Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHASE GENERAL CORP | |
Entity Central Index Key | 0000015357 | |
Trading Symbol | csgn | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 969,834 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
CURRENT ASSETS | ||
Cash and Cash Equivalents | $ 24,185 | $ 18,800 |
Trade Receivables, Net of Allowance for Doubtful Accounts of $13,149 and $12,849, Respectively | 447,531 | 137,869 |
Inventories: | ||
Finished Goods | 270,421 | 200,085 |
Goods in Process | 11,357 | 12,999 |
Raw Materials | 52,310 | 45,456 |
Packaging Materials | 161,645 | 151,795 |
Prepaid Expenses | 37,902 | 7,653 |
Total Current Assets | 1,005,351 | 574,657 |
Property and Equipment: | ||
Land | 35,000 | 35,000 |
Buildings | 77,348 | 77,348 |
Machinery and Equipment | 851,791 | 851,791 |
Trucks and Autos | 158,632 | 158,632 |
Office Equipment | 33,025 | 33,025 |
Leasehold Improvements | 72,068 | 72,068 |
Total | 1,227,864 | 1,227,864 |
Less Accumulated Depreciation | 1,030,415 | 1,016,764 |
Total Property and Equipment, Net | 197,449 | 211,100 |
Other Long-Term Assets | ||
Right of Use Assets | 360,542 | 0 |
Total Long-Term Assets | 557,991 | 211,100 |
Total Assets | 1,563,342 | 785,757 |
CURRENT LIABILITIES | ||
Accounts Payable | 265,990 | 78,549 |
Current Maturities of Notes Payable and Line of Credit | 299,319 | 97,133 |
Current Maturities of Lease Liability | 56,462 | 0 |
Accrued Expenses | 44,939 | 28,851 |
Refund Liability Owed to Customers | 20,909 | 10,403 |
Deferred Income | 1,299 | 1,299 |
Total Current Liabilities | 688,918 | 216,235 |
LONG-TERM LIABILITIES | ||
Lease Liability, Less Current Maturities | 304,080 | 0 |
Notes Payable, Less Current Maturities | 17,257 | 20,408 |
Deferred Income | 5,843 | 6,168 |
Total Long-Term Liabilities | 327,180 | 26,576 |
Total Liabilities | 1,016,098 | 242,811 |
COMMITMENTS AND CONTINGENCIES | ||
Capital Stock Issued and Outstanding: | ||
Common Stock, $1 Par Value | 969,834 | 969,834 |
Paid-In Capital in Excess of Par | 3,134,722 | 3,134,722 |
Accumulated Deficit | (5,918,752) | (5,923,050) |
Total Stockholders' Equity | 547,244 | 542,946 |
Total Liabilities and Stockholders' Equity | 1,563,342 | 785,757 |
Prior Cumulative Preferred Stock - Series A | ||
Capital Stock Issued and Outstanding: | ||
Preferred stock, value | 500,000 | 500,000 |
Prior Cumulative Preferred Stock - Series B | ||
Capital Stock Issued and Outstanding: | ||
Preferred stock, value | 500,000 | 500,000 |
Cumulative Preferred Stock - Series A | ||
Capital Stock Issued and Outstanding: | ||
Preferred stock, value | 1,170,660 | 1,170,660 |
Cumulative Preferred Stock - Series B | ||
Capital Stock Issued and Outstanding: | ||
Preferred stock, value | $ 190,780 | $ 190,780 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Allowance for doubtful accounts on trade receivables (in dollars) | $ 13,149 | $ 12,849 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Prior Cumulative Preferred | ||
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Prior Cumulative Preferred Stock - Series A | ||
Preferred stock, liquidation preference (in dollars) | $ 2,347,500 | $ 2,340,000 |
Prior Cumulative Preferred Stock - Series B | ||
Preferred stock, liquidation preference (in dollars) | $ 2,302,500 | $ 2,295,000 |
Convertible Cumulative Preferred | ||
Preferred stock, par value (in dollars per share) | $ 20 | $ 20 |
Cumulative Preferred Stock - Series A | ||
Preferred stock, liquidation preference (in dollars) | $ 5,267,963 | $ 5,253,329 |
Cumulative Preferred Stock - Series B | ||
Preferred stock, liquidation preference (in dollars) | $ 858,518 | $ 856,133 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
SALES | $ 714,081 | $ 741,520 |
COST OF SALES | 488,630 | 526,321 |
Gross Profit on Sales | 225,451 | 215,199 |
OPERATING EXPENSES | ||
Selling | 77,955 | 72,903 |
General and Administrative Expenses | 144,389 | 138,484 |
Total Operating Expenses | 222,344 | 211,387 |
Income from Operations | 3,107 | 3,812 |
OTHER INCOME (EXPENSE) | ||
Miscellaneous Income | 2,873 | 363 |
Interest Expense | (1,682) | (2,883) |
Total Other Income (Expense) | 1,191 | (2,520) |
Net Income before Income Taxes | 4,298 | 1,292 |
INCOME TAX EXPENSE (BENEFIT) | 0 | 0 |
NET INCOME | 4,298 | 1,292 |
Preferred dividends | (32,018) | (32,018) |
Net loss applicable to common stockholders | $ (27,720) | $ (30,726) |
NET LOSS PER SHARE OF COMMON STOCK | ||
Basic (in dollars per share) | $ (0.03) | $ (0.03) |
Diluted (in dollars per share) | $ (0.03) | $ (0.03) |
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING | ||
BASIC | 969,834 | 969,834 |
DILUTED | 2,003,168 | 2,003,168 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $ 4,298 | $ 1,292 |
Adjustments to Reconcile Net Income to Net Cash Used by Operating Activities: | ||
