UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
		For the quarterly period ended February 27, 2010
	OF THE SECURITIES EXCHANGE ACT OF 1934
OR
	For the quarterly period ended August 28, 2010
[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
		For the transition period from _____________ to ______________
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
		Commission File No. 0-5815
	OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____________ to ______________
	Commission File No. 0-5815
AMERICAN CONSUMERS, INC.
(Exact name of registrant as specified in its charter)
	GEORGIA	58-1033765
	(State or other jurisdiction of	(I.R.S. Employer Identification
	Incorporation or organization)	Number)
55 Hannah Way, Rossville, GA 30741
(Address of principal executive offices) (Zip Code)
	Registrant’s Telephone Number, including Area Code: (706) 861-3347
	__________________________________________________________________
	(Former name, former address and former fiscal year, if changed since last report)

~~AMERICAN~~Indicate ~~CONSUMERS,~~by ~~INC.~~check mark whether the registrant (~~Exact~~1) ~~name~~has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant aswas ~~specified~~required into ~~its~~file ~~charter~~such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

GEORGIA		58-1033765
(State or other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification Number)
55 Hannah Way, Rossville, GA		30741
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, including Area Code: (706) 861-3347 _____________________________________________________________ (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES 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 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.

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).

o YES x o NO x

APPLICABLE ONLY TO CORPORATE ISSUERS:

	APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Class		Outstanding at October 7, 2010
COMMON STOCK - $ .10 PAR VALUE		749,475
NON VOTING COMMON STOCK - $ .10 PAR VALUE		----

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

ITEM 1. FINANCIAL STATEMENTS

FINANCIAL INFORMATION

AMERICAN CONSUMERS, INC.

CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

(UNAUDITED)
	THIRTEEN WEEKS ENDED
	August 28,				August 29,
	2010				2009

NET SALES	$	7,881,042		$	8,643,898
COST OF GOODS SOLD		5,966,636			6,611,907
Gross Margin		1,914,406			2,031,991
OPERATING, GENERAL AND
ADMINISTRATIVE EXPENSES		2,075,468			2,060,467

Operating Loss		(161,062	)		(28,476	)

OTHER INCOME (EXPENSE)
Interest income		2,012			1,880
Other income		19,575			23,167
Loss on disposal of equipment		(8,708	)		---
Interest expense		(16,913	)		(13,402	)
Loss Before Income Taxes		(165,096	)		(16,831	)
INCOME TAXES		---			---

NET LOSS		(165,096	)		(16,831	)

RETAINED EARNINGS:
Beginning		585,054			1,064,534

Redemption of common stock		---			(81	)

Ending	$	419,958		$	1,047,622

PER SHARE:
Net loss	$	(0.220	)	$	(0.022	)
Cash dividends	$	---		$	---
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		749,475			767,359

Class	Outstanding at April 8, 2010
COMMON STOCK - $ .10 PAR VALUE	749,922
NON VOTING COMMON STOCK - $ .10 PAR VALUE	----

ITEM 1. FINANCIAL STATEMENTS FINANCIAL INFORMATION AMERICAN CONSUMERS, INC. CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)

		THIRTEEN WEEKS ENDED					THIRTY-NINE WEEKS ENDED
	February 27 2010			February 28, 2009			February 27, 2010			February 28, 2009
NET SALES	$	8,153,886		$	8,513,107		$	24,936,767		$	25,999,284
COST OF GOODS SOLD		6,147,539			6,391,451			18,931,380			19,640,287
Gross Margin		2,006,347			2,121,656			6,005,387			6,358,997
OPERATING, GENERAL AND ADMINISTRATIVE EXPENSES		2,124,801			2,123,307			6,347,466			6,365,124
Operating Income (Loss)		(118,454	)		(1,651)			(342,079	)		(6,127	)
OTHER INCOME (EXPENSE)
Interest income		1,972			2,610			5,865			7,828
Other income		19,244			21,514			62,395			69,685
Gain ( Loss) on disposition of property and equipment		----			100			----			(2,043	)
Interest expense		(15,934	)		(15,239	)		(44,325	)		(34,553	)
Income (Loss) Before Income Taxes		(113,172	)		7,334			(318,144	)		34,790
INCOME TAXES		—			—			—			—
NET INCOME (LOSS)		(113,172	)		7,334			(318,144	)		34,790
RETAINED EARNINGS:
Beginning		858,930			1,032,286			1,064,534			1,004,859
Redemption of common stock		(133	)		(895	)		(765	)		(924	)
Ending	$	745,625		$	1,038,725		$	745,625		$	1,038,725
PER SHARE:
Net Income (Loss)	$	(0.149	)	$	0.009		$	(0.418	)	$	0.045
Cash dividends	$	—		$	—		$	—		$	—
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		760,452			780,268			761,652			780,751

See Notes to Financial Statements

FINANCIAL INFORMATION AMERICAN CONSUMERS, INC. CONDENSED BALANCE SHEETS
FINANCIAL INFORMATION
						February 27, 2010	May 30, 2009
AMERICAN CONSUMERS, INC.
						(Unaudited)
CONDENSED BALANCE SHEETS
	August 28,				May 29,
	2010				2010
	(Unaudited)
--ASSETS--
CURRENT ASSETS
Cash and cash equivalents	$	347,809		$	824,443
Certificate of deposit		318,509			316,552
Accounts receivable		104,733			117,137
Inventories		2,263,163			2,407,785
Prepaid expenses		48,883			50,433
Total current assets		3,083,097			3,716,350
PROPERTY AND EQUIPMENT - at cost
Leasehold improvements		314,556			314,556
Furniture, fixtures and equipment		3,113,936			3,067,580
		3,428,492			3,382,136
Less accumulated depreciation		(2,891,331	)		(2,860,964	)
		537,161			521,172
TOTAL ASSETS	$	3,620,258		$	4,237,522
--LIABILITIES AND STOCKHOLDERS' EQUITY--
CURRENT LIABILITIES
Accounts payable	$	673,438		$	776,479
Book overdraft		505,849			714,206
Short-term borrowings		679,079			800,541
Current maturities of long-term debt		123,293			107,537
Accrued sales tax		80,625			86,088
Other		213,665			245,199
Total current liabilities		2,275,949			2,730,050
LONG-TERM DEBT		224,400			222,467
STOCKHOLDERS' EQUITY
Nonvoting preferred stock – authorized 5,000,000
shares of no par value; no shares issued		---			---
Nonvoting common stock – authorized 5,000,000
shares-$.10 par value; no shares issued		---			---
Common stock - $.10 par value; authorized 5,000,000
shares; shares issued of 749,475 and 749,475		74,948			74,948
Additional paid-in capital		625,003			625,003
Retained earnings		419,958			585,054
Total Stockholders' Equity		1,119,909			1,285,005
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,620,258		$	4,237,522

--A S S E T S--
CURRENT ASSETS
Cash and short-term investments	$	603,456		$	971,416
Certificate of deposit		314,627			307,375
Accounts receivable		123,308			122,646
Inventories		2,323,774			2,283,909
Prepaid expenses		49,925			33,513
Total current assets		3,415,090			3,718,859
PROPERTY AND EQUIPMENT - at cost
Leasehold improvements		314,556			303,766
Furniture, fixtures and equipment		3,113,237			3,112,606
		3,427,793			3,416,372
Less accumulated depreciation		(2,882,050	)		(2,804,322	)
		545,743			612,050
TOTAL ASSETS	$	3,960,833		$	4,330,909
--LIABILITIES AND STOCKHOLDERS' EQUITY--
CURRENT LIABILITIES
Accounts payable	$	739,275		$	766,878
Book overdraft		578,968			394,631
Short-term borrowings		511,673			596,660
Current maturities of long-term debt		110,696			117,774
Accrued sales tax		85,538			94,446
Other		232,983			247,845
Total current liabilities		2,259,133			2,218,234
LONG-TERM DEBT		250,027			331,285
STOCKHOLDERS' EQUITY
Nonvoting preferred stock – authorized 5,000,000 shares of no par value; no shares issued		—			—
Nonvoting common stock – authorized 5,000,000 shares-$.10 par value; no shares issued		—			—
Common stock - $.10 par value; authorized 5,000,000 shares; shares issued of 756,003 and 767,576 respectively		75,600			76,758
Additional paid-in capital		630,448			640,098
Retained earnings		745,625			1,064,534
Total Stockholders' Equity		1,451,673			1,781,390
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	3,960,833		$	4,330,909

See Notes to Financial Statements

FINANCIAL INFORMATION AMERICAN CONSUMERS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FINANCIAL INFORMATION AMERICAN CONSUMERS, INC. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

		THIRTEEN WEEKS ENDED
		August 28,			August 29,
		2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(165,096	)	$	(16,831	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization		33,464			31,368
Loss on disposal of equipment		8,708			—
Change in operating assets and liabilities:
Accounts receivable		12,404			18,617
Inventories		144,622			(18,797	)
Prepaid expenses		1,550			(9,557	)
Accounts payable		(103,041	)		(24,824	)
Accrued sales tax		(5,463	)		(4,600	)
Other accrued liabilities		(31,534	)		(41,413	)
Book overdraft		(208,357	)		(354,378	)
Net cash used in operating activities		(312,743	)		(420,415	)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in certificate of deposit		(1,957	)		(3,356	)
Purchase of property and equipment		(58,161	)		(5,975	)
Net cash used in investing activities		(60,118	)		(9,331	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings		(121,462	)		203,488
Proceeds from long-term debt		45,000			—
Principal payments on long-term debt		(27,311	)		(29,180	)
Redemption of common stock		—			(1,224	)
Net cash (used in) provided by financing activities		(103,773	)		173,084
Net decrease in cash		(476,634	)		(256,662	)
Cash and cash equivalents at beginning of period		824,443			971,416
Cash and cash equivalents at end of period	$	347,809		$	714,754

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the quarter for: Interest	$	16,263		$	13,402

See Notes to Financial Statements

	THIRTY-NINE WEEKS ENDED
	February 27, 2010			February 28, 2009,
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(318,144	)	$	34,790
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization		94,651			93,705
Loss on disposition of property and equipment		---			2,043
Change in operating assets and liabilities:
Accounts receivable		(662	)		(6,736	)
Inventories		(39,865	)		(25,246	)
Prepaid expenses		(16,412	)		(28,083	)
Accounts payable		(27,603	)		(84,190	)
Book overdraft		184,337			(186,557	)
Accrued sales tax		(8,908	)		(52,615	)
Other accrued liabilities		(14,862	)		(19,738	)
Net cash used in operating activities		(147,468	)		(272,627)
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in certificate of deposit		(7,252	)		6,961
Purchase of property and equipment		(28,344	)		(239,667	)
Net cash used in investing activities		(35,596	)		(232,706	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in short-term borrowings		(84,987	)		293,231
Proceeds from long-term borrowings		—			228,470
Principal payments on long-term debt		(88,336	)		(53,386	)
Redemption of common stock		(11,573	)		(13,982	)
Net cash provided by (used in) financing activities		(184,896	)		454,333
Net decrease in cash		(367,960	)		(51,000	)
Cash and cash equivalents at beginning of period		971,416			741,440
Cash and cash equivalents at end of period	$	603,456		$	690,440
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the nine months for: Interest	$	44,325		$	34,553

See Notes to Financial Statements

AMERICAN CONSUMERS, INC.

NOTES TO FINANCIAL STATEMENTS

(1)	Basis of Presentation.

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

The interim financial statements have not been audited and should be read in conjunction with the notes to the financial statements presented in the Corporation’s ~~2009~~2010 Annual Report to Shareholders. The quarterly financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for interim periods. All such adjustments are of a normal recurring nature. The results for the interim periods are not necessarily indicative of the results to be expected for the complete fiscal year.

(2)	Commitments and Contingencies.

~~Ordinary~~We ~~course~~presently estimate that capital expenditures for required replacements of ~~store~~ equipment ~~during~~in the ~~remainder~~ordinary ofcourse ~~fiscal~~during ~~2010,~~the ~~including~~remainder ~~anticipated replacements~~ of ~~meat~~fiscal ~~scales~~2011 ~~and~~will ~~printers at certain of our stores, are estimated to~~ be $50100,000 or less, ~~and~~which ~~are~~we ~~expected~~expect to be funded from operating cash flows. AsSuch ofexpenditures ~~February~~would ~~27,~~be ~~2010~~in addition to $58,161 ~~capital~~already ~~expenditures~~expended ~~for~~during the first quarter of fiscal ~~year~~2011 tofor ~~date~~new ~~totaled~~hand-held ~~$28,344,~~price ~~consisting~~scanning ofguns ~~$2,390~~that ~~for~~the ~~roof~~Company ~~repairs~~had ~~and~~to $8purchase to replace older refurbished equipment,~~400~~ in ~~improvements~~order to maintain the ~~office~~necessary incompliance ~~one~~with the Payment Card Industry Data Security Standard (“PCI compliance”) for the processing of ~~our~~debit ~~retail~~and ~~stores~~credit card transactions. The purchase price for this equipment was funded in part through a new $45,000, three-year term loan from Gateway Bank & Trust, with the ~~addition~~remainder being funded out of ~~four~~working ~~computers~~capital. inIf it becomes necessary to replace the Company’s ~~executive~~maintenance ~~offices~~vehicle in this fiscal year, the ~~amount~~estimated cost of replacement will be approximately $335,~~347,~~000. aFuture ~~new~~vehicle ~~display~~replacements, ~~case~~to ~~and~~the ~~door~~extent ~~mat~~not paid for ~~one~~in ~~store~~cash, ~~totaling~~are ~~$1,680,~~expected ~~two~~to ~~cash~~be ~~counting~~funded ~~machines~~through ~~totaling~~either ~~$4,326,~~bank ~~the~~or ~~replacement~~manufacturer offinancing, awhichever ~~freezer~~option ~~door~~will ~~for~~provide ~~$683,~~the ~~and~~Company ~~three~~with ~~phone~~the ~~systems~~most ~~totaling~~favorable ~~$7,518~~terms. While management is attempting to postpone future store improvements (which would include, among other things, replacement of certain older refrigeration equipment with more modern, attractive and energy-efficient cases), such improvements may be necessary prior to the end of fiscal ~~2010~~2011. We cannot reliably estimate the cost of any such improvements at the present time, but we will attempt to manage the costs and the timing of such improvements in a manner which both contains the Company’s overall costs and allows us to finance these costs on the most favorable terms that we are able to obtain. Management has determined that additional vehicle replacements likely can be postponed beyond fiscal 2010, although up to three vehicles may have to be replaced during fiscal 2011 at a cost of approximately $25,000 each. We also may have to replace the Company’s maintenance vehicle during fiscal 2011 at an estimated cost of $30,000 to $35,000. We expect to fund these vehicle replacements through either bank or manufacturer financing, whichever will provide the Company with the most favorable terms.

