Washington, D.C. 20549
1307 South 59th, St. Joseph, Missouri 64507
(Former name, former address and former fiscal year, if changed since last report)
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.
Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
As of April 30, 2012, there were 969,834 shares of common stock, $1.00 par value, outstanding.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - GENERAL
The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as “Chase”, “we”, “our”, and “us”) at June 30, 2011 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three months and nine months ended March 31, 2012 and for the three months and nine months ended March 31, 2011 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, 2011. The results of operations for the three and nine months ended March 31, 2012 and cash flows for the nine months ended March 31, 2012 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2012. Where appropriate, items within the condensed consolidated financial statements have been reclassified from the previous periods’ presentation. 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 March 31, 2012, through May 11, 2012, 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, 2012.
NOTE 2 - NET INCOME PER SHARE
The income per share was computed on the weighted average of outstanding common shares during the period. Diluted earnings per share is calculated by including contingently issuable shares with the weighted average shares outstanding.
| | | Three Months Ended | | | Nine Months Ended | |
| | | March 31 | | | March 31 | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
| | | | | | | | | | | | | |
| Net income (loss) | | $ | (106,933 | ) | | $ | (68,849 | ) | | $ | (42,227 | ) | | $ | 106,519 | |
| | | | | | | | | | | | | | | | | |
| 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 income (loss) common stockholders | | $ | (138,951 | ) | | $ | (100,867 | ) | | $ | (138,281 | ) | | $ | 10,465 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares - basic | | | 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 | | | 2,003,168 | | | | 2,003,168 | | | | 2,003,168 | | | | 2,003,168 | |
| | | | | | | | | | | | | | | | | |
| Basic earnings per share | | $ | (.14 | ) | | $ | (.10 | ) | | $ | (.14 | ) | | $ | .01 | |
| | | | | | | | | | | | | | | | | |
| Diluted earnings per share | | | | | | | | | | $ | (.14 | ) | | $ | .01 | |
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - NET INCOME PER SHARE (CONTINUED)
Cumulative Preferred Stock dividends in arrears at March 31, 2012 and 2011 totaled $7,404,500 and $7,276,428, respectively. Total dividends in arrears, on a per share basis, consist of the following:
| | | Nine Months Ended March 31 | |
| | | 2012 | | | 2011 | |
| 6% Convertible | | | | | | |
| Series A | | $ | 16 | | | $ | 16 | |
| Series B | | | 16 | | | | 15 | |
| | | | | | | | | |
| 5% Convertible | | | | | | | | |
| Series A | | | 63 | | | | 62 | |
| Series B | | | 63 | | | | 62 | |
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.
NOTE 3 - NOTES PAYABLE
The Company’s long-term debt consists of:
| | | | | March 31, | | | June 30, | |
| Payee | | Terms | | 2012 | | | 2011 | |
| | | | | | | | | |
| Nodaway Valley Bank | | Line-of-credit agreement expiring on January 3, 2013 with a variable interest rate at prime, which was 5% at March 31, 2012. The line-of-credit is collateralized by substantially all assets of the Company. | | $ | - | | | $ | - | |
| | | | | | | | | | | |
| Ford Credit | | $679 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle. | | | 32,600 | | | | 38,713 | |
| | | | | | | | | | | |
| Ford Credit | | $517 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle. | | | 24,800 | | | | 29,450 | |
| | | | | | | | | | | |
| Honda | | $508 monthly payments including interest of 1.9%; final payment was due December 15, 2011, secured by a vehicle. | | | - | | | | 3,030 | |
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - NOTES PAYABLE (CONTINUED)
| | | | | March 31, | | | June 30, | |
| Payee | | Terms | | 2012 | | | 2011 | |
| | | | | | | | | |
| Nissan | | $557 monthly payments including interest of 3.9%; final payment was due April 2012, secured by a vehicle. | | | - | | | | 5,425 | |
| | | | | | | | | | | |
| Toyota Financial Services | $502 monthly payments including interest of 4.9%; final payment due March 2015, secured by a vehicle. | | | 16,745 | | | | - | |
| | | | | | | | | | | |
| Toyota Financial Services | $305 monthly payments including interest of 2.9%; final payment due March 2015, secured by a vehicle. | | | 10,500 | | | | - | |
| | | | | | | | | | | |
| Nodaway Valley Bank | $3,192 monthly payments including interest of 6.25%; final payment due June 2015, secured by certain equipment. | | | 92,149 | | | | 115,036 | |
| | | | | | | | | | | |
| | | Total | | | 176,794 | | | | 191,654 | |
| | | Less current portion | | | 56,649 | | | | 54,844 | |
| | | Long-term portion | | $ | 120,145 | | | $ | 136,810 | |
| | | | | | | | | | | |
| Future minimum payments for the twelve months ending March 31 are: | | | | | | | | |
| | | | | | | | | | | |
| | | 2013 | | $ | 56,649 | | | | | |
| | | 2014 | | | 59,175 | | | | | |
| | | 2015 | | | 46,620 | | | | | |
| | | 2016 | | | 14,350 | | | | | |
| | | | | | | | | | | |
| | | Total | | $ | 176,794 | | | | | |
NOTE 4 - INCOME TAXES
The recognition of income tax expense related to uncertain tax positions is determined under the provisions of FASB ASC – 740-10. As of March 31, 2012, the Company has not identified any uncertain tax positions requiring recognition in the condensed consolidated financial statements. The income tax positions taken for open years are appropriately stated and supported for all open years. The Company’s federal tax returns for the fiscal years ended 2009, 2010 and 2011 are subject to examination by the IRS taxing authority.
