Commission File Number 1-15589 Table of Contents 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 December 31, 2022 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________to _________ (Exact name of registrant as specified in its charter) | Delaware | 47-0702918 | | --- | --- ...

Financial Performance - Sales for fiscal 2022 reached $2,010.8 million, an increase of $338.4 million compared to $1,672.4 million in fiscal 2021[155] - Gross profit for fiscal 2022 was $127.7 million, representing a gross profit margin of 6.4%, up from 6.0% in fiscal 2021[155] - Net income available to common shareholders for fiscal 2022 was $16.7 million, compared to $15.5 million in fiscal 2021, reflecting an increase of $1.2 million[155] - The Wholesale Segment's gross profit increased by $28.2 million in fiscal 2022, driven by higher sales volumes and the acquisition of Team Sledd[162] - Retail Segment sales decreased by $1.1 million in fiscal 2022, primarily due to a $1.5 million decline in sales volume related to store closures[160] - Operating income rose to $22.60 million in fiscal year 2022, compared to $17.82 million in fiscal year 2021, marking a 27.5% increase[242] - Net income available to common shareholders increased to $16,672,257 in September 2022 from $15,545,265 in September 2021, representing an increase of approximately 7.2%[249] - Basic earnings per share available to common shareholders increased to $29.37 in fiscal year 2022 from $28.24 in fiscal year 2021, a rise of 4.0%[242] - Diluted earnings per share for fiscal 2022 were $28.59, compared to $27.36 in fiscal 2021[310] Expenses and Liabilities - Operating expenses increased by $22.4 million to $105.1 million in fiscal 2022, driven by a $11.6 million increase related to the acquisition of Team Sledd and a $7.3 million rise in employee compensation[164] - Total liabilities increased to $196.30 million in September 2022, compared to $110.80 million in September 2021, reflecting a growth of 77.1%[239] - Selling, general and administrative expenses rose to $101.47 million in fiscal year 2022, up from $79.63 million in fiscal year 2021, an increase of 27.5%[242] - The Company’s self-insured liabilities reserve ending balance was $1.9 million in 2022, up from $1.5 million in 2021, reflecting an increase of approximately 26.7%[346] Cash Flow and Liquidity - Cash decreased to $431.58 million in September 2022 from $519.59 million in September 2021, a decline of 17.0%[239] - The Company believes its liquidity position will be adequate to sustain operations in both the short- and long-term[180] - The Company’s liquidity position is significantly influenced by customer credit risk and ongoing access to bank credit[179] Acquisitions and Goodwill - The Company became the majority owner of Team Sledd, LLC with a controlling interest of approximately 56% in May 2022, with no additional consideration provided for the acquisition[233] - Goodwill recorded on the Company's consolidated balance sheet was $5.3 million and $4.4 million at September 2022 and September 2021, respectively[198] - The acquisition of Team Sledd was accounted for using the discounted cash flow methodology, considering factors such as sales growth and gross profit estimates[233] - The total identifiable net assets of Team Sledd at the Control Date were valued at approximately $22.5 million, with goodwill of approximately $0.8 million arising from the acquisition[304][306] Taxation - The effective income tax rate increased in fiscal 2022 due to higher non-deductible compensation, resulting in effective tax rates exceeding statutory rates[167] - The Company reported an income tax expense of $6.5 million for fiscal 2022, up from $4.5 million in fiscal 2021, reflecting an increase in current federal and state taxes[332] Risks and Challenges - Risks associated with an inflationary operating environment could impact the Company's operating cost structure and food ingredient costs[221] - The Company faces potential regulatory risks related to the manufacturing and distribution of certain tobacco products, including proposed regulations on menthol and flavored tobacco[221] - Increased competition in the wholesale and retail health food businesses may affect the carrying value and potential impairment of assets[221] - The Company is exposed to risks from disruptions in technology systems, including security breaches and cyber-attacks[223] - Ongoing supply chain disruptions and a competitive labor market are leading to increased product and operational costs[223] - The Company may face challenges in its repositioning strategy for its retail business and the opening of new retail stores[221] Shareholder Information - The Company paid cash dividends of $3.4 million, or $5.72 per common share during fiscal 2022 and fiscal 2021[176] - The Company made matching contributions to profit-sharing plans of approximately $1.2 million in fiscal 2022, compared to $1.0 million in fiscal 2021[341] - As of September 2022, a total of 111,420 shares had been awarded under the Omnibus Plans, with an additional 83,580 shares available for future awards[348]

