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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 September 30, 2006



| ̈ | 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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FOREFRONT HOLDINGS, 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

The number of shares of common stock and preferred stock outstanding on November 7, 2006, was 7,548,239
and 5,650,000, respectively. Unless otherwise specified herein, all common share, warrant and option amounts give effect to a 1-for-2 reverse stock split effective as of December 5, 2005.

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



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##### Table of Contents

FOREFRONT HOLDINGS, INC.

INDEX



|                               |  |         |  |                                                                                                                            |  |      
|------------------------------ |  | ------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | -----
|                               |  | Page   
|PART I -
Financial Information |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Financial statements (unaudited)                                                                                           |  |      
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Balance Sheet at September 30, 2006                                                                 |  | 3    
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2006 and October 1, 2005 |  | 4    
|                               |  |         | 
|                               |  |         |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2006 and October 1, 2005           |  | 5    
|                               |  |         | 
|                               |  |         |  | Notes to Condensed Consolidated Financial Statements                                                                       |  | 6-16 
|                               |  |         | 
|                               |  | Item 2. |  | Managements Discussion and Analysis or Plan of Operations                                                                 |  | 17-25
|                               |  |         | 
|                               |  | Item 3. |  | Controls and Procedures                                                                                                    |  | 26   
|                               | 
|PART II -
Other Information    |  |        
|                               |  |         | 
|                               |  | Item 1. |  | Legal Proceedings                                                                                                          |  | 27   
|                               |  |         | 
|                               |  | Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                |  | 27   
|                               |  |         | 
|                               |  | Item 3. |  | Defaults Upon Senior Securities                                                                                            |  | 27   
|                               |  |         | 
|                               |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                                                        |  | 27   
|                               |  |         | 
|                               |  | Item 5. |  | Other Information                                                                                                          |  | 28   
|                               |  |         | 
|                               |  | Item 6. |  | Exhibits                                                                                                                   |  | 28   
|                               |  |         | 
|                               |  |         |  | Signatures                                                                                                                 |  | 29   



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##### Table of Contents

PART I - Financial Information

FOREFRONT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2006

(Unaudited)



|                                                                                                                                                    |  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------- | -
|ASSETS                                                                                                                                              |  |   |             |  
|Current assets:                                                                                                                                     |  |   |             |  
|Cash                                                                                                                                                |  | $ | 127,972     |  
|Accounts receivable, net of allowance of $499,245                                                                                                   |  |   | 5,645,580   |  
|Inventories, net                                                                                                                                    |  |   | 7,023,519   |  
|Prepaid expenses                                                                                                                                    |  |   | 517,938     |  
|Other receivables                                                                                                                                   |  |   | 43,829      |  
|                                                                                                                                                    |  |   |             |  
|Total current assets                                                                                                                                |  |   | 13,358,838  |  
|                                                                                                                                                    | 
|Property and equipment, net                                                                                                                         |  |   | 2,001,476   |  
|Intangibles, net of accumulated amortization of $1,168,838                                                                                          |  |   | 3,827,069   |  
|Goodwill                                                                                                                                            |  |   | 547,657     |  
|Other assets                                                                                                                                        |  |   | 28,259      |  
|                                                                                                                                                    |  |   |             |  
|Total assets                                                                                                                                        |  | $ | 19,763,299  |  
|                                                                                                                                                    |  |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                |  |   |             |  
|Current liabilities:                                                                                                                                |  |   |             |  
|Revolving credit facility                                                                                                                           |  | $ | 5,557,441   |  
|Accounts payable and accrued liabilities                                                                                                            |  |   | 6,593,014   |  
|Interest payable and accrued liabilities to related parties                                                                                         |  |   | 354,657     |  
|Notes payable to related parties                                                                                                                    |  |   | 2,175,000   |  
|Capital lease obligation                                                                                                                            |  |   | 27,090      |  
|                                                                                                                                                    |  |   |             |  
|Total current liabilities                                                                                                                           |  |   | 14,707,202  |  
|                                                                                                                                                    |  |   |             |  
|Notes payable to related parties, less current portion                                                                                              |  |   | 2,100,000   |  
|Guarantee under purchase consideration to related party                                                                                             |  |   | 487,500     |  
|Capital lease obligation, less current portion                                                                                                      |  |   | 133,296     |  
|Accrued pension liability, less current portion                                                                                                     |  |   | 428,285     |  
|Minority interest in subsidiary                                                                                                                     |  |   | 74,088      |  
|                                                                                                                                                    |  |   |             |  
|Total liabilities                                                                                                                                   |  |   | 17,930,371  |  
|                                                                                                                                                    |  |   |             |  
|Commitments and contingencies                                                                                                                       |  |   |             |  
|                                                                                                                                                    | 
|Stockholders equity:                                                                                                                               |  |   |             |  
|Series A Preferred stock, $.001 par value; 1,000,000 shares authorized; 1,000,000 shares issued and outstanding (Liquidation preference
$2,000,000) |  |   | 1,000       |  
|Series B Preferred stock, $.001 par value; 4,500,000 shares authorized; 4,300,000 shares issued and outstanding (Liquidation preference
$8,600,000) |  |   | 4,300       |  
|Common stock, $.001 par value; authorized 500,000,000 shares; 7,045,739 shares issued and outstanding                                               |  |   | 7,046       |  
|Additional paid-in capital                                                                                                                          |  |   | 18,998,204  |  
|Accumulated deficit                                                                                                                                 |  |   | (17,177,622 | )
|                                                                                                                                                    |  |   |             |  
|Total stockholders equity                                                                                                                          |  |   | 1,832,928   |  
|                                                                                                                                                    |  |   |             |  
|Total liabilities and stockholders equity                                                                                                          |  | $ | 19,763,299  |  
|                                                                                                                                                    |  |   |             |  

See the accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

FOREFRONT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---------- | - | ------------------------- | - | ---------- | ------------------ |  | - | --------------- | - |  | - | ---------- | -
|                                                                                                                                                               |  | For the three months ended |            |   | For the nine months ended |  
|                                                                                                                                                               |  | September 30, 2006         |            |   | October 1, 2005           |   |            | September 30, 2006 |  |   | October 1, 2005 |  
|Net sales                                                                                                                                                      |  | $                          | 6,621,553  |   |                           | $ | 6,524,448  |                    |  | $ | 21,528,920      |   |  | $ | 21,240,828 |  
|                                                                                                                                                               |  |                            |            |  
|Cost of sales                                                                                                                                                  |  |                            | 5,519,478  |   |                           |   | 5,290,722  |                    |  |   | 16,487,305      |   |  |   | 15,505,338 |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Gross margin                                                                                                                                                   |  |                            | 1,102,075  |   |                           |   | 1,233,726  |                    |  |   | 5,041,615       |   |  |   | 5,735,490  |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Operating expenses                                                                                                                                             |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Sales and marketing                                                                                                                                            |  |                            | 1,938,265  |   |                           |   | 1,727,120  |                    |  |   | 6,236,054       |   |  |   | 5,027,230  |  
|General and administrative                                                                                                                                     |  |                            | 1,888,566  |   |                           |   | 1,077,224  |                    |  |   | 4,864,953       |   |  |   | 3,333,375  |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Total operating expenses                                                                                                                                       |  |                            | 3,826,831  |   |                           |   | 2,804,344  |                    |  |   | 11,101,007      |   |  |   | 8,360,605  |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Loss from operations                                                                                                                                           |  |                            | (2,724,756 | ) |                           |   | (1,570,618 | )                  |  |   | (6,059,392      | ) |  |   | (2,625,115 | )
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Other income (expense)                                                                                                                                         |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Interest expense (three- and nine-month periods include related party expense of $64,597 and $228,276 in 2006 and $116,599 and $301,791 in
2005, respectively) |  |                            | (251,479   | ) |                           |   | (319,682   | )                  |  |   | (687,219        | ) |  |   | (792,598   | )
|Other income, net                                                                                                                                              |  |                            | 27,628     |   |                           |   | 24,852     |                    |  |   | 67,185          |   |  |   | 25,937     |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Net other expense                                                                                                                                              |  |                            | (223,851   | ) |                           |   | (294,830   | )                  |  |   | (620,034        | ) |  |   | (766,661   | )
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Net loss                                                                                                                                                       |  | $                          | (2,948,607 | ) |                           | $ | (1,865,448 | )                  |  | $ | (6,679,426      | ) |  | $ | (3,391,776 | )
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Basic and diluted net loss per common share                                                                                                                    |  | $                          | (0.43      | ) |                           | $ | (0.33      | )                  |  | $ | (1.00           | ) |  | $ | (0.60      | )
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|Basic and diluted weighted average common shares outstanding                                                                                                   |  |                            | 6,829,072  |   |                           |   | 5,611,092  |                    |  |   | 6,662,745       |   |  |   | 5,620,994  |  
|                                                                                                                                                               |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  