CHASE GENERAL CORPORATION AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
| | | Nine Months Ended | |
| | | March 31 | |
| | | 2012 | | | 2011 | |
| Cash paid for: | | | | | | |
| Income taxes | | $ | - | | | $ | 197 | |
| Interest | | | 9,966 | | | | 8,157 | |
| | | | | | | | | |
| Non-cash transaction: | | | | | | | | |
| Financing of vehicles | | $ | 27,245 | | | $ | - | |
| Net book value of vehicles traded-in | | $ | 14,962 | | | $ | - | |
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Chase General Corporation (Chase) is a holding company for its wholly-owned subsidiary, Dye Candy Company. This subsidiary is the main operating company that is engaged in the manufacture of confectionery products which are sold primarily to wholesale houses, grocery accounts, vendors, and repackers. The subsidiary (Company) operates two divisions, Chase Candy division and Seasonal Candy division, which share a common labor force and utilize the same basic equipment and raw materials. Therefore, segment reporting for the two divisions is not maintained by Management.
The Company’s business, like that of many other confectionary product manufacturers, is seasonal. Historically, the Company has realized more of its revenue and earnings in the fiscal second quarter, which includes the majority of the holiday shopping season, than in any other fiscal quarter.
RESULTS OF OPERATIONS - Three Months Ended March 31, 2012 Compared with Three Months Ended March 31, 2011 and Nine Months Ended March 31, 2012 Compared with Nine Months Ended March 31, 2011
The following management comments regarding Chase’s results of operations and outlook should be read in conjunction with the condensed consolidated financial statements included pursuant to Item 1 of the quarterly report.
The following table sets forth certain items as a percentage of net sales and revenues for the periods presented:
| | | Three Months Ended | | Nine Months Ended |
| | | March 31 | | March 31 |
| | | 2012 | | 2011 | | 2012 | | 2011 |
| | | | | | | | | | | | | |
| Net sales | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % |
| | | | | | | | | | | | | | | | | |
| Cost of sales | | | 92 | | | | 88 | | | | 77 | | | | 71 | |
| | | | | | | | | | | | | | | | | |
| Gross profit on sales | | | 8 | | | | 12 | | | | 23 | | | | 29 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | 42 | | | | 44 | | | | 25 | | | | 23 | |
| Income (loss) from operations | | | (34 | ) | | | (32 | ) | | | (2 | ) | | | 6 | |
| Net income (loss) before income taxes | | | (34 | ) | | | (32 | ) | | | (3 | ) | | | 5 | |
| Provision (credit) for income taxes | | | (9 | ) | | | (14 | ) | | | (1 | ) | | | 1 | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | | (25 | )% | | | (18 | )% | | | (2 | )% | | | 4 | % |
NET SALES
Net sales increased $51,649 or 14% for the three months ended March 31, 2012 to $428,140 compared to $376,491 for the three months ended March 31, 2011. Gross sales for Chase Candy increased $5,064 to $384,609 for the three months ended March 31, 2012 compared to $379,545 for 2011. Gross sales for Seasonal Candy increased $35,964 to $46,608 for the three months ended March 31, 2012 compared to $10,644 for 2011.
