Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB/A
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2008
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________TO _________
COMMISSION FILE NUMBER: 000-8880
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THE BANKER'S STORE, INC.
(Exact name of registrant as specified in its charter)
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NEW YORK 22-3755756
State or Other Jurisdiction (I.R.S. Employer
Of Incorporation or Organization Identification No.)
1535 MEMPHIS JUNCTION ROAD, BOWLING GREEN, KY 42101
(Address, including zip code, of principal executive offices)
(270) 781-8453
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, par value $0.01, 27,754,781 shares outstanding as of
August 31, 2008.
THE BANKER'S STORE, INC.
FORM 10-QSB
AUGUST 31, 2008
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See financial statements beginning on page F-1.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION
The matters discussed in this management's discussion and analysis or plan of
operations contain forward-looking statements that involve risks and
uncertainties. The Company's actual results in its two operating segments
could differ materially from those discussed here. Factors that could cause
or contribute to such differences are discussed elsewhere in this quarterly
report on Form 10-QSB. The Company disclaims any intent or obligation to
update these forward-looking statements.
OVERVIEW
The Banker's Store, Inc. (the "Company") was established in 1968. It remained
dormant for many years until it completed the acquisition of B.G. Banking
Equipment, Inc., ("B.G. Banking") and Financial Building Equipment Exchange,
Inc., ("FBEE"). These acquisitions introduced the Company to the business of
buying, selling, refurbishing and trading new and refurbished financial
equipment for banks and other financial institutions. Pursuant to the June
2008 Board of Directors resolution the Company expanded its Corporate
Information Statement to pursue other lines of business including security,
ecommerce, power, energy and transportation. In conjunction with such
change, the Company entered into an agreement in August 2008 with AFC
Holdings, Inc. and subsidiaries that gave the Company the right to certain
servicing and maintenance agreements, subcontracting rights, intellectual
properties and associated personnel. These assumptions of rights expanded
the Company's existing business lines to new markets; and introduced security
integration and sophisticated access controls significantly altering both the
business of the Company and its geographic footprint. The Company markets
products throughout the United States primarily through direct sales and
other distributors supported by its direct sales force and soliciting new
contacts through its presence on the Internet.
The Company anticipates that its results of operations may fluctuate for the
foreseeable future due to several factors, including whether and when new
products at competitive prices are obtained and sources of good used banking
and banking related equipment and furniture become available at favorable
prices, market acceptance of current or new products, delays, or
inefficiencies, shipment problems, seasonal customer demand, the timing of
significant orders, competitive pressures on average selling prices and
changes in the mix of products sold.
Operating results would also be adversely affected by a downturn in the
market for the Company's current and future products, order cancellations, or
order rescheduling or remanufacturing or delays. The Company purchases and
resells new merchandise and remanufactures and ships its other products
shortly after receipt of orders. The Company has not developed a significant
backlog for such products and does not anticipate developing a material
backlog for such products in the future. The Company may not be able to
sustain revenue growth on a quarterly or annual basis.
The Company has increased its operating expenses, primarily for personnel and
activities supporting newly-introduced products, new product development and
entering new markets. The Company's operating results have been and will
continue to be adversely affected if sales do not correspondingly increase or
if product development efforts are unsuccessful or are subject to delays.
During the quarter ended August 31, 2008, the Company entered into an
Acquisition Agreement and Plan of Merger with Chesscom Consultants, Inc. The
Company agreed to acquire 100% of the issued and outstanding shares of
Chesscom Consultants, Inc. in exchange for 12,000,000 shares of the Company's
common stock. The Company continues the work necessary to reach a valuation
for the purchase of Chesscom Consultants, Inc and the Company's commons
shares issued for such purchase. At this time a third party valuation is
being considered. The purchase of Chesscom Consultant's, Inc. was previously
disclosed in the Form 8-K of June 18, 2008. Until such time that the
valuation is complete such assets of Chesscom Consultant's Inc. and the
Company's common shares thus issued are not accounted for in the financial
statements of the Company. The transaction close is pending completion of
the valuation.
