|   | (X)      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT OF 1934 |
|--------|----------------------------------------------------------------------------------------------------|

|   | (      ) TRANSITION REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934 |
|--------|-------------------------------------------------------------------------------------------------------------|

| Kansas                                                         | 48-0201080                                |
|---------------------------------------------------------------------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.      Employer Identification No.) |
|                                                                |                                      |
| 401      Cottage StreetAbilene,      Kansas                    |   67410-2832                    |
| (Address      of principal executive offices)                       | (Zip      Code)                           |

----

| TABLE      OF CONTENTS |          |   |                                                                                                                    |
|------------------------|---------------|--------|-------------------------------------------------------------------------------------------------------------------------|
|                   |          |   |                                                                                                                    |   |   |
| PART      I            |          |   |
|                   | Item      1.  |   | Business.                                                                                                               |   | 3 |
|                   | Item      1A. |   | Risk      Factors.                                                                                                      |   | 5 |
|                   | Item      1B. |   | Unresolved      Staff Comments.                                                                                         |   | 7 |
|                   | Item      2.  |   | Properties.                                                                                                             |   | 7 |
|                   | Item      3.  |   | Legal      Proceedings.                                                                                                 |   | 7 |
|                   | Item      4.  |   | Submission      of Matters to a Vote of Security Holders.                                                               |   | 7 |
|                   |          |   |
| PART      II           |          |   |
|                   | Item      5.  |   | Market      for Registrant's Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities. |   | 7 |
|                   | Item      6.  |   | Selected      Financial Data.                                                                                           |   | 9 |
|                   | Item      7.  |   | Management's      Discussion and Analysis of Financial Condition and Results of      Operations.                        |   | 10 |
|                   | Item      7A. |   | Quantitative      and Qualitative Disclosures About Market Risk.                                                        |   | 16 |
|                   | Item      8.  |   | Financial      Statements and Supplementary Data.                                                                       |   | 17 |
|                   | Item      9.  |   | Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure.                         |   | 31 |
|                   | Item      9A. |   | Controls      and Procedures.                                                                                           |   | 32 |
|                   | Item      9B. |   | Other      Information.                                                                                                 |   | 33 |
|                   |          |   |
| PART      III          |          |   |
|                   | Item      10. |   | Directors      and Executive Officers of the Registrant.                                                                |   | 33 |
|                   | Item      11. |   | Executive      Compensation.                                                                                            |   | 34 |
|                   | Item      12. |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters.               |   | 34 |
|                   | Item      13. |   | Certain      Relationships and Related Transactions.                                                                    |   | 34 |
|                   | Item      14. |   | Principal      Accountant Fees and Services.                                                                            |   | 34 |
|                   |          |   |
| PART      IV           |          |   |
|                   | Item      15. |   | Exhibits      and Financial Statement Schedules.                                                                        |   | 34 |
|                   |          |   |
| Signatures             |          | 35     |
|                   |          |   |
|                   |          |   |

----

|                                                                     |   |                     |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                                     |   | Percentage      of Sales |   |
|                                                                     |   |                     |   |   |   |   |
|                                                                     |   | 2008                     |   |   | 2007   |   |
| Merchandise      Category:                                               |   |                     |   |   |   |   |
| Consumables      and commodities                                         |   |                     | 30     | %      |   |   | 30 | % |
| Electronics,      entertainment, sporting goods, toys and outdoor living |   |                     | 25     | %      |   |   | 25 | % |
| Apparel      and accessories                                             |   |                     | 20     | %      |   |   | 20 | % |
| Home      furnishings and décor                                     |   |                     | 14     | %      |   |   | 14 | % |
| Other                                                                    |   |                     | 11     | %      |   |   | 11 | % |
|                                                                     |   |                     |   |   |   |   |   |   |
| Total                                                                    |   |                     | 100    | %      |   |   | 100 | % |

----

|                | 2008       |   | 2007     |   | 2006 |
|---------------------|------------|--------|----------|--------|------|
|                | ALCO  |   | Duckwall |   | ALCO |   | Duckwall |   | ALCO |   | Duckwall |
| Stores      Opened  | 18         |   |  -  |   | 7    |   | - |   | 7 |   | 1 |
| Stores      Closed  | 3          |   | 9        |   | 1    |   | 1 |   | 10 |   | 13 |
| Net      New Stores | 15         |   | (9)      |   | 6    |   | (1) |   | (3) |   | (12) |

----

| Duckwall      Stores |   | ALCO      Stores |
|----------------------|--------|------------------|
|                 |   |             |   |   |   |   |   |
| Colorado             | 5      |             | Arizona | 8 |   | Montana | 1 |
| Iowa                 | 4      |             | Arkansas | 5 |   | Nebraska | 16 |
| Kansas               | 23     |             | Colorado | 12 |   | New      Mexico | 9 |
| Nebraska             | 6      |             | Idaho | 3 |   | North      Dakota | 8 |
| New      Mexico      | 1      |             | Georgia | 3 |   | Ohio | 5 |
| North      Dakota    | 2      |             | Illinois | 11 |   | Oklahoma | 8 |
| Oklahoma             | 6      |             | Indiana | 14 |   | South      Dakota | 9 |
| South      Dakota    | 2      |             | Iowa | 10 |   | Texas | 27 |
| Texas                | 9      |             | Kansas | 28 |   | Utah | 6 |
|                 |   |             | Minnesota | 11 |   | Wisconsin | 1 |
|                 |   |             | Missouri | 6 |   | Wyoming | 3 |

----

----

| ITEM      1B. | UNRESOLVED STAFF      COMMENTS. |
|---------------|---------------------------------|

| ITEM      2. | PROPERTIES. |
|--------------|-------------|

| ITEM      3. | LEGAL      PROCEEDINGS. |
|--------------|-------------------------|

| ITEM      4. | SUBMISSION OF MATTERS TO A VORE      OF SECURITY HOLDERS. |
|--------------|-----------------------------------------------------------|

| ITEM      5. | MARKET FOR REGISTRANT'S COMMON      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY      SECURITIES. |
|--------------|------------------------------------------------------------------------------------------------------------------------------|

| Fiscal      2008    |   |   |   | High   |   | Low    |
|---------------------|--------|--------|--------|--------|--------|--------|
| First      quarter  |   |   |   | $41.49 |   | $34.44 |
| Second      quarter |   |   |   | $40.50 |   | $36.51 |
| Third      quarter  |   |   |   | $40.88 |   | $35.13 |
| Fourth      quarter |   |   |   | $37.00 |   | $21.53 |
|                |   |   |   |   |   |   |
| Fiscal      2007    |   |   |   | High   |   | Low    |
| First      quarter  |   |   |   | $26.70 |   | $22.34 |
| Second      quarter |   |   |   | $34.93 |   | $25.40 |
| Third      quarter  |   |   |   | $38.54 |   | $33.65 |
| Fourth      quarter |   |   |   | $42.06 |   | $33.77 |

----

|                            |   | 2003   |   |   | 2004   |   |   | 2005   |   |   | 2006   |   |   | 2007   |   |   | 2008   |   |
|---------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| NASDAQ      Composite Index     |   |   | 100.00 |   |   |   | 156.42 |   |   |   | 154.12 |   |   |   | 174.44 |   |   |   | 184.38 |   |   |   | 182.70 |   |
| S&P      Retail Index  |   |   | 100.00 |   |   |   | 148.35 |   |   |   | 169.05 |   |   |   | 182.31 |   |   |   | 201.55 |   |   |   | 167.80 |   |
| Duckwall-ALCO      Stores, Inc. |   |   | 100.00 |   |   |   | 156.04 |   |   |   | 194.79 |   |   |   | 266.56 |   |   |   | 376.88 |   |   |   | 227.71 |   |

