FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, including the Management's Discussion and Analysis 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," "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. You should understand 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:

† increases in state and federal excise taxes on cigarette and tobacco products,

† integration risk related to acquisitions or other efforts to expand,

† higher commodity prices which could impact food ingredient costs for many of the products we sell,

† regulation of cigarette and tobacco products by the FDA, in addition to existing state and federal regulations by other agencies,

† potential bans or restrictions imposed by the FDA on the manufacture, distribution, and sale of certain cigarette and tobacco products,

† increases in manufacturer prices,

† increases in inventory carrying costs and customer credit risk,

† changes in promotional and incentive programs offered by manufacturers,

† decreased availability of capital resources,

† demand for the Company's products, particularly cigarette and tobacco products,

† new business ventures or acquisitions,

† domestic regulatory and legislative risks,

† competition,

† poor weather conditions,

† increases in fuel prices,

† consolidation trends within the convenience store and wholesale distribution industry,

† natural disasters and domestic unrest,

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

FORWARD-LOOKING STATEMENTS (continued)

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.

CRITICAL ACCOUNTING ESTIMATES

Certain accounting estimates used in the preparation of the Company's 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, 2011, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these policies during our fiscal quarter ended June 2012.

THIRD FISCAL QUARTER 2012 (Q3 2012)

The following discussion and analysis includes the Company's results of operations for the three and nine months ended June 2012 and June 2011.

Wholesale Segment

Our wholesale segment is one of the largest wholesale distributors in the United States serving approximately 5,000 retail outlets including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. In October 2011, Convenience Store News ranked us as the sixth (6th) largest convenience store distributor in the United States based on annual sales.

We currently distribute over 14,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery, beverages, groceries, paper products, health and beauty care products, frozen and chilled products and institutional food service products. We also provide consultative services to our customers in the areas of marketing, merchandising, inventory optimization, and information systems which are designed to enhance the ability of our customers to compete and maximize their profitability. Convenience stores represent our largest customer category.

Retail Segment

The Company's retail health food stores, which are operated as Chamberlin's Market & Café and Akin's Natural Foods Market, carry over 30,000 different national and regionally branded and private label products. These products include 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 first established in 1935, operates six stores in and around Orlando, Florida. Akin's, which was also established in 1935, has a total of eight locations in Oklahoma, Nebraska, Missouri, and Kansas.

Business Update - Wholesale Segment

From sugary drinks to tobacco products, legislative initiatives across the country (i.e. higher excise taxes) are squarely taking aim at many of the products sold by convenience stores which is one of our core customer segments. We believe these trends could accelerate as states continue to struggle with budget shortfalls. The convenience store industry continues to consolidate and from time-to-time, some of our customers are acquired by larger chains which either self-distribute or have preexisting relationships with competing distributors. Accordingly, the competitive landscape remains intense and we expect these factors to pressure margins moving forward.

Business Update - Wholesale Segment (continued)

The industry remains highly fragmented with a high percentage of independent single-store operators and mid-sized convenience store chains. Our customers' reliance on traditional revenue streams (gas, tobacco products etc.) is evolving and many store owners are transitioning their businesses into newer quick-style restaurant retail formats. Our Company offers a comprehensive suite of next generation merchandising programs to assist convenience stores in making this transition. This is an important consideration as the wholesale competitive environment is intense and customers are looking for suppliers with the best price-value relationship.

Business Update - Retail Segment

Our Chamberlin's stores in Florida have shown improved sales results as that region of the country gradually recovers from the severity of the economic downturn. Our Akin's stores, which are located in the Midwest, have experienced increased competition in certain markets resulting from the expansion of national and regional health food chains. We are actively seeking opportunities for expansion.

The popularity and awareness of natural products continues to grow. Consumers of natural products tend to be a better educated customer segment who demand a higher level of product knowledge by in-store associates; a level of service which is difficult for mass merchandisers to deliver in a big box retail format. This is particularly true in product categories such as vitamin supplements which involve a high degree of expert consultation and personal interaction throughout the sales engagement process. We believe that our high level of service differentiates our stores from those of our competitors. This is an important consideration as the retail health food industry is highly competitive and customers are looking for a compelling price-value relationship.

