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, 2012

o 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 incorporation or organization)	(IRS Employer Identification No.)

1307 South 59th, St. Joseph, Missouri 64507

(Address of principal executive offices, Zip Code)

(816) 279-1625  

(Issuer’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x No o

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                             

Yes x No o

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

Large accelerated filer o	Accelerated filer  o
Non-accelerated filer  o  (Do not check if a smaller reporting company)	Smaller reporting company 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 o    No x

As of  April 30, 2012, there were 969,834 shares of common stock, $1.00 par value, outstanding.

CHASE GENERAL CORPORATION AND SUBSIDIARY

Quarterly Report on Form 10-Q

For the Nine Months Ended March 31, 2012

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements	3
		Condensed Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and June 30, 2011	3
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011 (Unaudited)	5
		Condensed Consolidated Statements of Operations for the Nine Months Ended March 31, 2012 and 2011 (Unaudited)	6
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2012 and 2011 (Unaudited)	7
		Notes to Condensed Consolidated Financial Statements (Unaudited)	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
	Item 4.	Controls and Procedures	16
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	17
	Item 1A.	Risk Factors	17
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
	Item 3.	Defaults Upon Senior Securities	17
	Item 4.	Mine Safety Disclosures	17
	Item 5.	Other Information	17
	Item 6.	Exhibits	17
	SIGNATURES		18

2

PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

	March 31,		June 30,
	2012		2011
	(Unaudited)		(Audited)
CURRENT ASSETS
Cash and cash equivalents	$	167,772	$	18,772
Trade receivables, net of allowance for doubtful
accounts, of $16,283 and $15,383, respectively		151,631		161,670
Inventories:
Finished goods		86,795		263,934
Goods in process		8,097		3,275
Raw materials		125,902		88,490
Packaging materials		138,033		188,025
Prepaid expenses		16,757		5,047
Deferred income taxes		7,213		6,900
Total current assets		702,200		736,113
PROPERTY AND EQUIPMENT - NET		473,888		497,909
TOTAL ASSETS	$	1,176,088	$	1,234,022
The accompanying notes are an integral part of the
condensed consolidated financial statements.

3

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

	March 31,			June 30,
	2012			2011
	(Unaudited)			(Audited)
CURRENT LIABILITIES
Accounts payable	$	119,122		$	104,796
Current maturities of notes payable		56,649			54,844
Accrued expenses		26,686			17,210
Deferred income		1,299			1,299
Total current liabilities		203,756			178,149
LONG-TERM LIABILITIES
Deferred income		15,584			16,558
Notes payable, less current maturities		120,145			136,810
Deferred income taxes		76,544			100,219
Total long-term liabilities		212,273			253,587
Total liabilities		416,029			431,736
STOCKHOLDERS' EQUITY
Capital stock issued and outstanding:
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $2,122,500
and $2,100,000 respectively)		500,000			500,000
Series B (liquidation preference $2,077,500
and $2,055,000 respectively)		500,000			500,000
Cumulative preferred stock, $20 par value
Series A (liquidation preference $4,828,965
and $4,785,065 respectively)		1,170,660			1,170,660
Series B (liquidation preference $786,975
and $779,821 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		(5,705,937	)		(5,663,710	)
Total stockholders' equity		760,059			802,286
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	1,176,088		$	1,234,022
The accompanying notes are an integral part of the
condensed consolidated financial statements.

4

CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Three Months Ended
	March 31
	2012			2011
NET SALES	$	428,140		$	376,491
COST OF SALES		393,144			329,511
Gross profit on sales		34,996			46,980
OPERATING EXPENSES
Selling		87,662			79,655
General and administrative		103,967			86,093
Gain on sale of equipment		(10,929	)		-
Total operating expenses		180,700			165,748
Loss from operations		(145,704	)		(118,768	)
OTHER INCOME (EXPENSE)
Miscellaneous income		550			861
Interest expense		(1,850	)		(2,133	)
Total other income (expense)		(1,300	)		(1,272	)
Net loss before income taxes		(147,004	)		(120,040	)
CREDIT FOR INCOME TAXES		(40,071	)		(51,191	)
NET LOSS		(106,933	)		(68,849	)
Preferred dividends		(32,018	)		(32,018	)
Net loss applicable to common stockholders	$	(138,951	)	$	(100,867	)
NET LOSS PER SHARE OF COMMON STOCK - BASIC	$	(0.14	)	$	(0.10	)
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		969,834			969,834
The accompanying notes are an integral part of the
condensed consolidated financial statements.

