UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
——————————
FORM 10-QSB
——————————
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2008
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________TO ____________
COMMISSION FILE NUMBER: 000-8880
—————————
THE BANKER'S STORE, INC.
(Exact name of registrant as specified in its charter)
—————————
NEW YORK | 22-3755756 |
State or Other Jurisdiction | (I.R.S. Employer |
1535 MEMPHIS JUNCTION ROAD, BOWLING GREEN, KY 42101
(Address, including zip code, of principal executive offices)
(270) 781-8453
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common stock, par value $0.01, 14,954,781 shares outstanding as of April 1, 2008.
THE BANKER'S STORE, INC.
FORM 10-QSB
FEBRUARY 29, 2008
INDEX
PART I – FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
See financial statements beginning on page F-1.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION
The matters discussed in this management's discussion and analysis or plan of operations contain forward-looking statements that involve risks and uncertainties. The Company's actual results in our two operating segments could differ materially from those discussed here. Factors that could cause or contribute to such differences are discussed elsewhere in this quarterly report on Form 10-QSB. The Company disclaims any intent or obligation to update these forward-looking statements.
OVERVIEW
The Banker's Store, Inc. ("Store") was established in 1968. It remained dormant for many years until it completed the acquisition of B.G. Banking Equipment, Inc., ("B.G. Banking") and Financial Building Equipment Exchange, Inc., ("FBEE"). We are now in the business of buying, selling, refurbishing and trading new and refurbished financial equipment for banks and other financial institutions. Commencing during the fourth quarter of the year ended May 31, 2002, we entered the office equipment and furniture retail business. We market products throughout the United States primarily through direct sales to financial institutions and other distributors supported by our direct sales force and soliciting new contacts through our presence on the Internet.
We anticipate that our results of operations may fluctuate for the foreseeable future due to several factors, including whether and when new products at competitive prices are obtained and sources of good used banking and banking related equipment and furniture become available at favorable prices, market acceptance of current or new products, delays, or inefficiencies, shipment problems, seasonal customer demand, the timing of significant orders, competitive pressures on average selling prices and changes in the mix of products sold.
Operating results would also be adversely affected by a downturn in the market for our current and future products, order cancellations, or order rescheduling or remanufacturing or delays. We purchase and resell new merchandise and remanufacture and ship our other products shortly after receipt of orders. We have not developed a significant backlog for such products and do not anticipate developing a material backlog for such products in the future. We may not be able to sustain revenue growth on a quarterly or annual basis.
We have increased our operating expenses, primarily for personnel and activities supporting newly-introduced products, new product development and entering new markets. Our operating results have been and will continue to be adversely affected if our sales do not correspondingly increase or if our product development efforts are unsuccessful or are subject to delays.
1
SUMMARY OF SIGNIFICANT ACCOUNTING ESTIMATES, RELATED PARTY TRANSACTIONS AND CONTINGENCIES:
Significant accounting estimates:
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to accounts receivable, inventories, equipment and improvements, income taxes and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting estimates used as of May 31, 2007 and as outlined in our previously filed Form 10-KSB have been applied consistently for the nine months ended February 29, 2008.
Related party transactions:
We have entered into two operating leases with our Chairman of the Board and principal stockholder, Paul Clark, for the lease of an aggregate of 32,000 square feet of office and warehouse space located in Bowling Green, Kentucky. The leases provide for a monthly rent plus maintenance expenses. The leases expire in August and September 2008, respectively.