The Company has a 401(k) plan that is administered by Capital Bank and Trust Company. Participation in the plan is available to all full -time employees ~~after one year of service and age 19~~. The Company’s annual contributions to the plan are discretionary. The Company’s contribution to the plan was $7,500 in each of fiscal years ~~2009~~2010 and ~~2010~~2009.

(3) ~~The~~Fair ~~Financial~~Value ~~Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”)~~Disclosures.

In June 2009, the FASB issued an accounting standard which established the Codification to become the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities, with the exception of guidance issued by the U.S. Securities and Exchange Commission (the “SEC”) and its staff. All guidance contained in the Codification carries an equal level of authority. The Codification is not intended to change GAAP, but rather is expected to simplify accounting research by reorganizing current GAAP in approximately 90 accounting topics.

On August 18, 2009 the Securities and Exchange Commission published interpretive guidance titled “Commission Guidance Regarding the Financial Accounting Standards Board’s Accounting Standards Codification”. In its guidance, the SEC stated that concurrent with the Effective Date, references in the SEC’s rules and SEC staff guidance to specific standards under U.S. generally accepted accounting principles should be understood to mean the corresponding reference in the FASB Codification. The SEC also stated that the FASB Codification does not supersede any SEC rules or regulations, is not the authoritative source for SEC rules or SEC staff guidance, and the inclusion of any SEC rules or SEC staff guidance in the FASB Codification will not affect how such items may be updated in the future by the SEC.

(4) Fair Value Disclosures.

Fair Value Measurements:

ASC Topic 820, “Fair Value Measurements and Disclosures”, (ASC Topic 820) defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. ASC Topic 820 applies only to the fair-value measurements that are already required or permitted by other accounting standards and is expected to increase the consistency of those measurements. The definition of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to acquire the asset or received to assume the liability at the measurement date. The statement emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, the fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.

ASC Topic 820 also establishes a three-tier fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value, as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2 – Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets, quoted prices in markets that are not active and other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company has no assets or liabilities whose fair values are measured using levels 1, 2, or 3 inputs.

Fair value of financial instruments:

The carrying values of cash and cash equivalents, the certificate of deposit, accounts receivable, short-term borrowings, accounts payable, accrued expenses and other liabilities are reasonable estimates of their fair values because of the short maturity of these financial instruments. Based on the borrowing rates available to the Company for long-term debt with similar terms and average maturities, the carrying amounts approximate the fair value of such financial instruments.

(54) Cost of Goods Sold.

Cost of goods sold is comprised of the cost of purchasing the Company’s products (such as groceries and other vendor-supplied products) which are sold during the period. Cost of goods sold is equal to the beginning inventory, plus the cost of goods purchased during the period, less the amount comprising ending inventory. The cost of goods sold shown on the Company’s Statement of Operations and Retained Earnings is presented net of rebates from suppliers. These rebates represent cash consideration received from suppliers based primarily on the Company’s volume of purchases from such suppliers. These rebates do not include reimbursement of costs incurred to sell the supplier’s products. In accordance with ASC Topic 605, “Customer Payments and Incentives,” the Company applies rebates from suppliers (excluding rebates for advertising costs) as a reduction in cost of goods sold.

(6~~) Subsequent Events.~~

~~Management~~on ~~has~~the ~~performed~~Company’s anStatement ~~evaluation~~ of ~~subsequent~~Operations ~~events~~and ~~through~~Retained ~~April~~Earnings 8,is ~~2010,~~presented ~~the~~net ~~date~~of ~~these~~rebates ~~financial~~from ~~statements were issued~~suppliers. ~~Material~~These ~~events~~rebates orrepresent ~~transactions~~cash ~~occurring~~consideration ~~after~~received ~~February~~from ~~27,~~suppliers ~~2010,~~based ~~but~~primarily ~~prior~~on to the ~~issuance~~Company’s volume of ~~these~~purchases ~~financial~~from ~~statements,~~such ~~that~~suppliers. These ~~provided~~rebates ~~additional~~do ~~evidence~~not ~~about~~include ~~conditions~~reimbursement ~~that~~of ~~existed~~costs atincurred ~~February~~to ~~27,~~sell ~~2010, have been recognized in~~ the ~~financial~~supplier’s ~~statements for the period ended February 27, 2010~~products. ~~Events~~In oraccordance ~~transactions~~with ~~that~~ASC ~~provided~~Topic ~~evidence~~605, ~~about~~“Customer ~~conditions~~Payments ~~that~~and ~~did not exist at February 27~~Incentives,” ~~2010, but arose before~~ the ~~financial~~Company ~~statements~~applies ~~were~~rebates ~~issued~~from ~~have~~suppliers ~~not~~(excluding ~~been~~rebates ~~recognized~~for inadvertising ~~the~~costs) ~~financial~~as ~~statements~~a ~~for~~reduction ~~the~~in ~~period~~cost ~~ended~~of ~~February~~goods ~~27, 2010~~sold.

(5)	Subsequent Events.

The Company has evaluated subsequent events for potential recognition and/or disclosures in the condensed financial statements and accompanying notes included in this Quarterly Report on Form 10-Q.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

	~~THIRTEEN WEEKS ENDED~~			THIRTEEN WEEKS ENDED				~~THIRTY-NINE WEEKS ENDED~~
	February 27, 2010				February 28, 2009			February 27, 2010			February 28, 2009
				August 28,			August 29,
Sales	$	8,153,886			$	8,513,107		$	24,936,767		$	25,999,284
				2010			2009
% Sales Increase (Decrease)		(4.22	)%			(1.41	)%		(4.09	)%		0.53	%
Sales			$	7,881,042		$	8,643,898
Gross Margin %		24.61	%			24.92	%		24.08	%		24.46	%
% Sales Increase (Decrease)				(8.83%)			(1.61%)
Operating, General and Administrative Expenses:
Gross Margin %				24.29%			23.51%
Amount	$	2,124,801			$	2,123,307		$	6,347,466		$	6,365,124
Operating, General and Administrative Expenses:
% of Sales		26.06	%			24.94	%		25.45	%		24.48	%
Amount			$	2,075,468			2,060,467
Net Income (Loss)	$	(113,172	)		$	7,334		$	(318,144	)	$	34,790
% of Sales				26.33%			23.84%
Net Loss			$	(165,096)		$	(16,831)

Overview:

American Consumers, Inc., (the “Company”), operates eight (8) self-service supermarkets within a compact geographical area that comprises Northwest Georgia, Northeast Alabama, and Southeast Tennessee. All of our supermarkets are operated under the name “Shop-Rite,” and are engaged in the retail sale of groceries including meats, fresh produce, dairy products, frozen foods, bakery products, tobacco products, and miscellaneous other non-food items.

The Company’s ~~operated~~sales atcontinued ato ~~loss~~decline ofduring ~~$113,172 for~~ the first quarter ~~and $318,144 for the nine months ended February 27, 2010, with $96,390~~ of ~~the loss for the nine-month period being attributable to the previously reported flood loss at one of our stores in September 2009. Overall~~2011, ~~sales~~decreasing ~~decreased~~ by $~~359~~762,~~221~~856 (or 48.2283%) ~~for the quarter and $1,062,517 (or 4.09%) for the nine month period ended February 27, 2010, as~~ compared to the ~~same periods of the prior fiscal year. These decreases, which continue a trend that began in the~~ first quarter of fiscal 2010 ~~with a 1~~.~~61%~~ This decrease ~~compared~~led to the ~~prior~~net ~~year~~loss ~~period,~~of ~~were due in part to lower prices (both wholesale and retail) on milk and other dairy products during the current periods as compared to the prior year periods~~$165,096 ~~as well as to the additional factors discussed below under “Sales”~~ for ~~both~~ the ~~three and nine month periods~~quarter. InThe ~~addition~~significant ~~to the~~ sales decrease, ~~our~~experienced ~~gross margin percentage decreased by 0.31%~~ for ~~the~~this ~~third~~ quarter ~~and~~represents ~~0.36%~~an ~~for~~unfortunate ~~the~~continuation ~~first nine months~~ of ~~fiscal~~the ~~2010~~trends ~~compared~~noted toover the ~~same~~past ~~periods~~two years of ~~fiscal~~increasing ~~2009,~~downward ~~negatively~~pressure ~~impacting~~on ~~net~~sales ~~income~~due byto ~~approximately~~a ~~$25,277~~number ~~and~~of ~~$89~~factors,~~772~~ ~~for~~including ~~the~~retail ~~three~~price ~~and~~decreases ~~nine~~in ~~month~~certain ~~periods,~~lines ~~respectively,~~as ~~due~~well ~~primarily~~as toa ~~certain~~continuation ~~pricing~~of ~~changes~~the ~~made~~trend noted in anrecent ~~effort~~periods toof ~~stimulate~~customers ~~sales~~purchasing ~~during~~more ~~the~~private ~~quarter. Operating,~~label ~~general~~ and ~~administrative~~generic ~~expenses increased by only $1~~merchandise,~~494~~ ~~(or~~which ~~0.07%)~~normally ~~during~~retails ~~the~~at ~~third~~lower ~~quarter~~prices asthan ~~compared~~national ~~to last year~~brands, ~~and~~magnifying ~~actually~~the ~~decreased~~impact byon ~~$17,658~~our ~~(or~~selling ~~0.28%)~~prices ~~for the first nine months~~ of ~~fiscal~~a ~~2010~~sharply ~~compared~~more tocompetitive ~~2009,~~environment ~~but~~that ~~increased~~is asnow awidespread ~~percentage~~in ofthe ~~sales~~grocery ~~by 1~~industry.~~12%~~ Management ~~for~~also believes the ~~quarter~~Company ~~and~~is ~~0.97%~~experiencing ~~for~~an ~~the~~ongoing ~~nine~~impact ~~month~~from ~~period~~aggressive ~~due~~promotions toby ~~the~~other ~~decreased~~non-grocery ~~sales~~competitors ~~levels. The~~for ~~changes~~consumers’ infood ~~operating~~purchase dollars, ~~general~~such ~~and~~as ~~administrative~~fast ~~expenses~~food ~~are~~franchises ~~discussed~~offering inentrée ~~more~~items ~~detail~~for ~~below~~one ~~under “Operating~~dollar, ~~General~~as ~~and Administrative Expenses” for~~ both ~~periods~~these ~~presented. Both~~outlets ~~interest income~~ and ~~other~~more ~~income~~full ~~decreased~~service ~~slightly~~restaurants ~~for~~cut ~~the~~prices ~~third~~this ~~quarter~~year ~~and~~to ~~first~~increase ~~nine~~their ~~months~~share of ~~fiscal~~consumers’ ~~2010~~purchases asin ~~compared~~response to ~~fiscal 2009, due, respectively, to lower prevailing interest rates on~~ the ~~Company’s~~trend ~~bank~~observed ~~deposits and to variations~~ in ~~the~~recent ~~level~~periods of ~~certain~~customers ~~activities,~~preparing asmeals ~~discussed~~at ~~below~~home ~~under~~to ~~“Interest~~reduce ~~and Other Income” for each period presented~~spending. ~~Interest~~We ~~expense~~also ~~increased~~believe ~~for~~that ~~both~~ the ~~three~~economy ~~and~~itself ~~nine~~is ~~month~~affecting ~~periods,~~retail ~~due~~grocery ~~largely~~sales, toas ~~additional~~individuals ~~debt~~are ~~incurred~~forced ~~since~~to ~~the~~reduce ~~first~~spending, ~~quarter~~and ofpurchase ~~fiscal~~only ~~2009~~what tothey ~~finance~~need ~~the~~on ~~replacement~~each ~~cycle~~trip ~~for~~to the ~~Company’s~~grocery ~~electronic~~store, ~~cash~~in ~~registers~~an ~~and~~effort ~~scanning~~to ~~equipment~~provide ~~that~~other ~~was~~essentials ~~completed~~to ~~during~~their ~~fiscal 2009~~families.

Our gross margin improved from 23.51% of sales to 24.29% of sales for the current quarter ended August 28, 2010 as compared to the same quarter of the prior fiscal year. The first quarter gross margin also represented an improvement over the 23.95% gross margin realized for the full 2010 fiscal year, though it still trails the 24.55% gross margin realized for fiscal 2009. Given this increase in gross margin, management estimates that the Company would have operated at a break even level during the first quarter had sales not decreased as discussed above. Management is continuing to work on the gross margin in an attempt to get back to the 24.55% level achieved for fiscal 2009. Operating, general and administrative expenses for the first

~~After operating at a loss of $2,659 for the first~~ quarter ofincreased ~~fiscal~~by ~~2009,~~only ~~the Company operated at a net income of~~ $3015,~~115~~001 ~~for~~as ~~the~~compared ~~second quarter and net income of $7,334 for the third quarter, allowing us~~ to ~~report a net income of $34,790 for~~ the ~~first~~prior ~~nine~~year ~~months of fiscal 2009. We experienced a slight sales decrease ($121~~period,~~462,~~ orbut ~~1.41%)~~increased ~~during the third quarter of fiscal 2009~~ as ~~compared~~a topercentage ~~the same quarter~~ of ~~fiscal~~sales ~~2008,~~from ~~when we experienced a $188,499 (or 2.~~23.84%) ~~increase in sales as compared~~ to ~~the third quarter of fiscal 2007~~26. ~~Sales for the first three quarters of fiscal 2009 have remained essentially flat (increasing only 0.53~~33%), asdue ~~compared~~largely to the ~~same~~decrease ~~period~~ in ~~fiscal 2008, when~~ sales ~~grew by 2~~.~~51% as compared to the first three quarters of fiscal 2007.~~ The ~~failure~~changes ~~to match fiscal 2008’s rates of growth~~ in ~~sales~~operating, ~~was~~general ~~partially~~and ~~offset,~~administrative ~~however,~~expenses byare ~~decreases~~discussed in ~~the~~more ~~Company’s~~detail ~~cost of sales of $174~~below. Finally,~~974~~ ~~(or 2.66%) for the third quarter and~~ $~~137~~4,~~283~~034 ~~(or~~of ~~0.69%) for~~ the first ~~nine~~quarter ~~months~~loss ofwas ~~fiscal~~due ~~2009, which lead~~ to ~~significant~~a ~~increases~~slight ~~in the gross margin for both the quarter~~ (~~to 24.92% from 23.95%~~$132) ~~and~~increase ~~nine~~in ~~month~~interest ~~(to~~income ~~24.46%~~on ~~from~~the ~~23.53%)~~Company’s ~~periods~~certificate of ~~such~~deposit ~~year. Unfortunately,~~being ~~the improved gross margin for both periods was~~ more than offset by ~~increases in operating, general and administrative expenses ($63,838, or 1.09% as~~ a ~~percentage~~decline of ~~sales for the quarter, and~~ $~~300~~3,~~976,~~592 ~~or 1.03% as a percentage of sales for the nine month period), resulting~~ in small operating losses for both the third quarter ($1,651) and first nine months ($6,127) of fiscal 2009. The increase in expenses was due primarily to increases in payroll costs, increases in group insurance premiums, utility costs and professional services. However, the net positive impact of other income ~~and~~as ~~expense~~compared ~~items allowed us~~ to ~~remain profitable for both~~ the ~~third quarter and~~ first ~~nine months of fiscal 2009. Interest expense was down somewhat for both the third~~ quarter ~~and year-to-date periods~~ of fiscal ~~2009,~~2010 ~~reflecting the continued favorable impact of a cash management system implemented during fiscal 2008. However, the decreases in interest expense for both the quarter~~ (~~$2,087)~~due ~~and~~mainly ~~year-~~to~~-date~~ ~~($17,841)~~variations ~~periods~~in ofactivity ~~fiscal 2009~~levels, as ~~compared~~discussed ~~to the same periods of fiscal 2008~~below), ~~were not~~ as ~~dramatic~~well as ~~those~~by ~~reported~~a ~~last quarter~~$3,511 asincrease ~~the~~in ~~impact of decreased~~ interest onexpense ~~the~~(due ~~line~~to ofa ~~credit~~slightly ~~was~~higher ~~offset~~fixed ~~by increased~~ interest ~~expense~~rate on the ~~additional~~Company’s ~~borrowings~~newest ~~associated with the purchases of new cash registers and scanning~~ equipment~~. Partially~~ ~~offsetting the decreases in interest expense were simultaneous decreases for the third quarter and first nine months of fiscal 2009 in interest income ($1~~loan,~~382~~ ~~and~~partially ~~$3,968,~~offset ~~respectively,~~by ~~due~~slightly ~~principally to~~ lower ~~prevailing~~balances ~~interest rates~~ on ~~our bank deposits) and~~ other ~~income~~debt ~~($6,432~~compared ~~and $25,782, respectively, due principally~~ to ~~variations in~~ the ~~level~~prior ofyear ~~certain activities~~period) ~~Cumulatively,~~ ~~these~~and ~~changes~~a ~~resulted in decreases in net income of~~ $158,~~953~~708 ~~(or~~loss ~~68.51%)~~on ~~for~~disposal ~~the~~of ~~third quarter and $41,019 (or 54.11%) for~~ the ~~first~~obsolete ~~nine~~scanning ~~months~~guns ofthat ~~fiscal~~were ~~2009~~replaced asduring ~~compared to~~ the ~~same periods of fiscal 2008~~quarter.

~~Management~~The ~~actively~~Company ~~monitors~~lost ~~both~~$16,831 during the ~~gross~~quarter ~~margin~~ended ~~and~~August ~~the~~29, ~~Company’s~~2009. Sales ~~retail~~decreased ~~pricing~~by ~~structure~~1.61%, from $8,785,280 to $8,643,898. This $141,382 decrease in ansales ~~attempt~~was due in part to ~~maximize~~the ~~profitability. Management~~lower ~~began~~prices ~~working~~(both wholesale and retail) on ~~the~~milk ~~Company’s~~and ~~gross~~other ~~margin~~dairy products during the first quarter ~~ended~~of ~~August~~fiscal ~~31,~~2010 ~~2002,~~as atcompared ~~which~~to ~~time~~ the ~~gross~~prior ~~margin~~year ~~stood~~period, atas ~~22.79%~~well ~~for~~as ~~the~~to ~~fiscal~~our ~~year~~customers ~~ended~~continuing ~~June~~to 1,alter ~~2002. While~~their ~~occasional~~buying ~~improvements~~habits inby ~~gross~~switching ~~profit~~from ~~have~~national ~~been~~brands ~~seen~~to inprivate ~~recent~~label ~~periods,~~brands ~~such~~which ascarry ~~the~~lower 24retail prices.~~55%~~ The gross margin wewas ~~achieved~~down ~~for~~slightly, ~~fiscal~~from ~~2009~~23.75% asto ~~compared~~23.51%, toimpacting ~~the~~net ~~gross~~income ~~margins~~by ofapproximately 23$21,000.~~85%~~ Another ~~for~~factor ~~fiscal~~contributing ~~2008~~to ~~and~~the ~~23.73%~~net loss for ~~fiscal~~the ~~2007~~quarter was a $5,555 itincrease isin ~~difficult~~interest toexpense, ~~maintain~~due alargely ~~trend~~to ofadditional ~~consistent~~debt ~~improvement~~incurred insince the ~~gross~~first ~~margin~~quarter ~~due~~of fiscal 2009 to ~~competitive~~finance ~~conditions~~the ~~which~~replacement ~~often~~cycle ~~delay~~for the Company’s ~~ability~~electronic tocash ~~pass~~registers ~~through~~and ~~price~~scanning ~~increases~~equipment ~~experienced~~that atwas ~~the~~completed ~~wholesale~~during ~~level~~fiscal 2009. ~~Accordingly~~The decrease in sales and gross margin, ~~while~~and ~~management~~the ~~attempts~~increased tointerest expense, were partially offset ~~increases~~by a net decrease of $48,663 in ~~its~~operating, ~~costs~~general ~~through~~and ~~pricing~~administrative ~~adjustments~~expenses (as ~~competition~~detailed ~~allows,~~below). Interest ~~further~~income ~~improvements~~for in the ~~gross~~first ~~margin~~quarter ~~may~~of ~~not~~fiscal be2010 ~~achievable~~(principally atcomprised ~~this~~of ~~time~~interest on our certificate of deposit) decreased from $2,651 ~~and~~to ~~deterioration~~$1,880 due primarily to a decrease in the ~~Company’s~~interest ~~gross~~rate ~~margin~~upon isits ~~possible~~annual renewal.

Management ~~believes~~actively ~~that~~monitors ~~competitive~~both ~~pressures~~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 ~~have~~time ~~led~~the togross margin stood at 22.79% for the ~~losses~~fiscal ~~experienced~~year ended June 1, 2002. While occasional improvements in ~~years~~gross ~~prior~~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 ~~2007,~~2008 and 23.73% for fiscal 2007, it is difficult to maintain a trend of consistent improvement in the ~~current~~gross margin – as evidenced by the 23.95% gross margin realized for fiscal ~~year~~2010 – due to ~~date,~~competitive ~~will~~conditions ~~continue~~which often delay the Company’s ability to ~~increase~~pass ~~over~~through ~~time~~price increases experienced at the wholesale level. The 24.29% gross margin realized for the first quarter of fiscal 2011 as compared to a ~~result~~gross margin of ~~competitors~~23.51% ~~opening~~for ~~more~~the ~~new~~first ~~stores~~quarter of the prior year reflects the impact of retail pricing adjustments made during the quarter. While management attempts to offset increases in its costs through pricing adjustments as competition allows, further improvements in the gross margin may not be achievable at this time, and further deterioration in the Company’s ~~trade~~gross margin is possible.

Management believes that competitive pressures on the Company, which have led to the losses experienced in three out of the last six 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

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. In response to these developments, management will continue seeking to manage the Company’s pricing structure to produce the most favorable balance between increases in sales, which help to offset our fixed operating expenses, and the gross margin, which determines the profitability of the additional sales. We will attempt to improve the gross margin and increase profitability by working to obtain the lowest cost for the Company’s inventory, and as competition permits, by periodically implementing adjustments in the Company’s overall mix of retail prices.

Our gross margins may not be directly comparable to those of our larger competitors, since some of those companies may include the costs of their internal distribution networks in cost of goods sold – thus impacting the gross margin – while others reflect such costs elsewhere (such as in operating, general and administrative expenses). Unlike many of the larger grocery store chains with which we compete, the Company does not have an internal distribution network. Inventory is delivered directly to our individual store locations by our wholesale supplier, which recovers its distribution costs through the markup that it charges to the Company. Accordingly, our cost of goods sold as reflected in the Company’s financial statements is comprised principally of our direct wholesale cost for the acquisition of such inventory, net of applicable rebates and allowances as discussed under “Inventories” in Note 1 of the financial statements presented in the Company’s ~~2009~~2010 Annual Report to Shareholders.

~~Management~~While management has been working to contain increases in operating, general and administrative expenses as much as possible~~. Excluding~~, ~~the~~they have continued to rise in recent periods, including first quarter of fiscal 2011, when they increased $9615,~~390~~001 ~~flood~~due ~~loss~~mainly ~~incurred~~to ~~during~~utilities, ~~the~~repairs ~~second~~and ~~quarter~~services, as well as an unfavorable variance in bad checks expense, as detailed below. We achieved a small measure of success in these ~~expenses~~efforts ~~would~~for ~~have~~the ~~decreased~~first quarter of fiscal 2010, with such expenses decreasing by $~~114~~48,~~048~~663, (or 10.7917%) ~~for~~as a percentage of sales, as compared to the first ~~nine~~quarter ~~months~~of fiscal 2009. While payroll, which comprises approximately 50% of our operating, general and administrative expenses, actually declined for the first quarter of fiscal ~~2010~~2011 as compared to the ~~first~~prior ~~nine~~year ~~months~~period, a series of ~~fiscal~~government-mandated ~~2009~~increases in the minimum wage in recent years have pushed these costs steadily upward. Management continues to monitor these expenses and continues to evaluate the performance of each of our grocery store locations to determine their long-term value to the Company. Cost increases, combined with the relatively fixed nature of certain of our expenses, mean that whenever sales decrease, due to the effects of ongoing competition or otherwise, prior improvements experienced in these expenses as a percentage of sales will be eroded. As demonstrated by the results for the current quarter ~~and first nine months of fiscal 2010~~, this directly and adversely affects the Company’s operating profits. A more detailed discussion of these expenses and related changes for the periods presented is set forth below under the caption “Operating, General and Administrative Expenses~~” for each of the periods presented~~.”

Three Months Ended February 27, 2010 Compared to Three Months Ended February 28, 2009

Sales:

Sales decreased by $~~359~~762,~~221~~856 ~~during~~(or 8.83%) for the first quarter ~~ended~~of ~~February~~fiscal ~~27,~~2011 ~~2010~~as compared to the first quarter ~~ended~~of ~~February~~the ~~28,~~prior ~~2009~~year. ~~One~~All of the Company’s stores ~~actually~~ experienced ansales ~~increase~~decreases, inranging ~~sales~~from of 0.3139%, ~~while~~to 28.23%. The current quarter also continued the ~~other~~recent ~~seven~~trend ~~stores~~of ~~experienced~~customers ~~sales~~purchasing ~~decreases~~more ~~ranging~~private ~~from~~label ~~1.91%~~merchandise, towhich ~~15.08%. As~~normally ~~noted~~retails ~~above~~at lower prices than national brands, ~~while~~as ~~overhead~~well ~~remained~~as ~~essentially~~ongoing ~~flat~~price competition from non-grocery competitors for ~~the~~consumers’ ~~quarter,~~food ~~decreases~~expenditures in(as ~~sales~~discussed ~~magnify~~above). The location with the ~~impact~~largest ofdecrease ~~our~~continues ~~operating,~~to ~~general~~be ~~and~~adversely ~~administrative~~impacted ~~expenses~~by onanother ~~the~~tenant ~~Company’s~~having ~~profitability,~~moved ~~resulting~~out inof the ~~net~~shopping ~~loss~~center ~~experienced~~where ~~for~~it ~~the~~is ~~quarter. A~~located ~~reduction~~during infiscal ~~the~~2006 and been replaced by a tenant which does not generate as much traffic,

~~retail~~as ~~sales~~well ~~prices~~as ofby ~~dairy~~generally ~~items~~unfavorable astraffic ~~compared~~patterns toat ~~the~~that ~~prior~~location ~~year~~and ~~period~~by ~~was~~the ~~one~~recent ~~factor~~opening ~~contributing~~of toanother ~~the~~significant ~~overall~~grocery ~~sales~~chain ~~decrease~~in its trade area. The ~~current~~situation ~~quarter~~is ~~also~~further ~~continued~~complicated by the ~~recent~~fact ~~trend~~that this store’s trade area currently has the highest unemployment rate of ~~customers~~any ~~purchasing~~of ~~more~~the ~~private~~Company’s ~~label~~eight ~~merchandise,~~markets. A ~~which~~new ~~normally~~tenant ~~retails~~is atcurrently ~~lower~~trying ~~prices~~to ~~than~~open ~~national~~in ~~brands~~the same shopping center as this store, ~~magnifying~~but ~~the~~it is not yet known whether this will have an impact on the performance of our ~~selling~~store. Another ~~prices~~one of aour ~~sharply~~stores ~~more~~also ~~competitive~~was ~~environment~~affected by the closing during the quarter of a manufacturing plant that iswas ~~now~~one of ~~widespread~~the largest employers in its trade area. ~~The~~We ~~Company~~will iscontinue ~~also~~to ~~experiencing~~closely ~~increased~~monitor ~~competition~~the ~~from~~performance ~~specials~~of ~~promoted~~each byof ~~restaurants~~our individual stores, and ~~fast~~will ~~food~~attempt ~~businesses~~to maintain overall sales levels through active management of the Company’s advertising programs, ~~which~~product ~~are~~selection ~~reducing~~and ~~their~~overall mix of retail prices inthroughout anthe ~~effort~~year. We tobelieve ~~increase~~that ~~their~~offering ~~share~~a broader selection of ~~consumers’~~generic ~~food~~and ~~purchases~~private inlabel ~~response~~merchandise tothan ~~the~~some ~~trend~~of ~~observed~~our incompetitors ~~recent~~may ~~periods~~help ofto bolster sales, as customers ~~preparing~~seek ~~meals~~out atmore ~~home~~of these goods to ~~reduce~~economize on their grocery spending. ~~Management~~It ~~also~~is ~~believes~~hoped that ~~the~~these ~~economy~~trends ~~itself~~in isconsumer ~~affecting~~preferences ~~retail~~will ~~grocery~~continue ~~sales~~and, astogether ~~individuals~~with ~~are~~the ~~forced~~availability toof ~~reduce~~our ~~spending~~check cashing program for customers, will assist us in anmaintaining ~~effort~~sales toand ~~provide~~thereby ~~other~~offsetting ~~essentials~~some toof ~~their~~the ~~families~~Company’s own increased costs.

Sales decreased by $~~121~~141,~~462~~382 (or 1.4161%) for the ~~three~~first ~~months~~quarter ~~ended~~of ~~February~~fiscal ~~28,~~2010 ~~2009~~from ~~compared to~~ the same quarter of ~~the~~fiscal ~~previous year~~2009. ~~Four~~Six of ~~our~~the Company’s stores experienced sales decreases, (ranging from 30.3211% to 7.2000%). The astwo ~~compared~~remaining tostores ~~the~~showed ~~same~~increased ~~quarter~~sales offor ~~fiscal 2008, while~~ the ~~other~~current ~~four~~quarter ~~stores~~of ~~experienced less significant sales increases (ranging from~~ 0.1219% toand 32.2815%), respectively. ~~While~~A ~~two~~reduction ofin ~~our~~the ~~grocery~~retail ~~store~~sales ~~locations~~prices ~~continued to be affected by the opening~~ of adairy ~~locally~~items ~~owned~~was ~~supermarket located between the two locations,~~ one offactor ~~these~~contributing ~~locations~~to ~~experienced~~the aoverall sales decrease. The ~~for~~trend ~~the third quarter as compared to the same period~~ of ~~the~~customers ~~prior~~purchasing ~~year,~~more ~~while~~private ~~the~~label ~~other location experienced an increase~~merchandise, which ~~management~~normally ~~attributes~~retails toat ~~the~~lower ~~relative~~prices ~~difference~~than innational ~~driving~~brands, ~~distances~~also ~~from~~was ~~the~~reflected ~~competitor~~in tothis ~~one~~quarter’s ~~of our stores versus the other~~sales. OfAs ~~the~~noted ~~other three stores that experienced sales decreases~~above, one ~~was affected by another local operator having opened a supermarket within driving distance of that~~ location ~~and another has been affected by the opening of a regional chain in its trade area early in 2008, while the third~~ continued to be adversely impacted by another tenant having moved out of the shopping center where it is located during fiscal 2006 and been replaced by aanother tenant which does not generate as much traffic~~, and by generally unfavorable traffic pattern conditions at that location~~. The overall sales increases experienced over four of the past five fiscal years, as shown in the Company’s 2009 Annual Report to Stockholders, make it more difficult for the Company to continue to show same-store sales increases in consecutive periods without making pricing adjustments that would have more adverse impacts on profitability. Pricing adjustments made to stimulate sales contributed to some erosion of the gross margin during fiscal years 2007 and 2008, so maintaining profitable sales increases over time may not be achievable.

We will continue to attempt to maintain overall sales levels through active management of the Company’s advertising programs, product selection and overall mix of retail prices throughout the year. We believe that offering a broader selection of generic and private label merchandise than some of our competitors may have helped bolster sales in recent periods, prior to the declines experienced for the first nine months of fiscal 2010, as customers seek out more of these goods to economize on their grocery spending. It is hoped that these trends in consumer preferences will continue and, together with the availability of our check cashing program for customers, will assist us in bolstering sales and thereby offsetting some of the Company’s own increased costs. Of course, as also demonstrated by the current period’s results, pricing adjustments made to stimulate sales can contribute to erosion of the gross margin, as also occurred during fiscal years 2007 and 2008, so maintaining profitable increases in sales over time may not be achievable.

Gross Margin:

~~The~~Due to retail pricing adjustments implemented during the quarter ended on August 28, 2010, the Company’s gross margin ofincreased by 0.78% to 24.6129% wefrom ~~achieved~~23.51% for the ~~third~~same quarter a year ago, which also represented an increase of 0.34% from the 23.95% gross margin we achieved for fiscal 2010. Management ~~represented~~is ~~increases~~attempting ~~over~~to keep the gross margin in line through strategic pricing adjustments while competing with larger chains with more resources available to them to reduce the impact of lower gross margins. If management is forced to reduce the gross margin in order to remain competitive such a decrease would have unfavorable effects on the Company’s net income. While we achieved an increase in the gross margin for ~~both~~the current quarter, in recent years, the ~~first~~gross ~~and~~margin ~~second~~for ~~quarters~~the first quarter of ~~the~~our fiscal year has been lower than the level typically achieved for the other three quarters, due to sales mix and seasonal Fourth of July promotions.

The Company’s gross margin for the quarter ended August 29, 2009 decreased by 0.24%, to 23.51% from 23.75% for the first quarter of fiscal 2009, which also represented a decrease of 1.04% from the 24.55% gross margin we achieved for fiscal 2009. As noted above, while this illustrates the difficulty of maintaining consistent improvements in the gross margin, management strives to keep the gross margin in line through strategic pricing adjustments balanced with periodic promotions to stimulate sales.

(23.51% and 24.17%, respectively), although it did not reach the 24.92% level achieved for the quarter ended February 28, 2009. Management will continue its efforts to keep the gross margin in line through strategic pricing adjustments, while competing with larger chains with more resources available to them to reduce the impact of lower gross margins. If we are forced to reduce the gross margin in order to remain competitive, as occurred during the first nine months of fiscal 2010, then, in the absence of offsetting reductions in expenses, the Company’s net income will be negatively impacted.

A 0.97% increase in the Company’s gross margin, from 23.95% for the quarter ended March 1, 2008 to 24.92% for the quarter ended February 28, 2009, helped the Company to realize only a small operating loss for the third quarter of fiscal 2009 despite increases in operating, general and administrative expenses, thereby contributing to the net income of $7,334 reported for the quarter. Management worked throughout the period to make adjustments to retail prices of merchandise to recover increases in our wholesale costs, to the extent permitted by competition, in order to keep the gross margin at a rate favorable to the Company in its efforts to generate net income.

Operating, General and Administrative Expenses:

The Company’s ongoing operating, general and administrative expenses are comprised mainly of personnel salary and related payroll costs, utilities and telephone expenses, rental payments for leased locations, insurance expense, advertising and promotion expense, general and office supplies expense, repairs and maintenance, depreciation expense, bank service charges and credit card fees, bad checks expense, professional fees, ~~vehicle~~ and other minor miscellaneous expenses. In accordance with ASC Topic 605, “Customer Payments and Incentives,” advertising rebates received from suppliers are deducted from advertising expense within this category.

The ~~table presented on the~~ following ~~page~~table details the components of operating, general and administrative expenses, both in absolute terms and as a percentage of the total of all such expenses, for the quarters ended ~~February~~August 2728, 2010 and ~~February~~August 2829, 2009:

Expense Item	~~Third~~First Quarter ~~2010~~2011 Amount		% of First Qtr. 2011 Total	%First ofQuarter ~~Third~~2010 ~~Qtr. 2010Total~~Amount		% of First Qtr. 2010 Total	~~Third Quarter 2009 Amount~~		~~% of Third Qtr. 2009 Total~~
Payroll	$1,036,760	~~1,078,778~~	49.9	$1,055,600	~~50.8~~	51.3	$	~~1,058,527~~		~~49.8~~
Utilities & telephone expense	214,176	~~214,974~~	10.3	202,606	~~10.1~~	9.8		~~236,780~~		~~11.1~~
Rent	167,482	~~167,670~~	8.1	168,500	~~7.9~~	8.2		~~168,964~~		~~8.0~~
Insurance	154,483	~~162,655~~	7.4	151,361	~~7.7~~	7.3		~~148,014~~		~~7.0~~
Advertising & promotion	121,198	~~120,285~~	5.8	125,768	~~5.7~~	6.1		~~132,461~~		~~6.2~~
General & office supplies	82,025	~~86,107~~	4.0	99,631	~~4.1~~	4.8		~~96,987~~		~~4.6~~
Repairs & maintenance	84,723	~~85,491~~	4.1	58,712	~~4.0~~	2.8		~~80,963~~		~~3.8~~
Depreciation	33,463	~~32,234~~	1.6	31,368	~~1.5~~	1.5		~~33,296~~		~~1.6~~
Bank service charges and credit card fees	38,754	~~32,004~~	1.9	32,680	~~1.5~~	1.6		~~32,998~~		~~1.6~~
Bad checks	19,765	~~23,496~~	1.0	9,499	~~1.0~~	0.5		~~28,952~~		~~1.4~~
Professional fees	71,869	~~59,329~~	3.5	63,919	~~2.8~~	3.1		~~48,403~~		~~2.3~~
All other miscellaneous		61,778			2.9			56,962		2.6
All other misc.	50,770		2.4	60,823		3.0
TOTAL	$2,075,468	~~2,124,80~~	100.0	$2,060,467	~~100.0~~	100.0	$	~~2,123,307~~		~~100.0~~

Overall, operating, general and administrative expenses for the first quarter of fiscal 2011 increased by $15,001 (or 0.7%) as compared to the first quarter of fiscal 2010, as increases totaling $67,088 in utilities and telephone expense, insurance, repairs and maintenance, depreciation, bank service charges and credit card fees, bad checks expense and professional fees were offset by decreases totaling $52,087 in payroll, rent, advertising and promotion expense, general & office supplies expense and all other miscellaneous expenses.

Utilities increased by $11,570 (or 5.7%) due to one of the hottest summers on record. Insurance increased by $3,122 (or 2.1%) due to the increase in the Company’s group health, disability and life insurance premiums which took effect January 1, 2010 and the additional cost incurred to purchase “key man” life insurance on our chief executive officer, partially offset by a reduction in the Company’s other insurance premiums. Repairs and maintenance increased by $26,011 (or 44.3%) due to additional repairs required on aging equipment during the quarter. Depreciation expense increased by $2,095 (or 6.7%), reflecting the impact of the new cash registers, scanning

~~Overall,~~equipment ~~operating, general~~ and ~~administrative~~other ~~expenses~~assets ~~increased~~purchased bysince ~~$1,494 (or 0.07%) for the third quarter of~~ fiscal ~~2010 as compared to the comparable period of fiscal~~ 2009. ~~Payroll~~Bank ~~expenses~~service ~~increased~~charges byand ~~$20,251~~credit ~~(or~~card ~~1.91%)~~fees versus last year, due to the federally mandated increase in the minimum wage that took effect on July 24, 2009. This increase was partially offset by a decrease in store-level bonuses for the current quarter in the amount of $7,443, due to a reduction in net income. Insurance expense increased by $146,~~641~~074 (or 918.896%) due to anvolume ~~increase~~driven inincreases ~~group insurance premiums~~ in ~~January~~charges ~~2010,~~billed ~~and due~~ to ~~a credit based on an audit of~~ the Company’s ~~workers compensation and liability insurance realized during the comparable period of fiscal 2009 that was not included in the 2010 results. Repairs and maintenance expenses increased~~ by ~~$4,528~~its ~~(or~~service ~~5.59%),~~provider ~~due~~for tocredit ~~an increase in repairs to equipment during the current quarter as compared to the prior year period. Repairs~~ and ~~maintenance~~debit ~~expense~~card ~~has trended downward in recent periods, but as reflected in the current period, this trend is not likely to continue, as our equipment continues to age and require more upkeep~~processing. ~~Professional~~Bad ~~fees~~checks increased by $10,~~926~~266 (or 22108.571%) asfor ~~compared to~~ the ~~same~~ quarter ~~last year~~, ~~reflecting increased utilization related to transitional issues surrounding the death of the Company’s former Chairman and Chief Executive Officer during the third quarter of fiscal 2010,~~ as ~~well~~we asexperienced ~~the~~a ~~ongoing~~significant ~~costs~~upswing ofin ~~compliance~~individuals ~~with~~attempting ~~the Sarbanes-Oxley Act. We are also incurring additional expense for the use of an outside agent~~ to ~~collect~~pass bad checks, ~~which resulted in an offsetting decrease in bad checks expense as noted below. Other expenses increased by $4,816 (or 8.45%),~~ due to ~~increases in other miscellaneous expenses during~~ the ~~quarter. These~~current ~~increases~~economic ~~were largely offset by decreases in certain operating, general and administrative expenses, including a decrease of $21,806 (or 9~~conditions.~~21%) in utilities and telephone expense, as our energy costs continued to decline.~~ ~~The~~Professional ~~decrease~~fees inincreased ~~rent of $1,294 (or 0.77%) was due to decreased sales, resulting in lower percentage rents based on sales levels. General and office supplies also decreased~~ by $107,~~880~~950 (or ~~11.22%) due to decreases in sales, which resulted in reduced usage of bags and other operating supplies tied to sales levels. Advertising & promotion decreased by $~~12~~,176 (or 9~~.194%), ~~due to lower retail prices for merchandise given away by the Company in its ongoing “free milk card” sales promotion,~~ as ~~well~~compared as to ~~certain other changes in advertising. Depreciation expense decreased by $1,062 (or 3.19%), primarily attributable to~~ the ~~aging~~first ofquarter ~~most~~ of our equipment apart from the cash registers and scanning equipment that were replaced last year. Bad checks expense decreased by $5,456 (or 18.84%), reflecting the continuing favorable impact of having switched all of our stores to a new provider for bad check collection and control services during fiscal ~~2009. Bank service charges and credit card fees decreased by $994 (or 3.01%)~~2010, ~~as costs continued to decline~~ due to ~~the~~increased ~~new~~utilization service provider used by the Company for processing credit and debit card transactions. Management is continually working to reduce or limit increases in these costs to the extent possible, subject to sales levels, the economy, the continued aging of ~~the Company’s equipment, government regulation, costs passed on to the Company by its suppliers of goods and~~ services ~~and many other factors~~.

~~Operating,~~Payroll ~~general~~expense ~~and~~decreased ~~administrative expenses increased~~ by $6318,~~838~~840 (or 31.108%), ~~for~~reflecting ~~the~~changes ~~third~~to ~~quarter~~officers’ ofpay ~~fiscal~~following ~~2009~~the asmanagement ~~compared~~realignment tothat ~~the~~occurred ~~same~~after ~~period~~the death of ~~fiscal~~our ~~2008. Payroll~~former ~~costs increased~~Chairman byand ~~$43~~CEO last year,~~562~~ ~~versus~~as ~~the~~well ~~prior~~as ~~year,~~management’s ~~due~~efforts to ~~the~~reduce ~~federally~~payroll ~~mandated~~to ~~increase~~help inoffset the ~~minimum~~reduction ~~wage~~in ~~that~~sales. Rent ~~took~~decreased ~~effect~~by ~~on July~~$1,018 ~~24,~~(or ~~2008,~~0.6%) ~~which~~due ~~was~~to ~~partially~~the ~~offset~~reduction ~~by a decrease~~ in ~~store-level~~percentage ~~bonuses~~rents inoverages ~~the~~related ~~amount~~to ofdecreased sales. The $24,~~078~~570 ~~due~~(or to3.6%) ~~reduction~~decrease in ~~net~~advertising ~~income. Utilities~~ and ~~telephone~~promotion expense ~~increased~~resulted ~~$31,345~~from ~~(or~~a ~~15.26%)~~decrease ~~due~~in tothe ~~increases~~cost inof ~~energy~~one ~~costs. Rent~~of ~~increased~~our bypromotional ~~$2,954~~programs ~~(or~~due ~~1.78%),~~to ~~due~~decreased ~~primarily~~sales tolevels, ~~increases~~as inwell ~~rent~~as ~~under~~management’s ~~intervening~~efforts ~~lease~~to ~~renewals. General~~reduce ~~and~~amounts ~~office~~spent ~~supplies~~on ~~increased~~advertising. The byreduction of $317,~~414~~606 (or 317.657%) ~~due to increases~~ in ~~the~~general ~~cost~~and ofoffice supplies ~~and~~expense ~~office~~is ~~supply~~due ~~items~~primarily ~~purchased~~ to ~~make~~a ~~changes~~reduction in ~~the~~supplies ~~Company’s~~ordered ~~office~~ due to ~~personnel~~the ~~changes~~decrease in sales. ~~Depreciation~~ ~~expense~~All ~~increased~~other miscellaneous expenses decreased by $110,~~839~~053 (or 316.195%), ~~primarily~~due ~~attributable~~ to ~~the~~decreased ~~net~~sales ~~effect~~and ofmanagement’s ~~the~~efforts ~~new~~to ~~register~~reduce ~~systems~~overall ~~added since the third quarter of fiscal 2008~~expenses. ~~Bad checks increased $489 (or~~

Operating, general and administrative expenses for the first quarter of fiscal 2010 decreased by $48,663 (or 2.3%) as compared to the first quarter of fiscal 2009, as increases totaling $30,037 in payroll, utilities and telephone expense, rent, insurance, depreciation and other miscellaneous expenses were more than offset by decreases totaling $78,700 in advertising and promotion expense, general & office supplies expense, repairs and maintenance, bank service charges and credit card fees, professional fees, and bad checks expense.

Payroll expense increased by $11,513 (or 1.1%), reflecting the impact of the third in a series of Federally mandated increases in the minimum wage, partially offset by management efforts to contain these cost increases through the use of more efficient employee scheduling. Utilities and telephone expense increased by $6,746 (or 3.4%), primarily due to increased energy costs. Insurance expense increased by $4,385 (or 3.0%), due to an increase in the Company’s group life, health and disability insurance premiums that took effect January 1, 2009, partially offset by a reduction in the Company’s other insurance premiums. Rent increased by $2,719 (or 1.6%) due to the renewal of leases at certain of the Company’s stores. Depreciation expense increased by $3,442 (or 12.3%), reflecting the impact of the new cash registers, scanning equipment and other assets purchased during fiscal 2009. Other expenses increased by $1,232 (or 2.1%), due to increases in various miscellaneous expenses not otherwise classified. The $5,061 (or 3.9%) decrease in advertising and promotion expense resulted from a decrease in the cost of a promotional program tied to the cost of milk, which also decreased during the first quarter of 2010 compared to the same quarter of fiscal 2009, as well as management’s efforts to reduce amounts spent on advertising. The reduction of $3,775 (or 3.7%) in general and office supplies expense is due primarily to a reduction in supplies ordered due to the decrease in sales. The first quarter benefited from a large reduction in repairs and maintenance expense ($25,350, or 30.2% as compared to the prior year period), as we experienced significantly fewer repairs and maintenance issues as compared to the first quarter of fiscal 2009. As demonstrated by the first quarter of fiscal 2011, however, we are unable to reliably forecast future fluctuations in this expense due to the age of most of our equipment (apart from the recently replaced registers and scanning equipment), and the inability to predict major equipment failures. Bank service charges and credit card fees decreased by $4,422 (or 11.9%), due mainly to the Company changing

~~1.72%),~~service ~~due~~providers ~~primarily~~for ~~to problems at one store involving a change in management personnel during~~ the ~~third~~handling ~~quarter~~ of ~~fiscal~~credit ~~2009~~card ~~which impacted the administration of the Company’s check cashing guidelines~~activity. Professional fees ~~increased~~were down by $186,~~706~~530 (or 629.993%) asfor ~~compared to~~ the ~~same~~first quarter of ~~the~~fiscal ~~prior year~~2010, asdue ~~costs~~ to ~~comply~~a ~~with~~slight ~~the~~reduction ~~Sarbanes-Oxley~~as ~~Act~~compared ~~continued~~ to ~~rise,~~the ~~including~~fiscal ~~increases~~2009 period in ~~utilization~~our ofongoing ~~legal~~costs ~~and other professional services related~~ to ~~compliance~~comply with the ~~internal~~Sarbanes-Oxley ~~controls~~Act ~~provisions~~ of ~~Section~~2002 ~~404~~(which ofremain ~~such~~elevated ~~Act~~overall). ~~All other expenses decreased $7~~Finally,~~522~~ ~~(or 11.66%), due to decreases in other miscellaneous expenses during~~ the quarter~~. Insurance~~ ~~decreased~~also bybenefited ~~$3,208~~from ~~(or 2.12%) despite an increase in group insurance premiums in January 2009, due to~~ a ~~credit~~very ~~based~~significant ~~audit~~reduction of ~~the Company’s workers compensation and liability insurance. Advertising and promotion remained relatively consistent, decreasing by~~ $333,~~725~~562 (or 277.749%)~~. Repairs~~ ~~and~~in ~~maintenance~~bad ~~expenses~~checks ~~were~~expense, ~~down~~which bymore ~~$19,976~~than ~~(or~~offset ~~19.79%)~~$8,358 ~~due~~of toprofessional ~~a reduction in repairs to equipment. Bank service charges and credit card~~ fees ~~decreased~~associated ~~$4,040~~with ~~(or~~switching ~~10.91%),~~all ~~reflecting~~of ~~the~~our ~~change~~stores to a new provider tofor ~~handle~~bad ~~the~~check ~~Company’s~~collection ~~credit~~ and ~~debit~~control ~~card processing~~ services induring ~~conjunction~~fiscal ~~with the replacement of our registers~~2009.

Interest and Other Income:

Other income (not including interest income) decreased ~~from~~ $213,~~514~~592 ~~for~~(or ~~the~~15.5%) ~~quarter ended February 28, 2009 to $19,244~~ for the quarter ended ~~February~~August 2728, 2010, ~~due to a decrease in returned check fees charged to customers writing bad checks (which reflected a lower volume of this activity during the current quarter~~ as compared to the ~~prior~~quarter ~~year~~ended ~~period)~~August 29, ~~as well as slight decreases related to decreased activity levels in each of the other categories detailed below~~2009. The components of other income for the quarters ended ~~February~~August 2728, 2010 and ~~February~~August 2829, 2009, apart from interest income, were as follows:

		~~THIRTEEN WEEKS ENDED~~	THIRTEEN WEEKS ENDED
~~Description~~	Description	~~February 27, 2010~~	August 28, 2010	August 29, 2009	~~February 28, 2009~~
~~Check cashing fees~~	Check cashing fees	$	12$13,~~986~~865	$15,008	$	~~13,728~~
Funds received for handling money orders			1,268			1,398
	Funds for handling money orders/transfers		598	1,447
~~Vendor’s compensation from the States of Alabama and Georgia for collecting and remitting sales taxes on a timely basis~~	Vendor’s compensation from the States of Alabama and Georgia for collecting and remitting sales taxes on a timely basis		3,~~548~~489	3,616		~~3,708~~
~~Returned check fees~~	Returned check fees		~~540~~1,212	3,029		~~1,703~~
~~Revenue related to Fed-Ex shipments/other~~	Revenue related to Fed-Ex shipments/other		~~902~~411	67		~~977~~
~~TOTAL~~	TOTAL	$	$19,~~244~~575	$23,167	$	~~21,514~~

The decrease in check cashing fees for the first quarter of 2011 reflects a reduction in the activity of cash checking, as management attempts to more closely monitor the acceptance of bad checks. A new system was in place at all of the Company’s stores as of the end of the quarter ended August 29, 2009, and the new system scans checks when presented and rejects any checks not deemed good by the system’s database. Other changes in the components of other income presented above relate primarily to variations in the volume of the associated activity or service provided by the Company during each of the fiscal quarters presented. Interest income ~~decreased~~increased by $~~638~~132 ~~for~~as compared to the first quarter of fiscal 2010, due primarily to the re-pricing of the interest rate on the Company’s certificate of deposit at the ~~last~~latest renewal date.

14Income Taxes:

Nine Months Ended February 27, 2010 Compared to Nine Months Ended February 28, 2009

Sales:

Sales for the nine months ended February 27, 2010 decreased by $1,062,517 (or 4.09%) compared to the first nine months of fiscal 2009, as the 4.22% decrease in sales experienced during the third quarter added to the sales decreases experienced during the first and second quarters. Sales decreased at seven of the Company’s eight stores for the nine months ended February 27, 2010 (with decreases ranging from 0.72% to 12.45%). The other store experienced a sales increase of 0.17%. Factors believed by management to have influenced these changes included those discussed above in relation to the third quarter numbers, as well as the effects of the unscheduled closing of one location during September 2009 due to a flood. While it is difficult to consistently increase sales due to the effects of competition, management is continuing to adjust the Company’s retail pricing structure, in response to competitive conditions, in an effort to improve sales levels and maintain a loyal customer base.

Sales for the nine months ended February 28, 2009 were relatively flat compared to the same period of fiscal 2008, increasing by $136,626 (or 0.53%) as the 1.41% decrease in sales experienced during the third quarter of fiscal 2009 largely offset the modest sales increases experienced during the first and second quarters. Sales grew at four of the Company’s eight stores for the thirty-nine weeks ended February 28, 2009 (with increases ranging from 1.31% to 5.22%). The other four stores experienced sales decreases ranging from 1.97% to 6.76%.

Gross Margin:

The Company’s gross margin percentage for the nine months ended February 27, 2010 decreased by 0.38% as compared to the nine months ended February 28, 2009, from 24.46% to 24.08%. Gross margin decreased by $353,610 in absolute dollars, as compared to the prior year period. The gross margin percentage achieved for all of fiscal 2009 was 24.55%, with the gross margin for the fourth quarter of fiscal 2009 being 24.83%. The gross margin achieved in the four individual quarters making up fiscal 2009 ranged from 23.75% to 24.92%, while the gross margins achieved for the first three quarters of fiscal 2010 has been 23.51%, 24.17% and 24.61%, respectively. While we have succeeded in maintaining a trend of improvements in the gross margin for the fiscal year to date, these improvements are dependent on our ability to keep pace with increases in wholesale prices and our ability to pass those increases on to the customer based on competition. Management is constantly working to strategically adjust the retail prices of our merchandise to recover increases in our wholesale costs, to the extent permitted by competition.

The Company’s gross margin percentage for the nine month period ended February 28, 2009 increased by 0.93% as compared to the nine months ended March 1, 2008, from 23.53% to 24.46%. This added $273,909 of gross margin for the first nine months of fiscal 2009 as compared to the same period of fiscal 2008, on a sales increase of only $136,626. The gross margin percentage achieved for all of fiscal 2008 was 23.85%, with the gross margin for the fourth quarter of fiscal 2008 being 24.83%. The gross margin achieved in the four individual quarters making up fiscal 2008 ranged from 23.25% to 24.83%, while the gross margins achieved for the first three quarters of fiscal 2009 were 23.75%, 24.72% and 24.92%, respectively.

Operating, General and Administrative Expenses:

The following table details the components of operating, general and administrative expenses, both in absolute terms and as a percentage of the total of all such expenses, for the nine months ended February 27, 2010 and February 28, 2009:

Expense Item	Nine Month 2010 Amount		% of 2010 Nine Month Total		Nine Month 2009 Amount		% of 2009 Nine Month Total
Payroll	$	3,209,130		50.6	$	3,172,480		49.7
Utilities & telephone expense		617,035		9.7		646,978		10.2
Rent		503,717		7.9		501,472		7.9
Insurance		462,973		7.3		445,351		7.0
Advertising & promotion		369,793		5.8		388,571		6.1
General & office supplies		271,604		4.3		302,186		4.8
Repairs & maintenance		222,710		3.5		241,283		3.8
Depreciation		94,651		1.5		93,705		1.5
Bank service charges and credit card fees		96,070		1.5		105,105		1.6
Bad checks		46,301		0.7		99,626		1.6
Professional fees		175,333		2.8		171,862		2.7
Flood loss		96,390		1.5		—		—
All other miscellaneous		181,759		2.9		196,505		3.1
TOTAL	$	6,347,466		100.0	$	6,365,124		100.0

In spite of the $96,390 flood loss experienced in the second quarter, the Company’s operating, general and administrative expenses decreased by $17,658 (or 0.28%) for the first nine months of fiscal 2010 as compared to the same period last year, reflecting management’s ongoing efforts to control costs. Without the flood loss, the decrease would have been $114,048 (or 1.79%). Payroll costs increased by $36,650 (or 1.16%). As discussed above, this increase was due to an increase in the minimum wage effective on July 24, 2009. Officers’ and supervisors’ accrued bonuses actually decreased by $8,072 for the nine month period, due to the losses incurred for the period. Rent expense only increased by $2,245 (or 0.45%) over the same period of last year, due to increased rent at one location when the lease agreement was renewed being partially offset by the decreases in percentage rents related to sales levels, as discussed above. Insurance increased by $17,622 (or 3.96%) due to increased premiums under the Company’s health insurance package maintained for employees, partially offset by a decrease in the premiums for the Company’s workmen’s compensation package and commercial liability coverage. Professional fees increased by $3,471 (or 2.02%) as compared to the same quarter last year, due mainly to ongoing increases in costs to comply with the Sarbanes-Oxley Act and subsequent regulatory developments. The Company also incurred approximately $24,000 in professional fees paid to its new check collection agency, offset as noted above by the related decrease in bad checks expense. Depreciation remained relatively consistent, only increasing by $946 (or 1.01%) for the first nine months of fiscal 2010 as compared to the prior year period. These increases were offset by decreases in certain operating, general and administrative expenses, including a decrease of $29,943 (or 4.63%) as compared to the prior year period in utilities and telephone expense, as our energy costs continued to decline. Advertising and promotion expense decreased by $18,778 (or 4.83%) as management continually works to control these costs by

reducing the amount of certain of these activities during the year, and also due to retail price reductions on milk products utilized in an ongoing sales promotion, as discussed above. Repairs and maintenance decreased by $18,573 (or 7.70%) due to a reduction in repairs to equipment during the first nine months of fiscal 2010 compared to the first nine months of fiscal 2009. These repairs are expensed as incurred and may not continue to decrease during the remainder of the year. General and office supplies decreased by $30,582 (or 10.12%), due to reduced sales decreasing the Company’s use of certain supplies as discussed above. Bank service charges and credit card fees decreased by $9,035 (or 8.60%), due to a more favorable fee structure with the new processor of card transactions that we switched in connection with the recent replacement of the Company’s cash registers. Bad check expense decreased by $53,325 (or 53.53%), reflecting the benefits of switching to a new provider for handling bad checks as discussed above, as well as ongoing efforts to improve store procedures. All other expense decreased by $14,746 (or 7.50%), due to decreases in other miscellaneous expenses during the nine month period.

Operating, general and administrative expenses increased by $300,976 (or 4.96%) for the first nine months of fiscal 2009 as compared to the same period of fiscal 2008. Payroll costs increased by $172,152 (or 5.74%). This increase was due to an increase in the minimum wage effective on July 24, 2008 and to the hiring of additional personnel during the first nine months of fiscal 2009. Officer’s and supervisor’s accrued bonuses actually decreased by $9,710 for the nine month period because of the reduction in net income for the nine months ended February 28, 2009 in the amount of $41,019 as compared to the prior year period. Utilities and telephone expenses increased by $80,214 (or 14.15%), as energy costs continue to rise. Rent expense only increased by $5,957 (or 1.20%) over the same period of fiscal 2008, due to increased rent at one location when the lease agreement was renewed. Insurance increased by $25,659 (or 6.11%) due to increased premiums under the Company’s health insurance package maintained for employees, partially offset by a decrease in the premiums for the Company’s workmen’s compensation package and commercial liability coverage. Advertising and promotion expense also remained fairly consistent, increasing by only $1,449 (or 0.37%) as management continually works to control these costs by reducing the amount of certain of these activities during the year. General and office supplies increased by $8,420 (or 2.87%), reflecting increases in costs of paper, operating supplies and other store and office supplies. Professional fees increased by $54,500 (or 46.44%) as compared to the same period of fiscal 2008, as costs to comply with the Sarbanes-Oxley Act continued to rise, including significant increases in utilization of legal services and other outside consulting fees related to compliance with the internal controls provisions of Section 404 of such Act. The Company also incurred approximately $15,000 in professional fees paid to a new check collection agency in an effort to reduce bad checks expense. All other expense increased by $14,091 (or 7.72%), due to increases in other miscellaneous expenses during the quarter.

Repairs and maintenance decreased by $37,125 (or 13.33%) due to the reduction in repairs to equipment during the first nine months of fiscal 2009 as compared to the same period of fiscal 2008. Depreciation remained consistent, decreasing by $43 (or 0.05%). Bank service charges and credit card fees decreased by $7,400 (or 6.58%), due to a more favorable fee structure with a new processing firm. Bad check expense decreased by $16,898 (or 14.50%), reflecting the Company’s switch to a new provider for bad check collection services, as well as improvements in check cashing procedures implemented during the period.

Interest and Other Income:

Other income (not including interest income) decreased from $69,685 for the nine months ended February 28, 2009 to $62,395 for the nine months ended February 27, 2010, due primarily to activity-driven decreases in check cashing fees, vendor compensation for collecting sales taxes, revenue from returned check fees and revenue related to Fed-Ex shipments and other miscellaneous customer services (including coupon handling commissions and vending machine revenues) during the nine-month period, partially offset by an activity-driven increase in revenue from handling money orders. The components of other income for the thirty-nine weeks ended February 27, 2010 and February 28, 2009 were as follows:

	THIRTY-NINE WEEKS ENDED
Description	February 27, 2010		February 28, 2009
Check cashing fees	$	41,920	$	48,418
Funds received for handling money orders		3,857		2,508
Vendor’s compensation from the States of Alabama and Georgia for collecting and remitting sales taxes on a timely basis		10,664		11,311
Returned check fees		4,355		4,412
Revenue related to Fed-Ex shipments/other		1,599		3,036
TOTAL	$	62,395	$	69,685

Interest income decreased by $1,963 due to re-pricing of the Company’s certificate of deposit at last renewal.

Income Taxes

The Company accounts for income taxes in accordance with the provisions of ASC Topic 740, “Income Taxes,” which requires that deferred income taxes be determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of the enacted tax laws. Valuation allowances are used to reduce deferred tax assets to the amount considered likely to be realized.

No amounts have been provided for current and deferred federal and state tax expense in the statements of income for the ~~nine~~thirteen ~~months~~weeks ended ~~February~~August 2728, 2010 or ~~February~~August 2829, 2009, as a ~~result of a continued net operating loss carry-forward and the related full valuation of the Company’s net deferred tax assets.~~

~~Inflation~~14

~~The~~result ~~Company continues to seek ways to cope with the threat~~ of ~~inflation. To~~a ~~the~~continued ~~extent~~net ~~permitted~~operating byloss ~~competition,~~carry-forward ~~increased costs of goods~~ and ~~services to~~ the ~~Company~~related ~~are~~full ~~reflected~~valuation in increased selling prices for the Company’s goods. However, competitive conditions often delay our ability to pass through price increases experienced at the wholesale level. When the Company is forced to raise overall prices of ~~its goods, we attempt to preserve~~ the Company’s ~~market~~net ~~share~~deferred ~~through~~tax ~~competitive pricing strategies that emphasize weekly-advertised specials~~assets.

18Inflation:

The Company continues to seek ways to cope with the threat of inflation. To the extent permitted by competition, increased costs of goods and services to the Company are reflected in increased selling prices for the Company’s goods. However, competitive conditions often delay our ability to pass through price increases experienced at the wholesale level. When the Company is forced to raise overall prices of its goods, the Company attempts to preserve its market share by competitive pricing strategies that emphasize weekly-advertised specials.

FINANCIAL CONDITION

Liquidity and Capital Resources:

Changes in the Company’s liquidity and capital resources during the periods presented resulted primarily from the following:

Cash Flows from Operating Activities

During the ~~thirty-nine~~thirteen ~~weeks~~week quarter ended ~~February~~August 2728, 2010, the Company used ~~a net amount of~~ $~~147~~312,~~468~~743 in cash ~~flows~~flow infrom ~~its~~ operating activities. ~~Sources~~In ofaddition ~~operating~~to ~~cash~~the ~~flow~~Company’s ~~included~~net ~~the~~loss ~~impact~~ of ~~non-cash~~$165,096 ~~depreciation~~for ~~charges~~the inquarter, ~~the~~other ~~amount~~uses of ~~$94,651~~cash ~~and~~included ana ~~increase~~decrease of $208,357 in the book overdraft inas ~~the~~compared ~~amount~~to offiscal ~~$184,337~~2010 year end (resulting from the timing ~~impacts~~impact of draws and repayments ~~under~~on our revolving line of credit in conjunction with the ~~related~~associated cash management ~~program with the bank that provides the line of credit~~feature)~~. These~~, ~~sources~~a of$5,463 ~~operating~~reduction ~~cash~~in ~~flows~~sales ~~were~~taxes ~~more~~owed ~~than~~(resulting ~~offset~~mainly byfrom ~~uses~~decreased ofsales), ~~funds~~a ~~that~~decrease ~~included~~in ~~the~~accounts ~~net~~payable ~~loss~~ of $~~318~~103,~~144~~041 ~~for~~(representing ~~the~~a ~~first~~reduction ~~nine~~in ~~months~~trade ofpayables ~~fiscal~~owed ~~2010,~~due ~~a $27,603 decrease~~ in ~~accounts~~part ~~payable (due~~ to ~~the~~decreased ~~seasonal~~sales ~~pay-down~~and ofdecreased ~~trade accounts generated by the holiday build-up of~~ inventory), and a ~~reduction of~~ $831,~~908~~534 reduction in ~~sales~~other ~~tax~~accrued ~~payable~~liabilities (due ~~mainly~~ to ~~timing~~differences ~~of payments), an increase~~ in ~~inventories~~the timing of ~~$39,865~~payments ~~(due~~on tocertain aother ~~decrease~~liabilities in comparing the ~~Company’s~~two ~~inventory~~periods ~~turnover~~presented). Offsetting ~~rate~~sources ~~during~~of ~~the~~operating ~~period,~~cash ~~primarily~~flow ~~occurring~~included in the ~~third~~impact ~~fiscal~~of ~~quarter,~~non-cash ~~without~~depreciation acharges ~~corresponding decrease~~ in ~~purchases~~the ~~due~~amount toof ~~purchases~~$33,464 ~~made~~and tothe ~~take~~$8,708 ~~advantage~~book ofloss ~~certain~~on ~~promotions~~equipment bydisposed ~~our~~of ~~wholesale supplier~~ during the quarter), anas ~~increase~~well as a decrease in ~~prepaid~~accounts ~~expenses~~receivable of $1612,~~412~~404, ~~(due~~a ~~mainly~~decrease ~~to timing differences involving payments~~ of ~~commercial liability and workers’ compensation insurance premiums)~~$144,622 ~~an increase~~ in ~~accounts~~inventories ~~receivable of $662~~ (due to anpurchasing ~~increase~~adjustments made in ~~advertising~~response ~~and~~to ~~volume-based~~decreased ~~rebates~~sales) ~~due~~and ~~from vendors, partially offset by~~ a decrease in ~~coupons~~prepaid ~~receivable~~expenses ~~due to timing~~ of ~~mailing coupons for redemption)~~$1,550 ~~and~~as a ~~net~~result ~~decrease~~ of ~~$14,862 in other accrued liabilities (due mainly to~~ a ~~$8,072~~decrease ~~reduction~~ in ~~accrued~~prepaid ~~bonus~~maintenance ~~compensation~~at ~~due to~~ the ~~Company’s~~end ~~net~~of ~~loss for~~ the ~~fiscal year to date)~~quarter.

During the ~~thirty-nine~~thirteen ~~weeks~~week quarter ended ~~February~~August 2829, 2009, the Company used ~~a net amount of~~ $~~272~~420,~~627~~415 in cash ~~flows~~flow infrom ~~its~~ operating activities. In addition to the Company’s net ~~income~~loss of $3416,~~790~~831 for the ~~period~~quarter, other ~~sources~~uses of ~~operating~~ cash ~~flow~~ included ~~the~~a ~~impact~~decrease of ~~non-cash~~$354,378 ~~depreciation charges~~ in the ~~amount~~book ofoverdraft ~~$93,705~~as ~~and~~compared ~~a non-cash loss on disposition of property and equipment of $2,043 related~~ to ~~older~~fiscal ~~equipment~~2009 ~~discarded~~year orend ~~sold,~~(resulting ~~primarily~~from ~~in connection with~~ the ~~upgrade~~timing impact of ~~the~~draws ~~Company’s cash register~~ and ~~scanning~~repayments ~~systems. These~~on ~~sources~~our ofrevolving ~~operating~~line ~~cash flows were more than offset by uses~~ of ~~funds~~credit ~~that included a decrease~~ in ~~the~~conjunction ~~book~~with ~~overdraft in~~ the ~~amount~~associated ofcash ~~$186~~management feature),~~557,~~ a $8418,~~190~~797 ~~decrease~~increase in ~~accounts~~inventories ~~payable~~ (due primarily to ~~the~~continued ~~seasonal~~increases ~~pay-down~~in ofwholesale ~~trade accounts generated by the holiday build-up of inventory)~~costs, abut ~~reduction~~also ofreflecting ~~$52,615~~increases in ~~sales~~certain ~~tax~~orders ~~payable~~from ~~(due~~our ~~mainly~~supplier to ~~timing~~mitigate ofcost ~~payments),~~increases anby ~~increase~~taking inadvantage ~~inventories~~ of ~~$25,246~~certain ~~(due~~promotional ~~to increases in wholesale inventory costs~~programs), ana $9,557 increase in prepaid expenses ofas ~~$28,083~~a ~~(due~~result ~~mainly~~of tothe timing ~~differences~~of ~~involving~~ payments of ~~commercial liability and workers’ compensation~~ insurance premiums, ~~but~~during ~~also~~the ~~due~~current inquarter, ~~part~~a ~~to deposits on new register purchases)~~$24,824 andecrease ~~increase~~ in accounts ~~receivable~~payable ~~of $6,736 (~~due to ana ~~increase~~reduction in ~~advertising~~trade ~~and~~payables ~~volume-based~~owed ~~rebates~~as ~~from~~a ~~vendors~~result ~~and~~of decreased sales, a ~~decrease~~$4,600 reduction in ~~coupons~~sales ~~receivable~~taxes ~~due~~owed toas ~~timing~~a result of ~~mailing~~decreased ~~coupons for redemption)~~sales, and a ~~net decrease of~~ $1941,~~738~~413 reduction in other accrued liabilities (due ~~mainly~~ to a ~~$26,576~~ reduction in accrued ~~bonus~~management ~~compensation~~bonuses ~~due~~in tocurrent ~~the~~quarter ~~Company’s~~as ~~lower net income for the fiscal year to date).~~

1915

compared to the prior year period, as well as to differences in the timing of payments on certain other liabilities in comparing the two periods presented. Offsetting sources of operating cash flow during the quarter included the impact of non-cash depreciation charges in the amount of $31,368 and a $18,617 decrease in accounts receivable (due to a decrease in the amount of supplier rebates owed to the Company at the end of the quarter, as a result of changes in available supplier rebate promotions in relation to the mix of merchandise ordered by the Company during the two periods presented).

Cash Flows from Investing Activities

Investing activities used $3560,~~596~~118 of cash flow during the ~~nine~~thirteen ~~months~~weeks ended ~~February~~August 2728, 2010~~. Such~~, ~~amount~~due ~~included~~to $2858,~~344~~161 of expenditures for ~~equipment~~the ~~purchases~~purchase ~~during~~of ~~the~~equipment ~~period,~~consisting asof ~~described~~updates ~~above~~to inhand ~~the~~held ~~Note~~price 2scanning toguns ~~the~~necessitated ~~Company’s~~by ~~financial~~requirements ~~statements~~to ~~for~~remain ~~the~~PCI ~~nine~~compliant ~~months~~as ~~ended~~discussed ~~February~~above ~~27,~~and ~~2010. The~~an ~~balance~~increase onin the Company’s ~~bank~~ certificate of deposit ~~also increased~~ in the amount of $71,~~252 during the period~~957.

~~During~~Investing ~~the~~activities ~~nine~~used ~~months~~$9,331 ~~ended~~of ~~February 28,~~cash ~~2009,~~flow ~~net~~during ~~cash~~the ~~used~~thirteen inweeks ~~investing~~ended ~~activities~~August of29, ~~$232~~2009,~~706~~ ~~consisted~~due ofto $~~239~~5,~~667~~975 of expenditures for the ~~equipment~~purchase ~~purchases~~of ~~($223,926 for the upgraded cash register and scanning~~ equipment ~~systems~~consisting ~~for~~of ~~five~~a ~~stores plus approximately $15~~computer,~~841~~ ~~for~~two ~~the purchase of three~~ scales ~~for produce~~ and ~~meat departments and~~ a ~~fax~~freezer ~~machine,~~door ~~server~~ and ~~monitor~~an ~~purchased~~increase ~~for the corporate office, less $100 of proceeds from disposal of the old equipment), partially offset by a decrease~~ in the Company’s certificate of deposit in the amount of $63,~~961~~356.

Cash Flows from Financing Activities

Financing activities used $~~184~~103,~~896~~773 of ~~additional~~ cash flow during the ~~nine~~thirteen ~~months~~weeks ended ~~February~~August 2728, 2010, ~~including~~as ~~principal~~a ~~payments~~net ondecrease ~~long-term debt in the amount~~ of $88121,~~336~~462 ~~and redemption of common stock~~ in ~~the amount of $11,573, as well as a net decrease in~~ short-term ~~borrowings~~debt of(primarily ~~$84,987,~~outstanding ~~reflecting~~borrowings ~~activity~~ under our ~~operating~~ line of credit) asand ~~well~~payments ason ~~the~~long-term ~~reduction~~debt in ~~accounts~~the ~~payable~~amount ~~discussed above under operating cash flows. Outstanding borrowings under our line~~ of ~~credit typically fluctuate throughout each quarter~~$27,311 aswere ~~amounts~~partially ~~are~~offset ~~continuously~~by ~~drawn~~proceeds ~~and~~from ~~repaid,~~new ~~based~~term ondebt in the ~~timing~~amount of ~~expenditures~~$45,000 ~~and~~used ~~revenues,~~to ~~under~~assist in the ~~terms~~purchase of the ~~cash~~hand ~~management~~held ~~facility~~price ~~with~~scanning ~~our lender~~guns.

~~Net~~Financing ~~cash~~activities provided by$173,084 ~~financing~~of ~~activities~~additional ~~for~~cash flow during the ~~nine~~thirteen ~~months~~weeks ended ~~February 28~~August 29, 2009, ~~amounted~~as toa ~~$454,333. We~~net ~~incurred~~increase of $~~228~~203,~~470~~488 ofin ~~additional long~~short-term debt in(primarily ~~connection~~outstanding ~~with~~borrowings ~~the~~under ~~ongoing~~our ~~cash~~line ~~register~~of ~~and~~credit) ~~scanning~~was ~~equipment purchases,~~ partially offset by ~~principal~~ payments on long-term debt in the amount of $5329,~~386. We~~180 ~~also~~and ~~had~~redemption aof ~~net~~common ~~increase~~stock in ~~borrowings under~~ the ~~Company’s~~amount ~~line~~ of ~~credit of~~ $~~293~~1,~~231,~~224. The ~~which~~outstanding ~~related~~balance ~~primarily~~on toour ~~the~~line ~~reductions~~of incredit ~~book~~fluctuates ~~overdraft~~throughout ~~and~~each ~~accounts~~quarter, ~~payable~~ as ~~noted~~amounts ~~above~~are ~~under~~continuously ~~the~~drawn ~~discussion~~and ofrepaid, ~~operating~~based ~~cash~~on ~~flows for~~ the ~~first~~timing ~~nine months~~ of ~~fiscal~~expenditures ~~2009. We~~and ~~also~~revenues, ~~redeemed~~under ~~common stock in~~ the ~~amount~~terms of ~~$13,982 during~~ the ~~first~~cash ~~nine~~management ~~months~~facility ofwith ~~fiscal~~our ~~2009~~lender.

Overall, the Company’s cash and cash equivalents decreased by $~~367~~476,~~960~~634 during the ~~thirty-nine~~first ~~week~~quarter ~~period~~of ~~ended~~fiscal ~~February~~2011 ~~27,~~as ~~2010,~~compared ~~versus~~to a decrease in cash and cash equivalents of $51256,~~000~~662 ~~during~~for the ~~comparable~~first ~~period~~quarter of ~~the~~fiscal ~~prior year~~2010.

The ratio of current assets to current liabilities was 1.5135 to 1 at the end of the latest quarter, ~~February~~August 2728, 2010 compared to 1.8074 to 1 on ~~February~~August 2829, 2009 and 1.6836 to 1 at the end of the fiscal year ended on May 3029, ~~2009~~2010. Cash, cash equivalents and the certificate of deposit constituted 2621.8861% of the total current assets at ~~February~~August 2728, 2010, as compared to 2829.5551% of the total current assets at ~~February~~August 2829, 2009 and 3430.3970% at May 3029, ~~2009~~2010. As previously reported, the Company has increased its reliance on bank financing and working capital management, and has limited additional capital spending where possible, to maintain adequate liquidity to fund operations in connection with the operating losses experienced in five out of the last ten ~~fiscal~~ years. ~~Our~~As ~~liquidity~~employment ~~situation~~and ~~has~~inventory ~~also~~costs ~~benefited from a net reduction of approximately $7~~increase,~~500~~ inmanagement ~~the~~will ~~Company’s~~continue ~~monthly~~to ~~debt~~attempt ~~service~~to ~~requirements over the past four~~compensate

2016

fiscal years, achieved through a combination of the retirement of long term debt and our success in limiting the additional debt incurred to finance our equipment replacements during fiscal 2009 to less than the amount originally anticipated. As employment and inventory costs increase, management will continue to attempt to compensate for the increases through operational efficiencies (including both efficient working capital management and seeking to reduce other expenses where possible), and through seeking to continue the favorable cash management ~~arrangement~~arrangements with our primary lender.

~~In general~~Historically, ~~management~~the ~~also~~Company has ~~been~~financed its working capital requirements principally through its cash flow from operations. Short-term borrowing to ~~reduce~~finance inventory purchases is currently provided by the Company’s ~~inventory~~$800,000 ~~levels~~line ~~when~~of ~~possible~~credit with Gateway Bank & Trust and through borrowings from related parties, as andiscussed ~~additional~~below. The ~~means~~bank line of ~~providing~~credit ~~working~~has ~~capital~~a 12 month term which requires that it be renewed in May of each year and contains a borrowing base provision that limits the maximum outstanding indebtedness to forty percent (40%) of the value of the Company’s inventory, as measured on a quarterly basis. ~~However~~As of August 28, ~~while~~2010, ~~inventories~~we ~~were~~had ~~down~~$121,470 ~~from~~available to be borrowed under the ~~normal~~line ~~seasonal~~of ~~peak~~credit. The ~~reflected~~bank atline of credit is secured by the ~~end~~Company’s certificate of deposit, as well as by a security interest in substantially all of our accounts receivable, inventory, machines and equipment, furniture and fixtures and by the ~~first~~personal ~~six~~guarantee ~~months~~of Paul R. Cook, the Company’s Chairman of the ~~fiscal~~Board, ~~year~~Chief ~~(due~~Executive Officer and Chief Financial Officer. While we believe that these sources will continue to ~~inventory~~provide ~~build-up~~us ~~for~~with adequate liquidity to supply the ~~holiday~~Company’s ~~shopping~~working ~~season)~~capital needs, ~~inventories~~if atthe ~~February~~Company’s 27operating losses were to increase relative to depreciation and other non-cash charges, ~~2010~~our ~~still~~operating ~~reflected~~cash aflows ~~slight~~could ~~increase~~be ofadversely ~~$39~~affected. If this happens,~~865~~ ~~over~~we ~~the~~could ~~inventory~~be atrequired ~~year-end~~to ~~May~~seek 30additional financing through bank loans, ~~2009~~or other sources, in order to meet our working capital needs. ~~The~~If ~~overall~~we were required to seek such additional financing and were not able to obtain it, or were unable to do so on commercially reasonable terms, we could be required to reduce the Company’s current level of ~~inventory~~operations ~~balances~~ in ~~recent~~order ~~periods~~to ~~also~~lower ~~has~~our ~~been~~working ~~affected~~capital byrequirements ~~reduced~~to ~~sales~~a ~~and~~level ~~inventory~~that ~~turnover~~our ~~rates~~present financing arrangements would support.

Historically, the Company has financed its working capital requirements principally through its cash flow from operations. Short-term borrowing to finance inventory purchases is provided primarily by the Company’s $800,000 line of credit with Gateway Bank & Trust. This line of credit has a 12 month term, which requires that it be renewed in proximity to the Company’s fiscal year end each May, and contains a borrowing base provision that limits the maximum outstanding indebtedness to forty percent (40%) of the value of the Company’s inventory, as measured on a quarterly basis. As of February 27, 2010, we had $288,860 available to be borrowed under the line of credit. Based on current discussions with the lender, we expect the line of credit to be renewed for an additional year, on substantially similar terms, prior to its expiration date. The bank line of credit is secured by the Company’s certificate of deposit as well as by a security interest in substantially all of our accounts receivable, inventory, machines and equipment, furniture and fixtures and by the personal guarantee of Paul R. Cook, the Company’s President and Chief Executive Officer. While we believe that these sources will continue to provide us with adequate liquidity to supply the Company’s working capital needs, if the Company’s operating losses were to increase relative to depreciation and other non-cash charges, our operating cash flows could be adversely affected. If this happens, we could be required to seek additional financing through bank loans, or other sources, in order to meet our working capital needs. If we were required to seek such additional financing and were not able to obtain it, or were unable to do so on commercially reasonable terms, we could be required to reduce the Company’s current level of operations in order to lower our working capital requirements to a level that our present financing arrangements would support.

Short-term borrowings as of specific dates are presented below:

	February 27, 2010		May 30, 2009		February 28, 2009
	August 28, 2010		May 29, 2010		August 29, 2009
Michael and Diana Richardson	$	—	$	—	$	10,198
Matthew Richardson	$	549	$	541	$	518
Matthew Richardson		533		510		503
Line of Credit		678,530		800,000		799,630
Line of Credit		511,140		596,150		705,350
TOTAL	$	679,079	$	800,541	$	800,148
TOTAL	$	511,673	$	596,660	$	716,051

21During the quarter ended August 28, 2010, we increased the Company’s borrowings from related parties by a net amount of $8 (reflecting additional interest accrued) and also decreased the outstanding balance under the line of credit by a net amount of $121,470. We paid a total of $10,686 and $6,317 in interest on the Company’s outstanding borrowings under its bank line of credit during the first quarter of fiscal years 2011 and 2010, respectively.

~~During~~The ~~the~~Company’s ~~first~~line ~~nine~~of ~~months~~credit ofwith ~~fiscal~~Gateway ~~2010,~~Bank we& ~~increased~~Trust ~~the~~bears ~~Company’s~~interest ~~borrowings~~at ~~from~~the ~~related~~prime ~~parties~~rate byas apublished ~~net~~in ~~amount~~The ofWall ~~$23~~Street ~~(reflecting~~Journal, ~~additional~~subject ~~accrued~~to ~~interest),~~a ~~and~~6.0% ~~decreased~~floor. The ~~the~~note ~~outstanding~~to ~~balance~~Matthew ~~under~~Richardson ~~the~~is ~~line~~unsecured, ofpayable ~~credit~~on bydemand aand ~~net~~bear ~~amount~~interest ofat ~~$85,010~~. We25% ~~paid~~below athe ~~total~~base ofrate ~~$25,014~~charged ~~and~~by ~~$20,980~~Gateway inBank ~~interest~~& Trust on the ~~Company’s~~line ~~outstanding~~of ~~borrowings~~credit. Matthew ~~under~~Richardson ~~its~~is ~~bank~~a ~~line~~son of ~~credit~~principal ~~during~~stockholder ~~the~~Diana ~~first~~Richardson, ~~nine~~and ~~months~~is the brother of ~~fiscal~~Todd ~~years~~Richardson, ~~2010~~the Company’s Executive Vice President and ~~2009,~~Chief ~~respectively~~Operating Officer.

