Chase General (CSGN) 10-Q 2025 Q2 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2024

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

For the transition period from                   to                  

Commission File Number 2-5916

Chase General Corporation

(Exact name of registrant as specified in its charter)

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

1307 South 59th, St. Joseph, Missouri 64507

(Address of principal executive offices, Zip Code)

(816) 279-1625

(Registrant’s telephone number, including area code)

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

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

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

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

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

Large accelerated filer ◻	Accelerated filer ◻
Nonaccelerated filer ⌧	Smaller reporting company ☒
Emerging Growth Company ☐

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

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

As of February 5, 2025, there were 969,834 shares of common stock, $1.00 par value, outstanding.

CHASE GENERAL CORPORATION AND SUBSIDIARY

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

FOR THE SIX MONTHS ENDED December 31, 2024

PART I	FINANCIAL INFORMATION
	ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
		CONDENSED CONSOLIDATED BALANCE SHEETS AS OF December 31, 2024 AND JUNE 30, 2024 (UNAUDITED)	1
		CONDENSED CONSOLIDATED STATEMENTS OF income FOR THE THREE MONTHS ENDED December 31, 2024 AND 2023 (UNAUDITED)	3
		CONDENSED CONSOLIDATED STATEMENTS OF income FOR THE SIX MONTHS ENDED December 31, 2024 AND 2023 (UNAUDITED)	4
		CONDENSED CONSOLIDATED STATEMENTS OF stockholders’ Equity FOR THE Three and SIX MONTHS ENDED December 31, 2024 AND 2023 (UNAUDITED)	5
		CONDENSED CONSOLIDATED STATEMENTS OF Cash flows FOR THE SIX MONTHS ENDED December 31, 2024 AND 2023 (UNAUDITED)	6
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	7
	ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	18
	ITEM 4.	CONTROLS AND PROCEDURES	18
PART II	OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS	19
	ITEM 1A.	RISK FACTORS	19
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	19
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	19
	ITEM 4.	MINE SAFETY DISCLOSURES	19
	ITEM 5.	OTHER INFORMATION	19
	ITEM 6.	EXHIBITS	19
	SIGNATURES		20

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	December 31,		June 30,
	2024		2024
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	319,143	$	41,974
Trade Receivables, Net of Allowance for Credit Losses of $1,896		340,847		222,699
Inventories:
Finished Goods		22,641		384,641
Goods in Process		10,967		21,971
Raw Materials		93,428		119,508
Packaging Materials		149,069		193,122
Prepaid Expenses		13,360		6,640
Total Current Assets		949,455		990,555
LONG-TERM ASSETS
Property & Equipment
Land		35,000		35,000
Buildings		77,348		77,348
Machinery and Equipment		866,976		866,976
Trucks and Autos		184,200		184,200
Office Equipment		33,025		33,025
Leasehold Improvements		72,068		72,068
Total		1,268,617		1,268,617
Less: Accumulated Depreciation and Amortization		(1,085,107)		(1,061,745)
Total Property and Equipment, Net		183,510		206,872
Right-of-Use Asset		339,855		365,372
Deferred Tax Asset		-		21,239
Total Long-Term Assets		523,365		593,483
Total Assets	$	1,472,820	$	1,584,038

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(1)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(UNAUDITED)

	December 31,		June 30,
	2024		2024
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	$	112,106	$	173,153
Current Maturities of Notes Payable		22,208		161,688
Current Maturities of Lease Liability		47,527		52,019
Income Tax Payable		8,381		—
Accrued Expenses		9,535		25,099
Refund Liability Owed to Customers		30,150		16,533
Deferred Income		324		972
Total Current Liabilities		230,231		429,464
LONG-TERM LIABILITIES
Deferred Tax Liability		8,165		—
Notes Payable, Less Current Maturities		25,643		36,870
Lease Liability, Less Current Maturities		285,828		313,353
Total Long-Term Liabilities		319,636		350,223
Total Liabilities		549,867		779,687
COMMITMENTS AND CONTINGENCIES (NOTE 7)
STOCKHOLDERS’ EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,505,000 and $2,490,000, Respectively)		500,000		500,000
Series B (Liquidation Preference $2,460,000 and $2,445,000, Respectively)		500,000		500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,575,261 and $5,545,994, Respectively)		1,170,660		1,170,660
Series B (Liquidation Preference $908,598 and $903,828, Respectively)		190,780		190,780
Common Stock, $1 Par Value		969,834		969,834
Paid-In Capital in Excess of Par		3,134,722		3,134,722
Accumulated Deficit		(5,543,043)		(5,661,645)
Total Stockholders’ Equity		922,953		804,351
Total Liabilities and Stockholders’ Equity	$	1,472,820	$	1,584,038