Contingencies:
Litigation:
On March 7, 2000, we filed an action in the Supreme Court of the State of New York, County of New York, against Stamford Financial Consulting, Inc., Taurus International Investment, Inc., George C. Bergleitner, Jr., Alexander C. Brosda and Andrew Seim (the “New York Action”), seeking an amount of not less than $1.7 million for breach of fiduciary duty, breach of contract, conversion and unjust enrichment, and seeking an accounting of defendants’ books and records. The action arises out of B. G. Banking’s Confidential Private Placement Memorandum dated January 31, 1998, prepared by Stamford Financial, for the sale of 3,000,000 shares of B. G. Banking common stock at $1.00 per share. On April 5, 2000, defendant George C. Bergleitner served a counterclaim alleging that we failed to have 180,000 shares of stock transferred without any legal endorsement, pursuant to Rule 144(k) under the Securities Exch ange Act of 1934, as amended. The counterclaim seeks damages of $900,000 based upon the value of the stock at the highest amount at which it traded, which is alleged to be $5.00 per share.
In December 2000, the court entered a default judgment against Taurus International Investment, Inc., Alexander C. Brosda and Andrew Seim leaving only George Bergleitner and his company, Stamford Financial to defend the lawsuit.
By order entered on May 4, 2001, the Court granted a motion filed by Stamford Financial Consulting, Inc. and George C. Bergleitner, to transfer the New York Action to the New York State Supreme Court, Delaware County, and the action is continuing there against these two defendants. We have filed a motion to dismiss the counterclaim.
Although we cannot predict the outcome of the litigation described above, we do not believe that the ultimate outcome will have any material adverse effect on our consolidated financial statements in subsequent periods.
2
RESULTS OF OPERATIONS
The following table sets forth operating data as a percentage of revenue for the nine months and three months ended February 29, 2008 and 2007:
|
| Nine Months Ended |
| Three Months Ended |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
| 100.0 | % |
| 100.0 | % |
| 100.0 | % |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
| 63.3 | % |
| 71.5 | % |
| 57.2 | % |
| 64.7 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 36.7 | % |
| 28.5 | % |
| 42.8 | % |
| 35.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 44.1 | % |
| 39.9 | % |
| 53.3 | % |
| 36.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
| -7.4 | % |
| -11.4 | % |
| -10.5 | % |
| -0.8 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
| -0.5 | % |
| -0.5 | % |
| -0.8 | % |
| -0.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax provision |
|
| -7.9 | % |
| -11.9 | % |
| -11.3 | % |
| -1.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| -7.9 | % |
| -11.9 | % |
| -11.3 | % |
| -1.1 | % |
RESULTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS ENDED FEBRUARY 29, 2008 AS COMPARED TO THE NINE MONTHS AND THREE MONTHS ENDED FEBRUARY 28, 2007.
Revenues were approximately $1,922,269 for the nine months ending February 29, 2008 as compared to approximately $1,789,397 for the nine months ended February 28, 2007 reflecting an increase of approximately $132,872, or 7%. The increase in revenues during the nine months ending February 29, 2008 is due to the net result of increased equipment prices from our vendors and the completion of several jobs from the prior periods. The revenues for the three months ending February 29, 2008 were $557,896 as compared to $698,516 for the three months ended February 28, 2007, reflecting a decrease of approximately $140,620, or 20%. This decrease for the three months ending February 29, 2008 is the result of the economic impact of the mortgage crisis and high gasoline prices which has caused a number of financial institutions to take a “wait and see” attitude regarding their spending on new construction, focusing i nstead on small remodeling projects, upgrading drive up systems and other new technologies. Banking equipment revenues increased approximately $52,833 or 3.3% for the nine months ending February 29, 2008 from the nine months ended February 28, 2007. Office equipment revenues increased approximately $80,039 or 40.6% for the nine months ending February 29, 2008 from the nine months ended February 28, 2007.
Cost of goods sold for the nine months ended February 29, 2008 were approximately $1,217,537 or 63% of net sales as compared to approximately $1,279,538, or 72% of net sales for the nine months ended February 28, 2007. Cost of goods sold for the three months ended February 30, 2008 was approximately $319,089, or 57% of net sales as compared to approximately $451,866, or 64% of net sales for the three months ended February 28, 2007. Gross profit increased during the nine months ending February 29, 2008 to approximately $704,732, or 37% of net sales as compared to the nine months ended February 28, 2007 of $509,858 or 29% of net sales. This increase in gross profit is primarily due to changes in pricing structures of new equipment.