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 2012:



                                                  For the three months ended June
                                                                          Incr
                                        2012             2011            (Decr)       % Change
CONSOLIDATED:
Sales (1)                           $ 307,112,774    $ 263,828,199    $ 43,284,575         16.4
Cost of sales                         287,211,769      245,610,146      41,601,623         16.9
Gross profit                           19,901,005       18,218,053       1,682,952          9.2
Gross profit percentage                       6.5 %            6.9 %

Operating expense                      16,398,089       14,300,655       2,097,434         14.7
Operating income                        3,502,916        3,917,398        (414,482 )      (10.6 )
Interest expense                          361,756          372,525         (10,769 )       (2.9 )
Income tax expense                      1,343,000        1,791,000        (448,000 )      (25.0 )
Income from operations after
income taxes                            1,846,001        1,827,751          18,250          1.0

BUSINESS SEGMENTS:
Wholesale
Sales                               $ 297,613,762    $ 254,318,948    $ 43,294,814         17.0
Gross profit                           15,827,670       14,177,301       1,650,369         11.6
Gross profit percentage                       5.3 %            5.6 %
Retail
Sales                               $   9,499,012    $   9,509,251    $    (10,239 )       (0.1 )
Gross profit                            4,073,335        4,040,752          32,583          0.8
Gross profit percentage                      42.9 %           42.5 %

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 - Q3 2012 vs. Q3 2011

Sales in our Wholesale Segment increased $43.3 million during Q3 2012 as compared to Q3 2011. Significant items impacting sales during Q3 2012 included a $29.3 million increase in sales related to our acquisition of LPS in May 2011, a $7.2 million increase in sales related to price increases implemented by cigarette manufacturers, a $2.9 million increase in sales related to the volume and mix of cigarette cartons sold, and a $3.9 million increase in sales in our tobacco, beverage, snacks, candy, grocery, health & beauty products, automotive, foodservice, and store supplies categories ("Other Products").

Sales in our Retail Segment were substantially unchanged in Q3 2012 as compared to Q3 2011. Significant items impacting sales during the period were a $0.5 million increase in our Chamberlin's retail stores, offset by a $0.5 million decrease in sales in our Akin's retail stores. Sales in our Chamberlin's stores continue to show improved results coming off the depths of the severe recession in the Florida region, while sales in our Akin's retail stores have been impacted by increased competition from the expansion of national and regional health food chains in our markets.

GROSS PROFIT - Q3 2012 vs. Q3 2011

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 $1.7 million in Q3 2012 as compared to Q3 2011. Of this increase, approximately $1.5 million related to our acquisition of LPS and $0.9 million related to the benefit from cigarette manufacturer price increases and the impact of increases in cigarette excise taxes. These increases were partially offset up a $0.7 million decrease in gross profit related to the volume and mix of sales in our cigarette and Other Product categories. Gross profit in our Retail Segment was substantially unchanged in Q3 2012 as compared to Q3 2011.

OPERATING EXPENSE - Q3 2012 vs. Q3 2011

Operating expense includes selling, general and administrative expenses and depreciation and amortization. Selling, general, and administrative expenses include costs related to our sales, warehouse, delivery and administrative departments for all segments. Specifically, purchasing and receiving costs, warehousing costs and costs of picking and loading customer orders are all classified as selling, general and administrative expenses. Our most significant expenses relate to employee costs, facility and equipment leases, transportation costs, fuel costs, insurance, and professional fees.

Q3 2012 operating expenses increased $2.1 million as compared to Q3 2011. Significant items impacting operating expenses during Q3 2012 included an additional $1.4 million in operating expenses related to servicing our new business added in conjunction with the LPS acquisition, a $0.4 million increase in compensation expense, and a $0.3 million increase in other operating expenses.