See the accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

FOREFRONT HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                     |  |                           |            |   |                 |   |            |  
|------------------------------------------------------------------------------------ |  | ------------------------- | ---------- | - | --------------- | - | ---------- | -
|                                                                                     |  | For the nine months ended |           
|                                                                                     |  | September 30, 2006        |            |   | October 1, 2005 |  
|Cash flows from operating activities:                                                |  |                           |            |   |                 |   |            |  
|Net loss                                                                             |  | $                         | (6,679,426 | ) |                 | $ | (3,391,776 | )
|Adjustments to reconcile net loss to net cash used in operating activities:          |  |                           |            |   |                 |   |            |  
|Depreciation and amortization                                                        |  |                           | 801,683    |   |                 |   | 588,760    |  
|Amortization of loan fees                                                            |  |                           | 37,500     |   |                 |   | 37,500     |  
|Minority interest in subsidiary                                                      |  |                           | (47,162    | ) |                 |   |           |  
|Common stock issued for services                                                     |  |                           |           |   |                 |   | 18,000     |  
|Stock based compensation                                                             |  |                           | 155,540    |   |                 |   |           |  
|Bad debts                                                                            |  |                           | 71,428     |   |                 |   | 163,541    |  
|Loss on disposal of fixed assets                                                     |  |                           | 853        |   |                 |   |           |  
|                                                                                     |  |                          
|Convertible debenture debt discount                                                  |  |                           |           |   |                 |   | 48,702     |  
|                                                                                     |  |                          
|Changes in assets and liabilities:                                                   |  |                           |            |   |                 |   |            |  
|Accounts receivable                                                                  |  |                           | 140,121    |   |                 |   | (679,680   | )
|Inventories                                                                          |  |                           | (629,976   | ) |                 |   | 1,006,130  |  
|Prepaid expenses                                                                     |  |                           | 83,212     |   |                 |   | (11,122    | )
|Other receivables                                                                    |  |                           | 13,020     |   |                 |   | 32,182     |  
|Other assets                                                                         |  |                           | (25,847    | ) |                 |   | 34,240     |  
|Accounts payable and accrued liabilities                                             |  |                           | 1,308,366  |   |                 |   | (758,673   | )
|Interest payable and accrued liabilities to related parties                          |  |                           | 90,671     |   |                 |   |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Net cash used in operating activities                                                |  |                           | (4,680,017 | ) |                 |   | (2,912,196 | )
|                                                                                     |  |                           |            |   |                 |   |            |  
|Cash flows from investing activities:                                                |  |                           |            |   |                 |   |            |  
|Payment for ForeFront Burton, net of cash acquired of $4,143                         |  |                           | (1,970,857 | ) |                 |   |           |  
|Purchase of property and equipment                                                   |  |                           | (458,404   | ) |                 |   | (268,757   | )
|Contingent acquisition payment to related party                                      |  |                           | (63,863    | ) |                 |   | (116,108   | )
|                                                                                     |  |                           |            |   |                 |   |            |  
|Net cash used in investing activities                                                |  |                           | (2,493,124 | ) |                 |   | (384,865   | )
|                                                                                     |  |                           |            |   |                 |   |            |  
|Cash flows from financing activities:                                                |  |                           |            |   |                 |   |            |  
|Net borrowings under revolving credit facility                                       |  |                           | 1,539,320  |   |                 |   | 590,192    |  
|Net payments to finance company                                                      |  |                           |           |   |                 |   | (21,560    | )
|Borrowings under convertible debenture note - Stanford                               |  |                           |           |   |                 |   | 2,000,000  |  
|Payments under capital lease obligations                                             |  |                           | (14,687    | ) |                 |   |           |  
|Payment of notes to related parties                                                  |  |                           | (900,000   | ) |                 |   | (930,000   | )
|Payment of note to bank                                                              |  |                           | (59,307    | ) |                 |   |           |  
|Exercise of warrants - Stanford                                                      |  |                           | 398        |   |                 |   |           |  
|Sale of common stock - Stanford                                                      |  |                           |           |   |                 |   | 560,000    |  
|Sale of preferred stock - Stanford                                                   |  |                           | 5,600,000  |   |                 |   |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Net cash provided by financing activities                                            |  |                           | 6,165,724  |   |                 |   | 2,198,632  |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Net decrease in cash                                                                 |  |                           | (1,007,417 | ) |                 |   | (1,098,429 | )
|Cash, beginning of period                                                            |  |                           | 1,135,389  |   |                 |   | 1,363,168  |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Cash, end of period                                                                  |  | $                         | 127,972    |   |                 | $ | 264,739    |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Supplemental disclosures of cash flow information:                                   |  |                           |            |   |                 |   |            |  
|Interest paid                                                                        |  | $                         | 770,323    |   |                 | $ | 774,120    |  
|Income taxes paid                                                                    |  | $                         | 31,722     |   |                 | $ | 43,285     |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Supplemental disclosures of non-cash investing and financing activities:             |  |                           |            |   |                 |   |            |  
|Purchases of property and equipment under capital lease obligations                  |  | $                         | 94,276     |   |                 | $ |           |  
|Convertible debenture debt discount                                                  |  | $                         |           |   |                 | $ | 974,026    |  
|Common stock issued                                                                  |  | $                         |           |   |                 | $ | 36,000     |  
|                                                                                     |  |                          
|Net assets acquired and liabilities assumed of Burton:                               |  |                           |            |   |                 |   |            |  
|Total purchase price                                                                 |  | $                         | 4,376,947  |   |                 | $ |           |  
|Less: cash consideration paid                                                        |  |                           | (1,975,000 | ) |                 |   |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Non-cash consideration                                                               |  | $                         | 2,401,947  |   |                 | $ |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Notes Payable Burton shareholders                                                   |  | $                         | 1,225,000  |   |                 | $ |           |  
|Guarantee under purchase consideration                                               |  |                           | 487,500    |   |                 |   |           |  
|Common stock issued                                                                  |  |                           | 512,500    |   |                 |   |           |  
|Acquisition costs ($144,000 finders fee to Stanford and $32,947 for legal services) |  |                           | 176,947    |   |                 |   |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  
|Allocation of non-cash consideration                                                 |  | $                         | 2,401,947  |   |                 | $ |           |  
|                                                                                     |  |                           |            |   |                 |   |            |  

See the accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

FOREFRONT HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of
Business and Significant Accounting Policies

ForeFront Holdings, Inc. (ForeFront Holdings or the Company) is comprised of its
both direct and indirect wholly owned subsidiaries ForeFront Group Inc. (ForeFront), Miller Golf Company (Miller), ForeFront Burton, Inc. (ForeFront Burton), ForeFront Multimedia, LLC, (Multimedia),
and a 50% ownership interest in ForeFront Crellin LLC (ForeFront Crellin). The Company manufactures, designs, assembles and distributes golf bags and golf accessories for sale to on-course golf pro shops and off-course golf specialty
shops, sporting goods stores, corporate premium customers, golf event sponsoring organizations, and mass merchandisers mainly in the United States and Canada. The Company is based and conducts a substantial portion of its operations in Springfield,
Tennessee.

ForeFront Holdings is the successor to Greenhold Group, Inc., (GGI) (a public company) which was originally incorporated in the
State of Florida on March 22, 1999. On October 15, 2004, ForeFront Holdings entered into a merger transaction with Golf Acquisition, Inc. (GAI) whereby GAI was merged with and into ForeFront Holdings. On October 25, 2004,
GGI amended its articles of incorporation to change its name to Datrek Miller International, Inc. At the time of such merger, GAI simultaneously acquired substantially all of the operating assets and liabilities of the predecessor Miller Golf
Company, LLC (MGC) and most of the assets of the predecessor Datrek Professional Bags, Inc (DPB). Stanford Venture Capital Holdings Inc. (SVCH), prior to this transaction, was the 95% owner of MGC. In connection
with the merger, SVCH agreed to purchase 2,250,000 shares of ForeFront Holdings common stock for an aggregate cash investment of $4,500,000 funded between October 2004 and January 2005. As a result of these transactions, SVCH became the
principal shareholder. Accordingly, the acquisition of Miller by ForeFront Holdings was accounted for as a reverse merger. The acquisition of DPB was accounted for as a business combination. On July 27, 2006, Datrek Miller International, Inc.
amended its articles of incorporation to change its name to ForeFront Holdings, Inc.

Since the completion of the transactions described above, SVCH has
transferred its interests in ForeFront Holdings to Stanford International Bank Ltd. (Stanford). Stanford has entered into several securities purchase agreements with ForeFront Holdings whereby it has invested an aggregate of $10,600,000,
and currently owns 71.9% of ForeFronts Holdings issued and outstanding common stock (assuming conversion of all preferred stock) at September 30, 2006.

On September 12, 2006, the Company, through ForeFront Burton, executed an Asset Purchase Agreement (the Burton Purchase Agreement) with Burton Golf, Inc. (Burton). Under the Burton Purchase Agreement, which is
effective as of September 3, 2006, the Company acquired substantially all of the assets and assumed certain liabilities of Burton for an aggregate purchase price of $4,376,947. The purchase price consisted of $1,975,000 in cash and $2,225,000
in promissory notes described in greater detail below, as well as $176,947 of acquisition costs. The Company also issued 250,000 shares of its common stock to Burton which shall be used to satisfy a portion of the promissory notes.

Burton, based in Fort Walton Beach, Florida, manufactures and markets high quality golf bags and accessories and is a leading supplier of premium golf bags throughout
the Companys existing distribution channels which distribute throughout North America and internationally. The Company purchased Burton to further expand ForeFronts market share of the golf bag market.

A portion of the purchase price under the Burton Purchase Agreement is evidenced by three unsecured promissory notes delivered to Burton. A short-term note in the
principal amount of $475,000 is payable in three installments, with the final installment due in November 2006. The short-term note does not bear interest. A second note in the principal amount of $750,000 with interest accruing at 8% per annum
is payable in two installments on the first and second anniversary of the closing. Payments of interest under this note are due quarterly commencing in the third quarter of 2006. The third note represents a guarantee of the consideration paid in the
acquisition that is associated with the value of the common shares issued, based upon the per share price of the Companys common stock on the third anniversary of the closing. The third note does not bear interest. Each of the promissory notes
may be prepaid at any time without penalty.

The third note, representing the guarantee, will be satisfied with the 250,000 shares of issued common stock
if, as of the second, two and one-half or third anniversary of the closing, such shares may be sold on any national exchange or other established market, and the per share market price of such shares is equal to or greater than $4.00. In such case,
the note shall be deemed paid and satisfied in full on such anniversary of the closing. In the event that the per share market price of the shares is less than $4.00 on each of such anniversary dates, then the principal balance of the note, less the
fair value of such shares on the third anniversary



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##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

date, may be satisfied in cash or additional shares of the Companys common stock on the third anniversary of the closing. In accordance with Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standard 141, Business Combinations (FAS 141), the fair value of the shares issued is recorded at fair value as of the acquisition date. Due to the
uncertainty of the amount of the third note that will be satisfied in stock in lieu of a cash payment, the remaining obligation under the note has been classified as a contingent long-term liability. At such time that the obligation is settled, the
note will be relieved and paid-in-capital will be adjusted to the fair value of the stock or the total principal amount of the note, whichever is less.

ForeFront Burtons activity is included from the effective date of acquisition in the Condensed Consolidated Financial Statements.

On
October 25, 2004, ForeFront Holdings effected a one-for-thirty-five reverse split of its common stock. On December 5, 2005, the Company effected a one-for-two reverse split of its common stock. All common share, warrant, option and per
share amounts presented in these unaudited Condensed Consolidated Financial Statements have been retroactively adjusted to reflect both the one-for-thirty-five and the one-for-two reverse stock splits.

Liquidity and Capital Resources

The Company incurred net losses of
$6.7 million and $3.4 million for the nine months ended September 30, 2006 and October 1, 2005, respectively. The Company was not in compliance with its change of control, fixed charge coverage and salary covenants with respect to its line
of credit facility at December 31, 2005. On March 13, 2006, the Company and First Capital Corporation, LLC (FCC) amended the loan agreement including a waiver of these covenants (as set forth in a Waiver and Sixth Amendment).
In connection with the amendment of the loan agreement, the term was extended for an additional three-year period through October 2009, and the maximum credit limit was increased from $7.5 million to $10.5 million. The interest rate decreased by 1%
from prime (8.25% at September, 2006) plus 2.5% to prime plus 1.5%. The facility was further amended to provide for an annual administration fee of $75,000 payable on the anniversary date. The facility continues to carry a monthly maintenance fee of
$2,000 and interest is payable monthly. The restricted cash of $700,000 that was formerly held by FCC was released on April 11, 2006. The Company was not in compliance with its fixed charge coverage and tangible net worth covenants with respect
to its line of credit facility at September 30, 2006. On November 10, 2006, the Company and First Capital Corporation, LLC (FCC) amended the loan agreement including a waiver of these covenants (as set forth in a Waiver and
Seventh Amendment) through November 10, 2006.

