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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | ----------------------------------------------------------------------------------------



For the Quarterly Period Ended October 1, 2005



| ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | -----------------------------------------------------------------------------------------



For the transition period from  to



Commission File No.: 000-29707



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DATREK MILLER INTERNATIONAL, INC.

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 65-0910697                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



835 Bill Jones
Industrial Drive, Springfield, Tennessee 37172

(Address of principal executive offices)



(615) 384-1286

(Issuers Telephone Number, Including Area Code)



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Check whether the issuer has 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.    x  Yes ̈No



Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



As of November 17, 2005, 11,222,183 shares of the issuers Common Stock, $.001 par value per share, were outstanding.



Transitional Small Business Disclosure Format (Check One):    Yes ̈No  x



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC.



FORM 10-QSB



OCTOBER 1, 2005



TABLE OF CONTENTS



|                               |  |         |  |                                                                                                                                   |  |      
|------------------------------ |  | ------- |  | --------------------------------------------------------------------------------------------------------------------------------- |  | -----
|                               |  |         |  |                                                                                                                                   |  | Page 
|PART I -
Financial Information |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Financial Statements (Unaudited)                                                                                                  |  |      
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Balance Sheet at October 1, 2005                                                                           |  | 1    
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Operations for the Three and Nine-Month Periods Ended October 1, 2005 and September 30, 2004 |  | 2    
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statement of Stockholders Equity for the Nine-Month Period Ended October 1, 2005                          |  | 3    
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended October 1, 2005 and September 30, 2004           |  | 4-5  
|                               |  |         | 
|                               |  |         |  | Notes to Condensed Consolidated Financial Statements                                                                              |  | 6-13 
|                               |  |         | 
|                               |  | Item 2. |  | Managements Discussion and Analysis or Plan of Operation                                                                         |  | 14-22
|                               |  |         | 
|                               |  | Item 3. |  | Controls and Procedures                                                                                                           |  | 23   
|                               | 
|PART II -
Other Information    |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Legal Proceedings                                                                                                                 |  | 23   
|                               |  |         | 
|                               |  | Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                       |  | 23-24
|                               |  |         | 
|                               |  | Item 3. |  | Defaults Upon Senior Securities                                                                                                   |  | 24   
|                               |  |         | 
|                               |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                               |  | 24   
|                               |  |         | 
|                               |  | Item 5. |  | Other Information                                                                                                                 |  | 24   
|                               |  |         | 
|                               |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                                                  |  | 25   
|                               | 
|SIGNATURES                     |  | 26     



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##### Table of Contents

PART I - Financial Information



DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

OCTOBER 1, 2005

(Unaudited)



|                                                                                                  |  |   |            |  
|------------------------------------------------------------------------------------------------- |  | - | ---------- | -
|ASSETS                                                                                            |  |   |            |  
|                                                                                                  | 
|CURRENT ASSETS                                                                                    |  |   |            |  
|Cash                                                                                              |  | $ | 264,739    |  
|Accounts receivable trade, net of allowance for doubtful accounts of $557,850                     |  |   | 4,578,060  |  
|Inventories, net                                                                                  |  |   | 4,733,268  |  
|Prepaid expenses                                                                                  |  |   | 450,827    |  
|Receivables from related parties                                                                  |  |   | 148,031    |  
|Other receivables                                                                                 |  |   | 71,459     |  
|                                                                                                  |  |   |            |  
|Total Current Assets                                                                              |  |   | 10,246,384 |  
|                                                                                                  | 
|PROPERTY AND EQUIPMENT, NET                                                                       |  |   | 840,711    |  
|INTANGIBLES, NET                                                                                  |  |   | 2,212,624  |  
|GOODWILL                                                                                          |  |   | 361,503    |  
|RESTRICTED CASH                                                                                   |  |   | 700,000    |  
|OTHER ASSETS                                                                                      |  |   | 7,019      |  
|                                                                                                  |  |   |            |  
|TOTAL ASSETS                                                                                      |  | $ | 14,368,241 |  
|                                                                                                  |  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                              |  |   |            |  
|                                                                                                  | 
|CURRENT LIABILITIES                                                                               |  |   |            |  
|Revolving credit facility                                                                         |  | $ | 4,911,708  |  
|Note payable to related party                                                                     |  |   | 750,000    |  
|Accounts payable and accrued liabilities                                                          |  |   | 3,663,588  |  
|Accrued interest payable, related party                                                           |  |   | 99,590     |  
|                                                                                                  |  |   |            |  
|Total Current Liabilities                                                                         |  |   | 9,424,886  |  
|                                                                                                  | 
|NOTE PAYABLE TO RELATED PARTY                                                                     |  |   | 3,200,000  |  
|CONVERTIBLE DEBENTURE TO RELATED PARTY, net of discount of $925,324                               |  |   | 1,074,676  |  
|                                                                                                  |  |   |            |  
|Total Liabilities                                                                                 |  |   | 13,699,562 |  
|                                                                                                  |  |   |            |  
|COMMITMENTS AND CONTINGENCIES                                                                     |  |   |            |  
|                                                                                                  | 
|STOCKHOLDERS EQUITY                                                                              |  |   |            |  
|Common stock, $.001 par value, 1,000,000,000 shares authorized, 11,222,183 issued and outstanding |  |   | 11,222     |  
|Additional paid-in capital                                                                        |  |   | 7,655,140  |  
|Accumulated deficit                                                                               |  |   | (6,997,683 | )
|                                                                                                  |  |   |            |  
|Total Stockholders Equity                                                                        |  |   | 668,679    |  
|                                                                                                  |  |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                        |  | $ | 14,368,241 |  
|                                                                                                  |  |   |            |  



See notes to condensed
consolidated financial statements.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------- | - | --------- | -------------- |  | - | ------------------ | - |  | - | ---------- | -
|                                                        |  | For the Three Months Ended |            |   | For the Nine Months Ended |  
|                                                        |  | October 1,2005             |            |   | September 30,2004         |   |           | October 1,2005 |  |   | September 30, 2004 |  
|NET SALES                                               |  | $                          | 6,449,855  |   |                           | $ | 1,392,774 |                |  | $ | 20,893,548         |   |  | $ | 5,079,988  |  
|                                                        |  |                            |            |  
|COST OF SALES                                           |  |                            | 5,254,196  |   |                           |   | 1,159,069 |                |  |   | 15,344,639         |   |  |   | 4,120,684  |  
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|GROSS PROFIT                                            |  |                            | 1,195,659  |   |                           |   | 233,705   |                |  |   | 5,548,909          |   |  |   | 959,304    |  
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|OPERATING EXPENSES                                      |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|Sales and marketing                                     |  |                            | 1,727,014  |   |                           |   | 626,905   |                |  |   | 5,025,665          |   |  |   | 1,742,423  |  
|General and administrative                              |  |                            | 1,076,973  |   |                           |   | 183,224   |                |  |   | 3,332,484          |   |  |   | 589,769    |  
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|TOTAL OPERATING EXPENSES                                |  |                            | 2,803,987  |   |                           |   | 810,129   |                |  |   | 8,358,149          |   |  |   | 2,332,192  |  
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|LOSS FROM OPERATIONS                                    |  |                            | (1,608,328 | ) |                           |   | (576,424  | )              |  |   | (2,809,240         | ) |  |   | (1,372,888 | )
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|OTHER INCOME (EXPENSE)                                  |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|Interest expense                                        |  |                            | (319,682   | ) |                           |   | (143,741  | )              |  |   | (792,598           | ) |  |   | (379,811   | )
|Other income, net                                       |  |                            | 62,562     |   |                           |   | (56,894   | )              |  |   | 210,062            |   |  |   | (56,894    | )
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|TOTAL OTHER EXPENSE                                     |  |                            | (257,120   | ) |                           |   | (200,635  | )              |  |   | (582,536           | ) |  |   | (436,705   | )
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|NET LOSS                                                |  | $                          | (1,865,448 | ) |                           | $ | (777,059  | )              |  | $ | (3,391,776         | ) |  | $ | (1,809,593 | )
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|NET LOSS PER COMMON SHARE - BASIC AND DILUTED           |  | $                          | (0.17      | ) |                           | $ | (0.26     | )              |  | $ | (0.31              | ) |  | $ | (0.60      | )
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  
|WEIGHTED AVERAGE SHARES OUTSTANDING  BASIC AND DILUTED |  |                            | 11,222,183 |   |                           |   | 3,000,000 |                |  |   | 11,118,447         |   |  |   | 3,000,000  |  
|                                                        |  |                            |            |   |                           |   |           |                |  |   |                    |   |  |   |            |  



See notes to condensed
consolidated financial statements.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITY

FOR THE NINE MONTHS ENDED OCTOBER 1, 2005

(Unaudited)



|                                    |  |              |  |                            |        |                     |   |           |                      |   |            |   |  |   |            |  
|----------------------------------- |  | ------------ |  | -------------------------- | ------ | ------------------- | - | --------- | -------------------- | - | ---------- | - |  | - | ---------- | -
|                                    |  | Common Stock |  | Additional Paid-in Capital |        | Accumulated Deficit |   |           | Stockholders Equity |  
|                                    |  | Shares       |  | Amount                     |        |                     |  
|BALANCE, December 31, 2004          |  | 10,362,183   |  | $                          | 10,362 |                     | $ | 6,085,974 |                      | $ | (3,605,907 | ) |  | $ | 2,490,429  |  
|                                    |  |              |  |                            |       
|Sale of common stock - Stanford     |  | 560,000      |  |                            | 560    |                     |   | 559,440   |                      |   |           |   |  |   | 560,000    |  
|Common stock issued for services    |  | 300,000      |  |                            | 300    |                     |   | 35,700    |                      |   |           |   |  |   | 36,000     |  
|Convertible debenture debt discount |  |             |  |                            |       |                     |   | 974,026   |                      |   |           |   |  |   | 974,026    |  
|Net loss                            |  |             |  |                            |       |                     |   |          |                      |   | (3,391,776 | ) |  |   | (3,391,776 | )
|                                    |  |              |  |                            |        |                     |   |           |                      |   |            |   |  |   |            |  
|BALANCE, October 1, 2005            |  | 11,222,183   |  | $                          | 11,222 |                     | $ | 7,655,140 |                      | $ | (6,997,683 | ) |  | $ | 668,679    |  
|                                    |  |              |  |                            |        |                     |   |           |                      |   |            |   |  |   |            |  



See notes to condensed
consolidated financial statements.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                            |  |                           |            |   |                   |   |            |  
|--------------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ----------------- | - | ---------- | -
|                                                                            |  | For the Nine Months Ended |           
|                                                                            |  | October 1,2005            |            |   | September 30,2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                        |  |                           |            |   |                   |   |            |  
|Net loss                                                                    |  | $                         | (3,391,776 | ) |                   | $ | (1,809,593 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                           |            |   |                   |   |            |  
|Depreciation                                                                |  |                           | 149,378    |   |                   |   | 87,131     |  
|Amortization of intangibles                                                 |  |                           | 439,382    |   |                   |   |           |  
|Amortization of finance fees                                                |  |                           | 37,500     |   |                   |   |           |  
|Common stock issued for services                                            |  |                           | 18,000     |   |                   |   |           |  
|Bad debt expense                                                            |  |                           | 163,541    |   |                   |   | (14,421    | )
|Convertible debenture debt discount                                         |  |                           | 48,702     |   |                   |   |           |  
|Changes in operating assets and liabilities:                                |  |                           |            |   |                   |   |            |  
|Accounts receivable                                                         |  |                           | (679,680   | ) |                   |   | (342,568   | )
|Inventories                                                                 |  |                           | 1,006,130  |   |                   |   | 131,358    |  
|Prepaid expenses                                                            |  |                           | (11,122    | ) |                   |   | (8,925     | )
|Receivables from related parties                                            |  |                           | (762       | ) |                   |   |           |  
|Other receivables                                                           |  |                           | 32,944     |   |                   |   |           |  
|Other assets                                                                |  |                           | 34,240     |   |                   |   | 2,253      |  
|Accounts payable and accrued liabilities                                    |  |                           | (758,673   | ) |                   |   | 479,198    |  
|                                                                            |  |                           |            |   |                   |   |            |  
|Net cash used in operating activities                                       |  |                           | (2,912,196 | ) |                   |   | (1,475,567 | )
|                                                                            |  |                           |            |   |                   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                        |  |                           |            |   |                   |   |            |  
|Purchases of property and equipment                                         |  |                           | (268,757   | ) |                   |   | (57,601    | )
|Contingent acquisition earn-out recorded to intangible assets               |  |                           | (116,108   | ) |                   |   |           |  
|                                                                            |  |                           |            |   |                   |   |            |  
|Net cash used in investing activities                                       |  |                           | (384,865   | ) |                   |   | (57,601    | )
|                                                                            |  |                           |            |   |                   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                        |  |                           |            |   |                   |   |            |  
|Net borrowings under line of credit, related party (Stanford)               |  |                           |           |   |                   |   | 2,080,000  |  
|Net borrowings under revolving credit facility                              |  |                           | 590,192    |   |                   |   |           |  
|Borrowings under convertible debenture note, related party (Stanford)       |  |                           | 2,000,000  |   |                   |   |            |  
|Repayments to related party (former Datrek shareholders)                    |  |                           | (930,000   | ) |                   |   |           |  
|Sale of common stock to Stanford                                            |  |                           | 560,000    |   |                   |   |           |  
|Repayments to finance companies                                             |  |                           | (21,560    | ) |                   |   | (14,002    | )
|                                                                            |  |                           |            |   |                   |   |            |  
|Net cash provided by financing activities                                   |  |                           | 2,198,632  |   |                   |   | 2,065,998  |  
|                                                                            |  |                           |            |   |                   |   |            |  
|NET (DECREASE) INCREASE IN CASH                                             |  |                           | (1,098,429 | ) |                   |   | 532,830    |  
|                                                                            |  |                          
|CASH, BEGINNING OF THE PERIOD                                               |  |                           | 1,363,168  |   |                   |   | 38,804     |  
|                                                                            |  |                           |            |   |                   |   |            |  
|CASH, END OF THE PERIOD                                                     |  | $                         | 264,739    |   |                   | $ | 571,634    |  
|                                                                            |  |                           |            |   |                   |   |            |  



See notes to condensed
consolidated financial statements.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                  |  |                           |         |                   |   |      
|------------------------------------------------- |  | ------------------------- | ------- | ----------------- | - | -----
|                                                  |  | For the Nine Months Ended
|                                                  |  | October 1,2005            |         | September 30,2004
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |  |                           |         |                   |   |      
|Cash paid during the period for interest          |  | $                         | 774,120 |                   | $ | 2,008
|                                                  |  |                          
|Cash paid during the period for taxes             |  | $                         | 43,285  |                   | $ |     
|                                                  |  |                          
|NON-CASH INVESTING AND FINANCING                  |  |                           |         |                   |   |      
|Common stock issued for services                  |  | $                         | 36,000  |                   | $ |     
|                                                  |  |                          
|Convertible debenture debt discount               |  | $                         | 974,026 |                   | $ |     



See notes to condensed
consolidated financial statements.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1 - Nature of Business and Operations



Business



Datrek Miller International, Inc. (DMI) and its wholly owned subsidiaries Datrek Professional Bags, Inc. (Datrek) and Miller
Golf Company (Miller) (collectively the Company), manufacture, design, assemble and distribute golf bags and golf accessories for sale to on-course golf facilities and off-course golf specialty shops, sporting goods stores,
corporate premium customers, golf event sponsoring organizations, and mass merchandisers primarily in the United States and Canada. The Company is based in and conducts all of its operations from Springfield, Tennessee.



DMI is the successor to Greenhold Group, Inc., (GGI) which was
originally incorporated in the State of Florida on March 22, 1999.



Stanford Venture Capital Holdings, Inc. (f/k/a Stanford Telecommunications Holdings, Inc.) (Stanford Holdings) prior to the transactions described below was the 95% owner of Miller Golf Company, LLC. Miller (through a newly
formed acquisition corporation) entered into a merger agreement (October 15, 2004) with Datrek Miller International, Inc., a public shell corporation (f/k/a Greenhold Group, Inc.), whereby 3,000,000 shares of DMI were exchanged for substantially all
of the assets and liabilities of Miller. In conjunction with the merger, DMI (through a newly formed acquisition corporation) purchased substantially all of the assets and assumed substantially all of the liabilities of Datrek for approximately
$6,471,000, including costs of $160,000. The purchase price consisted of $475,000 cash, $5,440,000 in notes payable and 2,200,000 shares (issued at $.18 based on appraisal value) of DMI common stock valued at $396,000. In connection with the
acquisition, the Company recorded intangible assets for Datreks registered trade name and customer list of $1,813,000 and $819,000, respectively. All of the goodwill associated with the acquisition is deductible for income tax purposes.



Additionally, Ryan Holdings, Inc., the former owner of the
Datrek business, is entitled to a contingent payment of up to $1,000,000 based on the assembly and distribution of a certain line of Wilson Sporting Goods (Wilson) golf products. The Company is required to pay the contingent payment on a
quarterly basis over a period of five years beginning on January 1, 2005. For the nine months ended October 1, 2005, the Company recorded additional contingent consideration of $116,108. Any additional consideration paid to the former
owner of the Datrek business is to be recorded as an additional intangible asset and will be amortized over the remaining contractual life of the Wilson assembly and distribution agreement.



In connection with the acquisition of Datrek, all of the assets acquired and
liabilities assumed were recorded at their fair value. The reason for the acquisition was to further expand DMIs market share of the golf accessories business.



As a result of these transactions, Stanford Holdings became the controlling stockholder of DMI. Accordingly, the acquisition
of Miller by DMI is a reverse acquisition that has been accounted for as a recapitalization of Miller, and the acquisition of Datrek is accounted for as a purchase business combination. The historical financial results prior to the reverse
acquisition on October 15, 2004 are those of Miller. Datreks results of operations are included in the Companys consolidated financial results commencing October 15, 2004.



Additionally, as part of the merger agreement, Stanford Holdings entered into
a common stock purchase agreement with DMI to acquire 4,500,000 shares of DMI common stock for an aggregate $4,500,000 purchased in several tranches through January 2005. As of December 31, 2004, the Company received $3,940,000 and issued
3,940,000 shares of common stock. The balance of $560,000 was received and 560,000 shares of common stock were issued in January 2005. Stanford also agreed to forgive certain Miller obligations totaling $7,157,245. The forgiven amounts were
accounted for as a contribution to capital as part of the merger.



On October 25, 2004, GGI amended its articles of incorporation to change its name to Datrek Miller International, Inc. and to effect a one-for-thirty-five reverse split of the Companys common shares. All common share amounts
presented herein have been retroactively adjusted to reflect the one-for-thirty-five reverse stock split and to reflect the recapitalization of Miller.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 1 - Nature of Business and Operations (continued)



Liquidity



The Company
has incurred losses from operations of $2,809,240 and $1,372,888 for the nine months ended October 1, 2005 and September 30, 2004, respectively, and has an accumulated deficit of $6,997,683 at October 1, 2005. The line of credit from
FCC, LLC (FCC) required the Company to comply with two financial covenants. In April 2005, the Company negotiated the elimination of the tangible net worth ratio requirement (evidenced by a waiver and second amendment) and also
negotiated the deferral of the initial application of the monthly fixed charges covenant from March 31, 2005 to May 31, 2005. At July 2, 2005 and October 1, 2005, the Company was not in compliance with this covenant. In August
2005 and November, 2005, FCC granted waivers of non-compliance with the monthly fixed charges covenant until October 31, 2005 and December 31, 2005 respectively. The Company does not expect to be in compliance with the covenant at
December 31, 2005. In the past, FCC has granted waivers to the Company. Management anticipates that FCC will waive its right to enforce the covenant, but there can be no assurances that future waivers will be granted. Management of the Company
has initiated discussions with FCC to amend the covenant for 2006. Management believes FCC will amend the covenant but there is no assurance that the covenant will be amended. If the Company is unable to amend the covenant or restructure the debt,
it will seek alternative sources of funding.