Depreciation and Amortization | 13,651 | 14,245 |
Allowance for Bad Debts | 300 | 300 |
Deferred Income Amortization | (325) | (324) |
Effects of Changes in Operating Assets and Liabilities: | ||
Trade Receivables | (309,962) | (418,933) |
Inventories | (85,398) | (57,940) |
Prepaid Expenses | (30,249) | (23,788) |
Accounts Payable | 187,441 | 117,835 |
Accrued Expenses | 16,088 | 27,101 |
Refund Liability Owed to Customers | 10,506 | 18,274 |
Net Cash Used by Operating Activities | (193,650) | (321,938) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from Line-of-Credit | 202,000 | 310,000 |
Principal Payments on Notes Payable | (2,965) | (2,754) |
Bank Overdraft | 0 | 12,846 |
Net Cash Provided by Financing Activities | 199,035 | 320,092 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 5,385 | (1,846) |
Cash and Cash Equivalents - Beginning of Period | 18,800 | 2,129 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 24,185 | $ 24,185 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Sep. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 SIGNIFICANT ACCOUNTING POLICIES General The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as Chase, we, our, and us) at June 30, 2019 has been condensed from audited consolidated financial statements at that date. The condensed consolidated financial statements as of and for the three months ended September 30, 2019 and for the three months ended September 30, 2018 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2019. The results of operations for the three months ended September 30, 2019 and cash flows for the three months ended September 30, 2019 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2020. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included. No events have occurred subsequent to September 30, 2019, 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, 2019. Revenue Recognition The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, including 1) a candy bar marketed under the trade name “Cherry Mash” and 2) coconut, peanut, chocolate, and fudge confectioneries. The Company recognizes revenue at the point in time that control of the ordered product(s) is transferred to the customer, which is typically upon shipment to the customer. Shipping and handling costs incurred to ship product to the customer are recorded within cost of sales. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation. Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The amount of consideration the Company expects to receive and revenue the Company recognizes includes estimates of variable consideration, including costs for trade promotional programs, customer incentives, and allowances and discounts associated with aged or potentially unsaleable products. These estimates are based upon our analysis of the programs offered, historical trends, and expectations regarding customer and consumer participation, sales and payment trends and our experience with payment patterns associated with similar programs offered in the past. The Company reviews and updates these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments recognized in the first quarter of the year ending June 30, 2020 resulting from updated estimates of revenue for prior year product sales were not significant. 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: 2019 2018 Sales - Chase Candy $ 355,825 $ 294,447 Sales - Seasonal Candy 358,256 447,073 Sales $ 714,081 $ 741,520 Recently Adopted Pronouncements The Company adopted the guidance of ASU No. 2016-02, Leases, (ASC 842) as of July 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all, and disclose key leasing information. The Company elected a package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward the historical lease classification, and exclude from balance sheet reporting those leases with initial terms of 12 months or less. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Adoption of the new standard on July 1, 2019 resulted in the recording of operating lease ROU assets and lease liabilities in the amount of $376,105. The standard did not materially affect the Company’s consolidated net income or cash flows. See Note 7—Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases. Recently Issued Pronouncements There have been no newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company’s consolidated financial statements. |
EARNINGS (LOSS) PER SHARE
EARNINGS (LOSS) PER SHARE | 3 Months Ended |
Sep. 30, 2019 | |
EARNINGS (LOSS) PER SHARE | |
