EDGAR 10-K Filing

Company CIK: 15357
Filing Year: 2024
Filename: 15357_10-K_2024_0001558370-24-012911.json

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ITEM 1. BUSINESS
ITEM 1.
BUSINESS

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ITEM 1A. RISK FACTORS
ITEM 1A.
RISK FACTORS

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B.
UNRESOLVED STAFF COMMENTS

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ITEM 2. PROPERTIES
ITEM 2 PROPERTIES
We conduct our operations from two buildings as follows:
Chase Warehouse - This building is located in St. Joseph, Missouri and is owned by Dye Candy Company, a wholly-owned subsidiary of the registrant. The facility is currently devoted entirely to the storage of supplies, and the warehousing and shipping of candy products. This warehouse is over seventy years old, is in fair condition and adequate to meet present requirements. The warehouse has approximately 15,000 square feet and is not encumbered.
Chase General Office and Dye Candy Company Operating Plant - This building is located in St. Joseph, Missouri and contains the general offices (of approximately 2,000 square feet) for Chase General Corporation, Dye Candy Company and its divisions. The production plant of Dye Candy Company occupies the remainder of the building or 18,000 square feet. The building, specifically designed for the Company, is leased from an entity that is owned by the son of the Chief Executive Officer of the Company. The annual rental expense of this facility was $78,000 for each year ended June 30, 2024 and 2023.
The net book value of our premises, land and office, and production equipment totaled $206,872 and $198,130 at June 30, 2024 and 2023, respectively.
We believe both facilities are adequately covered by insurance.
(7)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3 LEGAL PROCEEDINGS
None.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4 MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market information
There is no established public trading market for the common stock (par value $1 per share) of the Company.
Security holders
As of September 20, 2024, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.
Dividends
(1) Dividend history and restrictions
No dividends have been paid during the past two fiscal years and there are no dividend restrictions. Preferred stock dividends in arrears are accumulated.
(2) Dividend policy
There is no set policy on the payment of dividends due to the financial condition of the Company and other factors. It is not anticipated that cash dividends will be paid in the foreseeable future.
Securities authorized for issuance under equity compensation plans
The Company does not have any equity compensation plans.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6 SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
(8)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This report contains statements that plan for or anticipate the future. Forward-looking statements may include statements about the future of our products and the industry, statements about our future business plans and strategies, and other statements that are not historical in nature. In this report, forward-looking statements are generally identified by the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” and the like. Readers should carefully review these cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, the Company at the time the statements are made. These expectations, assumptions, and uncertainties include: the Company’s expectation of heavier demand on working capital in the fall and winter months in anticipation of August through December sales; the assumption that the Company has stabilized its customer base and will continue its efforts to expand the existing market area and increase sales to customers; and the expectation that the Company will maintain tight control of all expenditures.
Overview
During fiscal year ended June 30, 2024, the Company’s sales were $3,395,505, as compared to sales of $3,446,234 for fiscal year ended June 30, 2023. The 1.4% decrease in sales is attributable to change in composition of sales between Chase Candy Products division and the Seasonal Candy Products division. The Chase Candy Products division, which historically has a higher average price, incurred a volume of sales decline by 2.8% while the Seasonal Candy Products division experienced volume increases of 2.7%. Additionally, the 7.6% increase in cost of sales and 3.4% increase in operating expenses resulted in a change in profitability during the year, as reflected in the loss from operations of $98,626 for fiscal year 2024 compared to the income from operations of $163,363 for fiscal year 2023. Working capital decreased $121,446 to $561,091 for the fiscal year 2024 from $682,537 for the fiscal year 2023 due primarily to a decrease in inventory and corresponding increase in accounts payable.
The following information should be read together with the consolidated financial statements and notes thereto included elsewhere herein.
Critical Accounting Policies and Estimates
General
Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
(9)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Critical Accounting Policies and Estimates (continued)
General(continued)
The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Revenue Recognition
The Company recognizes revenues as product is shipped to customers. Sales are comprised of the total sales billed during the period, including shipping and handling charges to the customer, less the estimated returns, customer allowances, customer discounts, billbacks and advertising.
Inventories
Raw material and packaging material inventories are carried at the “lower of cost or net realizable value,” with cost being determined on the “first-in, first-out” basis of accounting. The cost of goods in process include an estimate for manufacturing overhead. Finished goods inventory are valued using the lower of cost or market value, determined by the retail inventory method. Under the retail inventory method, the valuation of finished goods inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories.
Results of Operations
The following table sets forth for the years indicated, the percentage of sales of certain items in the Company’s consolidated statements of operations for the years ended June 30, 2024 and 2023, respectively:
For the Years Ended
June 30,
Sales
%
%
Cost of Sales
%
%
Gross Profit on Sales
%
%
Operating Expenses
%
%
Income (Loss) from Operations
(3)
%
%
Other Expense, Net
-
%
-
%
Income (Loss) before Income Taxes
(3)
%
%
Income Tax Provision (Benefit)
-
%
-
%
Net Income (Loss)
(3)
%
%
Fiscal Year 2024 Compared to Fiscal Year 2023
Sales
During the year ended June 30, 2024, sales, net of returns and allowances, decreased $50,729 or 1.5% as compared to the year ended June 30, 2023. Sales for Chase Candy products decreased $74,367 or 3.8% to $1,882,291 for the year ended June 30, 2024 compared to $1,956,658 for the year ended June 30, 2023. Sales for Seasonal Candy products increased $23,638 or 1.6% to $1,513,214 for the year ended June 30, 2024 as compared to $1,489,576 for the year ended June 30, 2023.
(10)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Fiscal Year 2024 Compared to Fiscal Year 2023 (Continued)
Sales (continued)
Sales for Chase Candy consisted of the following divisions: L276 Cherry Mash Distributor Pack division, L100/L200 Cherry Mash Merchandisers division, L260 Changemaker Jar division, L279/L299 Bulk Mini Mash division, and L278/L212 Mini Mash division. The 3.8% decrease in sales of Chase Candy of $74,367 for the year ended June 30, 2024 over the same period ended June 30, 2023, is primarily due to the following: 1) decreased sales of the L276/L277 Cherry Mash Bar division by approximately $31,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers, 2) decreased sales of the L278/L212 Mini Mash segment by approximately $32,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers, 3) increased sales allowances and discounts related to this category of product of approximately $25,000 offset by 4) increased sales of the L100/L200 Cherry Mash Merchandisers division by approximately $11,500, primarily due to an increase in orders from existing customers, and 5) increased sales of the L260 Changemaker Jar and L264 Mini Mash Keg divisions by approximately $2,000 versus the same period a year ago, primarily due to an increase in orders from existing customers.
Sales for Seasonal Candy consisted of the following divisions: bulk seasonal division, clamshell seasonal division, and the generic seasonal division. The 1.6% increase in sales of Seasonal Candy of $23,638 for the year ended June 30, 2024 over the same period ended June 30, 2023, is primarily due to 1) increased sales in the generic seasonal division by approximately $85,000 versus the same period a year ago, primarily due to increased orders from existing customers, offset by 2) decreased sales in the bulk seasonal division by approximately $25,000 due to decreased orders from existing customers and 3) decreased sales in the clamshell seasonal division by approximately $15,000 versus the same period a year ago, primarily due to decreased orders from existing customers 4) increased sales allowances and discounts related to these category of products of approximately $21,000.
Cost of Sales
Cost of sales for the year ended June 30, 2024, as compared to the year ended June 30, 2023, increased by 7.6%. The cost of sales increased $180,090 to $2,542,003 while increasing to 74.9% of sales for the year ended June 30, 2024, compared to $2,361,913 or 68.5% of sales for the year ended June 30, 2023.
The 7.6% increase in cost of sales of $180,090 is related to increases in prices of raw materials and increased labor rates. Due to volatility in the regions where raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand.
Labor costs, including wages, vacation pay and payroll taxes of $873,483 for the year ended June 30, 2024, increased 9.6% or $76,331 as compared to $797,152 for the year ended June 30, 2023 primarily due to increased production wages due to increased hours, bonuses, and pay rates compared to the same period ended June 30, 2023. All employees were given a 5-10% raise at the end of January 2023.
(11)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Fiscal Year 2024 Compared to Fiscal Year 2023 (Continued)
Gross Profit on Sales
The gross profit decreased 21.3% or $230,819 to $853,502, which is 25.1% of related sales for the year ended June 30, 2024, as compared to $1,084,321 or 31.5% of related sales for the year ended June 30, 2023, as a net result of the 7.6% increase in cost of sales described above and the 1.5% decrease in sales. The Company was able to implement a price increase in March 2024 of approximately 14% for the majority of the customers for Chase Candy products, after which gross profit on sales still declined by 1% compared to the nine months ended March 31, 2024. Due to the seasonal nature of the Company’s business and the fact that the Company’s largest customer continues to have price increases at lower negotiated rates, the majority of these price increases will not be fully realized until the first and second quarter of fiscal year 2025. Additionally, management intends to increase prices on seasonal candy between 14-20% during the first half of fiscal year 2025.
Selling Expenses
Selling expenses for the year ended June 30, 2024 decreased $2,918 to $340,816, which is 10% of sales, compared to $343,734 or 10% of sales for the year June 30, 2023. This decrease is primarily due to efforts to minimize selling expenses in an attempt to recover costs not passed along with price increases. Specifically, commission expense decreased $7,358 to $137,430 for the year ended June 30, 2024, as compared to $144,788 for the year ended June 30, 2023, due to decrease in sales. However, these savings were offset by an increase in depreciation expense of $5,511 to $34,546 for the year ended June 30, 2024, as compared to $29,035 for the year ended June 30, 2023, primarily due to purchases of new vehicles, as well as miscellaneous increases in other costs associated with selling expenses.