The 1% increase in gross sales of Chase Candy of $5,064 for the three months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to the net effect of increased sales of the Cherry Mash Bar of $72,000 primarily due to two customers having increased orders in the third quarter offset by decreases of sales of the 12/12oz. Mini Mash bag to one customer by approximately $44,000, and decreased sales to Cherry Mash Merchandisers of approximately $19,000 for the second straight quarter. The 338% increase in gross sales of Seasonal Candy of $35,964 for the three months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to increased orders from one customer totaling approximately $34,000 from the clamshell seasonal product category.
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NET SALES (CONTINUED)
Net sales decreased $19,828 or 1% for the nine months ended March 31, 2012 to $2,552,201 compared to $2,572,029 for the nine months ended March 31, 2011. Gross sales for Chase Candy decreased $54,707 to $1,193,037 for the nine months ended March 31, 2012 compared to $1,247,744 for 2011. Gross sales for Seasonal Candy increased $24,543 to $1,409,593 for the nine months ended March 31, 2012 compared to $1,385,050 for 2011.
The 4% decrease in gross sales of Chase Candy of $54,707 for the nine months ended March 31, 2012 over the same period ended March 31, 2011 is primarily due to the net effect of the following: 1) increased sales of Cherry Mash Bar of approximately $111,000 offset by; 2) decreased sales of the 12/12oz. Mini Mash bag to one customer by approximately $115,000 due to reduced distribution; 3) decreased sales of the 24/12oz. Mini Mash bag to another customer by approximately $35,000 due to the timing of Halloween orders and; 4) overall decreased sales to Cherry Mash Merchandisers of approximately $21,000. The 2% increase in gross sales of Seasonal Candy of $24,543 for the nine months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to the net effect of increased sales from two customers in the clamshell seasonal product category of approximately $102,000 offset by decreased sales from three customers in the bulk seasonal product category of approximately $69,000 and overall decreases in the generic seasonal product category of $6,000.
COST OF SALES
The cost of sales increased $63,633 to $393,144 increasing to 92% of related revenues for the three months ended March 31, 2012, compared to $329,511 or 88% of related revenues for the three months ended March 31, 2011.
The 19% increase in cost of sales of $63,633 is primarily due to the 14% increase in net sales of $51,649 and the raw material price increases in chocolate, peanuts, and sugar which were not passed along to customers. Direct costs of goods for materials manufactured and net change in inventories for the three months ended March 31, 2012, increased $74,735 or 83% to $164,705 as compared to $89,970 for the three months ended March 31, 2011. Increases in chocolate prices were primarily caused by civil unrest in cocoa producing areas of West Africa where decreased supply lead to increased costs. Increases in the price of peanuts was primarily caused by a drought in Texas where decreased supply lead to increased costs. Increases in the price of sugar were primarily caused by increased worldwide demand for sugar and unintentional decreased production levels by sugar producers primarily caused by a domestic drought and a lengthy strike at one domestic sugar company where increased demand and decreased supply lead to increased costs. Management does not anticipate the prices of these raw materials to return to previous levels in the near future. Management is considering and evaluating the need to increase prices charged to customers for future sales.
The cost of sales increased $136,768 or 7% to $1,968,646 or 77% of related revenues for the nine months ended March 31, 2012, compared to $1,831,878 or 71% of related revenues for the nine months ended March 31, 2011.
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
COST OF SALES (CONTINUED)
The 7% increase in cost of sales of $136,768 is primarily due to the 1% decrease in net sales of $19,828 offset by the raw material price increases in chocolate, peanuts, and sugar which were not passed along to customers. Direct costs of goods for materials manufactured and net change in inventories for the nine months ended March 31, 2012, increased $210,587 or 23% to $1,126,276 as compared to $915,689 for the nine months ended March 31, 2011. Increased chocolate prices were primarily caused by civil unrest in cocoa producing areas of West Africa where decreased supply lead to increased costs. Increases in the price of peanuts was primarily caused by a drought in Texas where decreased supply lead to increased costs. Increases in the price of sugar were primarily caused by increased worldwide demand for sugar and unintentional decreased production levels by sugar producers primarily caused by a domestic drought and a lengthy strike at one domestic sugar company where increased demand and decreased supply lead to increased costs. Management does not anticipate the prices of these raw materials to return to previous levels in the near future. Management is considering and evaluating the need to increase prices charged to customers for future sales. Direct labor cost decreased $43,908 or 13% to $303,833 as compared to $347,741 for the nine months ended March 31, 2011, which is primarily due to a decrease of 2,409 production hours worked for the nine months ended March 31, 2012 of 20,012 production hours compared to 22,421 production hours worked for the nine months ended March 31, 2012.