EARNINGS (LOSS) PER SHARE | NOTE 2 EARNINGS (LOSS) PER SHARE The loss per share were computed on the weighted average of outstanding common shares during the period. Three Months Ended September 30 2019 2018 Net Income $ 4,298 $ 1,292 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 - Common Stockholders $ (27,720) $ (30,726) Diluted earnings per share are calculated by including contingently issuable shares with the weighted average shares outstanding. Three Months Ended September 30 2019 2018 Weighted Average Shares - Basic 969,834 969,834 Dilutive Effect of Contingently Issuable Shares 1,033,334 1,033,334 Weighted Average Shares – Diluted 2,003,168 2,003,168 Basic Loss per Share $ (0.03) $ (0.03) Diluted Loss per Share $ (0.03) $ (0.03) The contingently issuable shares were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share. Cumulative Preferred Stock dividends in arrears at September 30, 2019 and 2018 totaled $8,365,040 and $8,236,968, respectively. Total dividends in arrears, on a per share basis, consist of the following: Three Months Ended September 30 2019 2018 6% Convertible Series A $ 18 $ 18 Series B 18 17 5% Convertible Series A $ 70 $ 69 Series B 70 69 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. 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 $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred. |
NOTES PAYABLE AND LINE OF CREDI
NOTES PAYABLE AND LINE OF CREDIT | 3 Months Ended |
Sep. 30, 2019 | |
NOTES PAYABLE AND LINE OF CREDIT | |
NOTES PAYABLE AND LINE OF CREDIT | NOTE 3 NOTES PAYABLE AND LINE OF CREDIT The Company’s long-term debt consists of: September 30, June 30, Payee Terms 2019 2019 Nodaway $350,000 line-of-credit agreement expiring on January 4, 2020, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration. $ 287,000 $ 85,000 Ford Credit $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. 16,552 18,407 Toyota Credit $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. 13,024 14,134 Total 316,576 117,541 Less: Current Portion 299,319 97,133 Long-Term Portion $ 17,257 $ 20,408 Future minimum payments for the twelve months ending September 30 are: Twelve Months Ending September 30, Amount 2020 $ 299,319 2021 13,090 2022 4,167 Total $ 316,576 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Sep. 30, 2019 | |
INCOME TAXES | |
INCOME TAXES | 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 recognized no liability for unrecognized tax benefits at September 30, 2019. The Company has no material tax positions at September 30, 2019 for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The Company’s federal income tax returns for the fiscal years ended 2017, 2018, and 2019 are subject to examination by the Internal Revenue Service (IRS) taxing authority. |
SUPPLEMENTAL DISCLOSURES OF CAS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | 3 Months Ended |
Sep. 30, 2019 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | NOTE 5 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Three Months Ended September 30 2019 2018 Cash Paid for: Interest $ 1,682 $ 2,883 |
DISCLOSURES ABOUT FAIR VALUE OF
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | 3 Months Ended |
Sep. 30, 2019 | |
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | |
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | 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 notes payable. There are no significant differences between the carrying value and fair value of any of these consolidated financial instruments. As of September 30, 2019, the amount of the Company’s long-term debt approximates fair value based on the present value of estimated future cash flows using a discount rate commensurate with a borrowing rate available to the Company. |
LEASES
LEASES | 3 Months Ended |
Sep. 30, 2019 | |
LEASES | |
LEASES | NOTE 7 LEASES The Company adopted ASC 842 on July 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the three months ended September 30, 2018 or as of June 30, 2019. The Company leases its office and manufacturing facility, located at 1307 South 59 th , St. Joseph, Missouri under an operating lease from an entity that is partially owned by the son of the Chief Executive Officer of the Company. The lease term is from February 1, 2005 through March 31, 2025 with an option to extend for an additional term of five years. The Company does not believe that exercise of the renewal option is reasonably assured, and has not included the additional five years in the lease term. The lease currently requires payments of $6,500 per month. Operating lease right-of-use assets and lease liabilities were recognized upon adoption of the lease standard based on the present value of minimum lease payments over the remaining lease term. The Company's operating lease has a remaining term of 5.5 years and the present value of the lease payments is calculated using the lessor's implicit rate of 6.43%. Operating lease expense is recognized on a straight-line basis over the lease term. The Company's lease agreement does not