INCOME TAX EXPENSE - Q3 2012 vs. Q3 2011

The effective income tax rate for Q3 2012 was 42.1% as compared to 49.5% in Q3 2011. The change in the effective tax rates between the fiscal periods was primarily related to the deductibility of certain expenses based on limitations set forth by the Internal Revenue Service.

RESULTS OF OPERATIONS - NINE MONTHS ENDED JUNE 2012:



                                                        For the nine months
                                                             ended June
                                                                          Incr
                                        2012             2011            (Decr)        % Change
CONSOLIDATED:
Sales                               $ 866,505,090    $ 725,388,399    $ 141,116,691         19.5
Cost of sales                         808,750,009      673,193,512      135,556,497         20.1
Gross profit                           57,755,081       52,194,887        5,560,194         10.7
Gross profit percentage                       6.7 %            7.2 %

Operating expenses                     48,877,267       41,902,384        6,974,883         16.6
Operating income                        8,877,814       10,292,503       (1,414,689 )      (13.7 )
Interest expense                        1,105,707        1,020,980           84,727          8.3
Income tax expense                      3,316,000        4,169,000         (853,000 )      (20.5 )
Income from operations after
income taxes                            4,749,086        5,244,493         (495,407 )       (9.4 )

BUSINESS SEGMENTS:
Wholesale
Sales                               $ 838,329,436    $ 696,878,565    $ 141,450,871         20.3
Gross profit                           45,688,406       39,977,660        5,710,746         14.3
Gross profit percentage                       5.4 %            5.7 %
Retail
Sales                               $  28,175,654    $  28,509,834    $    (334,180 )       (1.2 )
Gross profit                           12,066,675       12,217,227         (150,552 )       (1.2 )
Gross profit percentage                      42.8 %           42.9 %

SALES - Nine Months Ended June 2012

Sales in our Wholesale Segment increased $141.5 million for the nine months ended June 2012 as compared to the same prior year period. Significant items impacting our Wholesale Segment sales for the nine months ended June 2012 included a $120.0 million increase in sales related to the acquisition of LPS, a $19.2 million increase in sales related to price increases implemented by cigarette manufacturers, and a $8.0 million increase in our Other Product categories sales. These increases were partially offset by a $5.7 million reduction in sales related to the volume and mix of cigarette cartons sold.

Sales in our Retail Segment for the nine months ended June 2012 decreased approximately $0.3 million as compared to the same prior year period. The change in sales is primarily related to lower sales in our Akin's retail stores which have experienced increased competition from the expansion of national and regional health food chains, partially offset by higher sales in our Chamberlin's stores which continue to show improved results coming off the depths of the severe recession.

GROSS PROFIT - Nine Months Ended June 2012

Gross profit in our Wholesale Segment increased $5.7 million for the nine month period ended June 2012 as compared to the same prior year period. Of this increase, approximately $6.5 million related to our acquisition of LPS and $0.9 million related to the benefit from cigarette manufacturer price increases and the impact of increases in cigarette excise taxes. Partially offsetting this was a $1.7 million reduction in gross profit related to the volume and mix of sales in our cigarette and Other Product categories.

Gross profit in our Retail Segment decreased $0.2 million for the nine month period ended June 2012 as compared to the same prior year period. This decrease was primarily related to lower sales volumes in our Akin's retail stores.

OPERATING EXPENSE - Nine Months Ended June 2012

Operating expenses increased $7.0 million for the nine months ended June 2012 as compared to the same prior year period. Significant items impacting operating expenses during the nine month period ended June 2012 included an additional $5.9 million in operating expenses related to servicing our new business added in conjunction with the LPS acquisition, a $0.8 million net increase in bad debt expense, a $0.3 million increase in our Retail Segment operating expenses, a $0.3 million increase in fuel expense, and a $0.5 million increase in other operating expenses. These increases were partially offset by a $0.8 million reduction in compensation expense.

INCOME TAX EXPENSE -Nine Months Ended June 2012

The effective income tax rate for the nine months ended was 41.1% as compared to 44.3% same prior year period. The change in the effective tax rates between fiscal periods was primarily related to the deductibility of certain expenses based on limitations set forth by the Internal Revenue Service.

