Chase General 10Q 2025 Q1 Quarterly report

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2024

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

For the transition period from to

Commission File Number 2-5916

Chase General Corporation

(Exact name of registrant as specified in its charter)

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

1307 South 59th, St. Joseph, Missouri 64507

(Address of principal executive offices, Zip Code)

(816) 279-1625

(Registrant’s telephone number, including area code)

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


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

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

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

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

Large accelerated filer ◻	Accelerated filer ◻

Non-accelerated filer ⌧	Smaller reporting company ☒

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ◻ No ⌧

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

As of November 13, 2024, there were 969,834 shares of common stock, $1.00 par value, outstanding.

Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

FOR THE THREE months ENDED SEPTEMBER 30, 2024

PART I	FINANCIAL INFORMATION

	ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		CONDENSED CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2024 AND JUNE 30, 2024 (UNAUDITED)	1

		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (UNAUDITED)	3

		CONDENSED CONSOLIDATED STATEMENTS OF stockholders’ Equity FOR THE Three months ENDED SEPTEMBER 30, 2024 AND 2023 (UNAUDITED)	4

		CONDENSED CONSOLIDATED STATEMENTS OF Cash flows FOR THE Three months ENDED SEPTEMBER 30, 2024 AND 2023 (UNAUDITED)	5

		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	6

	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12

	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	16

	ITEM 4.	CONTROLS AND PROCEDURES	16

PART II	OTHER INFORMATION

	ITEM 1.	LEGAL PROCEEDINGS	17

	ITEM 1A.	RISK FACTORS	17

	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	17

	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	17

	ITEM 4.	MINE SAFETY DISCLOSURES	17

	ITEM 5.	OTHER INFORMATION	17

	ITEM 6.	EXHIBITS	17

	SIGNATURES		18

Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30,		June 30,
	2024		2024

ASSETS

CURRENT ASSETS
Cash and Cash Equivalents	$	44,311	$	41,974
Trade Receivables, Net of Allowance for Credit Losses of $1,896		788,852		222,699
Inventories:
Finished Goods		333,171		384,641
Goods in Process		15,518		21,971
Raw Materials		109,016		119,508
Packaging Materials		179,902		193,122
Prepaid Expenses		4,736		6,640
Total Current Assets		1,475,506		990,555

LONG-TERM ASSETS
Property & Equipment
Land		35,000		35,000
Buildings		77,348		77,348
Machinery and Equipment		866,976		866,976
Trucks and Autos		184,200		184,200
Office Equipment		33,025		33,025
Leasehold Improvements		72,068		72,068
Total		1,268,617		1,268,617
Less: Accumulated Depreciation and Amortization		(1,073,427)		(1,061,745)
Total Property and Equipment, Net		195,190		206,872
Right-of-Use Asset		352,734		365,372
Deferred Tax Asset		26,849		21,239
Total Long-Term Assets		574,773		593,483

Total Assets	$	2,050,279	$	1,584,038

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(UNAUDITED)


	September 30,		June 30,
	2024		2024

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts Payable	$	293,872	$	173,153
Current Maturities of Notes Payable		491,947		161,688
Current Maturities of Lease Liability		53,014		52,019
Accrued Expenses		58,543		25,099
Refund Liability Owed to Customers		34,500		16,533
Deferred Income		648		972
Total Current Liabilities		932,524		429,464

LONG-TERM LIABILITIES
Notes Payable, Less Current Maturities		31,297		36,870
Lease Liability, Less Current Maturities		299,720		313,353
Total Long-Term Liabilities		331,017		350,223

Total Liabilities		1,263,541		779,687

COMMITMENTS AND CONTINGENCIES (NOTE 7)

STOCKHOLDERS’ EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,497,500 and $2,490,000, Respectively)		500,000		500,000
Series B (Liquidation Preference $2,452,500 and $2,445,000, Respectively)		500,000		500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,560,627 and $5,545,994, Respectively)		1,170,660		1,170,660
Series B (Liquidation Preference $906,213 and $903,828, 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		(5,679,258)		(5,661,645)
Total Stockholders’ Equity		786,738		804,351

Total Liabilities and Stockholders’ Equity	$	2,050,279	$	1,584,038

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended
	September 30,
	2024		2023
SALES	$	989,021	$	1,110,799

COST OF SALES		704,078		797,020
Gross Profit on Sales		284,943		313,779

OPERATING EXPENSES
Selling		96,791		100,382
General and Administrative		204,129		199,096
Total Operating Expenses		300,920		299,478

Income (Loss) from Operations		(15,977)		14,301

OTHER INCOME (EXPENSE)
Miscellaneous Income		368		357
Interest Expense		(7,614)		(7,473)
Total Other Expenses, net		(7,246)		(7,116)