SIGNIFICANT EVENTS
On July 12, 2008, the Company issued 12,000,000 shares of common stock to the
shareholders of Chesscom Consultants, Inc. These shares were issued in
exchange for 100% of the issued and outstanding shares of Chesscom
Consultants, Inc. As then-current management had determined that Chesscom
had performed all conditions precedent to closing, the shares were issued.
The conditions precedent to closing to be satisfied by Chesscom included
approval by the Board of Directors and the Shareholders of Chesscom, the
absence of any material adverse changes in the financial condition of
Chesscom, and the delivery of certain enumerated documents, which included
(1) the Corporate Book of Chesscom, (2) a list of states in which Chesscom
was authorized to do business, (3) a list of authorized and outstanding
shares of Chesscom, (4) The Articles of Incorporation and Bylaws of
Chesscom, (5) any and all contracts and agreements tha Chesscom is party to,
(6) a list of employees of Chesscom, (7) a list of any and all patents,
trademarks, trade names, copyrights, and applications for same, (8) a list
of all financing and/or loan agreements to which Chesscom is a party, (9) a
list of all bank accounts of Chesscom, and (10) a written certification by
the Chief Executive Officer of Chesscom stating that, as of the date of
closing, all representations and warranties contained within the agreement
are true and accurate. The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On August 19, 2008 the Company entered into an Agreement for the Servicing,
Subcontracting and Assignment of the Rights to Certain Assets with AFC
Holdings, Inc., and related subsidiaries Engage Technologies, Inc. and AFC
Systems, Inc. Pursuant to the Agreement the Company has increased its
finance and banking business lines through significant new clients, added 13
new state markets, and added the new business lines of access controls and
security integration inclusive of intellectual property and clients.
Further, the Company received the rights to the customers and clients; the
maintenance and service agreements for ATMs, other financial institution
services and access control systems. In exchange for such rights the Company
agreed to a maximum payment of $135,000 and to issue warrants on common stock
valued at a maximum of $400,000. The closing of such transaction is to occur
six months plus one day subsequent to August 19, 2008.
In August 2008, the Company issued 800,000 shares of common stock in
settlement of the note payable of $138,405 and the accrued compensation of
$263,100 attributable to the principal shareholder, Paul D. Clark, from prior
years. Such amounts totaled approximately $401,505. This transaction
resulted in a gain on extinguishment of debt amounting to $345,505. These
shares were issued pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933, as amended.
SUMMARY OF SIGNIFICANT ACCOUNTING ESTIMATES, RELATED PARTY TRANSACTIONS
AND CONTINGENCIES:
Significant accounting estimates:
The Company's discussion and analysis of its financial condition and results
of operations are based upon its condensed consolidated financial statements,
which have been prepared in conformity with accounting principles generally
accepted in the United States of America. The preparation of these condensed
consolidated financial statements requires the Company to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosures of contingent assets and liabilities.
On an on-going basis, the Company evaluates its estimates, including those
related to accounts receivable, inventories, equipment and improvements,
income taxes and contingencies. The Company bases its estimates on historical
experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The accounting estimates
used as of May 31, 2008 and as outlined in its previously filed Form 10-KSB
have been applied consistently for the three months ended August 31, 2008.
Related party transactions:
The Company has entered into an operating lease with a principal stockholder,
Paul Clark, for the lease of an aggregate of 25,000 square feet of office and
warehouse space located in Bowling Green, Kentucky. The lease provides for a
monthly rent plus maintenance expenses and expires in August 2009.
Additionally, warehouse space approximating 7,000 square feet is leased month
to month from Mr. Clark.
In August 2008, the Company issued 800,000 shares of common stock in
settlement of the note payable of $138,405 and the accrued compensation of
$263,100 attributable to the principal shareholder, Paul D. Clark, from prior
years. Such amounts totaled approximately $401,000. This transaction
resulted in a gain on extinguishment of debt amounting to $345,505.
