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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000928465-05-000022.txt : 20050214
<SEC-HEADER>0000928465-05-000022.hdr.sgml : 20050214
<ACCEPTANCE-DATETIME>20050214171752
ACCESSION NUMBER:		0000928465-05-000022
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20041231
FILED AS OF DATE:		20050214
DATE AS OF CHANGE:		20050214

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AMCON DISTRIBUTING CO
		CENTRAL INDEX KEY:			0000928465
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-GROCERIES & GENERAL LINE [5141]
		IRS NUMBER:				470702918
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15589
		FILM NUMBER:		05612463

	BUSINESS ADDRESS:	
		STREET 1:		7405 IRVINGTON ROAD
		STREET 2:		POST OFFICE BOX 641940 (68164-7940)
		CITY:			OMAHA
		STATE:			NE
		ZIP:			68122
		BUSINESS PHONE:		4023313727

	MAIL ADDRESS:	
		STREET 1:		7405 IRVINGTON ROAD
		STREET 2:		POST OFFICE BOX 641940 (68164-7940)
		CITY:			OMAHA
		STATE:			NE
		ZIP:			68122
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>dec0410q.txt
<DESCRIPTION>DEC 2004 FORM 10-Q
<TEXT>
                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549

                                  FORM 10-Q

/X/  Quarterly report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the quarterly period ended December 31, 2004

                                      OR

/ /  Transition report pursuant to section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the transition period from          to

                        ------------------------------
                        COMMISSION FILE NUMBER 0-24708
                        ------------------------------

                          AMCON DISTRIBUTING COMPANY
           (Exact name of registrant as specified in its charter)

                                   DELAWARE
                (State or other jurisdiction of Incorporation)

                               7405 Irvington Road
                                Omaha, NE 68122
                   (Address of principal executive offices)
                                  (Zip Code)

                                  47-0702918
                    (I.R.S. Employer Identification No.)

                               (402) 331-3727
             (Registrant's telephone number, including area code)


        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
                             -------       -------

        Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).

                        Yes            No     X
                             -------       -------

The Registrant had 527,062 shares of its $.01 par value common stock
outstanding as of February 7, 2005.



                                                                Form 10-Q
                                                               1st Quarter


                                INDEX
                               -------

                                                                        PAGE
                                                                        ----
PART I -  FINANCIAL INFORMATION

Item 1.   Financial Statements:
          --------------------------------------------
          Condensed consolidated unaudited balance sheets at
          December 2004 and September 2004                                3

          Condensed consolidated unaudited statements of operations
          for the three months ended December 2004 and 2003               4

          Condensed consolidated unaudited statements of cash flows
          for the three months ended December 2004 and 2003               5

          Notes to condensed consolidated unaudited
          financial statements                                            6

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                  19

Item 3.   Quantitative and Qualitative Disclosures About Market Risk     28

Item 4.   Controls and Procedures                                        29

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                              29

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds    30

Item 3.   Defaults Upon Senior Securities                                30

Item 6.   Exhibits                                                       31















                                     2


PART I -  FINANCIAL INFORMATION
Item 1.   Financial Statements
<TABLE>
<Caption>
                               AMCON Distributing Company and Subsidiaries
                             Condensed Consolidated Unaudited Balance Sheets
                                   December 2004 and September 2004
- -------------------------------------------------------------------------------------------------------

                                                                     December 2004     September 2004
                                                                      ------------     --------------
<S>                                                                       <C>                <C>
                  ASSETS
Current assets:
  Cash                                                               $    904,670       $    416,073
  Accounts receivable, less allowance for doubtful
    accounts of $0.5 million and $0.7 million,
    respectively                                                       27,190,236         29,586,255
  Inventories                                                          36,617,385         36,481,014
  Income tax receivable                                                   955,839          1,162,625
  Deferred income taxes                                                 2,618,391          2,548,391
  Other                                                                 1,179,421            708,916
                                                                     ------------       ------------
          Total current assets                                         69,465,942         70,903,274

Fixed assets, net                                                      20,958,714         20,095,334
Goodwill                                                                6,449,741          6,449,741
Other intangible assets                                                13,216,751         13,271,211
Other assets                                                            1,485,457          1,010,303
                                                                     ------------       ------------
                                                                     $111,576,605       $111,729,863
                                                                     ============       ============
       LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                   $ 11,924,157       $ 17,762,392
  Accrued expenses                                                      5,767,555          4,427,976
  Accrued wages, salaries, bonuses                                      1,103,555          1,380,477
  Current liabilities of discontinued operations                           78,024            107,724
  Current portion of long-term debt                                     9,562,560         11,409,234
  Current portion of subordinated debt                                  1,076,219          7,876,219
                                                                     ------------       ------------
          Total current liabilities                                    29,512,070         42,964,022
                                                                     ------------       ------------

Deferred income taxes                                                     617,794            593,018
Other long-term liabilities                                             2,807,000          2,807,000
Long-term debt, less current portion                                   61,622,121         50,063,571
Minority interest                                                               -             97,100

Commitments and contingencies

Shareholders' equity:
   Series A and B cumulative, convertible preferred stock,
     $.01 par value 180,000 and 100,000 shares authorized
     and issued, respectively                                               1,800              1,000

   Common stock, $.01 par value, 15,000,000
    shares authorized, 527,062 shares issued                                5,271              5,271

  Additional paid-in capital- preferred stock                           4,294,200          2,437,355
  Additional paid-in capital- common stock                              6,218,476          6,218,476
  Accumulated other comprehensive income,
    net of tax of $0.1 million and $0.03 million, respectively            100,323             59,900
  Retained earnings                                                     6,397,550          6,483,150
                                                                     ------------       ------------
          Total shareholders' equity                                   17,017,620         15,205,152
                                                                       ----------       ------------
                                                                     $111,576,605       $111,729,863
                                                                     ============       ============

The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>



                                     3

<TABLE>
<Caption>
                      AMCON Distributing Company and Subsidiaries
                Condensed Consolidated Unaudited Statements of Operations
                   for the three months ended December 2004 and 2003
- ----------------------------------------------------------------------------
                                                   2004             2003
                                              -------------     ------------
<S>                                                <C>              <C>
Sales (including excise taxes of
 $49.6 million and $45.3 million,
 respectively)                                $ 215,178,466    $ 193,037,116

Cost of sales                                   199,282,768      177,972,857
                                              -------------    -------------
     Gross profit                                15,895,698       15,064,259
                                              -------------    -------------
Selling, general and administrative
 expenses                                        14,383,140       13,370,097
Depreciation and amortization                       676,083          561,118
                                              -------------    -------------
                                                 15,059,223       13,931,215
                                              -------------    -------------

     Income from operations                         836,475        1,133,044
                                              -------------    -------------
Other expense (income):
  Interest expense                                1,076,082          778,908
  Other income, net                                 (59,389)        (430,108)
                                              -------------    -------------
                                                  1,016,693          348,800
                                              -------------    -------------

(Loss) income from operations
 before income taxes                               (180,218)         784,244

Income tax (benefit) expense                        (70,000)         270,000

Minority interest in loss, net of tax               (97,100)               -
                                              -------------    -------------

Net (loss) income                             $     (13,118)   $     514,244

Preferred stock dividend requirements                72,481                -
                                              -------------    -------------
(Loss) income available to common
 shareholders                                 $     (85,599)   $     514,244
                                              =============    =============

(Loss) earnings per share:
   Basic                                      $       (0.16)   $        0.97
                                              =============    =============
   Diluted                                    $       (0.16)   $        0.96
                                              =============    =============

Dividends per share                           $           -    $        0.18
                                              =============    =============

Weighted average shares outstanding:
  Basic                                             527,062          528,165
  Diluted                                           527,062          535,549


The accompanying notes are an integral part of these condensed consolidated financial statements.

</TABLE>


                                     4



<TABLE>
<Caption>

                     AMCON Distributing Company and Subsidiaries
              Condensed Consolidated Unaudited Statements of Cash Flows
                  for the three months ended December 2004 and 2003
- ---------------------------------------------------------------------------------
                                                         2004            2003
                                                     ------------    ------------
<S>                                                       <C>             <C>
Net cash flows from operating activities             $ (2,493,207)   $  4,759,176
                                                     ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of fixed assets                            (1,278,617)       (422,123)
  Proceeds from sales of fixed assets                      16,500          55,000
  Proceeds from sales of available-for-sale
   securities                                                   -         457,053
  Other                                                    (6,476)              -
                                                     ------------    ------------

  Net cash flows from investing activities             (1,268,593)         89,930
                                                     ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net (payments) proceeds on bank
   credit agreements                                   13,621,209      (4,745,546)
  Net proceeds from preferred stock issuance            1,857,645               -
  Proceeds from borrowings of long-term debt            1,272,667               -
  Preferred stock dividend requirements                   (72,481)              -
  Payments on long-term debt and
   subordinated debt                                  (11,982,000)       (149,172)
  Proceeds from exercise of stock options                       -             523
  Debt issue costs                                       (446,643)              -
                                                     ------------    ------------
  Net cash flows from financing activities              4,250,397      (4,894,195)
                                                     ------------    ------------

Net change in cash                                        488,597         (45,089)

Cash, beginning of period                                 416,073         668,073
                                                     ------------    ------------

Cash, end of period                                  $    904,670    $    622,984
                                                     ============    ============

Supplemental disclosure of cash flow information:
  Cash paid during the period for interest           $  1,012,476    $    855,112
  Cash paid (refunded) during the period
    for income taxes                                     (206,786)        879,813

The accompanying notes are an integral part of these condensed consolidated financial statements.

</TABLE>











                                    5


                AMCON Distributing Company and Subsidiaries
         Notes to Unaudited Condensed Consolidated Financial Statements
                           December 2004 and 2003
- ----------------------------------------------------------------------------

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements
include the accounts of AMCON Distributing Company and its subsidiaries
("AMCON" or the "Company").  As a result of its 85% ownership in Trinity
Springs, Inc. (TSI), the Company has included the operating results of TSI in
the accompanying consolidated financial statements since the date of
acquisition (June 17, 2004) and has presented the 15% non-owned interest in
this subsidiary as a minority interest.  During the first quarter of fiscal
2005, the Company suspended the allocation of TSI's losses to minority
shareholders once their basis was reduced to zero because the minority
shareholders have not guaranteed TSI debt or committed additional capital to
TSI.

All significant intercompany transactions and balances have been eliminated
in consolidation.  Certain information and footnote disclosures normally
included in our annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.  In
the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary to fairly present the
financial information included therein, such adjustments consisting of normal
recurring items.  It is suggested that these financial statements be read in
conjunction with the audited financial statements and notes thereto for the
fiscal year ended September 24, 2004, which are included in the Company's
Annual Report to Shareholders filed with Form 10-K ("2004 Annual Report").
Results for the interim period are not necessarily indicative of results to
be expected for the entire year.

AMCON's fiscal first quarters ended on December 31, 2004 and December 26,
2003.  For convenience, the fiscal first quarters of 2005 and 2004 have been
indicated as December 2004 and 2003, respectively.  During the first quarter
of fiscal 2005, the Company changed its reporting period from a 52-53 week
year ending on the last Friday in September to a calendar month reporting
period ending on September 30.  As a result of this change, the first quarter
of fiscal 2005 comprises 14 weeks of operations as compared to 13 weeks of
operations in the first quarter of fiscal 2004.  The additional week of
operations increased sales, gross profit and net income by approximately
$14.4 million, $0.8 million and $0.1 million, respectively.

During fiscal 2004, the shareholders' approved a one-for-six reverse stock
split of the outstanding shares of its common stock.  On May 14, 2004, the
Company effected the reverse stock split and those shareholders who held
fewer than six shares of AMCON's common stock immediately prior to the
reverse stock split received a cash payment in exchange for their shares.
All common stock shares and per share data (except par value) for all periods
presented have been adjusted to reflect the reverse stock split.






                                     6


Stock-based Compensation
- ------------------------
Prior its expiration in June 2004, AMCON maintained a stock-based
compensation plan which provided that the Compensation Committee of the Board
of Directors granted incentive stock options and non-qualified stock options.
AMCON accounted for these stock option grants in accordance with Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees" using the intrinsic value method under which compensation cost was
measured by the excess, if any, of the fair market value of its common stock
on the date of grant over the exercise price of the stock option.
Accordingly, stock-based compensation cost related to stock option grants was
not reflected in income or loss as all options granted under the plan had an
exercise price equal to or above the market value of the underlying stock on
the date of grant.

The following table illustrates the required pro forma effect on income
(loss) and earnings (loss) per share assuming the Company had applied the
fair value recognition provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation" to
stock-based employee compensation:

<TABLE>
<CAPTION>
                                             For the three months
                                                ended December
                                          -------------------------
                                              2004          2003
                                          -----------   -----------
<S>                                           <C>           <C>
(Loss) earnings
===============================

(Loss) income available to common
  shareholders, as reported               $   (85,599)  $   514,244

Deduct: Total stock-based employee
  compensation expense determined
  under fair value based method
  for all awards, net of related
  tax effects                                 (14,008)      (15,303)
                                          -----------   -----------
Pro forma (loss) income                   $   (99,607)  $   498,941
                                          ===========   ===========

(Loss) earnings per share
=========================================

As reported: Basic                        $     (0.16)  $      0.97
                                          ===========   ===========
             Diluted                      $     (0.16)  $      0.96
                                          ===========   ===========

Pro forma:   Basic                        $     (0.19)  $      0.94
                                          ===========   ===========
             Diluted                      $     (0.19)  $      0.93
                                          ===========   ===========
</TABLE>






                                     7


2.  ACQUISITIONS

Trinity Springs, Inc.
- ---------------------
On June 17, 2004, a newly formed subsidiary of AMCON, TSL Acquisition Corp.
acquired the tradename, water source, customer list and substantially all of
the operating assets of Trinity Springs, Ltd. (the "Seller," which
subsequently changed its name to Crystal Paradise Holdings, Inc.), a bottler
of geothermal bottled water and a natural mineral supplement.  TSL
Acquisition Corp. subsequently changed its name to TSI and continues to
operate under that name.

The total purchase price of $8.8 million was paid through a combination of
$2.3 million in cash, $3.3 million in notes which were issued by TSI and
guaranteed by AMCON; the assumption of approximately $0.2 million of
liabilities and the issuance of TSI common stock representing 15% ownership
of TSI which had an estimated fair value of $0.2 million.  The TSI common
stock is convertible into 16,666 shares of AMCON common stock at the option
of the Seller.  Additionally, the conversion option had an estimated fair
value of $0.2 million.  Included in the $2.3 million paid in cash are
transaction costs totaling approximately $0.8 million that were incurred to
complete the acquisition and consists primarily of fees and expenses for
attorneys and investment bankers.  In addition, TSI will pay an annual water
royalty to the Seller, in perpetuity, in an amount equal to the greater of
$0.03 per liter of water extracted from the source or 4% of water revenues
(as defined by the purchase agreement) which is guaranteed by AMCON up to a
maximum of $5 million, subject to a floor of $206,400 for the first year and
$288,000 annually thereafter.  The Company has recorded a $2.8 million
liability for the present value of future minimum water royalty payments and
related brokers fees to be paid in perpetuity.  The discount rate utilized by
the Company to determine the present value of the future minimum water
royalty was based on a weighted average cost of capital which incorporated
the Company's equity discount rate, dividend rate on the Series A Convertible
Preferred Stock and the Company's average borrowing rate for all outstanding
debt.

The promissory notes referred to above and the water royalty are secured by a
first priority security and mortgage on the acquired assets, other than
inventory and accounts receivable.  The Seller retains the right to receive
any water royalty payment for the first five years in shares of AMCON common
stock up to a maximum of 41,666 shares.  The water royalty can be cancelled
after ten years have elapsed following the closing of the sale of assets of
TSI, or if the business of TSI is sold to an unaffiliated third party, in
which case the Seller would be entitled to receive the appraised fair market
value of the water royalty but not less than $5 million.  The Company's
Chairman has, in turn, guaranteed AMCON for these payments as well as the
promissory notes referred to above.

The acquisition has been recorded on the Company's books using the purchase
method of accounting.  The purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair values.  The
following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition based on a preliminary
allocation of the purchase price and are subject to refinement.



                                     8

                 At June 17, 2004
              (Dollars in millions)
     ---------------------------------------
     Current assets                    $  0.5
     Fixed assets                         3.0
     Intangible assets                    5.5
                                       ------
          Total assets acquired           9.0
                                       ------
     Current liabilities                  0.2
                                       ------
          Total liabilities assumed       0.2
                                       ------
          Net assets acquired          $  8.8
                                       ======

The portion of the purchase price in excess of the estimated fair value of
the net assets acquired to be allocated to identifiable intangible assets is
approximately $5.5 million.

The initial purchase price allocation performed in the third quarter of
fiscal 2004 was based on management's internal preliminary allocation and
resulted in an estimated purchase price of approximately $11.1 million, with
approximately $7.8 million of the purchase price being allocated to
intangible assets, including customer list, the Trinity tradename and the
water source.  Subsequently, the Company engaged an independent valuation
firm to further analyze the transaction and based on preliminary input from
the independent valuation firm, the amount of purchase price was reduced from
$11.1 million to $8.8 million based on reassessment of the future water
royalty obligation and related brokers fees and the weighted average cost of
capital rate applied to the payment stream in perpetuity.  Accordingly, the
amount allocated to intangible assets was also reduced from $7.8 million to
$5.5 million.  At this stage, the purchase price allocation remains
preliminary and is subject to completion of an independent appraisal.  The
Company has engaged an independent valuation firm to value the identifiable
intangible assets and it is expected that a final report will be completed by
the end of the second fiscal quarter of 2005, at which time any differences
from the preliminary purchase price allocation will be recorded.

The Company has determined that it has acquired a unique water source as part
of the transaction which represents an intangible asset and the Company has
assigned a preliminary value of $2.8 million to this intangible asset.
Additionally, the Company has acquired the Trinity tradename and has assigned
a preliminary value of $2.3 million to this intangible asset.  Upon
completion of the independent valuation, the amount assigned to the water
source and/or the Trinity tradename could be different and any residual
amount would then be assigned to goodwill.  Since both the water source and
the Trinity tradename have indefinite lives, as does any goodwill, the assets
are not amortized.  Therefore, any change resulting from completion of the
independent valuation in the allocation of purchase price from water source
or tradename to goodwill would not have any impact on operating income.
Additionally, the Company has assigned a preliminary value of $0.4 million to
a customer list which will be amortized over a five year period.




                                     9

Assuming the above acquisition had hypothetically occurred on the first day
of fiscal 2004 (September 27, 2003) unaudited pro forma consolidated sales,
loss from operations, net loss and net loss per share would have been as
follows:

<TABLE>
<CAPTION>
                                      For the three months
                                      ended December 2003
                                      --------------------
 <S>                                           <C>

Sales                                  $    193,582,389
Loss from operations                           (846,064)
Net loss                                        (89,277)
Loss per share:
   Basic                               $          (0.17)
   Diluted                             $          (0.17)

</TABLE>

Nesco Hawaii
- ------------
On July 1, 2004, the Company's water bottling subsidiary in Hawaii entered
into an agreement to acquire certain water bottling assets and liabilities
from a water bottling company on the island of Oahu in Hawaii ("Nesco
Hawaii") for $0.5 million in cash, and $0.7 million in notes and the
assumption of $0.1 million of liabilities.  The acquisition has been recorded
on the Company's books using the purchase method of accounting.  The purchase
price was allocated to the assets acquired and liabilities assumed based on
their estimated fair values. The preliminary allocation of the purchase price
is as follows:

                 At July 1, 2004
              (Dollars in millions)
     ----------------------------------------
     Current assets                    $  0.1
     Fixed assets                         0.5
     Intangible assets                    0.7
                                       ------
          Total assets acquired           1.3
     Current liabilities                  0.1
                                       ------
          Total liabilities assumed       0.1
                                       ------
          Net assets acquired          $  1.2
                                       ======

The portion of the purchase price in excess of the estimated fair value of
the net assets acquired to be allocated to identifiable intangible assets is
approximately $0.7 million.  The identifiable intangible assets consists of
tradenames and a customer list.  The tradenames of $0.1 million have
indefinite lives and therefore are not amortized.  The customer list of $0.2
million is amortized over a five year period.  The remaining portion of the
excess purchase price allocated to goodwill was $0.4 million.  Proforma
information is not presented due to the insignificance of the acquisition.



                                     10

3.  SHAREHOLDERS' EQUITY

In October 2004, the Company issued $2.0 million of Series B Convertible
Preferred Stock ("Series B Preferred") representing 80,000 shares at a
purchase price of $25 per share (the "Liquidation Preference").  The Series B
Preferred is convertible at any time by the holders into a number of shares
of AMCON common stock equal to the number of Preferred Shares being converted
times a fraction equal to $25.00 divided by the conversion price.  The
conversion price is initially $24.65 per share, but is subject to customary
adjustments in the event of stock splits, stock dividends and certain other
distributions on the Common Stock.  Cumulative dividends on the Series B
Preferred are payable at a rate of 6.37% per annum and are payable in
arrears, when, as and if declared by the Board of Directors, on March 31,
June 30, September 30 and December 31 of each year. In the event of a
liquidation of the Company, the holders of the Series B Preferred Stock are
entitled to receive the Liquidation Preference plus any accrued and unpaid
dividends prior to the distribution of any amount to the holders of the
Common Stock.  The Series B Preferred also contains redemption features in
certain circumstances such as a change of control, minimum thresholds of
ownership by the Chairman and his family in AMCON, or bankruptcy.  Finally,
the Series B Preferred are optionally redeemable by the Company beginning
October 8, 2006 at a redemption price equal to 112% of the Liquidation
Preference.  The redemption price decreases 1% annually thereafter until
October 8, 2018, after which date it remains the Liquidation Preference.

In addition, the Company has Series A Convertible Preferred Stock ("Series A
Preferred") outstanding as of December 2004 that was issued during fiscal
2004.  The Series A Preferred generated gross proceeds of $2.5 million and
consisted of 100,000 Series A shares.  All terms of the Series A Preferred
are the same as Series B Preferred except for the dividend rate which is
6.785% for Series A and that the Series A is optionally redeemable by the
Company beginning June 17, 2006.