General and Administrative Expenses
General and administrative expenses for the year ended June 30, 2024 increased $34,088 to $611,312, which is 18% of sales, compared to $577,224 or 16.7% of sales for the year ended June 30, 2023. The increase is primarily due to increases in office salaries of approximately $11,000, increases in payroll tax expense of approximately $5,000, increases in insurance expense of approximately $7,000, plus approximately $10,000 attributable to miscellaneous decreases in other costs associated with general and administrative expenses. Additionally, the Company had a gain on sale of property and equipment of approximately $44,000 recorded in the prior year, compared to a current year gain on sale of property and equipment of approximately $23,000.
Other Income (Expense)
Other income (expense) reflects expense of $(13,098) for the year ended June 30, 2024, as compared to expense of $(6,196) for the year ended June 30, 2023. This increase of $6,902 in other expense was primarily due to an increase in interest expense for the year ended June 30, 2024 due to rising interest rates and increased borrowings during the year ended June 30, 2024.
Income Tax Benefit (Provision)
The Company recorded an income tax benefit for the year ended June 30, 2024 of $19,647, the majority of which is attributable to the current net operating loss carryforwards. The Company recorded no income tax benefit or provision for the year ended June 30, 2023
(12)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Fiscal Year 2024 Compared to Fiscal Year 2023 (Continued)
Net Income (Loss)
Net loss for the year ended June 30, 2024 was $(92,077), compared to a net income for the year ended June 30, 2023 of $157,167. This decrease of $249,244 is the result of those items previously discussed.
Preferred Dividends
Preferred dividends were $128,072 for the years ended June 30, 2024 and June 30, 2023, 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 Income (Loss) Applicable to Common Stockholders
Net income (loss) applicable to common stockholders for the year ended June 30, 2024 was $(220,149) which is an decrease of $249,244 as compared to the net income applicable to common stockholders for the year ended June 30, 2023 of $29,095.
Liquidity and Sources of Capital
The table below presents the summary of cash flow for the fiscal year indicated.
For the Years Ended
June 30,
Net Cash Provided by/(Used in) Operating Activities
$
117,100
$
(52,524)
Net Cash Used in Investing Activities
$
(31,088)
$
(32,683)
Net Cash Provided by/(Used in) Financing Activities
$
(55,333)
$
82,991
Management has made no material commitments for capital expenditures for fiscal 2024. The cash provided by or used in operating, investing and financing activities for the year ended June 30, 2024 is fully detailed in the consolidated statement of cash flows.
Overall cash and cash equivalents increased $30,679 to $41,974 at June 30, 2024 from $11,295 at June 30, 2023.
At June 30, 2024, the Company’s accumulated deficit was $5,661,645, compared to an accumulated deficit of $5,569,568 as of June 30, 2023. Working capital as of June 30, 2024 decreased $121,446 to $561,091 from $682,537 as of June 30, 2023.
(13)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2024
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Fiscal Year 2024 Compared to Fiscal Year 2023 (Continued)
Liquidity and Sources of Capital (continued)
The Company’s lease on its office and plant facility is effective through March 31, 2025, with an option to extend for an additional term of five years. During the year ended June 30, 2023, the Company determined the exercise of the renewal option is reasonably assured and therefore remeasured the right-of-use asset and lease liability to include the additional five years at the current rate so that the new term expires on March 31, 2030. The lease currently requires payments of $6,500 per month, as noted the Company does not believe the payments in the renewal period will vary significantly from this current amount. The facility is leased from an entity that is owned by the son of the Chief Executive Officer of the Company.
In order to maintain funds to finance operations and meet debt obligations, it is the intention of management to continue its efforts to expand the present market area and increase sales to its customers. Management also intends to continue tight control on all expenditures. Due to volatility in the regions where these raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand. Management intends to make sales price adjustments in the future to correspond with changes in raw material prices. Management believes that the projected cash flow from operations combined with the availability on the line of credit will be sufficient to meet its funding requirements for the foreseeable future.
ITEM 7AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a smaller reporting company.
ITEM 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 16 through 37 of this Form 10-K.
(14)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 483)
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(15)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Chase General Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Chase General Corporation and its subsidiary (the Company) as of June 30, 2024 and 2023, the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ HoganTaylor LLP
We have served as the Company's auditor since 2022.
Oklahoma City, Oklahoma
September 20, 2024
(16)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2024 AND 2023
June 30,
June 30,
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents
$
41,974
11,295
Trade Receivables, Net of Allowance for Credit Losses of $1,896
222,699
253,900
Inventories:
Finished Goods
384,641
393,898
Goods in Process
21,971
9,156
Raw Materials
119,508
131,549
Packaging Materials
193,122
269,028
Prepaid Expenses
6,640
21,884
Total Current Assets
990,555
1,090,710
LONG-TERM ASSETS
Property & Equipment
Land
35,000
35,000
Buildings
77,348
77,348
Machinery and Equipment
866,976
886,341
Trucks and Autos
184,200
170,378
Office Equipment
33,025
33,025
Leasehold Improvements
72,068
72,068
Total
1,268,617
1,274,160
Less: Accumulated Depreciation and Amortization
(1,061,745)
(1,076,030)
Total Property and Equipment, Net
206,872
198,130
Right-of-Use Asset
365,372
413,595
Deferred Tax Asset
21,239
-
Total Long-Term Assets
593,483
611,725
Total Assets
$
1,584,038
$
1,702,435
The accompanying notes are an integral part of the consolidated financial statements.
(17)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, 2024 AND 2023
June 30,
June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
$
173,153
100,754
Current Maturities of Notes Payable
161,688
222,400
Current Maturities of Lease Liability
52,019
41,724
Accrued Expenses
25,099
31,996
Refund Liability Owed to Customers
16,533
10,000
Deferred Income
1,299
Total Current Liabilities
429,464
408,173
LONG-TERM LIABILITIES
Notes Payable, Less Current Maturities
36,870
31,491
Lease Liability, Less Current Maturities
313,353
365,371
Deferred Income
-
Total Long-Term Liabilities
350,223
397,834
Total Liabilities
779,687
806,007
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS’ EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,490,000 and $2,460,000, Respectively)
500,000
500,000
Series B (Liquidation Preference $2,445,000 and $2,415,000, Respectively)
500,000
500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,545,994 and $5,487,461, Respectively)
1,170,660
1,170,660
Series B (Liquidation Preference $903,828 and $894,289, 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
(5,661,645)
(5,569,568)
Total Stockholders’ Equity
804,351
896,428
Total Liabilities and Stockholders’ Equity
$
1,584,038
$
1,702,435
The accompanying notes are an integral part of the consolidated financial statements.
(18)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
For the Years Ended
June 30,
SALES
$
3,395,505
$
3,446,234
COST OF SALES
2,542,003
2,361,913
Gross Profit on Sales
853,502
1,084,321
OPERATING EXPENSES
Selling
340,816
343,734
General and Administrative
611,312
577,224
Total Operating Expenses
952,128
920,958
Income (Loss) from Operations
(98,626)
163,363
OTHER INCOME (EXPENSE)
Miscellaneous Income
1,899
1,763
Interest Expense
(14,997)
(7,959)
Total Other Income (Expense), net
(13,098)
(6,196)
Income (Loss) before Income Taxes
(111,724)
157,167
INCOME TAX BENEFIT (PROVISION)
Current tax expense
(1,592)
-
Deferred tax benefit
21,239
-
Total Income Tax Benefit (Provision)
19,647
-
NET INCOME (LOSS)
$
(92,077)
$
157,167
EARNINGS (LOSS) PER SHARE
Basic and Diluted
$
(0.23)
$
0.03
The accompanying notes are an integral part of the consolidated financial statements.
(19)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
Prior Cumulative
Cumulative
Preferred Stock
Preferred Stock
Common
Paid-In
Accumulated
Series A
Series B
Series A
Series B
Stock
Capital
Deficit
Total
BALANCE, June 30, 2022
$
500,000
$
500,000
$
1,170,660
$
190,780
$
969,834
$
3,134,722
$
(5,726,735)
$
739,261
Net Income
-
-
-
-
-
-
157,167
157,167
BALANCE, June 30, 2023
500,000
500,000
1,170,660
190,780
969,834
3,134,722
(5,569,568)
896,428
Net Loss
-
-
-
-
-
-
(92,077)
(92,077)
BALANCE, June 30, 2024
$
500,000
$
500,000
$
1,170,660
$
190,780
$
969,834
$
3,134,722
$
(5,661,645)
$
804,351
The accompanying notes are an integral part of the consolidated financial statements.
(20)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
For the Year Ended
June 30,
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)
$
(92,077)
$
157,167
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by/(Used in) Operating Activities:
Depreciation and Amortization
44,970
41,713
Allowance for Credit Losses
-
Deferred Income Amortization
(1,299)
(1,299)
Gain on Sale of Property and Equipment
(22,624)
(43,681)
Deferred income taxes
(21,239)
-
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables
31,201
(113,512)
Inventories
84,389
(38,354)
Prepaid Expenses
15,244
(15,244)
Accounts Payable
72,399
(34,951)
Refund Liability Owed to Customers
6,533
1,791
Accrued Expenses
(6,897)
(602)
Operating Lease Liability
6,500
(6,500)
Net Cash Provided by/(Used in) Operating Activities
117,100
(52,524)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Disposal of Property and Equipment
-
28,000
Purchases of Property and Equipment
(31,088)
(60,683)
Net Cash Used in Investing Activities
(31,088)
(32,683)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit
430,000
565,000
Principal Payments on Line-of-Credit
(500,000)
(475,000)
Proceeds from Note Payable
28,506
-
Proceeds from Note Payable - Stockholder
100,000
-
Principal Payments on Note Payable - Stockholder
(100,000)
-
Principal Payments on Notes Payable
(13,839)
(7,009)
Net Cash Provided by/(Used in) Financing Activities
(55,333)
82,991
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
30,679
(2,216)
Cash and Cash Equivalents - Beginning of Period
11,295
13,511
CASH AND CASH EQUIVALENTS - END OF PERIOD
$
41,974
$
11,295
The accompanying notes are an integral part of the consolidated financial statements.
(21)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Chase General Corporation (the Company) was incorporated on November 6, 1944 in the state of Missouri for the purpose of manufacturing confectionery products. The Company grants credit terms to substantially all customers, consisting of repackers, grocery accounts, and national syndicate accounts, who are primarily located in the Midwest region of the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting of the Business
The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 in these consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Shipping and Handling Costs
Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2024 and 2023 was $153,116 and $168,442, respectively.
Trade Receivables
Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.
(22)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade Receivables (Continued)
