Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2020 | May 13, 2020 | |
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 | Mar. 31, 2020 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
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 ($) | Mar. 31, 2020 | Jun. 30, 2019 |
CURRENT ASSETS | ||
Cash and Cash Equivalents | $ 128,877 | $ 18,800 |
Trade Receivables, Net of Allowance for Doubtful Accounts of $13,749 and $12,849, Respectively | 117,688 | 137,869 |
Inventories: | ||
Finished Goods | 28,490 | 200,085 |
Goods in Process | 4,645 | 12,999 |
Raw Materials | 101,741 | 45,456 |
Packaging Materials | 151,183 | 151,795 |
Prepaid Expenses | 22,638 | 7,653 |
Total Current Assets | 555,262 | 574,657 |
PROPERTY AND EQUIPMENT | ||
Land | 35,000 | 35,000 |
Buildings | 77,348 | 77,348 |
Machinery and Equipment | 851,791 | 851,791 |
Trucks and Autos | 158,632 | 158,632 |
Office Equipment | 33,025 | 33,025 |
Leasehold Improvements | 72,068 | 72,068 |
Total | 1,227,864 | 1,227,864 |
Less Accumulated Depreciation | 1,057,720 | 1,016,764 |
Total Property and Equipment, Net | 170,144 | 211,100 |
Other Long-Term Assets | ||
Right of Use Assets | 332,764 | 0 |
Total Long-Term Assets | 502,908 | 211,100 |
Total Assets | 1,058,170 | 785,757 |
CURRENT LIABILITIES | ||
Accounts Payable | 82,075 | 78,549 |
Current Maturities of Notes Payable | 12,698 | 97,133 |
Current Maturities of Lease Liability | 58,302 | 0 |
Accrued Expenses | 25,631 | 28,851 |
Refund Liability Owed to Customers | 5,067 | 10,403 |
Deferred Income | 1,299 | 1,299 |
Total Current Liabilities | 185,072 | 216,235 |
LONG-TERM LIABILITIES | ||
Deferred Income | 5,194 | 6,168 |
Lease Liabilities, Less Current Maturities | 274,462 | 0 |
Notes Payable, Less Current Maturities | 10,813 | 20,408 |
Total Long-Term Liabilities | 290,469 | 26,576 |
Total Liabilities | 475,541 | 242,811 |
COMMITMENTS AND CONTINGENCIES | ||
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 | (5,883,367) | (5,923,050) |
Total Stockholders' Equity | 582,629 | 542,946 |
Total Liabilities and Stockholders' Equity | 1,058,170 | 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 ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Allowance for doubtful accounts on trade receivables (in dollars) | $ 13,749 | $ 12,849 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Prior Cumulative Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 |
Prior Cumulative Preferred Stock - Series A | ||
Preferred stock, liquidation preference (in dollars) | $ 2,362,500 | $ 2,340,000 |
Prior Cumulative Preferred Stock - Series B | ||
Preferred stock, liquidation preference (in dollars) | $ 2,317,500 | $ 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) | $ 5,297,229 | $ 5,253,329 |
Cumulative Preferred Stock - Series B | ||
Preferred stock, liquidation preference (in dollars) | $ 863,287 | $ 856,133 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
SALES | $ 316,113 | $ 327,044 | $ 2,261,653 | $ 2,199,193 |
COST OF SALES | 320,745 | 355,195 | 1,616,045 | 1,633,970 |
Gross Loss on Sales | (4,632) | (28,151) | 645,608 | 565,223 |
OPERATING EXPENSES | ||||
Selling | 62,645 | 61,398 | 240,823 | 229,815 |
General and Administrative | 107,163 | 96,654 | 363,387 | 332,467 |
Total Operating Expenses | 169,808 | 158,052 | 604,210 | 562,282 |
Loss from Operations | (174,440) | (186,203) | 41,398 | 2,941 |
OTHER INCOME (EXPENSE) | ||||
Miscellaneous Income | 568 | 586 | 3,874 | 4,411 |
Interest Expense | (392) | (368) | (5,589) | (6,309) |
Total Other Income (Expense) | 176 | 218 | (1,715) | (1,898) |
Loss before Income Taxes | (174,264) | (185,985) | 39,683 | 1,043 |
INCOME TAX BENEFIT | 0 | (3,400) | 0 | 0 |
NET LOSS | $ (174,264) | $ (182,585) | $ 39,683 | $ 1,043 |
LOSS PER SHARE | ||||
Basic (in dollars per share) | $ (0.21) | $ (0.22) | $ (0.06) | $ (0.10) |
Diluted (in dollars per share) | $ (0.21) | $ (0.22) | $ (0.06) | $ (0.10) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $ 39,683 | $ 1,043 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation and Amortization | 40,956 | 42,337 |
Allowance for Bad Debts | 900 | 900 |
Deferred Income Amortization | (974) | (974) |
Effects of Changes in Operating Assets and Liabilities: | ||
Trade Receivables | 19,281 | (31,155) |
Inventories | 124,276 | 234,598 |
Prepaid Expenses | (14,985) | (10,110) |
Accounts Payable | 3,526 | (129,213) |
Refund Liability Owed to Customers | (5,336) | 11,020 |
Accrued Expenses | (3,220) | (6,021) |