Contingencies:
Litigation:
On March 7, 2000, the Company filed an action in the Supreme Court of the
State of New York, County of New York, against Stamford Financial Consulting,
Inc., Taurus International Investment, Inc., George C. Bergleitner, Jr.,
Alexander C. Brosda and Andrew Seim (the "New York Action"), seeking an
amount of not less than $1.7 million for breach of fiduciary duty, breach of
contract, conversion and unjust enrichment, and seeking an accounting of
defendants' books and records. The action arises out of B. G. Banking's
Confidential Private Placement Memorandum dated January 31, 1998, prepared by
Stamford Financial, for the sale of 3,000,000 shares of B. G. Banking common
stock at $1.00 per share. On April 5, 2000, defendant George C. Bergleitner
served a counterclaim alleging that the Company failed to have 180,000 shares
of stock transferred without any legal endorsement, pursuant to Rule 144(k)
under the Securities Exchange Act of 1934, as amended. The counterclaim seeks
damages of $900,000 based upon the value of the stock at the highest amount
at which it traded, which is alleged to be $5.00 per share.
In December 2000, the court entered a default judgment against Taurus
International Investment, Inc., Alexander C. Brosda and Andrew Seim leaving
only George Bergleitner and his company, Stamford Financial to defend the
lawsuit.
By order entered on May 4, 2001, the Court granted a motion filed by Stamford
Financial Consulting, Inc. and George C. Bergleitner, to transfer the New
York Action to the New York State Supreme Court, Delaware County, and the
action is continuing there against these two defendants. The Company has
filed a motion to dismiss the counterclaim.
On September 25, 2008, the parties agreed to resolve the dispute(s) through a
confidential settlement agreement, with no admission of liability by either
party. The parties have filed a notice of dismissal of all actions referred
to above with the Court.
RESULTS OF OPERATIONS
The following table sets forth operating data as a percentage of revenue for
the three months ended August 31, 2008 and 2007:
Three months ended
August 31,
2008 2007
Net sales 100.0% 100.0%
Cost of goods sold 86.4% 66.0%
Gross profit 13.6% 34.0%
Selling, general and administrative expenses 53.2% 37.5%
Income (loss) from operations -39.6% -3.5%
Other 63.4% -0.2%
Income before income tax provision 23.8% -3.7%
Income tax provision 0.0% 0.0%
Net income (loss) 23.8% -3.7%
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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31, 2008 AS COMPARED
TO THE THREE MONTHS ENDED AUGUST 31, 2007.
Revenues were approximately $524,956 for the three months ending August 31,
2008 as compared to approximately $830,738 for the three months ended August
31, 2007 reflecting a decrease of approximately $305,782, or 36.8%. The
decrease in revenues during the three months ending August 31, 2008 is due to
the continued effect of economic slowdown in the financial industry.
Cost of goods sold for the three months ended August 31, 2008 were
approximately $453,576 or 86.4% of net sales as compared to approximately
$548,547 or 66% of net sales for the three months ended August 31, 2007.
Gross profit decreased during the three months ending August 31, 2008 to
approximately $71,381, or 13.6% of net sales as compared to the three months
ended August 31, 2007 of $282,190 or 34% of net sales. This decrease in gross
profit is primarily related to the expansion into the Florida market with the
aforementioned agreement with AFC Holdings, Inc.
Selling, general and administrative expenses were approximately $279,476, or
53% of net sales for the three months ending August 31, 2008 as compared to
approximately $311,198, or 37% of net sales for the three months ended August
31, 2007 reflecting a decrease of approximately $31,722. This decrease is
due primarily to a reduction of compensation.
Other income for the three month period ended August 31, 2008 was an increase
of $332,598, as opposed to a decrease of $2,068 from the prior year period of
August 31, 2007 due to a gain on extinguishment of debt to the principal
stockholder.
As a result of the aforementioned, the Company incurred a net gain during the
three months ending August 31, 2008 of approximately $190,554, as opposed to
a net loss of approximately $31,075 for the three months ending August 31,
2007.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through internal cash
flows from operations.
The Company had cash and cash equivalents of $109,749 and working capital of
$263,861 at August 31, 2008. At August 31, 2008, the Company's working
capital had increased by $189,536 from the year ended May 31, 2008. The
increase in working capital was primarily caused by a retirement of a note
payable and accrued compensation regarding the principal shareholder in
exchange for common stock.
The Company's desire to expand its customer base, enter additional markets
and introduce new lines of business was partially achieved during the quarter
ended August 31, 2008. The Company will continue evaluating opportunities to
grow and expand through mergers or acquisitions, and may hire additional
sales personnel in order to reach potential customers in new markets and
additional customers in existing markets.