5

CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
	Nine Months Ended
	March 31
	2012			2011
NET SALES	$	2,552,201		$	2,572,029
COST OF SALES		1,968,646			1,831,878
Gross profit on sales		583,555			740,151
OPERATING EXPENSES
Selling		328,383			310,626
General and administrative		323,646			283,362
Gain on sale of equipment		(10,929	)		(500	)
Total operating expenses		641,100			593,488
Income (loss) from operations		(57,545	)		146,663
OTHER INCOME (EXPENSE)
Miscellaneous income		1,326			1,721
Interest expense		(9,966	)		(7,901	)
Total other income (expense)		(8,640	)		(6,180	)
Net income (loss) before income taxes		(66,185	)		140,483
PROVISION (CREDIT) FOR INCOME TAXES		(23,958	)		33,964
NET INCOME (LOSS)		(42,227	)		106,519
Preferred dividends		(96,054	)		(96,054	)
Net income (loss) applicable to common stockholders	$	(138,281	)	$	10,465
NET INCOME (LOSS) PER SHARE OF COMMON
STOCK - BASIC	$	(0.14	)	$	0.01
- DILUTED	$	(0.14	)	$	0.01
WEIGHTED AVERAGE SHARES OF COMMON
STOCK OUTSTANDING		969,834			969,834
The accompanying notes are an integral part of the
condensed consolidated financial statements.

6

CHASE GENERAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine Months Ended
	March 31
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(42,227	)	$	106,519
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization		84,875			82,297
Allowance for bad debts		900			900
Deferred income amortization		(974	)		(974	)
Deferred income taxes		(23,988	)		19,009
Gain on sale of equipment		(10,929	)		(500	)
Effects of changes in operating assets and liabilities:
Trade receivables		9,139			31,927
Inventories		184,897			(39,423	)
Prepaid expenses		(11,710	)		(30,514	)
Accounts payable		14,326			(14,389	)
Accrued expenses		9,476			1,326
Income taxes payable		-			14,758
Net cash provided by operating activities		213,785			170,936
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment		23,000			500
Purchases of property and equipment		(45,680	)		(18,425	)
Net cash used in investing activities		(22,680	)		(17,925	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line-of-credit		250,000			40,000
Principal payments on line-of-credit		(250,000	)		(40,000	)
Principal payments on notes payable		(42,105	)		(73,310	)
Net cash used in financing activities		(42,105	)		(73,310	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		149,000			79,701
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		18,772			106,508
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	167,772		$	186,209
The accompanying notes are an integral part of the
condensed consolidated financial statements.

7

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - GENERAL

The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as “Chase”, “we”, “our”, and “us”) at June 30, 2011 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three months and nine months ended March 31, 2012 and for the three months and nine months ended March 31, 2011 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2011. The results of operations for the three and nine months ended March 31, 2012 and cash flows for the nine months ended March 31, 2012 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2012. Where appropriate, items within the condensed consolidated financial statements have been reclassified from the previous periods’ presentation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included.

No events have occurred subsequent to March 31, 2012, through May 11, 2012, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the nine month period ended March 31, 2012.

NOTE 2 - NET INCOME PER SHARE

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

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2012			2011			2012			2011
Net income (loss)	$	(106,933	)	$	(68,849	)	$	(42,227	)	$	106,519
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value		15,000			15,000			45,000			45,000
5% Convertible Cumulative Preferred, $20 par value		17,018			17,018			51,054			51,054
Total dividend requirements		32,018			32,018			96,054			96,054
Net income (loss) common stockholders	$	(138,951	)	$	(100,867	)	$	(138,281	)	$	10,465
Weighted average shares - basic		969,834			969,834			969,834			969,834
Dilutive effect of contingently issuable shares		1,033,334			1,033,334			1,033,334			1,033,334
Weighted average shares - diluted		2,003,168			2,003,168			2,003,168			2,003,168
Basic earnings per share	$	(.14	)	$	(.10	)	$	(.14	)	$	.01
Diluted earnings per share							$	(.14	)	$	.01

8

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 2 - NET INCOME PER SHARE (CONTINUED)