Table of Contents 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 June 30, 2022 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) | --- | --- | |--------------------------- ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents AMCON Distributing Company's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, cash flows, and accompanying notes for the periods ended March 31, 2022 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were $181.2 million, a decrease from $188.4 million at September 30, 2021, primarily due to lower inventories and accounts receivable Condensed Consolidated Balance Sheets (in thousands) | Account | March 2022 (Unaudited) | September 2021 | | :--- | :--- | :--- | | **Total current assets** | $130,479 | $136,575 | | **Total assets** | **$181,170** | **$188,411** | | **Total current liabilities** | $45,390 | $47,136 | | **Total liabilities** | $99,137 | $110,800 | | **Total shareholders' equity** | $82,033 | $77,613 | | **Total liabilities and shareholders' equity** | **$181,170** | **$188,411** | [Condensed Consolidated Unaudited Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Unaudited%20Statements%20of%20Operations) For Q2 2022, sales rose 3.5% to $391.9 million and net income increased 23.8% to $3.0 million, with diluted EPS at $5.19 Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Sales | $391,888 | $378,513 | $814,459 | $783,258 | | Gross Profit | $26,677 | $22,973 | $53,610 | $46,435 | | Operating Income | $3,943 | $3,171 | $7,701 | $7,259 | | Net Income | $3,006 | $2,429 | $6,007 | $5,507 | | Diluted EPS | $5.19 | $4.33 | $10.33 | $9.87 | [Condensed Consolidated Unaudited Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Unaudited%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity increased from $77.6 million to $82.0 million by March 31, 2022, driven by net income and partially offset by dividends - For the six months ended March 31, 2022, total shareholders' equity increased by approximately **$4.4 million**. Key changes include a **$6.0 million** increase from net income and a **$3.2 million** decrease due to dividend payments[18](index=18&type=chunk)[19](index=19&type=chunk) [Condensed Consolidated Unaudited Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Unaudited%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $13.8 million for the six months ended March 31, 2022, primarily due to working capital changes Cash Flow Summary for Six Months Ended March 31 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $13,796 | $21,280 | | Net cash used in investing activities | ($720) | ($710) | | Net cash used in financing activities | ($13,067) | ($20,615) | | **Net change in cash** | **$8** | **($45)** | [Notes to Condensed Consolidated Unaudited Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Unaudited%20Financial%20Statements) The notes detail business segments, accounting policies, the Team Sledd equity investment, credit facility terms, and segment-level financial performance - The company operates two business segments: a Wholesale Segment serving approximately **4,100 retail outlets**, and a Retail Segment operating **twenty health food stores**[24](index=24&type=chunk)[25](index=25&type=chunk) - The company holds a **49% equity interest** in Team Sledd, LLC, with a carrying value of **$10.5 million** as of March 2022. This investment generated **$1.4 million** in earnings for the six months ended March 2022[39](index=39&type=chunk) Segment Operating Income (in thousands) | Period | Wholesale Segment | Retail Segment | | :--- | :--- | :--- | | **Q2 2022** | $6,303 | $746 | | **Q2 2021** | $4,431 | $661 | | **Six Months 2022** | $13,742 | $1,208 | | **Six Months 2021** | $10,219 | $546 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses macroeconomic impacts, operational results for three and six-month periods, and the company's strong liquidity position [Business Update and Impact of COVID-19](index=25&type=section&id=Business%20Update%20and%20Impact%20of%20COVID-19) The company faces macroeconomic headwinds including supply chain disruptions, higher fuel costs, and potential FDA regulations on tobacco products - The business is facing cost pressures from global supply chain challenges, higher fuel costs, and a competitive labor market, creating an inflationary environment[74](index=74&type=chunk) - The company is closely monitoring potential FDA regulations to ban or limit menthol and flavored tobacco products, which would have a negative impact on financial results if implemented[76](index=76&type=chunk) [Results of Operations – Three Months Ended