Net Cash Provided by Operating Activities | 204,107 | 112,425 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from Line-of-Credit | 227,000 | 340,000 |
Principal Payments on Line-of-Credit | (312,000) | (340,000) |
Principal Payments on Notes Payable | (9,030) | (15,777) |
Net Cash Used by Financing Activities | (94,030) | (15,777) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 110,077 | 96,648 |
Cash and Cash Equivalents - Beginning of Period | 18,800 | 2,129 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ 128,877 | $ 98,777 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Mar. 31, 2020 | |
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 taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three and nine months ended March 31, 2020 and for the three and nine months ended March 31, 2019 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2019. The results of operations for the three and nine months ended March 31, 2020 and cash flows for the nine months ended March 31, 2020 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2020. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations, and cash flows for the periods have been included. Revenue Recognition The majority of our revenue is derived by fulfilling customer orders for the purchase of our products, including 1) a candy bar marketed under the trade name “Cherry Mash” and 2) coconut, peanut, chocolate, and fudge confectioneries. The Company recognizes revenue at the point in time that control of the ordered product(s) is transferred to the customer, which is typically upon shipment to the customer. Shipping and handling costs incurred to ship product to the customer are recorded within cost of sales. Amounts billed and due from our customers are classified as accounts receivables on the balance sheet and require payment on a short-term basis. Generally, individual orders from customers are accounted for as a single performance obligation. Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The amount of consideration the Company expects to receive and revenue the Company recognizes includes estimates of variable consideration, including costs for trade promotional programs, customer incentives, and allowances and discounts associated with aged or potentially unsaleable products. These estimates are based upon our analysis of the programs offered, historical trends, and expectations regarding customer and consumer participation, sales and payment trends and our experience with payment patterns associated with similar programs offered in the past. The Company reviews and updates these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified. The adjustments recognized in the third quarter of the year ending June 30, 2020 resulting from updated estimates of revenue for prior year product sales were not significant. The company has elected a practical expedient to recognize incremental costs incurred to obtain contracts, which primarily represent sales commissions where the amortization period would be less than one year, as a selling expense when incurred in the financial statements. The majority of the Company’s products are confectionery and confectionery-based and, therefore, exhibit similar economic characteristics, such that they are based on similar ingredients and are marketed and sold through the same channels to the same customers. The Company operates two divisions, Chase Candy Products and Seasonal Candy Products. Chase Candy Products involve production and sale of a candy bar marketed under the trade name “Cherry Mash”. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Both divisions share a common labor force and utilize the same basic equipment and raw materials. Management considers these two divisions as one reportable segment. The various divisions of revenue are as follows: For the three months ended March 31, 2020 2019 Sales - Chase Candy $ 305,944 $ 321,532 Sales - Seasonal Candy 10,169 5,512 Sales $ 316,113 $ 327,044 For the nine months ended March 31, 2020 2019 Sales - Chase Candy $ 1,124,689 $ 1,046,088 Sales - Seasonal Candy 1,136,964 1,153,105 Sales $ 2,261,653 $ 2,199,193 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. |
LOSS PER SHARE
LOSS PER SHARE | 9 Months Ended |
Mar. 31, 2020 | |
LOSS PER SHARE | |