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(2)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Three Months Ended
	December 31,
	2024		2023
SALES	$	1,455,512	$	1,338,492
COST OF SALES		980,269		999,191
Gross Profit on Sales		475,243		339,301
OPERATING EXPENSES
Selling		112,733		106,713
General and Administrative		179,584		165,774
Total Operating Expenses		292,317		272,487
Income from Operations		182,926		66,814
OTHER INCOME (EXPENSE)
Miscellaneous Income		448		446
Interest Expense		(3,764)		(6,311)
Total Other Expenses, net		(3,316)		(5,865)
Income before Income Taxes		179,610		60,949
INCOME TAX PROVISION		(43,395)		(16,058)
NET INCOME	$	136,215	$	44,891
EARNINGS PER SHARE
Basic	$	0.11	$	0.01
Diluted	$	0.07	$	0.01

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(3)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

	Six Months Ended
	December 31,
	2024		2023
SALES	$	2,444,533	$	2,449,291
COST OF SALES		1,684,347		1,796,211
Gross Profit on Sales		760,186		653,080
OPERATING EXPENSES
Selling		209,524		207,095
General and Administrative		383,713		364,870
Total Operating Expenses		593,237		571,965
Income from Operations		166,949		81,115
OTHER INCOME (EXPENSE)
Miscellaneous Income		816		803
Interest Expense		(11,378)		(13,784)
Total Other Expenses, net		(10,562)		(12,981)
Income before Income Taxes		156,387		68,134
INCOME TAX PROVISION		(37,785)		(23,802)
NET INCOME	$	118,602	$	44,332
EARNINGS (LOSS) PER SHARE
Basic and Diluted	$	0.06	$	(0.02)

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(4)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

	Prior Cumulative				Cumulative
	Preferred Stock				Preferred Stock				Common		Paid-In		Accumulated
	Series A		Series B		Series A		Series B		Stock		Capital		Deficit		Total
BALANCE, September 30, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,570,127)	$	895,869
Net Income, three months ended December 31, 2023		—		—		—		—		—		—		44,891		44,891
BALANCE, December 31, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,525,236)	$	940,760
		Prior Cumulative				Cumulative
		Preferred Stock				Preferred Stock				Common		Paid-In		Accumulated
		Series A		Series B		Series A		Series B		Stock		Capital		Deficit		Total
BALANCE, September 30, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,679,258)	$	786,738
Net Income, three months ended December 31, 2024		—		—		—		—		—		—		136,215		136,215
BALANCE, December 31, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,543,043)	$	922,953
	Prior Cumulative				Cumulative
	Preferred Stock				Preferred Stock				Common		Paid-In		Accumulated
	Series A		Series B		Series A		Series B		Stock		Capital		Deficit		Total
BALANCE, June 30, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,569,568)	$	896,428
Net income, six months ended December 31, 2023		—		—		—		—		—		—		44,332		44,332
BALANCE, December 31, 2023	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,525,236)	$	940,760
	Prior Cumulative				Cumulative
	Preferred Stock				Preferred Stock				Common		Paid-In		Accumulated
	Series A		Series B		Series A		Series B		Stock		Capital		Deficit		Total
BALANCE, June 30, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,661,645)	$	804,351
Net income, six months ended December 31, 2024		—		—		—		—		—		—		118,602		118,602
BALANCE, December 31, 2024	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,543,043)	$	922,953