The Company's ability to effect any of these strategies or to take any of
these steps will depend on a number of factors including, but not limited to,
the Company's ability to generate sufficient cash flow or obtain sufficient
capital on reasonable terms; the Company's ability to locate and hire
qualified personnel on satisfactory terms and conditions, the availability of
attractive candidates for merger or acquisition on reasonable terms and
conditions; continued demand for the Company's products and services; the
Company's ability to withstand increased competitive pressures; and economic
conditions within the industries and markets the Company now serves. There is
no assurance that the Company will be able to meet any or all of its goals.
The Company believes that its available cash and cash from operations will be
sufficient to satisfy the Company's funding needs through at least August 31,
2009. However, if cash generated from operations is insufficient to satisfy
the Company's working capital and capital expenditure requirements, the
Company may be required to sell additional equity or debt securities or
obtain additional credit facilities. There can be no assurance that such
additions, if needed, will be available on satisfactory terms, if at all.
Furthermore, any additional equity financing may be substantially dilutive to
stockholders, and debt financing, if available, may include restrictive
covenants and also result in substantial dilution to stockholders. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's new products
and products under consideration are successfully developed, gain market
acceptance, become and remain competitive as well as the costs and timing of
further expansion of sales and marketing. The failure by the Company to raise
capital on acceptable terms when needed could have a material adverse effect
on the Company's business, financial condition and results of operations.
ITEM 3. CONTROLS AND PROCEDURES
(a) DISCLOSURE CONTROLS AND PROCEDURES. As of August 31, 2008, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures. Cynthia Hayden, the Company's President, and David
Nail, the Company's Chief Financial Officer, supervised and participated in
this evaluation. Based on this evaluation, Ms. Hayden and Mr. Nail concluded
that, as of the date of their evaluation, the Company's disclosure
controls and procedures were effective.
(b) CHANGES IN INTERNAL CONTROLS. There were no changes in internal controls
over financial reporting known to the President that occurred during the
period covered by this report that have materially affected, or are likely to
materially effect, the Company's internal control over financial reporting.
PART II. - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's ongoing legal proceedings which began in March of 2000 against
Stamford Financial Consulting, Inc. and George C. Bergleitner, Jr. have been
settled. On September 25, 2008, the parties agreed to resolve the dispute(s)
through a confidential settlement agreement, with no admission of liability
by either party. The parties have filed a notice of dismissal of all actions
referred to above with the Court.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
a)Exhibits
Exhibit Number Description
31.1 Certification Pursuant to Rule 13a-14(a) of Thomas C. Cook,
Principal Executive Officer and Director
31.2 Certification of Thomas C. Cook
7
FINANCIAL STATEMENTS
THE BANKER'S STORE, INC. AND SUBSIDIARIES
I N D E X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS AUGUST 31, 2008
(UNAUDITED) AND MAY 31, 2008 F-2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED
AUGUST 31, 2008 AND 2007 (UNAUDITED) F-3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED
AUGUST 31, 2008 AND 2007 (UNAUDITED) F-4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) F-5 - F-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PART II. OTHER INFORMATION
SIGNATURES
F-1
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AUGUST 31, 2008 (Unaudited) AND MAY 31, 2008
CONDENSED CONSOLIDATED BALANCE SHEETS
AUGUST 31, MAY 31,
ASSETS 2008 2008
Current Assets:
Cash and cash equivalents $ 109,749 $ 149,365
Accounts receivable, net of allowance for
bad debts of $4,043 147,853 131,820
Inventories 568,807 578,790
Prepaid expenses and other current assets 85,899 62,461
Total current assets 912,308 922,436
Equipment and improvements, net 70,788 69,181
Other assets 831 831
Totals $ 983,927 $ 992,448
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ - $ -
Accounts payable and accrued expenses 371,230 137,377
Customer deposits 277,216 305,115
Note payable - principal stockholder - 142,519
Accrued compensation - principal stockholder - 263,100
Total current liabilities 648,446 848,111
Long-term debt, net of current portion - -
Total liabilities 648,446 848,111
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value; 200,000,000
shares authorized; 27,754,781 shares
issued and outstanding 277,548 149,548
Additional paid-in capital 492,529 553,889
Less: treasury stock 2,000 shares (at cost) (2,000) (2,000)
Accumulated (deficit) earnings (432,596) (557,100)
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Total stockholders' equity 335,481 144,337
Totals $ 983,927 $ 992,448
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The accompanying notes are an integral part of these financial statements.