On November 30, 2005, the Company entered into a Preferred Stock Purchase Agreement (the Purchase
Agreement) with Stanford. In November 2006, the Company negotiated an amendment to the Purchase Agreement (the Amendment), which is subject to final execution by both parties. Under the Amendment, in order to provide the Company
with funds for acquisitions and working capital, Stanford will have the right to buy shares of the Companys Series C Preferred Stock and warrants covered by the Amendment for an aggregate purchase price of $8,000,000, subject to
Stanfords approval of each transaction in its sole discretion. In contemplation of the transactions set forth in the Amendment, Stanford advanced the Company a total of $1,200,000 in four installments of $300,000 on November 3, 2006; November
6, 2006; November 10, 2006 and November 13, 2006, respectively.

There can be no assurance that the Company will be in compliance with the above-mentioned
bank covenants in the future and there can be no assurance that FCC will continue to provide waivers if the Company is not in compliance. In addition, there can be no assurance that Stanford will execute or fund the Amendment. However, management
believes that, if necessary, the Company will be able to secure any such bank waivers. In addition, management believes cash balances on hand and cash generated from operations, as well as proceeds from the sale of the preferred stock under the
Purchase Agreement and the proposed Amendment with Stanford (see Notes 8 and 13), will be sufficient to fund the business requirements during the next twelve months. Historically, the Company has been, and currently continues to be dependent on the
funding it has received from Stanford. Without this continued financial support, as is called for in the Purchase Agreement, the Company would be required to restructure its existing debt and/or raise capital through the issuance of its debt or
equity securities.

Significant accounting policies are as follows:

Net Loss Per Common Share

Basic and diluted net loss per share is
computed using the weighted average number of shares of outstanding common stock. For all periods presented, diluted net loss per share (EPS) was the same as basic net loss per share since the inclusion of common stock equivalents would
have been anti-dilutive. Common stock equivalents include shares issuable upon the exercise of stock options and shares issuable upon the conversion of preferred stock. Total outstanding common stock equivalents related to stock options and
preferred stock were 3,339,750 at September 30, 2006 and 329,750 at October 1, 2005, respectively.

Principles of Consolidation and Basis of
Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of ForeFront Holdings and its both direct and
indirect wholly owned subsidiaries, ForeFront, ForeFront Burton, Miller and Multimedia, as well as ForeFront Crellin, in which the Company holds a 50% interest. These condensed consolidated 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 three- and nine-month periods ended September 30, 2006 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2006.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the
Companys 2005 Annual Report on Form 10-KSB filed with the U.S. Securities and Exchange Commission on March 31, 2006.

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 2006 and 2005 ended on September 30 and October 1, respectively.

Recently Issued Accounting
Standards

In February 2006, the FASB issued Statement of Financial Accounting Standard 155 Accounting for Certain Hybrid Financial
Instruments (SFAS 155), which eliminates the exemption from applying SFAS 133 Accounting for Derivative Instruments and Hedging Activities (SFAS 133) to interests in securitized financial assets so that
similar instruments are accounted for similarly regardless of the form of the instruments. SFAS 155 also allows the election of fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a
remeasurement event. Adoption is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. Early adoption is permitted. The adoption of SFAS 155 is not expected
to have a material effect on the Companys consolidated financial position, results of operations or cash flows.

In March 2006, the FASB issued
Statement of Financial Accounting Standard 156 Accounting for Servicing of Financial Assets (SFAS 156), which requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value.
SFAS 156 permits, but does not require, the subsequent measurement of servicing assets and servicing liabilities at fair value. Adoption is required as of the beginning of the first fiscal year that begins after September 15, 2006. Early
adoption is permitted. The adoption of SFAS 156 is not expected to have a material effect on the Companys consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Accounting for Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, and establishes a framework for measuring fair value in
generally accepted accounting principles and expands disclosure about fair value measurements. SFAS 157 is effective for the Company for financial statements issued subsequent to November 15, 2007. The Company does not expect the new standard
to have a material impact on the Companys financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS
No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business
entity or changes in unrestricted net assets of a not-for-profit organization. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. SFAS
157 is effective for the Company for the year ended December 31, 2006. The Company does not expect the new standard to have a material impact on the Companys financial position, results of operations or cash flows.

Reclassifications

Certain 2005
amounts have been reclassified to conform to the 2006 presentation.



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##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note 2. Inventories, net

Inventories
at September 30, 2006 are summarized as follows:



|                                                 |  |   |           |  
|------------------------------------------------ |  | - | --------- | -
|Raw materials                                    |  | $ | 1,493,821 |  
|Work in progress                                 |  |   | 301,145   |  
|Finished goods                                   |  |   | 6,117,562 |  
|                                                 |  |   |           |  
|                                                 |  |   | 7,912,528 |  
|Reserve for slow-moving and obsolete inventories |  |   | (889,009  | )
|                                                 |  |   |           |  
|Total                                            |  | $ | 7,023,519 |  
|                                                 |  |   |           |  

Note 3. Property and Equipment, net

Property and equipment at September 30, 2006 is summarized as follows:



|                                                            |  |   |           |  
|----------------------------------------------------------- |  | - | --------- | -
|Machinery and equipment                                     |  | $ | 1,329,639 |  
|Furniture and fixtures                                      |  |   | 1,101,142 |  
|Leasehold Improvements                                      |  |   | 101,557   |  
|Product prototypes                                          |  |   | 147,327   |  
|                                                            |  |   |           |  
|                                                            |  |   | 2,679,665 |  
|Less: Accumulated depreciation                              |  |   | (696,236  | )
|                                                            |  |   |           |  
|                                                            |  |   | 1,983,429 |  
|Construction in progress of fixtures and product prototypes |  |   | 18,047    |  
|                                                            |  |   |           |  
|Total property and equipment, net                           |  | $ | 2,001,476 |  
|                                                            |  |   |           |  

Depreciation expense totaled $323,067 and $149,378 for the nine month periods ended September 30, 2006 and
October 1, 2005, respectively.

Note 4. Stock-Based Compensation

On June 22, 2005 the Companys Board of Directors approved the adoption of the Companys 2005 Management and Director Equity Incentive and Compensation Plan (the Plan). As amended, 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.

Effective January 1, 2006, the Company adopted SFAS 123R Share Based
Payment: An Amendment of FASB Statements 123 and 95 (SFAS 123R) which replaces SFAS 123, Accounting for Stock-Based Compensation (SFAS 123). SFAS 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial statements based on their fair values. SFAS 123R supersedes the Companys previous accounting under Accounting Principles Board Opinion No. 25 Accounting
for Stock Issues to Employees (APB 25). In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulleting No. 107 (SAB 107) relating to SFAS 123R. The Company has applied the provisions of SAB 107
in its adoption of SFAS 123R.

The Company has selected the Black-Scholes method of valuation for share-based compensation and has adopted the modified
prospective transition method under SFAS 123R, which requires that compensation cost be recorded, as earned, for all unvested stock options outstanding as the beginning of the first quarter of adoption of SFAS 123R. As permitted by SFAS 123R, prior
periods have not been restated. The charge is generally recognized on a straight-line basis over the remaining service period after the adoption date based on the options original estimate of fair values.

SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant. The value of stock options granted to employees and directors
is estimated using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods. Prior to the adoption of SFAS 123R, the Company applied the
intrinsic-value-based method of accounting prescribed by APB 25 and related interpretations, to account for



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

its stock options to employees. Under this method, compensation cost was recorded only if the market price of the underlying stock on the date of grant exceeded the
exercise price. As permitted by SFAS 123, the Company elected to continue to apply the intrinsic-value-based method of accounting described above, and adopted only the disclosure requirements of SFAS 123. The fair-value-based method used to
determine historical pro forma amounts under SFAS 123 was similar in most respects to the method used to determine stock-based compensation expense under SFAS 123R. The impact of the adoption of SFAS 123R on the condensed consolidated financial
statements was deminimus. The Company had 329,750 options outstanding at October 1, 2005. The pro forma effect of these options was not material to the three- and nine-month periods ended October 1, 2005, and, therefore, no pro forma
disclosures are considered necessary.

Stock-based compensation expense recognized in the Companys Condensed Consolidated Statements of Operations
for the three-month and nine-month periods ended September 30, 2006 includes compensation expense for all share-based payment awards granted prior to, but not yet vested as of January 1, 2006, based upon the grant date fair value estimated
in accordance with the pro forma provision of SFAS 123, and compensation expense for the share-based payment awards granted subsequent to January 1, 2006, based upon the grant date fair value estimated in accordance with the provisions of SFAS
123R. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award. As stock-based compensation expense recognized in the three and nine-month periods ended
September 30, 2006 is based upon awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. The compensation expense for the three- and nine-month periods ended September 30, 2006 was $89,589 and $155,540, respectively. As of September 30, 2006, there was $694,857 of total unrecognized
compensation cost (at fair value) related to non-vested share-based compensation arrangements granted under the Plan that is being recognized as an expense between October 2006 through June 2009.

Options to purchase 417,000 shares, with lives of ten years, vesting ratably over a three year period, were issued during the nine months ended September 30, 2006
to a group of eligible recipients under terms of the Plan. These options have exercise prices ranging from $1.50 to $2.20. The weighted average fair value per share of these options was estimated to be $1.33 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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Option activity was as follows for the nine-month period ended September 30, 2006.



|                                 |  |         |   |  |                                |      |                         |   |       
|-------------------------------- |  | ------- | - |  | ------------------------------ | ---- | ----------------------- | - | ------
|                                 |  | Shares  |   |  | Weighted-AverageExercise price |      | AggregateIntrinsicValue
|Outstanding at beginning of year |  | 302,250 |   |  | $                              | 2.22 |                         |   |       
|Granted                          |  | 417,000 |   |  |                                | 1.81 |                         |   |       
|Forfeited/Cancelled              |  | (29,500 | ) |  |                                | 2.39 |                         |   |       
|                                 |  |         |   |  |                                |      |                         |   |       
|Outstanding at 9/30/06           |  | 689,750 |   |  | $                              | 1.96 |                         | $ | 27,590
|                                 |  |         |   |  |                                |      |                         |   |       
|Exercisable at 9/30/06           |  | 90,917  |   |  | $                              | 2.20 |                         |   |      
|                                 |  |         |   |  |                                |      |                         |   |       

Option activity for unvested options was as follows for the nine-month period
ended September 30, 2006.



|                              |  |         |   |  |                                        |     
|----------------------------- |  | ------- | - |  | -------------------------------------- | ----
|                              |  | Shares  |   |  | Weighted-Average Grant Date Fair Value
|Unvested at beginning of year |  | 302,250 |   |  | $                                      | 1.29
|Granted                       |  | 417,000 |   |  |                                        | 1.33
|Vested                        |  | (90,917 | ) |  |                                        | 1.31
|Forfeited/Cancelled           |  | (29,500 | ) |  |                                        | 1.29
|                              |  |         |   |  |                                        |     
|Unvested at 9/30/06           |  | 598,833 |   |  | $                                      | 1.31
|                              |  |         |   |  |                                        |     

Shares available for issuance under the Plan were 310,250 as of September 30, 2006.