----

|                                                                        |   | Fiscal      Year Ended |      |
|-----------------------------------------------------------------------------|--------|------------------------|-----------|
|                                                                        |   | 53      Weeks          |      |   | 52      Weeks |   |   | 52      Weeks |   |   | 52      Weeks |   |   | 52      Weeks |   |
|                                                                        |   | February      3,       |      |   | January      28, |   |   | January      29, |   |   | January      30, |   |   | February      1, |   |
| Statement      of Operations Data                                           |   | 2008                   |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
| Net      sales                                                              |   | $                      | 499,032   |   |   |   | 467,321 |   |   |   | 425,756 |   |   |   | 400,545 |   |   |   | 390,331 |   |
| Cost      of sales                                                          |   |                   | 341,393   |   |   |   | 318,999 |   |   |   | 289,621 |   |   |   | 267,105 |   |   |   | 259,123 |   |
| Gross      margin                                                           |   |                   | 157,639   |   |   |   | 148,322 |   |   |   | 136,135 |   |   |   | 133,440 |   |   |   | 131,208 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses (SG&A) (1)            |   |                   | 144,937   |   |   |   | 130,445 |   |   |   | 122,705 |   |   |   | 119,825 |   |   |   | 115,198 |   |
| Depreciation      and amortization (4)                                      |   |                   | 9,817     |   |   |   | 6,868 |   |   |   | 5,873 |   |   |   | 6,333 |   |   |   | 6,735 |   |
| Income      from continuing operations                                      |   |                   | 2,885     |   |   |   | 11,009 |   |   |   | 7,557 |   |   |   | 7,282 |   |   |   | 9,275 |   |
| Interest      expense                                                       |   |                   | 3,382     |   |   |   | 2,730 |   |   |   | 1,272 |   |   |   | 1,231 |   |   |   | 1,386 |   |
| Earnings      (loss) from continuing operations before                      |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| income      taxes and discontinued operations                               |   |                   | (497      | ) |   |   | 8,279 |   |   |   | 6,285 |   |   |   | 6,051 |   |   |   | 7,889 |   |
| Income      tax expense (benefit)                                           |   |                   | (252      | ) |   |   | 2,893 |   |   |   | 1,710 |   |   |   | 2,077 |   |   |   | 2,387 |   |
| Earning      (loss) from continuing operations before                       |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| discontinued      operations                                                |   |                   | (245      | ) |   |   | 5,386 |   |   |   | 4,575 |   |   |   | 3,974 |   |   |   | 5,502 |   |
| Income      (loss) from discontinued operations, net                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of      income tax                                                          |   |                   | 21        |   |   |   | 318 |   |   |   | (2,626 | ) |   |   | (51 | ) |   |   | 1,011 |   |
| Net      earnings (loss)                                                    |   | $                      | (224      | ) |   |   | 5,704 |   |   |   | 1,949 |   |   |   | 3,923 |   |   |   | 6,513 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per      share information                                                  |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - basic                                      |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) before discontinued operations                         |   | $                      | (0.06     | ) |   |   | 1.42 |   |   |   | 1.12 |   |   |   | 0.90 |   |   |   | 1.30 |   |
| Discontinued      operations                                                |   |                   | 0.01      |   |   |   | 0.08 |   |   |   | (0.64 | ) |   |   | (0.01 | ) |   |   | 0.24 |   |
| Net      earnings (loss)                                                    |   | $                      | (0.05     | ) |   |   | 1.50 |   |   |   | 0.48 |   |   |   | 0.89 |   |   |   | 1.54 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - diluted                                    |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) before discontinued operations                         |   | $                      | (0.06     | ) |   |   | 1.41 |   |   |   | 1.11 |   |   |   | 0.89 |   |   |   | 1.27 |   |
| Discontinued      operations                                                |   |                   | 0.01      |   |   |   | 0.08 |   |   |   | (0.64 | ) |   |   | (0.01 | ) |   |   | 0.23 |   |
| Net      earnings                                                           |   | $                      | (0.05     | ) |   |   | 1.49 |   |   |   | 0.47 |   |   |   | 0.88 |   |   |   | 1.50 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding:                                   |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                       |   |                   | 3,807,033 |   |   |   | 3,792,202 |   |   |   | 4,083,798 |   |   |   | 4,391,538 |   |   |   | 4,243,441 |   |
| Diluted                                                                     |   |                   | 3,807,033 |   |   |   | 3,828,928 |   |   |   | 4,117,922 |   |   |   | 4,464,416 |   |   |   | 4,343,381 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      Data                                                         |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stores      open at year-end                                                |   |                   | 262       |   |   |   | 256 |   |   |   | 251 |   |   |   | 266 |   |   |   | 264 |   |
| Stores      in non-competitive markets at year-end (2)                      |   |                   | 215       |   |   |   | 222 |   |   |   | 222 |   |   |   | 231 |   |   |   | 230 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percentage      of total stores in non-competitive markets (2)              |   |                   | 82.06     | % |   |   | 86.72 | % |   |   | 88.45 | % |   |   | 86.84 | % |   |   | 87.12 |  % |
| Net      sales of stores in non-competitive markets (2)                     |   | $                      | 391,913   |   |   | $ | 404,196 |   |   | $ | 381,863 |   |   | $ | 366,637 |   |   | $ | 363,634 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percentage      of net sales from stores in non-competitive markets (2)     |   |                   | 78.54     | % |   |   | 85.05 | % |   |   | 87.78 | % |   |   | 84.59 | % |   |   | 83.99 |  % |
| Same-store      sales increase for all stores (3)                           |   |                   | 0.80      | % |   |   | 6.02 | % |   |   | 3.12 | % |   |   | 0.13 | % |   |   | 0.98 |  % |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Same-store sales increase for      stores in non-competitive markets (2)(3) |   |                   | 3.31      | % |   |   | 6.43 | % |   |   | 3.67 | % |   |   | 0.78 | % |   |   | 2.09 |  % |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      Sheet Data                                                     |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                                           |   | $                      | 185,386   |   |   | $ | 195,420 |   |   | $ | 178,922 |   |   | $ | 163,118 |   |   | $ | 167,493 |   |
|                                                                        |   |                   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total debt (includes capital      lease obligation and current maturities)  |   |                   | 33,013    |   |   |   | 29,988 |   |   |   | 26,240 |   |   |   | 8,605 |   |   |   | 10,876 |   |
| Stockholders'      equity                                                   |   |                   | 107,172   |   |   |   | 106,060 |   |   |   | 102,147 |   |   |   | 114,676 |   |   |   | 109,193 |   |

| (1) | Effective      January 29, 2006, the Company adopted SFAS no 123(R), Share-Based Payments.      Included in selling, general and administrative expenses is $1.1 million      of share-based compensation expense in fiscal 2008 and $821 in fiscal      2007, respectively.  No expense was recorded for share-based      compensation in earlieryears.  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | “Non-competitive” markets      refer to those markets where there is not a national or regional full-line      discount store located in the primary market served by the Company. The      Company's stores in such non-competitive markets nevertheless face      competition from various sources. See Item 1      “Business-Competition”. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Percentages,      as adjusted to a comparable 52 week year, reflect the increase or decrease      based upon a comparison of the applicable fiscal year with the immediately      preceding fiscal year for stores open during the entirety of both      years.  For fiscal 2008, sales were reduced by the week 53      amount. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | In      fiscal 2008, a provision for asset impairment of $2.1 million is included      in depreciation and amortization. |
|-----|--------------------------------------------------------------------------------------------------------------------------|

----

| ITEM      7. | MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATION. |
|--------------|-------------------------------------------------------------------------------------------------------|

|   | · | Net      sales increased 6.8% to $499,032. Same store sales increased 2.8% compared      to the prior year.      |
|--------|--------|------------------------------------------------------------------------------------------------------------------|
|   | · | Gross      margin decreased to 31.6% of sales, compared to 31.7% in the prior      year.                         |
|   | · | Selling,      general and administrative expenses were 29.0% of sales, compared to 27.9%      in the prior year. |
|   | · | Net      earnings (loss) per share was $(0.05), compared to earnings of $1.49 per      share in the prior year.  |
|   | · | Return      on average equity was (0.2) %, compared to 5.5% in the prior      year.                              |

----

|                                                                                |   | Fiscal      Year Ended |   |
|-------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                |   | 53      Weeks          |   |   | 52      Weeks |   |   | 52      Weeks |   |
|                                                                                |   | February      3,       |   |   | January      28, |   |   | January      29, |   |
|                                                                                |   | 2008                   |   |   | 2007 |   |   | 2006 |   |
| Net      sales                                                                      |   |                   | 100.0  | % |   |   | 100.0 | % |   |   | 100.0 | % |
| Cost      of sales                                                                  |   |                   | 68.4   |   |   |   | 68.3 |   |   |   | 68.0 |   |
| Gross      margin                                                                   |   |                   | 31.6   |   |   |   | 31.7 |   |   |   | 32.0 |   |
|                                                                                |   |                   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                                   |   |                   | 29.0   |   |   |   | 27.9 |   |   |   | 28.8 |   |
| Depreciation      and amortization                                                  |   |                   | 2.0    |   |   |   | 1.4 |   |   |   | 1.4 |   |
| Total      operating expenses                                                       |   |                   | 31.0   |   |   |   | 29.3 |   |   |   | 30.2 |   |
| Income      from continuing operations                                              |   |                   | 0.6    |   |   |   | 2.4 |   |   |   | 1.8 |   |
| Interest      expense                                                               |   |                   | 0.7    |   |   |   | 0.6 |   |   |   | 0.3 |   |
| Earnings      (loss) from continuing operations before income                       |   |                   |   |   |   |   |   |   |   |   |   |   |
| taxes      and discontinued operations                                              |   |                   | (0.1   | ) |   |   | 1.8 |   |   |   | 1.5 |   |
| Income      tax expense (benefit)                                                   |   |                   | (0.1   | ) |   |   | 0.6 |   |   |   | 0.4 |   |
| Earnings      (loss) from continuing operations before discontinued      operations |   |                   | (0.0   | ) |   |   | 1.2 |   |   |   | 1.1 |   |
| Income      (loss) from discontinued operations, net of income tax                  |   |                   | 0.0    |   |   |   | 0.1 |   |   |   | (0.6 | ) |
| Net      earnings (loss)                                                            |   |                   | (0.0   | )      % |   |   | 1.1 | % |   |   | 0.5 | % |