Cumulative Preferred Stock dividends in arrears at March 31, 2012 and 2011 totaled $7,404,500 and $7,276,428, respectively. Total dividends in arrears, on a per share basis, consist of the following:

	Nine Months Ended March 31
	2012		2011
6% Convertible
Series A	$	16	$	16
Series B		16		15
5% Convertible
Series A		63		62
Series B		63		62

The 6% convertible prior cumulative preferred stock may, upon thirty days prior notice, be redeemed by the Corporation at $5.25 a share plus unpaid accrued dividends to date of redemption. In the event of voluntary liquidation, holders of this stock are entitled to receive $5.25 per share plus accrued dividends. It may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for one share of Series A and 3.75 common shares for one share of Series B.

The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred.

NOTE 3 - NOTES PAYABLE

The Company’s long-term debt consists of:

		March 31,		June 30,
Payee	Terms	2012		2011
Nodaway Valley Bank	Line-of-credit agreement expiring on January 3, 2013 with a variable interest rate at prime, which was 5% at March 31, 2012. The line-of-credit is collateralized by substantially all assets of the Company.	$	-	$	-
Ford Credit	$679 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle.		32,600		38,713
Ford Credit	$517 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle.		24,800		29,450
Honda	$508 monthly payments including interest of 1.9%; final payment was due December 15, 2011, secured by a vehicle.		-		3,030

9

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 - NOTES PAYABLE(CONTINUED)

		March 31,		June 30,
Payee	Terms	2012		2011
Nissan	$557 monthly payments including interest of 3.9%; final payment was due April 2012, secured by a vehicle.		-		5,425
Toyota Financial Services	$502 monthly payments including interest of 4.9%; final payment due March 2015, secured by a vehicle.		16,745		-
Toyota Financial Services	$305 monthly payments including interest of 2.9%; final payment due March 2015, secured by a vehicle.		10,500		-
Nodaway Valley Bank	$3,192 monthly payments including interest of 6.25%; final payment due June 2015, secured by certain equipment.		92,149		115,036
	Total		176,794		191,654
	Less current portion		56,649		54,844
	Long-term portion	$	120,145	$	136,810
Future minimum payments for the twelve months ending March 31 are:
	2013	$	56,649
	2014		59,175
	2015		46,620
	2016		14,350
	Total	$	176,794

NOTE 4 - INCOME TAXES

The recognition of income tax expense related to uncertain tax positions is determined under the provisions of FASB ASC – 740-10. As of March 31, 2012, the Company has not identified any uncertain tax positions requiring recognition in the condensed consolidated financial statements. The income tax positions taken for open years are appropriately stated and supported for all open years. The Company’s federal tax returns for the fiscal years ended 2009, 2010 and 2011 are subject to examination by the IRS taxing authority.

10

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Nine Months Ended
	March 31
	2012		2011
Cash paid for:
Income taxes	$	-	$	197
Interest		9,966		8,157
Non-cash transaction:
Financing of vehicles	$	27,245	$	-
Net book value of vehicles traded-in	$	14,962	$	-

11

CHASE GENERAL CORPORATION AND SUBSIDIARY

ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

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

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

RESULTS OF OPERATIONS - Three Months Ended March 31, 2012 Compared with Three Months Ended March 31, 2011 and Nine Months Ended March 31, 2012 Compared with Nine Months Ended March 31, 2011

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

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

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2012			2011			2012			2011
Net sales		100	%		100	%		100	%		100	%
Cost of sales		92			88			77			71
Gross profit on sales		8			12			23			29
Operating expenses		42			44			25			23
Income (loss) from operations		(34	)		(32	)		(2	)		6
Net income (loss) before income taxes		(34	)		(32	)		(3	)		5
Provision (credit) for income taxes		(9	)		(14	)		(1	)		1
Net income (loss)		(25	)%		(18	)%		(2	)%		4	%

NET SALES

Net sales increased $51,649 or 14% for the three months ended March 31, 2012 to $428,140 compared to $376,491 for the three months ended March 31, 2011. Gross sales for Chase Candy increased $5,064 to $384,609 for the three months ended March 31, 2012 compared to $379,545 for 2011. Gross sales for Seasonal Candy increased $35,964 to $46,608 for the three months ended March 31, 2012 compared to $10,644 for 2011.

