UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended May 3029, ~~2009~~2010

o 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 0-5815

AMERICAN CONSUMERS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Georgia

(State or other jurisdiction of incorporation or organization)

58-1033765

(I.R.S. Employer Identification No.)

55 Hannah Way, Rossville, GA

(Address of principal executive office)

30741

(Zip Code)

Registrant’s telephone number, including area code: (706) 861-3347

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

Common Stock, $0.10 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No x

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 periods that the registrant was required to file such report(s)) and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. xo

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

Large accelerated filer o Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company) o Smaller reporting company x

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

Yes o No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter:

As of November 2928, ~~2008~~2009 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $~~392~~567,~~125~~760. (Calculated for these purposes by multiplying the total number of outstanding shares held by non-affiliates by the average of available bid and asked price information for such date.)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

~~766~~749,~~352~~475 shares of Common Stock, $0.10 par value, as of August 2631, ~~2009~~2010.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes:

(1) specified portions of the Registrant’s Annual Report to Shareholders for the fiscal year ended May 3029, ~~2009~~2010, incorporated by reference into Part II of this Annual Report on Form 10-K.

(2) specified portions of the Registrant’s Definitive Proxy Statement filed with the Securities and Exchange Commission for the Registrant’s ~~2009~~2010 Annual Meeting of Shareholders, incorporated by reference into Part III of this Annual Report on Form 10-K.

Part I

ITEM 1. BUSINESS

Incorporated in Georgia in 1968, American Consumers, Inc. (which we refer to herein as the “Company,” “we” or “us,” and “ACI”), operates eight (8) supermarkets within a compact geographical area that comprises Northwest Georgia, Northeast Alabama, and Southeast Tennessee.

All of the Company’s supermarkets are operated under the name “Shop-Rite.” All of the Company’s supermarkets are self-service and are engaged in the retail selling of groceries including meats, fresh produce, dairy products, frozen foods, bakery products, tobacco products, and miscellaneous other non-food items. The Company’s supermarkets feature national brand merchandise with only a minor part of sales from controlled-label, private-label or generic merchandise. “Controlled-label” or “private-label” merchandise is merchandise purchased from national or local suppliers under a trade name chosen by the wholesaler supplying the merchandise. The Company’s supermarkets offer milk and certain dairy products, as well as canned vegetables, frozen vegetables and jellies, under the controlled-labels “Foodland,” “Food Club,” “Ultimate Choice,” “Freshland,” “Price Saver,” “Top Crest,” “Top Care,” “Select” and “Valu Time.” Bread and related bakery items are also offered as controlled-label groceries.

During the fiscal years ended May 3029, ~~2009~~2010 and May 3130, ~~2008~~2009, the Company’s major supplier of staple groceries was Mitchell Grocery Corporation (“Mitchell”), with its principal corporate offices in Albertville, Alabama. For the fiscal year ended May 3029, ~~2009~~2010, approximately 8482% of the Company’s total inventory purchases of $25,~~971~~048,~~302~~904 were made from Mitchell. For the fiscal year ended May 3130, ~~2008~~2009, approximately 8284% of the Company’s total inventory purchases of $2625,~~265~~971,~~102~~302 were made from Mitchell.

Various local suppliers within the geographical area served by the Company’s supermarkets provide the Company with certain perishable items, including produce, and accounted for approximately 1618% and 1816% of the Company’s total inventory purchases during fiscal years ~~2009~~2010 and ~~2008~~2009, respectively. The Company believes that there are other adequate and convenient sources of groceries, including several area and local suppliers, which could meet its needs. Accordingly, while the Company has elected to purchase the majority of its inventory from Mitchell for reasons of cost, the Company is not dependent upon any particular supplier for its requirements of groceries.

The supermarket industry is highly competitive and the principal method of competition historically has been the pricing of groceries. The Company’s current major competitors now include various local and four regional chains, as well as one major national retailer (Wal-Mart). The nature of price competition which the Company encounters from these major competitors includes the sale of selected items at below cost prices as “loss-leaders” or “advertised specials,” the practice of “double couponing” or matching coupon discounts with additional cash discounts, loyalty card programs, as well as the sale of certain main line items at prices below the Company’s wholesale cost. The Company believes that its major competitors have been and are able to obtain preferential treatment from suppliers in the form of advertising allowances, lower prices and other concessions not available to the Company. These factors allow our competitors to engage in the aggressive pricing and promotional activities described above at a level that the Company cannot match, putting us at a competitive disadvantage. As a result of these competitive conditions, it has been difficult to achieve meaningful sales increases apart from the addition of two new store locations in recent years.

As discussed in more detail below, these factors also have made it difficult for the Company to sustain consistent improvements in gross profit.

Management believes that, in recent periods, entry into the Company’s trade area by Publix, Save-A-Lot and United Grocery Outlets, and further expansion in the area by Food Lion and Wal-Mart in addition to the presence of Ingle’s and Bi-Lo, have created a situation of ongoing price competition and increasingly expensive advertising and promotional activities which place an operation the size of the Company at a significant competitive disadvantage. These developments, combined with increased overhead expenses and rising inventory costs, have resulted in constant pressure on the Company’s market share, sales and profits over the past several years, which has made it difficult for the Company to operate at a consistent profit.

The addition of two stores since April of 2001 and the change in our principal inventory supplier in March of 2000 has allowed the Company to better compete in the marketplace. The Company recorded a net loss for the fiscal year ended May 29, 2010 of $478,284 due to decreased sales ($1,483,481) and a resulting decrease in gross margin ($561,083) compared to the past fiscal year and a flood loss of $96,390 incurred in 2010. The Company recorded a net profit for the fiscal year ended May 30, 2009 of $60,614. This represented our third consecutive profitable year after struggling with operating losses for the three prior fiscal years. We recorded a net profit of $132,741 for the fiscal year ended May 31, 2008 and $97,502 for the fiscal year ended June 2, 2007, as compared to net losses sustained for the fiscal years ended June 3, 2006, May 28, 2005 and May 29, 2004 of $167,379, $331,360 and $236,050, respectively. ~~We recorded a net profit of $40,134 for the fiscal year ended May 31, 2003.~~

~~Although~~The ~~sales~~Company ~~decreased~~experienced ~~during~~sales ~~fiscal~~decreases ~~2009~~in byeach ~~$71,305~~of ~~(or~~the ~~0.21%),~~past ~~management~~two ~~was~~fiscal ~~pleased~~years, with the ~~overall~~current ~~net~~fiscal ~~income achieved for the~~ year, asdecrease ~~improvements~~of in4.31% ~~the~~being ~~gross~~more ~~margin~~significant ~~helped~~that ~~to offset~~ the ~~sales~~0.21% decrease ~~and~~experienced ~~significant~~for ~~increases~~fiscal in2009. This ~~operating~~decrease, ~~general~~along ~~and~~with ~~administrative~~a ~~expenses (both~~0.60% decrease in ~~absolute~~gross ~~terms~~margin and asthe a$96,390 ~~percentage~~flood ofloss ~~the~~led ~~Company’s~~to ~~slightly~~the ~~reduced~~net ~~sales). Sales~~loss ~~increased~~of by $~~709~~478,~~579~~284 ~~(or~~for ~~2.10%)~~the ~~during fiscal 2008 as compared to fiscal 2007~~year. ~~Sales~~Even ~~increased~~with bythe ~~$503,124~~decrease ~~(or~~in ~~1.51%)~~gross ~~for~~margin, ~~fiscal~~our ~~2007~~loss ~~even~~would ~~though~~have ~~fiscal~~been ~~2006~~significantly ~~was~~less a– ~~fifty~~management ~~three~~estimates ~~week~~approximately ~~year~~$30,000 ~~while~~– ~~fiscal~~had ~~2007~~sales ~~was~~not ~~only~~decreased aand ~~fifty~~the ~~two~~flood ~~week~~loss ~~year~~not occurred. While ~~this~~sales ~~increase~~decreased ~~was significantly less than those experienced~~ during ~~the prior two~~ fiscal ~~years~~2009 ofby ~~2006~~$71,305 (~~3.67%)~~or ~~and 2005 (6~~0.9621%), ~~adjusting~~management ~~to eliminate~~was ~~the~~pleased ~~effects~~with of the ~~extra~~overall ~~week~~net ofincome ~~operations~~achieved ~~during~~for the 2009 fiscal ~~2006~~year, ~~would~~as ~~have~~improvements ~~yielded~~in anthe ~~annual~~gross ~~sales~~margin ~~increase~~helped ofto ~~3.46%~~offset ~~for~~the ~~fiscal~~sales ~~2007. Management~~decrease ~~believes~~and ~~that~~significant ~~factors~~increases ~~contributing~~in tooperating, ~~the~~general ~~small~~and ~~sales~~administrative ~~decrease~~expenses ~~during~~(both ~~fiscal~~in ~~2009~~absolute ~~included~~terms ~~retail~~and ~~price~~as ~~decreases~~a ~~throughout~~percentage of the ~~fiscal~~Company’s ~~year~~slightly inreduced ~~certain~~sales). Sales ~~lines~~increased ~~such~~by ~~as dairy~~$709,579 as(or ~~well~~2.10%) asduring afiscal ~~continuation~~2008 ofas ~~the~~compared ~~trend~~to ~~noted~~fiscal in2007, ~~recent~~which ~~periods~~management ofbelieved ~~customers~~was ~~switching~~due ~~from~~to ~~national~~customers ~~name~~deciding ~~brand~~for ~~items~~economic reasons to ~~private~~buy ~~label~~more groceries and ~~generic~~eat ~~items~~at ~~which,~~home ~~while~~more ~~typically~~often, ~~selling at~~as ~~lower~~well ~~prices~~as ~~than~~to the ~~national~~Company’s ~~name~~success ~~brand~~in ~~items,~~recovering ~~also~~certain ~~tend~~cost toincreases ~~produce~~through aadjustments ~~better~~to ~~gross~~retail ~~margin~~prices asduring ~~compared to~~ the ~~national brands~~year.

~~The~~Factors ~~gross~~contributing ~~margin~~to ~~for~~the ~~fiscal~~small ~~2009~~sales ~~increased~~decrease ~~0.70%~~during ~~from~~ fiscal ~~2008,~~2009 toand ~~24.55%~~the ~~which~~more ~~remained~~significant ~~relatively~~sales ~~consistent~~decrease ~~with~~in ~~the~~fiscal ~~gross~~2010 ~~margin~~included ofretail ~~24.83%~~price ~~realized~~decreases ~~for~~throughout ~~the~~both ~~fourth~~years ~~quarter~~in ofcertain ~~fiscal~~lines ~~2008. The~~such ~~increase~~as isdairy, ~~due~~as inwell ~~part~~as toa continuation of the ~~shift~~trend noted in ~~customers’~~recent ~~buying~~periods ~~patterns~~of tocustomers ~~include~~ purchasing more ~~lower-priced,~~private ~~higher-margin~~label and generic ~~brands~~merchandise, aswhich ~~mentioned~~normally ~~above. Management~~retails ~~also~~at ~~has~~lower ~~continued~~prices tothan ~~carefully~~national ~~manage~~brands, magnifying the ~~Company’s~~impact ~~overall~~on ~~mix~~our ofselling ~~retail~~ prices inof ~~order~~a tosharply ~~maintain~~more ~~the~~competitive ~~gross~~environment ~~margin,~~that ~~which~~is ~~ranged~~now ~~from 23~~widespread.~~75%~~ It tois ~~24.92%~~also ~~for~~difficult ~~the~~to ~~four~~compete ~~quarters~~with ofaggressive ~~fiscal~~promotions ~~2009. Operating,~~such ~~general~~as ~~and~~fast ~~administrative~~food ~~expenses~~franchises ~~increased~~offering byentrée ~~$268,637~~items ~~(or 3.29%)~~ for ~~fiscal~~one ~~2009~~dollar, ~~and~~as ~~also~~both ~~increased~~these ~~0.83%~~outlets asand amore ~~percent~~full ofservice ~~sales. Increases~~restaurants incut ~~payroll,~~prices ~~utilities~~this ~~and~~year ~~telephone,~~to ~~rent,~~increase ~~insurance, general~~their ~~and~~share ~~office~~of ~~supplies,~~consumers’ ~~depreciation~~food purchases, ~~and~~in ~~professional~~response ~~fees~~to ~~were~~the ~~somewhat~~trend ~~offset~~observed ~~by decreases~~ in ~~advertising~~recent ~~and~~periods ~~promotion,~~of ~~repairs~~customers ~~and~~preparing ~~maintenance,~~meals ~~bank~~at ~~service~~home ~~charges~~to ~~and~~reduce ~~credit~~spending. Management ~~card~~also ~~fees,~~believes ~~bad~~that ~~checks~~the ~~and~~economy ~~miscellaneous~~itself ~~expenses. Management~~is ~~will~~affecting ~~continue~~retail togrocery ~~monitor~~sales, ~~these~~as ~~expenses~~individuals ~~and~~are ~~attempt~~forced to ~~control~~reduce ~~costs~~spending asin ~~much~~an aseffort ~~possible. Controlling~~to ~~the~~provide ~~growth~~other ofessentials ~~these~~to ~~expenses~~their ~~has~~families.