LOSS PER SHARE | NOTE 2 LOSS PER SHARE The loss per share was computed on the weighted average of outstanding common shares during the period. Diluted earnings per share are calculated by including contingently issuable shares with the weighted average shares outstanding. Three Months Ended Nine Months Ended March 31 March 31 2020 2019 2020 2019 Net Income (Loss) $ (174,264) $ (182,585) $ 39,683 $ 1,043 Preferred Dividend Requirements: 6% Prior Cumulative Preferred, $5 Par Value 15,000 15,000 45,000 45,000 5% Convertible Cumulative Preferred, $20 Par Value 17,018 17,018 51,054 51,054 Total Dividend Requirements 32,018 32,018 96,054 96,054 Net Loss - Common Stockholders $ (206,282) $ (214,603) $ (56,371) $ (95,011) Weighted Average Shares - Basic 969,834 969,834 969,834 Dilutive Effect of Contingently Issuable Shares 1,033,334 1,033,334 1,033,334 1,033,334 Weighted Average Shares – Diluted 2,003,168 2,003,168 2,003,168 2,003,168 Basic Loss per Share $ (0.21) $ (0.22) $ (0.06) $ (0.10) Diluted Loss per Share $ (0.21) $ (0.22) $ (0.06) $ (0.10) The contingently issuable shares, for the three months and nine months ended March 31, 2020 and 2019, were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share. Cumulative Preferred Stock dividends in arrears at March 31, 2020 and 2019 totaled $8,429,076 and $8,301,004, respectively. Total dividends in arrears, on a per share basis, consist of the following: Nine Months Ended March 31 2020 2019 6% Convertible: Series A $ 18 $ 18 Series B 18 18 5% Convertible: Series A $ 71 $ 70 Series B 71 70 The 6% convertible prior cumulative preferred stock may, upon thirty days prior notice, be redeemed by the Corporation at $5.25 a share plus unpaid accrued dividends to date of redemption. In the event of voluntary liquidation, holders of this stock are entitled to receive $5.25 per share plus accrued dividends. It may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for one share of Series A and 3.75 common shares for one share of Series B. The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Mar. 31, 2020 | |
NOTES PAYABLE | |
NOTES PAYABLE | NOTE 3 NOTES PAYABLE The Company’s long-term debt consists of: March 31, June 30, Payee Terms 2020 2019 Nodaway Valley Bank $350,000 line-of-credit agreement expiring on January 4, 2021, with a variable interest rate at prime but not less than 5%. The line-of-credit is collateralized by substantially all assets of the Company. $ — $ 85,000 Ford Credit $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. 12,761 18,407 Toyota Credit $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. 10,750 14,134 Total 23,511 117,541 Less Current Portion 12,698 97,133 Long-Term Portion $ 10,813 $ 20,408 Future minimum payments for the twelve months ending March 31 are: March 31, Amount 2021 $ 12,698 2022 9,935 2022 878 Total $ 23,511 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020. The Company has no material tax positions at March 31, 2020, for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility. The Company had no accruals for interest or penalties at March 31, 2020. The Company’s federal income tax returns for the fiscal years ended 2017, 2018, and 2019 are subject to examination by the Internal Revenue Service taxing authority. |
SUPPLEMENTAL DISCLOSURES OF CAS
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | 9 Months Ended |
Mar. 31, 2020 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | NOTE 5 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Nine Months Ended March 31 2020 2019 Cash Paid for: Interest $ 5,589 $ 6,309 |
DISCLOSURES ABOUT FAIR VALUE OF
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020, the amount of the Company’s long-term debt approximates fair value based on the present value of estimated future cash flows using a discount rate commensurate with a borrowing rate available to the Company. |
LEASES
LEASES | 9 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2019 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 $58,500 for the nine months ended March 31, 2020, of which, $53,673 is included in cost of sales and $4,827 is included in general and administrative expenses. Minimum annual payments required under existing operating lease liabilities that have initial or remaining noncancelable terms in excess of one year as of March 31, 2020 are as follows: Twelve Months Ending March 31, Amount 2021 $ 78,000 2022 78,000 2023 78,000 2024 78,000 2025 78,000 Total Lease Payments 390,000 Less: Imputed Interest 57,236 Total Lease Payments $ 332,764 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Mar. 31, 2020 