The 1% increase in gross sales of Chase Candy of $5,064 for the three months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to the net effect of increased sales of the Cherry Mash Bar of $72,000 primarily due to two customers having increased orders in the third quarter offset by decreases of sales of the 12/12oz. Mini Mash bag to one customer by approximately $44,000, and decreased sales to Cherry Mash Merchandisers of approximately $19,000 for the second straight quarter. The 338% increase in gross sales of Seasonal Candy of $35,964 for the three months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to increased orders from one customer totaling approximately $34,000 from the clamshell seasonal product category.

12

CHASE GENERAL CORPORATION AND SUBSIDIARY

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

NET SALES (CONTINUED)

Net sales decreased $19,828 or 1% for the nine months ended March 31, 2012 to $2,552,201 compared to $2,572,029 for the nine months ended March 31, 2011. Gross sales for Chase Candy decreased $54,707 to $1,193,037 for the nine months ended March 31, 2012 compared to $1,247,744 for 2011. Gross sales for Seasonal Candy increased $24,543 to $1,409,593 for the nine months ended March 31, 2012 compared to $1,385,050 for 2011.

The 4% decrease in gross sales of Chase Candy of $54,707 for the nine months ended March 31, 2012 over the same period ended March 31, 2011 is primarily due to the net effect of the following: 1) increased sales of Cherry Mash Bar of approximately $111,000 offset by; 2) decreased sales of the 12/12oz. Mini Mash bag to one customer by approximately $115,000 due to reduced distribution; 3) decreased sales of the 24/12oz. Mini Mash bag to another customer by approximately $35,000 due to the timing of Halloween orders and; 4) overall decreased sales to Cherry Mash Merchandisers of approximately $21,000. The 2% increase in gross sales of Seasonal Candy of $24,543 for the nine months ended March 31, 2012 over the same period ended March 31, 2011, is primarily due to the net effect of increased sales from two customers in the clamshell seasonal product category of approximately $102,000 offset by decreased sales from three customers in the bulk seasonal product category of approximately $69,000 and overall decreases in the generic seasonal product category of $6,000.

COST OF SALES

The cost of sales increased $63,633 to $393,144 increasing to 92% of related revenues for the three months ended March 31, 2012, compared to $329,511 or 88% of related revenues for the three months ended March 31, 2011.

The 19% increase in cost of sales of $63,633 is primarily due to the 14% increase in net sales of $51,649 and the raw material price increases in chocolate, peanuts, and sugar which were not passed along to customers. Direct costs of goods for materials manufactured and net change in inventories for the three months ended March 31, 2012, increased $74,735 or 83% to $164,705 as compared to $89,970 for the three months ended March 31, 2011. Increases in chocolate prices were primarily caused by civil unrest in cocoa producing areas of West Africa where decreased supply lead to increased costs. Increases in the price of peanuts was primarily caused by a drought in Texas where decreased supply lead to increased costs. Increases in the price of sugar were primarily caused by increased worldwide demand for sugar and unintentional decreased production levels by sugar producers primarily caused by a domestic drought and a lengthy strike at one domestic sugar company where increased demand and decreased supply lead to increased costs. Management does not anticipate the prices of these raw materials to return to previous levels in the near future. Management is considering and evaluating the need to increase prices charged to customers for future sales.

The cost of sales increased $136,768 or 7% to $1,968,646 or 77% of related revenues for the nine months ended March 31, 2012, compared to $1,831,878 or 71% of related revenues for the nine months ended March 31, 2011.

13

CHASE GENERAL CORPORATION AND SUBSIDIARY

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

COST OF SALES (CONTINUED)

The 7% increase in cost of sales of $136,768 is primarily due to the 1% decrease in net sales of $19,828 offset by the raw material price increases in chocolate, peanuts, and sugar which were not passed along to customers. Direct costs of goods for materials manufactured and net change in inventories for the nine months ended March 31, 2012, increased $210,587 or 23% to $1,126,276 as compared to $915,689 for the nine months ended March 31, 2011. Increased chocolate prices were primarily caused by civil unrest in cocoa producing areas of West Africa where decreased supply lead to increased costs. Increases in the price of peanuts was primarily caused by a drought in Texas where decreased supply lead to increased costs. Increases in the price of sugar were primarily caused by increased worldwide demand for sugar and unintentional decreased production levels by sugar producers primarily caused by a domestic drought and a lengthy strike at one domestic sugar company where increased demand and decreased supply lead to increased costs. Management does not anticipate the prices of these raw materials to return to previous levels in the near future. Management is considering and evaluating the need to increase prices charged to customers for future sales. Direct labor cost decreased $43,908 or 13% to $303,833 as compared to $347,741 for the nine months ended March 31, 2011, which is primarily due to a decrease of 2,409 production hours worked for the nine months ended March 31, 2012 of 20,012 production hours compared to 22,421 production hours worked for the nine months ended March 31, 2012.