March 2022](index=31&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20March%202022) Consolidated sales increased 3.5% to $391.9 million, driven by wholesale segment growth, while operating expenses rose due to higher compensation and fuel costs - Wholesale segment sales increased by **$13.3 million**, reflecting a **$16.8 million** increase from cigarette price hikes and a **$12.3 million** increase from other product sales, partially offset by a **$15.8 million** decrease from lower cigarette carton volume[96](index=96&type=chunk) - Operating expenses increased by **$2.9 million**, largely due to a **$1.8 million** rise in employee compensation and benefits from a competitive labor market and a **$0.5 million** increase in fuel costs[99](index=99&type=chunk) [Results of Operations – Six Months Ended March 2022](index=35&type=section&id=Results%20of%20Operations%20%E2%80%93%20Six%20Months%20Ended%20March%202022) Consolidated sales grew 4.0% to $814.5 million, with wholesale segment gross profit increasing, though operating expenses rose due to higher employee, insurance, and fuel costs - Wholesale segment sales increased by **$30.3 million**, reflecting a **$35.7 million** increase from cigarette price hikes and a **$26.5 million** increase from other product sales, partially offset by a **$31.9 million** decrease from lower cigarette carton volume[103](index=103&type=chunk) - Operating expenses increased by **$6.7 million**, primarily due to a **$4.8 million** rise in employee compensation, a **$1.0 million** increase in insurance costs, and a **$0.9 million** increase in fuel costs[107](index=107&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company primarily finances operations through a $110.0 million revolving credit facility, with $70.8 million available as of March 2022 - The main source of liquidity is a credit facility with a **$110.0 million** revolving limit and a **$25.0 million** accordion feature[107](index=107&type=chunk) - As of March 2022, the company had **$70.8 million** available under its credit facility, with **$35.2 million** outstanding[111](index=111&type=chunk) - The company paid cash dividends totaling **$3.2 million** for the six-month period ended March 31, 2022[114](index=114&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is noted as not applicable for this reporting period - Not applicable[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal controls - Based on an evaluation as of March 31, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[122](index=122&type=chunk) - There were no changes in internal control over financial reporting during the fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[128](index=128&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - None[130](index=130&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the Company's risk factors as previously disclosed in the Form 10-K for the fiscal year ended September 30, 2021[131](index=131&type=chunk) [Other Items (2, 3, 4, 5)](index=44&type=section&id=Other%20Items) Items 2, 3, 4, and 5 were all reported as not applicable for this reporting period - Items 2, 3, 4, and 5 are not applicable for this reporting period[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and the Interactive Data File - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, and the Interactive Data File (XBRL)[137](index=137&type=chunk) Signatures - The report was duly signed and authorized on April 18, 2022, by Christopher H. Atayan (CEO and Chairman) and Charles J. Schmaderer (VP, CFO, and Secretary)[139](index=139&type=chunk)[140](index=140&type=chunk)

Table of Contents 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 December 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 _________ (Exact name of registrant as specified in its charter) Commission File Number 1-15589 | --- | |----------------------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended September 30, 2021 ◻ 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 (State or other jurisdiction of incorpora ...

Table of Contents 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 June 30, 2021 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________to _________ (Exact name of registrant as specified in its charter) Commission File Number 1-15589 | --- | |------------------------------| | ...

Table of Contents 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 _________ (Exact name of registrant as specified in its charter) Commission File Number 1-15589 | --- | |------------------------------| ...

Table of Contents 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 December 31, 2020 OR ◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________to _________ (Exact name of registrant as specified in its charter) Commission File Number 1-15589 | --- | |----------------------------- ...