4.  INVENTORIES:

Inventories consisted of the following at December 2004 and September 2004:

                                December        September
                                  2004            2004
                              ------------    ------------
      Finished goods          $ 39,386,083    $ 39,617,912
      Raw materials              1,411,780         926,237
      LIFO reserve              (4,180,478)     (4,063,135)
                              ------------    ------------
                              $ 36,617,385    $ 36,481,014
                              ============    ============

The wholesale distribution and retail health food segment inventories consist
of finished products purchased in bulk quantities to be redistributed to the
Company's customers or sold at retail.  The wholesale distribution
operation's inventories are stated at the lower of cost (last-in, first-out
or "LIFO" method) or market.  The retail health food operation utilizes the
retail LIFO inventory method of accounting stated at the lower of cost (LIFO)
or market.  The beverage operation's inventories are stated at the lower of
cost (LIFO) or market and consist of raw materials and finished goods.  The
Company's finished goods inventory includes materials, labor and

                                    11

manufacturing overhead costs.  Raw materials inventory consists of pre-forms
used to make bottles, caps, labels and various packaging and shipping
materials.  The LIFO reserve at December 2004 and September 2004 represents
the amount by which LIFO inventories were less than the amount of such
inventories valued on a first-in, first-out basis, respectively.  An
allowance for obsolete inventory is maintained in the retail health food and
beverage segments to reflect the expected unsaleable or non-refundable
inventory based on evaluation of slow moving and discontinued products.

5.  OTHER INTANGIBLE ASSETS:

Other intangible assets at December 2004 and September 2004 consisted of the
following:
<TABLE>
<Caption>
                                                         December       September
                                                           2004            2004
                                                       ------------    ------------
<S>                                                        <C>             <C>
Trademarks and tradenames                              $  9,686,997    $  9,680,521
Water source                                              2,807,000       2,807,000
Covenants not to compete (less accumulated
  amortization of $872,835 and $843,527)                     47,390          76,698
Favorable leases (less accumulated
  amortization of $349,936 and $340,003)                    136,064         145,997
Customer lists (less accumulated
  amortization of ($47,980 and $26,285)                     539,300         560,995
                                                       ------------    ------------
                                                       $ 13,216,751    $ 13,271,211
                                                       ============    ============
</TABLE>

Trademarks, tradenames and the water source are considered to have indefinite
useful lives, therefore, no amortization is taken on these assets.
Amortization expense for the intangible assets that are considered to have
finite lives was $60,936 and $79,822 for the three months ended December 2004
and 2003, respectively.

Amortization expense related to the amortizing intangible assets held at
December 2004 for each of the five years subsequent to September 2004 is
estimated to be as follows:
<TABLE>
<Caption>

                                Fiscal      Fiscal      Fiscal     Fiscal     Fiscal
                                 2005        2006        2007       2008       2009
                               ---------   ---------   --------   --------   --------
<S>                               <C>         <C>        <C>        <C>        <C>
Covenants not to compete       $  77,000   $       -   $      -   $      -   $      -
Favorable leases                  40,000      40,000     40,000     26,000          -
Customer lists                   117,000     117,000    117,000    117,000     92,000
                               ---------   ---------   --------   --------   --------
                               $ 234,000   $ 157,000   $157,000   $143,000   $ 92,000
                               =========   =========   ========   ========   ========
</TABLE>






                                     12

6.  EARNINGS (LOSS) PER SHARE:

Basic earnings (loss) per share is calculated by dividing net income (loss)
available to common shareholders by the weighted average common shares
outstanding for each period.  Diluted earnings per share is calculated by
dividing net income (loss) available to common shareholders by the sum of the
weighted average common shares outstanding and the weighted average dilutive
options, using the treasury stock method.  Stock options outstanding at
December 2004 and 2003, which were not included in the computations of
diluted earnings per share because the option's exercise price was greater
than the average market price of the Company's common shares, totaled 194,195
with an average exercise price of $29.32 and 31,440 with an average exercise
price of $39.75, respectively.


<TABLE>
<CAPTION>

                                               For the three months ended December
                                      -------------------------------------------------------
                                                2004                           2003
                                      -------------------------     -------------------------
                                         Basic        Diluted          Basic        Diluted
                                      -----------   -----------     -----------   -----------
<S>                                        <C>           <C>             <C>          <C>
1.  Weighted average common
     shares outstanding                   527,062       527,062         528,165       528,165


2.  Weighted average of net
     additional shares outstanding
     assuming dilutive options
     exercised and proceeds
     used to purchase treasury
     stock/1/                                   -             -               -         7,384
                                      -----------   -----------     -----------   -----------
3.  Weighted average number of
     shares outstanding                   527,062       527,062         528,165       535,549
                                      ===========   ===========     ===========   ===========

4.  (Loss) income available to
      common shareholders             $   (85,599)  $   (85,599)    $   514,244   $   514,244
                                      ===========   ===========     ===========   ===========

5.  (Loss) earnings per share         $     (0.16)  $     (0.16)    $      0.97   $      0.96
                                      ===========   ===========     ===========   ===========
</TABLE>

     /1/ Weighted average of net additional shares not included for the
period in 2004 as such shares are anti-dilutive due to the net loss incurred
during the period.











                                     13

7.  COMPREHENSIVE INCOME (LOSS):

The following is a reconciliation of (loss) income available to common
shareholders per the accompanying condensed consolidated unaudited statements
of operations to comprehensive income for the periods indicated:
<TABLE>
<CAPTION>
                                                  For the three months
                                                     ended December
                                               -------------------------
                                                   2004          2003
                                               -----------   -----------
<S>                                                <C>           <C>
(Loss) income available to
  common shareholders                          $   (85,599)  $   514,244
Other comprehensive income:
 Unrealized holding gains from
 investments arising during the
 period, net of income tax expense of
 $5,000 in 2003                                          -         7,471
 Reclassification adjustments for
  gains included in net income
  in prior periods, net of income
  tax expense of $145,000 in 2003                        -      (236,741)
 Interest rate swap valuation
  adjustment, net of income tax
  expense $25,000 and $32,000,
  respectively                                      40,423        50,702
                                               -----------   -----------
Comprehensive income (loss)                    $   (45,176)  $   335,676
                                               ===========   ===========
</TABLE>

8.  DEBT

CREDIT AGREEMENT
- ----------------
In order to finance the payment of $6.8 million in subordinated notes related
to the Company's acquisition of Health Food Associates, Inc. in 1999 and $4.8
million of long-term debt related to the funding of operations in the
beverage segment, the Company refinanced its existing credit agreement in
October 2004.  The amended credit agreement provides for a $55.0 million
credit limit consisting of a $53.8 million revolving credit line and a $1.2
million term note ("Term Note A").  As payments are made on Term Note A, the
revolving credit limit increases accordingly to a maximum of $55.0 million.
In addition, the amended credit agreement provided for a separate term loan
in the amount of $5.0 million ("Term Note B").

The Company's amended $55.0 million revolving credit facility (the "New
Facility") with LaSalle Bank extends the credit agreement through April 2007
and retains many of the existing facility's terms including lending limits
subject to accounts receivable and inventory limitations, an unused
commitment fee and financial covenants.  The significant changes under the
New Facility are as follows:

   - Inclusion of the subsidiaries, except TSI, as borrowers.

   - Inclusion of Term Note A within the $55.0 million revolving limit that
     is amortized in equal monthly installments over 60 months.


                                    14

   - Replacement of the LIBOR interest rate borrowing option (LIBOR plus
     2.50%) on the revolving portion of the New Facility and the $1.2 million
     term loan with the bank's base rate, except for $15.0 million of
     the new facility that corresponds with the Company's existing interest
     rate swap agreements which will remain at LIBOR plus 2.50%.

   - Inclusion of a fixed charge coverage ratio of 0.8 to 1.0 through
     June 2005 and 1.0 to 1.0 thereafter in lieu of a debt service coverage
     ratio, which was subsequently amended in Q2 2005, effective December
     2004 and decreased to 0.7 to 1.0.

   - Amendment of the definition of minimum tangible net worth and reduction
     of the minimum tangible net worth requirement to $3.0 million through
     June 2005 which was subsequently amended in Q2 2005, effective December
     2004 and decreased to $1.5 million through the end September 29, 2005
     and $2.5 million thereafter.

   - Inclusion of a prepayment penalty should the loans be paid off prior to
     September 30, 2006.

The Company's New Facility, including Term Note A, maintains the maximum
borrowing limit at $55.0 million, subject to eligible accounts receivable and
inventory requirements.  As of December 2004, the outstanding balance on the
New Facility was $53.4 million.  The New Facility bears interest at the
bank's base rate, which was 5.25% at December 2004.  The Company is required
to pay an unused commitment fee equal to 0.25% per annum on the difference
between the maximum loan limit and the average monthly borrowing for the
month.  The New Facility is collateralized by all of the Company's equipment,
intangibles, inventories, and accounts receivable, except those held by TSI.

The outstanding balance on Term Note B was $5.0 million at December 2004.  It
bears interest at the banks base rate, plus 2.0%, which was 7.25% at December
2004 and is payable in equal monthly installments of $0.3 million beginning
May 1, 2005.

The Company's Chairman has personally guaranteed repayment of up to $10
million of the combined amount of the New Facility and the term loans.  AMCON
will pay the Company's Chairman an annual fee equal to 2% of the guaranteed
principal then outstanding in return for the personal guarantee.  This
guarantee is secured by a pledge of the shares of Chamberlin Natural Foods,
Inc., Health Food Associates, Inc., HNWC and TSI.

The Company was not in compliance with the minimum tangible net worth
covenant as of December 2004 and has obtained a waiver from the lender for
first quarter of fiscal 2005.  In Q2 2005, the minimum tangible net worth
covenant was amended effective December 2004 to reduce the tangible net worth
covenant to $1.5 million through September 29, 2005 and $2.5 million
thereafter, and to redefine and reduce the fixed charge coverage ratio to 0.7
for the remainder of fiscal 2005. The Company is currently in compliance with
the covenants of the New Facility, as amended, effective December 2004 and
expects to be in compliance with the amended covenant for the remainder of
fiscal 2005.





                                     15


TSI REVOLVING CREDIT FACILITY
- -----------------------------
In December 2004, a director of the Company extended a revolving credit
facility to TSI in a principal amount of up to $1,000,000 at an interest rate
of 8.0% per annum with an initial advance of $500,000 during Q1 2005.  To
induce the director to extend this loan to TSI, the Company agreed to allow
the director to receive a second mortgage on TSI's real property on an equal

basis with the Company's existing second mortgage on TSI's real property.
The revolving credit line matures on December 14, 2005 at which time
principal and accrued interest will be due.

CONSTRUCTION FINANCING
- ----------------------
In December 2004, the Company purchased a building in order to relocate its
distribution facility in Rapid City, South Dakota and began construction of
an addition to the building.  The lease on the current Rapid City facility
was extended through April 2005 to coincide with the completion of
construction.  The Company expects capital expenditures relating to the
building, construction of the addition and related equipment purchases to be
approximately $1.8 million.

At December 2004, the Company had borrowed $0.8 million of the $1.0 million
maximum borrowings intended to finance the purchase of the building and the
construction of the addition to the building.  The additional $0.2 million of
funds are expected to be borrowed in the second and third quarters of fiscal
2005 as the Company completes the addition. The terms of repayment are
interest only through July 31, 2005 and then payable in 54 equal monthly
installments of principal of $4,100 based on a twenty year amortization
schedule with the entire remaining principal due and payable on December 31,
2009.  The interest rate is 6.33%.

The Company also arranged the financing of certain equipment expenditures
totaling $0.5 million, however at December 2004, the Company has not drawn on
these funds.  Once drawn upon, the principal payments will be made in 60
equal monthly installments of $8,000 beginning April 1, 2005.  The interest
rate is 6.33%.

INTEREST RATE SWAPS
- -------------------
The Company hedges its variable rate risk on $15.0 million of its borrowings
under the Facility by utilizing interest rate swap agreements.  The variable
interest payable on this amount is subject to interest rate swap agreements
which have the effect of converting this amount to fixed rates ranging
between 4.38% and 4.87%.












                                     16

9.  BUSINESS SEGMENTS:

AMCON has three reportable business segments: the wholesale distribution of
consumer products, the retail sale of health and natural food products, and
the bottling, marketing and distribution of bottled water and other beverage
products.  The segments are evaluated on revenue, gross margins, operating
income (loss) and income (loss) before taxes.
<TABLE>
<CAPTION>
                                 Wholesale
                               Distribution       Retail         Beverage      Other /2/    Consolidated
                               -------------    -----------    -----------   ------------   -------------
<S>                                 <C>             <C>            <C>           <C>             <C>
QUARTER ENDED DECEMBER 2004:
External revenue:
 Cigarettes                    $ 155,561,138    $         -    $         -    $        -    $ 155,561,138
 Confectionery                    14,038,345              -              -             -       14,038,345
 Health food                               -      8,574,131              -             -        8,574,131
 Tobacco, beverage & other        34,240,324              -      2,805,634       (41,106)      37,004,852
                               -------------    -----------    -----------    ----------    -------------
  Total external revenue         203,839,807      8,574,131      2,805,634       (41,106)     215,178,466

Depreciation & amortization /1/      312,955        212,114        205,479             -          730,548
Operating income (loss)            2,239,819        137,997     (1,557,703)       16,362          836,475
Interest expense                     261,260        401,501        413,321             -        1,076,082
Income (loss) before taxes         2,024,309       (249,865)    (1,971,024)       16,362         (180,218)
Total assets                      70,482,360     17,287,930     23,629,968       176,347      111,576,605
Capital expenditures               1,140,534          6,656        131,427             -        1,278,617

QUARTER ENDED DECEMBER 2003:
External revenue:
 Cigarettes                    $ 141,234,663    $         -    $         -    $        -    $ 141,234,663
 Confectionery                    12,386,357              -              -             -       12,386,357
 Health food                               -      8,169,000              -             -        8,169,000
 Tobacco, beverage & other        30,100,823              -      1,192,460       (46,187)      31,247,096
                               -------------    -----------    -----------    ----------    -------------
  Total external revenue         183,721,843      8,169,000      1,192,460       (46,187)     193,037,116

Depreciation & amortization /1/      317,123        219,996         52,011             -          589,130
Operating income (loss)            2,079,718        277,874     (1,184,842)      (39,706)       1,133,044
Interest expense                     294,749        298,681        185,478             -          778,908
Income (loss) before taxes         2,207,135        (12,891)    (1,370,294)      (39,706)         784,244
Total assets                      68,755,348     16,891,332     11,848,041        25,861       97,520,582
Capital expenditures                  94,094        110,568        217,461             -          422,123

</TABLE>

/1/ Includes depreciation reported in cost of sales for the beverage segment.

/2/ Includes charges to operations incurred by discontinued operations and
intercompany eliminations.

10.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In November 2004, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 151 "Inventory Costs."  This statement amends Accounting Research
Bulletin No. 43, Chapter 4, "Inventory Pricing" and removes the "so abnormal"
criterion that under certain circumstances could have led to the
capitalization of these items.   SFAS No. 151 requires that idle facility
expense, excess spoilage, double freight and rehandling costs be recognized
as current-period charges regardless of whether they meet the criterion of
"so abnormal."  SFAS 151 also requires that allocation of fixed production
overhead expenses to the costs of conversion be based on the normal capacity
of the production facilities.  SFAS No. 151 is effective for all fiscal years
beginning after June 15, 2005 (fiscal 2006 for AMCON).  Management does not


                                  17

believe there will be a significant impact on the Company's results of
operations or financial condition as a result of adopting this Statement.

In December 2004, the FASB published FASB Statement No. 123 (revised 2004),
"Share-Based Payment." Statement 123(R) will provide investors and other
users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based
payment transactions be recognized in financial statements.  That cost will
be measured based on the fair value of the equity or liability instruments
issued.  This Statement is the result of a two-year effort to respond to
requests from investors and many others that the FASB improve the accounting
for share-based payment arrangements with employees.  Statement 123(R)
replaces FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees."  Statement 123, as originally issued in 1995, established as
preferable a fair-value-based method of accounting for share-based payment
transactions with employees.  However, that Statement permitted entities the
option of continuing to apply the guidance in Opinion 25, as long as the
footnotes to financial statements disclosed what net income would have been
had the preferable fair-value-based method been used.  Although those
disclosures helped to mitigate the problems associated with accounting under
Opinion 25, many investors and other users of financial statements said that
the failure to include employee compensation costs in the income statement
impaired the transparency, comparability, and credibility of financial
statements.  Public entities (other than those filing as small business
issuers) will be required to apply Statement 123(R) as of the first interim
or annual reporting period that begins after June 15, 2005 (the fourth
quarter of fiscal 2005 for the Company).  The Company is currently assessing
the impact that this standard will have on the Company.

In December 2004, the FASB issued Statement No. 152, "Accounting for Real
Estate Time-Sharing Transactions." Statement 152 amends FASB Statements No.
66, "Accounting for the Sales of Real Estate," and No. 67, "Accounting for
Costs and Initial Rental Operations of Real Estate Projects," in association
with the issuance of AICPA Statement of Position (SOP) 04-2, Accounting for
Real Estate Time-Sharing Transactions.  The guidance is effective for
financial statements for fiscal years beginning after June 15, 2005 (fiscal
2006 for the Company), with earlier application encouraged.  Management does
not believe there will be an impact on the Company's results of operations or
financial condition as a result of adopting this Statement.

In December 2004, the FASB issued Statement No. 153, "Exchanges of
Nonmonetary Assets," an amendment of APB Opinion No. 29, "Accounting for
Nonmonetary Transactions."  The amendments made by Statement 153 are based on
the principle that exchanges of nonmonetary assets should be measured based
on the fair value of the assets exchanged. Further, the amendments eliminate
the narrow exception for nonmonetary exchanges of similar productive assets
and replace it with a broader exception for exchanges of nonmonetary assets
that do not have commercial substance.  Previously, Opinion 29 required that
the accounting for an exchange of a productive asset for a similar productive
asset or an equivalent interest in the same or similar productive asset
should be based on the recorded amount of the asset relinquished.  The
Statement is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005 (fiscal 2006 for the Company).  Earlier
application is permitted for nonmonetary asset exchanges occurring in fiscal
periods beginning after the date of issuance.  The Company is currently
assessing the impact that this standard will have on the Company.

                                     18

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

FORWARD LOOKING STATEMENTS

This Quarterly Report, including the Management's Discussion and Analysis and
other sections, contains forward looking statements that are subject to risks
and uncertainties and which reflect management's current beliefs and
estimates of future economic circumstances, industry conditions, company
performance and financial results.  Forward looking statements include
information concerning the possible or assumed future results of operations
of the Company and those statements preceded by, followed by or that include
the words "future," "position," "anticipate(s)," "expect," "believe(s),"
"see," "plan," "further improve," "outlook," "should" or similar expressions.
For these statements, we claim the protection of the safe harbor for forward
looking statements contained in the Private Securities Litigation Reform Act
of 1995.  Forward-looking statements are not guarantees of future performance
or results.  They involve risks, uncertainties and assumptions.  You should
understand that the following important factors, in addition to those
discussed elsewhere in this document, could affect the  future results of the
Company and could cause those results to differ materially from those
expressed in our forward looking statements:

   - changing market conditions with regard to cigarettes,
   - changes in promotional and incentive programs offered by cigarette
     manufacturers,
   - the demand for the Company's products,
   - new business ventures,
   - domestic regulatory risks,
   - competition,
   - other risks over which the Company has little or no control, and
   - any other factors not identified herein could also have such an effect.

Changes in these factors could result in significantly different results.
Consequently, future results may differ from management's expectations.
Moreover, past financial performance should not be considered a reliable
indicator of future performance.  Any forward looking statement contained
herein is made as of the date of this document.  Except as required by law,
the Company undertakes no obligation to publicly update or correct any of
these forward looking statements in the future to reflect changed
assumptions, the occurrence of material events or changes in future operating
results, financial conditions or business over time.

CRITICAL ACCOUNTING POLICIES

Certain accounting policies used in the preparation of the Company's
financial statements require us to make judgments and estimates and the
financial results we report may vary depending on how we make these
judgements and estimates.  The Company's critical accounting policies are
discussed in the Company's 2004 Annual Report to Shareholders on Form 10-K
for the fiscal year ended September 24, 2004.  There have been no significant
changes with respect to these policies during the Company's first quarter of
fiscal 2005.




                                     19

COMPANY OVERVIEW - FIRST FISCAL QUARTER 2005

AMCON Distributing Company ("AMCON" or the "Company") is primarily engaged in
the wholesale distribution business in the Great Plains and Rocky Mountain
regions of the United States.  In addition, AMCON operates thirteen retail
health food stores and a non-alcoholic beverage business that includes
natural spring and geothermal water bottling operations in the States of
Hawaii and Idaho and a marketing and distribution operation which is focused
on selling licensed speciality beverages and private label energy drinks.  As
used herein, unless the context indicates otherwise, the term "ADC" means the
wholesale distribution segment and "AMCON" or the "Company" means AMCON
Distributing Company and its consolidated subsidiaries.

During the first quarter of fiscal 2005, the Company:

   - changed its reporting period from a 52-53 week year ending on the last
     Friday in September to a calendar month reporting period ending on
     September 30 which resulted in 14 weeks of operations during the first
     quarter of fiscal 2005 as compared to 13 weeks in Q1 2004.

   - amended and restated its existing credit facility and security agreement
     in order to fund the payment of $6.8 million in subordinated term debt
     in the retail segment and $4.8 million of revolving debt in the beverage
     segment.

   - completed a $2.0 million private placement of Series B Convertible
     Preferred Stock, a portion of which was used to fund the payment of
     the subordinated debt described above.

   - purchased a building in order to relocate its distribution facility in
     Rapid City, South Dakota to replace the existing facility which will
     continue to be leased until the new distribution facility is ready for
     operation in the third quarter of fiscal 2005.

   - experienced a 11.5% increase in sales compared to the first quarter of
     fiscal 2004 primarily due to the extra week of operations which resulted
     from the change in reporting periods from fiscal month to calendar
     month.

   - recognized a loss per diluted share of $0.16 for the three months ended
     December 2004 compared to earnings per diluted share of $0.96 in the
     same period of the prior year.

   - suspended payment of dividends on its common stock in order to conserve
     capital to fund operations.