~~become~~Pricing ~~increasingly~~adjustments ~~challenging~~made into ~~recent~~stimulate ~~years~~sales during fiscal 2010 contributed to some erosion of the gross margin, ~~however~~which decreased from 24.55% for fiscal 2009 to 23.95% for fiscal 2010. However, ~~given~~management was pleased to be able to maintain the ~~ongoing~~fiscal ~~regulatory~~2010 gross margin at a level above the 23.85% realized in fiscal 2008 and ~~market~~the ~~driven~~23.73% ~~increases~~realized in ~~several~~fiscal 2007. The 24.55% gross margin realized for fiscal 2009 was relatively consistent with the gross margin of ~~these~~24.83% ~~costs~~realized for the fourth quarter of fiscal 2008. The fiscal 2009 increase was due in part to a shift in customers’ buying patterns to include more lower-priced, higher-margin generic brands. Management also was able to manage the Company’s overall mix of retail prices to maintain the gross margin, which ranged from 23.75% to 24.92% for the four quarters of fiscal 2009. The Company’s 23.85% gross margin for fiscal 2008 represented an increase of 0.12% from fiscal 2007, but remained a decrease of 0.33% as compared to the 24.18% gross margin achieved for fiscal 2006. The slight increase over fiscal 2007 was attributable to management’s efforts to manage retail prices to increase gross margin when possible, and due to the Company having refrained from certain sales promotions conducted during fiscal 2007 which had a negative impact on gross margin.

~~The~~It ~~Company’s~~is ~~23.85%~~extremely ~~gross~~difficult ~~margin~~to ~~for~~remain ~~fiscal~~competitive ~~2008~~without ~~represented~~offering ana ~~increase~~wide variety of ~~0.12%~~items from ~~fiscal~~which ~~2007,~~consumers ~~but~~may ~~remained~~choose; ahowever, ~~decrease~~this ofalso ~~0.33%~~creates assignificant ~~compared~~challenges to ~~the~~our ~~24.18%~~ability ~~gross margin achieved for fiscal 2006. The slight increase over fiscal 2007 was attributable~~ to ~~management’s efforts~~maintain toa ~~manage~~profitable ~~retail prices to increase~~ gross margin ~~when~~while ~~possible,~~customers ~~and~~are ~~due~~seeking to ~~the~~lower ~~Company~~their ~~having~~overall ~~refrained~~grocery ~~from~~bill. Management ~~certain~~will ~~sales~~continue ~~promotions~~its ~~conducted~~efforts ~~during~~to ~~fiscal~~keep ~~2007~~the ~~which had a negative impact on~~ gross margin~~. However,~~ ~~this~~in ~~slight~~line ~~increase~~through ~~was~~strategic ~~only~~pricing ~~achieved during the fourth quarter~~adjustments, aswhile ~~the~~competing ~~Company struggled~~ with ~~slight~~larger ~~decreases~~chains inwith ~~the~~more ~~gross~~resources ~~margin~~available ~~as compared~~ to ~~the~~them ~~comparable period of fiscal 2007 throughout the remainder of the year, due~~ to ~~ongoing~~reduce ~~increases in~~ the ~~wholesale~~impact ~~costs~~ of ~~certain grocery~~lower ~~items~~gross ~~as well as gradual increases in suppliers’ fuel surcharges due to increased gasoline prices~~margins, ~~that~~and we ~~were~~remain ~~not~~optimistic ~~able~~about ~~to immediately recover through adjustments to~~ the ~~Company’s~~economy ~~retail~~and ~~prices due to~~ the ~~impacts~~possibility of ~~competition~~its recovery. ~~Although operating~~However, ~~general~~if ~~and~~we ~~administrative~~are ~~expenses~~forced ~~increased~~to byreduce ~~$170,774~~the ~~(or~~gross ~~2.13%)~~margin in ~~fiscal~~order ~~2008,~~to ~~they~~remain ~~remained~~competitive, ~~essentially flat~~ as aoccurred ~~percentage~~during offiscal ~~sales. Increases in wages~~2010, ~~supplies~~then, ~~rent,~~in ~~utilities,~~the ~~professional~~absence ~~fees~~of ~~and~~offsetting ~~bad~~reductions ~~checks were~~in ~~offset~~expenses, ~~somewhat~~the byCompany’s ~~decreases~~net inincome ~~advertising,~~will ~~depreciation,~~continue ~~and~~to ~~bank~~be ~~and~~negatively ~~credit card fees~~impacted.

~~Our~~Operating, ~~23.73%~~general ~~gross~~and ~~margin~~administrative expenses for fiscal ~~2007~~2010 ~~represented~~decreased aby ~~decrease~~$44,682 of(or 0.4553%). These ~~from~~expenses ~~fiscal~~would ~~2006~~have ~~and~~decreased aby ~~decrease~~$141,072 of(or 01.1667%) asif ~~compared~~it towere ~~fiscal~~not ~~2005. This~~for ~~reduction~~the ~~reflected~~flood ~~the~~loss ~~fact~~occurring ~~that~~in ~~competition~~fiscal ~~prevented~~2010. However, uswe ~~from~~were ~~succeeding~~unable ~~until~~to overcome the ~~third~~decrease ~~quarter~~in ofsales ~~fiscal~~and ~~2007~~gross inmargin ~~adjusting~~as ~~our~~discussed ~~retail prices~~above. Operating, togeneral ~~recover~~and ~~increases~~administrative inexpenses ~~our~~increased ~~wholesale~~by ~~costs~~$268,637 ~~for~~(or ~~certain~~3.29%) ~~items~~for ~~(principally~~fiscal ~~certain~~2009, ~~private~~and ~~label~~also ~~merchandise)~~increased ~~which~~0.83% ~~occurred~~as ~~earlier~~a inpercent ~~the~~of ~~year~~sales. ~~The~~Increases ~~gross~~in ~~margin~~payroll, ~~also~~utilities ~~was~~and ~~impacted~~telephone, byrent, ~~our~~insurance, ~~introduction~~general ofand ~~certain~~office ~~lower-priced~~supplies, ~~generic~~depreciation, ~~merchandise~~and ~~which~~professional ~~carried~~fees ~~lower~~during ~~margins~~fiscal ~~during~~2009 ~~the~~were ~~year,~~somewhat asoffset ~~well~~by asdecreases ~~certain~~in ~~targeted~~advertising ~~merchandise~~and ~~sales~~promotion, repairs and ~~other~~maintenance, ~~weekly~~bank ~~advertised~~service ~~specials~~charges ~~run~~and tocredit ~~stimulate~~card ~~sales. Management’s~~fees, ~~efforts~~bad tochecks ~~control~~and ~~the~~miscellaneous ~~Company’s~~expenses. Although operating, general and administrative expenses ~~helped~~increased ~~translate~~by ~~the~~$170,774 ~~relatively~~(or ~~small~~2.13%) ~~sales increase~~ in fiscal ~~2007 into the Company’s first net profit in four years~~2008, ~~despite~~they ~~the~~remained ~~slight~~essentially ~~reduction~~flat inas ~~our gross margin. We achieved~~ a ~~measure~~percentage of ~~success~~sales. Increases in ~~reducing~~wages, ~~these~~supplies, ~~expenses~~rent, ~~both~~utilities, inprofessional ~~absolute~~fees ~~terms~~and ~~(by~~bad ~~$260,829)~~checks ~~and~~during asthe ayear ~~percentage~~were ofoffset ~~sales~~somewhat (by ~~1.15%)~~decreases ~~during~~in ~~fiscal~~advertising, ~~2007~~depreciation, asand ~~compared~~bank toand ~~the~~credit ~~prior~~card ~~year~~fees.

Management ~~actively~~is ~~monitors~~continually ~~both~~working ~~the~~to ~~gross~~monitor ~~margin~~these expenses and ~~the~~to ~~company’s~~reduce ~~retail~~them ~~pricing~~where ~~structure in an attempt to maximize profitability~~possible. ~~Management began working on the Company’s gross margin during the quarter ended August 31~~However, ~~2002,~~we atare ~~which~~unable ~~time~~to ~~the~~control ~~gross~~certain ~~margin stood at 22.79% for the trailing fiscal year. While occasional improvements in gross profit have been seen in recent periods~~costs, such as ~~the~~payroll ~~24.55%~~(due ~~gross~~to ~~margin~~increases wein ~~achieved for fiscal 2009 as compared to~~ the ~~gross~~Federal ~~margins~~minimum ofwage), ~~23.85%~~taxes ~~for fiscal 2008~~ and ~~23.73%~~licenses ~~for~~expense ~~fiscal~~(due ~~2007, it is difficult~~ to ~~maintain~~local agovernments ~~trend~~increasing oflocal ~~consistent~~taxes), ~~improvement~~and inprofessional ~~the~~fees ~~gross margin~~ (due to ~~competitive~~continuing ~~conditions~~cost ~~which often delay the Company’s ability to pass through price~~ increases ~~experienced~~related ~~at the wholesale level. Accordingly, while management attempts~~ to ~~offset~~compliance ~~increases~~with ~~in its cost (such as our successes in recovering various wholesale price increases and fuel surcharges added by suppliers in recent periods), further improvements in~~ the ~~gross~~Sarbanes-Oxley ~~margin~~Act ~~may not be achievable at this time,~~ and ~~further~~related ~~deterioration~~regulations inapplicable ~~the~~to ~~Company’s~~public ~~gross margin is possible~~companies).

~~Management~~The ~~believes~~challenges ~~that~~created ~~competitive~~by ~~pressures~~competition onfrom ~~the~~larger ~~Company,~~grocery ~~which~~retailers ~~have~~continue ~~led~~ to ~~the~~pressure ~~losses experienced in four out of~~ the ~~last~~Company ~~eight fiscal years, will continue~~ to ~~increase~~seek ~~over~~higher ~~time~~gross asmargins aand ~~result~~reductions ofin ~~larger~~its ~~competitors~~operating, ~~which~~general ~~are~~and inadministrative aexpenses. The ~~better~~same ~~position than the Company to withstand prolonged price~~ competition, ~~opening~~makes ~~more~~it ~~new~~extremely ~~stores~~difficult into ~~the~~achieve ~~Company’s~~those ~~trade area~~goals.