The Company decreased total inventory $184,897 or 34% to $358,827 at March 31, 2012 from $543,724 at June 30, 2011 due to the Company’s busy season coming to an end. The Company decreased finished goods inventory 67% at March 31, 2012 to $86,795 from June 30, 2011 of $263,934. The Company increased goods in process inventory 147% at March 31, 2012 to $8,097 from June 30, 2011 of $3,275. The Company increased raw materials inventory 42% at March 31, 2012 to $125,902 from June 30, 2011 of $88,490. The increase in raw materials inventory was primarily due to price increases in chocolate, peanuts, and sugar. The Company decreased packaging materials inventory 27% at March 31, 2012 to $138,033 from June 30, 2011 of $188,025.
SELLING EXPENSES
Selling expenses for the three months ended March 31, 2012 increased $8,007 to $87,662, which is 20% of net sales, compared to $79,655 or 21% of net sales for the three months ended March 31, 2011.
The increase of $8,007 or 10% in selling expenses for the three months ended March 31, 2012 is primarily due to higher commissions being paid as sales volume increased 14% during the same period and increased depreciation due to recent vehicles purchased. Commissions increased $3,176 to $12,926 for this period from $9,750 for the three months ended March 31, 2011. Depreciation increased $4,902 to $11,484 for this period from $6,582 for the three months ended March 31, 2011.
Selling expenses for the nine months ended March 31, 2012 increased $17,757 to $328,383, which is 13% of net sales, compared to $310,626 or 12% of net sales for the nine months ended March 31, 2011.
The increase of $17,757 or 6% in selling expenses for the nine months ended March 31, 2012 is primarily due to higher samples sent out in an effort to increase sales volume and increased depreciation due to recent vehicles purchased. Samples increased $5,386 to $33,115 for this period from $27,729 for the nine months ended March 31, 2011. Depreciation increased $12,231 to $32,390 for this period from $20,159 for the nine months ended March 31, 2011.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the three months ended March 31, 2012 increased $17,874 to $103,967 and increased to 24% of net sales, compared to $86,093 or 23% of net sales for the three months ended March 31, 2011. These increased costs are primarily reflected in insurance expense, professional fees, general taxes and licenses and office salaries.
General and administrative expenses for the nine months ended March 31, 2012 increased $40,284 to $323,646 and increased to 13% of net sales, compared to $283,362 or 11% of net sales for the nine months ended March 31, 2011. These increased costs are primarily reflected in insurance expense, professional fees, general taxes and licenses and office salaries.
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
OTHER INCOME (EXPENSE)
Other income and (expense) increased by $28 for the three months ended March 31, 2012 to $(1,300), compared to $(1,272) for the three months ended March 31, 2011 primarily due to an increase in interest expense.
Other income and (expense) increased by $2,460 for the nine months ended March 31, 2012 to $(8,640), compared to $(6,180) for the nine months ended March 31, 2011 primarily due to an increase in interest expense.
PROVISION FOR INCOME TAXES
The Company recorded a tax benefit for the three months ended March 31, 2012 of $(40,071) as compared to a tax benefit of $(51,191) for the three months ended March 31, 2011. The Company recorded a tax benefit for the nine months ended March 31, 2012 of $(23,958) as compared to a tax provision of $33,964 for the nine months ended March 31, 2011. The net tax expense recorded for the nine months ended March 31, 2011 is primarily due to recognizing taxes related to profitable operations for that period. The net tax benefit recorded for the nine months ended March 31, 2012 and the three months ended March 31, 2012 and 2011 is primarily due to losses recognized on operations for those periods.
NET INCOME
The Company reported a net loss for the three months ended March 31, 2012 of $(106,933), compared to net loss of $(68,849) for the three months ended March 31, 2011. This decrease of $38,084 is explained above.
The Company reported a net loss for the nine months ended March 31, 2012 of $(42,227), compared to net income of $106,519 for the nine months ended March 31, 2011. This decrease of $148,746 is explained above.
