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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FORM 10-K☒Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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For the Fiscal Year Ended June 30 2021, 2023

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☐Transaction Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

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For the transition period from ______  to _______      

Commission File Number: 2-5916

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Chase General Corporation

(Exact name of registrant as specified in its charter)

	Chase General Corporation
	(Exact name of registrant as specified in its charter)

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1307 South 59th,St. Joseph,Missouri64507

(Address of principal executive offices, Zip Code)

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(816)279-1625

(Issuer’sRegistrant’s telephone number, including area code)

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

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

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

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

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to it management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit.   Yes ☐   No   ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐   No   ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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   x☒

Aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant as of September 26, 2023 (based on the last closing sale price as of December 31, 2022) was NO BID.

As of October 13, 2021,September 26, 2023, there were 969,834 shares of common stock, $1.00 par value, outstanding.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20212023

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PART I

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Chase General Corporation was incorporated November 6, 1944 for the purpose of manufacturing confectionery products. In 1970, Chase General Corporation acquired a 100% interest in its wholly-owned subsidiary, Dye Candy Company. (ChaseChase General Corporation and Dye Candy Company are sometimes referred herein as the Company).Company. This subsidiary is the main operating company for the reporting entity.

Principal Products and Methods of Distribution

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 the 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 for inclusion in this filing.

The principal products produced are as follows:

Chase Candy Products of Dye Candy Company produces a candy bar under the trade name of “Cherry Mash”. The bar is distributed in the following case sizes:

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In addition to the regular size bar, a “mini-mash” is distributed in the following case sizes:

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20212023

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Principal Products and Methods of Distribution (Continued)

Seasonal Candy Products of Dye Candy Company produces coconut, peanut, chocolate, and fudge confectioneries and purchases other outsourced products. These products are distributed in bulk or packaged. Principal products include:

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The Champion Crème Drops, Frosted Pretzels, and Jelly Candies are not produced by the Company.

All products are shipped to customers by commercial haulers.

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Competition and Market Area

The Chase Candy Products division bars are sold primarily to wholesale candy, and tobacco jobbing houses, grocery accounts, vendors, and repackers. “Cherry Mash” bars are marketed in the Midwest region of the United States. For the years ended June 30, 20212023 and 2020,2022, this division accounted for 63%57% and 57%60%, respectively, of the consolidated sales of Dye Candy Company.

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The Seasonal Candy Products division is sold primarily on a Midwest regional basis to national syndicate accounts, repackers and grocery accounts. For the years ended June 30, 20212023 and 2020,2022, this division accounted for 37%43% and 43%40%, respectively of the consolidated sales of Dye Candy Company.

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The Company has no government contracts, foreign operations or export sales. In addition, all domestic sales are primarily in the Midwest region of the United States.

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The Company is a seasonal business whereby the largest volume of sales occur in August through December of each year. The earnings per quarter of the Company varies in direct proportion to the seasonal sales volume.

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Due to the seasonal nature of the business, there is a heavier demand on working capital in the fall and winter months of the year when the Company is building its inventories in anticipation of August through December sales. The fluctuation of demand on working capital due to the seasonal nature of the business is common to the confectionery industry. If necessary, the Company has the ability to borrow short-term funds to finance operations prior to receiving cash collections from fall sales. The Company occasionally offers extended payment terms of up to sixty days. Since this practice is infrequent, the effect on working capital is minimal.

CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2021

Competition and Market Area (Continued)​

Prompt service and efficient service are traits demanded in the confectionery industry, which results in a continual low volume of back-orders. Therefore, at no time during the year does the Company have a significant amount of back-orders.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

The confectionery (candy) market for the type of product produced by the divisions of DyeANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 1 BUSINESS (CONTINUED)

Competition and Market Area (Continued)

Chase Candy Company is very competitiveseasonal products are sold in both the grocery and quality minded. The confectionery industry in which the divisions operate is highly competitiveproduce departments with many small companiesbulk, prepackaged clamshell and within certain specialized areas, a few competitors dominate. In the United States, the dominant competitors in the coconut candy industry are Crownshippers.  Chase Candy Company Vermico Candy Company, and the Seasonal Candy Products divisionoffers a variety of Dye Candy Company with approximately 70%quality products at a value price.  The competitive set of the market share among them. In the United States, Old Dominion has approximately 80% of the market share of the peanut candy business in which the Seasonal Candy Products division operates. Dye Candy Company sells approximately 95% of its products in the Midwest region with seasonal orders being shipped to the Southern and Eastern regions of the United States. Except for the coconut candy industry, Dye Candy Company is not a dominant competitor in any of the candy industries in which it competes. Dye Candy Company’s market share in the coconut industry does not vary significantly from year to year.have a national brand competitor but mostly regional competition and private label.  The primary competition includes:

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Principal methods of competition the Company uses include quality of product, price, reduced transportation costs due to central location, and service. The Company’s competitive position is positively influenced by labor costs being lower than industry average. Chase General Corporation is firmly established in the confectionery market and through its operating divisions has many years of experience associated with its name.

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Research and Development

The Company has not developed any new products for the years ended June 30, 20212023 and 2020.2022.

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Raw Materials and Principal Suppliers

Raw materials and packaging materials are produced on a national basis with products coming from locations throughout the United States. Raw materials and packaging materials are generally widely available, depending on common market influences. NoTwo suppliers accounted for more than 10%25% of the Company’s cost of sales for the yearsyear ended June 30, 20212023 and 2020.one supplier accounted for more than 12% of the Company’s costs of sales for the year ended June 30, 2022.

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Patents and Trademarks

The largest single revenue producing product, the “Cherry Mash” bar, is protected by a trademark registered with The United States Patent and Trademark Office. The Company considers this trademark significant to operations. This trademark expires in the year 2023. The2029.

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Employees

As of June 30, 2023, the Company and its legal representatives do not expect any impedimenthad 17 full-time employees. This expands to renewing this trademark prior to its expiration.approximately 30 full-time personnel during the busy production months of August through December.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20212023

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EmployeesCustomers

As of June 30, 2021, the Company had 19 full time employees. This expands to approximately 30 full time personnel during the busy production months of August through December.

Customers

For the years ended June 30, 20212023 and 2020,2022, one customer accounted for 41%42% and 45%40%, respectively, of sales. As of June 30, 20212023 and 2020,2022, that same customer accounted for 24%47% and 14%21%, respectively, of trade receivables. For the years ended June 30, 20212023 and 2020,2022, another customer and its affiliates accounted for 8%6% and 3%, respectively, of sales. As of June 30, 20212023 and 2020,2022, that same customer and its affiliates accounted for 28%12% and 23%13%, respectively, of trade receivables. For the years ended June 30, 2023 and 2022, another customer and its affiliates accounted for 6% of sales each year. As of June 30, 2023 and 2022, that same customer and its affiliates accounted for 5% and 15%, respectively, of trade receivables. No other customer accounted for more than 10% of the Company’s sales for the years ended June 30, 20212023 and 2020.2022. No other customers accounted for more than 10% of the Company’s trade receivables for the years ended June 30, 20212023 and 2020.2022.

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Environmental Protection and the Effect on Probable Government Regulations on the Business

To the best of management’s knowledge, the Company is presently in compliance with all environmental laws and regulations and does not anticipate any future expenditures in this regard. The Company has evaluated the requirements of the Food Safety Modernization Act (FSMA). The FSMA aims to ensure the U.S. food supply is safe by shifting the focus of federal regulators from responding to contamination to preventing it. The FSMA has given the Food and Drug Administration (FDA) new authorities to regulate the way foods are grown, harvested, and processed. As of the fiscal year ended June 30, 20212023 and through the filing of this form, management believes the Company is compliant with all FSMA requirements. Another inspection for compliance will be conducted by a third-partythird party within 12 months of year-end. Management does not anticipate any future significant expenditures in the next twelve months in this regard.

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Need for Government Approval of Principal Products or Services

The Company is required to meet the Food and Drug Administration guidelines for proper labeling of its products and for contents of its products. Management does not anticipate any future significant expenditures in the next twelve months in this regard.

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Reports to Security Holders

The Registrant is not required to send the annual audit report, annual 10-K report and quarterly 10-Q reports to security holders since the stock is not actively traded. These reports are available at the Registrant’s registered office or they are available on-lineonline on the SEC’s EDGAR website.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2021

Not applicable to a smaller reporting company.

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The Company has no unresolved SEC staff comments at June 30, 2021.2023.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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We conduct our operations from two buildings as follows:

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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.

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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 partially 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, 20212023 and 2020.2022.

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The net book value of our premises, land and office, and production equipment totaled $132,387$198,130 and $156,494$112,579 at June 30, 20212023 and 2020,2022, respectively.

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We believe both facilities are adequately covered by insurance.

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None.

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Not applicable.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20212023

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PART II

Market information

There is no established public trading market for the common stock (par value $1 per share) of the Company.

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Security holders

As of October 13, 2021,September 26, 2023, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

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Dividends

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No dividends have been paid during the past two fiscal years and there are no dividend restrictions. Preferred stock dividends in arrears are accumulated.

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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.

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Securities authorized for issuance under equity compensation plans

The Company does not have any equity compensation plans.

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Not applicable to a smaller reporting company.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2021

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, including the impact of the COVID-19 pandemic.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; our beliefthe assumption that the Company has stabilized its customer base;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.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Overview

During fiscal year ended June 30, 2021,2023, the Company’s sales were $2,960,357,$3,446,234, as compared to sales of $2,576,311$3,064,443 for fiscal year ended June 30, 2020.2022. The 14.9%12.5% increase in volume 1.5% decreasecoupled with various price increases, 7.4% increase in cost of sales and 10.5%3.7% increase in operating expenses resulted in a change in profitability during the year, as reflected in the income from operations of $186,160$163,363 for fiscal year 20212023 compared to the loss from operations of $144,491$22,264 for fiscal year 2020.2022. Working capital increased $279,057$120,935 to $568,676$682,537 for the fiscal year 20212023 from $289,619$561,602 for the fiscal year 20202022 due primarily to an increase in inventory and accounts receivable.

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The following information should be read together with the consolidated financial statements and notes thereto included elsewhere herein.

CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2021

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.

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The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

There have been no other events that have occurred subsequent to June 30, 2021, through the date of filing this form, that would require disclosure in the Form 10-K or would be required to be recognized in the consolidated financial statements as of or for the year ended June 30, 2021.

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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 customer discounts.advertising.

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CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2021Inventories

Inventories

InventoriesRaw 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.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

New Accounting Guidance

See Note 1, RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS, to the consolidated financial statements for a discussion of new accounting standards.

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, 20212023 and 2020,2022, respectively:

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CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2021

Fiscal Year 20212023 Compared to Fiscal Year 20202022

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Sales

During the year ended June 30, 2021,2023, sales, net of returns and allowances, increased $384,046$381,791 or 14.9%12.5% as compared to the year ended June 30, 2020.2022. Sales for Chase Candy products increased $388,613$107,431 or 26.3%5.8% to $1,868,899$1,956,658 for the year ended June 30, 20212023 compared to $1,480,286$1,849,227 for the year ended June 30, 2020.2022. Sales for Seasonal Candy products decreased $4,567increased $274,360 or .4%22.6% to $1,091,458$1,489,576 for the year ended June 30, 20212023 as compared to $1,096,025$1,215,216 for the year ended June 30, 2020.2022.