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:



|                                         |  |                    |   |  |                 |  
|---------------------------------------- |  | ------------------ | - |  | --------------- | -
|                                         |  | Nine Months Ended  |  
|                                         |  | September 30, 2006 |   |  | October 1, 2005 |  
|Dividend yield                           |  | 0                  | % |  | 0               | %
|Weighted average expected life           |  | 3.0 years          |   |  | 3.0 years       |  
|Weighted average risk-free interest rate |  | 5.15               | % |  | 3.77            | %
|Expected volatility                      |  | 310.53             | % |  | 91.00           | %

A further summary of options outstanding at September 30, 2006, is as
follows:



|               |  |                   |  |                                                   
|-------------- |  | ----------------- |  | --------------------------------------------------
|Exercise Price |  | NumberOutstanding |  | Weighted-AverageRemaining ContractualLife in Years
|$  2.20        |  | 417,750           |  | 9.0                                               
|$  1.50        |  | 222,000           |  | 9.7                                               
|$  2.05        |  | 50,000            |  | 10.0                                              
|               |  |                   |  |                                                   
|               |  | 689,750           |  |                                                   
|               |  |                   |  |                                                   



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Note 5. Intangibles, net and Goodwill

On October 15, 2004, the
Company acquired DPB and recorded intangibles including a customer list and a registered tradename. The total consideration paid for DPBs net assets was $6,471,000 and included $2,632,000 of intangible assets. Additionally, the former
shareholders of DPB receive a payment as contingent consideration based on assembly, distribution and sales of certain products under service agreements of up to $1,000,000 over terms ranging from three to five years (Contingent
Payment). The Company is capitalizing as an intangible the Contingent Payment in the period in which the Contingent Payment is incurred and is amortizing the Contingent Payment over the remaining terms of the service agreements.

On September 12, 2006 the Company acquired ForeFront Burton and recorded intangibles including a customer list, a registered tradename and a customer logo database.
The total consideration paid for Burtons net assets was $4,376,947 and included $2,155,742 of intangible assets. The Company considers the tradename to have an indefinite life. As such, in accordance with SFAS 142, Goodwill and Other
Intangible Assets, the tradename, which has been valued at $979,000, will not be amortized and will be reviewed for impairment at least annually.

The following is a summary of intangibles:



|                       |  |      |           |                       |   |           |  |                                        |           |                 |   |         |  |   |        
|---------------------- |  | ---- | --------- | --------------------- | - | --------- |  | -------------------------------------- | --------- | --------------- | - | ------- |  | - | -------
|                       |  |      |           | At September 30, 2006 |   |           |  | Amortization for the Nine Months Ended
|Description            |  | Cost |           | Amortization          |   | Net Asset |  | September 30, 2006                     |           | October 1, 2005
|Customer Lists         |  | $    | 1,875,000 |                       | $ | 564,833   |  | $                                      | 1,310,167 |                 | $ | 234,083 |  | $ | 204,750
|Registered Trade Names |  |      | 2,792,000 |                       |   | 529,267   |  |                                        | 2,262,733 |                 |   | 202,698 |  |   | 220,651
|Customer Logo Database |  |      | 120,742   |                       |   | 4,006     |  |                                        | 116,736   |                 |   | 4,006   |  |   |       
|Contingent Payment     |  |      | 208,165   |                       |   | 70,732    |  |                                        | 137,433   |                 |   | 37,829  |  |   | 13,981 
|                       |  |      |           |                       |   |           |  |                                        |           |                 |   |         |  |   |        
|Total                  |  | $    | 4,995,907 |                       | $ | 1,168,838 |  | $                                      | 3,827,069 |                 | $ | 478,616 |  | $ | 439,382
|                       |  |      |           |                       |   |           |  |                                        |           |                 |   |         |  |   |        

On October 15, 2004 the Company recorded goodwill for its purchase of DPB in the amount of $361,503, and on
September 12, 2006 the Company recorded goodwill for its purchase of ForeFront Burton in the amount of $186,154.

Note 6. Revolving Credit Facility

On October 18, 2004, the Company obtained a revolving credit facility from FCC for a two-year term. The facility was amended on March 13,
2006 (pursuant to a Waiver and Sixth amendment) extending the term for an additional three-year period, through October 2009, and increasing the maximum credit limit of $7.5 million to $10.5 million. In addition, the interest rate was decreased by
1% from prime (8.25% at September 30, 2006) plus 2.5%, to prime plus 1.5%, payable monthly. The facility was further amended to provide for an annual administration fee of $75,000 payable on the anniversary date of the facility and it continues
to carry a monthly maintenance fee of $2,000. The restricted cash of $700,000 that was formerly held by FCC was released to the Company on April 11, 2006. Borrowings under the credit facility are limited to 85% of eligible accounts receivable
and 50% of eligible inventory less certain reserves, subject to a loan cap of $5.0 million for eligible inventory and $0.5 million for in-transit inventory. The facility is secured by a primary security interest in accounts receivable, inventories,
and other assets of the Company. After October 2009, the facility will renew for succeeding one-year periods unless either party provides notice to the other of its intention to terminate the facility. At September 30, 2006, the balance of the
line of credit was $5.6 million. The line of credit from FCC requires the Company to comply with certain covenants. In March 2006, FCC granted waivers of non-compliance that occurred as of December 31, 2005 with respect to the change of
control, fixed charge and maximum salary covenants and amended the financial covenants for the remainder of the term of the facility. During 2006, FCC has granted waivers of non compliance that have occurred through November 10, 2006. There can
be no assurance that the Company will be in compliance with the above-mentioned covenants in the future and there can be no assurance that FCC will continue to provide waivers if the Company is not in compliance. However, management believes that,
if necessary, the Company will be able to secure any necessary waivers.

Note 7. Note Payables to Related Parties

On October 15, 2004, the Company acquired substantially all of the assets and liabilities of DPB. The purchase price for DPB included among other items, notes
payable totaling $5,440,000, consisting of a short-term note payable of $2,240,000 and a long-term note payable of $3,200,000 to Ryan Holdings, Inc. The shareholders of Ryan Holdings, Inc., the successor of DPB, are Deborah and Dennis Ryan. As of
April 13, 2006, Ms. Ryan separated from service as the Companys Executive Vice-President of ForeFront. Ms. Ryan remains a director of the Company. Mr. Ryan separated from service as President of the Off-Course division on
May 26, 2006.



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##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Regarding the unsecured short-term obligation of $2,240,000, $560,000 was paid in November 2004, $560,000 was paid in January 2005, $370,000 was paid in September 2005,
$250,000 was paid in May 2006, $400,000 was paid in July 2006 and a final payment of $100,000 was paid in August 2006. Beginning in January 2005, the note carried interest at 8% per annum payable monthly, increasing to 10% per annum
payable monthly in February 2005 and thereafter.

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, respectively. 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. The principal installment in the amount $1,600,000, due on June 30, 2007, is presented as a current liability in the accompanying balance sheet for the period ended
September 30, 2006.

On September 12, 2006, the Company acquired substantially all of the assets and assumed certain liabilities of Burton. The
purchase price for Burton of $4,376,947 included among other items, notes payable totaling $2,225,000, consisting of a short-term note payable of $475,000, a long-term note payable in the amount of $750,000 and a promissory note, representing a
guarantee of the consideration paid in the acquisition that is associated with the value of the Companys common stock, in the amount of $1,000,000. Two significant shareholders of Burton are now employed with ForeFront Burton as of the
effective date of the acquisition.

The first note is an unsecured, non-interest bearing, short-term obligation of $475,000, in which $150,000 was paid in
September 2006, $87,500 was paid in October 2006 and $237,500 was paid in November 2006.

The second note is an unsecured, long-term note in the amount of
$750,000 which bears interest at the rate of 8% per annum, payable quarterly, and the principal is payable in two installments of $250,000 payable on September 12, 2007 and $500,000 payable on September 12, 2008. The principal
installment in the amount $250,000, due on September 12, 2007, is presented as a current liability in the accompanying balance sheet for the period ended September 30, 2006.

The third note is an unsecured, non-interest bearing, long-term note in the amount of $1,000,000 and represents the guarantee, as discussed above. It is payable in one lump sum on September 12, 2009. As discussed
in Note 1 above, this note will be satisfied, in part or in full, with common stock that the Company issued to Burton. In accordance with SFAS 141, the fair value of the shares at the acquisition date of $512,500 has been recorded in the
shareholders equity section of the accompanying balance sheet for the period ended September 30, 2006. Due to the uncertainty of the amount of the note that will be satisfied with the issued stock, the remaining obligation under the note
of $487,500 has been recorded as a guarantee for the purchase consideration in the accompanying balance sheet for the period ended September 30, 2006.

Note 8. Debt and Equity with Stanford

On July 18, 2005, the Company entered into a Securities Purchase Agreement in which Stanford
agreed to make an aggregate investment of $2,000,000, in the form of an 8% Subordinated Convertible Debenture (the Debenture). Under the terms of the Securities Purchase Agreement, the Company agreed to authorize a class of Series A
preferred stock which Stanford could convert the Debenture into, at a ratio of $2.00 per share. Each share of preferred stock is convertible into one-half share of the Companys common stock and has a liquidation preference of $2.00 per
preferred share. Holders of the preferred stock are entitled to vote with the holders of our common stock on all matters. The Company also issued to Stanford five-year warrants (exercisable at $.001 par value per share) to purchase 300,000 shares of
the Companys common stock, 150,000 shares of which were subsequently assigned. The warrants to purchase 300,000 shares of the Companys common stock were exercised on November 30, 2005. The Company allocated $1,337,987 of the
proceeds of the $2,000,000 investment 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. On November 30, 2005, Stanford exchanged the Debenture for 1,000,000 shares of Series A preferred stock. The total debt discounts of $974,026 were amortized through November 2005 with
the balance charged to interest expense upon conversion of the Debenture into preferred stock in November 2005.

