase  Agreement
pursuant to which Douglas agreed to sell, through a series of transactions,  all
250,000  shares of the  Company's  Series A Preferred  Stock  owned by him.  The
shares were sold to Michael  Sessions and John Meyers in exchange for a $150,000
note payable.  In conjunction with the sale of the Douglas  Preferred Stock, the
then-current  directors  of the  Company  resigned  from the Board  and  Michael
Sessions  and John Meyers were  appointed  to the Board.  In  addition,  Michael
Sessions was  appointed to serve as the  Company's  CEO and  Secretary  and John
Meyers was appointed to serve as the Company's COO and Treasurer.

On January 31, 2003, the Company  acquired 100% of the outstanding  common stock
of Kina'ole  Development  Corporation,  a Hawaii  corporation  ("Kina'ole"),  in
exchange for 500,000  shares of the  Company's  Series B  Convertible  Preferred
Stock. The Company



                                       12
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002


NOTE 3 - RELATED PARTY TRANSACTIONS (Continued)

acquired the Kina'ole shares from Michael Sessions and John Meyers,  who, at the
time of the acquisition, were officers and directors of the Company.

On February 21, 2003, the Company  entered into a Stock Purchase  Agreement with
its then-current directors,  Michael Sessions and John Meyers, and Scott Siegel,
whereby  the Company  agreed to issue  1,050,000  shares of common  stock to Mr.
Siegel, and Michael Sessions and John Meyers transferred 250,000 personally held
shares  of Series A  Preferred  Stock to Mr.  Siegel,  all in  exchange  for the
payment of approximately $72,500 in outstanding Company liabilities and $150,000
for outstanding personal liabilities owed by Michael Sessions and John Meyers to
Marc Douglas. On March 5, 2003, Sessions and Meyers resigned as directors of the
Company and Mr.  Siegel,  who was not a related party to the Company at the time
of the  transaction,  became a director of the Company and was appointed as CEO.
Mr. Siegel resigned from these positions on July 14, 2003.

On March 5, 2003,  250,000 shares of common stock were issued to a Richard Dwyer
for services performed pursuant to a verbal consulting  agreement.  Professional
services  expense  amounting  to  $375,000  was  recorded  in  the  consolidated
statement of operations  for the six month period ended June 30, 2003 related to
this  transaction  based on the market  price of the common stock on the date of
issuance. At the time time of the transaction, Mr. Dwyer was not a member of the
Board of Directors, an officer of the Company, or a significant shareholder.  On
August 21, 2003, Mr. Dwyer was appointed as CEO of the Company.

On May 9, 2003, the Company  borrowed  $20,000 from an individual.  There was no
formal note related to the  borrowing.  On June 17, 2003, the Company repaid the
advance  through the  issuance of 55,556  shares of common  stock  valued at the
current  trading  price of $0.36 per share.  In addition to the repayment of the
advance,  the Company also issued  2,944,444  shares of common stock to the same
individual  for consulting  services  rendered  pursuant to a verbal  consulting
agreement. Professional services expense amounting to $1,060,000 was recorded in
the consolidated statement of operations for the six month period ended June 30,
2003 related to this  transaction  based on the market price of the common stock
on the date of issuance. As a result of these transactions,  the individual owns
a significant portion of the Company's outstanding common stock, and as such, is
considered to be a related party.

On June 13, 2003,  the Company  borrowed  $30,000 from Dr.  Martin Peskin in the
form of a note  payable,  which bears  interest at 8%per  annum.  Principal  and
interest on the note was due and payable in one lump sum on the maturity date of
June 30, 2003. The proceeds of the note were used for working capital  purposes.
On June 17,  2003,  the Company  repaid the note  through the issuance of 83,833
shares of common stock valued at the current  trading  price of $0.36 per share.
In addition to the  repayment of the note,  TMI  HOLDINGS,  INC. AND  SUBSIDIARY
Notes to the  Consolidated  Financial  Statements June 30, 2003 and December 29,
2002



                                       13
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002


the Company also issued  2,916,667 shares of common stock to the same individual
for consulting  services  rendered  pursuant to a verbal  consulting  agreement.
Professional  services  expense  amounting  to  $1,050,000  was  recorded in the
consolidated  statement  of  operations  for the six month period ended June 30,
2003 related to this  transaction  based on the market price of the common stock
on the date of issuance. As a result of these transactions,  the individual owns
a significant portion of the Company's outstanding common stock, and as such, is
considered to be a related party.  Dr. Peskin was appointed as the Company's CEO
on July 14, 2003, and resigned from this position on August 21, 2003.

