10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2020

¨ 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 small business issuer 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

(Issuer’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 if the registrant is a well-known issuer, as defined in Rule 405 of the Securities Act. Yes ¨  No x

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated 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.

Large accelerated filer  ¨	Accelerated filer  ¨
Nonaccelerated filer x	Smaller reporting company  x
Emerging Growth Company  ¨

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) Yes ¨  No x

As of May 13, 2020, 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 NINE MONTHS ENDED MARCH 31, 2020

Part I	Financial Information
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, 2020 (UNAUDITED) and June 30, 2019	1
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)	3
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)	4
		Condensed Consolidated Statements of Cash Flows FOR THE NINE MONTHS ENDED MARCH 31, 2020 AND 2019 (UNAUDITED)	5
		Notes to Condensed Consolidated Financial Statements (Unaudited)	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
	Item 4.	Controls and Procedures	22
Part II	Other Information
	Item 1.	Legal Proceedings	23
	Item 1A.	Risk Factors	23
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
	Item 3.	Defaults Upon Senior Securities	23
	Item 4.	Mine Safety Disclosures	23
	Item 5.	Other Information	23
	Signatures		24

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		June 30,
	2020		2019
		(Unaudited)
ASSETS
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		-
Total Long-Term Assets		502,908		211,100
Total Assets	$	1,058,170	$	785,757

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)

	March 31,			June 30,
	2020			2019
		(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	$	82,075		$	78,549
Current Maturities of Notes Payable		12,698			97,133
Current Maturities of Lease Liability		58,302			-
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			-
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
STOCKHOLDERS' EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,362,500 and $2,340,000, Respectively)		500,000			500,000
Series B (Liquidation Preference $2,317,500 and $2,295,000, Respectively)		500,000			500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,297,229 and $5,253,329, Respectively)		1,170,660			1,170,660
Series B (Liquidation Preference $863,287 and $856,133, 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		(5,883,367	)		(5,923,050	)
Total Stockholders' Equity		582,629			542,946
Total Liabilities and Stockholders' Equity	$	1,058,170		$	785,757

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 OPERATIONS

(UNAUDITED)

	Three Months Ended
	March 31
	2020			2019
SALES	$	316,113		$	327,044
COST OF SALES		320,745			355,195
Gross Loss on Sales		(4,632	)		(28,151	)
OPERATING EXPENSES
Selling		62,645			61,398
General and Administrative		107,163			96,654
Total Operating Expenses		169,808			158,052
Loss from Operations		(174,440	)		(186,203	)
OTHER INCOME (EXPENSE)
Miscellaneous Income		568			586
Interest Expense		(392	)		(368	)
Total Other Income		176			218
Loss before Income Taxes		(174,264	)		(185,985	)
INCOME TAX BENEFIT		-			(3,400	)
NET LOSS	$	(174,264	)	$	(182,585	)
LOSS PER SHARE
Basic	$	(0.21	)	$	(0.22	)
Diluted	$	(0.21	)	$	(0.22	)

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 OPERATIONS

(UNAUDITED)

	Nine Months Ended
	March 31
	2020			2019
SALES	$	2,261,653		$	2,199,193
COST OF SALES		1,616,045			1,633,970
Gross Profit on Sales		645,608			565,223
OPERATING EXPENSES
Selling		240,823			229,815
General and Administrative		363,387			332,467
Total Operating Expenses		604,210			562,282
Income from Operations		41,398			2,941
OTHER INCOME (EXPENSE)
Miscellaneous Income		3,874			4,411
Interest Expense		(5,589	)		(6,309	)
Total Other Expense		(1,715	)		(1,898	)
Income before Income Taxes		39,683			1,043
INCOME TAX BENEFIT		-			-
NET INCOME	$	39,683		$	1,043
LOSS PER SHARE
Basic	$	(0.06	)	$	(0.10	)
Diluted	$	(0.06	)	$	(0.10	)

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 CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	March 31
	2020			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

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

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, 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.

(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 (CONTINUED)

Revenue Recognition (Continued)

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

(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 (CONTINUED)

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

(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 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			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.

(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 LOSS PER SHARE (continued)

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.

(10)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

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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 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.

NOTE 5 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Nine Months Ended
	March 31
	2020		2019
Cash Paid for:
Interest	$	5,589	$	6,309

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.