Management actively monitors both the gross margin and the company’s retail pricing structure in an attempt to maximize profitability. Management began working on the Company’s gross margin during the quarter ended August 31, 2002, at which time the gross margin stood at 22.79% for the trailing fiscal year. While occasional improvements in gross profit have been seen in recent periods, such as the 24.55% gross margin we achieved for fiscal 2009 as compared to the gross margins of 23.85% for fiscal 2008 and 23.73% for fiscal 2007, it is difficult to maintain a trend of consistent improvement in the gross margin, as evidenced by this year’s results, due to competitive conditions which often delay the Company’s ability to pass through price increases experienced at the wholesale level. Accordingly, while management attempts to offset increases in its cost, such as fuel surcharges implemented by our suppliers from time to time when gasoline prices rise, further improvements in the gross margin may not be achievable at this time, and further deterioration in the Company’s gross margin is possible.

Management believes that competitive pressures on the Company, which have led to the losses experienced in one out of the last three and five out of the last ten fiscal years, will continue to increase over time as a result of the increased presence of larger competitors operating in the Company’s trade area. These competitors have greater financial resources than those of the Company, and may be able to obtain preferential treatment from suppliers in the form of advertising allowances, lower prices and other concessions not available to the Company. These factors allow our competitors to engage in aggressive pricing and promotional activities that the Company cannot match, putting us at a competitive disadvantage.

Backlog is not a significant factor in the Company’s business.

The Company employs approximately 8683 full-time employees and approximately ~~132~~118 part-time and seasonal employees.

The Company believes it is in compliance with all federal, state and local laws relating to environmental protection. No capital expenditures for equipment relating to environmental protection are presently anticipated.

The Company is engaged in a single line of business; namely, the retail, self-service grocery business which is not divisible into separate segments. The following table sets forth information for the last three (3) fiscal years as to the total sales and revenue of the Company contributed by each class of products which contributed a significant percentage of the total retail sales and revenues of the Company in the last three (3) fiscal years.

Product Class	Fiscal ~~2009~~2010 (52 Weeks)	Fiscal ~~2008~~2009 (52 Weeks)	Fiscal ~~2007~~2008 (52 Weeks)
Grocery and Non-Food Items	$2221,~~219~~113,~~238~~424	$22,~~327~~219,~~217~~238	$2122,~~627~~327,~~218~~217
Meat and Deli	9,~~503~~199,~~268~~863	9,~~452~~503,~~010~~268	9,~~419~~452,~~858~~010
Produce	2,~~698~~624,~~820~~558	2,~~713~~698,~~404~~820	2,~~735~~713,~~976~~404

ITEM 1A. RISK FACTORS

The following are certain risk factors that could affect the Company’s business, results of operations and financial condition. These risk factors could cause the Company’s actual results to differ materially from those projected in the forward-looking statements contained in our Annual Report on Form 10-K. Before investing in the Company, investors should know that making such an investment involves some risks. The risks that are described below are not the only ones the Company faces; there may be other risks and uncertainties not presently known to us, or that we presently deem immaterial, that could affect our business. If any of the following risks occur, the Company’s business, results of operations or financial condition could be negatively affected. The Company does not undertake any obligation to update forward-looking statements.

For ~~four~~five out of the past ~~eight~~ten fiscal years we have been unable to operate profitably due to a high level of competition in the retail grocery store business. This intense competition may be expected to have a negative impact on both the prices we may charge for our products and certain elements of our overhead and, accordingly, on the Company’s revenues, margins and profitability.

The retail food industry in which the Company operates is extremely competitive and is generally characterized by narrow profit margins and high inventory turnover. We are competing against national, regional and local supermarket chains, independent and specialty grocers, and nontraditional food stores, such as super-centers and club stores, as well as convenience stores and prepared food retailers. Aggressive super-center expansion, increasing fragmentation of retail formats, entry of non-traditional competitors and market consolidation have further contributed to an increasingly competitive marketplace. Many of our competitors have financial, distribution, purchasing, and marketing resources that are greater than ours. Thus our profitability may be impacted by the pricing, purchasing, financing, advertising or promotional decisions made by competitors. Our principal competitors compete primarily on the basis of price, quality of products, product assortment, service, and store location and condition.

A historical lack of inflation in food prices and increasingly competitive markets have made it difficult generally for grocery store operators to achieve comparable store sales gains and maintain profitability. Because sales growth has been difficult to attain, competitors have attempted to maintain market share through increased levels of promotional activities and discount pricing, creating a more difficult environment in which to consistently increase year-over-year-sales. Our responses to these competitive pressures, such as additional promotions and increased advertising, have in the past adversely affected our operating margins and our overall profitability, and may continue to do so in the future. Further, these competitive pressures often delay our ability to adjust our prices to reflect increases in our costs, such as increases seen in recent periods in employment costs, energy costs, wholesale inventory prices or other elements of our overhead. Accordingly, we may not be able to fully absorb any future cost increases through our efforts to adjust retail prices or increase efficiencies in other areas of operations, which could result in increased losses in future periods. Additionally, we sometimes face the opening of a new or remodeled competitor’s store in our trade area. Competition also requires us to periodically remodel our existing stores, at ever increasing costs, in order to maintain their appeal.

Our level of outstanding indebtedness, coupled with the losses we have experienced in ~~four~~five of the last ~~eight~~ten years and increasing interest expense and other bank charges, could impair our financial flexibility and negatively impact our business.

As of May 3029, ~~2009~~2010, our aggregate outstanding indebtedness stood at $2,~~549~~952,~~519~~517 as compared to total assets for the Company of $4,~~330~~237,~~909~~522 at such date. Our level of indebtedness could:

make it difficult for us to satisfy our obligations, including making interest payments;

limit our ability to obtain additional financing to fund both working capital and capital spending requirements;

limit our financial flexibility in planning for, and reacting to, industry changes;

place us at a competitive disadvantage as compared to less leveraged companies;

increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates; and

require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing the availability of our cash flow for other purposes.

Additionally, the terms of our debt agreements with our senior lender contain negative covenants which prohibit us, without the lender’s written consent, from taking any of the following actions which we might otherwise deem to be in the interest of the Company and its shareholders: (i) subject to certain exceptions, incur additional indebtedness or guaranty obligations; (ii) subject to certain exceptions, sell Company assets; (iii) purchase or acquire any interest in, or loan money to, any other enterprise or entity; (iv) engage in any merger or sale of the Company’s assets, or in any business activity substantially different from our current business; or (v) pay any dividends on our stock.

Historically, we have financed our working capital requirements principally through cash flow from operations. During the past ~~six~~seven years, however, we have increased our reliance on both bank and vendor financing due to periodic losses which coincided with increased inventory and capital spending requirements beginning in fiscal 2004 related to the establishment of our eighth grocery store location. While we believe that our cash flows and existing financing arrangements will continue to supply our working capital needs, if we are unable to recover future cost increases due to competitive conditions, our operating losses could increase relative to depreciation and other non-cash charges, which could require us to seek additional financing through bank loans, or other sources, in order to meet our working capital needs. If we could not obtain such additional financing, or could not do so on commercially reasonable terms, we could be required to reduce our current level of operations. We also could be forced to delay or cancel future planned equipment upgrades and other capital spending if we are not able to obtain appropriate financing for such projects on commercially reasonable terms. Further, increased interest expense resulting from higher debt levels and rising interest rates, as well as increased bank service charges related to both temporary overdrafts in our accounts and fees for processing larger numbers of credit and debit card transactions required to maintain sales, have placed significant pressure on our operating results in recent periods and may continue to adversely impact our future performance.

Economic conditions that impact consumer spending and the financial markets may continue to be volatile, which could materially impact our business.

The U.S. economy and financial markets have declined and experienced volatility due to uncertainties related to energy prices, availability of credit, difficulties in the banking and financial services sectors, the decline in the housing market, diminished market liquidity, falling consumer confidence and rising unemployment rates. As a result, consumers are more cautious. This has led to reduced consumer spending, to consumers switching to a less expensive mix of products, and to consumers seeking out cheaper alternatives to the products offered in our stores for their food purchases, as reflected by the competitive impact in recent periods of “dollar menus” offered by fast food outlets competing with the Company in our trade areas. These factors have affected, and could continue to adversely affect, our sales growth and earnings. Additionally, while we have no indication that the lender under our line of credit will be unable to fulfill its financing commitments to the Company, many financial institutions have in the past reduced and, in some cases, ceased to provide funding to borrowers. There can be no assurance that various governmental activities to stabilize the markets and stimulate the economy will restore consumer confidence or change spending habits. If the economy and financial markets do not improve, or if they worsen, our results of operations and financial condition could be adversely affected.

We are subject to the requirements of Section 404 of the Sarbanes-Oxley Act. If we are unable to timely comply with Section 404 or if the costs related to compliance are significant, our profitability, stock price and results of operations and financial condition could be materially adversely affected.

We are required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act of 2002, which require us to maintain an ongoing evaluation and documentation of the internal controls over financial reporting related to our business. We were required to document and test our internal controls and certify that we are responsible for maintaining an adequate system of internal control procedures beginning with our fiscal year ended May 31, 2008. Beginning with our 2010 fiscal year and in subsequent years, our independent registered public accounting firm will be required to opine on those internal controls. In the process, we may identify areas requiring improvement, and we may have to design enhanced processes and controls to address issues identified through such reviews.

During fiscal year 2008, we incurred additional professional fees in the amount of $40,968 directly related to preparations for management’s initial assessment of internal control over financial reporting pursuant to these rules, in addition to having to devote significant internal management effort and resources to these activities. We ~~have~~ incurred additional professional fees in the amount of $12,200 during fiscal year 2009 and $3,500 ~~thus far~~ during ~~the first quarter of~~ fiscal 2010 related to (i) the completion of management’s initial annual assessment as of fiscal 2008 year end, (ii) the execution and testing of management’s remediation plan for the material weaknesses in internal controls that were detected in management’s initial assessment and (iii) the completion of management’s ~~second~~ annual assessment as of the end of fiscal year 2009. Management’s ~~year~~annual assessment of internal controls as of the end of fiscal year 2010 was completed without incurring additional professional fees. WeWhile Congress has recently repealed the annual auditor attestation requirement concerning internal controls for smaller entities such as the Company, we still expect some degree of ongoing compliance costs to complete management’s annual required assessments of internal control over financial reporting ~~to average at least $10~~,~~000~~ ~~per~~in ~~year,~~addition ~~not~~to ~~counting~~ the value of internal management time and resources devoted to these efforts. We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act have been, and will continue to be, significant. If the time and costs associated

Further, we believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and operational changes caused by the need to comply with the requirements of Section 404 of the Sarbanes-Oxley Act have been, and will continue to be, significant. As noted above, we will be required to begin including an annual attestation report by our independent auditors addressing the effectiveness of such internal controls with our annual report for fiscal 2010. While we cannot precisely estimate the additional professional fees that will be incurred in conjunction with satisfying this requirement for fiscal 2010 and future years, we currently project that such additional fees will amount to at least $45,000 for the completion of our auditors’ initial fiscal 2010 report during fiscal 2011. If the time and costs associated with such compliance exceed our current expectations, our results of operations could be adversely affected.

We could experience material weaknesses in our internal control over financial reporting, which could impact negatively our ability to report our results of operations and financial condition accurately and in a timely manner.

As required by Section 404 of the Sarbanes-Oxley Act of 2002, we have conducted an evaluation of the effectiveness of our internal control over financial reporting as of May 30, 2009. As of May 30, 2009 we believe that we have remediated all past material weaknesses but we can provide no assurance that we will not experience material weaknesses in the future.