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(5)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	December 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	118,602	$	44,332
Adjustments to Reconcile Net Incme to Net Cash Provided by/(Used in) Operating Activities:
Depreciation and Amortization		23,362		21,676
Deferred Income Amortization		(648)		(649)
Deferred Income Taxes		29,404		18,213
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables		(118,148)		37,702
Inventories		443,137		367,744
Prepaid Expenses		(6,720)		2,008
Income Tax Payable		8,381		—
Accounts Payable		(61,047)		(50,939)
Refund Liability Owed to Customers		13,617		26,300
Accrued Expenses		(15,564)		(11,450)
Operating Lease Liability		(6,500)		—
Net Cash Provided by Operating Activities		427,876		454,937
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit		330,000		290,000
Principal Payments on Line-of-Credit		(470,000)		(500,000)
Proceeds from Note Payable - Stockholder (Note 7)		—		100,000
Principal Payments on Note Payable - Stockholder (Note 7)		—		(100,000)
Principal Payments on Notes Payable		(10,707)		(6,167)
Net Cash Used In Financing Activities		(150,707)		(216,167)
INCREASE IN CASH AND CASH EQUIVALENTS		277,169		238,770
Cash and Cash Equivalents - Beginning of Period		41,974		11,295
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	319,143	$	250,065

The accompanying notes are an integral part of the unaudited

condensed consolidated financial statements.

(6)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 1       SIGNIFICANT ACCOUNTING POLICIES

General

The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as Chase, the Company, we, our, and us) at June 30, 2024 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three and six months ended December 31, 2024 and for the three and six months ended December 31, 2023 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2024. The results of operations for the three and six months ended December 31, 2024 and cash flows for the six months ended December 31, 2024 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2025. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations, and cash flows for the periods have been included.

Revenue Recognition

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

Revenue is measured as the amount of consideration we expect to receive in exchange for fulfilling product orders. Sales, value added, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The amount of consideration the Company expects to receive and revenue the Company recognizes includes estimates of variable consideration, including costs for trade promotional programs, customer incentives, and allowances and discounts associated with aged or potentially unsaleable products. These estimates are based upon our analysis of the programs offered, historical trends, and expectations regarding customer and consumer participation, sales and payment trends and our experience with payment patterns associated with similar programs offered in the past. The Company reviews and updates these estimates regularly and the impact of any adjustments are recognized in the period the adjustments are identified.

(7)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 1       SIGNIFICANT ACCOUNTING POLICIES (cont.)

Revenue Recognition (cont.)

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

For the three months ended December 31,

	2024		2023
SALES
Chase Candy	$	720,907	$	568,451
Seasonal Candy		734,605		770,041
Total	$	1,455,512	$	1,338,492

For the six months ended December 31,

	2024		2023
SALES
Chase Candy	$	1,037,875	$	952,177
Seasonal Candy		1,406,658		1,497,114
Total	$	2,444,533	$	2,449,291

Subsequent Events

Other than what is disclosed in Note 3, no other events have occurred subsequent to December 31, 2024, through the date of filing this form, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the six month period ended December 31, 2024.

(8)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 2       EARNINGS (LOSS) PER SHARE

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

	Three Months Ended				Six Months Ended
	December 31,				December
	2024		2023		2024		2023
Net Income	$	136,215	$	44,891	$	118,602	$	44,332
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value		15,000		15,000		30,000		30,000
5% Convertible Cumulative Preferred, $20 Par Value		17,018		17,018		34,036		34,036
Total Dividend Requirements		32,018		32,018		64,036		64,036
Net Income (Loss) attributable to Common Stockholders	$	104,197	$	12,873	$	54,566	$	(19,704)
Weighted Average Shares - Basic		969,834		969,834		969,834		969,834
Effect of Contingently Issuable Shares, if Dilutive		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 (Loss) per Share	$	0.11	$	0.01	$	0.06	$	(0.02)
Diluted Earnings (Loss) per Share	$	0.07	$	0.01	$	0.06	$	(0.02)

The Company excludes equity instruments from the calculation of diluted earnings per share if the effect of including such instruments is anti-dilutive.  All of the preferred stock, which is convertible into 1,033,334 shares of common stock, was excluded for the three and six months ended December 31, 2023 and the six months ended December 31, 2024, as its conversion would have an anti-dilutive effect.  Cumulative Preferred Stock dividends in arrears at December 31, 2024 and 2023 totaled $9,037,418 and $8,909,346, respectively. Total dividends in arrears, on a per share basis, consist of the following:

	Six Months Ended
	December 31,
	2024		2023
6% Convertible:
Series A	$	20	$	20
Series B	$	19	$	19
5% Convertible:
Series A	$	75	$	74
Series B	$	75	$	74

(9)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 2       EARNINGS (LOSS) PER SHARE (cont.)

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

The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21 per share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20 per share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of 5% convertible preferred stock.