On July 18,
2005, DMI and Stanford International Bank Ltd. (Stanford) entered into a Securities Purchase Agreement in which Stanford agreed to make an aggregate investment of $2,000,000, subject to the conditions of that agreement (the
Investment). The Investment was in the form of an 8% Subordinated Convertible Debenture issued by the Company in favor of Stanford (the Debenture). Under the terms of the Securities Purchase Agreement, DMI has authorized a
series of preferred stock in which Stanford may exchange (at $2.00 per share) the Debenture for preferred stock. The preferred stock will be convertible on a one-for-one basis into shares of common stock and shall have a liquidation preference of
$2.00 per share. Holders of the preferred stock will be entitled to vote with the holders of the common stock on all matters. The principal amount of the Debenture, to the extent not converted earlier, is due on July 18, 2010. Interest payments
under the Debenture are due on a quarterly basis beginning October 18, 2005. The Debenture is also convertible into shares of common stock of the Company at a conversion price of $2.00 per share. In connection with the above transaction, the
Company also issued to Stanford five-year warrants (exercisable at par value) to purchase 600,000 shares of its common stock. Pursuant to a registration rights agreement, the Company has agreed to file a registration statement with the SEC within
180 days of July 18, 2005, and use its best efforts to register the shares of common stock underlying the preferred stock and the warrants. In accordance with the registration rights agreement, the Company has agreed to such actions as are
necessary to make available to the shareholders the benefits of Rule 144 or any other similar rule or regulation of the SEC that may at any time permit the shareholders to sell shares of common stock of the Company to the public pursuant to Rule
144. In accordance with APB Opinion 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios and EITF 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, the Company allocated $1,337,987 of the proceeds to the Debenture and $662,013 of the proceeds to the warrants. The fair value of the
warrants was recorded as a debt discount to the Debenture. The Company also recorded a debt discount of $312,013 representing a beneficial conversion feature of the Debenture. Both discounts, totaling $974,026, are being amortized as charges to
interest expense over the term of the Debenture, which is five years. The amount charged to interest expense for the three months ended October 1, 2005 amounted to $48,702. The balance of the unamortized debt discount at October 1, 2005 is
$925,324. DMI and Stanford have negotiated the terms of a Preferred Stock Purchase Agreement providing for the purchase by Stanford of up to an aggregate of 4,000,000 shares of DMIs Series B Preferred Stock; see Note 15 Subsequent
Events.



Management believes that cash balances on hand,
cash generated from operations, availability of funds under the line of credit and the proceeds from the sale of Preferred Stock to Stanford will be adequate to satisfy the Companys projected operating cash requirements during the next twelve
months; however, if Stanford does not enter into the Purchase Agreement described in Note 15 below, we may not have sufficient funds to satisfy these operating cash requirements. If necessary, the Company may seek to restructure its existing debt or
raise additional capital through the future issuance of stock or debt.



NOTE 2 - Basis of Presentation



The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted for interim financial information and the instructions to Form 10-QSB. Accordingly, they do not include
all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. The results of operations for the nine-month period ended October 1, 2005 are not necessarily indicative of the
operating results that may be expected for the year ending December 31, 2005.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 2  Basis of Presentation (continued)



These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Companys 2004 Annual Report on Form 10-KSB filed with the U.S. Securities and
Exchange Commission.



The Company reports its financial results
on the basis of thirteen week quarters, each ending on the nearest Saturday to the calendar quarter end, with the exception of the first quarter, which begins on January 1, and the fourth quarter, which ends on December 31. The third
quarter of 2005 ended on October 1.



NOTE
3 - Net Loss per Common Share



Basic and diluted net
loss per share is computed using the weighted average number of shares of common stock outstanding during the periods presented. The effect of the recapitalization of Miller has been given retroactive effect in the earnings per share
(EPS) calculation. The common stock issued and outstanding with respect to the pre-merger GGI stockholders have been included since the effective date of the reverse acquisition on October 15, 2004. The common stock issued to
acquire Datrek has been included in the EPS calculation since the date of the acquisition.



There were no common stock equivalents consisting of options and warrants which were required to be included in the calculation of diluted loss per share for the periods presented since their inclusion would be
antidilutive. The total number of stock options and warrants outstanding as of October 1, 2005 was 1,228,500.



NOTE 4 - Stock-Based Compensation



As permitted by the Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS)
No. 123,Accounting for Stock-Based Compensation, which establishes a fair value based method of accounting for equity-based compensation plans, the Company has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25) for recognizing equity-based compensation expense for financial statement purposes. Under APB 25, no compensation expense is recognized at the time of option grant if the exercise
price of the employee stock option is fixed and equals or exceeds the fair market value of the underlying common stock on the date of grant and the number of shares to be issued pursuant to the exercise of such options are known and fixed at the
grant date.



The Company accounts for equity instruments issued
to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force (EITF) Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or In
Conjunction with Selling, Goods or Serviceswhich require that such equity instruments are recorded at their fair value on the measurement date, which is typically the date the services are performed.



In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure  an Amendment of FASB Statement No. 123. This standard amends the disclosure requirements of SFAS No. 123 for fiscal years ending after December 15, 2002 to require
prominent disclosure in both annual and interim financial statements about the method used and the impact on reported results. The Company follows the disclosure-only provisions of SFAS No. 123 that require disclosure of the pro forma effects
on net income (loss) as if the fair value method of accounting prescribed by SFAS No. 123 had been adopted, as well as certain other information.



On June 22, 2005 the Board of Directors approved the adoption of the Companys 2005 Management and Director Equity Incentive and Compensation
Plan (the Plan). The Plan authorizes the issuance of options to purchase up to 1,000,000 shares of the Companys common stock to directors, officers and certain other employees of the Company. The Plan allows the Company to issue
both non-qualified stock options and incentive stock options to qualified directors, officers and employees.



Options to purchase 628,500 shares, with lives of 5- and 10-years, vesting ratably over a three year period, were issued on July 1, 2005 and remain
outstanding as of October 1, 2005 to a group of eligible recipients under terms of the Plan. These options have exercise prices of $1.10 and $1.21. The weighted average fair value per share of these options was estimated to be $.65 per share at
the date of grant using the Black-Scholes option pricing model. Compensation expense generally must be recorded based on the fair value of the stock options over the vesting period.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 4  Stock Based Compensation (continued)



The following table summarizes relevant information as to reported results under the Companys intrinsic value method of accounting for stock awards, with supplemental information as if the fair value recognition provisions of SFAS 123
had been applied for the following three and nine month periods ended:



|                                                                                              |  |                            |            |   |                           |   |          |                |  |   |                   |   |  |   |            |  
|--------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------- | - | -------- | -------------- |  | - | ----------------- | - |  | - | ---------- | -
|                                                                                              |  | For the Three Months Ended |            |   | For the Nine Months Ended |  
|                                                                                              |  | October 1,2005             |            |   | September 30,2004         |   |          | October 1,2005 |  |   | September 30,2004 |  
|Net loss applicable to common stock, as reported                                              |  | $                          | (1,865,448 | ) |                           | $ | (777,059 | )              |  | $ | (3,391,776        | ) |  | $ | (1,809,593 | )
|Deduct total stock-based compensation determined Under fair value based method for all awards |  |                            | (34,113    | ) |                           |   | (0       | )              |  |   | (34,113           | ) |  |   | (0         | )
|                                                                                              |  |                            |            |   |                           |   |          |                |  |   |                   |   |  |   |            |  
|Pro forma net loss applicable to common stock                                                 |  | $                          | (1,899,561 | ) |                           | $ | (777,059 | )              |  | $ | (3,425,889        | ) |  | $ | (1,809,593 | )
|                                                                                              |  |                            |            |   |                           |   |          |                |  |   |                   |   |  |   |            |  
|Basic and diluted loss per common share, as reported                                          |  | $                          | (0.17      | ) |                           | $ | (0.26    | )              |  | $ | (0.31             | ) |  | $ | (0.60      | )
|                                                                                              |  |                            |            |   |                           |   |          |                |  |   |                   |   |  |   |            |  
|Pro forma loss per share basic and diluted                                                    |  | $                          | (0.17      | ) |                           | $ | (0.26    | )              |  | $ | (0.31             | ) |  | $ | (0.60      | )
|                                                                                              |  |                            |            |   |                           |   |          |                |  |   |                   |   |  |   |            |  



The fair value of each
option grant was estimated at the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are
fully transferable. Because the Companys stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in
managements opinion, the existing models do not necessarily provide a reliable single measure of the fair value estimate of its stock options. In calculating the fair values of the stock options, the following assumptions were used:



|                                         |  |             |   |  |            
|---------------------------------------- |  | ----------- | - |  | -----------
|                                         |  | 2005 Grants |   |  | 2004 Grants
|Dividend yield                           |  |            |   |  |           
|Weighted average expected life           |  | 3.0 years   |   |  | n/a        
|Weighted average risk-free interest rate |  | 3.77        | % |  | n/a        
|Expected volatility                      |  | 91.00       | % |  | n/a        



NOTE
5 - Inventories, net



Inventories, at October 1,
2005, are as follows:



|                         |  |        |           |  
|------------------------ |  | ------ | --------- | -
|                         |  | Amount |          
|Raw materials            |  | $      | 1,006,603 |  
|Work-in-process          |  |        | 62,387    |  
|Finished goods           |  |        | 4,000,261 |  
|                         |  |        |           |  
|                         |  |        | 5,069,251 |  
|Reserves for slow moving |  |        | (335,983  | )
|                         |  |        |           |  
|Totals                   |  | $      | 4,733,268 |  
|                         |  |        |           |  



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 6 - Recently Issued Accounting Standards



In December 2004, FASB issued its final standard on accounting for share-based payments (SBP), FASB Statement No. 123R (revised 2004), Share-Based Payment. The Statement requires companies to expense the value of
employee stock options and similar awards. Under FAS 123R, SBP awards result in a cost that will be measured at fair value on the awards grant date, based on the estimated number of awards that are expected to vest. Compensation cost for
awards that vest would not be reversed if the awards expire without being exercised. The effective date for the Company is the first annual reporting period beginning after December 15, 2005, and applies to all outstanding and unvested SBP
awards at a companys adoption. Management does not believe the adoption of this pronouncement will have a material impact on the consolidated financial statements.



In May 2005, the FASB issued FASB 154- Accounting Changes and Error Corrections - a replacement of APB Opinion
No. 20 and FASB Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes,and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements,and changes the
requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principles. It also applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed. This statement is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. Management does not believe the adoption of this pronouncement will have a material impact on the consolidated financial statements.



In June 2005, the EITF reached consensus on Issue No. 05-6,
Determining the Amortization Period for Leasehold Improvements (EITF 05-6). EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to
lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. The adoption of EITF 05-6 did not have a material impact on the Companys consolidated financial
statements.



In September 2005, the FASB ratified the following
consensus reached in EITF Issue 05-8,Income Tax Consequences of Issuing Convertible Debt with a Beneficial Conversion Feature,: a) The issuance of convertible debt with a beneficial conversion feature results in a basis difference in applying
FASB Statement of Financial Accounting Standards SFAS No. 109, Accounting for Income Taxes. Recognition of such a feature effectively creates a debt instrument and a separate equity instrument for book purposes, whereas the convertible
debt is treated entirely as a debt instrument for income tax purposes. b) The resulting basis difference should be deemed a temporary difference because it will result in a taxable amount when the recorded amount of the liability is recovered or
settled. c) Recognition of deferred taxes for the temporary difference should be reported as an adjustment to additional paid-in capital. This consensus is effective in the first interim or annual reporting period commencing after December 15,
2005, with early application permitted. The effect of applying the consensus should be accounted for retroactively to all debt instruments containing a beneficial conversion feature that are subject to EITF Issue 00-27, Application of Issue
No. 98-5 to Certain Convertible Debt Instruments (and thus is applicable to debt instruments converted or extinguished in prior periods but which are still presented in the financial statements). The adoption of this pronouncement is not
expected to have a material impact on the Companys consolidated financial statements.