On November 30, 2005, the Company
entered into the Purchase Agreement with Stanford. The Purchase Agreement provides for purchases at any time within two years from the date of the Purchase Agreement of up to an aggregate of 4,500,000 shares of the Companys Series B
Convertible Preferred Stock (the Preferred Stock) at a purchase price of $2.00 per share of Preferred Stock and issuance of 5-year warrants to purchase up to 1,350,000 shares of the Companys common stock at an exercise price of
$0.001 per share (the Warrants) in various installments, subject to Stanfords approval of each installment in its sole discretion.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Under the Purchase Agreement, each share of Preferred Stock is convertible (based on the stated value of the preferred stock at a $2.00 conversion price) into one half
share of the Companys common stock and is entitled to one half vote per preferred share. Under the terms of the Purchase Agreement, Stanford has acquired (in various tranches) an aggregate of 4,300,000 shares of Series B Preferred Stock and
Warrants to purchase an aggregate of 1,290,000 shares of the Companys common stock for $8,600,000. Stanford has assigned half of all Warrants issuable under the Purchase Agreement to five employees of an affiliate pursuant to a warrant
assignment agreement. All of these Warrants have been exercised by Stanford and the five employees as follows: 450,000 Warrants were exercised in November 2005, 210,000 Warrants were exercised in March 2006, 187,500 Warrants were exercised in July
2006 and 442,500 Warrants were exercised in October 2006.

In addition, the 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 150,000 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 Purchase Agreement.

The financial instruments discussed above were accounted for in accordance with 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 preferred stock is considered permanent equity.
The warrants and conversion option are also components of equity and were not determined to be a derivative liability in accordance with the provisions of FASB Statement No. 133 or EITF 00-19 Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Companys Own Stock.

Stanford is the owner of 71.9% of the Companys issued and
outstanding common stock (assuming conversion of all preferred stock) at September 30, 2006. Stanford is the owner of all of the Companys issued and outstanding preferred stock.

See Note 13 below for further discussion of the Companys agreement with Stanford.

Note 9. Litigation

Incident to the Companys business
activities, it may at times be a party to legal proceedings, lawsuits and claims. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. Management believes at this time there are no ongoing matters which
will have a material adverse effect upon the Companys consolidated financial position or annual results of operations.

Note 10. Burton
Acquisition - Pro Forma Information

On September 12, 2006, the Company, through ForeFront Burton, executed the Burton Purchase Agreement with
Burton. Under the Burton Purchase Agreement, which is effective as of September 3, 2006, the Company acquired substantially all of the assets and assumed certain liabilities of Burton for an aggregate purchase price of $4,376,947. The purchase
price consisted of $1,975,000 in cash and $2,225,000 in promissory notes, as well as $176,947 of acquisition costs. The Company also issued 250,000 shares of its common stock to Burton which shall be used to satisfy a portion of the promissory
notes.

Based on the Companys evaluation, the allocation of the purchase price is as follows:



|                                    |  |   |          
|----------------------------------- |  | - | ---------
|Assets acquired:                    |  |   |          
|Cash                                |  | $ | 4,143    
|Accounts and other receivables, net |  |   | 977,401  
|Inventories, net                    |  |   | 1,282,126
|Prepaid expenses                    |  |   | 107,648  
|Property and equipment, net         |  |   | 741,593  
|Identifiable intangible assets      |  |   | 2,149,453
|Goodwill                            |  |   | 186,154  
|                                    |  |   |          
|Total assets acquired               |  | $ | 5,448,518
|                                    |  |   |          
|Liabilities assumed:                |  |   |          
|Accounts payable                    |  | $ | 712,808  
|Other accrued expenses              |  |   | 218,659  
|Capital lease payable               |  |   | 80,797   
|Note payable to bank                |  |   | 59,307   
|                                    |  |   |          
|Total liabilities assumed           |  | $ | 1,071,571
|                                    |  |   |          
|Total consideration                 |  | $ | 4,376,947
|                                    |  |   |          



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##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table presents the unaudited pro forma combined results of operations of the Company, assuming the Burton transaction discussed in Note 1 had been executed
at the beginning of each period presented. The results have been adjusted to account for the amortization of acquired intangibles, as well as other pro forma adjustments. The pro forma information presented below does not purport to represent what
actual results would have been if the acquisition occurred at the beginning of such periods, nor does the information project results for any future period. The unaudited pro forma consolidated financial information for the three and nine month
periods ended September 30, 2006 and October 1, 2005, is as follows:



|                                                             |  |                            |            |   |                           |   |            |                    |  |   |                 |   |  |   |            |  
|------------------------------------------------------------ |  | -------------------------- | ---------- | - | ------------------------- | - | ---------- | ------------------ |  | - | --------------- | - |  | - | ---------- | -
|                                                             |  | For the Three Months Ended |            |   | For the Nine Months Ended |  
|                                                             |  | September 30, 2006         |            |   | October 1, 2005           |   |            | September 30, 2006 |  |   | October 1, 2005 |  
|Net sales                                                    |  | $                          | 7,778,159  |   |                           | $ | 8,554,847  |                    |  | $ | 27,870,905      |   |  | $ | 29,103,729 |  
|Net loss                                                     |  | $                          | (3,799,627 | ) |                           | $ | (2,219,282 | )                  |  | $ | (8,187,574      | ) |  | $ | (3,850,687 | )
|Basic and diluted net loss per common share                  |  | $                          | (0.54      | ) |                           | $ | (0.38      | )                  |  | $ | (1.19           | ) |  | $ | (0.66      | )
|Basic and diluted weighted average common shares outstanding |  |                            | 7,029,072  |   |                           |   | 5,861,092  |                    |  |   | 6,897,930       |   |  |   | 5,873,771  |  

Note 11. Product Information

The Companys operations consist of one business segment, the golf industry 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
|                 |  | September 30, 2006         |           | October 1, 2005           |   | September 30, 2006 |  | October 1, 2005
|Golf bags        |  | $                          | 4,111,364 |                           | $ | 3,653,697          |  | $               | 13,664,453 |  | $ | 13,519,003
|Golf accessories |  |                            | 2,478,383 |                           |   | 2,796,158          |  |                 | 7,702,166  |  |   | 7,374,545 
|Services         |  |                            | 31,806    |                           |   | 74,593             |  |                 | 162,301    |  |   | 347,280   
|                 |  |                            |           |                           |   |                    |  |                 |            |  |   |           
|                 |  | $                          | 6,621,553 |                           | $ | 6,524,448          |  | $               | 21,528,920 |  | $ | 21,240,828
|                 |  |                            |           |                           |   |                    |  |                 |            |  |   |           

Note 12. Departure of Principal Officers

On April 13, 2006, Deborah Ryan, Executive Vice President of ForeFront, separated from the Company. In addition, Dennis Ryan, President of the Off-Course division, separated from the Company with an effective
date of May 26, 2006. Under the terms of her employment agreement, Deborah Ryan is entitled to continue to receive her base salary for a period of twelve months along with certain other benefits. Under the terms of his employment agreement,
Dennis Ryan is entitled to continue to receive his base salary for a period of twelve months along with certain other benefits. During the nine month period ended September 30, 2006, the Company recorded an expense of $350,000 in relation to
these agreements. At September 30, 2006, $214,057 remains unpaid and is reflected as an accrued liability to related parties in the accompanying Condensed Consolidated Balance Sheet.

Note 13. Subsequent Events

In October 2006, Stanford acquired
200,000 shares of Series B Preferred Stock and Warrants to purchase 60,000 shares of the Companys common stock for an aggregate purchase price of $400,000 received on October 2, 2006. Stanford assigned half of the 60,000 Warrants issuable
under the Agreement to five employees of an affiliate pursuant to a warrant assignment agreement and all such Warrants were exercised during October 2006.

In November 2006, the Company negotiated the Amendment to the Purchase Agreement with Stanford, which is subject to final execution by both parties. The proposed Amendment provides for the purchases of up to an aggregate of 2,000,000 shares
of the Companys Series C Preferred Stock and issuance of 5-year warrants to purchase up to 1,200,000 shares of the Companys common stock at an exercise price of $0.001 per share 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. Initially, each share of Series C Preferred Stock is convertible into one share of the Companys common stock.
Under the Amendment, Stanford will have the right to buy the Series C Preferred Stock and warrants covered by the Amendment for an aggregate purchase price of $8,000,000. In addition, under the terms of the Amendment the Company is required to file
a registration statement with the SEC covering the resale of the shares of the Companys common stock underlying the Series C Preferred Shares and the



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##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

warrants. In contemplation of the transactions set forth in the Amendment, Stanford advanced the Company a total of $1,200,000 in four installments of $300,000 on
November 3, 2006; November 6, 2006; November 10, 2006 and November 13, 2006, respectively.

Stanford is the Companys
principal shareholder, owning 71.9% of the Companys issued and outstanding common stock (assuming conversion of all preferred stock) at September 30, 2006, and has funded the Companys operations since inception. The Amendment
provides for the Company to submit a request for funding and Stanford has the right to accept or reject any requests. If Stanford was not to enter into this Amendment, the Companys ability to operate the business at current operating levels
could be impacted and the Company would be required to restructure its existing debt and/or raise capital through the issuance of its debt or equity securities.



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##### Table of Contents

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

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

The unaudited condensed consolidated financial statements herein have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying unaudited condensed consolidated financial
statements have been prepared under the presumption that users of the unaudited condensed financial information have either read or have access to the audited financial statements for the latest fiscal year ended December 31, 2005. Accordingly,
footnote disclosures which would substantially duplicate the disclosures contained in the December 31, 2005 audited financial statements have been omitted from these unaudited condensed consolidated financial statements. Certain information and
footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In our
opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary for a fair presentation. Although we believe that the disclosures are adequate to make the information presented not misleading, it is
suggested that these interim consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in our latest Annual Report on Form 10-KSB.

Forward-Looking Statements

This Quarterly Report on Form 10-QSB 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. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Overview

ForeFront Holdings, Inc. (ForeFront Holdings or the Company), through its both direct and indirect wholly-owned subsidiaries,
ForeFront Group Inc. (ForeFront), Miller Golf Company (Miller), ForeFront Burton, Inc. (ForeFront Burton), ForeFront Multimedia, LLC (Multimedia), and a 50% ownership interest in ForeFront Crellin LLC
(ForeFront Crellin), is a leading supplier of products and value-added services to the golf industry. Our key product offerings include high-quality golf bags and golf accessories marketed to three major trade channels.

The golf bag and accessory market is fragmented and diverse. Beginning with a comprehensive understanding of the golf industry, player needs and new
product trends, our goal is to be the one-stop sales/distribution option for our customers. We believe that by leveraging the strength and breadth of our selling and distribution capabilities, we are uniquely qualified to meet the needs of our
customers.