Income (Loss) before Income Taxes		(23,223)		7,185

INCOME TAX BENEFIT (PROVISION)		5,610		(7,744)

NET LOSS	$	(17,613)	$	(559)

LOSS PER SHARE
Basic and Diluted	$	(0.05)	$	(0.03)

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	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, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,569,568)	$	896,428

Net loss, three months ended September 30, 2023		—		—		—		—		—		—		(559)		(559)

BALANCE, September 30, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,570,127)	$	895,869

	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, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,661,645)	$	804,351

Net loss, three months ended September 30, 2024		—		—		—		—		—		—		(17,613)		(17,613)

BALANCE, September 30, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,679,258)	$	786,738

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended
	September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(17,613)	$	(559)
Adjustments to Reconcile Net Loss to Net Cash Provided by/(Used in) Operating Activities:
Depreciation and Amortization		11,682		10,943
Deferred Income Amortization		(324)		(324)
Deferred Income Taxes		(5,610)		7,065
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables		(566,153)		(706,807)
Inventories		81,635		(24,555)
Prepaid Expenses		1,904		17,722
Accounts Payable		120,719		249,356
Refund Liability Owed to Customers		17,967		24,110
Accrued Expenses		33,444		45,303
Net Cash Used in Operating Activities		(322,349)		(377,746)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit		330,000		290,000
Proceeds from Note Payable - Stockholder (Note 7)		—		100,000
Principal Payments on Notes Payable		(5,314)		(3,064)
Net Cash Provided by Financing Activities		324,686		386,936

INCREASE IN CASH AND CASH EQUIVALENTS		2,337		9,190

Cash and Cash Equivalents - Beginning of Period		41,974		11,295

CASH AND CASH EQUIVALENTS - END OF PERIOD	$	44,311	$	20,485

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES

General

The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as Chase, the Company, we, our, and us) at June 30, 2024 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three months ended September 30, 2024 and for the three months ended September 30, 2023 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2024. The results of operations for the three months ended September 30, 2024 and cash flows for the three months ended September 30, 2024 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2025. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present the financial position, results of operations, and cash flows for the periods have been included.

Revenue Recognition

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

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (cont.)

Revenue Recognition (cont.)

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

For the three months ended September 30,


	2024		2023
SALES
Chase Candy	$	319,080	$	385,147
Seasonal Candy		669,941		725,652
Total	$	989,021	$	1,110,799

Subsequent Events

No other events have occurred subsequent to September 30, 2024, through the date of filing this form, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the three month period ended September 30, 2024.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 2 LOSS PER SHARE

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


	Three Months Ended
	September 30,
	2024		2023
Net Loss	$	(17,613)	$	(559)

Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value		15,000		15,000
5% Convertible Cumulative Preferred, $20 Par Value		17,018		17,018
Total Dividend Requirements		32,018		32,018

Net Loss attributable to Common Stockholders	$	(49,631)	$	(32,577)

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 Loss per Share	$	(0.05)	$	(0.03)

The Company excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive. All of the preferred stock, which is convertible into 1,033,334 shares of common stock was excluded at September 30, 2024 and 2023, as its conversion would have an anti-dilutive effect. Cumulative Preferred Stock dividends in arrears at September 30, 2024 and 2023 totaled $9,005,400 and $8,877,328, respectively. Total dividends in arrears, on a per share basis, consist of the following:


	Three Months Ended
	September 30,
	2024		2023
6% Convertible:
Series A	$	20	$	19
Series B	$	19	$	19
5% Convertible:
Series A	$	75	$	74
Series B	$	75	$	74

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

The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21 per share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

this stock are entitled to receive $20 per share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred.

NOTE 3 NOTES PAYABLE

The Company’s notes payable consists of:


		September 30,		June 30,
Payee	Terms	2024		2024
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% at September 30, 2024). The line of credit is collateralized by substantially all assets of the Company.	$	470,000	$	140,000

Nodaway Valley Bank	$885 monthly payments, interest of 7.25%; final payment due April 2027, secured by a vehicle.		24,916		27,082

Ford Motor Credit Company	$1,126 monthly payments, interest of 2.9%; final payment due November 2026, secured by a vehicle.		28,328		31,476

	Total		523,244		198,558
	Less Current Portion		491,947		161,688
	Long-Term Portion	$	31,297	$	36,870

Future minimum payments for the twelve months ended September 30 are:


September 30,	Amount
2025	$	491,947
2026		23,016
2027		8,281
Total	$	523,244

NOTE 4 INCOME TAXES

The Company follows the provisions for uncertain tax positions as addressed in Financial Accounting Standards Board Accounting Standards Codification 740-10. The Company recorded an income tax benefit of $5,610 for the three months ended September 30, 2024. The income tax benefit is a result of additional net operating losses generated during this period. As such, there is no current income tax liability. The Company recorded an income tax provision of $7,744 for the three months ended September 30, 2023 as the Company recognized a return to provision adjustment related to the recognition of a net deferred tax liability as well as federal and state income tax payable accounts. As of September 30, 2024, the Company has net operating loss carryovers of $210,524, none of which expire.

