Company Quick10K Filing
Chase General
Price-0.00 EPS-0
Shares2 P/E0
MCap-0 P/FCF0
Net Debt-0 EBIT-0
TEV-0 TEV/EBIT0
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-14
10-Q 2019-12-31 Filed 2020-02-12
10-Q 2019-09-30 Filed 2019-11-14
10-K 2019-06-30 Filed 2019-09-30
10-Q 2019-03-31 Filed 2019-05-15
10-Q 2018-12-31 Filed 2019-02-14
10-Q 2018-09-30 Filed 2018-11-13
10-K 2018-06-30 Filed 2018-09-26
10-Q 2018-03-31 Filed 2018-05-14
10-Q 2017-12-31 Filed 2018-02-12
10-Q 2017-09-30 Filed 2017-11-13
10-K 2017-06-30 Filed 2017-09-27
10-Q 2017-03-31 Filed 2017-05-12
10-Q 2016-12-31 Filed 2017-02-10
10-Q 2016-09-30 Filed 2016-11-10
10-K 2016-06-30 Filed 2016-09-23
10-Q 2016-03-31 Filed 2016-05-12
10-Q 2015-12-31 Filed 2016-02-12
10-Q 2015-09-30 Filed 2015-11-12
10-K 2015-06-30 Filed 2015-09-22
10-Q 2015-03-31 Filed 2015-05-08
10-Q 2014-12-31 Filed 2015-02-13
10-Q 2014-09-30 Filed 2014-11-12
10-K 2014-06-30 Filed 2014-09-18
10-Q 2014-03-31 Filed 2014-05-09
10-Q 2013-12-31 Filed 2014-02-07
10-Q 2013-09-30 Filed 2013-11-08
10-K 2013-06-30 Filed 2013-09-19
10-Q 2013-03-31 Filed 2013-05-10
10-Q 2012-12-31 Filed 2013-02-08
10-Q 2012-09-30 Filed 2012-11-09
10-K 2012-06-30 Filed 2012-09-14
10-Q 2012-03-31 Filed 2012-05-11
10-Q 2011-12-31 Filed 2012-02-14
10-Q 2011-09-30 Filed 2011-11-14
10-K 2011-06-30 Filed 2011-09-26
10-Q 2011-03-31 Filed 2011-05-17
10-Q 2010-12-31 Filed 2011-02-14
10-Q 2010-09-30 Filed 2010-11-15
10-K 2010-06-30 Filed 2010-09-27
10-Q 2010-03-31 Filed 2010-05-14
10-Q 2009-12-31 Filed 2010-02-12
8-K 2019-02-01
8-K 2018-03-19

CSGN 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 1Significant Accounting Policies
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Part I.	Financial Information
Note 2Loss per Share
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Part I.	Financial Information
Note 3Notes Payable
Item 1. Condensed Consolidated Financial Statements
Note 4Income Taxes
Note 5Supplemental Disclosures of Cash Flow Information
Note 6Disclosures About Fair Value of Financial Instruments
Part I.	Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 7Leases
Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Note 8Subsequent Events
Part I. Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Part I.	Financial Information
Part II. Other Information
Item 3Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 5. Other Information
Item 6. Exhibits
EX-31.1 tm2014572d1_ex31-1.htm
EX-32.1 tm2014572d1_ex32-1.htm

Chase General Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.81.41.10.70.40.02012201420172020
Assets, Equity
1.51.20.80.50.1-0.22012201420172020
Rev, G Profit, Net Income
0.70.50.30.0-0.2-0.42012201420172020
Ops, Inv, Fin

10-Q 1 tm2014572d1_10q.htm FORM 10-Q

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

xQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

 

¨TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from           to

 

Commission File Number 2-5916

 

    Chase General Corporation    

(Exact name of small business issuer as specified in its charter)

 

  MISSOURI       36-2667734  
(State or other jurisdiction of   (IRS Employer Identification No.)
incorporation or organization)    

 

    1307 South 59th, St. Joseph, Missouri 64507    

(Address of principal executive offices, Zip Code)

 

      (816) 279-1625      

(Issuer’s telephone number, including area code)

 

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

Title of each class Ticker symbol(s) Name of each exchange on which registered
None Not Applicable Not Applicable

 

Indicate by check mark if the registrant is a well-known issuer, as defined in Rule 405 of the Securities Act. Yes ¨  No x

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes ¨  No x

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No ¨

 

Indicate by check mark whether the registrant (1) has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x  No ¨

 

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

 

  Large accelerated filer  ¨  Accelerated filer  ¨
      
  Nonaccelerated filer x  Smaller reporting company  x
      
  Emerging Growth Company  ¨   

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ¨  No x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes ¨  No x

 

As of May 13, 2020, there were 969,834 shares of common stock, $1.00 par value, outstanding.