Our primary strategic initiative is to become the leading supplier to customers in each of the unique trade channels we serve
in the golf industry. These key trade channels include:



| |  |  | Off-Course: retail, golf specialty shops, sporting goods stores, mass merchandisers;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | On-Course: pro shops, municipal courses, private clubs, resorts, daily fee courses; and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | Premium-International-OEM (PIO): Corporate, International, and Original Equipment Manufacturers (OEM) customers.
| | - |  | --------------------------------------------------------------------------------------------------------------------

Our Off-Course sales executives have a broad knowledge of the retail environments in which we compete. Many of the sales executives in this group have
been with us for over ten years and have participated in the substantial growth which the golf industry has experienced over that period. Our On-Course sales executive group includes many PGA registered professionals. These sales professionals
understand the needs of our customers in this trade channel, in particular their limited time and resources to stock these golf shops. While the PIO group previously existed as part of the Off-Course Division, we formally established this channel
under new leadership in December 2005. Our PIO group includes sales professionals with substantial industry experience. Each of our sales groups is supported by personnel who maintain a detailed knowledge of our products and industry trends.



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##### Table of Contents

Through the three key trade channels that we serve, we offer a broad range of golf bags and golf
accessories marketed under our primary brand names Datrek, Burton and Miller Golf, as well as licensed brands including NCAA and the Wilson/ NFL team logo branded products.



| |  |  | Our golf bags use state of the art 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.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Our golf accessories include tees and tee packets, ball markers, bag tags, divot tools, towels, umbrellas, club head covers, luggage and pouches, golf bag travel covers, shoe bags,
business accessories, tournament gifts and awards, trophies / pre-packaged gift kits, beverage and barware, coasters, insulated coolers, money clips / key chains, apparel accessories, badges / lapel pins, and other golf accessories. We also market
and distribute golf improvement products.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.forefrontgolf.com.

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 strain on our managerial, operational and financial resources. If we cannot manage our
growth effectively, our business and operating results may suffer.

We also bear the potential 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.

We are reliant on purchases of a majority of our inventory from a
limited number of vendors located in Southeast Asia. If we are not able to procure this inventory effectively, our business and operating results may suffer.



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##### Table of Contents

Results of Operations

The following table sets forth certain unaudited financial data, in thousands, for the periods indicated.



|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|-------------------------- | ------------------ | ------------------ | ------ | --------------- | ----------------- | ----- | ------------------ | ------ | - | --------------- | ------------- |  | ----- | ------ |  | - | ------------- | - |  | ------ | -- |  | ------------- | ------ | - |  | ----- | --
|                           |                    | Three Months Ended |        |                 | Nine Months Ended |      
|                           | September 30, 2006 |                    |        | October 1, 2005 |                   |       | September 30, 2006 |        |   | October 1, 2005 |              
|                           |                    | Amount             |        |                 | % of NetSales     |       |                    | Amount |   |                 | % of NetSales |  |       | Amount |  |   | % of NetSales |   |  | Amount |    |  | % of NetSales |       
|Net Sales                  |                    | $                  | 6,622  |                 |                   | 100.0 | %                  |        | $ | 6,524           |               |  | 100.0 | %      |  | $ | 21,529        |   |  | 100.0  | %  |  | $             | 21,241 |   |  | 100.0 | % 
|Cost of sales              |                    |                    | 5,520  |                 |                   | 83.4  |                    |        |   | 5,290           |               |  | 81.1  |        |  |   | 16,487        |   |  | 76.6   |    |  |               | 15,506 |   |  | 73.0  |   
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Gross margin               |                    |                    | 1,102  |                 |                   | 16.6  |                    |        |   | 1,234           |               |  | 18.9  |        |  |   | 5,042         |   |  | 23.4   |    |  |               | 5,735  |   |  | 27.0  |   
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Operating expenses         |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Sales and marketing        |                    |                    | 1,938  |                 |                   | 29.3  |                    |        |   | 1,727           |               |  | 26.5  |        |  |   | 6,236         |   |  | 29.0   |    |  |               | 5,027  |   |  | 23.7  |   
|General and administrative |                    |                    | 1,889  |                 |                   | 28.5  |                    |        |   | 1,078           |               |  | 16.5  |        |  |   | 4,865         |   |  | 22.6   |    |  |               | 3,333  |   |  | 15.7  |   
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Total operating expenses   |                    |                    | 3,827  |                 |                   | 57.8  |                    |        |   | 2,805           |               |  | 43.0  |        |  |   | 11,101        |   |  | 51.6   |    |  |               | 8,360  |   |  | 39.4  |   
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Loss from operations       |                    |                    | (2,725 | )               |                   | (41.1 | )                  |        |   | (1,571          | )             |  | (24.1 | )      |  |   | (6,059        | ) |  | (28.1  | )  |  |               | (2,625 | ) |  | (12.4 | ) 
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Other income (expense):    |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Interest expense           |                    |                    | (252   | )               |                   | (3.8  | )                  |        |   | (319            | )             |  | (4.9  | )      |  |   | (687          | ) |  | (3.2   | )  |  |               | (793   | ) |  | (3.7  | ) 
|Other income, net          |                    |                    | 28     |                 |                   | .4    |                    |        |   | 25              |               |  | 0.4   |        |  |   | 67            |   |  | 0.3    |    |  |               | 26     |   |  | 0.1   |   
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Net other expense          |                    |                    | (224   | )               |                   | (3.4  | )                  |        |   | (294            | )             |  | (4.5  | )      |  |   | (620          | ) |  | (2.9   | )  |  |               | (767   | ) |  | (3.6  | ) 
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   
|Net loss                   |                    | $                  | (2,949 | )               |                   | (44.5 | )%                 |        | $ | (1,865          | )             |  | (28.6 | )%     |  | $ | (6,679        | ) |  | (31.0  | )% |  | $             | (3,392 | ) |  | (16.0 | )%
|                           |                    |                    |        |                 |                   |       |                    |        |   |                 |               |  |       |        |  |   |               |   |  |        |    |  |               |        |   |  |       |   

In managing our operations and assessing our financial performance, management supplements the
information provided by financial statement measures with other operational and customerfocused performance metrics. Since our operations and fixed expenses are relatively stable, the principal factors our management analyzes in evaluating our
performance are changes in our sources of revenue and their related gross margins. To evaluate the effectiveness of our operations and the strength of our financial position, management reviews our days of sales outstanding and inventory turns for
each period.

These performance measures are non-GAAP financial measures. A non-GAAP financial measure is a numerical measure of a
companys financial performance or cash flows that (a) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the consolidated balance sheet, consolidated statements of operations, or consolidated statements of cash flows, or (b) includes amounts, or is subject to adjustments that have the
effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

Comparison of the Three Months Ended September 30, 2006 and October 1, 2005

Net sales increased $0.1 million for
the three months ended September 30, 2006 to $6.6 million compared to $6.5 million during the same period in 2005. This change is comprised of the addition of sales of golf bags from ForeFront Burton of $0.7 million and golf accessories of
ForeFront Crellin of $0.3 million offset by decreases in the sales of other accessories of $0.6 million and other golf bags of $0.2 million.

Cost of sales for the three months ended September 30, 2006 was $5.5 million, or 83.4% of net sales, as compared to $5.3 million, or 81.1% of net sales, for the comparable period in the prior year. The principal components of our cost
of sales are direct product costs including 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 as a percent of revenues of
2.3% was attributed primarily to inventory markdowns associated with discontinued items of $0.2 million.

Total operating expenses were
$3.8 million for the three months ended September 30, 2006, as compared to $2.8 million for the three months ended October 1, 2005. Operating expenses were comprised of sales and marketing expenses and general and administrative expenses.



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Sales and marketing expense totaled $1.9 million, or 29.3% of net sales, for the three months ended
September 30, 2006, compared to $1.7 million, or 26.5% of net sales, for the three months ended October 1, 2005. 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, participation in trade shows, advertising, telephone charges, product catalogs, and royalty fees. The increase of $0.2 million is primarily attributable to the addition of
$0.1 million associated with ForeFront Burton.

General and administrative expense was $1.9 million, or 28.5% of net sales, for the three
months ended September 30, 2006 as compared to $1.1 million, or 16.5% of net sales, for the three months ended October 1, 2005. Included in our general and administrative expense are salaries and related expenses for our executive
officers, administrative employees and corporate costs such as legal and accounting, bad debts, office supplies, equipment maintenance, bank charges and amortization of intangibles. The principal reasons for the increase of $0.8 million are the
addition of expenses of ForeFront Burton of $0.3 million, higher personnel and administrative costs associated with the infrastructure necessary for long-term growth of $0.2 million, the addition of expenses of ForeFront Crellin of $0.2 million and
stock option expense of $0.1 million.

Interest expense was $0.3 million for both of the three month periods ended September 30, 2006
and October 1, 2005, respectively.

Comparison of the Nine Months Ended September 30, 2006 and
October 1, 2005

Net sales increased $0.3 million for the nine months ended September 30, 2006 to $21.5 million compared to
$21.2 million during the same period in 2005. This change is comprised of the addition of sales of golf accessories of ForeFront Crellin of $0.9 million and golf bags of ForeFront Burton of $0.7 million, offset by decreases in the sales of other
golf bags of $0.5 million, other accessories of $0.6 million and services revenue of $0.1 million.

Cost of sales for the nine months ended
September 30, 2006 was $16.5 million, or 76.6% of net sales, as compared to $15.5 million, or 73.0% of net sales, for the comparable period in the prior year. The principal components of our cost of sales are direct product costs including
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 as a percent of revenues of 3.6% was attributed primarily to lower sales
margins resulting from sales discounting.

Total operating expenses were $11.1 million for the nine months ended September 30, 2006,
as compared to $8.4 million for the nine months ended October 1, 2005. Operating expenses were comprised of sales and marketing expenses and general and administrative expenses.

Sales and marketing expense totaled $6.2 million, or 29.0% of net sales, for the nine months ended September 30, 2006 compared to $5.0 million, or
23.7% of net sales, for the nine months ended October 1, 2005. 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
expenses for our sales personnel, participation in trade shows, advertising, telephone charges, product catalogs, and royalty fees. The increase of $1.2 million is primarily attributable to an increase in severance expense for two former officers of
$0.4 million, an increase of $0.2 million associated with the PIO division, an increase of $0.1 million associated with Multimedia, an increase of $0.2 million in off-course related expenses and an increase of $0.1 million in on-course expense.

General and administrative expense was $4.9 million, or 22.6% of net sales, for the nine months ended September 30, 2006 as compared
to $3.3 million, or 15.7% of net sales, for the nine months ended October 1, 2005. Included in our general and administrative expense are salaries and related expenses for our executive officers, administrative employees and corporate costs
such as legal and accounting, bad debts, office supplies, equipment maintenance, bank charges and amortization of intangibles. The principal reasons for the increase are higher personnel and administrative costs associated with the infrastructure
necessary for long-term growth of $0.6 million, the addition of expenses of ForeFront Crellin of $0.5 million, the addition of expenses of ForeFront Burton of $0.3 million and stock option expense of $0.2 million.

Interest expense was $0.7 million for the nine months ended September 30, 2006 as compared to $0.8 million for the nine months ended October 1,
2005, resulting from lower borrowings in the current period.

