**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





**ANNUAL
      REPORT UNDER SECTION 13 OR 15(D)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**For
      the Fiscal Year Ended May 31, 2007**





*COMMISSION
      FILE NO.: 000-08880*





**THE
      BANKER'S STORE, INC.**


(Exact
      Name of Registrant in its Charter)





NEW
                YORK
            
            22-3755766State
                or Other Jurisdiction Of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)





1535
      Memphis Junction Road, Bowling Green, KY 42101


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES)





Registrant's
      Telephone Number, Including Area Code: (270) 781-8453





Securities
      Registered Pursuant to Section 12(b) of the Act: None





**Securities
      Registered Pursuant to Section 12(g) of Act: Common Stock,**


par
      value
      $.01 per share.





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) or the Exchange Act.  ̈





Check
      whether the issuer: (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for such shorter period that the Registrant was required to file such reports),
      and (2) has been subject to such filing requirements for the past 90 days.
x
      Yes      o No.





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


o
      Yes     x No





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained herein, and will not be contained, to the best of Registrant's
      knowledge, in definitive proxy or information statements incorporated by
      reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
      x





For
      the
      fiscal year ended May 31, 2007, the issuer's revenues were
      $2,622,010.





As
      of
      July 25, 2007, the aggregate market value of the voting and non-voting common
      equity held by non-affiliates of the Registrant was approximately $135,287.
      This
      aggregate market value is computed by reference to the last sale price of such
      common equity on such date.  As of August 2, 2007, the
      Registrant had 14,954,781 shares of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**


Portions
      of the Proxy Statement for 2007 Annual Meeting of Stockholders: Part
      III





Transitional
      Small Business Format o
      Yes      x No








1





**ITEM
      1. DESCRIPTION OF
      BUSINESS**





**BUSINESS
      DEVELOPMENT**





The
      Banker's Store, Inc. (the "Store") was established in 1968. It remained dormant
      for many years until we completed the acquisition of B.G. Banking Equipment,
      Inc., ("B.G. Banking") and Financial Building Equipment Exchange, Inc.,
      ("FBEE"), Kentucky corporations. We are now in the business of buying, selling,
      trading and refurbishing financial equipment (both new and pre-owned) for banks
      and other financial institutions. We also sell office equipment and furniture
      at
      retail. We market products throughout the United States primarily through direct
      sales to financial institutions and other distributors supported by our direct
      sales force and soliciting new contacts through our presence on the
      internet.  In May 1998, our company, which had no significant assets,
      liabilities, or operations at the time, completed the reverse acquisition of
      B.G. Banking Equipment, Inc., and Financial Building Equipment Exchange, Inc.,
      which were two affiliated companies that had common ownership.





In
      connection with this acquisition, we issued 11,282,250 shares of our common
      stock in exchange for all of the shares of the acquired companies. As a result
      of the exchange, the former stockholders of the acquired companies owned
      approximately 75% of the post-acquisition entity, and our former stockholders
      owned approximately 25% of the post-acquisition entity. The acquisition was
      treated as a purchase business combination and a reverse acquisition for
      accounting purposes, in which we were the legal acquirer and the acquired
      companies were the accounting acquirer.





**OUR
      BUSINESS**





**Principal
      Products and Services and Their Markets.**





Our
      principal products are bank-related equipment, remote drive-up and walk-up
      teller systems, automated teller machines (ATMs), vaults, safe deposit boxes,
      safes, filing systems and counter lines.  In addition to traditional
      bank locations, we have added pharmacies and super drug stores, utilities,
      shipping departments in factories and hospitals to our customer base with
      drive-up and walk-up pneumatic and belt driven money transport and transaction
      systems. In addition, we provide all types of physical security systems
      including access control, master key systems and electronic locks, closed
      circuit television, and security systems to our customers.





We
      sell
      new and pre-owned equipment which has been refurbished in our facilities. We
      receive much of our pre-owned products directly from existing customers, through
      asset managers of bank holding companies, web advertising, and a large
      independent bank equipment dealer network.





Our
      primary geographic markets are Kentucky, Tennessee and surrounding states.
      We
      install our own products and also service the products we sell. The internet
      has
      increased awareness of our products and has been a good resource for purchasing
      as well as sales. Our core market has been the community banks and credit unions
      with ten branches or less.





In
      June
      of 2001, we entered the office equipment and retail furniture business, selling
      to financial institutions, as well as commercial and industrial
      customers.





**Distribution
      Methods of Products and Services.**





Sales
      of
      equipment are made directly to customers by our sales personnel, as well as
      representatives from related companies, and direct support from several
      manufacturers and distributors. The technical nature of our products requires
      direct contact with customers and their architects and building contractors.
      Most products are sold under contractual agreements on total price, terms and
      conditions.  Purchase agreements are required from
      customers.  We currently employ four sales representatives who operate
      in Kentucky, Tennessee and bordering states who serve customers over the
      telephone, via internet, on location, and on a walk-in basis.





**Competitive
      Conditions.**





We
      know
      of other entities presently competing for the same geographic and business
      markets.  Some of the other entities, such as Diebold, have greater
      capital resources, better geographic presence, national marketing, and more
      experience than we have. Other entities cover similar markets but sell different
      manufacturers' products as a dealership, and are not quite as diversified in
      terms of product mix. We have an advantage in some areas with our pre-owned,
      in-house refurbished steel products and warehousing, transport and installation
      capabilities, which gives us a pricing advantage on many of the products
      required by banks.  Many of these products seldom change in style and
      pre-owned can be resold for less than the cost of a new product.  We
      also compete by allowing customer trade-ins, consignment, or purchasing of
      our
      customers' excess equipment. From time to time, we cooperate with competitors
      who, like us, are independent suppliers of banking equipment in fulfilling
      large
      orders or supplying each other with pieces of equipment that may otherwise
      be
      more difficult to locate.




2





Once
      space and funding  is available, we plan to install a permanent
      display area for drive-up systems, which we currently use warehouse space to
      demonstrate.  When complete, we plan to have a showplace for the
      latest bank related equipment for display and demonstration including banking
      delivery systems, ATMs, check cashing equipment and other cash handling
      machines, and office furniture.  As planned, the showroom will allow
      our customers to compare products from different manufacturers.  By
      appointment, our prospective customers can bring drawings of upcoming projects
      and we will provide brochures, schematics and cut sheets for the architect
      or
      builder with complete specifications of all our products.





**Product
      Sources and Principal Suppliers.**





Because
      of a large number of mergers in the past decade among banks, resulting in the
      closing and relocating of a number of branches, we have been able to stockpile
      some quantities of equipment for resale. This equipment includes safes and
      vaults, vault panels, depositories, bullet resistant glass, teller fixtures,
      and
      office furniture. We do not believe that a shortage of our products is likely.
      Because part of this business requires that we match an existing product's
      specifications, size, color, and other features, we buy from several
      manufacturers for each product we sell.  We can usually match our
      competitors' equipment for quality and price, with new or pre-owned products
      purchased directly from manufacturers, distributors and specialty equipment
      brokers.





**Significant
      Customers.**





None.




**Intellectual
      Property.**





None.





**Need
      for any Governmental Approval for Products or Services.**





None.





**Effect
      of Existing or Probable Governmental Regulations on the
      Business.**





None.





**Description
      of Research and Development Activities Over Last Two
      Years.**





None.





**Costs
      and Effects of Compliance with Environmental Laws.**





None.





**EMPLOYEES**





As
      of
      July 13, 2007, we employed 21 full-time employees.  Paul Clark serves
      as our Chairman, Vincent C. Buckman serves as our President and CEO, Sam Stone
      serves as our CFO, and Cynthia Hayden serves as Vice President and our corporate
      Secretary.  We have four persons employed in sales, five persons in
      administrative capacities and one clerical worker. We also have five persons
      engaged in installation, and six in service activities in the
      field.




