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|                                                
|------------------------------------------------
|UNITED STATES SECURITIES AND EXCHANGE COMMISSION
|WASHINGTON, D.C. 20549                          
|                                                
|                                                
|                                                
|FORM 10-Q                                       

|           |                                                                                          
|---------- | -----------------------------------------------------------------------------------------
|(Mark One)
|          
|x          | QUARTERLY REPORT PURSUANT TO
 SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|           |                                                                                          
|           | For the quarterly period ended October 31, 2009                                          
|           |                                                                                          
|OR        
|           |                                                                                          
|o          | TRANSITION REPORT PURSUANT TO
 SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |                                                                                          
|           | For the transition period from _________ to _________                                    

|                                                               |                       
|-------------------------------------------------------------- | ----------------------
|Commission File Number 001-09097                              
|                                                               |                       
|                                                              
|                                                               |                       
|REX STORES CORPORATION                                        
|(Exact name of registrant as specified in
 its charter)       
|                                                              
|                                                              
|                                                              
|Delaware                                                       | 31-1095548            
|(State or other jurisdiction of                                | (I.R.S. Employer      
|incorporation or organization)                                 | Identification Number)
|                                                               |                       
|2875 Needmore Road, Dayton,
 Ohio               45414         
|(Address of principal executive
 offices)          (Zip
 Code)
|                                                              
|(937) 276-3931                                                
|(Registrants telephone number, including
 area code)         
|                                                              
|                                                              

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

Yes x No o


Indicate by
check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).

Yes o No o

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See definition
of large accelerated filer, accelerated filer and smaller reporting
company in Rule 12b-2 of the Exchange Act.

|                         |                                                 |                              |                     
|------------------------ | ----------------------------------------------- | ---------------------------- | --------------------
|Large
 accelerated filer | o                                               |                              | Accelerated
 filer x
|Non-accelerated
 filer   | o (Do not check if a smaller reporting company) | Smaller
 reporting company o

Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).
Yes o
No x

At the close
of business on December 2, 2009 the registrant had 9,153,853 shares of Common Stock, par value $.01 per share, outstanding.

---

---



REX STORES
CORPORATION AND SUBSIDIARIES

INDEX

|         |                                                                                        |  |      | 
|-------- | -------------------------------------------------------------------------------------- |  | ---- | 
|         |                                                                                        |  | Page
|         |                                                                                        |  |     
|PART I.  | FINANCIAL INFORMATION                                                                  |  |      | 
|         |                                                                                        |  |      | 
|Item 1.  | Financial Statements
 (Unaudited)                                                      |  |      | 
|         |                                                                                        |  |      | 
|         | Consolidated Condensed
 Balance Sheets                                                 |  | 3    | 
|         | Consolidated Condensed
 Statements of Operations                                       |  | 4    | 
|         | Consolidated Condensed
 Statements of Equity                                           |  | 5    | 
|         | Consolidated Condensed
 Statements of Cash Flows                                       |  | 6    | 
|         | Notes to Consolidated
 Condensed Financial Statements                                  |  | 7    | 
|         |                                                                                        |  |      | 
|Item 2.  | Managements Discussion
 and Analysis of Financial Condition and Results of Operations |  | 27   | 
|         |                                                                                        |  |      | 
|Item 3.  | Quantitative and
 Qualitative Disclosures About Market Risk                            |  | 39   | 
|         |                                                                                        |  |      | 
|Item 4.  | Controls and Procedures                                                                |  | 39   | 
|         |                                                                                        |  |      | 
|PART II. | OTHER INFORMATION                                                                      |  |      | 
|         |                                                                                        |  |      | 
|Item 1.  | Legal Proceedings                                                                      |  | 39   | 
|         |                                                                                        |  |      | 
|Item 1A. | Risk Factors                                                                           |  | 40   | 
|         |                                                                                        |  |      | 
|Item 2.  | Unregistered Sales of
 Equity Securities and Use of Proceeds                           |  | 40   | 
|         |                                                                                        |  |      | 
|Item 6.  | Exhibits                                                                               |  | 40   | 

---



PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

REX STORES CORPORATION AND
SUBSIDIARIESConsolidated Condensed Balance SheetsUnaudited

|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|------------------------------------------------------------------------------------ |  | ------------------ | -------- | ------------------ | - | ------------------ | - | - | -------- | -
|                                                                                     |  | October
 31,
 2009 |          | January
 31,
 2009 |   | October
 31,
 2008 |  
|                                                                                     |  | (In
 Thousands)    |         
|Assets                                                                               |  |                    |         
|Current
 assets:                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Cash and cash equivalents                                                            |  | $                  | 84,448   |                    | $ | 91,991             |   | $ | 66,215   |  
|Restricted cash                                                                      |  |                    | 1,025    |                    |   |                   |   |   | 1,318    |  
|Accounts receivable, net                                                             |  |                    | 9,261    |                    |   | 4,197              |   |   | 4,643    |  
|Inventory, net                                                                       |  |                    | 7,673    |                    |   | 24,374             |   |   | 56,554   |  
|Refundable income taxes                                                              |  |                    | 4,703    |                    |   | 7,790              |   |   | 2,501    |  
|Prepaid expenses and other                                                           |  |                    | 1,846    |                    |   | 1,063              |   |   | 1,176    |  
|Deferred taxes, net                                                                  |  |                    | 7,980    |                    |   | 13,230             |   |   | 9,801    |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 current assets                                                                |  |                    | 116,936  |                    |   | 142,645            |   |   | 142,208  |  
|Property
 and equipment, net                                                         |  |                    | 253,153  |                    |   | 235,454            |   |   | 221,967  |  
|Other
 assets                                                                        |  |                    | 9,837    |                    |   | 12,414             |   |   | 12,953   |  
|Deferred
 taxes, net                                                                 |  |                    | 25,435   |                    |   | 18,697             |   |   | 21,929   |  
|Investments                                                                          |  |                    | 43,038   |                    |   | 42,078             |   |   | 44,052   |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 assets                                                                        |  | $                  | 448,399  |                    | $ | 451,288            |   | $ | 443,109  |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Liabilities
 and shareholders equity:                                               |  |                    |          |                    |   |                    |   |   |          |  
|Current
 liabilities:                                                                |  |                    |          |                    |   |                    |   |   |          |  
|Current portion of long-term
 debt and capital lease obligations, alternative energy |  | $                  | 12,802   |                    | $ | 5,898              |   | $ | 4,852    |  
|Current portion of long-term
 debt, other                                            |  |                    | 369      |                    |   | 1,576              |   |   | 1,541    |  
|Accounts payable, trade                                                              |  |                    | 9,474    |                    |   | 25,167             |   |   | 38,539   |  
|Deferred income                                                                      |  |                    | 8,813    |                    |   | 13,510             |   |   | 14,140   |  
|Derivative financial
 instruments                                                    |  |                    | 2,796    |                    |   | 1,996              |   |   | 507      |  
|Other current liabilities                                                            |  |                    | 6,492    |                    |   | 10,122             |   |   | 6,208    |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total current liabilities                                                            |  |                    | 40,746   |                    |   | 58,269             |   |   | 65,787   |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Long-term
 liabilities:                                                              |  |                    |          |                    |   |                    |   |   |          |  
|Long-term debt and capital
 lease obligations, alternative energy                    |  |                    | 127,450  |                    |   | 94,003             |   |   | 73,089   |  
|Long-term debt, other                                                                |  |                    | 2,686    |                    |   | 9,936              |   |   | 11,428   |  
|Deferred income                                                                      |  |                    | 7,929    |                    |   | 17,263             |   |   | 18,136   |  
|Derivative financial
 instruments                                                    |  |                    | 3,746    |                    |   | 4,032              |   |   | 1,359    |  
|Other                                                                                |  |                    | 4,462    |                    |   | 4,152              |   |   | 1,176    |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 long-term liabilities                                                         |  |                    | 146,273  |                    |   | 129,386            |   |   | 105,188  |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Equity:                                                                              |  |                    |          |                    |   |                    |   |   |          |  
|REX shareholders equity:                                                            |  |                    |          |                    |   |                    |   |   |          |  
|Common stock                                                                         |  |                    | 299      |                    |   | 299                |   |   | 299      |  
|Paid-in capital                                                                      |  |                    | 142,806  |                    |   | 142,486            |   |   | 142,310  |  
|Retained earnings                                                                    |  |                    | 283,713  |                    |   | 282,332            |   |   | 287,711  |  
|Treasury stock                                                                       |  |                    | (190,255 | )                  |   | (186,057           | ) |   | (183,845 | )
|Accumulated other
 comprehensive income, net of tax                                  |  |                    | 49       |                    |   |                   |   |   |         |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 REX shareholders equity                                                      |  |                    | 236,612  |                    |   | 239,060            |   |   | 246,475  |  
|Noncontrolling interests                                                             |  |                    | 24,768   |                    |   | 24,573             |   |   | 25,659   |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 equity                                                                        |  |                    | 261,380  |                    |   | 263,633            |   |   | 272,134  |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  
|Total
 liabilities and equity                                                        |  | $                  | 448,399  |                    | $ | 451,288            |   | $ | 443,109  |  
|                                                                                     |  |                    |          |                    |   |                    |   |   |          |  

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

3

---



REX STORES CORPORATION AND SUBSIDIARIES 
Consolidated Condensed Statements Of Operations 
Unaudited

|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | ------------------------------- | - | ------ | - | ---- | ------- | - | - | ------- | -
|                                                                                                                |  | Three Months
 Ended
 October 31,         |        | Nine Months
 Ended
 October 31, |  
|                                                                                                                |  |                                          |        |                                 |  
|                                                                                                                |  | 2009                                     |        | 2008                            |   | 2009   |   | 2008 |        
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |        
|                                                                                                                |  | (In Thousands, Except Per Share Amounts) |       
|                                                                                                                |  |                                          |       
|Net sales and revenue                                                                                           |  | $                                        | 64,416 |                                 | $ | 39,171 |   | $    | 111,180 |   | $ | 99,642  |  
|Cost of sales (excluding retail segment
 depreciation)                                                          |  |                                          | 56,556 |                                 |   | 35,499 |   |      | 96,408  |   |   | 83,336  |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Gross profit                                                                                                    |  |                                          | 7,860  |                                 |   | 3,672  |   |      | 14,772  |   |   | 16,306  |  
|Selling, general and administrative
 expenses                                                                   |  |                                          | (2,581 | )                               |   | (7,578 | ) |      | (8,355  | ) |   | (21,746 | )
|Investment income                                                                                               |  |                                          | 92     |                                 |   | 363    |   |      | 356     |   |   | 1,732   |  
|Interest expense                                                                                                |  |                                          | (1,642 | )                               |   | (1,070 | ) |      | (3,250  | ) |   | (2,074  | )
|Equity in income of unconsolidated ethanol
 affiliates                                                          |  |                                          | 1,221  |                                 |   | 1,044  |   |      | 1,144   |   |   | 2,966   |  
|Gains on sales of real estate                                                                                   |  |                                          |       |                                 |   | 2,279  |   |      |        |   |   | 2,279   |  
|Other income                                                                                                    |  |                                          | 766    |                                 |   | 12     |   |      | 666     |   |   | 682     |  
|(Losses) gains on derivative financial
 instruments, net                                                        |  |                                          | (899   | )                               |   | (947   | ) |      | (1,561  | ) |   | 481     |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Income (loss) from continuing operations
 before provision/benefit for income taxes and discontinued operations |  |                                          | 4,817  |                                 |   | (2,225 | ) |      | 3,772   |   |   | 626     |  
|(Provision) benefit for income taxes                                                                            |  |                                          | (1,510 | )                               |   | 41     |   |      | (1,450  | ) |   | (701    | )
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Income (loss) from continuing operations including
 noncontrolling interest                                     |  |                                          | 3,307  |                                 |   | (2,184 | ) |      | 2,322   |   |   | (75     | )
|Loss from discontinued operations, net of
 tax                                                                  |  |                                          | (22    | )                               |   | (344   | ) |      | (873    | ) |   | (103    | )
|Gain on disposal of discontinued
 operations, net of tax                                                        |  |                                          |       |                                 |   |       |   |      | 127     |   |   | 190     |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Net income (loss) including noncontrolling
 interest                                                            |  |                                          | 3,285  |                                 |   | (2,528 | ) |      | 1,576   |   |   | 12      |  
|Net (income) loss attributable to
 noncontrolling interest                                                      |  |                                          | (1,012 | )                               |   | 1,878  |   |      | (195    | ) |   | 2,070   |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Net income (loss) attributable to REX
 common shareholders                                                      |  | $                                        | 2,273  |                                 | $ | (650   | ) | $    | 1,381   |   | $ | 2,082   |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Weighted average shares outstanding  basic                                                                     |  |                                          | 9,161  |                                 |   | 9,937  |   |      | 9,229   |   |   | 10,389  |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Basic income (loss) per share from
 continuing operations attributable to REX common shareholders               |  | $                                        | 0.25   |                                 | $ | (0.03  | ) | $    | 0.23    |   | $ | 0.19    |  
|Basic loss per share from discontinued
 operations attributable to REX common shareholders                      |  |                                          |       |                                 |   | (0.04  | ) |      | (0.09   | ) |   | (0.01   | )
|Basic income per share on disposal of
 discontinued operations attributable to REX common shareholders          |  |                                          |       |                                 |   |       |   |      | 0.01    |   |   | 0.02    |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Basic net income (loss) per share
 attributable to REX common shareholders                                      |  | $                                        | 0.25   |                                 | $ | (0.07  | ) | $    | 0.15    |   | $ | 0.20    |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Weighted average shares outstanding 
 diluted                                                                  |  |                                          | 9,464  |                                 |   | 9,937  |   |      | 9,478   |   |   | 11,029  |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Diluted income (loss) per share from
 continuing operations attributable to REX common shareholders             |  | $                                        | 0.24   |                                 | $ | (0.03  | ) | $    | 0.23    |   | $ | 0.18    |  
|Diluted loss per share from discontinued
 operations attributable to REX common shareholders                    |  |                                          |       |                                 |   | (0.04  | ) |      | (0.09   | ) |   | (0.01   | )
|Diluted income per share on disposal of
 discontinued operations attributable to REX common shareholders        |  |                                          |       |                                 |   |       |   |      | 0.01    |   |   | 0.02    |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Diluted net income (loss) per share
 attributable to REX common shareholders                                    |  | $                                        | 0.24   |                                 | $ | (0.07  | ) | $    | 0.15    |   | $ | 0.19    |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Amounts
 attributable to REX common shareholders:                                                               |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Income (loss) from continuing operations,
 net of tax                                                           |  | $                                        | 2,295  |                                 | $ | (306   | ) | $    | 2,127   |   | $ | 1,995   |  
|(Loss) income from discontinued operations,
 net of tax                                                         |  |                                          | (22    | )                               |   | (344   | ) |      | (746    | ) |   | 87      |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  
|Net income (loss)                                                                                               |  | $                                        | 2,273  |                                 | $ | (650   | ) | $    | 1,381   |   | $ | 2,082   |  
|                                                                                                                |  |                                          |        |                                 |   |        |   |      |         |   |   |         |  

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

4

---



REX STORES CORPORATION AND SUBSIDIARIES 
Consolidated Condensed Statements Of Equity 
Unaudited

|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|--------------------------------------------------------------------------- |  | --------------------- | ------ | -------- | - | ---------------- |  | ------------------ | ------ | ----------------------------------------- | - | ------------------------ | - | ------------- | ------- |  | - | ------- |  | - | -- |  | - | ------ |  | - | ------- | -
|                                                                            |  | REX Shareholders      |        |          |   |                  | 
|                                                                            |  |                       |        |          |   |                  | 
|                                                                            |  | Common Shares
 Issued |        | Treasury |   | Paid-in
 Capital |  | Retained
 Earnings |        | Accumulated
 Other
 Comprehensive
 Income |   | Noncontrolling
 Interest |   | Total
 Equity |        
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                          
|                                                                            |  | Shares                |        | Amount   |   | Shares           |  | Amount             |        |                                           |   |                          |   |              
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         | 
|                                                                            |  |                       |        |          |   | (In Thousands)   |  |                    |        |                                           |   |                          |   |               |         |  |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Balance at January 31, 2009, as reported                                    |  |                       | 29,853 |          | $ | 299              |  |                    | 20,471 |                                           | $ | (186,057                 | ) | $             | 142,486 |  | $ | 282,332 |  | $ |   |  | $ |       |  | $ | 239,060 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Effects of adoption of new accounting standard for noncontrolling
 interest |  |                       |       |          |   |                 |  |                    |       |                                           |   |                         |   |               |        |  |   |        |  |   |   |  |   | 24,573 |  |   | 24,573  |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Balance at January 31, 2009, as adjusted                                    |  |                       | 29,853 |          |   | 299              |  |                    | 20,471 |                                           |   | (186,057                 | ) |               | 142,486 |  |   | 282,332 |  |   |   |  |   | 24,573 |  |   | 263,633 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Net income                                                                  |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   | 1,381   |  |   |    |  |   | 195    |  |   | 1,576   |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Stock based compensation                                                    |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               | 234     |  |   |         |  |   |    |  |   |        |  |   | 234     |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Treasury stock acquired                                                     |  |                       |        |          |   |                  |  |                    | 535    |                                           |   | (5,543                   | ) |               |         |  |   |         |  |   |    |  |   |        |  |   | (5,543  | )
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Unrealized investment gains, net of income taxes of $32                     |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   | 49 |  |   |        |  |   | 49      |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Stock options exercised and related tax effects                             |  |                       |       |          |   |                 |  |                    | (148   | )                                         |   | 1,345                    |   |               | 86      |  |   |        |  |   |   |  |   |       |  |   | 1,431   |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  
|Balance at October 31, 2009                                                 |  |                       | 29,853 |          | $ | 299              |  |                    | 20,858 |                                           | $ | (190,255                 | ) | $             | 142,806 |  | $ | 283,713 |  | $ | 49 |  | $ | 24,768 |  | $ | 261,380 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                                           |   |                          |   |               |         |  |   |         |  |   |    |  |   |        |  |   |         |  

|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|--------------------------------------------------------------------------- |  | --------------------- | ------ | -------- | - | ---------------- |  | ------------------ | ------ | ------------------------ | - | ------------- | - | - | ------- | - | - | ------- |  | - | ------ | - | - | ------- | -
|                                                                            |  | REX Shareholders      |        |          |   |                  | 
|                                                                            |  |                       |        |          |   |                  | 
|                                                                            |  | Common Shares
 Issued |        | Treasury |   | Paid-in
 Capital |  | Retained
 Earnings |        | Noncontrolling
 Interest |   | Total
 Equity |  
|                                                                            |  |                       |        |          |   |                  |  |                    |       
|                                                                            |  | Shares                |        | Amount   |   | Shares           |  | Amount             |        |                          |   |               |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |  
|                                                                            |  |                       |        |          |   | (In Thousands)   |  |                    |        |                          |   |               |   |   |        
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Balance at January 31, 2008,
 as reported                                   |  |                       | 29,813 |          | $ | 298              |  |                    | 19,094 |                          | $ | (170,693      | ) | $ | 141,357 |   | $ | 285,629 |  | $ |       |   | $ | 256,591 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Effects of adoption of new accounting standard for noncontrolling
 interest |  |                       |       |          |   |                 |  |                    |       |                          |   |              |   |   |        |   |   |        |  |   | 27,729 |   |   | 27,729  |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Balance at January 31, 2008,
 as adjusted                                   |  |                       | 29,813 |          |   | 298              |  |                    | 19,094 |                          |   | (170,693      | ) |   | 141,357 |   |   | 285,629 |  |   | 27,729 |   |   | 284,320 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Net income (loss)                                                           |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   | 2,082   |  |   | (2,070 | ) |   | 12      |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Stock based compensation                                                    |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   | 967     |   |   |         |  |   |        |   |   | 967     |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Treasury stock acquired                                                     |  |                       |        |          |   |                  |  |                    | 1,332  |                          |   | (15,496       | ) |   |         |   |   |         |  |   |        |   |   | (15,496 | )
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Stock options exercised and related tax effects                             |  |                       | 40     |          |   | 1                |  |                    | (259   | )                        |   | 2,344         |   |   | (14     | ) |   |        |  |   |       |   |   | 2,331   |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  
|Balance at October 31, 2008                                                 |  |                       | 29,853 |          | $ | 299              |  |                    | 20,167 |                          | $ | (183,845      | ) | $ | 142,310 |   | $ | 287,711 |  | $ | 25,659 |   | $ | 272,134 |  
|                                                                            |  |                       |        |          |   |                  |  |                    |        |                          |   |               |   |   |         |   |   |         |  |   |        |   |   |         |  

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

5

---



REX STORES CORPORATION AND SUBSIDIARIESConsolidated Condensed Statements Of Cash Flows
Unaudited

|                                                                                             |  |                                |         |      |   |         |  
|-------------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | ---- | - | ------- | -
|                                                                                             |  | Nine Months Ended
 October 31, |        
|                                                                                             |  |                                |        
|                                                                                             |  | 2009                           |         | 2008 |  
|                                                                                             |  |                                |         |      |  
|                                                                                             |  | (In Thousands)                 |        
|Cash flows from operating activities:                                                        |  |                                |         |      |   |         |  
|Net income including noncontrolling interest                                                 |  | $                              | 1,576   |      | $ | 12      |  
|Adjustments to reconcile net income to net cash provided by (used in)
 operating activities: |  |                                |         |      |   |         |  
|Depreciation and amortization                                                                |  |                                | 6,489   |      |   | 2,551   |  
|Income from equity method investments                                                        |  |                                | (1,144  | )    |   | (2,966  | )
|Income from synthetic fuel investments                                                       |  |                                |        |      |   | (691    | )
|Gain on disposal of real estate and property and equipment                                   |  |                                | (51     | )    |   | (3,279  | )
|Dividends received from equity method investees                                              |  |                                |        |      |   | 400     |  
|Deferred income                                                                              |  |                                | (14,031 | )    |   | (5,273  | )
|Unrealized losses (gains) on derivative financial instruments                                |  |                                | 1,561   |      |   | (481    | )
|Other                                                                                        |  |                                | 248     |      |   | 2,439   |  
|Deferred income tax                                                                          |  |                                | (1,521  | )    |   | 798     |  
|Changes in assets and liabilities:                                                           |  |                                |         |      |   |         |  
|Accounts receivable                                                                          |  |                                | (5,064  | )    |   | (2,766  | )
|Inventory                                                                                    |  |                                | 16,701  |      |   | (6,621  | )
|Other assets                                                                                 |  |                                | 5,070   |      |   | 1,635   |  
|Accounts payable, trade                                                                      |  |                                | (6,208  | )    |   | (1,490  | )
|Other liabilities                                                                            |  |                                | (3,320  | )    |   | (10,547 | )
|                                                                                             |  |                                |         |      |   |         |  
|Net cash provided by (used in) operating activities                                          |  |                                | 306     |      |   | (26,279 | )
|                                                                                             |  |                                |         |      |   |         |  
|Cash flows from investing activities:                                                        |  |                                |         |      |   |         |  
|Capital expenditures                                                                         |  |                                | (34,532 | )    |   | (75,903 | )
|Proceeds from sale of synthetic fuel investments                                             |  |                                |        |      |   | 1,264   |  
|Proceeds from sale of real estate and property and equipment                                 |  |                                | 1,002   |      |   | 6,379   |  
|Purchase of investments                                                                      |  |                                | (25     | )    |   |        |  
|Restricted cash                                                                              |  |                                | (1,025  | )    |   | (1,318  | )
|Restricted investments                                                                       |  |                                | 184     |      |   | (22     | )
|                                                                                             |  |                                |         |      |   |         |  
|Net cash used in investing activities                                                        |  |                                | (34,396 | )    |   | (69,600 | )
|                                                                                             |  |                                |         |      |   |         |  
|Cash flows from financing activities:                                                        |  |                                |         |      |   |         |  
|Payments of long-term debt and capital lease obligations                                     |  |                                | (12,080 | )    |   | (4,425  | )
|Proceeds from long-term debt                                                                 |  |                                | 43,974  |      |   | 53,088  |  
|Stock options exercised                                                                      |  |                                | 1,243   |      |   | 1,453   |  
|Treasury stock acquired                                                                      |  |                                | (5,543  | )    |   | (15,496 | )
|Realized losses on derivative financial instruments                                          |  |                                | (1,047  | )    |   | (254    | )
|Other                                                                                        |  |                                |        |      |   | 12      |  
|                                                                                             |  |                                |         |      |   |         |  
|Net cash provided by financing activities                                                    |  |                                | 26,547  |      |   | 34,378  |  
|                                                                                             |  |                                |         |      |   |         |  
|Net decrease in cash and cash equivalents                                                    |  |                                | (7,543  | )    |   | (61,501 | )
|Cash and cash equivalents, beginning of period                                               |  |                                | 91,991  |      |   | 127,716 |  
|                                                                                             |  |                                |         |      |   |         |  
|Cash and cash equivalents, end of period                                                     |  | $                              | 84,448  |      | $ | 66,215  |  
|                                                                                             |  |                                |         |      |   |         |  
|Non cash investing activities  Accrued capital expenditures                                 |  | $                              |        |      | $ | 12,776  |  
|                                                                                             |  |                                |         |      |   |         |  
|Non cash investing activities  Assets acquired by capital leases                            |  | $                              |        |      | $ | 2,922   |  
|                                                                                             |  |                                |         |      |   |         |  

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

6

---



REX STORES CORPORATION AND SUBSIDIARIESNOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31, 2009

Note 1. Consolidated
Condensed Financial Statements

The
consolidated condensed financial statements included in this report have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission and include, in the opinion of
management, all adjustments necessary to state fairly the information set forth
therein. Any such adjustments were of a normal recurring nature. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United
States of America have been omitted pursuant to such rules and regulations,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. Financial information as of January 31,
2009 included in these financial statements has been derived from the audited
consolidated financial statements included in the Companys Annual Report on
Form 10-K for the year ended January 31, 2009 (fiscal year 2008). It is
suggested that these unaudited consolidated condensed financial statements be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Companys Annual Report on Form 10-K for the year ended
January 31, 2009. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the year.

Basis
of Consolidation  The consolidated condensed financial statements in this
report include the operating results and financial position of REX Stores
Corporation and its wholly and majority owned subsidiaries. The Company
includes the results of operations of Levelland Hockley County Ethanol, LLC
(Levelland Hockley) and One Earth Energy, LLC (One Earth) in its
Consolidated Condensed Statements of Operations on a delayed basis of one
month.

Nature
of Operations  The Company operates in three reportable segments, alternative
energy, real estate and retail. The Company substantially completed the exit of
its retail business during the second quarter of fiscal year 2009, although it
will continue to recognize revenue and expense associated with administering
extended service policies.

Reclassifications
 Certain amounts have been reclassified to conform to current year
presentation.

Note 2. Accounting
Policies

The interim
consolidated condensed financial statements have been prepared in accordance
with the accounting policies described in the notes to the consolidated
financial statements included in the Companys 2008 Annual Report on Form 10-K.
While management believes that the procedures followed in the preparation of
interim financial information are reasonable, the accuracy of some estimated
amounts is dependent upon facts that will exist or calculations that will be
accomplished at fiscal year end. Examples of such estimates include management
bonuses, restructuring accruals, the fair value of financial instruments,
reserves for inventory obsolescence and lower of cost or market calculations
and the provision for income taxes. Any adjustments pursuant to

7

---



such estimates during the quarter were of a normal recurring nature.
Actual results could differ from those estimates.

Revenue Recognition

The Company
recognizes sales
from the production of ethanol and distillers grains when title transfers to
customers, generally upon shipment from the ethanol plants. Shipping and
handling charges to ethanol customers are included in net sales and revenue.

The Company
includes income from its real estate leasing activities in net sales and
revenue. The Company accounts for these leases as operating leases.
Accordingly, minimum rental revenue is recognized on a straight-line basis over
the term of the lease.

The
Company recognized sales of retail products upon receipt by the customer. The
Company sold retail product service contracts covering periods beyond the
normal manufacturers warranty periods, usually with terms of coverage
(including manufacturers warranty periods) of between 12 to 60 months.
Contract revenues and sales commissions are deferred and amortized on a
straight-line basis over the life of the contracts after the expiration of
applicable manufacturers warranty periods. Amortization of deferred contract
revenues is included in net sales and revenue while amortization of deferred
sales commissions is included in selling, general and administrative expenses.
The Company retains the obligation to perform warranty service and such costs
are charged to operations as incurred.

Cost of Sales

Ethanol
cost of sales includes depreciation, costs of raw materials, inbound freight
charges, purchasing and receiving costs, inspection costs, shipping costs,
other distribution expenses, warehousing costs, plant management, certain
compensation costs, and general facility overhead charges.

Real
estate cost of sales includes depreciation, real estate taxes, insurance,
repairs and maintenance and other costs directly associated with operating the
Companys portfolio of real property.

Retail
cost of sales includes the cost of merchandise (net of vendor allowances),
markdowns and inventory shrink, receiving, warehousing and freight charges to
deliver merchandise to retail stores, service repair bills as well as cash
discounts and rebates. The Company classifies purchasing costs as selling,
general and administrative expenses.

Vendor Allowances and Advertising Costs

Vendors
often funded, up front, certain advertising costs and exposure to general
changes in pricing to customers due to technological change. Allowances were
deferred as received from vendors and recognized into income as an offset to
the cost of merchandise sold when the related product was sold or expense
incurred. All such allowances were used in the wind down of the Companys retail
business during fiscal year 2009. Advertising costs were expensed as incurred.

8

---



Selling, General and Administrative Expenses

The
Company includes non-production related costs from its alternative energy
segment such as certain payroll and related costs, professional fees and other
general expenses in selling, general and administrative expenses.

The
Company includes costs not directly related to operating its portfolio of real
property from its real estate segment such as certain payroll and related
costs, professional fees and other general expenses in selling, general and
administrative expenses.

The
Company included store expenses from its retail segment (such as payroll and
occupancy costs), as well as advertising, purchasing, depreciation, insurance
and overhead costs in selling, general and administrative expenses.

Interest Cost

Interest
expense of $3,250,000 for the nine months ended October 31, 2009 is net of
approximately $1,651,000 of interest capitalized. Interest expense of
$2,074,000 for the nine months ended October 31, 2008 is net of approximately
$736,000 of interest capitalized. Cash paid for interest for the nine months
ended October 31, 2009 and 2008 was approximately $1,620,000 and $1,592,000,
respectively.

Financial Instruments

Forward
grain purchase and ethanol and distiller grain sale contracts are accounted for
as normal purchases and normal sales as permitted by the accounting standards
because these arrangements are for purchases of grain that will be delivered in
quantities expected to be used by the Company and sales of ethanol and
distiller grain quantities expected to be produced by the Company over a
reasonable period of time in the normal course of business.

The
Company uses derivative financial instruments to manage its balance of fixed
and variable rate debt. The Company does not hold or issue derivative financial
instruments for trading or speculative purposes. Interest rate swap agreements
involve the exchange of fixed and variable rate interest payments and do not
represent an actual exchange of the notional amounts between the parties. The
swap agreements were not designated for hedge accounting pursuant to the
accounting standards. The interest rate swaps are recorded at their fair values
and the changes in fair values are recorded as gain or loss on derivative
financial instruments in the Consolidated Condensed Statements of Operations.

Income Taxes

The
Company applies an effective tax rate to interim periods that is consistent
with the Companys estimated annual tax rate. The Company provides for deferred
tax liabilities and assets for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis and operating loss and tax
credit carryforwards. The Company provides for a valuation allowance if, based
on the weight of

9

---



available
evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized. The Company paid no income taxes in the first nine
months of fiscal year 2009 and approximately $0.7 million for the nine months
ended October 31, 2008.

As of
October 31, 2009, total unrecognized tax benefits were $4,171,000 and accrued
penalties and interest were $291,000. If the Company were to prevail on all
unrecognized tax benefits recorded, approximately $165,000 of the reserve would
benefit the effective tax rate. In addition, the impact of penalties and
interest would also benefit the effective tax rate. Interest and penalties
associated with unrecognized tax benefits are recorded within income tax
expense. On a quarterly and annual basis, the Company accrues for the effects
of open uncertain tax positions and the related potential penalties and
interest.

Restricted Cash

The
Company has approximately $1.0 million on deposit at October 31, 2009 in a
restricted bank account as collateral for a letter of credit on behalf of
Levelland Hockley to secure grain purchasing. The cash is carried at cost plus
accrued interest.

Inventories

Inventories
are carried at the lower of cost or market on a first-in, first-out (FIFO)
basis. Alternative energy segment inventory includes direct production costs
and certain overhead costs such as depreciation, property taxes and utilities
related to producing ethanol and related by-products. Reserves are established
for net realizable value based upon commodity prices. The market value of
inventory is often dependent upon changes in commodity prices. The components of inventory at October 31,
2009, January 31, 2009 and October 31, 2008 are as follows (amounts in
thousands):

|                                      |  |                   |       |                   |   |                   |  |   |        | 
|------------------------------------- |  | ----------------- | ----- | ----------------- | - | ----------------- |  | - | ------ | 
|                                      |  | October 31,
 2009 |       | January 31,
 2009 |   | October 31,
 2008 | 
|                                      |  |                   |       |                   |   |                   | 
|                                     
|Retail merchandise, net               |  | $                 | 290   |                   | $ | 22,318            |  | $ | 54,730 | 
|Ethanol related:                      |  |                   |       |                   |   |                   |  |   |        | 
|Ethanol and other finished goods, net |  |                   | 2,082 |                   |   | 487               |  |   | 453    | 
|Work in process, net                  |  |                   | 1,535 |                   |   | 341               |  |   | 533    | 
|Grain and other raw materials         |  |                   | 3,766 |                   |   | 1,228             |  |   | 838    | 
|                                      |  |                   |       |                   |   |                   |  |   |        | 
|Total                                 |  | $                 | 7,673 |                   | $ | 24,374            |  | $ | 56,554 | 
|                                      |  |                   |       |                   |   |                   |  |   |        | 

Property and Equipment

Property
and equipment is recorded at cost. Assets under capital leases are capitalized
at the lower of the net present value of minimum lease payments or the fair market
value of the leased asset. Depreciation is computed using the straight-line
method. Estimated useful lives are 15 to 40 years for buildings and
improvements, and 3 to 20 years for fixtures and equipment.

In
accordance with the accounting standards, the carrying value of long-lived
assets is assessed for recoverability by management when changes in
circumstances indicate that the carrying amount may not be recoverable based on
appraisals or an analysis of undiscounted future expected

10

---



cash flows
from the use and ultimate disposition of the asset.

Investments

The
Company periodically evaluates its investments for impairment due to declines
in market value considered to be other than temporary. Such impairment
evaluations include, in addition to persistent, declining market prices,
general economic and company-specific evaluations. If the Company determines
that a decline in market value is other than temporary, then a charge to
earnings is recorded in the accompanying Consolidated Condensed Statements of
Operations for all or a portion of the unrealized loss and a new cost basis in
the investment is established.

Accounting Changes

On
September 15, 2009, the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (the Codification) became the single source
of authoritative generally accepted accounting principles in the United States
of America. The Codification changed the referencing of financial standards but
did not change or alter existing U.S. GAAP. The Codification became
effective for the Company in the third quarter of fiscal year 2009.

During
December 2007, the FASB issued new accounting and disclosure guidance related
to noncontrolling interests in subsidiaries. This guidance establishes
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. The Company adopted the
provisions of this guidance as of the beginning of its 2009 fiscal year. This
guidance is to be applied prospectively as of the beginning of 2009 except for
the presentation and disclosure requirements which are to be applied
retrospectively. The consolidated condensed financial statements conform to the
presentation required under this guidance. Other than the change in
presentation of noncontrolling interests, the adoption had no impact on the
Companys results of operations or financial position.

In
April 2009, the FASB issued new accounting standards that require
disclosures about the fair value of financial instruments in financial
statements for interim and annual reporting periods of publicly traded
companies. These accounting standards are effective for interim and annual
reporting periods ending after June 15, 2009. The adoption of these
accounting standards did not have a material impact on the Companys condensed
consolidated financial statements.

In
May 2009, the FASB issued a new accounting standard which clarifies that
management must evaluate, as of each reporting period, events or transactions
that occur after the balance sheet date through the date that the financial
statements are issued or are available to be issued. This accounting standard
is effective for interim and annual periods ending after June 15, 2009. The
Company adopted this accounting standard in the second quarter of fiscal year
2009. The adoption of this accounting standard did not have a material impact
on the Companys consolidated financial statements but does require the Company
to disclose the date through which management had evaluated subsequent events.

Recently Issued Accounting Standards

In
June 2009, the FASB issued a new accounting standard addressing accounting for
transfers of financial assets which amends the derecognition guidance in prior
accounting standards. This

11

---



accounting
standard is effective for financial asset transfers occurring in fiscal years
beginning after November 15, 2009, and interim periods within those fiscal
years. The Company has not determined the impact on its consolidated financial
statements of adopting this standard.

In
June 2009, the FASB issued a new accounting standard which amends the
consolidation guidance that applies to variable interest entities. This
accounting standard is effective for fiscal years beginning after November 15,
2009, and interim periods within those fiscal years. The Company has not
determined the impact on its consolidated financial statements of adopting this
standard.

Note 3. Comprehensive
Income

Comprehensive
income includes net income and unrealized gains on securities classified as
available for sale (net of the related tax effects), and are reported
separately in shareholders equity. The components of comprehensive income are
as follows (amounts in thousands):

|                                                                |  |                                 |       |                                |   |      |   |      |       |  |   |       | 
|--------------------------------------------------------------- |  | ------------------------------- | ----- | ------------------------------ | - | ---- | - | ---- | ----- |  | - | ----- | 
|                                                                |  | Three Months Ended
 October 31, |       | Nine Months Ended
 October 31, |  
|                                                                |  | 2009                            |       | 2008                           |   | 2009 |   | 2008 |      
|                                                                |  |                                 |       |                                |   |      |   |      |      
|                                                               
|Net income (loss) attributable to REX
 common shareholders      |  | $                               | 2,273 |                                | $ | (650 | ) | $    | 1,381 |  | $ | 2,082 | 
|Unrealized holding gains on available for
 sale securities, net |  |                                 | 12    |                                |   |     |   |      | 49    |  |   |      | 
|                                                                |  |                                 |       |                                |   |      |   |      |       |  |   |       | 
|Total comprehensive income (loss)                               |  | $                               | 2,285 |                                | $ | (650 | ) | $    | 1,430 |  | $ | 2,082 | 
|                                                                |  |                                 |       |                                |   |      |   |      |       |  |   |       | 

Note 4. Sale and Leaseback Transaction and Other Leases

On April 30,
2007, the Company completed a transaction for the sale of 86 of its former
store locations to KLAC REX, LLC (Klac) for $74.5 million in cash, before
selling expenses. The Company also entered into leases to leaseback 40 of the
properties from Klac for initial lease terms expiring January 31, 2010. All of
the leases with Klac have been terminated as of October 31, 2009.

This
transaction resulted in a gain (realized and deferred) of $14.8 million. Of
this gain, $3.9 million and $1.1 million was recognized in the first nine
months of fiscal years 2009 and 2008, respectively. As a result of the wind
down of the Companys retail business, the term over which the deferred gain
was being amortized has been shortened and is based upon the Company abandoning,
or otherwise ceasing use of the leased property. See Note 13 for a discussion
of restructuring related charges. The leases have been accounted for as
operating leases. The following table summarizes the pre-tax gains recognized
during the third quarter and first nine months of fiscal years 2009 and 2008
(amounts in thousands):

|                         |  |                                 |   |                                |   |      |  |      |       |  |   |       | 
|------------------------ |  | ------------------------------- | - | ------------------------------ | - | ---- |  | ---- | ----- |  | - | ----- | 
|                         |  | Three Months Ended
 October 31, |   | Nine Months Ended
 October 31, |  
|Classification of Gain   |  | 2009                            |   | 2008                           |   | 2009 |  | 2008 |      
|                         |  |                                 |   |                                |   |      |  |      |      
|                        
|Discontinued
 Operations |  | $                               |  |                                | $ | 323  |  | $    | 3,933 |  | $ | 1,068 | 
|                         |  |                                 |   |                                |   |      |  |      |       |  |   |       | 

12

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At
October 31, 2009, the Company has lease or sub-lease agreements, as landlord,
for all or portions of eight properties. The Company owns seven of these
properties and is the tenant/sub landlord for one of the properties. All of the
leases are accounted for as operating leases. The following table is a summary
of future minimum rentals on such leases (amounts in thousands):

|                              |  |                 |       | 
|----------------------------- |  | --------------- | ----- | 
|Years Ended 
 January 31      |  | Minimum Rentals |      
|                              |  |                 |       | 
|                             
|Remainder of January 31, 2010 |  | $               | 101   | 
|2011                          |  |                 | 923   | 
|2012                          |  |                 | 855   | 
|2013                          |  |                 | 817   | 
|2014                          |  |                 | 717   | 
|Thereafter                    |  |                 | 845   | 
|                              |  |                 |       | 
|Total                         |  | $               | 4,258 | 
|                              |  |                 |       | 

Levelland
Hockley leases certain real estate and equipment for its ethanol plant. The
leases have been classified as capital leases. The following is a summary, at
October 31, 2009, of the aggregate minimum future annual rental commitments for
all capital leases (amounts in thousands):

|                                                      |  |                 |       | 
|----------------------------------------------------- |  | --------------- | ----- | 
|Years Ended January 31                                |  | Minimum Rentals |      
|                                                      |  |                 |       | 
|                                                     
|Remainder of January 31, 2010                         |  | $               | 142   | 
|2011                                                  |  |                 | 569   | 
|2012                                                  |  |                 | 569   | 
|2013                                                  |  |                 | 521   | 
|2014                                                  |  |                 | 393   | 
|                                                      |  |                 |       | 
|Total minimum lease payments                          |  |                 | 2,194 | 
|Less amount representing interest                     |  |                 | 205   | 
|                                                      |  |                 |       | 
|Present value of minimum capital lease
 payments      |  |                 | 1,989 | 
|Less current maturities of capital lease
 obligations |  |                 | 467   | 
|                                                      |  |                 |       | 
|Long term capital lease obligations                   |  | $               | 1,522 | 
|                                                      |  |                 |       | 

Note 5. Fair Value

Effective
February 1, 2008, the Company adopted new accounting standards for fair
value measurements, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value.
The framework for measuring fair value uses three levels of inputs that may be
used to measure fair values which are provided below. The Company carries cash
equivalents and derivative assets and liabilities at fair value.

Level
1  Quoted prices in active markets for identical assets or liabilities. Level
1 assets and liabilities include debt and equity securities and derivative
contracts that are traded in an active

13

---



exchange
market, as well as certain U.S. Treasury securities that are highly liquid and
are actively traded in over-the-counter markets.

Level
2  Observable inputs other than Level 1 prices such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or
other inputs that are observable or can be corroborated by observable market
data for substantially the full term of the assets or liabilities. Level 2
assets and liabilities include derivative contracts whose value is determined using
a pricing model with inputs that are observable in the market or can be derived
principally or corroborated by observable market data.

Level
3  Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. Level 3
assets and liabilities include financial instruments whose value is determined
using pricing models, discounted cash flow methods, or similar techniques, as
well as instruments for which the determination of fair value requires
significant management judgment or estimation. Unobservable inputs shall be
developed based on the best information available, which may include the
Companys own data.

The
fair values of derivative assets and liabilities traded in the over-the-counter
market are determined using quantitative models that require the use of
multiple market inputs including interest rates, prices and indices to generate
pricing and volatility factors, which are used to value the position. The
predominance of market inputs are actively quoted and can be validated through
external sources, including brokers, market transactions and third-party
pricing services. Estimation risk is greater for derivative asset and liability
positions that are either option-based or have longer maturity dates where
observable market inputs are less readily available or are unobservable, in
which case interest rate, price or index scenarios are extrapolated in order to
determine the fair value. The fair values of derivative assets and liabilities
include adjustments for market liquidity, counterparty credit quality, the
Companys own credit standing and other specific factors, where appropriate. To
ensure the prudent application of estimates and management judgment in
determining the fair value of derivative assets and liabilities, various
processes and controls have been adopted, which include: model validation that
requires a review and approval for pricing, financial statement fair value
determination and risk quantification; periodic review and substantiation of
profit and loss reporting for all derivative instruments. There was no impact
on the beginning balance of retained earnings as a result of adopting the new
accounting standards because the Company held no financial instruments in which
a gain or loss at inception was deferred. Financial assets and liabilities
measured at fair value on a recurring basis are summarized below as of October
31, 2009 (amounts in thousands):

|                       |  |         |        |         |   |         |  |            |       |  |   |        | 
|---------------------- |  | ------- | ------ | ------- | - | ------- |  | ---------- | ----- |  | - | ------ | 
|                       |  | Level 1 |        | Level 2 |   | Level 3 |  | Fair Value |      
|                       |  |         |        |         |   |         |  |            |      
|                      
|Cash equivalents       |  | $       | 75,753 |         | $ |        |  | $          |      |  | $ | 75,753 | 
|Restricted investments |  |         | 1,357  |         |   |        |  |            |      |  |   | 1,357  | 
|Debt securities        |  |         |       |         |   |        |  |            | 1,014 |  |   | 1,014  | 
|                       |  |         |        |         |   |         |  |            |       |  |   |        | 
|Total assets           |  | $       | 77,110 |         | $ |        |  | $          | 1,014 |  | $ | 78,124 | 
|                       |  |         |        |         |   |         |  |            |       |  |   |        | 
|                       |  |         |        |         |   |         |  |            |       |  |   |        | 
|Derivative liabilities |  | $       |       |         | $ | 6,542   |  | $          |      |  | $ | 6,542  | 
|                       |  |         |        |         |   |         |  |            |       |  |   |        | 
|Total liabilities      |  | $       |       |         | $ | 6,542   |  | $          |      |  | $ | 6,542  | 
|                       |  |         |        |         |   |         |  |            |       |  |   |        | 

14

---



Note 6. Property and
Equipment

The
components of property and equipment at October 31, 2009, January 31, 2009 and October 31, 2008 are as follows (amounts in
thousands):

|                                   |  |                   |         |                   |   |                   |   |   |         |  
|---------------------------------- |  | ----------------- | ------- | ----------------- | - | ----------------- | - | - | ------- | -
|                                   |  | October
 31, 2009 |         | January
 31, 2009 |   | October
 31, 2008 |  
|                                   |  |                   |         |                   |   |                   |   |   |         |  
|Land
 and improvements             |  | $                 | 29,126  |                   | $ | 24,073            |   | $ | 15,888  |  
|Buildings
 and improvements        |  |                   | 61,500  |                   |   | 40,987            |   |   | 42,669  |  
|Machinery,
 equipment and fixtures |  |                   | 185,748 |                   |   | 70,408            |   |   | 71,348  |  
|Leasehold
 improvements            |  |                   | 1,005   |                   |   | 3,396             |   |   | 5,141   |  
|Construction
 in progress          |  |                   | 160     |                   |   | 121,333           |   |   | 113,201 |  
|                                   |  |                   |         |                   |   |                   |   |   |         |  
|                                   |  |                   | 277,539 |                   |   | 260,197           |   |   | 248,247 |  
|Less:
 accumulated depreciation    |  |                   | (24,386 | )                 |   | (24,743           | ) |   | (26,280 | )
|                                   |  |                   |         |                   |   |                   |   |   |         |  
|                                   |  |                   |         |                   |   |                   |   |   |         |  
|                                   |  | $                 | 253,153 |                   | $ | 235,454           |   | $ | 221,967 |  
|                                   |  |                   |         |                   |   |                   |   |   |         |  

Note 7. Other Assets

The
components of other assets at October 31, 2009, January 31, 2009 and October
31, 2008 are as follows (amounts in thousands):

|                    |  |                   |       |                   |   |                   |  |   |        | 
|------------------- |  | ----------------- | ----- | ----------------- | - | ----------------- |  | - | ------ | 
|                    |  | October
 31, 2009 |       | January
 31, 2009 |   | October
 31, 2008 | 
|                    |  |                   |       |                   |   |                   | 
|                    |  |                   |       |                   |   |                   |  |   |        | 
|Prepaid loan fees   |  | $                 | 3,864 |                   | $ | 4,515             |  | $ | 4,761  | 
|Prepaid commissions |  |                   | 5,092 |                   |   | 7,563             |  |   | 7,896  | 
|Other               |  |                   | 881   |                   |   | 336               |  |   | 296    | 
|                    |  |                   |       |                   |   |                   |  |   |        | 
|Total               |  | $                 | 9,837 |                   | $ | 12,414            |  | $ | 12,953 | 
|                    |  |                   |       |                   |   |                   |  |   |        | 

Note 8. Long Term Debt and Interest Rate Swaps

During
the first nine months of fiscal year 2009, the Company completed the payoff of
14 mortgage loans resulting in approximately $8.0 million of debt being paid
off prior to the scheduled maturities of the loans. The Company recognized
approximately $0.1 million of early debt termination costs in connection with
the early payoff of these loans. The fair value of the Companys long term debt
was approximately $141.6 million at October 31, 2009. The Company utilizes a
present value technique using its estimate of current market rates to estimate
the fair value of its long term debt.

Levelland Hockley
Subsidiary Level Debt

During
the second quarter of fiscal year 2008, pursuant to the terms of the
construction loan agreement, Levelland Hockley converted the construction loan
into a permanent term loan. Beginning with the first monthly payment on June
30, 2008, payments are due in 59 equal monthly

15

---



payments of principal plus accrued interest
with the principal portion calculated based on a 120 month amortization
schedule. One final installment will be required on the maturity date (June 30,
2013) for the remaining unpaid principal balance with accrued interest. The
term loan bears interest at a floating rate of 400 basis points above LIBOR
(4.3% at October 31, 2009), adjusted monthly through the maturity date.
Borrowings are secured by all of the assets of Levelland Hockley. This debt is
recourse only to Levelland Hockley and not to REX Stores Corporation or any of
its other subsidiaries. As of October 31, 2009, approximately $38.2 million was
outstanding on the term loan. Levelland Hockley is also subject to certain
financial covenants under the loan agreement, including required levels of
EBITDAR, debt service coverage ratio requirements, net worth requirements and
other common covenants. On September 4, 2009, Levelland Hockley amended its
loan agreement with GE to adjust certain covenants and to waive defaults
occurring prior to July 1, 2009. Levelland Hockley is in compliance with all
debt covenants as of October 31, 2009.

Levelland
Hockley entered into a forward interest rate swap with an initial notional
amount of $43.7 million with Merrill Lynch Capital during fiscal year 2007. The
swap effectively fixed the variable interest rate of the term loan subsequent
to the plant completion date at 7.89%. The swap settlements commenced on May
31, 2008 and terminate on April 30, 2010. At October 31, 2009, the Company has
recorded a liability of $0.8 million related to the fair value of the swap. The
change in fair value was recorded in the Consolidated Condensed Statements of
Operations.

One Earth Energy
Subsidiary Level Debt

In
September 2007, One Earth entered into a $111,000,000 financing agreement
consisting of a construction loan agreement for $100,000,000 together with a
$10,000,000 revolving loan and a $1,000,000 letter of credit with First
National Bank of Omaha. The construction loan was converted into a term loan on
July 31, 2009 as all of the requirements, for such conversion, of the
construction and term loan agreement were fulfilled. The term loan bears
interest at variable interest rates ranging from LIBOR plus 300 basis points to
LIBOR plus 310 basis points (3.3% -3.4%) at October 31, 2009. Beginning with
the first quarterly payment on October 8, 2009, payments are due in 20
quarterly payments of principal plus accrued interest with the principal
portion calculated based on a 120 month amortization schedule. One final
installment will be required on the maturity date (July 31, 2014) for the
remaining unpaid principal balance with accrued interest.

Borrowings
are secured by all property of One Earth. This debt is recourse only to One
Earth and not to REX Stores Corporation or any of its other subsidiaries.
During the first nine months of fiscal year 2009, One Earth borrowed $44.0
million on this loan. As of September 30, 2009, approximately $100.0 million
was outstanding on the term loan. One Earth is also subject to certain
financial covenants under the loan agreement, including required levels of
EBITDA, working capital, debt service coverage ratio requirements, net worth
requirements and other common covenants. One Earth was in compliance with all
applicable covenants at October 31, 2009. One Earth has paid approximately $1.4
million in financing costs. These costs are recorded as prepaid loan fees and
are being amortized ratably over the term of the loan.

One
Earth entered into two forward interest rate swaps in the notional amounts of
$50.0 million and $25.0 million with the Bank. The swap settlements commenced
July 31, 2009; the $50.0 million swap terminates on July 8, 2014 and the $25.0
million swap terminates on July 31, 2011. The $50.0 million swap effectively
fixed a portion of the variable interest rate of the term loan subsequent

16

---



to the plant completion date at 7.9% while
the $25.0 million swap effectively fixed the rate at 5.49%. At October 31,
2009, the Company recorded a liability of $5.7 million related to the fair
value of the swaps. The change in fair value was recorded in the Consolidated
Condensed Statements of Operations.

Note 9. Financial
Instruments

The
Company uses interest rate swaps to manage its interest rate exposure at
Levelland Hockley and One Earth by fixing the interest rate on a portion of the
variable rate debt these entities have. The Company does not engage in trading
activities involving derivative contracts for which a lack of marketplace
quotations would necessitate the use of fair value estimation techniques. As of
October 31, 2009, the notional value of the Levelland Hockley and One Earth
interest rate swaps were $37.5 million and $75.0 million, respectively. At
October 31, 2009, the Company has recorded a liability of $6.5 million related
to the fair value of the swaps. The change in fair value was recorded in the
Consolidated Condensed Statements of Operations. The notional amounts and fair
values of derivatives, all of which are not designated as cash flow hedges at
October 31, 2009 are summarized in the table below (amounts in thousands):

|                    |  |                |         |                      |   |       | 
|------------------- |  | -------------- | ------- | -------------------- | - | ----- | 
|                    |  | NotionalAmount |         | Fair Value Liability |  
|                    |  |                |         |                      |  
|                    |  |                |         |                      |  
|Interest rate swaps |  | $              | 112,518 |                      | $ | 6,542 | 

As
the interest rate swaps are not designated as cash flow hedges, the unrealized
gain and loss on the derivatives is reported in current earnings. The Company
reported losses of $899,000 and $947,000 in the third quarter of fiscal years
2009 and 2008, respectively. The Company reported losses of $1,561,000 and
gains of $481,000 in the first nine months of fiscal years 2009 and 2008,
respectively.

In
the normal course of its ethanol business, the Company enters into forward
pricing agreements for the purchase of grain and for the sale of ethanol and
distillers grains for delivery in future periods. The Company accounts for
these forward pricing arrangements as normal purchases and normal sales pursuant
to accounting standards.

Levelland
Hockley has forward purchase contracts for 558,000 bushels of sorghum, the
principal raw material for its ethanol plant. Levelland Hockley expects to take
delivery of the sorghum through December 2009. The unrealized gain of such
contracts was approximately $39,000 at September 30, 2009.

One
Earth has forward purchase contracts for 4,945,000 bushels of corn, the
principal raw material for its ethanol plant. One Earth expects to take
delivery of the corn through February 2010. The unrealized gain of such
contracts was approximately $644,000 at September 30, 2009.

Levelland
Hockley has sales commitments for 53,600 tons of distiller grains. Levelland
Hockley expects to deliver the distiller grains through December 2009. The
unrealized loss of such contracts was approximately $118,000 at September 30,
2009.

17

---



One
Earth has sales commitments for 19.9 million gallons of ethanol and 54,400 tons
of distiller grains. One Earth expects to deliver the ethanol and distiller
grains through March 2010. The unrealized loss of such contracts was
approximately $0.5 million at September 30, 2009.

Note 10. Stock Option Plans

The
Company has stock-based compensation plans under which stock options have been
granted to directors, officers and key employees at the market price on the
date of the grant. No options have been granted since fiscal year 2004.

The
total intrinsic value of options exercised during the nine months ended October
31, 2009 and 2008 was approximately $0.5 million and $2.2 million,
respectively, resulting in tax deductions of approximately $0.2 million and
$0.9 million, respectively. The following table summarizes options exercised
and canceled or expired during the nine months ended October 31, 2009:

|                                                 |  |        |           |                                  |   |                                               |  |                                          |     |  |   |       | 
|------------------------------------------------ |  | ------ | --------- | -------------------------------- | - | --------------------------------------------- |  | ---------------------------------------- | --- |  | - | ----- | 
|                                                 |  | Shares |           | Weighted Average
 Exercise Price |   | Weighted Average
 Remaining
 Contractual Term |  | AggregateIntrinsic
 Value(in
 thousands) |    
|                                                 |  |        |           |                                  |   |                                               |  |                                          |    
|Outstanding at January 31, 2009                  |  |        | 2,715,001 |                                  | $ | 9.63                                          |  |                                          |     |  |   |       | 
|Exercised                                        |  |        | (148,050  | )                                | $ | 8.39                                          |  |                                          |     |  |   |       | 
|Forfeited                                        |  |        | (69,280   | )                                | $ | 12.24                                         |  |                                          |     |  |   |       | 
|                                                 |  |        |           |                                  |   |                                               |  |                                          |     |  |   |       | 
|Outstanding and
 exercisable at October 31, 2009 |  |        | 2,497,671 |                                  | $ | 9.63                                          |  |                                          | 2.0 |  | $ | 7,492 | 
|                                                 |  |        |           |                                  |   |                                               |  |                                          |     |  |   |       | 

At October 31, 2009, there was no
unrecognized compensation cost related to nonvested stock options.

Note 11. Income Per Share from Continuing Operations

The
following table reconciles the computation of basic and diluted net income per
share from continuing operations for each period presented (in thousands,
except per share amounts):

|                                                                                             |  |                                      |       |                                     |  |           |  |        |      |        |   |           |  |  |       |  |   |      | 
|-------------------------------------------------------------------------------------------- |  | ------------------------------------ | ----- | ----------------------------------- |  | --------- |  | ------ | ---- | ------ | - | --------- |  |  | ----- |  | - | ---- | 
|                                                                                             |  | Three Months Ended
 October 31, 2009 |       | Nine Months Ended
 October 31, 2009 | 
|                                                                                             |  |                                      |       |                                     | 
|                                                                                             |  | Income                               |       | Shares                              |  | Per Share |  | Income |      | Shares |   | Per Share | 
|                                                                                             |  |                                      |       |                                     |  |           |  |        |      |        |   |           | 
|Basic income per share from continuing
 operations attributable to REX common shareholders   |  | $                                    | 2,295 |                                     |  | 9,161     |  | $      | 0.25 |        | $ | 2,127     |  |  | 9,229 |  | $ | 0.23 | 
|                                                                                             |  |                                      |       |                                     |  |           |  |        |      |        |   |           |  |  |       |  |   |      | 
|Effect of stock
 options                                                                     |  |                                      |      |                                     |  | 303       |  |        |      |        |   |          |  |  | 249   |  |   |      | 
|                                                                                             |  |                                      |       |                                     |  |           |  |        |      |        |   |           |  |  |       |  |   |      | 
|Diluted income per share from continuing
 operations attributable to REX common shareholders |  | $                                    | 2,295 |                                     |  | 9,464     |  | $      | 0.24 |        | $ | 2,127     |  |  | 9,478 |  | $ | 0.23 | 
|                                                                                             |  |                                      |       |                                     |  |           |  |        |      |        |   |           |  |  |       |  |   |      | 

18

---



|                                                                                             |  |                                     |       |        |  |            |  |   |      | 
|-------------------------------------------------------------------------------------------- |  | ----------------------------------- | ----- | ------ |  | ---------- |  | - | ---- | 
|                                                                                             |  | Nine Months Ended
 October 31, 2008 |      
|                                                                                             |  |                                     |      
|                                                                                             |  | Income                              |       | Shares |  | Per
 Share | 
|                                                                                             |  |                                     |       |        |  |            | 
|Basic income per share from continuing operations attributable to REX
 common shareholders   |  | $                                   | 1,995 |        |  | 10,389     |  | $ | 0.19 | 
|                                                                                             |  |                                     |       |        |  |            |  |   |      | 
|Effect of stock options                                                                      |  |                                     |      |        |  | 640        |  |   |      | 
|                                                                                             |  |                                     |       |        |  |            |  |   |      | 
|Diluted income per share from continuing operations attributable to
 REX common shareholders |  | $                                   | 1,995 |        |  | 11,029     |  | $ | 0.18 | 
|                                                                                             |  |                                     |       |        |  |            |  |   |      | 

As
there was a loss from continuing operations for the three months ended October
31, 2008, basic loss per share from continuing operations equals diluted loss
per share from continuing operations. For the three months ended October 31,
2009, a total of 692,323 shares, and for the nine months ended October 31, 2009
and 2008, a total of 692,323 shares and 286,536 shares, respectively, subject
to outstanding options were not included in the common equivalent shares
outstanding calculation as the effect from these shares is antidilutive.

Note 12. Investments

The
following tables summarize investments at October 31, 2009, January 31, 2009
and October 31, 2008 (amounts in thousands):

Debt Securities October 31,
2009

|                                               |  |              |   |            |  |                    |  |                     |       |                     |   |     | 
|---------------------------------------------- |  | ------------ | - | ---------- |  | ------------------ |  | ------------------- | ----- | ------------------- | - | --- | 
|Investment                                     |  | Coupon
 Rate |   | Maturity   |  | Classification     |  | Fair
 Market
 Value |       | Initial
 Investment |  
|                                               |  |              |   |            |  |                    |  |                     |       |                     |  
|                                              
|Patriot Renewable
 Fuels, LLC Convertible Note |  | 16.00        | % | 11/25/2011 |  | Available for Sale |  | $                   | 1,014 |                     | $ | 933 | 
|                                               |  |              |   |            |  |                    |  |                     |       |                     |   |     | 

Debt Securities January 31, 2009

|                                               |  |              |   |            |  |                    |  |                     |     |                     |   |     | 
|---------------------------------------------- |  | ------------ | - | ---------- |  | ------------------ |  | ------------------- | --- | ------------------- | - | --- | 
|Investment                                     |  | Coupon
 Rate |   | Maturity   |  | Classification     |  | Fair
 Market
 Value |     | Initial
 Investment |  
|                                               |  |              |   |            |  |                    |  |                     |     |                     |  
|                                              
|Patriot Renewable
 Fuels, LLC Convertible Note |  | 16.00        | % | 11/25/2011 |  | Available for Sale |  | $                   | 933 |                     | $ | 933 | 
|                                               |  |              |   |            |  |                    |  |                     |     |                     |   |     | 

19

---



Debt Securities October 31, 2008



|                             |  |              |   |            |  |                  |  |                     |       |                     |   |       | 
|---------------------------- |  | ------------ | - | ---------- |  | ---------------- |  | ------------------- | ----- | ------------------- | - | ----- | 
|Investment                   |  | Coupon
 Rate |   | Maturity   |  | Classification   |  | Fair
 Market
 Value |       | Initial
 Investment |  
|                             |  |              |   |            |  |                  |  |                     |       |                     |  
|                            
|United States Treasury
 Bill |  | 1.55         | % | 12/11/2008 |  | Held to Maturity |  | $                   | 1,571 |                     | $ | 1,571 | 
|                             |  |              |   |            |  |                  |  |                     |       |                     |  

Unrealized
holding gains were $81,000 at October 31, 2009. There were no material realized
or unrealized holding gains at January 31, 2009 or October 31, 2008.

The
Company has approximately $742,000 at October 31, 2009 and approximately
$933,000 at January 31, 2009 and October 31, 2008 on deposit with the Florida
Department of Financial Services to secure its obligation to fulfill future
obligations related to extended warranty contracts sold in the state of
Florida. The deposits earned 2.5%, 2.3% and 3.1% at October 31, 2009, January
31, 2009 and October 31, 2008, respectively. In addition to the deposit with
the Florida Department of Financial Services, the Company has $1,357,000 at
October 31, 2009 and $1,351,000 at January 31, 2009, invested in a money market
mutual fund to satisfy Florida Department of Financial Services regulations.
This investment earned 0.01% at October 31, 2009 and 1.3% at January 31, 2009.

The
following table summarizes equity method investments at October 31, 2009,
January 31, 2009 and October 31, 2008 (amounts in thousands):

Equity Method Investments
October 31, 2009

|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|-------------------------------- |  | -------------------- |  | --------------- | - | ------------------ |  |  |  | - | ------ |  | 
|Entity                           |  | Ownership Percentage |  | Carrying Amount |   | Initial Investment | 
|                                 |  |                      |  |                 |   |                    | 
|                                
|Big River Resources, LLC         |  | 10%                  |  |                 | $ | 24,563             |  |  |  | $ | 20,025 |  | 
|Patriot Renewable
 Fuels, LLC    |  | 23%                  |  |                 |   | 15,362             |  |  |  |   | 16,000 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|Total Equity Method
 Investments |  |                      |  |                 | $ | 39,925             |  |  |  | $ | 36,025 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 

Equity Method Investments January 31, 2009

|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|-------------------------------- |  | -------------------- |  | --------------- | - | ------------------ |  |  |  | - | ------ |  | 
|Entity                           |  | Ownership Percentage |  | Carrying Amount |   | Initial Investment | 
|                                 |  |                      |  |                 |   |                    | 
|Big River Resources, LLC         |  | 10%                  |  |                 | $ | 23,850             |  |  |  | $ | 20,000 |  | 
|Patriot Renewable
 Fuels, LLC    |  | 23%                  |  |                 |   | 15,011             |  |  |  |   | 16,000 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|Total Equity Method
 Investments |  |                      |  |                 | $ | 38,861             |  |  |  | $ | 36,000 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 

20

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Equity Method Investments
October 31, 2008

|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|-------------------------------- |  | -------------------- |  | --------------- | - | ------------------ |  |  |  | - | ------ |  | 
|Entity                           |  | Ownership Percentage |  | Carrying Amount |   | Initial Investment | 
|                                 |  |                      |  |                 |   |                    | 
|                                
|Big River Resources, LLC         |  | 10%                  |  |                 | $ | 25,357             |  |  |  | $ | 20,000 |  | 
|Patriot Renewable
 Fuels, LLC    |  | 23%                  |  |                 |   | 16,192             |  |  |  |   | 16,000 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 
|Total Equity Method
 Investments |  |                      |  |                 | $ | 41,549             |  |  |  | $ | 36,000 |  | 
|                                 |  |                      |  |                 |   |                    |  |  |  |   |        |  | 

During
the third quarter of fiscal years 2009 and 2008, the Company recorded income of
$514,000 and $1,598,000, respectively as its share of earnings from Big River.
During the first nine months of fiscal years 2009 and 2008, the Company
recorded income of $688,000 and $3,405,000, respectively as its share of
earnings from Big River.

During
the third quarter of fiscal years 2009 and 2008, the Company recorded income of
$707,000 and a loss of $554,000, respectively as its share of earnings from
Patriot. During the first nine months of fiscal years 2009 and 2008, the
Company recorded income of $456,000 and a loss of $439,000, respectively as its
share of earnings or loss from Patriot. Undistributed earnings of equity method
investees totaled approximately $4.5 million at October 31, 2009, $3.8 million
at January 31, 2009 and $5.0 million at October 31, 2008.

Note 13. Restructuring and
Other

During
the fourth quarter of fiscal year 2008, the Company entered into an agreement
with Appliance Direct pursuant to which (i) the Company agreed to sell certain
appliance inventory, furniture, fixtures and equipment at the store locations
to be taken over by Appliance Direct and (ii) subsidiaries of Appliance Direct
leased 37 retail store locations owned by the Company. The Company agreed to
pay Appliance Direct, as of the implementation date defined in the agreement,
an amount equal to the adjusted book value liability of the Companys customer
extended service plans for certain appliance inventory previously sold at
locations that Appliance Direct takes over from the Company (the ESP Credit).

During
the fourth quarter of fiscal year 2008, the Company recorded a restructuring
charge of approximately $4.2 million related to (i) a workforce reduction of a
majority of employees located at its corporate headquarters, retail stores and
distribution facilities and (ii) certain costs associated with the transition
of the Companys retail business to Appliance Direct.

On
July 31, 2009, the Company entered into a Third Amendment to Agreement and a
Second Global Amendment to Multiple Leases (together, the Amendments) with
Appliance Direct. The Amendments (i) eliminated the right of Appliance Direct
to purchase stores it leased from the Company (ii) eliminated the right of
Appliance Direct to terminate certain leases in the future and (iii) eliminated
the obligation of Appliance Direct to lease 22 properties from the Company. The
terms of the 15 leases and one sub-lease under which the Company leased
property to Appliance Direct remained in full force except as modified by the
Amendments. As a result of these

21

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Amendments, the Company
reduced the accruals for employee severance and bonus costs by approximately
$0.7 million, for investment banker fees by approximately $0.3 million and for
the ESP Credit by approximately $0.3 million during the second quarter of
fiscal year 2009.

On
September 30, 2009, the Company entered into a letter agreement with Appliance
Direct pursuant to which (i) Appliance Direct agreed to vacate all properties
leased from the Company and turn over possession of the leased premises to the
Company and (ii) the Company and Appliance Direct agreed to release and
discharge each other from all claims or causes of action whatsoever.

The
Company substantially completed its exit of the retail business as of July 31,
2009. During the first nine months of fiscal year 2009, the Company recorded
additional restructuring charges of approximately $1.7 million. The following
is a summary of restructuring charges and payments for the nine months ended
October 31, 2009 (in thousands):

|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |   |      |   |   |        |  
|------------------------------------- |  | ------------------------------------ | ----- | ------------------------- | - | ------------------------ | - | ----------- | ---- | ----------------------------- | - | ---- | - | - | ------ | -
|                                      |  | Employee
 Severance and
 Bonus Costs |       | Lease
 Termination
 Costs |   | Investment
 Banker
 Fees |   | ESP
 Credit |      | Total
 Restructuring
 Accrual |  
|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |  
|Balance, January 31, 2009             |  | $                                    | 2,839 |                           | $ |                         |   | $           | 834  |                               | $ | 498  |   | $ | 4,171  |  
|Restructuring charges                 |  |                                      |      |                           |   | 1,460                    |   |             |     |                               |   |     |   |   | 1,460  |  
|Payment of restructuring
 liabilities |  |                                      | (436  | )                         |   | (409                     | ) |             |     |                               |   |     |   |   | (845   | )
|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |   |      |   |   |        |  
|Balance, April 30, 2009               |  |                                      | 2,403 |                           |   | 1,051                    |   |             | 834  |                               |   | 498  |   |   | 4,786  |  
|Restructuring charges                 |  |                                      | 28    |                           |   | 1,492                    |   |             |     |                               |   |     |   |   | 1,520  |  
|Reversal of restructuring
 charges    |  |                                      | (706  | )                         |   |                         |   |             | (325 | )                             |   | (287 | ) |   | (1,318 | )
|Payment of restructuring
 liabilities |  |                                      | (838  | )                         |   | (975                     | ) |             |     |                               |   | (211 | ) |   | (2,024 | )
|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |   |      |   |   |        |  
|Balance, July 31, 2009                |  |                                      | 887   |                           |   | 1,568                    |   |             | 509  |                               |   |     |   |   | 2,964  |  
|Restructuring charges                 |  |                                      | 57    |                           |   |                         |   |             |     |                               |   |     |   |   | 57     |  
|Reversal of restructuring
 charges    |  |                                      |      |                           |   | (41                      | ) |             |     |                               |   |     |   |   | (41    | )
|Payment of restructuring
 liabilities |  |                                      | (422  | )                         |   | (967                     | ) |             | (509 | )                             |   |     |   |   | (1,898 | )
|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |   |      |   |   |        |  
|Balance, October 31, 2009             |  | $                                    | 522   |                           | $ | 560                      |   | $           |     |                               | $ |     |   | $ | 1,082  |  
|                                      |  |                                      |       |                           |   |                          |   |             |      |                               |   |      |   |   |        |  

Note 14. Income Taxes

The
effective tax rate on consolidated pre-tax loss or income from continuing
operations was 38.4% for the nine months ended October 31, 2009, 30.5% for the
year ended January 31, 2009 and 112.0% for the nine months ended October 31,
2008. An adjustment for recognizing uncertain tax positions of 3.2% is
reflected in the effective rate for the nine months ended October 31, 2009
compared to a benefit of 35.0% for the nine months ended October 31, 2008. The
provision for state taxes is approximately 3.9% for the nine months ended
October 31, 2009 and 5.0% for the nine months ended October 31, 2008. The
effective tax rate was decreased by approximately 1.6% in the first nine months
of fiscal year 2009 from the income of pass-through entities (Levelland Hockley
and One Earth) that is allocated to non-controlling interests. The effective
tax was increased by

22

---



approximately
138.8% in the first nine months of fiscal year 2008 from the loss of
pass-through entities that is allocated to non-controlling interests.

The
Company files a U.S. federal income tax return and income tax returns in
various states. In general, the Company is no longer subject to U.S. federal,
state or local income tax examinations by tax authorities for years ended
January 31, 2006 and prior. A reconciliation of the beginning and ending amount
of unrecognized tax benefits, including interest and penalties, is as follows
(amounts in thousands):

|                                                |  |   |       | 
|----------------------------------------------- |  | - | ----- | 
|Unrecognized
 tax benefits, February 1, 2009    |  | $ | 4,160 | 
|Changes for
 tax positions for prior years, net |  |   | 302   | 
|Changes for
 current year tax positions         |  |   |      | 
|                                                |  |   |       | 
|Unrecognized
 tax benefits, October 31, 2009    |  | $ | 4,462 | 
|                                                |  |   |       | 
|                                                |  |   |       | 

Note 15. Discontinued
Operations

During
the first nine months of fiscal year 2009, the Company closed 53 retail stores
in which the Company vacated the market or will not have a further continuing
involvement with the related property. These stores and certain other retail
stores closed in previous periods were classified as discontinued operations
for all periods presented. Below is a table reflecting certain items of the
Consolidated Condensed Statements of Operations that were reclassified as
discontinued operations for the periods indicated:

|                            |  |                                 |     |                                |   |        |   |      |        |   |   |        |  
|--------------------------- |  | ------------------------------- | --- | ------------------------------ | - | ------ | - | ---- | ------ | - | - | ------ | -
|                            |  | Three Months Ended
 October 31, |     | Nine Months Ended
 October 31, |  
|                            |  |                                 |     |                                |  
|                            |  | 2009                            |     | 2008                           |   | 2009   |   | 2008 |       
|                            |  |                                 |     |                                |   |        |   |      |       
|                            |  | (In
Thousands)                  |    
|Net sales
 and revenue      |  | $                               |    |                                | $ | 25,515 |   | $    | 14,398 |   | $ | 80,357 |  
|Cost of
 sales              |  |                                 | 2   |                                |   | 19,595 |   |      | 13,225 |   |   | 60,310 |  
|Loss before
 income taxes   |  |                                 | (32 | )                              |   | (556   | ) |      | (1,317 | ) |   | (173   | )
|Benefit for
 income taxes   |  |                                 | 10  |                                |   | 212    |   |      | 444    |   |   | 70     |  
|Gain on
 disposal           |  |                                 |    |                                |   |       |   |      | 194    |   |   | 305    |  
|Provision
 for income taxes |  |                                 |    |                                |   |       |   |      | (67    | ) |   | (115   | )
|Net (loss)
 income          |  | $                               | (22 | )                              | $ | (344   | ) | $    | (746   | ) | $ | 87     |  

Note 16. Commitments
and Contingencies

During
the second quarter of fiscal year 2009, Levelland Hockley entered into an
agreement to construct certain improvements at its water treatment facility.
The total cost of the agreement is expected to be approximately $600,000, of
which $235,000 has been paid as of October 31, 2009.

The
Company is involved in various legal matters arising in the normal course of
business. The Company does not expect the results of these proceedings to have
a material adverse effect on its consolidated financial position, liquidity or
results of operations.

23

---



Note 17. Segment
Reporting

Beginning
in the second quarter of fiscal year 2009, the Company has realigned its
reportable business segments to be consistent with changes to its management
structure and reporting. The Company now has three segments: alternative
energy, real estate and retail. The real estate segment was formerly included
in the retail segment and prior year amounts have been reclassified to conform
to the current year segment reporting presentation. For stores and warehouses
closed for which the Company has a retained interest in the related real
estate, operations are presented in the real estate segment when retail
operations cease.

The
Company evaluates the performance of each reportable segment based on segment
profit. Segment profit excludes income taxes, indirect interest expense,
discontinued operations, indirect interest income and certain other items that
are included in net income determined in accordance with accounting principles
generally accepted in the United States of America. Segment profit includes
realized and unrealized gains and losses on derivative financial instruments.
The following tables summarize segment business activities in the periods
presented (amounts in thousands):

|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|----------------------------- |  | ------------------------------ | ------ | ----------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                              |  | Three Months Ended October 31, |        | Nine Months Ended October 31, |  
|                              |  | 2009                           |        | 2008                          |   | 2009   |   | 2008 |        
|                              |  |                                |        |                               |   |        |   |      |        
|Net sales
 and revenue:       |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Alternative
 energy           |  | $                              | 61,368 |                               | $ | 22,444 |   | $    | 92,296  |   | $ | 48,468 |  
|Real estate                   |  |                                | 341    |                               |   | 83     |   |      | 827     |   |   | 270    |  
|Retail                        |  |                                | 2,707  |                               |   | 16,644 |   |      | 18,057  |   |   | 50,904 |  
|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Total net
 sales and revenues |  | $                              | 64,416 |                               | $ | 39,171 |   | $    | 111,180 |   | $ | 99,642 |  
|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Segment
 gross profit (loss): |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Alternative
 energy           |  | $                              | 5,790  |                               | $ | (2,443 | ) | $    | 6,740   |   | $ | (1,753 | )
|Real estate                   |  |                                | (117   | )                             |   | 77     |   |      | (351    | ) |   | 252    |  
|Retail                        |  |                                | 2,187  |                               |   | 6,038  |   |      | 8,383   |   |   | 17,807 |  
|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Total gross
 profit           |  | $                              | 7,860  |                               | $ | 3,672  |   | $    | 14,772  |   | $ | 16,306 |  
|                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  

24

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|                                                              |  |                                |       |                               |   |        |   |      |        |   |   |        |  
|------------------------------------------------------------- |  | ------------------------------ | ----- | ----------------------------- | - | ------ | - | ---- | ------ | - | - | ------ | -
|                                                              |  | Three Months Ended October 31, |       | Nine Months Ended October 31, |  
|                                                              |  | 2009                           |       | 2008                          |   | 2009   |   | 2008 |       
|                                                              |  |                                |       |                               |   |        |   |      |       
|Segment
 profit (loss):                                       |  |                                |       |                               |   |        |   |      |        |   |   |        |  
|Alternative
 energy                                           |  | $                              | 4,569 |                               | $ | (4,957 | ) | $    | 2,222  |   | $ | (3,527 | )
|Real estate                                                   |  |                                | (187  | )                             |   | 25     |   |      | (462   | ) |   | 95     |  
|Retail                                                        |  |                                | 843   |                               |   | 2,936  |   |      | 3,142  |   |   | 3,331  |  
|Corporate
 expense                                            |  |                                | (430  | )                             |   | (484   | ) |      | (1,046 | ) |   | (1,113 | )
|Interest
 expense                                             |  |                                | (60   | )                             |   | (111   | ) |      | (314   | ) |   | (332   | )
|Investment
 income                                            |  |                                | 82    |                               |   | 345    |   |      | 230    |   |   | 1,481  |  
|Income from
 synthetic fuel investments                       |  |                                |      |                               |   | 21     |   |      |       |   |   | 691    |  
|                                                              |  |                                |       |                               |   |        |   |      |        |   |   |        |  
|Income
 (loss) from continuing operations before income taxes |  | $                              | 4,817 |                               | $ | (2,225 | ) | $    | 3,772  |   | $ | 626    |  
|                                                              |  |                                |       |                               |   |        |   |      |        |   |   |        |  

|                    |  |                   |         |                   |   |                   |  |   |         |  |  |  | 
|------------------- |  | ----------------- | ------- | ----------------- | - | ----------------- |  | - | ------- |  |  |  | 
|                    |  |                   |         |                   |   |                   |  |   |         |  |  |  | 
|                    |  | October 31,
 2009 |         | January 31,
 2009 |   | October 31,
 2008 |  |   |         | 
|                    |  |                   |         |                   |   |                   |  |   |         | 
|Assets:             |  |                   |         |                   |   |                   |  |   |         |  |  |  | 
|Alternative
 energy |  | $                 | 289,662 |                   | $ | 249,422           |  | $ | 233,941 |  |  |  | 
|Real estate         |  |                   | 36,416  |                   |   | 35,523            |  |   | 35,969  |  |  |  | 
|Retail              |  |                   | 7,863   |                   |   | 44,914            |  |   | 76,114  |  |  |  | 
|Corporate           |  |                   | 114,458 |                   |   | 121,429           |  |   | 97,085  |  |  |  | 
|                    |  |                   |         |                   |   |                   |  |   |         |  |  |  | 
|Total assets        |  | $                 | 448,399 |                   | $ | 451,288           |  | $ | 443,109 |  |  |  | 
|                    |  |                   |         |                   |   |                   |  |   |         |  |  |  | 

25

---



|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|---------------------------------------------- |  | ------------------------------ | --- | ----------------------------- |  | ---- | - | ---- | --- | - |  | --- | -
|                                               |  | Three Months Ended October 31, |     | Nine Months Ended October 31, | 
|                                               |  | 2009                           |     | 2008                          |  | 2009 |   | 2008 |    
|                                               |  |                                |     |                               |  |      |   |      |    
|Sales of
 products alternative energy segment: |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Ethanol                                        |  |                                | 84  | %                             |  | 84   | % |      | 81  | % |  | 83  | %
|Dried
 distiller grains                        |  |                                | 12  | %                             |  | 9    | % |      | 12  | % |  | 10  | %
|Wet distiller
 grains                          |  |                                | 4   | %                             |  | 7    | % |      | 7   | % |  | 7   | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Total                                          |  |                                | 100 | %                             |  | 100  | % |      | 100 | % |  | 100 | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Sales of
 services real estate segment:        |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Lease
 revenue                                 |  |                                | 100 | %                             |  | 100  | % |      | 100 | % |  | 100 | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Sales of
 products retail segment:             |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Televisions                                    |  |                                |    | %                             |  | 45   | % |      | 32  | % |  | 45  | %
|Appliances                                     |  |                                |    | %                             |  | 26   | % |      | 28  | % |  | 28  | %
|Audio                                          |  |                                |    | %                             |  | 6    | % |      | 2   | % |  | 5   | %
|Video                                          |  |                                |    | %                             |  | 2    | % |      | 1   | % |  | 2   | %
|Other                                          |  |                                |    | %                             |  | 2    | % |      | 3   | % |  | 1   | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Total                                          |  |                                |    | %                             |  | 81   | % |      | 66  | % |  | 81  | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Sales of
 services retail segment:             |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Extended
 service contracts                    |  |                                | 100 | %                             |  | 19   | % |      | 34  | % |  | 19  | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  
|Total retail
 segment sales                    |  |                                | 100 | %                             |  | 100  | % |      | 100 | % |  | 100 | %
|                                               |  |                                |     |                               |  |      |   |      |     |   |  |     |  

Certain
corporate costs and expenses, including information technology, employee
benefits and other shared services are allocated to the business segments. The
allocations are generally amounts agreed upon by management, which may differ
from amounts that would be incurred if such services were purchased separately
by the business segment. Corporate assets are primarily cash and equivalents
and deferred income tax benefits.

Cash,
except for cash held by Levelland Hockley and One Earth, is considered to be
fungible and available for both corporate and segment use dependent on
liquidity requirements. The Company expects cash of approximately $8.7 million
held by Levelland Hockley and One Earth to be used to provide working capital
for those entities.

Note 18. Subsequent
Events

On
December 1, 2009, the Companys Board of Directors increased the authorized
number of shares that can be repurchased by 500,000 shares.

The
company evaluated all subsequent event activity through December 3, 2009 (the
issue date of this Quarterly Report on Form 10-Q) and concluded that no
additional subsequent events have occurred that would require recognition in
the financial statements or disclosure in the notes to the financial
statements.

26

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|                                                                                                 | 
|------------------------------------------------------------------------------------------------ | 
|Item 2.  Managements Discussion and Analysis of
 Financial Condition and Results of Operations.

Historically,
we were a specialty retailer in the consumer electronics/appliance industry
serving small to medium-sized towns and communities. In addition, we have been
an investor in various alternative energy entities beginning with synthetic
fuel partnerships in 1998 and later ethanol production facilities beginning in
2006.

In
fiscal year 2007, we began to evaluate strategic alternatives for our retail
segment with a focus on closing unprofitable or marginally profitable retail
stores and monetizing our retail-related real estate assets. Reflecting this
focus, we commenced an evaluation of a broad range of alternatives intended to
derive value from the remaining retail operations and our real estate
portfolio. Following a comprehensive analysis, late in fiscal year 2008 we
leased 37 owned store locations to Appliance Direct. We also provided Appliance
Direct an option to purchase all of the properties being leased from REX during
the first two years of the lease term. Appliance Direct also reached an
agreement to lease or sub-lease two of our leased locations.

On
July 31, 2009, we entered into a Third Amendment to Agreement and a Second
Global Amendment to Multiple Leases (together, the Amendments) with Appliance
Direct. The Amendments (i) eliminated the right of Appliance Direct to purchase
stores it leased from us, (ii) eliminated the right of Appliance Direct to
terminate certain leases in the future and (iii) eliminated the obligation of
Appliance Direct to lease 22 properties from us. The terms of the 15 leases and
one sub-lease under which we leased property to Appliance Direct remained in
full force except as modified by the Amendments. We substantially completed our
exit of the retail business as of July 31, 2009.

On
September 30, 2009, we entered into a letter agreement with Appliance Direct
pursuant to which (i) Appliance Direct agreed to vacate all properties leased
from us and turn over possession of the leased premises to us and (ii) we and
Appliance Direct agreed to release and discharge each other from all claims or
causes of action whatsoever. We are marketing these vacant properties to lease
or sell.

We
currently have invested approximately $115 million in ethanol production
entities and have interests in four ethanol entities, two of which we have
majority ownership. We have no definitive plans, but will continue to consider
additional investments in the alternative energy segment.

We
plan to seek and evaluate various investment opportunities. We can make no
assurances that we will be successful in our efforts to find such
opportunities.

Fiscal Year

All
references in this report to a particular fiscal year are to REXs fiscal year
ended January 31. For example, fiscal year 2009 means the period February 1,
2009 to January 31, 2010.

27

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Comparison of Three Months and Nine Months Ended October 31, 2009 and 2008

Net
sales and revenue in the quarter ended October 31, 2009 were $64.4 million
compared to $39.2 million in the prior years third quarter, representing an
increase of $25.2 million or 64.4%. Net sales and revenue do not include
merchandise sales from retail stores classified in discontinued operations. The
increase was primarily caused by higher sales in our alternative energy segment
of $38.9 million, which was partially offset by lower sales at retail stores of
$13.9 million.

Net
sales and revenue for the first nine months of fiscal year 2009 were $111.2
million compared to $99.6 million for the first nine months of fiscal year
2008. This represents an increase of $11.6 million or 11.6%. The increase was
primarily caused by higher sales in our alternative energy segment of $43.8
million, which was partially offset by lower sales at retail stores of $32.8
million.

We
closed our remaining retail store locations during the first nine months of
fiscal year 2009 as we substantially completed the wind down of our retail
operations.

Gross
profit in the third quarter of fiscal year 2009 was $7.9 million (12.2% of net
sales and revenue) compared to $3.7 million (9.4% of net sales and revenue)
recorded in the third quarter of fiscal year 2008. This represents an increase
of $4.2 million or 114.1%. Gross profit for the third quarter of fiscal year
2009 increased by $8.2 million as a result of operations in the alternative
energy segment. Gross profit for the third quarter of fiscal year 2009
decreased by $3.9 million from our retail segment. In addition, our real estate
segment had a decline in gross profit for the third quarter of fiscal year 2009
of $0.2 million.

Gross
profit for the first nine months of fiscal year 2009 was $14.8 million (13.3%
of net sales and revenue) compared to $16.3 million (16.4% of net sales and
revenue) for the first nine months of fiscal year 2008. Gross profit for the
nine months ended October 31, 2009 increased by $8.5 million as a result of operations
in the alternative energy segment. Gross profit for the first nine months of
fiscal year 2009 decreased by $9.4 million from our retail segment. Gross loss
for the nine months ended October 31, 2009 from our real estate segment was
42.4% of segment net sales and revenue compared to gross profit of 93.3% of
segment net sales and revenue for the nine months ended October 31, 2008.

Selling,
general and administrative expenses for the third quarter of fiscal year 2009
were $2.6 million (4.0% of net sales and revenue), a decrease of $5.0 million
or 65.9% from $7.6 million (19.3% of net sales and revenue) for the third
quarter of fiscal year 2008. Selling, general and administrative expenses were
$8.4 million (7.5% of net sales and revenue) for the first nine months of
fiscal year 2009 representing a decrease of $13.3 million or 61.6% from $21.7
million (21.8% of net sales and revenue) for the first nine months of fiscal
year 2008. For the third quarter of fiscal year 2009, these expenses declined
approximately $4.0 million and $0.9 million in the retail and alternative
energy segments, respectively. For the first nine months of fiscal year 2009,
these expenses declined approximately $11.5 million and $1.7 million in the
retail and alternative energy segments, respectively.

28

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Investment
income was $92,000 and $363,000 for the third quarter of fiscal years 2009 and
2008, respectively. Investment income was $356,000 and $1,732,000 for the first
nine months of fiscal years 2009 and 2008, respectively. The decline generally
results from lower yields earned on our excess cash in the current year
compared to the prior year.

Interest
expense was $1.6 million for the third quarter of fiscal year 2009, an increase
of $0.6 million over the prior year third quarter. Interest expense was $3.3
million for the first nine months of fiscal year 2009 compared to $2.1 million
for the first nine months of fiscal year 2008. The increases in interest
expense are primarily attributable to the alternative energy segment.

During
the third quarter of fiscal years 2009 and 2008, we recognized income of
approximately $1,221,000 and $1,044,000 from our equity investments in Big
River and Patriot, respectively. During the first nine months of fiscal years
2009 and 2008, we recognized income of approximately $1,144,000 and $2,966,000
from our equity investments in Big River and Patriot, respectively.

On
September 16, 2008, we completed a transaction for the sale and leaseback of
our Cheyenne, Wyoming distribution center under a three year lease term. A
pre-tax gain, classified as continuing operations, of approximately $1.6
million (net of expenses) resulted from this sale. We also sold vacant land
adjacent to the Cheyenne, Wyoming distribution center for a gain of $0.7
million.

During
the third quarter of fiscal year 2009, Levelland Hockley entered into an
agreement with Layne Christensen Company (Layne) to settle litigation between
the two parties. As a result of the settlement agreement, Layne paid Levelland
Hockley $1.5 million. Of the proceeds received, approximately $0.3 million was
recognized as other income during the third quarter of fiscal year 2009. The
remainder of the settlement offset contingent legal expenses and reduced the
carrying amount of certain plant equipment.

During
the third quarter of fiscal year 2009, Levelland Hockley received notification
from the United States Department of Agriculture that Levelland Hockley had
been approved to receive funds under the Advanced Biofuel Producer Program. As
a result, approximately $0.5 million was recognized as other income during the
third quarter of fiscal year 2009.

During
the first nine months of fiscal year 2008, we recognized approximately $0.7
million of income from the sales of our entire partnership interests in Colona
SynFuel Limited Partnership, L.L.L.P., (Colona) and Somerset Synfuel, L.P.
(Somerset). This income represents the estimated final settlements related to
Colona and Somerset as all synthetic fuel production ceased during fiscal year
2007. As the Section 29/45K program expired December 31, 2007, the Company does
not expect additional income from these sales.

On
March 30, 2004, we also sold our membership interest in the limited liability
company that owned a synthetic fuel facility in Gillette, Wyoming. The plant
was subsequently sold and during the third quarter of fiscal year 2006, we
modified our agreement with the owners and operators of the synthetic fuel facility.
Based on the terms of the modified agreement, we currently are not able to
determine the likelihood and timing of collecting payments related to
production occurring after September 30, 2006. Thus, we cannot currently
determine the timing of income recognition, if any,

29

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related to production occurring subsequent to September 30, 2006. We did not recognize any
income from this sale during the first nine months of fiscal years 2009 or 2008.

We
recognized losses of $899,000 and $947,000 during the third quarter of fiscal
years 2009 and 2008, respectively, related to forward interest rate swap
agreements that Levelland Hockley and One Earth entered into during fiscal year
2007. We recognized a loss related to the swaps of $1,561,000 during the first
nine months of fiscal year 2009 compared to a gain of $481,000 during the first
nine months of fiscal year 2008.

Our
effective tax rate was 31.3% and 1.8% for the third quarter of fiscal years
2009 and 2008, respectively. Our effective tax rate for the first nine months
of fiscal year 2009 was 38.4% compared to 112.0% for the first nine months of
fiscal year 2008. The fluctuations in the effective tax rates are primarily a
result of not recognizing a tax provision or benefit on the income or loss
attributable to the noncontrolling interests in our consolidated ethanol
subsidiaries.

During
the quarter and nine months ended October 31, 2009 we closed 29 and 53 retail
stores, respectively, that were classified as discontinued operations. As a
result of these closings and certain other retail store closings from prior
periods, we had a loss from discontinued operations, net of tax benefit, of
$22,000 for the third quarter of fiscal year 2009 compared to $344,000 for the
third quarter of fiscal year 2008. We had a loss from discontinued operations,
net of tax benefit, of $873,000 for the first nine months of fiscal year 2009
compared to $103,000 for the first nine months of fiscal year 2008.

On
April 30, 2007, we completed a transaction for the sale of 86 of our former
store locations to KLAC REX, LLC (Klac) for $74.5 million in cash, before
selling expenses. We also entered into leases to leaseback 40 of the properties
from Klac for initial lease terms expiring January 31, 2010. All of the leases
with Klac have been terminated as of October 31, 2009.

This
transaction resulted in a gain (realized and deferred) of $14.8 million. Of
this gain, $3.9 million and $1.1 million was recognized in the first nine
months of fiscal years 2009 and 2008, respectively. The following table
summarizes the pre-tax gains recognized during the third quarter and first nine
months of fiscal years 2009 and 2008 (amounts in thousands):

|                         |   |                                 |  |                                |     |      |   |       |  |   |       |  | 
|------------------------ | - | ------------------------------- |  | ------------------------------ | --- | ---- | - | ----- |  | - | ----- |  | 
|                         |   | Three Months Ended
 October 31, |  | Nine Months Ended
 October 31, |    
|Classification
 of Gain  |   | 2009                            |  | 2008                           |     | 2009 |   | 2008  | 
|                         |   |                                 |  |                                |     |      |   |       | 
|                         |   |                                 |  |                                |     |      |   |       |  |   |       |  | 
|Discontinued
 Operations | $ |                                |  | $                              | 323 |      | $ | 3,933 |  | $ | 1,068 | 
|                         |   |                                 |  |                                |     |      |   |       |  |   |       |  | 

Two
properties classified as discontinued operations were sold or abandoned during
the first nine months of fiscal year 2009, resulting in a gain, net of tax
expense of $0.1 million. These gains are consistent with those recognized in
the prior year.

Noncontrolling
interest (income) loss of $(1,012,000) and $1,878,000 for the quarters ended
October 31, 2009 and 2008, respectively and $(195,000) and $2,070,000 for the
nine months ended October 31, 2009 and 2008, respectively, represents the
owners (other than REX) share of the income or loss of Levelland Hockley and
One Earth.

30

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As
a result of the foregoing, net income attributable to REX common shareholders
for the third quarter of fiscal year 2009 was $2.3 million, an increase of $3.0
million from the loss of $0.7 million for the third quarter of fiscal year
2008. Net income attributable to REX common shareholders for the first nine
months of fiscal year 2009 was $1.4 million, a decrease of $0.7 million from
net income of $2.1 million for the first nine months of fiscal year 2008.

Business Segment Results

Beginning
in the second quarter of fiscal year 2009, we realigned our reportable business
segments to be consistent with changes to our management structure and
reporting. We now have three segments: alternative energy, real estate and
retail. The real estate segment was formerly included in the retail segment.
For stores and warehouses closed for which we have a retained interest in the
related real estate, operations are now presented in the real estate segment
when retail operations ceased.

As
discussed in Note 17, our chief operating decision maker (as defined by the
accounting standards) evaluates the operating performance of our business
segments using a measure we call segment profit. Segment profit includes realized
and unrealized gains and losses on derivative financial instruments. Segment
profit excludes income taxes, indirect interest expense, discontinued
operations, indirect investment income and certain other items that are
included in net income determined in accordance with accounting principles
generally accepted in the United States of America. Management believes these
are useful financial measures; however, they should not be construed as being
more important than other comparable GAAP measures.

Items
excluded from segment profit generally result from decisions made by corporate
executives. Financing, divestiture and tax structure decisions are generally
made by corporate executives. Excluding these items from our business segment
performance measure enables us to evaluate business segment operating
performance based upon current economic conditions.

31

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The
following table sets forth, for the periods indicated, sales and profits by
segment (amounts in thousands):

|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|------------------------------------------------------------- |  | ------------------------------ | ------ | ----------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                              |  | Three Months Ended October 31, |        | Nine Months Ended October 31, |  
|                                                              |  | 2009                           |        | 2008                          |   | 2009   |   | 2008 |        
|                                                              |  |                                |        |                               |   |        |   |      |        
|Net sales and revenue:                                        |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Alternative energy                                            |  | $                              | 61,368 |                               | $ | 22,444 |   | $    | 92,296  |   | $ | 48,468 |  
|Real estate                                                   |  |                                | 341    |                               |   | 83     |   |      | 827     |   |   | 270    |  
|Retail                                                        |  |                                | 2,707  |                               |   | 16,644 |   |      | 18,057  |   |   | 50,904 |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Total net sales and revenues                                  |  | $                              | 64,416 |                               | $ | 39,171 |   | $    | 111,180 |   | $ | 99,642 |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Segment gross profit (loss):                                  |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Alternative energy                                            |  | $                              | 5,790  |                               | $ | (2,443 | ) | $    | 6,740   |   | $ | (1,753 | )
|Real estate                                                   |  |                                | (117   | )                             |   | 77     |   |      | (351    | ) |   | 252    |  
|Retail                                                        |  |                                | 2,187  |                               |   | 6,038  |   |      | 8,383   |   |   | 17,807 |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Total gross profit                                            |  | $                              | 7,860  |                               | $ | 3,672  |   | $    | 14,772  |   | $ | 16,306 |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Segment profit (loss):                                        |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Alternative energy                                            |  | $                              | 4,569  |                               | $ | (4,957 | ) | $    | 2,222   |   | $ | (3,527 | )
|Real estate                                                   |  |                                | (187   | )                             |   | 25     |   |      | (462    | ) |   | 95     |  
|Retail                                                        |  |                                | 843    |                               |   | 2,936  |   |      | 3,142   |   |   | 3,331  |  
|Corporate expense                                             |  |                                | (430   | )                             |   | (484   | ) |      | (1,046  | ) |   | (1,113 | )
|Interest expense                                              |  |                                | (60    | )                             |   | (111   | ) |      | (314    | ) |   | (332   | )
|Investment income                                             |  |                                | 82     |                               |   | 345    |   |      | 230     |   |   | 1,481  |  
|Income from synthetic fuel investments                        |  |                                |       |                               |   | 21     |   |      |        |   |   | 691    |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Income (loss) from continuing operations
 before income taxes |  | $                              | 4,817  |                               | $ | (2,225 | ) | $    | 3,772   |   | $ | 626    |  
|                                                              |  |                                |        |                               |   |        |   |      |         |   |   |        |  

Alternative Energy

The
alternative energy segment includes the consolidated financial statements of
Levelland Hockley and One Earth, our other investments in ethanol facilities,
the income or loss related to those investments and certain administrative
expenses. One Earth began limited production operations late in the second
quarter of fiscal year 2009 and became fully operational during the third
quarter of fiscal year 2009.

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The following table summarizes sales from Levelland Hockley and One Earth by product group (amounts in thousands):

|                       |  |                                 |        |                                |   |        |  |      |        |  |   |        | 
|---------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ------ | 
|                       |  | Three Months Ended
 October 31, |        | Nine Months Ended
 October 31, |  
|                       |  | 2009                            |        | 2008                           |   | 2009   |  | 2008 |       
|                       |  |                                 |        |                                |   |        |  |      |       
|                       |  |                                 |        |                                |   |        |  |      |        |  |   |        | 
|Ethanol                |  | $                               | 51,332 |                                | $ | 18,766 |  | $    | 75,108 |  | $ | 40,356 | 
|Dried distiller grains |  |                                 | 7,636  |                                |   | 1,936  |  |      | 10,925 |  |   | 4,674  | 
|Wet distiller grains   |  |                                 | 2,268  |                                |   | 1,622  |  |      | 5,958  |  |   | 3,287  | 
|Other                  |  |                                 | 132    |                                |   | 120    |  |      | 305    |  |   | 151    | 
|                       |  |                                 |        |                                |   |        |  |      |        |  |   |        | 
|Total                  |  | $                               | 61,368 |                                | $ | 22,444 |  | $    | 92,296 |  | $ | 48,468 | 
|                       |  |                                 |        |                                |   |        |  |      |        |  |   |        | 

The
following table summarizes selected operating data from Levelland Hockley and
One Earth:

|                                                         |  |                                 |        |                                |   |        |  |      |        |  |   |       | 
|-------------------------------------------------------- |  | ------------------------------- | ------ | ------------------------------ | - | ------ |  | ---- | ------ |  | - | ----- | 
|                                                         |  | Three Months Ended
 October 31, |        | Nine Months Ended
 October 31, |  
|                                                         |  | 2009                            |        | 2008                           |   | 2009   |  | 2008 |       
|                                                         |  |                                 |        |                                |   |        |  |      |       
|                                                         |  |                                 |        |                                |   |        |  |      |        |  |   |       | 
|Average selling price per gallon of ethanol              |  | $                               | 1.59   |                                | $ | 2.32   |  | $    | 1.59   |  | $ | 2.31  | 
|Average selling price per ton of dried
 distiller grains |  | $                               | 101.00 |                                | $ | 188.00 |  | $    | 113.00 |  | $ | 188.0 | 
|Average selling price per ton of wet
 distiller grains   |  | $                               | 44.00  |                                | $ | 50.00  |  | $    | 48.00  |  | $ | 53.00 | 
|Average cost per bushel of grain                         |  | $                               | 3.63   |                                | $ | 6.13   |  | $    | 3.61   |  | $ | 5.95  | 
|Average cost of natural gas (per mmbtu)                  |  | $                               | 3.63   |                                | $ | 11.30  |  | $    | 4.17   |  | $ | 10.76 | 

Segment Results  Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008

Net
sales and revenue for the current year increased $38.9 million to $61.4
million, primarily a result of One Earth becoming fully operational during the
third quarter of fiscal year 2009. The average selling price per gallon of ethanol
declined from $2.32 in the prior year 2008 to $1.59 in the current year. Our
sales were based upon 32.4 million gallons of ethanol in the current year
compared to 8.1 million gallons in the prior year.

Gross
profit from these sales was approximately $5.8 million during the current year
compared to a gross loss of $2.4 million during the prior year. Gross profit
improved primarily as a result of an improved spread between ethanol and grain
prices compared to the prior year.

Segment
profit was $4.6 million in the current year compared to segment loss of $5.0
million in the prior year. The increase in segment performance was primarily
related to the increase in gross profit discussed above. In addition, selling
general and administrative expenses decreased by $0.9 million in the current
year compared to the prior year 2008. An impairment charge of $1.3 million

33

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related to the
write off of goodwill associated with the Levelland Hockley acquisition caused
a majority of this fluctuation. Interest expense increased $0.6 million in the
current year over the prior year, as we no longer capitalize interest on the
One Earth credit facility subsequent to the commencement of operations at the
plant. Other income increased $0.8 million in the current year compared to the
prior year. The increase is a result of recognizing a legal settlement of $0.3
million and grant income of $0.5 million in fiscal year 2009.

Segment Results  Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008

Net
sales and revenue for the current year were $92.3 million compared to $48.5
million for the prior year. The increase in sales is primarily a result of One
Earth becoming fully operational during the third quarter of fiscal year 2009.
The average selling price per gallon of ethanol declined from $2.31 in the
prior year 2008 to $1.59 in the current year. Our sales were based upon 47.3
million gallons of ethanol in the current year compared to 17.5 million gallons
in the prior year.

Gross
profit from these sales was approximately $6.7 million during the current year
compared to a gross loss of $1.8 million during the prior year. Gross profit
improved primarily as a result of an improved spread between ethanol and grain
prices compared to the prior year.

Segment
profit was $2.2 million in the current year compared to segment loss of $3.5
million in the prior year. The increase in segment performance was primarily
related to the increase in gross profit discussed above. In addition, selling
general and administrative expenses decreased by $1.7 million in the current
year compared to the prior year. An impairment charge of $1.3 million
recognized in the prior year that related to the write off of goodwill associated
with the Levelland Hockley acquisition caused a majority of this fluctuation.
Interest expense increased $1.3 million in the current year over the prior
year, as we no longer capitalize interest on the One Earth credit facility
subsequent to the commencement of operations at the plant. Income from equity
method investments declined from $3.0 million in the prior year to $1.1 million
in the current year. Losses on derivative financial instruments were $1.6
million in the current year compared to gains of $0.5 million in the prior
year.

Real Estate

The
real estate segment includes all owned and sub-leased real estate including
those previously used as retail store and distribution center operations, our
real estate sales and leasing activities and certain administrative expenses.
It excludes results from discontinued operations.

At
October 31, 2009, we had lease or sub-lease agreements, as landlord, for all or
parts of seven former retail store properties. We own six of these properties
and are the tenant/sub landlord for one of the properties. We have 38 owned
properties, including one former distribution center, that are vacant at
October 31, 2009. We are marketing these vacant properties to lease or sell. In

34

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addition, we
have one owned former distribution center that is partially leased to a tenant;
we are marketing the vacant space for lease or sale.

Segment Results  Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008

Net
sales and revenue in the current year increased to approximately $0.3 million
from approximately $0.1 million in the prior year; the increase is primarily a
result of 15 properties leased to Appliance Direct for a portion of the current
year that were utilized in our retail segment in the prior year. Gross loss
from these sales was approximately $0.1 million during the current year
compared to gross profit of approximately $0.1 million during the prior year.
Gross profit declined as a result of expenses associated with vacant
properties. The increase in vacant properties is a result of the agreement we
reached with Appliance Direct during the current year which relieved Appliance
Direct of their obligation to lease properties from us.

Segment
loss was approximately $200,000 for the current year compared to segment profit
of approximately $25,000 for the prior year. The decline in segment profit is
primarily a result of the lower gross profit in the current year discussed
above.

Segment Results  Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008

Net
sales and revenue for the current year were approximately $0.8 million compared
to approximately $0.3 million for the prior year. The increase in revenue is
primarily a result of 15 properties leased to Appliance Direct for a portion of
the current year that were utilized in our retail segment in fiscal year 2008.
Gross loss from these sales was approximately $0.4 million during the current
year compared to gross profit of approximately $0.3 during the prior year.
Gross profit declined as a result of expenses associated with vacant
properties. The increase in vacant properties is a result of the agreement we
reached with Appliance Direct during the current year which relieved Appliance
Direct of their obligation to lease properties from us.

Retail

The
retail segment includes all of our store and distribution center operations and
certain administrative expenses. It excludes results from discontinued
operations. We substantially exited the retail business as of July 31, 2009. We
expect ongoing results from the retail segment to include revenue and expense
associated with our extended warranty operations.

Segment Results  Third Quarter Fiscal Year
2009 Compared to Third Quarter Fiscal Year 2008

Net
sales and revenue for the current year decreased to approximately $2.7 million
from approximately $16.6 million, primarily a result of the winding down of our
retail business. Gross profit was approximately $2.2 million in the current
year 2009 compared to approximately $6.0 million in the prior year. The
decrease in gross profit is primarily attributable to the decline in retail
sales. However, gross profit margin as a percentage of sales increased in the
current year as gross

35

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profit from
extended service plans was a higher percentage of retail gross profit in the
current year compared to the prior year.

Retail
segment profit decreased approximately $2.1 million to approximately $0.8
million in the current year from approximately $2.9 million in the prior year.
The decrease in segment profit was primarily related to lower gross profit in
the current year discussed above. In addition, selling, general and
administrative expenses declined to approximately $1.3 million in the current
year compared to approximately $5.4 million in the prior year. This decrease is
primarily a result of cost reductions in fiscal year 2009 associated with the
wind down of our retail business.

Segment Results  Nine Months Ended October
31, 2009 Compared to Nine Months Ended October 31, 2008

Net
sales and revenue for the current year decreased to approximately $18.1 million
from approximately $50.9 million, primarily a result of the winding down of our
retail business. Gross profit was approximately $8.4 million in the current
year compared to approximately $17.8 million in the prior year. The decrease in
gross profit is primarily attributable to the decline in retail sales. However,
gross profit margin as a percentage of sales increased in the current year 2009
as gross profit from extended service plans was a higher percentage of retail
gross profit in the current year compared to the prior year.

Retail
segment profit of approximately $3.1 million in the current year is consistent
with the prior year profit of $3.3 million. Selling, general and administrative
expenses declined by approximately $11.5 million offsetting the decline in net
sales and revenue. This decline is primarily a result of cost reductions in the
current year associated with the wind down of our retail business. We had gains
of approximately $2.3 million on the sale of retail related real estate in the
prior year; there were no such gains in the current year.

Corporate and Other

Corporate
and other includes certain administrative expenses of the corporate
headquarters, interest expense and interest income not directly allocated to
the alternative energy, real estate or retail segments and income from
synthetic fuel investments.

Corporate and Other Results  Third Quarter
Fiscal Year 2009 Compared to Third Quarter Fiscal Year 2008

Selling,
general and administrative expenses were $0.4 million in the current year,
consistent with $0.5 million in the prior year.

Interest
expense of $0.1 million in the current year is consistent with prior year
expense.

Investment
income was $0.1 million in the current year compared to $0.3 million in the
prior year. The decline generally results from lower yields earned on our
excess cash in the current year compared to the prior year.

36

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Corporate and Other Results  Nine Months
Ended October 31, 2009 Compared to Nine Months Ended October 31, 2008

Selling,
general and administrative expenses were $1.0 million in the current year
consistent with the $1.1 million in the prior year.

Interest
expense of $0.3 million in the current year is consistent with prior year
expense.

Investment
income was $0.2 million in the current year 2009 compared to $1.5 million in
the prior year. The decline generally results from lower yields earned on our
excess cash in the current year compared to the prior year.

Income
from synthetic fuel investments declined $0.7 million in the current year compared
to the prior year. Prior year income represents the estimated final settlements
for Colona and Somerset as all synthetic fuel production ceased during fiscal
year 2007.

Liquidity and Capital Resources

Net
cash provided by operating activities was approximately $0.3 million for the
first nine months of fiscal year 2009, compared to cash used of $26.3 million
for the first nine months of fiscal year 2008. For the first nine months of
fiscal year 2009, cash was provided by net income of $1.6 million, non-cash
items of $(8.4) million, which consisted of depreciation and amortization,
income from equity method investments, deferred income, unrealized losses on
derivative financial instruments, other items and the deferred income tax
provision. In addition, inventory and other assets provided cash of $16.7
million and $5.1 million, respectively, primarily a result of the wind down of
our retail business. The primary use of cash was a decrease in accounts payable
of $6.2 million as we finalized several outstanding retail vendor accounts
associated with the wind down of our retail business. Accounts receivable
increased $5.1 million as a result of production and sales from both of our
consolidated ethanol entities. Other liabilities decreased $3.3 million as we
paid certain payroll and other accrued expenses in connection with the wind
down of our retail business.

Net
cash used in operating activities was approximately $26.3 million for the first
nine months of fiscal year 2008. For the first nine months of fiscal year 2008,
cash was provided by net income of $0.01 million, adjusted for the impact of
$0.7 million for gains on our sales of synthetic fuel investments, the gain on
the disposal of real estate and property and equipment of $3.3 million and
non-cash items of $(2.9) million, which consisted of depreciation and
amortization, income from equity method investments, deferred income,
unrealized gains on derivative financial instruments, other items and the
deferred income tax provision. In addition, other assets provided cash of $1.6
million, primarily a result of reductions in our levels of prepaid commissions
associated with the sale of extended service contracts. The increase in
accounts receivable of $2.8 million is primarily a result of Levelland Hockley
commencing operations in the current fiscal year. The increase in inventory of
$6.6 million was primarily due to seasonal fluctuations in our retail segment
and Levelland Hockley commencing operations in the current fiscal year. The decrease
in accounts payable is primarily a result of our modification of payment terms
with one of our retail product vendors. The primary use of cash was a decrease
in other liabilities of $10.5 million; primarily a

37

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result of
payments related to synthetic fuel obligations, incentive compensation and
other payroll and sales tax payments being made in the first quarter of fiscal
year 2008.

At October 31, 2009, working capital was $76.2 million compared to
$84.4 million at January 31, 2009. This decrease is primarily a result of
treasury stock purchases. The ratio of current assets to current liabilities
was 2.9 to 1 and 2.5 to 1 at October 31, 2009 and January 31, 2009,
respectively.

Cash
of $34.4 million was used in investing activities for the first nine months of
fiscal year 2009, compared to $69.6 million for the first nine months of fiscal
year 2008. During the first nine months of fiscal year 2009, we received
proceeds of $1.0 million from the sale of real estate and property and equipment.
We had capital expenditures of approximately $34.5 million during the first
nine months of fiscal year 2009, primarily related to construction at the One
Earth ethanol plant. We deposited approximately $1.0 million into a restricted
account as collateral for a letter of credit on behalf of Levelland Hockley to
secure grain purchasing.

Cash
of $69.6 million was used in investing activities for the first nine months of
fiscal year 2008. During the first nine months of fiscal year 2008, we received
proceeds of $1.3 million from the sales of our synthetic fuel investments and
$6.4 million from the sale of real estate and property and equipment. We had
capital expenditures of approximately $75.9 million during the first nine
months of fiscal year 2008, primarily related to construction at the Levelland
Hockley and One Earth ethanol plants. We deposited $1.3 million in escrow
accounts (restricted cash) in connection with the final draw on Levelland
Hockleys construction loan.

Cash
provided by financing activities totaled approximately $26.6 million for the
first nine months of fiscal year 2009 compared to $34.4 million for the first
nine months of fiscal year 2008. Cash of approximately $12.1 million was used
to repay debt and capital lease obligations. Cash was provided by debt
borrowings of $44.0 million on One Earths construction loan and stock option
activity of $1.2 million. Cash of approximately $5.5 million was also used to
acquire 535,000 shares of our common stock. As of October 31, 2009, we had
approximately 45,000 authorized shares remaining available for purchase under
the stock buy-back program. Cash of approximately $1.0 million was used to pay
settlements of derivative financial instruments.

Cash
provided by financing activities totaled approximately $34.4 million for the
first nine months of fiscal year 2008. Cash of approximately $4.4 million was
used to repay debt and capital lease obligations. Cash was provided by new debt
borrowings at Levelland Hockley and One Earth of $53.1 million. Cash of
approximately $15.5 million was also used to acquire 1,332,000 shares of our
common stock.

We
believe we have sufficient working capital and credit availability to fund our
commitments and to maintain our operations at their current levels for the next
twelve months and foreseeable future.

We
plan to seek and evaluate various investment opportunities. We can make no
assurances that we will be successful in our efforts to find such
opportunities.

38

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Forward-Looking Statements

This Form 10-Q
contains or may contain forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Such statements can be identified by use of
forward-looking terminology such as may, expect, believe, estimate,
anticipate or continue or the negative thereof or other variations thereon
or comparable terminology. Readers are cautioned that there are risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements. These risks and
uncertainties include the risk factors set forth from time to time in the
Companys filings with the Securities and Exchange Commission and include among
other things: the uncertainty of constructing ethanol plants on time and on
budget, the impact of legislative changes, the price volatility and
availability of corn, sorghum, distiller grains, ethanol, gasoline and natural
gas, ethanol plants operating efficiently and according to forecasts and
projections, changes in the national or regional economies, weather, the
effects of terrorism or acts of war, changes in real estate market conditions,
the fluctuating amount of income received from the Companys synthetic fuel
investments and the impact of Internal Revenue Service audits. The Company does
not intend to update publicly any forward-looking statements except as required
by law. Other factors that could cause actual results to differ materially from
those in the forward-looking statements are set forth in Item 1A of the
Companys Annual Report on Form 10-K for the fiscal year ended January 31, 2009
(File No. 001-09097).

|                                                                    | 
|------------------------------------------------------------------- | 
|Item 3.  Quantitative and Qualitative Disclosures About Market Risk

No
material changes since January 31, 2009.

|                                 | 
|-------------------------------- | 
|Item 4.  Controls and Procedures

Our
management evaluated, with the participation of our Chief Executive Officer and
Chief Financial Officer, the effectiveness of our disclosure controls and
procedures, as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commissions rules and forms and is accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

There
were no changes in our internal control over financial reporting that occurred
during our last fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

|                           | 
|-------------------------- | 
|Item 1.  Legal Proceedings

Levelland
Hockley entered into a lease agreement with Layne Christensen Company (Layne)
for certain water treatment equipment for its ethanol plant. Levelland Hockley
filed a lawsuit, as amended, against Layne in the District Court, Hockley
County, Texas on April 30, 2008, generally alleging that Layne was negligent in
its design and construction of the water treatment facility and breached its
various process guaranties and warranties. Layne and Levelland Hockley

39

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settled this litigation during the third quarter of fiscal year 2009 as the parties executed
a settlement agreement.

|                       | 
|---------------------- | 
|Item 1A.  Risk Factors

During
the quarter ended October 31, 2009, there have been no material changes to the
risk factors discussed in our Annual Report on Form 10-K for the year ended
January 31, 2009.

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

Issuer Purchases of Equity Securities

|                      |  |                                    |  |                                 |       |                                                                                          |  |                                                                                        |  |  |         |  | 
|--------------------- |  | ---------------------------------- |  | ------------------------------- | ----- | ---------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- |  |  | ------- |  | 
|Period                |  | Total Number
 of Shares
 Purchased |  | Average
 Price
 Paid per
 Share |       | Total Number of
 Shares Purchased
 as Part of Publicly
 Announced Plans
 or Programs (1) |  | Maximum Number
 of Shares that May
 Yet Be Purchased
 Under the Plans
 or Programs (1) | 
|                      |  |                                    |  |                                 |       |                                                                                          |  |                                                                                        | 
|August 1-31,
 2009    |  |                                   |  | $                               |      |                                                                                          |  |                                                                                       |  |  | 298,843 | 
|September
 1-30, 2009 |  | 42,713                             |  | $                               | 10.51 |                                                                                          |  | 42,713                                                                                 |  |  | 256,130 | 
|October
 1-31, 2009   |  | 211,329                            |  | $                               | 12.10 |                                                                                          |  | 211,329                                                                                |  |  | 44,801  | 
|                      |  |                                    |  |                                 |       |                                                                                          |  |                                                                                        |  |  |         |  | 
|Total                 |  | 254,042                            |  | $                               | 11.83 |                                                                                          |  | 254,042                                                                                |  |  | 44,801  | 
|                      |  |                                    |  |                                 |       |                                                                                          |  |                                                                                        |  |  |         |  | 

| |     |                                                                                                                                                                                                                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | At October
 31, 2009, a total of 44,801 shares remained available to purchase under this
 authorization. On December 1, 2009, the Companys Board of Directors
 authorized the Company to purchase up to an additional 500,000 shares from
 time to time in private or market transactions at prevailing market prices.

|                   | 
|------------------ | 
|Item 6.  Exhibits.

| |                                                     |  |                                         
| | --------------------------------------------------- |  | ----------------------------------------
| | The
 following exhibits are filed with this report:
| |                                                    
| | 31                                                  |  | Rule
 13a-14(a)/l5d-14(a) Certifications
| |                                                     |  |                                         
| | 32                                                  |  | Section 1350
 Certifications            

40

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SIGNATURES

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |                        
| | -----------------------
| | REX STORES
 CORPORATION
| | Registrant             

|                          |  |                                       |  |                 
|------------------------- |  | ------------------------------------- |  | ----------------
|Signature                 |  | Title                                 |  | Date            
|                          |  |                                       |  |                 
|                          |  |                                       |  |                 
|/s/
 Stuart A. Rose       |  | Chairman of the Board                 |  | December 3, 2009
|                          |  | (Chief Executive Officer)             |  |                 
|(Stuart A. Rose)          |  |                                       |  |                 
|                          |  |                                       |  |                 
|/s/
 Douglas L. Bruggeman |  | Vice President, Finance and Treasurer |  | December 3, 2009
|                          |  | (Chief Financial Officer)             |  |                 
|(Douglas L. Bruggeman)    |  |                                       |  |                 

41

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