NOTE 7 - Financing - Debt



A  REVOLVING CREDIT FACILITY



Effective October 18, 2004, the Company obtained a line of credit facility with FCC having a maximum credit limit of $5,000,000 with an interest rate
of prime (6.75% at October 1, 2005) plus 2.5% and paid a closing fee of $100,000. The facility is for a period of two years, subject to an annual administration fee of $50,000 payable on the anniversary date. The facility carries a monthly
maintenance fee of $2,000 and interest is payable monthly. Borrowings are limited to 85% of eligible accounts receivable and 50% of eligible inventory less certain reserves, subject to a total eligible inventory cap of $2,000,000 and an in-transit
inventory cap of $400,000. The facility is secured by a primary interest in accounts receivable, inventories, other assets and restricted cash reserves of $700,000. The facility has an initial term of two years and, thereafter, renews for succeeding
one-year periods unless either party provides notice to the other of its intention to terminate the facility. On March 22, 2005, the terms of the line of credit were amended to increase the borrowing limit to $6,000,000 and the total inventory
borrowing cap to $3,000,000 for the period from March 22 through July 31, 2005.



On June 2, 2005, the terms of the line of credit were further amended (evidenced by a third amendment) to increase the borrowing limit to $7,000,000 and the total inventory borrowing limit to $3,500,000 for the
remaining term of the loan.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 7  Financing (continued)



At
October 1, 2005, the balance of the line of credit was $4,911,708. The line of credit from FCC required the Company to comply with two financial covenants. In April 2005, the Company negotiated the elimination of the tangible net worth ratio
requirement (evidenced by a waiver and second amendment) and also negotiated the deferral of the initial application of the monthly fixed charges covenant from March 31, 2005 to May 31, 2005. At July 2, 2005 and October 1, 2005,
the Company was not in compliance with this covenant. In August 2005 and November, 2005, FCC granted waivers of non-compliance with the monthly fixed charges covenant until October 31, 2005 and December 31, 2005 respectively. Management of
the Company has initiated discussions with FCC to amend the covenant for 2006. If the Company is unable to amend the covenant or restructure the debt, it will seek alternative sources of funding. In accordance with the line of credit agreement, the
Company is required to maintain a lock-box arrangement, whereby all of its customer collections are deposited in a lock-box controlled by FCC and therefore such working capital funds are used to repay outstanding banking obligations.



B  NOTE PAYABLE TO RELATED PARTIES



At October 1, 2005, the Company had a short term and a long term
note payable to the former stockholders of Datrek. The short term obligation was a non interest-bearing note in the original amount of $2,240,000 which was due in installments of $560,000 each on November 15 and December 15, 2004 and one
installment of $1,120,000 on December 31, 2004. By mutual agreement between the parties, the two December installments were deferred until January 2005. The December 15 scheduled payment was made on January 3, 2005. The remaining
balance of $1,120,000 was rescheduled for payment on August 31, 2005 and bears interest at 10% per annum payable monthly. On September 6, 2005 a payment in the amount of $370,000 was made against the note. The remaining balance of
$750,000 was rescheduled for payment on or before January 31, 2006 and bears interest at 10% per annum payable monthly. The long term note in the amount of $3,200,000 bears interest at the rate of 8% per annum, payable quarterly, and
the principal is payable in two installments of $1,600,000 on June 30, 2007 and December 31, 2007. The Company has an outstanding letter of credit in the amount of $3,200,000 to guarantee this note payable. The letter of credit was issued
by Stanford and expires in January 2008.



C- CONVERTIBLE DEBENTURE TO RELATED PARTY



On July 18,
2005, DMI and Stanford entered into a Securities Purchase Agreement in which Stanford agreed to make an aggregate investment of $2,000,000, subject to the conditions of that agreement (the Investment). The Investment was in the form of
an 8% Subordinated Convertible Debenture issued by the Company in favor of Stanford (the Debenture). Under the terms of the Securities Purchase Agreement, DMI has authorized a series of preferred stock in which Stanford may exchange (at
$2.00 per share) the Debenture for preferred stock. The preferred stock will be convertible on a one-for-one basis into shares of common stock and shall have a liquidation preference of $2.00 per share. Holders of the preferred stock will be
entitled to vote with the holders of the common stock on all matters. The principal amount of the Debenture, to the extent not converted earlier, is due on July 18, 2010. Interest payments under the Debenture are due on a quarterly basis
beginning October 18, 2005. The Debenture is also convertible into shares of common stock of the Company at a conversion price of $2.00 per share. In connection with the above transaction, the Company also issued to Stanford five-year warrants
(exercisable at par value) to purchase 600,000 shares of its common stock. Pursuant to a registration rights agreement, the Company has agreed to file a registration statement with the SEC within 180 days of July 18, 2005, and use its best
efforts to register the shares of common stock underlying the preferred stock and the warrants. In accordance with the registration rights agreement, the Company has agreed to such actions as are necessary to make available to the shareholders the
benefits of Rule 144 or any other similar rule or regulation of the SEC that may at any time permit the shareholders to sell shares of common stock of the Company to the public pursuant to Rule 144. In accordance with APB Opinion 14, EITF 98-5 and
EITF 00-27, the Company allocated $1,337,987 of the proceeds to the Debenture and $662,013 of the proceeds to the warrants. The fair value of the warrants was recorded as a debt discount to the Debenture. The Company also recorded a debt discount of
$312,013 representing a beneficial conversion feature of the Debenture instrument. Both discounts, totaling $974,026, are being amortized as a charge to interest expense over the term of the Debenture, which is five years. The amount charged to
interest expense for the three months ended October 1, 2005 amounted to $48,702. The balance of the unamortized debt discount at October 1, 2005 is $925,324.



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 8 - Stockholders Equity



During
the nine months ended October 1, 2005, the Company sold 560,000 shares of common stock and received $560,000 in proceeds. In addition, 300,000 shares of common stock were issued in exchange for services.



On October 6, 2005, the Company filed an amendment to its Articles of
Incorporation authorizing the creation of a class of preferred stock consisting of 5,000,000 shares. The Company has designated 1,000,000 shares of its preferred stock as Series A Convertible Preferred Stock. No shares of preferred stock of the
Company are currently outstanding.



NOTE 9 -
Related Parties



General and administrative expense
includes management fees of $-0- and $75,000 to related parties for the nine months ended October 1, 2005 and September 30, 2004, respectively, and $-0- and $25,000 for the three month periods then ended in 2005 and 2004, respectively.
Interest expense includes $350,494 and $377,912 to related parties for the nine months ended October 1, 2005 and September 30, 2004, respectively, and $165,301 and $142,527 to related parties for the three month periods then ended in 2005
and 2004, respectively.



NOTE 10 -
Commitments and Contingencies



Legal Proceedings and Disputes



On
February 18, 2005, the Company received notice from the IUE-CWA Pension Fund notifying the Company that it was responsible for funding a pension plan liability relating to Miller, which was acquired and merged with DMI, in the amount of
$462,000, discounted at the annual interest rate of 5.65%. As of the date hereof, the Company is legally responsible for the payment of this obligation. The first three quarterly payments of $9,674 each were made on May 1,
2005, August 1, 2005 and November 18, 2005 in connection with this liability. The Company is currently disputing the total obligation, but until such time as the validity of the above obligation is resolved, a provision for the full
amount has been established and scheduled quarterly payments will be made.



On June 9, 2005, the Company received a complaint from a competitor alleging that one of the Companys products infringed a patent held by the competitor. The matter is being reviewed by the Companys
patent counsel. Management does not believe resolution of this complaint will have any material impact on the Companys consolidated financial statements.



NOTE 11 - Acquisition and Pro Forma Information



The following table presents the unaudited pro forma combined results of operations of the Company for the nine months ended
September 30, 2004, assuming the transactions discussed in Note 1 had been executed at January 1, 2004:



|                                                        |  |                                              |            |  
|------------------------------------------------------- |  | -------------------------------------------- | ---------- | -
|                                                        |  | Pro forma Combined Results September 30,2004 |           
|Net sales                                               |  | $                                            | 20,545,727 |  
|                                                        |  |                                              |            |  
|Net loss                                                |  | $                                            | (1,767,213 | )
|                                                        |  |                                              |            |  
|Net loss per common share - basic and diluted           |  | $                                            | (.16       | )
|                                                        |  |                                              |            |  
|Weighted average shares outstanding  basic and diluted |  |                                              | 10,923,573 |  
|                                                        |  |                                              |            |  



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##### Table of Contents

DATREK MILLER INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



NOTE 12 - Accounts Payable and Accrued Liabilities



As of October 1, 2005, accounts payable and accrued liabilities are comprised of the following:



|                                    |  |        |          
|----------------------------------- |  | ------ | ---------
|                                    |  | Amount
|Accounts payable - general          |  | $      | 1,965,368
|Accounts payable - import purchases |  |        | 821,822  
|Accrued salary and benefits         |  |        | 281,977  
|Accrued pension obligations         |  |        | 455,516  
|Other liabilities                   |  |        | 138,905  
|                                    |  |        |          
|                                    |  | $      | 3,663,588
|                                    |  |        |          



NOTE
13 - Product Information



The Companys
operations consist of one business segment. However, the Company evaluates the performance of its business based on revenues for certain distinct categories. Revenues of these categories are as follows:



|                 |  |                            |           |                           |   |                 |  |                    |            |  |   |          
|---------------- |  | -------------------------- | --------- | ------------------------- | - | --------------- |  | ------------------ | ---------- |  | - | ---------
|                 |  | For the Three Months Ended |           | For the Nine Months Ended
|                 |  | October 1, 2005            |           | September 30, 2004        |   | October 1, 2005 |  | September 30, 2004
|Golf bags        |  | $                          | 3,456,000 |                           | $ |                |  | $                  | 12,821,000 |  | $ |         
|Golf accessories |  |                            | 2,994,000 |                           |   | 1,393,000       |  |                    | 8,073,000  |  |   | 5,080,000
|                 |  |                            |           |                           |   |                 |  |                    |            |  |   |          
|                 |  | $                          | 6,450,000 |                           | $ | 1,393,000       |  | $                  | 20,894,000 |  | $ | 5,080,000
|                 |  |                            |           |                           |   |                 |  |                    |            |  |   |          



NOTE
14 - Reclassifications



Certain amounts in 2004 have
been reclassified to conform with the 2005 presentation.