----

----

|                                                                                                                                                                                                                |   | For      the Years Ended |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                                                                                                                                                                |   | 53      Weeks            |    |   | 52      Weeks |   |
| SG&A      Expenses Breakout                                                                                                                                                                                     |   | February      3, 2008    |    |   | January      28, 2007 |   |
| General      office                                                                                                                                                                                                 |   | $                        | 21,641  |   |   |   | 19,021 |   |
| Distribution      center                                                                                                                                                                                            |   |                     | 9,327   |   |   |   | 9,225 |   |
| 401K      expense                                                                                                                                                                                                   |   |                     | 480     |   |   |   | 478 |   |
| Same-store      SG&A                                                                                                                                                                                            |   |                     | 101,413 |   |   |   | 97,183 |   |
| Non same-store      SG&A (1)                                                                                                                                                                               |   |                     | 10,946  |   |   |   | 3,717 |   |
| Share-based      compensation expense                                                                                                                                                                               |   |                     | 1,130   |   |   |   | 821 |   |
| Final      SG&A as reported                                                                                                                                                                                     |   | $                        | 144,937 |   |   |   | 130,445 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| ROE      (2)                                                                                                                                                                                                        |   |                     | -0.21   | % |   |   | 5.48 | % |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Net      sales                                                                                                                                                                                                      |   | $                        | 499,032 |   |   | $ | 467,321 |   |
| SG&A      as % of sales                                                                                                                                                                                         |   |                     | 29.04   | % |   |   | 27.91 | % |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| SG&A      per average selling square foot                                                                                                                                                                       |   | $                        | 33.75   |   |   | $ | 31.79 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| EBITDA      (3)                                                                                                                                                                                                     |   | $                        | 13,832  |   |   | $ | 18,698 |   |
| EBITDA      per average selling square foot (4)                                                                                                                                                                     |   | $                        | 3.22    |   |   | $ | 4.56 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Sales      per average selling square feet (5)                                                                                                                                                                      |   |                     |    |   |   |   |   |   |
| ALCO                                                                                                                                                                                                                |   | $                        | 118.87  |   |   | $ | 116.46 |   |
| Duckwall                                                                                                                                                                                                            |   | $                        | 80.82   |   |   | $ | 80.45 |   |
| Total                                                                                                                                                                                                               |   | $                        | 116.21  |   |   | $ | 113.88 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Average      inventory per average selling square feet (5)(6)                                                                                                                                                       |   |                     |    |   |   |   |   |   |
| ALCO      (7)                                                                                                                                                                                                       |   | $                        | 27.37   |   |   | $ | 30.64 |   |
| Duckwall                                                                                                                                                                                                            |   | $                        | 20.21   |   |   | $ | 23.60 |   |
| Total      (7)                                                                                                                                                                                                      |   | $                        | 26.83   |   |   | $ | 30.07 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Average      selling square feet (in thousands) (5)                                                                                                                                                                 |   |                     | 4,294   |   |   |   | 4,104 |   |
| Average      square feet % change                                                                                                                                                                                   |   |                     | 4.6     | % |   |   | 3.1 | % |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Total      stores operating beginning of period                                                                                                                                                                     |   |                     | 256     |   |   |   | 251 |   |
| Total      stores operating end of period                                                                                                                                                                           |   |                     | 262     |   |   |   | 256 |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| Supplemental      Data: (8)                                                                                                                                                                                         |   |                     |    |   |   |   |   |   |
| Same-store      sales change                                                                                                                                                                                        |   |                     | 2.8     | % |   |   | 6.0 | % |
| Same-store      gross margin percentage change                                                                                                                                                                      |   |                     | 1.0     |  % |   |   | -.05 | % |
| Same-store      SG&A percentage change                                                                                                                                                                          |   |                     | 4.4     |  % |   |   | 4.8 |  % |
| Total      customer count change                                                                                                                                                                                    |   |                     | 1.2     | % |   |   | 1.9 | % |
| Average      sale per ticket change                                                                                                                                                                                 |   |                     | 2.6     | % |   |   | 7.6 | % |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
|                                                                                                                                                                                                                |   |                     |    |   |   |   |   |   |
| (1)      Non same-stores are those stores opened in Fiscal 2008 & Fiscal      2007                                                                                                                              |   |                     |    |   |   |
| (2)      Return on average equity (ROE) is calculated as net earnings (loss)      divided by average stockholders' equity                                                                                           |   |
| Average      Stockholders' Equity is calculated as (beginning of period stockholders'      equity plus end of period stockholders' equity) divided by    2                                                          |   |
| (3)      Adjusted EBITDA is a non-GAAP financial measure and is calculated as      earnings (loss) from continuing operations before interest, taxes,      depreciation and amortization, and stock option expense. |   |                     |    |   |   |
| (4)      Adjusted EBITDA per selling square foot is a non-GAAP financial measure      and is calculated as EBITDA divided by selling squarefeet.                                                                    |   |
| (5)      Average selling square feet is (beginning square feet plus ending square      feet) divided by 2.                                                                                                          |   |                     |    |   |   |   |   |   |
| (6)      Average inventory is (beginning inventory plus ending inventory) divided      by 2. This includes only the merchandise inventory at store      level.                                                      |   |                     |    |   |   |   |   |   |
| (7)      Excludes inventory for unopened stores.                                                                                                                                                                    |   |                     |    |   |   |   |   |   |
| (8)      Fiscal 2008 amounts are for 53 weeks                                                                                                                                                                       |   |                     |    |   |   |   |   |   |

----

| ·   | increased      payroll and benefits of $1.8 million                     |
|--------------------|-------------------------------------------------------------------------|
| ·   | increased      professional fees of $376                                |
| ·   | decreased      information technology systems related expenses of  $296 |

| ·   | increased      information technology systems related expenses of $1.8      million |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | increased      floor care expenses of $1.4 million |
|--------------------|----------------------------------------------------|

| ·   | increased      real property rent of $432 |
|--------------------|-------------------------------------------|

| ·   | increased      utilities of $367 |
|--------------------|----------------------------------|

| ·   | decreased      payroll and benefits of $168 |
|--------------------|---------------------------------------------|

| ·   | decreased      personal and real property taxes of$332 |
|--------------------|--------------------------------------------------------|

|                                                            |   | For      the Years Ended |   |
|-----------------------------------------------------------------|--------|--------------------------|--------|
|                                                            |   | 53      Weeks            |   |   | 52      Weeks |   |
|                                                            |   | February      3, 2008    |   |   | January      28, 2007 |   |
|                                                            |   |                     |   |   |   |   |
| Earnings      (loss) from continuing operations                 |   | $                        | (245   | ) |   | $ | 5,386 |   |
| Plus      interest                                              |   |                     | 3,382  |   |   |   | 2,730 |   |
| Plus      taxes                                                 |   |                     | (252   | ) |   |   | 2,893 |   |
| Plus      depreciation and amortization                         |   |                     | 9,817  |   |   |   | 6,868 |   |
| Plus      share-based compensation expense                      |   |                     | 1,130  |   |   |   | 821 |   |
| =Adjusted      EBITDA                                           |   | $                        | 13,832 |   |   | $ | 18,698 |   |
|                                                            |   |                     |   |   |   |   |   |   |
|                                                            |   |                     |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations per square foot |   | $                        | (0.06  | ) |   | $ | 1.31 |   |
| Plus      interest per square foot                              |   |                     | 0.79   |   |   |   | 0.67 |   |
| Plus      taxes per square foot                                 |   |                     | (0.06  | ) |   |   | 0.70 |   |
| Plus      depreciation and amortization per square foot         |   |                     | 2.29   |   |   |   | 1.67 |   |
| Plus      share-based compensation expense per square foot      |   |                     | 0.26   |   |   |   | 0.20 |   |
| =Adjusted      EBITDA per selling square foot                   |   | $                        | 3.22   |   |   | $ | 4.55 |   |

|             |                                            |   | First  |   |   | Second |   |   | Third  |   |   | Fourth(1)(2) |   |
|------------------|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------------|--------|
|             |                                            |   |   |   |   |   |   |   |   |   |   |         |   |
|             |                                            |   |   |   |   |   |   |   |   |   |   |         |   |
| Fiscal      2008 | Net      sales                                  |   | $      | 110.1  |   |   |   | 122.8  |   |   |   | 113.8        |   |   |   | 152.3 |   |
|             | Gross      margin                               |   |   | 33.9   |   |   |   | 40.7   |   |   |   | 36.8         |   |   |   | 46.2 |   |
|             | Earnings      (loss) from continuing operations |   |   | (2.2   | )      |   |   | 2.8    |   |   |   | (1.9         | )      |   |   | 0.9 |   |
|             | Net      earnings (loss)                        |   |   | (2.2   | )      |   |   | 2.6    |   |   |   | (1.6         | )      |   |   | 1.0 |   |
|             |                                            |   |   |   |   |   |   |   |   |   |   |         |   |   |   |   |   |
| Fiscal      2007 | Net      sales                                  |   | $      | 106.9  |   |   |   | 118.3  |   |   |   | 108.3        |   |   |   | 133.8 |   |
|             | Gross      margin                               |   |   | 31.9   |   |   |   | 35.9   |   |   |   | 33.7         |   |   |   | 46.8 |   |
|             | Earnings      (loss) from continuing operations |   |   | 0.1    |   |   |   | 1.4    |   |   |   | (0.5         | )      |   |   | 4.2 |   |
|             | Net      earnings (loss)                        |   |   | 0.5    |   |   |   | 1.4    |   |   |   | (0.6         | )      |   |   | 4.4 |   |

|   | (1) | In      fiscal 2008, a provision for asset impairment of $2.1 million      negatively impacted net earnings. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------|

|   | (2) | In      fiscal 2007, an increase in shrinkage of $795 in the fourth quarter      negatively impacted gross margin. A LIFO, lower of cost or market      adjustment of $795 positively impacted gross margin. A shrinkage reserve      of $300 negatively impacted grossmargin. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                        |   |                            |    |   |            |   |   |   |            |   |   |   |       |         |   |
|---------------------------------------------|--------|---------------------------------|---------|--------|-----------------|--------|--------|--------|-----------------|--------|--------|--------|------------|--------------|--------|
|                                        |   | Payments      due by Period (1) |    |
|                                        |   |                            |    |   | Less      than  |   |   |   | 2 -      3 |   |   |   | 4 -      5 |         |   | After |   |
| Contractual      obligations                |   | Total                           |    |   | 1      year (2) |   |   | years  |            |   | years  |   |       | 5      years |   |
| Revolving      loan credit facility         |   | $                               | 20,715  |   |            |   | -      |   |            |   | 20,715 |   |       |         | -      |   |   |   | - |   |
| FF&E      term loan, including interest |   |                            | 6,236   |   |            |   | 1,592  |   |            |   | 3,184  |   |       |         | 1,460  |   |   |   | - |   |
| Capital      lease obligations              |   |                            | 8,043   |   |            |   | 2,375  |   |            |   | 4,193  |   |       |         | 1,155  |   |   |   | 320 |   |
| Operating      leases                       |   |                            | 161,901 |   |            |   | 19,768 |   |            |   | 32,431 |   |       |         | 24,105 |   |   |   | 85,597 |   |
| Transportation      contract                |   |                            | 247     |   |            |   | 247    |   |            |   | -      |   |       |         | -      |   |   |   | - |   |
| Contingent      rentals                     |   |                            | 12,957  |   |            |   | 1,500  |   |            |   | 3,137  |   |       |         | 3,328  |   |   |   | 4,992 |   |
|                                        |   | $                               | 210,099 |   |            |   | 25,482 |   |            |   | 63,660 |   |       |         | 30,048 |   |   |   | 90,909 |   |