The Company decreased total inventory $184,897 or 34% to $358,827 at March 31, 2012 from $543,724 at June 30, 2011 due to the Company’s busy season coming to an end. The Company decreased finished goods inventory 67% at March 31, 2012 to $86,795 from June 30, 2011 of $263,934. The Company increased goods in process inventory 147% at March 31, 2012 to $8,097 from June 30, 2011 of $3,275. The Company increased raw materials inventory 42% at March 31, 2012 to $125,902 from June 30, 2011 of $88,490. The increase in raw materials inventory was primarily due to price increases in chocolate, peanuts, and sugar. The Company decreased packaging materials inventory 27% at March 31, 2012 to $138,033 from June 30, 2011 of $188,025.

SELLING EXPENSES

Selling expenses for the three months ended March 31, 2012 increased $8,007 to $87,662, which is 20% of net sales, compared to $79,655 or 21% of net sales for the three months ended March 31, 2011.

The increase of $8,007 or 10% in selling expenses for the three months ended March 31, 2012 is primarily due to higher commissions being paid as sales volume increased 14% during the same period and increased depreciation due to recent vehicles purchased. Commissions increased $3,176 to $12,926 for this period from $9,750 for the three months ended March 31, 2011. Depreciation increased $4,902 to $11,484 for this period from $6,582 for the three months ended March 31, 2011.

Selling expenses for the nine months ended March 31, 2012 increased $17,757 to $328,383, which is 13% of net sales, compared to $310,626 or 12% of net sales for the nine months ended March 31, 2011.

The increase of $17,757 or 6% in selling expenses for the nine months ended March 31, 2012 is primarily due to higher samples sent out in an effort to increase sales volume and increased depreciation due to recent vehicles purchased. Samples increased $5,386 to $33,115 for this period from $27,729 for the nine months ended March 31, 2011. Depreciation increased $12,231 to $32,390 for this period from $20,159 for the nine months ended March 31, 2011.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the three months ended March 31, 2012 increased $17,874 to $103,967 and increased to 24% of net sales, compared to $86,093 or 23% of net sales for the three months ended March 31, 2011. These increased costs are primarily reflected in insurance expense, professional fees, general taxes and licenses and office salaries.

General and administrative expenses for the nine months ended March 31, 2012 increased $40,284 to $323,646 and increased to 13% of net sales, compared to $283,362 or 11% of net sales for the nine months ended March 31, 2011. These increased costs are primarily reflected in insurance expense, professional fees, general taxes and licenses and office salaries.

14

CHASE GENERAL CORPORATION AND SUBSIDIARY

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

OTHER INCOME (EXPENSE)

Other income and (expense) increased by $28 for the three months ended March 31, 2012 to $(1,300), compared to $(1,272) for the three months ended March 31, 2011 primarily due to an increase in interest expense.

Other income and (expense) increased by $2,460 for the nine months ended March 31, 2012 to $(8,640), compared to $(6,180) for the nine months ended March 31, 2011 primarily due to an increase in interest expense.

PROVISION FOR INCOME TAXES

The Company recorded a tax benefit for the three months ended March 31, 2012 of $(40,071) as compared to a tax benefit of $(51,191) for the three months ended March 31, 2011. The Company recorded a tax benefit for the nine months ended March 31, 2012 of $(23,958) as compared to a tax provision of $33,964 for the nine months ended March 31, 2011. The net tax expense recorded for the nine months ended March 31, 2011 is primarily due to recognizing taxes related to profitable operations for that period. The net tax benefit recorded for the nine months ended March 31, 2012 and the three months ended March 31, 2012 and 2011 is primarily due to losses recognized on operations for those periods.

NET INCOME

The Company reported a net loss for the three months ended March 31, 2012 of $(106,933), compared to net loss of $(68,849) for the three months ended March 31, 2011. This decrease of $38,084 is explained above.