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 8 SUBSEQUENT EVENTS The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. The Company put preparedness plans in place at the manufacturing facility. They have adjusted the number of people allowed at their facilities, enforced social distancing, maintained proper sanitation protocol and have asked that any high risk or employees feeling ill to not come in. The office and sales staff continues to work, while adhering to social distancing guidelines, implementing flexible hours, reducing person-to-person interaction and increasing safety measures. To date, there has been minimal disruption to the supply chain network, including the supply of ingredients, packaging or other sourced materials, though it is possible that more disruptions could occur if the COVID-19 pandemic continues to impact markets around the world. The Company has repackaged inventory to continue to fill orders as needed and repurposed employees to better meet the current needs. Cost measures have been put in place to limit any non-essential needs. The Company believes they have sufficient liquidity to satisfy current cash needs, however, they continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that the business can continue to operate during these uncertain times. The potential impact to the Company’s consolidated financial statements could occur as early as the first quarter of fiscal year ending June 30, 2021 and include, but not limited to: impairment of long lived assets; including property and equipment and operating lease right-of-use assets related to the Company’s fair value and collectability of receivables and other financial assets. Subsequent to the filing period, the Company received a loan in the amount of $171,500 to fund payroll, rent, utilities and interest on mortgages and existing debt through the federal Paycheck Protection Program. These amounts may be forgiven subject to compliance and approval based on the timing and use of these funds in accordance with the program. No other events have occurred subsequent to March 31, 2020, through the date of filing this form, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the nine month period ended March 31, 2020. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Mar. 31, 2020 | |
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 taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three and nine months ended March 31, 2020 and for the three and nine months ended March 31, 2019 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2019. The results of operations for the three and nine months ended March 31, 2020 and cash flows for the nine months ended March 31, 2020 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2020. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations, and cash flows for the periods have been included. |
Principles of Consolidation | 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 third quarter of the year ending June 30, 2020 resulting from updated estimates of revenue for prior year product sales were not significant. The company has elected a practical expedient to recognize incremental costs incurred to obtain contracts, which primarily represent sales commissions where the amortization period would be less than one year, as a selling expense when incurred in the financial statements. The majority of the Company’s products are confectionery and confectionery-based and, therefore, exhibit similar economic characteristics, such that they are based on similar ingredients and are marketed and sold through the same channels to the same customers. The Company operates two divisions, Chase Candy Products and Seasonal Candy Products. Chase Candy Products involve production and sale of a candy bar marketed under the trade name “Cherry Mash”. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Both divisions share a common labor force and utilize the same basic equipment and raw materials. Management considers these two divisions as one reportable segment. The various divisions of revenue are as follows: For the three months ended March 31, 2020 2019 Sales - Chase Candy $ 305,944 $ 321,532 Sales - Seasonal Candy 10,169 5,512 Sales $ 316,113 $ 327,044 For the nine months ended March 31, 2020 2019 Sales - Chase Candy $ 1,124,689 $ 1,046,088 Sales - Seasonal Candy 1,136,964 1,153,105 Sales $ 2,261,653 $ 2,199,193 |
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) | 9 Months Ended |