LIQUIDITY AND CAPITAL RESOURCES

Overview

† General. The Company requires cash to pay operating expenses, purchase inventory, and make capital investments. In general, the Company finances its cash flow requirements with cash generated from operating activities and credit facility borrowings.

† Operating Activities. The Company used cash of approximately $6.7 million for operating activities during the nine months ended June 2012. Significant uses of cash during the period included increases in accounts receivable and inventory and decreases in both accounts payable and income taxes payable. These items were partially offset by a decrease in prepaid and other current assets, an increase in deferred income taxes, and the impact of net earnings.

Our 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 the warm weather months, which is our peak time of operations, we generally carry higher amounts of inventory to ensure high fill rates and customer satisfaction.

† Investing Activities. The Company used cash of $0.9 million during the nine month period ended June 2012 for investing activities, primarily related to capital expenditures for property and equipment.

† Financing Activities. The Company generated cash of $6.8 million from financing activities during the nine months ended June 2012. Of this amount, approximately $9.3 million related to net borrowings on the Company's credit facility. Partially offsetting this was $1.0 million related to repayment on long-term debt, $0.9 million related to the repurchase of the Company's common shares, and $0.6 million related to dividends on the Company's common and preferred stock. †
† Cash on Hand/Working Capital. At June 2012, the Company had cash on hand of $0.6 million and working capital (current assets less current liabilities) of $63.6 million. This compares to cash on hand of $1.4 million and working capital of $49.0 million at September 2011.

CREDIT AGREEMENT

The Company primarily finances its operations through a credit facility agreement with Bank of America (the "Facility") and long-term debt agreements with banks.

The Facility included the following significant terms at June 2012:

† April 2014 maturity date and a $70.0 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 $5.0 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 the original term of the agreement or the end of any renewal period.

† Prepayment penalty equal to one-half of one percent (1/2%) if the Company prepays the entire Facility or terminates it in year one of the agreement, and one-fourth of one percent (1/4%) if the Company prepays the entire Facility or terminates it in year two of the agreement. The prepayment penalty is calculated based on the maximum loan limit.

† The Facility bears interest at either the bank's prime rate or at LIBOR plus 175 basis points, at the election of the Company.

† 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.

† Provides that the Company may not pay dividends on its common stock in excess of $1.00 per share on an annual basis.

† A financial covenant requiring a fixed charge coverage ratio of at least 1.1 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 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 June 2012 was $69.6 million, of which $30.1 million was outstanding, leaving $39.5 million available.

At June 2012, 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 2.43% at June 2012.

For the nine months ended June 2012, our peak borrowings under the Facility were $50.7 million, and our average borrowings and average availability under the Facility were $33.8 million and $30.0 million, respectively. Our availability to borrow under the Facility generally decreases as inventory and accounts receivable levels increase because of the borrowing limitations that are placed on collateralized assets.

Cross Default and Co-Terminus Provisions

The Company's owned real estate in Bismarck, ND, Quincy, IL, and Rapid City, SD, and certain warehouse equipment in the Rapid City, SD warehouse are financed through term loans with BMO Harris, NA ("BMO") which is also a participant lender on the Company's revolving line of credit. The BMO loans contain cross default provisions which cause all loans with BMO to be considered in default if any one of the loans where BMO is a lender, including the revolving credit facility, is in default. There were no such cross defaults at June 2012. In addition, the BMO loans contain 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.

Dividends Payments

The Company paid cash dividends on its common stock and convertible preferred stock issuances totaling $0.2 million and $0.6 million for the three and nine month periods ended June 2012, respectively, and $0.2 million and $0.5 million for the three and nine month periods ended June 2011, respectively.

Contractual Obligations

There have been no significant changes to the Company's contractual obligations as set forth in the Company's annual report on Form 10-K for the fiscal period ended September 30, 2011.

Other

AMCON has issued a letter of credit in the amount of approximately $0.4 million to its workers' compensation insurance carrier as part of its self-insured loss control program.

Off-Balance Sheet Arrangements

. . .