3





**ITEM
      2. DESCRIPTION OF PROPERTY**




We
      currently occupy approximately 32,000 square feet of office, warehouse, showroom
      and shop space which we lease from our Chairman, Paul Clark pursuant to two
      separate leases.  We pay a monthly rental of $5,500, plus maintenance
      expenses, for 23,976 square feet of office and warehouse space, which is located
      at 1535 Memphis Junction Road, Bowling Green, Kentucky, pursuant to a three
      year
      lease agreement dated August 1, 1998, between Mr. Clark and the
      Company.  This lease has been renewed thru August 2007 on
      substantially the same terms. We also pay $2,420 per month, plus maintenance
      expenses, for the remainder of the space, primarily consisting of a showroom
      located at 370 Cal Batsel Road, Bowling Green, Kentucky, pursuant to a lease
      that has been extended thru September 2007.   In January 2007 the
      monthly rent was raised from $7,200 to $7,920 as a result of an increase in
      property taxes.





**ITEM
      3. LEGAL PROCEEDINGS**





On
      March
      7, 2000, we filed an action in the Supreme Court of the State of New York,
      County of New York, against Stamford Financial Consulting, Inc., Taurus
      International Investment, Inc., George C. Bergleitner, Jr., Alexander C. Brosda
      and Andrew Seim (the “New York Action”), seeking an amount of not less than $1.7
      million for breach of fiduciary duty, breach of contract, conversion and unjust
      enrichment, and seeking an accounting of defendants’ books and records. The
      action arises out of B. G. Banking’s Confidential Private Placement Memorandum
      dated January 31, 1998, prepared by Stamford Financial, for the sale of
      3,000,000 shares of B. G. Banking common stock at $1.00 per share. On April
      5,
      2000, defendant George C. Bergleitner served a counterclaim alleging that we
      failed to have 180,000 shares of stock transferred without any legal
      endorsement, pursuant to Rule 144(k) under the Securities Exchange Act of 1934,
      as amended. The counterclaim seeks damages of $900,000 based upon the value
      of
      the stock at the highest amount at which it traded, which is alleged to be
      $5.00
      per share.





In
      December 2000, the court entered a default judgment against Taurus International
      Investment, Inc., Alexander C. Brosda and Andrew Seim leaving only George
      Bergleitner and his company, Stamford Financial to defend the
      lawsuit.





By
      order
      entered on May 4, 2001, the Court granted a motion filed by Stamford Financial
      Consulting, Inc. and George C. Bergleitner, to transfer the New York Action
      to
      the New York State Supreme Court, Delaware County, and the action is continuing
      there against these two defendants.




We
      recently filed a motion to dismiss the counterclaim.





Although
      we cannot predict the outcome of the litigation described above, we do not
      believe that the ultimate outcome will have any material adverse effect on
      our
      consolidated financial statements in subsequent periods.





**ITEM
      4. SUBMISSION OF MATTER TO A VOTE OF SECURITY
      HOLDERS**





None.





**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS,
      AND SMALL BUSNESS ISSUER PURCHASES OF EQUITY
      SECURITIES**





**Market
      Information.**





The
      principal market on which our Common Stock is traded is the OTC Bulletin Board.
      Our ticker symbol is BSTR.





The
      following table sets forth the high and low bid information for our Common
      Stock
      for each quarter, since August 31, 2005.  This information was
      received from the OTC Bulletin Board. As these are over-the-counter market
      quotations, they reflect inter-dealer prices, without retail markup, markdown,
      or commissions, and may not represent actual transactions.




4




High:
            
            
            
            Low:For
                the quarter ended:
            August
                31, 2005
            
            $
            0.08
            
            
            $
            0.07November
                30, 2005
            
            
            0.11
            
            
            
            0.08February
                28, 2006
            
            
            0.12
            
            
            
            0.09May
                31, 2006
            
            
            0.08
            
            
            
            0.06August
                31, 2006
            
            
            0.08
            
            
            
            0.06November
                30, 2006
            
            
            0.09
            
            
            
            0.06February
                28, 2007
            
            
            0.35
            
            
            
            0.09May
                31, 2007
            
            
            0.10
            
            
            
            0.10





**Holders
      of our Securities.**





The
      approximate number of holders of record of our common Stock, as of August 2,
      2007 was 571. This information was obtained from Continental Stock Transfer
      & Trust Company, our transfer agent.





**Dividends.**





No
      dividends have been paid on our Common Stock; we do not foresee paying any
      dividends on our stock in the near future.





**Equity
      Compensation Plan Information**





The
      following table provides a summary of the number of options granted under plans
      or agreements approved by our shareholders, the weighted average exercise price
      of those options and the number of shares remaining available for issuance
      as of
      May 31, 2007.




**Number
                of securities to be issued upon exercise of outstanding
                options**
            
            **Weighted
                –Average exercise price of outstanding options**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans**Equity
                compensation plans approved by security holders (1)
            
            550,000
                shares
            
            $.07
            
            950,000
                shares(2)Equity
                compensation plans not approved by security holders
            
            N/A
            
            N/A
            
            N/ATotal
            
            550,000
            
            $.07
            
            950,000(2)





(1)
      Shareholders approved stock option agreements granted to the Company’s President
      and Chief Executive Officer and the Company’s Financial Officer with respect to
      a total of 550,000 shares at the Company’s annual meeting of shareholders held
      on January 11, 2007.  At the January 11, 2007 annual meeting,
      shareholders also approved the 2006 Stock Ownership Incentive Plan (“Plan”)
      which authorizes the grant of restricted stock and stock options with respect
      to
      a maximum of 950,000 shares.





(2)
      Although no options have been granted under the Plan, pursuant to employment
      agreements with the Company’s President and Chief Executive Officer and the
      Company’s Chief Financial Officer (“Employment Agreements”), the Company agreed
      to issue options in 2007 and 2008 under the Plan to the Company’s President and
      Chief Executive Officer to purchase a total of an additional 245,455 shares
      of
      Common Stock, and to the Company’s Chief Financial Officer to purchase a total
      of an additional 204,545 shares of Common Stock with an exercise price equal
      to
      fair market value on the date of grant.  See “2006 Stock Ownership
      Incentive Plan” below.





***Options
      Granted***





On
      October 9, 2006 the Company entered into Employment Agreements with Vincent
      C.
      Buckman and Samuel J. Stone with regard to their service as President and Chief
      Executive Officer and Chief Financial Officer, respectively.  Under
      the Employment Agreements, the Company granted options to Mr. Buckman and Mr.
      Stone to purchase 300,000 shares and 250,000 shares, respectively, of the
      Company’s Common Stock. Shareholders of the Company approved these option
      agreements at the annual meeting of shareholders held on January 11, 2007.
      The
      exercise price of these options was equal to fair market value of the Company’s
      Common Stock on the date of issuance. The Company also agreed to issue options
      to Mr. Buckman to purchase an additional 245,455 shares of Common Stock and
      options to Mr. Stone to purchase an additional 204,545 shares of Common Stock
      pursuant to the Employment Agreements. These additional options will be granted
      pursuant to the Plan as described below.




5





***2006
      Stock Ownership Incentive Plan***





The
      Plan
      was approved by shareholders at the annual meeting of shareholders held on
      January 11, 2007.  The purpose of the Plan is to enhance the ability
      of the Company to secure and retain the services of qualified employees and
      non-employee directors and to provide incentives for such employees and
      non-employee directors to exert maximum efforts for the success of the
      Company.  The number of shares of Common Stock authorized for issuance
      under the Plan is 950,000 shares, subject to adjustment as provided in the
      Plan.  Full-time employees of the Company and its subsidiaries and
      non-employee directors of the Company are eligible to receive stock options
      and
      restricted stock under the Plan.  As of May 31, 2007, the Company had
      approximately 21 full-time employees and the Company had 1 non-employee
      director.