~~As we have previously disclosed, as of May 31, 2008, material weaknesses existed related to, among other things, our internal controls over financial reporting~~ with ~~respect~~such tocompliance ~~the~~exceed ~~segregation of duties in~~ our ~~finance~~current ~~and accounting functions~~expectations, ~~including~~our aresults ~~lack~~ of ~~segregation~~operations ofcould ~~the~~be ~~CFO’s duties~~adversely or independent review or verification of the primary spreadsheets used by the CFO in the preparation of financial statements and related disclosures, and a lack of meaningful review of the bank statements used by the CFO to perform reconciliationsaffected. ~~We completed a number of remedial actions during fiscal 2009 to correct these weaknesses, and we believe that no additional remedial efforts are required with respect to these weaknesses.~~

~~Nevertheless,~~We ~~there~~could isexperience amaterial ~~risk~~weaknesses ofin ~~additional~~our ~~errors~~internal ~~not~~control ~~being~~over ~~prevented~~financial ~~or detected~~reporting, which could ~~result~~impact innegatively ~~the~~our ~~identification~~ability to report our results of ~~material~~operations ~~weaknesses~~and infinancial ~~our~~condition ~~internal~~accurately ~~controls~~and in ~~the~~a ~~future~~timely manner.

As required by Section 404 of the Sarbanes-Oxley Act of 2002, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of May 29, 2010. As of May 29, 2010 we believe that there were no material weaknesses in internal controls, but we can provide no assurance that we will not experience material weaknesses in the future.

As we have previously disclosed, as of May 31, 2008, material weaknesses existed related to, among other things, our internal controls over financial reporting with respect to the segregation of duties in our finance and accounting functions, including a lack of segregation of the CFO’s duties or independent review or verification of the primary spreadsheets used by the CFO in the preparation of financial statements and related disclosures, and a lack of meaningful review of the bank statements used by the CFO to perform reconciliations. We completed a number of remedial actions during fiscal 2009 to correct these weaknesses, and we believe that no additional remedial efforts are required with respect to these weaknesses. Nevertheless, there is a risk of additional errors not being prevented or detected, which could result in the identification of material weaknesses in our internal controls in the future.

There are inherent limitations in all control systems, and misstatements due to error or fraud may occur and not be detected, which may adversely impact our business and operating results.

Effective internal control over financial reporting is necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud. If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our business and operating results could be harmed. Internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. In addition, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If we fail to maintain the adequacy of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed and we could fail to meet our reporting obligations.

Our common stock is not actively traded and is not traded on an established exchange, and a majority of our stock is held by insiders, which may be expected to result in limited liquidity and stock price volatility for investors.

Our common stock is quoted on the Pink Sheets under the symbol “ANCS.PK”. The Pink Sheets is not an established exchange, and we do not have enough shareholders or outstanding shares to support an active trading market. Accordingly, the market for our common stock is not liquid and the historical prices at which our stock has traded may not provide a reliable indication of future market prices. For those reasons, the trading price of our common stock could fluctuate significantly. Volatility in our stock price could also result from the following factors, among others:

· the fact that we are presently unable to pay dividends to our stockholders due to covenants in the debt agreements with our senior lender, as well as the losses experienced in several of our recent fiscal years;

· the fact that a majority of our outstanding common stock (approximately 64.74%) is controlled by the Company’s officers and directors, principally by Michael A. Richardson, our Chief Executive Officer, and his wife, Diana K. Richardson;

to support an active trading market. Accordingly, the market for our common stock is not liquid and the historical prices at which our stock has traded may not provide a reliable indication of future market prices. For those reasons, the trading price of our common stock could fluctuate significantly. Volatility in our stock price could also result from the following factors, among others:

the fact that we are presently unable to pay dividends to our stockholders due to covenants in the debt agreements with our senior lender, as well as the losses experienced in several of our recent fiscal years;

the fact that a majority of our outstanding common stock (approximately 65.20%) is controlled by the Company’s principal shareholder, Diana K. Richardson, with an additional 1.03% controlled by our officers and directors, for aggregate insider ownership of approximately two-thirds of our outstanding common stock;

quarterly variations in the Company’s operating results;

changes in governmental regulations;

the operating and stock price performance of other companies in our industry; and

general stock market and economic conditions.

The loss of our Chairman and Chief Executive Officer, Paul R. Cook, or of any of our other key employees, could have a material adverse effect on our business and, in the case of Mr. Cook, could result in an event of default under the credit arrangements with our senior lender.

We are heavily dependent upon the services of Paul R. Cook, who, following the untimely death of our former Chairman and CEO, Michael A. Richardson, on November 20, 2009, is now serving as our Chairman of the Board, President and Chief Executive Officer, in addition to retaining his prior responsibilities as the Company’s Treasurer and Chief Financial Officer. We also are very dependent on the continued services of certain other key personnel, including our Executive Vice President and Chief Operating Officer, M. Todd Richardson. If Mr. Cook or any of our other key personnel were to unexpectedly leave the Company, our business, financial condition and results of operations could be materially and adversely affected. In particular, all of our credit arrangements with our senior lender, Gateway Bank and Trust, contain provisions that would allow the lender to declare the debt to be in default based on the death, incapacity or insolvency of a personal guarantor. The lender waived all of these provisions in connection with the death of Michael A. Richardson. However, Mr. Cook is now the only remaining personal guarantor of the Company’s indebtedness under these arrangements. While the Company has obtained $750,000 of “key man” life insurance coverage on Mr. Cook to address this contingency, and the lender has expressed its support of this decision, there can be no assurance that the lender would provide a similar waiver in the event of the death, incapacity or insolvency of Mr. Cook. Further, we must continue to attract, retain and motivate a significant number of qualified management and operating personnel, including replacement of senior management upon retirement. Individuals of this caliber are historically in short supply and this shortage may limit our ability to hire and retain qualified personnel, and thus, may hinder our ability to operative effectively.

Unfavorable changes in governmental regulation may impose additional costs and administrative burdens on the Company that could have an adverse effect on our results of operations and financial condition.

Our stores are subject to various federal, state and local laws, and regulations affecting our business. We must comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling, land use and zoning, community right-to-know laws, equal employment opportunity, workplace safety, minimum wages and other employment practices, licensing for the sale of food, age requirements for the sale of tobacco products, and fire safety regulations. We cannot predict the nature of future laws, regulations, interpretations or their application, or determine what effect additional government regulations or administrative orders, when and if promulgated, or disparate federal, state or local schemes would have on our future business. They could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling and/or substantiation. Any or all of such requirements, to the extent they either raise the wholesale prices for our inventory or impose additional direct costs on the Company, could have an adverse effect on our results of operations and financial condition.

Further, the Sarbanes-Oxley Act of 2002 ~~includes~~and subsequent legislative and regulatory initiatives, including the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, have included numerous provisions addressing audits, financial reporting and disclosure, internal controls, conflicts of interest and corporate governance at public companies. We have already incurred increased professional fees during fiscal years 2005 through ~~2008~~2010 related to compliance with these provisions. AsWe ~~discussed~~expect ~~above,~~these ~~compliance~~costs ~~with~~to ~~the provisions of Section 404 of this Act, which deals with management’s report on internal controls and an auditor’s examination of internal controls, already has imposed, and may~~ continue to ~~impose~~rise, ~~significant~~and ~~additional costs on the Company. We expect these costs~~ to include additional significant increases in legal, accounting and ~~consulting~~other professional fees, as well as additional internal personnel costs and the indirect costs imposed by the diversion of scarce management resources to deal with regulatory compliance matters as opposed to operational issues. These increased costs are likely to adversely affect our financial condition and results of operations because, as discussed above, the intensely competitive nature of our business makes it difficult for the Company to recover cost increases through adjustments to our retail prices.

The majority of our operating, general and administrative expenses is composed of personnel costs, so that increases in prevailing wages, benefits and other associated costs, such as recent legislation mandating increases in the federal minimum wage, could have a material adverse effect on our results of operations and financial condition.

The majority of our operating, general and administrative expenses is composed of employee payroll and related insurance and benefits expense. Accordingly, our financial performance may be greatly influenced by increases in wage and benefit costs. We compete with other businesses in our markets in attracting and retaining employees. Tight labor markets, increased overtime, government mandated increases in the minimum wage and a higher proportion of full−time employees could all result in an increase in our labor costs. We have a substantial number of employees who are paid wage rates at or slightly above the minimum wage. As federal and state minimum wage rates increase, we may be required to increase not only the wages of our minimum wage employees but also the wages paid to employees whose wage rates are above minimum wage. A shortage of qualified employees also could require us to increase our wage and benefit offerings in order to compete effectively in the hiring and retention of qualified employees or to retain more expensive

910

~~mandated~~temporary ~~increases~~employees. In inaddition, the ~~minimum~~cost ~~wage and a higher proportion~~ of ~~full−time~~group ~~employees~~health ~~could~~insurance ~~all~~for ~~result in an increase in~~ our ~~labor costs. We have a substantial number of~~ employees ~~who~~has ~~are~~continued ~~paid~~to ~~wage~~rise ~~rates~~in atrecent oryears, ~~slightly~~and ~~above~~recent ~~the~~legislative ~~minimum~~and ~~wage. As~~private ~~federal~~sector ~~and~~initiatives ~~state~~regarding ~~minimum~~healthcare ~~wage~~reform ~~rates~~could ~~increase,~~result wein ~~may~~significant bechanges ~~required~~ to ~~increase not only~~ the ~~wages~~U.S. ofhealthcare ~~our minimum wage employees but also the wages paid to employees whose wage rates are above minimum wage~~system. AThe ~~shortage~~Company ofis ~~qualified~~not ~~employees~~able ~~also~~at ~~could~~this ~~require~~time us to ~~increase~~determine ~~our~~the ~~wage~~impact ~~and~~that ~~benefit~~healthcare ~~offerings~~reform incould ~~order~~have toon ~~compete effectively in~~ the ~~hiring~~cost ~~and retention~~ of ~~qualified~~providing ~~employees~~this orcoverage to ~~retain~~our ~~more expensive temporary~~ employees~~. Additionally~~, ~~various~~but ~~proposals~~the ~~that would require employers to provide health insurance for all of their employees are being considered from time-to-time in Congress and various states. The~~ imposition of ~~any~~requirements ~~requirement~~ that we provide health insurance to ~~all~~our employees on terms materially different from our existing programs could also significantly increase our costs. Due to competitive conditions in our business, any such increases in labor and benefits costs would be difficult for us to recover through contemporaneous price increases, and there can be no assurance that we would be able to absorb such cost increases through efforts to increase efficiencies in other areas of our operations. Accordingly, increased labor and benefits costs could have a material adverse effect on our financial condition and results of operations.

If competitive conditions prevent us from being able to recover increases in our costs through adjustments to our retail prices, our results of operations and financial condition will be adversely affected.

In recent periods, we have experienced increases in transportation cost and in the cost of products we sell in our stores. The increases in our costs are attributed to increases in fuel, plastic, grain and other commodity costs. As inflation has increased expenses, we have recovered, to the extent permitted by competition, the increase in expenses by increasing prices over time. However, the economic and competitive environment in our trade area continues to challenge us to become more cost efficient as our ability to recover increases in expenses through price increases is often limited, or at least delayed, by the effects of competition. Our future results of operations will depend upon our ability to adapt to the current economic environment as well as current and future competitive conditions.

We are vulnerable to adverse changes in economic conditions in the concentrated geographic region in which we operate, as well as changes affecting the national economy, and negative economic developments either locally or nationally could have a material adverse impact on our business.

Our operations are concentrated within a compact geographical area that comprises Northwest Georgia, Northeast Alabama, and Southeast Tennessee. We are therefore vulnerable to regional economic downturns as well as to natural and other catastrophic events that may impact our local region, in addition to being vulnerable to any such events that may affect the national economy as a whole. Economic conditions such as the recent disruptions experienced in both commercial and consumer credit markets, inflation, adverse changes in interest rates, rising energy costs and rising unemployment rates may adversely affect both our sales and our cost structure, which could lead to losses, and may also adversely affect our future growth and expansion. Further, since our operations are concentrated in a single, relatively compact geographical area, opportunities for future store expansion may be limited, which may adversely affect our business and results of operations.