3
Selling, general and administrative expenses were approximately $848,281, or 44% of net sales for the nine months ending February 29, 2008 as compared to approximately $714,698, or 40% of net sales for the nine months ended February 28, 2007 reflecting an increase of approximately $133,583. This increase is due primarily to additional professional services, employee salaries and compensation. Selling, general and administrative expenses were approximately $297,495, or 53% of net sales for the three months ending February 28, 2007 as compared to approximately $252,149, or 36% of net sales for the three months ended February 28, 2007 reflecting an increase of approximately $45,345.
As a result of the aforementioned, the Company incurred a net loss during the nine months ending February 29, 2008 of approximately $152,732, or 8% of net sales as opposed to a net loss of approximately $213,133, or 11% of net sales for the nine months ending February 28, 2007. For the three months ending February 29, 2008, the Company incurred a loss of approximately $58,688, or 11% of net sales as opposed to a net loss of approximately $7,450, or 1% of net sales for the comparable prior period.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed our operations through revenues from operations.
We had cash and cash equivalents of $207,331 and working capital of $248,989 at February 29, 2008. At February 29, 2008, the Company’s cash position had decreased by $149,992 from the year ended May 31, 2007. The decrease in cash was primarily caused by an increase in accounts receivable of $153,299 and a decrease in customer deposits of $141,333 which was partially offset by a decrease of $160,311 of inventory and an increase in accounts payable of $95,913. Our $350,000 revolving line of credit expired on November 7, 2007 and was not renewed as it had never been utilized.
We are evaluating various alternatives in addressing our future facilities’ needs. The alternatives being evaluated include consolidation of our office equipment facility with our bank equipment facility thus reducing our lease expense and associated overhead expenses. Other expense reductions are being explored.
We also desire to expand our customer base and enter additional markets. To accomplish these goals, we are currently evaluating a number of strategies and related steps. We are considering and evaluating opportunities to grow and expand through mergers or acquisitions. We may hire additional sales personnel in order to reach potential customers in new markets and additional customers in existing markets.
Our ability to effect any of these strategies or to take any of these steps will depend on a number of factors including, but not limited to, our ability to generate sufficient cash flow or obtain sufficient capital on reasonable terms; our ability to locate and hire qualified personnel on satisfactory terms and conditions, the availability of attractive candidates for merger or acquisition on reasonable terms and conditions; continued demand for our products and services; our ability to withstand increased competitive pressures; and economic conditions within the financial services industry and within the markets we serve. There is no assurance that we will be able to meet any or all of our goals.
We believe that our available cash and cash from operations will be sufficient to satisfy our funding needs through at least February 28, 2009. Thereafter, if cash generated from operations is insufficient to satisfy our working capital and capital expenditure requirements, we may be required to sell additional equity or debt securities or obtain additional credit facilities. There can be no assurance that such additions, if needed, will be available on satisfactory terms, if at all. Furthermore, any additional equity financing may be substantially dilutive to stockholders, and debt financing, if available, may include restrictive covenants and also result in substantial dilution to stockholders. Our future liquidity and capital funding requirements will depend on numerous factors, including the extent to which our new products and products under consideration are successfully developed, gain market acceptance, become and remain competit ive as well as the costs and timing of further expansion of sales and marketing. The failure by us to raise capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations.
4
ITEM 3.
CONTROLS AND PROCEDURES
(a)
DISCLOSURE CONTROLS AND PROCEDURES. As of February 29, 2008, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures. The Company's disclosure controls and procedures are the controls and other procedures that it designed to ensure that it records, processes, summarizes and reports in a timely manner the information it must disclose in reports that it files with or submits to the Securities and Exchange Commission. Vincent Buckman, the Company's President, CEO and CFO supervised and participated in this evaluation. Based on this evaluation, Mr. Buckman concluded that, as of the date of their evaluation, the Company's disclosure controls and procedures were effective.