NOTE 3       NOTES PAYABLE AND LINE-OF-CREDIT

The Company’s debt consists of:

		December 31,		June 30,
Payee	Terms	2024		2024
Nodaway Valley Bank	$500,000 line-of-credit agreement expiring on January 4, 2025, with a variable interest rate at prime but not less than 5% (7.5% at December 31, 2024). The line of credit is collateralized by substantially all assets of the Company.	$	-	$	140,000
Nodaway Valley Bank	$885 monthly payments, interest of 7.25%; final payment due April 2027, secured by a vehicle.		22,704		27,082
Ford Motor Credit Company	$1,126 monthly payments, interest of 2.9%; final payment due November 2026, secured by a vehicle.		25,147		31,476
	Total		47,851		198,558
	Less Current Portion		22,208		161,688
	Long-Term Portion	$	25,643	$	36,870

Subsequent to the quarter ended December 31, 2024, the line-of-credit agreement was renewed under similar terms maturing on January 2, 2026.

Future minimum payments for the twelve months ending December 31 are:

December 31,	Amount
2025	$	22,208
2026		22,158
2027		3,485
Total	$	47,851

(10)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

NOTE 4       INCOME TAXES

The Company follows the provisions for uncertain tax positions as addressed in Financial Accounting Standards Board Accounting Standards Codification 740-10. The Company recorded an income tax provision of $43,395 for the three months ended December 31, 2024 and $37,785 for the six months ended December 31, 2024.  The income tax provision is a result of additional net operating income generated during these periods.  The current income tax payable is $8,381 which results from the net operating loss being limited to 80% of taxable income.  As of December 31, 2024, the Company has estimated net operating loss carryovers of $61,565, none of which expire.    

Due to the utilization of net operating loss carryovers, there is a deferred tax liability as of December 31, 2024 of $8,165.  The Company has no material tax positions at December 31, 2024, for which the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of such deductibility.  The Company had no accruals for interest or penalties at December 31, 2024.  The Company’s federal income tax returns for the fiscal years ended 2022, 2023, and 2024 are subject to examination by the Internal Revenue Service taxing authority.

NOTE 5       SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Six Months Ended
	December 31,
	2024		2023
Supplemental Cash Flow Information:
Interest paid	$	11,738	$	14,062

NOTE 6      DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NOTE 7       COMMITMENT, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS

The Company leases its office and manufacturing facility located in St. Joseph, Missouri under an operating lease from an entity that is 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.  During the year ended June 30, 2023, the Company determined the exercise of the renewal option is reasonably assured and has therefore remeasured the right-of-use asset and lease liability to include the additional five years at the current rate so that the new term expires on March 31, 2030. The lease currently requires payments of $6,500 per month, as noted the Company does not believe the payments in the renewal period will vary significantly from this current amount.

(11)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I.     FINANCIAL INFORMATION

Item 1. Condensed Consolidated financial statements

notes to condensed consolidated financial statements

(unaudited)

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

An operating lease right-of-use asset and lease liability was recognized based on the present value of minimum lease payments over the remaining lease term. The Company’s operating lease has a remaining term of 5.25 years and the present value of the lease payments is calculated using the Company’s estimated incremental borrowing rate of 7.6% as of the remeasurement date. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company’s lease agreement does not contain any residual value guarantees. The Company has made a policy election to combine lease and non-lease components, and a policy election to not recognize right-of-use assets or lease liabilities for leases that are less than twelve months. Cash paid for operating lease liabilities was $45,500 and operating lease expense was $39,000 for the six months ended December 31, 2024, of which, $35,782 is included in cost of sales and $3,218 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 December 31, 2024 are as follows:

Twelve Months Ending December 31,	Amount
2025	$	71,500
2026		78,000
2027		78,000
2028		78,000
2029		78,000
Thereafter		26,000
Total Lease Payments		409,500
Less: Imputed Interest		(76,145)
Total Lease Liabilities	$	333,355

On September 28, 2023, the Chief Executive Officer of the Company advanced the Company $100,000 under a standard promissory note agreement with interest at a rate of 8.5% per annum, due December 30, 2023. On November 30, 2023, the Company paid the note in full including interest of $1,446.