contain any residual value guarantees. Additionally, any other short-term leases are immaterial. The Company elected the practical expedient to not separate lease and non-lease components and also elected the short-term practical expedient for all leases that qualify. As a result, the Company will not recognize right-of-use assets or liabilities for short-term leases that qualify for the short-term practical expedient, but instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. Operating lease expenses and cash paid for operating lease liabilities were $19,500 for the three months ended September 30, 2019, of which, $17,891 is included in cost of sales and $1,609 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 September 30, 2019 are as follows: Twelve months ending September 30, 2020 $ 78,000 2021 78,000 2022 78,000 2023 78,000 2024 78,000 Thereafter 39,000 Total lease payments 429,000 Less imputed interest 68,458 Total lease payments $ 360,542 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Sep. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
General | General The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as Chase, we, our, and us) at June 30, 2019 has been condensed from audited consolidated financial statements at that date. The condensed consolidated financial statements as of and for the three months ended September 30, 2019 and for the three months ended September 30, 2018 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2019. The results of operations for the three months ended September 30, 2019 and cash flows for the three months ended September 30, 2019 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2020. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included. No events have occurred subsequent to September 30, 2019, 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, 2019. |
Revenue Recognition | Revenue Recognition The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, including 1) a candy bar marketed under the trade name “Cherry Mash” and 2) coconut, peanut, chocolate, and fudge confectioneries. The Company recognizes revenue at the point in time that control of the ordered product(s) is transferred to the customer, which is typically upon shipment to the customer. Shipping and handling costs incurred to ship product to the customer are recorded within cost of sales. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation. Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The amount of consideration the Company expects to receive and revenue the Company recognizes includes estimates of variable consideration, including costs for trade promotional programs, customer incentives, and allowances and discounts associated with aged or potentially unsaleable products. These estimates are based upon our analysis of the programs offered, historical trends, and expectations regarding customer and consumer participation, sales and payment trends and our experience with payment patterns associated with similar programs offered in the past. The Company reviews and updates these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments recognized in the first quarter of the year ending June 30, 2020 resulting from updated estimates of revenue for prior year product sales were not significant. 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: 2019 2018 Sales - Chase Candy $ 355,825 $ 294,447 Sales - Seasonal Candy 358,256 447,073 Sales $ 714,081 $ 741,520 |
Recently Adopted Pronouncements | Recently Adopted Pronouncements The Company adopted the guidance of ASU No. 2016-02, Leases, (ASC 842) as of July 1, 2019 using the modified retrospective transition approach with the cumulative effect recognized at the date of initial application. The comparative information in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all, and disclose key leasing information. The Company elected a package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward the historical lease classification, and exclude from balance sheet reporting those leases with initial terms of 12 months or less. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. Adoption of the new standard on July 1, 2019 resulted in the recording of operating lease ROU assets and lease liabilities in the amount of $376,105. The standard did not materially affect the Company’s consolidated net income or cash flows. See Note 7—Leases for the required disclosures of the nature, amount, timing, and uncertainty of cash flows arising from leases. Recently Issued Pronouncements There have been no newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company’s consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of divisions of revenue | The various divisions of revenue are as follows for the three months ended September 30: 2019 2018 Sales - Chase Candy $ 355,825 $ 294,447 Sales - Seasonal Candy 358,256 447,073 Sales $ 714,081 $ 741,520 |