| (1)   | The      principal amount of the Company’s Revolving Loan Credit Facility is shown      in its contractual obligations table as the amount being paid during the      year that the current agreement on the credit facility expires. Interest      related to the Revolving Loan Credit Facility is dependent on the level of      borrowing and variable interest rates as more fully described in Note 3 to      the consolidated financial statements and is not shown in this      table. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Total      liabilities for unrecognized tax benefits as of February 3, 2008, were      $2.5 million and are classified on the Company's consolidated balance      sheet within "Other current liabilities" and are not included in the      table. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                |                                                                                                                             | Page   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                |                                                                                                                             |   |
| Report      of Independent Registered Public Accounting Firm……………………..                              | 18                                                                                                                               |
|                                                                                                                                                |                                                                                                                             |   |
| Financial      Statements:                                                                                                                          |                                                                                                                             |
|                                                                                                                                                | Consolidated      Balance Sheets --                                                                                              |   |
|                                                                                                                                                | February      3, 2008 and January 28, 2007……………………………….. | 19     |
|                                                                                                                                                |                                                                                                                             |   |
|                                                                                                                                                | Consolidated      Statements of Operations --                                                                                    |   |
|                                                                                                                                                | Fiscal      years Ended February 3, 2008,                                                                                        |   |
|                                                                                                                                                | January      28, 2007 and January 29, 2006……………………………….  | 20     |
|                                                                                                                                                |                                                                                                                             |   |
|                                                                                                                                                | Consolidated      Statements of Stockholders'                                                                                    |   |
|                                                                                                                                                | Equity      -- Fiscal years Ended February 3, 2008,                                                                              |   |
|                                                                                                                                                | January      28, 2007 and January 29, 2006……………………..………..      | 21     |
|                                                                                                                                                |                                                                                                                             |   |
|                                                                                                                                                | Consolidated      Statements of Cash Flows --                                                                                    |   |
|                                                                                                                                                | Fiscal      years Ended February 3, 2008,                                                                                        |   |
|                                                                                                                                                | January      28, 2007 and January 29, 2006……………………………….. | 22     |
|                                                                                                                                                |                                                                                                                             |   |
| Notes      to Consolidated Financial Statements…………………………………….. | 23                                                                                                                               |
|                                                                                                                                                |                                                                                                                             |   |
| Financial      Statement Schedules:                                                                                                                 |                                                                                                                             |
|                                                                                                                                                |                                                                                                                             |   |
|                                                                                                                                                | No      financial statement schedules are included as they are                                                                   |   |
|                                                                                                                                                | not      applicable to the Company                                                                                               |   |

----

----

| Duckwall-ALCO      Stores, Inc.                                                                             |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| And      Subsidiaries                                                                                       |   |
| Consolidated      Balance Sheets                                                                            |   |
| (dollars      in thousands, except share amounts)                                                           |   |
|                                                                                                        |   |   |   |   |   |   |
| Assets                                                                                                      |   |
|                                                                                                        |   |   |   |   |   |   |
|                                                                                                        |   | February      3, |   |   | January      28, |   |
|                                                                                                        |   | 2008 |   |   | 2007 |   |
|                                                                                                        |   |   |   |   |   |   |
| Current      assets:                                                                                        |   |   |   |   |   |   |
|    Cash      and cash equivalents                                                            |   | $ | 5,501 |   |   |   | 2,983 |   |
|    Receivables                                                                               |   |   | 4,905 |   |   |   | 3,059 |   |
|    Prepaid      income taxes                                                                 |   |   | 768 |   |   |   | - |   |
|    Inventories                                                                               |   |   | 128,545 |   |   |   | 151,406 |   |
|    Prepaid      expenses                                                                     |   |   | 3,101 |   |   |   | 1,561 |   |
|    Deferred      income taxes                                                                |   |   | 7,094 |   |   |   | 3,037 |   |
|           Total      current assets                       |   |   | 149,914 |   |   |   | 162,046 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      and equipment, at cost:                                                                       |   |   |   |   |   |   |   |   |
|    Land      and land improvements                                                           |   |   | 2,205 |   |   |   | 1,719 |   |
|    Buildings      and building improvements                                                  |   |   | 11,931 |   |   |   | 12,023 |   |
|    Furniture,      fixtures and equipment                                                    |   |   | 58,911 |   |   |   | 56,703 |   |
|    Transportation      equipment                                                             |   |   | 1,310 |   |   |   | 1,491 |   |
|    Leasehold      improvements                                                               |   |   | 15,419 |   |   |   | 15,410 |   |
|    Construction      work in progress                                                        |   |   | 1,282 |   |   |   | 138 |   |
|           Total      property and equipment               |   |   | 91,058 |   |   |   | 87,484 |   |
|    Less      accumulated depreciation                                                        |   |   | 64,019 |   |   |   | 64,451 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|           Net      property and equipment                 |   |   | 27,039 |   |   |   | 23,033 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Property      under capital leases                                                                          |   |   | 13,571 |   |   |   | 24,571 |   |
|    Less      accumulated amortization                                                        |   |   | 8,654 |   |   |   | 17,618 |   |
|           Net      property under capital leases          |   |   | 4,917 |   |   |   | 6,953 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Other      non-current assets                                                                               |   |   | 262 |   |   |   | 44 |   |
| Deferred      income taxes                                                                                  |   |   | 3,254 |   |   |   | 3,344 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|           Total      assets                               |   |  $ | 185,386 |   |   |   | 195,420 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Liabilities      and Stockholders' Equity                                                                   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Current      liabilities:                                                                                   |   |   |   |   |   |   |   |   |
|    Current      maturities of long-tem debt                                                  |   |  $ | 1,278 |   |   |   | - |   |
|    Current      maturities of capital lease obligations                                      |   |   | 1,860 |   |   |   | 2,128 |   |
|    Accounts      payable                                                                     |   |   | 19,134 |   |   |   | 35,263 |   |
|    Income      taxes payable                                                                 |   |   | - |   |   |   | 1,915 |   |
|    Accrued      salaries and commissions                                                     |   |   | 3,711 |   |   |   | 4,180 |   |
|    Accrued      taxes other than income                                                      |   |   | 4,301 |   |   |   | 4,242 |   |
|    Self-insurance      claim reserves                                                        |   |   | 4,571 |   |   |   | 4,322 |   |
|    Other      current liabilities                                                            |   |   | 7,360 |   |   |   | 3,634 |   |
|           Total      current liabilities                  |   |   | 42,215 |   |   |   | 55,684 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Long      term debt, less current maturities                                                                |   |   | 4,227 |   |   |   | - |   |
| Notes      payable under revolving loan                                                                     |   |   | 20,715 |   |   |   | 21,077 |   |
| Capital      lease obligations - less current maturities                                                    |   |   | 4,933 |   |   |   | 6,783 |   |
| Deferred      gain on leases                                                                                |   |   | 4,985 |   |   |   | 5,372 |   |
| Other      noncurrent liabilities                                                                           |   |   | 1,139 |   |   |   | 444 |   |
|           Total      liabilities                          |   |   | 78,214 |   |   |   | 89,360 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| Stockholders'      equity:                                                                                  |   |   |   |   |   |   |   |   |
|    Common      stock, $.0001 par value, authorized                                           |   |   |   |   |   |   |   |   |
|     20,000,000      shares; issued and outstanding                                      |   |   |   |   |   |   |   |   |
|     3,810,591      shares and 3,794,303 shares respectively                             |   |   | 1 |   |   |   | 1 |   |
|    Additional      paid-in capital                                                           |   |   | 38,766 |   |   |   | 37,315 |   |
|    Retained      earnings                                                                    |   |   | 68,405 |   |   |   | 68,744 |   |
|           Total      stockholders' equity                 |   |   | 107,172 |   |   |   | 106,060 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|           Total      liabilities and stockholders' equity |   | $ | 185,386 |   |   |   | 195,420 |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
|                                                                                                        |   |   |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements.                                           |   |   |   |   |   |