F-2
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AUGUST 31, 2008 AND 2007 (Unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
AUGUST 31,
2008 2007
Revenue $ 524,956 $ 830,738
Cost of goods sold 453,576 548,547
Gross profit 71,380 282,191
Selling, general and administrative expenses 279,476 311,198
Income (loss) from operations (208,096) (29,007)
Other income (expense):
Interest income (expenses) 241 2,027
Interest expense (2,508) (4,095)
Gain on extinguishment of debt to
princial stockholder 334,865
Total other income (expense): 332,598 (2,068)
Income before income tax provision 124,502 (31,075)
Income tax provision - -
Net income $ 124,502 $ (31,075)
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Basic earnings (loss) per common share $ 0.01 $ (0.00)
Diluted earnings (loss) per share $ 0.01 $ (0.00)
The accompanying notes are an integral part of these financial statements.
F-3
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 2008 AND 2007 (Unaudited)
AUGUST 31,
2008 2007
Operating activities
Net income (loss) $ 124,502 $ (31,075)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 5,015 5,149
Stock based compensation - 4,333
Changes in operating assets and liabilities:
Accounts notes and contracts receivable (16,032) (130,350)
Inventories 9,982 14,506
Prepaid expenses and other current assets (23,437) 46,876
Accounts payable and accrued expenses 233,853 147,112
Customer deposits (27,899) (138,629)
Net cash (used in) operating activities 305,984 (82,078)
Investing activities
Capital expenditures, net of writeoffs (6,621) (6,065)
Net cash (used in) investing activities (6,621) (6,065)
Financing activities
Increase (decrease) in long-term debt, net - (1,781)
Proceeds from long-term debt - -
Loan payable - Borrowing from principal stockholder (405,619) (11,394)
Common stock issued 8,000 -
Purchase of Treasury stock -
Additional paid in capital 58,640 -
Net cash provided by (used in) financing activities (338,979) (13,175)
Net decrease in cash and cash
Equivalents (39,616) (101,318)
Cash and cash equivalents, beginning of period 149,365 357,323
Cash and cash equivalents, end of period $ 109,749 $ 256,005
---------- ----------
Supplemental disclosure of cash flow information:
Interest paid $ 2,508 $ 4,095
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Income taxes paid $ - $ -
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The accompanying notes are an integral part of these financial statements.
F-4
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of presentation:
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting of
normal recurring accruals, necessary to present fairly the financial position
of The Banker's Store, Inc. and Subsidiaries (the "Company") as of August 31,
2008 and the Company's results of operations and cash flows for the three
months ended August 31, 2008 and 2007. Pursuant to the rules and regulations
of the United States Securities and Exchange Commission (the "SEC"), certain
information and disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed in or omitted from these
consolidated financial statements unless significant changes have taken place
since the end of the most recent fiscal year. Accordingly, these unaudited
condensed consolidated financial statements should be read in conjunction
with the audited consolidated financial statements as of May 31, 2008 and the
notes thereto (the "Audited Financial Statements") and the other information
included in the Company's Annual Report on Form 10-KSB (the "Form 10-KSB")
for the year ended May 31, 2008.
The consolidated results of operations for the three months ended August 31,
2008 are not necessarily indicative of the results to be expected for the
full year.
Note 2 - Earnings (loss) per common share:
The Company presents "basic" earnings (loss) per share and, if applicable,
"diluted" earnings per share pursuant to the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share". Basic earnings
(loss) per share is calculated by dividing net income or loss by the weighted
average number of shares outstanding during each period. The calculation of
diluted earnings per share is similar to that of basic earnings per share,
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially dilutive
common shares were issued during the period. The weighted average numbers of
shares for determining basic earnings per share were 15,754,781 in 2008. The
weighted average numbers of shares for determining diluted earnings per share
were 15,754,781 in 2008.
Note 3 - Income taxes:
The Company's estimated federal and state income tax rate is 40 percent. Due
to the uncertainties related to, among other things, the extent and timing of
the Company's future taxable income, the Company offset the deferred tax
assets attributable to the potential benefits of approximately $50,000 from
the utilization of net operating loss carryforwards and other deferred tax
assets by an equivalent valuation allowance during the three months ending
August 31, 2008. Total deferred tax assets were approximately $197,000 which
was offset by an equivalent valuation allowance as of August 31, 2008.
As a result of the corresponding decrease in the valuation allowance and
deferred tax assets of $50,000 during the three months ended August 31, 2008,
the Company did not recognize any income taxes in the accompanying condensed
consolidated statements of operations to offset its pre-tax income and loss
in the periods.
F-5
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 4 - Contingencies:
Litigation:
On March 7, 2000, the Company filed an action in the Supreme Court of the
State of New York, County of New York, against Stamford Financial Consulting,
Inc., Taurus International Investment, Inc., George C. Bergleitner, Jr.,
Alexander C. Brosda and Andrew Seim (the "New York Action"), seeking an
amount of not less than $1.7 million for breach of fiduciary duty, breach of
contract, conversion and unjust enrichment, and seeking an accounting of
defendants' books and records. The action arises out of B. G. Banking's
Confidential Private Placement Memorandum dated January 31, 1998, prepared by
Stamford Financial, for the sale of 3,000,000 shares of B. G. Banking common
stock at $1.00 per share. On April 5, 2000, defendant George C. Bergleitner
served a counterclaim alleging that the Company failed to have 180,000 shares
of stock transferred without any legal endorsement, pursuant to Rule 144(k)
under the Securities Exchange Act of 1934, as amended. The counterclaim seeks
damages of $900,000 based upon the value of the stock at the highest amount
at which it traded, which is alleged to be $5.00 per share.
In December 2000, the court entered a default judgment against Taurus
International Investment, Inc., Alexander C. Brosda and Andrew Seim leaving
only George Bergleitner and his company, Stamford Financial to defend the
lawsuit.
By order entered on May 4, 2001, the Court granted a motion filed by Stamford
Financial Consulting, Inc. and George C. Bergleitner, to transfer the New
York Action to the New York State Supreme Court, Delaware County, and the
action is continuing there against these two defendants. The Company filed a
motion to dismiss the counterclaim.
On September 25, 2008, the parties agreed to resolve the dispute(s) through a
confidential settlement agreement, with no admission of liability by either
party. The parties have filed a notice of dismissal of all actions referred
to above with the Court.
Note 5 - Segment information:
The Company has adopted the provisions of Statements of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information ("SFAS 131"). Pursuant to the provisions of SFAS 131, the Company
is reporting segment sales, cost of goods sold, gross margins and inventories
in the same format reviewed by the Company's management (the "management
approach"). The Company has two reporting segments: "Banking Equipment",
"Office Equipment." The Banking Equipment segment is comprised of the
operations connected with the buying, selling and trading of new and
refurbished financial equipment for banks and other financial institutions.
The Office Equipment segment is comprised of buying and selling office
equipment and supplies.
F-6
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Revenues and other related segment information follows for the three months
ended August 31, 2008 and 2007:
THE BANKER'S STORE, INC. AND SUBSIDIARIES
DISCLOSURE OF REPORTED SEGMENT PROFIT OR LOSS, AND SEGMENT ASSETS
THREE MONTHS ENDED THREE MONTHS ENDED
AUGUST AUGUST
2008 2007
Banking Office Banking Office
Equipment Equipment Totals Equipment Equipment Totals
---------- --------- ---------- ---------- --------- ----------
Revenues from
external
customers $ 470,838 $ 54,118 $ 524,956 $ 696,906 $ 133,832 $ 830,738
Segment
profit (loss) 134,599 (10,097) 124,502 (25,739) (5,336) (31,075)
Segment
Assets $ 916,946 $ 66,980 $ 983,926 $1,275,723 $ 88,647 $1,364,370
F-7
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE BANKER'S STORE, INC.
By: /s/ Thomas C. Cook
------------------
Thomas C. Cook
Principal Executive Officer and Director
Dated : November 23, 2009
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