EARNINGS (LOSS) PER SHARE (Tabl
EARNINGS (LOSS) PER SHARE (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
EARNINGS (LOSS) PER SHARE | |
Schedule of income per share computed on the weighted average of outstanding common shares | Three Months Ended September 30 2019 2018 Net Income $ 4,298 $ 1,292 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 - Common Stockholders $ (27,720) $ (30,726) Three Months Ended September 30 2019 2018 Weighted Average Shares - Basic 969,834 969,834 Dilutive Effect of Contingently Issuable Shares 1,033,334 1,033,334 Weighted Average Shares – Diluted 2,003,168 2,003,168 Basic Loss per Share $ (0.03) $ (0.03) Diluted Loss per Share $ (0.03) $ (0.03) |
Schedule of total dividends in arrears, on a per share basis | Three Months Ended September 30 2019 2018 6% Convertible Series A $ 18 $ 18 Series B 18 17 5% Convertible Series A $ 70 $ 69 Series B 70 69 |
NOTES PAYABLE AND LINE OF CRE_2
NOTES PAYABLE AND LINE OF CREDIT (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
NOTES PAYABLE AND LINE OF CREDIT | |
Schedule of long-term debt | September 30, June 30, Payee Terms 2019 2019 Nodaway $350,000 line-of-credit agreement expiring on January 4, 2020, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration. $ 287,000 $ 85,000 Ford Credit $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. 16,552 18,407 Toyota Credit $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. 13,024 14,134 Total 316,576 117,541 Less: Current Portion 299,319 97,133 Long-Term Portion $ 17,257 $ 20,408 |
Schedule of future minimum payments of long term debt | Twelve Months Ending September 30, Amount 2020 $ 299,319 2021 13,090 2022 4,167 Total $ 316,576 |
SUPPLEMENTAL DISCLOSURES OF C_2
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
Schedule of supplemental disclosures of cash flow information | Three Months Ended September 30 2019 2018 Cash Paid for: Interest $ 1,682 $ 2,883 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Sep. 30, 2019 | |
LEASES | |
Schedule of annual payments | Twelve months ending September 30, 2020 $ 78,000 2021 78,000 2022 78,000 2023 78,000 2024 78,000 Thereafter 39,000 Total lease payments 429,000 Less imputed interest 68,458 Total lease payments $ 360,542 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Sales | $ 714,081 | $ 741,520 |
Sales - Chase Candy | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 355,825 | 294,447 |
Sales - Seasonal Candy | ||
Disaggregation of Revenue [Line Items] | ||
Sales | $ 358,256 | $ 447,073 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) | 3 Months Ended | ||
Sep. 30, 2019USD ($)segmentdivision | Jul. 01, 2019USD ($) | Jun. 30, 2019USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Number of product divisions | division | 2 | ||
Number of reportable segment | segment | 1 | ||
Operating Lease, Right-of-Use Asset | $ 360,542 | $ 376,105 | $ 0 |
Operating Lease, Liability | $ 360,542 | $ 376,105 |
EARNINGS (LOSS) PER SHARE (Deta
EARNINGS (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Class of Stock [Line Items] | ||
Net Income | $ 4,298 | $ 1,292 |
Preferred Dividend Requirements: | ||
Total Dividend Requirements | 32,018 | 32,018 |
Net Loss - Common Stockholders | $ (27,720) | $ (30,726) |
Weighted Average Shares - Basic (in shares) | 969,834 | 969,834 |
Dilutive Effect of Contingently Issuable Shares | 1,033,334 | 1,033,334 |
Weighted Average Shares - Diluted (in shares) | 2,003,168 | 2,003,168 |
Basic Loss per Share (in dollars per share) | $ (0.03) | $ (0.03) |
Diluted Loss per Share (in dollars per share) | $ (0.03) | $ (0.03) |
6% Prior Cumulative Preferred, $5 Par Value | ||
Preferred Dividend Requirements: | ||
Total Dividend Requirements | $ 15,000 | $ 15,000 |
5% Convertible Cumulative Preferred, $20 Par Value | ||
Preferred Dividend Requirements: | ||
Total Dividend Requirements | $ 17,018 | $ 17,018 |
EARNINGS (LOSS) PER SHARE (Pare
EARNINGS (LOSS) PER SHARE (Parentheticals) (Details) - $ / shares | 3 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | |
6% Prior Cumulative Preferred, $5 Par Value | |||
Class of Stock [Line Items] | |||
Stated percentage of preferred stock | 6.00% | 6.00% | |
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 | |
Prior Cumulative Preferred | |||
Class of Stock [Line Items] | |||
Preferred stock, par value (in dollars per share) | 5 | $ 5 | |
Convertible Cumulative Preferred | |||
Class of Stock [Line Items] | |||
Preferred stock, par value (in dollars per share) | $ 20 | $ 20 | |
5% Convertible Cumulative Preferred, $20 Par Value | |||
Class of Stock [Line Items] | |||
Stated percentage of preferred stock | 5.00% | 5.00% | |
