Duckwall-Alco Stores (DUCK)

(c)   Changes in Internal Control over Financial Reporting

The Company is currently implementing procedures to establish and maintain controls which will result in all necessary reviews being performed. To date, the Company has moved the responsibility for updating the vendor master file to a department independent of accounts payable.  The procedures for secondary review of journal entries and supporting analysis have been modified to assure adequate review.  The Company is currently implementing procedures to ensure that detailed reconciliations are being prepared.  The Company initiated the development and implementation of controls over the development of the financial statements in the fourth quarter of fiscal 2006.  The Company has designed and implemented procedures to reconcile the warehouse inventory to the general ledger on a quarterly basis.  The Company will continue to review these processes and reevaluate and test these controls to determine that these weaknesses have been remediated.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended October 29, 2006 that materially affected, or are reasonably likely to material affect, the Company’s internal control over financial reporting.

(c)  Changes in Internal Control over Financial Reporting

In response to the material weaknesses initially reported as of January 29, 2006 the Company is currently implementing procedures to establish and maintain controls which will result in all necessary reviews being performed. To date, the Company has moved the responsibility for updating the vendor master file to a department independent of accounts payable.  The procedures for secondary review of journal entries and supporting analysis have been modified to assure adequate review.  The Company initiated the development and implementation of controls over the development of the financial statements in the fourth quarter of fiscal 2006.  The Company has designed and implemented procedures to reconcile the warehouse inventory to the general ledger on a quarterly basis.  The Company will continue to review these processes and reevaluate and test these controls to determine that these weaknesses have been remediated.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended July 30, 2006 that materially affected, or are reasonably likely to material affect, the Company’s internal control over financial reporting.

(c)  Changes in Internal Control over Financial Reporting

The Company is currently implementing procedures to establish and maintain controls which will result in the necessary reviews being performed. These procedures include secondary review of journal entries and supporting analysis and independent review of changes or additions to the accounts payable vendor master file. The Company initiated the development and implementation of controls over the development of the financial statements in the fourth quarter of fiscal 2006. The Company has designed and implemented procedures to reconcile the warehouse inventory to the general ledger on a quarterly basis. The Company will continue to review these processes and reevaluate these controls to determine that these weaknesses have been remediated.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended April 30, 2006 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.