10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

⌧	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2021

OR

◻	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 1-15589

(Exact name of registrant as specified in its charter)

Delaware	47-0702918
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)
7405 Irvington Road, Omaha NE	68122
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (402) 331-3727

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	DIT	NYSE American

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 ⌧  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)  Yes ⌧  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻ Accelerated filer ◻ Non-accelerated filer ⌧

Smaller reporting company ☒Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

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

The Registrant had 551,369 shares of its $.01 par value common stock outstanding as of April 16, 2021.

Form 10-Q

2nd Quarter

INDEX

March 31, 2021	PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed consolidated balance sheets at March 31, 2021 (unaudited) and September 30, 2020	3
Condensed consolidated unaudited statements of operations for the three and six months ended March 31, 2021 and 2020	4
Condensed consolidated unaudited statements of shareholders’ equity for the three and six months ended March 31, 2021 and 2020	5
Condensed consolidated unaudited statements of cash flows for the six months ended March 31, 2021 and 2020	6
Notes to condensed consolidated unaudited financial statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	21
Item 4. Controls and Procedures	22
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3. Defaults Upon Senior Securities	23
Item 4. Mine Safety Disclosures	23
Item 5. Other Information	23
Item 6. Exhibits	23

2

PART I — FINANCIAL INFORMATION

Item 1.      Financial Statements

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Balance Sheets

March 31, 2021 and September 30, 2020

	March		September
	2021		2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	616,109	$	661,195
Accounts receivable, less allowance for doubtful accounts of $0.9 million at March 2021 and September 2020		32,883,402		34,278,429
Inventories, net		81,088,400		98,971,773
Income taxes receivable		85,705		—
Prepaid and other current assets		6,188,097		2,091,645
Total current assets		120,861,713		136,003,042
Property and equipment, net		16,670,297		17,497,274
Operating lease right-of-use assets, net		17,588,664		18,936,126
Note receivable		3,500,000		3,500,000
Goodwill		4,436,950		4,436,950
Other intangible assets, net		500,000		500,000
Equity method investment		7,606,925		6,744,095
Other assets		360,459		383,786
Total assets	$	171,525,008	$	188,001,273
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	22,553,918	$	22,108,299
Accrued expenses		8,737,907		8,306,160
Accrued wages, salaries and bonuses		3,656,777		4,761,020
Income taxes payable		—		567,408
Current operating lease liabilities		5,744,143		5,607,098
Current maturities of long-term debt		516,189		516,850
Total current liabilities		41,208,934		41,866,835
Credit facility		42,109,177		61,971,682
Deferred income tax liability, net		1,854,823		1,806,575
Long-term operating lease liabilities		12,438,764		14,028,606
Long-term debt, less current maturities		5,371,889		2,608,794
Other long-term liabilities		757,387		927,241
Shareholders’ equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized		—		—
Common stock, $.01 par value, 3,000,000 shares authorized, 551,369 shares outstanding at March 2021 and 537,715 shares outstanding at September 2020		8,834		8,697
Additional paid-in capital		24,917,765		24,282,058
Retained earnings		73,724,722		71,362,334
Treasury stock at cost		(30,867,287)		(30,861,549)
Total shareholders’ equity		67,784,034		64,791,540
Total liabilities and shareholders’ equity	$	171,525,008	$	188,001,273

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

3

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Operations

for the three and six months ended March 31, 2021 and 2020

	For the three months ended March				For the six months ended March
	2021		2020		2021		2020
Sales (including excise taxes of $92.0 million and $87.5 million, and $192.5 million and $181.5 million, respectively)	$	378,513,490	$	337,886,516	$	783,258,263	$	697,987,619
Cost of sales		355,540,704		317,193,063		736,823,498		656,449,455
Gross profit		22,972,786		20,693,453		46,434,765		41,538,164
Selling, general and administrative expenses		19,022,167		18,512,890		37,621,983		37,465,626
Depreciation and amortization		779,925		790,901		1,554,210		1,516,361
		19,802,092		19,303,791		39,176,193		38,981,987
Operating income		3,170,694		1,389,662		7,258,572		2,556,177
Other expense (income):
Interest expense		310,543		387,263		686,973		859,686
Other (income), net		(84,265)		(29,920)		(126,088)		(36,697)
		226,278		357,343		560,885		822,989
Income from operations before income taxes		2,944,416		1,032,319		6,697,687		1,733,188
Income tax expense		829,000		333,000		1,840,000		582,000
Equity method investment earnings, net of tax		313,492		—		648,831		—
Net income available to common shareholders	$	2,428,908	$	699,319	$	5,506,518	$	1,151,188
Basic earnings per share available to common shareholders	$	4.41	$	1.24	$	10.02	$	2.04
Diluted earnings per share available to common shareholders	$	4.33	$	1.22	$	9.87	$	2.02
Basic weighted average shares outstanding		551,369		565,697		549,729		564,129
Diluted weighted average shares outstanding		560,941		571,852		557,741		569,856
Dividends declared and paid per common share	$	5.18	$	0.46	$	5.36	$	0.64

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

4

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Shareholders’ Equity

for the three and six months ended March 31, 2021 and 2020

							Additional
	Common Stock			Treasury Stock			Paid-in		Retained
	Shares	Amount		Shares	Amount		Capital		Earnings		Total
THREE MONTHS ENDED MARCH 2020
Balance, January 1, 2020	869,367	$	8,692	(303,534)	$	(28,840,011)	$	24,192,954	$	66,592,637	$	61,954,272
Dividends on common stock, $0.18 per share	—		—	—		—		—		(107,056)		(107,056)
Compensation expense and issuance of stock in connection with equity-based awards	—		—	—		—		31,191		—		31,191
Repurchase of common stock	—		—	(307)		(23,643)		—		—		(23,643)
Net income	—		—	—		—		—		699,319		699,319
Balance, March 31, 2020	869,367	$	8,692	(303,841)	$	(28,863,654)	$	24,224,145	$	67,184,900	$	62,554,083
THREE MONTHS ENDED MARCH 2021
Balance, January 1, 2021	883,589	$	8,834	(332,220)	$	(30,867,287)	$	25,007,239	$	71,401,400	$	65,550,186
Dividends on common stock, $0.18 per share	—		—	—		—		—		(105,586)		(105,586)
Compensation expense and issuance of stock in connection with equity-based awards	—		—	—		—		(89,474)		—		(89,474)
Repurchase of common stock	—		—	—		—		—		—		—
Net income	—		—	—		—		—		2,428,908		2,428,908
Balance, March 31, 2021	883,589	$	8,834	(332,220)	$	(30,867,287)	$	24,917,765	$	73,724,722	$	67,784,034

							Additional
	Common Stock			Treasury Stock			Paid-in		Retained
	Shares	Amount		Shares	Amount		Capital		Earnings		Total
SIX MONTHS ENDED MARCH 2020
Balance, October 1, 2019	856,039	$	8,561	(303,425)	$	(28,831,855)	$	23,165,639	$	66,414,397	$	60,756,742
Dividends on common stock, $0.64 per share	—		—	—		—		—		(380,685)		(380,685)
Compensation expense and issuance of stock in connection with equity-based awards	13,328		131	—		—		1,058,506		—		1,058,637
Repurchase of common stock	—		—	(416)		(31,799)		—		—		(31,799)
Net income	—		—	—		—		—		1,151,188		1,151,188
Balance, March 31, 2020	869,367	$	8,692	(303,841)	$	(28,863,654)	$	24,224,145	$	67,184,900	$	62,554,083
SIX MONTHS ENDED MARCH 2021
Balance, October 1, 2020	869,867	$	8,697	(332,152)	$	(30,861,549)	$	24,282,058	$	71,362,334	$	64,791,540
Dividends on common stock, $5.36 per share	—		—	—		—		—		(3,144,130)		(3,144,130)
Compensation expense and issuance of stock in connection with equity-based awards	13,722		137	—		—		635,707		—		635,844
Repurchase of common stock	—		—	(68)		(5,738)		—		—		(5,738)
Net income	—		—	—		—		—		5,506,518		5,506,518
Balance, March 31, 2021	883,589	$	8,834	(332,220)	$	(30,867,287)	$	24,917,765	$	73,724,722	$	67,784,034

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

5

AMCON Distributing Company and Subsidiaries

Condensed Consolidated Unaudited Statements of Cash Flows

for the six months ended March 31, 2021 and 2020

	March		March
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,506,518	$	1,151,188
Adjustments to reconcile net income from operations to net cash flows from (used in) operating activities:
Depreciation		1,554,210		1,516,361
Equity method investment earnings, net of tax		(648,831)		—
(Gain) loss on sales of property and equipment		(1,374)		33,642
Equity-based compensation		833,624		446,114
Deferred income taxes		48,248		102,163
Provision for losses on doubtful accounts		5,000		390,000
Inventory allowance		110,769		55,746
Other		—		(42,011)
Changes in assets and liabilities:
Accounts receivable		1,390,027		(3,535,875)
Inventories		17,772,604		17,375,263
Prepaid and other current assets		(4,096,452)		(100,883)
Other assets		23,327		(133,074)
Accounts payable		429,389		4,401,077
Accrued expenses and accrued wages, salaries and bonuses		(610,589)		(1,432,939)
Other long-term liabilities		(169,854)		—
Income taxes payable and receivable		(867,112)		178,013
Net cash flows from (used in) operating activities		21,279,504		20,404,785
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(720,567)		(2,245,139)
Proceeds from sales of property and equipment		10,938		—
Net cash flows from (used in) investing activities		(709,629)		(2,245,139)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility		771,182,879		680,161,101
Repayments under revolving credit facility		(791,045,384)		(697,319,735)
Proceeds from borrowings on long-term debt		3,000,000		—
Principal payments on long-term debt		(237,566)		(264,275)
Repurchase of common stock		(5,738)		(31,799)
Dividends on common stock		(3,144,130)		(380,685)
Settlement and withholdings of equity-based awards		(365,022)		—
Net cash flows from (used in) financing activities		(20,614,961)		(17,835,393)
Net change in cash		(45,086)		324,253
Cash, beginning of period		661,195		337,704
Cash, end of period	$	616,109	$	661,957
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	690,134	$	927,322
Cash paid during the period for income taxes		2,658,865		301,824
Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable	$	16,230	$	6,583
Issuance of common stock in connection with the vesting and exercise of equity-based awards		949,812		990,653

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

6

AMCON Distributing Company and Subsidiaries

Notes to Condensed Consolidated Unaudited Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

● Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products and provides a full range of programs and services to our customers that are focused on helping them manage their business and increase their profitability. We serve customers in 26 states and primarily operate in the Central, Rocky Mountain, and Mid-South regions of the United States.

● Our retail health food segment (“Retail Segment”) operates twenty-one health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 4,100 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 17,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. Convenience stores represent our largest customer category. In December 2020, Convenience Store News ranked us as the seventh (7th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment offers retailers the ability to take advantage of manufacturer and Company sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers’ investment in inventory, while seeking to maximize their sales and profits. In addition, our wholesale distributing capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from our broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from our distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 685,000 square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kelloggs, Kraft, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers.

RETAIL SEGMENT

Our Retail Segment, through our Healthy Edge, Inc. subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation. All of the products carried in our stores must meet strict quality and ingredient guidelines, and include offerings such as gluten-free and antibiotic-free groceries and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils. We design our retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment.

We operate within the natural products retail industry, which is a subset of the U.S. grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers.

7

Our Retail Segment operates twenty-one retail health food stores as Chamberlin’s Natural Foods (“Chamberlin’s”), Akin’s Natural Foods (“Akin’s”), and Earth Origins Market (“EOM”). These stores carry over 33,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was established in 1935, has a total of seven locations in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of six locations in Arkansas, Missouri, and Oklahoma. EOM has a total of eight locations in Florida.