Although
      no options have been granted under the Plan, the Employment Agreements provide
      for the following future issuances of options under the Plan:





**Options
                to be granted - number of shares**
            
            **Date
                of Grant**
            
            **Recipient
                of Options**122,728
            
            October
                9, 2007
            
            Vincent
                C. Buckman, President and Chief Executive Officer122,727
            
            October
                9, 2008
            
            Vincent
                C. Buckman, President and Chief Executive Officer102,273
            
            October
                9, 2007
            
            Samuel
                J. Stone, Chief Financial Officer102,272
            
            October
                9, 2008
            
            Samuel
                J. Stone, Chief Financial Officer





**Recent
      Sales of Unregistered Securities**





An
      agreement with Objective Equity LLC was signed on June 2, 2007 pursuant to
      which
      300,000 shares of restricted stock will be issued by the Company as compensation
      to Objective Equity LLC for Corporate Advisory and Financial Placement
      Services.





**Purchase
      of Equity Securities by the Small Business Issuer and Affiliated
      Purchasers**





The
      Company did not purchase any of its securities during the fourth quarter of
      the
      fiscal year ended May 31, 2007.





**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS**





The
      matters discussed in this management's discussion and analysis of financial
      condition and results of operations contain forward-looking statements that
      involve risks and uncertainties. Our actual results in our two segments could
      differ materially from those discussed here. Factors that could cause or
      contribute to such differences are discussed elsewhere in this annual report
      on
      Form 10-KSB. We disclaim any intent or obligation to update these
      forward-looking statements.





**Overview**





The
      Banker's Store, Inc. (the "Store") was established in 1968. It remained dormant
      for many years until we completed the acquisition of B.G. Banking Equipment,
      Inc., ("B.G. Banking") and Financial Building Equipment Exchange, Inc.,
      ("FBEE"), Kentucky corporations. We are now in the business of buying, selling,
      trading and refurbishing financial equipment (both new and pre-owned) for banks
      and other financial institutions. We also sell office equipment and furniture
      at
      retail. We market products throughout the United States primarily through direct
      sales to financial institutions and other distributors supported by our direct
      sales force and soliciting new contacts through our presence on the
      Internet.




6





We
      anticipate that our results of operations may fluctuate for the foreseeable
      future due to several factors, including our ability to obtain new products
      at
      competitive prices, sources of good used banking and banking related equipment
      and furniture at favorable prices, market acceptance of current or new products,
      delays, or inefficiencies, shipping problems, seasonal customer demand, the
      timing of significant orders, competition for customers and markets, competitive
      pressures on average selling prices and changes in the mix of products
      sold.





Operating
      results could also be adversely affected by a downturn in the market for our
      current and future products, order cancellations, order rescheduling or
      manufacturing delays. We purchase and resell new merchandise and refurbish
      and
      ship our other products shortly after receipt of orders. We have not developed
      a
      significant backlog for such products and do not anticipate developing a
      material backlog for such products in the future.





Because
      we have increased our operating expenses for personnel, our operating results
      have been adversely effected.  Subject to available funds, we plan to
      increase activities supporting newly introduced products, new product
      development and entering new markets.  Our operating results could
      continue to be adversely affected if our sales do not correspondingly increase
      or if our product development efforts are unsuccessful or are subject to
      delays.





**SUMMARY
      OF CRITICAL ACCOUNTING POLICIES, RELATED PARTY TRANSACTIONS AND
      CONTINGENCIES:**





**Estimates:**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      conformity with accounting principles generally accepted in the United States
      of
      America. The preparation of these consolidated financial statements requires
      us
      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, we evaluate our estimates, including
      those related to accounts receivable, inventories, equipment and improvements,
      income taxes and contingencies. We base our 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.





**Inventories:**





Inventories,
      consisting primarily of finished goods, are stated at the lower of cost or
      market. Cost is determined by the first-in first-out method. Management monitors
      and periodically reviews inventory quantities and agings and, when appropriate,
      inventory is sold at lower than normal margins in order to reduce the levels
      of
      excess or older goods.





Impairment
      losses on the equipment and improvements are recognized when events indicate
      that the undiscounted cash flows estimated to be generated by such assets are
      less than their carrying value and all or a portion of such carrying value
      may
      not be recoverable. We recognized $1,148 of impairment losses in
      2007.  We did not recognize any impairment losses during
      2006.





**Income
      Taxes:**





Deferred
      tax assets resulted from temporary differences attributable to allowance for
      doubtful accounts, slow-moving inventories, accrued officer salary and other
      temporary differences. Due to the uncertainties related to the extent and timing
      of our future taxable income, we have established a valuation allowance in
      prior
      periods.  In 2007, we increased the valuation allowance in an amount
      equivalent to the deferred income tax benefit.





**New
      Accounting Pronouncements:**





The
      Company evaluated new accounting pronouncements and concluded that none of
      them
      had any potential impact on its financial position, results of operations or
      cash flows.





**Related
      Party Transactions:**





We
      have
      entered into two operating leases with our Chairman and principal stockholder,
      Paul Clark for the lease of an aggregate of approximately 32,000 square feet
      of
      office and warehouse space located in Bowling Green, Kentucky. The leases
      provide for a monthly rent of $7,200 in the aggregate plus maintenance expenses.
      The leases expire in August and September 2007, respectively.  In
      January 2007 the monthly rent was raised from $7,200 to $7,920 as a result
      of an
      increase in property taxes.




7





**Contingencies:**





Concentrations
      of credit risk:





Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist principally of cash and cash equivalents and accounts receivable.
      The Company places its cash and cash equivalents with high credit quality
      institutions to limit its credit exposure. Cash balances are insured by the
      Federal Deposit Insurance Corporation up to $100,000 per depositor. The
      Company's cash balances with financial institutions, at times, may exceed the
      Federal Deposit Insurance Corporation insured limits. At May 31, 2007, the
      Company has cash and cash equivalent balances that exceed federally insured
      limits in the amount of approximately $125,016.





The
      Company closely monitors the extension of credit to its customers while
      maintaining allowances for potential credit losses. On a periodic basis, the
      Company evaluates its accounts receivable and establishes an allowance for
      doubtful accounts, based on a history of past write-offs and collections and
      current credit considerations.





**Litigation:**





Please
      see discussion of certain legal proceedings under Item 3.





**Results
      of Operations**





The
      following table sets forth operating data as a percentage of net
      sales:





Twelve
                months ended
            
            
            Three
                months endedMay
                31,
            
            
            May
                31,2007
            
            
            2006
            
            
            2007
            
            
            2006Net
                sales
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %
            
            
            100.0
            %Cost
                of goods sold
            
            
            72.5
            %
            
            
            68.0
            %
            
            
            74.8
            %
            
            
            81.2
            %Gross
                profit
            
            
            27.5
            %
            
            
            32.0
            %
            
            
            25.2
            %
            
            
            18.8
            %Selling,
                general and administrative expenses
            
            
            35.3
            %
            
            
            29.6
            %
            
            
            25.4
            %
            
            
            26.1
            %Income
                (loss) from operations
            
            
            -7.8
            %
            
            
            2.4
            %
            
            
            -0.2
            %
            
            
            -7.3
            %Other
            
            
            -0.4
            %
            
            
            -0.4
            %
            
            
            -0.3
            %
            
            
            -0.5
            %Income
                before income tax provision
            
            
            -8.2
            %
            
            
            2.0
            %
            
            
            -0.5
            %
            
            
            -7.8
            %Income
                tax provision
            
            
            0.0
            %
            
            
            0.0
            %
            
            
            0.0
            %
            
            
            -2.9
            %Net
                income (loss)
            
            
            -8.2
            %
            
            
            2.0
            %
            
            
            -0.5
            %
            
            
            -4.9
            %




**Results
      of Operations for the Years Ended May 31,
      2007 and 2006.**





Revenues
      were approximately $2,622,010 for the year ended May 31, 2007 as compared to
      approximately $2,456,015 for the year ended May 31, 2006 reflecting an increase
      of approximately $165,995 or 7%.