NOTE 15  Subsequent Events



DMI and Stanford have negotiated the terms of a Preferred Stock Purchase Agreement (the Purchase Agreement), which has been executed by DMI and is subject to execution by Stanford. The proposed Purchase
Agreement provides for purchases of up to an aggregate of 4,000,000 shares of the Companys Series B Preferred Stock (the Preferred Stock) and issuance of 5-year warrants to purchase up to 2,400,000 shares of the Companys
common stock at an exercise price of $0.001 per share (the Warrants) in various installments, in order to provide the Company with funds for acquisitions and working capital, subject to Stanfords approval of each transaction in its
sole discretion. Under the proposed Purchase Agreement, Stanford has the right to buy all of the Preferred Stock and accompanying Warrants covered by the Purchase Agreement at a price of $2.00 per share of Preferred Stock. On November 10, 2005,
Stanford advanced $700,000 to DMI in contemplation of this transaction.



In addition, the proposed Purchase Agreement grants Stanford the right to purchase an additional 500,000 shares of parity preferred stock, when authorized by the Company, and warrants to purchase an additional 300,000 shares of the
Companys common stock for an aggregate purchase price of $1,000,000 on the same terms and conditions set forth in the proposed Purchase Agreement.



We are materially dependent on Stanford to execute the proposed Purchase Agreement and make the investment in our securities contemplated by the proposed
Purchase Agreement.



On November 21, 2005, our Board of
Directors authorized a 1 for 2 reverse stock split of the issued and outstanding shares of the Companys common stock effective December 5, 2005.



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##### Table of Contents

Item 2. Managements Discussion and Analysis or Plan of Operation



The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-QSB.



Forward-Looking Statements



This Managements Discussion and Analysis or Plan of Operation contains
statements that are forward-looking. These statements are based on current expectations, estimates, forecasts, projections and assumptions that are subject to risks and uncertainties. Words such as expects, anticipates,
targets, goals, projects, intends, plans, believes, seeks, estimates, variations of such words, and similar expressions are intended to identify such
forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual future results may differ
materially and adversely from those expressed in any forward-looking statements. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports on Forms 10-KSB and 8-K, each as it
may be amended from time to time. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.



Overview



We are engaged in the business of manufacturing, marketing, distributing and selling high quality golf bags and golf accessories of our Datrek
(off-course) and Miller Golf (on-course) brands.



The primary markets for our golf bags are the off-course golf specialty shops, sporting goods stores, mass merchandisers and the on-course pro shops. Our bags use lightweight, fashionable materials which we believe
make our products more customer-friendly. We believe that we are the leading supplier of ladies golf bags and the leading supplier of cart bags sold through retail shops in the U.S.



The primary market for our accessories is the on-course golf pro shops. We endeavor to provide a one-stop shop for golf pros
who operate these on-course shops. Our sales staff includes many PGA registered professionals who understand the needs of the on-course shops and the limited time and resources golf pros have to supply these shops appropriately.



We differentiate our products and maintain our market share through the use
of the following:



| |  |  | styling and product features including pockets and divider tops used to sort golf clubs;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | high quality materials and workmanship;
| | - |  | ---------------------------------------



| |  |  | use of trendy fabrics, fashionable colors and textures and lightweight materials; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | responsiveness to customer preferences.
| | - |  | ---------------------------------------



We sell to both on- and off-course golf shops, sporting goods stores and mass merchandisers who sell quality golf products and provide a level of customer
service appropriate for the sale of such products. For the nine-month period ended October 1, 2005, we sold to an aggregate of approximately 6,000 customers. On a consolidated basis, no one customer accounted for more than 5% of our revenues in
this period. We also have two private label programs. Under these programs, we assemble and sell golf bags and other golf accessories which are embellished with the corporate logos of these companies. These programs accounted for approximately 12.5%
of revenues for the quarter ended October 1, 2005.



Our
program of licensing agreements with the NCAA that includes over 100 colleges accounted for approximately 11.6% of our revenues for the nine-month period ended October 1, 2005.



Our executive offices are located at 835 Bill Jones Industrial Drive, Springfield, Tennessee 37172. Our telephone number is
(615) 384-1286. Our website is www.dmigolf.com.



Datrek Professional Bags, Inc. Acquisition



On
October 15, 2004, simultaneous with the acquisition of Miller Golf Company, we acquired substantially all the assets and liabilities of Datrek Professional Bags, Inc., a Tennessee corporation. The former stockholders of Datrek are entitled to
receive a future contingency payment based on assembly and distribution of certain Wilson golf products of up to $1,000,000 over the next five years. Amounts earned by the former owners of Datrek under the contingent earn-out provision and recorded
as an additional intangible asset during the nine months ended October 1, 2005 totaled $116,108.



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The acquisition of Datrek provided us with a unique opportunity to expand our operations into the golf
bag and collegiate golf business and significantly increase our golf accessory business.



Evaluation of Company Performance and Financial Condition



Since our operations and fixed expenses are relatively stable, the principal factor our management analyzes in evaluating
our performance is changes in our principal sources of revenue. Management therefore focuses primarily on the volume and size of transactions per customer in each fiscal period to evaluate our performance.



Operational Risks and Challenges



Management believes that as we grow and expand our line of products and
services, we may be increasingly encroaching on the markets of larger, more established golf and sporting goods vendors. It is likely that one or more of these more financially capable companies will develop or offer competing products.



The proper integration of the operations of our acquired companies is
critical to our short-term success. In addition, we intend to further develop and expand our operations. The pace of our anticipated expansion, demands an unusual amount of focus by our management team. We expect this expansion will place a limited
strain on our managerial, operational and financial resources. If we cannot manage our growth effectively, our business and operating results will suffer.



We also bear the cost and risks associated with adverse economic conditions. Our products are recreational in nature and are therefore discretionary
purchases for consumers. Consumers are generally more willing to make discretionary purchases of golf products during favorable economic conditions and when consumers are feeling confident and prosperous. Adverse economic conditions in the United
States or a decrease in consumer confidence as a result of anticipated adverse economic conditions could cause consumers to forgo or to postpone purchasing new golf products which could have a material adverse effect upon us.



Critical Accounting Policies



Our significant accounting policies are more fully described in Note 2 in
our annual report on Form 10-KSB for the year ended December 31, 2004. Certain of our accounting policies require the application of significant judgment by management in applying the requirements of certain accounting standards as well as the
selection of the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our
observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate. Different estimates reasonably could have been used in the current period, which could have a material
impact on the presentation of our financial condition, changes in financial condition or results of operations. We believe that the following financial estimates are both important to the portrayal of our financial condition and results of
operations and require subjective or complex judgments. Further, we believe that the items discussed below are properly recorded in the financial statements for all periods presented. Management has discussed the development, selection, and
disclosure of our most critical financial estimates with our auditors. The judgments about those financial estimates are based on information available as of the date of the financial statements. Those financial estimates include:



Revenue Recognition



Sales are recognized when both title and risk of loss transfer to the
customer. Sales are recorded net of an allowance for sales returns and sales programs. Sales returns are estimated based upon historical returns, current economic trends, changes in customer demands and sell-through of products. We also record
estimated reductions to revenue for sales programs such as incentive offerings. Sales program accruals are estimated based upon the attributes of the sales program, managements forecast of future product demand, and historical customer
participation in similar programs. If the actual costs of sales returns and sales programs exceed the recorded estimated allowance, our sales could be adversely affected.



Allowance for Doubtful Accounts



We maintain an allowance for estimated losses resulting from the failure of our customers to make required payments. An
estimate of uncollectible amounts is made by management based upon historical bad debts, current customer receivable balances, age of customer receivable balances, the customers financial condition and current economic trends. If the actual
uncollected amounts exceed the estimated allowance, then our operating expenses and net income could be adversely affected.



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Inventories



Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method. The
inventory balance, which includes material, labor and manufacturing overhead costs, is recorded net of an estimated allowance for obsolete or unmarketable inventory. The estimated allowance for obsolete or unmarketable inventory is based upon
managements understanding of market conditions and forecasts of future product demand. If the actual amount of obsolete or unmarketable inventory exceeds the estimated allowance, our cost of sales, gross profit and net income could be
adversely affected.



Accounting for
Long-Lived Assets



We review property and equipment,
intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors we consider important which could trigger an impairment review
include the following: (1) significant underperformance relative to expected historical or projected future operating results; (2) significant changes in the manner of our use of the acquired assets or the strategy for our overall
business; (3) significant negative industry or economic trends; (4) significant decline in our stock price for a sustained period; and (5) significant decline in our market capitalization relative to net book value. Recoverability is
measured by comparison of the assets carrying amounts to their expected future undiscounted net cash flows. Intangible assets represent customer lists and trade names acquired in business combinations. Identifiable intangibles are amortized on
a straight-line basis over their estimated useful lives.



Goodwill



Goodwill
represents the excess of the purchase price of an acquired enterprise or assets over the fair value of the identifiable assets acquired and liabilities assumed. Goodwill and intangible assets with indefinite useful lives are tested for impairment at
least annually (December 31 for the Company), or whenever events or changes in the circumstances indicate that the carrying amount of the goodwill may not be recoverable.



Warranty



Our policy is to accrue the estimated cost of satisfying future warranty claims at the time the sale is recorded. In estimating our future warranty
obligations, we consider various relevant factors, including our stated warranty policies and practices, the historical frequency of claims, and the cost to replace or repair our products under warranty. If the cost of satisfying warranty claims
exceeds the estimated warranty reserve, our cost of sales, gross profit and net income could be adversely affected.



Income Taxes



We account for income taxes under SFAS No. 109, Accounting for Income Taxes. Under SFAS No. 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between their financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.



Recent Accounting Pronouncements



In December 2004, the FASB issued its final standard on
accounting for share-based payments, FASB Statement No. 123R (revised 2004). The Statement requires companies to expense the value of employee stock options and similar awards. Under SFAS 123R, SBP awards result in a cost that will be measured
at fair value on the awards grant date, based on the estimated number of awards that are expected to vest. Compensation cost for awards that vest would not be reversed if the awards expire without being exercised. The effective date for the
Company is the first annual reporting period beginning after December 15, 2005, and applies to all outstanding and unvested SBP awards at a companys adoption. Management does not believe the adoption of this pronouncement will have a
material impact on the consolidated financial statements.



In
May 2005, the FASB issued FASB 154. This Statement replaces APB Opinion No. 20 and FASB Statement No. 3 and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all
voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific
transition provisions, those provisions should be followed. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Management does not believe the adoption of this
pronouncement will have a material impact on the consolidated financial statements.