 

 

 

 

 

Chase General Corporation and Subsidiary

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

FOR THE NINE MONTHS ENDED MARCH 31, 2020

 

Part I Financial Information   
          
  Item 1.  Condensed Consolidated Financial Statements    
         
    Condensed Consolidated Balance Sheets as of March 31, 2020 (UNAUDITED) and June 30, 2019  1 
          
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)  3 
          
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)  4 
          
    Condensed Consolidated Statements of Cash Flows FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)  5 
          
    Notes to Condensed Consolidated Financial Statements (Unaudited)  6 
          
  Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations  15 
          
  Item 3.  Quantitative and Qualitative Disclosures About Market Risk  22 
          
  Item 4.  Controls and Procedures  22 
          
Part II Other Information   
          
  Item 1.  Legal Proceedings  23 
          
  Item 1A.  Risk Factors  23 
          
  Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds  23 
          
  Item 3.  Defaults Upon Senior Securities  23 
          
  Item 4.  Mine Safety Disclosures  23 
          
  Item 5.  Other Information  23 
          
  Signatures    24 

 

 

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31,   June 30, 
   2020   2019 
    (Unaudited)      
ASSETS          
           
CURRENT ASSETS          
Cash and Cash Equivalents  $128,877   $18,800 
Trade Receivables, Net of Allowance for Doubtful Accounts of $13,749 and $12,849, Respectively   117,688    137,869 
Inventories:          
Finished Goods   28,490    200,085 
Goods in Process   4,645    12,999 
Raw Materials   101,741    45,456 
Packaging Materials   151,183    151,795 
Prepaid Expenses   22,638    7,653 
Total Current Assets   555,262    574,657 
           
PROPERTY AND EQUIPMENT          
Land   35,000    35,000 
Buildings   77,348    77,348 
Machinery and Equipment   851,791    851,791 
Trucks and Autos   158,632    158,632 
Office Equipment   33,025    33,025 
Leasehold Improvements   72,068    72,068 
Total   1,227,864    1,227,864 
Less: Accumulated Depreciation   1,057,720    1,016,764 
Total Property and Equipment, Net   170,144    211,100 
           
Other Long-Term Assets:          
Right of Use Assets   332,764    - 
Total Long-Term Assets   502,908    211,100 
           
Total Assets  $1,058,170   $785,757 

 

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

 

(1)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

 

   March 31,   June 30, 
   2020   2019 
    (Unaudited)      
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
CURRENT LIABILITIES          
Accounts Payable  $82,075   $78,549 
Current Maturities of Notes Payable   12,698    97,133 
Current Maturities of Lease Liability   58,302    - 
Accrued Expenses   25,631    28,851 
Refund Liability Owed to Customers   5,067    10,403 
Deferred Income   1,299    1,299 
Total Current Liabilities   185,072    216,235 
           
LONG-TERM LIABILITIES          
Deferred Income   5,194    6,168 
Lease Liabilities, Less Current Maturities   274,462    - 
Notes Payable, Less Current Maturities   10,813    20,408 
Total Long-Term Liabilities   290,469    26,576 
           
Total Liabilities   475,541    242,811 
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS' EQUITY          
Capital Stock Issued and Outstanding:          
Prior Cumulative Preferred Stock, $5 Par Value:          
Series A (Liquidation Preference $2,362,500 and $2,340,000, Respectively)   500,000    500,000 
Series B (Liquidation Preference $2,317,500 and $2,295,000, Respectively)   500,000    500,000 
Cumulative Preferred Stock, $20 Par Value:          
Series A (Liquidation Preference $5,297,229 and $5,253,329, Respectively)   1,170,660    1,170,660 
Series B (Liquidation Preference $863,287 and $856,133, Respectively)   190,780    190,780 
Common Stock, $1 Par Value   969,834    969,834 
Paid-In Capital in Excess of Par   3,134,722    3,134,722 
Accumulated Deficit   (5,883,367)   (5,923,050)
Total Stockholders' Equity   582,629    542,946 
           
Total Liabilities and Stockholders' Equity  $1,058,170   $785,757 

 

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

 

(2)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   Three Months Ended 
   March 31 
   2020   2019 
SALES  $316,113   $327,044 
           
COST OF SALES   320,745    355,195 
Gross Loss on Sales   (4,632)   (28,151)
           
OPERATING EXPENSES          
Selling   62,645    61,398 
General and Administrative   107,163    96,654 
Total Operating Expenses   169,808    158,052 
           
Loss from Operations   (174,440)   (186,203)
           
OTHER INCOME (EXPENSE)          
Miscellaneous Income   568    586 
Interest Expense   (392)   (368)
Total Other Income   176    218 
           
Loss before Income Taxes   (174,264)   (185,985)
           
INCOME TAX BENEFIT   -    (3,400)
           
NET LOSS  $(174,264)  $(182,585)
           
LOSS PER SHARE          
Basic  $(0.21)  $(0.22)
           
Diluted  $(0.21)  $(0.22)