The Company recognized a net deferred tax asset for unrecognized tax benefits at September 30, 2024. The Company has no material tax positions at September 30, 2024, for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The Company had no accruals for interest or penalties at September 30, 2024. The Company’s federal income tax returns for the

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

fiscal years ended 2022, 2023, and 2024 are subject to examination by the Internal Revenue Service taxing authority.

NOTE 5 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION


	Three Months Ended
	September 30,
	2024		2023
Supplemental Cash Flow Information:
Interest paid	$	717	$	313

NOTE 6 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist principally of cash and cash equivalents, trade receivables and payables, and line-of-credit. There are no significant differences between the carrying value and fair value of any of these financial instruments.

NOTE 7 COMMITMENT, 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 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 at time of remeasurment 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 the current amount.

An operating lease right-of-use asset and lease 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 5.5 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. The Company has made a policy election to combine lease and non-lease components, and a policy election to not recognize right-of-use assets or lease liabilities for leases that are less than twelve months. Cash paid for operating lease liabilities was $19,500 and operating lease expense was $19,500 for the three months ended September 30, 2024, of which, $17,891 is included in cost of sales and $1,609 is included in general and administrative expenses.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 7 COMMITMENT, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS (cont.)

Minimum annual payments required under the existing operating lease liability that has initial or remaining noncancelable terms in excess of one year as of September 30, 2024 is as follows:


Twelve Months Ending September 30,	Amount
2025	$	78,000
2026		78,000
2027		78,000
2028		78,000
2029		78,000
Thereafter		45,500
Total Lease Payments		435,500
Less: Imputed Interest		(82,766)
Total Lease Liabilities	$	352,734

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.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

OVERVIEW

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

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

RESULTS OF OPERATIONS - Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

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

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


	Three Months Ended
	September 30,
	2024		2023
Sales	100	%	100	%
Cost of Sales	71	%	72	%
Gross Profit on Sales	29	%	28	%
Operating Expenses	30	%	27	%
Income (Loss) from Operations	(2)	%	1	%
Other Expense, Net	(1)	%	—	%
Income (Loss) before Income Taxes	(3)	%	1	%
Income Tax Benefit (Provision)	1	%	(1)	%
Net Loss	(2)	%	(0)	%

SALES

Sales decreased $121,778 or 11% for the three months ended September 30, 2024 to $989,021 compared to $1,110,799 for the three months ended September 30, 2023. Sales for Chase Candy decreased $66,067 to $319,080 for the three months ended September 30, 2024, compared to $385,147 for the three months ended September 30, 2023. Sales for Seasonal Candy decreased $55,711 to $669,941 for the three months ended September 30, 2024, compared to $725,652 for the three months ended September 30, 2023.

The 17% decrease in sales of Chase Candy of $66,067 for the three months ended September 30, 2024 over the same period ended September 30, 2023, is primarily due to the effect of the following: 1) decreased net sales of approximately $21,000 for the Mini Mash L278/L212 segments due to a decrease in orders to existing customers; 2) decreased sales of the L276 Cherry Mash Distributors Pack segment by approximately $15,000 versus the same period a year ago primarily due to decreased orders from existing customers; 3) decreased sales of the L279/L299 Bulk Mini Mash segment by approximately $5,000 versus the same period a year ago primarily due to decreased orders from existing customers; and 4) decreased net sales of the L100/L200 Cherry Mash Merchandisers segment by approximately $25,000 due to an decrease in orders to existing customers.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

SALES (cont.)

The 8% decrease in sales of Seasonal Candy of $55,711 for the three months ended September 30, 2024 over the same period ended September 30, 2023, is primarily due to the effect of the following: 1) decreased sales in the bulk seasonal division by approximately $5,000 versus the same period a year ago, primarily due to decreased sales to existing customers; and 2) decreased sales to existing customers in the clamshell division by approximately $50,000. Management intends to implement a price increase for this category during 2025.

Despite the overall decrease in quantities sold for both divisions, 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 and in July 2024 of approximately 14% for the bulk and clamshell products. Both price increases have contributed to a slight increase in margins for the three months ended September 30, 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 continue to be more fully realized during the second quarter of fiscal year 2025.

COST OF SALES

Cost of sales decreased $92,942 to $704,078 or 71% of sales for the three months ended September 30, 2024, compared to $797,020 or 72% of sales for the three months ended September 30, 2023.

The slight decrease in cost of sales as a percentage of sales is related to decreases in raw material quantities ordered, lower prices and labor efficiencies. 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.