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In June 2005, the EITF reached consensus on Issue No. 05-6 (EITF 05-6). EITF 05-6
provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods
beginning after June 29, 2005. The adoption of EITF 05-6 did not have a material impact on the Companys unaudited interim condensed consolidated financial statements



In September 2005, the FASB ratified the following consensus reached in EITF Issue 05-8: a) The issuance of convertible debt
with a beneficial conversion feature results in a basis difference in applying FASB Statement of Financial Accounting Standards SFAS No. 109. Recognition of such a feature effectively creates a debt instrument and a separate equity instrument
for book purposes, whereas the convertible debt is treated entirely as a debt instrument for income tax purposes. b) The resulting basis difference should be deemed a temporary difference because it will result in a taxable amount when the recorded
amount of the liability is recovered or settled. c) Recognition of deferred taxes for the temporary difference should be reported as an adjustment to additional paid-in capital. This consensus is effective in the first interim or annual reporting
period commencing after December 15, 2005, with early application permitted. The effect of applying the consensus should be accounted for retroactively to all debt instruments containing a beneficial conversion feature that are subject to EITF
Issue 00-27 (and thus is applicable to debt instruments converted or extinguished in prior periods but which are still presented in the financial statements). The adoption of this pronouncement is not expected to have a material impact on the
Companys consolidated financial statements.



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##### Table of Contents

Results of Operations



The following table sets forth certain unaudited financial data expressed as a percentage of net sales for each of the periods indicated.



|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|-------------------------- |  | ------------------ | -- |  | ------------------ | -- |  | --------------- | -- |  | ------------------ | --
|                           |  | Three Months Ended |    |  | Nine Months Ended  |   
|                           |  | October 1, 2005    |    |  | September 30, 2004 |    |  | October 1, 2005 |    |  | September 30, 2004 |   
|Net Sales                  |  | 100.0              | %  |  | 100.0              | %  |  | 100.0           | %  |  | 100.0              | % 
|Cost of sales              |  | 81.5               |    |  | 83.2               |    |  | 73.4            |    |  | 81.1               |   
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Gross profit               |  | 18.5               |    |  | 16.8               |    |  | 26.6            |    |  | 18.9               |   
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Operating expenses:        |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Sales and marketing        |  | 26.8               |    |  | 45.0               |    |  | 24.1            |    |  | 34.3               |   
|General and administrative |  | 16.6               |    |  | 13.2               |    |  | 15.9            |    |  | 11.6               |   
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Total operating expenses   |  | 43.4               |    |  | 58.2               |    |  | 40.0            |    |  | 45.9               |   
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Loss from operations       |  | (24.9              | )  |  | (41.4              | )  |  | (13.4           | )  |  | (27.0              | ) 
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Other income/(expense):    |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Interest expense           |  | (5.0               | )  |  | (10.3              | )  |  | (3.8            | )  |  | (7.5               | ) 
|Other income, net          |  | 1.0                |    |  | (4.1               | )  |  | 1.0             |    |  | (1.1               | ) 
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Total other expense        |  | (4.0               | )  |  | (14.4              | )  |  | (2.8            | )  |  | (8.6               | ) 
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   
|Net loss                   |  | (28.9              | )% |  | (55.8              | )% |  | (16.2           | )% |  | (35.6              | )%
|                           |  |                    |    |  |                    |    |  |                 |    |  |                    |   



The following table
sets forth a comparison of the unaudited results of operations for the periods indicated.



|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|-------------------------- |  | ------------------ | ------ | - | ----------------- | - | ----- | -------------- |  | - | ----------------- | - |  | - | ------ | -
|                           |  | Three Months Ended |        |   | Nine Months Ended |  
|                           |  | October 1,2005     |        |   | September 30,2004 |   |       | October 1,2005 |  |   | September 30,2004 |  
|                           |  | (In Thousands)     |        |   | (In Thousands)    |  
|Net Sales                  |  | $                  | 6,450  |   |                   | $ | 1,393 |                |  | $ | 20,894            |   |  | $ | 5,080  |  
|Cost of sales              |  |                    | 5,254  |   |                   |   | 1,159 |                |  |   | 15,345            |   |  |   | 4,121  |  
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Gross profit               |  |                    | 1,196  |   |                   |   | 234   |                |  |   | 5,549             |   |  |   | 959    |  
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Operating expenses:        |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Sales and marketing        |  |                    | 1,727  |   |                   |   | 627   |                |  |   | 5,026             |   |  |   | 1,742  |  
|General and administrative |  |                    | 1,077  |   |                   |   | 183   |                |  |   | 3,332             |   |  |   | 590    |  
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Total operating expenses   |  |                    | 2,804  |   |                   |   | 810   |                |  |   | 8,358             |   |  |   | 2,332  |  
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Loss from operations       |  |                    | (1,608 | ) |                   |   | (576  | )              |  |   | (2,809            | ) |  |   | (1,373 | )
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Other income/(expense):    |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Interest expense           |  |                    | (320   | ) |                   |   | (144  | )              |  |   | (793              | ) |  |   | (380   | )
|Other income, net          |  |                    | 63     |   |                   |   | (57   | )              |  |   | 210               |   |  |   | (57    | )
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Total other expense        |  |                    | (257   | ) |                   |   | (201  | )              |  |   | (583              | ) |  |   | (437   | )
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  
|Net loss                   |  | $                  | (1,865 | ) |                   | $ | (777  | )              |  | $ | (3,392            | ) |  | $ | (1,810 | )
|                           |  |                    |        |   |                   |   |       |                |  |   |                   |   |  |   |        |  



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##### Table of Contents

Comparison of the Three Months Ended October 1, 2005 and September, 2004



Net sales increased $5,057,000 for the three months ended
October 1, 2005 to $6,450,000 compared to $1,393,000 during the same period in 2004. The primary contributor to our revenue growth during the period arose from $5,060,000 in the sales of golf bags and accessories from the activities of the
off-course division (acquired on October 15, 2004). This increase in our off-course revenue is comprised totally of increased sales volume as selling prices have remained constant.



Cost of sales for the three months ended October 1, 2005 was $5,254,000 or 81.5% of net sales as compared to $1,159,000
or 83.2% of revenues for the three months ended September 30, 2004. The principal components of our cost of sales are direct product costs comprising material, labor, and production overhead. Other costs include import duties, inbound and
outbound transportation costs, and warranty expenses. The increase in the cost of sales was attributed primarily to increased sales volumes, partially reduced by reductions in overhead that resulted from closing the Rockland, Massachusetts facility
in December, 2004. Additionally, the Company recorded a $342,000 (5.3%) charge to cost of sales for the reduction of inventory values related to a physical inventory adjustment and standard cost revaluation.



Total operating expenses were $2,804,000 for the three months ended
October 1, 2005 compared to $810,000 for the three months ended September 30, 2004.



Operating expenses were comprised of:



| |  |  | Sales and marketing expense totaled $1,727,000 for the three months ended October 1, 2005 compared to $627,000 for the three months ended September 30, 2004. Included in our
sales and marketing expense are the employee costs incurred from our marketing, sales, sales administration and sales support employees. Other costs include travel for our sales people, trade shows, advertising, telephone, product catalogs, and
royalty fees. The increase is primarily attributable to an increase of $1,045,000 from the off-course division. In addition, the increase is partially related to an increase in our direct sales, management and customer service personnel of $190,000
in the on-course division offset by a reduction of $64,000 in commissions paid to independent sales representatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | General and administrative expense was $1,077,000 for the three months ended October 1, 2005 and $183,000 for the three months ended September 30, 2004, an increase of
$894,000. Included in our general and administrative expense are salaries and related expenses for our executive officers and administrative employees. Also included in general and administrative are corporate costs such as legal and accounting, bad
debts, office supplies, equipment maintenance, bank charges and amortization of intangibles. The principal reason for the increase was the inclusion of the off-course division in 2005 which accounted for approximately $528,000 in expenses.
Additionally, there was an increase of $84,000 related to additional personnel costs and consulting fees. The increase is also partially related to an increase in outside services of $132,000 due to legal and accounting fees related to our
preparation of our SEC filings and the amortization of intangibles related to the Datrek acquisition of $150,000.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Interest expense was $320,000 for the three months ended October 1, 2005 and $144,000 for the three months ended September 30, 2004, an increase
of $176,000. The principal reasons for this increase are $117,000 paid and payable to Ryan Holdings, Inc. on the DPB acquisition notes and the balance from increased drawing under our line of credit facility with FCC.



Other income increased to $63,000 in for the three months ended
October 1, 2005 compared to other expense of $57,000 for the comparable period in 2004. This increase was entirely attributable to fees for subcontract assembly operations.



Comparison of the Nine Months Ended October 1, 2005 and September 30, 2004



Net sales increased $15,814,000 for the nine months ended October 1,
2005 to $20,894,000 compared to $5,080,000 during the same period in 2004. The primary contributor to our revenue growth during the period arose from $16,665,000 in the sales of golf bags and accessories from the activities of the off-course
division (acquired on October 15, 2004). This increase in our off-course revenue is comprised totally of increased sales volume as selling prices have remained constant. Our net sales were offset by a general sales decrease from the on-course
division, which can be primarily attributed to transitional issues arising from the relocation of Miller from Rockland, MA to Springfield, TN. In December, 2004, customer service and data processing functions for our on-course division were
relocated from Rockland, MA to our headquarters in Springfield, TN. The former customer service and order entry personnel did not transfer to Tennessee and we were required to hire and train new customer service personnel while at the same time
integrating order processing functions into our computer systems. As a result, during this transitional period, many customer orders were delayed or misplaced, resulting in a negative impact on our net sales. We believe that these issues were
substantially resolved during the quarter ended July 2, 2005 due to our customer service training programs as well as improvements to our customer service organization and order processing systems.



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Cost of sales for the nine months ended October 1, 2005 was $15,345,000 or 73.4% of net sales as
compared to $4,121,000 or 81.1% of revenues for the nine months ended September 30, 2004. Included as part of our cost of sales are direct product costs comprising material, labor, and production overhead. Other costs include import duties,
inbound and outbound transportation costs, and warranty expenses. The increase in the cost of sales was attributed primarily to increased sales volumes, partially reduced by reductions in overhead that resulted from closing the Rockland,
Massachusetts facility in December, 2004. Additionally, the Company recorded a $342,000 (1.6%) charge to cost of sales in the third quarter for the reduction of inventory values related to a physical inventory adjustment and standard cost
revaluation.



Total operating expenses were $8,358,000 for the
nine months ended October 1, 2005 compared to $2,332,000 for the nine months ended September 30, 2004.