PART I [Business](index=3&type=section&id=Item%201.%20Business) AMCON operates wholesale distribution across 26 states and 21 retail health food stores, with wholesale, particularly cigarettes, driving 69% of FY2020 consolidated revenue - The company operates two business segments: Wholesale Distribution and Retail Health Food[8](index=8&type=chunk)[9](index=9&type=chunk) - The Wholesale Segment serves approximately **4,100 retail outlets**, including convenience stores, and is ranked the **8th largest convenience store distributor** in the U.S. by Convenience Store News[10](index=10&type=chunk) - The Retail Segment operates **21 health food stores** under the brand names Chamberlin's Natural Foods, Akin's Natural Foods, and Earth Origins Market[16](index=16&type=chunk) Product Category Contribution to Consolidated Revenue | Product Category | % of Consolidated Revenue (FY2020 & FY2019) | | :--- | :--- | | Cigarettes | ~69% | | Other Products | ~31% | Employee Count by Category (as of September 2020) | Employee Category | Number of Employees (as of Sep 2020) | | :--- | :--- | | Managerial | 45 | | Administrative | 93 | | Delivery | 144 | | Sales & Marketing | 353 | | Warehouse | 294 | | **Total Employees** | **929** | [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks including heavy reliance on declining cigarette sales, intense competition in retail, pandemic impacts, IT infrastructure vulnerabilities, restrictive debt covenants, and common stock delisting potential [Risk Factors Related to the Wholesale Business](index=8&type=section&id=RISK%20FACTORS%20RELATED%20TO%20THE%20WHOLESALE%20BUSINESS) Wholesale operations face significant risks from heavy reliance on declining cigarette sales (69% of FY2020 revenue), increased FDA regulation, excise taxes, and intense competition - The distribution of cigarettes represents a significant portion of the business, accounting for approximately **69% of consolidated revenues in fiscal 2020**, despite being a declining sales category[50](index=50&type=chunk) - The FDA's authority to regulate tobacco products, including potential product bans or restrictions, could materially decrease future revenue[43](index=43&type=chunk)[46](index=46&type=chunk) - Competition is a major risk, with national wholesalers like McLane Co. and Core-Mark, regional wholesalers, and Amazon™ posing threats that could reduce margins and market share[61](index=61&type=chunk) [Risk Factors Related to the Retail Business](index=14&type=section&id=RISK%20FACTORS%20RELATED%20TO%20THE%20RETAIL%20BUSINESS) The retail health food segment faces intense competition from national chains and online retailers, supply disruptions, perishable inventory losses, and reduced customer traffic from anchor store closures - The retail business faces intense competition from a wide range of regional and national competitors, including Whole Foods, Trader Joe's, Sprouts, and online retailers like Amazon™[72](index=72&type=chunk) - Sales are partly derived from traffic generated by other anchor stores in shopping areas; a decline in this traffic could materially impact business[76](index=76&type=chunk)[77](index=77&type=chunk) - The business depends on its ability to anticipate and react to changing consumer preferences in the natural and organic grocery market[78](index=78&type=chunk)[79](index=79&type=chunk) [Risk Factors Related to All Businesses](index=17&type=section&id=RISK%20FACTORS%20RELATED%20TO%20ALL%20OF%20OUR%20BUSINESSES) Broad operational and financial risks include public health crises, acquisition integration issues, trade tariffs, IT system vulnerabilities, restrictive credit covenants, supplier dependence, and asset impairment - A major epidemic or pandemic, such as COVID-19, could adversely affect operations by causing disruptions, labor shortages, and decreased demand[85](index=85&type=chunk) - The company's revolving credit facility contains restrictive covenants that limit its ability to incur debt, make distributions, and sell assets, potentially restricting flexibility[108](index=108&type=chunk)[109](index=109&type=chunk) - The company depends on relatively few suppliers for a large portion of its products and does not have significant long-term contracts, posing a supply chain risk[115](index=115&type=chunk)[116](index=116&type=chunk) [Risk Factors Related to Common Stock](index=24&type=section&id=RISK%20FACTORS%20RELATED%20TO%20OUR%20COMMON%20STOCK) Common stock risks include potential delisting from NYSE American due to fewer than 300 shareholders, which could impact liquidity, and anti-takeover provisions deterring change-of-control transactions - As of September 30, 2020, the number of record owners of common stock was below 300, which could allow the company to suspend its SEC reporting obligations and lead to delisting from NYSE American[125](index=125&type=chunk)[126](index=126&type=chunk) - The company has various anti-takeover mechanisms in place, such as a classified board and supermajority voting requirements, which may discourage takeover attempts[127](index=127&type=chunk)[128](index=128&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - Not applicable[129](index=129&type=chunk) [Properties](index=26&type=section&id=Item%202.