1011

The loss of any of our key employees could have a material adverse effect on our business.

We are heavily dependent upon the services of Michael A. Richardson, our President and Chief Executive Officer, and Paul R. Cook, our Executive Vice President and Chief Financial Officer, as well as certain other key personnel. If Mr. Richardson, Mr. Cook or any of our other key personnel were to unexpectedly leave our Company, our business, financial condition and results of operations could be materially and adversely affected. In addition, we must continue to attract, retain and motivate a significant number of qualified management and operating personnel, including replacement of senior management upon retirement. Individuals of this caliber are historically in short supply and this shortage may limit our ability to hire and retain qualified personnel, and thus, may hinder our ability to operative effectively.

Changes in the terms on which suppliers require the Company to pay for store merchandise could have an adverse effect on the Company’s business, financial condition and results of operations.

Similar to many retailers, the Company has payment terms with most of its suppliers that extend payment for up to 30 days beyond the date the product is purchased. Those payment terms are subject to change at any time. If the Company’s suppliers change their payment terms for whatever reason and require faster payment by the Company, it could have a material adverse effect on the Company’s business, financial condition and results of operations.

A change in supplier rebates could adversely affect our results.

We receive allowances, credits and income from suppliers primarily for volume incentives, new product introductions, in-store promotions and co-operative advertising. Certain of these funds are based on volume of net sales or purchases, growth rate of net sales or purchases and marketing programs. If we do not grow our net sales over prior periods or if we are not in compliance with the terms of these programs, there could be a material negative effect on the amount of incentives offered or paid to us by our suppliers.

Additionally, suppliers routinely change the requirements for, and the amount of, funds available. No assurance can be given that we will continue to receive such incentives or that we will be able to collect outstanding amounts relating to these incentives in a timely manner, or at all. A reduction in, the discontinuance of, or a significant delay in receiving such incentives, as well as the inability to collect such incentives, could have a material adverse effect on our business, results of operations and financial condition.

We depend on one principal supplier for a substantial portion of our merchandise inventory. A disruption in supply or a change in our relationship could have a material adverse effect on our business.

We purchase approximately 8482% of our merchandise including grocery, meat and produce items, from a single wholesale grocer, Mitchell Grocery Corporation. Mitchell has been a supplier of ours since 2000. We do not have a written contract with Mitchell but a change of merchandise suppliers, a disruption in supply or a significant change in our relationship with Mitchell could have a material adverse effect on our business and results of operations and ability to service our outstanding indebtedness.

As a result of selling food products, we may be exposed to product liability claims and adverse publicity that could have a material adverse effect on our profitability and business operations.

The packaging, marketing, distribution and sale of food products purchased from others entail an inherent risk of product liability, product recall and adverse publicity resulting from such events. Any such products may contain contaminants that we may inadvertently redistribute. These contaminants may, in certain cases, result in illness, injury or death if processing at the foodservice or consumer level does not eliminate the contaminants. Even an inadvertent shipment of adulterated products may violate the law and may lead to an increased risk of exposure to product liability claims. There can be no assurance that such claims will not be asserted against us or that we will not be obligated to perform such a recall in the future. If a product liability claim is successful, our insurance may not be adequate to cover all liabilities that we may incur, and we may not be able to continue to maintain such insurance, or obtain comparable insurance at a reasonable cost, if at all. If we do not have adequate insurance or contractual indemnification available from the producer of the product or others in the supply chain, product liability claims relating to defective products could have a material adverse effect on our business, financial condition and results of operations. In addition, adverse publicity about these types of claims and concerns, whether or not valid, may discourage consumers from buying our products or cause production and delivery disruptions, which also could have a material adverse effect on our business, financial condition and results of operations.

insurance may not be adequate to cover all liabilities that we may incur, and we may not be able to continue to maintain such insurance, or obtain comparable insurance at a reasonable cost, if at all. If we do not have adequate insurance or contractual indemnification available from the producer of the product or others in the supply chain, product liability claims relating to defective products could have a material adverse effect on our business, financial condition and results of operations. In addition, adverse publicity about these types of claims and concerns, whether or not valid, may discourage consumers from buying our products or cause production and delivery disruptions, which also could have a material adverse effect on our business, financial condition and results of operations.

Threats or potential threats to security or the occurrence of a widespread health epidemic may adversely affect the Company’s financial condition and results of operations.

The Company’s businesses may be severely impacted by wartime activities, threats or acts of terror or a widespread regional, national or global health epidemic, such as pandemic flu. Such activities, threats or epidemics may adversely impact the Company’s businesses by disrupting production and delivery of products to its stores, by affecting the Company’s ability to appropriately staff its stores and by causing customers to avoid public gathering places or otherwise change their shopping behaviors.

Additionally, data theft, information espionage or other criminal activity directed at the grocery store industry, the transportation industry, or computer or communications systems may adversely affect the Company’s businesses by causing the Company to implement costly security measures in recognition of actual or potential threats, by requiring the Company to expend significant time and expense developing, maintaining or upgrading its information technology systems and by causing the Company to incur significant costs to reimburse third parties for damages. Such activities may also adversely affect the Company’s financial condition and results of operations by reducing consumer confidence in the marketplace and by modifying consumer spending habits.

If we were held liable for any future environmental damages or cleanup costs, our business and financial condition could be adversely impacted.

Our operations subject us to various laws and regulations relating to the protection of the environment, including those governing the management and disposal of hazardous materials and the cleanup of contaminated sites. Under some environmental laws, such as the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, also known as CERCLA or the Superfund law, and similar state statues, responsibility for the entire cost of cleanup of a contaminated site can be imposed upon any current or former site owners or operators, or upon any party who sent waste to the site, regardless of the lawfulness of the original activities that lead to the contamination. We believe we are currently in substantial compliance with all applicable environmental requirements. However, future developments such as more aggressive enforcement policies, new laws or discoveries of unknown conditions may require expenditures that could have a material adverse effect on our business and financial condition.

1213

Environmental Response, Compensation, and Liability Act of 1980, also known as CERCLA or the Superfund law, and similar state statues, responsibility for the entire cost of cleanup of a contaminated site can be imposed upon any current or former site owners or operators, or upon any party who sent waste to the site, regardless of the lawfulness of the original activities that lead to the contamination. We believe we are currently in substantial compliance with all applicable environmental requirements. However, future developments such as more aggressive enforcement policies, new laws or discoveries of unknown conditions may require expenditures that could have a material adverse effect on our business and financial condition.

Adverse outcomes in any future legal proceedings could have a material adverse effect on our financial condition and results of operations.

From time to time, we may be made a party to legal proceedings, including matters involving personnel and employment issues, personal injury, intellectual property and other proceedings arising in the ordinary course of business. We are not presently a party to any material legal proceedings, and we estimate our exposure to any such claims and litigation arising in the normal course of business and currently believe we have made adequate provisions for such exposure. Unexpected future outcomes in any such matters, however, could result in a material adverse effect on our financial condition and results of operations.

Any disruptions to the operation of, or breaches in the security of data maintained in, the information technology systems on which our business increasingly depends could adversely affect the Company.

Our business is increasingly dependent on information technology systems that are complex and vital to continuing operations. If we were to experience difficulties maintaining existing systems or implementing new systems, we could incur significant losses due to disruptions in our operations. Additionally, these systems contain valuable proprietary data that if breached, as noted above, would have an adverse effect on the Company.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES

The executive offices of the Company are located in a 4,000 square-foot office building on Hannah Way, just off Battlefield Parkway in Rossville, Georgia, which the Company holds under a lease for a term of ~~three~~two years, expiring in September ~~2009~~2011 with ~~one~~no ~~two-year~~ renewal ~~option~~options.

The Company’s supermarkets are located in Ringgold, LaFayette, Chatsworth, Chickamauga and Tunnel Hill, Georgia; Stevenson, Alabama; and Dayton and Jasper, Tennessee. All of the eight locations are leased from unaffiliated landlords. Summary information concerning these leases is presented below:

Location	Square Footage	Current Lease Term	Renewal Options
Ringgold, GA	14,400	12/01/0809 - 11/30/0910	32-1 yr. terms
LaFayette, GA	20,500	02/01/07 - 01/31/12	1-5 yr. ~~terms~~term
Chatsworth, GA	24,360	05/01/08 - 04/30/13	—-
Chickamauga, GA	13,840	01/01/0510 - 12/31/0914	1-~~5 yr. term~~
Tunnel Hill, GA	18,900	09/01/07 - 08/31/12	2-5 yr. terms
Stevenson, AL	23,860	06/01/09 - 05/31/14	—-
Dayton, TN	23,004	08/01/07 - 07/31/12	—-
Jasper, TN	25,000	05/01/06 – 04/30/14	2-5 yr. terms
	163,864

The supermarkets in Ringgold, LaFayette, Chatsworth and Tunnel Hill, Georgia; Stevenson, Alabama; and Dayton, Tennessee, are located in strip shopping centers. The stores in Chickamauga, Georgia and Jasper, Tennessee are free-standing.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Company is a party, or to which any of its property is subject, nor have any material legal proceedings been terminated during the fourth quarter of the Company’s fiscal year.

ITEM 4. ~~SUBMISSION~~(REMOVED OFAND ~~MATTERS TO A VOTE OF SECURITY HOLDERS~~RESERVED)

~~None.~~15

EXECUTIVE OFFICERS OF THE COMPANY

The Company’s Board of Directors appoints the Company’s Executive Officers for a term of one year. The names, ages, offices held with the Company, business experience during the past five years, and certain directorships held by each of the Company’s Executive Officers are set forth in the following table:

Name and Year First Elected as Executive Officer		Office(s) Presently Held, Business Experience and Certain Directorships	Age
Name and Year First Elected as Executive Officer Paul R. Cook 1987	Office(s) Presently Held, Business Experience and Certain Directorships Chairman of the Board of Directors, President, Chief Executive Officer, since December 2009. Treasurer and Chief Financial Officer since April 1991. Executive Vice President from April 1991 until December 2009. Member of the Executive Committee of the Board of Directors. Director of Capital Bank, Fort Oglethorpe, Georgia since May 1993.	Age 60
Michael A. Richardson 1977		Chairman of the Board of Directors, President, Chief Executive Officer, member of the Executive Committee of the Board of Directors.	63
M. Todd Richardson 2009	Executive Vice-President, Chief Operating Officer since December 2009. Director of Meat Operations since 2005.	37
Paul R. Cook 1987		Executive Vice-President, Treasurer, Chief Financial Officer, Director, member of the Executive Committee of the Board of Directors. Director of Capital Bank, Fort Oglethorpe, Georgia since May 1993.	59
Reba S. Southern 1991	Secretary, member of the Executive Committee (ex-officio).	57
Reba S. Southern 1991		Secretary, member of the Executive Committee (ex-officio).	56

1516

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a) The approximate number of record holders of the Company’s common stock at May 3029, ~~2009~~2010, was ~~752~~739. The Company does not have any equity compensation plans. The remaining information required by paragraph (a) of this Item 5 is incorporated herein by reference to page 4 of the Company’s Annual Report to security holders for the fiscal year ended May 3029, ~~2009~~2010, a copy of relevant portions of which is filed as Exhibit 13 to this Report.

(b) Not applicable.

The following table presents information with respect to repurchases of common stock made by the Company during the fourth quarter of the fiscal year covered by this report:

Period	Total Number of Shares Purchased (1)	~~Total~~Average ~~Number~~Price ofPaid ~~Shares~~per ~~Purchased (1)~~Share	Total Number of Shares Purchased as Part of a Publicly Announced Plan	~~Average~~Maximum ~~Price~~Number ~~Paid~~of ~~per~~Shares ~~Share~~that May Yet Be Purchased Under the Plan	~~Total Number of Shares Purchased as Part of a Publicly Announced Plan~~	~~Maximum Number of Shares that May Yet Be Purchased Under the Plan~~
March 1 – March 28, 2009		220		$1.00	—	—
February 28 – March 27, 2010	6,082	$1.00	—	—
March 29 – April 25, 2009		_____		$1.00	—	—
March 28 – May 1, 2010	447	$1.00	—	—
April 26 – May 30, 2009		_____		$1.00	—	—
May 2 – May 29, 2010	_____	$1.00	—	—
Total	6,529	~~220~~$1.00	—	~~$1.00~~—	—	—

(1)	Represents shares repurchased at $1.00 per share in response to unsolicited requests from unaffiliated shareholders during the quarter.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this Item is incorporated herein by reference to page 3 of the Company’s Annual Report to security holders for the fiscal year ended May 3029, ~~2009~~2010, a copy of relevant portions of which is filed as Exhibit 13 to this Report.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this Item is incorporated herein by reference to pages 5 through 2021 of the Company’s Annual Report to security holders for the fiscal year ended May 3029, ~~2009~~2010, a copy of relevant portions of which is filed as Exhibit 13 to this Report.

1617

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is incorporated herein by reference to pages 2122 through 3739 of the Company’s Annual Report to security holders for the fiscal year ended May 3029, ~~2009~~2010, a copy of relevant portions of which is filed as Exhibit 13 to this Report.

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T).

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) ~~and~~or 15d-15(e)) designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its ~~principal~~Chief ~~executive~~Executive Officer (“CEO”) and ~~principal~~Chief ~~financial~~Financial ~~officers~~Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In connection with the preparation of this Annual Report on Form 10-K, our management, with the participation of our ~~Chief~~CEO ~~Executive~~(who ~~Officer~~also ~~(“CEO”)~~serves ~~and~~as our ~~Chief Financial Officer (“~~CFO”), evaluated the effectiveness of our disclosure controls and procedures as of May 3029, ~~2009~~2010. Based on that evaluation, our CEO (and CFO) concluded that, as of that date, the Company’s disclosure controls and procedures, were effective at a reasonable assurance level. In reaching such conclusion, management considered, among other factors, the current status of the additional controls and procedures implemented during fiscal 2009 to remediate the material weaknesses in internal control over financial reporting identified in Item 9A(T) of our Annual Report on Form 10-K for the fiscal year ended May 31, 2008, as discussed further below under Management’s Report on Internal Control over Financial Reporting.

Management’s Report on Internal Control over Financial Reporting

Management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance

Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company’s CEO and CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. 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. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of May 30, 2009, management, with the participation of the Company’s CEO and CFO, conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO, and considering the matters discussed further below under “Remediation of Material Weaknesses,” management (including our CEO and CFO) concluded that the Company’s internal control over financial reporting was effective as of May 30, 2009.

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

Remediation of Material Weaknesses

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

~~In connection with the preparation~~ of ~~last~~records ~~year’s~~that ~~Annual~~in ~~Report~~reasonable ondetail ~~Form~~accurately ~~10-K,~~and ~~including~~fairly ~~our~~reflect ~~financial statements for~~ the ~~year~~transactions ~~ended~~and ~~May~~disposition ~~31,~~of ~~2008,~~the ~~management~~assets ~~identified~~of ~~certain significant deficiencies in~~ the Company’s; ~~internal~~(ii) provide ~~control~~reasonable ~~over~~assurance ~~financial reporting~~ that, ~~individually and~~transactions inare ~~the~~recorded ~~aggregate,~~as ~~represented~~necessary ~~material~~to ~~weaknesses,~~permit ~~including,~~preparation ~~insufficient segregation~~ of ~~duties~~financial statements in ~~our~~accordance ~~finance~~with ~~and~~generally accepted accounting ~~functions due to limited personnel. Specifically~~principles, ~~management~~and ~~determined~~ that areceipts ~~material~~and ~~weakness~~expenditures ~~existed due to a lack~~ of ~~any independent review of~~ the ~~spreadsheets~~Company ~~used~~are tobeing ~~aggregate,~~made ~~summate~~only ~~and~~in ~~calculate~~accordance ~~the~~with ~~amounts~~authorizations ~~used~~of inmanagement ~~the~~and ~~preparation~~directors of the ~~financial~~Company; ~~statements~~ and ~~related~~(iii) provide ~~disclosures~~reasonable ~~and~~assurance aregarding ~~lack~~prevention ofor ~~segregation~~timely ofdetection ~~duties due to the concentration~~ of ~~many~~unauthorized ~~responsibilities with~~acquisition, ~~the~~use ~~CFO without any independent review~~ or ~~verification. Additionally,~~disposition ~~meaningful reviews~~ of the Company’s ~~bank~~assets ~~statements used by the CFO to perform reconciliations were not being performed, and it was determined~~ that ~~these control deficiencies~~ could ~~result~~have ~~in material misstatement to our interim or annual financial statements that would not be prevented or detected in~~ a ~~timely manner. Management believes that each of these~~ material ~~weaknesses~~effect ~~could have a pervasive impact~~ on ~~our~~ ~~internal~~the ~~control over~~ financial ~~reporting~~statements.

~~During~~Our management, including our CEO (who also is currently serving as our CFO), does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the ~~Company~~control system’s ~~fiscal~~objectives ~~year~~will ~~ended~~be ~~May 30~~met. Further, ~~2009,~~the wedesign ~~implemented~~of a ~~number~~control system must reflect the fact that there are resource constraints, and the benefits of ~~remediation~~controls ~~measures~~must be considered relative to ~~address~~their costs. Because of the ~~material~~inherent ~~weaknesses~~limitations ~~described~~in ~~above~~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. AsThese ~~described~~inherent inlimitations ~~our~~include ~~Form 10~~the realities that judgments in decision-Kmaking ~~for~~can ~~fiscal~~be ~~year~~faulty, ~~2008~~and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the ~~Company’s~~controls. Over ~~remediation~~time, ~~plans~~controls ~~included:~~may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

·As ~~Hiring~~of ~~additional~~May ~~staff~~29, to2010, ~~(A)~~management, ~~have~~with the ~~responsibility~~participation of ~~independently reviewing~~ the ~~spreadsheets~~Company’s ~~maintained~~CEO byand ~~the~~CFO, ~~Chief~~conducted ~~Financial~~an ~~Officer~~assessment toof ~~verify~~ the ~~amounts,~~effectiveness ~~calculations,~~of ~~and~~the ~~formulas~~Company’s ~~used~~internal tocontrol ~~compile~~over ~~the~~financial ~~amounts~~reporting ~~used~~based inon the ~~preparation~~framework ofestablished ~~the~~in ~~financial~~Internal ~~statements~~Control — ~~and~~Integrated ~~related~~Framework ~~disclosures~~issued ~~and~~by ~~(B)~~the ~~assist~~Committee inof ~~further~~Sponsoring ~~segregation~~Organizations of ~~duties~~the ~~within~~Treadway ~~the~~Commission ~~Company’s~~(COSO). Based ~~accounting~~on ~~and~~the ~~financial~~criteria ~~reporting~~established ~~functions~~by COSO, management (including ~~reducing~~our ~~the~~CEO ~~degree~~and ofCFO) ~~duties~~concluded ~~and~~that ~~responsibilities~~the ~~concentrated~~Company’s ~~with~~internal ~~the~~control ~~Chief~~over ~~Financial~~financial ~~Officer~~reporting ~~without~~was ~~any~~effective ~~independent~~as ~~review~~of orMay ~~verification;~~29, ~~and~~2010.

·This ~~Having~~Annual ~~the~~Report ~~CEO~~on ~~perform~~Form a10-K ~~detailed~~does ~~review~~not include an attestation report of the ~~bank~~Company’s ~~statements,~~independent ~~including~~registered ~~examination~~public ofaccounting ~~individual~~firm ~~items,~~regarding ~~used~~internal control over financial reporting. Management’s report was not subject to attestation by the ~~CFO~~Company’s inindependent ~~the~~registered ~~preparation~~public accounting firm pursuant to temporary rules of ~~reconciliations~~the Securities Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

The Company completed its remediation plans as described below:

· During the first two quarters of fiscal 2009, we added additional staff to segregate and provide additional backup for certain of the CFO’s duties. Such staff, along with designated members of the existing staff, were given the responsibility of independently reviewing the spreadsheets maintained by the CFO to verify the amounts, calculations, and formulas used to compile the amounts used in the preparation of the financial statements and related disclosures. As of the end of the second quarter, the Company had completed the initial testing and verification of all of the major calculational spreadsheets used by the CFO in preparation of the financial statements.

· We implemented procedures pursuant to which the CEO performs a detailed review of all bank statements for unusual items or transactions, prior to their use by the CFO in the preparation of reconciliations. The CEO documents his review and any questions arising from the review, and then works with the CFO to oversee the investigation and resolution of any unusual items. If any item is not satisfactorily resolved as a result of management’s initial investigation, the CEO will report the matter to the Audit Committee of the Board of Directors for further follow-up in accordance with the Audit Committee’s directions.

· We implemented additional steps to enhance segregation of duties within the Company’s accounting and financial reporting functions, including (A) requiring that the employee responsible for keying vendor invoices into the Company’s accounts payable system not be the same employee responsible for the manual reconciliations of vendor invoices and (B) requiring that each employee will only be able to access those modules of the Company’s accounting software utilized for performing his or her duties with the employee’s personal password and, if one employee is required to perform duties normally performed by a second employee in such employee’s absence, a different, temporary password must be utilized.

· Throughout the third and fourth quarters of fiscal 2009, the Company continued to monitor the effectiveness of these remediation measures, and we completed the final testing and evaluation of their effectiveness to remediate the material weaknesses in internal controls discussed above during the fourth quarter of fiscal 2009.

Changes in Internal Control over Financial Reporting

~~While~~There ~~the remediation steps described above~~ were ~~designed~~no ~~and~~changes in ~~place~~our byinternal ~~the~~control ~~end~~over offinancial ~~the~~reporting ~~second~~during ~~quarter~~the offourth fiscal ~~2009,~~quarter ~~management continued to evaluate their operating effectiveness through the end~~ of ~~fiscal year 2009, when it was concluded that~~ the Company’s ~~internal~~fiscal ~~control~~year ~~over financial reporting was sufficiently mature to support an assessment that the controls were effective. There were no changes in our internal control over financial reporting during the quarter~~ ended May 3029, ~~2009~~2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

None.

2019

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE

GOVERNANCE

Executive Officers

Information concerning the Company’s Executive Officers is set forth in Part I of this report on Form 10-K under the caption “Executive Officers of the Company.”

Audit Committee Financial Expert

All ~~three~~four of the Company’s independent directors currently serve on the Audit Committee, and each is an experienced business professional. Thomas L. Richardson is the retired chief executive officer of Learning Labs, Inc., a position he held for 27 years. He has had over 3334 years of experience in reviewing the Company’s financial reporting process through service as an independent director. Danny R. Skates has 1415 years of senior management experience as Vice President and General Manager of Jackson Chevrolet Pontiac Buick GMC, Inc.~~, and~~ Andrew V. Douglas has had extensive experience with the business of independent grocery retailers such as the Company through his service as a retail counselor for Fleming Companies, Inc., our former principal supplier, and Virgil E. Bishop is very familiar with the Company’s financial reporting, having served as an officer of ACI for 37 years prior to his retirement in 2006. Accordingly, in light of their backgrounds and their understanding of the Company’s business, the Board of Directors believes that the members of the Audit Committee will be able to provide effective oversight for the Company’s financial reporting process and its relationship with its independent accountants. Nevertheless, the Company’s Board of Directors has not determined that any member of the Company’s Audit Committee qualifies as an “audit committee financial expert” under the SEC’s detailed, technical definition of that term.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) which applies to its principal executive officer, principal financial officer and principal accounting officer or controller, and any persons performing similar functions. A copy of the Code of Ethics is filed as Exhibit 14 to this Report.

The remaining information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Company’s ~~2009~~2010 Annual Meeting of Shareholders, under the headings “INFORMATION ABOUT NOMINEES FOR DIRECTOR” and “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.”

2120

ITEM 11.

EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Company’s ~~2009~~2010 Annual Meeting of Shareholders, under the headings “DIRECTOR COMPENSATION” and “EXECUTIVE COMPENSATION.”

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Securities Authorized for Issuance Under Equity Compensation Plans

The Company has not adopted any equity compensation plans.

The remaining information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Company’s ~~2009~~2010 Annual Meeting of Shareholders, under the ~~headings~~heading “PRINCIPAL SHAREHOLDERS~~” and “INFORMATION ABOUT NOMINEES FOR DIRECTOR~~.”

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference to the Company’s definitive proxy statement filed with the Securities and Exchange Commission pursuant to Regulation 14A for the Company’s ~~2009~~2010 Annual Meeting of Shareholders, under the headings “CERTAIN TRANSACTIONS” and “DIRECTOR NOMINATION PROCESS AND INDEPENDENCE DETERMINATIONS.”

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

2221

PART IV

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

1. The following Financial Statements in the Company’s ~~2009~~2010 Annual Report to the security holders for the fiscal year ended May 3029, ~~2009~~2010, are incorporated by reference in Item 8 hereof:

Report of Independent Registered Public Accounting Firm

- Balance Sheets – May 3029, ~~2009~~2010 and May 3130, ~~2008~~2009

- Statements of ~~Income~~Operations and Changes in Stockholders’ Equity - Fiscal Years Ended May 3029, ~~2009~~2010 and May 3130, ~~2008~~2009

- Statements of Cash Flows - Fiscal Years Ended May 3029, ~~2009~~2010 and May 3130, ~~2008~~2009

Notes to Financial Statements

None of the schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are required under the related instructions, or else are inapplicable to the Company, and therefore no such schedules have been filed.

The Exhibit Index attached to this report is incorporated by reference into this Item 15(a)(3).

2322

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	AMERICAN CONSUMERS, INC.
Date: August 27, 2009	By:	/s/ Michael A. Richardson
		Michael A. Richardson
		Chairman of the Board, President and Chief Executive Officer

AMERICAN CONSUMERS, INC.

Date: August 26, 2010 By: /s/ Paul R. Cook

Paul R. Cook

Chairman of the Board,

President and Chief

Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Michael A. Richardson Michael A. Richardson	Chairman of the Board, President and Chief Executive Officer	August 27, 2009
/s/ Paul R. Cook Paul R. Cook	Chairman of the Board President and Chief Executive Officer, Treasurer, Chief Financial Officer, and Director	August 26, 2010
/s/ Paul R. Cook Paul R. Cook	Executive Vice- President, Chief Financial Officer, Treasurer (Chief Accounting Officer) and Director	August 27, 2009
/s/ M. Todd Richardson M. Todd Richardson	Executive Vice President, Chief Operating Officer, Vice President of Meat Operations and Director	August 26, 2010
/s/ Virgil E. Bishop Virgil E. Bishop	Director	August 2726, ~~2009~~2010
/s/ Danny R. Skates Danny R. Skates	Director	August 2726, ~~2009~~2010
/s/ Thomas L. Richardson Thomas L. Richardson	Director	August 2726, ~~2009~~2010
/s/ Andrew V. Douglas Andrew V. Douglas	Director	August 2726, ~~2009~~2010

EXHIBIT INDEX

Exhibit 3

Articles of Incorporation and By-Laws. Incorporated by reference to Exhibit 3 to Form 10-K for the year ended May 29, 1993.

Exhibit 10.1

Lease for the Company’s Ringgold, Georgia location, as amended through the Fifth Amendment thereto dated February 18, 2008. Incorporated by reference to Exhibit 10.1 to Form 10-Q for quarterly period ended March 1, 2008.

Exhibit 10.2

Lease Agreement for the Company’s LaFayette, Georgia location. Incorporated by reference to Exhibit 10(f) to Form 10-K for the year ended May 29, 1993.

Exhibit 10.3

Lease Agreement for the Company’s Chatsworth, Georgia location. Incorporated by reference to Exhibit 10(g) to Form 10-K for the year ended May 29, 1993.

Exhibit 10.4

First Lease Amendment Agreement for the Company’s Chatsworth, Georgia location, dated March 19, 2003. Incorporated by reference to Exhibit 10.15 to Form 10-K for the year ended May 31, 2003.

Exhibit 10.5

Second Lease Amendment Agreement for the Company’s Chatsworth, Georgia location, dated November 30, 2007. Incorporated by reference to Exhibit 10.28 to Current Report on Form 8-K dated November 30, 2007.

Exhibit 10.6

Lease Agreement for the Company’s Chickamauga, Georgia location. Incorporated by reference to Exhibit 10(h) to Form 10-K for the year ended May 29, 1993.

Exhibit 10.7

Letter Agreement, dated August 3, 1994, concerning three 5-year extension options for the Company’s Chickamauga, Georgia location. Incorporated by reference to Exhibit 10 to Form 10-Q for quarterly period ended August 27, 1994.

Exhibit 10.8

Renewal Lease Agreement for the Company’s Stevenson, Alabama location, as further supplemented by Renewal and Extension Agreement, dated April 24, 2009, for such lease. Filed herewith.

Exhibit 10.9

Lease Agreement for the Company’s Dayton, Tennessee location. Incorporated by reference to Exhibit 10(j) to Form 10-K for the year ended May 29, 1993.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.10

Lease Agreement for the Company’s Executive Offices. Incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarterly period ended September 1, 2001.

Exhibit 10.11

Lease Agreement for the Company’s Jasper, Tennessee location. Incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended June 2, 2001.

Exhibit 10.12

Lease Agreement for the Company’s Tunnel Hill, Georgia location, dated December 20, 2003 between the Company and Tunnel Properties, LLC. Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarterly period ended February 28, 2004.

Exhibit 10.13

Demand Note with Variable Interest Rate between the Company and Michael A. and Diana K. Richardson. Incorporated by reference to Exhibit 10.21 to Form 10-K for the year ended May 29, 2004.

Exhibit 10.14

Demand Note with Variable Interest Rate between the Company and Matthew A. Richardson. Incorporated by reference to Exhibit 10.22 to Form 10-K for the year ended May 29, 2004.

Exhibit 10.15

Commitment Letter between the Company and Gateway Bank and Trust Company, dated as of March 16, 2007. Incorporated by reference to Exhibit 10.17 to Form 10-K for the year ended June 2, 2007.

Exhibit 10.16

Business Loan Agreement and Promissory Note between the Company and Gateway Bank and Trust Company, dated as of May 3, 2007, for $180,000 Term Loan. Incorporated by reference to Exhibit 10.18 to Form 10-K for the year ended June 2, 2007.

Exhibit 10.17

Commercial Security Agreement between the Company and Gateway Bank and Trust Company for $180,000 Term Loan, dated as of May 3, 2007. Incorporated by reference to Exhibit 10.19 to Form 10-K for the year ended June 2, 2007.

Exhibit 10.18

Assignment of Deposit Account between the Company and Gateway Bank and Trust Company for $180,000 Term Loan, dated as of May 3, 2007. Incorporated by reference to Exhibit 10.20 to Form 10-K for the year ended June 2, 2007.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.18 Assignment of Deposit Account between the Company and Gateway Bank and Trust Company for $180,000 Term Loan, dated as of May 3, 2007. Incorporated by reference to Exhibit 10.20 to Form 10-K for the year ended June 2, 2007.

Exhibit 10.19

Letter Agreement, dated as of May 3, 2007, between the Company and Gateway Bank and Trust Company. Incorporated by reference to Exhibit 10.24 to Form 10-K for the year ended June 2, 2007.

Exhibit 10.20*

Narrative Summary of the Company’s Named Executive Officer Base Salaries for Fiscal 2010. Filed herewith.

Exhibit 10.21*

Narrative Summary of the Company’s Cash Bonus Plan for Fiscal 2010. Filed herewith.

Exhibit 10.22*

Narrative Summary of Director Compensation Arrangements for the Company for Fiscal 2009 and 2010. Filed herewith.

Exhibit 10.23 ~~Cash~~Terms ~~Register~~Sheet ~~Purchase~~Letter ~~Agreement~~between ~~for~~ the Company’s ~~LaFayette,~~and ~~Georgia~~Gateway ~~location~~Bank & Trust Company, dated as of February 57, 2008, regarding commitment under which first borrowing was initiated July 25, 2008. Incorporated by reference to Exhibit 10.2937 to Current Report on Form 8-K dated ~~February~~July 525, 2008.

Exhibit 10.24 ~~Business~~Two ~~Loan~~Promissory ~~Agreement~~Notes ~~and~~for ~~Promissory~~$56,000 ~~Note~~each between the Company and Gateway Bank ~~and~~& Trust Company, dated as of ~~April~~July 25, 2008~~, for $800,000 Revolving Line of Credit~~. Incorporated by reference to Exhibit 10.3038 to Current Report on Form 8-K dated ~~May~~July 525, 2008.

Exhibit 10.25 Commercial Security ~~Agreement~~Agreements between the Company and Gateway Bank ~~and~~& Trust Company ~~for~~related to Two $~~800~~56,000 ~~Revolving~~Promissory ~~Line~~Notes ~~of Credit,~~ dated as of ~~April~~July 25, 2008. Incorporated by reference to Exhibit 10.3139 to Current Report on Form 8-K dated ~~May~~July 525, 2008.

Exhibit 10.26 ~~Assignment~~Assignments of Deposit Account between the Company and Gateway Bank ~~and~~& Trust Company ~~for~~related to Two $~~800~~56,000 ~~Revolving~~Promissory ~~Line~~Notes ~~of Credit,~~ dated as of ~~April~~July 25, 2008. Incorporated by reference to Exhibit 10.3240 to Current Report on Form 8-K dated ~~May~~July 525, 2008.

Exhibit 10.27 ~~Letter~~Cash ~~Agreement,~~Register ~~dated~~Purchase asAgreement offor ~~May 8, 2008, between~~ the Company’s ~~and~~Dayton, ~~Gateway~~Tennessee ~~Bank~~location, ~~and~~dated ~~Trust~~September ~~Company~~2, 2008. Incorporated by reference to Exhibit 10.3341 to Current Report on Form 8-K dated ~~May~~September 52, 2008.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.28 ~~Cash~~Promissory ~~Register~~Note ~~Purchase~~for ~~Agreement~~$56,000 ~~for~~between the Company’s ~~Tunnel~~and ~~Hill,~~Gateway ~~Georgia~~Bank ~~location~~& Trust Company, dated ~~May~~as 22of September 2, 2008. Incorporated by reference to Exhibit 10.3442 to Current Report on Form 8-K dated ~~May~~September 222, 2008.

Exhibit 10.29 ~~Cash~~Commercial ~~Register~~Security ~~Purchase~~ Agreement ~~for~~between the Company’s ~~Chickamauga,~~and ~~Georgia~~Gateway ~~location~~Bank & Trust Company related to $56,000 Promissory Note dated ~~July~~as 18of September 2, 2008. Incorporated by reference to Exhibit 10.3543 to Current Report on Form 8-K dated ~~July~~September 182, 2008.

Exhibit 10.30 ~~Cash~~Assignment ~~Register~~of ~~Purchase~~Deposit ~~Agreement~~Account ~~for~~between the Company’s ~~Stevenson,~~and ~~Alabama~~Gateway ~~location~~Bank & Trust Company related to $56,000 Promissory Note dated ~~July~~as 18of September 2, 2008. Incorporated by reference to Exhibit 10.3644 to Current Report on Form 8-K dated ~~July~~September 182, 2008.

Exhibit 10.31 ~~Terms~~Cash ~~Sheet~~Register ~~Letter~~Purchase ~~between~~Agreement for the Company’s ~~and~~Chatsworth, ~~Gateway~~Georgia ~~Bank & Trust Company~~location, dated ~~as of~~ February 720, ~~2008, regarding commitment under which first borrowing was initiated July 25, 2008~~2009. Incorporated by reference to Exhibit 10.3745 to Current Report on Form 8-K dated ~~July~~February 2520, ~~2008~~2009.

Exhibit 10.32 ~~Two~~Cash ~~Promissory~~Register ~~Notes~~Purchase Agreement for ~~$56,000 each between~~ the Company’s ~~and~~Jasper, ~~Gateway~~Tennessee ~~Bank & Trust Company~~location, dated asMarch ~~of July 25~~5, ~~2008~~2009. Incorporated by reference to Exhibit 10.3846 to Current Report on Form 8-K dated ~~July~~March 255, ~~2008~~2009.

Exhibit 10.33 ~~Commercial~~Cash ~~Security~~Register ~~Agreements~~Purchase ~~between~~Agreement for the Company’s ~~and~~Ringgold, ~~Gateway~~Georgia ~~Bank & Trust Company related to Two $56~~location,~~000~~ ~~Promissory Notes~~ dated asMarch ~~of July 25~~5, ~~2008~~2009. Incorporated by reference to Exhibit 10.3947 to Current Report on Form 8-K dated ~~July~~March 255, ~~2008~~2009.

Exhibit 10.34 ~~Assignments~~Promissory ofNote ~~Deposit~~for ~~Account~~$60,470 between the Company and Gateway Bank & Trust Company ~~related to Two $56~~,~~000~~ ~~Promissory Notes~~ dated as of ~~July~~February 2524, ~~2008~~2009. Incorporated by reference to Exhibit 10.4048 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~July~~February 2528, ~~2008~~2009.

Exhibit 10.35 ~~Cash~~Commercial ~~Register~~Security ~~Purchase~~ Agreement ~~for~~between the Company’s ~~Dayton,~~and ~~Tennessee~~Gateway ~~location~~Bank & Trust Company related to $60,470 Promissory Note dated ~~September~~as 2of February 24, ~~2008~~2009. Incorporated by reference to Exhibit 10.4149 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~September~~February 228, ~~2008~~2009.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.36 Exhibit 10.37 Assignment of Deposit Account between the Company and Gateway Bank & Trust Company related to $60,470 Promissory Note dated as of February 24, 2009. Incorporated by reference to Exhibit 10.50 to Form 10-Q for the quarter ended February 28, 2009. Promissory Note for $5660,~~000~~470 between the Company and Gateway Bank & Trust Company, dated as of ~~September~~March 25, ~~2008~~2009. Incorporated by reference to Exhibit 10.4251 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~September~~February 228, ~~2008~~2009.

Exhibit 10.3738 Commercial Security Agreement between the Company and Gateway Bank & Trust Company related to $5660,~~000~~470 Promissory Note dated as of ~~September~~March 25, ~~2008~~2009. Incorporated by reference to Exhibit 10.4352 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~September~~February 228, ~~2008~~2009.

Exhibit 10.3839 Assignment of Deposit Account between the Company and Gateway Bank & Trust Company related to $5660,~~000~~470 Promissory Note dated as of ~~September~~March 25, ~~2008~~2009. Incorporated by reference to Exhibit 10.4453 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~September~~February 228, ~~2008~~2009.

Exhibit 10.3940 ~~Cash~~Promissory ~~Register~~Note ~~Purchase~~for ~~Agreement~~$55,470 ~~for~~between the Company’s ~~Chatsworth,~~and ~~Georgia~~Gateway ~~location~~Bank & Trust Company, dated ~~February~~as 20of March 5, 2009. Incorporated by reference to Exhibit 10.4554 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended February 2028, 2009.

Exhibit 10.4041 ~~Cash~~Commercial ~~Register~~Security ~~Purchase~~ Agreement ~~for~~between the Company’s ~~Jasper,~~and ~~Tennessee~~Gateway ~~location~~Bank & Trust Company related to $55,470 Promissory Note dated as of March 5, 2009. Incorporated by reference to Exhibit 10.4655 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~March~~February 528, 2009.

Exhibit 10.4142 ~~Cash~~Assignment ~~Register~~of ~~Purchase~~Deposit ~~Agreement~~Account ~~for~~between the Company’s ~~Ringgold,~~and ~~Georgia~~Gateway ~~location~~Bank & Trust Company related to $55,470 Promissory Note dated as of March 5, 2009. Incorporated by reference to Exhibit 10.4756 to ~~Current~~Form ~~Report~~10-Q onfor ~~Form~~the ~~8-K~~quarter ~~dated~~ended ~~March~~February 528, 2009.

Exhibit 10.4243 Promissory Note ~~for $60,470~~ between the Company and Gateway Bank &and Trust Company, dated as of ~~February~~April 2420, 2009, for renewal of $800,000 Revolving Line of Credit. Incorporated by reference to Exhibit 10.4857 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~April 2820, 2009.

Exhibit 10.43 Commercial Security Agreement between the Company and Gateway Bank & Trust Company related to $60,470 Promissory Note dated as of February 24, 2009. Incorporated by reference to Exhibit 10.49 to Form 10-Q for the quarter ended February 28, 2009.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.44 Exhibit 10.45 Commercial Security Agreement between the Company and Gateway Bank & Trust Company for renewal of $800,000 Revolving Line of Credit, dated as of April 20, 2009. Incorporated by reference to Exhibit 10.58 to Current Report on Form 8-K dated April 20, 2009. Assignment of Deposit Account between the Company and Gateway Bank & Trust Company ~~related~~for torenewal of $60800,~~470~~000 ~~Promissory~~Revolving ~~Note~~Line of Credit, dated as of ~~February~~April 2420, 2009. Incorporated by reference to Exhibit 10.5059 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~April 2820, 2009.

Exhibit 10.4546 ~~Promissory~~Letter ~~Note~~Agreement, ~~for~~dated ~~$60~~as of April 24,~~470~~ 2009, between the Company and Gateway Bank &and Trust Company, ~~dated~~related asto ofPromissory ~~March~~Note 5dated April 20, 2009. Incorporated by reference to Exhibit 10.5160 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~April 2820, 2009.

Exhibit 10.4647 ~~Commercial~~Letter ~~Security~~ Agreement, dated as of December 14, 2009, between the Company and Gateway Bank &and Trust Company, ~~related~~Concerning toWaiver ~~$60,470~~of ~~Promissory~~any ~~Note~~Default ~~dated~~Resulting asfrom Death of ~~March 5, 2009~~Guarantor. Incorporated by reference to Exhibit 10.5255 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~December 2814, 2009.

Exhibit 10.4748 ~~Assignment~~Business ofLoan ~~Deposit~~Agreement ~~Account~~ between the Company and Gateway Bank &and Trust Company ~~related to $60~~,~~470~~ ~~Promissory Note~~ dated as of ~~March~~May 520, ~~2009~~2010, for $800,000 Revolving Line of Credit. Incorporated by reference to Exhibit 10.5356 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~May 2820, ~~2009~~2010.

Exhibit 10.4849 Promissory Note ~~for $55,470~~ between the Company and Gateway Bank &and Trust Company, dated as of ~~March~~May 520, ~~2009~~2010, for renewal of $800,000 Revolving Line of Credit. Incorporated by reference to Exhibit 10.5457 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~May 2820, ~~2009~~2010.

Exhibit 10.4950 Commercial Security Agreement between the Company and Gateway Bank &and Trust Company ~~related~~for torenewal of $55800,~~470~~000 ~~Promissory~~Revolving ~~Note~~Line of Credit, dated as of ~~March~~May 520, ~~2009~~2010. Incorporated by reference to Exhibit 10.5558 to ~~Form~~Current ~~10-Q~~Report ~~for~~on ~~the~~Form ~~quarter~~8-K ~~ended~~dated ~~February~~May 2820, ~~2009~~2010.

Exhibit 10.50 Assignment of Deposit Account between the Company and Gateway Bank & Trust Company related to $55,470 Promissory Note dated as of March 5, 2009. Incorporated by reference to Exhibit 10.56 to Form 10-Q for the quarter ended February 28, 2009.

Exhibit 10.51 Promissory Note between the Company and Gateway Bank and Trust Company, dated as of April 20, 2009, for renewal of $800,000 Revolving Line of Credit. Incorporated by reference to Exhibit 10.57 to Current Report on Form 8-K dated April 20, 2009.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

Exhibit 10.5251 ~~Commercial~~Assignment ~~Security~~of ~~Agreement~~Deposit Account between the Company and Gateway Bank &and Trust Company for renewal of $800,000 Revolving Line of Credit, dated as of ~~April~~May 20, ~~2009~~2010. Incorporated by reference to Exhibit 10.5859 to Current Report on Form 8-K dated ~~April~~May 20, ~~2009~~2010.

Exhibit 10.5352 ~~Assignment~~Letter Agreement, dated as of ~~Deposit~~May ~~Account~~20, 2010, between the Company and Gateway Bank &and Trust Company, ~~for~~related ~~renewal~~to ofBusiness ~~$800,000~~Loan ~~Revolving~~Agreement ~~Line~~and ofPromissory ~~Credit~~Note, each dated as of ~~April~~May 20, ~~2009~~2010. Incorporated by reference to Exhibit 10.5960 to Current Report on Form 8-K dated ~~April~~May 20, ~~2009~~2010.

Exhibit 10.5453 ~~Letter~~Promissory ~~Agreement,~~Note ~~dated~~for ~~as of April 24~~$45,000 ~~2009,~~ between the Company and Gateway Bank ~~and~~& Trust Company, ~~related~~dated toas ~~Promissory~~of ~~Note~~July ~~dated April~~ 20, ~~2009~~2010. Incorporated by reference to Exhibit 10.6061 to Current Report on Form 8-K dated ~~April~~July 20, ~~2009~~2010.

Exhibit 1310.54 ~~Information~~Commercial ~~Incorporated~~Security byAgreement ~~Reference~~between ~~from~~the ~~Annual~~Company ~~Report~~and toGateway ~~Shareholders~~Bank ~~for~~& Trust Company related to the ~~Fiscal~~$45,000 ~~Year~~Promissory ~~ended~~Note ~~May~~dated 30as of July 20, ~~2009~~2010. ~~Filed~~Incorporated ~~herewith~~by reference to Exhibit 10.62 to Current Report on Form 8-K dated July 20, 2010.

Exhibit 13

Information Incorporated by Reference from Annual Report to Shareholders for the Fiscal Year ended May 29, 2010. Filed herewith.

Exhibit 14

Code of Business Conduct and Ethics. Incorporated by reference to Exhibit 14 to Form 10-K for the year ended May 29, 2004.

Exhibit 23

Consent of Hazlett, Lewis & Bieter, PLLC. Filed herewith.

Exhibit 31.1 C.E.O. and C.F.O. Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a). Filed herewith.

Exhibit 3132 C.2E.O. and C.F.O. Certification pursuant to Exchange Act Rules 13a-14(ab) and 15d-14(ab). Filed herewith.

Exhibit 32.1 C.E.O. Certification pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b). Filed herewith.

Exhibit 32.2 C.F.O. Certification pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b). Filed herewith.

* Indicates a management contract or compensatory plan or arrangement.

All references incorporating exhibits from

documents previously filed by the Company

with the SEC are to SEC File No. 0-5815

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