PREFERRED DIVIDENDS
These amounts reflect additional preferred stock dividends in arrears for the three and nine months ended March 31, 2012 and 2011, respectively, on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS
Net loss applicable to common stockholders for the three months ended March 31, 2012 was $(138,951) which is a decrease of $38,084 as compared to the net loss for the three months ended March 31, 2011 of $(100,867), as explained above.
Net loss applicable to common stockholders for the nine months ended March 31, 2012 was $(138,281) which is a decrease of $148,746 as compared to the net income for the nine months ended March 31, 2011 of $10,465, as explained above.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents the summary of cash flow for the fiscal period indicated.
| | | 2012 | | | 2011 | |
| | | | | | | |
| Net cash provided by operating activities | | $ | 213,785 | | | $ | 170,936 | |
| Net cash used in investing activities | | $ | (22,680 | ) | | $ | (17,925 | ) |
| Net cash used in financing activities | | $ | (42,105 | ) | | $ | (73,310 | ) |
CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The $22,680 of cash used in investing activities was the result of capital expenditures. Management has no material commitments for capital expenditures during the remainder of fiscal 2012. The $42,105 of cash used in financing activities was for principal payments on equipment and vehicle loans. Management believes projected cash flow from operations, combined with its existing cash balances, will be sufficient to meet its funding requirements for the foreseeable future. The Company has $250,000 remaining on its bank line-of-credit, which could be utilized to help fund any working capital requirements.
Management believes that inflation will have only a minimal effect on future operations since such effects will be offset by sales price increases, which are not expected to have a significant effect upon demand.
Forward-Looking Information
This report, as well as our other reports filed with the Securities and Exchange Commission (“SEC”), contains forward-looking statements made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast,” “may,” “will,” “should,” “continue,” “predict” and similar expressions are intended to identify forward-looking statements. This report contains forward-looking statements regarding, among other topics, our expected financial position, results of operations, cash flows, strategy, and management’s plans and objectives. Accordingly, these forward-looking statements are based on assumptions about a number of important factors. While we believe that our assumptions about such factors are reasonable, such factors involve risks and uncertainties that could cause actual results to be different from what appear here. These risk factors include: the ability to adequately pass through customers unanticipated future increases in raw material costs, decreased demand for products, expected orders that do not occur, loss of key customers, the impact of competition and price erosion as well as supply and manufacturing constraints, and other risks and uncertainties. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will prove accurate, and our actual results may differ materially from these forward-looking statements. We assume no obligation to update any forward-looking statements made herein.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to a smaller reporting company.
ITEM 4. - CONTROLS AND PROCEDURES
| (a) | Evaluation of Disclosure Controls and Procedures |
| | |
| | Chase’s management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, this officer has concluded that Chase’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to management, including those officers, and to members of the Board of Directors, to allow timely decisions regarding required disclosure. |
| | |
| (b) | Changes in Internal Control over Financial Reporting |
| | |
| | There were no significant changes in Chase’s internal control over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect Chase’s internal control over financial reporting subsequent to the date of the evaluation. |
PART II. OTHER INFORMAITON
| | | | | |
| ITEM 1. | LEGAL PROCEEDINGS |
| | | | |
| | | a. | None |
| | | |
| ITEM 1A. | | RISK FACTORS |
| | | |
| | | Not applicable to a smaller reporting company. |
| | | |
| ITEM 2. | | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| | | | |
| | | a. | None |
| | | |
| ITEM 3. | | DEFAULTS UPON SENIOR SECURITIES |
| | | | |
| | | a. | None |
| | | | |
| | | b. | The total cumulative preferred stock dividends contingency at March 31, 2012 is $7,404,500. |
| | | | |
| ITEM 4. | | MINE SAFETY DISCLOSURES |
| | | |
| | | Not applicable. |
| | | |
| ITEM 5. | | OTHER INFORMATION |
| | | | |
| | | a. | None |
| | | | |
| | | b. | None |
| | | |
| ITEM 6. | | EXHIBITS |
| | | | |
| | | a. | Exhibits. |
| | | | | |
| | | | Exhibit 31.1 | Certification of Chief Executive Officer and Treasurer pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
| | | | Exhibit 32.1 | Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| | | | Exhibit 101 | The following financial statements for the quarter ended March 31, 2012, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | Chase General Corporation and Subsidiary (Registrant) |
| | |
| | |
| May 11, 2012 | /s/ Barry M. Yantis |
| Date | Barry M. Yantis
Chairman of the Board, Chief Executive Officer and
Chief Financial Officer, President and Treasurer |