On June 19, 2003, the Company entered into consulting  agreements with,  Richard
Dwyer and his brother,  Mathew  Dwyer.  The  consulting  agreements  provide for
strategic  planning  services,  and  services  relating  to the  identification,
evaluation, structuring,  negotiation, and closing of business acquisitions, and
have a term of six months.  In exchange for their  services,  the Company issued
warrants to purchase  2,500,000  shares of common  stock.  The warrants  have an
exercise price of $0.03 per share and expire one year from the date of issuance.
Of the 2,500,000 warrants,  1,800,000 were exercisable immediately. The balance,
warrants to purchase  700,000  shares of common  stock,  will vest on October 1,
2003.  Based on an exercise price of $0.03 per share, a current trading price of
$0.36 per share,  volatility of 397.8%,  and a risk free interest rate of 3.45%,
the warrants have a fair value of $0.36 per share, or $889,724 in total. Richard
Dwyer was  appointed  as CEO of the  Company on August 21,  2003.  As such,  his
consulting agreement was terminated, and the entire value of the warrants issued
to him were  expensed  in the  current  period.  Professional  services  expense
amounting to $640,601 was recorded in the  consolidated  statement of operations
for the six month period ended June 30, 2003 related to these transactions.  The
balance,  of $249,123  will be  recorded as expense in the third  quarter as the
term of Mathew  Dwyer's  agreement  expires and his warrants  fully vest. Due to
Richard Dwyer's  appointment as CEO, and his relationship to Mathew Dwyer,  both
are considered to be related parties.


During the six months ended June 30, 2003 officers of the Company's wholly-owned
subsidiary,  Kina'Ole, and significant  shareholders of the Company advanced the
Kina'Ole  $52,887 in cash.  The  advances  are  expected  to be repaid  upon the
completion and sale of certain projects under construction, which is expected to
be within the next twelve months.  As the advances are short-term in nature,  no
interest is being charged or accrued.


During the six months ended June 30, 2003,  the Company paid $13,416 to officers
and significant shareholders as repayment for previously advanced cash.



                                       14
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002


NOTE 4 - OTHER SIGNIFICANT EVENTS

STOCK SPLIT


Effective January 27, 2003, the Company's Board of Directors approved a 1 for 10
reverse split of the Company's issued and outstanding  common stock as well as a
1 for 10 reverse split of the number of authorized  shares of common stock. As a
result of the splitting of the issued and outstanding and authorized shares, the
par value of the Company's stock was inversely increased by the same ratio, from
$0.01 per share to $0.10 per share.  The effect of the  reverse  stock split has
been retroactively  reflected in the consolidated  financial  statements for all
periods presented.

INCREASE IN THE NUMBER OF AUTHORIZED COMMON SHARES OUTSTANDING

On May 2, 2003,  the Company's  Board of Directors  approved an amendment to the
Company's  articles of  incorporation  that increased the  authorized  number of
common shares  outstanding  from  1,500,000 to  30,000,000.  The amendment  also
decreased the par value of the Company's  common stock from $0.10 to $0.01,  the
pre-split and historical par value.  The effect of the decrease in par value has
been retroactively  reflected in the consolidated  financial  statements for all
periods presented.


During the second quarter,  the Company  determined that, due to an error in the
interpretation of the series of events as described above, including the reverse
stock  split and the change in par value of the common  stock,  the  disclosures
relating to these items had been  misstated in the  December  29, 2002,  audited
consolidated  financial  statements,  and  in  the  March  30,  2003,  quarterly
consolidated financial statements. The effect of these misstatements was limited
to a  reclassification  between the dollar value of common stock, and additional
paid-in  capital  in  the  December  29,  2002,  financial  statements,   and  a
misstatement of the number of authorized shares in the March 30, 2003, quarterly
financial  statements.  These  amounts  have been  reclassified  to reflect  the
correct balances and figures as of June 30, 2003.

DEBT ISSUANCES

On April 29,  2003,  the Company  borrowed  $5,000 in the form of a note payable
which  bears  interest  at 8%.  Principal  and  interest  on the Note is due and
payable in one lump sum on the maturity date of August 15, 2003. The proceeds of
the Note are being used for working  capital  purposes.  In connection  with the
note,  the Company  issued  50,000  shares of its common  stock to the holder as
inducement to provide financing.  The shares were valued at the trading price of
the  common  stock as of the date of the note.  Interest  expense  amounting  to
$15,000 was recorded in the  consolidated  statement of  operations  for the six
month period ended June 30, 2003 related to this transaction.




                                       15
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002

On June 4, 2003,  the  Company  borrowed  $15,000 in the form of a note  payable
which  bears  interest  at 8%.  Principal  and  interest  on the Note is due and
payable in one lump sum on the maturity date of August 4, 2003.  The proceeds of
the Note are being used for working  capital  purposes.  In connection  with the
note,  the Company  issued  25,000  shares of its common  stock to the holder as
inducement to provide financing.  The shares were valued at the trading price of
the  common  stock as of the date of the note.  Interest  expense  amounting  to
$9,000 was  recorded in the  consolidated  statement of  operations  for the six
month period ended June 30, 2003 related to this transaction.

LETTER OF INTENT

On June 27,  2003,  the  Company  entered  into a letter  of intent  with  Total
Identity Systems  Corporation  ("TISC"),  whereby the Company agreed to purchase
60% ownership interest in TISC in exchange for $1,000,000 in cash. The first two
installments  of $100,000,  and $250,000  were  scheduled to be made on July 25,
2003,  and August 15, 2003,  respectively.  Neither of these  payments have been
made, and no other  consummating  transactions  or events have  occurred,  as of
September 8, 2003.

NOTE 5 - CONTINGENCIES

On June 9, 2003,  the  Company  received  notification  of a  potential  lawsuit
against the Company,  Scott Siegel,  Michael Sessions,  John Meyers, and Matthew
Dwyer by Mr. Marc  Douglas,  a former  officer and director of the Company.  Mr.
Dwyer is a  current  officer  and  director  of the  Company;  Mr.  Siegel,  Mr.
Sessions,  and Mr.  Meyers are former  officers  and  directors  of the Company.
According to the written  notice,  Mr.  Douglas is alleging that: i) the Company
wrongfully  cancelled and wrote off a consulting  agreement Mr. Douglas had with
the Company,  causing damages to Mr. Douglas in the amount of $160,000;  and ii)
that Mr.  Dwyer  breached  his  obligations  under a  promissory  note which was
secured by the 250,000  shares of the Company's  Series A Convertible  Preferred
Stock, and has caused Mr. Douglas damages in excess of $157,000. The Company has
not had an opportunity to fully evaluate the merits of Mr. Douglas'  claims.  If
Mr.  Douglas files a lawsuit,  the Company  intends to vigorously  defend itself
against  these  claims.  Mr.  Douglas is also seeking the 250,000  shares of the
Company's  Series  A  Convertible  Preferred  Stock,  which  is not  held by the
Company,  as a result of Mr. Dwyer's  alleged breach of the promissory  note. If
Mr.  Douglas is  successful  in his  claims,  he could  potentially  acquire the
250,000  shares of the Company's  Series A Convertible  Preferred  Stock,  which
could result in a change of control of the Company.

On June 12,  2003,  the Company  received  notification  of a potential  lawsuit
against the Company, Scott Siegel, Neil Dolgin, W. Michael Sessions, and John W.
Meyers by Richard A. Weiner and his family members ("Weiner Group").  The Weiner
Group  alleges they are  shareholders  of the Company.  According to the written
notice,  the Weiner Group is alleging  that:  i) the Company's  1-for10  reverse
stock split, effective


                                       16
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002

NOTE 5 - CONTINGENCIES (Continued)


January 27, 2003, was not done in accordance with Florida corporate law; and ii)
there has been unlawful  manipulation of the Company's  stock.  The Weiner Group
claims the alleged wrongful reverse stock split and the alleged  manipulation of
the Company's stock have caused them damages in excess of $1,000,000. The Weiner
Group is  threatening  to sue the Company for these alleged  wrongful  acts. The
Company has not had an  opportunity  to fully  evaluate the merits of the Weiner
Group's  claims.  However,  if the Weiner  Group  elects to file a lawsuit,  the
Company intends to vigorously defend itself against these claims.

NOTE 6 - GOING CONCERN

The Company's  financial  statements  are prepared using  accounting  principles
generally accepted in the United States of America applicable to a going concern
which  contemplates  the realization of assets and liquidation of liabilities in
the normal course of business.  The Company has not yet  established  an ongoing
source of revenues  sufficient to cover its operating  costs. The ability of the
Company to continue as a going  concern is  dependent  on the Company  obtaining
adequate  capital to fund operating losses until it becomes  profitable.  If the
Company  is  unable  to  obtain  adequate  capital,  it could be forced to cease
operations.

The Company's  current plans going forward are to divest Kina'ole and pursue the
acquisition of undervalued and/or unused  manufacturing  assets. The Company has
identified  a number of  opportunities,  and is in very early  discussions  with
potential acquisition candidates,  but has not agreed to terms or entered into a
binding letter of intent or similar  agreement with any acquisition  candidates.
Management believes that, based upon the current operating plan of divesting the
majority of the Company's  ownership of Kina'ole and pursuing the acquisition of
undervalued and/or unused  manufacturing  assets, the Company's existing working
capital  will not be  sufficient  to fund  its  acquisition  activities  and the
ongoing  expenses of a reporting  company  through  December  28,  2003.  If the
Company is not successful in identifying and acquiring undervalued and/or unused
manufacturing  assets which  produce  positive cash flows from  operations,  the
Company may be forced to raise  additional  equity or debt financing to fund its
ongoing  obligations,  seek protection  under existing  bankruptcy laws or cease
doing  business.  If additional  funds are raised through the issuance of equity
securities,  the percentage ownership of the Company's then-current stockholders
would be diluted.  If additional  funds are raised  through the issuance of debt
securities,  the Company will incur  interest  charges until the related debt is
paid off.  Management  cannot  provide any  assurances  that the Company will be
successful in accomplishing any of its plans.



                                       17
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002

NOTE 7 -SUBSEQUENT EVENTS

EXERCISE OF WARRANTS BY RELATED PARTIES

On July 1, 2003,  Richard Dwyer and Mathew Dwyer exercised  warrants to purchase
1,600,000 shares of common stock in exchange for $48,000 in cash.

CONSULTING AGREEMENT

On August 18, 2003, the Company entered into a consulting  agreement whereby the
Company  agreed to pay a $15,000 cash  advisory  fee in exchange for  consulting
services  relating to the  acquisition  of target  companies  and the pursuit of
capital  funding.  If the  consulting  firm  successfully  negotiates a business
combination,  a  success  fee of  $75,000,  or 6.0% of the  transaction  amount,
whichever is greater,  will be payable upon the first closing. If the consulting
firm  successfully  negotiates a capital funding,  a success fee of $75,000 or a
percentage  of the raised  capital  (from 1.0% to 7.0%  depending on the type of
financing  obtained),  whichever  is  greater,  will be  payable  upon the first
closing.


MARKETING AGREEMENT

On August 26, 2003, the Company entered into a marketing  agreement  whereby the
Company  agreed to pay $7,500 in cash in exchange  for  marketing  and  investor
relations services to be provided over three months.

ITEM 2 MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION OR PLAN OF
OPERATIONS

The following  discussion contains certain  forward-looking  statements that are
subject to business and economic risks and uncertainties, and our actual results
could differ  materially from those  forward-looking  statements.  The following
discussion regarding our financial statements should be read in conjunction with
the financial statements and notes thereto.

OVERVIEW

As a result of the sale of its business  units that was  completed on August 27,
2001, the Company had no subsidiaries or active business  operations  during the
year  ended  December  29,  2002 and for the  period  ended  January  31,  2003.
Accordingly, the accompanying consolidated Statement of Operations for the three
months ended June 29, 2003 and the accompanying  Statement of Operations for the
three months ended June 30, 2002 reflect none of the Company's  former  business
operations.


                                       18
<PAGE>

                        TMI HOLDINGS, INC. AND SUBSIDIARY
                 Notes to the Consolidated Financial Statements
                       June 30, 2003 and December 31, 2002

On January 31,  2003,  the Company  acquired  100% of the  outstanding  stock of
Kina'ole Development Corporation, a Hawaii corporation ("Kina'ole"). Kina'ole is
located in Lihue,  Hawaii,  and through  arrangements  with  dealerships on each
Hawaiian island,  Kina'ole plans to sell manufactured homes to retail customers.
The Company acquired the Kina'ole shares from Sessions and Meyers,  both of whom
were  officers and directors of the Company at the time of the  transaction.  In
exchange for  Kina'ole's  shares,  the Company  issued  Sessions and Meyers each
250,000 shares of the Company's Series B Convertible Preferred Stock.

Accordingly,  the Company's  consolidated financial statements and the following
discussion contain the results of operations of Kina'ole from January 31, 2003.


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Our  independent  auditors  have issued  their report dated May 23, 2003 with an
explanatory  paragraph  stating  that the audited  financial  statements  of the
Company for the fiscal year ending December 29, 2002 have been prepared assuming
the Company will continue as a going concern.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company's  financial condition and results of
operations are based upon its consolidated financial statements, which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  for  interim  period  information.   The  preparation  of  these
consolidated  financial  statements  requires us to make estimates and judgments
that affect the reported amounts of assets,  liabilities,  revenues and expenses
and related disclosure of contingent assets and liabilities.

On an on-going  basis,  we evaluate our estimates,  including  those related to:
valuation  of  investments  in joint  ventures,  valuation  of  construction  in
process, revenue recognition,  and deferred tax assets. We base our estimates on
our limited  historical  experience  and on various  other  assumptions  that we
believe reasonable under the circumstances,  the results of which form the basis
for making judgments about the carrying value of assets and liabilities that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

We have identified the following policies as critical to our business operations
and the understanding of our results of operations.

Valuation of Investment in Related Party Joint Venture:

The Company has an  investment  in a related  party  joint  venture.  Management
periodically  evaluates  the  adequacy  of the  underlying  assets  of the joint
venture. When management estimates the proceeds from the sale of such assets are
not adequate a reserve is recorded.  Based on its estimates,  Management has not
recorded an impairment  charge  related to this asset for the three months ended
June 30, 2003.




                                       19
<PAGE>

Valuation of Construction in Process

The Company  evaluates the carrying value of its investment in  construction  in
process for  impairment  whenever  there is an impairment  indicator,  generally
using an undiscounted cash flow methodology.  During the three months ended June
30, 2003, no impairment in the carrying value of the Company's  construction  in
process was indicated.

Revenue Recognition

The Company has  entered  into  certain  fixed  price and  modified  fixed-price
contracts for the construction of manufactured  homes.  Revenue is recognized on
these contracts using the full accrual method of accounting.  Under this method,
reasonable estimates of the costs applicable to the various stages of a contract
are made.  Should  estimates  indicate a loss is expected to be incurred under a
specific  contract,  cost of sales is charged with a provision  for such loss in
the period in which such loss is determined.


THREE MONTHS ENDED JUNE 30, 2003

Revenues

The Company had no business operations during the fiscal year ended December 29,
2002 and there were no  revenues  for the three  months  ended June 30, 2003 and
June 30, 2002, respectively.

Expenses

General and administrative expenses decreased $34,949 from $50,228 in the second
quarter of fiscal 2002 to $15,279 in the second  quarter of fiscal  2003.  Total
Expenses  increased  from  $50,228 for the three  months  ended June 30, 2002 to
$2,983,051  for the three months ended June 30, 2003. The Total Expenses for the
three months ended June 30, 2003 included $15,279 in general and  administrative
expenses,   $45,000  salaries  and  wages  and  $2,922,722  which  consisted  of
professional  fees and other  consulting  costs  associated  with the  Company's
acquisition efforts.

Net Losses

Net losses for the  three-month  period ended June 30, 2003 were  $3,007,181  as
compared to $25,313 for the  three-month  period ended June 30, 2002. The higher
net loss figure for the three-months ended June 30, 2003 as compared to the same
period last year is a result of the  increase in  operating  expenses  discussed
above  partially  offset by $24,915 of interest income recorded during the three
months ended June 30, 2002.



                                       20
<PAGE>

The basic and diluted loss per share for the quarter ended June 30, 2003,  based
on a  weighted  average  number  of  shares of  2,363,560  was $1.27 per  share,
compared  with the basic and diluted loss per share of $0.08 based on a weighted
average number of shares of 325,555 for the quarter ended June 30, 2002.

SIX MONTHS ENDED JUNE 30, 2003

Revenues

The Company had no business operations during the fiscal year ended December 29,
2002 and there were no revenues  for the six months ended June 30, 2003 and June
30, 2002, respectively.

Expenses

General and administrative  expenses decreased $33,555 from $88,357 in the first
six months of fiscal 2002 to $54,802 in the second quarter of fiscal 2003. Total
Expenses  increased  from  $88,357  for the six months  ended  June 30,  2002 to
$3,486,161  for the six months ended June 30, 2003.  The Total  Expenses for the
six months ended June 29, 2003 included $54,802 in operating  expenses,  $75,000
salaries and wages and $3,356,359 which consisted of professional fees and other
consulting costs associated with the Company's acquisition efforts.

Net Losses

Net losses for the  six-month  period  ended June 30,  2003 were  $3,510,291  as
compared to $38,769 for the six-month period ended June 30, 2002. The higher net
loss  figure for the  six-months  ended June 30,  2003 as  compared  to the same
period  last year is a result of the  increase  in  general  and  administrative
expenses discussed above partially offset by $49,588 of interest income recorded
during the six months ended June 30, 2002.

The basic and  diluted  loss per share for the six months  ended June 29,  2003,
based on a weighted  average  number of shares of 1,469,643 was $2.39 per share,
compared  with the basic and diluted loss per share of $0.12 based on a weighted
average number of shares of 316,626 for the six months ended June 30, 2002.

Liquidity and Capital Requirements

As of June 30, 2003,  the Company had total  current  assets  totaling  $639,717
consisting of cash and cash  equivalents  of $2,501,  an investment in a related
party joint venture of $107,850 and  construction  in progress of $525,866.  The
Company's  total  assets as of June 30, 2003  amounted to  $643,557,  consisting
primarily of its total current assets.



                                       21
<PAGE>

The Company's  total  liabilities  were  $1,157,626 as of June 30, 2003,  all of
which are current, and stockholders' deficit amounted to $514,069.

As of June 30, 2003, the Company has ($517,909) of negative  working capital and
is illiquid.  The Company has also suffered  recurring  losses from  operations.
These factors raise substantial doubt about the Company's ability to continue as
a going concern.

Management believes that, based upon the current operating plan of divesting the
majority of the Company's  ownership of Kina'ole and pursuing the acquisition of
undervalued and/or unused  manufacturing  assets, the Company's existing working
capital  will not be  sufficient  to fund  its  acquisition  activities  and the
ongoing  expenses of a reporting  company  through  December  31,  2003.  If the
Company is not successful in identifying and acquiring undervalued and/or unused
manufacturing  assets which  produce  positive cash flows from  operations,  the
Company may be forced to raise  additional  equity or debt financing to fund its
ongoing  obligations,  seek protection  under existing  bankruptcy laws or cease
doing  business.  If additional  funds are raised through the issuance of equity
securities,   the   percentage  of  ownership  of  the  Company's   then  common
stockholders  would be  diluted.  If  additional  funds are raised  through  the
issuance of debt  securities,  the Company will incur interest charges until the
related debt is paid off.

There can be no assurance  that the Company will be able to identify and acquire
undervalued and/or unused manufacturing assets which produce positive cash flows
from operations or raise any additional capital necessary to achieve its current
operating plan.

ITEM 3 CONTROLS AND PROCEDURES

The Company's  Chief  Executive  Officer and Chief  Financial  Officer (or those
persons performing similar functions), after evaluating the effectiveness of the
Company's  disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c)  under the  Securities  Exchange Act of 1934, as amended) as of a date
within 90 days of the filing of this quarterly report (the  "Evaluation  Date"),
have  concluded  that,  as of the  Evaluation  Date,  the  Company's  disclosure
controls  and  procedures  were  effective  to  ensure  the  timely  collection,
evaluation  and  disclosure  of  information  relating to the Company that would
potentially be subject to disclosure under the Securities  Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.  There were no
significant  changes in the Company's internal controls or in other factors that
could  significantly  affect the internal controls  subsequent to the Evaluation
Date.