(12)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I     financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

OVERVIEW

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

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

RESULTS OF OPERATIONS - Three Months Ended December 31, 2024 Compared to Three Months Ended December 31, 2023, and Six months Ended December 31, 2024 Compared to Six months Ended December 31, 2023

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

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

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2024		2023		2024		2023
Sales	100	%	100	%	100	%	100	%
Cost of Sales	67	%	75	%	69	%	73	%
Gross Profit on Sales	33	%	25	%	31	%	27	%
Operating Expenses	20	%	20	%	24	%	23	%
Income from Operations	13	%	5	%	7	%	4	%
Other Expense, Net	(1)	%	(1)	%	—	%	(1)	%
Income before Income Taxes	12	%	4	%	7	%	3	%
Income Tax Provision	(3)	%	(1)	%	(2)	%	(1)	%
Net Income	9	%	3	%	5	%	2	%

SALES

Sales increased $117,020 or 9% for the three months ended December 31, 2024 to $1,455,512 compared to $1,338,492 for the three months ended December 31, 2023. Sales for Chase Candy increased $152,456 to $720,907 for the three months ended December 31, 2024, compared to $568,451 for the three months ended December 31, 2023. Sales for Seasonal Candy decreased $35,436 to $734,605 for the three months ended December 31, 2024, compared to $770,041 for the three months ended December 31, 2023.

(13)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I     financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

SALES (cont.)

The 27% increase in sales of Chase Candy of $152,456 for the three months ended December 31, 2024 over the same period ended December 31, 2023, is primarily due to the effect of the following: 1) increased net sales of approximately $49,000 for the Cherry Mash Bar L276/L277 segments due to an increase in orders to existing customers; 2) increased sales of the Mini Mash L278/L212 segment by approximately $60,000 versus the same period a year ago primarily due to increased orders from existing customers; 3) increased sales of the L279/L299 Bulk Mini Mash segment by approximately $7,500 versus the same period a year ago primarily due to increased orders from existing customers; 4) increased sales of the Changemaker Jar L260 and Mini Mash Keg L264 segments by approximately $8,000 due to an increase in orders to existing customers; and 5) increased net sales of the L100/L200 Cherry Mash Merchandisers segment by approximately $28,000 due to an increase in orders to existing customers.

The 5% decrease in sales of Seasonal Candy of $35,436 for the three months ended December 31, 2024 over the same period ended December 31, 2023 is primarily due to the effect of: 1) increased sales in the clamshell division by approximately $38,000 versus the same period a year ago, primarily due to increased sales to existing customers; offset by 2) decreased sales in the bulk seasonal division by approximately $12,000 versus the same period a year ago; and 3) decreased sales to existing customers in the regular produce category by approximately $62,000 versus the same period a year ago.

Sales decreased $4,758 or less than 1% for the six months ended December 31, 2024 to $2,444,533 compared to $2,449,291 for the six months ended December 31, 2023. Sales for Chase Candy increased $85,698 to $1,037,875 for the six months ended December 31, 2024, compared to $952,177 for the six months ended December 31, 2023. Sales for Seasonal Candy decreased $90,456 to $1,406,658 for the six months ended December 31, 2024, compared to $1,497,114 for the six months ended December 31, 2023.

The 9% increase in sales of Chase Candy of $85,698 for the six months ended
December 31, 2024 over the same period ended December 31, 2023, is primarily due to the effect of the following: 1) increased net sales of approximately $35,000 for the Cherry Mash Bar L276/L277 segments due to an increase in orders to existing customers; 2) increased sales of the Mini Mash L278/L212 segment by approximately $38,000 versus the same period a year ago primarily due to increased orders from existing customers; 3) increased sales of the L279/L299 Bulk Mini Mash segment by approximately $2,900 versus the same period a year ago primarily due to increased orders from existing customers; and 4) increased sales of the Changemaker Jar L260 and Mini Mash Keg L264 segments by approximately $4,900 due to an increase in orders to existing customers; 5) decrease in sales allowances and discounts of approximately $10,000 offset by 6) decreased net sales of the L100/L200 Cherry Mash Merchandisers segment by approximately $3,300 due to a decrease in orders to existing customers.

The 6% decrease in sales of Seasonal Candy of $90,456 for the six months ended December 31, 2024 over the same period ended December 31, 2023, is primarily due to decreases in orders in the first and second quarters, including: 1) decreased sales in the clamshell division by approximately $13,500 versus the same period a year ago, primarily due to decreased sales to existing customers; 2) decreased sales in the bulk seasonal division by approximately $18,300 versus the same period a year ago; and 3) decreased sales to existing customers in the regular produce category by approximately $73,700 versus the same period a year ago; offset by 4) a decrease in sales allowance and discounts by approximately $16,000.