 

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

 

(3)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

   Nine Months Ended 
   March 31 
   2020   2019 
SALES  $2,261,653   $2,199,193 
           
COST OF SALES   1,616,045    1,633,970 
Gross Profit on Sales   645,608    565,223 
           
OPERATING EXPENSES          
Selling   240,823    229,815 
General and Administrative   363,387    332,467 
Total Operating Expenses   604,210    562,282 
           
Income from Operations   41,398    2,941 
           
OTHER INCOME (EXPENSE)          
Miscellaneous Income   3,874    4,411 
Interest Expense   (5,589)   (6,309)
Total Other Expense   (1,715)   (1,898)
           
Income before Income Taxes   39,683    1,043 
           
INCOME TAX BENEFIT   -    - 
           
NET INCOME  $39,683   $1,043 
           
LOSS PER SHARE          
Basic  $(0.06)  $(0.10)
           
Diluted  $(0.06)  $(0.10)

 

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

 

(4)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   Nine Months Ended 
   March 31 
   2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Income  $39,683   $1,043 
Adjustments to Reconcile Net Income to Net Cash          
Provided by Operating Activities:          
Depreciation and Amortization   40,956    42,337 
Allowance for Bad Debts   900    900 
Deferred Income Amortization   (974)   (974)
Effects of Changes in Operating Assets and Liabilities:          
Trade Receivables   19,281    (31,155)
Inventories   124,276    234,598 
Prepaid Expenses   (14,985)   (10,110)
Accounts Payable   3,526    (129,213)
Refund Liability Owed to Customers   (5,336)   11,020 
Accrued Expenses   (3,220)   (6,021)
Net Cash Provided by Operating Activities   204,107    112,425 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from Line-of-Credit   227,000    340,000 
Principal Payments on Line-of-Credit   (312,000)   (340,000)
Principal Payments on Notes Payable   (9,030)   (15,777)
Net Cash Used by Financing Activities   (94,030)   (15,777)
           
NET INCREASE IN CASH AND CASH EQUIVALENTS   110,077    96,648 
           
Cash and Cash Equivalents - Beginning of Period   18,800    2,129 
           
CASH AND CASH EQUIVALENTS - END OF PERIOD  $128,877   $98,777 

 

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

 

(5)

 

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1SIGNIFICANT ACCOUNTING POLICIES

 

General

 

The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as Chase, we, our, and us) at June 30, 2019 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three and nine months ended March 31, 2020 and for the three and nine months ended March 31, 2019 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2019. The results of operations for the three and nine months ended March 31, 2020 and cash flows for the nine months ended March 31, 2020 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2020. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations, and cash flows for the periods have been included.

 

Revenue Recognition

 

The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, including 1) a candy bar marketed under the trade name “Cherry Mash” and 2) coconut, peanut, chocolate, and fudge confectioneries. The Company recognizes revenue at the point in time that control of the ordered product(s) is transferred to the customer, which is typically upon shipment to the customer. Shipping and handling costs incurred to ship product to the customer are recorded within cost of sales. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation.

 

(6)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue Recognition (Continued)

 

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The amount of consideration the Company expects to receive and revenue the Company recognizes includes estimates of variable consideration, including costs for trade promotional programs, customer incentives, and allowances and discounts associated with aged or potentially unsaleable products. These estimates are based upon our analysis of the programs offered, historical trends, and expectations regarding customer and consumer participation, sales and payment trends and our experience with payment patterns associated with similar programs offered in the past. The Company reviews and updates these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments recognized in the third quarter of the year ending June 30, 2020 resulting from updated estimates of revenue for prior year product sales were not significant. The company has elected a practical expedient to recognize incremental costs incurred to obtain contracts, which primarily represent sales commissions where the amortization period would be less than one year, as a selling expense when incurred in the financial statements.

 

The majority of the Company’s products are confectionery and confectionery-based and, therefore, exhibit similar economic characteristics, such that they are based on similar ingredients and are marketed and sold through the same channels to the same customers. The Company operates two divisions, Chase Candy Products and Seasonal Candy Products. Chase Candy Products involve production and sale of a candy bar marketed under the trade name “Cherry Mash”. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Both divisions share a common labor force and utilize the same basic equipment and raw materials. Management considers these two divisions as one reportable segment. The various divisions of revenue are as follows:

 

For the three months ended March 31,        
   2020   2019 
Sales - Chase Candy  $305,944   $321,532 
Sales - Seasonal Candy   10,169    5,512 
Sales  $316,113   $327,044 

 

For the nine months ended March 31,        
   2020   2019 
Sales - Chase Candy  $1,124,689   $1,046,088 
Sales - Seasonal Candy   1,136,964    1,153,105 
Sales  $2,261,653   $2,199,193 

 

(7)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 1SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Recently Adopted Pronouncements

 

The Company adopted the guidance of ASU No. 2016-02, Leases, (ASC 842) as of July 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all, and disclose key leasing information. The Company elected a package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward the historical lease classification, and exclude from balance sheet reporting those leases with initial terms of 12 months or less. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Adoption of the new standard on July 1, 2019 resulted in the recording of operating lease ROU assets and lease liabilities in the amount of $376,105. The standard did not materially affect the Company’s consolidated net income or cash flows. See Note 7—Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases.