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2020, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended March 31, 2021 and March 31, 2020 have been referred to throughout this quarterly report as Q2 2021 and Q2 2020, respectively. The fiscal balance sheet dates as of March 31, 2021 and September 30, 2020 have been referred to as March 2021 and September 2020, respectively.

ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for the Company) with early adoption permitted. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this update were effective upon issuance for all entities through December 31, 2022. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

2. INVENTORIES

Inventories in our wholesale segment consisted of finished goods and are stated at the lower of cost or net realizable value, determined on a FIFO basis. Inventories in our retail segment consisted of finished goods and are stated at the lower of cost or market using the retail method. The wholesale distribution and retail health food segment inventories consist of finished products purchased in bulk quantities to be redistributed to the Company’s customers or sold at retail. Finished goods included total reserves of approximately $0.8 million at March 2021 and $0.7 million at September 2020. These reserves include the Company’s obsolescence allowance, which reflects estimated unsalable or non-refundable inventory based upon an evaluation of slow moving and discontinued products.

8

3. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill at March 2021 and September 2020 was as follows:

	March		September
	2021		2020
Wholesale Segment	$	4,436,950	$	4,436,950

Other intangible assets at March 2021 and September 2020 consisted of the following:

	March		September
	2021		2020
Trademarks and tradenames (Retail Segment)	$	500,000	$	500,000

Goodwill, trademarks and tradenames are considered to have indefinite useful lives and therefore no amortization has been taken on these assets. Goodwill recorded on the Company’s consolidated balance sheet represents amounts allocated to its wholesale reporting unit which totaled $4.4 million at both March 2021 and September 2020. The Company performs its annual impairment testing during the fourth fiscal quarter of each year or as circumstances change or necessitate. There have been no material changes to the Company’s impairment assessments since its fiscal year ended September 2020.

4. EQUITY METHOD INVESTMENT

In April 2020, the Company completed a transaction with Chas. M. Sledd Company (“Sledd”), a West Virginia wholesale distributor serving the convenience store industry, to jointly own and operate a limited liability company (“Team Sledd”) formed for the purpose of owning and operating Sledd’s wholesale distribution business. Sledd contributed substantially all of its assets and stated liabilities to Team Sledd, while the Company contributed $10.0 million in cash, of which $6.5 million was structured as equity and $3.5 million was structured as a secured loan to Team Sledd which is subordinate to the liens of Team Sledd's existing secured lenders.

At March 2021, AMCON owned approximately 44% of Team Sledd’s outstanding equity, with a carrying value of $7.6 million. For the three and six months ended March 2021, the Company recognized $0.3 million and $0.6 million, respectively, in equity in earnings (net of income taxes) from its investment in Team Sledd. The Company’s secured loan to Team Sledd had a carrying value of $3.5 million as of March 2021. Pursuant to an operating agreement between the Company and Sledd, it is anticipated that certain membership interests in Team Sledd will be redeemed over a period of years, with such redemptions to be funded from the operations of Team Sledd. These redemptions would result in corresponding increases in the percentage of the outstanding equity of Team Sledd owned by AMCON. During April 2021, subsequent to Q2 2021, certain membership interests in Team Sledd were redeemed, which resulted in AMCON’s ownership of Team Sledd’s outstanding equity increasing to approximately 49%.

Team Sledd’s summarized unaudited financial data for the three and six months ended March 2021 was as follows:

	For the three months ended March 2021		For the six months ended March 2021
Sales	$	158,459,384	$	323,027,468
Gross profit	$	7,719,918	$	15,567,308
Net income before income taxes	$	941,027	$	1,944,820
Net income attributable to AMCON, net of tax	$	313,492	$	648,831

5. DIVIDENDS

The Company paid cash dividends on its common stock totaling $3.0 million and $3.1 million for the three and six month periods ended March 31, 2021, respectively, and $0.3 million and $0.4 million for the three and six month periods ended March 31, 2020, respectively.

9

6. EARNINGS PER SHARE

Basic earnings per share available to common shareholders is calculated by dividing net income by the weighted average common shares outstanding for each period. Diluted earnings per share available to common shareholders is calculated by dividing income from operations by the sum of the weighted average common shares outstanding and the weighted average dilutive equity awards.

	For the three months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		551,369		551,369		565,697		565,697
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		9,572		—		6,155
Weighted average number of shares outstanding		551,369		560,941		565,697		571,852
Net income available to common shareholders	$	2,428,908	$	2,428,908	$	699,319	$	699,319
Net earnings per share available to common shareholders	$	4.41	$	4.33	$	1.24	$	1.22

(1) Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

	For the six months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		549,729		549,729		564,129		564,129
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		8,012		—		5,727
Weighted average number of shares outstanding		549,729		557,741		564,129		569,856
Net income available to common shareholders	$	5,506,518	$	5,506,518	$	1,151,188	$	1,151,188
Net earnings per share available to common shareholders	$	10.02	$	9.87	$	2.04	$	2.02

(1) Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

7. DEBT

The Company primarily finances its operations through a credit facility agreement (the “Facility”) and long-term debt agreements with banks. The Facility is provided through Bank of America acting as the senior agent and with BMO Harris Bank (“BMO”) participating in a loan syndication.

CREDIT FACILITY

The Facility included the following significant terms at March 2021:

● A March 2025 maturity date without a penalty for prepayment.

● $110.0 million revolving credit limit.

● Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

● A provision providing an additional $10.0 million of credit advances for certain inventory purchases.

● Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of any original or renewal term of the agreement.

10

● The Facility bears interest at either the bank’s prime rate, or at LIBOR (or equivalent successor rate index) plus 125 - 150 basis points depending on certain credit facility utilization measures, at the election of the Company. For this purpose, in no event shall LIBOR be less than 50 basis points.

● Lending limits subject to accounts receivable and inventory limitations.

● An unused commitment fee equal to one-quarter of one percent (1/4%) per annum on the difference between the maximum loan limit and average monthly borrowings.

● Secured by collateral including all of the Company’s equipment, intangibles, inventories, and accounts receivable.

● A financial covenant requiring a fixed charge coverage ratio of at least 1.0 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement. The Company’s fixed charge coverage ratio was over 1.0 for the trailing twelve months.

● Provides that the Company may use up to $3.5 million annually, on a collective basis, for the payment of dividends on its common stock, or other distributions or investments, provided the Company is not in default before or after such dividends, distributions or investments. Additionally, the Company may pay dividends on its common stock, or make other distributions or investments in excess of $3.5 million annually provided the Company meets certain excess availability and proforma fixed charge coverage ratios and is not in default before or after such dividends, distributions or investments.

The amount available for use on the Facility at any given time is subject to a number of factors including eligible accounts receivable and inventory balances that fluctuate day-to-day. Based on our collateral and loan limits as defined in the Facility agreement, the credit limit of the Facility at March 2021 was $95.7 million, of which $42.1 million was outstanding, leaving $53.6 million available.

At March 2021, the revolving portion of the Company’s Facility balance bore interest based on the bank’s prime rate and various short-term LIBOR rate elections made by the Company. The average interest rate was 1.85% at March 2021. For the six months ended March 2021, our peak borrowings under the Facility were $71.7 million, and our average borrowings and average availability under the Facility were $44.8 million and $42.0 million, respectively.

LONG-TERM DEBT

In addition to the Facility, the Company also had the following long term obligations at March 2021.

	March 2021		September 2020
Real Estate Loan, interest payable at a fixed rate of 3.625% with monthly installments of principal and interest of $47,399 through February 2025 with remaining principal due March 2025, collateralized by three distribution facilities	$	4,698,949	$	1,866,231
Note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023		1,189,129		1,259,413
		5,888,078		3,125,644
Less current maturities		(516,189)		(516,850)
	$	5,371,889	$	2,608,794

Cross Default and Co-Terminus Provisions

The Company owns real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, which is financed through a single term loan with BMO (the “Real Estate Loan”) which is also a participant lender on the Company’s revolving line of credit. The Real Estate Loan contains cross default provisions which cause the loan to be considered in default if the loans where BMO is a lender, including the revolving credit facility, are in default. There were no such cross defaults at March 2021.

11

In addition, the Real Estate Loan contains co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Other

The Company has issued a letter of credit for $0.5 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.

8. BUSINESS SEGMENTS

The Company has two reportable business segments: the wholesale distribution of consumer products and the retail sale of health and natural food products. The retail health food stores’ operations are aggregated to comprise the Retail Segment because such operations have similar economic characteristics, as well as similar characteristics with respect to the nature of products sold, the type and class of customers for the health food products and the methods used to sell the products. Included in the “Other” column are intercompany eliminations, and assets held and charges incurred and income earned by our holding company. The segments are evaluated on revenues, gross margins, operating income (loss), and income (loss) before taxes.

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2021
External revenues:
Cigarettes	$	255,558,043	$	—	$	—	$	255,558,043
Tobacco		61,431,768		—		—		61,431,768
Confectionery		19,901,516		—		—		19,901,516
Health food		—		12,306,332		—		12,306,332
Foodservice & other		29,315,831		—		—		29,315,831
Total external revenue		366,207,158		12,306,332		—		378,513,490
Depreciation		487,004		292,921		—		779,925
Operating income (loss)		4,431,132		661,303		(1,921,741)		3,170,694
Interest expense		58,109		—		252,434		310,543
Income (loss) from operations before taxes		4,425,941		664,193		(2,145,718)		2,944,416
Equity method investment earnings, net of tax		—		—		313,492		313,492
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		186,991		101,294		—		288,285

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	228,865,603	$	—	$	—	$	228,865,603
Tobacco		51,639,145		—		—		51,639,145
Confectionery		18,027,050		—		—		18,027,050
Health food		—		12,994,651		—		12,994,651
Foodservice & other		26,360,067		—		—		26,360,067
Total external revenue		324,891,865		12,994,651		—		337,886,516
Depreciation		443,143		347,758		—		790,901
Operating income (loss)		2,907,818		85,521		(1,603,677)		1,389,662
Interest expense		32,590		—		354,673		387,263
Income (loss) from operations before taxes		2,902,907		87,760		(1,958,348)		1,032,319
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		439,019		349,425		—		788,444

12

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2021
External revenue:
Cigarettes	$	532,147,749	$	—	$	—	$	532,147,749
Tobacco		126,277,312		—		—		126,277,312
Confectionery		40,066,093		—		—		40,066,093
Health food		—		23,453,430		—		23,453,430
Foodservice & other		61,313,679		—		—		61,313,679
Total external revenue		759,804,833		23,453,430		—		783,258,263
Depreciation		959,697		594,513		—		1,554,210
Operating income (loss)		10,219,371		546,316		(3,507,115)		7,258,572
Interest expense		87,645		—		599,328		686,973
Income (loss) from operations before taxes		10,195,201		552,034		(4,049,548)		6,697,687
Equity method investment earnings, net of tax		—		—		648,831		648,831
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		593,431		143,366		—		736,797

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	473,915,657	$	—	$	—	$	473,915,657
Tobacco		105,956,693		—		—		105,956,693
Confectionery		38,863,912		—		—		38,863,912
Health food		—		23,091,146		—		23,091,146
Foodservice & other		56,160,211		—		—		56,160,211
Total external revenue		674,896,473		23,091,146		—		697,987,619
Depreciation		875,405		640,956		—		1,516,361
Operating income (loss)		6,556,832		(1,056,785)		(2,943,870)		2,556,177
Interest expense		66,564		—		793,122		859,686
Income (loss) from operations before taxes		6,522,571		(1,052,392)		(3,736,991)		1,733,188
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		1,232,700		949,769		—		2,182,469

9. COMMON STOCK REPURCHASES

The Company did not repurchase any shares of its common stock during the three months ended March 2021 and repurchased a total of 307 shares of its common stock during the three months ended March 2020 for cash totaling less than $0.1 million. The Company repurchased 68 and 416 shares of its common stock during the six months ended March 2021 and March 2020, respectively, for cash totaling less than $0.1 million in each respective period. All repurchased shares were recorded in treasury stock at cost.

10. IMPACT OF COVID-19

In March 2020, the World Health Organization (WHO) declared the novel strain of coronavirus (COVID-19) a global pandemic. Since that time, the Company has been designated as a critical infrastructure supplier to the Convenience Store Industry and both of its business segments have continued to operate as essential suppliers of goods and services.  In response to the pandemic, the Company has undertaken a range of precautionary steps to ensure the safety of its employees, customers and suppliers, including the frequent cleaning and disinfection of workspaces, property and equipment, instituting social distancing measures, and mandating remote working environments for certain employees.

The Company continues to monitor medical, regulatory, consumer, and community-based regulations. While some COVID-19 restrictions have eased, the operating environment remains fluid and we cannot predict the long-term impact of the pandemic on our business or results of operations. Accordingly, future disruptions to consumer demand or our supply chain and/or our ability to procure products or fulfill orders, could negatively impact our financial position.

13

Item 2.      Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections, contains forward-looking statements that are subject to risks and uncertainties and which reflect management’s current beliefs and estimates of future economic circumstances, industry conditions, Company performance and financial results. Forward-looking statements include information concerning the possible or assumed future results of operations of the Company and those statements preceded by, followed by or that include the words “future,” “position,” “anticipate(s),” “expect(s),” “believe(s),” “see,” “plan,” “further improve,” “outlook,” “should” or similar expressions. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance or results. They involve risks, uncertainties and assumptions.

It should be understood that the following important factors, in addition to those discussed elsewhere in this document, could affect the future results of the Company and could cause those results to differ materially from those expressed in our forward-looking statements:

● risks associated with the threat or occurrence of epidemics or pandemics (such as the recent COVID-19 pandemic or its variants) or other public health issues, including the continued health of our employees and management, the imposition of governmental orders restricting our operations and the activities of our employees, suppliers and customers and the reduced demand for our goods and services, in particular, disruptions to our supply chain or our ability to procure products or fulfill orders due to disruptions in our warehouse operations, or increased credit risk from customer credit defaults resulting from an economic downturn,

● risks associated with the acquisition of assets or new businesses or investments in equity investees by either of our business segments including, but not limited to, risks associated with purchase price and business valuation risks, vendor and customer retention risks, employee and technology integration risks, and risks related to the assumption of certain liabilities or obligations,

● increasing competition and market conditions in our wholesale and retail health food businesses and any associated impact on the carrying value and any potential impairment of assets (including intangible assets) within those businesses,

● that our repositioning strategy for our retail business will not be successful,

● risks associated with opening new retail stores,

● if online shopping formats such as Amazon™ continue to grow in popularity and further disrupt traditional sales channels, it may present a significant direct risk to our brick and mortar retail business and potentially to our wholesale distribution business,

● the potential impact of ongoing, decreasing, or changing trade tariff and trade policies may have on our product costs or on consumer disposable income and demand,

● increases in operational costs, including the cost of maintaining a refrigerated trucking fleet and general business insurance costs,

● the risks associated with a competitive labor market, particularly for truck drivers and warehouse workers, which may impact our ability to recruit and retain employees and result in higher employee compensation costs,

● increases in state and federal excise taxes on cigarette and tobacco products and the potential impact on demand,

● higher commodity prices and general inflation which could impact food ingredient costs and demand for many of the products we sell,

14

● regulations, potential bans and/or litigation related to the manufacturing, distribution, and sale of certain cigarette, tobacco, and e-cigarette/vaping products by the United States Food and Drug Administration (“FDA”), state or local governmental agencies, or other parties,

● increases in inventory carrying costs and customer credit risks,

● changes in pricing strategies and/or promotional/incentive programs offered by cigarette and tobacco manufacturers,

● demand for the Company’s products, particularly cigarette, tobacco and e-cigarette/vaping products,

● risks that product manufacturers may begin selling directly to convenience stores and bypass wholesale distributors,

● changes in laws and regulations and ongoing compliance related to health care and associated insurance,

● increasing health care costs for both the Company and consumers and its potential impact on discretionary consumer spending,

● decreased availability of capital resources,

● domestic regulatory and legislative risks,

● poor weather conditions, and the adverse effects of climate change,

● consolidation trends within the convenience store, wholesale distribution, and retail health food industries,

● natural disasters, and domestic or political unrest, or any restrictions, regulations, or security measures implemented by governmental bodies in response to these items,

● other risks over which the Company has little or no control, and any other factors not identified herein.

Changes in these factors could result in significantly different results. Consequently, future results may differ from management’s expectations. Moreover, past financial performance should not be considered a reliable indicator of future performance. Any forward-looking statement contained herein is made as of the date of this document. Except as required by law, the Company undertakes no obligation to publicly update or correct any of these forward-looking statements in the future to reflect changed assumptions, the occurrence of material events or changes in future operating results, financial conditions or business over time.

IMPACT OF COVID-19 (CORONAVIRUS) ON OUR BUSINESS

In March 2020, the World Health Organization (WHO) declared the novel strain of coronavirus (COVID-19) a global pandemic. Since that time, the Company has been designated as a critical infrastructure supplier to the Convenience Store Industry and both of its business segments have continued to operate as essential suppliers of goods and services.  In response to the pandemic, the Company has undertaken a range of precautionary steps to ensure the safety of its employees, customers and suppliers, including the frequent cleaning and disinfection of workspaces, property and equipment, instituting social distancing measures, and mandating remote working environments for certain employees.

The Company continues to monitor medical, regulatory, consumer, and community-based regulations. While some COVID-19 restrictions have eased, the operating environment remains fluid and we cannot predict the long-term impact of the pandemic on our business or results of operations. Accordingly, future disruptions to consumer demand or our supply chain and/or our ability to procure products or fulfill orders, could negatively impact our financial position.

15

CRITICAL ACCOUNTING ESTIMATES

Certain accounting estimates used in the preparation of the Company’s condensed consolidated unaudited financial statements (“financial statements”) require us to make judgments and estimates and the financial results we report may vary depending on how we make these judgments and estimates. Our critical accounting estimates are set forth in our annual report on Form 10-K for the fiscal year ended September 30, 2020, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these policies during the six months ended March 2021.

SECOND FISCAL QUARTER 2021 (Q2 2021)

The following discussion and analysis includes the Company’s results of operations for the three and six months ended March 2021 and March 2020:

Wholesale Segment

Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 4,100 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 17,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. Convenience stores represent our largest customer category. In December 2020, Convenience Store News ranked us as the seventh (7th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment offers retailers the ability to take advantage of manufacturer and Company sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers’ investment in inventory, while seeking to maximize their sales and profits. In addition, our wholesale distributing capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from our broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from our distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 685,000 square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kelloggs, Kraft, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers.

Retail Segment

Our Retail Segment, through our Healthy Edge, Inc. subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation. All of the products carried in our stores must meet strict quality and ingredient guidelines, and include offerings such as gluten-free and antibiotic-free groceries and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils. We design our retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment.

We operate within the natural products retail industry, which is a subset of the U.S. grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers.

Our Retail Segment operates twenty-one retail health food stores as Chamberlin’s Natural Foods (“Chamberlin’s”), Akin’s Natural Foods (“Akin’s”), and Earth Origins Market (“EOM”). These stores carry over 33,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was established in 1935, has a total of seven locations in and around Orlando, Florida. Akin’s, which was also

16

established in 1935, has a total of six locations in Arkansas, Missouri, and Oklahoma. EOM has a total of eight locations in Florida.

RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH:

	2021			2020			Incr (Decr)		% Change
CONSOLIDATED:
Sales(1)	$	378,513,490		$	337,886,516		$	40,626,974	12.0
Cost of sales		355,540,704			317,193,063			38,347,641	12.1
Gross profit		22,972,786			20,693,453			2,279,333	11.0
Gross profit percentage		6.1	%		6.1	%
Operating expense	$	19,802,092		$	19,303,791		$	498,301	2.6
Operating income		3,170,694			1,389,662			1,781,032	128.2
Interest expense		310,543			387,263			(76,720)	(19.8)
Income tax expense		829,000			333,000			496,000	148.9
Net income		2,428,908			699,319			1,729,589	247.3
BUSINESS SEGMENTS:
Wholesale
Sales	$	366,207,158		$	324,891,865		$	41,315,293	12.7
Gross profit		18,279,542			16,159,058			2,120,484	13.1
Gross profit percentage		5.0	%		5.0	%
Retail
Sales	$	12,306,332		$	12,994,651		$	(688,319)	(5.3)
Gross profit		4,693,244			4,534,395			158,849	3.5
Gross profit percentage		38.1	%		34.9	%

(1) Sales are reported net of costs associated with incentives provided to retailers. These incentives totaled $7.3 million in Q2 2021 and $6.9 million in Q2 2020.

SALES

Changes in sales are driven by two primary components:

(i) changes to selling prices, which are largely controlled by our product suppliers, and excise taxes imposed on cigarettes and tobacco products by various states; and

(ii) changes in the volume of products sold to our customers, either due to a change in purchasing patterns resulting from consumer preferences or the fluctuation in the comparable number of business days in our reporting period.

SALES – Q2 2021 vs. Q2 2020

Sales in our Wholesale Segment increased $41.3 million during Q2 2021 as compared to Q2 2020. Significant items impacting sales during Q2 2021 included a $16.3 million increase in sales related to price increases implemented by cigarette manufacturers, a $10.4 million increase in sales related to the volume and mix of cigarette cartons sold, and a $14.6 million increase in sales related to higher sales volumes in our tobacco, confectionery, foodservice, and other categories (“Other Products”). Sales in our Wholesale Segment continue to benefit from higher consumer demand across a range of product categories.

Sales in our Retail Segment decreased $0.7 million during Q2 2021 as compared to Q2 2020. This decrease was primarily due to lower sales volumes in our existing stores as customers restocked their home pantries near the end of Q2 2020 in response to the onset of the COVID-19 pandemic.

17

GROSS PROFIT – Q2 2021 vs. Q2 2020

Our gross profit does not include fulfillment costs and costs related to the distribution network which are included in selling, general and administrative costs, and may not be comparable to those of other entities. Some entities may classify such costs as a component of cost of sales. Cost of sales, a component used in determining gross profit, for the wholesale and retail segments includes the cost of products purchased from manufacturers, less incentives we receive which are netted against such costs.

Gross profit in our Wholesale Segment increased $2.1 million during Q2 2021 as compared to Q2 2020. Significant items impacting gross profit during Q2 2021 included a $1.7 million increase in gross profit related to higher sales volumes and promotions in our Other Products category and a $0.4 million increase in gross profit related to the volume and mix of cigarette cartons sold. Gross profit in our Retail Segment increased $0.2 million during Q2 2021 as compared to Q2 2020. This change was primarily related to higher gross margins in our existing stores resulting from improved operational efficiencies and variations in volume and product mix between the comparative periods, partially offset by the impact of overall lower sales volumes in our existing stores compared to the prior year period.

OPERATING EXPENSE – Q2 2021 vs. Q2 2020

Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses primarily consist of costs related to our sales, warehouse, delivery and administrative departments, including purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders. Our most significant expenses relate to costs associated with employees, facility and equipment leases, transportation, fuel, and insurance. Our Q2 2021 operating expenses increased $0.5 million as compared to Q2 2020. Significant items impacting operating expenses during Q2 2021 included a $0.7 million increase in employee compensation and benefit costs and a $0.5 million increase in health insurance costs.  These increases were partially offset by a $0.4 million decrease in our Retail Segment expenses primarily related to closure of one non-performing store in our Midwest market during the prior fiscal period and reductions in other operating expenses.

INCOME TAX EXPENSE – Q2 2021 vs. Q2 2020

The change in the Q2 2021 income tax rate as compared to Q2 2020 was primarily related to nondeductible compensation expense in relation to the amount of income from operations before income tax expense between the comparative periods.

18

RESULTS OF OPERATIONS – SIX MONTHS ENDED MARCH:

	2021			2020			Incr (Decr)		% Change
CONSOLIDATED:
Sales(1)	$	783,258,263		$	697,987,619		$	85,270,644	12.2
Cost of sales		736,823,498			656,449,455			80,374,043	12.2
Gross profit		46,434,765			41,538,164			4,896,601	11.8
Gross profit percentage		5.9	%		6.0	%
Operating expenses	$	39,176,193		$	38,981,987		$	194,206	0.5
Operating income		7,258,572			2,556,177			4,702,395	184.0
Interest expense		686,973			859,686			(172,713)	(20.1)
Income tax expense		1,840,000			582,000			1,258,000	216.2
Net income		5,506,518			1,151,188			4,355,330	378.3
BUSINESS SEGMENTS:
Wholesale
Sales	$	759,804,833		$	674,896,473		$	84,908,360	12.6
Gross profit		37,646,883			33,745,852			3,901,031	11.6
Gross profit percentage		5.0	%		5.0	%
Retail
Sales	$	23,453,430		$	23,091,146		$	362,284	1.6
Gross profit		8,787,882			7,792,312			995,570	12.8
Gross profit percentage		37.5	%		33.7	%

(1) Sales are reported net of costs associated with incentives provided to retailers. These incentives totaled $14.1 million for the six month period ended March 2021 and $13.0 million for the six month period ended March 2020.

SALES – Six months ended March 2021

Sales in our Wholesale Segment increased $84.9 million for the six months ended March 2021 as compared to the same prior year period. Significant items impacting sales during the period included a $30.8 million increase in sales related to price increases implemented by cigarette manufacturers, a $27.4 million increase in sales related to the volume and mix of cigarette cartons sold, and a $26.7 million increase in sales related to higher sales volumes in our Other Products category. Sales in our Retail Segment increased $0.4 million for the six months ended March 2021 as compared to the same prior year period. Of this increase, approximately $0.6 million related to higher sales volumes in our existing stores, partially offset by a $0.2 million decrease in sales volume related to the closure of one non-performing store in our Midwest market during the prior fiscal period which was nearing the end of its lease term. Fiscal 2021 sales in both of our business segments continue to benefit from higher consumer demand across a range of product categories.

GROSS PROFIT – Six months ended March 2021

Gross profit in our Wholesale Segment increased $3.9 million for the six months ended March 2021 as compared to the same prior year period. Significant items impacting gross profit during the period included a $2.9 million increase in gross profit related to higher sales volumes and promotions in our Other Products category, a $0.5 million increase in gross profit due to the timing and related benefits of cigarette manufacturer price increases between the comparative periods and a $0.5 million increase in gross profit related to the volume and mix of cigarette cartons sold. Gross profit in our Retail Segment increased $1.0 million for the six months ended March 2021 as compared to the same prior year period. This change was primarily related to higher sales and gross margins in our existing stores resulting from improved operational efficiencies and variations in volume and product mix between the comparative periods, partially offset by the closure of one non-performing store in our Midwest market during the prior year period.

OPERATING EXPENSE – Six months ended March 2021

Operating expenses increased $0.2 million during the six months ended March 2021 as compared to the same prior year period. Significant items impacting operating expenses during the period included a $1.3 million increase in employee

19

compensation and benefit costs and a $0.4 million increase in health and other insurance costs. These increases were partially offset by a $0.4 million decrease in bad debt expense, a $0.3 million reduction in fuel costs, a $0.2 million decrease in other Wholesale Segment operating expenses, and a $0.6 million decrease in our Retail Segment operating expenses primarily related to closure of one non-performing store in our Midwest market during the prior fiscal period and reductions in other store operating expenses.

INCOME TAX EXPENSE – Six month ended March 2021

The change in the six months ended March 2021 income tax rate as compared to the same prior year period was primarily related to nondeductible compensation expense in relation to the amount of income from operations before income tax expense between the comparative periods.

LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company’s variability in cash flows from operating activities is dependent on the timing of inventory purchases and seasonal fluctuations. For example, periodically we have inventory “buy-in” opportunities which offer more favorable pricing terms. As a result, we may have to hold inventory for a period longer than the payment terms. This generates a cash outflow from operating activities which we expect to reverse in later periods. Additionally, during our peak time of operations in the warm weather months, we generally carry higher amounts of inventory to ensure high fill rates and customer satisfaction.

In general, the Company finances its operations through a credit facility agreement (the “Facility”) with Bank of America acting as the senior agent and with BMO Harris Bank (“BMO”) participating in the loan syndication. The Facility included the following significant terms at March 2021:

● A March 2025 maturity date without a penalty for prepayment.

● $110.0 million revolving credit limit.

● Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

● A provision providing an additional $10.0 million of credit advances for certain inventory purchases.

● Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of any original or renewal term of the agreement.

● The Facility bears interest at either the bank’s prime rate, or at LIBOR (or equivalent rate index) plus 125 - 150 basis points depending on certain credit facility utilization measures, at the election of the Company. For this purpose, in no event shall LIBOR be less than 50 basis points.

● Lending limits subject to accounts receivable and inventory limitations.

● An unused commitment fee equal to one-quarter of one percent (1/4%) per annum on the difference between the maximum loan limit and average monthly borrowings.

● Secured by collateral including all of the Company’s equipment, intangibles, inventories, and accounts receivable.

● A financial covenant requiring a fixed charge coverage ratio of at least 1.0 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement. The Company’s fixed charge ratio was over 1.0 for the trailing twelve months.

● Provides that the Company may use up to $3.5 million annually, on a collective basis, for the payment of dividends on its common stock, or other distributions or investments, provided the Company is not in default before or after

20

such dividends, distributions or investments.  Additionally, the Company may pay dividends on its common stock, or make other distributions or investments in excess of $3.5 million annually provided the Company meets certain excess availability and proforma fixed charge coverage ratios and is not in default before or after such dividends, distributions or investments.

The amount available for use on the Facility at any given time is subject to a number of factors including eligible accounts receivable and inventory balances that fluctuate day-to-day. Based on our collateral and loan limits as defined in the Facility agreement, the credit limit of the Facility at March 2021 was $95.7 million, of which $42.1 million was outstanding, leaving $53.6 million available.

At March 2021, the revolving portion of the Company’s Facility balance bore interest based on the bank’s prime rate and various short-term LIBOR rate elections made by the Company. The average interest rate was 1.85% at March 2021. For the six months ended March 2021, our peak borrowings under the Facility were $71.7 million, and our average borrowings and average availability under the Facility were $44.8 million and $42.0 million, respectively.

Cross Default and Co-Terminus Provisions

The Company owns real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, which is financed through a single term Real Estate Loan with BMO which is also a participant lender on the Company’s revolving line of credit. The Real Estate Loan contains cross default provisions which cause the loan to be considered in default if the loans where BMO is a lender, including the revolving credit facility, are in default. There were no such cross defaults at March 2021. In addition, the Real Estate Loan contains co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Dividend Payments

The Company paid cash dividends on its common stock totaling $3.0 million and $3.1 million for the three and six month periods ended March 31, 2021, respectively, and $0.3 million and $0.4 million for the three and six month periods ended March 31, 2020, respectively.

Other

The Company has issued a letter of credit for $0.5 million to its workers’ compensation insurance carrier as part of its self-insured loss control program.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Liquidity Risk

The Company’s liquidity position is significantly influenced by its ability to maintain sufficient levels of working capital. For our Company and industry in general, customer credit risk and ongoing access to bank credit heavily influence liquidity positions.

The Company does not currently hedge its exposure to interest rate risk or fuel costs. Accordingly, significant price movements in these areas can and do impact the Company’s profitability.

While the Company believes its liquidity position going forward will be adequate to sustain operatioins, a precipitous change in operating environment could materially impact the Company’s future revenue streams as well as its ability to collect on customer accounts receivable or secure bank credit.

Item 3.      Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

21

Item 4.      Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2021 was made under the supervision and with the participation of our senior management, including our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all errors and fraud. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Other

As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of equity method investees and (ii) internal control over the preparation of any financial statement schedules which would be required by Article 12 of Regulation S-X. However, our assessment of internal control over financial reporting with respect to equity method investees did include controls over the recording of amounts related to our investment that are recorded in the consolidated financial statements, including controls over the selection of accounting methods for our investments, the recognition of equity method earnings and losses and the determination, valuation and recording of our investment account balances.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended March 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

22

PART II — OTHER INFORMATION

Item 1.      Legal Proceedings

None.

Item 1A.   Risk Factors

There have been no material changes to the Company’s risk factors as previously disclosed in Item 1A “Risk Factors” of the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2020.

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

Not applicable.

Item 3.      Defaults Upon Senior Securities

Not applicable.

Item 4.      Mine Safety Disclosures

Not applicable.

Item 5.      Other Information

Not applicable.

Item 6.      Exhibits

(a) Exhibits

31.1	Certification by Christopher H. Atayan, Chief Executive Officer and Chairman,  pursuant to section 302 of the Sarbanes-Oxley Act
31.2	Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, pursuant to section 302 of the Sarbanes-Oxley Act
32.1	Certification by Christopher H. Atayan, Chief Executive Officer and Chairman, furnished pursuant to section 906 of the Sarbanes-Oxley Act
32.2	Certification by Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary, furnished pursuant to section 906 of the Sarbanes-Oxley Act
101	Interactive Data File (filed herewith electronically)

23

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.

	AMCON DISTRIBUTING COMPANY
	(registrant)
Date: April 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman
Date: April 19, 2021	/s/ Charles J. Schmaderer
	Charles J. Schmaderer,
	Vice President, Chief Financial Officer and Secretary
	(Principal Financial and Accounting Officer)

24

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Christopher H. Atayan, certify that:

1. I have reviewed this report on Form 10-Q of AMCON Distributing Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July
Date: April 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan,
	Chief Executive Officer and Chairman

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Charles J. Schmaderer, certify that:

1. I have reviewed this report on Form 10-Q of AMCON Distributing Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants’ fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 19, 2021	/s/ Charles J. Schmaderer
	Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of AMCON Distributing Company (the “Company”) for the fiscal quarter ended March 31, 2021, I, Christopher H. Atayan, Chief Executive Officer and Principal Executive Officer of the Company, hereby certify that, to the best of my knowledge and belief:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Ju
Date: April 19, 2021	/s/ Christopher H. Atayan
	Christopher H. Atayan
	Title: Chief Executive Officer and Chairman

A signed original of this written statement required by Section 906 has been provided to AMCON Distributing Company and will be retained by AMCON Distributing Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the “Report”) of AMCON Distributing Company (the “Company”) for the fiscal quarter ended March 31, 2021, I, Charles J. Schmaderer, Vice President, Chief Financial Officer and Secretary of the Company, hereby certify that, to the best of my knowledge and belief:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 19, 2021	/s/ Charles J. Schmaderer
	Charles J. Schmaderer
	Title: Vice President, Chief Financial Officer and Secretary

A signed original of this written statement required by Section 906 has been provided to AMCON Distributing Company and will be retained by AMCON Distributing Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 31, 2021	Apr. 16, 2021
Document and Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Entity Registrant Name	AMCON DISTRIBUTING CO
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		551,369
Entity Central Index Key	0000928465
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2021	Sep. 30, 2020
Current assets:
Cash	$ 616,109	$ 661,195
Accounts receivable, less allowance for doubtful accounts of $0.9 million at March 2021 and September 2020	32,883,402	34,278,429
Inventories, net	81,088,400	98,971,773
Income taxes receivable	85,705
Prepaid and other current assets	6,188,097	2,091,645
Total current assets	120,861,713	136,003,042
Property and equipment, net	16,670,297	17,497,274
Operating lease right-of-use assets, net	17,588,664	18,936,126
Note receivable	3,500,000	3,500,000
Goodwill	4,436,950	4,436,950
Other intangible assets, net	500,000	500,000
Equity method investment	7,606,925	6,744,095
Other assets	360,459	383,786
Total assets	171,525,008	188,001,273
Current liabilities:
Accounts payable	22,553,918	22,108,299
Accrued expenses	8,737,907	8,306,160
Accrued wages, salaries and bonuses	3,656,777	4,761,020
Income taxes payable		567,408
Current operating lease liabilities	5,744,143	5,607,098
Current maturities of long-term debt	516,189	516,850
Total current liabilities	41,208,934	41,866,835
Credit facility	42,109,177	61,971,682
Deferred income tax liability, net	1,854,823	1,806,575
Long-term operating lease liabilities	12,438,764	14,028,606
Long-term debt, less current maturities	5,371,889	2,608,794
Other long-term liabilities	757,387	927,241
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized
Common stock, $.01 par value, 3,000,000 shares authorized, 551,369 shares outstanding at March 2021 and 537,715 shares outstanding at September 2020	8,834	8,697
Additional paid-in capital	24,917,765	24,282,058
Retained earnings	73,724,722	71,362,334
Treasury stock at cost	(30,867,287)	(30,861,549)
Total shareholders' equity	67,784,034	64,791,540
Total liabilities and shareholders' equity	$ 171,525,008	$ 188,001,273

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2021	Sep. 30, 2020
Condensed Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts	$ 0.9	$ 0.9
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	3,000,000	3,000,000
Common stock, shares outstanding (in shares)	551,369	537,715

XML

Condensed Consolidated Unaudited Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Condensed Consolidated Unaudited Statements of Operations
Sales (including excise taxes of $92.0 million and $87.5 million, and $192.5 million and $181.5 million, respectively)	$ 378,513,490	$ 337,886,516	$ 783,258,263	$ 697,987,619
Cost of sales	355,540,704	317,193,063	736,823,498	656,449,455
Gross profit	22,972,786	20,693,453	46,434,765	41,538,164
Selling, general and administrative expenses	19,022,167	18,512,890	37,621,983	37,465,626
Depreciation and amortization	779,925	790,901	1,554,210	1,516,361
Total operating expenses	19,802,092	19,303,791	39,176,193	38,981,987
Operating income	3,170,694	1,389,662	7,258,572	2,556,177
Other expense (income):
Interest expense	310,543	387,263	686,973	859,686
Other (income), net	(84,265)	(29,920)	(126,088)	(36,697)
Total other expenses (income)	226,278	357,343	560,885	822,989
Income from operations before income taxes	2,944,416	1,032,319	6,697,687	1,733,188
Income tax expense	829,000	333,000	1,840,000	582,000
Equity method investment earnings, net of tax	313,492		648,831
Net income available to common shareholders	$ 2,428,908	$ 699,319	$ 5,506,518	$ 1,151,188
Basic earnings per share available to common shareholders	$ 4.41	$ 1.24	$ 10.02	$ 2.04
Diluted earnings per share available to common shareholders	$ 4.33	$ 1.22	$ 9.87	$ 2.02
Basic weighted average shares outstanding	551,369	565,697	549,729	564,129
Diluted weighted average shares outstanding	560,941	571,852	557,741	569,856
Dividends declared and paid per common share	$ 5.18	$ 0.46	$ 5.36	$ 0.64

XML

Condensed Consolidated Unaudited Statements of Operations (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Condensed Consolidated Unaudited Statements of Operations
Sales, excise taxes	$ 92.0	$ 87.5	$ 192.5	$ 181.5

XML

Condensed Consolidated Unaudited Statements of Shareholders' Equity - USD ($)	Common Stock	Treasury Stock	Additional Paid in Capital	Retained Earnings	Total
Balance at Sep. 30, 2019	$ 8,561	$ (28,831,855)	$ 23,165,639	$ 66,414,397	$ 60,756,742
Balance (in shares) at Sep. 30, 2019	856,039	(303,425)
Increase (Decrease) in Stockholders' Equity
Dividends on common stock				(380,685)	(380,685)
Compensation expense and issuance of stock in connection with equity-based awards	$ 131		1,058,506		1,058,637
Compensation expense and issuance of stock in connection with equity-based awards (in shares)	13,328
Repurchase of common stock		$ (31,799)			(31,799)
Repurchase of common stock (in shares)		(416)
Net income				1,151,188	1,151,188
Balance at Mar. 31, 2020	$ 8,692	$ (28,863,654)	24,224,145	67,184,900	62,554,083
Balance (in shares) at Mar. 31, 2020	869,367	(303,841)
Balance at Dec. 31, 2019	$ 8,692	$ (28,840,011)	24,192,954	66,592,637	61,954,272
Balance (in shares) at Dec. 31, 2019	869,367	(303,534)
Increase (Decrease) in Stockholders' Equity
Dividends on common stock				(107,056)	(107,056)
Compensation expense and issuance of stock in connection with equity-based awards			31,191		31,191
Repurchase of common stock		$ (23,643)			(23,643)
Repurchase of common stock (in shares)		(307)
Net income				699,319	699,319
Balance at Mar. 31, 2020	$ 8,692	$ (28,863,654)	24,224,145	67,184,900	62,554,083
Balance (in shares) at Mar. 31, 2020	869,367	(303,841)
Balance at Sep. 30, 2020	$ 8,697	$ (30,861,549)	24,282,058	71,362,334	$ 64,791,540
Balance (in shares) at Sep. 30, 2020	869,867	(332,152)			537,715
Increase (Decrease) in Stockholders' Equity
Dividends on common stock				(3,144,130)	$ (3,144,130)
Compensation expense and issuance of stock in connection with equity-based awards	$ 137		635,707		635,844
Compensation expense and issuance of stock in connection with equity-based awards (in shares)	13,722
Repurchase of common stock		$ (5,738)			(5,738)
Repurchase of common stock (in shares)		(68)
Net income				5,506,518	5,506,518
Balance at Mar. 31, 2021	$ 8,834	$ (30,867,287)	24,917,765	73,724,722	$ 67,784,034
Balance (in shares) at Mar. 31, 2021	883,589	(332,220)			551,369
Balance at Dec. 31, 2020	$ 8,834	$ (30,867,287)	25,007,239	71,401,400	$ 65,550,186
Balance (in shares) at Dec. 31, 2020	883,589	(332,220)
Increase (Decrease) in Stockholders' Equity
Dividends on common stock				(105,586)	(105,586)
Compensation expense and issuance of stock in connection with equity-based awards			(89,474)		(89,474)
Net income				2,428,908	2,428,908
Balance at Mar. 31, 2021	$ 8,834	$ (30,867,287)	$ 24,917,765	$ 73,724,722	$ 67,784,034
Balance (in shares) at Mar. 31, 2021	883,589	(332,220)			551,369

XML

Condensed Consolidated Unaudited Statements of Shareholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Condensed Consolidated Unaudited Statements of Shareholders’ Equity
Dividends on common stock	$ 0.18	$ 0.18	$ 5.36	$ 0.64

XML

Condensed Consolidated Unaudited Statements of Cash Flows - USD ($)	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 5,506,518	$ 1,151,188
Adjustments to reconcile net income from operations to net cash flows from (used in) operating activities:
Depreciation	1,554,210	1,516,361
Equity method investment earnings, net of tax	(648,831)
(Gain) loss on sales of property and equipment	(1,374)	33,642
Equity-based compensation	833,624	446,114
Deferred income taxes	48,248	102,163
Provision for losses on doubtful accounts	5,000	390,000
Inventory allowance	110,769	55,746
Other		(42,011)
Changes in assets and liabilities:
Accounts receivable	1,390,027	(3,535,875)
Inventories	17,772,604	17,375,263
Prepaid and other current assets	(4,096,452)	(100,883)
Other assets	23,327	(133,074)
Accounts payable	429,389	4,401,077
Accrued expenses and accrued wages, salaries and bonuses	(610,589)	(1,432,939)
Other long-term liabilities	(169,854)
Income taxes payable and receivable	(867,112)	178,013
Net cash flows from (used in) operating activities	21,279,504	20,404,785
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(720,567)	(2,245,139)
Proceeds from sales of property and equipment	10,938
Net cash flows from (used in) investing activities	(709,629)	(2,245,139)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility	771,182,879	680,161,101
Repayments under revolving credit facility	(791,045,384)	(697,319,735)
Proceeds from borrowings on long-term debt	3,000,000
Principal payments on long-term debt	(237,566)	(264,275)
Repurchase of common stock	(5,738)	(31,799)
Dividends on common stock	(3,144,130)	(380,685)
Settlement and withholdings of equity-based awards	(365,022)
Net cash flows from (used in) financing activities	(20,614,961)	(17,835,393)
Net change in cash	(45,086)	324,253
Cash, beginning of period	661,195	337,704
Cash, end of period	616,109	661,957
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	690,134	927,322
Cash paid during the period for income taxes	2,658,865	301,824
Supplemental disclosure of non-cash information:
Equipment acquisitions classified in accounts payable	16,230	6,583
Issuance of common stock in connection with the vesting and exercise of equity-based awards	$ 949,812	$ 990,653

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

6 Months Ended

Mar. 31, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

· Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products and provides a full range of programs and services to our customers that are focused on helping them manage their business and increase their profitability. We serve customers in 26 states and primarily operate in the Central, Rocky Mountain, and Mid-South regions of the United States.

· Our retail health food segment (“Retail Segment”) operates twenty-one health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 4,100 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 17,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. Convenience stores represent our largest customer category. In December 2020, Convenience Store News ranked us as the seventh  (7th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment offers retailers the ability to take advantage of manufacturer and Company sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers’ investment in inventory, while seeking to maximize their sales and profits. In addition, our wholesale distributing capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from our broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from our distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 685,000 square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kelloggs, Kraft, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers.

RETAIL SEGMENT

Our Retail Segment, through our Healthy Edge, Inc. subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation. All of the products carried in our stores must meet strict quality and ingredient guidelines, and include offerings such as gluten-free and antibiotic-free groceries and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils. We design our retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment.

We operate within the natural products retail industry, which is a subset of the U.S. grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers.

Our Retail Segment operates twenty-one retail health food stores as Chamberlin’s Natural Foods (“Chamberlin’s”), Akin’s Natural Foods (“Akin’s”), and Earth Origins Market (“EOM”). These stores carry over 33,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was established in 1935, has a total of seven locations in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of six locations in Arkansas, Missouri, and Oklahoma. EOM has a total of eight locations in Florida.

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2020, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended March 31, 2021 and March 31, 2020 have been referred to throughout this quarterly report as Q2 2021 and Q2 2020, respectively. The fiscal balance sheet dates as of March 31, 2021 and September 30, 2020 have been referred to as March 2021 and September 2020, respectively.

ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for the Company) with early adoption permitted. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this update were effective upon issuance for all entities through December 31, 2022. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

XML

INVENTORIES

6 Months Ended

Mar. 31, 2021

INVENTORIES

INVENTORIES

2. INVENTORIES

Inventories in our wholesale segment consisted of finished goods and are stated at the lower of cost or net realizable value, determined on a FIFO basis. Inventories in our retail segment consisted of finished goods and are stated at the lower of cost or market using the retail method. The wholesale distribution and retail health food segment inventories consist of finished products purchased in bulk quantities to be redistributed to the Company’s customers or sold at retail. Finished goods included total reserves of approximately $0.8 million at March 2021 and $0.7 million at September 2020. These reserves include the Company’s obsolescence allowance, which reflects estimated unsalable or non-refundable inventory based upon an evaluation of slow moving and discontinued products.

XML

GOODWILL AND OTHER INTANGIBLE ASSETS

6 Months Ended

Mar. 31, 2021

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

3. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill at March 2021 and September 2020 was as follows:

	March		September
	2021		2020
Wholesale Segment	$	4,436,950	$	4,436,950

Other intangible assets at March 2021 and September 2020 consisted of the following:

	March		September
	2021		2020
Trademarks and tradenames (Retail Segment)	$	500,000	$	500,000

Goodwill, trademarks and tradenames are considered to have indefinite useful lives and therefore no amortization has been taken on these assets. Goodwill recorded on the Company’s consolidated balance sheet represents amounts allocated to its wholesale reporting unit which totaled $4.4 million at both March 2021 and September 2020. The Company performs its annual impairment testing during the fourth fiscal quarter of each year or as circumstances change or necessitate. There have been no material changes to the Company’s impairment assessments since its fiscal year ended September 2020.

XML

EQUITY METHOD INVESTMENT

6 Months Ended

Mar. 31, 2021

EQUITY METHOD INVESTMENT

EQUITY METHOD INVESTMENT

4. EQUITY METHOD INVESTMENT

In April 2020, the Company completed a transaction with Chas. M. Sledd Company (“Sledd”), a West Virginia wholesale distributor serving the convenience store industry, to jointly own and operate a limited liability company (“Team Sledd”) formed for the purpose of owning and operating Sledd’s wholesale distribution business. Sledd contributed substantially all of its assets and stated liabilities to Team Sledd, while the Company contributed $10.0 million in cash, of which $6.5 million was structured as equity and $3.5 million was structured as a secured loan to Team Sledd which is subordinate to the liens of Team Sledd's existing secured lenders.

At March 2021, AMCON owned approximately 44% of Team Sledd’s outstanding equity, with a carrying value of $7.6 million. For the three and six months ended March 2021, the Company recognized $0.3 million and $0.6 million, respectively, in equity in earnings (net of income taxes) from its investment in Team Sledd. The Company’s secured loan to Team Sledd had a carrying value of $3.5 million as of March 2021. Pursuant to an operating agreement between the Company and Sledd, it is anticipated that certain membership interests in Team Sledd will be redeemed over a period of years, with such redemptions to be funded from the operations of Team Sledd. These redemptions would result in corresponding increases in the percentage of the outstanding equity of Team Sledd owned by AMCON. During April 2021, subsequent to Q2 2021, certain membership interests in Team Sledd were redeemed, which resulted in AMCON’s ownership of Team Sledd’s outstanding equity increasing to approximately 49%.

Team Sledd’s summarized unaudited financial data for the three and six months ended March 2021 was as follows:

	For the three months ended March 2021		For the six months ended March 2021
Sales	$	158,459,384	$	323,027,468
Gross profit	$	7,719,918	$	15,567,308
Net income before income taxes	$	941,027	$	1,944,820
Net income attributable to AMCON, net of tax	$	313,492	$	648,831

XML

DIVIDENDS

6 Months Ended

Mar. 31, 2021

DIVIDENDS

DIVIDENDS

5. DIVIDENDS

The Company paid cash dividends on its common stock totaling $3.0 million and $3.1 million for the three and six month periods ended March 31, 2021, respectively, and $0.3 million and $0.4 million for the three and six month periods ended March 31, 2020, respectively.

XML

EARNINGS PER SHARE

6 Months Ended

Mar. 31, 2021

EARNINGS PER SHARE

EARNINGS PER SHARE

6. EARNINGS PER SHARE

Basic earnings per share available to common shareholders is calculated by dividing net income by the weighted average common shares outstanding for each period. Diluted earnings per share available to common shareholders is calculated by dividing income from operations by the sum of the weighted average common shares outstanding and the weighted average dilutive equity awards.

	For the three months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		551,369		551,369		565,697		565,697
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		9,572		—		6,155
Weighted average number of shares outstanding		551,369		560,941		565,697		571,852
Net income available to common shareholders	$	2,428,908	$	2,428,908	$	699,319	$	699,319
Net earnings per share available to common shareholders	$	4.41	$	4.33	$	1.24	$	1.22

(1) Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

	For the six months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		549,729		549,729		564,129		564,129
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		8,012		—		5,727
Weighted average number of shares outstanding		549,729		557,741		564,129		569,856
Net income available to common shareholders	$	5,506,518	$	5,506,518	$	1,151,188	$	1,151,188
Net earnings per share available to common shareholders	$	10.02	$	9.87	$	2.04	$	2.02

(1) Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

XML

DEBT

6 Months Ended

Mar. 31, 2021

DEBT

DEBT

7. DEBT

The Company primarily finances its operations through a credit facility agreement (the “Facility”) and long-term debt agreements with banks. The Facility is provided through Bank of America acting as the senior agent and with BMO Harris Bank (“BMO”) participating in a loan syndication.

CREDIT FACILITY

The Facility included the following significant terms at March 2021:

· A March 2025 maturity date without a penalty for prepayment.

· $110.0 million revolving credit limit.

· Loan accordion allowing the Company to increase the size of the credit facility agreement by $25.0 million.

· A provision providing an additional $10.0 million of credit advances for certain inventory purchases.

· Evergreen renewal clause automatically renewing the agreement for one year unless either the borrower or lender provides written notice terminating the agreement at least 90 days prior to the end of any original or renewal term of the agreement.

· The Facility bears interest at either the bank’s prime rate, or at LIBOR (or equivalent successor rate index) plus 125 - 150 basis points depending on certain credit facility utilization measures, at the election of the Company. For this purpose, in no event shall LIBOR be less than 50 basis points.

· Lending limits subject to accounts receivable and inventory limitations.

· An unused commitment fee equal to one-quarter of one percent (1/4%) per annum on the difference between the maximum loan limit and average monthly borrowings.

· Secured by collateral including all of the Company’s equipment, intangibles, inventories, and accounts receivable.

· A financial covenant requiring a fixed charge coverage ratio of at least 1.0 as measured by the previous twelve month period then ended only if excess availability falls below 10% of the maximum loan limit as defined in the credit agreement. The Company’s fixed charge coverage ratio was over 1.0 for the trailing twelve months.

· Provides that the Company may use up to $3.5 million annually, on a collective basis, for the payment of dividends on its common stock, or other distributions or investments, provided the Company is not in default before or after such dividends, distributions or investments. Additionally, the Company may pay dividends on its common stock, or make other distributions or investments in excess of $3.5 million annually provided the Company meets certain excess availability and proforma fixed charge coverage ratios and is not in default before or after such dividends, distributions or investments.

The amount available for use on the Facility at any given time is subject to a number of factors including eligible accounts receivable and inventory balances that fluctuate day-to-day. Based on our collateral and loan limits as defined in the Facility agreement, the credit limit of the Facility at March 2021 was $95.7 million, of which $42.1 million was outstanding, leaving $53.6 million available.

At March 2021, the revolving portion of the Company’s Facility balance bore interest based on the bank’s prime rate and various short-term LIBOR rate elections made by the Company. The average interest rate was 1.85% at March 2021. For the six months ended March 2021, our peak borrowings under the Facility were $71.7 million, and our average borrowings and average availability under the Facility were $44.8 million and $42.0 million, respectively.

LONG-TERM DEBT

In addition to the Facility, the Company also had the following long term obligations at March 2021.

	March 2021		September 2020
Real Estate Loan, interest payable at a fixed rate of 3.625% with monthly installments of principal and interest of $47,399 through February 2025 with remaining principal due March 2025, collateralized by three distribution facilities	$	4,698,949	$	1,866,231
Note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023		1,189,129		1,259,413
		5,888,078		3,125,644
Less current maturities		(516,189)		(516,850)
	$	5,371,889	$	2,608,794

Cross Default and Co-Terminus Provisions

The Company owns real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, which is financed through a single term loan with BMO (the “Real Estate Loan”) which is also a participant lender on the Company’s revolving line of credit. The Real Estate Loan contains cross default provisions which cause the loan to be considered in default if the loans where BMO is a lender, including the revolving credit facility, are in default. There were no such cross defaults at March 2021. In addition, the Real Estate Loan contains co-terminus provisions which require all loans with BMO to be paid in full if any of the loans are paid in full prior to the end of their specified terms.

Other

The Company has issued a letter of credit for $0.5 million to its workers’ compensation insurance carrier as part of its self‑insured loss control program. 

XML

BUSINESS SEGMENTS

6 Months Ended

Mar. 31, 2021

BUSINESS SEGMENTS

BUSINESS SEGMENTS

8. BUSINESS SEGMENTS

The Company has two reportable business segments: the wholesale distribution of consumer products and the retail sale of health and natural food products. The retail health food stores’ operations are aggregated to comprise the Retail Segment because such operations have similar economic characteristics, as well as similar characteristics with respect to the nature of products sold, the type and class of customers for the health food products and the methods used to sell the products. Included in the “Other” column are intercompany eliminations, and assets held and charges incurred and income earned by our holding company. The segments are evaluated on revenues, gross margins, operating income (loss), and income (loss) before taxes.

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2021
External revenues:
Cigarettes	$	255,558,043	$	—	$	—	$	255,558,043
Tobacco		61,431,768		—		—		61,431,768
Confectionery		19,901,516		—		—		19,901,516
Health food		—		12,306,332		—		12,306,332
Foodservice & other		29,315,831		—		—		29,315,831
Total external revenue		366,207,158		12,306,332		—		378,513,490
Depreciation		487,004		292,921		—		779,925
Operating income (loss)		4,431,132		661,303		(1,921,741)		3,170,694
Interest expense		58,109		—		252,434		310,543
Income (loss) from operations before taxes		4,425,941		664,193		(2,145,718)		2,944,416
Equity method investment earnings, net of tax		—		—		313,492		313,492
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		186,991		101,294		—		288,285

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	228,865,603	$	—	$	—	$	228,865,603
Tobacco		51,639,145		—		—		51,639,145
Confectionery		18,027,050		—		—		18,027,050
Health food		—		12,994,651		—		12,994,651
Foodservice & other		26,360,067		—		—		26,360,067
Total external revenue		324,891,865		12,994,651		—		337,886,516
Depreciation		443,143		347,758		—		790,901
Operating income (loss)		2,907,818		85,521		(1,603,677)		1,389,662
Interest expense		32,590		—		354,673		387,263
Income (loss) from operations before taxes		2,902,907		87,760		(1,958,348)		1,032,319
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		439,019		349,425		—		788,444

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2021
External revenue:
Cigarettes	$	532,147,749	$	—	$	—	$	532,147,749
Tobacco		126,277,312		—		—		126,277,312
Confectionery		40,066,093		—		—		40,066,093
Health food		—		23,453,430		—		23,453,430
Foodservice & other		61,313,679		—		—		61,313,679
Total external revenue		759,804,833		23,453,430		—		783,258,263
Depreciation		959,697		594,513		—		1,554,210
Operating income (loss)		10,219,371		546,316		(3,507,115)		7,258,572
Interest expense		87,645		—		599,328		686,973
Income (loss) from operations before taxes		10,195,201		552,034		(4,049,548)		6,697,687
Equity method investment earnings, net of tax		—		—		648,831		648,831
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		593,431		143,366		—		736,797

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	473,915,657	$	—	$	—	$	473,915,657
Tobacco		105,956,693		—		—		105,956,693
Confectionery		38,863,912		—		—		38,863,912
Health food		—		23,091,146		—		23,091,146
Foodservice & other		56,160,211		—		—		56,160,211
Total external revenue		674,896,473		23,091,146		—		697,987,619
Depreciation		875,405		640,956		—		1,516,361
Operating income (loss)		6,556,832		(1,056,785)		(2,943,870)		2,556,177
Interest expense		66,564		—		793,122		859,686
Income (loss) from operations before taxes		6,522,571		(1,052,392)		(3,736,991)		1,733,188
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		1,232,700		949,769		—		2,182,469

XML

COMMON STOCK REPURCHASES

6 Months Ended

Mar. 31, 2021

COMMON STOCK REPURCHASES

COMMON STOCK REPURCHASES

9. COMMON STOCK REPURCHASES

The Company did not repurchase any shares of its common stock during the three months ended March 2021 and repurchased a total of 307 shares of its common stock during the three months ended March 2020 for cash totaling less than $0.1 million. The Company repurchased 68 and 416 shares of its common stock during the six months ended March 2021 and March 2020, respectively, for cash totaling less than $0.1 million in each respective period. All repurchased shares were recorded in treasury stock at cost.

XML

IMPACT OF COVID-19

6 Months Ended

Mar. 31, 2021

IMPACT OF COVID-19

IMPACT OF COVID-19

10. IMPACT OF COVID-19

In March 2020, the World Health Organization (WHO) declared the novel strain of coronavirus (COVID-19) a global pandemic. Since that time, the Company has been designated as a critical infrastructure supplier to the Convenience Store Industry and both of its business segments have continued to operate as essential suppliers of goods and services.  In response to the pandemic, the Company has undertaken a range of precautionary steps to ensure the safety of its employees, customers and suppliers, including the frequent cleaning and disinfection of workspaces, property and equipment, instituting social distancing measures, and mandating remote working environments for certain employees.

The Company continues to monitor medical, regulatory, consumer, and community-based regulations. While some COVID-19 restrictions have eased, the operating environment remains fluid and we cannot predict the long-term impact of the pandemic on our business or results of operations. Accordingly, future disruptions to consumer demand or our supply chain and/or our ability to procure products or fulfill orders, could negatively impact our financial position.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Policies)

6 Months Ended

Mar. 31, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

WHOLESALE SEGMENT AND RETAIL SEGMENT

AMCON Distributing Company and Subsidiaries (“AMCON” or the “Company”) operate two business segments:

· Our wholesale distribution segment (“Wholesale Segment”) distributes consumer products and provides a full range of programs and services to our customers that are focused on helping them manage their business and increase their profitability. We serve customers in 26 states and primarily operate in the Central, Rocky Mountain, and Mid-South regions of the United States.

· Our retail health food segment (“Retail Segment”) operates twenty-one health food retail stores located throughout the Midwest and Florida.

WHOLESALE SEGMENT

Our Wholesale Segment is one of the largest wholesale distributors in the United States serving approximately 4,100 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. We currently distribute over 17,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. Convenience stores represent our largest customer category. In December 2020, Convenience Store News ranked us as the seventh  (7th) largest convenience store distributor in the United States based on annual sales.

Our Wholesale Segment offers retailers the ability to take advantage of manufacturer and Company sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers’ investment in inventory, while seeking to maximize their sales and profits. In addition, our wholesale distributing capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from our broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from our distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit.

Our Wholesale Segment operates six distribution centers located in Illinois, Missouri, Nebraska, North Dakota, South Dakota, and Tennessee. These distribution centers, combined with cross-dock facilities, include approximately 685,000 square feet of permanent floor space. Our principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kelloggs, Kraft, and Mars Wrigley. We also market private label lines of water, candy products, batteries, and other products. We do not maintain any long-term purchase contracts with our suppliers.

RETAIL SEGMENT

Our Retail Segment, through our Healthy Edge, Inc. subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation. All of the products carried in our stores must meet strict quality and ingredient guidelines, and include offerings such as gluten-free and antibiotic-free groceries and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils. We design our retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment.

We operate within the natural products retail industry, which is a subset of the U.S. grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers.

Our Retail Segment operates twenty-one retail health food stores as Chamberlin’s Natural Foods (“Chamberlin’s”), Akin’s Natural Foods (“Akin’s”), and Earth Origins Market (“EOM”). These stores carry over 33,000 different national and regionally branded and private label products including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Chamberlin’s, which was established in 1935, has a total of seven locations in and around Orlando, Florida. Akin’s, which was also established in 1935, has a total of six locations in Arkansas, Missouri, and Oklahoma. EOM has a total of eight locations in Florida.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

The Company’s fiscal year ends on September 30. The results for the interim period included with this Quarterly Report may not be indicative of the results which could be expected for the entire fiscal year. All significant intercompany transactions and balances have been eliminated in consolidation. Certain information and footnote disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been condensed or omitted. In the opinion of management, the accompanying condensed consolidated unaudited financial statements (“financial statements”) contain all adjustments necessary to fairly present the financial information included herein. The Company believes that although the disclosures contained herein are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with the Company’s annual audited consolidated financial statements for the fiscal year ended September 30, 2020, as filed with the Securities and Exchange Commission on Form 10-K. For purposes of this report, unless the context indicates otherwise, all references to “we”, “us”, “our”, the “Company”, and “AMCON” shall mean AMCON Distributing Company and its subsidiaries. Additionally, the three month fiscal periods ended March 31, 2021 and March 31, 2020 have been referred to throughout this quarterly report as Q2 2021 and Q2 2020, respectively. The fiscal balance sheet dates as of March 31, 2021 and September 30, 2020 have been referred to as March 2021 and September 2020, respectively.

ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, which introduces a forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models, and methods for estimating expected credit losses. This guidance is effective for fiscal years beginning after December 15, 2022 (fiscal 2024 for the Company) with early adoption permitted. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as the market transitions from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The amendments in this update were effective upon issuance for all entities through December 31, 2022. The Company is currently reviewing this ASU and its potential impact on our consolidated financial statements.

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

6 Months Ended

Mar. 31, 2021

GOODWILL AND OTHER INTANGIBLE ASSETS

Schedule of goodwill

	March		September
	2021		2020
Wholesale Segment	$	4,436,950	$	4,436,950

Schedule of other intangible assets

	March		September
	2021		2020
Trademarks and tradenames (Retail Segment)	$	500,000	$	500,000

XML

EQUITY METHOD INVESTMENT (Tables)

6 Months Ended

Mar. 31, 2021

EQUITY METHOD INVESTMENT

Summarized financial data of equity investee

	For the three months ended March 2021		For the six months ended March 2021
Sales	$	158,459,384	$	323,027,468
Gross profit	$	7,719,918	$	15,567,308
Net income before income taxes	$	941,027	$	1,944,820
Net income attributable to AMCON, net of tax	$	313,492	$	648,831

XML

EARNINGS PER SHARE (Tables)

6 Months Ended

Mar. 31, 2021

EARNINGS PER SHARE

Schedule of net earnings per share available to common shareholders

	For the three months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		551,369		551,369		565,697		565,697
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		9,572		—		6,155
Weighted average number of shares outstanding		551,369		560,941		565,697		571,852
Net income available to common shareholders	$	2,428,908	$	2,428,908	$	699,319	$	699,319
Net earnings per share available to common shareholders	$	4.41	$	4.33	$	1.24	$	1.22

(1) Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

	For the six months ended March
	2021				2020
	Basic		Diluted		Basic		Diluted
Weighted average common shares outstanding		549,729		549,729		564,129		564,129
Weighted average net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock (1)		—		8,012		—		5,727
Weighted average number of shares outstanding		549,729		557,741		564,129		569,856
Net income available to common shareholders	$	5,506,518	$	5,506,518	$	1,151,188	$	1,151,188
Net earnings per share available to common shareholders	$	10.02	$	9.87	$	2.04	$	2.02

Diluted earnings per share calculation includes all stock options and restricted stock units deemed to be dilutive.

XML

DEBT (Tables)

6 Months Ended

Mar. 31, 2021

DEBT

Schedule of long-term obligations

	March 2021		September 2020
Real Estate Loan, interest payable at a fixed rate of 3.625% with monthly installments of principal and interest of $47,399 through February 2025 with remaining principal due March 2025, collateralized by three distribution facilities	$	4,698,949	$	1,866,231
Note payable, interest payable at a fixed rate of 4.50% with quarterly installments of principal and interest of $49,114 through June 2023 with remaining principal due September 2023		1,189,129		1,259,413
		5,888,078		3,125,644
Less current maturities		(516,189)		(516,850)
	$	5,371,889	$	2,608,794

XML

BUSINESS SEGMENTS (Tables)

6 Months Ended

Mar. 31, 2021

BUSINESS SEGMENTS

Schedule of segment information

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2021
External revenues:
Cigarettes	$	255,558,043	$	—	$	—	$	255,558,043
Tobacco		61,431,768		—		—		61,431,768
Confectionery		19,901,516		—		—		19,901,516
Health food		—		12,306,332		—		12,306,332
Foodservice & other		29,315,831		—		—		29,315,831
Total external revenue		366,207,158		12,306,332		—		378,513,490
Depreciation		487,004		292,921		—		779,925
Operating income (loss)		4,431,132		661,303		(1,921,741)		3,170,694
Interest expense		58,109		—		252,434		310,543
Income (loss) from operations before taxes		4,425,941		664,193		(2,145,718)		2,944,416
Equity method investment earnings, net of tax		—		—		313,492		313,492
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		186,991		101,294		—		288,285

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
THREE MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	228,865,603	$	—	$	—	$	228,865,603
Tobacco		51,639,145		—		—		51,639,145
Confectionery		18,027,050		—		—		18,027,050
Health food		—		12,994,651		—		12,994,651
Foodservice & other		26,360,067		—		—		26,360,067
Total external revenue		324,891,865		12,994,651		—		337,886,516
Depreciation		443,143		347,758		—		790,901
Operating income (loss)		2,907,818		85,521		(1,603,677)		1,389,662
Interest expense		32,590		—		354,673		387,263
Income (loss) from operations before taxes		2,902,907		87,760		(1,958,348)		1,032,319
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		439,019		349,425		—		788,444

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2021
External revenue:
Cigarettes	$	532,147,749	$	—	$	—	$	532,147,749
Tobacco		126,277,312		—		—		126,277,312
Confectionery		40,066,093		—		—		40,066,093
Health food		—		23,453,430		—		23,453,430
Foodservice & other		61,313,679		—		—		61,313,679
Total external revenue		759,804,833		23,453,430		—		783,258,263
Depreciation		959,697		594,513		—		1,554,210
Operating income (loss)		10,219,371		546,316		(3,507,115)		7,258,572
Interest expense		87,645		—		599,328		686,973
Income (loss) from operations before taxes		10,195,201		552,034		(4,049,548)		6,697,687
Equity method investment earnings, net of tax		—		—		648,831		648,831
Total assets		142,275,883		17,673,640		11,575,485		171,525,008
Capital expenditures		593,431		143,366		—		736,797