In addition to the changes in the overall quantities sold during both the three and six months ended December 31, 2024, the Company was able to implement a price increase in March 2024 of approximately 14% for the majority of the customers for Chase Candy products. For the Seasonal Candy divisions, the Company was able to implement a price increase in July 2024 of approximately 14% for the bulk and clamshell products.  Both price increases noted above have contributed to an increase in margins for the three months ended December 31, 2024.  Due to the seasonal nature of the Company’s business, it was reasonable that most of these price increases implemented earlier in the year were more fully realized during the second quarter of 2025.

(14)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I     financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

COST OF SALES

The cost of sales decreased $18,922 to $980,269 or 67% of related sales for the three months ended December 31, 2024, compared to $999,191 or 75% of related sales for the three months ended December 31, 2023.

The cost of sales decreased $111,864 to $1,684,347 or 69% of related sales for the six months ended December 31, 2024, compared to $1,796,211 or 73% of related sales for the six months ended December 31, 2023.

The slight decrease in cost of sales as a percentage of sales for both the quarter and the six months ended December 31, 2024, is related to price and labor efficiencies. Due to volatility in the regions where these raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand.

SELLING EXPENSES

Selling expenses for the three months ended December 31, 2024 increased $6,020 to $112,733, which is 8% of sales, compared to $106,713, or 8% of sales for the three months ended December 31, 2023.

Selling expenses for the six months ended December 31, 2024 increased $2,429 to $209,524, which is 9% of sales, compared to $207,095, or 8% of sales for the six months ended December 31, 2023.

The increase in selling expenses for both the quarter and six months ended December 31, 2024, is primarily due to increases in freight costs attributable to ongoing supply chain issues, as well as an increase related to truck and automotive depreciation.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended December 31, 2024 increased $13,810 to $179,584 and 12% of sales, compared to $165,774 or 12% of sales for the three months ended December 31, 2023.

The increase of $13,810 in general and administrative expenses for the three months ended December 31, 2024 is primarily due to an increase in professional fees of approximately $18,800 compared to the three months ended December 31, 2023.  The increase of professional fees during the second quarter of fiscal year 2025 is related to the timing and nature of fees from service providers as part of the annual and quarterly filings.   Additionally, in the three-month period ended December 31, 2024, office supplies expense increased by approximately $2,000 and insurance expense increased by approximately $3,300 from the prior period. These increases are offset by a decrease in dues and subscriptions fees of approximately $8,500 and decreases in various other general and administrative expense items.  The decrease in dues and subscriptions fee is related to an annual subscription fee charged from one of the Company’s largest customers that was paid during the first quarter 2024 compared to the second quarter of 2023.

General and administrative expenses for the six months ended December 31, 2024 increased $18,843 to $383,713 and 16% of sales, compared to $364,870 or 15% of sales for the six months ended December 31, 2023.

The increase of $18,843 in general and administrative expenses for the six months ended December 31, 2024 is primarily due to an increase in professional fees of approximately $9,300 compared to the six months ended December 31, 2023. Additionally, in the six-month period ended December 31, 2024, office supplies expense increased by approximately $2,200 and insurance expense increased by approximately $7,500 from the prior period.

(15)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I     financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

OTHER INCOME (EXPENSE)

Other expense decreased by $2,549 for the three months ended December 31, 2024 to ($3,316), compared to ($5,865) for the three months ended December 31, 2023.

Other expense decreased by $2,419 for the six months ended December 31, 2024 to ($10,562) compared to ($12,981) for the six months ended December 31, 2023.

The majority of this change can be attributed to a decrease in interest expense, specifically due to interest rate reductions that began in the first quarter of 2024.

PROVISION FOR INCOME TAXES

Due to the net income for the quarter ending December 31, 2024, the Company recorded an income tax provision of approximately $43,000.  Due to the net income for the six months ended December 31, 2024, the Company recorded an income tax provision of approximately $38,000.  

NET INCOME

The Company reported a net income for the three months ended December 31, 2024 of $136,215, compared to a net income of $44,891 for the three months ended December 31, 2023. This increase of $91,324 is explained above.  The Company reported net income for the six months ended December 31, 2024 of $118,602, compared to a net income of $44,332 for the six months ended December 31, 2023. This increase of $74,270 is explained above.