----

| Duckwall-ALCO      Stores, Inc.                                                                 |   |
|-------------------------------------------------------------------------------------------------|--------|
| And      Subsidiaries                                                                           |   |
| Consolidated      Statements of Operations                                                      |   |
| Fiscal      years ended February 3, 2008, January 28, 2007 and January 29,      2006       |   |
| (dollars      in thousands, except per share amounts)                                           |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |
|                                                                                            |   | 53      Weeks |   |   | 52      Weeks |   |   | 52      Weeks |   |
|                                                                                            |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Net      sales                                                                                  |   | $ | 499,032 |   |   |   | 467,321 |   |   |   | 425,756 |   |
| Cost      of sales                                                                              |   |   | 341,393 |   |   |   | 318,999 |   |   |   | 289,621 |   |
| Gross      margin                                                                               |   |   | 157,639 |   |   |   | 148,322 |   |   |   | 136,135 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative                                                        |   |   | 144,937 |   |   |   | 130,445 |   |   |   | 122,705 |   |
| Depreciation      and amortization                                                              |   |   | 9,817 |   |   |   | 6,868 |   |   |   | 5,873 |   |
|            Total      operating expenses |   |   | 154,754 |   |   |   | 137,313 |   |   |   | 128,578 |   |
| Operating      income from continuing operations                                                |   |   | 2,885 |   |   |   | 11,009 |   |   |   | 7,557 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                                                           |   |   | 3,382 |   |   |   | 2,730 |   |   |   | 1,272 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations before income taxes                             |   |   | (497 | ) |   |   | 8,279 |   |   |   | 6,285 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense (benefit)                                                               |   |   | (252 | ) |   |   | 2,893 |   |   |   | 1,710 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from continuing operations                                                 |   |   | (245 | ) |   |   | 5,386 |   |   |   | 4,575 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) from discontinued operations, net of income                                |   |   |   |   |   |   |   |   |   |   |   |   |
|    tax      expense (benefit) of $14, $195 and ($1,426) in                       |   |   |   |   |   |   |   |   |   |   |   |   |
|       2008,      2007 and 2006, respectively                      |   |   | 21 |   |   |   | 318 |   |   |   | (2,626 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings (loss)                                                                        |   |  $ | (224 | ) |   |   | 5,704 |   |   |   | 1,949 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|      Basic                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |  $ | (0.06 | ) |   |   | 1.42 |   |   |   | 1.12 |   |
|          Discontinued      operations              |   |   | 0.01 |   |   |   | 0.08 |   |   |   | (0.64 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net      earnings (loss) per share        |   |  $ | (0.05 | ) |   |   | 1.50 |   |   |   | 0.48 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
|      Diluted                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|          Continuing      operations                |   |  $ | (0.06 | ) |   |   | 1.41 |   |   |   | 1.11 |   |
|          Discontinued      operations              |   |   | 0.01 |   |   |   | 0.08 |   |   |   | (0.64 | ) |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|          Net      earnings (loss) per share        |   |  $ | (0.05 | ) |   |   | 1.49 |   |   |   | 0.47 |   |
|                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements.                               |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Duckwall-ALCO      Stores, Inc.                                                           |   |
|-------------------------------------------------------------------------------------------|--------|
| And      Subsidiaries                                                                     |   |
| Consolidated      Statements of Stockholders' Equity                                      |   |
| Fiscal      years ended February 3, 2008, January 28, 2007 and January 29,      2006 |   |
| (dollars      in thousands, except share amounts)                                         |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                      |   | Common |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                      |   | stock |   |   |   |   |   | Additional |   |   |   |   |   | Total |   |
|                                                                                      |   | shares |   |   | Common |   |   | paid-in |   |   | Retained |   |   | stockholders' |   |
|                                                                                      |   | outstanding |   |   | stock |   |   | capital |   |   | earnings |   |   | equity |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      January 30, 2005                                                            |   |   | 4,475,079 |   |   | $ | 1 |   |   |   | 50,889 |   |   |   | 63,786 |   |   |   | 114,676 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings for the year ended                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    January      29, 2006                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1,949 |   |   |   | 1,949 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase      and retirement of                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    common      shares                                                      |   |   | (729,861 | ) |   |   | - |   |   |   | (14,985 | ) |   |   | - |   |   |   | (14,985 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax benefit related to exercise of                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    stock      options                                                      |   |   | - |   |   |   | - |   |   |   | 84 |   |   |   | - |   |   |   | 84 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options      exercised to purchase shares                                                 |   |   | 41,735 |   |   |   | - |   |   |   | 423 |   |   |   | - |   |   |   | 423 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      January 29, 2006                                                            |   |   | 3,786,953 |   |   |   | 1 |   |   |   | 36,411 |   |   |   | 65,735 |   |   |   | 102,147 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings for the year ended                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    January      28, 2007                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,704 |   |   |   | 5,704 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative      change for accounting for inventory (Note 14)                             |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,695 | ) |   |   | (2,695 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Repurchase      and retirement of                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    common      shares                                                      |   |   | (3,337 | ) |   |   | - |   |   |   | (102 | ) |   |   | - |   |   |   | (102 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax benefit related to exercise of                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    stock      options                                                      |   |   | - |   |   |   | - |   |   |   | 51 |   |   |   | - |   |   |   | 51 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                                                 |   |   | -  |   |   |   | - |   |   |   | 821 |   |   |   | -  |   |   |   | 821 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options      exercised to purchase shares                                                 |   |   | 10,687 |   |   |   | - |   |   |   | 134 |   |   |   | - |   |   |   | 134 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      January 28, 2007                                                            |   |   | 3,794,303 |   |   |   | 1 |   |   |   | 37,315 |   |   |   | 68,744 |   |   |   | 106,060 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss for the year ended                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    February      3, 2008                                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (224 | ) |   |   | (224 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative      effect of a change in accounting principle (Note 7)                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (115 | ) |   |   | (115 | ) |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      tax benefit related to exercise of                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    stock      options                                                      |   |   | - |   |   |   | - |   |   |   | 14 |   |   |   | - |   |   |   | 14 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                                                 |   |   | -  |   |   |   | -  |   |   |   | 1,130 |   |   |   | -  |   |   |   | 1,130 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options      exercised to purchase shares                                                 |   |   | 16,288 |   |   |   | - |   |   |   | 307 |   |   |   | - |   |   |   | 307 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      February 3, 2008                                                            |   |   | 3,810,591 |   |   | $ | 1 |   |   |   | 38,766 |   |   |   | 68,405 |   |   |   | 107,172 |   |
|                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements.                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Duckwall-ALCO      Stores, Inc.                                                                                |   |
|----------------------------------------------------------------------------------------------------------------|--------|
| And      Subsidiaries                                                                                          |   |
| Consolidated      Statements of Cash Flows                                                                     |   |
| Fiscal      years ended February 3, 2008, January 28, 2007 and January 29,      2006                      |   |
| (dollars      in thousands)                                                                                    |   |
|                                                                                                           |   | 53      Weeks |   |   | 52      Weeks |   |   | 52      Weeks |   |
|                                                                                                           |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                                                                     |   |   |   |   |   |   |   |   |   |
| Net      earnings (loss)                                                                                       |   | $ | (224 | ) |   |   | 5,704 |   |   |   | 1,949 |   |
| Adjustments      to reconcile net earnings (loss) to net cash (used in) provided by      operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                                                                             |   |   | 9,867 |   |   |   | 6,801 |   |   |   | 6,006 |   |
| Amortization      of debt financing costs                                                                      |   |   | 38  |   |   |   | 11  |   |   |   | 95  |   |
| Gain      (loss) on sale of assets                                                                             |   |   | (180 | ) |   |   | (307 | ) |   |   | 629 |   |
| Share-based      compensation                                                                                  |   |   | 1,130 |   |   |   | 821 |   |   |   | - |   |
| Tax      benefit of stock options exercised                                                                    |   |   | 14 |   |   |   | 51 |   |   |   | 84 |   |
|  Deferred      income tax expense, net                                                                    |   |   | (1,428 | ) |   |   | (3,465 | ) |   |   | (831 | ) |
| Changes      in:                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Receivables                                                                                                    |   |   | (1,846 | ) |   |   | (325 | ) |   |   | (291 | ) |
| Prepaid      expenses                                                                                          |   |   | (1,540 | ) |   |   | 1,060 |   |   |   | 301 |   |
| Inventories                                                                                                    |   |   | 22,861 |   |   |   | (20,673 | ) |   |   | (5,591 | ) |
| Accounts      payable                                                                                          |   |   | (16,129 | ) |   |   | 6,963 |   |   |   | 6,066 |   |
| Income      taxes payable                                                                                      |   |   | (2,560 | ) |   |   | 752 |   |   |   | 896 |   |
| Accrued      salaries and commissions                                                                          |   |   | (469 | ) |   |   | (1,821 | ) |   |   | 1,273 |   |
| Accrued      taxes other than income                                                                           |   |   | 59 |   |   |   | (501 | ) |   |   | 376 |   |
| Self-insurance      claims reserves                                                                            |   |   | 249 |   |   |   | 567 |   |   |   | 550 |   |
| Other      assets and liabilities                                                                              |   |   | 1,256 |   |   |   | 347 |   |   |   | 455 |   |
| Net      cash provided by (used in) provided by operatingactivities                                            |   |   | 11,098 |   |   |   | (4,015 | ) |   |   | 11,967 |   |
| Cash      flows from investing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds      from sale-leasebacks                                                                             |   |   | - |   |   |   | 12,563 |   |   |   |   |   |
| Proceeds      from the sale of assets                                                                          |   |   | 637 |   |   |   | 1,563 |   |   |   | 50 |   |
| Acquisition      of:                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Buildings      and building components                                                                         |   |   | (26 | ) |   |   | (15 | ) |   |   | (4,971 | ) |
| Fixtures,      equipment and leasehold improvements                                                            |   |   | (12,267 | ) |   |   | (7,612 | ) |   |   | (6,150 | ) |
| Net      cash (used in) provided by investing activities                                                  |   |   | (11,656 | ) |   |   | 6,499 |   |   |   | (11,071 | ) |
| Cash      flows from financing activities:                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (reductions) borrowings under revolving loan                                                     |   |   | (362 | ) |   |   | 4,015 |   |   |   | 13,039 |   |
| Refinancing      costs on revolving loan and term loan fees                                                    |   |   | (256 | )  |   |   | - |   |   |   | (61 | ) |
| Proceeds      from exercise of outstanding stock options                                                       |   |   | 307 |   |   |   | 113 |   |   |   | 423 |   |
| Excess      tax benefit on stock options exercised                                                             |   |   | - |   |   |   | 36 |   |   |   | - |   |
| Repurchase      of stock                                                                                       |   |   | - |   |   |   | (2,012 | ) |   |   | (13,075 | ) |
| Net      borrowings under term loan                                                                       |   |   | 5,505 |   |   |   | - |   |   |   | - |   |
| Principal      payments under capital lease obligations                                                        |   |   | (2,118 | ) |   |   | (2,125 | ) |   |   | (1,101 | ) |
| Net      cash provided by (used in) financing activities                                                  |   |   | 3,076 |   |   |   | 27 |   |   |   | (775 | ) |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase in cash and cash equivalents                                                            |   |   | 2,518 |   |   |   | 2,511 |   |   |   | 121 |   |
| Cash      and cash equivalents at beginning of year                                                            |   |   | 2,983 |   |   |   | 472 |   |   |   | 351 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents at end of year                                                                  |   | $ | 5,501 |   |   |   | 2,983 |   |   |   | 472 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of non-cash activity:                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Tax      benefit related to stock options exercised                                                            |   |  $ | 14 |   |   |   | - |   |   |   | 84 |   |
| Assets      acquired under capital lease                                                                       |   |   | - |   |   |   | 1,858 |   |   |   | 5,697 |   |
|                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to consolidated financial statements.                                              |   |   |   |   |   |   |   |   |   |   |   |   |

----

| 1. | Summary      of Significant Accounting Policies |
|----|-------------------------------------------------|

|   | (a) | Nature      of Business |
|--------|-----|-------------------------|

|   | (b) | Principles      of Consolidation |
|--------|-----|----------------------------------|

|   | (c) | Basis      of Presentation |
|--------|-----|----------------------------|

|   | (d) | Inventories |
|--------|-----|-------------|

|   | (e) | Property      and Equipment |
|--------|-----|-----------------------------|

| Buildings                              | 25      years     |
|----------------------------------------|-------------------|
| Building      improvements             | 10      years     |
| Coolers      and freezers              | 15      years     |
| Software                               | 3 -      5 years  |
| Furniture,      fixtures and equipment | 3 -      8 years  |
| Transportation      equipment          | 3 -      5 years  |
| Leasehold      improvements            | 2 -      10 years |

|   | (f) | Operating      Leases |
|--------|-----|-----------------------|

|   | (g) | Insurance |
|--------|-----|-----------|

----

|   | (h) | Income      Taxes |
|--------|-----|-------------------|

|   | (i) | Net      Sales |
|--------|-----|----------------|

|   | (j) | Net      Earnings (Loss) Per Share |
|--------|-----|------------------------------------|

|   | (k) | Consolidated      Statements of Cash Flows |
|--------|-----|--------------------------------------------|

|                                                                                                                                      |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Interest,      excluding interest on capital lease obligations and amortization of debt      financing costs (net of capitalized interest |   |   |   |   |   |   |   |   |   |
|          of $0, in fiscal 2008, $0 in fiscal 2007 and $54 in fiscal      2006)                                             |   | $      | 2,823  |   |   |   | 1,713  |   |   |   | 774 |   |
| Income      taxes                                                                                                                         |   |   | 3,716  |   |   |   | 5,738  |   |   |   | 584 |   |

|   | (l) | Use      of Estimates |
|--------|-----|-----------------------|

|   | (m) | Long-lived      Assets |
|--------|-----|------------------------|

|   |  (n) | Store      Closings and DiscontinuedOperations |
|--------|-----------|------------------------------------------------|

|                                                                         |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                         |   |   |   |   |   |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |   |
| Store      closure liability at beginning of year                            |   | $      | 105    |   |   |   | 477    |   |   |   | 107 |   |
| Store      closure (income) expense (included in discontinued    operations) |   |   | (71    | )      |   |   | (30    | )      |   |   | 808 |   |
| Payments                                                                     |   |   | (34    | )      |   |   | (342   | )      |   |   | (438 | ) |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Store      closure liability at end of year                                  |   | $      | -      |   |   |   | 105    |   |   |   | 477 |   |

----

|  |  (o) | Consideration      Received from Vendors |
|--|-----------|------------------------------------------|

|   | (p) | Advertising      Costs |
|--------|-----|------------------------|

|   | (q) | Share-based      Compensation |
|--------|-----|-------------------------------|

|                                                              |   | 2006    |   |
|-------------------------------------------------------------------|--------|---------|--------|
| Net      earnings as reported                                |   | $       | 1,949  |   |
|                                                              |   |    |   |   |
| Pro      forma share-based employee compensation cost, net of tax |   |    | (250   | ) |
| Pro      forma net earnings                                       |   |    | 1,699  |   |
|                                                              |   |    |   |   |
| Net      earnings per share as reported:                     |   |    |   |   |
| Basic                                                             |   |  $ | 0.48   |   |
| Diluted                                                           |   |    | 0.47   |   |
|                                                              |   |    |   |   |
| Net      earnings per share, pro forma:                      |   |    |   |   |
| Basic                                                             |   |  $ | 0.42   |   |
| Diluted                                                           |   |    | 0.41   |   |

|   | (r) | Fair      Value of Financial Instruments |
|--------|-----|------------------------------------------|

|   | (s) | Pre-opening      Costs |
|--------|-----|------------------------|

|   | (t) | Future      Accounting Pronouncements |
|--------|-----|---------------------------------------|

----

| 2. | Inventories |
|----|-------------|

|                                 |   |   |    |   |   |   |
|--------------------------------------|--------|--------|---------|--------|--------|--------|
|                                 |   | 2008   |    |   | 2007   |   |
|                                 |   |   |    |   |   |   |
| FIFO      cost                       |   | $      | 132,385 |   |   |   | 155,153 |   |
| Less      LIFO and markdown reserves |   |   | (3,840  | )      |   |   | (3,747 | ) |
| LIFO      Cost                       |   | $      | 128,545 |   |   |   | 151,406 |   |

| 3. | Credit      Arrangements, Notes Payable and Long-termDebt |
|----|-----------------------------------------------------------|

|                                |   |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                |   | Payments      due by Fiscal Period |   |
| Contractual      Obligations        |   | Total                              |   |   | 2009   |   |   | 2010   |   |   | 2011   |   |   | 2012   |   |   | 2013   |   |
| Revolving      loan credit facility |   | $                                  | 20,715 |   |   |   | -      |   |   |   | -      |   |   |   | 20,715 |   |   |   | - |   |   |   | - |   |
| FF&E      term loan             |   |                               | 5,505  |   |   |   | 1,278  |   |   |   | 1,362  |   |   |   | 1,451  |   |   |   | 1,414 |   |   |   | - |   |
|                                |   | $                                  | 26,220 |   |   |   | 1,278  |   |   |   | 1,362  |   |   |   | 22,166 |   |   |   | 1,414 |   |   |   | - |   |

| 4. | Employee      Benefits |
|----|------------------------|

| 5. | Self-Insurance      Reserves |
|----|------------------------------|

|                      |   | 2008   |   |   | 2007   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|
| Beginning      balance    |   | $      | 4,322  |   |   |   | 3,755 |   |
| Reserve      additions    |   |   | 1,791  |   |   |   | 2,234 |   |
| Claims      paid          |   |   | (1,542 | )      |   |   | (1,667 | ) |
|  Ending      balance |   | $      | 4,571  |   |   |   | 4,322 |   |

| 6.     | Leases |
|----------------------------|--------|

----

|                                   |   | 2008   |         |   | 2007   |   |
|----------------------------------------|--------|--------|--------------|--------|--------|--------|
| Buildings                              |   | $      | 3,375   |   |   |   | 14,375  |   |
| Fixtures                               |   |   | 3,338   |   |   |   | 3,338  |   |
| Software                               |   |   | 6,858   |   |   |   | 6,858  |   |
|                                   |   |   | 13,571  |   |   |   | 24,571  |   |
| Less      accumulated amortization     |   |   | 8,654   |   |   |   | 17,618  |   |
| Net      property under capital leases |   | $      | 4,917        |   |   |   | 6,953  |   |

|                                                                   |   | Capital |   |   | Operating |   |
|-----------------------------------------------------------------------------|--------|---------|--------|--------|-----------|--------|
|                                                                        |   | Leases  |   |   | Leases    |   |
| Fiscal      year:                                                           |   |    |   |   |      |   |
| 2009                                                                        |   | $       | 2,375  |   |      |   | 19,768 |   |
| 2010                                                                        |   |    | 2,263  |   |      |   | 17,581 |   |
| 2011                                                                        |   |    | 1,930  |   |      |   | 14,850 |   |
| 2012                                                                        |   |    | 702    |   |      |   | 12,499 |   |
| 2013                                                                        |   |    | 453    |   |      |   | 11,606 |   |
| Later      years                                                            |   |    | 320    |   |      |   | 85,597 |   |
| Total      minimum lease payments                                           |   |    | 8,043  |   |      | $      | 161,901 |   |
|             Less amount representing interest |   |    | 1,250  |   |      |   |   |   |
| Present      value of net minimum lease payments                            |   |    | 6,793  |   |      |   |   |   |
|            Less current maturities                 |   |    | 1,860  |   |      |   |   |   |
| Capital      lease obligations, less current maturities                     |   | $       | 4,933  |   |      |   |   |   |

|                       |   | 2008   |   |   | 2007   |   |   | 2006   |   |
|----------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Minimum      rentals       |   | $      | 16,106 |   |   |   | 12,261 |   |   |   | 10,768 |   |
| Contingent      rentals    |   |   | 1,468  |   |   |   | 1,501  |   |   |   | 1,120 |   |
| Less      sublease rentals |   |   | (51    | )      |   |   | (51    | )      |   |   | (53 | ) |
|                       |   | $      | 17,523 |   |   |   | 13,711 |   |   |   | 11,835 |   |

| 7.     | Income      Taxes |
|----------------------------|-------------------|

|                                        |   | 2008   |     |   | 2007   |   |        | 2006   |   |
|---------------------------------------------|--------|--------|----------|--------|--------|--------|-------------|--------|--------|
| Income      tax expense (benefit) allocated |   |   |     |   |   |   |        |   |   |
| to      continuing operations               |   | $      | (252     | )      |   |   | 2,893  |   |   |   | 1,710  |   |
| Income      tax expense (benefit) allocated |   |   |     |   |   |   |        |   |   |   |   |   |
| to      discontinued operations             |   |   | 14  |   |   |   | 195    |   |   |   | (1,426 | )   |
| Total      income tax expense               |   | $      | (238     | )      |   |   | 3,088  |   |   |   | 284  |   |

|                                                    |   | Current |      |   | Deferred |   |   | Total         |   |
|---------------------------------------------------------|--------|---------|-----------|--------|----------|--------|--------|---------------|--------|
| 2008:                                                   |   |    |      |   |     |   |   |          |   |
|              Federal |   | $       | 1,009     |   |     |   | (1,221 | )        |   |   | (212 | )   |
| State                                                   |   |    | 167  |   |     |   | (207   | )        |   |   | (40 | )        |
|                                                    |   |    | 1,176     |   |     |   | (1,428 | )        |   |   | (252 | )        |
| 2007:                                                   |   |    |      |   |     |   |   |          |   |   |   |   |
|              Federal |   |    | 5,510     |   |     |   | (2,889 | )        |   |   | 2,621  |   |
| State                                                   |   |    | 848  |   |     |   | (576   | )        |   |   | 272  |   |
|                                                    |   |    | 6,358     |   |     |   | (3,465 | )        |   |   | 2,893  |   |
|                                                    |   |    |      |   |     |   |   |          |   |   |   |   |
| 2006:                                                   |   |    |      |   |     |   |   |          |   |   |   |   |
|              Federal |   |    | 2,100     |   |     |   | (626   | )        |   |   | 1,474  |   |
| State                                                   |   |    | 441  |   |     |   | (205   | )        |   |   | 236  |   |
|                                                    |   | $       | 2,541     |   |     |   | (831   | )        |   |   | 1,710  |   |