(b)
CHANGES IN INTERNAL CONTROLS. There were no changes in internal controls over financial reporting known to the Chief Executive Officer and Chief Financial Officer that occurred during the period covered by this report that have materially affected, or are likely to materially effect, the Company’s internal control over financial reporting.
5
PART II. – OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
No material developments occurred during the quarter with respect to our on-going litigation. For a discussion of this litigation, please see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation-Litigation herein.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS BY THE COMPANY UPON ITS SENIOR SECURITIES
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 17, 2008, The Banker’s Store, Inc. held its annual meeting of shareholders. The shareholders voted on (1) the election of five directors to terms ending in 2009, (2) the approval to amend the Certificate of Incorporation to increase the number of issued and outstanding common stock from 40,000,000 to 200,000,000, (3) to amend the Certificate of Incorporation to add 2,000,000 preferred stock, (4) to amend the Certificate of Incorporation to permit shareholder action by less than unanimous written consent, (5) to amend the Company’s Bylaws to allow securities to be issued in book entry form, and (6) the proposal to ratify the appointment of Marmann, Irons & Assoc. PC as the independent registered certified public accounting firm for 2008.
* | The election of directors proposed by the Board: |
| For |
| Withheld |
| Against |
| Abstain |
| Paul D. Clark |
| 12,876,380 |
| — |
| — |
| — |
| Vincent C. Buckman |
| 12,876,380 |
| — |
| — |
| — |
| Samuel J. Stone |
| 12,876,380 |
| — |
| — |
| — |
| Cynthia A. Hayden |
| 12,876,380 |
| — |
| — |
| — |
| Roberta W. Clark |
| 12,876,380 |
| — |
| — |
| — |
* | The approval of an Amendment to the Certificate of Incorporation to increase the number of authorized common shares from 40,000,000 to 200,000,000 |
| 12,876,380 |
| — |
| — |
| — |
* | The approval of an Amendment to the Certificate of Incorporation to add 2,000,000 preferred shares |
| 12,876,380 |
| — |
| — |
| — |
* | The approval of an Amendment to the Certificate of Incorporation to permit shareholder action by less than unanimous written consent |
| 12,876,380 |
| — |
| — |
| — |
* | The approval of an Amendment to the Company’s Bylaws to allow securities to be issued in book entry form. |
| 12,876,380 |
| — |
| — |
| — |
* | The ratification of the appointment of Marmann, Irons & Assoc. PC, as independent public accountants for the fiscal year ending May 31, 2008. |
| 12,876,380 |
| — |
| — |
| — |
6
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
a)
Exhibits
| Exhibit Number |
| Description |
|
| Certification Pursuant to Rule 13a-14(a) of Vincent C. Buckman, CEO, CFO, | |
|
| Certification of Vincent C. Buckman |
7
THE BANKER'S STORE, INC. AND SUBSIDIARIES
I N D E X
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS |
|
|
|
| PAGE |
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS FEBRUARY 29, 2008 |
| F-2 |
|
|
|
| F-3 | |
|
|
|
| F-4 | |
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
| F-5 - F-7 |
|
|
|
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
|
|
|
|
|
PART II. OTHER INFORMATION |
|
|
|
|
|