INDUSTRY SEGMENT OVERVIEWS

Wholesale Distribution Segment
- ------------------------------
The wholesale distribution of cigarettes and convenience store products has
been significantly affected during the past year due to changing promotional
programs implemented by the major cigarette manufacturers.  Reductions in
these promotional programs have caused wholesalers to react by increasing
cigarette prices to retailers.  This occurred for the first time at the
beginning of fiscal 2004 without a corresponding price increase from

                                     20


manufacturers and occurred again at the beginning of the second quarter of
fiscal 2004.  The manufacturers followed by implementing promotional programs
later in fiscal 2004 and then increased prices in Q1 2005 on certain brands.
Based on these activities, it is difficult to predict how future changes in
promotional programs will impact the Company and the industry in the future.

As a result of one of the manufacturer program changes discussed above,
certain small wholesalers filed suit against Philip Morris and RJ Reynolds
alleging unfair trade practices.  In addition, due to the heightened level of
competition in the marketplace from both a wholesale and retail convenience
store perspective, a number of wholesalers and retailers have sought
bankruptcy protection, been acquired or are on the market to be sold.
Therefore, we expect that competition and pressure on profit margins will
continue to affect both large and small distributors and demand that
distributors consolidate in order to become more efficient.

Retail Health Food Segment
- --------------------------
The retail health food industry has experienced declining sales and gross
profit over the past several periods and our retail health food segment has
felt the impacts of this trend as well.  The impact of reduced supplement
sales resulting from unfavorable media coverage related to the government ban
on ephedra based products and a general softening of the low-carb market
coupled with continued expansion of low-carb offerings and sales through
mainstream grocery channels has caused management to closely review all store
locations for opportunities to close or relocate marginally performing
stores, remodel and expand good performing stores and identify new locations
for one or two additional stores in fiscal 2005.

Beverage Segment
- ----------------
The beverage segment consists of Hawaiian Natural Water Co., Inc. ("HNWC"),
The Beverage Group, Inc. ("TBG") and Trinity Springs, Inc. ("TSI").  HNWC
completed the construction of an expanded warehouse and packaging building at
our plant on the Big Island in Hawaii in the first quarter of fiscal 2004 and
management is hopeful that HNWC will now generate profits as we focus on
expansion of our markets and take advantage of the new operations.  In
addition, the acquisition of a purified water bottling operations on the
island of Oahu in Hawaii ("Nesco Hawaii") in Q4 2004 will better able us to
compete in the private label water bottling channel and diversify our water
production to include premium spring water and purified water.  TSI, acquired
in June 2004, bottles and sells geothermal bottled water and a natural
mineral supplement.  The company, which is an 85% owned subsidiary of AMCON,
is now headquartered in Boise, Idaho.  The TSI water and mineral supplements
are currently sold primarily in health food stores where they represent the
number one selling water products.  The Company plans to extend the
distribution channels for this water and mineral supplement outside the
health food market.

The beverage marketing and distribution business (TBG) incurred significant
losses during 2004 as significant expenditures were made for product
development, distribution network development and marketing efforts to
promote our portfolio of specialty beverages.  The resulting sales were less
than expected due to lack of market penetration of our new beverage products.



                                     21


In October 2004, we took steps to reduce on-going operating expenses by
reducing the work force and consolidating certain activities of marketing and
distribution with other companies in the affiliated group.  In addition, we
are evaluating the line of product offerings and plan to discontinue non-
contributing brands and focus on the brands with the greatest potential for
market penetration.

RESULTS OF OPERATIONS

AMCON's fiscal first quarters ended on December 31, 2004 and December 26,
2003.  For ease of discussion, these fiscal quarters are referred to herein
as December 2004 and 2003, respectively or Q1 2005 and Q1 2004, respectively.

Comparison of the three months ended December 2004 and 2003
- -----------------------------------------------------------
Sales for Q1 2005 increased 11.5%, or $22.1 million, compared to Q1 2004.
Sales are reported net of costs associated with sales incentives provided to
retailers, totaling $3.8 million and $3.4 million, for Q1 2005 and Q1 2004,
respectively.  The increase in sales by business segment from Q1 2004 to Q1
2005 is as follows:

    Wholesale distribution segment        $ 20.1  million
    Retail health food stores segment        0.4  million
    Beverage segment                         1.6  million
    Intersegment eliminations                  -  million
                                          ------
                                          $ 22.1  million
                                          ======

Cigarette sales in the wholesale distribution business increased by $14.3
million and the sales of tobacco, confectionary and other products
contributed an additional $5.8 million in Q1 2005 compared to Q1 2004.  Of
the increase in cigarette sales, $10.4 million was a result of the change in
our monthly reporting period which added an extra week of sales in Q1 2005 as
compared to Q1 2004, $0.7 million was attributable to price increases
implemented by major cigarette manufacturers in December 2004 and $3.2
million was due to a 2.4% increase in carton volume (excluding the extra
week).  Of the increase in tobacco, confectionary and other products, $3.2
million was due to the extra week and $2.6 million was attributable primarily
to new business obtained through expansion of our market area.  We continue
to market our full service capabilities in an effort to differentiate our
Company from competitors who utilize pricing as their primary marketing tool.

Sales from the retail health food segment during Q1 2005 increased by $0.4
million when compared to Q1 2004 primarily due to the extra week of
operations in Q1 2005 as compared to Q1 2004 resulting from the change in the
Company's monthly reporting period.  The retail health food segment
experienced lower grocery sales of low carb products in Q1 2005 as these
products continued to move to mainstream grocery channels.

The beverage segment accounted for $2.8 million in sales for Q1 2005 compared
to $1.2 million in Q1 2004.  TSI, which was acquired in June 2004, accounted
for $0.7 of the increase in sales.  The addition of Nesco Hawaii increased
sales in Q1 2005 by $0.3 million.  The remaining increase is primarily due to
increased sales of Hawaiian Natural spring water, due to completion of plant
construction in 2004, a change to a new distributor in the Hawaii market in

                                     22

2004, and the extra week of operations in Q1 2005 resulting from the change
in the Company's monthly reporting period which increased sales by $0.2
million as compared to Q1 2004.

Gross profit increased 5.5%, or $0.8 million, in Q1 2005 as compared to Q1
2004.  Gross profit as a percent of sales decreased to 7.4% in Q1 2005
compared to 7.8% in Q1 2004.  Gross profit by business segment is as follows:
(dollars in millions)

<TABLE>
<CAPTION>
                                             Quarter ended
                                                December
                                            ----------------    Incr
                                             2004      2003    (Decr)
                                            ------    ------    -----
    <S>                                       <C>      <C>       <C>
    Wholesale distribution segment          $ 12.2    $ 11.5    $ 0.7
    Retail health food stores segment          3.4       3.4      0.0
    Beverage segment                           0.3       0.2      0.1
                                            ------    ------    -----
                                            $ 15.9    $ 15.1    $ 0.8
                                            ======    ======    =====
</TABLE>

Items increasing gross profit during Q1 2005 from our wholesale distribution
business as compared to Q1 2004 were $0.6 million attributable to the extra
week of operations resulting from the reporting period change, $0.3 million
due to cigarette price increases implemented by major cigarette manufacturers
in December 2004, a decrease in the quarterly impact of the LIFO reserve of
$0.1 million and incentive payments of $0.4 million received from a non-
cigarette vendors based on the Company's buying volumes.  These increases
were offset primarily by a decrease in cigarette manufacturer promotional
allowances of $0.7 million resulting from changes in promotional programs.

Gross profit for the retail health food segment was flat at $3.4 million
compared with Q1 2004, including the extra week of operations which
contributed approximately $0.2 million in gross profit during the period.

Gross profit for the beverage segment increased in Q1 2005 primarily due to
the incremental sales from TSI which was acquired in June 2004.

Total operating expense, which includes selling, general and administrative
expenses and depreciation and amortization, increased 8.1% or approximately
$1.1 million in Q1 2005 compared to Q1 2004.  The increase is primarily
related to the extra week of operations which increased the amount of payroll
and certain other expenses during Q1 2005 as compared to Q1 2004 and the
addition of TSI in June 2004 which added $1.0 million of additional operating
expenses.  These increases were offset by a $0.6 million decrease in
operating expenses at TBG as a result of cost reduction strategies that were
implemented in October 2004.  In addition, the wholesale business had
increases in bad debt expense and professional fees.   The retail health food
segment's operating expense increased slightly ($0.1 million) as a result of
the additional week in Q1 2005.



                                     23

As a result of the above, income from operations for Q1 2005 decreased $0.3
million compared to Q1 2004.

Interest expense for Q1 2005 increased 38.2%, or $0.3 million, during Q1
2005.  The increase was primarily due to increases in the prime rate, which
under the terms of the amended and restated credit facility, is the rate at
which the Company primarily borrows and an increase in the Company's average
borrowings of approximately $14.7 million.  On average, the Company's
borrowing rates on its variable rate debt were 0.95% higher in Q1 2005 as
compared to Q1 2004.

Other income decreased $0.4 million in Q1 2005 because of the sale of
available-for-sale securities in Q1 2004 that did not recur in Q1 2005.

During Q1 2005, the Company paid preferred dividends of $0.1 million on its
Series A and B, Cumulative, Convertible Preferred Stock.

Minority interest in loss, net of tax, increased during the period (which
decreased the net loss) by $0.1 million in Q1 2005 due to the 15% ownership
of TSI that is not owned by AMCON.

LIQUIDITY AND CAPITAL RESOURCES

Overview
- ----------
The Company requires cash to pay its operating expenses, purchase inventory
and make capital investments and acquisitions of businesses.  In general, the
Company finances these cash needs from the cash flow generated by its
operating activities and from borrowings, as necessary.  During the three
months ended December 31, 2004, the Company used $2.5 million of cash from
operating activities, primarily the result of quicker accounts receivable
turns and an increase in accrued expenses offset by a reduction of our
accounts payable.  Cash of $1.3 million was utilized in investing activities
during the Q1 2005 for capital expenditures.  The Company generated net cash
of $4.3 million from financing activities in Q1 2005 primarily from
borrowings of $14.9 million on bank credit agreements and other long-term
debt arrangements and the private placement of $1.9 million of Series B
Convertible Preferred Stock (net of costs incurred to issue the securities).
Cash of $12.0 million was used in financing activities in Q1 2005 to pay down
revolving lines of credit totaling $4.8 million used to fund our beverage
segment, $6.8 million in subordinated debt in the retail segment and other
long-term debt totaling $0.4 million.  During Q1 2005, $0.1 million was used
to pay dividends on preferred stock and $0.4 million was used to pay for
costs incurred to amend and restate our revolving credit facility.

As of December 2004, the Company had cash on hand of $0.9 million and working
capital (current assets less current liabilities) of $40.0 million.  This
compares to cash on hand of $0.4 million and working capital of $27.9 million
as of September 2004.  The Company's ratio of debt to equity decreased to
4.25 at December 2004 compared to 4.56 in September 2004.

The Company believes that funds generated from operations, supplemented as
necessary with funds available under the New Facility will provide sufficient
liquidity for the operation of its wholesale and retail businesses.
Management is presently negotiating with LaSalle Bank to bring TSI into the
Company's revolving credit facility and with investors to privately place

                                     24

additional debt or equity to provide additional funding for TSI.  Although
management is optimistic that additional financing will be committed, the
ultimate outcome of this financing is not certain at this time.  If the
Company is unable to raise the additional funds in the near future, plans for
growth within TSI would be negatively impacted and could potentially impact
the carrying value of the business.

Dividend Payments
- -----------------
During the first quarter of fiscal 2005, the Board of Directors suspended
payment of cash dividends on our common shares.  The Company is implementing
a strategy to invest its cash resources into growth-oriented businesses and
has therefore determined to suspend the payment of cash dividends on common
stock for the foreseeable future.  The Company will periodically revisit its
dividend policy to determine whether it has adequate internally generated
funds, together with other needed financing to fund its growth and operations
in order to resume the payment of cash dividends on common stock.

Contractual Obligations
- -----------------------
The following table summarizes our outstanding contractual obligations and
commitments as of December 2004.  Significant changes to this schedule since
fiscal year end 2004, that are reflected below, are the amendment to the
$55.0 million credit facility to include a $1.2 million term note ("Term Note
A") which reduces the amount available under the $55.0 million revolving
limit by the amount outstanding under Term Note A, to include the
subsidiaries, except TSI, as borrowers and to payoff $4.8 million of
revolving credit related to our beverage segment.  In addition, the Company
obtained a $5.0 term note ("Term Note B") which was used in addition to funds
raised from the Series B Convertible Preferred Stock offering to retire $6.8
million of subordinated debt at the retail health food segment. (Amounts in
thousands):
<TABLE>
<CAPTION>
                                           Payments Due By Period
                        --------------------------------------------------------------------
   Contractual                      Fiscal    Fiscal    Fiscal   Fiscal   Fiscal
   Obligations            Total      2005/1/    2006      2007     2008     2009   Thereafter
- ------------------      ---------  --------  --------  -------  -------  -------  ----------
<S>                         <C>       <C>       <C>      <C>      <C>      <C>        <C>
Long-term debt/2/       $  71,185  $  7,612  $ 15,844  $44,959  $   321  $ 2,449   $       -
Subordinated debt           1,076     1,076         -        -        -        -           -
Operating leases           19,108     4,037     4,489    2,712    1,963    1,505       4,402
Minimum water royalty/3/    4,114       155       288      288      288      288       2,807
                        ---------  --------  --------  -------  -------  -------   ---------
Total                   $  95,483  $ 12,880  $ 20,621  $47,959  $ 2,572  $ 4,242   $   7,209
                        =========  ========  ========  =======  =======  =======   =========

                          Total
   Other Commercial      Amounts    Fiscal    Fiscal    Fiscal   Fiscal   Fiscal
   Commitments          Committed    2005/1/   2006      2007     2008     2009   Thereafter
- ------------------      ---------  --------  --------  -------  -------  -------  ----------
Lines of credit (LOC)   $  56,000  $      -  $ 1,000  $ 55,000 $     -  $     -   $       -
LOC in use                (53,931)        -     (500)  (53,431)       -        -           -
                        ---------  --------  --------  -------  -------  -------  ----------
LOC available               2,069         -      500     1,569        -        -           -
Water source guarantee      5,000         -         -        -        -        -       5,000
Letters of credit             837       837         -        -        -        -           -
                        ---------  --------  --------  -------  -------  -------  ----------
Total                   $   7,906  $    837  $    500  $ 1,569 $      - $      -  $    5,000
                        =========  ========  ========  =======  =======  =======   =========
</TABLE>
                                     25

     /1/  Includes remaining payments scheduled to be made in the last nine
months of fiscal 2005

     /2/  Includes capital leases of $1.4 million.

     /3/ Fiscal 2005 - 2009 represent the annual minimum water royalty and
the balance thereafter represents the minimum water royalty in perpetuity.

Credit Agreement
- -------------------
The Company's primary source of borrowing for liquidity purposes is its
revolving credit facility with LaSalle Bank (the "Facility").  As of December
2004, the outstanding balance on the Facility was $53.4 million.  In October
2004, the Facility was amended (the "New Facility") to transfer $1.2 million
of revolving debt to term debt and add the subsidiaries, except TSI, as
borrowers.  The New Facility bears interest at a variable rate equal to the
bank's base rate, which was 5.25% at December 2004.  The Company may,
however, select a rate equal to LIBOR plus 2.50%, for an amount of the New
Facility up to $15.0 million which relates to our swap agreements.  The New
Facility continues to restrict borrowings for intercompany advances to TBG
and TSI to $1.0 million in the aggregate and to the retail health food
subsidiaries and HNWC to $0.9 million in the aggregate in fiscal 2005 and
$0.1 million in the aggregate in subsequent years.

The Company hedges its variable rate risk on a notional $15.0 million of its
borrowings under the New Facility by use of interest rate swap agreements.
These swap agreements have the effect of converting the interest on this
amount of debt to fixed rates ranging between 4.38% and 4.87% per annum.

The Company is required to pay an unused commitment fee equal to 0.25% per
annum on the difference between the maximum loan limit and average monthly
borrowing for the month.  The New Facility is collateralized by all of the
Company's equipment, intangibles, inventories, and accounts receivable,
except those held by TSI. The New Facility expires in April 2007.

The New Facility contains covenants which, among other things, set certain
financial ratios and net worth requirements.  The New Facility includes
covenants that (i) restrict permitted investments, (ii) restrict intercompany
advances to certain subsidiaries as described above, (iii) restrict
incurrence of additional debt, (iv) restrict mergers and acquisitions and
changes in business or conduct of business and (v) require the maintenance of
certain financial ratios and net worth levels including an average annual
fixed charge ratio of 0.8 to 1.0, and a minimum tangible net worth of $3.0
million through June 2005 and increases to $3.5 million in September 2005.
The Facility also provides that the Company may not pay dividends on its
common stock in excess of $0.72 per share on an annual basis.  The Company
was not in compliance with the minimum tangible net worth covenant as of
December 2004 and has obtained a waiver from the lender for first quarter of
fiscal 2005.  In Q2 2005, the minimum tangible net worth covenant was amended
effective December 2004 to reduce the tangible net worth covenant to $1.5
million through September 29, 2005 and $2.5 million thereafter, and to
redefine and reduce the minimum fixed charge coverage ration to 0.7 for the
remainder of fiscal 2005. The Company is currently in compliance with the
covenants of the New Facility, as amended, effective December 2004 and
expects to be in compliance with the amended covenant for the remainder of
fiscal 2005.

                                     26


In addition, the Company obtained Term Note B, which had an outstanding
balance of $5.0 million at December 2004. Term Note B bears interest at the
bank's base rate plus 2.00%, which was 7.25% at December 2004 and is required
to be repaid in eighteen monthly installments of $0.3 million beginning March
2005.

The Company's Chairman has personally guaranteed repayment of up to $10
million of the combined amount of the New Facility and the term loans.  AMCON
will pay the Company's Chairman an annual fee equal to 2% of the guaranteed
principal in return for the personal guarantee.  This guarantee is secured by
a pledge of the shares of Chamberlin Natural Foods, Inc., Health Food
Associates, Inc., HNWC and TSI.

The Company's $2.8 million and $2.0 million credit facilities with a bank
which were used to fund operating activities of our beverage segment were
eliminated in October 2004 as they were brought into the Company's revolving
credit facility as part of the debt restructuring transaction.

Preferred Stock
- ---------------
In October 2004 the Company completed a $2.0 million private placement of
Series B Convertible Preferred Stock representing 80,000 shares at $25 per
share, the proceeds of which were used in combination with funds from Term
Note B to retire $6.8 million of subordinated debt.

Real Estate Term Debt
- ---------------------
In December 2004, the Company purchased a distribution facility in Rapid
City, South Dakota and began construction of an addition to the building.
The lease on the current Rapid City facility was extended to coincide with
the completion of construction in the second quarter of fiscal 2005.  The
Company expects capital expenditures relating to the building, construction
of the addition and related equipment purchases to be approximately $1.8
million.  The Company has arranged permanent financing for the building and
equipment in an amount equal to 80% of the acquisition cost or approximately
$1.5 million.  The remainder of the capital expenditures related to the
facility will be provided from the Facility.

TSI Revolving Debt
- ------------------
In December 2004, a director of the Company extended a revolving credit
facility to TSI in a principal amount of up to $1.0 million at an interest
rate of 8% per annum with an initial advance of $0.5 million.  To induce the
director to extend this loan to TSI, the Company agreed to allow the director
to receive a second mortgage on TSI's real property on an equal basis with
the Company's existing second mortgage on TSI's real property.











                                     27

CERTAIN ACCOUNTING CONSIDERATIONS

In December 2004, the FASB published FASB Statement No. 123 (revised 2004),
"Share-Based Payment." Statement 123(R) will provide investors and other
users of financial statements with more complete and neutral financial
information by requiring that the compensation cost relating to share-based
payment transactions be recognized in financial statements.  That cost will
be measured based on the fair value of the equity or liability instruments
issued.  This Statement is the result of a two-year effort to respond to
requests from investors and many others that the FASB improve the accounting
for share-based payment arrangements with employees.  Statement 123(R)
replaces FASB Statement No. 123, "Accounting for Stock-Based Compensation,"
and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees."  Statement 123, as originally issued in 1995, established as
preferable a fair-value-based method of accounting for share-based payment
transactions with employees.  However, that Statement permitted entities the
option of continuing to apply the guidance in Opinion 25, as long as the
footnotes to financial statements disclosed what net income would have been
had the preferable fair-value-based method been used.  Although those
disclosures helped to mitigate the problems associated with accounting under
Opinion 25, many investors and other users of financial statements said that
the failure to include employee compensation costs in the income statement
impaired the transparency, comparability, and credibility of financial
statements. Public entities (other than those filing as small business
issuers) will be required to apply Statement 123(R) as of the first interim
or annual reporting period that begins after June 15, 2005 (the fourth
quarter of fiscal 2005 for the Company).  The Company is currently assessing
the impact that this standard will have on the Company.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements that have or are
reasonably expected to have a material effect on the Company's financial
position or results of operations.

RELATED PARTY TRANSACTIONS

As described under the headings LIQUIDITY AND CAPITAL RESOURCES - Credit
Facilities and TSI Revolving Debt, the Company's Chairman has personally
guaranteed repayment of certain obligations of the Company and is being paid
a guarantee fee for that service.  In addition, a director of the Company has
extended a $1.0 million revolving line of credit to TSI.

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to interest rate risk on its variable rate debt.  At
December 2004, we had $38.4 million of variable rate debt outstanding
(excluding $15.0 million variable rate debt which is fixed through the swaps
described below), with maturities through April 2007.  The interest rate on
this debt was 5.25% at December 2004. We estimate that our annual cash flow
exposure relating to interest rate risk based on our current borrowings is
approximately $0.3 million for each 1% change in our lender's prime interest
rate.




                                     28

In June 2003, the Company entered into two interest rate swap agreements with
a bank in order to mitigate the Company's exposure to interest rate risk on
this variable rate debt.  Under the agreements, the Company agrees to
exchange, at specified intervals, fixed interest amounts for variable
interest amounts calculated by reference to agreed-upon notional principal
amounts of $10.0 million and $5.0 million.  The interest rate swaps
effectively convert $15.0 million of variable-rate senior debt to fixed-rate
debt at rates of 4.87% and 4.38% on the $10.0 million and $5.0 million
notional amounts through the maturity of the swap agreements on June 2, 2006
and 2005, respectively.  These interest rate swap agreements have been
designated as hedges and are accounted for as such for financial accounting
purposes.