Liquidity and Capital Resources

We have incurred an accumulated deficit at September 30, 2006 of $17.2 million. We had negative working capital at September 30, 2006 of $1.3
million, which includes the $1.6 million current portion of a note payable due to a related party that is due June 30, 2007 and was reclassified into a current liability in the current year period. We incurred a net loss for the nine months
ending September 30, 2006 of $6.7 million.



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To date, our principal sources of liquidity have included cash generated from our operations, drawings
under our revolving credit facility and the sale of our capital stock and convertible debenture to Stanford, our principal shareholder. Management believes that cash balances on hand and generated from operations, availability of funds under our
line of credit and 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. If necessary, we may seek to raise additional capital through the
future issuance of equity 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 $4.7 million of cash for the nine months ended September 30, 2006, as compared to $2.9 million during the comparable
period of 2005. The increase in cash used by operating activities for 2006 as compared to 2005 is primarily attributable to a higher net loss of $3.3 million and additional cash used for inventory of $1.6 million, partially offset by additional cash
provided in the 2006 period from accounts payable and accrued liabilities of $2.1 million and accounts receivable of $0.8 million.

Investing activities used $2.5 million for the nine months ended September 30, 2006, whereas such activities used $0.4 million in the comparable period in 2005. Cash used in investing activities in 2006 is primarily attributable to the
payment for ForeFront Burton, net of cash acquired, of $2.0 million and purchases of property and equipment of $0.5 million.

Financing
activities provided $6.2 million for the nine months ended September 30, 2006, whereas such activities provided $2.2 million for the comparable period in 2005. The principal source of cash provided by financing activities was proceeds from the
sale of $5.6 million of preferred stock to our principal shareholder, Stanford, and an increase in net borrowings under our revolving credit facility of $1.5 million, offset by repayments of notes to related parties of $1.0 million.

Cash at September 30, 2006 was $0.1 million compared with $1.1 million at December 31, 2005. At September 30, 2006 we had
stockholders equity of $1.8 million compared with $2.2 million at December 31, 2005.

On October 18, 2004, we obtained a
revolving credit facility from FCC for a two-year term. The facility was amended on March 13, 2006 (pursuant to a Waiver and Sixth Amendment) extending the term for an additional three-year period, through October 2009 and increasing the
maximum credit limit of $7.5 million to $10.5 million. In addition, the interest rate was decreased by 1% from prime (8.25% at September 30, 2006) plus 2.5%, to prime plus 1.5%, payable monthly. The facility was further amended to provide for
an annual administration fee of $75,000 payable on the anniversary date of the facility, and it continues to carry a monthly maintenance fee of $2,000. The restricted cash of $700,000 that was formerly held by FCC was released to us on
April 11, 2006 and is included in cash in the accompanying balance sheet. Borrowings under the credit facility are limited to 85% of eligible accounts receivable and 50% of eligible inventory less certain reserves, subject to a loan cap of $5.0
million for eligible inventory and $0.5 million for in-transit inventory. The facility is secured by a primary security interest in accounts receivable, inventories, and other of our assets. After October 2009, the facility will renew for succeeding
one-year periods unless either party provides notice to the other of its intention to terminate the facility. At September 30, 2006, the balance of the line of credit was $5.6 million. The revolving credit facility from FCC requires us to
comply with certain covenants. In March 2006, FCC granted waivers of non-compliance with respect to the change of control, fixed charge and maximum salary covenants and amended the financial covenants for the remainder of the term of the facility.
During 2006, FCC has granted waivers of non compliance that have occurred through November 10, 2006. There can be no assurance that we will be in compliance with the above-mentioned covenants in the future and there can be no assurance that FCC
will continue to provide waivers if we are not in compliance. However, we believe that, if necessary, we will be able to secure any such waivers. In addition, we believe cash balances on hand and cash generated from operations as well as proceeds
from the availability of the preferred stock under the Preferred Stock Purchase Agreement with Stanford (further discussed below) will be sufficient to fund our business requirements the next twelve months; however, if Stanford does not enter in the
Amendment to 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 and/or raise capital through the future issuance of our
securities.

At September 30, 2006, we had a long-term note payable to Ryan Holdings, Inc. in the amount of $3,200,000 which bears
interest at the rate of 8% per annum, payable quarterly. The principal is payable in two installments of $1,600,000 on June 30, 2007 and December 31, 2007. We have provided a letter of credit issued by Stanford in the amount of
$3,200,000 to guarantee this note payable. The letter of credit expires in January 2008.

At September 30, 2006, we had a short-term
note payable to Burton Golf, Inc. of $475,000, a long-term note payable in the amount of $750,000 and a promissory note, representing a guarantee of the consideration paid in the acquisition of ForeFront Burton that is associated with the value of
the our common stock, in the amount of $1,000,000.

The first note is an unsecured, non-interest bearing, short-term obligation of
$475,000, in which $150,000 was paid in September 2006, $87,500 was paid in October 2006 and $237,500 was paid in November 2006.



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The second note is an unsecured, long-term note in the amount of $750,000 which bears interest at the
rate of 8% per annum, payable quarterly, and the principal is payable in two installments of $250,000 payable on September 12, 2007 and $500,000 payable on September 12, 2008.

The third note is an unsecured, non-interest bearing, long-term note in the amount of $1,000,000 and represents the guarantee, as discussed above. It is
payable in one lump sum on September 12, 2009. This note will be satisfied, in part or in full, with common stock that we issued to Burton Golf, Inc. In accordance with SFAS 141 Business Combinations, the fair value of the shares at
the acquisition date of $512,500 has been recorded in the shareholders equity section of our Condensed Consolidated Balance Sheet for the period ended September 30, 2006. Due to the uncertainty of the amount of the note that will be
satisfied with the issued stock, the remaining obligation under the note of $487,500 has been recorded as a guarantee for the purchase consideration in our Condensed Consolidated Balance Sheet for the period ended September 30, 2006.

Another source of liquidity has been the purchase by SVCH, and subsequently Stanford, of our securities. Under a Securities Purchase
Agreement, dated October 15, 2004, SVCH made an aggregate investment in our common stock, in several tranches, totaling $4,500,000. For its aggregate investment of $4,500,000, SVCH received an aggregate of 2,250,000 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, in the form of an 8% Subordinated Convertible Debenture (the Debenture). Under the terms of the Securities Purchase Agreement, we agreed to authorize a class of Series A preferred stock which Stanford could convert the
Debenture into, at a ratio of $2.00 per share. Each share of preferred stock is convertible into one-half share of our common stock and has a liquidation preference of $2.00 per preferred share. Holders of the Series A preferred stock are entitled
to vote with the holders of our common stock on all matters. We also issued to Stanford five-year warrants (exercisable at $.001 per share) to purchase 300,000 shares of our common stock, 150,000 shares of which were subsequently assigned. The
warrants to purchase 300,000 shares of our common stock were exercised on November 30, 2005. We allocated $1,337,987 of the proceeds of the $2,000,000 investment 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. We also recorded a debt discount of $312,013 representing a beneficial conversion feature of the Debenture instrument. On November 30, 2005, Stanford exchanged the Debenture for
1,000,000 shares of Series A preferred stock. The total debt discounts of $974,026 were amortized through November 2005 with the balance charged to interest expense upon the conversion of the Debenture to Series A preferred stock in November 2005.

On November 30, 2005, we entered into a Preferred Stock Purchase Agreement (the Purchase Agreement) with Stanford. The
Purchase Agreement provides for purchases at any time within two years from the date of the Purchase Agreement of up to an aggregate of 4,500,000 shares of our Series B Convertible Preferred Stock (the Preferred Stock) at a purchase
price of $2.00 per share of Preferred Stock and issuance of 5-year warrants to purchase up to 1,350,000 shares of our common stock at an exercise price of $0.001 per share (the Warrants) in various installments, in order to provide us
with funds for acquisitions and working capital, subject to Stanfords approval of each installment in its sole discretion.

Under the
Purchase Agreement each share of Preferred Stock is convertible (based on the stated value of the preferred stock at a $2.00 conversion price) into one half share of our common stock and is entitled to one half vote per preferred share. Under the
terms of the Purchase Agreement, Stanford has acquired (in various tranches) an aggregate of 4,300,000 shares of Series B Preferred Stock and Warrants to purchase an aggregate of 1,290,000 shares of our common stock for $8,600,000. Stanford has
assigned half of all Warrants issuable under the Purchase Agreement to five employees of an affiliate pursuant to a warrant assignment agreement. All of these Warrants have been exercised by Stanford and the five employees as follows: 450,000
Warrants were exercised in November 2005, 210,000 Warrants were exercised in March 2006, 187,500 Warrants were exercised in July 2006 and 442,500 Warrants were exercised in October 2006.

In October 2006, Stanford acquired 200,000 shares of Series B Preferred Stock and Warrants to purchase 60,000 shares of our common stock for $400,000
received on October 2, 2006. Stanford assigned half of the 60,000 Warrants issuable under the Agreement to five employees of an affiliate pursuant to a warrant assignment agreement and all such Warrants were exercised during October 2006.

In addition, the Purchase Agreement grants Stanford the right to purchase an additional 500,000 shares of parity Series C Preferred Stock,
when authorized by us, and warrants to purchase an additional 150,000 shares of our Common Stock for an aggregate purchase price of $1,000,000 on the same terms and conditions set forth in the Purchase Agreement.

In November 2006, we negotiated an Amendment to the Purchase Agreement with Stanford (the Amendment), which is subject to final execution by
both parties. The proposed Amendment provides for the purchases of up to an aggregate of 2,000,000 shares of our Series C Preferred Stock and issuance of 5-year warrants to purchase up to 1,200,000 shares of our common stock at an exercise price of
$0.001 per share in various installments, in order to provide us with funds for acquisitions and working capital, subject to Stanfords approval of each transaction in its sole discretion. Initially, each share of Series C Preferred Stock is



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convertible into one share of our common stock. Under the Amendment, Stanford will have the right to buy the Series C
Preferred Stock and warrants covered by the Amendment for an aggregate purchase price of $8,000,000. In addition, under the terms of the Amendment we are required to file a registration statement with the SEC covering the resale of the shares of our
common stock underlying the Series C Preferred Stock and the warrants. In contemplation of the transactions set forth in the Amendment, Stanford has advanced us a total of $1,200,000 in four installments of $300,000 on November 3,
2006; November 6, 2006; November 10, 2006 and November 13, 2006, respectively.

Stanford is our principal
shareholder, owning 71.9% of our issued and outstanding common stock (assuming conversion of all preferred stock) at September 30, 2006, and has funded our operations since inception. The Amendment provides for us to submit a request for funding and
Stanford has the right to accept or reject any requests. If Stanford was not to enter into this Amendment, our ability to operate the business at current operating levels could be impacted and we would be required to restructure our existing debt
and/or raise capital through the issuance of our debt or equity securities.