 

Recently Issued Pronouncements

 

There have been no newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company’s consolidated financial statements

 

(8)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

  

NOTE 2LOSS PER SHARE

 

The loss per share was computed on the weighted average of outstanding common shares during the period. Diluted earnings per share are calculated by including contingently issuable shares with the weighted average shares outstanding.

 

   Three Months Ended   Nine Months Ended 
   March 31   March 31 
   2020   2019   2020   2019 
Net Income (Loss)  $(174,264)  $(182,585)  $39,683   $1,043 
                     
Preferred Dividend Requirements:                    
6% Prior Cumulative Preferred,                    
  $5 Par Value   15,000    15,000    45,000    45,000 
5% Convertible Cumulative                    
  Preferred, $20 Par Value   17,018    17,018    51,054    51,054 
Total Dividend Requirements   32,018    32,018    96,054    96,054 
                     
Net Loss - Common                    
  Stockholders  $(206,282)  $(214,603)  $(56,371)  $(95,011)
                     
Weighted Average Shares - Basic   969,834    969,834    969,834    969,834 
Dilutive Effect of Contingently                    
  Issuable Shares   1,033,334    1,033,334    1,033,334    1,033,334 
Weighted Average Shares – Diluted   2,003,168    2,003,168    2,003,168    2,003,168 
                     
Basic Loss per Share  $(0.21)  $(0.22)  $(0.06)  $(0.10)
                     
Diluted Loss per Share  $(0.21)  $(0.22)  $(0.06)  $(0.10)

 

The contingently issuable shares, for the three months and nine months ended March 31, 2020 and 2019, were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

 

(9)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

note 2LOSS PER SHARE (continued)

 

Cumulative Preferred Stock dividends in arrears at March 31, 2020 and 2019 totaled $8,429,076 and $8,301,004, respectively. Total dividends in arrears, on a per share basis, consist of the following:

 

   Nine Months Ended 
   March 31 
   2020   2019 
6% Convertible:        
Series A  $18   $18 
Series B   18    18 
5% Convertible:          
Series A  $71   $70 
Series B   71    70 

 

The 6% convertible prior cumulative preferred stock may, upon thirty days prior notice, be redeemed by the Corporation at $5.25 a share plus unpaid accrued dividends to date of redemption. In the event of voluntary liquidation, holders of this stock are entitled to receive $5.25 per share plus accrued dividends. It may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for one share of Series A and 3.75 common shares for one share of Series B.

 

The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred.

 

 

(10)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 3NOTES PAYABLE

 

The Company’s long-term debt consists of:

 

      March 31,   June 30, 
Payee  Terms  2020   2019 
Nodaway Valley Bank  $350,000 line-of-credit agreement          
   expiring on January 4, 2021, with          
   a variable interest rate at prime but          
   not less than 5%. The line-of-credit          
   is collateralized by substantially all          
   assets of the Company.  $-   $85,000 
              
Ford Credit  $705 monthly payments, interest          
   of 5.8%; final payment due October          
   2021, secured by a vehicle.   12,761    18,407 
              
Toyota Credit  $444 monthly payments, interest          
   of 6.49%; final payment due May          
   2022, secured by a vehicle.   10,750    14,134 
              
Total      23,511    117,541 
Less Current Portion      12,698    97,133 
Long-Term Portion     $10,813   $20,408 

 

Future minimum payments for the twelve months ending March 31 are:

 

March 31,  Amount 
2021  $12,698 
2022   9,935 
2022   878 
Total  $23,511 

 

(11)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 4INCOME TAXES

 

The Company follows the provisions for uncertain tax positions as addressed in Financial Accounting Standards Board Accounting Standards Codification 740-10. The Company recognized no liability for unrecognized tax benefits at March 31, 2020. The Company has no material tax positions at March 31, 2020, for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The Company had no accruals for interest or penalties at March 31, 2020. The Company’s federal income tax returns for the fiscal years ended 2017, 2018, and 2019 are subject to examination by the Internal Revenue Service taxing authority.

 

NOTE 5SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

   Nine Months Ended 
   March 31 
   2020   2019 
Cash Paid for:          
Interest  $5,589   $6,309 

 

NOTE 6DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company’s financial instruments consist principally of cash and cash equivalents, trade receivables and payables, and notes payable. There are no significant differences between the carrying value and fair value of any of these consolidated financial instruments. As of March 31, 2020, the amount of the Company’s long-term debt approximates fair value based on the present value of estimated future cash flows using a discount rate commensurate with a borrowing rate available to the Company.