Mar. 31, 2020 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of divisions of revenue | For the three months ended March 31, 2020 2019 Sales - Chase Candy $ 305,944 $ 321,532 Sales - Seasonal Candy 10,169 5,512 Sales $ 316,113 $ 327,044 For the nine months ended March 31, 2020 2019 Sales - Chase Candy $ 1,124,689 $ 1,046,088 Sales - Seasonal Candy 1,136,964 1,153,105 Sales $ 2,261,653 $ 2,199,193 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
LOSS PER SHARE | |
Schedule of earnings per share computed on the weighted average of outstanding common shares | Three Months Ended Nine Months Ended March 31 March 31 2020 2019 2020 2019 Net Income (Loss) $ (174,264) $ (182,585) $ 39,683 $ 1,043 Preferred Dividend Requirements: 6% Prior Cumulative Preferred, $5 Par Value 15,000 15,000 45,000 45,000 5% Convertible Cumulative Preferred, $20 Par Value 17,018 17,018 51,054 51,054 Total Dividend Requirements 32,018 32,018 96,054 96,054 Net Loss - Common Stockholders $ (206,282) $ (214,603) $ (56,371) $ (95,011) Weighted Average Shares - Basic 969,834 969,834 969,834 Dilutive Effect of Contingently Issuable Shares 1,033,334 1,033,334 1,033,334 1,033,334 Weighted Average Shares – Diluted 2,003,168 2,003,168 2,003,168 2,003,168 Basic Loss per Share $ (0.21) $ (0.22) $ (0.06) $ (0.10) Diluted Loss per Share $ (0.21) $ (0.22) $ (0.06) $ (0.10) |
Schedule of total dividends in arrears, on a per share basis | Nine Months Ended March 31 2020 2019 6% Convertible: Series A $ 18 $ 18 Series B 18 18 5% Convertible: Series A $ 71 $ 70 Series B 71 70 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
NOTES PAYABLE | |
Schedule of long-term debt | March 31, June 30, Payee Terms 2020 2019 Nodaway Valley Bank $350,000 line-of-credit agreement expiring on January 4, 2021, with a variable interest rate at prime but not less than 5%. The line-of-credit is collateralized by substantially all assets of the Company. $ — $ 85,000 Ford Credit $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle. 12,761 18,407 Toyota Credit $444 monthly payments, interest of 6.49%; final payment due May 2022, secured by a vehicle. 10,750 14,134 Total 23,511 117,541 Less Current Portion 12,698 97,133 Long-Term Portion $ 10,813 $ 20,408 |
Schedule of future minimum payments of long term debt | March 31, Amount 2021 $ 12,698 2022 9,935 2022 878 Total $ 23,511 |
SUPPLEMENTAL DISCLOSURES OF C_2
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |
Schedule of supplemental disclosures of cash flow information | Nine Months Ended March 31 2020 2019 Cash Paid for: Interest $ 5,589 $ 6,309 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
LEASES | |
Schedule of annual payments | Twelve Months Ending March 31, Amount 2021 $ 78,000 2022 78,000 2023 78,000 2024 78,000 2025 78,000 Total Lease Payments 390,000 Less: Imputed Interest 57,236 Total Lease Payments $ 332,764 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 316,113 | $ 327,044 | $ 2,261,653 | $ 2,199,193 |
Sales - Chase Candy | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | 305,944 | 321,532 | 1,124,689 | 1,046,088 |
Sales - Seasonal Candy | ||||
Disaggregation of Revenue [Line Items] | ||||
Sales | $ 10,169 | $ 5,512 | $ 1,136,964 | $ 1,153,105 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) | 9 Months Ended | ||
Mar. 31, 2020USD ($)segmentdivision | Jul. 01, 2019USD ($) | Jun. 30, 2019USD ($) | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Number of product divisions | division | 2 | ||
Number of reportable segment | segment | 1 | ||
Operating Lease, Right-of-Use Asset | $ 332,764 | $ 376,105 | $ 0 |
Operating Lease, Liability | $ 332,764 | $ 376,105 |
LOSS PER SHARE (Details)
LOSS PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Class of Stock [Line Items] | ||||
Net Income | $ (174,264) | $ (182,585) | $ 39,683 | $ 1,043 |
Preferred Dividend Requirements: | ||||
Total Dividend Requirements | 32,018 | 32,018 | 96,054 | 96,054 |
Net Loss - Common Stockholders | $ (206,282) | $ (214,603) | $ (56,371) | $ (95,011) |
Weighted Average Shares - Basic (in shares) | 969,834 | 969,834 | 969,834 | 969,834 |
Dilutive Effect of Contingently Issuable Shares | 1,033,334 | 1,033,334 | 1,033,334 | 1,033,334 |
Weighted Average Shares - Diluted (in shares) | 2,003,168 | 2,003,168 | 2,003,168 | 2,003,168 |
Basic Loss per Share (in dollars per share) | $ (0.21) | $ (0.22) | $ (0.06) | $ (0.10) |
Diluted Loss per Share (in dollars per share) | $ (0.21) | $ (0.22) | $ (0.06) | $ (0.10) |