Operating expenses were comprised of:



| |  |  | Sales and marketing expense totaled $5,026,000 for the nine months ended October 1, 2005 compared to $1,742,000 for the nine months ended September 30, 2004. We included in our
sales and marketing expense the employee costs incurred from our marketing, sales, sales administration and sales support employees. Other costs included are the travel for our sales people, trade shows, advertising, telephone, product catalogs, and
royalty fees. The increase is primarily attributable to an increase of $3,128,000 from the off-course division. In addition, we increased our direct sales, management and customer service personnel during this period. The increase is partially
related to an increase in our direct sales, management and customer service personnel of $347,000 in the on-course division offset by a reduction of $227,000 in commissions paid to independent sales representatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | General and administrative expense was $3,332,000 for the nine months ended October 1, 2005 and $590,000 for the nine months ended September 30, 2004, an increase of
$2,742,000. Included in our general and administrative expense are salaries and related expenses for our executive officers and administrative employees. Also included in general and administrative are corporate costs such as, but not limited to,
legal and accounting, bad debts, office supplies, equipment maintenance, bank charges and amortization of intangibles. The principal reason for the increase was the inclusion of the off-course division in 2005 which accounted for approximately
$1,371,000 in expenses. Additionally, there was an increase of $225,000 related to additional personnel costs and consulting fees. The increase is also partially related to an increase in outside services of $670,000 due to legal and accounting fees
related to our preparation of our SEC filings and the amortization of intangibles related to the Datrek acquisition of $440,000.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Interest expense was $793,000 for the nine months ended October 1, 2005 and $380,000 for the nine months ended September 30, 2004, an increase
of $413,000. The principal reasons for this increase are $302,000 paid and payable to Ryan Holdings, Inc. on the DPB acquisition notes and the balance from increased drawing under our line of credit facility with FCC.



Other income increased to $210,000 in for the nine months ended
October 1, 2005 compared to other expense of $57,000 for the comparable period in 2004. This increase was entirely attributable to fees for subcontract assembly operations.



Liquidity and Capital Resources



We have incurred an accumulated deficit at October 1, 2005 of $6,998,000. We had working capital at October 1, 2005 of $821,000 and have
incurred a net loss for the nine months ending October 1, 2005 of $3,392,000.



To date, our principal sources of liquidity have included cash generated from our operations, drawings under our line of credit and the sale of our capital stock and convertible debenture to Stanford, our principal
shareholder. Our principal sources of liquidity for the foreseeable future are expected to remain the same. Management believes that cash balances on hand and generated from operations, availability of funds under our line of credit and the proceeds
from the sale of the Preferred Stock to Stanford will be adequate to satisfy our projected operating cash requirements during the next twelve months; however, if Stanford does not enter into the Purchase Agreement described below, we may not have
sufficient funds to satisfy these operating cash requirements. If necessary, we may seek to restructure our existing debt or raise additional capital through the future issuance of stock or debt. Our cash flow estimates are based upon achieving
certain levels of sales and operating expenses. Should sales be less than forecasted, expenses be higher than forecasted or we fail to properly manage our growth, we may require additional funding. Such additional funding may not be available
through financings of debt and/or equity and we may not have adequate resources to fund operations.



Operating activities used $2,912,000 for the nine months ended October 1, 2005, as compared to $1,476,000 during the same period of 2004. Cash used
by operating activities for the nine months ended October 1, 2005, is primarily attributable to a net loss of $3,392,000, an increase in accounts receivable of $680,000 and a decrease of accounts payable and accrued liabilities of $759,000.
These uses were partially offset by non cash items such as depreciation and amortization of $626,000 and a reduction in inventories of $1,006,000.



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Investing activities used $385,000 for the nine months ended October 1, 2005, whereas such
activities used $58,000 for the nine months ended September 30, 2004. Cash used in investing activities in 2005 is primarily attributable to purchases of property and equipment of $269,000 for the expansion of our offices to accommodate
additional customer service and administrative personnel and $116,000 attributable to the contingent earn-out payable to the prior owners of Datrek.



Financing activities provided $2,199,000 for the nine months ended October 1, 2005, whereas such activities provided $2,066,000 for the comparable
period of 2004. The principal source of cash provided by financing activities was proceeds from borrowings under our line of credit and the sale of stock and convertible debenture to Stanford.



Cash at October 1, 2005 and December 31, 2004, respectively, was
$265,000 and $1,363,000. At October 1, 2005 we had stockholders equity of $669,000 and stockholders equity at December 31, 2004 of $2,490,000.



Effective October 18, 2004, we obtained a line of credit facility with FCC having a maximum credit limit of $5,000,000
with an interest rate of prime (6.75% at October 1, 2005) plus 2.5% and paid a closing fee of $100,000. The facility is for a period of two years, subject to an annual administration fee of $50,000 payable on the anniversary date. The facility
carries a monthly maintenance fee of $2,000 and interest is payable monthly. Borrowings are limited to 85% of eligible accounts receivable and 50% of eligible inventory less certain reserves, subject to a total eligible inventory cap of $2,000,000
and an in-transit inventory cap of $400,000. The facility is secured by a primary security interest in accounts receivable, inventories, other assets and restricted cash reserves of $700,000. The facility has an initial term of two years and,
thereafter, renews for succeeding one-year periods unless either party provides notice to the other of its intention to terminate the facility. On March 22, 2005 the terms of the line of credit were amended to increase the borrowing limit to
$6,000,000 and the total inventory-borrowing cap to $3,000,000 for the period from March 22 through July 31, 2005. On June 2, 2005 the terms of the line of credit were further amended to increase the borrowing limit to $7,000,000 and
the total inventory borrowing limit to $3,500,000 for the remaining term of the loan. At October 1, 2005, the balance of the line of credit was $4,911,708. The line of credit from FCC required the Company to comply with two financial covenants.
In April 2005, the Company negotiated the elimination of the tangible net worth ratio requirement (evidenced by a waiver and second amendment) and also negotiated the deferral of the initial application of the monthly fixed charges covenant from
March 31, 2005 to May 31, 2005. At July 2, 2005 and October 1, 2005, the Company was not in compliance with this covenant. In August 2005 and November, 2005, FCC granted waivers of non-compliance with the monthly fixed charges
covenant until October 31, 2005 and December 31, 2005 respectively. The Company does not expect to be in compliance with the covenant at December 31, 2005. In the past, FCC has granted waivers to the Company. Management anticipates
that FCC will waive its right to enforce the covenant, but there can be no assurances that future waivers will be granted. Management of the Company has initiated discussions with FCC to amend the covenant for 2006. Management believes FCC will
amend the covenant but there is no assurance that the covenant will be amended. If the Company is unable to amend the covenant or restructure the debt, it will seek alternative sources of funding.



At October 1, 2005, we had a short term and a long term note payable to
the former shareholders of Datrek. The short term obligation was a non interest-bearing note in the original amount of $2,240,000 which was due in installments of $560,000 each on November 15 and December 15, 2004 and one installment of
$1,120,000 on December 31, 2004. By mutual agreement between the parties, the two December installments were deferred until January 2005. The December 15 scheduled payment was made on January 3, 2005. The remaining balance of
$1,120,000 was rescheduled for payment on August 31, 2005 and bears interest at 10% per annum. On September 6, 2005 a payment in the amount of $370,000 was made against the note. The remaining balance of $750,000 was rescheduled for
payment on or before January 31, 2006 and bears interest at 10% per annum payable monthly. The long term note in the amount of $3,200,000 bears interest at the rate of 8% per annum, payable quarterly, and the principal is payable in
two installments of $1,600,000 on June 30, 2007 and December 31, 2007. We have an outstanding letter of credit in the amount of $3,200,000 to guarantee this note payable. The letter of credit was issued by Stanford International Bank Ltd.
and expires in January 2008.



Another source of liquidity has
been the purchase by Stanford of our common stock. Under a Securities Purchase Agreement, dated October 15, 2004, Stanford agreed to make an aggregate investment in our common stock, in several tranches, totaling $4,500,000, the last of which
$560,000 was received on January 13, 2005, subject to the conditions of that agreement. For its aggregate investment of $4,500,000, Stanford received an aggregate of 4,500,000 shares of our common stock.



On July 18, 2005, we entered into a Securities Purchase Agreement in
which Stanford agreed to make an aggregate investment of $2,000,000, subject to the conditions of that agreement (the Investment). The Investment was in the form of an 8% Subordinated Convertible Debenture issued by the Company in favor
of Stanford (the Debenture). Under the terms of the Securities Purchase Agreement, we have authorized a series of preferred stock in which Stanford may exchange (at $2.00 per share) the Debenture for preferred stock at a ratio of $2.00
per share. The preferred stock will be convertible on a one-for-one basis into shares of common stock and shall have a liquidation preference of $2.00 per share. Holders of the preferred stock will be entitled to vote with the holders of the common
stock on all matters. Upon the creation of the preferred stock, Stanford may exchange the Debenture into shares of preferred stock. The principal amount of the Debenture, to the extent not converted earlier, is due on July 18, 2010. Interest
payments under the Debenture are due on a quarterly basis beginning October 18, 2005. The Debenture is convertible into shares of our common stock at a conversion price of $2.00 per share. We also issued to Stanford five-year warrants
(exercisable at par value) to



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purchase 600,000 shares of its common stock, 300,000 of which were subsequently assigned. Pursuant to a registration
rights agreement, we have agreed to file a registration statement with the SEC within 180 days of July 18, 2005 and use our best efforts to register the shares of common stock underlying the preferred stock and the warrants. In accordance with
the registration rights agreement, the Company has agreed to such actions as are necessary to make available to the shareholders the benefits of Rule 144 or any other similar rule or regulation of the SEC that may at any time permit the shareholders
to sell shares of common stock of the Company to the public pursuant to Rule 144. In accordance with APB Opinion 14, EITF 98-5 and EITF 00-27, the Company allocated $1,337,987 of the proceeds to the Debenture and $662,013 of the proceeds to the
warrants. The fair value of the warrants was recorded as a debt discount to the Debenture. The Company also recorded a debt discount of $312,013 representing a beneficial conversion feature of the Debenture instrument. Both discounts, totaling
$974,026, are being amortized as a charge to interest expense over the term of the Debenture, which is five years. The amount charged to interest expense for the three months ended October 1, 2005 amounted to $48,702. The balance of the
unamortized debt discount at October 1, 2005 is $925,324.



DMI and Stanford have negotiated the terms of a Preferred Stock Purchase Agreement (the Purchase Agreement), which has been executed by DMI and is subject to execution by Stanford. The proposed Purchase Agreement provides for
purchases of up to an aggregate of 4,000,000 shares of the Companys Series B Preferred Stock (the Preferred Stock) and issuance of 5-year warrants to purchase up to 2,400,000 shares of the Companys common stock at an exercise
price of $0.001 per share (the Warrants) in various installments, in order to provide the Company with funds for acquisitions and working capital, subject to Stanfords approval of each transaction in its sole discretion. Under the
proposed Purchase Agreement, Stanford has the right to buy all of the Preferred Stock and accompanying Warrants covered by the Purchase Agreement at a price of $2.00 per share of Preferred Stock. On November 10, 2005, Stanford advanced $700,000 to
DMI in contemplation of this transaction.