(12)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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

(13)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

(14)

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 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, 2020 Compared to Three Months Ended March 31, 2019, and Nine Months Ended March 31, 2020 Compared to Nine Months Ended March 31, 2019

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 and revenues for the periods presented:

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2020			2019			2020			2019
Sales		100	%		100	%		100	%		100	%
Cost of Sales		101			109			71			74
Gross Profit (Loss) on Sales		(1	)		(9	)		29			26
Operating Expenses		54			48			27			26
Loss from Operations		(55	)		(57	)		2			-
Other Income (Expense), Net		-			-			-			-
Income (Loss) before Income Taxes		(55	)		(57	)		2			-
Benefit for Income Taxes		-			(1	)		-			-
Net Income (Loss)		(55	)%		(56	)%		2	%		-	%

(15)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

SALES

Sales decreased $10,931 or 3% for the three months ended March 31, 2020 to $316,113 compared to $327,044 for the three months ended March 31, 2019. Sales for Chase Candy decreased $15,588 to $305,944 for the three months ended March 31, 2020, compared to $321,532 for the three months ended March 31, 2019. Sales for Seasonal Candy increased $4,657 to $10,169 for the three months ended March 31, 2020, compared to $5,512 for the three months ended March 31, 2019.

The 5% decrease in sales of Chase Candy of $15,588 for the three months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) decreased sales of the L212/L278 Mini Mash division by approximately $20,000 versus the same period a year ago, primarily due to decreased orders from existing customers, 2) various other fluctuations netting to a decrease of approximately $5,000, 3) decreased website sales by approximately $2,500 primarily due to existing customers decreasing orders; 4) decreased sales of the L276 Cherry Mash Distributor Pack by approximately $1,500 versus the same period a year ago, primarily due to existing customers decreasing orders, offset by 5) increased sales of the L100/L200/SK2100 Merchandisers division by approximately $13,500 versus the same period a year ago, primarily due to customers increasing orders. Decreased sales are primarily driven by competitors increasing their market share.

The 84% increase in sales of Seasonal Candy of $4,657 for the three months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) increased sales in the bulk seasonal division by approximately $4,200 versus the same period a year ago, primarily due to increased sales to existing customer; offset by 2) increased sales in the clamshell division netting approximately $1,000 primarily due to increased sales to existing customers.

Sales increased $62,460 or 3% for the nine months ended March 31, 2020 to $2,261,653 compared to $2,199,193 for the nine months ended March 31, 2019. Sales for Chase Candy increased $78,601 to $1,124,689 for the nine months ended March 31, 2020, compared to $1,046,088 for the nine months ended March 31, 2019. Sales for Seasonal Candy decreased $16,141 to $1,136,964 for the nine months ended March 31, 2020, compared to $1,153,105 for the nine months ended March 31, 2019.

The 8% increase in sales of Chase Candy of $78,601 for the nine months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the following: 1) increased sales of the L100/L200/SK2100 Merchandisers division by approximately $76,500 versus the same period a year ago, primarily due to existing customers increasing orders, 2) increased sales of the L212/L278 Mini Mash division by approximately $12,000 versus the same period a year ago, primarily due to customers increasing orders, 3) increased sales of the L279/L299 Bulk Mini Mash division by approximately $3,000 versus the same period a year ago, primarily due to customers increasing orders; offset by 4) decreased sales of the L276 Cherry Mash Distributor by approximately $8,500 versus the same period a year ago, primarily due to customers decreasing orders, 5) various other fluctuations netting to a decrease of approximately $2,500, and 6) decreased website sales by approximately $2,000 versus the same period a year ago, primarily due to decreased orders from customers.

(16)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

SALES (CONTINUED)

The 1% decrease in sales of Seasonal Candy of $16,141 for the nine months ended March 31, 2020 over the same period ended March 31, 2019, is primarily due to the net effect of the following: 1) decreased orders from customers in the bulk seasonal division netting approximately $20,000 versus the same period a year ago, primarily due to customers decreasing orders 2) decreased orders from various customers in the generic seasonal division netting approximately $15,000 versus the same period a year ago, primarily due to customers decreasing orders, offset by 3) increased orders from various customers in the clamshell seasonal division netting approximately $19,000 versus the same period a year ago, primarily due to customers increasing orders.

COST OF SALES

The cost of sales decreased $34,450 to $320,745 or 101% of related revenues for the three months ended March 31, 2020, compared to $355,195 or 109% of related revenues for the three months ended March 31, 2019. The 10% decrease in cost of sales of $34,450 is primarily due to the net impact of 1) a 7.4% decrease in the price of corn syrup; and 2) a 3% decrease in sales of $10,931; and 3) a 2% decrease in the price of sugar.

The cost of sales decreased $17,925 to $1,616,045 or 71% of related revenues for the nine months ended March 31, 2020, compared to $1,633,970 or 74% of related revenues for the nine months ended March 31, 2019. The 1% decrease in cost of sales of $17,925 is primarily due to the net impact of 1) 5% decrease in the price of peanuts; 2) a 1% decrease in the price of chocolate; and 3) a 1% decrease in the price corn syrup; offset by 4) a 3% increase in sales of $62,460; and 5) a 2% increase in the price of sugar.