6% Prior Cumulative Preferred, $5 Par Value | ||||
Preferred Dividend Requirements: | ||||
Total Dividend Requirements | $ 15,000 | $ 15,000 | $ 45,000 | $ 45,000 |
5% Convertible Cumulative Preferred, $20 Par Value | ||||
Preferred Dividend Requirements: | ||||
Total Dividend Requirements | $ 17,018 | $ 17,018 | $ 51,054 | $ 51,054 |
LOSS PER SHARE (Parentheticals)
LOSS PER SHARE (Parentheticals) (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
6% Prior Cumulative Preferred, $5 Par Value | ||||
Class of Stock [Line Items] | ||||
Stated percentage of preferred stock | 6.00% | 6.00% | 6.00% | 6.00% |
Preferred stock, par value (in dollars per share) | $ 5 | $ 5 | $ 5 | $ 5 |
5% Convertible Cumulative Preferred, $20 Par Value | ||||
Class of Stock [Line Items] | ||||
Stated percentage of preferred stock | 5.00% | 5.00% | 5.00% | 5.00% |
Preferred stock, par value (in dollars per share) | $ 20 | $ 20 | $ 20 | $ 20 |
LOSS PER SHARE - Cumulative Pre
LOSS PER SHARE - Cumulative Preferred Stock dividends (Details) - $ / shares | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
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 | 18 |
Cumulative Preferred Stock - Series A | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | 71 | 70 |
Cumulative Preferred Stock - Series B | ||
Class of Stock [Line Items] | ||
Total dividends in arrears | $ 71 | $ 70 |
LOSS PER SHARE - Additional inf
LOSS PER SHARE - Additional information (Details) | 9 Months Ended | |
Mar. 31, 2020USD ($)$ / shares | Mar. 31, 2019USD ($)$ / shares | |
Class of Stock [Line Items] | ||
Total cumulative preferred stock dividends in arrears | $ | $ 8,429,076 | $ 8,301,004 |
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 - Long-term debt
NOTES PAYABLE - Long-term debt (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Debt Instrument [Line Items] | ||
Total | $ 23,511 | $ 117,541 |
Less Current Portion | 12,698 | 97,133 |
Long-Term Portion | 10,813 | 20,408 |
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2021, with a variable interest rate at prime but not less than 5%. The line-of-credit is collateralized by substantially all assets of the Company. | ||
Debt Instrument [Line Items] | ||
Total | 0 | 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 | 12,761 | 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 | $ 10,750 | $ 14,134 |
NOTES PAYABLE - Long-term deb_2
NOTES PAYABLE - Long-term debt (Parentheticals) (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Jun. 30, 2019 | |
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2021, with a variable interest rate at prime but not less than 5%. The line-of-credit is collateralized by substantially all assets of the Company. | ||
Debt Instrument [Line Items] | ||
Line-of-credit agreement, amount | $ 350,000 | $ 350,000 |
Line of Credit Facility, Expiration date | Jan. 4, 2021 | Jan. 4, 2021 |
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% | |
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% | |
Maturity date | May 1, 2022 | May 1, 2022 |
NOTES PAYABLE - Future minimum
NOTES PAYABLE - Future minimum payments (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
NOTES PAYABLE | ||
2020 | $ 12,698 | |
2021 | 9,935 | |
2022 | 878 | |
Total | $ 23,511 | $ 117,541 |
INCOME TAXES (Details)
INCOME TAXES (Details) | Mar. 31, 2020USD ($) |
INCOME TAXES | |
Accruals for interest or penalties | $ 0 |
Unrecognized Tax Benefits | $ 0 |
SUPPLEMENTAL DISCLOSURES OF C_3
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Paid for: | ||
Interest | $ 5,589 | $ 6,309 |
LEASES - Annual payments (Detai
LEASES - Annual payments (Details) - USD ($) | Mar. 31, 2020 | Jul. 01, 2019 |
LEASES | ||
2021 | $ 78,000 | |
2022 | 78,000 | |
2023 | 78,000 | |
2024 | 78,000 | |
2025 | 78,000 | |
Total lease payments | 390,000 | |
Less imputed interest | 57,236 | |
Total lease payments | $ 332,764 | $ 376,105 |
LEASES - Additional information
LEASES - Additional information (Details) | 9 Months Ended |
Mar. 31, 2020USD ($) | |
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 | $ 58,500 |
Cost of sales | |
LEASES | |
Operating lease liabilities | 53,673 |
General and administrative expenses | |
LEASES | |
Operating lease liabilities | $ 4,827 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | 1 Months Ended |
Apr. 30, 2020USD ($) | |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Borrowing Capacity Of Loan For Payroll And Rent Utilities | $ 171,500 |