----

|                                             |   | 2008   |   |          | 2007   |   |        | 2006          |   |
|--------------------------------------------------|--------|--------|--------|---------------|--------|--------|-------------|---------------|--------|
| Computed      “expected” tax expense |   | $      | (169   | )             |   |   | 2,898       |          |   |   | 2,200 |   |
| State      income taxes, net of the Federal      |   |   |   |          |   |   |        |          |   |   |   |   |
| income      tax benefit                          |   |   | (26    | )        |   |   | 179    |          |   |   | 236  |   |
| Adjustment      for prior period taxes           |   |   | (76    | )        |   |   | (36         | )        |   |   | (391 | )  |
| Other,      net                                  |   |   | 19     |          |   |   | (148        | )        |   |   | (335 | )   |
|                                             |   | $      | (252   | )             |   |   | 2,893  |          |   |   | 1,710  |   |

|                                                                                                                |   | 2008   |        |   | 2007   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| Deferred      tax assets:                                                                                           |   |   |        |   |   |   |
|                  Capital leases                              |   | $      | 335         |   |   |   | 449  |   |
|                  Other liabilities                           |   |   | 1,205       |   |   |   | 803  |   |
|                  Insurance reserves                          |   |   | 1,863  |   |   |   | 1,640  |   |
|             Vacation      and sick pay accrual          |   |   | 894    |   |   |   | 862  |   |
|             Property      and equipment                 |   |   | 205    |   |   |   | 434  |   |
|                  Inventory                                   |   |   | 3,939       |   |   |   | 419  |   |
|                  Deferred gain property and equipment        |   |   | 1,989  |   |   |   | 2,042  |   |
|             State      net operating loss carryforwards |   |   | 45     |   |   |   | 78  |   |
| Total      deferred tax assets                                                                                      |   |   | 10,475      |   |   |   | 6,727  |   |
| Deferred      tax liabilities:                                                                                      |   |   |        |   |   |   |   |   |
|                    Other assets                    |   |   | 127    |   |   |   | 346  |   |
| Net      deferred tax asset                                                                                         |   | $      | 10,348      |   |   |   | 6,381  |   |

| Gross      unrecognized tax benefits at January 29, 2007             |   | $      | 2,124 |   |
|---------------------------------------------------------------------------|--------|--------|-------|--------|
| Increases      related to prior period tax positions                      |   |   | 50    |   |
| Decreases      related to prior period tax positions                      |   |   | -     |   |
| Increases      related to current year tax positions                      |   |   | 346   |   |
| Settlements                                                               |   |   | -     |   |
| Expiration      of the statute of limitations for the assessment of taxes |   |   | -     |   |
| Gross      unrecognized tax benefits at February 3, 2008                  |   | $      | 2,520 |   |

| 8. | Stockholders’      Equity |
|----|---------------------------------|

----

| 9. | Earnings      Per Share |
|----|-------------------------|

|                                                     |   | 2008   |      |   | 2007   |   |      | 2006   |   |
|----------------------------------------------------------|--------|--------|-----------|--------|--------|--------|-----------|--------|--------|
|                                                     |   |   |      |   |   |   |      |   |   |
| Weighted      average shares outstanding (basic)         |   |   | 3,807,033 |   |   |   | 3,792,202 |   |   |   | 4,083,798 |   |
|                                                     |   |   |      |   |   |   |      |   |   |   |   |   |
| Effect      of dilutive options to purchase common stock |   |   | -         |   |   |   | 36,726    |   |   |   | 34,124 |   |
|                                                     |   |   |      |   |   |   |      |   |   |   |   |   |
| As      adjusted for diluted calculation                 |   |   | 3,807,033 |   |   |   | 3,828,928 |   |   |   | 4,117,922 |   |

| 10.   | Share-Based      Compensation |
|-----------------|-------------------------------|

|                                                         |   | February      3, |   |   | January      28, |   |
|--------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|                                                         |   | 2008             |   |   | 2007             |   |
|                                                         |   |             |   |   |             |   |
| Share-based      compensation expense before income taxes    |   | $                | 1,130  |   |             |   | 821 |   |
| Income      tax benefits                                     |   |             | (429   | )      |             |   | (285 | ) |
|                                                         |   |             |   |   |             |   |   |   |
| Share-based      compensation expense net of income benefits |   | $                | 701    |   |             |   | 536 |   |
|                                                         |   |             |   |   |             |   |   |   |
| Effect      on:                                              |   |             |   |   |             |   |   |   |
|   Basic      earnings (loss) per share             |   | $                | 0.18   |   |             |   | 0.14 |   |
|   Diluted      earnings (loss) per share           |   | $                | 0.18   |   |             |   | 0.14 |   |

|                                          |   | February      3, |   |   | January      28, |   |   | January      29, |   |
|-----------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                          |   | 2008             |   |   | 2007             |   |   | 2006             |   |
|                                          |   |             |   |   |             |   |   |             |   |
| Expected      price volatility                |   |             | 25.64  | %      |             |   | 37.40  | %                |   |   | 38.40 | % |
|                                          |   |             |   |   |             |   |   |             |   |   |   |   |
| Risk-free      interest rate                  |   |             | 4.79   | %      |             |   | 5.00   | %                |   |   | 4.00 | % |
|                                          |   |             |   |   |             |   |   |             |   |   |   |   |
| Weighted      average expected lives in years |   |             | 3.8    |   |             |   | 3.8    |             |   |   | 5.0 |   |
|                                          |   |             |   |   |             |   |   |             |   |   |   |   |
| Dividend      yield                           |   |             | 0.00   | %      |             |   | 0.00   | %                |   |   | 0.00 | % |

----

|                                                 |   |   |    |    |     |    |   | Weighed     |   |   |           |   |
|------------------------------------------------------|--------|--------|---------|---------|----------|---------|--------|-------------|--------|--------|----------------|--------|
|                                                 |   |   |    |    | Weighed  |    |   | Average     |   |   | Aggregate      |   |
|                                                 |   | Number |    |    | Average  |    |   | Remaining   |   |   | Intrinsic      |   |
|                                                 |   | Of     |    |    | Exercise |    |   | Contractual |   |   | Value      (in |   |
|                                                 |   | Shares |    |    | Price    |    |   | Term        |   |   | thousands)     |   |
| Outstanding      January 28, 2007                    |   |   | 501,951 |    |     |  $ | 26.13  |        |   |   |           |   |   |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |
| Granted                                              |   |   | 88,000  |    |     |    | 39.02  |        |   |   |           |   |   |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |
| Exercised                                            |   |   | (16,288 | )       |     |    | 14.41  |        |   |   |           |   |   |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |
| Forfeited                                            |   |   | (40,250 | )       |     |    | 29.54  |        |   |   |           |   |   |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |
| Expired                                              |   |   | (2,038  | )  |     |    | 12.50  |        |   |   |           |   |   |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |
| Outstanding      February 3, 2008                    |   |   | 531,375 |    |     |  $ | 29.39  |        |   |   | 3.3            |   |   |  $ | 381 |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |   |   |
| Vested      and expected to vest at February 3, 2008 |   |   | 474,689 |    |     |  $ | 29.43  |        |   |   | 3.3            |   |   |  $ | 331 |   |
|                                                 |   |   |    |    |     |    |   |        |   |   |           |   |   |   |   |   |
| Exercisable      at February 3, 2008                 |   |   | 140,625 |    |     |  $ | 24.70  |        |   |   | 2.80           |   |   |  $ | 190 |   |

|                                                  |   | February      3, |   |   | January      28, |   |   | January      29, |   |
|-------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
|                                                  |   | 2008             |   |   | 2007             |   |   | 2006             |   |
|                                                  |   |             |   |   |             |   |   |             |   |
| Weighted      average grant date fair value of stock  |   |             |   |   |             |   |   |             |   |
| Options      granted (per share)                      |   | $                | 10.93  |   |             |   | 10.59  |             |   |   | 7.36 |   |
|                                                  |   |             |   |   |             |   |   |             |   |   |   |   |
| Total      fair value of stock options vested         |   |             | 1,262  |   |             |   | 249    |             |   |   | 54 |   |
|                                                  |   |             |   |   |             |   |   |             |   |   |   |   |
| Total      intrinsic value of stock options exercised |   |             | 396    |   |             |   | 184    |             |   |   | 458 |   |

| 11. | Quarterly      Financial Information (Unaudited) |
|-----|--------------------------------------------------|

|             |                                            |   | First  |    |   | Second |   |    | Third  |   |   | Fourth(1) |   |
|------------------|-------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|-----------|--------|
|             |                                            |   |   |    |   |   |   |    |   |   |   |      |   |
| Fiscal      2008 | Net      sales                                  |   | $      | 110,089 |   |   |   | 122,837 |   |   |   | 113,838   |   |   |   | 152,268 |   |
|             | Gross      margin                               |   |   | 33,934  |   |   |   | 40,710  |   |   |   | 36,831    |   |   |   | 46,164 |   |
|             | Earnings      (loss) from continuing operations |   |   | (2,175  | )      |   |   | 2,846   |   |   |   | (1,859    | )      |   |   | 929 |   |
|             | Net      earnings (loss)                        |   |   | (2,232  | )      |   |   | 2,594   |   |   |   | (1,635    | )      |   |   | 1,049 |   |
|             | Net      earnings (loss) per share (2):         |   |   |    |   |   |   |    |   |   |   |      |   |   |   |   |   |
|             |     Basic                   |   |   | (0.59   | )      |   |   | 0.68    |   |   |   | (0.43     | )      |   |   | 0.28 |   |
|             |     Diluted                 |   |   | (0.59   | )      |   |   | 0.67    |   |   |   | (0.43     | )      |   |   | 0.27 |   |
|             |                                            |   |   |    |   |   |   |    |   |   |   |      |   |   |   |   |   |
| Fiscal      2007 | Net      sales                                  |   | $      | 106,877 |   |   |   | 118,268 |   |   |   | 108,332   |   |   |   | 133,844 |   |
|             | Gross      margin                               |   |   | 31,902  |   |   |   | 35,950  |   |   |   | 33,698    |   |   |   | 46,771 |   |
|             | Earnings      (loss) from continuing operations |   |   | 148     |   |   |   | 1,359   |   |   |   | (548      | )      |   |   | 4,232 |   |
|             | Net      earnings (loss)                        |   |   | 540     |   |   |   | 1,417   |   |   |   | (646      | )      |   |   | 4,393 |   |
|             | Net      earnings (loss) per share (2):         |   |   |    |   |   |   |    |   |   |   |      |   |   |   |   |   |
|             |     Basic                   |   |   | 0.14    |   |   |   | 0.37    |   |   |   | (0.17     | )      |   |   | 1.16 |   |
|             |     Diluted                 |   |   | 0.14    |   |   |   | 0.37    |   |   |   | (0.17     | )      |   |   | 1.14 |   |

----

|   | (1) | In      fiscal 2008, a provision for asset impairment of $2.1 million      negatively impacted netearnings. |
|--------|-----|------------------------------------------------------------------------------------------------------------------|

|   | (2) | Earnings      per share amounts are computed independently for each of the quarters      presented. Therefore, the sum of the quarterly earnings per share in      fiscal 2008 and fiscal 2007 does not equal the total computed for the      year. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12. | Related      Party Transactions |
|-----|---------------------------------|

| 13. | Business      Operations |
|-----|--------------------------|

|                                                                     |   |                     |   |   |   |   |
|--------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                                     |   | Percentage      of Sales |   |
|                                                                     |   |                     |   |   |   |   |
|                                                                     |   | 2008                     |   |   | 2007   |   |
| Merchandise      Category:                                               |   |                     |   |   |   |   |
| Consumables      and commodities                                         |   |                     | 30     | %      |   |   | 30 | % |
| Electronics,      entertainment, sporting goods, toys and outdoor living |   |                     | 25     | %      |   |   | 25 | % |
| Apparel      and accessories                                             |   |                     | 20     | %      |   |   | 20 | % |
| Home      furnishings and décor                                     |   |                     | 14     | %      |   |   | 14 | % |
| Other                                                                    |   |                     | 11     | %      |   |   | 11 | % |
|                                                                     |   |                     |   |   |   |   |   |   |
| Total                                                                    |   |                     | 100    | %      |   |   | 100 | % |

| 14. | Staff      Accounting Bulletin 108 (SAB 108) |
|-----|----------------------------------------------|

| Description             |   | Current |   |   | Deferred          |   |   | Retained |   |
|-------------------------|--------|---------|--------|--------|-------------------|--------|--------|----------|--------|
|                    |   | Assets  |   |   | Income      Taxes |   |   | Earnings |   |
| Inventory               |   | $       | (4,344 | )      |              |   | -      |     |   |   | 4,344 |   |
| Deferred      tax asset |   |    | -      |   |              |   | 1,649  |     |   |   | (1,649 | ) |
|                    |   |    |   |   |              |   |   |     |   |   |   |   |
| Total                   |   | $       | (4,344 | )      |              |   | 1,649  |     |   |   | 2,695 |   |

| ITEM      9. | CHANGES      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE. |
|--------------|------------------------------------------------------------------------------------------------------|

----

| ·   | The      Company did not have adequate transition plans to address turnover in      finance and accounting personnel.  As a result, due to      significant changes in these personnel that occurred around the Company’s      February 3, 2008 year-end closing process, the Company did not have      sufficient trained resources to effectively operate the year-end closing      process controls.  This resulted in misstatements that were      corrected prior to the issuance of the consolidated financial      statements.  As a result of this material weakness, there is more      than a reasonable possibility that a material misstatement of the      Company’s annual or interim financial statements will not be prevented or      detected on a timely basis. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | Report      of Independent Registered Public AccountingFirm |
|--------|-----|-------------------------------------------------------------|

----

| Name                      | Age    | Position                                          |
|---------------------------|--------|---------------------------------------------------|
|                      |   |                                              |
| Donny      R. Johnson     | 47     | Interim      - Chief Executive Officer            |
| Tom      L. Canfield, Jr. | 54     | Senior      Vice President                        |
| Anthony      C. Corradi   | 47     | Senior      Vice President                        |
| Phillip      D. Hixon     | 54     | Senior      Vice President                        |
| Jon      A. Ramsey        | 40     | Interim  -      Chief Financial Officer |

----

| (a) | Documents      filed as part of this report |
|-----|---------------------------------------------|

| (1) | Consolidated      Financial Statements |
|-----|----------------------------------------|

|   | The      financial statements are listed in the index for Item 8 of this Form      10-K. |
|--------|------------------------------------------------------------------------------------------|
|   |                                                                                     |

| (2) | Financial      Statement Schedules |
|-----|------------------------------------|

|   | All      schedules are omitted because they are inapplicable, not required, or the      information is included elsewhere in the Consolidated Financial Statements      or the notes thereto. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                          |

| (3) | Exhibits |
|-----|----------|

|   | The      exhibits filed with or incorporated by reference in this report are listed      below: |
|--------|-------------------------------------------------------------------------------------------------|

| 3.1 | Amended      and Restated Articles of Incorporation (filed as Exhibit 3(a) to Company’s      Registration Statement on Form S-1 and hereby incorporated herein by      reference). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate      of Amendment to the Articles of Incorporation (filed as Exhibit 3(b) to      Company’s Annual Report on Form 10-K for the fiscal year ended January 29,      1995, and incorporated herein by reference) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Bylaws      (filed as Exhibit 3(b) to Company’s Registration Statement on Form S-1 and      hereby incorporated herein byreference). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Specimen      Common Stock Certificates (filed as Exhibit 4.1 to Company’s Registration      Statement on Form S-1 and incorporated herein by    reference). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Reference      is made to the Amended and Restated Articles of Incorporation and Bylaws      described above under 3(1) and 3(3), respectively (filed as Exhibit 4(a)      to Company’s Registration Statement on Form S-1 and hereby incorporated      herein by reference). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Reference      is made to the Certificate of Amendment to the Articles of Incorporation      described above under 3(2) (filed as Exhibit 3(2) to Company’s Annual      Report on Form 10-K for the fiscal year ended January 29, 1995, and      incorporated herein by reference). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Employment      Agreement dated March 23, 2006 between the Company and Michael S. Marcus      is incorporated by reference to Exhibit 10.1 to the Current Report on Form      8-K of the Company dated March 28,2006. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Separation      Agreement and Release, dated as of February 22, 2008, between the Company      and Bruce C. Dale is incorporated by reference to Exhibit 10.3 to the      Current Report on Form 8-K of the Company dated February 28,      2008. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Employment      Agreement dated July 23, 2007 between the Company and Ron V. Mapp is      incorporated by reference to Exhibit 10.4 to the Current Report on Form      8-K of the Company dated July 30,2007. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Employment      Agreement dated August 1, 2007 between the Company and Donny R. Johnson is      incorporated by reference to Exhibit 10.5 to the Current Report on Form      8-K of the Company dated August 6,2007. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Loan      and Security Agreement, dated as of January 18, 2008, between the Company      and Fleet Retail Finance Inc. |
|------|------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Joinder      Agreement and First Amendment to Loan and Security Agreement dated      September 9, 2002 among the Company, Fleet Retail Finance Inc., and DA      Good Buys, Inc. (filed as Exhibit 10.17 to the Company’s Annual Report on      Form 10-K for the fiscal year ended February 2, 2003 and hereby      incorporated by reference). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 21.1 | Amended      and Restated List of Subsidiaries of the Company (filed as Exhibit 21.1 to      the Company’s Annual Report on Form 10-K for the fiscal year ended      February 2, 2003 and hereby incorporated by  reference). |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 23.1 | Consent      of Independent Registered Public AccountingFirm |
|------|--------------------------------------------------------------|

| 31.1 | Certification      of Interim Chief Executive Officer of Duckwall-ALCO Stores, Inc. dated      April 28, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange      Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2003. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 | Certification      of Interim Chief Financial Officer of Duckwall-ALCO Stores, Inc. dated      April 28, 2008, pursuant to Rule 13a-4(a) under the Securities Exchange      Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2003. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 | Certification      of Interim Chief Executive Officer of Duckwall-ALCO Stores, Inc, dated      April 28, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Annual Report on Form 10-K for the year ended February 3, 2008 and is      not treated as filed in reliance upon § 601(b)(32) of Regulations      S-K. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 | Certification      of Interim Chief Financial Officer of Duckwall-ALCO Stores, Inc., dated      April 28, 2008, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to      Section 906 of the Sarbanes-Oxley Act of 2002, which is furnished with      this Annual Report on Form 10-K for the year ended February 3, 2008 and is      not treated as filed in reliance upon § 601(b)(32) of Regulations      S-K. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Signature      and Title                           |   |   | Date                |   |
|----------------------------------------------------|--------|--------|---------------------|--------|
|                                               |   |   |                |   |
| /s/      Donny R. Johnson                          |   |   | April      28, 2008 |   |
| Donny      R. Johnson                              |   |   |                |   |
| Interim      President and Chief Executive Officer |   |   |                |   |
| (Principal      Executive Officer)                 |   |   |                |   |
|                                               |   |   |                |   |
| /s/      Jon A. Ramsey                             |   |   | April      28, 2008 |   |
| Jon      A. Ramsey                                 |   |   |                |   |
| Interim      Chief Financial Officer and Treasurer |   |   |                |   |
| (Principal      Financial and Accounting Officer)  |   |   |                |   |
|                                               |   |   |                |   |
| /s/      Royce L. Winsten                          |   |   | April      28, 2008 |   |
| Royce      L. Winsten                              |   |   |                |   |
| Director                                           |   |   |                |   |
|                                               |   |   |                |   |
| /s/      Raymond A.D. French                       |   |   | April      28, 2008 |   |
| Raymond      A.D. French                           |   |   |                |   |
| Director                                           |   |   |                |   |
|                                               |   |   |                |   |
| /s/      Lolan C. Mackey                           |   |   | April      28, 2008 |   |
| Lolan      C. Mackey                               |   |   |                |   |
| Director                                           |   |   |                |   |
|                                               |   |   |                |   |
| /s/      James G. Hyde                             |   |   | April      28, 2008 |   |
| James      G. Hyde                                 |   |   |                |   |
| Director                                           |   |   |                |   |
|                                               |   |   |                |   |
| /s/      Dennis E. Logue                           |   |   | April      28, 2008 |   |
| Dennis      E. Logue                               |   |   |                |   |
| Director                                           |   |   |                |   |

----