SELLING EXPENSES

Selling expenses for the three months ended March 31, 2020 increased $1,247 to $62,645, which is 20% of sales, compared to $61,398, or 19% of sales for the three months ended March 31, 2019. The increase of $1,247 in selling expenses for the three months ended March 31, 2019 is primarily due to higher sales salaries by lower shipping costs. Sales salaries increased $3,042 to $27,687 for this period from $24,645 for the three months ended March 31, 2019, primarily due to annual raises for one of the salespersons. Shipping expenses decreased $1,533 to $7,550 for this period from $9,083 for the three months ended March 31, 2019, primarily due to a decrease in shipment of online orders.

Selling expenses for the nine months ended March 31, 2020 increased $11,008 to $240,823, which is 11% of sales, compared to $229,815 or 10% of sales for the nine months ended March 31, 2019. The increase of $11,008 in selling expenses for the nine months ended March 31, 2020 is primarily due to higher sales salaries and customer shows offset by lower shipping costs. Sales salaries increased $12,164 to $83,059 for this period from $70,895 for the nine months ended March 31, 2019 primarily due to annual raises for one of the salespersons. Customer shows increased $1,697 to $6,996 for this period from $5,299 for the nine months ended March 31, 2019 primarily due to the timing of shows. Shipping expense decreased $2,335 to $24,921 for this period from $27,256 for the nine months ended March 31, 2019 primarily due to a decrease in shipment of online orders.

(17)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended March 31, 2020 increased $10,509 to $107,163 and 34% of sales, compared to $96,654 or 30% of sales for the three months ended March 31, 2019. The increase of $10,509 in general and administrative expenses for the three months ended March 31, 2020 is primarily due to higher professional fees and indirect costs. Professional fees increased $8,256 to $23,286 for this period from $15,030 for the three months ended March 31, 2019 primarily due the Company’s audit firm increasing their fees. During the current year, the Company began allocating indirect costs to general and administrative expenses that were previously allocated to cost of sales. This allocation is for the administrative portion of the office and totaled $3,003 for the three months ended March 31, 2020.

General and administrative expenses for the nine months ended March 31, 2020 increased $30,920 to $363,387 or 16% of sales, compared to $332,467 or 15% of sales for the nine months ended March 31, 2019. The increase of $30,920 in general and administrative expenses for the nine months ended March 31, 2020 is primarily due to higher professional fees, indirect costs, and office salaries offset by lower insurance expense. Professional fees increased $22,441 to $122,028 for this period from $99,587 for the three months ended March 31, 2019 due to the Company’s audit firm increasing their fees and an increase in attorney’s fees. During the current year, the Company began allocating indirect costs to general and administrative expenses that were previously allocated to cost of sales. This allocation is for the administrative portion of the office and totaled $10,128 for the nine months ended March 31, 2020. Office salaries increased $3,803 to $72,849 for this period from $69,046 for the nine months ended March 31, 2019 due to annual raises for employees. Insurance expense decreased $4,883 to $95,844 for this period from $100,727 for the three months ended March 31, 2019 due less employees enrolled in the plan.

OTHER INCOME (EXPENSE)

Other income (expense) decreased by $42 for the three months ended March 31, 2020 to $176, compared to $218 for the three months ended March 31, 2019.

Other income (expense) increased by $183 for the nine months ended March 31, 2020 to $(1,715), compared to $(1,898) for the nine months ended March 31, 2019.

PROVISION (BENEFIT) FOR INCOME TAXES

The Company recorded income tax benefit for the three months ended March 31, 2020 of $(0) as compared to income tax benefit of $(3,400) for the three months ended March 31, 2019. The Company recorded no income tax benefit for the nine months ended March 31, 2020 and 2019. The net income tax expense (benefit) recorded for the three and nine months ended March 31, 2020 is primarily due to recognizing income taxes related to current net income or loss. Additionally, the Company has placed a valuation allowance on the net operating loss carryforward of $206,846 for the current period after it was determined that the Company would not be likely to use the remaining balance in the near future.

(18)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

NET INCOME (LOSS)

The Company reported a net loss for the three months ended March 31, 2020 of $(174,264), compared to a net loss of $(182,585) for the three months ended March 31, 2019. This earnings increase of $8,321 is explained above. The Company reported net income for the nine months ended March 31, 2020 of $39,683, compared to net income of $1,043 for the nine months ended March 31, 2019. This earnings increase of $38,640 is explained above.