                                       22
<PAGE>

                                     PART II

ITEM 1   LEGAL PROCEEDINGS

Marc Douglas Threatened Litigation

On June 17,  2003,  the  Company  was served  with a lawsuit  from Marc  Douglas
against the Company,  Scott Siegel,  W. Michael  Sessions,  John W. Meyers,  and
Matthew Dwyer by Mr. Marc Douglas, a former officer and director of the Company.
Mr. Siegel is a current director of the Company; Mr. Sessions and Mr. Meyers are
former officers and directors of the Company and current  officers and directors
of the Company's  subsidiary.  According to the written  notice,  Mr. Douglas is
alleging  that: i) the Company  wrongfully  cancelled and wrote off a consulting
agreement Mr.  Douglas had with the Company,  causing  damages to Mr. Douglas in
the amount of $160,000;  and ii) that Mr. Matt Dwyer,  a former owner of 250,000
shares of the  Company's  Series A  Convertible  Preferred  Stock,  breached his
obligations  under a promissory  note which was secured by the 250,000 shares of
the Company's  Series A Convertible  Preferred Stock, and has caused Mr. Douglas
damages in excess of $157,000.

Mr.  Douglas  is suing the  Company  for  damages  as a result of the  Company's
alleged  cancellation  of the  consulting  agreement.  The  Company  intends  to
vigorously  defend itself against these claims.  Mr. Douglas is also seeking the
250,000 shares of the Company's Series A Convertible  Preferred Stock,  which is
not held by the  Company,  as a result  of Mr.  Dwyer's  alleged  breach  of the
promissory note.

On July 2, 2003 Marc Douglas obtained an emergency hearing to seek an Injunction
or force the Company into Receivership. The Court granted a Temporary Injunction
against the Company from  issuing any  additional  securities,  creating any new
class of securities,  preventing  Scott Siegel from  transferring,  selling,  or
voting the 250,000 shares of series "A" shares or Preferred  Stock.  The Company
is filing the necessary  documents to obtain a hearing to remove the  Injunction
and believes it will be successful in having the  Injunction  lifted and removed
from the lawsuit all together.

Richard A. Weiner Threatened Litigation

On June 12,  2003,  the Company  received  notification  of a potential  lawsuit
against the Company, Scott Siegel, Neil Dolgin, W. Michael Sessions, and John W.
Meyers by Richard A. Weiner and his family members ("Weiner Group").  The Weiner
Group  alleges they are  shareholders  of the Company.  According to the written
notice,  the Weiner Group is alleging  that:  i) the Company's  1-for10  reverse
stock split, effective January 27, 2003, was not done in accordance with Florida
corporate  law; and ii) there has been  unlawful  manipulation  of the Company's
stock.  The Weiner Group claims the alleged wrongful reverse stock split and the
alleged  manipulation  of the Company's stock have caused them damages in excess
of $1,000,000.

The Weiner Group is  threatening  to sue the Company for these alleged  wrongful
acts. The Company has not had an opportunity to fully evaluate the merits of the
Weiner Group's  claims.  However,  if the Weiner Group elects to file a lawsuit,
the Company intends to vigorously defend itself against these claims.




                                       23
<PAGE>

General Matters


The Company is from time to time involved in other various pending or threatened
legal actions. The litigation process is inherently uncertain and it is possible
that the  resolution of such matters might have a material  adverse  effect upon
the financial condition and/or results of operations of the Company. However, in
the opinion of the Company's management, matters currently pending or threatened
against the Company are not  expected to have a material  adverse  effect on the
financial position or results of operations of the Company.


ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS

During the second fiscal quarter, the Company issued the following securities:

(A)      On March 5,  2003,  250,000  shares of common  stock  were  issued to a
         Richard Dwyer for services  performed  pursuant to a verbal  consulting
         agreement.  Professional  services  expense  amounting  to $375,000 was
         recorded in the consolidated  statement of operations for the six month
         period  ended June 30, 2003  related to this  transaction  based on the
         market price of the common  stock on the date of issuance.  At the time
         of the  transaction,  Mr.  Dwyer  was  not a  member  of the  Board  of
         Directors, an officer of the Company, or a significant shareholder.  On
         August 21, 2003, Mr. Dwyer was appointed as CEO of the Company.

(B)      On May 9, 2003, the Company borrowed $20,000 from an individual.  There
         was no formal note  related to the  borrowing.  On June 17,  2003,  the
         Company  repaid the advance  through the  issuance of 55,556  shares of
         common stock valued at the current trading price of $0.36 per share. In
         addition to the  repayment  of the  advance,  the  Company  also issued
         2,944,444  shares of common stock to the same individual for consulting
         services   rendered   pursuant  to  a  verbal   consulting   agreement.
         Professional  services expense  amounting to $1,060,000 was recorded in
         the consolidated statement of operations for the six month period ended
         June 30, 2003 related to this transaction  based on the market price of
         the  common  stock  on the  date of  issuance.  As a  result  of  these
         transactions,   the  individual  owns  a  significant  portion  of  the
         Company's  outstanding common stock, and as such, is considered to be a
         related party.