Preferred stock, par value (in dollars per share) | $ 20 | $ 20 |
EARNINGS (LOSS) PER SHARE - Cum
EARNINGS (LOSS) PER SHARE - Cumulative Preferred Stock dividends (Details) - $ / shares | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Prior Cumulative Preferred Stock - Series A | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | $ 18 | $ 18 |
Prior Cumulative Preferred Stock - Series B | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | 18 | 17 |
Cumulative Preferred Stock - Series A | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | 70 | 69 |
Cumulative Preferred Stock - Series B | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | $ 70 | $ 69 |
EARNINGS (LOSS) PER SHARE - Add
EARNINGS (LOSS) PER SHARE - Additional information (Details) | 3 Months Ended | |
Sep. 30, 2019USD ($)$ / shares | Sep. 30, 2018USD ($)$ / shares | |
Class of Stock [Line Items] | ||
Total cumulative preferred stock dividends in arrears | $ | $ 8,365,040 | $ 8,236,968 |
6% Prior Cumulative Preferred, $5 Par Value | ||
Class of Stock [Line Items] | ||
Redemption price per share (in dollars per share) | $ 5.25 | $ 5.25 |
Preferred stock, liquidation preference per share (in dollars per share) | $ 5.25 | $ 5.25 |
Prior Cumulative Preferred Stock - Series A | ||
Class of Stock [Line Items] | ||
Number of common stock exchanged for each preferred stock held | 4 | 4 |
Prior Cumulative Preferred Stock - Series B | ||
Class of Stock [Line Items] | ||
Number of common stock exchanged for each preferred stock held | 3.75 | 3.75 |
5% Convertible Cumulative Preferred, $20 Par Value | ||
Class of Stock [Line Items] | ||
Redemption price per share (in dollars per share) | $ 21 | $ 21 |
Preferred stock, liquidation preference per share (in dollars per share) | $ 20 | $ 20 |
Number of common stock exchanged for each preferred stock held | 3.795 | 3.795 |
NOTES PAYABLE AND LINE OF CRE_3
NOTES PAYABLE AND LINE OF CREDIT - Long-term debt (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Total | $ 316,576 | $ 117,541 |
Less Current Portion | 299,319 | 97,133 |
Long-Term Portion | 17,257 | 20,408 |
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2020, 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. | ||
Debt Instrument [Line Items] | ||
Total | 287,000 | 85,000 |
Ford Credit: $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. | ||
Debt Instrument [Line Items] | ||
Total | 16,552 | 18,407 |
Toyota Credit: $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. | ||
Debt Instrument [Line Items] | ||
Total | $ 13,024 | $ 14,134 |
NOTES PAYABLE AND LINE OF CRE_4
NOTES PAYABLE AND LINE OF CREDIT - Long-term debt (Parentheticals) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Jun. 30, 2019 | |
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2020, 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. | ||
Debt Instrument [Line Items] | ||
Line-of-credit agreement, amount | $ 350,000 | $ 350,000 |
Line of Credit Facility, Expiration date | Jan. 4, 2020 | Jan. 4, 2020 |
Basis Spread on Variable Rate | 5.00% | 5.00% |
Ford Credit: $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. | ||
Debt Instrument [Line Items] | ||
Notes payable, periodic payment | $ 705 | $ 705 |
Interest rate | 5.80% | 5.80% |
Maturity date | Oct. 31, 2021 | Oct. 31, 2021 |
Toyota Credit: $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. | ||
Debt Instrument [Line Items] | ||
Notes payable, periodic payment | $ 444 | $ 444 |
Interest rate | 6.49% | 6.49% |
Maturity date | May 1, 2020 | May 1, 2020 |
NOTES PAYABLE AND LINE OF CRE_5
NOTES PAYABLE AND LINE OF CREDIT - Future minimum payments (Details) - USD ($) | Sep. 30, 2019 | Jun. 30, 2019 |
NOTES PAYABLE AND LINE OF CREDIT | ||
2020 | $ 299,319 | |
2021 | 13,090 | |
2022 | 4,167 | |
Total | $ 316,576 | $ 117,541 |
SUPPLEMENTAL DISCLOSURES OF C_3
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Paid for: | ||
Interest | $ 1,682 | $ 2,883 |
LEASES - Annual payments (Detai
LEASES - Annual payments (Details) - USD ($) | Sep. 30, 2019 | Jul. 01, 2019 |
LEASES | ||
2020 | $ 78,000 | |
2021 | 78,000 | |
2022 | 78,000 | |
2023 | 78,000 | |
2024 | 78,000 | |
Thereafter | 39,000 | |
Total lease payments | 429,000 | |
Less imputed interest | 68,458 | |
Total lease payments | $ 360,542 | $ 376,105 |
LEASES - Additional information
LEASES - Additional information (Details) | 3 Months Ended |
Sep. 30, 2019USD ($) | |
LEASES | |
Option to extend | True |
Additional term | 5 years |
Lease payments | $ 6,500 |
Operating lease remaining term | 5 years 6 months |
Operating Lease lessor's implicit rate | 6.43% |
Operating lease liabilities | $ 19,500 |
Cost of sales | |
LEASES | |
Operating lease liabilities | 17,891 |
General and administrative expenses | |
LEASES | |
Operating lease liabilities | $ 1,609 |