In addition, the
proposed Purchase Agreement grants Stanford the right to purchase an additional 500,000 shares of parity preferred stock, when authorized by the Company, and warrants to purchase an additional 300,000 shares of the Companys common stock for an
aggregate purchase price of $1,000,000 on the same terms and conditions set forth in the proposed Purchase Agreement.



We are materially dependent on Stanford to execute the proposed Purchase Agreement and make the investment in our securities contemplated by the proposed
Purchase Agreement.



On November 21, 2005, our Board of
Directors authorized a 1 for 2 reverse stock split of the issued and outstanding shares of the Companys common stock effective December 5, 2005.



Accounts receivable at October 1, 2005 were $4,578,000 as compared to $4,062,000 at December 31, 2004, an increase of 12.7%. Days of sales
outstanding were 70.5 days as of October 1, 2005 compared with 88 days at December 31, 2004. Our standard terms of sale require customers to pay within 30 or 45 days from the date of the invoice. Several large customers are granted 60-day
terms. During certain periods of the year, certain customers are offered extended dating terms as a competitive selling feature.



Accounts payable and accrued expenses at October 1, 2005 and December 31, 2004 were $3,664,000 and $4,522,000, respectively.



We expended funds for capital expenditures of $269,000 for property and
equipment during the nine months ended October 1, 2005. We do not have any plans for major purchases for the remainder of 2005.



Seasonality



Our operations have historically been cyclical due to the seasonal nature of golf rounds played. Approximately 83% of our sales occur in the first three
quarters of the year with one-third of our sales occurring in the second calendar quarter alone. The significant portion of our fourth quarter sales are attributable to our collegiate product category. We are focusing efforts on increasing sales
activity during the off season months through the use of special marketing programs, sales in geographic regions which are less affected by winter weather conditions and the expansion of our collegiate licensing programs.



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Item 3. Controls and Procedures



Evaluation of our Disclosure Controls and Internal Controls



Based on our evaluation as of the end of the period covered by this Form 10-Q, our management, with the participation of our Chief Executive Officer and
our interim Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based upon the evaluation that was conducted, the Chief
Executive Officer and interim Chief Financial Officer have concluded that, as of the end of the period covered by this report the disclosure controls and procedures evaluated were effective to insure that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported with the time periods specified by the SECs rules and forms.



During the month of September our former Chief Financial Officer left the Company. We believe this could constitute a
significant deficiency in the financial reporting process. Our Chief Operating Officer, a prior Chief Financial Officer of a publicly traded company, assumed the role of interim Chief Financial Officer and we have since engaged outside professionals
to assist in the performance of certain financial functions on an interim basis. We have commenced a search for a permanent Chief Financial Officer and anticipate this position will be filled by the end of 2005.



Changes in Internal Controls



There were no changes made in our internal controls over financial reporting
that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.



Limitations on the Effectiveness of Controls



We believe that a control system, no matter how well designed and operated,
cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all controls issues and instances of fraud, if any, within a company have been detected. Our
disclosure controls and procedures are designed to provide a reasonable assurance of achieving their objectives and our Chief Executive Officer and interim Chief Financial Officer have concluded that the controls and procedures evaluated are
effective.



Part II  Other Information



Item 1. Legal Proceedings



On February 18, 2005, we received notice from the IUE-CWA Pension Fund notifying us that we are responsible for funding a pension plan liability relating to Miller, which was acquired by us, in the amount of $462,000, discounted at the
annual interest rate of 5.65%. We are legally responsible for the payment of this obligation. The first three quarterly payments of $9,674 each were made on May 1,August 1, 2005 and November 18, 2005 in connection with this liability. We
are currently disputing the total obligation, but until such time as the validity of the above obligation is resolved, a provision for the full amount has been established and scheduled quarterly payments will be made.



On June 9, 2005 we received a complaint from a competitor alleging that
one of our products infringed a patent held by the competitor. The matter is being reviewed by our patent counsel. Management does not believe resolution of this complaint will have any material impact on our financial condition or results of
operations.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.



Subsequent Event



DMI
and Stanford have negotiated the terms of a Preferred Stock Purchase Agreement (the Purchase Agreement), which has been executed by DMI and is subject to execution by Stanford. The proposed Purchase Agreement provides for purchases of up
to an aggregate of 4,000,000 shares of the Companys Series B Preferred Stock (the Preferred Stock) and issuance of 5-year warrants to purchase up to 2,400,000 shares of the Companys common stock at an exercise price of $0.001
per share (the Warrants) in various installments, in order to provide the Company with funds for acquisitions and working capital, subject to Stanfords approval of each transaction in its sole discretion. Under the proposed
Purchase Agreement, Stanford has the right to buy all of the Preferred Stock and accompanying Warrants covered by the Purchase Agreement at a price of $2.00 per share of Preferred Stock. On November 10, 2005, Stanford advanced $700,000 to DMI in
contemplation of this transaction.



In addition, the proposed
Purchase Agreement grants Stanford the right to purchase an additional 500,000 shares of parity preferred stock, when authorized by the Company, and warrants to purchase an additional 300,000 shares of the Companys common stock for an
aggregate purchase price of $1,000,000 on the same terms and conditions set forth in the proposed Purchase Agreement.



We are materially dependent on Stanford to execute the proposed Purchase Agreement and make the investment in our securities contemplated by the proposed
Purchase Agreement.



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On November 21, 2005, our Board of Directors authorized a 1 for 2 reverse stock split of the issued
and outstanding shares of the Companys common stock effective December 5, 2005.



Item 3. Defaults Upon Senior Securities



Effective October 18, 2004, the Company obtained a line of credit facility with FCC having a maximum credit limit of $5,000,000 with an interest rate of prime (6.75% at October 1, 2005) plus 2.5% and paid a
closing fee of $100,000. The facility is for a period of two years, subject to an annual administration fee of $50,000 payable on the anniversary date. The facility carries a monthly maintenance fee of $2,000 and interest is payable monthly.
Borrowings are limited to 85% of eligible accounts receivable and 50% of eligible inventory less certain reserves, subject to a total eligible inventory cap of $2,000,000 and an in-transit inventory cap of $400,000. The facility is secured by a
primary interest in accounts receivable, inventories, other assets and restricted cash reserves of $700,000. The facility has an initial term of two years and, thereafter, renews for succeeding one-year periods unless either party provides notice to
the other of its intention to terminate the facility. On March 22, 2005, the terms of the line of credit were amended to increase the borrowing limit to $6,000,000 and the total inventory borrowing cap to $3,000,000 for the period from
March 22 through July 31, 2005.



On June 2,
2005, the terms of the line of credit were further amended (evidenced by a third amendment) to increase the borrowing limit to $7,000,000 and the total inventory borrowing limit to $3,500,000 for the remaining term of the loan.



At October 1, 2005, the balance of the line of credit was $4,911,708.
The line of credit from FCC required the Company to comply with two financial covenants. In April 2005, the Company negotiated the elimination of the tangible net worth ratio requirement (evidenced by a waiver and second amendment) and also
negotiated the deferral of the initial application of the monthly fixed charges covenant from March 31, 2005 to May 31, 2005. At July 2, 2005 and October 1, 2005, the Company was not in compliance with this covenant. In August
2005 and November, 2005, FCC granted waivers of non-compliance with the monthly fixed charges covenant until October 31, 2005 and December 31, 2005 respectively. The Company does not expect to be in compliance with the covenant at
December 31, 2005. In the past, FCC has granted waivers to the Company. Management anticipates that FCC will waive its right to enforce the covenant, but there can be no assurances that future waivers will be granted. Management of the Company
has initiated discussions with FCC to amend the covenant for 2006. Management believes FCC will amend the covenant but there is no assurance that the covenant will be amended. If the Company is unable to amend the covenant or restructure the debt,
it will seek alternative sources of funding. In accordance with the line of credit agreement, the Company is required to maintain a lock-box arrangement, whereby all of its customer collections are deposited in a lock-box controlled by FCC and
therefore such working capital funds are used to repay outstanding banking obligations.



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



The Companys stockholders holding a majority of the voting power of the Company, pursuant to a written consent dated June 8, 2005, approved the
following proposal:



To approve an amendment to the
Companys Articles of Incorporation creating a class of preferred stock (the Amendment). The Amendment provides for the creation of a class of preferred stock consisting of 5,000,000 shares with a par value of $0.001 per share. The
preferred stock may be issued with such rights as may be set forth in a resolution or resolutions providing for the issuance of such preferred stock adopted by our Board of Directors from time to time.



Item 5. Other Information



None



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Item 6. Exhibits and Reports on Form 8-K



|(a) | Exhibits:
|--- | ---------



|     |  |                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Waiver Agreement, dated November 18, 2005, by and among FCC, LLC, Datrek Professional Bags, Inc. and Miller Golf Company.
|     | 
|31.1 |  | Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                        
|     | 
|31.2 |  | Certification of C.F.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                        
|     | 
|32.1 |  | Certification Pursuant to 10 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002.                         



|(b) | Reports on Form 8-K
|--- | -------------------



On July 21, 2005, we filed a current report on Form 8-K reporting under Item 3.02  Unregistered Sale of Equity Securities that
we had entered into the July 18, 2005 sale of securities transaction with Stanford.



On September 15, 2005, we filed a current report on Form 8-K reporting under Item 5.02  Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal
Officers the resignation of our former chief financial officer.



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SIGNATURES



In accordance with Section 13 or
15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.



Dated: November 21, 2005



|                                  |  |                                                                  
|--------------------------------- |  | -----------------------------------------------------------------
|DATREK MILLER INTERNATIONAL, INC.
|                                  | 
|By:                               |  | /s/ Michael S. Hedge                                             
|                                  |  | Michael S. Hedge                                                 
|                                  |  | (Chief Executive Officer)                                        
|                                  | 
|By:                               |  | /s/ J. Max Waits                                                 
|                                  |  | J. Max Waits                                                     
|                                  |  | (Interim Chief Financial Officer and principal financial
officer)



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EXHIBIT INDEX



|            |  |                                                                                                                          
|----------- |  | -------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit Description                                                                                                      
|10.1        |  | Waiver Agreement, dated November 18, 2005, by and among FCC, LLC, Datrek Professional Bags, Inc. and Miller Golf Company.
|            | 
|31.1        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                  
|            | 
|31.2        |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                  
|            | 
|32.1        |  | Certification Pursuant to 10 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002.