The carrying amount of trade receivables is reduced by an allowance for credit losses that reflects management’s best estimate of amounts that will not be collected. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions adjusted for current conditions and reasonable and supportable forecasts. All accounts or portions thereof deemed to be uncollectible, or that require an excessive collection cost, are written off to the allowance for credit losses.
Inventories
Raw material and packaging material inventories are carried at the “lower of cost or net realizable value,” with cost being determined on the “first-in, first-out” basis of accounting. The cost of goods in process include an estimate for manufacturing overhead. Finished goods inventory are valued using the lower of cost or market value, determined by the retail inventory method. Under the retail inventory method, the valuation of finished goods inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories.
Property and Equipment
The Company’s property and equipment is recorded at cost and is being depreciated on straight-line method over the following estimated useful lives:
Buildings
39 years
Machinery and equipment
5 - 7 years
Trucks and autos
5 years
Office equipment
5 - 7 years
Leasehold improvements
Lesser of estimated useful life or the lease term
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.
(23)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred income tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred income tax assets are only recognized if it is more likely than not that a tax position will be realized or sustained upon examination by the relevant taxing authority. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred income tax assets will not be realized. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of relevant information. Deferred income tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment. As of June 30, 2023, the full valuation allowance previously established was removed. The deferred income tax balance as of June 30, 2024 as shown on the accompanying consolidated balance sheet and is expected to be fully utilized.
The Company’s policy is to evaluate uncertain tax positions under the guidance as prescribed by ASC 740, Income Taxes. As of June 30, 2024 and 2023, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company had no accruals for interest or penalties as of June 30, 2024 and 2023.
Earnings Per Common Share
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, diluted earnings per share will be calculated in the same manner as basic earnings per share.
Recently Issued Pronouncements
Effective July 1, 2023, the Company adopted ASU 2016-13, Financial Instrument - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments related to the impairment of financial instruments using the modified retrospective approach, which applies Topic 326 at the beginning of the earliest period presented. This guidance, commonly referred to as Current Expected Credit Loss (“CECL”), changes impairment recognition to a model that is based on expected losses rather than incurred losses. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables. The Company evaluated and determined the amendment did not have a material affect on the condensed consolidated financial statement.
(24)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The majority of the Company’s 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 trade receivables on the consolidated balance sheets and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation.
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 for the year ended June 30, 2024 and 2023 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 consolidated 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. Advertising is expensed when incurred and considered as a component of revenue. Advertising expense was $20,660 and $20,121 for the years ended June 30, 2024 and 2023, respectively.
The various divisions of revenue are as follows:
SALES
Chase Candy
$
1,882,291
$
1,956,658
Seasonal Candy
1,513,214
1,489,576
Total
$
3,395,505
$
3,446,234
(25)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 2 FORGIVABLE LOAN AND DEFERRED INCOME
During 2004, the Company received a $25,000 economic development incentive from Buchanan County, which is a five-year forgivable loan at a rate of $5,000 per year. The Nodaway Valley Bank established an Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of January 3, 2010. The Company met the criteria of occupying a 20,000 square foot building and creating a minimum of two new full-time equivalent jobs during the first year of operation in the new facility. In addition, the Company maintained 19 existing jobs during the five-year term. Notice was received February 6, 2009 from the Buchanan County Commission, that the Company had fulfilled its minimum loan requirements so that the loan was forgiven in full and has no further obligations. Since the Company was no longer legally required to return the monies, the liability was reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. Deferred revenue is recognized on a straight line basis over the lease term of 20 years. During the years ended June 30, 2024 and 2023, deferred revenue of $1,299 was amortized into miscellaneous income.
NOTE 3 NOTES PAYABLE
The Company’s long-term debt at June 30, 2024 and 2023 consists of:
June 30,
June 30,
Payee
Terms
Nodaway Valley Bank
$500,000 line-of-credit agreement expiring on January 4, 2025, with a variable interest rate at prime but not less than 5% (8.5% at June 30, 2024). The line of credit is collateralized by substantially all assets of the Company.
$
140,000
$
-
Nodaway Valley Bank
$500,000 line-of-credit agreement expired on January 4, 2024, 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.
-
210,000
Nodaway Valley Bank
$885 monthly payments, interest of 7.25%; final payment due April 2027, secured by a vehicle.
27,082
-
Ford Motor Credit Company
$1,126 monthly payments, interest of 2.9%; final payment due November 2026, secured by a vehicle.
31,476
43,891
Total
198,558
253,891
Less Current Portion
161,688
222,400
Long-Term Portion
$
36,870
$
31,491
Future minimum payments for the twelve months ending June 30 are:
June 30,
Amount
$
161,688
22,741
14,129
Total
$
198,558
(26)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 4 CAPITAL STOCK
Capital stock authorized, issued, and outstanding as of June 30, 2024 is as follows:
Shares
Issued and
Authorized
Outstanding
Prior Cumulative Preferred Stock, $5 Par Value:
6% Convertible
240,000
Series A
100,000
Series B
100,000
Cumulative Preferred Stock, $20 Par Value:
5% Convertible
150,000
Series A
58,533
Series B
9,539
Common Stock, $1 Par Value:
Reserved for Conversion of Preferred Stock - 1,030,166 shares
2,000,000
969,834
Cumulative Preferred Stock dividends in arrears at June 30, 2024 and 2023 totaled $8,973,382 and $8,845,310, respectively. Total dividends in arrears, on a per share basis, consist of the following at June 30, 2024 and 2023:
For the Year Ended
June 30,
6% Convertible:
Series A
$
$
Series B
$
$
5% Convertible:
Series A
$
$
Series B
$
$
The 6% convertible prior cumulative preferred stock may, upon 30 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. Cumulative preferred stock may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for 1 share of Series A and 3.75 common shares for 1 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 1 of preferred.
(27)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 5 INCOME TAXES
Management believes the income tax positions taken for open years are appropriately stated and supported for all open years. The Company’s federal tax returns for the years ended June 30, 2023, 2022, and 2021 are subject to examination by the Internal Revenue Service taxing authority.
The sources of deferred income tax assets and liabilities at June 30, 2024 and 2023 are as follows:
June 30,
June 30,
Deferred tax assets:
Allowance for Credit Losses
Deferred Income
Contribution Carryover
2,329
-
Other
-
6,000
Net operating loss carryforwards
47,014
20,600
50,078
27,600
Deferred tax liabilities:
Book/Tax Difference on Property and Equipment
(28,839)
(27,600)
(28,839)
(27,600)
Net deferred tax asset before valuation allowance
21,239
-
Valuation allowance:
Beginning balanace
-
(30,500)
Decrease/(Increase) during the period
-
30,500
Ending balance
-
-
Net deferred tax asset
$
21,239
$
-
The income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate to pretax income (loss) for the years ended June 30, 2024 and 2023 due to the following:
For the Years Ended
June 30,
Computed at statutory rate
$
(23,462)
$
33,005
Increase (decrease) resulting from:
State income taxes - net of federal tax benefit
(2,588)
4,966
Change in deferred tax asset valuation allowance
-
(30,500)
Other
6,403
(7,471)
Actual tax (benefit) provision
$
(19,647)
$
-
The Company has available at June 30, 2024, $194,767 of net unused operating losses that may be carried forward and applied against future taxable income. These net operating loss carryforwards do not expire but are subject to an 80% of taxable income utilization.
(28)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 6 EARNINGS (LOSS) PER SHARE
The earnings (loss) per share for the years ended June 30, 2024 and 2023, respectively, was computed on the weighted average of outstanding common shares during the year as follows:
For the Years Ended
June 30,
Net Income (Loss)
$
(92,077)
$
157,167
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value
60,000
60,000
5% Convertible Cumulative Preferred, $20 Par Value
68,072
68,072
Total Dividend Requirements
128,072
128,072
Net Income (Loss) attributable to Common Stockholders
$
(220,149)
$
29,095
Weighted Average Shares - Basic
969,834
969,834
Effect of Contingently Issuable Shares, if Dilutive
1,033,334
1,033,334
Weighted Average Shares - Diluted
2,003,168
2,003,168
Basic and Diluted Earnings (Loss) per Share
$
(0.23)
$
0.03
Contingently issuable shares were not included in the 2024 or 2023 diluted earnings per common share as they would have an antidilutive effect upon earnings per share.
The following table details out the contingently issuable shares for the years ended June 30, 2024 and 2023.
Shares Issuable Upon Conversion of Series A Prior Cumulative Preferred Stock
400,000
400,000
Shares Issuable Upon Conversion of Series B Prior Cumulative Preferred Stock
375,000
375,000
Shares Issuable Upon Conversion of Series A Cumulative Preferred Stock
222,133
222,133
Shares Issuable Upon Conversion of Series B Cumulative Preferred Stock
36,201
36,201
Total Dilutive Effect of Contingently Issuable Shares
1,033,334
1,033,334
NOTE 7 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
For the Years Ended
June 30,
Supplemental Cash Flow Information:
Interest paid
$
14,915
$
7,681
Right-of-use asset obtained in exchange for modification of operating lease liability
$
-
$
279,072
Proceeds received on trade-in of vehicle
$
24,000
$
-
Note Payable obligation incurred for vehicle
$
-
$
50,900
(29)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 8 COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
The Company leases its office and manufacturing facility, located in St. Joseph, Missouri under an operating lease from an entity that is 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. During the period ended June 30, 2023, the Company determined the exercise of the renewal option is reasonably assured and therefore remeasured the right-of-use asset and lease liability to include the additional five years at the current rate so that the new term expires on March 31, 2030. The lease currently requires payments of $6,500 per month, as noted the Company does not believe the payments in the renewal period will vary significantly from this current amount.