We do not utilize financial instruments for trading purposes and hold no
derivative financial instruments other than the interest rate swaps which
could expose us to significant market risk.

Item 4.   Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure
that information required to be disclosed in the Company's reports under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission, and that such information is accumulated and communicated to the
Company's management, including its Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding
required disclosures.  Any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives.  The Company's management, including the
Company's Principal Executive Officer and Chief Financial Officer, reviewed
and evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of the end of the period covered by
this report.  Based on that evaluation and subject to the foregoing, the
Principal Executive Officer and Chief Financial Officer have concluded that
the Company's current disclosure controls and procedures, as designed and
implemented provided reasonable assurance that the disclosure controls and
procedures are effective as of the end of the period covered by this report.
There have been no significant changes in the Company's internal controls or
in other factors that could significantly affect the Company's internal
controls subsequent to the date of their evaluation.  There were no material
weaknesses identified in the course of such review and evaluation and,
therefore, no corrective measures were taken by the Company.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

AMCON announced in May 2004 that it was filing suit against Trinity Springs,
Ltd. in order to obtain an order from the United States District Court for
the District of Idaho declaring that a majority of the votes entitled to be
cast by the shareholders of Trinity Springs, Ltd. were cast in favor of the
sale of substantially all of its assets to AMCON's subsidiary, TSL
Acquisition Corp. and thereby satisfied the shareholder approval condition of
the asset purchase transaction.  Subsequent to AMCON's filing of its lawsuit,
the Inspectors of Election and the Board of Directors of Trinity Springs,

                                     29

Ltd. certified the shareholder voting results in favor of the asset purchase
transaction.

After the certification of the voting results, certain minority shareholders
filed a complaint and motion seeking injunctive relief in the District Court
of the Fifth Judicial District of the State of Idaho.  The Court granted a
temporary restraining order on June 11, 2004, which prevented the closing of
the asset purchase transaction until the Court had an opportunity to review
additional briefing on the issues presented and the parties could be heard by
the Court.  On June 16, 2004, the Court heard arguments on whether to extend
the temporary restraining order and grant the minority shareholders' motion
for preliminary injunction.  As a result of the parties' briefing and the
arguments presented, the Court dissolved the temporary restraining order and
thereby enabled the asset sale transaction to be consummated.

On July 19, 2004, several of the same minority shareholders, along with some
additional shareholders filed an amended complaint in the same Idaho state
court action.  The minority shareholders' amended complaint seeks (i) a
declaration that the asset sale transaction is void and injunctive relief
rescinding that transaction or, alternatively, that a new shareholder vote on
the asset sale transaction be ordered, (ii) damages for the alleged breaches
of fiduciary duty which are claimed to have arisen out of the disclosure made
in connection with the solicitation of proxies, how the votes were counted,
and conducting the closing without the requisite shareholder vote, and (iii)
imposition of a constructive trust on the sale proceeds and requiring
separate books to be maintained.  AMCON continues to believe that the
shareholders of Trinity Springs, Ltd. approved the sale of assets to the
Company in accordance with applicable law and that the asset sale transaction
was properly completed.

The Company is also party to other lawsuits and claims arising out of the
operation of its businesses.  Management believes the ultimate resolution of
such matters should not have a material adverse effect on the Company's
financial condition, results of operations or liquidity after giving
consideration to amounts already recorded in the Company's financial
statements.

Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

In October 2004, the Company completed a $2.0 million private placement of
Series B Convertible Preferred Stock representing 80,000 shares at $25 per
share which was primarily used in part to fund subordinated debt obligations
of the Company.  The Series B Convertible Preferred Stock is senior to the
Company's outstanding common stock and provides for preferential treatment
for preferred shareholders in the event of distributions, proceeds upon
liquidation of the Company or the redemption of the stock.

Item 3.  Defaults Upon Senior Securities

During the fiscal quarter ended December 2004, the Company's minimum tangible
net worth dropped below that required by the New Facility.  LaSalle has
waived this default and we have entered into an amendment to the Credit
Agreement effective December 31, 2004 which reduced the minimum tangible net
worth covenant requirement to $1.5 million to September 29, 2005 and $2.5
million thereafter, and redefined and reduced the minimum fixed charge
coverage ration to 0.7 million for the remainder of fiscal 2005.

                                     30


Item 6.   Exhibits

(a) EXHIBITS

2.1  Assets Purchase and Sale Agreement by and between Food For Health
     Company, Inc., AMCON  Distributing Company and Tree of Life, Inc. dated
     March 8, 2001 (incorporated by reference to Exhibit 2.1 of AMCON's
     Current Report on Form 8-K filed on April 10, 2001)

2.2  Amendment to Assets Purchase and Sale Agreement by and between Food For
     Health Company, Inc., AMCON Distributing Company and Tree of Life, Inc.
     effective March 23, 2001 (incorporated by reference to Exhibit 2.2 of
     AMCON's Current Report on Form 8-K filed on April 10, 2001)

2.3  Asset Purchase Agreement, dated February 8, 2001, between AMCON
     Distributing Company, Merchants Wholesale Inc. and Robert and Marcia
     Lansing (incorporated by reference to Exhibit 2.1 of AMCON's Current
     Report on Form 8-K filed on June 18, 2001)

2.4  Addendum to Asset Purchase Agreement, dated May 30, 2001, between AMCON
     Distributing Company, Merchants Wholesale Inc. and Robert and Marcia
     Lansing (incorporated by reference to Exhibit 2.2 of AMCON's Current
     Report on Form 8-K filed on June 18, 2001)

2.5  Real Estate Purchase Agreement, dated February 8, 2001, between AMCON
     Distributing Company and Robert and Marcia Lansing (incorporated by
     reference to Exhibit 2.3 of AMCON's Current Report on Form 8-K filed on
     June 18, 2001)

2.6  Addendum to Real Estate Purchase Agreement, dated May 30, 2001, between
     AMCON Distributing Company and Robert and Marcia Lansing (incorporated
     by reference to Exhibit 2.4 of AMCON's Current Report on Form 8-K filed
     on June 18, 2001)

2.7  Asset Purchase Agreement, dated April 24, 2004, between TSL Acquisition
     Corp., AMCON Distributing Company and Trinity Springs, Ltd.
    (incorporated by reference to Exhibit 2.8 of AMCON's Quarterly Report on
     Form 10-Q filed on August 9, 2004)

2.8  First Amendment to Asset Purchase Agreement dated June 17, 2004 between
     TSL Acquisition Corp., AMCON Distributing Company and Trinity Springs,
     Ltd. (incorporated by reference to Exhibit 2.9 of AMCON's Quarterly
     Report on Form 10-Q filed on August 9, 2004)

3.1  Restated Certificate of Incorporation of the Company, as amended May
     11, 2004 (incorporated by reference to Exhibit 3.1 of AMCON's Quarterly
     Report on Form 10-Q filed on August 9, 2004)

3.2  Bylaws of the Company (incorporated by reference to Exhibit 3.2 of
     AMCON's Registration Statement on Form S-1 (Registration No. 33-82848)
     filed on August 15, 1994)






                                     31

3.3  Second Corrected Certificate of Designations, Preferences and Rights of
     Series A Convertible Preferred Securities of AMCON Distributing Company
     dated August 5, 2004 (incorporated by reference to Exhibit 3.3 of
     AMCON's Quarterly Report on Form 10-Q filed on August 9, 2004)

3.4  Certificate of Designations, Preferences and Rights of Series B
     Convertible Preferred Securities of AMCON Distributing Company dated
     October 8, 2004 (incorporated by reference to Exhibit 3.4 of AMCON's
     Annual Report on Form 10-K filed on January 7, 2005)

4.1  Specimen Common Stock Certificate (incorporated by reference to Exhibit
     4.1 of AMCON's Registration Statement on Form S-1 (Registration No.
     33-82848) filed on August 15, 1994)

4.2  Specimen Series A Convertible Preferred Stock Certificate (incorporated
     by reference to Exhibit 4.2 of AMCON's Quarterly Report on Form 10-Q
     filed on August 9, 2004)

4.3  Specimen Series B Convertible Preferred Stock Certificate (incorporated
     by reference to Exhibit 3.4 of AMCON's Annual Report on Form 10-K filed
     on January 7, 2005)

4.4  Securities Purchase Agreement dated June 17, 2004 between AMCON
     Distributing Company, William F. Wright and Draupnir, LLC (incorporated
     by reference to Exhibit 4.3 of AMCON's Quarterly Report on Form 10-Q
     filed on August 9, 2004)

4.5  Securities Purchase Agreement dated October 8, 2004 between AMCON
     Distributing Company and Spencer Street Investments, Inc. (incorporated
     by reference to Exhibit 3.4 of AMCON's Annual Report on Form 10-K filed
     on January 7, 2005)

10.1  Amended and Restated Loan and Security Agreement, dated September 30,
      2004, between the Company and LaSalle National  Bank, as agent
     (incorporated by reference to Exhibit 3.4 of AMCON's Annual Report on
      Form 10-K filed on January 7, 2005)

10.2  First Amended and Restated AMCON Distributing Company 1994 Stock Option
      Plan (incorporated by reference to Exhibit 10.17 of AMCON's Current
      Report on Form 10-Q filed on August 4, 2000)

10.3  AMCON Distributing Company Profit Sharing Plan (incorporated by
      reference to Exhibit 10.8 of  Amendment No. 1 to the Company's
      Registration Statement on Form S-1 (Registration No. 33-82848) filed on
      November 8, 1994)

10.4  Employment Agreement, dated May 22, 1998, between the Company and
      William F. Wright (incorporated by reference to Exhibit 10.14 of
      AMCON's Quarterly Report on Form 10-Q filed on August 6, 1998)

10.5  Employment Agreement, dated May 22, 1998, between the Company and
      Kathleen M. Evans (incorporated by reference to Exhibit 10.15 of
      AMCON's Quarterly Report on Form 10-Q filed on August 6, 1998)




                                     32


10.6  Agreement, dated December 10, 2004 between AMCON Distributing Company
      and William F. Wright with respect to split dollar life insurance
     (incorporated by reference to Exhibit 3.4 of AMCON's Annual Report on
      Form 10-K filed on January 7, 2005)

10.7  Agreement, dated December 15, 2004 between AMCON Distributing Company
      and Kathleen M. Evans with respect to split dollar life insurance
     (incorporated by reference to Exhibit 3.4 of AMCON's Annual Report on
      Form 10-K filed on January 7, 2005)

10.8  ISDA Master Agreement, dated as of May 12, 2003 between the Company and
      LaSalle Bank National Association (incorporated by reference to Exhibit
      10.13 of AMCON's Quarterly Report on Form 10-Q filed on August 11,
      2003)

10.9  Swap Transaction Confirmation ($10,000,000) dated as of May 23, 2003
      between the Company and LaSalle Bank National Association (incorporated
      by reference to Exhibit 10.14 of AMCON's Quarterly Report on Form 10-Q
      filed on August 11, 2003)

10.10 Swap Transaction Confirmation ($5,000,000) dated as of May 23, 2003
      between the Company and LaSalle Bank National Association (incorporated
      by reference to Exhibit 10.15 of AMCON's Quarterly Report on Form 10-Q
      filed on August 11, 2003)

10.11 Promissory Note ($2,828,440), dated as of June 17, 2004 between the
      Company and Trinity Springs, Ltd. (incorporated by reference to Exhibit
      10.15 of AMCON's Quarterly Report on Form 10-Q filed on August 9, 2004)

10.12 Promissory Note ($500,000), dated as of June 17, 2004 between the
      Company and Trinity Springs, Ltd. (incorporated by reference to Exhibit
      10.16 of AMCON's Quarterly Report on Form 10-Q filed on August 9, 2004)

10.13 Security Agreement, dated June 17, 2004 by and between TSL Acquisition
      Corp., AMCON Distributing Company and Trinity Springs,Ltd.(incorporated
      by reference to Exhibit 10.17 of AMCON's Quarterly Report on Form 10-Q
      filed on August 9, 2004)

10.14 Shareholders Agreement, dated June 17,2004, by and between TSL
      Acquisition Corp, AMCON Distributing Company and Trinity Springs, Ltd.
      (incorporated by reference to Exhibit 10.18 of AMCON's Quarterly Report
      on Form 10-Q filed on August 9, 2004)

10.15 Guaranty and Suretyship Agreement, dated June 17, 2004, by and between
      AMCON Distributing Company and Trinity Springs, Ltd. (incorporated by
      reference to Exhibit 10.19 of AMCON's Quarterly Report on Form 10-Q
      filed on August 9, 2004)

10.16 Mortgage, dated June 17, 2004, by and between TSL Acquisition Corp.,
      AMCON Distributing Company and Trinity Springs, Ltd.(incorporated by
      reference to Exhibit 10.20 of AMCON's Quarterly Report on Form 10-Q
      filed on August 9, 2004)





                                     33


10.17 Guaranty Fee, Reimbursement and Indemnification Agreement, dated as of
      September 30, 2004, between AMCON Distributing Company and William F.
      Wright (incorporated by reference to Exhibit 3.4 of AMCON's Annual
      Report on Form 10-K filed on January 7, 2005)

10.18 Unconditional Guaranty, dated as of September 30, 2004 between William
      F. Wright and LaSalle Bank, N.A.(incorporated by reference to Exhibit
      3.4 of AMCON's Annual Report on Form 10-K filed on January 7, 2005)

10.19 Secured Promissory Note ($1,000,000), dated December 14, 2004, issued
      by Trinity Springs, Inc. to Allen D. Petersen (incorporated by
      reference to Exhibit 3.4 of AMCON's Annual Report on Form 10-K filed
      on January 7, 2005)

10.20 Modification and Extension of Second Lien Commercial Mortgage,
      Assignment of Leases and Rents, and Fixture Filing, dated as of
      December 14, 2004 between Trinity Springs, Inc. and Allen D. Petersen
     (incorporated by reference to Exhibit 3.4 of AMCON's Annual Report on
      Form 10-K filed on January 7, 2005)

10.21 Term Real Estate Promissory Note, dated December 21, 2004, issued by
      AMCON Distributing Company to Gold Bank

10.22 Term Equipment Promissory Note, dated December 21, 2004 issued by AMCON
      Distributing Company to Gold Bank

10.23 One Hundred Eighty Day Redemption Mortgage and Security Agreement by
      and between AMCON Distributing Company and Gold Bank

10.24 Security Agreement by and between AMCON Distributing Company and Gold
      Bank

11.1  Statement re: computation of per share earnings (incorporated by
      reference to footnote 4 to the financial statements which are
      incorporated herein by reference to Item 1 of Part I herein)

14.1  Code of Ethics for Principal Executive and Financial Officers
      (incorporated by reference to Exhibit 14.1 of AMCON's Annual Report on
      Form 10-K filed on December 24, 2003)

31.1  Certification by William F. Wright, Chairman and Principal Executive
      Officer, furnished pursuant to section 302 of the Sarbanes-Oxley Act

31.2  Certification by Michael D. James, Vice President and Chief Financial
      Officer, furnished pursuant to section 302 of the Sarbanes-Oxley Act

32.1  Certification by William F. Wright, Chairman and Principal Executive
      Officer, furnished pursuant to section 906 of the Sarbanes-Oxley Act

32.2  Certification by Michael D. James, Vice President and Chief Financial
      Officer, furnished pursuant to section 906 of the Sarbanes-Oxley Act






                                     34

                              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, hereunto duly authorized.

                                  AMCON DISTRIBUTING COMPANY
                                        (registrant)


Date:     February 14, 2005        /s/ William F. Wright
          -----------------        -----------------------------
                                   William F. Wright
                                   Chairman of the Board and
                                     Principal Executive Officer


Date:     February 14, 2005        /s/ Michael D. James
          -----------------        -----------------------------
                                   Michael D. James
                                   Treasurer & CFO and
                                     Principal Financial and
                                     Accounting Officer


































                                     35






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex1021termrealestate.txt
<DESCRIPTION>EX 10.21 TERM REAL ESTATE PROMISSORY NOTE
<TEXT>
                  TERM REAL ESTATE PROMISSORY NOTE


$984,000.00                                        December 21, 2004


FOR VALUE RECEIVED, the undersigned borrower (hereinafter referred to
as the "Borrower"), promises to pay to the order of GOLD BANK (herein,
together with its successors and assigns who become holders of this
Note, referred to as the "Lender") at 800 West 47th Street, Kansas
City, Missouri 64112, or at such other place as may be designated in
writing by Lender from time to time, the maximum principal sum of up
to Nine Hundred Eighty-Four Thousand and No/100 Dollars ($984,000.00)
provided the principal sum shall not exceed the lesser of 80% of the
completed appraisal cost or actual purchase price cost and cost of
planned addition of the Mortgaged Property as defined in the Real
Estate Mortgage defined below, payable as to interest only through
July 31, 2005, and payable thereafter as to principal plus interest in
fifty-four (54) equal calendar monthly installments of $4,100 based on
a two hundred forty (240) month amortization schedule with the entire
remaining principal plus all accrued interest due and payable on
December 31, 2009 (the "Maturity Date").  Interest on the unpaid
principal balance of this Note will be payable monthly in arrears.
Each monthly payment of interest only or principal and interest shall
be paid on the first (1st) day of each month beginning January 1, 2005
and ending December 1, 2009; provided, however, that the entire unpaid
principal balance of this Note plus accrued and unpaid interest
thereon shall be due and payable prior to the Maturity Date upon the
happening of certain events as set forth herein, in the Real Estate
Mortgage of even date herewith between Borrower and Lender (as amended
from time to time, the "Real Estate Mortgage") and in the Loan
Documents as defined below.  All interest payments made hereunder
shall be calculated based on the five year United States Treasury Rate
as of the date first written above plus 275 basis points ("Interest
Rate").  All principal and interest payments due hereunder are to be
made together with any additional payments provided for in the Real
Estate Mortgage and in that certain Term Equipment Promissory Note
("Equipment Note") and Security Agreement executed by Borrower for the
benefit of Lender of even date herewith ("Security Agreement")
(collectively, this Note, the Equipment Note, the Mortgage, the
Security Agreement and any other documents executed in connection
therewith shall be referred to herein as the "Loan Documents").

This Note is secured by the collateral as set forth in the Real Estate
Mortgage and is cross-collateralized against the equipment and other
collateral as set forth in the Security Agreement, the other Loan
Documents and any other collateral now or hereafter given by the
Borrower to Lender to secure the Indebtedness ("Collateral").  In
addition, this Note is cross-defaulted and co-terminus with any and
all other loans now or hereafter existing by and between Debtor,
Debtor's subsidiaries or affiliates and Secured Party.  The
cancellation or surrender of this Note, upon payment or otherwise,
shall not affect any right Lender has to retain the Collateral, the
Mortgage or any other collateral for any other Indebtedness of
Borrower to Lender.  All of the items described in such documents
constitute security for this Note, whether filed of record or
otherwise, and reference is made to the same for a further description
of the rights of Lender thereunder.

Borrower shall have the right to prepay this Note in whole or in part
at any time; provided, however, if a third party (i.e., not Borrower
or a subsidiary thereof) prepays this Note in whole or in part prior
to the Maturity Date, Borrower shall pay Lender (in addition to the
outstanding principal and interest payments due Lender under the Loan
Documents) a prepayment penalty of 1% calculated on the outstanding
principal and interest balance of this Promissory Note and the
Equipment Note at the time the prepayment is made.  All prepayments
shall be credited first to amounts owing by Borrower to Lender other
than principal and interest, second to interest, and third to the
principal balance.

Upon the occurrence of any of the following events:

1.  Failure to pay when due any principal or interest or other amount
due on this Note or the Equipment Note or any costs, fees,
reimbursable expenses or other amounts payable by Borrower under any
of the Loan Documents that is not cured within any applicable cure
period in the Loan Documents; or

2.  If for any reason Borrower dissolves, terminates or otherwise
ceases to exist or is not extended beyond the term of this Note, the
Equipment Note or the Loan Documents; or

3.  The occurrence of any other Event of Default under this Note or
the Loan Documents which is not cured within any applicable cure
period (if any) contained in this Note or the Loan Documents;  then
Lender may, at Lender's option:  (i) have all principal, interest,
fees, charges, expenses and other costs outstanding or owing hereunder
bear interest at the Interest Rate plus two percent (2%) ("Default
Interest Rate") for so long as said Event of Default shall continue;
and (ii) declare all sums outstanding or owing hereunder, in the
Equipment Note and in the other Loan documents, including principal,
interest, fees, charges, expenses and other costs to be immediately
due and payable without presentment, demand or notice of any kind, all
of which are hereby expressly waived by Borrower.

To induce Lender to enter into the Loan Documents, and to advance to
Borrower as herein provided, Borrower represents and warrants and, so
long as any indebtedness and Obligations (as defined in the Mortgage
and other Loan Documents) remains unpaid or the Loan Documents remain
in effect, Borrower shall be deemed continuously to represent and
warrant as follows:

Borrower is and will continue to be a Delaware corporation duly formed
and validly existing under the laws of the State of Delaware; Borrower
has adequate power, authority and legal right to own, manage and hold
the Real Estate as described in the Mortgage; and Borrower has
adequate authority, power and legal right to enter into and carry out
the provisions of this Note, to borrow money and to give security for
borrowing as required by this Note and to consummate the transactions
contemplated hereby and under the Loan Documents.

Neither this Note, nor any statements or documents referred to herein
or delivered by Borrower in any of the other Loan Documents, contains
any untrue statement or omits to state a material fact necessary to
make the statements herein or therein not misleading.

Borrower will execute and deliver or cause to be executed and
delivered to Lender all of the Loan Documents required by the terms
hereof together with all other instruments and documents relating
thereto as required by Lender.

Borrower will notify Lender in the event any lien is filed against the
Collateral or Mortgage is foreclosed on the subject Real Estate.

Borrower will maintain and keep the Real Estate as described in the
Mortgage and the contents thereof properly insured in all respects up
to at least the fair market value of the Real Estate.

Borrower has or will perform and comply with each and all of the terms
and provisions of this Note, any and all of the other Loan Documents
and any and all other instruments and documents respecting the loan
described herein.

All covenants, representations and warranties made herein shall
survive the repayment of the Note, the Real Estate Note and the Loan
Documents.  Borrower's request for this loan shall constitute an
affirmation on behalf of Borrower that the foregoing covenants,
representations and warranties remain true and correct as of the date
of such request.

