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:

· 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,

· risks associated with the acquisition of assets or new businesses 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,

· 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 trade tariffs may have on our product costs or


    on consumer disposable income and demand,

· increases in fuel costs and expenses associated with operating a refrigerated


    trucking fleet,

· the risks associated with a highly 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,

· 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,








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· increases in manufacturer prices,

· increases in inventory carrying costs and customer credit risks,

· changes in promotional and incentive programs offered by 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,

· 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.





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, 2019, as filed with the Securities and Exchange Commission. There have been no significant changes with respect to these policies during the three months ended December 2019 other than the adoption of ASC 842 which did have a material impact on the Company's consolidated balance sheet.







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FIRST FISCAL QUARTER 2020 (Q1 2020)

The following discussion and analysis includes the Company's results of operations for the three months ended December 2019 and December 2018:





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 November 2019, Convenience Store News ranked us as the eighth (8th) 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, optimizing inventory, 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. 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-two retail health food stores as Chamberlin's Natural Foods ("Chamberlin's"), Akin's Natural Foods ("Akins"), 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 seven locations in Arkansas, Missouri, and Oklahoma. Earth Origins Market has a total of eight locations in Florida.





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