 

(12)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 7Leases

 

The Company adopted ASC 842 on July 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the three months ended March 31, 2019 or as of June 30, 2019.

 

The Company leases its office and manufacturing facility, located at 1307 South 59th, St. Joseph, Missouri under an operating lease from an entity that is partially owned by the son of the Chief Executive Officer of the Company. The lease term is from February 1, 2005 through March 31, 2025 with an option to extend for an additional term of five years. The Company does not believe that exercise of the renewal option is reasonably assured, and has not included the additional five years in the lease term. The lease currently requires payments of $6,500 per month.

 

Operating lease right-of-use assets and lease liabilities were recognized upon adoption of the lease standard based on the present value of minimum lease payments over the remaining lease term. The Company’s operating lease has a remaining term of 5.5 years and the present value of the lease payments is calculated using the lessor’s implicit rate of 6.43%. Operating lease expense is recognized on a straight-line basis over the lease term.

 

The Company’s lease agreement does not contain any residual value guarantees. Additionally, any other short-term leases are immaterial. The Company elected the practical expedient to not separate lease and non-lease components and also elected the short-term practical expedient for all leases that qualify. As a result, the Company will not recognize right-of-use assets or liabilities for short-term leases that qualify for the short-term practical expedient, but instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. Operating lease expenses and cash paid for operating lease liabilities were $58,500 for the nine months ended March 31, 2020, of which, $53,673 is included in cost of sales and $4,827 is included in general and administrative expenses.

 

Minimum annual payments required under existing operating lease liabilities that have initial or remaining noncancelable terms in excess of one year as of March 31, 2020 are as follows:

 

Twelve Months Ending March 31,  Amount 
2021  $78,000 
2022   78,000 
2023   78,000 
2024   78,000 
2025   78,000 
Total Lease Payments   390,000 
Less: Imputed Interest   57,236 
Total Lease Payments  $332,764 

 

(13)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

NOTE 8Subsequent events

 

The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. The Company put preparedness plans in place at the manufacturing facility. They have adjusted the number of people allowed at their facilities, enforced social distancing, maintained proper sanitation protocol and have asked that any high risk or employees feeling ill to not come in. The office and sales staff continues to work, while adhering to social distancing guidelines, implementing flexible hours, reducing person-to-person interaction and increasing safety measures.

 

To date, there has been minimal disruption to the supply chain network, including the supply of ingredients, packaging or other sourced materials, though it is possible that more disruptions could occur if the COVID-19 pandemic continues to impact markets around the world. The Company has repackaged inventory to continue to fill orders as needed and repurposed employees to better meet the current needs. Cost measures have been put in place to limit any non-essential needs.

 

The Company believes they have sufficient liquidity to satisfy current cash needs, however, they continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that the business can continue to operate during these uncertain times.

 

The potential impact to the Company’s consolidated financial statements could occur as early as the first quarter of fiscal year ending June 30, 2021 and include, but not limited to: impairment of long lived assets; including property and equipment and operating lease right-of-use assets related to the Company’s fair value and collectability of receivables and other financial assets.

 

Subsequent to the filing period, the Company received a loan in the amount of $171,500 to fund payroll, rent, utilities and interest on mortgages and existing debt through the federal Paycheck Protection Program. These amounts may be forgiven subject to compliance and approval based on the timing and use of these funds in accordance with the program.

 

No other events have occurred subsequent to March 31, 2020, through the date of filing this form, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the nine month period ended March 31, 2020.

 

(14)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

OVERVIEW

 

Chase General Corporation (Chase) is a holding company for its wholly-owned subsidiary, Dye Candy Company. This subsidiary is the main operating company that is engaged in the manufacture of confectionery products which are sold primarily to wholesale houses, grocery accounts, vendors, and repackers. The subsidiary (Company) operates two divisions, Chase Candy division and Seasonal Candy division, which share a common labor force and utilize the same basic equipment and raw materials. Therefore, segment reporting for the two divisions is not maintained by Management.

 

The Company’s business, like that of many other confectionary product manufacturers, is seasonal. Historically, the Company has realized more of its revenue and earnings in the fiscal second quarter, which includes the majority of the holiday shopping season, than in any other fiscal quarter.

 

RESULTS OF OPERATIONS - Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019, and Nine Months Ended March 31, 2020 Compared to Nine Months Ended March 31, 2019

 

The following management comments regarding Chase’s results of operations and outlook should be read in conjunction with the condensed consolidated financial statements included pursuant to Item 1 of the quarterly report.

 

The following table sets forth certain items as a percentage of sales and revenues for the periods presented:

 

   Three Months Ended   Nine Months Ended 
   March 31   March 31 
   2020   2019   2020   2019 
Sales   100%   100%   100%   100%
Cost of Sales   101    109    71    74 
Gross Profit (Loss) on Sales   (1)   (9)   29    26 
Operating Expenses   54    48    27    26 
Loss from Operations   (55)   (57)   2    - 
Other Income (Expense), Net   -    -    -    - 
Income (Loss) before Income Taxes   (55)   (57)   2    - 
Benefit for Income Taxes   -    (1)   -    - 
Net Income (Loss)   (55)%   (56)%   2%   -%

 

(15)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

SALES

 

Sales decreased $10,931 or 3% for the three months ended March 31, 2020 to $316,113 compared to $327,044 for the three months ended March 31, 2019. Sales for Chase Candy decreased $15,588 to $305,944 for the three months ended March 31, 2020, compared to $321,532 for the three months ended March 31, 2019. Sales for Seasonal Candy increased $4,657 to $10,169 for the three months ended March 31, 2020, compared to $5,512 for the three months ended March 31, 2019.

 

The 5% decrease in sales of Chase Candy of $15,588 for the three months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) decreased sales of the L212/L278 Mini Mash division by approximately $20,000 versus the same period a year ago, primarily due to decreased orders from existing customers, 2) various other fluctuations netting to a decrease of approximately $5,000, 3) decreased website sales by approximately $2,500 primarily due to existing customers decreasing orders; 4) decreased sales of the L276 Cherry Mash Distributor Pack by approximately $1,500 versus the same period a year ago, primarily due to existing customers decreasing orders, offset by 5) increased sales of the L100/L200/SK2100 Merchandisers division by approximately $13,500 versus the same period a year ago, primarily due to customers increasing orders. Decreased sales are primarily driven by competitors increasing their market share.

 

The 84% increase in sales of Seasonal Candy of $4,657 for the three months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) increased sales in the bulk seasonal division by approximately $4,200 versus the same period a year ago, primarily due to increased sales to existing customer; offset by 2) increased sales in the clamshell division netting approximately $1,000 primarily due to increased sales to existing customers.

 

Sales increased $62,460 or 3% for the nine months ended March 31, 2020 to $2,261,653 compared to $2,199,193 for the nine months ended March 31, 2019. Sales for Chase Candy increased $78,601 to $1,124,689 for the nine months ended March 31, 2020, compared to $1,046,088 for the nine months ended March 31, 2019. Sales for Seasonal Candy decreased $16,141 to $1,136,964 for the nine months ended March 31, 2020, compared to $1,153,105 for the nine months ended March 31, 2019.

 

The 8% increase in sales of Chase Candy of $78,601 for the nine months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the following: 1) increased sales of the L100/L200/SK2100 Merchandisers division by approximately $76,500 versus the same period a year ago, primarily due to existing customers increasing orders, 2) increased sales of the L212/L278 Mini Mash division by approximately $12,000 versus the same period a year ago, primarily due to customers increasing orders, 3) increased sales of the L279/L299 Bulk Mini Mash division by approximately $3,000 versus the same period a year ago, primarily due to customers increasing orders; offset by 4) decreased sales of the L276 Cherry Mash Distributor by approximately $8,500 versus the same period a year ago, primarily due to customers decreasing orders, 5) various other fluctuations netting to a decrease of approximately $2,500, and 6) decreased website sales by approximately $2,000 versus the same period a year ago, primarily due to decreased orders from customers.

 

(16)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

SALES (CONTINUED)

 

The 1% decrease in sales of Seasonal Candy of $16,141 for the nine months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) decreased orders from customers in the bulk seasonal division netting approximately $20,000 versus the same period a year ago, primarily due to customers decreasing orders 2) decreased orders from various customers in the generic seasonal division netting approximately $15,000 versus the same period a year ago, primarily due to customers decreasing orders, offset by 3) increased orders from various customers in the clamshell seasonal division netting approximately $19,000 versus the same period a year ago, primarily due to customers increasing orders.

 

COST OF SALES

 

The cost of sales decreased $34,450 to $320,745 or 101% of related revenues for the three months ended March 31, 2020, compared to $355,195 or 109% of related revenues for the three months ended March 31, 2019. The 10% decrease in cost of sales of $34,450 is primarily due to the net impact of 1) a 7.4% decrease in the price of corn syrup; and 2) a 3% decrease in sales of $10,931; and 3) a 2% decrease in the price of sugar.

 

The cost of sales decreased $17,925 to $1,616,045 or 71% of related revenues for the nine months ended March 31, 2020, compared to $1,633,970 or 74% of related revenues for the nine months ended March 31, 2019. The 1% decrease in cost of sales of $17,925 is primarily due to the net impact of 1) 5% decrease in the price of peanuts; 2) a 1% decrease in the price of chocolate; and 3) a 1% decrease in the price corn syrup; offset by 4) a 3% increase in sales of $62,460; and 5) a 2% increase in the price of sugar.

 

SELLING EXPENSES

 

Selling expenses for the three months ended March 31, 2020 increased $1,247 to $62,645, which is 20% of sales, compared to $61,398, or 19% of sales for the three months ended March 31, 2019. The increase of $1,247 in selling expenses for the three months ended March 31, 2019 is primarily due to higher sales salaries by lower shipping costs. Sales salaries increased $3,042 to $27,687 for this period from $24,645 for the three months ended March 31, 2019, primarily due to annual raises for one of the salespersons. Shipping expenses decreased $1,533 to $7,550 for this period from $9,083 for the three months ended March 31, 2019, primarily due to a decrease in shipment of online orders.

 

Selling expenses for the nine months ended March 31, 2020 increased $11,008 to $240,823, which is 11% of sales, compared to $229,815 or 10% of sales for the nine months ended March 31, 2019. The increase of $11,008 in selling expenses for the nine months ended March 31, 2020 is primarily due to higher sales salaries and customer shows offset by lower shipping costs. Sales salaries increased $12,164 to $83,059 for this period from $70,895 for the nine months ended March 31, 2019 primarily due to annual raises for one of the salespersons. Customer shows increased $1,697 to $6,996 for this period from $5,299 for the nine months ended March 31, 2019 primarily due to the timing of shows. Shipping expense decreased $2,335 to $24,921 for this period from $27,256 for the nine months ended March 31, 2019 primarily due to a decrease in shipment of online orders.

 

(17)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

General and administrative expenses for the three months ended March 31, 2020 increased $10,509 to $107,163 and 34% of sales, compared to $96,654 or 30% of sales for the three months ended March 31, 2019. The increase of $10,509 in general and administrative expenses for the three months ended March 31, 2020 is primarily due to higher professional fees and indirect costs. Professional fees increased $8,256 to $23,286 for this period from $15,030 for the three months ended March 31, 2019 primarily due the Company’s audit firm increasing their fees. During the current year, the Company began allocating indirect costs to general and administrative expenses that were previously allocated to cost of sales. This allocation is for the administrative portion of the office and totaled $3,003 for the three months ended March 31, 2020.

 

General and administrative expenses for the nine months ended March 31, 2020 increased $30,920 to $363,387 or 16% of sales, compared to $332,467 or 15% of sales for the nine months ended March 31, 2019. The increase of $30,920 in general and administrative expenses for the nine months ended March 31, 2020 is primarily due to higher professional fees, indirect costs, and office salaries offset by lower insurance expense. Professional fees increased $22,441 to $122,028 for this period from $99,587 for the three months ended March 31, 2019 due to the Company’s audit firm increasing their fees and an increase in attorney’s fees. During the current year, the Company began allocating indirect costs to general and administrative expenses that were previously allocated to cost of sales. This allocation is for the administrative portion of the office and totaled $10,128 for the nine months ended March 31, 2020. Office salaries increased $3,803 to $72,849 for this period from $69,046 for the nine months ended March 31, 2019 due to annual raises for employees. Insurance expense decreased $4,883 to $95,844 for this period from $100,727 for the three months ended March 31, 2019 due less employees enrolled in the plan.

 

OTHER INCOME (EXPENSE)

 

Other income (expense) decreased by $42 for the three months ended March 31, 2020 to $176, compared to $218 for the three months ended March 31, 2019.

 

Other income (expense) increased by $183 for the nine months ended March 31, 2020 to $(1,715), compared to $(1,898) for the nine months ended March 31, 2019.

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

The Company recorded income tax benefit for the three months ended March 31, 2020 of $(0) as compared to income tax benefit of $(3,400) for the three months ended March 31, 2019. The Company recorded no income tax benefit for the nine months ended March 31, 2020 and 2019. The net income tax expense (benefit) recorded for the three and nine months ended March 31, 2020 is primarily due to recognizing income taxes related to current net income or loss. Additionally, the Company has placed a valuation allowance on the net operating loss carryforward of $206,846 for the current period after it was determined that the Company would not be likely to use the remaining balance in the near future.

 

(18)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

NET INCOME (LOSS)

 

The Company reported a net loss for the three months ended March 31, 2020 of $(174,264), compared to a net loss of $(182,585) for the three months ended March 31, 2019. This earnings increase of $8,321 is explained above. The Company reported net income for the nine months ended March 31, 2020 of $39,683, compared to net income of $1,043 for the nine months ended March 31, 2019. This earnings increase of $38,640 is explained above.

 

PREFERRED DIVIDENDS

 

Preferred dividends were $32,018 for the three months ended March 31, 2020 and March 31, 2019, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

 

Preferred dividends were $96,054 for the nine months ended March 31, 2020 and March 31, 2019, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

 

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS

 

Net loss applicable to common stockholders for the three months ended March 31, 2020 was $206,282 which is a decrease in losses of $8,321 as compared to the net loss for the three months ended March 31, 2019 of $214,603.