%20Properties) As of September 2020, the company operates six distribution centers (685,000 sq ft) and twenty-one retail stores (203,600 sq ft), deemed adequate for current operations Company Facilities Overview | Facility Type | Location | Total Square Feet | | :--- | :--- | :--- | | Distribution | IL, MO, ND, NE, SD, & TN | 685,000 | | Retail | AR, FL, MO, & OK | 203,600 | | **Total** | | **888,600** | [Legal Proceedings](index=26&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no legal proceedings - None[132](index=132&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - Not applicable[133](index=133&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE American (DIT), with consistent $1.00 per share dividends and ongoing share repurchases, including a new 75,000-share authorization in October 2020 - The Company's common stock trades on NYSE American under the symbol '**DIT**'[140](index=140&type=chunk) - As of November 4, 2020, there were **551,437 shares outstanding**[140](index=140&type=chunk) - The company paid cash dividends of **$0.6 million**, or **$1.00 per common share**, during both fiscal 2020 and fiscal 2019[143](index=143&type=chunk) Share Repurchase Activity | Fiscal Year | Shares Repurchased | Total Cost (approx.) | | :--- | :--- | :--- | | 2020 | 28,727 | $2.0 million | | 2019 | 75,113 | $7.5 million | - In October 2020, the Board of Directors renewed the authorization to repurchase up to **75,000 shares** of the Company's common stock[146](index=146&type=chunk) [Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable - Not applicable[149](index=149&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2020 consolidated sales grew 9.3% to **$1.52 billion**, with net income rising to **$5.5 million**, supported by a **$110 million** credit facility and key accounting estimates for asset impairment and lease accounting [Results of Operations](index=30&type=section&id=Results%20of%20Operations) FY2020 consolidated sales increased by **$128.9 million**, primarily from wholesale growth, leading to a **$2.8 million** rise in operating income and **$5.5 million** net income Consolidated Financial Performance (in millions) | Financial Metric (In millions) | Fiscal 2020 | Fiscal 2019 | Change | | :--- | :--- | :--- | :--- | | Sales | $1,521.3 | $1,392.4 | +$128.9 | | Gross Profit | $87.7 | $84.0 | +$3.7 | | Operating Income | $9.1 | $6.3 | +$2.8 | | Net Income | $5.5 | $3.2 | +$2.3 | - Wholesale segment sales increased by **$127.1 million** in FY2020, attributed to cigarette manufacturer price increases (**$45.5 million**), higher sales volume in other product categories (**$37.1 million**), and increased cigarette carton volume/mix (**$32.7 million**)[156](index=156&type=chunk) - Retail segment sales increased by **$1.8 million** in FY2020 due to higher sales volumes in existing stores, partially offset by the closure of one non-performing store[157](index=157&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily from a **$110.0 million** revolving credit facility, with **$62.0 million** outstanding and **$47.6 million** available as of September 2020, secured by assets and subject to covenants - The company finances its operations through a credit facility with a **$110.0 million** revolving credit limit and a March 2025 maturity date[166](index=166&type=chunk)[167](index=167&type=chunk) - At September 2020, **$62.0 million** was outstanding on the credit facility, with **$47.6 million** available, and the average interest rate was **2.41%**[174](index=174&type=chunk)[175](index=175&type=chunk) - The company paid cash dividends of **$0.6 million** (**$1.00 per share**) in both fiscal 2020 and 2019[178](index=178&type=chunk) [Critical Accounting Estimates](index=37&type=section&id=OTHER%20MATTERS%E2%80%94Critical%20Accounting%20Estimates) Significant accounting estimates include allowances for doubtful accounts, inventory, and impairment testing of long-lived assets and goodwill, with the retail unit recording **$0.5 million** and **$2.9 million** in impairment charges in FY2020 and FY2019, respectively - Critical accounting estimates include allowance for doubtful accounts, inventory valuation, impairment of long-lived assets (including goodwill), insurance reserves, income taxes, and revenue recognition[184](index=184&type=chunk)[185](index=185&type=chunk) - The retail reporting unit recorded impairment charges of approximately **$0.5 million** in fiscal 2020 and **$2.9 million** in fiscal 2019 due to heightened competition and earnings shortfalls[201](index=201&type=chunk) - Goodwill on the balance sheet, totaling **$4.4 million**, is allocated entirely to the wholesale reporting unit and was not impaired in fiscal 2020 or 2019[202](index=202&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable - Not applicable[227](index=227&type=chunk) [Financial Statements and Supplementary Data](index=49&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Audited consolidated financial statements show total assets grew to **$188.0 million** in FY2020, with net income of **$5.5 million** and positive operating cash flow of **$15.2 million**, detailing key accounting policies and segment performance [Consolidated Balance Sheets](index=51&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of September 30, 2020, total assets increased to **$188.0 million**, driven by new lease assets and investments, while total liabilities rose to **$123.2 million**, and shareholders' equity reached **$64.8 million** Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Highlights (in millions) | Sep 30, 2020 | Sep 30, 2019 | | :--- | :--- | :--- | | Total Assets | $188.0 | $157.7 | | Total Liabilities | $123.2 | $97.0 | | Total Shareholders' Equity | $64.8 | $60.8 | [Consolidated Statements of Operations](index=53&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) FY2020 sales reached **$1.52 billion**, with operating income increasing to **$9.1 million** and net income rising to **$5.5 million** (**$9.76 per diluted share**) Consolidated Income Statement Highlights (in millions, except EPS) | Income Statement Highlights (in millions, except EPS) | Fiscal Year 2020 | Fiscal Year 2019 | | :--- | :--- | :--- | | Sales | $1,521.3 | $1,392.4 | | Gross Profit | $87.7 | $84.0 | | Operating Income | $9.1 | $6.3 | | Net Income | $5.5 | $3.2 | | Diluted EPS | $9.76 | $5.25 | [Consolidated Statements of Cash Flows](index=55&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) FY2020 operating cash flow was **$15.2 million**, a significant improvement from a **$11.5 million** use in 2019, with investing activities using **$13.3 million** and financing activities using **$1.6 million** Consolidated Cash Flow Summary (in millions) | Cash Flow Summary (in millions) | Fiscal Year 2020 | Fiscal Year 2019 | | :--- | :--- | :--- | | Net cash from operating activities | $15.2 | $(11.5) | | Net cash used in investing activities | $(13.3) | $(4.4) | | Net cash (used in) from financing activities | $(1.6) | $15.7 | [Notes to Consolidated Financial Statements](index=56&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Notes detail accounting policies, including **69%** revenue from cigarette sales, ASC 842 adoption, a **$10.0 million** investment in Team Sledd LLC, debt, and segment performance showing wholesale profitability versus retail loss - Cigarette sales accounted for approximately **69%** of the Company's consolidated revenue during both fiscal 2020 and fiscal 2019[255](index=255&type=chunk) - In April 2020, the Company invested **$10.0 million** in Team Sledd LLC, a wholesale distributor, structured as **$6.5 million** in equity and a **$3.5 million** secured loan[308](index=308&type=chunk) Segment Performance (FY 2020, in millions) | Segment Performance (FY 2020, in millions) | Wholesale | Retail | | :--- | :--- | :--- | | Total External Revenue | $1,475.3 | $46.0 | | Operating Income (Loss) | $17.3 | $(1.8) | [Controls and Procedures](index=85&type=section&id=Item%209A.%20Controls%20and%20Procedures) Senior management concluded that disclosure controls and internal control over financial reporting were effective as of September 30, 2020, based on the COSO 2013 framework - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[369](index=369&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of September 30, 2020, based on the COSO 2013 framework[376](index=376&type=chunk) [Other Information](index=89&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[381](index=381&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=90&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance, including the code of ethics and audit committee, is incorporated by reference from the December 2020 proxy statement - Required information is incorporated by reference from the definitive proxy statement for the December 2020 Annual Meeting of Shareholders[384](index=384&type=chunk) [Executive Compensation](index=90&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the definitive proxy statement - Required information is incorporated by reference from the definitive proxy statement[386](index=386&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=90&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the definitive proxy statement - Required information is incorporated by reference from the definitive proxy statement[387](index=387&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=90&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the definitive proxy statement - Required information is incorporated by reference from the definitive proxy statement[388](index=388&type=chunk) [Principal Accounting Fees and Services](index=90&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the definitive proxy statement - Required information is incorporated by reference from the definitive proxy statement[389](index=389&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=92&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements included under Item 8 and all exhibits filed with the Form 10-K, noting that financial statement schedules are not applicable - The financial statements are listed on the index to Consolidated Financial Statements under Item 8[392](index=392&type=chunk) - Financial Statement Schedules are not applicable[393](index=393&type=chunk) [Form 10-K Summary](index=94&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - None[398](index=398&type=chunk)