SELLING EXPENSES

Selling expenses for the three months ended September 30, 2024 decreased $3,591 to $96,791, which is 10% of sales, compared to $100,382, or 9% of sales for the three months ended September 30, 2023.

The decrease of $3,591 in selling expenses for the three months ended September 30, 2024 is primarily due to a decrease in commission expense of approximately $4,500 over the same period ended September 30, 2023, primarily due to decreased sales. This decrease was offset by increases totaling $1,000 in other miscellaneous selling expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended September 30, 2024 increased $5,033 to $204,128 and 21% of sales, compared to $199,096 or 18% of sales for the three months ended September 30, 2023.

The increase of $5,033 in general and administrative expenses for the three months ended September 30, 2024 is primarily due to an increase in dues and subscriptions of approximately $8,500, an increase in insurance expense of $4,000, and approximately $3,000 of increases in other miscellaneous general and administrative expenses. The increase in dues and subscriptions is related to a subscription fee charge from one of the Company’s largest customers that began during the second quarter of 2023. These increases were offset by decreases in professional fees of approximately $9,000 for the period ended September 30, 2024.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

OTHER INCOME (EXPENSE)

Other expense increased by $130 for the three months ended September 30, 2024 to ($7,246), compared to ($7,116) for the three months ended September 30, 2023.

The majority of this change can be attributed to an increase in interest expense.

BENEFIT (PROVISION) FOR INCOME TAXES

Due to the net loss for the quarter ending September 30, 2024, the Company recorded an income tax benefit of approximately $5,600.

The Company recorded a $(7,744) income tax provision for the three months ended September 30, 2023 primarily due to the Company recognizing a return to provision adjustment related to the recognition of a net deferred tax liability as well as federal and state income tax payable accounts.

NET LOSS

The Company reported a net loss for the three months ended September 30, 2024 of $(17,613), compared to net loss of $(559) for the three months ended September 30, 2023. This decrease of $17,054 is explained above.

PREFERRED DIVIDENDS

Preferred dividends were $32,018 for the three months ended September 30, 2024 and September 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 LOSS APPLICABLE TO COMMON STOCKHOLDERS

Net loss applicable to common stockholders for the three months ended September 30, 2024 was $(49,631) which is a decrease of $17,054 as compared to net loss applicable to common stockholders for the three months ended September 30, 2023 of $(32,577).

LIQUIDITY AND CAPITAL RESOURCES

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


	Three Months Ended
	September 30,
	2024		2023
Net Cash Used in Operating Activities	$	(322,349)	$	(377,746)
Net Cash Provided by Financing Activities	$	324,686	$	386,936

Management has made no material commitments for capital expenditures during the remainder of fiscal year 2025. The $322,349 of cash used in operating activities for the three months ended September 30, 2024 is fully detailed in the condensed consolidated statement of cash flows. The $324,686 of cash provided by financing activities for the three months ended September 30, 2024 is fully detailed in the condensed consolidated statement of cash flows.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

LIQUIDITY AND CAPITAL RESOURCES (cont.)

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 Company’s ability to generate positive working capital will be sufficient to meet its funding requirements for the foreseeable future.

CRITICAL ACCOUNTING POLICIES

Forward-Looking Information

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

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I Financial information

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4.CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

Chase’s management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, 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.

A material weakness was identified in our internal control over financial reporting due to a lack of accounting personnel with the appropriate level of knowledge, experience and training to perform an assessment of its internal controls. This has also resulted in a failure to maintain appropriate segregation of duties over system access. Management believes that this material weakness did not have an adverse effect on the Company’s financial results reported herein.

(b)Changes in Internal Control over Financial Reporting

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

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART Ii other information

ITEM 1.LEGAL PROCEEDINGS

None.

ITEM 1A.RISK FACTORS

Not applicable to a smaller reporting company.

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

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

a.None.

b.The total cumulative preferred stock dividends contingency at September 30, 2024 is $9,005,400.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

a.Exhibits.

Exhibit 31.1

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

Exhibit 32.1

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

Exhibit 101

The following financial statements for the quarter ended September 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024, (ii) Condensed Consolidated Statements of Operations for the Three months Ended September 30, 2024 and 2023, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the Three months Ended September 30, 2024 and 2023, (iv) Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and 2023, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

Exhibit 104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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CHASE GENERAL CORPORATION AND SUBSIDIARY

PART Ii other information

SIGNATURES

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

		Chase General Corporation and Subsidiary
		(Registrant)

November 13, 2024		/s/ Barry M. Yantis
Date		Barry M. Yantis
		Chairman of the Board, Chief Executive Officer and
		Chief Financial Officer, President, and Treasurer

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Chase General (CSGN) 10-Q2025 Q1 Quarterly report

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