No provision of this Note shall be construed to mean that Borrower has
paid or agreed to pay, directly or indirectly, under any circumstances
whatsoever, any interest in excess of that which lawfully may be
charged under any applicable laws relating to interest. If for any
reason interest in excess of the highest lawful rate shall at any time
be paid hereunder, any such excess shall constitute and shall be
treated as a payment on the principal amount due.

Each payment hereunder and in the Loan Documents shall be made in
lawful money of the United States of America and payable in
immediately available funds on the date that such funds are due at
Lender's address set forth above or at such other place as the legal
holder hereof shall from time to time designate to Borrower in
writing.  If any payment of principal or interest on this Note is due
on a Saturday, a Sunday or a legal holiday under the laws of the State
of Kansas, such payment shall be made on the next succeeding business
day, and such extension of time shall be included in computing
interest in connection with such payment.

Borrower agrees to pay to Lender a .50% loan fee on each amount
borrowed under this Note and the Equipment Note.  In addition,
Borrower hereby agrees to reimburse the Lender and will pay all of
Lender's reasonable costs and expenses incurred in connection with: i)
due diligence costs, preparation, negotiation, execution, delivery,
renewal, modification, amendment, regular review, and administration
of the Note and the Loan Documents or any renewals, extensions or
modifications of any of the foregoing; ii) the making or disbursement
of the advances; and, iii) the exercise or enforcement of any of
Lender's rights or remedies under this Note or any of the other Loan
Documents, including, but not limited to, recording charges,
attorneys' fees and disbursements (including duplicating and word
processing fees), any other reasonable fees and costs for services
that are not customarily performed by Lender's salaried employees, and
any other fees, costs or expenses expended by Lender under this Note
and the other Loan Documents. The provisions of this Section will
survive the termination of this Note and the repayment of the Note.
If an attorney is engaged by Lender because of any Event of Default
under this Note, the Equipment Note, or any of the other Loan
Documents or to enforce or defend any provision of any such document
or instrument, then Borrower shall pay upon demand, to the extent
permitted or not prohibited by applicable law, reasonable attorneys'
fees and all costs and expenses so incurred by Lender.

The following representations, warranties and actions, in addition to
any others contained in this Note, the Equipment Note and the Loan
Documents executed or delivered in connection therewith, are required
prior to Lender advancing funds hereunder:

The undersigned Borrower shall execute and deliver to Lender for the
benefit of Borrower, the Mortgage securing all of Borrower's
indebtedness hereunder as well as the Obligations as set forth in the
Security Agreement and in the other Loan Documents in form and content
satisfactory to Lender.

Borrower shall execute and in accordance with Lender's instructions,
record a Mortgage in Pennington County, South Dakota, granting a
security interest in that real estate listed in the Mortgage in form
and content satisfactory to Lender.

Borrower will provide evidence that no default is continuing or
currently exists under any other Loan Documents executed by Borrower.

Evidence that Borrower is in good standing in the States of Delaware
and South Dakota as of the date hereof and evidence that the Note and
all Loan Documents have been validly approved by corporate action with
appropriate Corporate Resolutions as requested by Lender.

All expenses incurred by Lender in filing, recording and perfecting
any mortgage, as well as any expenses or fees of any kind (including
reasonable attorney fees) incurred in the inspection, audit,
protection, collection or levy upon such secured Real Estate and
Collateral shall be considered to be part of Borrower's obligations
and payable by Borrower.


Each of the above conditions shall be considered both a condition
precedent and a continuing condition of this Note and the Loan
Documents, and shall remain in full force and effect until all of
Borrower's obligations hereunder have been paid in full.

No waiver of any breach, Event of Default, default or failure of
condition under the terms of this Note, the Equipment Note or the
other Loan Documents shall be implied from any failure of Lender to
take, or any delay by Lender in taking, any action with respect to any
such breach, Event of Default, default or failure of condition or from
any previous waiver of any similar or unrelated breach, Event of
Default, default or failure of condition.  A waiver of any term of
this Note, the Equipment Note or the other Loan Documents must be made
in writing by Lender and shall be limited to the express written terms
of such waiver.

All obligations of Borrower and all rights, powers and remedies of
Lender expressed herein shall be in addition to and not in limitation
of those provided by law or in any written agreement or instrument
(other than this Note) relating to any of the Indebtedness of Borrower
to Lender or the security therefor.

Borrower waives presentment; demand; notice of dishonor; notice of
protest and nonpayment; notice of default interest and late charges;
notice of intent to accelerate; notice of acceleration; and diligence
in Lender taking any action to collect any sums owing under this Note,
the Equipment Note, the Loan Documents or in proceeding against any of
the rights and interests in and to the Collateral and Real Estate
securing payment of this Note and/or the Equipment Note.

Time is of the essence with respect to every provision hereof.
Capitalized terms not otherwise defined in this Note shall have the
meanings assigned to them under the Mortgage.

This Note shall be construed and enforced in accordance with the laws
of the State of Kansas, without regard to principles of conflicts of
law, except to the extent that federal laws preempt the laws of the
State of Kansas.


BORROWER

AMCON Distributing Company
a Delaware Corporation

By:           /s/ Michael D. James
              -------------------------------

Name (print): Michael D. James
              -------------------------------

Title:        VP and CFO
              -------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex1022termequipment.txt
<DESCRIPTION>EX 10.22 TERM EQUIPMENT PROMISSORY NOTE
<TEXT>
                   TERM EQUIPMENT PROMISSORY NOTE


$480,000.00                                         December 21, 2004

FOR VALUE RECEIVED, the undersigned debtor (hereinafter referred to as
the "Debtor"), promises to pay to the order of GOLD BANK (herein,
together with its successors and assigns who become holders of this
Note, called "Secured Party") at 800 West 47th Street, Kansas City,
Missouri 64112, or at such other place as may be designated in writing
by Secured Party from time to time, the maximum principal sum of up to
Four Hundred Eighty Thousand and No/100 Dollars ($480,000.00),  payable
as to principal plus interest in sixty equal calendar monthly
installments until fully paid.  Interest on the unpaid principal balance
of this Note will be payable monthly in arrears.  Each monthly payment
of principal plus interest shall be paid on the first (1st) day of each
month beginning April 1, 2005 and ending on March 1, 2010 when all
outstanding principal plus interest is due (the "Maturity Date");
provided, however, that the entire unpaid principal balance of this Note
plus accrued and unpaid interest thereon shall be due and payable prior
to the Maturity Date upon the happening of certain events as set forth
herein, in the Security Agreement of even date herewith between Debtor
and Secured Party (as amended from time to time, the "Security
Agreement") and in the Loan Documents as defined below.  All interest
payments made hereunder shall be calculated based on the five year
United States Treasury Rate as of the date first written above plus 275
basis points ("Interest Rate").  All principal plus interest payments
due hereunder are to be made together with any additional payments
provided for in the Security Agreement and that certain Term Real Estate
Promissory Note ("Real Estate Note") and One Hundred Eighty Day
Redemption Mortgage and Security Agreement executed by Debtor for the
benefit of Secured Party of even date herewith ("Mortgage"), the
Environmental Indemnity Agreement executed by Debtor in favor of Secured
Party of even date herewith ("Environmental Agreement") (collectively,
this Note, the Real Estate Note, the Security Agreement, the Mortgage,
the Environmental Agreement and any other documents executed in
connection therewith shall be referred to herein as the "Loan
Documents").

This Note is secured by the collateral as set forth in the Security
Agreement, related UCC-1 financing statements and is cross-
collateralized against the real estate and other collateral as set forth
in the Mortgage ("Real Estate"), the other Loan Documents and any other
collateral now or hereafter given by the Debtor to Secured Party to
secure the Indebtedness ("Collateral").  In addition, this Note is
cross-defaulted and co-terminus with any and all other loans now or
hereafter existing by and between Debtor, Debtor's subsidiaries or
affiliates and Secured Party.  The cancellation or surrender of this
Note, upon payment or otherwise, shall not affect any right Secured
Party has to retain the Collateral, the Mortgage or any other collateral
for any other Indebtedness of Debtor to Secured Party.  All of the items
described in such documents constitute security for this Note, whether
filed of record or otherwise, and reference is made to the same for a
further description of the rights of Secured Party thereunder.

Debtor shall have the right to prepay this Note in whole or in part at
any time; provided, however, if a third party (i.e., not Debtor or a
subsidiary thereof) prepays this Note in whole or in part prior to the
Maturity Date, Debtor shall pay Secured Party (in addition to the
outstanding principal and interest payments due Secured Party under the
Loan Documents) a prepayment penalty of 1% calculated on the outstanding
principal and interest balance of this Promissory Note and the Real
Estate Note at the time the prepayment is made.  All prepayments shall
be credited first to amounts owing by Debtor to Secured Party other than
principal and interest, second to interest, and third to the principal
balance.

Upon the occurrence of any of the following events:

1.  Failure to pay when due any principal or interest or other amount
due on this Note or the Real Estate Note or any costs, fees,
reimbursable expenses or other amounts payable by Debtor under any of
the Loan Documents that is not cured within any applicable cure period
in the Loan Documents; or

2.  If for any reason Debtor dissolves, terminates or otherwise ceases
to exist or is not extended beyond the term of this Note, the Real
Estate Note or the Loan Documents; or

3.  The occurrence of any other Event of Default under this Note or the
Loan Documents which is not cured within any applicable cure period (if
any) contained in this Note or the Loan Documents; then Secured Party
may, at Secured Party's option:  (I) have all principal, interest, fees,
charges, expenses and other costs outstanding or owing hereunder bear
interest at the Interest Rate plus two percent (2%) ("Default Interest
Rate") for so long as said Event of Default shall continue; and (ii)
declare all sums outstanding or owing hereunder, in the Real Estate Note
and in the other Loan documents, including principal, interest, fees,
charges, expenses and other costs to be immediately due and payable
without presentment, demand or notice of any kind, all of which are
hereby expressly waived by Debtor.

To induce Secured Party to enter into the Loan Documents, and to advance
to Debtor as herein provided, Debtor represents and warrants and, so
long as any indebtedness and Obligations (as defined in the Security
Agreement and other Loan Documents) remains unpaid or the Loan Documents
remain in effect, Debtor shall be deemed continuously to represent and
warrant as follows:

Debtor is and will continue to be a Delaware corporation duly formed and
validly existing under the laws of the State of Delaware; Debtor has
adequate power, authority and legal right to own, manage and hold the
Real Estate as described in the Mortgage; and Debtor has adequate
authority, power and legal right to enter into and carry out the
provisions of this Note, to borrow money and to give security for
borrowing as required by this Note and to consummate the transactions
contemplated hereby and under the Loan Documents.

Neither this Note, nor any statements or documents referred to herein or
delivered by Debtor in any of the other Loan Documents, contains any
untrue statement or omits to state a material fact necessary to make the
statements herein or therein not misleading.

Debtor will execute and deliver or cause to be executed and delivered to
Secured Party all of the Loan Documents required by the terms hereof
together with all other instruments and documents relating thereto as
required by Secured Party.

Debtor will notify Secured Party in the event any lien is filed against
the Collateral or Mortgage is foreclosed on the subject Real Estate.

Debtor will maintain and keep the Real Estate as described in the
Mortgage and the contents thereof properly insured in all respects up to
at least the fair market value of the Real Estate.

Debtor has or will perform and comply with each and all of the terms and
provisions of this Note, any and all of the other Loan Documents and any
and all other instruments and documents respecting the loan described
herein.

All covenants, representations and warranties made herein shall survive
the repayment of the Note, the Real Estate Note and the Loan Documents.
Debtor's request for this loan shall constitute an affirmation on behalf
of Debtor that the foregoing covenants, representations and warranties
remain true and correct as of the date of such request.

No provision of this Note shall be construed to mean that Debtor has
paid or agreed to pay, directly or indirectly, under any circumstances
whatsoever, any interest in excess of that which lawfully may be charged
under any applicable laws relating to interest. If for any reason
interest in excess of the highest lawful rate shall at any time be paid
hereunder, any such excess shall constitute and shall be treated as a
payment on the principal amount due.

Each payment hereunder and in the Loan Documents shall be made in lawful
money of the United States of America and payable in immediately
available funds on the date that such funds are due at Secured Party's
address set forth above or at such other place as the legal holder
hereof shall from time to time designate to Debtor in writing.  If any
payment of principal or interest on this Note is due on a Saturday, a
Sunday or a legal holiday under the laws of the State of Kansas, such
payment shall be made on the next succeeding business day, and such
extension of time shall be included in computing interest in connection
with such payment.

Debtor agrees to pay to Secured Party a .50% loan fee on each amount
borrowed under this Note and the Real Estate Note.  In addition, Debtor
hereby agrees to reimburse the Secured Party and will pay all of Secured
Party's reasonable costs and expenses incurred in connection with: I)
due diligence costs, preparation, negotiation, execution, delivery,
renewal, modification, amendment, regular review, and administration of
the Note and the Loan Documents or any renewals, extensions or
modifications of any of the foregoing; ii) the making or disbursement of
the advances; and, iii) the exercise or enforcement of any of Secured
Party's rights or remedies under this Note or any of the other Loan
Documents, including, but not limited to, recording charges, attorneys'
fees and disbursements (including duplicating and word processing fees),
any other reasonable fees and costs for services that are not
customarily performed by Secured Party's salaried employees, and any
other fees, costs or expenses expended by Secured Party under this Note
and the other Loan Documents. The provisions of this Section will
survive the termination of this Note and the repayment of the Note.  If
an attorney is engaged by Secured Party because of any Event of Default
under this Note, the Real Estate Note, or any of the other Loan
Documents or to enforce or defend any provision of any such document or
instrument, then Debtor shall pay upon demand, to the extent permitted
or not prohibited by applicable law, reasonable attorneys' fees and all
costs and expenses so incurred by Secured Party.

The following representations, warranties and actions, in addition to
any others contained in this Note, the Real Estate Note and the Loan
Documents executed or delivered in connection therewith, are required
prior to Secured Party advancing funds hereunder:

The undersigned Debtor shall execute and deliver to Secured Party for
the benefit of Debtor, a security agreement securing all of Debtor's
indebtedness hereunder as well as the Obligations as set forth in the
Security Agreement and in the other Loan Documents in form and content
satisfactory to Secured Party.

Debtor shall execute and in accordance with Secured Party's
instructions, record a Mortgage in Pennington County South Dakota
granting a security interest in that real estate listed in the Mortgage
in form and content satisfactory to Secured Party.

Debtor will provide evidence that no default is continuing or currently
exists under any other Loan Documents executed by Debtor.

Evidence that Debtor is in good standing in the States of Delaware and
South Dakota as of the date hereof and evidence that the Note and all
other Loan Documents have been validly approved by corporate action with
appropriate Corporate Resolutions as requested by Secured Party.

All expenses incurred by Secured Party in filing, recording and
perfecting any security interest, as well as any expenses or fees of any
kind (including reasonable attorney fees) incurred in the inspection,
audit, protection, collection or levy upon such secured Real Estate and
Collateral shall be considered to be part of Debtor's obligations and
payable by Debtor.

Each of the above conditions shall be considered both a condition
precedent and a continuing condition of this Note and the Loan
Documents, and shall remain in full force and effect until all of
Debtor's obligations hereunder have been paid in full.

No waiver of any breach, Event of Default, default or failure of
condition under the terms of this Note, the Real Estate Note or the
other Loan Documents shall be implied from any failure of Secured Party
to take, or any delay by Secured Party in taking, any action with
respect to any such breach, Event of Default, default or failure of
condition or from any previous waiver of any similar or unrelated
breach, Event of Default, default or failure of condition.  A waiver of
any term of this Note, the Real Estate Note or the other Loan Documents
must be made in writing by Secured Party and shall be limited to the
express written terms of such waiver.

All obligations of Debtor and all rights, powers and remedies of Secured
Party expressed herein shall be in addition to and not in limitation of
those provided by law or in any written agreement or instrument (other
than this Note) relating to any of the Indebtedness of Debtor to Secured
Party or the security therefor.

Debtor waives presentment; demand; notice of dishonor; notice of protest
and nonpayment; notice of default interest and late charges; notice of
intent to accelerate; notice of acceleration; and diligence in Secured
Party taking any action to collect any sums owing under this Note, the
Real Estate Note, the Loan Documents or in proceeding against any of the
rights and interests in and to the Collateral and Real Estate securing
payment of this Note and/or the Real Estate Note.
Time is of the essence with respect to every provision hereof.
Capitalized terms not otherwise defined in this Note shall have the
meanings assigned to them under the Security Agreement.

This Note shall be construed and enforced in accordance with the laws of
the State of Kansas, without regard to principles of conflicts of law,
except to the extent that federal laws preempt the laws of the State of
Kansas.


DEBTOR

AMCON Distributing Company
a Delaware Corporation

By:              /s/ Michael D. James
                 ----------------------
Name (print):    Michael D. James
                 ----------------------
Title:           VP and CFO
                 ----------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex1023redemptionmortgage.txt
<DESCRIPTION>EX 10.23 180 DAY REDEMPTION MORTGAGE AND SECURITY AGREEMENT
<TEXT>
Prepared by:     Shughart, Thomson & Kilroy, P.C
Address:         120 West 12th Street
                 Kansas City, Missouri 64105
Telephone:       (816) 421-3355






             One hundred eighty day redemption MORTGAGE

                       AND SECURITY AGREEMENT


THIS ONE HUNDRED EIGHTY DAY REDEMPTION MORTGAGE AND SECURITY AGREEMENT
(this "Mortgage") is made as of December 21, 2004, by and between
AMCON Distributing Company, a Delaware corporation, having an address
at 7405 Irvington Road, Omaha, Nebraska 68122 (the "Borrower"), in
favor of GOLD BANK, a Kansas banking corporation, having an address at
800 West 47th Street, Kansas City, Missouri 64112 (the "Lender").


                            RECITALS:

A.  Borrower has delivered to Lender the following promissory notes
(collectively, the "Notes"):

1.  A certain Term Real Estate Promissory Note (Real Estate Term Note)
of even date herewith in the maximum principal amount of up to Nine
Hundred Eighty-Four Thousand AND NO/100 DOLLARS ($984,000.00), with
interest as therein specified, due December 31, 2009, if not sooner
paid.

2.  A certain Term Equipment Promissory Note (Equipment Term Note) of
even date herewith in the maximum principal amount of up to Four
Hundred Eighty Thousand AND NO/100 DOLLARS ($480,000.00), with
interest as therein specified, due March 1, 2010, if not sooner paid.

The Notes, the Mortgage, the Security Agreement between Borrower and
Lender of even date herewith ("Security Agreement"), the Environmental
Indemnity Agreement executed by Borrower in favor of Lender of even
date herewith ("Environmental Indemnity Agreement") and any and all
other documents executed in connection therewith shall be referred to
herein as the "Loan Documents".

B.  Borrower is delivering this Mortgage to secure the payment of the
Indebtedness (hereinafter defined) including future advances and
future obligations pursuant to South Dakota law.

C.  THE PARTIES AGREE THAT THE PROVISIONS OF THE ONE HUNDRED EIGHTY
DAY REDEMPTION MORTGAGE ACT GOVERN THIS MORTGAGE.

NOW, THEREFORE, Borrower for legally sufficient consideration, the
receipt and sufficiency of which is hereby acknowledged, executes and
delivers this Mortgage to secure the payment of the following
indebtedness and obligations (collectively, the "Indebtedness"):

(A)  The payment of the principal, interest and premium, if any, on
the Notes according to their tenor and effect;

(B)  All other sums due to Lender (including all sums advanced by
Lender) hereunder or under any other instrument securing the Notes;
and

(C)  All other future advances of Lender to Borrower and all other
future obligations of Borrower to Lender.

                         GRANTING CLAUSE

To secure the payment of the Indebtedness, Borrower hereby grants,
bargains, sells, conveys, assigns, grants a security interest in,
mortgages and warrants unto Lender and to its successors and assigns
forever, the following described property (real and personal)
(collectively, the "Mortgaged Property"):

1.  All of the real estate described in "Exhibit A" attached hereto
and incorporated herein by reference, all tenements and hereditaments
thereunto appertaining and all after acquired interests of every kind
and nature therein, which real estate (the "Premises") is situated in
the County of Pennington, State of South Dakota, together with all
buildings, structures, fixtures, appurtenances and improvements
thereon situate or which may hereafter be erected or placed thereon,
all remainders and reversions in the Premises, all right, title and
interest of Borrower in and to all streets, roads, boulevards, avenues
or other public thoroughfares in front of and adjoining the Premises,
including all easements, licenses and rights-of-way thereunto
appurtenant, attached or belonging, and also all right, title and
interest of Borrower in and to all strips and gores of land adjacent
to the Premises; and

2.  All engines, machinery, apparatus, equipment, furniture and
furnishings now or hereafter located upon and used or furnished in
connection with the letting or operation of said Premises (including,
without limitation, all heating, lighting, ventilating, cooling,
refrigeration and water supply apparatus and fixtures, ovens,
furnaces, vent hoods and fans, bathtubs, sinks, water closets, basins,
air conditioning units, pipes, faucets, mantels, refrigerators
(mechanical or otherwise) dishwashers, disposals, stoves, ranges,
clothes washers and dryers, shades, awnings, screens, blinds, rugs,
carpets, mirrors, lamps, draperies, elevators, escalators, curtains,
hangings, pictures, kitchen cabinets, sprinklers, alarm and monitoring
systems, door opening and closing equipment, all equipment for the
removal of dust, debris, snow, refuse or garbage, but excluding
personal property owned by tenants and not by Borrower), and all
replacements thereof; and

3.  All rents, royalties, profits, revenues, incomes and other
benefits of and from the property subject or required to be subject to
the lien of this Mortgage, and all of the estate, right, title, and
interest of every nature whatsoever of the Borrower in and to the same
and every part and parcel thereof; and

4.  All right, title and interest of Borrower in and to all leases,
occupancy and rental agreements covering the Premises and the
buildings, improvements and structures thereon, or any portion
thereof, now or hereafter existing or entered into and all right,
title and interest of Borrower thereunder, including, without
limitation, all cash or security deposits, advance rentals and
deposits or payments of a similar nature; and

5.  All right, title and interest of Borrower in and to the following,
including the right to receive the same, to-wit:

(a)  All proceeds of insurance paid or payable as a result of damage
to or destruction of the property described above; and

(b)  Any and all awards or payments, including interest thereon, which
may be made with respect to the property described above as a result
of:  (i) the exercise of the right of eminent domain; (ii) the
alteration of the grade of any streets or roads; and (iii) any other
damage or injury to or decrease in the value of the property described
above;

in each such instance to the extent of all amounts which may be
secured by this Mortgage on the date of receipt by the Lender of any
such insurance proceeds, awards or payments, and to the extent of the
reasonable counsel fees (to the extent not prohibited by law), costs
and disbursements incurred by the Lender in connection with the
collection of any such insurance proceeds, award or payment.