Operating lease right-of-use asset and liability was recognized based on the present value of minimum lease payments over the remaining lease term. The Company’s operating lease has a remaining term of 5.75 years and the present value of the lease payments is calculated using the Company’s estimated incremental borrowing rate of 7.6% as of the remeasurement date. 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 nonlease 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. Cash paid for the operating lease liability was $71,500 and operating lease expense was $78,000 for the year ended June 30, 2024, of which, $71,565 is included in cost of sales and $6,435 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 June 30, 2024 are as follows:
Twelve Months Ending June 30,
Amount
$
78,000
78,000
78,000
78,000
78,000
Thereafter
65,000
Total Lease Payments
455,000
Less: Imputed Interest
(89,628)
Total Lease Liabilities
$
365,372
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
As of June 30, 2024, the Company had raw materials purchase commitments with nine vendors totaling approximately $230,000.
(30)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 9 DISCLOSURES 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 financial instruments.
NOTE 10 CONCENTRATION OF CREDIT RISK
For the years ended June 30, 2024 and 2023, two customers accounted for 45% and 48%, respectively , of sales. As of June 30, 2024 and 2023, these same two customers accounted for 43% and 59%, respectively, of trade receivables.
NOTE 11 SUBSEQUENT EVENTS
The Company monitors significant events occurring after June 30, 2024 and prior to the issuance of the financial statements to determine the impact, if any, of the events on the consolidated financial statements to be issued. All subsequent events of which the Company is aware were evaluated through the filing date of this Form 10-K.
(31)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
ITEM 9ACONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s principal executive officer, who is also the chief financial and accounting officer, has evaluated the effectiveness of the Company’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, such officer has concluded that the Company’s disclosure controls and procedures are not effective as a result of a weakness in the design of internal control over financial reporting identified below.
Disclosure controls and procedures include controls and procedures designed 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.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rue 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management, under the supervision of the Company’s principal executive, who is also the chief financial and accounting officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of June 30, 2024 under the criteria set forth in the 2013 Internal Control - Integrated Framework.
(32)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 9ACONTROLS AND PROCEDURES (CONTINUED)
Management’s Report on Internal Control over Financial Reporting (Continued)
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that material weaknesses exist due to the following reasons:
● The Company has an ineffective control environment due to the lack of the necessary corporate accounting resources with SEC financial reporting experience to ensure consistent, complete and accurate financial reporting, as well as disclosure controls and procedures. The Company has outsourced the financial reporting function to a qualified accounting firm; however, the Company does not have the internal resources to maintain appropriate disclosure controls and procedures.
● The Company has limited resources to ensure that necessary internal controls are implemented and followed throughout the Company. The limited resources result in a lack of adequate segregation of duties relating to the authorization, recognition, capture, and review of transactions, facts, circumstances and events that could have a material impact on the Company’s financial reporting process.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Controls
There were no significant changes in the Company’s internal controls over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect the Company’s internal controls over financial reporting subsequent to the date of the evaluation.
ITEM 9B OTHER INFORMATION
None
(33)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART III
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
(a) Directors
Periods of Service
Name
Age
as Director
Terms
Barry M. Yantis
1980 to Present
One Year
Brian A. Yantis
1986 to Present
One Year
Years of
Service as
Name
Age
an Officer
Term
Barry M. Yantis
Until Successor
Elected
Brian A. Yantis
Until Successor
Elected
(b) Certain Significant Employees
There are no significant employees other than above.
(c) Family Relationships
Barry M. Yantis and Brian A. Yantis are brothers.
Business Experience
(1) Barry M. Yantis, President and Treasurer has been an officer of the Company for 45 years, 13 years as Vice-President and 32 years as President. He has been on the board of directors for 45 years and has been associated with the candy business for 49 years.
Brian A. Yantis, Secretary has been an officer of the Company since May 1992. Until retiring in 2011, he had been associated with the insurance business for 37 years and was a Vice-President of Aon Risk Services in Chicago, Illinois for 22 years.
(2) The directors and executive officers listed above are also the directors and executive officers of Dye Candy Company.
(d)Involvement in Certain Legal Proceedings
Not applicable
(e)Audit Committee Financial Expert
The board of directors are not considered audit committee financial experts, but do effectively operate as the audit committee.
(34)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE (CONTINUED)
(f)Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors, and employees of the Company. The Code of Business Conduct and Ethics will be provided to any person without charge upon request.
ITEM 11EXECUTIVE COMPENSATION
(a)General
Executive officers are compensated for their services as set forth in the Summary Compensation Table. These salaries are approved yearly by the board of directors.
(b)Summary Compensation Table
Long-Term Compensation
Other
Restricted
Fiscal
Annual
Stock
Option
LTIP
All Other
Name
Year End
Salary
Bonus
Compensation
Award (s)
SARs (#)
Payouts
Compensation
Barry M. Yantis
6/30/2024
$
130,000
-
$
3,000
-
-
-
-
Barry M. Yantis
6/30/2023
123,334
-
1,640
-
-
-
-
Barry M. Yantis
6/30/2022
113,333
-
2,640
-
-
-
-
1) CEO, President and Treasurer
2) No other compensation than that which is listed in compensation table.
3) No other officers have compensation over $100,000 for their services besides those listed in this compensation table.
(c)Option/SAR grants table
Not applicable
(d)Aggregated option/SAR exercises and fiscal year-end option/SAR value table
Not applicable
(e)Long-term incentive plan awards table
Not applicable
(f)Compensation of Directors
Directors are not compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings.
(35)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 11EXECUTIVE COMPENSATION (CONTINUED)
(g)Employment contracts and termination of employment and change in control arrangements
No employment contracts exist with any executive officers. In addition, there are no contracts currently in place regarding termination of employment or change in control arrangements.
(h)Report on repricing of option/SARs
Not applicable
(i)
Additional information with respect to compensation committee interlocks and insider participation in compensation decisions
The registrant has no formal compensation committee. The board of directors, Brian A. Yantis and Barry M. Yantis (all current officers of the Company) annually approve the compensation of Barry M. Yantis, CEO, President and Treasurer.
(j)Board compensation committee report on executive compensation
The board bases the annual salary of the CEO on the Company’s prior year performance. The criteria is based upon, but is not limited to, market area expansion, gross profit improvement, control of operating expenses, generation of positive cash flow, and hours devoted to the business during the previous fiscal year.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS
Amounts
and Nature
of Beneficial
Title of Class
Name and Address
Ownership
% of Class
(a)
Security Ownership of Certain Beneficial Owners
Common; Par Value $1 per Share
Barry Yantis, CEO & Director 12 Longleaf Lane, Hilton Head Island, SC 29926
194,385
(1)
16.90
%(2)
Brian Yantis, Officer & Director 1210 E. Clarendon Arlington Heights, IL 60004
97,192
(1)
8.40
%(2)
(b)
Security Ownership of Management
Common; Par Value $1 per Share
Two Directors and CEO as a Group
110,856
11.40
%
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series A, 6% Convertible
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series B, 6% Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
3,017
5.20
%
Value: Series A, $5 Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
6.60
%
Value: Series B, $5 Convertible
(36)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS (CONTINUED)
(1) Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock.
(2) Reflects the percentage assuming the preferred shares above were converted into common stock.
(c) No Known Change of Control is Anticipated
ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
(a)Transactions with management and others
The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned by the son of the Chief Executive Officer of the Company. The annual rent is $78,000.
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
(b)Certain business relationships
Not applicable
(c)Indebtedness of management
Not applicable
(d)Transactions with promoters
Not applicable
ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2024 and 2023:
Audit Fees:
Mayer Hoffman McCann P.C. (MHM)
$
-
$
15,000
HoganTaylor LLP
104,000
102,150
Audit Related Fees
-
-
Tax Fees
-
-
Our Board of Directors pre-approves audit services provided by our independent auditors. The above services and fees were reviewed and approved by the Board before the respective services were rendered.
(37)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART IV
ITEM 15EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report.
1.
Consolidated Financial Statements:
Page
Index to Consolidated Financial Statements
Report of the Independent Registered Public Accounting Firm (PCAOB ID: 483)
Consolidated Balance Sheets
17-18
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
22-31
2.
Consolidated Financial Statement Schedules:
None
3.
Exhibits:
The exhibits listed below are filed with or incorporated by reference in this report.
The following have been previously filed and are incorporated by reference to prior years’ Forms 10-K filed by the Registrant:
3.1
Articles of Incorporation of Chase General Corporation
3.2
Bylaws
The following are Exhibits attached or explanations included in “Notes to Consolidated Financial Statements” in Part II of this report:
4.
Instruments defining the rights of security holders including indentures - Refer to Note 4.
11.
Computation of earnings (loss) per share - Refer to Note 6.
21.
Subsidiaries of registrant - Refer to Note 1 of Notes to Consolidated Financial Statements.
31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d - 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(38)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
32.1
Certification of Chairman of the Board, Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements for the year ended June 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2024 and 2023, (ii) Consolidated Statements of Operations for the years ended June 30, 2024 and 2023, (iii) Consolidated Statement of Stockholders’ Equity for the years ended June 30, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
(39)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION (Registrant)
Date:
September 20, 2024
By:
/s/ Barry M. Yantis
Barry M. Yantis
Chairman of the Board, Chief Executive Officer,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signatures
Title
Date
/s/ Barry M. Yantis
September 20, 2024
Barry M. Yantis
Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President, Treasurer and Director
/s/ Brian A. Yantis
September 20, 2024
Brian A. Yantis
Secretary and Director
(40)