The financial instruments discussed above were accounted for
in accordance with 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 preferred stock is considered permanent equity. The warrants and conversion option are also components of equity and were not determined to be derivative liabilities in accordance with the provisions of FASB Statement No, 133
Accounting for Derivative Instruments and Hedging Activities (SFAS 133) or EITF 00-19 Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock.

Stanford is the owner of 71.9% of our issued and outstanding common stock (assuming conversion of all preferred stock) at September 30, 2006.
Stanford is the owner of all of our issued and outstanding preferred stock.

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

Accounts receivable
at September 30, 2006 was $5.6 million, as compared to $4.7 million at December 31, 2005, an increase of 18.7%. This increase is primarily due to the addition of accounts receivable from ForeFront Burton of $1.3 million. Days sales
outstanding (DSO) were 63.2 days at September 30, 2006, compared with 69.7 days at December 31, 2005. 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.

Inventories at September 30, 2006 were $7.0 million, as compared to $5.0 million at December 31, 2005, an increase of 40.7%. This increase is primarily due to the addition of inventory for ForeFront Burton
of $1.5 million, as well as normal, seasonal differences in inventory levels. On a rolling four quarter basis, inventory turns were 3.8 times at September 30, 2006, as compared to 3.7 times at December 31, 2005.

Accounts payable and accrued expenses were $6.9 million at September 30, 2006, as compared to $4.1 million at December 31, 2005. The primary
reasons for this increase are the addition of amounts for ForeFront Burton, ForeFront Crellin and Multimedia of $1.8 million, accrued severance expense for two former officers of $0.2 million and legal costs associated with our acquisition of
ForeFront Burton of $0.1 million.

We expended funds for capital expenditures of $0.5 million for property and equipment during the nine
months ended September 30, 2006.

Critical Accounting Policies

Our significant accounting policies are more fully described in our latest Annual Report on Form 10-KSB. Certain of our accounting policies require the application of significant judgment by management in applying the
requirements of certain accounting standards as well as selecting 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, 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 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:



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Revenue Recognition

We recognize sales when products are shipped to our customers or when services are rendered. Sales are only recognized for arrangements with customers in which (1) there is persuasive evidence of a contract or
agreement which sets forth the terms of the arrangement; (2) services have been rendered; (3) our prices are fixed, determinable and agreed upon; and (4) collectibility is reasonably assured. 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, gross profit and net income 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.

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:



| |  |  | significant underperformance relative to expected historical or projected future operating results;
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | significant negative industry or economic trends;
| | - |  | -------------------------------------------------



| |  |  | significant decline in the our stock price for a sustained period; and
| | - |  | ----------------------------------------------------------------------



| |  |  | 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 primarily 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 and Intangibles

Goodwill represents the excess of the purchase price of an acquired enterprise or assets over the fair values of the identifiable
assets acquired and liabilities assumed. Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of goodwill or the
intangible asset 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.



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Income Taxes

We account for income taxes under SFAS No. 109 Accounting for Income Taxes (SFAS 109). Under SFAS 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 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 February 2006,
the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard 155 Accounting for Certain Hybrid Financial Instruments (SFAS 155), which eliminates the exemption from applying
SFAS 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments. SFAS 155 also allows the election of fair value measurement at acquisition, at issuance, or when
a previously recognized financial instrument is subject to a remeasurement event. Adoption is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. Early
adoption is permitted. The adoption of SFAS 155 is not expected to have a material effect on our consolidated financial position, results of operations or cash flows.

In March 2006, the FASB issued Statement of Financial Accounting Standard 156 Accounting for Servicing of Financial Assets (SFAS 156), which requires all separately recognized servicing assets
and servicing liabilities be initially measured at fair value. SFAS 156 permits, but does not require, the subsequent measurement of servicing assets and servicing liabilities at fair value. Adoption is required as of the beginning of the first
fiscal year that begins after September 15, 2006. Early adoption is permitted. The adoption of SFAS 156 is not expected to have a material effect on our consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Accounting for Fair Value Measurements (SFAS 157). SFAS 157 defines fair
value, and establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure about fair value measurements. SFAS 157 is effective for financial statements issued subsequent to November 15, 2007.
We do not expect the new standard to have a material impact on our financial position, results of operations or cash flows.

In September
2006, the FASB issued SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans (SFAS 158). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income
of a business entity or changes in unrestricted net assets of a not-for-profit organization. SFAS 158 also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited
exceptions. SFAS 157 is effective for the year ended December 31, 2006. We do not expect the new standard to have a material impact on our financial position, results of operations or cash flows.



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Item 3. Controls and Procedures

Evaluation of our Disclosure Controls and Internal
Controls

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and the Chief Financial Officer, of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are effective for gathering, analyzing and disclosing the information that we are required to disclose in the reports we file under the Securities Exchange Act of 1934. Our Chief Executive Officer and Chief
Financial Officer also concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to our company required to be included in our periodic SEC filings.

During the first quarter of 2006, our management determined that we did not maintain effective controls over the timeliness of our month-end close
processes, which we determined to be a significant deficiency. This deficiency resulted in delays in the preparation of the monthly financial reports and certain adjustments to these reports. We continue to remedy this condition by ensuring that we
have sufficient personnel to assist in the timely and accurate preparation of monthly reports. In addition, we are continuing to enhance our month-end closing procedures.

During 2005, our management, with the participation of our Chief Executive Officer and our 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 on the evaluation, our independent registered public accountants reported to our board of directors certain matters involving internal controls that were considered to be significant
deficiencies. There was a significant deficiency regarding contract negotiation and approval, including potential conflicts of interest, and a significant deficiency with respect to the prior approval of sales outside of pre-approved pricing
parameters. We continue to remedy these conditions by improving our controls and procedures regarding these two areas, including issuing policies and procedures in these areas. The contract negotiation and approval, including potential conflicts of
interests, and the approval of sales outside of pre-approved pricing parameters are no longer considered to be significant deficiencies. In general, other internal control concerns resulted from the lack of segregation of duties due to our small
size. Wherever possible, compensating controls have been established.

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 Chief Financial Officer have concluded that the controls and procedures evaluated are effective.



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##### Table of Contents

Part II  Other Information

Item 1. Legal Proceedings

Incident to our business activities, we may at times be parties to legal
proceedings, lawsuits and claims. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. Management believes at this time there are no ongoing matters which will have a material adverse effect upon our
consolidated financial position or annual results of operations.

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

During the three months ended
September 30, 2006, under the terms of the Securities Purchase Agreement, Stanford acquired an additional 1,600,000 shares of Series B Preferred Stock and Warrants to purchase 480,000 shares of our common stock for $3,200,000 with ten
installments as illustrated in the following table:



|                   |  |                           |  |                   |  |                     |          
|------------------ |  | ------------------------- |  | ----------------- |  | ------------------- | ---------
|Date               |  | Preferred Shares Acquired |  | Warrants Acquired |  | Total Consideration
|July, 3, 2006      |  | 125,000                   |  | 37,500            |  | $                   | 250,000  
|July 21, 2006      |  | 125,000                   |  | 37,500            |  |                     | 250,000  
|July 28, 2006      |  | 200,000                   |  | 60,000            |  |                     | 400,000  
|August 4, 2006     |  | 75,000                    |  | 22,500            |  |                     | 150,000  
|August 22, 2006    |  | 225,000                   |  | 67,500            |  |                     | 450,000  
|August 29, 2006    |  | 225,000                   |  | 67,500            |  |                     | 450,000  
|September 5, 2006  |  | 125,000                   |  | 37,500            |  |                     | 250,000  
|September 11, 2006 |  | 150,000                   |  | 45,000            |  |                     | 300,000  
|September 18, 2006 |  | 150,000                   |  | 45,000            |  |                     | 300,000  
|September 25, 2006 |  | 200,000                   |  | 60,000            |  |                     | 400,000  
|                   |  |                           |  |                   |  |                     |          
|                   |  | 1,600,000                 |  | 480,000           |  | $                   | 3,200,000
|                   |  |                           |  |                   |  |                     |          

Stanford assigned half of the 480,000 Warrants issuable under the Agreement to five employees of an affiliate
pursuant to a warrant assignment agreement. All 480,000 Warrants were exercised by Stanford and the five employees in October 2006.

In
October 2006, Stanford acquired 200,000 shares of Series B Preferred Stock and Warrants to purchase 60,000 shares of our common stock for $400,000 received on October 2, 2006. Stanford assigned half of the 60,000 Warrants issuable under the
Agreement to five employees of an affiliate pursuant to a warrant assignment agreement. All 60,000 Warrants were exercised by Stanford and the five employees in October 2006.

On September 12, 2006, in connection with the acquisition of the assets of Burton Golf, Inc. (Burton), we issued 250,000 shares of
our common stock to Burton as part of the purchase price for the assets. The shares of common stock issued to Burton were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. The shares of common
stock contain a legend restricting the transferability absent registration or applicable exemption.

In November 2006, we negotiated an
amendment to the Purchase Agreement with Stanford (the Amendment), which is subject to final execution by both parties. The proposed Amendment provides for the purchases of up to an aggregate of 2,000,000 shares of our Series C Preferred
Stock and issuance of 5-year warrants to purchase up to 1,200,000 shares of our common stock at an exercise price of $0.001 per share in various installments, in order to provide us with funds for acquisitions and working capital, subject to
Stanfords approval of each transaction in its sole discretion. Initially, each share of Class C Preferred Stock is convertible into one share of our common stock. Under the Amendment, Stanford will have the right to buy the Series C Preferred
Stock and warrants covered by the Amendment for an aggregate purchase price of $8,000,000. In addition, under the terms of the Amendment, we are required to file a registration statement with the SEC covering the resale of the shares of our common
stock underlying the Series C Preferred Stock and the warrants. In contemplation of the transactions set forth in the Amendment, Stanford has advanced us a total of $1,200,000 in four installments of $300,000 on November 3,
2006; November 6, 2006; November 10, 2006 and November 13, 2006, respectively.

Item 3. Defaults Upon Senior Securities

None

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

None



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##### Table of Contents

Item 5. Other Information

None

Item 6. Exhibits

Exhibits:



|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 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002.
|---- | ------------------------------------------------------------------------------------------------



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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 14, 2006



|                         |  |                        
|------------------------ |  | -----------------------
|FOREFRONT HOLDINGS, INC.
|                         | 
|By:                      |  | /s/ Michael S. Hedge   
|                         |  | Michael S. Hedge       
|                         |  | Chief Executive Officer
|                         | 
|By:                      |  | /s/ Randall J. Frapart 
|                         |  | Randall J. Frapart     
|                         |  | Chief Financial Officer



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                 
|----------- |  | ------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                     
|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 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002.



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