	Wholesale		Retail
	Segment		Segment		Other		Consolidated
SIX MONTHS ENDED MARCH 2020
External revenue:
Cigarettes	$	473,915,657	$	—	$	—	$	473,915,657
Tobacco		105,956,693		—		—		105,956,693
Confectionery		38,863,912		—		—		38,863,912
Health food		—		23,091,146		—		23,091,146
Foodservice & other		56,160,211		—		—		56,160,211
Total external revenue		674,896,473		23,091,146		—		697,987,619
Depreciation		875,405		640,956		—		1,516,361
Operating income (loss)		6,556,832		(1,056,785)		(2,943,870)		2,556,177
Interest expense		66,564		—		793,122		859,686
Income (loss) from operations before taxes		6,522,571		(1,052,392)		(3,736,991)		1,733,188
Total assets		142,552,270		20,835,266		478,777		163,866,313
Capital expenditures		1,232,700		949,769		—		2,182,469

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details)	1 Months Ended	6 Months Ended
	Dec. 31, 2020 item	Mar. 31, 2021 ft² segment state item
Number of business segments | segment		2
Wholesale Segment
Number of states served | state		26
Number of retail outlets served		4,100
Number of products sold or distributed		17,000
Rank assigned by Convenience Store News	7
Number of distribution centers		6
Floor space occupied by distribution centers (in square feet) | ft²		685,000
Retail Segment
Number of operating health food retail stores		21
Number of products sold or distributed		33,000
Retail Segment | Florida | Chamberlin's
Number of operating health food retail stores		7
Retail Segment | Florida | Earth Origins Markets
Number of operating health food retail stores		8
Retail Segment | Midwest | Akin's
Number of operating health food retail stores		6

XML

INVENTORIES (Details) - USD ($) $ in Millions	Mar. 31, 2021	Sep. 30, 2020
INVENTORIES
Total reserves on finished goods	$ 0.8	$ 0.7

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($)	Mar. 31, 2021	Sep. 30, 2020
Goodwill by reporting segment
Goodwill	$ 4,436,950	$ 4,436,950
Wholesale Segment
Goodwill by reporting segment
Goodwill	$ 4,436,950	$ 4,436,950

XML

GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($)	Mar. 31, 2021	Sep. 30, 2020
Other intangible assets, net	$ 500,000	$ 500,000
Trademarks and tradenames | Retail Segment
Other intangible assets, net	$ 500,000	$ 500,000

XML

EQUITY METHOD INVESTMENT (Details) - USD ($)	1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 30, 2020	Mar. 31, 2021	Mar. 31, 2021	Apr. 30, 2021	Sep. 30, 2020
EQUITY METHOD INVESTMENT
Carrying value of investment		$ 7,606,925	$ 7,606,925		$ 6,744,095
Equity method investment earnings, net of tax		313,492	648,831
Carrying value of secured loan		$ 3,500,000	$ 3,500,000		$ 3,500,000
Team Sledd
EQUITY METHOD INVESTMENT
Contribution in cash	$ 10,000,000
Contribution structured as equity	6,500,000
Contribution structured as a secured loan	$ 3,500,000
Ownership (as a percent)		44.00%	44.00%
Carrying value of investment		$ 7,600,000	$ 7,600,000
Equity method investment earnings, net of tax		300,000	600,000
Carrying value of secured loan		$ 3,500,000	$ 3,500,000
Subsequent events | Team Sledd
EQUITY METHOD INVESTMENT
Ownership (as a percent)				49.00%

XML

EQUITY METHOD INVESTMENT - Equity investee's summarized financial data (Details) - USD ($)	3 Months Ended	6 Months Ended
	Mar. 31, 2021	Mar. 31, 2021
EQUITY METHOD INVESTMENT
Net income attributable to AMCON, net of tax	$ 313,492	$ 648,831
Team Sledd
EQUITY METHOD INVESTMENT
Sales	158,459,384	323,027,468
Gross profit	7,719,918	15,567,308
Net income before income taxes	941,027	1,944,820
Net income attributable to AMCON, net of tax	$ 313,492	$ 648,831

XML

DIVIDENDS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
DIVIDENDS
Cash dividend paid on common stock	$ 3,000,000	$ 300,000	$ 3,144,130	$ 380,685

XML

EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
EARNINGS PER SHARE
Weighted average common shares outstanding, Basic	551,369	565,697	549,729	564,129
Weighted average of net additional shares outstanding assuming dilutive options exercised and proceeds used to purchase treasury stock	9,572	6,155	8,012	5,727
Weighted average number of shares outstanding, Diluted	560,941	571,852	557,741	569,856
Net income available to common shareholders	$ 2,428,908	$ 699,319	$ 5,506,518	$ 1,151,188
Net income available to common shareholders, diluted	$ 2,428,908	$ 699,319	$ 5,506,518	$ 1,151,188
Net earnings per share available to common shareholders, Basic (in dollars per share)	$ 4.41	$ 1.24	$ 10.02	$ 2.04
Net earnings per share available to common shareholders, Diluted (in dollars per share)	$ 4.33	$ 1.22	$ 9.87	$ 2.02

XML

DEBT - Credit Facility (Details) - Credit Facility $ in Millions	6 Months Ended
	Mar. 31, 2021 USD ($)
Revolving credit facility
Revolving credit limit	$ 110.0
Increase in borrowing capacity available under loan accordion	25.0
Additional credit advances for certain inventory purchases	$ 10.0
Automatic renewal period of agreement unless terminated	1 year
Unused commitment fee (as a percent)	0.25%
Period considered for computing fixed charge coverage ratio	12 months
Threshold of excess availability of credit as a percentage of maximum loan limit, required for financial covenant compliance	10.00%
Restricted amount of dividends on common stock	$ 3.5
Current credit limit of the Facility	95.7
Outstanding borrowings under the Facility	42.1
Credit available under the Facility	$ 53.6
Average interest rate	1.85%
Peak borrowings under the Facility	$ 71.7
Average borrowings under the Facility	44.8
Average availability under the Facility	$ 42.0
LIBOR
Revolving credit facility
Variable rate basis	LIBOR
Minimum basis points added to reference rate (as a percent)	0.50%
Prime rate
Revolving credit facility
Variable rate basis	prime rate
Minimum
Revolving credit facility
Notice period prior to the end of any original or renewal term of the agreement required for terminating the agreement either by the borrower or lender	90 days
Fixed charge coverage ratio	1.0
Minimum | LIBOR
Revolving credit facility
Basis points added to reference rate (as a percent)	1.25%
Maximum | LIBOR
Revolving credit facility
Basis points added to reference rate (as a percent)	1.50%

XML

DEBT - Long-Term Debt (Details)	6 Months Ended	12 Months Ended
	Mar. 31, 2021 USD ($) item	Sep. 30, 2020 USD ($) item
Long-term obligations
Long-term debt	$ 5,888,078	$ 3,125,644
Less current maturities	(516,189)	(516,850)
Long-term debt less current maturities	5,371,889	2,608,794
3.625% Real Estate Loan
Long-term obligations
Long-term debt	$ 4,698,949	$ 1,866,231
Fixed interest rate (as a percent)	3.625%	3.625%
Periodic installments of principal and interest	$ 47,399	$ 47,399
Number of owned distribution facilities which collateralize debt instrument | item	3	3
4.50% Note Payable
Long-term obligations
Long-term debt	$ 1,189,129	$ 1,259,413
Fixed interest rate (as a percent)	4.50%	4.50%
Periodic installments of principal and interest	$ 49,114	$ 49,114

XML

DEBT - Cross Default and Co-Terminus Provisions and Other (Details) $ in Millions	6 Months Ended
	Mar. 31, 2021 USD ($) item
Debt Instrument [Line Items]
Letter of credit issued for worker's compensation insurance carrier as part of the entity's self-insured loss control program | $	$ 0.5
3.625% Real Estate Loan
Debt Instrument [Line Items]
Number of cross defaults | item	0

XML

BUSINESS SEGMENTS (Details)	3 Months Ended		6 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 USD ($) segment	Mar. 31, 2020 USD ($)	Sep. 30, 2020 USD ($)
Information by business segments
Number of reportable business segments | segment			2
Total external revenue	$ 378,513,490	$ 337,886,516	$ 783,258,263	$ 697,987,619
Depreciation	779,925	790,901	1,554,210	1,516,361
Operating income (loss)	3,170,694	1,389,662	7,258,572	2,556,177
Interest expense	310,543	387,263	686,973	859,686
Income (loss) from operations before taxes	2,944,416	1,032,319	6,697,687	1,733,188
Equity method investment earnings, net of tax	313,492		648,831
Total assets	171,525,008	163,866,313	171,525,008	163,866,313	$ 188,001,273
Capital expenditures	288,285	788,444	736,797	2,182,469
Cigarettes
Information by business segments
Total external revenue	255,558,043	228,865,603	532,147,749	473,915,657
Tobacco
Information by business segments
Total external revenue	61,431,768	51,639,145	126,277,312	105,956,693
Confectionery
Information by business segments
Total external revenue	19,901,516	18,027,050	40,066,093	38,863,912
Health food
Information by business segments
Total external revenue	12,306,332	12,994,651	23,453,430	23,091,146
Foodservice & other
Information by business segments
Total external revenue	29,315,831	26,360,067	61,313,679	56,160,211
Other
Information by business segments
Operating income (loss)	(1,921,741)	(1,603,677)	(3,507,115)	(2,943,870)
Interest expense	252,434	354,673	599,328	793,122
Income (loss) from operations before taxes	(2,145,718)	(1,958,348)	(4,049,548)	(3,736,991)
Equity method investment earnings, net of tax	313,492		648,831
Total assets	11,575,485	478,777	11,575,485	478,777
Wholesale Segment
Information by business segments
Total external revenue	366,207,158	324,891,865	759,804,833	674,896,473
Depreciation	487,004	443,143	959,697	875,405
Operating income (loss)	4,431,132	2,907,818	10,219,371	6,556,832
Interest expense	58,109	32,590	87,645	66,564
Income (loss) from operations before taxes	4,425,941	2,902,907	10,195,201	6,522,571
Total assets	142,275,883	142,552,270	142,275,883	142,552,270
Capital expenditures	186,991	439,019	593,431	1,232,700
Wholesale Segment | Cigarettes
Information by business segments
Total external revenue	255,558,043	228,865,603	532,147,749	473,915,657
Wholesale Segment | Tobacco
Information by business segments
Total external revenue	61,431,768	51,639,145	126,277,312	105,956,693
Wholesale Segment | Confectionery
Information by business segments
Total external revenue	19,901,516	18,027,050	40,066,093	38,863,912
Wholesale Segment | Foodservice & other
Information by business segments
Total external revenue	29,315,831	26,360,067	61,313,679	56,160,211
Retail Segment
Information by business segments
Total external revenue	12,306,332	12,994,651	23,453,430	23,091,146
Depreciation	292,921	347,758	594,513	640,956
Operating income (loss)	661,303	85,521	546,316	(1,056,785)
Income (loss) from operations before taxes	664,193	87,760	552,034	(1,052,392)
Total assets	17,673,640	20,835,266	17,673,640	20,835,266
Capital expenditures	101,294	349,425	143,366	949,769
Retail Segment | Health food
Information by business segments
Total external revenue	$ 12,306,332	$ 12,994,651	$ 23,453,430	$ 23,091,146

XML

COMMON STOCK REPURCHASES (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2020	Mar. 31, 2021	Mar. 31, 2020
Number of shares of common stock repurchased	307	68	416
Maximum
Value of shares of common stock repurchased	$ 0.1	$ 0.1	$ 0.1