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 16 through 37 of this Form 10-K.
(14)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: 483)
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(15)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of
Chase General Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Chase General Corporation and its subsidiary (the Company) as of June 30, 2024 and 2023, the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ HoganTaylor LLP
We have served as the Company's auditor since 2022.
Oklahoma City, Oklahoma
September 20, 2024
(16)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2024 AND 2023
June 30,
June 30,
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents
$
41,974
11,295
Trade Receivables, Net of Allowance for Credit Losses of $1,896
222,699
253,900
Inventories:
Finished Goods
384,641
393,898
Goods in Process
21,971
9,156
Raw Materials
119,508
131,549
Packaging Materials
193,122
269,028
Prepaid Expenses
6,640
21,884
Total Current Assets
990,555
1,090,710
LONG-TERM ASSETS
Property & Equipment
Land
35,000
35,000
Buildings
77,348
77,348
Machinery and Equipment
866,976
886,341
Trucks and Autos
184,200
170,378
Office Equipment
33,025
33,025
Leasehold Improvements
72,068
72,068
Total
1,268,617
1,274,160
Less: Accumulated Depreciation and Amortization
(1,061,745)
(1,076,030)
Total Property and Equipment, Net
206,872
198,130
Right-of-Use Asset
365,372
413,595
Deferred Tax Asset
21,239
-
Total Long-Term Assets
593,483
611,725
Total Assets
$
1,584,038
$
1,702,435
The accompanying notes are an integral part of the consolidated financial statements.
(17)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, 2024 AND 2023
June 30,
June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable
$
173,153
100,754
Current Maturities of Notes Payable
161,688
222,400
Current Maturities of Lease Liability
52,019
41,724
Accrued Expenses
25,099
31,996
Refund Liability Owed to Customers
16,533
10,000
Deferred Income
1,299
Total Current Liabilities
429,464
408,173
LONG-TERM LIABILITIES
Notes Payable, Less Current Maturities
36,870
31,491
Lease Liability, Less Current Maturities
313,353
365,371
Deferred Income
-
Total Long-Term Liabilities
350,223
397,834
Total Liabilities
779,687
806,007
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS’ EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,490,000 and $2,460,000, Respectively)
500,000
500,000
Series B (Liquidation Preference $2,445,000 and $2,415,000, Respectively)
500,000
500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,545,994 and $5,487,461, Respectively)
1,170,660
1,170,660
Series B (Liquidation Preference $903,828 and $894,289, 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
(5,661,645)
(5,569,568)
Total Stockholders’ Equity
804,351
896,428
Total Liabilities and Stockholders’ Equity
$
1,584,038
$
1,702,435
The accompanying notes are an integral part of the consolidated financial statements.
(18)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
For the Years Ended
June 30,
SALES
$
3,395,505
$
3,446,234
COST OF SALES
2,542,003
2,361,913
Gross Profit on Sales
853,502
1,084,321
OPERATING EXPENSES
Selling
340,816
343,734
General and Administrative
611,312
577,224
Total Operating Expenses
952,128
920,958
Income (Loss) from Operations
(98,626)
163,363
OTHER INCOME (EXPENSE)
Miscellaneous Income
1,899
1,763
Interest Expense
(14,997)
(7,959)
Total Other Income (Expense), net
(13,098)
(6,196)
Income (Loss) before Income Taxes
(111,724)
157,167
INCOME TAX BENEFIT (PROVISION)
Current tax expense
(1,592)
-
Deferred tax benefit
21,239
-
Total Income Tax Benefit (Provision)
19,647
-
NET INCOME (LOSS)
$
(92,077)
$
157,167
EARNINGS (LOSS) PER SHARE
Basic and Diluted
$
(0.23)
$
0.03
The accompanying notes are an integral part of the consolidated financial statements.
(19)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
Prior Cumulative
Cumulative
Preferred Stock
Preferred Stock
Common
Paid-In
Accumulated
Series A
Series B
Series A
Series B
Stock
Capital
Deficit
Total
BALANCE, June 30, 2022
$
500,000
$
500,000
$
1,170,660
$
190,780
$
969,834
$
3,134,722
$
(5,726,735)
$
739,261
Net Income
-
-
-
-
-
-
157,167
157,167
BALANCE, June 30, 2023
500,000
500,000
1,170,660
190,780
969,834
3,134,722
(5,569,568)
896,428
Net Loss
-
-
-
-
-
-
(92,077)
(92,077)
BALANCE, June 30, 2024
$
500,000
$
500,000
$
1,170,660
$
190,780
$
969,834
$
3,134,722
$
(5,661,645)
$
804,351
The accompanying notes are an integral part of the consolidated financial statements.
(20)
CHASE GENERAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
For the Year Ended
June 30,
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)
$
(92,077)
$
157,167
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by/(Used in) Operating Activities:
Depreciation and Amortization
44,970
41,713
Allowance for Credit Losses
-
Deferred Income Amortization
(1,299)
(1,299)
Gain on Sale of Property and Equipment
(22,624)
(43,681)
Deferred income taxes
(21,239)
-
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables
31,201
(113,512)
Inventories
84,389
(38,354)
Prepaid Expenses
15,244
(15,244)
Accounts Payable
72,399
(34,951)
Refund Liability Owed to Customers
6,533
1,791
Accrued Expenses
(6,897)
(602)
Operating Lease Liability
6,500
(6,500)
Net Cash Provided by/(Used in) Operating Activities
117,100
(52,524)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Disposal of Property and Equipment
-
28,000
Purchases of Property and Equipment
(31,088)
(60,683)
Net Cash Used in Investing Activities
(31,088)
(32,683)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit
430,000
565,000
Principal Payments on Line-of-Credit
(500,000)
(475,000)
Proceeds from Note Payable
28,506
-
Proceeds from Note Payable - Stockholder
100,000
-
Principal Payments on Note Payable - Stockholder
(100,000)
-
Principal Payments on Notes Payable
(13,839)
(7,009)
Net Cash Provided by/(Used in) Financing Activities
(55,333)
82,991
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
30,679
(2,216)
Cash and Cash Equivalents - Beginning of Period
11,295
13,511
CASH AND CASH EQUIVALENTS - END OF PERIOD
$
41,974
$
11,295
The accompanying notes are an integral part of the consolidated financial statements.
(21)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Chase General Corporation (the Company) was incorporated on November 6, 1944 in the state of Missouri for the purpose of manufacturing confectionery products. The Company grants credit terms to substantially all customers, consisting of repackers, grocery accounts, and national syndicate accounts, who are primarily located in the Midwest region of the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.
Segment Reporting of the Business
The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 in these consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
Shipping and Handling Costs
Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2024 and 2023 was $153,116 and $168,442, respectively.
Trade Receivables
Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.
(22)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Trade Receivables (Continued)
The carrying amount of trade receivables is reduced by an allowance for credit losses that reflects management’s best estimate of amounts that will not be collected. The Company provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions adjusted for current conditions and reasonable and supportable forecasts. All accounts or portions thereof deemed to be uncollectible, or that require an excessive collection cost, are written off to the allowance for credit losses.
Inventories
Raw material and packaging material inventories are carried at the “lower of cost or net realizable value,” with cost being determined on the “first-in, first-out” basis of accounting. The cost of goods in process include an estimate for manufacturing overhead. Finished goods inventory are valued using the lower of cost or market value, determined by the retail inventory method. Under the retail inventory method, the valuation of finished goods inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories.
Property and Equipment
The Company’s property and equipment is recorded at cost and is being depreciated on straight-line method over the following estimated useful lives:
Buildings
39 years
Machinery and equipment
5 - 7 years
Trucks and autos
5 years
Office equipment
5 - 7 years
Leasehold improvements
Lesser of estimated useful life or the lease term
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.
(23)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred income tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred income tax assets are only recognized if it is more likely than not that a tax position will be realized or sustained upon examination by the relevant taxing authority. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred income tax assets will not be realized. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of relevant information. Deferred income tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment. As of June 30, 2023, the full valuation allowance previously established was removed. The deferred income tax balance as of June 30, 2024 as shown on the accompanying consolidated balance sheet and is expected to be fully utilized.
The Company’s policy is to evaluate uncertain tax positions under the guidance as prescribed by ASC 740, Income Taxes. As of June 30, 2024 and 2023, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company had no accruals for interest or penalties as of June 30, 2024 and 2023.
Earnings Per Common Share
Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, diluted earnings per share will be calculated in the same manner as basic earnings per share.
Recently Issued Pronouncements
Effective July 1, 2023, the Company adopted ASU 2016-13, Financial Instrument - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments related to the impairment of financial instruments using the modified retrospective approach, which applies Topic 326 at the beginning of the earliest period presented. This guidance, commonly referred to as Current Expected Credit Loss (“CECL”), changes impairment recognition to a model that is based on expected losses rather than incurred losses. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including trade receivables. The Company evaluated and determined the amendment did not have a material affect on the condensed consolidated financial statement.
