UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





——————————


FORM
10-Q


——————————





x QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)


OF
THE SECURITIES ACT OF 1934




FOR
THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2008





OR





o 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





—————————


THE
BANKER'S STORE, INC.


(Exact
name of registrant as specified in its charter)


—————————





NEW
      YORK
              
              22-3755756State
      or Other Jurisdiction
                Of
      Incorporation or Organization
              
              (I.R.S.
      Employer
                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 o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
the Act).  See the definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):




Large
      accelerated filer  ̈
                    Accelerated
      filer  ̈
                    Non-accelerated
      filer  ̈
                    Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b 2 of the Exchange Act).




Yes
  o    No  x





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, 15,754,781 shares outstanding as of November 30,
2008.





THE
BANKER'S STORE, INC.




FORM
10-Q




NOVEMBER
30, 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 RESULTS
OF OPERATIONS




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-Q. 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.


2


On June
11, 2008, the Company entered into an Acquisition Agreement and Plan of Merger
with Chesscom Consultants, Inc. ("Chesscom") that contemplated the merger
of Chesscom with and into the Company in exchange for 12 million shares of
Company common stock.  This transaction has not yet been completed due
to a continuing evaluation of certain questions regarding the value of the
assets of Chesscom, the structure of the transaction, and various other related
issues.  The holders of a majority of the outstanding shares of common
stock of the Company have raised various concerns regarding the
proposed Chesscom transaction and have determined that the transaction
is not in the best interests of the Company.  On January 15, 2009, the
majority stockholders executed a written consent action providing for the
removal of Steven K. Wilson, Joan Jolitz, and Allison Belcher from the board of
directors of the Company.  Such written consent action states
that the majority stockholders believe that such removal is necessary to prevent
these three directors from causing the Company to complete the Chesscom
transaction.  The removal of the directors will be effective 20
days after the delivery to the Company's shareholders of an SEC-filed
Information Statement relating to the consent action.  As a
result, although the agreement with Chesscom has not yet been
terminated, management does not believe that the transaction will
ultimately be completed.  On July 12, 2008, 12 million shares of Company
common stock were issued purportedly pursuant to the
Chesscom transaction, although management believes that these shares were
prematurely issued because the Chesscom transaction had not been completed, and
management intends to evaluate the Company's rights with respect
to pursuing the return of those shares.  Therefore,
the Company's financial statements included in this report on Form
10-Q do not reflect the issuance of those shares, as such shares are
not "validly issued" under New York corporate law




The
consulting agreement dated May 1, 2008 between the company and ZBI of Michigan
and Woodmoor Associates, LLC was not renewed and was terminated at the end of
the six month contractual period.





GOING
CONCERN




We have
experienced significant operating losses over the last 18 months. Our net
operating loss for the six months ended November 30, 2008 was $718,750 and for
the prior fiscal year ended May 31, 2008 was $312,635,
respectively.  The Company has experienced losses from continuing
operations during the last two quarters and for the prior fiscal year and has an
accumulated deficit of $943,719 as of November 30, 2008.  Net cash used for
continuing operations for the six month period ended November 30, 2008 was
negative $519,827 and for the prior fiscal year ending May 31, 2008 was negative
$152,691.  As of November 30, 2008, the Company’s cash is negative and the
only principal source of liquidity is $802,033 of trade accounts
receivable.  Such conditions raise substantial doubt that the Company will
be able to continue as a going concern.  These operating results occurred
while the Company was completing the business combination and was transitioning
and combining the two operating divisions in Florida and
Kentucky.  The Company is taking measures to increase revenues,
continue to reduce operating costs, and generate positive cash flows from
operations.




We are
seeking additional sources of capital and actively seeking to restructure and/or
modify existing indebtedness.  The amount of funding that we seek and the
timing of such fundraising efforts will depend on the extent to which we are
able to increase revenues through obtaining additional purchase orders for our
products and/or the extent to which we can restructure or modify our
debt.  We cannot guarantee that adequate funds will be available when
needed, and if we do not receive sufficient capital, we may be required to alter
or reduce the scope of our operations.




SIGNIFICANT
EVENTS




On August
19, 2008 the Company entered into a business combination with AFC Holdings, Inc.
and related subsidiaries and AFC Systems, Inc.  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.
 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
Company has recorded the transaction with AFC Holdings, Inc, and related
subsidiaries as a business combination.  The Company acquired a small
amount of immaterial assets primarily furniture, fixture, and computers however
the Company did not acquire any stock or equity nor assume any liabilities or
contingencies.  The Company recorded in Other Assets approximately
$521,282 of Goodwill associated with the business combination and determined
that the Goodwill had a finite life of five years.  The Company has
used this five-year life as the amortization period and therefore has recognized
in this 10Q for period ending November 30, 2008 three months of amortization of
goodwill in the amount of $26,064 which is reflected in the General and
Administrative Expense line of the Statement of Operations.


3





Below is
a forecasted Statements of Operations for the three month and six month periods
ending November 30, 2008 and 2007, respectively and for the 12 month period
ended May 31, 2009 which incorporates the Company’s actual financial results for
those periods.  This forward looking statement should not be relied
upon as achievable results due the many factors affecting the Company and its
operations.  The Company disclaims any intent or obligation to update
these forward-looking statements.