SIGNATURES |
|
|
F-1
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
FEBRUARY 29, 2008 AND MAY 31, 2007
|
| February 29, |
| May 31, |
| ||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 207,331 |
| $ | 357,323 |
|
|
|
|
|
|
|
|
|
Accounts receivable, net of allowance for bad debts of $4,043 |
|
| 316,683 |
|
| 163,384 |
|
|
|
|
|
|
|
|
|
Inventories |
|
| 507,326 |
|
| 667,637 |
|
Prepaid expenses and other current assets |
|
| 66,770 |
|
| 106,848 |
|
Total current assets |
|
| 1,098,110 |
|
| 1,295,192 |
|
|
|
|
|
|
|
|
|
Equipment and improvements, net |
|
| 71,072 |
|
| 80,143 |
|
Other assets |
|
| 4,182 |
|
| 20,467 |
|
Totals |
| $ | 1,173,364 |
| $ | 1,395,802 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Current portion of long-term debt |
| $ | — |
| $ | 2,346 |
|
Accounts payable and accrued expenses |
|
| 185,759 |
|
| 89,845 |
|
Customer deposits |
|
| 245,579 |
|
| 386,911 |
|
Note payable - principal stockholder |
|
| 154,683 |
|
| 189,625 |
|
Accrued compensation - principal stockholder |
|
| 263,100 |
|
| 263,100 |
|
Private placement funds in dispute |
|
| — |
|
| — |
|
Total current liabilities |
|
| 849,121 |
|
| 931,827 |
|
|
|
|
|
|
|
|
|
Long-term debt, net of current portion |
|
| — |
|
| — |
|
Total liabilities |
|
| 849,121 |
|
| 931,827 |
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Common stock, $.01 par value; 80,000,000 shares authorized; 14,954,781 |
|
| 149,548 |
|
| 149,548 |
|
Additional paid-in capital |
|
| 563,697 |
|
| 550,697 |
|
Less: treasury stock 2,000 shares (at cost) |
|
| (2,000 | ) |
| (2,000 | ) |
Accumulated (deficit) earnings |
|
| (387,002 | ) |
| (234,270 | ) |
Total stockholders' equity |
|
| 324,243 |
|
| 463,975 |
|
Totals |
| $ | 1,173,364 |
| $ | 1,395,802 |
|
The accompanying notes are an integral part of these financial statements.
F-2
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FEBRUARY 29, 2008 AND 2007
|
| Nine Months Ended |
| Three Months Ended |
| ||||||||
|
| 2008 |
| 2007 |
| 2008 |
| 2007 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
| $ | 1,922,269 |
| $ | 1,789,397 |
| $ | 557,896 |
| $ | 698,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
| 1,217,537 |
|
| 1,279,538 |
|
| 319,089 |
|
| 451,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 704,732 |
|
| 509,859 |
|
| 238,807 |
|
| 246,650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 848,281 |
|
| 714,698 |
|
| 297,495 |
|
| 252,149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
| (143,549 | ) |
| (204,839 | ) |
| (58,688 | ) |
| (5,499 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income (expenses) |
|
| 4,061 |
|
| 4,377 |
|
| 806 |
|
| 1,258 |
|
Interest expense |
|
| (13,244 | ) |
| (12,671 | ) |
| (5,265 | ) |
| (3,209 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense): |
|
| (9,183 | ) |
| (8,294 | ) |
| (4,459 | ) |
| (1,951 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax provision |
|
| (152,732 | ) |
| (213,133 | ) |
| (63,147 | ) |
| (7,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | (152,732 | ) | $ | (213,133 | ) | $ | (63,147 | ) | $ | (7,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share |
| $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
| $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) |
The accompanying notes are an integral part of these financial statements.
F-3
THE BANKER'S STORE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED FEBRUARY 29, 2008 AND 2007
|
| February 29, |
| ||||
|
| 2008 |
| 2007 |
| ||
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
Net income (loss) |
| $ | (152,732 | ) | $ | (213,134 | ) |
Adjustments to reconcile net income (loss) |
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 15,137 |
|
| 19,039 |
|
Stock based compensation |
|
| 13,000 |
|
| 7,222 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
Accounts receivable |
|
| (153,299 | ) |
| 108,203 |
|
Inventories |
|
| 160,311 |
|
| (48,394 | ) |
Prepaid expenses and other current assets |
|
| 56,364 |
|
| (3,083 | ) |
Accounts payable and accrued expenses |
|
| 95,913 |
|
| 55,378 |
|
Customer deposits |
|
| (141,333 | ) |
| 213,287 |
|
Net cash provided by operating activities |
|
| (106,639 | ) |
| 138,518 |
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
Capital expenditures, net of writeoffs |
|
| (6,066 | ) |
| (13,177 | ) |
Net cash (used in) investing activities |
|
| (6,066 | ) |
| (13,177 | ) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Increase (decrease) in long-term debt, net |
|
| (2,346 | ) |
| (5,927 | ) |
Loan payable - Borrowing from principal stockholder |
|
| (34,941 | ) |
| 1,483 |
|
Net cash provided by (used in) financing activities |
|
| (37,287 | ) |
| (4,444 | ) |
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents |
|
| (149,992 | ) |
| 120,897 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
| 357,323 |
|
| 354,688 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
| $ | 207,331 |
| $ | 475,585 |
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
Interest paid |
| $ | 13,244 |
| $ | 12,652 |
|
|
|
|
|
|
|
|
|
Income taxes paid |
| $ | — |
| $ | — |
|
The accompanying notes are an integral part of these financial statements.
F-4
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of presentation:
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, necessary to present fairly the financial position of The Banker's Store, Inc. and Subsidiaries (the "Company") as of February 29, 2008 and the Company's results of operations and cash flows for the nine months ended February 29, 2008 and 2007. Pursuant to the rules and regulations of the United States Securities and Exchange Commission (the "SEC"), certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed in or omitted from these consolidated financial statements unless significant changes have taken place since the end of the most recent fiscal year. Accordingly, these unaudited condensed consolidated financ ial statements should be read in conjunction with the audited consolidated financial statements as of May 31, 2007 and the notes thereto (the "Audited Financial Statements") and the other information included in the Company's Annual Report on Form 10-KSB (the "Form 10-KSB") for the year ended May 31, 2007.
The consolidated results of operations for the nine months ended February 29, 2008 are not necessarily indicative of the results to be expected for the full year.
Note 2 - Earnings (loss) per common share:
The Company presents "basic" earnings (loss) per share and, if applicable, "diluted" earnings per share pursuant to the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share". Basic earnings (loss) per share is calculated by dividing net income or loss by the weighted average number of shares outstanding during each period. The calculation of diluted earnings per share is similar to that of basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potentially dilutive common shares were issued during the period. The Company considers the stock options granted to the executives as potentially dilutive common shares outstanding during the period ended February 29, 2008. The weighted average numbers of shares for determining basic earnings per share were 14,954,781 in 2008. T he weighted average numbers of shares for determining diluted earnings per share were 15,504,781 in 2008.
Note 3 - Income taxes:
The Company’s estimated federal and state income tax rate is 40 percent. Due to the uncertainties related to, among other things, the extent and timing of our future taxable income, the Company offset the deferred tax assets attributable to the potential benefits of approximately $60,000 from the utilization of net operating loss carryforwards and other deferred tax assets by an equivalent valuation allowance during the nine months ending February 29, 2008. Deferred tax assets offset by a valuation allowance were approximately $204,000 offset by a valuation allowance of $184,000 as of February 28, 2007. Total deferred tax assets were approximately $270,000 which was offset by an equivalent valuation allowance as of February 29, 2008.
As a result of the corresponding increase in the valuation allowance and deferred tax assets of $60,000 during the nine months ended February 29, 2008, the Company did not recognize any income taxes in the accompanying condensed consolidated statements of operations to offset its pre-tax income and loss in the periods.
F-5
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 4 - Contingencies:
Litigation:
On March 7, 2000, we filed an action in the Supreme Court of the State of New York, County of New York, against Stamford Financial Consulting, Inc., Taurus International Investment, Inc., George C. Bergleitner, Jr., Alexander C. Brosda and Andrew Seim (the “New York Action”), seeking an amount of not less than $1.7 million for breach of fiduciary duty, breach of contract, conversion and unjust enrichment, and seeking an accounting of defendants’ books and records. The action arises out of B. G. Banking’s Confidential Private Placement Memorandum dated January 31, 1998, prepared by Stamford Financial, for the sale of 3,000,000 shares of B. G. Banking common stock at $1.00 per share. On April 5, 2000, defendant George C. Bergleitner served a counterclaim alleging that we failed to have 180,000 shares of stock transferred without any legal endorsement, pursuant to Rule 144(k) under the Securities Exc hange Act of 1934, as amended. The counterclaim seeks damages of $900,000 based upon the value of the stock at the highest amount at which it traded, which is alleged to be $5.00 per share.
In December 2000, the court entered a default judgment against Taurus International Investment, Inc., Alexander C. Brosda and Andrew Seim leaving only George Bergleitner and his company, Stamford Financial to defend the lawsuit.
By order entered on May 4, 2001, the Court granted a motion filed by Stamford Financial Consulting, Inc. and George C. Bergleitner, to transfer the New York Action to the New York State Supreme Court, Delaware County, and the action is continuing there against these two defendants. We filed a motion to dismiss the counterclaim.
Although we cannot predict the outcome of the litigation described above, we do not believe that the ultimate outcome will have any material adverse effect on our consolidated financial statements in subsequent periods.
Note 5 - Segment information:
The Company has adopted the provisions of Statements of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information ("SFAS 131"). Pursuant to the provisions of SFAS 131, the Company is reporting segment sales, cost of goods sold, gross margins and inventories in the same format reviewed by the Company's management (the "management approach"). The Company has two reporting segments: "Banking Equipment" and "Office Equipment." The Banking Equipment segment is comprised of the operations connected with the buying, selling and trading of new and refurbished financial equipment for banks and other financial institutions. The Office Equipment segment is comprised of buying and selling office equipment and supplies.
F-6
THE BANKER'S STORE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Revenues and other related segment information follows for the nine months and three months ended February 29, 2008 and 2007:
THE BANKER'S STORE, INC. AND SUBSIDIARIES
DISCLOSURE OF REPORTED SEGMENT PROFIT OR LOSS, AND SEGMENT ASSETS
|
| Nine Months Ended February 2008 |
| Nine Months Ended February 2007 |
| ||||||||||||||
|
| Banking Equipment |
| Office Equipment |
| Totals |
| Banking |
| Office |
| Totals |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
| $ | 1,645,276 |
| $ | 276,993 |
| $ | 1,922,269 |
| $ | 1,592,443 |
| $ | 196,954 |
| $ | 1,789,397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss) |
|
| (102,898 | ) |
| (49,834 | ) |
| (152,732 | ) |
| (185,901 | ) |
| (27,231 | ) |
| (213,132 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
| $ | 1,121,040 |
| $ | 52,324 |
| $ | 1,173,364 |
| $ | 1,416,594 |
| $ | 102,003 |
| $ | 1,518,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended February 29, 2008 |
| Three Months Ended February 29, 2007 |
| ||||||||||||||
|
| Banking Equipment |
| Office Equipment |
| Totals |
| Banking Equipment |
| Office Equipment |
| Totals |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from external customers |
| $ | 496,621 |
| $ | 61,275 |
| $ | 557,896 |
| $ | 606,672 |
| $ | 91,844 |
| $ | 698,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss) |
|
| (46,785 | ) |
| (16,362 | ) |
| (63,147 | ) |
| 12,387 |
|
| (19,837 | ) |
| (7,450 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets |
| $ | 1,121,040 |
| $ | 52,324 |
| $ | 1,173,364 |
| $ | 1,416,594 |
| $ | 102,003 |
| $ | 1,518,597 |
|
F-7
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| THE BANKER'S STORE, INC. | |
|
|
|
|
|
|
| By: | /s/ VINCENT C. BUCKMAN |
|
| Vincent C. Buckman, President, CEO, CFO, and Director (Principal Executive and Financial Officer) |
|
|
|
Date: April 14, 2008
8