(24)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The majority of the Company’s 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 trade receivables on the consolidated balance sheets and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation.
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 for the year ended June 30, 2024 and 2023 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 consolidated 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. Advertising is expensed when incurred and considered as a component of revenue. Advertising expense was $20,660 and $20,121 for the years ended June 30, 2024 and 2023, respectively.
The various divisions of revenue are as follows:
SALES
Chase Candy
$
1,882,291
$
1,956,658
Seasonal Candy
1,513,214
1,489,576
Total
$
3,395,505
$
3,446,234
(25)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 2 FORGIVABLE LOAN AND DEFERRED INCOME
During 2004, the Company received a $25,000 economic development incentive from Buchanan County, which is a five-year forgivable loan at a rate of $5,000 per year. The Nodaway Valley Bank established an Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of January 3, 2010. The Company met the criteria of occupying a 20,000 square foot building and creating a minimum of two new full-time equivalent jobs during the first year of operation in the new facility. In addition, the Company maintained 19 existing jobs during the five-year term. Notice was received February 6, 2009 from the Buchanan County Commission, that the Company had fulfilled its minimum loan requirements so that the loan was forgiven in full and has no further obligations. Since the Company was no longer legally required to return the monies, the liability was reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. Deferred revenue is recognized on a straight line basis over the lease term of 20 years. During the years ended June 30, 2024 and 2023, deferred revenue of $1,299 was amortized into miscellaneous income.
NOTE 3 NOTES PAYABLE
The Company’s long-term debt at June 30, 2024 and 2023 consists of:
June 30,
June 30,
Payee
Terms
Nodaway Valley Bank
$500,000 line-of-credit agreement expiring on January 4, 2025, with a variable interest rate at prime but not less than 5% (8.5% at June 30, 2024). The line of credit is collateralized by substantially all assets of the Company.
$
140,000
$
-
Nodaway Valley Bank
$500,000 line-of-credit agreement expired on January 4, 2024, 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.
-
210,000
Nodaway Valley Bank
$885 monthly payments, interest of 7.25%; final payment due April 2027, secured by a vehicle.
27,082
-
Ford Motor Credit Company
$1,126 monthly payments, interest of 2.9%; final payment due November 2026, secured by a vehicle.
31,476
43,891
Total
198,558
253,891
Less Current Portion
161,688
222,400
Long-Term Portion
$
36,870
$
31,491
Future minimum payments for the twelve months ending June 30 are:
June 30,
Amount
$
161,688
22,741
14,129
Total
$
198,558
(26)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 4 CAPITAL STOCK
Capital stock authorized, issued, and outstanding as of June 30, 2024 is as follows:
Shares
Issued and
Authorized
Outstanding
Prior Cumulative Preferred Stock, $5 Par Value:
6% Convertible
240,000
Series A
100,000
Series B
100,000
Cumulative Preferred Stock, $20 Par Value:
5% Convertible
150,000
Series A
58,533
Series B
9,539
Common Stock, $1 Par Value:
Reserved for Conversion of Preferred Stock - 1,030,166 shares
2,000,000
969,834
Cumulative Preferred Stock dividends in arrears at June 30, 2024 and 2023 totaled $8,973,382 and $8,845,310, respectively. Total dividends in arrears, on a per share basis, consist of the following at June 30, 2024 and 2023:
For the Year Ended
June 30,
6% Convertible:
Series A
$
$
Series B
$
$
5% Convertible:
Series A
$
$
Series B
$
$
The 6% convertible prior cumulative preferred stock may, upon 30 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. Cumulative preferred stock may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for 1 share of Series A and 3.75 common shares for 1 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 1 of preferred.
(27)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 5 INCOME TAXES
Management believes the income tax positions taken for open years are appropriately stated and supported for all open years. The Company’s federal tax returns for the years ended June 30, 2023, 2022, and 2021 are subject to examination by the Internal Revenue Service taxing authority.
The sources of deferred income tax assets and liabilities at June 30, 2024 and 2023 are as follows:
June 30,
June 30,
Deferred tax assets:
Allowance for Credit Losses
Deferred Income
Contribution Carryover
2,329
-
Other
-
6,000
Net operating loss carryforwards
47,014
20,600
50,078
27,600
Deferred tax liabilities:
Book/Tax Difference on Property and Equipment
(28,839)
(27,600)
(28,839)
(27,600)
Net deferred tax asset before valuation allowance
21,239
-
Valuation allowance:
Beginning balanace
-
(30,500)
Decrease/(Increase) during the period
-
30,500
Ending balance
-
-
Net deferred tax asset
$
21,239
$
-
The income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate to pretax income (loss) for the years ended June 30, 2024 and 2023 due to the following:
For the Years Ended
June 30,
Computed at statutory rate
$
(23,462)
$
33,005
Increase (decrease) resulting from:
State income taxes - net of federal tax benefit
(2,588)
4,966
Change in deferred tax asset valuation allowance
-
(30,500)
Other
6,403
(7,471)
Actual tax (benefit) provision
$
(19,647)
$
-
The Company has available at June 30, 2024, $194,767 of net unused operating losses that may be carried forward and applied against future taxable income. These net operating loss carryforwards do not expire but are subject to an 80% of taxable income utilization.
(28)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 6 EARNINGS (LOSS) PER SHARE
The earnings (loss) per share for the years ended June 30, 2024 and 2023, respectively, was computed on the weighted average of outstanding common shares during the year as follows:
For the Years Ended
June 30,
Net Income (Loss)
$
(92,077)
$
157,167
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value
60,000
60,000
5% Convertible Cumulative Preferred, $20 Par Value
68,072
68,072
Total Dividend Requirements
128,072
128,072
Net Income (Loss) attributable to Common Stockholders
$
(220,149)
$
29,095
Weighted Average Shares - Basic
969,834
969,834
Effect of Contingently Issuable Shares, if Dilutive
1,033,334
1,033,334
Weighted Average Shares - Diluted
2,003,168
2,003,168
Basic and Diluted Earnings (Loss) per Share
$
(0.23)
$
0.03
Contingently issuable shares were not included in the 2024 or 2023 diluted earnings per common share as they would have an antidilutive effect upon earnings per share.
The following table details out the contingently issuable shares for the years ended June 30, 2024 and 2023.
Shares Issuable Upon Conversion of Series A Prior Cumulative Preferred Stock
400,000
400,000
Shares Issuable Upon Conversion of Series B Prior Cumulative Preferred Stock
375,000
375,000
Shares Issuable Upon Conversion of Series A Cumulative Preferred Stock
222,133
222,133
Shares Issuable Upon Conversion of Series B Cumulative Preferred Stock
36,201
36,201
Total Dilutive Effect of Contingently Issuable Shares
1,033,334
1,033,334
NOTE 7 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
For the Years Ended
June 30,
Supplemental Cash Flow Information:
Interest paid
$
14,915
$
7,681
Right-of-use asset obtained in exchange for modification of operating lease liability
$
-
$
279,072
Proceeds received on trade-in of vehicle
$
24,000
$
-
Note Payable obligation incurred for vehicle
$
-
$
50,900
(29)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 8 COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
The Company leases its office and manufacturing facility, located in St. Joseph, Missouri under an operating lease from an entity that is 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. During the period ended June 30, 2023, the Company determined the exercise of the renewal option is reasonably assured and therefore remeasured the right-of-use asset and lease liability to include the additional five years at the current rate so that the new term expires on March 31, 2030. The lease currently requires payments of $6,500 per month, as noted the Company does not believe the payments in the renewal period will vary significantly from this current amount.
Operating lease right-of-use asset and liability was recognized based on the present value of minimum lease payments over the remaining lease term. The Company’s operating lease has a remaining term of 5.75 years and the present value of the lease payments is calculated using the Company’s estimated incremental borrowing rate of 7.6% as of the remeasurement date. 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 nonlease 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. Cash paid for the operating lease liability was $71,500 and operating lease expense was $78,000 for the year ended June 30, 2024, of which, $71,565 is included in cost of sales and $6,435 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 June 30, 2024 are as follows:
Twelve Months Ending June 30,
Amount
$
78,000
78,000
78,000
78,000
78,000
Thereafter
65,000
Total Lease Payments
455,000
Less: Imputed Interest
(89,628)
Total Lease Liabilities
$
365,372
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
As of June 30, 2024, the Company had raw materials purchase commitments with nine vendors totaling approximately $230,000.
(30)
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
NOTE 9 DISCLOSURES 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 financial instruments.
NOTE 10 CONCENTRATION OF CREDIT RISK
For the years ended June 30, 2024 and 2023, two customers accounted for 45% and 48%, respectively , of sales. As of June 30, 2024 and 2023, these same two customers accounted for 43% and 59%, respectively, of trade receivables.
NOTE 11 SUBSEQUENT EVENTS
The Company monitors significant events occurring after June 30, 2024 and prior to the issuance of the financial statements to determine the impact, if any, of the events on the consolidated financial statements to be issued. All subsequent events of which the Company is aware were evaluated through the filing date of this Form 10-K.
(31)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