~~The~~Long-Term Company’s line of credit with Gateway Bank & Trust bears interest at prime, subject to a 6.0% floor. The prior note to Michael and Diana Richardson, as well as the current outstanding note to Matthew Richardson, are unsecured, payable on demand and bear interest at .25% below the base rate charged by Gateway Bank & Trust on the line of credit.Debt:

~~Long~~At August 28, 2010, long-~~Term~~term ~~Debt~~debt consisted of (A) a note payable to Gateway Bank & Trust of $63,911 used to pay off Northwest Georgia Bank on a note which financed, in December 2003,

At February 28, 2010, long-term debt consisted of a note payable to Gateway Bank & Trust of $83,742 incurred in May 2007 to refinance the addition of the Company’s eighth grocery store. The Company also has six loans (current balance of $272,221), with the proceeds used to purchase registers and related equipment in six stores. In addition, three vehicles were purchased and financed through Tennessee Valley Federal Credit Union, with balances due at February 27, 2010 of $0, $2,014 and $2,746. Long-term debt as of specific dates is presented below:17

	February 27, 2010		May 30, 2009		February 28, 2009
Six notes payable (four on February 28, 2009), to Gateway Bank & Trust; principal and interest due in monthly installments aggregating $6,685; interest at prime rate plus 0.5%with 6.00% floor, and maturities ranging from August 2013 through March 2014; collateralized by equipment, inventory and personal guarantee of the Company’s CEO	$	272,221	$	318,672	$	215,086
Note payable to Gateway Bank & Trust; principal and interest due in monthly installments of $3,684, through April 2012; interest at prime rate with 6.00% floor; collateralized by equipment, inventory, and personal guarantee of the Company’s CEO		83,742		112,316		121,614
Three vehicle installment loans; principal and interest due in monthly installments aggregating $1,591; maturities ranging from January 2010 through July 2010; collateralized by automobiles		4,760		18,071		22,571
	$	360,723	$	449,059	$	359,271
Less current maturities		110,696		117,774		97,041
	$	250,027	$	331,285	$	262,230

the addition of the Company’s eighth grocery store; (B) six notes with an aggregate balance of $239,911 as of August 28, 2010, executed during fiscal 2009 with Gateway Bank & Trust to finance the replacement of cash registers and related equipment at six of the Company’s retail outlets; (C) a note payable to Gateway Bank & Trust of $43,871 which financed, in July 2010, the purchase of hand held price scanning guns. Long-term debt as of specific dates is presented below:

The following is a schedule by years of the amount of maturities of all long-term debt subsequent to February 27, 2010:

	August 28, 2010	May 29, 2010	August 29, 2009
Six notes payable to Gateway Bank & Trust; principal and interest due in monthly installments aggregating $6,685; interest at prime rate plus 0.5%with 6.00% floor, and maturities ranging from August 2013 through March 2014; collateralized by equipment, inventory and personal guarantees of the Company’s CEO and CFO	$ 239,911	$ 256,122	$ 303,423

Note payable to Gateway Bank & Trust; principal and interest due in monthly installments of $3,684, through April 2012; interest at prime rate with 6.00% floor; collateralized by equipment, inventory, and personal guarantees of the Company’s CEO and CFO	63,911	73,882	102,936

Note payable to Gateway Bank & Trust; principal and interest due in monthly installments of $1,381, through July 2013; interest fixed at 6.50%; collateralized by equipment, inventory, and personal guarantees of the Company’s CEO and CFO	43,871	—	—

Three vehicle installment loans; principal and interest due in monthly installments aggregating $1,591; maturities ranging from January 2010 through July 2010; collateralized by automobiles	—	—	13,520
	$347,693	$330,004	$419,879
Less current maturities	123,293	107,537	116,348
	$224,400	$222,467	$303,531

22The following is a schedule by years of the amount of maturities of all long-term debt subsequent to August 28, 2010:

Twelve Months Ending February		Amount
	Twelve Months Ending August			Amount
~~2011~~	2011	~~$ 110,696~~	$	123,293
~~2012~~	2012	~~112,470~~		109,309
~~2013~~	2013	~~74,691~~		90,775
~~2014~~	2014	~~59,742~~		24,316
~~2015~~	2015	~~3,124~~		—

~~During the quarter ended February 27, 2010 retained earnings decreased as a result of the Company’s net loss for the quarter.~~18

~~Critical~~During ~~Accounting~~the ~~Policies~~quarter ended August 28, 2010 retained earnings decreased as a result of the Company’s net loss for the quarter.

Critical ~~accounting~~Accounting policies are those policies that management believes are important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management believes it has chosen accounting policies that are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting policies are summarized in Note 1 to the Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended May 30, 2009.Policies:

Critical accounting policies are those policies that management believes are important to the portrayal of the Company’s financial condition and results of operations and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management believes it has chosen accounting policies that are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our significant accounting policies are summarized in Note 1 to the Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended May 29, 2010.

We believe that the following accounting policies are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosures of contingent assets and liabilities. Management determines its estimates based on historical experience and other factors believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Inventories:

All inventories are valued at the lower of average cost or market, following the Average Cost-to-Retail Method. Under this method, inventory is stated at average cost, which is determined by applying an average cost-to-retail ratio to each similar merchandise category’s ending retail value. If average cost is determined to exceed market value, the impacted merchandise’s carrying value is reduced to market value, with the reduction flowing through current period earnings. Management recognizes inventory shortages throughout the year based on actual physical counts, which are performed on a quarterly basis at each store location.

Vendor Allowances:

The Company receives funds for a variety of merchandising activities from vendors whose products the Company buys for resale in its stores. These incentives and allowances include volume or ~~purchased~~purchase based incentives, advertising allowances, and promotional discounts. The purpose of these incentives and allowances is generally to aid in the reduction of the costs incurred by the Company for stocking, advertising, promoting and selling the vendor’s products. These allowances generally relate to short-term arrangements with vendors, often relating to a period of one month or less, and are typically negotiated on a purchase-by-purchase basis. Due to system constraints and the nature of certain allowances, these allowances are applied as a reduction of inventory costs using a rational and systematic methodology, which results in the recognition of these incentives when the inventory related to the initial purchase is sold. Management recognized vendor allowances of $101,875 and $298,360, respectively, as a reduction in inventory costs for the quarter and nine month periods ended February 27, 2010, and recognized vendor allowances of $104,000 and $310,000, respectively, as a reduction in inventory costs for the quarter and nine month periods ended February 28, 2009. Amounts that represent a reimbursement of specific identifiable incremental costs, such as advertising, are recorded as a reduction to the related expense in the period that the related expense is incurred. Management recognized approximately $13,730 and $47,700, respectively, in advertising allowances recorded as a reduction of advertising expense for the quarter and nine month periods ended February 27, 2010, and recognized approximately $17,700 and $44,000 respectively, in advertising allowances recorded as a reduction of advertising expense for the quarter and nine month periods ended February 28, 2009.

Management recognized approximately $103,531 and $105,612 of vendor allowances as a reduction in inventory costs for the thirteen weeks ended August 28, 2010 and August 29, 2009, respectively. Amounts that represent a reimbursement of specific identifiable incremental costs, such as advertising, are recorded as a reduction to the related expense in the period that the related expense is incurred. Management recognized approximately $14,700 and $19,320 in advertising allowances recorded as a reduction of advertising expense for the thirteen weeks ended August 28, 2010 and August 29, 2009, respectively.

Asset Impairments:

Management accounts for any impairment of its long-lived assets in accordance with ASC Topic 360, “Property, Plant and Equipment.” Management monitors the carrying value of its long-lived assets for potential impairment each quarter based on whether any indicators of impairment have occurred. As of ~~February~~August 2728, 2010 and ~~February~~August 2829, 2009, no long-lived assets have been identified by management as impaired.

Off-Balance Sheet Arrangements:

The Company had no significant off-balance sheet arrangements as of ~~February~~August 2728, 2010.

Related Party Transactions:

Except as discussed above under “Liquidity and Capital Resources,” there were no material related party transactions during the ~~thirty-nine~~thirteen week period ended ~~February~~August 2728, 2010.

Forward – Looking Statements:

Information provided by the Company, including written or oral statements made by its representatives, may contain “forward looking information” as defined in Section 21E of the Securities Exchange Act of 1934, as amended. All statements which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as expansion and growth of the Company’s business, the effects of future competition, future capital expenditures and the Company’s business strategy, are forward-looking statements. In reviewing such information it should be kept in mind that actual results may differ materially from those projected or suggested in such forward-looking statements. This forward-looking information is based on various factors and was derived utilizing numerous assumptions. Many of these factors previously have been identified in filings or statements made on behalf of the Company, including filings with the Securities and Exchange Commission on Forms 10-Q, 10-K and 8-K. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward-looking statements include the following (in addition to those matters discussed in the Risk Factors included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 29, 2010): changes in the general economy or in the Company’s primary markets, the effects of ongoing price competition from competitors (some of which have greater financial resources than those of the Company), changes in consumer spending, the nature and extent of continued consolidation in the grocery store industry, changes in the rate of inflation, changes in state or federal legislation or regulation, adverse determinations with respect to any litigation or other claims, inability to develop new stores or complete remodels as rapidly as planned, stability of product costs, supply

2420

such things as expansion and growth of the Company’s business, the effects of future competition, future capital expenditures and the Company’s business strategy, are forward-looking statements. In reviewing such information it should be kept in mind that actual results may differ materially from those projected or suggested in such forward-looking statements. This forward-looking information is based on various factors and was derived utilizing numerous assumptions. Many of these factors previously have been identified in filings or statements made on behalf of the Company, including filings with the Securities and Exchange Commission on Forms 10-Q, 10-K and 8-K. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward-looking statements include the following (in addition to those matters discussed in the Risk Factors included in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended May 30, 2009, as supplemented by the revised Risk Factor concerning the loss of key employees contained in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended November 28, 2009): changes in the general economy or in the Company’s primary markets, the effects of ongoing price competition from competitors with greater financial resources than those of the Company, changes in consumer spending, the nature and extent of continued consolidation in the grocery store industry, changes in the rate of inflation, changes in state or federal legislation or regulation, adverse determinations with respect to any litigation or other claims, inability to develop new stores or complete remodels as rapidly as planned, stability of product costs, supply or quality control problems with the Company’s vendors, and other issues and uncertainties detailed from time-to-time in the Company’s filings with the Securities and Exchange Commission.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T.

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) 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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

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 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.

25Our management, including our CEO (who also serves 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 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

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.21

~~Our management, including our CEO (who also is currently acting 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 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.

The Company’s management, with the participation of its ~~Chief~~CEO ~~Executive Officer~~ (who also ~~acts~~serves as its ~~Chief Financial Officer~~CFO), evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) as of ~~February 27~~August 28, 2010. Based on that evaluation, the Company’s Chief Executive Officer (and Chief Financial Officer) concluded that the Company’s disclosure controls and procedures were effective as of such date.

~~Changes~~There have been no changes in ~~Internal~~our ~~Control~~internal control over ~~Financial~~financial ~~Reporting~~reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes made in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the following changes which were made in certain roles and responsibilities related to the Company’s internal control over financial reporting, as a result of the management changes triggered by the death of the Company’s former Chairman of the Board and Chief Executive Officer, Michael A. Richardson, on November 20, 2009:22

· At a Board meeting held on December 3, 2009, Paul R. Cook was elected by the Board of Directors to fill positions of Chairman of the Board, President and Chief Executive Officer of the Company that were previously held by Michael A. Richardson. The Board of Directors also determined that Mr. Cook should retain his prior responsibilities as the Company’s Treasurer and Chief Financial Officer (principal financial officer) on at least an interim basis and subsequently, at a meeting held on January 11, 2010, the Board

determined that Mr. Cook should serve, on an extended basis, in a dual capacity as both the Company’s CEO and its Treasurer and CFO.

· The Company previously had implemented procedures to which the CEO performed 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 was to then document his review and any questions arising from the review, and work with the CFO to oversee the investigation and resolution of any unusual items. The CEO was then to report to the Audit Committee of the Board of Directors any item that is not satisfactorily resolved as a result of management’s initial investigation, for further follow-up in accordance with the Audit Committee’s direction. Since Mr. Cook is now occupying the dual positions of CEO and CFO on at least an interim basis, due to the death of Michael A. Richardson, the responsibilities that previously were assigned to the CEO in implementing this control have now been assigned to the Company’s Secretary and Assistant Treasurer, Reba S. Southern.

AMERICAN CONSUMERS, INC.

PART II — OTHER INFORMATION

ITEM 1A.

RISK FACTORS

Information regarding risk factors appears under the caption “Forward-Looking Statements” in Part I, Item 2 of this Form 10-Q and in Part I, Item 1A ~~for~~of our Annual Report on Form 10-K for the fiscal year ended May 3029, ~~2009 (as supplemented by a revised Risk Factor concerning the loss of key employees contained in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended November 28, 2009)~~2010. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K ~~(as so supplemented)~~.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan		Maximum Number of Shares that May Yet Be Purchased Under the Plan
November 29 – Dec. 26, 2009		1,100	$	1.00		—		—
December 27,2009 – January 30, 2010		344		1.00		—		—
January 31 – February 27, 2010		570		1.00		—		—
Total		2,014	$	1.00		—		—

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

ITEM 6

EXHIBITS

The Exhibit Index attached to this report is incorporated by reference into this Item 6.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AMERICAN CONSUMERS, INC. (Registrant)
	AMERICAN CONSUMERS, INC.
Date: April 13, 2010	/s/Paul R. Cook
	(Registrant)
	Paul R. Cook
Date: October 12, 2010	/s/ Paul R. Cook
	CHAIRMAN OF THE BOARD AND
	Paul R. Cook
	CHIEF EXECUTIVE OFFICER (Principal Executive Officer)
	CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER (Principal Executive Officer)
	CHIEF FINANCIAL OFFICER AND
	CHIEF FINANCIAL OFFICER AND TREASURER (Principal Financial Officer & Chief Accounting Officer)
	TREASURER
	(Principal Financial Officer & Chief Accounting Officer)

AMERICAN CONSUMERS, INC.

EXHIBIT INDEX

The following exhibits are incorporated by reference or filed with this report, as noted below:

Exhibit No.	Description
11	Statement re: computation of per share earnings.*
31	CEO and CFO Certification pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a).*
32	CEO and CFO Certification pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b).*

* Filed herewith.

Filing Compare · AMERICAN CONSUMERS INC