THE
BANKER'S STORE, INC. AND SUBSIDIARIES





FORECASTED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


THREE
MONTHS ENDED NOVEMBER, 2008 AND 2007 (UNAUDITED)





THREE MONTHS ENDED
                              NOVEMBER 30,2008
                            
                            
                            2007Revenue
                            
                            $
                            1,455,898
                            
                            
                            $
                            4,213,546Income
      (loss) from operations
                            
                            
                            (510,656
                            )
                            
                            
                            (182,255
                            )Net
      income
                            
                            $
                            (511,123
                            )
                            
                            $
                            (167,685
                            )Basic
      earnings (loss) per common share
                            
                            $
                            (0.03
                            )
                            
                            $
                            (0.01
                            )Diluted
      earnings (loss) per share
                            
                            $
                            (0.03
                            )
                            
                            $
                            (0.01
                            )




THE
BANKER'S STORE, INC. AND SUBSIDIARIES
  FORECASTED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 SIX
MONTHS ENDED NOVEMBER, 2008 AND 2007 (UNAUDITED)
 
 SIX MONTHS ENDED
                                      NOVEMBER 30,2008
                                    
                                    
                                    2007Revenue
                                    
                                    $
                                    4,080,579
                                    
                                    
                                    $
                                    4,124,667Income
      (loss) from operations
                                    
                                    
                                    (739,747
                                    )
                                    
                                    
                                    64,119Net
      income
                                    
                                    $
                                    (407,616
                                    )
                                    
                                    $
                                    47,557$
                                    (0.03
                                    )
                                    
                                    $
                                    0.00Diluted
      earnings (loss) per share
                                    
                                    $
                                    (0.03
                                    )
                                    
                                    $
                                    0.00


4





THE
BANKER'S STORE, INC. AND SUBSIDIARIES





FORECASTED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


FOR
THE TWELVE MONTH PERIOD ENDED MAY 31, 2009 (UNAUDITED)





TWELVE MONTHS ENDED
                                              MAY 31, 2009Revenue
                                            
                                            $
                                            4,730,855Income
      (loss) from operations
                                            
                                            $
                                            (998,897
                                            )Net
      income
                                            
                                            $
                                            (673,056
                                            )Basic
      earnings (loss) per common share
                                            
                                            $
                                            (0.05
                                            )Diluted
      earnings (loss) per share
                                            
                                            $
                                            (0.04
                                            )




5




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 six months ended November 30, 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.




Contingencies:




Litigation:




The
Company has been served with a lawsuit by Woodmoor and Associates, LLC
(“Woodmoor”) whereby Woodmoor contends the Company owes Woodmoor $150,000
related to an alleged note payable.  On or about October 1, 2008
Woodmoor loaned the Company $150,000 to be used for working
capital.  The Company does not dispute the existence of the loan or
the amount thereof.  Woodmore alleges that the loan was due on demand, but
the Company believes that the payment schedule, or any other loan terms and
conditions, were ever agreed upon.  Until this matter is resolved, the
Company has recorded this loan in the financials of the Company as a Note
Payable to consultant.  The Company has secured counsel to represent the
Company in this matter




The
Company has been served with a lawsuit by Fortis Security (“Fortis”), whereby
Fortis contends the Company owes Fortis an outstanding balance of $6,804 related
to various equipment purchases.  The Company does not dispute that
this amount is owed to Fortis and expects to have the outstanding balance
resolved within the next 90 days.


6


RESULTS
OF OPERATIONS




The
following table sets forth operating data as a percentage of revenue for
the six months and three month periods ended November 30, 2008 and
2007:




Net
      sales
                                  
                                  
                                  100.0
                                  %
                                  
                                  
                                  100.0
                                  %
                                  
                                  
                                  100.0
                                  %
                                  
                                  
                                  100.0
                                  %Cost
      of goods sold
                                  
                                  
                                  97.7
                                  %
                                  
                                  
                                  65.9
                                  %
                                  
                                  
                                  101.8
                                  %
                                  
                                  
                                  65.6
                                  %Gross
      profit
                                  
                                  
                                  2.3
                                  %
                                  
                                  
                                  34.1
                                  %
                                  
                                  
                                  -1.8
                                  %
                                  
                                  
                                  34.4
                                  %Selling,
      general and administrative expenses
                                  
                                  
                                  38.6
                                  %
                                  
                                  
                                  40.4
                                  %
                                  
                                  
                                  33.3
                                  %
                                  
                                  
                                  44.9
                                  %Income
      (loss) from operations
                                  
                                  
                                  -36.3
                                  %
                                  
                                  
                                  -6.3
                                  %
                                  
                                  
                                  -35.1
                                  %
                                  
                                  
                                  -10.5
                                  %Other
                                  
                                  
                                  16.8
                                  %
                                  
                                  
                                  -0.3
                                  %
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  -0.5
                                  %Income
      before income tax provision
                                  
                                  
                                  -19.5
                                  %
                                  
                                  
                                  -6.6
                                  %
                                  
                                  
                                  -35.1
                                  %
                                  
                                  
                                  -11.0
                                  %Income
      tax provision
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  0.0
                                  %
                                  
                                  
                                  0.0
                                  %Net
      income (loss)
                                  
                                  
                                  -19.5
                                  %
                                  
                                  
                                  -6.6
                                  %
                                  
                                  
                                  -35.1
                                  %
                                  
                                  
                                  -11.0
                                  %




RESULTS
OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED NOVEMBER 30, 2008 AS COMPARED
TO THE SIX AND THREE MONTHS ENDED NOVEMBER 30, 2007




Revenues
were approximately $1,980,855 for the six months ending November 30, 2008 as
compared to approximately $1,364,372 for the six months ended November 30, 2007
reflecting an increase of approximately $616,483, or 45%.  The
increase in revenues during the six months ending November 30, 2008 is the
result of the Company’s business expansion with a Tampa, Florida office
specializing in the sales, service, and support of financial institution
equipment and diversifying into the access control and integration
market.  The revenues for the three months ending November 30, 2008
were $1,455,898 as compared to $533,635 for the three months ended November 30,
2007, reflecting an increase of approximately $922,263, or
172.8%.  This increase for the three months ending November 30, 2008
is the direct result of increased equipment sales due to the additional sales
driven from the Tampa, Florida office.





Cost of
goods sold for the six months ended November 30, 2008 were approximately
$1,935,782, or 97.7% of net sales as compared to approximately $898,448, or
65.9% of net sales for the six months ended November 30, 2007.  Cost
of goods sold for the three months ended November 30, 2008 was approximately
$1,482,207, or 101.8% of net sales as compared to approximately $349,901, or
65.6% of net sales for the three months ended November 30, 2007.  The
Company has experienced a decline in Gross Profit of approximately $420,851 for
the six months period ended November 30, 2008 as compared to the prior six month
period ended November 30, 2007.  Gross Profit was $45,073 and $465,924
for the six month periods ending November 30, 2008 and 2007,
respectively.  The decline in Gross Profit is primarily due to the
Company incurring transitional costs associated with the acquisition of the work
in progress and service contracts related to the Tampa, Florida office and to
the Company incurring transitional material costs that did not ultimately result
in recognized revenues.





Selling,
general and administrative expenses were approximately $763,823, or 38.6% of
revenues for the six months ending November 30, 2008 as compared to
approximately $550,786, or 40.4% of revenues for the six months ended November
30, 2007 reflecting an increase of approximately $213,037.  Selling,
general and administrative expenses were approximately $484,347, or 33.3% of
revenues for the three months ending November 30, 2008 as compared to
approximately $239,589, or 44.9% of revenues for the three months ended November
30, 2007 reflecting an increase of approximately $244,758.  This
increase is due to the additional staff added at the Tampa, Florida office which
includes three people in sales, ten people in the installation department,
twelve people in service and nine office personnel.


7





As a
result of the aforementioned, the Company incurred a net loss from operations
during the six months ending November 30, 2008 of approximately $718,750 as
opposed to a net operating loss of approximately $84,862 for the six months
ending November 30, 2007.  For the three months ending November 30,
2008, the Company incurred a net operating loss of approximately $510,656
as opposed to a net operating loss of approximately $55,855 for the comparable
prior period.




LIQUIDITY
AND CAPITAL RESOURCES




The
Company has historically financed its operations through internal cash flows
from operations.




The
Company had bank overdrafts of $10,047 and negative working capital of $769,673
at November 30, 2008. At November 30, 2008, the Company’s working capital had
decreased by $843,998 from the year ended May 31, 2008. The decrease in
working capital was primarily caused by the additional expenditures associated
with the acquisition of the Tampa, Florida office.




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 November 30,
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.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




We are
exposed to various market risks in conducting the business of the Company, and
we anticipate that this exposure will increase as a result of our planned
growth.  In an effort to mitigate losses associated with these risks, we
may at times enter into derivative financial instruments, although we have not
historically done so.  These may take the form of forward sales contracts,
option contracts, foreign currency exchange contracts, and interest rate
swaps.




ITEM 4.  CONTROLS AND
PROCEDURES




(a)
 DISCLOSURE CONTROLS AND PROCEDURES. As of May 31, 2008, the Company
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures. The Company's disclosure controls and procedures are
the controls and other procedures that it designed to ensure that it records,
processes, summarizes and reports in a timely manner the information it must
disclose in reports that it files with or submits to the Securities and Exchange
Commission. Cynthia Hayden, the Company's President, supervised and participated
in this evaluation. Based on this evaluation, Ms. Hayden 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.




ITEM 4T.  CONTROLS AND
PROCEDURES




Evaluation of Disclosure
Controls and Procedures.  In accordance with the final Release
No. 33-8934 by the Security and Exchange Commission, which requires
companies that are non-accelerated filers to include in their annual reports an
attestation report of their independent auditors on internal control over
financial reporting for fiscal years ending on or after December 15, 2009,
the Company has concluded that based on an evaluation of the effectiveness of
our disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Exchange Act) as of November 30, 2008, the end of the period covered by
this report, our Chief Executive Officer and Chief Financial Officer have
concluded that the disclosure controls and procedures were
effective.


8


Changes in Internal
Controls.  During the quarter ended November 30, 2008, there
was no change in our internal controls over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.




PART
II. – OTHER INFORMATION




ITEM
1.  LEGAL PROCEEDINGS


The
Company has been served with a lawsuit by Woodmoor and Associates, LLC
(“Woodmoor”) whereby Woodmoor contends the Company owes Woodmoor $150,000
related to an alleged note payable.  On or about October 1, 2008
Woodmoor loaned the Company $150,000 to be used for working
capital.  The Company does not dispute the existence of the loan or
the amount thereof.  Woodmore alleges that the loan was due on demand, but
the Company believes that the payment schedule, or any other loan terms and
conditions, were ever agreed upon.  Until this matter is resolved, the
Company has recorded this loan in the financials of the Company as a Note
Payable to consultant.  The Company has secured counsel to represent the
Company in this matter




The
Company has been served with a lawsuit by Fortis Security (“Fortis”), whereby
Fortis contends the Company owes Fortis an outstanding balance of $6,804 related
to various equipment purchases.  The Company does not dispute that
this amount is owed to Fortis and expects to have the outstanding balance
resolved within the next 90 days.




ITEM 2.  UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS





None.




ITEM
3.  DEFAULTS UPON SENIOR SECURITIES





None.




ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.





ITEM
5.  OTHER INFORMATION





On
January 15, 2009, stockholders of the Company holding more than a majority
of the outstanding common stock of the Company (the "Majority
Stockholders") executed a written consent action (the "Consent
Action") providing for the removal of Steven K. Wilson, Joan Jolitz, and
Allison Belcher (the "Removed Directors") from the Company's Board of
Directors.  The Consent Action states that the Majority
Stockholders have resolved to remove the Removed Directors from the Board
because the Majority Stockholders believe it is necessary to do
so  to prevent the Removed Directors, who comprise a majority of
the Board, from causing the Company to complete a transaction involving the
acquisition of Chesscom Consultants, Inc. ("Chesscom").




On June
11, 2008, the Company entered into an Acquisition Agreement and Plan of Merger
with Chesscom that contemplated the merger of Chesscom with and into the
Company in exchange for 12 million shares of Company common stock (the "Chesscom
Agreement").  Joan Jolitz is the sole stockholder of Chesscom, and
Allison Belcher is the stepdaughter of Ms. Jolitz.  According to the
Consent Action, following the execution of the Chesscom Agreement, the Majority
Stockholders examined the documentation, facts, and circumstances relating to
the proposed Chesscom transaction and communicated a variety of concerns and
potential problems regarding the transaction to the Company's Board of
Directors.  Thereafter, according to the Consent Action, neither the
Removed Directors nor their counsel responded directly to the Majority
Stockholders regarding these concerns, and the Removed Directors became
adversarial and attempted to force the Company to complete the Chesscom
transaction.  The Consent Action states that the Majority Stockholders
believe that the removal of the Removed Directors is necessary to prevent the
completion of the Chesscom transaction and that the removal is therefore
advisable and in the best interest of the Company's stockholders.  
The Company intends to file a Schedule 14C Information Statement with the SEC
regarding the Consent Action and to deliver the same to the Company's
stockholders, and it is currently anticipated that the removal of the Removed
Directors will be effective within 20 days following the mailing of the Schedule
14C Information Statement to the Company's stockholders.  The Consent
Action was signed by Paul Clark and Roberta Clark.


9





ITEM
6.  EXHIBITS





a)Exhibits





Exhibit Number
                    
                    Description31.1
                    
                    Certification
      Pursuant to Rule 13a-14(a) of Cynthia A. Hayden,
      President31.2
                    
                    Certification
      of Cynthia A. Hayden32.1
                    
                    Certification
      Pursuant to Rule 13a-14(a) of David A. Nail, CFO32.2
                    
                    Certification
      of David A.
Nail


10


FINANCIAL
STATEMENTS




THE
BANKER'S STORE, INC. AND SUBSIDIARIES




I
N D E X




PART
I - FINANCIAL INFORMATION




ITEM
1. FINANCIAL STATEMENTS




PAGECONDENSED
      CONSOLIDATED BALANCE SHEETS NOVEMBER 30, 2008 (UNAUDITED) AND MAY 31,
      2008
                      
                      F-2CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS AND THREE MONTHS
      ENDED NOVEMBER 30, 2008 AND 2007 (UNAUDITED)
                      
                      F-3CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED NOVEMBER 30,
       2008 AND 2007 (UNAUDITED)
                      
                      F-4NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                      
                      F-5
      - F-10ITEM
      2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONSPART
      II. OTHER INFORMATIONSIGNATURES




F-1




THE
BANKER'S STORE, INC. AND SUBSIDIARIES





CONDENSED
CONSOLIDATED BALANCE SHEETS


NOVEMBER
30, 2008 (UNAUDITED) AND MAY 31, 2008





NOVEMBER 30,
                      
                      
                      MAY 31,2008
                      
                      
                      2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
                      
                      $
                      -
                      
                      
                      $
                      149,365Accounts
      receivable, net of allowance for bad debts of $4,043
                      
                      
                      802,033
                      
                      
                      
                      131,820Costs
      and estimated earning in excess of billings
                      
                      
                      369,713
                      
                      
                      
                      -Inventories
                      
                      
                      480,377
                      
                      
                      
                      578,790Prepaid
      expenses and other current assets
                      
                      
                      90,995
                      
                      
                      
                      62,461Total
      current assets
                      
                      
                      1,743,118
                      
                      
                      
                      922,436Equipment
      and improvements, net
                      
                      
                      93,032
                      
                      
                      
                      69,181Other
      assets, inlcuding Goodwill, net of amortization
                      
                      
                      500,999
                      
                      
                      
                      831Totals
                      
                      $
                      2,337,149
                      
                      
                      $
                      992,448LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Bank
      Overdrafts
                      
                      $
                      10,047
                      
                      
                      $
                      -Accounts
      payable and accrued expenses
                      
                      
                      1,089,552
                      
                      
                      
                      137,377Customer
      deposits
                      
                      
                      247,097
                      
                      
                      
                      305,115Deferred
      Service Contracts
                      
                      
                      8,718
                      
                      
                      
                      -Note
      payable - principal stockholder
                      
                      
                      -
                      
                      
                      
                      142,519Note
      payable - AFC Holdings, Inc.
                      
                      
                      535,000
                      
                      
                      
                      -Note
      payable - consultant
                      
                      
                      150,000
                      
                      
                      
                      -Accrued
      compensation - principal stockholder
                      
                      
                      -
                      
                      
                      
                      263,100Short
      Term Debt - Funding Company
                      
                      
                      58,363
                      
                      
                      
                      -Billings
      in excess of costs and estimated earnings
                      
                      
                      414,014
                      
                      
                      
                      -Total
      current liabilities
                      
                      
                      2,512,791
                      
                      
                      
                      848,111Total
      liabilities
                      
                      
                      2,512,791
                      
                      
                      
                      848,111Commitments
      and contingenciesStockholders'
      equity:Common
      stock, $.01 par value; 200,000,000shares
      authorized; 15,754,781 sharesissued
      and outstanding
                      
                      
                      157,548
                      
                      
                      
                      149,548Additional
      paid-in capital
                      
                      
                      612,529
                      
                      
                      
                      553,889Less:
      treasury stock 2,000 shares (at cost)
                      
                      
                      (2,000
                      )
                      
                      
                      (2,000
                      )Accumulated
      (deficit) earnings
                      
                      
                      (943,719
                      )
                      
                      
                      (557,100
                      )Total
      stockholders' equity
                      
                      
                      (175,642
                      )
                      
                      
                      144,337Totals
                      
                      $
                      2,337,149
                      
                      
                      $
                      992,448




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
 NOVEMBER,
2008 AND 2007 (UNAUDITED)
 
 SIX MONTHS ENDED
                                                            
                                                            
                                                            THREE MONTHS ENDEDNOVEMBER 30,
                                                            
                                                            
                                                            NOVEMBER 30,2008
                                                            
                                                            
                                                            2007
                                                            
                                                            
                                                            2008
                                                            
                                                            
                                                            2007Revenue
                                                            
                                                            $
                                                            1,980,855
                                                            
                                                            
                                                            $
                                                            1,364,372
                                                            
                                                            
                                                            $
                                                            1,455,898
                                                            
                                                            
                                                            $
                                                            533,635Cost
      of goods sold
                                                            
                                                            
                                                            1,935,782
                                                            
                                                            
                                                            
                                                            898,448
                                                            
                                                            
                                                            
                                                            1,482,207
                                                            
                                                            
                                                            
                                                            349,901Gross
      profit
                                                            
                                                            
                                                            45,073
                                                            
                                                            
                                                            
                                                            465,924
                                                            
                                                            
                                                            
                                                            (26,309
                                                            )
                                                            
                                                            
                                                            183,734Selling,
      general and administrative expenses
                                                            
                                                            
                                                            763,823
                                                            
                                                            
                                                            
                                                            550,786
                                                            
                                                            
                                                            
                                                            484,347
                                                            
                                                            
                                                            
                                                            239,589Income
      (loss) from operations
                                                            
                                                            
                                                            (718,750
                                                            )
                                                            
                                                            
                                                            (84,862
                                                            )
                                                            
                                                            
                                                            (510,656
                                                            )
                                                            
                                                            
                                                            (55,855
                                                            )Other
      income (expense):Interest
      income (expenses)
                                                            
                                                            
                                                            410
                                                            
                                                            
                                                            
                                                            3,255
                                                            
                                                            
                                                            
                                                            169
                                                            
                                                            
                                                            
                                                            1,228Interest
      expense
                                                            
                                                            
                                                            (3,145
                                                            )
                                                            
                                                            
                                                            (7,979
                                                            )
                                                            
                                                            
                                                            (637
                                                            )
                                                            
                                                            
                                                            (3,883
                                                            )Gain
      on extinguishment of debt to princial stockholder
                                                            
                                                            
                                                            334,866Total
      other income (expense):
                                                            
                                                            
                                                            332,131
                                                            
                                                            
                                                            
                                                            (4,724
                                                            )
                                                            
                                                            
                                                            (468
                                                            )
                                                            
                                                            
                                                            (2,655
                                                            )Income
      before income tax provision
                                                            
                                                            
                                                            (386,619
                                                            )
                                                            
                                                            
                                                            (89,586
                                                            )
                                                            
                                                            
                                                            (511,124
                                                            )
                                                            
                                                            
                                                            (58,510
                                                            )Income
      tax provision
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -
                                                            
                                                            
                                                            
                                                            -Net
      income
                                                            
                                                            $
                                                            (386,619
                                                            )
                                                            
                                                            $
                                                            (89,586
                                                            )
                                                            
                                                            $
                                                            (511,124
                                                            )
                                                            
                                                            $
                                                            (58,510
                                                            )Basic
      earnings (loss) per common share
                                                            
                                                            $
                                                            (0.03
                                                            )
                                                            
                                                            $
                                                            (0.01
                                                            )
                                                            
                                                            $
                                                            (0.03
                                                            )
                                                            
                                                            $
                                                            (0.00
                                                            )Diluted
      earnings (loss) per share
                                                            
                                                            $
                                                            (0.03
                                                            )
                                                            
                                                            $
                                                            (0.01
                                                            )
                                                            
                                                            $
                                                            (0.03
                                                            )
                                                            
                                                            $
                                                            (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
 SIX
MONTHS ENDED NOVEMBER 30,  2008 AND 2007 (UNAUDITED)
 
 NOVEMBER
      30,2008
                                                
                                                
                                                2007Operating
      activitiesNet
      income (loss)
                                                
                                                $
                                                (386,619
                                                )
                                                
                                                $
                                                (89,586
                                                )Adjustments
      to reconcile net income (loss)  to net cash provided by (used
      in) operating activities:Depreciation
      and amortization
                                                
                                                
                                                36,134
                                                
                                                
                                                
                                                10,403Stock
      based compensation
                                                
                                                
                                                -
                                                
                                                
                                                
                                                8,667Changes
      in operating assets and liabilities:Accounts
      and contracts receivable
                                                
                                                
                                                (670,213
                                                )
                                                
                                                
                                                (45,194
                                                )Inventories
                                                
                                                
                                                98,412
                                                
                                                
                                                
                                                117,754Earnings
      in Excess of Billings
                                                
                                                
                                                (369,713
                                                )
                                                
                                                
                                                -Prepaid
      expenses and other current assets
                                                
                                                
                                                (28,533
                                                )
                                                
                                                
                                                48,347Other
      assets
                                                
                                                
                                                (526,232
                                                )
                                                
                                                
                                                16,286Accounts
      payable and accrued expenses
                                                
                                                
                                                962,222
                                                
                                                
                                                
                                                7,161Billings
      in Excess of Earnings
                                                
                                                
                                                414,014
                                                
                                                
                                                
                                                -Deferred
      Income
                                                
                                                
                                                8,718
                                                
                                                
                                                
                                                -Customer
      deposits
                                                
                                                
                                                (58,017
                                                )
                                                
                                                
                                                (217,890
                                                )Net
      cash (used in) operating activities
                                                
                                                
                                                (519,827
                                                )
                                                
                                                
                                                (144,052
                                                )Investing
      activitiesCapital
      expenditures, net of writeoffs
                                                
                                                
                                                (33,922
                                                )
                                                
                                                
                                                (6,066
                                                )Net
      cash (used in) investing activities
                                                
                                                
                                                (33,922
                                                )
                                                
                                                
                                                (6,066
                                                )Financing
      activitiesIncrease
      (decrease) in long-term debt, net
                                                
                                                
                                                -
                                                
                                                
                                                
                                                (2,346
                                                )Increase
      (decrease) in short-term debt, net
                                                
                                                
                                                58,363
                                                
                                                
                                                
                                                -Notes
      Payable - AFC Holdings and Consultant
                                                
                                                
                                                685,000
                                                
                                                
                                                
                                                -Loan
      payable - Borrowing from principal stockholder
                                                
                                                
                                                (405,619
                                                )
                                                
                                                
                                                (23,040
                                                )Common
      stock issued
                                                
                                                
                                                8,000
                                                
                                                
                                                
                                                -Additional
      paid in capital
                                                
                                                
                                                58,640
                                                
                                                
                                                
                                                -Net
      cash provided by (used  in) financing activities
                                                
                                                
                                                404,384
                                                
                                                
                                                
                                                (25,386
                                                )Net
      decrease in cash and cashequivalents
                                                
                                                
                                                (149,365
                                                )
                                                
                                                
                                                (175,504
                                                )Cash
      and cash equivalents, beginning of period
                                                
                                                
                                                149,365
                                                
                                                
                                                
                                                357,323Cash
      and cash equivalents, end of period
                                                
                                                $
                                                0
                                                
                                                
                                                $
                                                181,819Supplemental
      disclosure of cash flow information:Interest
      paid
                                                
                                                $
                                                3,145
                                                
                                                
                                                $
                                                7,979Income
      taxes paid
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
 
 The
accompanying notes are an integral part of these financial
statements.
  F-4
  THE
BANKER’S STORE, INC.
  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 November 30, 2008 and the
Company's results of operations and cash flows for the six months ended November
30, 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 six months ended November 30, 2008
are not necessarily indicative of the results to be expected for the full
year.
  Note
2 - Liquidity:
  The
accompanying unaudited condensed consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business.  As shown in the accompanying unaudited condensed
consolidated financial statements, the Company incurred a net loss available to
common stockholders of $511,124 and $58,510 for the three month period ended
November 30, 2008 and 2007, respectively.  Additionally, the Company
has negative cash flows from operations of $519,827 for the six month period
ended November 30, 2008 and an accumulated deficit of $943,719 as of November
30, 2008.  These factors among others may indicate that the Company
may be unable to continue as a going concern.
 
 The
Company’s continued existence is dependent upon management’s ability to develop
profitable operations and resolve its liquidity problems.  The
accompanying consolidated financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
  Note
3 - 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.
  F-5
  THE
BANKER’S STORE, INC.
  NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 (UNAUDITED)
  Note
4 - 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 $53,000 from the
utilization of net operating loss carry forwards and other deferred tax assets
by an equivalent valuation allowance during the three months ending November 30,
2008. Total deferred tax assets were approximately $300,000 which was offset by
an equivalent valuation allowance as of November 30, 2008.
  As a
result of the corresponding increase in the valuation allowance and deferred tax
assets of $53,000 during the six months ended November 30, 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.
  Note
5 - Contingencies:
  Litigation:
 The
Company has been served with a lawsuit by Woodmoor and Associates, LLC
(“Woodmoor”) whereby Woodmoor contends the Company owes Woodmoor $150,000
related to an alleged note payable.  On or about October 1, 2008
Woodmoor loaned the Company $150,000 to be used for working
capital.  The Company does not dispute the existence of the loan or
the amount thereof.  Woodmore alleges that the loan was due on demand, but
the Company believes that the payment schedule, or any other loan terms and
conditions, were ever agreed upon.  Until this matter is resolved, the
Company has recorded this loan in the financials of the Company as a Note
Payable to consultant.  The Company has secured counsel to represent the
Company in this matter
  The
Company has been served with a lawsuit by Fortis Security (“Fortis”), whereby
Fortis contends the Company owes Fortis an outstanding balance of $6,804 related
to various equipment purchases.  The Company does not dispute that
this amount is owed to Fortis and expects to have the outstanding balance
resolved within the next 90 days.
  Note
6 - 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 six months and three
months ended November 30, 2008 and 2007:




THE
      BANKER'S STORE, INC. AND SUBSIDIARIESDISCLOSURE
      OF REPORTED SEGMENT PROFIT OR LOSS, AND SEGMENT
  ASSETS





SIX
      MONTHS ENDED
                                  
                                  
                                  SIX
      MONTHS ENDEDNOVEMBER
                                  
                                  
                                  NOVEMBER2008
                                  
                                  
                                  2007Banking
                                  
                                  
                                  Office
                                  
                                  
                                  
                                  
                                  
                                  Banking
                                  
                                  
                                  OfficeEquipment
                                  
                                  
                                  Equipment
                                  
                                  
                                  Totals
                                  
                                  
                                  Equipment
                                  
                                  
                                  Equipment
                                  
                                  
                                  TotalsRevenues
      from external customers
                                  
                                  $
                                  1,908,916
                                  
                                  
                                  $
                                  71,939
                                  
                                  
                                  $
                                  1,980,855
                                  
                                  
                                  $
                                  1,148,655
                                  
                                  
                                  $
                                  215,717
                                  
                                  
                                  $
                                  1,364,372Segment
      profit (loss)
                                  
                                  
                                  (374,659
                                  )
                                  
                                  
                                  (11,960
                                  )
                                  
                                  
                                  (386,619
                                  )
                                  
                                  
                                  (56,114
                                  )
                                  
                                  
                                  (33,472
                                  )
                                  
                                  
                                  (89,586
                                  )Segment
      assets
                                  
                                  $
                                  2,272,316
                                  
                                  
                                  $
                                  64,833
                                  
                                  
                                  $
                                  2,337,149
                                  
                                  
                                  $
                                  1,045,493
                                  
                                  
                                  $
                                  33,276
                                  
                                  
                                  $
                                  1,078,769





THREE
      MONTHS ENDED
                                  
                                  
                                  THREE
      MONTHS ENDEDNOVEMBER
      30,
                                  
                                  
                                  NOVEMBER2008
                                  
                                  
                                  2007Banking
                                  
                                  
                                  Office
                                  
                                  
                                  
                                  
                                  
                                  Banking
                                  
                                  
                                  OfficeEquipment
                                  
                                  
                                  Equipment
                                  
                                  
                                  Totals
                                  
                                  
                                  Equipment
                                  
                                  
                                  Equipment
                                  
                                  
                                  TotalsRevenues
      from external customers
                                  
                                  $
                                  1,438,078
                                  
                                  
                                  $
                                  17,820
                                  
                                  
                                  $
                                  1,455,898
                                  
                                  
                                  $
                                  451,750
                                  
                                  
                                  $
                                  81,885
                                  
                                  
                                  $
                                  533,635Segment
      profit (loss)
                                  
                                  
                                  (509,258
                                  )
                                  
                                  
                                  (1,865
                                  )
                                  
                                  
                                  (511,123
                                  )
                                  
                                  
                                  (30,373
                                  )
                                  
                                  
                                  (28,137
                                  )
                                  
                                  
                                  (58,510
                                  )Segment
      assets
                                  
                                  $
                                  2,272,316
                                  
                                  
                                  $
                                  64,833
                                  
                                  
                                  $
                                  2,337,149
                                  
                                  
                                  $
                                  1,045,493
                                  
                                  
                                  $
                                  33,276
                                  
                                  
                                  $
                                  1,078,769




Note
7 - Goodwill:




The
Company recorded $521,282 of Goodwill associated with the business combination
between the Company and AFC Holdings, Inc.  The Company determined
that there is a finite life associated with this Goodwill of approximately five
years.  Accordingly the Company is amortizing the cost of Goodwill
over this five-year period.  The Company reflects the net carrying
amount in the Company’s financials and is recording a monthly amortization
expense of $8,688 and will record approximately $78,192 of amortization of
goodwill for this fiscal year ending May 31, 2009.


F-7




The
future amortization expense for each of the five succeeding years relating to
all intangible assets that are currently recorded in the Consolidated Statement
of Financial Position is estimated to be the following at May 31,
2009:





Fiscal
      Period Ending/Dollars in Thousands2010
                                
                                $
                                1042011
                                
                                $
                                1042012
                                
                                $
                                1042013
                                
                                $
                                1042014
      – 3 months
                                
                                $
                                27





Note
8 – Debt and Notes Payable:




Factoring
Agreement




The
Company entered into a Factoring, Loan, and Security Agreement (the “Agreement”)
with a financing company on September 19, 2008, which allows for borrowings of
up to $2,000,000.  The Agreement expires on September 18, 2009, and
automatically renews annually thereafter. All borrowings are secured by
outstanding receivables specifically assigned to the financing company. 
Assigned receivables are considered “Approved” or “Non-Approved” by the
financing company.




Payments
on assigned receivables are received directly by the financing company, and
applied to outstanding advances.  All outstanding advances and uncollected
assigned receivables are subject to fees and interest charges ranging from 0.55%
to 1.5% plus prime rate as published by the Wall Street Journal. All receivables
assigned and advances made are subject to return and recall by the financing
company, respectively.  As such, the advances have been classified as
short-term secured borrowings in accordance with SFAS No. 140 “Accounting
for Transfer and Servicing of Financial Assets and Extinguishments of
Liabilities.”




The total
outstanding advance made under the agreement as of November 30, 2008 is $58,363
which is presented as short-term debt.   The weighted average rate of
interest for borrowings made under the Agreement was 14.0% for the six months
ended November 30, 2008.  As of November 30, 2008, the Company’s
availability for future borrowing under the agreement is $89,000 which is
contingent on approval of eligible receivables by the financing
company.




Unsecured Subordinated Note
– Woodmoor and Associates, LLC




On or
about October 1, 2008, the Company received a loan of $150,000 from Woodmoor and
Associates, LLC to be used for working capital.  The loan was
structured as an unsecured note payable and the terms and conditions to
repayment are still being negotiated.  The note is subordinated to the
Factoring Agreement of First Growth Capital.  As of November 30, 2008,
the note is recorded as a current note payable in the financial statements of
the Company.





Unsecured Subordinated Debt
– AFC Holdings, Inc.




On August
19, 2008 the Company entered into a business combination with AFC Holdings, Inc.
and related subsidiaries and AFC Systems, Inc.  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.  The
agreement calls for a maximum payment of $135,000 and to issue warrants on
common stock valued at a maximum of $400,000.  The agreement has been
recorded in the Company’s records as a current note payable of $535,000 and as
of November 30, 2008, is reflected as a note payable – AFC Holdings, Inc. in the
current liabilities section of the Balance Sheet.




Note
9 – Business Combination:




On
August 19, 2008 the Company entered into a business combination with AFC
Holdings, Inc. and related subsidiaries and AFC Systems, Inc.  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.  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.


F-8





The
Company has recorded the transaction with AFC Holdings, Inc, and related
subsidiaries as a business combination.  The Company acquired a small
amount of immaterial assets primarily furniture, fixture, and computers however
the Company did not acquire any stock or equity nor assume any liabilities or
contingencies.  The Company recorded in Other Assets approximately
$521,282 of Goodwill associated with the business combination and determined
that the Goodwill had a finite life of five years.  The Company has
used this five-year life as the amortization period and therefore has recognized
in this 10Q for period ending November 30, 2008 three months of amortization of
goodwill in the amount of $26,064 which is reflected in the General and
Administrative Expense line of the Statement of Operations.





Below is
a forecasted Statements of Operations for the three month and six month periods
ending November 30, 2008 and 2007, respectively and for the 12 month period
ended May 31, 2009 which incorporates the Company’s actual financial results for
those periods.  This forward looking statement should not be relied
upon as achievable results due the many factors affecting the Company and its
operations.  The Company disclaims any intent or obligation to update
these forward-looking statements.




THE
      BANKER'S STORE, INC. AND SUBSIDIARIESFORECASTED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSTHREE
      MONTHS ENDED NOVEMBER, 2008 AND 2007
(UNAUDITED)





THREE
      MONTHS ENDEDNOVEMBER
      30,2008
                          
                          
                          2007Revenue
                          
                          $
                          1,455,898
                          
                          
                          $
                          4,213,546Income
      (loss) from operations
                          
                          
                          (510,656
                          )
                          
                          
                          (182,255
                          )Net
      income
                          
                          $
                          (511,123
                          )
                          
                          $
                          (167,685
                          )Basic
      earnings (loss) per common share
                          
                          $
                          (0.03
                          )
                          
                          $
                          (0.01
                          )Diluted
      earnings (loss) per share
                          
                          $
                          (0.03
                          )
                          
                          $
                          (0.01
                          )




THE
      BANKER'S STORE, INC. AND SUBSIDIARIESFORECASTED
      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSSIX MONTHS
      ENDED NOVEMBER, 2008 AND 2007
(UNAUDITED)




SIX MONTHS
      ENDEDNOVEMBER
      30,2008
                                
                                
                                2007Revenue
                                
                                $
                                4,080,579
                                
                                
                                $
                                4,124,667Income
      (loss) from operations
                                
                                
                                (739,747
                                )
                                
                                
                                64,119Net
      income
                                
                                $
                                (407,616
                                )
                                
                                $
                                47,557Basic
      earnings (loss) per common share
                                
                                $
                                (0.03
                                )
                                
                                $
                                (0.01
                                )Diluted
      earnings (loss) per share
                                
                                $
                                (0.03
                                )
                                
                                $
                                (0.01
                                )




F-9


THE
BANKER'S STORE, INC. AND SUBSIDIARIES




FORECASTED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS


FOR
THE TWELVE MONTH PERIOD ENDED MAY 31, 2009 (UNAUDITED)




TWELVE
      MONTHS ENDED
                                        MAY
      31, 2009Revenue
                                      
                                      $
                                      4,730,855Income
      (loss) from operations
                                      
                                      $
                                      (998,897
                                      )Net
      income
                                      
                                      $
                                      (673,056
                                      )Basic
      earnings (loss) per common share
                                      
                                      $
                                      (0.05
                                      )Diluted
      earnings (loss) per share
                                      
                                      $
                                      (0.04
                                      )




F-10




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/ Cynthia
      A. HaydenCynthia
      A. Hayden,
                    President
      and DirectorDated
      :  January 20, 2009