ITEM 9ACONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s principal executive officer, who is also the chief financial and accounting officer, has evaluated the effectiveness of the Company’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, such officer has concluded that the Company’s disclosure controls and procedures are not effective as a result of a weakness in the design of internal control over financial reporting identified below.
Disclosure controls and procedures include controls and procedures designed 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.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rue 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management, under the supervision of the Company’s principal executive, who is also the chief financial and accounting officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in 2013 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of June 30, 2024 under the criteria set forth in the 2013 Internal Control - Integrated Framework.
(32)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 9ACONTROLS AND PROCEDURES (CONTINUED)
Management’s Report on Internal Control over Financial Reporting (Continued)
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that material weaknesses exist due to the following reasons:
● The Company has an ineffective control environment due to the lack of the necessary corporate accounting resources with SEC financial reporting experience to ensure consistent, complete and accurate financial reporting, as well as disclosure controls and procedures. The Company has outsourced the financial reporting function to a qualified accounting firm; however, the Company does not have the internal resources to maintain appropriate disclosure controls and procedures.
● The Company has limited resources to ensure that necessary internal controls are implemented and followed throughout the Company. The limited resources result in a lack of adequate segregation of duties relating to the authorization, recognition, capture, and review of transactions, facts, circumstances and events that could have a material impact on the Company’s financial reporting process.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
Changes in Internal Controls
There were no significant changes in the Company’s internal controls over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect the Company’s internal controls over financial reporting subsequent to the date of the evaluation.
ITEM 9B OTHER INFORMATION
None
(33)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART III
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
(a) Directors
Periods of Service
Name
Age
as Director
Terms
Barry M. Yantis
1980 to Present
One Year
Brian A. Yantis
1986 to Present
One Year
Years of
Service as
Name
Age
an Officer
Term
Barry M. Yantis
Until Successor
Elected
Brian A. Yantis
Until Successor
Elected
(b) Certain Significant Employees
There are no significant employees other than above.
(c) Family Relationships
Barry M. Yantis and Brian A. Yantis are brothers.
Business Experience
(1) Barry M. Yantis, President and Treasurer has been an officer of the Company for 45 years, 13 years as Vice-President and 32 years as President. He has been on the board of directors for 45 years and has been associated with the candy business for 49 years.
Brian A. Yantis, Secretary has been an officer of the Company since May 1992. Until retiring in 2011, he had been associated with the insurance business for 37 years and was a Vice-President of Aon Risk Services in Chicago, Illinois for 22 years.
(2) The directors and executive officers listed above are also the directors and executive officers of Dye Candy Company.
(d)Involvement in Certain Legal Proceedings
Not applicable
(e)Audit Committee Financial Expert
The board of directors are not considered audit committee financial experts, but do effectively operate as the audit committee.
(34)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE (CONTINUED)
(f)Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors, and employees of the Company. The Code of Business Conduct and Ethics will be provided to any person without charge upon request.
ITEM 11EXECUTIVE COMPENSATION
(a)General
Executive officers are compensated for their services as set forth in the Summary Compensation Table. These salaries are approved yearly by the board of directors.
(b)Summary Compensation Table
Long-Term Compensation
Other
Restricted
Fiscal
Annual
Stock
Option
LTIP
All Other
Name
Year End
Salary
Bonus
Compensation
Award (s)
SARs (#)
Payouts
Compensation
Barry M. Yantis
6/30/2024
$
130,000
-
$
3,000
-
-
-
-
Barry M. Yantis
6/30/2023
123,334
-
1,640
-
-
-
-
Barry M. Yantis
6/30/2022
113,333
-
2,640
-
-
-
-
1) CEO, President and Treasurer
2) No other compensation than that which is listed in compensation table.
3) No other officers have compensation over $100,000 for their services besides those listed in this compensation table.
(c)Option/SAR grants table
Not applicable
(d)Aggregated option/SAR exercises and fiscal year-end option/SAR value table
Not applicable
(e)Long-term incentive plan awards table
Not applicable
(f)Compensation of Directors
Directors are not compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings.
(35)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 11EXECUTIVE COMPENSATION (CONTINUED)
(g)Employment contracts and termination of employment and change in control arrangements
No employment contracts exist with any executive officers. In addition, there are no contracts currently in place regarding termination of employment or change in control arrangements.
(h)Report on repricing of option/SARs
Not applicable
(i)
Additional information with respect to compensation committee interlocks and insider participation in compensation decisions
The registrant has no formal compensation committee. The board of directors, Brian A. Yantis and Barry M. Yantis (all current officers of the Company) annually approve the compensation of Barry M. Yantis, CEO, President and Treasurer.
(j)Board compensation committee report on executive compensation
The board bases the annual salary of the CEO on the Company’s prior year performance. The criteria is based upon, but is not limited to, market area expansion, gross profit improvement, control of operating expenses, generation of positive cash flow, and hours devoted to the business during the previous fiscal year.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS
Amounts
and Nature
of Beneficial
Title of Class
Name and Address
Ownership
% of Class
(a)
Security Ownership of Certain Beneficial Owners
Common; Par Value $1 per Share
Barry Yantis, CEO & Director 12 Longleaf Lane, Hilton Head Island, SC 29926
194,385
(1)
16.90
%(2)
Brian Yantis, Officer & Director 1210 E. Clarendon Arlington Heights, IL 60004
97,192
(1)
8.40
%(2)
(b)
Security Ownership of Management
Common; Par Value $1 per Share
Two Directors and CEO as a Group
110,856
11.40
%
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series A, 6% Convertible
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series B, 6% Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
3,017
5.20
%
Value: Series A, $5 Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
6.60
%
Value: Series B, $5 Convertible
(36)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS (CONTINUED)
(1) Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock.
(2) Reflects the percentage assuming the preferred shares above were converted into common stock.
(c) No Known Change of Control is Anticipated
ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
(a)Transactions with management and others
The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned by the son of the Chief Executive Officer of the Company. The annual rent is $78,000.
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
(b)Certain business relationships
Not applicable
(c)Indebtedness of management
Not applicable
(d)Transactions with promoters
Not applicable
ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2024 and 2023:
Audit Fees:
Mayer Hoffman McCann P.C. (MHM)
$
-
$
15,000
HoganTaylor LLP
104,000
102,150
Audit Related Fees
-
-
Tax Fees
-
-
Our Board of Directors pre-approves audit services provided by our independent auditors. The above services and fees were reviewed and approved by the Board before the respective services were rendered.
(37)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART IV
ITEM 15EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report.
1.
Consolidated Financial Statements:
Page
Index to Consolidated Financial Statements
Report of the Independent Registered Public Accounting Firm (PCAOB ID: 483)
Consolidated Balance Sheets
17-18
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
22-31
2.
Consolidated Financial Statement Schedules:
None
3.
Exhibits:
The exhibits listed below are filed with or incorporated by reference in this report.
The following have been previously filed and are incorporated by reference to prior years’ Forms 10-K filed by the Registrant:
3.1
Articles of Incorporation of Chase General Corporation
3.2
Bylaws
The following are Exhibits attached or explanations included in “Notes to Consolidated Financial Statements” in Part II of this report:
4.
Instruments defining the rights of security holders including indentures - Refer to Note 4.
11.
Computation of earnings (loss) per share - Refer to Note 6.
21.
Subsidiaries of registrant - Refer to Note 1 of Notes to Consolidated Financial Statements.
31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d - 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(38)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
32.1
Certification of Chairman of the Board, Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements for the year ended June 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2024 and 2023, (ii) Consolidated Statements of Operations for the years ended June 30, 2024 and 2023, (iii) Consolidated Statement of Stockholders’ Equity for the years ended June 30, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
(39)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION (Registrant)
Date:
September 20, 2024
By:
/s/ Barry M. Yantis
Barry M. Yantis
Chairman of the Board, Chief Executive Officer,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signatures
Title
Date
/s/ Barry M. Yantis
September 20, 2024
Barry M. Yantis
Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President, Treasurer and Director
/s/ Brian A. Yantis
September 20, 2024
Brian A. Yantis
Secretary and Director
(40)