 

Net loss applicable to common stockholders for the nine months ended March 31, 2020 was $56,371 which is a decrease in losses of $38,640 as compared to the net loss for the nine months ended March 31, 2019 of $95,011.

 

(19)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

LIQUIDITY AND CAPITAL RESOURCES

 

The table below presents the summary of cash flow for the fiscal period indicated.

 

   Nine Months Ended 
   March 31 
   2020   2019 
Net Cash Provided by Operating Activities  $204,107   $112,425 
Net Cash Used by Financing Activities  $(94,030)  $(15,777)

 

Management has no material commitments for capital expenditures during the remainder of fiscal 2020. The $204,107 of cash provided by operating activities for the nine months ended March 31, 2020 is fully detailed in the condensed consolidated statement of cash flows on page five. The $94,030 of cash used in financing activities for the nine months ended March 31, 2020 is the principal payments on vehicle loans. At March 31, 2020, the Company had $350,000 remaining on the line-of-credit, which could be utilized to help fund any working capital requirements.

 

The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. Specific to the Company, COVID-19 may impact various parts of its fiscal years ending June 30, 2020 and 2021 operations and financial results, including the production and sales of goods. Management believes the Company is taking appropriate actions to mitigate the negative impact. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events occurred subsequent to the filing period and are still developing.

 

Subsequent to the filing period, the Company received a loan in the amount of $170,500 to fund payroll, rent, utilities and interest on mortgages and existing debt through the federal Paycheck Protection Program. These amounts may be forgiven subject to compliance and approval based on the timing and use of these funds in accordance with the program.

 

Management believes that the projected cash flow from operations including the impact of the COVID-19 pandemic, combined with its existing cash balances, will be sufficient to meet its funding requirements for the foreseeable future.

 

Management believes that inflation will have only a minimal effect on future operations since such effects will be offset by sales price increases, which are not expected to have a significant effect upon demand.

 

(20)

 

 

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

 

CRITICAL ACCOUNTING POLICIES

 

Forward-Looking Information

 

This report, as well as our other reports filed with the Securities and Exchange Commission (SEC), contains forward-looking statements made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast,” “may,” “will,” “should,” “continue,” “predict,” and similar expressions are intended to identify forward-looking statements. This report contains forward-looking statements regarding, among other topics, our expected financial position, results of operations, cash flows, strategy, and management’s plans and objectives. Accordingly, these forward-looking statements are based on assumptions about a number of important factors. While we believe that our assumptions about such factors are reasonable, such factors involve risks, and uncertainties that could cause actual results to be different from what appear here. These risk factors include: the ability to adequately pass through customers unanticipated future increases in raw material costs, decreased demand for products, expected orders that do not occur, loss of key customers, the impact of competition and price erosion as well as supply and manufacturing constraints, and other risks and uncertainties. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will prove accurate, and our actual results may differ materially from these forward-looking statements. We assume no obligation to update any forward-looking statements made herein.

 

(21)

 

 

 

Chase General Corporation and Subsidiary

 

PART II. OTHER INFORMATION

 

Item 3QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET rISK

 

Not applicable to a smaller reporting company.

 

ITEM 4.CONTROLS AND PROCEDURES

 

(a)  Evaluation of Disclosure Controls and Procedures

 

Chase’s management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and management has concluded that Chase’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to management, including those officers, and to members of the board of directors, to allow timely decisions regarding required disclosure.

 

(b)  Changes in Internal Control over Financial Reporting

 

There were no significant changes in Chase’s internal control over financial reporting or in other factors that management’s estimates are reasonably likely to materially affect Chase’s internal control over financial reporting subsequent to the date of evaluation.

 

(22)

 

Chase General Corporation and Subsidiary

 

PART II. OTHER INFORMATION (CONTINUED)

 

ITEM 1. LEGAL PROCEEDINGS

 

 None.

 

  ITEM 1A. RISK FACTORS

 

Not applicable to a smaller reporting company.

 

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

 

 None

 

  ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

 a.    None

 

 b.   The total cumulative preferred stock dividends contingency at March 31, 2019 is $8,429,076.

 

  ITEM 4. MINE SAFETY DISCLOSURES

 

 Not applicable.

 

  ITEM 5. OTHER INFORMATION

 

 None.

 

  ITEM 6. EXHIBITS

 

  a.Exhibits.

 

Exhibit 31.1    Certification of Chief Executive Officer and Treasurer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

 

Exhibit 32.1    Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

Exhibit 101    The following financial statements for the quarter ended March 31, 2020, formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019, (ii) Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019, (iii) Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2020 and 2019, (iv) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

 

(23)

 

SIGNATURES

 

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

 

    Chase General Corporation and Subsidiary
    (Registrant)
     
May 14, 2020   /s/ Barry M. Yantis
Date   Barry M. Yantis
    Chairman of the Board, Chief Executive Officer and
    Chief Financial Officer, President, and Treasurer
 

 

(24)