                             ARTICLE I
                 PARTICULAR COVENANTS OF BORROWER

Borrower covenants and agrees as follows:

1.01  PAYMENT OF INDEBTEDNESS.

That it will pay the Indebtedness in full as provided herein and in
the Notes and the other Loan Documents and will perform and keep all
the covenants and agreements in this Mortgage and in all other
instruments securing payment of the Indebtedness.  The Indebtedness
shall not be prepaid except to the extent permitted by the terms of
the Notes or the Loan Documents.

1.02  TITLE AND LIEN.

That at the delivery hereof, it is the lawful owner of the Mortgaged
Property and is seized of a good and indefeasible estate of
inheritance therein, free and clear of all liens and encumbrances,
that it has full power to subject the same to the lien hereof and that
it will warrant and defend the title thereto forever against the
claims and demands of all persons whomsoever.

That the lien created by this Mortgage is a first and prior lien on
the Mortgaged Property and that it will keep the Mortgaged Property
free from all lien claims of every kind and will protect and defend
the title and possession thereof so that this Mortgage shall be and
remain a first lien thereon until the Indebtedness is fully paid, or
if foreclosure sale be had hereunder so that the purchaser at the said
sale shall acquire good title in fee simple to the Mortgaged Property
free and clear of all liens and encumbrances.

1.03  FURTHER ASSURANCES.

That it will, at its expense, do all such further acts and execute,
acknowledge, deliver and record financing and continuation statements
and all such further instruments as Lender shall require to:

(a)  Continue, preserve and maintain this Mortgage as a valid and
subsisting first lien and prior security interest upon the Mortgaged
Property enforceable in accordance with the terms and provisions of
this Mortgage;

(b)  Preserve and maintain the rights created by any other instruments
securing the payment of the Indebtedness; and

(c)  Preserve and maintain the priority of this Mortgage and all such
other instruments securing the payment of the Indebtedness and the
record notice thereof so that no rights or liens of others shall gain
parity with or priority over this Mortgage and the other instruments
securing the payment of the Indebtedness.

1.04  TAXES, ASSESSMENTS AND UTILITIES.

That it will forthwith pay all taxes, assessments, water and sewer
charges and public charges, general and special, of every nature, now
existing against the Mortgaged Property, and pay before delinquent all
taxes, assessments, water and sewer charges and public charges,
general and special of every nature hereafter levied or assessed
thereon.  In the event of the enactment after the date hereof of any
Federal law or law of the State of South Dakota deducting from the
value of land for the purpose of taxation, any lien thereon, or
changing in any way the laws now in force for the taxation of deeds of
trust or mortgages or debts secured by deeds of trust or mortgages, or
the manner of the collection of any such taxes, so as to affect this
Mortgage or the Indebtedness, then, in such case the whole of the
unpaid principal sum secured by this Mortgage, together with the
interest accrued thereon, shall, at the option of the Lender, without
notice to any party, become immediately due and payable; provided,
however, Lender agrees that it will not exercise such option to so
declare such indebtedness to be immediately due and payable if
Borrower shall pay before the same shall be delinquent any tax,
imposition or assessment imposed by any such law resulting in Lender
having to bear directly or indirectly the whole or any part of any
tax, imposition or assessment imposed upon or with respect to the
Mortgaged Property or this Mortgage or the lien created hereby.
Borrower will pay (or cause to be paid) before delinquent all charges
for gas, electricity, water, sewer or other public utility services
furnished to the Mortgaged Property.

In the event Borrower shall fail to pay any of the foregoing before
delinquent, Lender may (but shall not be obligated to) pay the same
and any interest and penalties thereon and the sums so advanced with
all costs and expenses thereof shall be secured hereby in accordance
with the provisions hereof.

1.05 INSURANCE.

That it will keep the improvements now or hereafter on the Premises
and the personal property, if any, included in the Mortgaged Property
insured against loss or damage by fire and the hazards or perils
covered by the extended coverage endorsement, boiler explosion,
vandalism, malicious mischief and against such other casualties or
hazards as may be required by Lender, including loss of rental income,
all in companies, amounts, manner and form satisfactory to Lender so
long as any of the Indebtedness remains unpaid, and will keep the
originals of all such policies of insurance (the "Fire and Extended
Coverage Policies") of whatever nature constantly assigned, pledged
and delivered to Lender with a noncontributory mortgage endorsement
making losses payable to Lender with the premiums thereon fully paid.
The Fire and Extended Coverage Policies are hereby subjected to the
lien of this Mortgage.  All Fire and Extended Coverage Policies shall
provide that the coverage evidenced thereby shall not be terminated or
modified without thirty (30) days' prior written notice to Lender.
Renewals of all Fire and Extended Coverage Policies shall be delivered
to Lender at least thirty (30) days prior to the expiration of such
policies.  For further securing the payment thereof, Borrower hereby
confers upon Lender the full right and power to settle and compromise
all losses covered by the Fire and Extended Coverage Policies in
excess of $15,000.00, together with the full right and power to
demand, receive and receipt for all monies becoming payable
thereunder, the same to apply, at the option of Lender toward the
payment of the Indebtedness or the repair, restoration or rebuilding
of the Mortgaged Property without affecting the lien of this Mortgage
for the full amount of the Indebtedness before such damage or payment
to Lender took place; and in the event of foreclosure hereunder, all
right, title and interest of Borrower in and to the Fire and Extended
Coverage Policies shall, at the option of the purchaser, pass to the
purchaser at said foreclosure sale and Borrower shall receive credit
in the amount of the applicable refund, if any.  Notwithstanding
anything to the contrary contained in this Section, insurance proceeds
payable as a result of any damage to the Mortgaged Property in the
amount of $15,000.00 or less for a single occurrence shall be paid to
Borrower and Borrower shall restore, repair or replace the Mortgaged
Property so damaged in accordance with the provisions of this
Mortgage.

Borrower shall annually, so long as any of the Indebtedness remains
unpaid, at least thirty (30) days prior to any applicable expiration
dates, furnish Lender with receipts showing that the premiums for all
Fire and Extended Coverage Policies have been paid in full for the
next succeeding year.  In the event Borrower shall for any reason fail
to:  (a) keep any of the Fire and Extended Coverage Policies in effect
with the premiums fully paid; (b) keep the Fire and Extended Coverage
Policies (including renewals thereof) duly assigned and delivered to
Lender; and  ) deliver certificates evidencing the renewals of the
Fire and Extended Coverage Policies to Lender; all as above provided,
Lender may (but shall not be obligated to) effect any such insurance
paying the costs and expenses thereof and shall be secured for the
sums so advanced in accordance with the provisions of this Mortgage.

1.06  MONTHLY TAX AND INSURANCE DEPOSITS.

Borrower will, at the option of Lender, at the time of each monthly
payment required by the Notes, deposit with Lender an amount estimated
by Lender to be sufficient to enable Lender to pay at least thirty
(30) days before they become due:

(a)  All taxes, assessments, and other similar charges against the
Mortgaged Property; and

(b)  Yearly premiums to keep in force the insurance coverage required
herein;

all of which funds shall be held by Lender for the benefit of Borrower
without any obligation of Lender to pay interest thereon and shall be
used and applied by Lender for the purposes and in the manner
prescribed in this Section.  In paying such items Lender may rely upon
any tax bill, notice of assessment or premium notice furnished to
Lender without further obligation to inquire into the validity or
accuracy of such items.  Upon demand of Lender, Borrower will deliver
to Lender such additional monies as are necessary to make up any
deficiency in the amount necessary to enable the Lender to pay the
foregoing items.  In the event of a default by Borrower in the
performance of any of the terms, covenants or conditions contained
herein or in the evidence of the Indebtedness, Lender may apply on the
Indebtedness, in such manner as Lender shall determine, any funds of
Borrower then in Lender's possession under this Section.  A waiver by
Lender of Lender's rights under this Section for any period of time or
for Borrower or any of Borrower's successors in title shall not
constitute a waiver of the provisions of this Section and Lender may
on one or more occasions exercise its rights hereunder unless such
waiver by Lender shall be in writing and shall specifically provide
that Lender waives all of its rights under this Section for the entire
term of this Mortgage. To the extent Borrower satisfies its
obligations under this Section to deposit with Lender the amounts as
herein above provided, Borrower shall be relieved of any further
obligation to pay taxes, assessments and other similar charges against
the Mortgaged Property and to pay the annual premiums to keep the
required insurance in force as required hereby.

1.07  MAINTENANCE OF IMPROVEMENTS - COMPLIANCE WITH LAWS.

Borrower will:

(a)  Keep the Mortgaged Property in good order and repair, and will
not commit or suffer waste thereon, nor remove, raze or demolish any
of the improvements located on the Premises without the prior written
consent of Lender, nor do or permit to be done any act whereby the
Mortgaged Property shall become less valuable;

(b)  Perform and comply promptly with, and cause the Mortgaged
Property to be maintained, used and operated in accordance with, any
and all (i) present and future laws, ordinances, rules, regulations
and requirements of every duly constituted governmental or quasi-
governmental authority or agency having jurisdiction over Borrower or
the Mortgaged Property, including without limitation, all applicable
federal, state and local laws pertaining to air and water quality,
hazardous materials, hazardous waste, waste disposal, air emissions
and other environmental matters, all zoning and other land use
matters, and rules, regulations and ordinances of the United States
Environmental Protection Agency and all other applicable federal,
state and local agencies and bureaus; (ii) similarly applicable
orders, rules and regulations of any regulatory, licensing,
accrediting, insurance underwriting or rating organization or other
body exercising similar functions; (iii) similarly applicable duties
or obligations of any kind imposed under any covenant, condition,
agreement or easement, public or private; and (iv) policies of
insurance at any time in force with respect to the Mortgaged Property.
If Borrower receives any notice that Borrower or the Mortgaged
Property is in default under or is not in compliance with any of the
foregoing, or notice of any proceeding initiated under or with respect
to any of the foregoing, Borrower will promptly furnish a copy of such
notice to Lender; and

(c)  Maintain and keep in full force and effect all licenses, permits
and consents necessary or required by any such governmental authority
or agency.

Borrower hereby represents and warrants that, neither Borrower nor, to
the best of Borrower's knowledge, any other person or entity used,
generated, stored or disposed of, on, under or about the Mortgaged
Property any hazardous waste, toxic substances or related materials
(hereafter referred to as "Hazardous Materials") (except for cleaning
solvents and other materials commonly used in the conduct of
Borrower's business in full compliance with all applicable laws).  For
the purposes of this Mortgage, Hazardous Materials shall include, but
shall not be limited to, any substance, material, or waste which is or
becomes regulated by any State or local government authority or the
United States Government.  The term "Hazardous Materials" includes,
without limitation, any material or substance which is listed in the
United States Department of Transportation Hazardous Materials Table
(49 C.F.R. s 172.101) or which is included within the definition of a
"hazardous substance", as that term is defined under the Comprehensive
Environmental Response Compensation and Liability Act [42 U.S.C. s
9601(14)], as the same may be amended from time to time ("CERCLA").
Further, Borrower agrees that it will not permit the storage of any
toxic materials or Hazardous Materials in, on or around the Mortgaged
Property now or at any future time (except for cleaning solvents and
other materials commonly used in the conduct of Borrower's business in
full compliance with all applicable laws) and will indemnify and hold
Lender harmless from and against any loss, liability, cost, expense or
action(s) which may result in connection with Hazardous Materials or
toxic material(s) as they relate to the Mortgaged Property.
Borrower's foregoing indemnity is independent of, and shall not be
measured or affected by: (i) any amounts at any time owing under the
Notes or the other Loan Documents; (ii) the sufficiency or
insufficiency of any collateral (including, without limitation, the
Premises) given to Lender to secure repayment of the Indebtedness;
(iii) any obligations of Borrower under the Notes or the other Loan
Documents; (iv) the consideration given by Lender or any other party
in order to acquire the Premises or any portion thereof; (v) the
modification, expiration or termination of any of the Notes or the
other Loan Documents; or (vi) the discharge or repayment in full of
the Indebtedness (including, without limitation, by amounts paid or
credit bid at a foreclosure sale or by discharge in connection with a
deed in lieu of foreclosure).  Borrower's obligations hereunder shall
survive any transfer of title to all or any part of the Premises in
connection with a foreclosure of this Mortgage, including, without
limitation, a sale pursuant to judicial decree or power of sale,
judicial consent foreclosure or by deed in lieu of such foreclosure.
Lender's rights under this Section shall be in addition to any other
rights and remedies under any other document or instrument now or
hereafter executed by Borrower, or at law or in equity (including,
without limitation, any right of reimbursement or contribution
pursuant to CERCLA or any other law related to Hazardous Materials),
and shall not in any way be deemed a waiver of any such rights.  All
obligations of Borrower hereunder shall be payable on demand, and
shall bear interest from the date of such demand at a per annum
interest rate equal to the default rate of interest calculated as
specified in the Loan Documents, whether or not any of the other Loan
Documents are then in effect.

If at any time it is determined that there are any toxic materials or
Hazardous Materials located on the Mortgaged Property (other than
cleaning solvents and other materials commonly used in the conduct of
Borrower's business in full compliance with all applicable laws),
Borrower shall diligently commence and continue to take such action,
at its sole expense, as is necessary to comply with all environmental
and safety requirements pertaining to the generation, transportation,
use and disposal of such materials.  Failure of Borrower to comply
with all environmental and safety requirements of federal, state or
local laws, statutes, ordinances or regulations, rules, court or
administrative orders or decrees, or private agreements, shall
constitute and be a default under this Mortgage and Lender, in lieu of
foreclosure, shall have the option to require specific performance of
Borrower's obligations hereunder.

Borrower hereby acknowledges and agrees that Lender has not
participated, and shall not participate, in the management of Borrower
and that any indicia of ownership which Lender may have in and to the
Mortgaged Property by virtue of this Mortgage (and the rights granted
to Lender herein) is primarily to protect Lender's security interest
and lien in and to the Mortgaged Property.

If Borrower shall fail to comply with this Section, Lender may effect
any needed repairs or alterations, maintain utility services and
obtain security protection for the Mortgaged Property if the same is
abandoned or vacant, obtain necessary licenses, permits and consents
and take any other action Lender deems necessary to cause the
Mortgaged Property to be in full compliance with this Section.  In
each such instance, Lender may (but shall not be obligated to) pay the
costs and expenses thereof and shall be secured hereby for the sums so
advanced.

1.08  PROTECTION OF MORTGAGES PROPERTY AND RIGHTS.

Lender shall have the right and power to institute and maintain or
defend or intervene in such suits and proceedings as it may reasonably
and in good faith deem necessary to:

(a)  Prevent any impairment of the Mortgaged Property by any acts
which may be unlawful or constitute a violation of this Mortgage;

(b)  Enforce, defend, preserve or protect its interest (including the
priority of the lien created hereby) in and to the Mortgaged Property
and the income, royalties, revenue, rents, profits and other benefits
arising therefrom and its rights and remedies under this Mortgage;

(c)  Restrain the enforcement of or compliance with any legislation or
other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid, if the enforcement of or
compliance with such enactment, rule or order would substantially
impair the security hereunder or be substantially prejudicial to the
interest of the Lender; and

(d)  Defend, preserve or protect its interests should Lender become a
party to any suit or proceeding by reason of this Mortgage.

All of Lender's costs and expenses (including attorneys' fees to the
extent now or hereafter not prohibited by law) incurred in any such
actions shall be secured hereby and be paid by Borrower on demand as
provided herein.

1.09  ADVANCES SECURED.

If Borrower shall fail to perform its obligations under this Mortgage
and if Lender shall advance its funds to ensure performance of such
obligations or if Lender shall advance sums for or in connection with
any suit or proceeding referred to herein, then the sums so advanced
by Lender, together with the costs and expenses of effecting the same,
shall be payable on demand with interest, at the default rate of
interest specified in the Real Estate Term Note, from the date of
payment.  All sums advanced by Lender pursuant to the provisions of
the Mortgage and the costs and expenses thereof with interest from the
date of the advance at the default rate of interest specified in the
Real Estate Term Note shall be added to and become a part of the
indebtedness of Borrower until paid and the repayment thereof shall be
secured by this Mortgage with the same priority and in the same manner
as the Indebtedness.

1.10  DAMAGE TO MORTGAGED PROPERTY.

If all or any part of the Mortgaged Property shall be damaged by fire
or other casualty, Borrower will promptly restore the Mortgaged
Property to the equivalent of its original condition, regardless of
whether or not there shall be any insurance proceeds therefor;
provided, however, if Lender shall elect to apply the insurance
proceeds to the payment of the Indebtedness, Borrower shall not be
obligated to restore the Mortgaged Property. If a part of the
Mortgaged Property shall be physically damaged through condemnation,
the Borrower will promptly restore, repair or alter the remaining
property in a manner satisfactory to Lender.

1.11  INSPECTIONS.

Lender is hereby authorized to enter upon and inspect the Mortgaged
Property at any time during normal business hours during the life of
this Mortgage and for such purposes is hereby granted an easement to
enter upon and inspect the Mortgaged Property.

1.12  REPLACEMENTS - ALTERATIONS.

That none of the improvements, fixtures, apparatus, equipment and
personal property, except personal property and trade fixtures owned
by tenants, now or hereafter owned or leased by Borrower and now or
hereafter attached to or located upon and used or furnished in
connection with the operation or letting of the Mortgaged Property or
any part thereof shall be removed unless replaced with similar
property of equal or greater value and no building or other
improvement now or hereafter on the Premises shall be materially
structurally altered without the prior written consent of Lender.

1.13  DEMOLITION - EMINENT DOMAIN - INJURY OR DAMAGE.

Upon the actual or threatened waste, demolition or removal of any of
the improvements now or hereafter on the Mortgaged Property or the
condemnation or other taking (including without limiting the
generality of the foregoing, changes of grades of streets or roads)
under the power of eminent domain of all or any part of the Mortgaged
Property or upon any other damage or injury to or any decrease in the
value of the Mortgaged Property, the entire Indebtedness shall, at the
option of Lender, without notice, become immediately due and payable.
Borrower hereby assigns to Lender as additional security for the
Indebtedness, all awards in any and all such proceedings, including
all awards or payments for injury or damage to or any decrease in the
value of the Mortgaged Property, which may, at the option of Lender,
be applied on the Indebtedness after first deducting the costs and
expenses of Lender (including attorneys' fees to the extent now or
hereafter not prohibited by law) incurred in such proceedings and any
balance of such monies then remaining shall be paid to Borrower.
Borrower will give notice of any such proceedings or event to Lender
and Lender may intervene therein for the protection of its interest in
the Mortgaged Property.  Borrower will execute and deliver to Lender
from time to time such further instruments as may be requested by
Lender to confirm such assignment to Lender of any such award or
payment.

1.14  RENT ASSIGNMENT.

That the income, rents and profits and rental value of the Mortgaged
Property and any and all present or future leases and rental and
occupancy agreements are hereby pledged and assigned to Lender as
additional security for the payment of the Indebtedness; provided,
however, until a default or defaults in any of the terms, covenants
and conditions of this Mortgage or of the Notes or any of the Loan
Documents, Borrower shall be suffered and permitted to use and enjoy
the Mortgaged Property and to receive when due, but not more than one
(1) month in advance except upon written approval of Lender, the
income, rents and profits and rental value thereof.

In the event and during the continuance of any default or defaults,
Lender, at its option and without notice, shall have full power and
authority to do and perform any one or more of the following, to-wit:

(a)  To take possession of the Mortgaged Property and to operate and
maintain the same with full power and authority to lease the whole or
any part thereof and to collect the income, rents and profits
therefrom;

(b)  To institute and carry on all actions and proceedings deemed
necessary for the recovery of possession or the protection of all or
any portion of the Mortgaged Property, and to institute and prosecute
all actions and proceedings for the collection of income, rents and
rental value then due and unpaid and thereafter to become due;

(c)  To make repairs, improvements, alterations or additions deemed
necessary;

(d)  To pay the costs and expenses (including, to the extent now or
hereafter not prohibited by law, attorneys' fees if one be employed),
of any or all of the foregoing out of the income, rents and profits
received, and to apply the balance toward the cost of discharging the
obligations imposed upon Borrower by this Mortgage and the
Indebtedness; and

(e)  Lender shall in addition be entitled to have a receiver appointed
by a court of proper jurisdiction to perform any and all of the
foregoing functions.

The foregoing powers and authorities shall be operative whether or not
foreclosure proceedings have been initiated and shall remain in effect
after sale and during redemption periods, if any.  Upon or after
default or defaults in any of the terms, covenants or conditions of
this Mortgage, or the Notes or any other Loan Documents, Lender, in
addition to the foregoing, at its option and without notice, shall
have full right, power and authority to enter upon the Mortgaged
Property and to collect the income, rents and profits hereby assigned
with or without taking actual possession of the Mortgaged Property or
any equivalent action.

1.15  FINANCIAL STATEMENTS.

Borrower, at its expense, shall furnish to Lender all financial
statements and other information required to be provided under the
terms of the Loan Documents.

1.16  LEASES AFFECTING MORTGAGED PROPERTY.

Borrower will not enter into any lease or other agreement for
possession or use of the Mortgaged Property without the prior written
consent of Lender, which consent shall not be unreasonably withheld.
If Borrower is permitted to enter into any lease or other agreement
affecting the Mortgaged Property, Borrower will comply with and
observe its obligations as landlord under all such leases and other
agreements affecting all or any part of the Mortgaged Property.
Borrower will furnish Lender with executed copies of all such leases
(together with all amendments, modifications, addenda and additions
thereof or thereto).  Borrower will not, without the prior written
consent of the Lender, reduce the amount of rent due under, extend the
term of, accept surrender of or terminate, either orally or in
writing, any lease or tenancy now existing upon the Mortgaged Property
nor will Borrower waive performance of the obligations of the tenants
thereunder nor permit an assignment or sublease without the prior
written consent of Lender unless the same shall be expressly permitted
by the terms of the lease.  Borrower will not accept payment of rent
for more than one (1) month in advance without the prior written
consent of Lender.  If requested by Lender, Borrower will separately
assign to Lender, as additional security, any and all such leases
whether now existing or hereafter created, including, without
limitation, all rents, royalties, issues and profits of the Mortgaged
Property from time to time accruing.

At the request of Lender, Borrower will enter into appropriate
agreements that will effect the subordination of this Mortgage to any
present or future leases of all or any part of the Mortgaged Property.

1.17  NO FURTHER ASSIGNMENTS OF LEASES - RENTS.

Borrower will make no assignment of leases, income, rents, profits or
rental value of the Mortgaged Property for any present or future debts
or obligations other than those secured by this Mortgage.


1.18  LEASES - FORECLOSURE.

In the event of a default under this Mortgage, Lender, at Lender's
option, is authorized to foreclose this Mortgage subject to the rights
of any tenants of the Mortgaged Property, and the failure to make any
such tenants parties defendant to any such foreclosure proceeding and
to foreclose their rights will not be, nor be asserted to be by the
Borrower, a defense to any proceedings instituted by the Lender to
collect the Indebtedness or any deficiency remaining unpaid after the
foreclosure sale of the Mortgaged Property.

1.19  MAXIMUM INTEREST.

No provision of this Mortgage, the Notes or any of the other Loan
Documents shall require the payment or permit the collection of
interest in excess of the maximum amount not prohibited by law.  If
any such excess interest is provided for, or shall be adjudicated to
be so provided for, in this Mortgage, in the Notes or in any other
Loan Documents, neither Borrower nor its successors in title shall be
obligated to pay such excess interest and the right to demand the
payment of any such excess interest is waived.  This provision shall
control any other provision of this Mortgage, the Notes, and the other
Loan Documents.  Any such excess interest paid by Borrower shall
automatically be treated as a permitted additional prepayment of
principal, but no premium for such prepayment shall be charged to
Borrower.

1.20  SECURITY AGREEMENT.

This Mortgage constitutes a Security Agreement between Borrower, as
debtor, and Lender, as secured party, with respect to that portion of
the Mortgaged Property, if any, which shall be subject to the Uniform
Commercial Code.

1.21  WAIVER OF REDEMPTION.

In the event of a default by Borrower in the performance of the
obligations imposed upon it by the terms of this Mortgage, the Notes
or the other Loan Documents, neither Borrower nor anyone claiming
through or under it shall or will set up, claim or seek to take
advantage of any stay, extension or redemption laws or redemption
periods or grace periods now or hereafter in force and affecting the
Mortgaged Property in order to prevent or hinder enforcement,
foreclosure, sale, confirmation of sale, or conveyance of the
Mortgaged Property upon foreclosure or the final and absolute putting
in possession thereof immediately after any such sale of the purchaser
or purchasers thereat, and Borrower, for itself and its successors in
title, to the full extent that it may lawfully do so for itself and
its successors in title, hereby waives the benefit of all such laws.


1.22  TRANSFER OR FURTHER ENCUMBRANCE OF MORTGAGED PROPERTY.

In the event that the Borrower sells, assigns, transfers, conveys or
otherwise alienates or further mortgages or encumbers the Mortgaged
Property or any part thereof or interest therein whether legal or
equitable, and whether voluntarily or involuntarily or by operation of
law, without in each such instance the prior written consent of
Lender, which consent may be withheld for any reason, Lender may elect
to (a) declare a default hereunder, (b) declare the total outstanding
Indebtedness, together with interest thereon and premium, if any, at
once due, payable and collectible, and/or (c) exercise any and all
rights and remedies available to Lender by this Mortgage, the Notes,
or any of the other Loan Documents, notice of such election being
expressly waived.

1.23  USE OF MORTGAGED PROPERTY.

Borrower shall operate the Mortgaged Property at all times in
accordance with all applicable laws.


                              ARTICLE II
                        DEFEASANCE - DEFAULTS

Borrower covenants and agrees with Lender as follows:

2.01  DEFEASANCE.

If the Indebtedness be paid when due and the covenants and agreements
in this Mortgage, the Notes, and all other Loan Documents be
faithfully kept and performed, then these presents shall be null and
void and the Mortgaged Property shall be released from the lien hereof
at the cost of Borrower.

2.02  DEFAULTS.

Upon the occurrence of an Event of Default (as defined in the Security
Agreement and the Loan Documents), this Mortgage shall stay in force
and during the continuance of any such Event of Default:

(a) Lender may declare the entire Indebtedness (including, without
limitation, unpaid principal, accrued and unpaid interest and
premiums, if any) to be due and payable immediately, and upon any such
declaration the same shall be immediately due and payable;

(b)  Lender shall be entitled to foreclose this Mortgage and shall be
entitled to a judgment for the Indebtedness, including all attorney
fees, costs and expenses of enforcing the same, to the extent now or
hereafter not prohibited by law, and shall be entitled to a decree for
the sale of the Mortgaged Property in satisfaction of said judgment
foreclosing all of the rights and equities of Borrower in and to the
Mortgaged Property, as well as all persons claiming under Borrower and
at which sale appraisement of the Mortgaged Property, the marshalling
of assets and all benefits of the Exemption and Stay Laws of the State
of South Dakota are hereby expressly waived by Borrower;

(c)  Lender shall continue to have the optional rights to exercise any
or all other powers, rights and remedies given Lender by this
Mortgage, including, but not by way of limitation, the right to pay
taxes, assessments, insurance and the cost of repairs and the like
given to it herein and the repayment of all such funds with interest
thereon as herein provided shall be secured by this Mortgage;

(d)  Lender shall have all the rights and remedies of a secured party
under the Uniform Commercial Code; and

(e)  Lender shall have, in addition to the foregoing, all rights and
remedies given by law and equity, including the right to have a
receiver appointed for the Mortgaged Property who shall take immediate
possession of the Mortgaged Property, preserve, maintain, manage,
operate and lease the Mortgaged Property and collect all income, rents
and profits therefrom.  All income, rents and profits so collected by
such receiver, after first deducting therefrom all costs and expenses
incurred by the receiver in the performance of his rights, duties and
powers as receiver (including the fees of such receiver), shall be
applied to the obligations imposed upon Borrower pursuant to this
Mortgage, the Notes, the Loan Documents or any other Transaction
Document.  Any receiver or receivers so appointed shall have such
rights, duties and powers as the court making the appointment shall
confer, which shall include, but not by way of limitation, all of the
rights and powers which Lender is authorized to exercise hereunder.
Lender shall be entitled to such appointment of a receiver for the
Mortgaged Property as a matter of right and if requested by Lender,
Borrower shall consent to the appointment of such receiver.  If the
income, rents and profits collected by such receiver from the
Mortgaged Property are not sufficient to pay all costs and expenses
incurred by the receiver in the performance of his rights, duties and
powers as receiver (including the fees of the receiver), Lender may
pay such costs and expenses and the sums so advanced by Lender,
together with interest thereon at the default rate of interest
described in the Loan Documents, shall be immediately due and payable
by Borrower to Lender, shall constitute a part of the indebtedness due
Lender under this Mortgage and shall be secured by this Mortgage.

(f)  In the case of a foreclosure by action, the holder of the
certificate of sale may apply to the court for a reduction of the
redemption period if the Mortgaged Property has been abandoned by
Borrower. If, after notice to the parties as the court directs, the
court finds the Mortgaged Property has been abandoned, the redemption
period may be reduced to not less than sixty (60) days from the date
of the recording of the certificate of sale.

Each and every remedy available to Lender pursuant to this Mortgage
shall be cumulative and shall be in addition to every other remedy
available to Lender hereunder, under the Notes, or any of the other
Loan Documents or now or hereafter existing at law or in equity or by
statute.  No delay or omission of Lender to exercise any right or
power accruing upon any Event of Default shall impair any such right
or power or shall be construed to be a waiver of any such Event of
Default or any acquiescence therein and every right, power or remedy
given by this Mortgage or now or hereafter existing at law or in
equity or by statute may be exercised from time to time and as often
as may be deemed expedient by Lender.



                             MISCELLANEOUS

Borrower covenants and agrees with Lender as follows:

3.01  NO WAIVER OF PROVISIONS.  No failure by Lender to insist upon
the strict performance of any covenant, agreement, term or condition
of this Mortgage or to exercise any right or remedy consequent upon a
breach thereof, and no acceptance of full or partial payment on the
Indebtedness during the continuance of any such breach, shall
constitute a waiver of any such breach or of such covenant, agreement,
term or condition.  No covenant, agreement, term or condition of this
Mortgage to be performed or complied with by Borrower, and no breach
thereof, shall be waived, altered or modified except by an instrument
executed by Lender.  No waiver of any breach shall affect or alter
this Mortgage, but each and every covenant, agreement, term and
condition of this Mortgage shall continue in full force and effect
with respect to any other then existing or subsequent breach thereof.

3.02  EXTENSIONS.

That any extension of the time for payment of the Indebtedness,
release of security or any modification of this Mortgage, any of the
Notes, or any of the other Loan Documents granted to any future owner
of the Mortgaged Property, shall not relieve Borrower from liability
to pay the Indebtedness nor release Borrower or any other party or
entity liable for the Indebtedness and Borrower does hereby waive
presentment, demand for payment, protest, notice of nonpayment and
notice of protest.

3.03  POWERS NOT EXHAUSTED.

No right or power given to Lender by this instrument shall be
exhausted by the exercise thereof on one or more occasions, but the
same shall be a continuing right or power during the entire term of
this Mortgage and may be exercised from time to time in accordance
with the provisions of this instrument.

3.04  COVENANTS RUN WITH LAND.

The covenants and agreements herein contained shall run with the land
and shall bind and inure to the benefit of the respective heirs,
executors, administrators, legal representatives, successors and
assigns of the parties hereto.

3.05  SUBROGATION.

Lender before a sale hereunder, and the purchaser at the sale
hereunder, shall be subrogated to the lien of any prior encumbrance or
vendor's lien, if any, on the Mortgaged Property paid out of the money
secured by this Mortgage, whether or not such prior lien or
encumbrance has been released of record.

3.06  SUCCESSORS AND ASSIGNS, ETC.

Whenever the singular or plural number, or masculine, feminine or
neuter gender is used herein, it shall equally include the other, and
every mention of the Lender or Borrower shall include the heirs,
executors, legal representatives, administrators, successors and
assigns of the party so designated.  If more than one party or entity
is designated as "Borrower" herein, each such party or entity shall be
jointly and severally liable for the performance and observance of all
the covenants, conditions and agreements of this Mortgage to be
performed and observed by Borrower.  The terms "Mortgage", "Notes",
"Security Agreement", "Environmental Indemnity Agreement" and "Loan
Documents" shall include all amendments, modifications and supplements
thereto.

3.07  INVALID PROVISIONS TO AFFECT NO OTHERS.

If any one or more of the covenants, agreements, terms or provisions
contained in this Mortgage, in the Notes or in any of the other Loan
Documents shall be invalid, illegal or unenforceable in any respect,
the validity of the remaining covenants, agreements, terms or
provisions contained herein, in the Notes and in the Loan Documents
shall be in no way affected, prejudiced, limited or impaired thereby.

3.08  NOTICE.

All notices to be given pursuant to this Mortgage shall be sufficient
if given in accordance with the terms of the other Loan Documents.

3.09  HEADINGS.

The headings of the Sections of this Mortgage are for convenience of
reference only, are not to be considered a part hereof, and shall not
limit or otherwise affect any of the terms hereof or the
interpretation hereof.

3.10 GOVERNING LAW.

This Mortgage shall be construed according to and shall be governed by
South Dakota law.


IN WITNESS WHEREOF, Borrower has executed these presents as of the day
and year first above written.

AMCON Distributing Company

By:            /s/ Michael D. James
               ---------------------------
Name (print):  Michael D. James
               ---------------------------
Title:         VP and CFO
               ---------------------------

STATE OF NEBRASKA
                                        ss.
COUNTY OF DOUGLAS


This instrument was acknowledged before me on DECEMBER 21, 2004, by
Michael D. James, as VP and CFO of AMCON DISTRIBUTING COMPANY
a foreign corporation.




Notary Public in and for said County and State

My Appointment Expires: February 7, 2005

/s/ Jan Klaus
- -----------------



















































                             EXHIBIT A

                         Legal Description

Lot 1R in Block Two (2), Rushmore Regional Industrial Park, City of
Rapid City, as shown by the plat recorded in Book 16 of plats on page
107 in the office of the Register of Deeds, Pennington County, South
Dakota.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-20
<SEQUENCE>5
<FILENAME>ex1024securityagreement.txt
<DESCRIPTION>EX 10.24 SECURITY AGREEMENT
<TEXT>
                         SECURITY AGREEMENT

THIS SECURITY AGREEMENT ("Agreement") is dated as of this December 21,
2004 day of December, 2004, by and between Gold Bank having an address
at 800 West 47th Street, Kansas City, Missouri 64112 ("Secured Party")
and AMCON Distributing Company, a Delaware corporation having an address
at 7405 Irvington Road, Omaha, NE 68122 ("Debtor").

WHEREAS, Debtor is the maker of that certain Term Equipment Promissory
Note in the principal amount of up to $480,000.00 ("Term Equipment
Promissory Note") and Term Real Estate Promissory Note in the principal
amount of up to $984,000.00 ("Term Real Estate Promissory Note"), both
of even date herewith executed by Debtor in favor of Secured Party (the
Term Equipment Promissory Note and the Term Real Estate Promissory Note
shall collectively be referred to herein as the "Promissory Notes" or
the "Loans").

WHEREAS, as further inducement for Secured Party to advance the amounts
contemplated by the Promissory Notes, Debtor has agreed to grant to
Secured Party a security interest in all of the personal property and
assets of Debtor as described herein.

NOW, THEREFORE, as a condition and as an inducement for Secured Party to
accept the Promissory Notes, and for other good and valuable
consideration given by Secured Party, the receipt and sufficiency of
which is hereby acknowledged by Debtor, the parties hereto agree as
follows:

                           ARTICLE 1

GRANT OF SECURITY INTEREST

As security for all Obligations (as such term is defined in Article 2 of
this Agreement) now existing or hereinafter arising, Debtor hereby
grants to Secured Party a security interest in the "Collateral" as
defined in Exhibit A attached hereto and incorporated herein by
reference, and all proceeds of said Collateral, as now owned or
hereafter acquired.

                          ARTICLE 2

OBLIGATIONS SECURED

The term "Obligations" means all obligations, indebtedness or
liabilities of Debtor to the Secured Party of every kind, including but
not limited to Debtor's obligations pursuant to the Promissory Notes,
now or hereafter existing, whether absolute or contingent, primary, or
otherwise, and whether for principal, interest, fees, costs, expenses or
otherwise, including all fees and expenses incurred in the enforcement
or collection of amounts due under the Promissory Notes or other
indebtedness, obligation or liability and all liabilities and
obligations of Debtor incurred or to be incurred under the Term
Equipment Promissory Note, Term Real Estate Promissory Note, this
Security Agreement, the Mortgage executed by Debtor in favor of Secured
Party of even date herewith securing the funds advanced under the Term
Real Estate Promissory Note ("Mortgage") and all amendments thereto
executed by Debtor in favor of Secured Party and all other liabilities
and obligations of Debtor incurred or to be incurred under the Loan
Documents as hereafter defined (the Promissory Notes, this Security
Agreement, related UCC-1 financing statements, the Mortgage, and all
such other related documents are hereafter referred to herein as the
"Loan Documents").  The term "Obligations" shall also include all, fees,
costs and expenses and reasonable attorney's fees incurred by Debtor in
connection with the Loans both before and after Default (as hereinafter
defined) to the extent allowed by Federal Bankruptcy Law.

                             ARTICLE 3

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO COLLATERAL

Debtor makes the following continuing warranties and representations
with respect to the Collateral hereunder:

A.  CORPORATE POWER AND AUTHORITY.

The execution, delivery, and performance by Debtor of this Agreement,
the Promissory Notes, the Loan Documents and all other documents,
agreements, instruments or certificates executed in connection therewith
have been duly authorized by all necessary corporate action and do not
and will not:  (a) require any consent or approval of the stockholders
of Debtor; (b) contravene Debtor's charter or bylaws; (c) violate any
provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination, or award presently in effect having
applicability to Debtor; (d) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other
agreement, lease, or instrument to which Debtor is a party or by which
its properties may be bound or affected; result in, or require, the
creation or imposition of any lien, upon or with respect to any of the
properties now owned or hereafter acquired by Debtor; and (e) cause
Debtor to be in default under any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination, or award or any such
indenture, agreement, lease, or instrument.

B.  LEGALLY ENFORCEABLE AGREEMENT.

This Agreement shall be, when executed and delivered by Debtor, the
legal, valid, and binding obligations of Debtor, enforceable against
Debtor, in accordance with their terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, and
other similar laws affecting creditors' rights generally.

C.  LIENS AND ENCUMBRANCES.

Debtor represents and warrants to Secured Party that Debtor holds all
Collateral, free and clear of all other liens and encumbrances.  Except
for the financing statements in favor of Secured Party pursuant to this
Agreement, no financing statement covering any of the Collateral is on
file in any public office and Secured Party shall remain first in
priority with respect to the Collateral described in Exhibit A and the
Real Estate as described in the Mortgage so long as any of the Loans are
outstanding.  Debtor shall defend Secured Party's rights in the
Collateral against the claims and demands of all other persons.

D.  DEBTOR'S PRINCIPAL OFFICE.

Debtor's chief executive office and the location where Debtor keeps its
records concerning all Collateral is 7405 Irvington Road, Omaha, NE
68122.

E.  NO MATERIAL MISREPRESENTATIONS.

The representations and warranties contained in this Article 3 and all
other information, exhibits, reports, instruments, documents or
certificates furnished by Debtor to Secured Party in connection with the
negotiation of this Agreement do not contain any material misstatement
of fact or omit to state a material fact or any fact necessary to make
the statement contained therein not materially misleading.

                             ARTICLE 4

COVENANTS OF DEBTOR

So long as this Agreement is in effect and until such time as the
Obligations secured hereunder have been fully paid and discharged,
Debtor covenants and agrees that:

A.  FURTHER ASSURANCES.

Debtor will execute and deliver to Secured Party, in a form acceptable
to Secured Party, any instrument, document, financing statement,
assignment or other writing which Secured Party may reasonably deem
necessary or desirable to carry out the terms of this Agreement, to
perfect Secured Party's security interest in the Collateral for the
Obligations to Secured Party, or to enable Secured Party to enforce
conveniently its security interest in any of the foregoing.

B.  BOOKS AND RECORDS.

Debtor will maintain, in accordance with sound accounting practice,
accurate records and books of account showing, among other things, all
Collateral, the proceeds of the sale or other disposition thereof and
the collections therefrom; and Secured Party shall have the right, upon
the reasonable request of Secured Party, without hindrance or delay, to
inspect the Collateral and to inspect, audit, check and make extracts
from the books, records, journals, orders, receipts, correspondence and
other data relating to Collateral, at Secured Party's sole expense.

C.  LEGENDS.

Debtor will, if requested by Secured Party, mark its records concerning
its Collateral in a manner satisfactory to Secured Party to show Secured
Party's security interest therein.

D.  FINANCIAL REPORTING.

Debtor will furnish Secured Party, from time to time when requested by
Secured Party, with balance sheets, operating statements and net worth
reconciliations financial statements of Debtor as of the close of such
accounting periods as Secured Party may reasonably request; and such
other information respecting the financial condition and affairs of
Debtor (including, without limitation, copies of federal income tax
returns) as Secured Party may, from time to time, reasonably request.
Such balance sheets and operating statements shall be prepared in
accordance with generally accepted accounting principles certified or
audited by a firm of certified public accountants at least annually when
requested by Secured Party.

(i)  Debtor will pay and discharge when due all premiums of insurance
required hereunder and all taxes, levies and other charges on its
property; and authorizes Secured Party to pay for the account of Debtor
any of the foregoing (or, as to insurance, premiums for insurance of
Secured Party's interest alone) which Debtor fails to pay, and any such
payment by Secured Party shall constitute an item of Obligations to
Secured Party.

(ii)  Debtor shall keep the Collateral insured in a manner consistent
with sound business practices and Secured Party shall appear as a named
insured (to whom loss shall be payable) in such amounts, in such
companies and against such risks as may be reasonably satisfactory to
Secured Party; pay the cost of all such insurance; secure the obligation
of the insurer to notify Secured Party at least ten (10) days prior to
the modification, expiration, revocation or cancellation of such
insurance; deliver certificates evidencing such insurance to Secured
Party; and, up to the amount of any and all of the Obligations, Debtor
assigns to Secured Party all right to receive proceeds of such
insurance; directs any insurer to pay all proceeds directly to Secured
Party, and authorizes Secured Party to endorse Debtor's name to any
draft or check for such proceeds; which proceeds Secured Party may set-
off against Obligations, or hold as security for Obligations; any
proceeds in excess of Obligations to be delivered to Debtor.

(iii)  In addition to insuring its Collateral as required above, Debtor
will maintain adequate insurance against loss or damage to all of its
other properties in such manner and to the extent which like properties
are so insured by others owning, operating or leasing properties of
similar character, and will maintain adequate insurance against
liability for damage to the person or property of others.

E.  COSTS AND EXPENSES.

Upon the occurrence of a Default or an Event of Default, Debtor will pay
Secured Party, upon demand, the cost of collection or enforcement
(including reasonable attorneys' fees) of any Collateral for Obligations
to Secured Party, if Secured Party itself undertakes such collection or
enforcement, together with all charges and expenses of every kind or
description (including taxes with respect to Collateral) paid or
incurred by Secured Party under or with respect to the Obligations or
any Collateral therefor, or execution or levy on such Collateral, and
any such charges shall be considered part of the Obligations.

F.  PRINCIPAL BUSINESS ADDRESS.

Debtor will promptly advise Secured Party in writing of any new
principal place of business, and of any change in Debtor's name.

G.  SCHEDULE OF PROPERTIES.

Debtor, upon request of Secured Party, will deliver to Secured Party in
a form satisfactory to Secured Party a schedule of real properties and
collateral locations relating to Debtor's operations, including without
limitation the following: (a) all real property owned or being purchased
by Debtor; (b) all real property being rented or leased by Debtor; (c)
all storage facilities owned, rented, leased, or being used by Debtor;
and (d) all of the properties where collateral is or may be located.

H.  COLLATERAL.

(i)  Except in the ordinary course of business, or as provided in this
Agreement, or for purposes of replacement and repair, Debtor will not
remove the Collateral (or allow removal), from Debtor's Rapid City
facility legally described as set forth on Exhibit B attached hereto and
incorporated by reference herein without the prior written consent of
Secured Party. Debtor will promptly give written notice to Secured Party
of any loss or damage by fire or other casualty to any substantial part
of the Collateral.

(ii)  Debtor, at its sole cost and expense, will protect and defend this
Agreement, all of the rights of Secured Party hereunder, and its
interest in the Collateral against the claims and demands of all other
parties.

(iii)  Debtor will at all times keep the Collateral in good order,
repair and condition, ordinary wear and tear excepted, and, in the
ordinary course of business, will promptly replace any part thereof that
from time to time may become obsolete, badly worn, or in a state of
disrepair.

(iv)  Secured Party or its representative may at any and all reasonable
times inspect the Collateral and may enter upon any and all of the
premises where the same is kept or might be located.

(v)  Debtor will not, without obtaining the prior written consent of
Secured Party, transfer or permit any transfer of the Collateral or any
part thereof to be made, or any interest therein to be created by way of
a sale, or by way of a grant of a security interest, or by way of a levy
or other judicial process.

(vi)  Debtor will promptly notify Secured Party of any levy, distraint
or other seizure by legal process or otherwise of any part of the
Collateral, and of any threatened or filed claims or proceedings that
might in any way affect or impair any of the rights of Secured Party
under this Security Agreement.

(vii)  Debtor has, and will continue to have, full title to the
Collateral free from any liens, leases, encumbrances, judgments or other
claims. Debtor will do all acts and things, and will execute and file
all instruments (including but not limited to security agreements,
financing statements, continuation statements, etc.) reasonably
requested by Secured Party to establish, maintain and continue the
perfected security interest of Secured Party in the Collateral.

(viii)  Debtor agrees not to take any action whatsoever which would
impair the Collateral as security for the Obligations.

I.  RIGHT TO CURE.

Secured Party may, at its option, and without any obligation to do so,
pay, perform and discharge any and all amounts, costs, expenses and
liabilities herein agreed to be paid or performed by Debtor, and all
amounts expended by Secured Party in so doing shall become part of the
Obligations secured hereby, and shall be immediately due and payable by
Debtor to Secured Party upon demand theretofore, and shall bear interest
at the Default Interest Rate (as defined in the Promissory Notes) from
the dates of such expenditures until paid.

                             ARTICLE 5

ADDITIONAL SECURITY

Secured Party shall have the right to call for and be provided with
additional security reasonably satisfactory to Secured Party should the
value of the existing security decline or be deemed by Secured Party to
be inadequate or unsatisfactory.  Debtor hereby agrees to execute and
deliver to Secured Party such additional agreements, instruments,
certificates or financing statements, and to take such additional
actions, as Secured Party may reasonably require, to protect Secured
Party's security interest in the Collateral granted hereunder and to
perfect any additional security interest requested by Secured Party
hereunder.

                             ARTICLE 6

WAIVER OF RIGHTS

Secured Party may, at its option, without notice to Debtor, extend the
maturity of the Obligations or exchange or release any of the Collateral
without affecting the liability of  Debtor.  Debtor hereby waives
presentment and demand for payment, protest and notice of nonpayment,
notice of dishonor, diligence and suit.   Debtor hereby waives all
defenses based on suretyship or impairment of collateral, and any
defenses which Debtor may assert on the underlying debt including but
not limited to failure of consideration, breach of warranty, fraud,
statute of frauds, bankruptcy, lack of legal capacity, statute of
limitations, lender liability, accord and satisfaction and usury.  The
delay or failure in the exercise of any right, remedy or power shall not
operate as a waiver thereof, nor shall any single or partial exercise or
waiver thereof preclude or limit any other or future exercise thereof.
All waivers, consents, notices and other communications must be in
writing and shall be sufficient if given in the manner as provided in
Section 9.A. hereof.

                              ARTICLE 7
DEFAULT

DEBTOR SHALL BE IN DEFAULT under this Security Agreement upon the
happening of any one or more of the following events:

A.  Default in the payment or performance of the Promissory Notes or any
amounts due hereunder by Debtor or default in the payment or performance
of any of the other Loan Documents or any Obligation, covenant or
liability of the Debtor contained or referred to herein, including but
not limited to those Obligations, covenants or liabilities referenced in
the Promissory Notes, the Loan Documents or any other document executed
in connection therewith, and such Default is not cured within ten (10)
business days of such default, regardless of whether Debtor has received
notice of such default.

B.  Any warranty, representation or statement made or furnished to the
Secured Party by the Debtor for the purpose of obtaining credit or
pursuant to this Agreement the Promissory Notes or the Loan Documents
proves to have been false in any material respect when made or
furnished.

C.  Significant loss, theft, damage, destruction, misuse, sale, lease or
additional encumbrances on any of the Collateral, or the making of any
levy, seizure or attachment or any other proceedings which in the
opinion of the Secured Party would impair the Secured Party's rights to
or diminish the value of the Collateral.

D.  Dissolution, insolvency, business failure or cessation, appointment
of a receiver of any part of the property of, assignment for the benefit
of creditors by, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against the Debtor, or any endorser,
guarantor or surety for Debtor.

E.  Failure by the Debtor to keep, observe or perform any material
provision of this Agreement or any other Loan Documents required to be
kept, observed or performed by Debtor.

Should any of the above-described events occur and be continuing, each
shall be considered to be an "Event of Default" (subject to the
applicable cure period with respect to Article 7, Section A above).

                               ARTICLE 8

REMEDIES

Should an Event of Default occur, Secured Party shall have the right to:

A.  avail itself of such rights with respect to any and all Collateral
which are provided for herein, in the Promissory Notes, in the Loan
Documents or in any other agreement between Secured Party and Debtor.

B.  all rights of a secured party with respect to the Collateral which
are provided for in the Uniform Commercial Code as amended from time to
time and as adopted in the State of Kansas or other state with proper
jurisdiction over the Collateral or this Agreement (hereinafter the
"Code"), including the right to require Debtor, upon written notice, to
promptly assemble any Collateral for Obligations to Secured Party, and
to make it available to Secured Party at a place reasonably convenient
to both parties.

C.  deem that any notice of sale or other disposition of the whole or
any part of the Collateral, received by Debtor at least five (5) days
prior to such action, shall constitute reasonable notice to Debtor.

D.  collect from Debtor and Debtor agrees that Debtor shall pay to
Secured Party the reasonable costs and expenses (including attorneys'
fees and disbursements) of the collection of the Obligations secured
hereunder and of all of the Obligations, and that in the event of
foreclosure upon Debtor's Collateral, the proceeds shall be first
applied to such expenses.

E.  take any and all actions and incur any and all expenses with respect
to the Collateral which Secured Party reasonably deems necessary and
proper in order to enhance Secured Party's ability to effectively levy
on such Collateral, including without limitation, causing such
Collateral to be completed, cleaned or repaired.  Debtor shall assist
Secured Party in such actions; any such expenses shall be included as
Obligations; and any proceeds from the Collateral shall be first applied
to such expenses.

F.  take control of any and all contracts with respect to which
"Contract Rights" (as defined in Exhibit A attached hereto) have arisen
or may arise at the time of such default and perform and take title to
such contracts, however, Secured Party shall be under absolutely no
obligation to do so and shall not incur additional liability if Secured
Party elects to do so or not.

G.  set-off against any amounts owed by Secured Party to Debtor for any
purpose whatsoever, at all times before, at or after such Default.

H.  avail itself of any and all other remedies at law or equity which
may be available to Secured Party with respect to Debtor, the Collateral
and any co-signer, guarantor or surety.

The parties hereto hereby declare that all Collateral transferred to
Secured Party hereunder is transferred in fact to secure loans and is
not, in fact, sold to Secured Party regardless of whether any assignment
thereof, which is separate from this Agreement, is in form absolute.
All rights and remedies of Secured Party whether granted hereunder,
under the Code or otherwise are cumulative and not alternative.  The
exercise, full or partial, or the commencement of the exercise of any
one right or remedy, shall not preclude the further exercise of it or
any other remedy.

                               ARTICLE 9

MISCELLANEOUS

A.  NOTICES.

All notices and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been fully
given if delivered personally or sent by certified mail, postage
prepaid, to the following addresses:

If to Debtor:

AMCON Distributing Company
Attn: Michael D. James
7405 Irvington Road
Omaha, NE 68122

If to Secured Party:

Gold Bank
Attn: Mark Jannaman
800 West 47th Street
Kansas City, Missouri 64112

with a copy to:

Attn:  Thomas W. Gray, Esq.
Shughart Thomson & Kilroy, P.C.
Twelve Wyandotte Plaza
120 W. 12th Street, Suite 1600
Kansas City, MO  64105

or to any other address or addresses as may hereafter be specified by
written notice given by any of the above for itself to the others.
Additionally, notices and other communications required or permitted to
be given hereunder may be sent using any other means (including
expedited courier, messenger service, facsimile transmission or
electronic mail), but no such notices or other communications shall be
deemed to have been given unless and until they are actually received by
the intended recipient if personally delivered or the next business day
after the same is sent by facsimile transmission (if delivered by
facsimile coupled with overnight delivery service).

B.  WRITTEN AMENDMENT.

No amendment, modification or termination of any provision of this
Agreement shall be effective unless set forth in a writing by all of the
parties hereto.

C.  SEVERABLILITY.

If any clause, provision or section of this Agreement be held illegal or
invalid by any court, the invalidity of such clause, provision or
section shall not affect any of the remaining clauses, provisions or
sections hereof, and this Agreement shall be construed and enforced as
if such illegal or invalid clause, provision or section had not been
contained herein.  In case any agreement or obligation contained in this
Agreement be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of Debtor,
as the case may be, to the full extent permitted by law.

D.  SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors or assigns of Secured Party.  Debtor
shall not assign or delegate its rights, liabilities or obligations
hereunder.  Secured Party shall have the right to sell, transfer,
delegate or assign its rights, liabilities or obligations under this
Agreement, the Promissory Notes, the Loan Documents, and any UCC-1
financing statements filed in connection herewith.

E.  STATE LAW.

The validity of this Agreement, the terms hereof, and all duties,
obligations and rights arising therefrom, shall be governed by and
interpreted in accordance with the laws and decisions of the State of
Kansas, as applicable to contracts made and to be performed in the State
of Kansas without reference or regard to conflicts of laws principles.

F.  CAPTIONS.

All captions are for ease of reference only and shall in no way be
construed to alter or limit the substance of the provisions of this
Agreement.  If more than one person executes this Agreement as a debtor,
the term "Debtor" shall mean all such persons, shall apply to each
person both individually and collectively and such persons shall be
jointly and severally liable.

G.  EXHIBITS.

All Exhibits referred to in this Agreement shall be attached hereto and
incorporated herein by reference.

H.  ENTIRE AGREEMENT.

This Agreement contains the entire agreement between the parties
respecting the matters herein set forth and supersedes all prior
agreements between the parties respecting such matters.  Time is of the
essence of this Agreement.  If any party obtains a judgment against any
other party by reason of a breach of this Agreement, a reasonable
attorneys' fee as fixed by the court shall be included in such judgment.
No remedy conferred upon a party in this Agreement is intended to be
exclusive of any other remedy herein or by law provided or permitted,
but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity or
by statute.

I.  CONTINUING AGREEMENT.

This Agreement shall remain in full force and effect until all
Obligations pursuant to this Agreement, the Promissory Notes and the
Loan Documents have been fully and completely terminated or discharged.

J.  NO WAIVER.

No failure or delay by any party hereto in exercising any right, power
or privilege hereunder (and no course of dealing between or among any of
the parties) shall operate as or constitute a waiver of any subsequent
or other default. No single or partial exercise of any right, power or
privilege shall preclude the further exercise thereof or of any other
right, power or privilege.

K.  RECITALS/PREAMBLE.

The preamble and recitals to this Agreement are hereby incorporated by
reference and made a part hereof.

L.  FACSIMILE SIGNATURES.

The parties hereby agree that, for purposes of the execution of this
Agreement, facsimile signatures shall constitute original signatures.
M.  COUNTERPARTS.

This Agreement may be executed in two or more counterparts and by the
different parties hereto on separate counterparts, each of which shall
be deemed an original, but all such counterparts shall together
constitute but one and the same instrument.

N.  WAIVER OF JURY TRIAL.

The parties hereto waive trial by jury in any action, proceeding or
counterclaim brought by any party against the other on any matter
arising out of or in any way connected with this Agreement, the Loan
Documents or the relationship of the parties created hereunder.

O.  LOAN FEE.

In addition to reimbursing the Secured Party for any and all costs and
expenses incurred in connection with issuing the Loans as described
herein, Debtor agrees to pay to Secured Party at Closing a .50% loan fee
on each amount borrowed under the Promissory Notes.

P.  CROSS COLLATERALIZED, CROSS-DEFAULTED AND CO-TERMINUS.

Debtor and Secured Party acknowledge and agree that the Loans are cross-
collateralized, cross-defaulted and co-terminus.  In addition, the Loans
are cross-defaulted and co-terminus with any and all other loans now or
hereafter existing by and between Debtor, Debtor's subsidiaries or
affiliates and Secured Party.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

DEBTOR:

AMCON Distributing Company,
a Delaware corporation



By:     /s/ Michael D. James
        ------------------------
Name:   Michael D. James
        ------------------------
Title:  VP of Finance and CFO
        ------------------------

SECURED PARTY:

GOLD BANK

By:     /s/ Mark Jannaman
        -----------------------
Name:   Mark Jannaman
        -----------------------
Title:  Vice President
        -----------------------


<PAGE>
                             EXHIBIT A

DESCRIPTION OF COLLATERAL

I.  As used herein, the following terms mean:

(A) "Equipment" means any property, goods, furniture, office supplies,
furnishings, machinery, tools, dies, hand tools, vehicles, motorized or
otherwise, titled or otherwise, used, bought, leased or otherwise
acquired for the business of DEBTOR.

(B) "Fixtures" means any goods, equipment or property which is so
related or affixed to real property that it may not be easily or readily
removed and in which an interest arises under the real estate law.

Except as otherwise defined in the Security Agreement, all terms of the
Security Agreement shall have the meanings to the extent the same are
defined or used therein, provided by the Code as defined in the Security
Agreement, so long as such meaning is reasonable given the context in
which it appears.

II.  To secure prompt performance and payment of all Obligations (as
defined in the Security Agreement) of the DEBTOR to SECURED PARTY
pursuant to the Security Agreement, DEBTOR hereby grants to SECURED
PARTY a continuing security interest in, a lien upon and a right of set
off against, and hereby assigns to SECURED PARTY all right, title and
interest in and to the following property of DEBTOR whether acquired by
purchase, lease or otherwise, and whether now owned or hereafter
acquired or existing, that is or at any time has been or hereafter is
located in, on or around the warehouse facility of Debtor having an
address at 1511 Turbine Drive, Rapid City, SD 57703 ("Warehouse")
(together with all other collateral security for the Obligations at any
time granted to or held by SECURED PARTY, collectively, the following is
the "Collateral"):

(1)  all of DEBTOR's right, title and interest in and to DEBTOR'S
Equipment as well as all of DEBTOR'S right, title and interest to any
and all equipment purchased with the proceeds of the Loans as defined in
the Security Agreement (regardless of whether said equipment is located
in, on or around the Warehouse);

(2)  all of DEBTOR's Fixtures and Equipment, including but not limited
to all furniture, furnishings, office supplies, machinery, storage
shelves, vehicles, motorized or otherwise, titled or otherwise, used,
bought, leased or otherwise, rolling stock and other goods used in the
conduct of DEBTOR's business, now or hereafter acquired together with
all increases, parts, fittings, accessories, attachments, additions,
materials, components, special tools and accessions now or hereafter
attached thereto or used in connection therewith, and any and all
replacements of all or any part thereof;

(3)  all interest of DEBTOR in parts, accessories, attachments,
additions, materials, components, replacements and accessions to any and
all of the foregoing, now existing or hereafter coming into existence;

(4)  all of DEBTOR's books and records and other instruments and
documents of title now existing or coming into existence pertaining to
any of the collateral described above;

(5)  all interest of DEBTOR in money, cash, non-cash and other proceeds
received should any of the foregoing be sold, exchanged, collected or
otherwise disposed of for all of the foregoing, including but not
limited to, deposit accounts, claims and demands, and insurance proceeds
(or rights thereto), now existing or hereafter coming into existence;
and

(6)  all interest of DEBTOR in any insurance proceeds received related
to any of the foregoing.

<PAGE>
                             EXHIBIT B


LEGAL DESCRIPTION

Lot 1R in Block Two (2), Rushmore Regional Industrial Park, City of
Rapid City, as shown by the plat recorded in Book 16 of plats on page
107 in the office of the Register of Deeds, Pennington County, South
Dakota.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>6
<FILENAME>ex311wfw.txt
<DESCRIPTION>EX 31.1 WFW CERTIFICATION
<TEXT>
                                   EXHIBIT 31.1
                                   ------------

                                  CERTIFICATION

I, William F. Wright, certify that:

    1.   I have reviewed this quarterly report on Form 10-Q of AMCON
         Distributing Company;

    2.   Based on my knowledge, this report does not contain any
         untrue statement of a material fact or omit to state a material
         fact necessary to make the statements made, in light of the
         circumstances under which such statements were made, not
         misleading with respect to the period covered by this quarterly
         report;

    3.   Based on my knowledge, the financial statements, and other
         financial information included in this report, fairly
         present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the
         periods presented in this report;

    4.   The registrant's other certifying officer and I are responsible
         for establishing and maintaining disclosure controls and procedures
         (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
          registrant and have:

         a. Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made
            known to us by others within those entities, particularly during
            the period in which this report is being prepared;

         b. Evaluated the effectiveness of the registrant's disclosure
            controls and procedures and presented in this report our
            conclusions about the effectiveness of the disclosure controls
            and procedures, as of the end of the period covered by this
            report based on such evaluation; and

         c. Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has
            materially affected, or is reasonably likely to materially
            affect, the registrant's internal control over financial
            reporting; and

   5.   The registrant's other certifying officer and I have disclosed,
         based on our most recent evaluation of internal control over
         financial reporting, to the registrant's auditors and the audit
         committee of the registrant's board of directors (or persons
         performing the equivalent functions):

         a. All significant deficiencies and material weaknesses in the
            design or operation of internal control over financial reporting
            which are reasonably likely to adversely affect the registrant's
            ability to record, process, summarize and report financial
            information; and

         b. Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.



Date: February 14, 2005                     William F. Wright, Chairman and
      -----------------                     -------------------------------
                                            Principal Executive Officer
                                            ---------------------------


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>7
<FILENAME>ex312mdj.txt
<DESCRIPTION>EX 31.2 MDJ CERTIFICTION
<TEXT>
                               EXHIBIT 31.2
                               ------------

                               CERTIFICATION

I, Michael D. James, certify that:

    1.   I have reviewed this quarterly report on Form 10-Q of AMCON
         Distributing Company;

    2.   Based on my knowledge, this report does not contain any
         untrue statement of a material fact or omit to state a material
         fact necessary to make the statements made, in light of the
         circumstances under which such statements were made, not
         misleading with respect to the period covered by this quarterly
         report;

    3.   Based on my knowledge, the financial statements, and other
         financial information included in this report, fairly
         present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the
         periods presented in this report;

    4.   The registrant's other certifying officer and I are responsible
         for establishing and maintaining disclosure controls and procedures
         (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
         registrant and have:

         a. Designed such disclosure controls and procedures, or caused such
            disclosure controls and procedures to be designed under our
            supervision, to ensure that material information relating to the
            registrant, including its consolidated subsidiaries, is made
            known to us by others within those entities, particularly during
            the period in which this report is being prepared;

         b. Evaluated the effectiveness of the registrant's disclosure
            controls and procedures and presented in this report our
            conclusions about the effectiveness of the disclosure controls
            and procedures, as of the end of the period covered by this
            report based on such evaluation; and

         c. Disclosed in this report any change in the registrant's internal
            control over financial reporting that occurred during the
            registrant's most recent fiscal quarter (the registrant's fourth
            fiscal quarter in the case of an annual report) that has
            materially affected, or is reasonably likely to materially
            affect, the registrant's internal control over financial
            reporting; and

   5.   The registrant's other certifying officer and I have disclosed,
        based on our most recent evaluation of internal control over
        financial reporting, to the registrant's auditors and the audit
        committee of the registrant's board of directors (or persons
        performing the equivalent functions):

         a. All significant deficiencies and material weaknesses in the
            design or operation of internal control over financial reporting
            which are reasonably likely to adversely affect the registrant's
            ability to record, process, summarize and report financial
            information; and

         b. Any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal control over financial reporting.



Date: February 14, 2005                    Michael D James
      -----------------                    ---------------
                                           Vice President and Chief
                                           ------------------------
                                           Financial Officer
                                           -----------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>8
<FILENAME>ex321wfw.txt
<DESCRIPTION>EX 32.1 WFW CERTIFICATION
<TEXT>
                             EXHIBIT 32.1
                             ------------
                            CERTIFICATION
                PURSUANT TO 18 U.S.C. SECTION 1350

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the
"Report") of AMCON Distributing Company (the "Company") for the fiscal
quarter ended December 31, 2004, I, William F. Wright, Chairman and
Principal Executive Officer of the Company, hereby certify pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to my knowledge, that:

    (1)the Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

    (2)the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.

Date: February 14, 2005          /s/ William F. Wright
                                -------------------------
                                Title: Chairman and Principal
                                        Executive Officer






























</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>9
<FILENAME>ex322mdj.txt
<DESCRIPTION>EX 32.2 MDJ CERTIFICATION
<TEXT>

                             EXHIBIT 32.2
                             ------------

                            CERTIFICATION
                PURSUANT TO 18 U.S.C. SECTION 1350

 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q (the
"Report") of AMCON Distributing Company (the "Company") for the fiscal
quarter ended December 31, 2004, I, Michael D. James, Vice President
and Chief Financial Officer of the Company, hereby certify pursuant to
18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, to my knowledge, that:

    (1)the Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and

    (2)the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.

Date: February 14, 2005          /s/ Michael D. James
                                 -------------------------
                                 Title: Vice President and
                                        Chief Financial Officer




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