---

ITEM 9A. CONTROLS AND PROCEDURES

---

ITEM 9B. OTHER INFORMATION
ITEM 9B OTHER INFORMATION
None
(33)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART III
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
(a) Directors
Periods of Service
Name
Age
as Director
Terms
Barry M. Yantis
1980 to Present
One Year
Brian A. Yantis
1986 to Present
One Year
Years of
Service as
Name
Age
an Officer
Term
Barry M. Yantis
Until Successor
Elected
Brian A. Yantis
Until Successor
Elected
(b) Certain Significant Employees
There are no significant employees other than above.
(c) Family Relationships
Barry M. Yantis and Brian A. Yantis are brothers.
Business Experience
(1) Barry M. Yantis, President and Treasurer has been an officer of the Company for 45 years, 13 years as Vice-President and 32 years as President. He has been on the board of directors for 45 years and has been associated with the candy business for 49 years.
Brian A. Yantis, Secretary has been an officer of the Company since May 1992. Until retiring in 2011, he had been associated with the insurance business for 37 years and was a Vice-President of Aon Risk Services in Chicago, Illinois for 22 years.
(2) The directors and executive officers listed above are also the directors and executive officers of Dye Candy Company.
(d)Involvement in Certain Legal Proceedings
Not applicable
(e)Audit Committee Financial Expert
The board of directors are not considered audit committee financial experts, but do effectively operate as the audit committee.
(34)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 10DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE (CONTINUED)
(f)Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors, and employees of the Company. The Code of Business Conduct and Ethics will be provided to any person without charge upon request.
ITEM 11EXECUTIVE COMPENSATION
(a)General
Executive officers are compensated for their services as set forth in the Summary Compensation Table. These salaries are approved yearly by the board of directors.
(b)Summary Compensation Table
Long-Term Compensation
Other
Restricted
Fiscal
Annual
Stock
Option
LTIP
All Other
Name
Year End
Salary
Bonus
Compensation
Award (s)
SARs (#)
Payouts
Compensation
Barry M. Yantis
6/30/2024
$
130,000
-
$
3,000
-
-
-
-
Barry M. Yantis
6/30/2023
123,334
-
1,640
-
-
-
-
Barry M. Yantis
6/30/2022
113,333
-
2,640
-
-
-
-
1) CEO, President and Treasurer
2) No other compensation than that which is listed in compensation table.
3) No other officers have compensation over $100,000 for their services besides those listed in this compensation table.
(c)Option/SAR grants table
Not applicable
(d)Aggregated option/SAR exercises and fiscal year-end option/SAR value table
Not applicable
(e)Long-term incentive plan awards table
Not applicable
(f)Compensation of Directors
Directors are not compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings.
(35)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 11EXECUTIVE COMPENSATION (CONTINUED)
(g)Employment contracts and termination of employment and change in control arrangements
No employment contracts exist with any executive officers. In addition, there are no contracts currently in place regarding termination of employment or change in control arrangements.
(h)Report on repricing of option/SARs
Not applicable
(i)
Additional information with respect to compensation committee interlocks and insider participation in compensation decisions
The registrant has no formal compensation committee. The board of directors, Brian A. Yantis and Barry M. Yantis (all current officers of the Company) annually approve the compensation of Barry M. Yantis, CEO, President and Treasurer.
(j)Board compensation committee report on executive compensation
The board bases the annual salary of the CEO on the Company’s prior year performance. The criteria is based upon, but is not limited to, market area expansion, gross profit improvement, control of operating expenses, generation of positive cash flow, and hours devoted to the business during the previous fiscal year.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS
Amounts
and Nature
of Beneficial
Title of Class
Name and Address
Ownership
% of Class
(a)
Security Ownership of Certain Beneficial Owners
Common; Par Value $1 per Share
Barry Yantis, CEO & Director 12 Longleaf Lane, Hilton Head Island, SC 29926
194,385
(1)
16.90
%(2)
Brian Yantis, Officer & Director 1210 E. Clarendon Arlington Heights, IL 60004
97,192
(1)
8.40
%(2)
(b)
Security Ownership of Management
Common; Par Value $1 per Share
Two Directors and CEO as a Group
110,856
11.40
%
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series A, 6% Convertible
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series B, 6% Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
3,017
5.20
%
Value: Series A, $5 Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
6.60
%
Value: Series B, $5 Convertible
(36)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS (CONTINUED)
(1) Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock.
(2) Reflects the percentage assuming the preferred shares above were converted into common stock.
(c) No Known Change of Control is Anticipated
ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
(a)Transactions with management and others
The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned by the son of the Chief Executive Officer of the Company. The annual rent is $78,000.
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
(b)Certain business relationships
Not applicable
(c)Indebtedness of management
Not applicable
(d)Transactions with promoters
Not applicable
ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2024 and 2023:
Audit Fees:
Mayer Hoffman McCann P.C. (MHM)
$
-
$
15,000
HoganTaylor LLP
104,000
102,150
Audit Related Fees
-
-
Tax Fees
-
-
Our Board of Directors pre-approves audit services provided by our independent auditors. The above services and fees were reviewed and approved by the Board before the respective services were rendered.
(37)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART IV
ITEM 15EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report.
1.
Consolidated Financial Statements:
Page
Index to Consolidated Financial Statements
Report of the Independent Registered Public Accounting Firm (PCAOB ID: 483)
Consolidated Balance Sheets
17-18
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
22-31
2.
Consolidated Financial Statement Schedules:
None
3.
Exhibits:
The exhibits listed below are filed with or incorporated by reference in this report.
The following have been previously filed and are incorporated by reference to prior years’ Forms 10-K filed by the Registrant:
3.1
Articles of Incorporation of Chase General Corporation
3.2
Bylaws
The following are Exhibits attached or explanations included in “Notes to Consolidated Financial Statements” in Part II of this report:
4.
Instruments defining the rights of security holders including indentures - Refer to Note 4.
11.
Computation of earnings (loss) per share - Refer to Note 6.
21.
Subsidiaries of registrant - Refer to Note 1 of Notes to Consolidated Financial Statements.
31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d - 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(38)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
32.1
Certification of Chairman of the Board, Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements for the year ended June 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2024 and 2023, (ii) Consolidated Statements of Operations for the years ended June 30, 2024 and 2023, (iii) Consolidated Statement of Stockholders’ Equity for the years ended June 30, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
(39)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION (Registrant)
Date:
September 20, 2024
By:
/s/ Barry M. Yantis
Barry M. Yantis
Chairman of the Board, Chief Executive Officer,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signatures
Title
Date
/s/ Barry M. Yantis
September 20, 2024
Barry M. Yantis
Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President, Treasurer and Director
/s/ Brian A. Yantis
September 20, 2024
Brian A. Yantis
Secretary and Director
(40)

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

---

ITEM 11. EXECUTIVE COMPENSATION

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS
Amounts
and Nature
of Beneficial
Title of Class
Name and Address
Ownership
% of Class
(a)
Security Ownership of Certain Beneficial Owners
Common; Par Value $1 per Share
Barry Yantis, CEO & Director 12 Longleaf Lane, Hilton Head Island, SC 29926
194,385
(1)
16.90
%(2)
Brian Yantis, Officer & Director 1210 E. Clarendon Arlington Heights, IL 60004
97,192
(1)
8.40
%(2)
(b)
Security Ownership of Management
Common; Par Value $1 per Share
Two Directors and CEO as a Group
110,856
11.40
%
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series A, 6% Convertible
Prior Cumulative Preferred, $5 Par
Two Directors and CEO as a Group
21,533
21.50
%
Value: Series B, 6% Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
3,017
5.20
%
Value: Series A, $5 Convertible
Cumulative Preferred, $20 Par
Two Directors and CEO as a Group
6.60
%
Value: Series B, $5 Convertible
(36)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS (CONTINUED)
(1) Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock.
(2) Reflects the percentage assuming the preferred shares above were converted into common stock.
(c) No Known Change of Control is Anticipated
ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
(a)Transactions with management and others
The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned by the son of the Chief Executive Officer of the Company. The annual rent is $78,000.
On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.
(b)Certain business relationships
Not applicable
(c)Indebtedness of management
Not applicable
(d)Transactions with promoters
Not applicable
ITEM 14PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2024 and 2023:
Audit Fees:
Mayer Hoffman McCann P.C. (MHM)
$
-
$
15,000
HoganTaylor LLP
104,000
102,150
Audit Related Fees
-
-
Tax Fees
-
-
Our Board of Directors pre-approves audit services provided by our independent auditors. The above services and fees were reviewed and approved by the Board before the respective services were rendered.
(37)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
PART IV
ITEM 15EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report.
1.
Consolidated Financial Statements:
Page
Index to Consolidated Financial Statements
Report of the Independent Registered Public Accounting Firm (PCAOB ID: 483)
Consolidated Balance Sheets
17-18
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
22-31
2.
Consolidated Financial Statement Schedules:
None
3.
Exhibits:
The exhibits listed below are filed with or incorporated by reference in this report.
The following have been previously filed and are incorporated by reference to prior years’ Forms 10-K filed by the Registrant:
3.1
Articles of Incorporation of Chase General Corporation
3.2
Bylaws
The following are Exhibits attached or explanations included in “Notes to Consolidated Financial Statements” in Part II of this report:
4.
Instruments defining the rights of security holders including indentures - Refer to Note 4.
11.
Computation of earnings (loss) per share - Refer to Note 6.
21.
Subsidiaries of registrant - Refer to Note 1 of Notes to Consolidated Financial Statements.
31.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d - 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(38)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
32.1
Certification of Chairman of the Board, Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements for the year ended June 30, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets as of June 30, 2024 and 2023, (ii) Consolidated Statements of Operations for the years ended June 30, 2024 and 2023, (iii) Consolidated Statement of Stockholders’ Equity for the years ended June 30, 2024 and 2023, (iv) Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023, and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text.
Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)
(39)
CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEARS ENDED JUNE 30, 2024 AND 2023
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHASE GENERAL CORPORATION (Registrant)
Date:
September 20, 2024
By:
/s/ Barry M. Yantis
Barry M. Yantis
Chairman of the Board, Chief Executive Officer,
President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signatures
Title
Date
/s/ Barry M. Yantis
September 20, 2024
Barry M. Yantis
Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President, Treasurer and Director
/s/ Brian A. Yantis
September 20, 2024
Brian A. Yantis
Secretary and Director
(40)

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES