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INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on June 29,July 5, 2012

Registration No. 333-182186

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

Amendment No. 12
to

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Natural Grocers by Vitamin Cottage, Inc.
(Exact name of registrant as specified in its charter)

12612 West Alameda Parkway
Lakewood, Colorado 80228
(303) 986-4600
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Kemper Isely
Natural Grocers by Vitamin Cottage, Inc.
12612 West Alameda Parkway
Lakewood, Colorado 80228
(303) 986-4600
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

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

CALCULATION OF REGISTRATION FEE

(1)

Includes shares to be sold upon exercise of the underwriters' overallotment option. See "Underwriting."

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(3)

Calculated pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

*

Previously paid.

          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

        This Amendment No. 1 is being filed solely for the purpose of filing exhibits to the Registration Statement on Form S-1, (File No. 333-182186) and no changes or additions arethe Registration Statement, is being made herebyfiled by Natural Grocers by Vitamin Cottage, Inc., a newly formed Delaware corporation, or the Registrant, in connection with a proposed registered public offering of shares of its common stock, or the Offering. Prior to the preliminarycompletion of the reorganization, or the Reorganization, described in the prospectus that is a part of this Registration Statement, which will occur immediately prior to the completion of the Offering, Natural Grocers by Vitamin Cottage, Inc. is a direct, wholly-owned subsidiary of Vitamin Cottage Natural Food Markets, Inc., a Colorado corporation, or the Operating Company, which is and immediately after the Reorganization will continue to be the operating entity for the Registrant's business.

        In connection with the completion of the Offering, (1) the existing shareholders of the Operating Company will exchange the capital stock of the Operating Company for common stock of the Registrant in a merger, (2) the Registrant will purchase the 45% membership interests in the Boulder Vitamin Cottage Group, LLC, or BVC, the only subsidiary of the Operating Company that is not currently wholly-owned, from a group of investors in exchange for cash and shares of the Registrant's common stock and (3) the Registrant will grant restricted common stock units to its Chief Financial Officer pursuant to her employment agreement. Immediately following the completion of the Offering, the common stock of the Registrant will be owned by (i) the purchasers of common stock of the Registrant pursuant to the offering, (ii) the entities and persons that, immediately prior to the completion of the Reorganization, owned membership interests in BVC, (iii) the Company's Chief Financial Officer and (iv) the entities and persons that, immediately prior to the completion of the Reorganization, were shareholders of the Operating Company and did not sell all of their shares in this Offering.

        See the section entitled "The Reorganization" in the prospectus that forms a part of this Registration Statement for additional information regarding the Registration Statement.corporate structure of the Registrant and its related entities.

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until a registration statement covering this offering is filed with the Securities and Exchange Commission and is declared effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus dated July 5, 2012

PROSPECTUS

                Shares

        This is Natural Grocers by Vitamin Cottage, Inc.'s initial public offering. We are selling            shares of common stock and the selling stockholders identified in this prospectus, including certain of our officers, are selling            shares of common stock. We will not receive any proceeds from the sale of shares by the selling stockholders.

        Prior to the completion of this offering, the existing stockholders of Vitamin Cottage Natural Food Markets, Inc. will exchange the capital stock of that entity for our common stock, and we will acquire the minority interests in a controlled subsidiary not previously owned by us for a combination of cash and shares of our common stock. These transactions will result in our owning all of the outstanding capital stock of Vitamin Cottage Natural Food Markets, Inc., our operating company. See "The Reorganization" for more information about these transactions.

        We qualify as an "emerging growth company" pursuant to the provisions of the Jumpstart Our Business Startups Act, or the JOBS Act, enacted on April 5, 2012.

        We expect the public offering price to be between $            and $            per share. Currently, no public market exists for the shares. We intend to apply to list our common stock on The New York Stock Exchange under the symbol "NGVC."

Investing in our common stock involves risks. Please read "Risk Factors" beginning on page 15.

        We and the selling stockholders have granted the underwriters a 30-day option to purchase up to an additional            shares of common stock from us and             shares of common stock from the selling stockholders on the same terms and conditions as set forth above.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

        The underwriters expect to deliver the shares on or about                        , 2012.

        The date of this prospectus is                  , 2012

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        Until                , 2012 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus or in any free-writing prospectus we may specifically authorize to be delivered or made available to you. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with information that is in addition to or different from that contained in this prospectus or any free-writing prospectus prepared by us or on our behalf. We do not, and the selling stockholders and the underwriters do not, take any responsibility for, and can provide no assurances as to, the reliability of any information that others provide to you. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of our common stock.

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whole grain bread door-to-door in Golden, Colorado and ultimately concluded they could develop a viable business that would also improve their customers' well being. Over time, they fostered relationships through nutrition education and began taking orders for dietary supplements, whole grain bread and unprocessed foods. As their customers gained more knowledge about nutrition, they were empowered to make changes to their diets in order to support their health. Using this model as the foundation for their business, the Iselys opened their first store in 1958, which they later moved to a modest cottage.

        In 1998, the second generation of the family, including Kemper Isely, Zephyr Isely, Heather Isely and Elizabeth Isely purchased our predecessor and the "Vitamin Cottage" trademark and assumed control of the business. Since then, we have grown our store count from 11 stores in Colorado to 55 stores in 11 states as of June 30, 2012. We have also implemented numerous organizational and operational improvements that have enhanced our ability to scale our operations. We believe that by staying true to our founding principles, we have been able to continue to attract new customers, extend our geographic reach and further solidify our competitive position.

Our Markets

        We operate within the natural products retail industry, which is a subset of the large and stable U.S. grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, independent health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers. According to the Nutrition Business Journal, a nutrition industry publication, total food sales in the U.S. were $631.9 billion in 2010, an increase of 0.7% over 2009.

        Natural and organic food and dietary supplement sales in the U.S. have grown at a faster rate than total food sales, according to the Nutrition Business Journal.

U.S. Natural & Organic Food Sales, 2000-2010		U.S. Dietary Supplement Sales, 2000-2010
$ in billions		$ in billions

Our Competitive Strengths

        We believe we are well-positioned to capitalize on favorable natural and organic grocery and dietary supplement industry dynamics as a result of the following competitive strengths:

        Strict focus on high-quality natural and organic grocery products and dietary supplements.    We offer high-quality products and brands, including an extensive selection of widely-recognized natural and organic food, dietary supplements, body care products, pet care products and books. We offer our customers an average of approximately 18,000 SKUs of natural and organic products per store, including an average of approximately 7,000 SKUs of dietary supplements. We believe this product offering enables our customers to utilize our stores for all of their grocery and dietary supplement purchases. In our grocery departments, we only sell USDA certified organic produce and do not approve for sale products that are known to contain artificial colors, flavors, preservatives, sweeteners,

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RISK FACTORS

This offering and an investment in our common stock involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase shares of our common stock. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flow and prospects could be materially and adversely affected. As a result, the trading price of our common stock could decline and you could lose all or part of your investment in our common stock.

Risks related to our business

We may not be successful in our efforts to grow.

        Our continued growth largely depends on our ability to successfully open and operate new stores on a profitable basis. During fiscal year 2011, we opened ten new stores, and we plan to open approximately ten new stores in fiscal year 2012, of which we have opened six as of June 30, 2012. Delays or failures in opening new stores, or achieving lower than expected sales in new stores, could materially and adversely affect our growth. Our plans for continued expansion could place increased demands on our financial, managerial, operational and administrative resources. For example, our planned expansion will require us to increase the number of people we employ and may require us to upgrade our management information system and our distribution infrastructure. We currently operate a single bulk food repackaging facility and distribution center, which houses our bulk food repackaging operation. In order to support our recent and expected future growth and to maintain the efficient operation of our business, we may need to add additional distribution centers in the future. These increased demands and operating complexities could cause us to operate our business less efficiently, which could materially and adversely affect our operations, financial performance and ability to grow in the future.

        Our ability to successfully open new stores is dependent upon a number of factors, including our ability to select suitable sites for our new store locations, to negotiate and execute leases, to coordinate the contracting work on our new stores, to identify and recruit store managers, Nutritional Health Coaches and other staff, to secure and manage the inventory necessary for the launch and successful operation of our new stores, and to effectively promote and market our new stores. If we are ineffective in performing these activities, then our efforts to open and operate new stores may be unsuccessful or unprofitable, and we may be unable to execute our growth plans.

        Although we target particular levels of cash-on-cash returns and capital investment for each of our new stores, new stores may not meet these targets. Any store we open may not be profitable or achieve operating results similar to those of our existing stores. There is also the potential that some of our new stores will be located near areas where we have existing stores, thereby reducing the sales of such existing stores.

         If we are unable to successfully identify market trends and react to changing consumer preferences in a timely manner, our sales may decrease.

        We believe our success depends, in substantial part, on our ability to:

•

anticipate, identify and react to natural and organic grocery and dietary supplement trends and changing consumer preferences in a timely manner;



•

translate market trends into appropriate, saleable product and service offerings in our stores before our competitors; and



•

develop and maintain vendor relationships that provide us access to the newest merchandise on reasonable terms.

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        Consumer preferences often change rapidly and without warning, moving from one trend to another among many product or retail concepts. Our performance is impacted by trends regarding natural and organic products, dietary supplements and at-home meal preparation. Consumer preferences towards dietary supplements or natural and organic food products might shift as a result of, among other things, economic conditions, food safety perceptions and the cost of these products. Our store offerings are currently comprised of natural and organic products and dietary supplements. A change in consumer preferences away from our offerings would have a material adverse effect on our business. Additionally, negative publicity over the safety of any such items may adversely affect demand for our products and could result in lower customer traffic, sales and results of operations.

        If we are unable to anticipate and satisfy consumer merchandise preferences in the regions where we operate, our net sales may decrease, and we may be forced to increase markdowns of slow-moving merchandise, either of which could have a material adverse effect on our business, financial condition and results of operations.

         Our inability to maintain or improve levels of comparable store sales could cause our stock price to decline.

        We may not be able to maintain or improve the levels of comparable store sales that we have experienced in the past. In addition, our overall comparable store sales may fluctuate in the future. A variety of factors affect comparable store sales, including:

•

our ability to execute our business strategy effectively, including successfully opening new stores that achieve sales consistent with our existing stores;



•

consumer preferences;



•

competition;



•

economic conditions;



•

product pricing and availability;



•

in-store merchandising-related activities;



•

consumer confidence;



•

unusually strong initial sales performance by our new stores; and



•

our ability to source and distribute products efficiently.

        In addition, many specialty retailers have been unable to sustain high levels of comparable store sales during and after periods of substantial expansion. These factors may cause our comparable store sales results to be materially lower than in recent periods, which could have a material adverse effect on our business, financial condition and results of operations, and could result in a decline in the price of our common stock.

         Our comparable store sales and quarterly financial performance may fluctuate for a variety of reasons.

        Our comparable store sales and quarterly results of operations have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of other factors affect our comparable store sales and quarterly financial performance, including:

•

changes in our merchandising strategy or product mix;



•

performance of our newer and remodeled stores;



•

the effectiveness of our inventory management;

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the timing and concentration of new store openings, and the related additional human resource requirements and pre-opening and other start-up costs;



•

the cannibalization of existing store sales by new store openings;



•

levels of pre-opening expenses associated with new stores;



•

timing and effectiveness of our marketing activities;



•

seasonal fluctuations due to weather conditions and extreme weather-related disruptions;



•

actions by our existing or new competitors, including pricing changes;



•

supply shortages; and



•

general U.S. economic conditions and, in particular, the retail sales environment.

        Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be expected for any other quarter, and comparable store sales of any particular future period may decrease. In the event of such a decrease, the price of our common stock would likely decline. For more information on our quarterly results of operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations."

         Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition and could negatively impact our ability to execute our growth strategy.

        Adverse and uncertain economic conditions may impact demand for the products we sell in our stores. Consumer spending and levels of disposable income, including spending for natural and organic grocery and dietary supplement products that we sell, are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wages, interest rates, the availability of credit, tax rates, housing market conditions, consumer confidence, political instability and consumer perception of economic conditions. The outbreak or escalation of war, the occurrence of terrorist acts or other hostilities in or affecting the United States, or concern regarding epidemics in the United States or in international markets could also lead to a decrease in spending by consumers. In the event of an economic slowdown, consumer spending could be adversely affected, and we could experience lower net sales than expected. We could be forced to delay or slow our new store growth plans, which could have a material adverse effect on our business, financial condition and results of operations. In addition, our ability to manage normal commercial relationships with our suppliers, manufacturers of our private label products, distributors, customers and creditors may suffer. Customers may shift purchases to lower-priced or other perceived value offerings during economic downturns. In particular, customers may reduce the amount of natural and organic products that they purchase and instead purchase conventional offerings, which generally have lower retail prices, at other stores. In addition, consumers may choose to purchase private label products at other stores rather than branded products because they are generally less expensive. Suppliers may become more conservative in response to these conditions and seek to reduce their production. Our results of operations depend upon, among other things, our ability to maintain and increase sales volume with our existing customers, to attract new customers and to provide products that appeal to customers at prices they are willing and able to pay. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability.

         We may be unable to compete effectively in our highly competitive markets.

        The markets for natural and organic groceries and dietary supplements are highly competitive with few barriers to entry. Our competition varies by market and includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, independent health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers and multi-level marketers. Many of our competitors are larger, more established and have greater financial,

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marketing and other resources than us, and may be able to adapt to changes in consumer preferences more quickly, devote greater resources to the marketing and sale of their products, or generate greater brand recognition. As a result, we may lose market share to our competitors, which could have a material adverse effect on our business, financial condition and results of operations.

         Our inability to maintain or increase our operating margins could adversely affect our results of operations and the price of our stock.

        We intend to continue to increase our operating margins by leveraging efficiencies of scale, improved systems, continued cost discipline, focus on appropriate store labor levels and disciplined product selection. If we are unable to successfully manage the potential difficulties associated with store growth, we may not be able to capture the efficiencies of scale that we expect from expansion. If we are not able to continue to capture efficiencies of scale, improve our systems, continue our cost discipline, and maintain appropriate store labor levels and disciplined product selection, we may not be able to achieve our goals with respect to operating margins. In addition, if we do not adequately refine and improve our various ordering, tracking and allocation systems, we may not be able to increase sales and reduce inventory shrink. As a result, our operating margins may stagnate or decline, which could have a material adverse effect on our business, financial condition and results of operations and adversely affect the price of our stock.

         A reduction in traffic to anchor stores in the shopping areas in close proximity to our stores could significantly reduce our sales and leave us with unsold inventory, which could have a material adverse effect on our business, financial condition and results of operations.

        Many of our stores are located in close proximity to shopping areas that may also accommodate other well-known anchor stores. Sales at our stores are derived, in part, from the volume of traffic generated by the other anchor stores in the shopping areas where our stores are located. Customer traffic may be adversely affected by regional economic downturns, a general downturn in the local area where our store is located, long-term nearby road construction projects, the closing of nearby anchor stores or other nearby stores or the decline of the shopping environment in a particular shopping area. Any of these events would reduce our sales and leave us with excess inventory, which could have a material adverse effect on our business, financial condition and results of operation. In response to such events, we may be required to increase markdowns or initiate marketing promotions to reduce excess inventory, which would further decrease our gross profits and net income.

         If we or our third-party suppliers fail to comply with regulatory requirements, or are unable to provide products that meet our specifications, our business and our reputation could suffer.

        If we or our third-party suppliers, including suppliers of our private label products, fail to comply with applicable regulatory requirements or to meet our specifications for quality, we could be required to take costly corrective action and our reputation could suffer. We do not own or operate any manufacturing facilities, except for our bulk food repackaging facility and distribution center discussed below, and therefore depend upon independent third-party vendors to produce our private label branded products, such as vitamins, minerals, dietary supplements, body care products, food products and bottled water. Third-party suppliers of our private label products may not maintain adequate controls with respect to product specifications and quality. Such suppliers may be unable to produce products on a timely basis or in a manner consistent with regulatory requirements. We depend upon our bulk food repackaging facility and distribution center for the majority of our private label bulk food products. We may also be unable to maintain adequate product specification and quality controls at our bulk food repackaging facility and distribution center, or produce products on a timely basis and in a manner consistent with regulatory requirements. In addition, we may be required to find new third-party suppliers of our private label products or to find third-party suppliers to source our bulk foods.

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There can be no assurance that we would be successful in finding such third-party suppliers that meet our quality guidelines.

         We, as well as our vendors, are subject to numerous laws and regulations and our compliance with these laws and regulations, as they currently exist or as modified in the future, may increase our costs, limit or eliminate our ability to sell certain products, raise regulatory enforcement risks not present in the past or otherwise adversely affect our business, results of operations and financial condition.

        As a retailer of food and dietary supplements and a seller of many of our own private label products, we are subject to numerous health and safety laws and regulations. Our suppliers and contract manufacturers are also subject to such laws and regulations. These laws and regulations apply to many aspects of our business, including the manufacturing, packaging, labeling, distribution, advertising, sale, quality and safety of our products, as well as the health and safety of our employees and the protection of the environment. In the U.S., we are subject to regulation by various government agencies, including the FDA, the USDA, Federal Trade Commission, or the FTC, Occupational Safety and Health Administration, the Consumer Product Safety Commission and the Environmental Protection Agency, as well as various state and local agencies. We are also subject to the USDA's Organic Rule, which facilitates interstate commerce and the marketing of organically produced food, and provides assurance to our customers that such products meet consistent, uniform standards. Compliance with the USDA's Organic Rule also places a significant burden on some of our suppliers, which may cause a disruption in some of our product offerings. In addition, our sales of dietary supplements are regulated under the Dietary Supplement Health and Education Act of 1994, or DSHEA. DSHEA expressly permits dietary supplements to bear statements describing how a product affects the structure, function and/or general well-being of the body. However, no statement may expressly or implicitly represent that a dietary supplement will diagnose, cure, mitigate, treat or prevent a disease. If these laws and regulations were violated by our management, associates, suppliers, distributors or vendors, we could be subject to fines, penalties and sanctions, including injunctions against future shipment and sale of products, seizure and confiscation of products, prohibition on the operation of our stores, restitution and disgorgement of profits, operating restrictions and criminal prosecution.

        In connection with the marketing and advertisement of our products, we could be the target of claims relating to false or deceptive advertising, including under the auspices of the FTC and the consumer protection statutes of some states. These events could interrupt the marketing and sales of products in our stores, including our private label products, severely damage our brand reputation and public image, increase the cost of products in our stores, result in product recalls or litigation, and impede our ability to deliver merchandise in sufficient quantities or quality to our stores, which could result in a material adverse effect on our business, financial condition and results of operations.

        New or revised government laws and regulations, such as the FDA Food Safety Modernization Act, or FSMA, passed in January 2011, which grants the FDA greater authority over the safety of the national food supply, as well as increased enforcement by government agencies, could result in additional compliance costs and civil remedies. Specifically, the FSMA requires the FDA to issue regulations mandating that risk-based preventive controls be observed by the majority of food producers. This authority applies to all domestic food facilities and, by way of imported food supplier verification requirements, to all foreign facilities that supply food products. In addition, the FSMA requires the FDA to establish science-based minimum standards for the safe production and harvesting of produce, requires the FDA to identify "high risk" foods and "high risk" facilities and instructs the FDA to set goals for the frequency of FDA inspections of such high risk facilities as well as non-high risk facilities and foreign facilities from which food is imported into the United States.

        With respect to both food and dietary supplements, the FSMA meaningfully augments the FDA's ability to access a producer's records and a supplier's records. This increased access could permit the

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FDA to identify areas of concern it had not previously considered to be problematic either for us or for our suppliers. The FSMA is also likely to result in enhanced tracking and tracing of food requirements and, as a result, added recordkeeping burdens upon our suppliers. In addition, effective July 2012, under the FSMA, the FDA will have the authority to inspect certifications and therefore evaluate whether foods and ingredients from our suppliers are compliant with the FDA's regulatory requirements. Such inspections may delay the supply of certain products or result in certain products being unavailable to us for sale in our stores.

        DSHEA established that no notification to the FDA is required to market a dietary supplement if it contains only dietary ingredients that were present in the U.S. food supply prior to DSHEA's enactment. However, for a dietary ingredient not present in the food supply prior to DSHEA's enactment, the manufacturer is required to provide the FDA with information supporting the conclusion that the ingredient will reasonably be expected to be safe at least 75 days before introducing a new dietary ingredient into interstate commerce. As required by the FSMA, the FDA issued draft guidance in July 2011, which attempts to clarify when an ingredient will be considered a "new dietary ingredient," the evidence needed to document the safety of a new dietary ingredient, and appropriate methods for establishing the identity of a new dietary ingredient. In particular, the new guidance may cause dietary supplement products available in the market before DSHEA to now be classified to include a new dietary ingredient if the dietary supplement product was produced using manufacturing processes different from those used in 1994. Accordingly, the adoption of the draft FDA guidance or similar guidance could materially adversely affect the availability of dietary supplement products.

        Furthermore, in recent years, the FDA has been aggressive in enforcing its regulations with respect to nutrient content claims (e.g., "low fat," "good source of," "calorie free," etc.), unauthorized "health claims" (claims that characterize the relationship between a food or food ingredient and a disease or health condition), and other claims that impermissibly suggest therapeutic benefits for certain foods or food components. Such FDA actions with respect to such promotional practices can result in costly product changes, potential private litigation, bad publicity and loss of consumer goodwill.

        We are also subject to laws and regulations more generally applicable to retailers, including labor and employment, taxation, zoning and land use. In addition, changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefits costs, which could hurt our profitability.

        We cannot predict the nature of future laws, regulations, interpretations or applications, or determine what effect either additional government regulations or administrative orders, when and if promulgated, or disparate federal, state and local regulatory schemes would have on our business in the future. They could, however, require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not able to be reformulated, additional recordkeeping, expanded documentation of the properties of certain products, expanded or different labeling and/or scientific substantiation. Any or all of such requirements could have an adverse effect on our operating results.

         The activities of our Nutritional Health Coaches and our nutrition education services may be impacted by government regulation or our inability to secure adequate liability insurance.

        Some of the activities of our Nutritional Health Coaches, or NHCs, who, among other duties, provide nutrition oriented educational services to our customers, may be subject to state and federal regulation, and oversight by professional organizations. In the past, the FDA has expressed concerns regarding summarized health and nutrition-related information that (1) does not, in the FDA's view, accurately present such information, (2) diverts a consumer's attention and focus from FDA-required nutrition labeling and information or (3) impermissibly promotes drug-type disease-related benefits. Although we have provided training to our NHCs on relevant regulatory requirements, we cannot

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control the actions of such individuals, and our NHCs may not act in accordance with such regulations. If our NHCs or other employees do not act in accordance with regulatory requirements, we may become subject to penalties which could have a material adverse effect on our business. We believe we are currently in compliance with relevant regulatory requirements, and we maintain professional liability insurance on behalf of our NHCs in order to mitigate risks associated with our NHCs' nutrition oriented educational activities. However, we cannot predict the nature of future government regulation and oversight, including the potential impact of any such regulation on the services currently provided by our NHCs. Furthermore, the availability of professional liability insurance or the scope of such coverage may change, or our insurance coverage may prove inadequate, which may adversely impact the ability of our NHC's to provide some services to our customers. The occurrence of any such developments could negatively impact the perception of our brand, our sales and our ability to attract new customers.

         Our future business, results of operations and financial condition may be adversely affected by reduced availability of organic products.

        Our ability to ensure a continuing supply of organic products at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow organic crops or raise organic livestock, the vagaries of these farming businesses and our ability to accurately forecast our sourcing requirements. The organic ingredients used in many of the products we sell are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, frosts, earthquakes, hurricanes and pestilences. Adverse weather conditions and natural disasters can lower crop yields and reduce crop size and quality, which in turn could reduce the available supply of, or increase the price of, organic ingredients. Certain products we purchase from our suppliers include organic ingredients sourced offshore, and the availability of such ingredients may be affected by events in other countries. In addition, we and our suppliers compete with other food producers in the procurement of organic ingredients, which are often less plentiful in the open market than conventional ingredients. This competition may increase in the future if consumer demand for organic products increases. If supplies of organic ingredients are reduced or there is greater demand for such ingredients from us and others, we may not be able to obtain sufficient supply on favorable terms, or at all, which could impact our ability to supply products to our stores and may adversely affect our business, results of operations and financial condition.

        The organic products we sell rely on independent certification and must comply with the requirements of independent organizations or certification authorities in order to be labeled as such. Certain products we sell in our stores can lose their "organic" certification if a contract manufacturing plant becomes contaminated with non-organic materials or if it is not properly cleaned after a production run, among other issues. The loss of any independent certifications could reduce the availability of organic products that we can sell in our stores and harm our business.

         Disruptions affecting our significant suppliers, or our relationships with such suppliers, could negatively affect our business.

        United Natural Foods Inc., or UNFI, is our single largest third-party supplier, accounting for approximately 46.4% of our total purchases in fiscal year 2011. Another 6.6% of our purchases were made through Albert's Organics, a subsidiary of UNFI that distributes fresh produce and meat. During fiscal year 2012, we extended our long-term relationship with UNFI as our primary supplier of dry grocery and frozen food products through 2016. Due to this concentration of purchases from a single third-party supplier, the cancellation of our distribution agreement or the disruption, delay or inability of UNFI to deliver product to our stores may materially and adversely affect our operating results and we may be unable to establish alternative distribution channels on reasonable terms or at all.

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        Certain of our vendors use overseas sourcing to varying degrees to manufacture some or all of their products. Any event causing a sudden disruption of manufacturing or imports from such foreign countries, including the imposition of additional import restrictions, unanticipated political changes, increased customs duties, labor disputes, health epidemics, adverse weather conditions, crop failure, acts of war or terrorism, legal or economic restrictions on overseas suppliers' ability to produce and deliver products, and natural disasters, could increase our costs and materially harm our operations, business and financial condition. Our business is also subject to a variety of other risks generally associated with indirectly sourcing goods from abroad, such as political instability, disruption of imports by labor disputes and local business practices. In addition, new requirements imposed by the FSMA require importers to verify that food products and ingredients produced by a foreign supplier comply with all applicable legal and regulatory requirements enforced by the FDA, which could result in certain products being deemed inadequate for import.

         The current geographic concentration of our stores creates exposure to local economies, regional downturns or severe weather or catastrophic occurrences.

        As of June 30, 2012, we have store concentration in Colorado and Texas, operating 30 stores and ten stores in those states, respectively, or a total of 72.7% of our stores. As a result, our business is currently more susceptible to regional conditions than the operations of more geographically diversified competitors, and we are vulnerable to economic downturns in those regions. Any unforeseen events or circumstances that negatively affect these areas could materially adversely affect our revenues and profitability. These factors include, among other things, changes in demographics, population, competition, consumer preferences, new or revised laws or regulations, fires, floods or other natural disasters in these regions.

         If we fail to maintain our reputation and the value of our brand, our sales may decline.

        We believe our continued success depends on our ability to maintain and grow the value of the Natural Grocers by Vitamin Cottage brand. Maintaining, promoting and positioning our brand and reputation will depend largely on the success of our marketing and merchandising efforts and our ability to provide a consistent, high quality customer experience. Brand value is based in large part on perceptions of subjective qualities, and even isolated incidents can erode trust and confidence, particularly if they result in adverse publicity, governmental investigations or litigation. Our brand could be adversely affected if we fail to achieve these objectives, or if our public image or reputation were to be tarnished by negative publicity. Our reputation could also suffer from real or perceived issues involving the labeling or marketing of our products as "natural." Although the FDA and USDA have each issued statements regarding the appropriate use of the word "natural," there is no single, U.S. government-regulated definition of the term "natural" for use in the food industry. The resulting uncertainty has led to consumer confusion, distrust and legal challenges. Plaintiffs have commenced legal actions against a number of food companies that market "natural" products, asserting false, misleading and deceptive advertising and labeling claims, including claims related to genetically modified ingredients. In limited circumstances, the FDA has taken regulatory action against products labeled "natural" but that nonetheless contain synthetic ingredients or components. Should we become subject to similar claims, consumers may avoid purchasing products from us or seek alternatives, even if the basis for the claim is unfounded. Adverse publicity about these matters may discourage consumers from buying our products. The cost of defending against any such claims could be significant. Any loss of confidence on the part of consumers in the truthfulness of our labeling or ingredient claims would be difficult and costly to overcome and may significantly reduce our brand value. Any of these events could adversely affect our reputation and brand and decrease our sales, which would have a material adverse effect on our business, financial condition and results of operations.

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         Perishable food product losses could materially impact our results of operations.

        Our stores offer a significant number of perishable products. Our offering of perishable products may result in significant product inventory losses in the event of extended power outages, natural disasters or other catastrophic occurrences.

         The decision by certain of our suppliers to distribute their specialty products through other retail distribution channels could negatively impact our revenue from the sale of such products.

        Some of the specialty retail products that we sell in our stores are not generally available through other retail distribution channels such as drug stores, conventional grocery stores, or mass merchandisers. In the future, our suppliers could decide to distribute such products through other retail distribution channels, allowing more of our competitors to offer these products, and adversely affecting the desirability of these products to our core customers, which could negatively impact our revenues.

         Our ability to operate our business effectively could be impaired if we fail to retain or attract key personnel or are unable to attract, train and retain qualified employees.

        Our business requires disciplined execution at all levels of our organization. This execution requires an experienced and talented management team. The loss of any member of our senior management team, particularly Kemper Isely and Zephyr Isely, our Co-Presidents since 1998, and Heather Isely and Elizabeth Isely, our Executive Vice Presidents since 1998, could have a material adverse effect on our ability to operate our business, our financial condition and results of operations, unless, and until, we are able to find a qualified replacement. For more information on our management team, see "Management." Furthermore, our ability to manage our new store growth will require us to attract, motivate and retain qualified managers, Nutritional Health Coaches and store associates who understand and appreciate our culture and are able to represent our brand effectively in our stores. Competition for such personnel is intense, and we may be unable to attract, assimilate and retain the personnel required to grow and operate our business profitably.

         Any significant interruption in the operations of our bulk food repackaging facility and distribution center could disrupt our ability to deliver our merchandise in a timely manner.

        Any significant interruption in the operation of our bulk food repackaging and distribution center infrastructure, such as disruptions due to fire, severe weather or other catastrophic events, power outages, labor disagreements, or shipping problems, could adversely impact our ability to receive and process orders, and distribute products to our stores. Such interruptions could result in lost sales, cancelled sales and a loss of customer loyalty to our brand. While we maintain business interruption and property insurance, if the operation of our distribution facility were interrupted for any reason causing delays in shipment of merchandise to our stores, our insurance may not be sufficient to cover losses we experience, which could have a material adverse effect on our business, financial condition and results of operations.

         A widespread health epidemic could materially impact our business.

        Our business could be severely impacted by a widespread regional, national or global health epidemic. A widespread health epidemic may cause customers to avoid public gathering places such as our stores or otherwise change their shopping behaviors. Additionally, a widespread health epidemic could also adversely impact our business by disrupting production and delivery of products to our stores and by impacting our ability to appropriately staff our stores.

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         Union activity at third-party transportation companies or labor organizing activities among our employees could disrupt our operations and harm our business.

        Independent third-party transportation companies deliver the majority of our merchandise to our stores and to our customers. Some of these third parties employ personnel represented by labor unions. Disruptions in the delivery of merchandise or work stoppages by employees of these third parties could delay the timely receipt of merchandise, which could result in cancelled sales, a loss of loyalty to our stores and excess inventory. While all of our employees are currently non-union, attempts on the part of our employees to organize labor or union activities among our employees could result in work slowdowns, reducing the efficiency of our operations, which could have a material adverse effect on our business, financial condition and results of operations.

         Our management has limited experience managing a public company, and our current resources may not be sufficient to fulfill our public company obligations.

        Following the completion of this offering, we will be subject to various regulatory requirements, including those of the Securities and Exchange Commission, or the SEC, and The New York Stock Exchange, or the NYSE. These requirements include record keeping, financial reporting and corporate governance rules and regulations. Our management team has limited experience in managing a public company and, historically, has not had the resources typically found in a public company. Our internal infrastructure may not be adequate to support our increased reporting obligations, and we may be unable to hire, train or retain necessary staff and may initially be reliant on engaging outside consultants or professionals to overcome our lack of experience. Our business could be adversely affected if our internal infrastructure is inadequate, we are unable to engage outside consultants, or are otherwise unable to fulfill our public company obligations.

         Future events could result in impairment of long-lived assets, which may result in charges that adversely affect our results of operations and capitalization.

        Our total assets included long-lived assets totaling $45.6 million at March 31, 2012. Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Our impairment evaluations require use of financial estimates of future cash flows. Application of alternative assumptions could produce significantly different results. We may be required to recognize impairments of long-lived assets based on future economic factors such as unfavorable changes in estimated future undiscounted cash flows of an asset group.

         We have significant lease obligations, which may require us to continue paying rent for store locations that we no longer operate.

        Our stores, bulk food repackaging facility and distribution center and administrative facility are leased. We are subject to risks associated with our current and future real estate leases. Our costs could increase because of changes in the real estate markets and supply or demand for real estate sites. We generally cannot cancel our leases, so if we decide to close or relocate a location, we may nonetheless be committed to perform our obligations under the applicable lease including paying the base rent for the remaining lease term. As each lease expires, we may fail to negotiate renewals, either on commercially acceptable terms or any terms at all and may not be able to find replacement locations that will provide for the same success as a current store location. Of the current leases for our stores, four expire in fiscal 2013, two expire in fiscal 2014 and the remainder expire between fiscal 2015 and 2027.

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         Any material failure of our information systems could negatively impact our operations.

        We are increasingly dependent on a variety of information systems to effectively manage the operations of our growing store base, including our supply chain, and to fulfill customer orders from our Internet business. The failure of our information systems to perform as designed, including the failure of our warehouse management software system to operate as expected or to support an expanded distribution facility, could have an adverse effect on our business and results of operations. Any material failure or slowdown of our systems could disrupt our ability to track, record and analyze our merchandise, and could negatively impact our operations, including, among other things, our ability to process and receive shipments of goods, process financial and credit card transactions and receive and process orders through our Internet business. Any security breaches of our information systems could disrupt our operational systems, resulting in a slowdown of our normal business activities or limitations on our ability to process credit card transactions. Moreover, leaks of proprietary information, including leaks of customers' private data, could weaken customer confidence in our company and our ability to compete in the food retail marketplace, which could have a material adverse effect on our business, financial condition and results of operations. Additionally, changes in technology could cause our information systems to become obsolete and it may be necessary to incur additional costs to upgrade such systems, and if our information systems prove inadequate to handle our growth, we could lose customers, which could have a material adverse effect on our business, financial condition and results of operations. Our Internet operations, while relatively small, are increasingly important to our business. We are also vulnerable to certain risks and uncertainties associated with our websites, including changes in required technology interfaces, website downtime and other technical failures, security breaches and consumer privacy concerns. Our failure to successfully respond to these risks could reduce Internet sales and damage our reputation.

         Claims under our self-insurance program may differ from our estimates, which could materially impact our results of operations.

        We currently maintain insurance customary for businesses of our size and type using a combination of insurance and self-insurance plans to provide for the potential liabilities for workers' compensation, general liability, professional liability, property insurance, director and officers' liability insurance, vehicle liability and employee health-care benefits. There are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could have a material adverse effect on our business and results of operations. In addition, liabilities associated with the risks that are retained by the Company are estimated, in part, by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Our results could be materially impacted by claims and other expenses related to such plans if future occurrences and claims differ from these assumptions and historical trends.

         If we are unable to protect our intellectual property rights, our ability to compete and the value of our brand could be harmed.

        We believe that our trademarks, trade dress, copyrights, trade secrets, know-how and similar intellectual property are important to our success. In particular, we believe that the Natural Grocers by Vitamin Cottage name is important to our business, as well as to the implementation of our growth strategy. Our principal intellectual property rights include registered trademarks on our names, Vitamin Cottage, Natural Grocers by Vitamin Cottage and Vitamin Cottage Natural Grocers, copyrights of our website content, rights to our domain names includingwww.vitamincottage.com andwww.naturalgrocers.com, and trade secrets and know-how with respect to our product sourcing, sales and marketing and other aspects of our business. As such, we rely on trademark and copyright law, trade secret protection and confidentially agreements with certain of our employees, consultants, suppliers and others to protect our proprietary rights. If we are unable to defend or protect or preserve the value

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of our trademarks, copyrights, trade secrets or other proprietary rights for any reason, our brand and reputation could be impaired and we could lose customers.

        Although our brand names are registered in the United States, we may not be successful in asserting trademark or trade name protection and the costs required to protect our trademarks and trade names may be substantial. In addition, the relationship between regulations governing domain names and laws protecting trademarks and similar proprietary rights is unclear. Therefore, we may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon or otherwise decrease the value of our trademarks and other proprietary rights. Additionally, other parties may infringe on our intellectual property rights and may thereby dilute our brand in the marketplace. Third parties could also bring intellectual property infringement suits against us from time to time, to challenge our intellectual property rights. Any such infringement of our intellectual property rights by others, or claims by third parties against us, would likely result in a commitment of our time and resources to protect these rights through litigation or otherwise. If we were to receive an adverse judgment in such a matter, we could suffer further dilution of our trademarks and other rights, which could harm our ability to compete as well as our business prospects, financial condition and results of operations.

         Our products could cause unexpected side effects, illness, injury or death that could result in their discontinuance or expose us to lawsuits, either of which could result in unexpected costs and damage to our reputation.

        There is increasing governmental scrutiny of and public awareness regarding food safety. We believe that many customers hold us to a higher quality standard than other retailers. Unexpected side effects, illness, injury, or death caused by our products could result in the discontinuance of sales of our products or prevent us from achieving market acceptance of the affected products. Such side effects, illnesses, injuries and death could also expose us to product liability or negligence lawsuits. Any claims brought against us may exceed our existing or future insurance policy coverage or limits. Any judgment against us that is in excess of our policy limits would have to be paid from our cash reserves, which would reduce our capital resources. Further, we may not have sufficient capital resources to pay a judgment in which case our creditors could levy against our assets. The real or perceived sale of contaminated or harmful products would cause negative publicity regarding our company, brand, or products, which could in turn harm our reputation and net sales, which could have a material adverse effect on our business, financial condition and results or operation, or result in our insolvency.

         Increase in the cost of raw materials could hurt our sales and profitability.

        The raw agricultural commodities used to make our private label products, including our bulk repackaged products, increased globally during 2011, and are generally subject to availability constraints and price volatility caused by weather, supply conditions, government regulations, energy prices, price inflation and general economic conditions and other unpredictable factors. An increase in the demand for, or the price of, raw agricultural commodities could cause our vendors to seek price increases from us, or may cause the retail price we charge for certain products to increase, in turn decreasing our sales of such products. As a result, our profitability may be adversely impacted through reduced gross margins or a decline in the number and average size of customer transactions. The cost of construction materials we use to build and remodel our stores is also subject to significant price volatility based on market and economic conditions. Higher construction material prices would increase the capital expenditures needed to construct a new store or remodel an existing store.

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         Energy costs are a significant component of our operating expenses and increasing energy costs, unless offset by more efficient usage or other operational responses, may impact our profitability.

        We utilize natural gas, water, sewer and electricity in our stores and use gasoline and diesel in our trucks that deliver products to our stores. Increases in energy costs, whether driven by increased demand, decreased or disrupted supply or an anticipation of any such events will increase the costs of operating our stores. Our shipping costs have also increased recently due to rising fuel and freight prices, and these costs may continue to increase. We may not be able to recover these rising costs through increased prices charged to our customers, and any increased prices may exacerbate the risk of customers choosing lower-cost alternatives. In addition, if we are unsuccessful in attempts to protect against these increases in energy costs through long-term energy contracts, improved energy procurement, improved efficiency and other operational improvements, the overall costs of operating our stores will increase which would impact our profitability, financial condition and results of operations.

         Increases in certain costs affecting our marketing, advertising and promotions may adversely impact our ability to advertise effectively and reduce our profitability.

        Postal rate increases, and increasing paper and printing costs affect the cost of our promotional mailings. Recent changes in postal rates have increased the cost of our Health Hotline mailings and increasing paper and printing costs have increased the cost of producing our Health Hotline newspaper inserts. In response to any future increase in mailing costs, we may consider reducing the number and size of certain promotional pieces. In addition, we rely on discounts from the basic postal rate structure, such as discounts for bulk mailings and sorting by zip code and carrier routes. We are not party to any long-term contracts for the supply of paper. We are also affected by increases in the cost of producing and broadcasting our television, radio and Internet advertising pieces. Recent changes in broadcast rates have resulted in an increase in the cost of our television commercials. In response to any future increase in broadcast costs, we may consider reducing the frequency, placement and length of certain promotional pieces. We are not party to any long-term contracts for broadcast time. Future increases in costs affecting our marketing, advertising and promotions could adversely impact our ability to advertise effectively and our profitability.

         Our credit facility could limit our operational flexibility.

        Following this offering we expect to have $            of availability under our credit facility. Substantially all of our assets are pledged as collateral for outstanding borrowings under the facility. Our credit facility contains usual and customary restrictive covenants relating to our management and the operation of our business. These covenants, among other things, restrict our ability to incur additional indebtedness, grant liens, engage in certain merger, consolidation or asset sale transactions, make certain investments, make loans, advances, guarantees or acquisitions, engage in certain transactions with affiliates, or permit sale and leaseback transactions. We are also required to maintain certain financial ratios under our credit agreement, including a consolidated leverage ratio, a consolidated fixed charge ratio and a consolidated EBITDA to revenue ratio. These covenants could restrict our operational flexibility, including our ability to open stores, and any failure to comply with these covenants or our payment obligations would limit our ability to borrow under our revolving credit facility and, in certain circumstances, may allow the lender thereunder to require repayment.

         We may need to raise additional debt or equity capital.

        We depend on cash flow from our operations and borrowings from our credit facility to fund our business and execute on our growth strategy. From time to time, after the completion of this offering, we may be required to seek additional equity or debt financing in order to fund capital expenditures or to provide additional working capital for our business, or to fund the execution of our growth strategy.

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In addition, changes in economic conditions, or market conditions requiring a shift in our business model could result in our need for additional debt or equity financing. We cannot predict the timing or amount of any such capital requirements at this time. We do not know whether we will be able to take any of such actions on a timely basis, on terms satisfactory to us or at all. If financing is not available to us on satisfactory terms, or at all, we may be unable to operate or expand our business or to successfully pursue our growth strategy, and our results of operations may suffer.

         Our political advocacy activities may reduce our customer count and sales.

        We believe our ability to profitably operate our business depends, in part, upon our access to natural and organic products and dietary supplements. We attempt to protect these interests through ongoing and proactive political advocacy campaigns, including participation in education programs, petitions, letter writing, phone calls, policy conferences, advisory boards, industry groups, public commentary and meetings with trade groups, office holders and regulators. We may publicly ally with and support trade groups, political candidates, government officials and regulators who support a particular policy we consider important to our business and in alignment with our principles regarding access to natural and organic products and dietary supplements. We may, from time to time, publicly oppose other trade groups, candidates, officeholders and regulators whose point of view we believe will harm our business, or impede access to nutritious food and dietary supplements. In some cases, we may lose customers and sales because our political advocacy activities are perceived to be contrary to those customers' points of view, political affiliations, political beliefs or voting preferences.

         Effective tax rate changes and results of examinations by taxing authorities could materially impact our results of operations.

        Our future effective tax rates could be adversely affected by our earnings mix being lower than historical results in states where we have lower statutory rates and higher-than-historical results in states where we have higher statutory rates, by changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws or interpretations thereof. In addition, we are subject to periodic audits and examinations by the Internal Revenue Service, or the IRS, and other state and local taxing authorities. Our effective tax rate is likely to change following the Boulder Contribution. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our results could be materially impacted by the determinations and expenses related to proceedings by the IRS and other state and local taxing authorities.

         Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.

        Reporting obligations as a public company and our anticipated growth are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel. In addition, as a public company, we will be required to document and test our internal controls over financial reporting pursuant to Section 404 of Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, so that our management can periodically certify the effectiveness of such controls. Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an "emerging growth company" as defined in the JOBS Act, if we take advantage of the exemptions contained in the JOBS Act. We expect that we will remain an "emerging growth company" until the earliest of (a) the last day of our fiscal year following the fifth anniversary of this offering; (b) the last day of our fiscal year in which we have annual gross revenue of $1.0 billion or more; (c) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and (d) the date on which we are deemed to be a "large accelerated filer," which

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will occur at such time as we have (1) an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (2) been required to file annual, quarterly and current reports under the Exchange Act for a period of at least 12 calendar months, and (3) filed at least one annual report pursuant to the Exchange Act. As a result, we may qualify as an "emerging growth company" until as late as September 30, 2017. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. If our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on management's assessment and the effectiveness of our internal control over financial reporting, or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our stock price.

         We are an "emerging growth company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

        We are an "emerging growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting and other requirements that are applicable to other public companies that are not "emerging growth companies." For so long as we are an "emerging growth company," we will, among other things:

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not be required to comply with the auditor attestation requirements of section 404(b) of Sarbanes-Oxley;



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not be required to hold a nonbinding advisory stockholder vote on executive compensation pursuant to Section 14A(a) of the Exchange Act;



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not be required to seek stockholder approval of any golden parachute payments not previously approved pursuant to Section 14A(b) of the Exchange Act;



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be exempt from any rule adopted by the Public Company Accounting Oversight Board, requiring mandatory audit firm rotation or a supplemental auditor discussion and analysis; and



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be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

        We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

        In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An "emerging growth company" can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to "opt out" of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

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Risks related to this offering

The market price of our common stock may be volatile, and you may not be able to sell our stock at a favorable price or at all.

        The market price of our common stock is likely to fluctuate significantly from time to time in response to a number of factors, most of which we cannot control, including those described under "—Risks related to our business" and the following:

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differences between our actual financial and operating results and those expected by investors;



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fluctuations in our quarterly operating results;



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market conditions in our industry and the economy as a whole;



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changes in our earnings guidance;



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a change in the recommendation by any research analyst that follows our stock or any failure to meet the estimates made by research analysts;



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investor perceptions of our prospects and the prospects of the grocery and dietary supplement industries;



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the performance of our key vendors;



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announcements by us, our vendors or our competitors regarding performance, strategy, significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments;



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introductions of new product or new pricing policies by us or our competitors;



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failure to recruit or retain key personnel; and



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the level and quality of securities research analyst coverage for our common stock.

        In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market price of equity securities.

         Our current principal stockholders will continue to have significant influence over us after this offering, and they could delay, deter or prevent a change of control or other business combination or otherwise cause us to take action with which you might not agree.

        Members of the Isely family controlled all of the voting power of our outstanding common stock prior to this offering. Immediately following the offering, members of the Isely family will own or control approximately        % of our common stock. Due to their holdings of common stock, members of the Isely family will be able to continue to determine the outcome of virtually all matters submitted to stockholders for approval, including the election of directors, an amendment of our certificate of incorporation (except when a class vote is required by law), any merger or consolidation requiring common stockholder approval, and a sale of all or substantially all of the Company's assets. Members of the Isely family have the ability to prevent change in control transactions as long as they maintain voting control of the Company. In addition, members of the Isely family and trusts controlled by them will enter into a stockholders agreement by which they will agree to aggregate their voting power with regard to the election of directors.

        In addition, because these holders will have the ability to elect all of our directors, they will be able to control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, the payments of dividends on our common stock and entering into extraordinary transactions, and their interests may not in all cases be aligned with your interests.

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         No public market for our common stock currently exists, and we cannot assure you that an active, liquid trading market will develop or be sustained following this offering.

        Prior to this offering, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NYSE or otherwise, or how liquid that market might become. If an active market does not develop, you may have difficulty selling any shares of our common stock that you purchase in this initial public offering. The initial public offering price for the shares of our common stock will be determined by negotiations between us, the selling stockholders and the representatives of the underwriters, and may not be indicative of prices that will prevail in the open market following this offering. If you purchase shares of our common stock, you may not be able to resell those shares at or above the initial public offering price.

         You will experience an immediate and substantial book value dilution after this offering.

        The initial public offering price of our common stock will be substantially higher than the net tangible book value per share attributable to our existing shareholders immediately after the offering. Based on an assumed initial public offering price of $        per share, the midpoint of the price range set forth on the cover of this prospectus and after giving effect to the Reorganization, you will incur immediate and substantial dilution in the amount of $            after the consummation of this offering. See "Dilution" included elsewhere in this prospectus.

         A substantial number of shares of our common stock will be eligible for sale in the near future, which could adversely affect our stock price and could impair our ability to raise capital through the sale of equity securities.

        If our stockholders sell, or the market perceives that our stockholders intend to sell, in the public market following this offering, substantial amounts of our common stock, the market price of our common stock could decline significantly. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price we deem appropriate. Upon completion of this offering,                     shares of our common stock, or                     shares of our common stock if the underwriters' option is exercised in full, will be outstanding. The shares of common stock affected in this offering will be freely tradable without restriction under the Securities Act of 1933, as amended, or Securities Act, except for any shares held by our "affiliates" as defined in Rule 144 under the Securities Act. Up to approximately                    additional shares of our common stock could be sold upon the expiration of the 180-day lock-up period described in "Underwriting—Lock-Up Agreements." As restrictions on resale end, the market price of our common stock could drop significantly if the holders of restricted shares sell them or are perceived by the market as intending to sell them. Also, in the future, we may issue shares of our common stock in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding shares of our common stock.

         We do not anticipate paying dividends on our capital stock in the foreseeable future and capital appreciation may be your sole source of potential gain.

        We anticipate that we will retain our future earnings, for the foreseeable future, in order to fund our growth strategy and for general corporate purposes. The declaration and payment of future dividends to holders of our common stock will be at the discretion of our board of directors, or our board, and will depend upon many factors, including our financial condition, earnings, legal requirements, and restrictions in our debt agreements and other factors our board deems relevant. As a result, we can make no assurance that we will pay cash dividends to our stockholders in the future. Capital appreciation, if any, of our common stock will be your sole source of potential gain for the

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foreseeable future. In addition, the market price for our common stock after this offering might not exceed the price that you pay for our common stock in this offering.

         If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our stock or if our operating results do not meet their expectations, our stock price could decline.

        The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts do not cover our company or fail to publish reports on us regularly, we may lose visibility in the financial markets, which could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover our company downgrades our stock, or if our operating results do not meet their expectations, our stock price could decline.

         Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change in control, even if a sale of the Company would be beneficial to our stockholders, which could cause our stock price to decline and prevent attempts by our stockholders to replace or remove our current management.

        Several provisions of our certificate of incorporation and amended and restated bylaws, each of which will be in effect upon the consummation of this offering, could make it difficult for our stockholders to change the composition of our board, preventing them from changing the composition of management. In addition, the same provisions may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable. See "Description of Capital Stock."

        These provisions include:

•

a staggered, or classified, board of directors;



•

authorizing our board of directors to issue "blank check" preferred stock without stockholder approval;



•

prohibiting cumulative voting in the election of directors;



•

limiting the persons who may call special meetings of stockholders;



•

prohibiting stockholders from acting by written consent after the Isely family ceases to own more than 50% of the total voting power of our shares; and



•

establishing advance notice requirements for nominations for election to our board or for proposing matters that can be acted on by stockholders at stockholder meetings.

        These anti-takeover provisions could substantially impede the ability of our common stockholders to benefit from a change in control and, as a result, could materially adversely affect the market price of our common stock and your ability to realize any potential change-in-control premium.

         We will be a "controlled company" within the meaning of the NYSE Listed Company rules, and, as a result, will rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

        Upon completion of this offering, the Isely family, or entities controlled by the Isely family, will own more than 50% of the total voting power of our common shares for the election of directors and we will be a "controlled company" under NYSE corporate governance standards. As a controlled

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company, certain exemptions under NYSE standards will free us from the obligation to comply with certain corporate governance requirements of the NYSE, including the requirements:

•

that a majority of our board consists of "independent directors," as defined under the rules of the NYSE;



•

that our director nominees be selected, or recommended for our boards' selection, either (1) by a majority of independent directors in a vote by independent directors, pursuant to a nominations process adopted by a board resolution, or (2) by a nominating and governance committee comprised solely of independent directors with a written charter addressing the nominations process; and



•

that the compensation of our executive officers be determined, or recommended to the board for determination, by a majority of independent directors in a vote by independent directors, or a compensation committee comprised solely of independent directors.

        Accordingly, for so long as we are a "controlled company," you will not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

         Our costs will increase significantly as a result of operating as a public company, and our management will be required to devote substantial time to complying with public company regulations.

        We historically have operated our business as a private company. As a public company, we will incur additional legal, accounting, compliance and other expenses that we have not incurred as a private company. After this offering, we will become obligated to file with the SEC annual and quarterly reports and other reports that are specified in Section 13 and other sections of the Securities Exchange Act of 1934, as amended, or the Exchange Act. In addition, we will also become subject to other reporting and corporate governance requirements, including certain requirements of the NYSE, and certain provisions of Sarbanes-Oxley and the Dodd Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank, which will impose significant compliance obligations upon us. We will need to institute a comprehensive compliance function, establish internal policies, ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis and design, establish, evaluate and maintain internal controls over financial reporting in compliance with Sarbanes-Oxley.

        Sarbanes-Oxley and Dodd-Frank, as well as rules subsequently implemented by the SEC and the NYSE, have imposed enhanced corporate governance and disclosure practices for public companies. Our efforts to comply with evolving laws, regulations and standards in this regard are likely to result in increased administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. These changes will require a significant commitment of additional capital and resources. We may not be successful in implementing these requirements, and implementing them could materially adversely affect our business, results of operations and financial condition. In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired. If we do not implement such requirements in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NYSE. Any such action could harm our reputation and the confidence of investors and customers in our company and materially adversely affect our business and cause our share price to fall.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus includes forward-looking statements in addition to historical information. These forward-looking statements are included throughout this prospectus, including in the sections entitled "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," "Executive Compensation," and "Certain Relationships and Related Party Transactions," and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" and similar terms and phrases to identify forward-looking statements in this prospectus.

        The forward-looking statements contained in this prospectus are based on management's current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include those described in "Risk Factors." Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

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USE OF PROCEEDS

        Assuming an initial public offering price of $      per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), we estimate that we will receive net proceeds from this offering of approximately $       million after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        We intend to use the net proceeds to us from this offering to repay our term loan and all outstanding amounts under our revolving credit facility, fund the payment of the cash portion of the purchase price for the Boulder Contribution, settle the cash portion of restricted stock units granted to our Chief Financial Officer, fund working capital and for general corporate purposes. The amount and timing of actual requirements for working capital or funds for general corporate purposes will depend on numerous factors related to the implementation of our business strategy. Our executive management will have broad discretion in the application of the net proceeds, and investors in our common stock will be relying on the judgment of our management regarding the application of the net proceeds from this offering.

        As of March 31, 2012, we had $16.0 million of indebtedness under our term loan and $9.5 million of indebtedness under our revolving credit facility, which was used to fund new store growth and working capital. The average annual interest rate on our term loan and revolving credit facility for the six months ended March 31, 2012 was 2.06% and 2.50%, respectively. Our term loan and revolving credit facility mature on June 30, 2014. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" for more information.

        The cash portion of the purchase price payable to the minority owners of BVC in connection with the Boulder Contribution will be determined based on the public offering price of the shares sold in this offering. Assuming a public offering price of $      per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), the minority owners of BVC would receive $      in cash in connection with the Boulder Contribution. For additional information regarding the Boulder Contribution, see "The Reorganization—The Boulder Contribution."

        Each $1.00 increase (decrease) in the assumed initial public offering price of $      per share would (assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same after deducting underwriting discounts and commissions and estimated offering expenses payable by us) increase (decrease) the net proceeds to us from this offering by approximately $       million and increase (decrease) the cash payable in connection with the Reorganization by approximately $        .

        We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders, including any shares that may be sold by the selling stockholders in connection with the exercise of the underwriters' overallotment option.

DIVIDEND POLICY

        Natural Grocers by Vitamin Cottage, Inc. will be a holding company with no operations of its own. It will depend on payments, dividends and distributions from the operating company, its wholly-owned subsidiary, for funds to pay dividends to our stockholders. The operating company currently expects to retain future earnings for use in the operation and expansion of our business and does not anticipate paying any cash dividends for the foreseeable future. In addition, our ability and the ability of our operating company to declare and pay cash dividends is prohibited by our credit facility. Furthermore, the declaration and payment of future dividends to holders of our common stock will be at the discretion of our board and will depend upon many factors, including our financial condition, earnings, legal requirements, restrictions in the operating company's debt agreements and other factors deemed relevant by our board. The operating company did not pay any dividends during fiscal years 2009, 2010 and 2011.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2012, on:

•

an actual basis, to reflect the cash and cash equivalents and capitalization of Vitamin Cottage Natural Food Markets, Inc. and its consolidated subsidiaries as of March 31, 2012; and



•

an as adjusted basis, to reflect (1) the sale by us of            shares of our common stock in this offering at an assumed initial offering price of $            per share (the midpoint of the estimated price range set forth on the cover page of this prospectus) after deducting underwriting discounts and commissions and estimated expenses payable by us, (2) the application of net proceeds as described in "Use of Proceeds" and (3) the Reorganization.

        You should read this table in conjunction with "Use of Proceeds," "Selected Historical Consolidated Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the audited and unaudited consolidated financial statements and related notes included elsewhere in this prospectus.

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THE REORGANIZATION

        Natural Grocers by Vitamin Cottage, Inc. was incorporated on April 9, 2012, in anticipation of this offering. Prior to this offering, Natural Grocers by Vitamin Cottage, Inc. is a wholly-owned subsidiary of Vitamin Cottage Natural Food Markets, Inc. In connection with, and immediately prior to the completion of this offering, we will complete a reorganization that includes: (1) the Delaware Merger, (2) the Boulder Contribution and (3) the issuance of restricted stock units to our Chief Financial Officer. The Delaware Merger and the Boulder Contribution are conditions to the consummation of this offering. The diagram below reflects our corporate structure immediately prior to the Reorganization:

        The Reorganization includes the following transactions:

•

The Delaware Merger.  In connection with, and immediately prior to the completion of, this offering, the existing shareholders of Vitamin Cottage Natural Food Markets, Inc. (which we refer to as the operating company) will exchange the capital stock of the operating company for an aggregate of      shares of common stock of Natural Grocers by Vitamin Cottage, Inc. by means of a statutory merger of the operating company with Vitamin Merger, Inc., a newly-formed, wholly-owned subsidiary of the issuer. The operating company will survive the merger and continue its existence as a wholly-owned subsidiary of the issuer. Following the completion of this offering, Natural Grocers by Vitamin Cottage, Inc. will be a holding company with no material assets other than its direct 100% ownership interest in the operating company. We refer to this transaction in this prospectus as the Delaware Merger.

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•

The Boulder Contribution.  The operating company has historically owned a 55% interest in BVC, which owns five of our stores in Colorado. In connection with and immediately prior to the completion of this offering, we will complete a transaction in which Natural Grocers by Vitamin Cottage, Inc. will purchase the 45% membership interests in BVC currently owned by a group of other non-affiliated investors. In exchange for the contribution of their 45% interests in BVC, the minority owners of BVC will receive a combination of cash and shares of common stock in Natural Grocers by Vitamin Cottage, Inc. In total, we will issue an aggregate of      shares of unregistered common stock of Natural Grocers by Vitamin Cottage, Inc. to the minority owners of BVC in connection with the contribution. The cash portion of the purchase price payable to the minority owners of BVC in connection with the Boulder Contribution will be determined based on the public offering price. Assuming a public offering price of $        per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), the minority owners of BVC would receive $        in cash in connection with the Boulder Contribution. Immediately following these transactions, Natural Grocers by Vitamin Cottage, Inc. will contribute the 45% interest in BVC to the operating company. We refer to this transaction in this prospectus as the Boulder Contribution.



•

Officer Grant.  Under our Chief Financial Officer's employment agreement, we will grant to her restricted stock units immediately following completion of the offering and following the exercise of the underwriters' overallotment option, if any. Assuming a public offering price of $          per share (the midpoint of the estimated price range set forth on the cover page of this prospectus), our Chief Financial Officer would receive          restricted stock units in total,        of which would be immediately vested and settled for a combination of         shares of common stock and $          , and          of which would remain subject to future vesting requirements. See "Executive Compensation—Compensation Discussion and Analysis—Compensation decisions for fiscal year 2011 and fiscal year 2012—Equity compensation" for additional information.

        In addition to the lock-up agreements entered into with the underwriters in connection with this offering, the minority owners of BVC have agreed that they will not sell or otherwise dispose of the shares of common stock of Natural Grocers by Vitamin Cottage, Inc. that they will receive in connection with the Boulder Contribution for a period of 180 days following the completion of this offering.

        Each $1.00 increase (decrease) in the assumed initial public offering price would (assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us) increase (decrease) the cash portion of the purchase price payable to the minority owners of BVC in connection with the Boulder Contribution by approximately $          , increase (decrease) the amount of cash payable to our Chief Financial Officer in settlement of vested restricted stock units by $                .

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        The diagram below illustrates our corporate structure immediately following completion of the Reorganization and this offering:

        The preceding diagram assumes that the underwriters will not exercise their overallotment option. If the underwriters exercise their overallotment option in full, former BVC minority investors would own             shares or      % of our common stock, former shareholders of Vitamin Cottage Natural Food Markets, Inc. would own              shares or      % of our common stock, and purchasers of stock in this offering would own             shares or      % of our common stock.

        Immediately following the offering, Kemper Isely, Zephyr Isely, Heather Isely and Elizabeth Isely will, in the aggregate, own and control approximately      % of our common stock, or approximately      % if the underwriters exercise their overallotment option in full. In addition, these shares will be subject to a stockholders agreement, pursuant to which these and other Isely family stockholders will agree to vote their shares of common stock together on all matters related to the election of directors. Accordingly, we will be a "controlled company" within the meaning of The New York Stock Exchange governance standards.

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DILUTION

        Dilution is the amount by which the initial public offering price paid by purchasers of common stock sold in this offering will exceed the net tangible book value per share of common stock after this offering. Net tangible book value per share is determined by dividing the total tangible assets of Natural Grocers by Vitamin Cottage, Inc. less its total liabilities by the number of shares of its common stock outstanding. The historical as adjusted net tangible book value as of March 31, 2012, giving effect to the Reorganization and before giving effect to the offering was $        , or $        per share.

        After giving effect to the sale of shares of our common stock in this offering at an assumed initial public offering price per share of $        per share (the midpoint of the estimated price range set forth on the cover page of this prospectus) and the application of the estimated net proceeds from this offering as described in "Use of Proceeds," after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us, the as adjusted net tangible book value as of March 31, 2012 would have been $         million, or $        per share of common stock. Purchasers of common stock in this offering will experience substantial and immediate dilution in net tangible book value per share of common stock for financial accounting purposes, as illustrated in the following table.

        A $1.00 increase (decrease) in the assumed initial public offering price per share would increase (decrease) the as adjusted net tangible book value after this offering by approximately $        , and the as adjusted net tangible book value per share after this offering by $        per share. It would also increase (decrease) the dilution per share to investors in this offering by $        per share, assuming the number of shares offered by us under this prospectus remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.

        The discussion and tables above also exclude shares of common stock reserved for issuance under our omnibus incentive plan that we intend to adopt in connection with this offering.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

        Natural Grocers by Vitamin Cottage, Inc. was incorporated in Delaware on April 9, 2012. Prior to the completion of this offering, Natural Grocers by Vitamin Cottage, Inc. will have no material assets. Following the completion of this offering, Natural Grocers by Vitamin Cottage, Inc. will be a holding company with no material assets other than its direct 100% ownership of Vitamin Cottage Natural Food Markets, Inc., which is our operating company. The consolidated financial statements of Natural Grocers by Vitamin Cottage, Inc. will reflect the assets, liabilities and results of operations of the operating company. Accordingly, the following tables set forth the selected historical consolidated financial and other data of the operating company as of the dates and for the periods indicated.

        The selected historical consolidated financial data for the year ended September 30, 2009, and as of and for the years ended September 30, 2010 and 2011 have been derived from the audited consolidated financial statements of the operating company, which are included elsewhere in this prospectus. The selected consolidated balance sheet data as of September 30, 2009 has been derived from audited consolidated financial statements not included in this prospectus.

        The selected historical unaudited consolidated financial data as of March 31, 2012 and for the three and six months ended March 31, 2011 and 2012 have been derived from the unaudited consolidated financial statements of the operating company, which are included elsewhere in this prospectus. The unaudited consolidated financial statements of the operating company have been prepared on the same basis as the audited consolidated financial statements of the operating company and, in the opinion of management, include all adjustments necessary for a fair presentation. Interim results are not necessarily indicative of results that may be expected for a full fiscal year.

        The selected historical consolidated data presented below should be read in conjunction with the information included in the sections entitled "Risk Factors," "The Reorganization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes thereto and other financial data included elsewhere in this prospectus. The historical results of Vitamin Cottage Natural Food Markets, Inc. set forth below are not necessarily indicative of results to be expected for any future period.

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        See "The Reorganization" for additional information regarding the Boulder Contribution.

(2)

Pro forma per share data gives effect to the Reorganization, including the issuance of            shares in connection with the Delaware Merger,             shares in connection with the Boulder Contribution,            shares and            restricted stock units to our Chief Financial Officer

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immediately following this offering. The following table sets forth the computation of pro forma basic and diluted earnings per share:

(3)

EBITDA is not a measure of financial performance under U.S. GAAP. EBITDA is defined as net income attributable to Vitamin Cottage Natural Food Markets, Inc. before interest expense, provision for income tax, net income attributable to the noncontrolling interest and depreciation and amortization. We believe EBITDA provides additional information about (i) our operating performance, because it assists us in comparing the operating performance of our stores on a consistent basis, as it removes the impact of non-cash depreciation and amortization expense as well as items not directly resulting from our core operations such as interest expense and income taxes and (ii) our performance and the effectiveness of our operational strategies. Additionally, EBITDA is used as a measure in our debt covenants under the credit facility, and our incentive compensation plans base incentive compensation payments on our EBITDA performance. Furthermore, EBITDA is used by investors as a supplemental measure to evaluate the overall operating performance of companies in our industry. Management believes that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations period over period and would ordinarily add back non-cash expenses such as depreciation and amortization as well as items that are not part of normal day-to-day operations of our business such as interest expense and income taxes. By providing this non-GAAP financial measure, together with a reconciliation, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Our competitors may define EBITDA differently, and as a result, our measure of EBITDA may not be directly comparable to EBITDA of other companies. Items excluded from EBITDA are significant components in understanding and assessing financial performance. EBITDA is a supplemental measure of operating performance that does not represent and should not be considered in isolation or as an alternative to, or substitute for net income or other financial statement data presented in the consolidated financial statements of the operating company as indicators of financial performance. EBITDA has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:

•

EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

•

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

•

EBITDA does not reflect our tax expense or the cash requirements to pay our taxes; and

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and EBITDA does not reflect any cash requirements for such replacements.

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Due to these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA only supplementally. We further believe that our presentation of these U.S. GAAP and non-GAAP financial measurements provide information that is useful to analysts and investors because they are important indicators of the strength of our operations and the performance of our business.

The following table reconciles EBITDA to net income attributable to Vitamin Cottage Natural Food Markets, Inc.:

(4)

EBITDA margin is defined as the ratio of EBITDA to net sales. We present EBITDA margin because it is used by management as a performance measurement of EBITDA generated from net sales. See footnote 3 above for a discussion of EBITDA as a non-GAAP financial measure and a reconciliation of net sales to EBITDA.

(5)

When calculating change in comparable store sales, we begin to include sales from a store in our comparable store base on the first day of the thirteenth full month following the store's opening. We monitor the percentage change in comparable store sales by comparing sales from all stores in our comparable store base for a reporting period against sales from the same stores for the same number of operating months in the comparable reporting period of the prior year. When a store that is included in comparable store sales is remodeled or relocated, we continue to consider sales from that store to be comparable store sales.

(6)

Gross square footage and selling square footage at the end of the period include the square footage for all stores that were open as of the end of the period presented.

(7)

Average comparable store size for gross square feet and selling square feet are calculated using the average store size for all stores that were in the comparable store base as of the end of the period presented.

(8)

Comparable store sales per selling square foot is calculated using comparable store sales for the period divided by the weighted average square feet per store based on the amount of time the store was included in the comparable store base during the period.

(9)

Total debt includes the outstanding principal balance of our term loan, outstanding borrowings on our revolving credit facility and notes payable to related parties.

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

        The following is a discussion of the financial position and results of operations for our operating company, Vitamin Cottage Natural Food Markets, Inc., and its consolidated subsidiaries for each of the years ended September 30, 2009, 2010 and 2011, and the three and six months ended March 31, 2011 and 2012. The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and notes thereto and "Selected Historical Consolidated Financial and Other Data," which are included elsewhere in this prospectus. To the extent that the following Management's Discussion and Analysis contains statements which are not of a historical nature, such statements are forward-looking statements which involve risks and uncertainties. These risks include, but are not limited to, those discussed under "Risk Factors" and included in other portions of this prospectus. Such forward-looking statements are often identified with such words as "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future" or similar words concerning future events. Actual results could differ materially from these forward-looking statements. All references to a "fiscal year" refer to a year beginning on October 1 of the previous year, and ending on September 30 of such year (for example "fiscal year 2011" refers to the year from October 1, 2010 to September 30, 2011).

Company Overview

        We operate natural and organic grocery and dietary supplement stores that are focused on providing high-quality products at affordable prices, exceptional customer service, nutrition education and community outreach. Since our founding, we have been at the forefront of the natural and organic foods movement. We are headquartered in Lakewood, Colorado, and as of June 30, 2012, we operated 55 stores in 11 states, including Colorado, Idaho, Kansas, Missouri, Montana, Nebraska, New Mexico, Oklahoma, Texas, Utah and Wyoming as well as a bulk food repackaging facility and distribution center in Colorado.

        We offer a variety of natural and organic groceries and dietary supplements that meet our strict quality guidelines. The size of our stores varies from 5,000 selling square feet to 14,500 selling square feet, and a typical new store averages 9,500 selling square feet.

        The growth in the organic and natural foods industry and growing consumer interest in health and nutrition has enabled us to continue to open new stores and enter new markets. In fiscal year 2011, we opened ten new stores, and in each of fiscal years 2009 and 2010, we opened six new stores. During the nine months ended June 30, 2012, we opened six new stores, and we currently plan to open four new stores in the remaining three months of fiscal year 2012.

Industry Trends and Economics

        We have identified the following recent trends and factors that have impacted and may continue to impact our results of operations and financial condition:

•

Opportunities in the growing natural and organic grocery and dietary supplements industry.  Our industry, which includes organic and natural foods and dietary supplements, has had significant growth over the last several years, driven in large part by increased public interest in health and nutrition. Our results of operations have been and may continue to be materially and adversely affected by the timing and number of new store openings. The length of time it takes for a new store to become profitable can vary depending on a number of factors including location, competition, a new market versus an existing market, the strength of store management and general economic conditions. New stores generally have lower sales compared to mature stores, but typically grow at a faster rate than mature stores for several years after their opening date. Mature stores refer to stores that have been open for five years or longer.

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Position within the broader grocery industry.  The grocery industry is highly competitive. Our competition varies by market and includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, independent health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers. Customer shopping preferences are based on a number of factors, including price, selection, quality, customer service, shopping environment, location or any combination of these factors. Natural and organic groceries and dietary supplements continue to be some of the fastest growing segments in grocery retailing. The growth in the market has also driven our competitors to open new stores and enter new markets, which has had and may continue to have an impact on our results of operations for any given period.



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Impact of broader economic trends.  The grocery industry and our sales are affected by general economic conditions. A number of factors can affect the level of consumer spending, including economic conditions, the level of disposable consumer income, consumer debt, interest rates, the price of commodities, the political environment and consumer confidence. Our sales were affected by the economic recession in fiscal years 2009 and 2010, as seen in our reduced comparable store sales growth year over year. In the twelve months ended September 30, 2007, 2008, 2009, 2010 and 2011 our comparable store sales grew 7.9%, 11.6%, 2.6%, 2.1% and 4.9%, respectively. In the six months ended March 31, 2012 our comparable store sales grew 10.2% compared to the six months ended March 31, 2011. While our comparable store sales did not decrease year over year in fiscal years 2009 and 2010, comparable store sales growth slowed substantially, due to lower growth in our average transaction size period over period.

Performance Highlights

        Key highlights of our recent performance are discussed briefly below and are discussed in further detail throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Net sales.  We reported net sales of approximately $159.7 million for the six months ended March 31, 2012, which is a 26.0% increase compared to the six months ended March 31, 2011. We reported net sales of approximately $264.5 million for the year ended September 30, 2011, which is a 16.6% increase compared to the year ended September 30, 2010. Net sales increased at a compound annual growth rate of 13.3% from fiscal year 2009 to fiscal year 2011.



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Comparable store sales.  Our comparable store sales for the six months ended March 31, 2012 increased 10.2% over the six months ended March 31, 2011. Our comparable store sales for the year ended September 30, 2011 increased 4.9% over the year ended September 30, 2010. As of March 31, 2012, we have had over 40 quarters of consecutive growth in comparable store sales.



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Net income.  We reported net income of approximately $4.0 million for the six months ended March 31, 2012 compared to net income of approximately $2.2 million for the six months ended March 31, 2011. We reported net income of approximately $4.6 million for the year ended September 30, 2011 compared to net income of approximately $5.6 million for the year ended September 30, 2010.



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EBITDA.  We generated EBITDA of $11.1 million in the six months ended March 31, 2012, which increased $4.0 million, or 57.5%, from $7.1 million in the six months ended March 31, 2011. EBITDA increased $597,000, or 4.1%, to $15.1 million in the year ended September 30, 2011 from $14.5 million in the year ended September 30, 2010. Our EBITDA has increased steadily, with a compound annual growth rate of 10.4% from fiscal year 2009 to fiscal year 2011. EBITDA is not a measure of financial performance under U.S. GAAP. Items excluded from EBITDA are significant components in understanding and assessing our financial performance. Refer to the "Selected Historical Consolidated Financial and Other Data" section of this

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prospectus for a reconciliation of EBITDA to net income attributable to Vitamin Cottage Natural Food Markets, Inc.

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Liquidity.  We had approximately $3.5 million in cash and cash equivalents as of March 31, 2012. Following the application of the net proceeds from this offering as described in "Use of Proceeds," we expect to have $         million available under our revolving credit facility. We believe that the cash generated from operations, together with the borrowing availability under our revolving credit facility has been and will continue to be sufficient to meet our working capital needs and capital expenditures related to new store needs for at least the next twelve months.



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New store growth.  We have opened 26 new stores since the beginning of fiscal year 2009, ending with 53 stores as of March 31, 2012. We opened six, six and ten new stores in the years ended September 30, 2009, 2010 and 2011, respectively. We opened four new stores during the six months ended March 31, 2012. We opened two new stores during the three months ended June 30, 2012 and plan to open an additional four new stores in the remaining three months of fiscal year 2012.

Outlook

        We believe there are several key factors that have contributed to our success and will enable us to continue to expand profitably, including a loyal customer base, growing consumer interest in nutrition and wellness, a differentiated shopping experience that focuses on customer service, nutrition education and a shopper-friendly retail environment, and our focus on high quality, affordable natural and organic groceries and dietary supplements.

        We plan for the foreseeable future to continue opening new stores and entering new markets at or above recent levels of growth. During the past few years, we have successfully expanded our infrastructure to enable us to support our continued growth. This has included successfully implementing an enterprise resource planning, or ERP, system in fiscal year 2010, hiring key personnel and developing efficient and effective new store opening construction and operations processes. We believe there are attractive opportunities for us to continue to expand our store base and focus on increasing comparable store sales. As we continue to expand our store base, we believe there are opportunities for increased leverage in fixed costs, such as administrative expenses, as well as increased economies of scale in sourcing products.