(C)      On June 13, 2003, the Company  borrowed  $30,000 from Dr. Martin Peskin
         in the form of a note  payable,  which bears  interest at 8%per  annum.
         Principal  and interest on the note was due and payable in one lump sum
         on the maturity  date of June 30,  2003.  The proceeds of the note were
         used for working capital purposes. On June 17, 2003, the Company repaid
         the note through the  issuance of 83,833  shares of common stock valued
         at the  current  trading  price of $0.36 per share.  In addition to the
         repayment  of the note,  the Company  also issued  2,916,667  shares of
         common stock to the same  individual for consulting  services  rendered
         pursuant  to  a  verbal  consulting  agreement.  Professional  services
         expense  amounting  to  $1,050,000  was  recorded  in the  consolidated
         statement  of  operations  for the six month period ended June 30, 2003
         related to this  transaction  based on the  market




                                       24
<PAGE>

         price of the common stock on the date of issuance. As a result of these
         transactions,   the  individual  owns  a  significant  portion  of  the
         Company's  outstanding common stock, and as such, is considered to be a
         related  party.  Dr.  Peskin was appointed as the Company's CEO on July
         14, 2003, and resigned from this position on August 21, 2003.

(D)      On June 19, 2003, the Company entered into consulting  agreements with,
         Richard Dwyer and his brother,  Mathew Dwyer. The consulting agreements
         provide for strategic planning  services,  and services relating to the
         identification,  evaluation,  structuring,  negotiation, and closing of
         business  acquisitions,  and have a term of six months. In exchange for
         their  services,  the Company  issued  warrants  to purchase  2,500,000
         shares of common stock.  The warrants  have an exercise  price of $0.03
         per  share  and  expire  one year  from the  date of  issuance.  Of the
         2,500,000  warrants,   1,800,000  were  exercisable  immediately.   The
         balance, warrants to purchase 700,000 shares of common stock, will vest
         on October 1, 2003.

(E)      On April 29, 2003,  the Company  borrowed  $5,000 in the form of a note
         payable which bears interest at 8%.  Principal and interest on the Note
         is due and payable in one lump sum on the  maturity  date of August 15,
         2003.  The  proceeds  of the Note are being  used for  working  capital
         purposes. In connection with the note, the Company issued 50,000 shares
         of its common stock to the holder as inducement  to provide  financing.
         The shares were valued at the trading  price of the common  stock as of
         the  date of the  note.  Interest  expense  amounting  to  $15,000  was
         recorded in the consolidated  statement of operations for the six month
         period ended June 30, 2003 related to this transaction.

(F)      On June 4, 2003,  the  Company  borrowed  $15,000 in the form of a note
         payable which bears interest at 8%.  Principal and interest on the Note
         is due and  payable in one lump sum on the  maturity  date of August 4,
         2003.  The  proceeds  of the Note are being  used for  working  capital
         purposes. In connection with the note, the Company issued 25,000 shares
         of its common stock to the holder as inducement  to provide  financing.
         The shares were valued at the trading  price of the common  stock as of
         the date of the note. Interest expense amounting to $9,000 was recorded
         in the  consolidated  statement of operations  for the six month period
         ended June 30, 2003 related to this transaction.

(G)      The Company issued 50,000 shares to Mr. Scott Siegel  representing  the
         balance of the shares that were to be issued to Mr.  Siegel in exchange
         for his  subscription of $72,500,  of which $41,000 has previously been
         paid.

All of these  transactions  were exempt under Section 4(2) of the Securities Act
of 1933 based on the  accredited  status of the  purchasers  or  pursuant  to an
exchange exempt under Section 3(a)(9) of the Securities Act of 1933.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

There have been no events which are required to be reported under this Item.



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<PAGE>

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 9, 2003, the Company filed a PRE 14C Proxy  Statement on May 20, 2003 the
Company  filed a DEF 14C then a DEFR 14C on June 12, 2003.  The Proxy notice was
for the NOTICE OF ANNUAL  MEETING OF  SHAREHOLDERS  TO BE HELD ON JUNE 10,  2003
9:00 AM, Pacific  Standard Time, at the Courtyard  Marriott located at 620 North
University  Drive,  Coral Springs,  Florida 33071,  to consider and act upon the
following proposals, as described in the accompanying Information Statement:

     1. To elect three (3)  directors to serve until the next Annual  Meeting of
Shareholders and thereafter until their successors are elected and qualified;

     2. To amend the Articles of  Incorporation  of the Company to effectuate an
increase in the number of shares of the Company's  authorized common stock to 30
million shares;

     3. To adopt the Second Restated  Articles of Incorporation  for the purpose
of consolidating previous amendments to the Company's Articles of Incorporation;

     4. To approve the TMI Holdings, Inc. 2003 Qualified Securities Plan;

     5. To ratify the TMI Holdings, Inc. 2003 Non-Qualified Securities Plan;

     6. To approve the Second Restated Bylaws of TMI Holdings, Inc.;

     7. To ratify  the  appointment  of  Berkowitz  Dick  Pollack  & Brant  LLP,
Certified  Public  Accountants,  as independent  auditors of the Company for the
fiscal year ending December 31, 2003; and

     8. To transact such other  business as may properly come before the meeting
or any adjournments thereof.

All the above listed  items were  approved and ratified by the Board on the 17th
of June, 2003 after the shareholders meeting.