PREFERRED DIVIDENDS

Preferred dividends were $32,018 for the three months ended March 31, 2020 and March 31, 2019, 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 $96,054 for the nine months ended March 31, 2020 and March 31, 2019, 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 LOSS APPLICABLE TO COMMON STOCKHOLDERS

Net loss applicable to common stockholders for the three months ended March 31, 2020 was $206,282 which is a decrease in losses of $8,321 as compared to the net loss for the three months ended March 31, 2019 of $214,603.

Net loss applicable to common stockholders for the nine months ended March 31, 2020 was $56,371 which is a decrease in losses of $38,640 as compared to the net loss for the nine months ended March 31, 2019 of $95,011.

(19)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES

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

	Nine Months Ended
	March 31
	2020			2019
Net Cash Provided by Operating Activities	$	204,107		$	112,425
Net Cash Used by Financing Activities	$	(94,030	)	$	(15,777	)

Management has no material commitments for capital expenditures during the remainder of fiscal 2020. The $204,107 of cash provided by operating activities for the nine months ended March 31, 2020 is fully detailed in the condensed consolidated statement of cash flows on page five. The $94,030 of cash used in financing activities for the nine months ended March 31, 2020 is the principal payments on vehicle loans. At March 31, 2020, the Company had $350,000 remaining on the line-of-credit, which could be utilized to help fund any working capital requirements.

The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. Specific to the Company, COVID-19 may impact various parts of its fiscal years ending June 30, 2020 and 2021 operations and financial results, including the production and sales of goods. Management believes the Company is taking appropriate actions to mitigate the negative impact. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events occurred subsequent to the filing period and are still developing.

Subsequent to the filing period, the Company received a loan in the amount of $170,500 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.

Management believes that the projected cash flow from operations including the impact of the COVID-19 pandemic, combined with its existing cash balances, will be sufficient to meet its funding requirements for the foreseeable future.

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.

(20)

Chase General Corporation and Subsidiary

pART i. FINANCIAL INFORMATION

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

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 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.

(21)

Chase General Corporation and Subsidiary

PART II. OTHER 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, the Chief Executive Officer and management 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 management’s estimates are reasonably likely to materially affect Chase’s internal control over financial reporting subsequent to the date of evaluation.

(22)

Chase General Corporation and Subsidiary

PART II. OTHER INFORMATION (CONTINUED)

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 March 31, 2019 is $8,429,076.

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 March 31, 2020, formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019, (ii) Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019, (iii) Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2020 and 2019, (iv) Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

(23)

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 14, 2020	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chairman of the Board, Chief Executive Officer and
	Chief Financial Officer, President, and Treasurer

(24)

EX-31.1

Exhibit 31.1

CHASE GENERAL CORPORATION

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND FINANCIAL OFFICER

PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER THE SECURITIES EXCHANGE

ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Barry M. Yantis, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Chase General Corporation.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am the certifying officer responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusion about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. I am the certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 14, 2020	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chief Executive Officer and Chief Financial Officer,
	President and Treasurer

EX-32.1

EXHIBIT 32.1

CHASE GENERAL CORPORATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Chase General Corporation (the Company) on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), the undersigned, Barry M. Yantis, as Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 14, 2020	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chairman of the Board, Chief Executive Officer and
	Chief Financial Officer, President and Treasurer

XML

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)

XML

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

XML

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

XML

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

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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.

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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

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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

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SUBSEQUENT EVENTS (Details)	1 Months Ended
	Apr. 30, 2020 USD ($)
Subsequent Event [Member]
Subsequent Event [Line Items]
Borrowing Capacity Of Loan For Payroll And Rent Utilities	$ 171,500

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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

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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

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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.

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LEASES - Additional information (Details)	9 Months Ended
	Mar. 31, 2020 USD ($)
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

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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.

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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

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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

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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. 04, 2021	Jan. 04, 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 01, 2022	May 01, 2022

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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

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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

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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

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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.

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LOSS PER SHARE - Additional information (Details)	9 Months Ended
	Mar. 31, 2020 USD ($) $ / shares	Mar. 31, 2019 USD ($) $ / 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)	$ 21.00	$ 21.00
Preferred stock, liquidation preference per share (in dollars per share)	$ 20.00	$ 20.00
Number of common stock exchanged for each preferred stock held	3.795	3.795

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SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details)	9 Months Ended
	Mar. 31, 2020 USD ($) segment division	Jul. 01, 2019 USD ($)	Jun. 30, 2019 USD ($)
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

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INCOME TAXES (Details)	Mar. 31, 2020 USD ($)
INCOME TAXES
Accruals for interest or penalties	$ 0
Unrecognized Tax Benefits	$ 0

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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

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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		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.

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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

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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

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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

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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

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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.

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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

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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		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

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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 59th, 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