PREFERRED DIVIDENDS

Preferred dividends were $32,018 for the three months ended December 31, 2024 and December 31, 2023, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

Preferred dividends were $64,036 for the six months ended December 31, 2024 and December 31, 2023, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS

Net income applicable to common stockholders for the three months ended December 31, 2024 was $104,197 which is an increase of $91,324 as compared to the net income applicable to common stockholders for the three months ended December 31, 2023 of $12,873.

Net income (loss) applicable to common stockholders for the six months ended December 31, 2024 was $54,566 which is an increase of $74,270 as compared to the net loss applicable to common stockholders for the six months ended December 31, 2024 of ($19,704).

(16)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I     financial INFORMATION

item 2. management’s discussion and analysis of

financial condition and results of operations

LIQUIDITY AND CAPITAL RESOURCES

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

	Six Months Ended
	December 31,
	2024		2023
Net Cash Provided by Operating Activities	$	427,876	$	454,937
Net Cash Used in Financing Activities	$	(150,707)	$	(216,167)

Management has made no material commitments for capital expenditures during the remainder of fiscal year 2025. The $427,876 of cash provided by operating activities for the six months ended December 31, 2024 is fully detailed in the condensed consolidated statement of cash flows. The $150,707 of cash used in financing activities for the six months ended December 31, 2024 is fully detailed in the condensed consolidated statement of cash flows.

In order to maintain funds to finance operations and meet debt obligations, it is the intention of management to continue its efforts to expand the present market area and increase sales to existing customers. Management also intends to continue tight control on all expenditures. Due to volatility in the regions where these raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand. Management intends to make sales price adjustments in the future to correspond with changes in raw material prices. Management believes that the projected cash flow from operations combined with the availability on the line of credit and the Company’s ability to generate positive working capital will be sufficient to meet its funding requirements for the foreseeable future.

CRITICAL ACCOUNTING POLICIES

Forward-Looking Information

This report, as well as our other reports filed with the Securities and Exchange Commission (SEC), contains forward-looking statements made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast,” “may,” “will,” “should,” “continue,” “predict,” and similar expressions are intended to identify forward-looking statements. This report contains forward-looking statements regarding, among other topics, our expected financial position, results of operations, cash flows, strategy, and management’s plans and objectives. Accordingly, these forward-looking statements are based on assumptions about a number of important factors. While we believe that our assumptions about such factors are reasonable, such factors involve risks, and uncertainties that could cause actual results to be different from what appear here. These risk factors include: the estimation process for the retail inventory method of accounting, 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.

(17)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART I Financial information

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4.CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

Chase’s management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that the Company’s disclosure controls and procedures are not effective as a result of a weakness in the design of internal control over financial reporting identified below.

Disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to Management, including those officers, and to members of the board of directors, to allow timely decisions regarding required disclosure.

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

(b)Changes in Internal Control over Financial Reporting

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

(18)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART Ii other information

ITEM 1.LEGAL PROCEEDINGS

None.

ITEM 1A.RISK FACTORS

Not applicable to a smaller reporting company.

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

None.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

a.None.

b.The total cumulative preferred stock dividends contingency at December 31, 2024 is $9,037,418.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

a.Exhibits.

Exhibit 31.1 Certification of Chief Executive Officer and Treasurer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

Exhibit 32.1 Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 101 The following financial statements for the quarter ended December 31, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of December 31, 2024 and June 30, 2024, (ii) Condensed Consolidated Statements of Income for the Three months Ended December 31, 2024 and 2023, (iii) Condensed Consolidated Statements of Income for the Six months Ended December 31, 2024 and 2023, (iv)  Consolidated Statements of Stockholders’ Equity for the Three and Six months Ended December 31, 2024 and 2023, (v) Condensed Consolidated Statements of Cash Flows for the Six months Ended December 31, 2024 and 2023, and (vi) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(19)

CHASE GENERAL CORPORATION AND SUBSIDIARY

PART Ii other information

SIGNATURES

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

	Chase General Corporation and Subsidiary
	(Registrant)
February 5, 2025	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chairman of the Board, Chief Executive Officer and
	Chief Financial Officer, President, and Treasurer

(20)