ITEM 5 OTHER INFORMATION

In July 2003,  the Board  appointed and elected Dr. Martin Peskin as a member of
the Board of Directors following the resignation of Mr. Scott Siegel. Mr. Siegel
remained as a member of the Board of Directors.  In August 2003,  Mr. Richard R.
Dwyer was elected as CEO/President of the Company.

On June 27, 2003,  the Company  entered into a Letter of Intent to acquire Total
Identity Group, Inc.



                                       26
<PAGE>

ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits 99.1 Certification  Pursuant to 18 U.S.C., Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002

(b) On June 17, 2003 the Company entered into consulting agreements with Richard
Dwyer for  Marketing and with Matthew P. Dwyer for Mergers &  Acquisitions.  The
agreements  are for a 6 months  period  with an option for the Company to extend
them an additional 6 months.

Reports on Form 8-K

(c) On January 9, 2003, the Company filed a Current Report on Form 8-K regarding
a series of  transactions  resulting  in a change in control of the Company from
Mr. Marc Douglas to Mr. Michael Session and Mr. John W. Meyers.

On February  11,  2003,  the Company  filed a Report on Form 8-K  regarding  the
Company's  acquisition of 100% of the outstanding stock of Kina'ole  Development
Corp. In this Form 8-K the Company stated it would be filing a subsequent Report
on Form 8-K,  which would include  audited  historical  and pro forma  financial
statements for Kina'ole. The Company filed the amended Form 8-K with the audited
historical and pro forma financial statement for Kina'ole on June 11, 2003.

(d) On February 21, 2003, the Company  entered into a Stock  Purchase  Agreement
with Mr. Sessions,  Mr. Meyers, and Mr. Scott Siegel, whereby the Company agreed
to issue 1,050,000 shares of common stock (1,000,000 has been issued to date) to
Mr.  Siegel,  and Mr.  Sessions and Mr.  Meyers  transferred  a total of 250,000
shares of Series A Preferred Stock to Mr. Siegel, all in exchange for Mr. Siegel
agreeing to pay  approximately  $72,500 in outstanding  Company  liabilities and
$150,000 for  outstanding  amounts owed by Mr.  Sessions and Mr.  Meyers to Marc
Douglas.  On March 5, 2003, Mr. Sessions and Mr. Meyers resigned as directors of
the Company and Mr.  Siegel,  who was not a related  party to the Company at the
time of the February 21, 2003 transaction, became an officer and director of the
Company on March 5, 2003.

ITEM 7 SUBSEQUENT EVENTS

(a) On July 1, 2003 the Company filed an S8 Registration for 6 million shares of
stock to be issued under  Statutory and  Non-Statutory  Stock Option plans.



                                       27
<PAGE>

The Plans effective May 2, 2003, to provide us with  flexibility and to conserve
our cash resources in compensating certain of our technical,  administrative and
professional employees and consultants, constitute the first prospectus relating
to issuances to our employees,  consultants and others of up to 2,640,000 shares
of  common  stock  pursuant  to our  2003  Qualified  Securities  Plan  and 2003
Non-Qualified Securities Plan (the "Plans").

(b) On July 14, 2003 the Board  Elected  Martin  Peskin as a member of the Board
and temporary  CEO/President  at the same Scott Siegel resigned as CEO/President
but remained a Board member.

(c) On August 19, 2003 the Company filed a Current  Report on Form 8-K regarding
a change in auditors.  The Company  terminated its  relationship  with Berkowitz
Dick Pollack and Brant and retained HJ & Associates, LLP as their new auditors.

(d) On August 19, 2003 the Company entered into an investment  banking agreement
with Argilus, LLC.

(e) On August  21,  2003 the Board of TMI  accepted  the  resignation  of Martin
Peskin  as  CEO/President  and  appointed  Richard  R.  Dwyer,  JR  as  the  new
CEO/President, Mr. Peskin remains a member of the Board.




                                       28
<PAGE>


                                   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.
Dated: September 9, 2003

By:   /s/ Richard Dwyer
--------------------------
Its:  Chief  Executive Officer,
      Chief Financial Officer and Secretary


Dated: September 9, 2003


By: /s/ Martin Peskin
--------------------------
Its: Director



                                       29
<PAGE>




                                  CERTIFICATION
                 OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER

         I, Richard Dwyer,  Chief Executive  Officer and Chief Financial Officer
of the registrant, 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 Rule 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 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   fulfilling   the  equivalent
functions):

         (i) 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

         (ii) any fraud,  whether or not material,  that involves  management or
other employees who have a significant role in the issuer'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  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: September 9, 2003

       /s/ Richard Dwyer
       -------------------------------
       Chief Executive Officer and
       Chief Financial Officer



                                       30