Third Millennium Industries folds

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Once $30 million-public company lost investors after power grab|ret||ret||tab|

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by Eric Olson|ret||ret||tab|

SBJ Reporter|ret||ret||tab|

eolson@sbj.net|ret||ret||tab|

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Rogersville-based Third Millennium Industries Inc., a one-time $30 million public company with about 12.3 million shares of common stock outstanding, has gone belly up.|ret||ret||tab|

Over an eight-week period from March 9 to May 10, Third Millennium officers saw two big investors bow out and two acquisition contracts cancelled, dropping its stock from $2.70 to 20 cents a share and ultimately collapsing the company, said Dennis K. DePriest, who co-founded Third Millennium in early 2003 and served as its CEO. Third Millennium stock, which traded as TMLL, has been delisted. The company has ceased operations and has no officers or directors.|ret||ret||tab|

Third Millennium manufactured horse trailers with living quarters. It went public in August 2003, after acquiring three companies Campers World in Tulsa, Okla., Clear Lake Trailers in Weatherford, Texas, and Twister Trailer in Ft. Scott, Kan. and executing a reverse merger.|ret||ret||tab|

The company's precipitous downward spiral began when it defaulted Feb. 28 on an approximately $500,000 promissory note it owed a Kansas City investment group. The investors exercised their right to take control of the company March 9, according to Third Millennium's Form 8-K filed with the U.S. Securities and Exchange Commission April 6. It was the company's last SEC filing.|ret||ret||tab|

According to DePriest, actions following the takeover drove the business into the ground.|ret||ret||tab|

"Within eight weeks the whole thing was down the tubes," DePriest said. "Some of the actions (the Kansas City investors) took basically drove away the other financial and operating partners we had in place. We had nowhere to go."|ret||ret||tab|

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Ready to grow|ret||ret||tab|

Before the takeover, Third Millennium officers were growing the company through acquisitions. In addition to August's three buyouts, Third Millennium performed a reverse merger with X-Net Services Corp. in October, and by March, two other deals were in place, company records show. Third Millennium officers had signed a contract to acquire Barrett Trailers Inc. of Purcell, Okla., and had signed a letter of intent to acquire J. D. Sutherland LLC, also of Purcell, Okla. They also were negotiating with Ozark Mountain Interiors before it closed, but could not strike a deal (see related story in SBJ's July 26 issue).|ret||ret||tab|

DePriest said the Barrett Trailers and J. D. Sutherland deals fell through after the "power grab," along with investment deals in excess of $10 million.|ret||ret||tab|

"It just blew up," said Victor Green, an investment banker with Spencer Clarke LLC in New York City. Spencer Clarke had agreed to raise bridge funding for Third Millennium acquisitions.|ret||ret||tab|

"(The investors) no longer followed the game plan we had in place originally and then they apparently closed the company," Green said.|ret||ret||tab|

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The bottom falls out|ret||ret||tab|

DePriest said a reverse merger executed in October took longer to finalize than expected from 90 days to 180 days causing Third Millennium to default on the $500,000 note.|ret||ret||tab|

Investor money in the wings was earmarked to pay off the note, he said.|ret||ret||tab|

"We couldn't go out and begin doing the investor awareness and begin taking the steps with the New York money" until all securities filings were complete, DePriest said. "Now, if we had more experience we would have allowed more time and negotiated the deal differently.|ret||ret||tab|

"They were still going to get completely paid off with the money coming out of New York. It was just an opportunity for them to grab control of the thing."|ret||ret||tab|

On March 9, when the investors took over, DePriest and Third Millennium Managing Director Greg Spencer resigned from their positions as officers and directors. That same day, members of the Kansas City investment group took over: Neil Anderson was appointed president, Phillip E. Tearney, chairman and former state Sen. Phillip Snowden, director, according to Third Millennium's April SEC filing.|ret||ret||tab|

The investors, which also included William P. Moore of the William P. Moore III Revocable Trust, formed Barrett Sutherland Acquisition LLC to execute the acquisitions of Barrett Trailers and J. D. Sutherland. On the same day DePriest and Spencer resigned, they also transferred 945,000 shares of Third Millennium's common stock to Barrett Sutherland Acquisition LLC, making it majority owner with 64.4 percent of Third Millennium's outstanding shares.|ret||ret||tab|

Moore and Tearney, who are principals of Continental Coal Inc. in Shawnee Mission, Kan., could not be reached for comment at press time.|ret||ret||tab|

Spencer Clarke was raising capital for the Barrett Trailers acquisition up until the company went defunct, Green said. Barrett Trailers President John Hodson was waiting for the financing.|ret||ret||tab|

"We were down to obtaining money when the people in Kansas City took it over," Hodson said. "The people in New York were ready to fund this acquisition when the people in Kansas City took over and basically told the people in New York they didn't need their money, that they were going to do it themselves. They were never able to do it themselves. They never executed the contracts."|ret||ret||tab|

Hodson said Barrett Sutherland Acquisition principals later made a separate, private offer that he refused. |ret||ret||tab|

"It was about one-third of the price Millennium had offered," Hodson said. "I think, had Dennis (DePriest) and Greg (Spencer) held on to it, everything would have happened. That's my opinion."|ret||ret||tab|

Third Millennium records provided by DePriest show that in addition to the Spencer Clarke deal, Cornell Capital Partners LP had signed a term sheet Feb. 27 to purchase up to $10 million of Third Millennium common stock over the next two years. |ret||ret||tab|

"Everything we had in place under contract, ready to go was dissolved," said Spencer. "This is a real hot potato."|ret||ret||tab|

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Aftermath|ret||ret||tab|

Barrett Trailers, an approximately $12 million horse trailer manufacturer, bought J. D. Sutherland after Third Millennium's deal went awry, proof for DePriest that the deal was a solid move.|ret||ret||tab|

"It was just a natural," DePriest said. "The whole thing was set up the way it needed to go. We had the thing figured out correctly.|ret||ret||tab|

"I'm not saying they didn't have the business acumen to work a deal like we did. The way they went about it drove everybody away. There still has to be a large measure of trust in deals of this size ($3 million-$10 million). In big deals, it's just numbers. We live in a world that is more relational in business than transactional."|ret||ret||tab|

According to Third Millennium's April SEC filing, Tearney, Snowden and Anderson resigned from their positions in April.|ret||ret||tab|

Both DePriest and Spencer are doing consulting work for local businesses.|ret||ret||tab|

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