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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 14.9%5.8% increase in sales of Chase Candy of $388,613$107,431 for the year ended June 30, 20212023 over the same period ended June 30, 2020,2022, is primarily due to the following: 1) increased salesprice increases that took effect in December 2022 for the majority of Cherry Mash Merchandisers division by approximately $49,000 versus the same period a year ago, primarily due to an increase in orders from existing customers 2) increased sales of the L278/L212 Mini Mash division by approximately $71,000$150,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, 3) increased sales of the L276 CherryL279/L299 Bulk Mini Mash Distributor Pack division by approximately $257,000$5,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, offset by 4) increaseddecreased sales of the L276 Cherry Mash Distributor Pack division by approximately $34,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers, 5) decreased sales of the Cherry Mash internet sales via the Company’s website by approximately $26,000 versus the same period a year ago, primarily due to an increase in orders from existing customers; offset by 5) decreased sales of the L279/L299 Bulk Mini Mash division by approximately $12,000$4,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers and 6) an increase in promotions expenses allocated todecreased sales of Cherry Mash Merchandisers division by approximately $7,500 versus the Chase Candy division of approximately $6,000same period a year ago, primarily due to selling more items with higher promotion fees associated with them.a decrease in orders from existing customers.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Sales (Continued)

Sales for Seasonal Candy consisted of the following divisions: bulk seasonal division, clamshell seasonal division, and the generic seasonal division. The .4% decrease22.6% increase in sales of Seasonal Candy of $4,567$274,360 for the year ended June 30, 20212023 over the same period ended June 30, 2020, 2022, is primarily due to a price increase in July 2022 which resulted in strong first and second quarter sales to existing customers offset by a relatively flat period of sales in the net effect ofthird and fourth quarters. Specifically by division, the following:following changes were noted 1) decreasedincreased sales in the Chase clamshell seasonal division by approximately $17,000$150,000 versus the same period a year ago, primarily due to decreasedincreased orders from existing customers, 2) decreasedincreased sales in the generic seasonal division by approximately $75,000 due to increased orders from existing customers and 3) increased sales in the bulk seasonal division by approximately $28,000$50,000 versus the same period a year ago, primarily due to decreased orders from existing customers, offset by 3) increased sales in the generic seasonal division by approximately $30,000 due to increased orders from existing customers and 4) decrease in sales allowances and discounts taken by customers of approximately $10,000.customers.

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CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2021

Fiscal Year 2021 Compared to Fiscal Year 2020 (Continued)

Cost of Sales

Cost of sales for the year ended June 30, 2021,2023, as compared to the year ended June 30, 2020, decreased2022, increased by 1.5%7.4%. The cost of sales decreased $28,414increased $163,148 to $1,911,697 $2,361,913 while decreasing to 64.6%68.5% of sales for the year ended June 30, 2021,2023, compared to $1,940,111$2,198,765 or 75.3%71.8% of sales for the year ended June 30, 2020.2022.

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The 1.5% decrease7.4% increase in cost of sales of $28,414$163,148 is related to increases in raw materials, labor and freight costs.  Due to volatility in the regions where raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily due to adverse effect the COVID-19 pandemic hadbased on the cost of sales for the fourth quarter of fiscal year ended June 30, 2020. Cost of sales for the fourth quarter ended June 30, 2020 increased 35% or $84,787 due to the costs associated with repurposing of finished goods inventory to adequately fill customer orderssupply and realignment of staff during a period of decreased production. This cost was not applicable to the year ended June 30, 2021.demand.

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Labor costs, including wages, vacation pay and payroll taxes of $672,879$797,152 for the year ended June 30, 2021,2023, increased 7.8%4.8% or $48,827$39,860 as compared to $624,052$757,292 for the year ended June 30, 20202022 primarily due to increased production wages due to increased hours, bonuses, and pay rates compared to the same period ended June 30, 2020.

2022.  All employees were given a 5-10% raise at the end of January 2023.

Freight expense, including shipping and handling costs on goods shipped of $115,587$168,442 for the year ended June 30, 2021, decreased 18.7%2023, increased 25.1% or $26,633$33,822 as compared to $142,220$134,620 for the year ended June 30, 20202022 due primarily to changing carriers during the fiscal year.inflationary impacts such as costs of fuel coupled with increase in quantities ordered.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Gross Profit on Sales

The gross profit increased 64.8%25.3% or $412,460$218,643 to $1,048,660$1,084,321 increasing to 35.4%31.5% of related sales for the year ended June 30, 2021,2023, as compared to $636,200$865,678 or 24.7%28.3% of related sales for the year ended June 30, 2020,2022, as a net result of the 1.5% decrease7.4% increase in cost of sales described above, the 14.9%12.5% increase in sales and a price increase that was effective in early 2021.

Finished goods inventory as of June 30, 2021 of $287,245 increased $201,613 or 235.44% from the June 30, 2020 finished goods inventory of $85,632. Raw materials inventory as of June 30, 2021 of $97,324 increased $31,769 or 48.5% from the June 30, 2020 raw materials inventory of $65,555. Packaging materials inventory as of June 30, 2021 of $224,318 increased $68,280 or 43.8% from June 30, 2020 packaging materials inventory of $156,038. Goods in process inventory as of June 30, 2021 of $11,254 increased $4,993 or 79.8% from the June 30, 2020 goods in process inventory of $6,261. Inventory levels vary based primarily on sales and purchases.

2023.

CHASE GENERAL CORPORATION AND SUBSIDIARY
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2021Selling Expenses

Fiscal Year 2021 Compared to Fiscal Year 2020 (Continued)

Selling Expenses

Selling expenses for the year ended June 30, 20212023 increased $20,831$21,742 to $320,775,$343,734, which is 10.8%10% of sales, compared to $299,944$321,992 or 11.6%10.5% of sales for the year June 30, 2020.2022. This increase is primarily due to higherincreases in commissions as a result of increase in sales and shipping costs.increases in depreciation expense due to purchase of new vehicles. Commission expense increased $17,560$13,320 to $119,288$144,788 for the year ended June 30, 2021,2023, as compared to $101,278$131,468 for the year ended June 30, 2020 primarily due2022.  Depreciation expense increased $9,863 to an increase in sales of items where the Company pays commissions. Shipping costs associated with selling expenses increased $14,771 to $47,425$29,035 for the year ended June 30, 2021,2023, as compared to $32,654$19,172 for the year ended June 30, 2020 primarily due to an increase in orders placed.2022.  The above increases wereincrease was offset by a decreasemiscellaneous decreases in depreciation expense of $12,554 for the year ended June 30, 2021.other costs associated with selling expenses.

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General and Administrative Expenses

General and administrative expenses for the year ended June 30, 20212023 increased $60,978$11,274 to $541,725,$577,224, which is 18.3%16.7% of sales, compared to $480,747$565,950 or 18.7%18.5% of sales for the year ended June 30, 2020.2022. The increase is primarily due to higher professionalincreases in insurance fees of approximately $9,000, increases in labor costs of approximately $9,000, increases in dues and insurance expense. Professional fees increased $44,739subscriptions of approximately $14,500, increase of $14,000 related to $200,741the reduction in allowance for bad debt recorded in the year ended June 30, 2021, as compared to $156,0022022 plus $10,000 miscellaneous increases in other costs associated with general and administrative expenses.  These increases were further offset by a gain on sale of property and equipment of approximately $44,000.

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Other Income (Expense)

Other income (expense) reflects expense of $(6,196) for the year ended June 30, 2020 primarily due2023, as compared to increased audit and consulting fees. Insurance expense increased $15,181 to $146,161income of $895 for thethe year ended June 30, 2021, as compared to $130,980 for the year ended June 30, 2020 primarily due to the increase in insurance premiums.

Income (Loss) from Operations

Income from operations for the year ended June 30, 2021 was 6.3%2022. This decrease of sales, as compared to a loss from operations which was (5.6)% of sales for the year ended June 30, 2020, for the reasons previously described.

Other Income (Expense)

Other income reflects a net of income of $177,573 for the year ended June 30, 2021, as compared to a net of expense of $(1,558) for the year ended June 30, 2020. This increase of $179,131$7,091 in other income was primarily due to the gain on extinguishment of debt related to the Paycheck Protection Program Promissory Note.

Income (Loss) before Income Taxes

Income before income taxes was $363,733an increase in interest expense for the year ended June 30, 2021, as compared2023 due to a loss before income taxesrising interest rates and increased borrowings on the lines of $146,049 forcredit during the year ended June 30, 2020. The reasons for the increase of $509,782 have been previously discussed.2023.

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