Cost
      of
      goods sold and related expenses were $1,902,046 for the year ended May 31,
      2007
      as compared to approximately $1,662,560 for the year ended May 31, 2006
      reflecting an increase of approximately $239,486 or 14%.  This
      increase is  primarily the result of decreased sales of pre-owned
      equipment.





Gross
      profit decreased by approximately $73,491 during the year ended May 31,
      2007  primarily due to decreased sales of pre-owned
      equipment.


8




Selling,
      general and administrative expenses were
      approximately $926,372 for the year ended May 31, 2007 as compared to
      approximately $725,267 for the year ended May 31, 2006, reflecting an increase
      of approximately $201,105 or 28%. In part, this increase is due to hiring two
      new executives, and creating two new executive positions. Previously, Paul
      D.
      Clark filled the position of CEO and CFO. Mr. Clark has now moved to the
      Chairman position and Mr. Vincent C. Buckman has assumed the CEO and President
      position and Mr. Sam Stone has assumed the CFO position.




As
      a
      result of the aforementioned, there was a net loss during the year ended May
      31,
      2007 of $217,523 as compared to net income of approximately $58,563 for the
      previous fiscal year.





**Liquidity
      and Capital Resources**





We
      have
      financed our operations primarily through revenues from operations.





We
      had
      cash and cash equivalents of $357,323 and working capital of $363,365 at May
      31,
      2007.  During the year ended May 31, 2007, our cash and cash
      equivalents increased by $2,635.  Net cash and cash equivalents
      provided by operations were $30,383 which increased primarily from a decrease
      in
      accounts receivable of $122,753 and an increase in customer deposits of $210,429
      and was partially offset by a decrease in accounts payable of $51,630 and
      prepaid expenses and other current assets of $79,299.  During the year
      ended May 31, 2007, long-term debt, which consisted of three car loans, was
      reduced by $7,651 as one of these car loans was retired.





We
      are
      evaluating various alternatives in addressing our future facilities expansion
      needs. The alternatives being evaluated include negotiations with various
      parties for the leasing of additional facility space and the purchase of
      additional property to build a new or additional office and warehousing
      facility. Relocation to a new facility or leasing of additional facility space
      would be expected to result in an increase in rent upon occupancy.





We
      also
      desire to expand our customer base and enter additional markets.  To
      accomplish these goals, we are currently evaluating a number of strategies
      and
      related steps.  We are considering and evaluating opportunities to
      grow and expand through mergers or acquisitions.   We have
      strengthened our management team by adding a CEO and CFO.  We may hire
      additional sales personnel in order to reach potential customers in new markets
      and additional customers in existing markets.





Our
      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 too, our ability to
      generate sufficient cash flow or obtain sufficient capital on reasonable terms;
      our 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 our products and
      services; our ability to withstand increased competitive pressures; and economic
      conditions within the financial services industry and within the markets we
      serve.  There is no assurance that we will be able to meet any or all
      of our goals.





We
      believe that our available cash, cash from operations and funds from existing
      credit arrangements will be sufficient to satisfy our funding needs through
      at
      least May 31, 2008. Thereafter, if cash generated from operations is
      insufficient to satisfy our working capital and capital expenditure
      requirements, we may be required to sell additional equity or debt securities
      or
      obtain additional credit facilities. In this regard, we have retained the
      services of an investment banking firm for corporate advisory and financial
      placement services in connection with raising additional
      capital.  There can be no assurance that such additional capital, if
      needed, will be available on satisfactory terms, if at all. Furthermore, any
      additional equity financing may be dilutive to stockholders, and debt financing,
      if available, may include restrictive covenants. Our future liquidity and
      capital funding requirements will depend on numerous factors, including the
      extent to which our new products and products under consideration are
      successfully developed, gain market acceptance and become and remain
      competitive, the timing and results of regulatory actions in the banking
      industry, the costs and timing of further expansion of sales, marketing and
      manufacturing activities, facilities expansion needs. The failure by us to
      raise
      capital on acceptable terms when needed could have a material adverse effect
      on
      our business, financial condition and results of operations.





9





**ITEM
      7. FINANCIAL
      STATEMENTS**









**THE
      BANKER’S STORE, INC. AND SUBSIDIARIES**





**INDEX**





**Page**Report
                of Independent Registered Public Accounting Firm
            
            F-2Condensed
                Consolidated:Balance
                Sheets May 31, 2007 and 2006
            
            F-3Statements
                of Operations Years ended May 31, 2007 and 2006
            
            F-4Statements
                of Changes in Stockholder’s Equity Years ended May 31, 2007 and
                2006
            
            F-5Statements
                of Cash Flows Years ended May 31, 2007 and 2006
            
            F-6Notes
                to Consolidated Financial Statements
            
            F-7





F-1







**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors and Stockholders





We
      have
      audited the accompanying consolidated balance sheets of The Banker's Store,
      Inc.
      and Subsidiaries as of May 31, 2007 and 2006, and the related consolidated
      statements of operations, changes in stockholders' equity and cash flows for
      the
      years then ended. These consolidated financial statements are the responsibility
      of the Company's management. Our responsibility is to express an opinion on
      these consolidated financial statements based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting.  Our audit included consideration of internal
      control over financial reporting as a basis for designing audit procedures
      that
      are appropriate in the circumstances, but not for the purpose of expressing
      an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting.  Accordingly, we express no such opinion. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of The Banker's Store, Inc.
      and
      Subsidiaries as of May 31, 2007 and 2006, and their results of operations and
      cash flows for the years then ended, in conformity with accounting principles
      generally accepted in the United States of America.








Marmann,
      Irons & Associates, PC


Sheffield,
      Alabama


July
      31,
      2007





F-2







**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**MAY
      31, 2007 AND MAY 31, 2006**





**May
                31,**
            
            
            **May
                31,****ASSETS**
            
            **2007**
            
            
            **2006**Current
                Assets:Cash
                and cash equivalents
            
            $
            357,323
            
            
            $
            354,688Accounts
                receivable, net of allowance for bad debts of $4,043
            
            
            163,384
            
            
            
            286,137Inventories
            
            
            667,637
            
            
            
            676,580Prepaid
                expenses and other current assets
            
            
            106,848
            
            
            
            27,549Total
                current assets
            
            
            1,295,192
            
            
            
            1,344,954Equipment
                and improvements, net
            
            
            80,143
            
            
            
            94,866Other
                assets
            
            
            20,467
            
            
            
            20,467Totals
            
            $
            1,395,802
            
            
            $
            1,460,287**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Current
                portion of long-term debt
            
            $
            2,346
            
            
            $
            8,454Accounts
                payable and accrued expenses
            
            
            89,845
            
            
            
            141,475Customer
                deposits
            
            
            386,911
            
            
            
            176,482Note
                payable - principal stockholder
            
            
            189,625
            
            
            
            207,991Accrued
                compensation - principal stockholder
            
            
            263,100
            
            
            
            254,400Private
                placement funds in dispute
            
            
            -
            
            
            
            42,000Total
                current liabilities
            
            
            931,827
            
            
            
            830,802Long-term
                debt, net of current portion
            
            
            -
            
            
            
            1,543Total
                liabilities
            
            
            931,827
            
            
            
            832,345Commitments
                and contingenciesStockholders'
                equity:Common
                stock, $.01 par value;  80,000,000 shares
                authorized;  14,954,781 and 14,954,715 shares issued and
                outstanding
            
            
            149,548
            
            
            
            149,548Additional
                paid-in capital
            
            
            550,697
            
            
            
            497,141Less:
                treasury stock 2,000 shares (at cost)
            
            
            (2,000
            )
            
            
            (2,000
            )Accumulated
                (deficit) earnings
            
            
            (234,270
            )
            
            
            (16,747
            )Total
                stockholders' equity
            
            
            463,975
            
            
            
            627,942Totals
            
            $
            1,395,802
            
            
            $
            1,460,287





The
      accompanying notes are an integral part of these financial
      statements.





F-3




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**MAY
      31, 2007 AND 2006**





**TWELVE
                MONTHS ENDED****MAY
                31,****2007**
            
            
            **2006**Revenue
            
            $
            2,622,010
            
            
            $
            2,456,015Cost
                of goods sold
            
            
            1,902,046
            
            
            
            1,662,560Gross
                profit
            
            
            719,964
            
            
            
            793,455Selling,
                general and administrative expenses
            
            
            926,372
            
            
            
            725,267Income
                (loss) from operations
            
            
            (206,408
            )
            
            
            68,188Other
                income (expense):Interest
                and other income (expenses)
            
            
            5,924
            
            
            
            7,489Interest
                expense
            
            
            (17,039
            )
            
            
            (17,114
            )Total
                other income (expense):
            
            
            (11,115
            )
            
            
            (9,625
            )Income
                before income tax provision
            
            
            (217,523
            )
            
            
            58,563Income
                tax provision
            
            
            -
            
            
            
            -Net
                income
            
            $
            (217,523
            )
            
            $
            58,563Basic
                earnings (loss) per common share
            
            $
            (0.01
            )
            
            $
            0.00Diluted
                earnings (loss) per share
            
            $
            (0.01
            )
            
            $
            0.00





The
      accompanying notes are an integral part of these financial
      statements.





F-4




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY**


**MAY
      31, 2007 AND 2006**








Common
                Stock
            
            
            Additional
                Paid-in
            
            
            Retained
                Earnings (Accumulated
            
            
            TreasuryShares
            
            
            Amount
            
            
            Capital
            
            
            Deficit)
            
            
            Stock
            
            
            TotalBalance
                May 31, 2005
            
            
            14,954,715
            
            
            $
            149,548
            
            
            $
            497,141
            
            
            $
            (75,310
            )
            
            $
            (2,000
            )
            
            $
            569,379Shares
                issued
            
            
            66
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Treasury
                stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            58,563
            
            
            
            -
            
            
            
            58,563Balance
                May 31, 2006
            
            
            14,954,781
            
            
            
            149,548
            
            
            
            497,141
            
            
            
            (16,747
            )
            
            
            (2,000
            )
            
            
            627,942Shares
                issued
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Treasury
                stock
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Private
                placement funds
            
            
            -
            
            
            
            -
            
            
            
            42,000
            
            
            
            -
            
            
            
            -
            
            
            
            42,000Stock
                based compensation
            
            
            -
            
            
            
            -
            
            
            
            11,556
            
            
            
            -
            
            
            
            -
            
            
            
            11,556Net
                income
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (217,523
            )
            
            
            -
            
            
            
            (217,523
            )Balance
                May 31, 2007
            
            
            14,954,781
            
            
            $
            149,548
            
            
            $
            550,697
            
            
            $
            (234,270
            )
            
            $
            (2,000
            )
            
            $
            463,975





The
      accompanying notes are an integral part of these financial
      statements.





F-5




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**TWELVE
      MONTHS ENDED MAY 31, 2007 AND 2006**





**MAY
                31,****2007**
            
            
            **2006**Operating
                activitiesNet
                income (loss)
            
            $
            (217,523
            )
            
            $
            58,563Adjustments
                to reconcile net income (loss) to net cash provided by (used in)
                operating
                activities:Depreciation
                and amortization
            
            
            25,154
            
            
            
            25,532Stock
                based compensation
            
            
            11,556
            
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            122,753
            
            
            
            141,710Inventories
            
            
            8,943
            
            
            
            35,198Prepaid
                expenses and other current assets
            
            
            (79,299
            )
            
            
            16,895Accounts
                payable and accrued expenses
            
            
            (51,630
            )
            
            
            (74,849
            )Customer
                deposits
            
            
            210,429
            
            
            
            (61,326
            )Net
                cash provided by operating activities
            
            
            30,383
            
            
            
            121,092Investing
                activitiesCapital
                expenditures, net of writeoffs
            
            
            (10,431
            )
            
            
            (14,642
            )Net
                cash (used in) investing activities
            
            
            (10,431
            )
            
            
            (14,642
            )Financing
                activitiesIncrease
                (decrease) in long-term debt, net
            
            
            (7,651
            )
            
            
            (12,550
            )Loan
                payable - Borrowing from principal stockholder
            
            
            (9,666
            )
            
            
            23,400Net
                cash provided by (used  in) financing activities
            
            
            (17,317
            )
            
            
            10,850Net
                increase in cash and cash equivalents
            
            
            2,635
            
            
            
            117,300Cash
                and cash equivalents, beginning of period
            
            
            354,688
            
            
            
            237,388Cash
                and cash equivalents, end of period
            
            $
            357,323
            
            
            $
            354,688Supplemental
                disclosure of cash flow information:Interest
                paid
            
            $
            17,039
            
            
            $
            16,809Income
                taxes paid
            
            $
            3,350
            
            
            $
            24,999





The
      accompanying notes are an integral part of these financial statements.





F-6




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL
      STATEMENTS**





**NOTE
      1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES:**





Organization
      and principles of consolidation:





The
      Banker's Store, Inc. (the "Store") was incorporated under the laws of the State
      of New York on June 26, 1968. On May 31, 1998, the Company completed the
      acquisition of B.G. Banking Equipment, Inc., ("B.G. Banking") and Financial
      Building Equipment Exchange, Inc. ("FBEE"), both Kentucky corporations, in
      exchange for 11,282,250 shares of its common stock. The acquisition of B.G.
      Banking and FBEE by the Store (collectively, the "Company") has been accounted
      for as a reverse merger involving a shell company, effectively a
      recapitalization of B.G. Banking and FBEE (the operating companies/accounting
      acquirers). Accordingly, the historical financial statements of the operating
      companies are presented as the historical financial statements of the
      registrant. The results of operations of the Store (legal acquirer) are included
      in the consolidated financial statements since May 31, 1998, the date of the
      merger. All significant intercompany accounts and transactions have been
      eliminated in consolidation. The Company is in the business of buying, selling,
      trading and refurbishing financial equipment for banks and other financial
      institutions. During 2001, the Company commenced the business of buying and
      selling office equipment.





Use
      of
      estimates:





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect certain reported amounts and disclosures.
      Actual results could differ from those estimates.





Revenue
      recognition:





The
      Company records sales of furniture and equipment when the products are
      shipped.  In sales that require installation, the Company generally
      obtains customer deposits and invoices the customer on completion of the
      contractual obligation.  In such cases, the sale is recognized when
      the customer is invoiced upon completion of the installation, and the customer
      deposit is applied against the amount due.





Cash
      and
      cash equivalents:





The
      Company considers all highly liquid investments with an original maturity of
      three months or less when purchased to be cash equivalents.





Inventories:





Inventory
      consists of new and used furniture and equipment primarily used in the banking
      industry.  Inventories are stated at the lower of cost or market
      utilizing the first-in, first-out method.  The Company reviews the
      inventory quarterly for obsolescence, and estimates an allowance.  The
      allowance for obsolete inventory was $35,000 and $36,148 as of May 31, 2006
      and
      2007, respectively.





Equipment
      and improvements:





Equipment
      and improvements are stated at cost, less accumulated depreciation and
      amortization. Depreciation and amortization have been provided utilizing the
      straight-line method over the estimated useful lives of the assets.





Reclassifications:





Certain
      reclassifications have been made to the 2006 financial statements to conform
      to
      the 2007 financial statement presentation.  These reclassifications
      had no effect on the statement of operations.





Advertising:


Advertising
      expenses are considered non-response costs and are expensed as
      incurred.  Total advertising expense was $13,978 in 2007 and $16,267
      in 2006.




F-7





**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**


(concluded):





Net
      earnings (loss) per 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 are 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 Company considered 322,000 reserve shares as
      potentially dilutive common shares outstanding during the year ended May 31
      2006.   However, based on the unlikelihood of the possible
      issuance of the reserve shares, the Company did not consider them and only
      considered the share based compensation as described in Note 11 in the
      calculation of dilutive common shares outstanding during the year ended May
      31
      2007. The weighted average numbers of shares for determining basic earnings
      per
      share were 14,954,781 and 14,947,281in 2007 and 2006,
      respectively.  The weighted average numbers of shares for determining
      diluted earnings per share were 15,321,448 and 15,269,281 in 2007 and 2006,
      respectively.





Income
      taxes:





The
      Company accounts for income taxes pursuant to the asset and liability method
      which requires deferred income tax assets and liabilities be computed for
      differences between the financial statement and tax bases of assets and
      liabilities that will result in taxable or deductible amounts in the future
      based on enacted tax laws and rates applicable to the periods in which the
      differences are expected to affect taxable income. Valuation allowances are
      established when necessary to reduce deferred tax assets to the amount expected
      to be realized. Income tax expense is the tax payable or refundable for the
      period plus or minus the change during the period in deferred tax assets and
      liabilities.  See Note 6.





**NOTE
      2 - EQUIPMENT AND
      IMPROVEMENTS:**





Equipment
      and improvements consist of the following:





Range
                ofEstimatedUseful
                Lives
            
            2007
            
            
            2006Machinery
                and equipment
            3
                to 10 years
            
            $
            43,138
            
            
            $
            57,441Transportation
                equipment
            5
                years
            
            
            139,794
            
            
            
            163,396Computer
                equipment
            5
                years
            
            
            20,332
            
            
            
            22,392Furniture
                and fixtures
            5
                years
            
            
            1,267
            
            
            
            1,267Leasehold
                improvements
            3
                years
            
            
            54,728
            
            
            
            51,028Totals
            
            
            
            259,259
            
            
            
            295,524Less
                accumulated depreciation and amortization
            
            
            
            179,116
            
            
            
            200,658Totals
            
            
            $
            80,143
            
            
            $
            94,866




Depreciation
      and amortization amounted to $25,154 and $25,532 for the years ended May 31,
      2007 and 2006 respectively.





F-8




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      3 - NOTE PAYABLE TO BANK:**





The
      Company has a $350,000 revolving line of credit with borrowings bearing interest
      at .25% above the prime rate and guaranteed by the Company's principal
      stockholder. The line of credit expires on November 7, 2007.  At May
      31, 2007, the Company has no outstanding borrowings under the line.





**NOTE
      4 - LONG-TERM DEBT:**





Long-term
      debt consists of the following notes that are collateralized by transportation
      equipment:





2007
            
            
            20066%
                  notes, payable in monthly installments of
                  $307, including interest and maturingJuly
                  2006
            
            $
            -
            
            
            $
            9106.5%
                    notes, payable in monthly installmentsof $310, including interest
                    and maturing September 2007
            
            
            1,225
            
            
            
            4,7406%
                    notes, payable in monthly installmentsof $283, including interest
                    and maturing September 2007
            
            
            1,121
            
            
            
            4,347Totals
            
            
            2,346
            
            
            
            9,997Less
                current portion
            
            
            2,346
            
            
            
            8,454Long-term
                portion
            
            $
            -
            
            
            $
            1,543




F-9




**THE
      BANKER'S STORE, INC. AND
      SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      5 – RELATED PARTY NOTE AND ACCRUED COMPENSATION:**





The
      Chairman and principal stockholder has an employment contract with the Company,
      renewable annually.  The contract provides for an annual salary of
      $12,000 plus health insurance and other benefits.  The Company has
      accrued compensation of $263,100 and $254,400 through May 31, 2007 and 2006,
      respectively, related to this contract.





The
      Company has a demand promissory note payable with interest accruing at prime
      plus 0.5% per annum with the Chairman and principal stockholder in the amount
      $189,625 and $207,991 as of May 31, 2007 and 2006, respectively. The Chairman
      and principal stockholder has represented that he will not demand repayment
      of
      the note until the Company has sufficient resources to make the
      repayment.  The company began repaying principal on the promissory
      note in January 2007.








**NOTE
      6 - INCOME TAXES:**





The
      provision for income taxes differs from the amounts computed using the Federal
      statutory rate of 34% as a result of the following:





2007
            
            
            2006Expected
                provision at Federal statutory rate
            
            
            (34
            %)
            
            
            34
            %Effect
                of state taxes, net of Federal income tax effect
            
            
            (6
            )
            
            
            6Utilization
                of deferred tax assets
            
            
            40
            
            
            
            -Decrease
                in deferred tax valuation
            
            
            -
            
            
            
            (40
            )Effective
                tax rate
            
            
            --
            %
            
            
            --
            %




Due
      to
      the uncertainties related to the extent and timing of our future taxable income,
      we have established a total valuation allowance against deferred tax assets
      in
      prior periods.  In 2006, we decreased the valuation allowance in an
      amount equivalent to current income tax expense.  The Company offset
      the current income tax expense of approximately $19,636 by an equivalent
      decrease in the valuation allowance as of May 31, 2006.  As of May 31,
      2007, the Company has $19,636 in deferred tax assets net of a valuation
      allowance, in order to recognize the benefit attributable to net operating
      loss
      carrybacks.




F-10




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      6 - INCOME TAXES (concluded):**


Significant
      components of the Company's deferred tax assets as of May 31, 2007 and 2006
      are
      as follows:





2007
            
            
            2006Deferred
                tax assets:Net
                operating loss carryback
            
            $
            19,636
            
            
            $
            -Net
                operating loss carryforwards
            
            
            55,364
            
            
            
            -Accrued
                officer salary
            
            
            105,000
            
            
            
            102,000Depreciation
            
            
            (1,000
            )
            
            
            (4,000
            )Inventory
                reserve
            
            
            14,500
            
            
            
            14,000Other
            
            
            3,500
            
            
            
            3,000197,000
            
            
            
            115,000Valuation
                allowance for deferred tax assets
            
            
            (177,364
            )
            
            
            (95,364
            )Deferred
                tax assets
            
            $
            19,636
            
            
            $
            19,636





**NOTE
      7 – LEASE OBLIGATIONS - RELATED PARTY:**





The
      Company has entered into two operating leases with its Chairman and principal
      stockholder for the lease of an aggregate of 31,616 square feet of office and
      warehouse space located in Bowling Green, Kentucky. The leases provide for
      a
      monthly rent of $7,200 plus applicable real estate taxes and maintenance
      expenses. The leases expire in August and September 2007,
      respectively.   In January 2007 the monthly rent was raised from
      $7,200 to $7,920 as a result of an increase in property taxes.





Related
      rent expense amounted to $89,280 and $86,400, respectively for the years ended
      May 31, 2007 and 2006.





**NOTE
      8 - CONTINGENCIES:**





Litigation:





On
      March
      7, 2000, we filed an action in the Supreme Court of the State of New York,
      County of New York, against Stamford Financial Consulting, Inc., Taurus
      International Investment, Inc., George C. Bergleitner, Jr., Alexander C. Brosda
      and Andrew Seim (the “New York Action”), seeking an amount of not less than $1.7
      million for breach of fiduciary duty, breach of contract, conversion and unjust
      enrichment, and seeking an accounting of defendants’ books and records. The
      action arises out of B. G. Banking’s Confidential Private Placement Memorandum
      dated January 31, 1998, prepared by Stamford Financial, for the sale of
      3,000,000 shares of B. G. Banking common stock at $1.00 per share. On April
      5,
      2000, defendant George C. Bergleitner served a counterclaim alleging that we
      failed to have 180,000 shares of stock transferred without any legal
      endorsement, pursuant to Rule 144(k) under the Securities Exchange Act of 1934,
      as amended. The counterclaim seeks damages of $900,000 based upon the value
      of
      the stock at the highest amount at which it traded, which is alleged to be
      $5.00
      per share.




F-11




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      8 - CONTINGENCIES (CONTINUED):**





In
      December 2000, the court entered a default judgment against Taurus International
      Investment, Inc., Alexander C. Brosda and Andrew Seim leaving only George
      Bergleitner and his company, Stamford Financial to defend the
      lawsuit.





By
      order
      entered on May 4, 2001, the Court granted a motion filed by Stamford Financial
      Consulting, Inc. and George C. Bergleitner, to transfer the New York Action
      to
      the New York State Supreme Court, Delaware County, and the action is continuing
      there against these two defendants.




We
      recently filed a motion to dismiss the counterclaim.





Although
      we cannot predict the outcome of the litigation described above, we do not
      believe that the ultimate outcome will have any material adverse effect on
      our
      consolidated financial statements in subsequent periods.





Concentrations
      of credit risk:





Financial
      instruments that potentially subject the Company to concentrations of credit
      risk consist principally of cash and cash equivalents and accounts receivable.
      The Company places its cash and cash equivalents with high credit quality
      institutions to limit its credit exposure. Cash balances are insured by the
      Federal Deposit Insurance Corporation up to $100,000 per depositor. The
      Company's cash balances with financial institutions, at times, may exceed the
      Federal Deposit Insurance Corporation insured limits. At May 31, 2007, the
      Company has cash and cash equivalent balances that exceed federally insured
      limits in the amount of approximately $125,016.





The
      Company closely monitors the extension of credit to its customers while
      maintaining allowances for potential credit losses. On a periodic basis, the
      Company evaluates its accounts receivable and establishes an allowance for
      doubtful accounts, based on a history of past write-offs and collections and
      current credit considerations.





**NOTE
      9 - FAIR VALUE OF FINANCIAL INSTRUMENTS:**





The
      Company's material financial instruments at May 31, 2007 for which disclosure
      of
      estimated fair value is required by certain accounting standards consisted
      of
      cash and cash equivalents, accounts receivable and accounts payable, advances
      from principal stockholder and long-term debt. In the opinion of management,
      (i)
      cash and cash equivalents, accounts receivable and accounts payable were carried
      at values that approximated their fair value because of their liquidity and/or
      their short-term maturities; (ii) long-term debt were carried at values that
      approximated their fair values because they had interest rates equivalent to
      those currently prevailing for financial instruments with similar
      characteristics and (iii) although management does not believe that there is
      a
      practical method that can be used to specifically determine the fair value
      of
      the advances from the principal stockholder, because of the relationship of
      the
      Company and its stockholders, it believes that the carrying value of the
      advances approximates fair value.




F-12





**THE
      BANKER'S STORE, INC. AND
      SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      10 - 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"). The Company has two reporting segments: "Banking
      Equipment" and "Office Equipment" The Banking Equipment segment is comprised
      of
      the operations connected with the buying, selling, 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.





Segment
      disclosure information follows :




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


**TWELVE
                  MONTHS ENDED**
              
              
              **TWELVE
                  MONTHS ENDED****MAY
                  31,**
              
              
              
              
              
              
              
              
              **MAY
                  31,****2007**
              
              
              
              
              
              
              
              
              **2006****Banking**
              
              
              **Office**
              
              
              
              
              
              **Banking**
              
              
              **Office****Equipment**
              
              
              **Equipment**
              
              
              **Totals**
              
              
              **Equipment**
              
              
              **Equipment**
              
              
              **Totals**Revenues
                  from external customers
              
              $
              2,325,322
              
              
              $
              296,688
              
              
              $
              2,622,010
              
              
              $
              2,191,196
              
              
              $
              264,819
              
              
              $
              2,456,015Intersegment
                  revenues
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Interest
                  revenue
              
              
              5,995
              
              
              
              -
              
              
              
              5,995
              
              
              
              3,404
              
              
              
              -
              
              
              
              3,404Interest
                  expense
              
              
              17,039
              
              
              
              -
              
              
              
              17,039
              
              
              
              17,114
              
              
              
              -
              
              
              
              17,114Net
                  interest expense
              
              
              11,043
              
              
              
              -
              
              
              
              11,043
              
              
              
              13,710
              
              
              
              -
              
              
              
              13,710Depreciation
                  and amortization
              
              
              24,435
              
              
              
              719
              
              
              
              25,154
              
              
              
              25,222
              
              
              
              310
              
              
              
              25,532Segment
                  profit (loss)
              
              
              (189,899
              )
              
              
              (27,624
              )
              
              
              (217,523
              )
              
              
              67,837
              
              
              
              (9,274
              )
              
              
              58,563Segment
                  assets
              
              $
              1,294,827
              
              
              $
              100,975
              
              
              $
              1,395,802
              
              
              $
              1,356,098
              
              
              $
              104,189
              
              
              $
              1,460,287




**NOTE
      11 – SHARE BASED COMPENSATION**





During
      the year ended May 31, 2007, the Company established a share based compensation
      plan, which is described below.  The compensation cost that has been
      charged against income was $11,556 for the year ended May 31,
      2007.  No income tax benefit was recognized during the year ended May
      31, 2007 “See Note 6”. There were no options exercised and no effect on cash
      flows during the year ended May 31, 2007.





***2006
      Stock Ownership Incentive Plan***





The
      Plan
      was approved by shareholders at the annual meeting of shareholders held on
      January 11, 2007.  The purpose of the Plan is to enhance the ability
      of the Company to secure and retain the services of qualified employees and
      non-employee directors and to provide incentives for such employees and
      non-employee directors to exert maximum efforts for the success of the
      Company.  The number of shares of Common Stock authorized for issuance
      under the Plan is 950,000 shares, subject to adjustment as provided in the
      Plan.  Full-time employees of the Company and its subsidiaries and
      non-employee directors of the Company are eligible to receive stock options
      and
      restricted stock under the Plan.  As of May 31, 2007, the Company had
      approximately 21 full-time employees and the Company had 1 non-employee
      director.





F-13





**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Under
      the
      plan option awards vest over a three year period.  The fair value of
      each option award is estimated on the date of grant using the Black Scholes
      Option Pricing Model.  The inputs used in the Black Scholes Option
      Pricing Model are disclosed below.





Current
                stock price
            
            $
            0.07Expected
                dividends
            
            NoneRestrictions
            
            NoneExercise
                price
            
            $
            0.07Risk
                free rate
            
            
            4.74
            %Expected
                term (in years)
            
            
            3.5Historical
                volatility
            
            
            127
            %Dilution
                adjustment
            
            
            6.27
            %




On
      October 9, 2006 the Company entered into Employment Agreements with Vincent
      C.
      Buckman and Samuel J. Stone with regard to their service as President and Chief
      Executive Officer and Chief Financial Officer, respectively.  Under
      the Employment Agreements, the Company granted options to Mr. Buckman and Mr.
      Stone to purchase 300,000 shares and 250,000 shares, respectively, of the
      Company’s Common Stock. Shareholders of the Company approved these option
      agreements at the annual meeting of shareholders held on January 11, 2007.
      The
      exercise price of these options was equal to fair market value of the Company’s
      Common Stock on the date of issuance. The Company also agreed to issue options
      to Mr. Buckman to purchase an additional 245,455 shares of Common Stock and
      options to Mr. Stone to purchase an additional 204,545 shares of Common Stock
      pursuant to the Employment Agreements. These additional options will be granted
      pursuant to the Plan as described below.








**Number
                of securities to be issued upon exercise of outstanding
                options**
            
            **Weighted
                –Average exercise price of outstanding options**
            
            **Number
                of securities remaining available for future issuance under equity
                compensation plans**Equity
                compensation plans approved by security holders (1)
            
            550,000
                shares
            
            $.07
            
            950,000
                shares(2)Equity
                compensation plans not approved by security holders
            
            N/A
            
            N/A
            
            N/ATotal
            
            550,000
            
            $.07
            
            950,000(2)





(1)
      Shareholders approved stock option agreements granted to the Company’s President
      and Chief Executive Officer and the Company’s Financial Officer with respect to
      a total of 550,000 shares at the Company’s annual meeting of shareholders held
      on January 11, 2007.  At the January 11, 2007 annual meeting,
      shareholders also approved the 2006 Stock Ownership Incentive Plan (“Plan”)
      which authorizes the grant of restricted stock and stock options with respect
      to
      a maximum of 950,000 shares.





(2)
      Although no options have been granted under the Plan, pursuant to employment
      agreements with the Company’s President and Chief Executive Officer and the
      Company’s Chief Financial Officer (“Employment Agreements”), the Company agreed
      to issue options in 2007 and 2008 under the Plan to the Company’s President and
      Chief Executive Officer to purchase a total of an additional 245,455 shares
      of
      Common Stock, and to the Company’s Chief Financial Officer to purchase a total
      of an additional 204,545 shares of Common Stock with an exercise price equal
      to
      fair market value on the date of grant.  See “2006 Stock Ownership
      Incentive Plan” below.





F-14




**THE
      BANKER'S STORE, INC. AND SUBSIDIARIES**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Options
                to be granted - number of shares**
            
            **Date
                of Grant**
            
            **Recipient
                of Options**122,728
            
            October
                9, 2007
            
            Vincent
                C. Buckman, President and Chief Executive Officer122,727
            
            October
                9, 2008
            
            Vincent
                C. Buckman, President and Chief Executive Officer102,273
            
            October
                9, 2007
            
            Samuel
                J. Stone, Chief Financial Officer102,272
            
            October
                9, 2008
            
            Samuel
                J. Stone, Chief Financial Officer








**NOTE
      12 – SUMMARIZED QUARTERLY FINANCIAL DATA
      (*****Unaudited*****)**


The
      following data summarizes quarterly operating results.





**Year
                ended May 31, 2007**August
                31,
            
            
            November
                30,
            
            
            February
                28,
            
            
            May
                31,2006
            
            
            2006
            
            
            2007
            
            
            2007
            
            
            TotalsRevenues
            
            $
            595,872
            
            
            $
            495,009
            
            
            $
            698,516
            
            
            $
            832,613
            
            
            $
            2,622,010Cost
                of goods sold
            
            
            464,993
            
            
            
            362,679
            
            
            
            451,866
            
            
            
            622,508
            
            
            
            1,902,046Gross
                profit
            
            
            130,879
            
            
            
            132,330
            
            
            
            246,650
            
            
            
            210,105
            
            
            
            719,964Selling,
                general and administrative expenses
            
            
            223,533
            
            
            
            239,016
            
            
            
            252,149
            
            
            
            211,674
            
            
            
            926,372Income
                (loss) from operations
            
            
            (92,654
            )
            
            
            (106,686
            )
            
            
            (5,499
            )
            
            
            (1,569
            )
            
            
            (206,408
            )Other
                income (expense)
            
            
            (2,996
            )
            
            
            (3,346
            )
            
            
            (1,951
            )
            
            
            (2,823
            )
            
            
            (11,115
            )Income
                before income tax provision
            
            
            (95,650
            )
            
            
            (110,032
            )
            
            
            (7,450
            )
            
            
            (4,391
            )
            
            
            (217,523
            )Income
                tax provision
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Net  income
                (loss)
            
            
            (95,650
            )
            
            
            (110,032
            )
            
            
            (7,450
            )
            
            
            (4,391
            )
            
            
            (217,523
            )Basic
                earnings (loss) per common share
            
            $
            -
            
            
            $
            (0.01
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            (0.01
            )Diluted
                earnings (loss) per common share
            
            $
            -
            
            
            $
            (0.01
            )
            
            $
            -
            
            
            $
            -
            
            
            $
            (0.01
            )




F-15





**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




None.




**ITEM
      8A. CONTROLS AND
      PROCEDURES**





(a)
      Disclosure controls and procedures. Based upon an evaluation, supervised by
      Vincent C. Buckman, our President and  Chief Executive Officer and Sam
      Stone, our Chief Financial Officer, of the effectiveness of the design and
      operation of our disclosure controls and procedures concluded that our
      disclosure controls and procedures were effective as of May 31,
      2007.





(b)
      Internal controls. During the year ended May 31, 2007, there were no significant
      changes in our internal accounting controls or in other factors that materially
      affected our internal controls over financial reporting.




**ITEM
      8B. OTHER INFORMATION**





None.





**PART
      III**





The
      information required by Part III, with the exception of Item 13, is incorporated
      by reference to the Company’s definitive proxy statement for the 2007 annual
      meeting of stockholders, which the Company will file with the Securities and
      Exchange Commission within 120 days after the end of the fiscal year covered
      by
      this report.








**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
      AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT**





Incorporated
      by reference as described above.








**ITEM
      10. EXECUTIVE COMPENSATION**





Incorporated
      by reference as described above.





**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





Incorporated
      by reference as described above.





**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





Incorporated
      by reference as described above.








**ITEM
      13. EXHIBITS**





**EXHIBIT
      NUMBER AND DESCRIPTION OF DOCUMENT**





2.1
            
            Agreement
                of Business Combination By Stock Exchange, dated April 15, 1998,
                by and
                between BG Banking Equipment and Maritime Transport & Technology, Inc.
                (2)3.1
            
            Certificate
                of Incorporation of The Banker's Store, Inc., as amended.
                (1)3.2
            
            Articles
                of Incorporation of Financial Building Equipment Exchange, Inc.
                (1)3.3
            
            Articles
                of Incorporation as amended of BG Banking Equipment, Inc.
                (1)




25




3.4
            
            Bylaws
                of The Banker's Store, Inc. (1)4.1
            
            Specimen
                Common Stock Certificate. (2)10.1
            
            Business
                Lease, dated August 1, 1998, by and between Paul D. Clark and Maritime
                Transport and Technology, Inc. (dba The Bank Store and dba BG Banking
                Equipment, Inc.)(2)10.2
            
            Employment
                Agreement, dated February 1, 1998, by and between Maritime Transport
&
                Technology, Inc. (dba The Bank Store and dba BG Banking Equipment,
                Inc.)
                and Paul Clark. (2)10.3
            
            Employment
                Agreement between the Company and Vincent C. Buckman.
                (3)10.4
            
            Employment
                Agreement between the Company and Samuel Stone (3)10.5
            
            2006
                Stock Ownership Incentive Plan (4)21.1
            
            Subsidiaries
                of the Company. (1)31.1
            
            Certification
                Pursuant to Rule 13a-14(a) of Vincent C. Buckman, CEO and
                President31.2
            
            Certification
                Pursuant to Rule 13a-14(a) of Sam Stone, Chief Financial
                Officer32.1
            
            Certification
                of Vincent C. Buckman32.2
            
            Certification
                of Sam Stone(1)
            
            Incorporated
                herein by reference from the Company's Form 10-K filed for the year
                ending
                May 31, 1998.(2)
            
            Incorporated
                herein by reference from the Company's Form 10-K filed for the year
                ending
                May 31, 2000.(3)
            
            Incorporated
                by reference from the Company’s Current Report on Form 8-K filed with the
                SEC on October 13, 2006.(4)
            
            Incorporated
                by reference from the Company’s definitive proxy statement filed with the
                SEC on December 11, 2006.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND
      SERVICES**





Incorporated
      by reference as described above.





26





**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this amended report to be signed on its
      behalf by the undersigned, thereunto duly authorized.





**The
                Banker's Store, Inc.**Dated:
                August 9, 2007
            
            By:
            /s/
                Vincent C. BuckmanVincent
                C. Buckman,President,
                CEO, & Director











Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.





/s/
                Vincent C. Buckman
            
            Dated:
                August 9, 2007Vincent
                C. Buckman,  President, CEO, & Director/s/
                Sam Stone
            
            Dated:
                August 9, 2007Sam
                Stone, CFO & Director/s/
                Paul D. Clark
            
            Dated:
                August 9, 2007Paul
                D. Clark,  Chairman & Director/s/
              Cynthia A. Hayden
            
            Dated:
                August 9, 2007Cynthia
                A. Hayden, VP,Secretary
                & Director/s/
              Roberta W. Clark
            
            Dated:
                August 9, 2007Roberta
                W. Clark, Director






27