The Company reported a net loss for the nine months ended March 31, 2012 of $(42,227), compared to net income of $106,519 for the nine months ended March 31, 2011. This decrease of $148,746 is explained above.

PREFERRED DIVIDENDS

These amounts reflect additional preferred stock dividends in arrears for the three and nine months ended March 31, 2012 and 2011, respectively, on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

NET INCOME APPLICABLE TO COMMON STOCKHOLDERS

Net loss applicable to common stockholders for the three months ended March 31, 2012 was $(138,951) which is a decrease of $38,084 as compared to the net loss for the three months ended March 31, 2011 of $(100,867), as explained above.

Net loss applicable to common stockholders for the nine months ended March 31, 2012 was $(138,281) which is a decrease of $148,746 as compared to the net income for the nine months ended March 31, 2011 of $10,465, as explained above.

LIQUIDITY AND CAPITAL RESOURCES

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

	2012			2011
Net cash provided by operating activities	$	213,785		$	170,936
Net cash used in investing activities	$	(22,680	)	$	(17,925	)
Net cash used in financing activities	$	(42,105	)	$	(73,310	)

15

CHASE GENERAL CORPORATION AND SUBSIDIARY

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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

The $22,680 of cash used in investing activities was the result of capital expenditures. Management has no material commitments for capital expenditures during the remainder of fiscal 2012. The $42,105 of cash used in financing activities was for principal payments on equipment and vehicle loans. Management believes projected cash flow from operations, combined with its existing cash balances, will be sufficient to meet its funding requirements for the foreseeable future. The Company has $250,000 remaining on its bank line-of-credit, which could be utilized to help fund any working capital requirements.

Management believes that inflation will have only a minimal effect on future operations since such effects will be offset by sales price increases, which are not expected to have a significant effect upon demand.

Forward-Looking Information

This report, as well as our other reports filed with the Securities and Exchange Commission (“SEC”), contains forward-looking statements made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast,” “may,” “will,” “should,” “continue,” “predict” and similar expressions are intended to identify forward-looking statements. This report contains forward-looking statements regarding, among other topics, our expected financial position, results of operations, cash flows, strategy, and management’s plans and objectives. Accordingly, these forward-looking statements are based on assumptions about a number of important factors. While we believe that our assumptions about such factors are reasonable, such factors involve risks and uncertainties that could cause actual results to be different from what appear here. These risk factors include: the ability to adequately pass through customers unanticipated future increases in raw material costs, decreased demand for products, expected orders that do not occur, loss of key customers, the impact of competition and price erosion as well as supply and manufacturing constraints, and other risks and uncertainties. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will prove accurate, and our actual results may differ materially from these forward-looking statements. We assume no obligation to update any forward-looking statements made herein.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

ITEM 4. - CONTROLS AND PROCEDURES

(a)	Evaluation of Disclosure Controls and Procedures
	Chase’s management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, this officer has concluded that Chase’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to management, including those officers, and to members of the Board of Directors, to allow timely decisions regarding required disclosure.
(b)	Changes in Internal Control over Financial Reporting
	There were no significant changes in Chase’s internal control over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect Chase’s internal control over financial reporting subsequent to the date of the evaluation.

16

PART II. OTHER INFORMAITON

ITEM 1.	LEGAL PROCEEDINGS
		a.	None
ITEM 1A.		RISK FACTORS
		Not applicable to a smaller reporting company.
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
		a.	None
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES
		a.	None
		b.	The total cumulative preferred stock dividends contingency at March 31, 2012 is $7,404,500.
ITEM 4.		MINE SAFETY DISCLOSURES
		Not applicable.
ITEM 5.		OTHER INFORMATION
		a.	None
		b.	None
ITEM 6.		EXHIBITS
		a.	Exhibits.
			Exhibit 31.1	Certification of Chief Executive Officer and Treasurer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
			Exhibit 32.1	Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
			Exhibit 101	The following financial statements for the quarter ended March 31, 2012, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text

17

SIGNATURES

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

	Chase General Corporation and Subsidiary (Registrant)
May 11, 2012	/s/ Barry M. Yantis
Date	Barry M. Yantis Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President and Treasurer

18

EX-31.1

Exhibit 31.1

CHASE GENERAL CORPORATION

CERTIFICATION OF THE CHIEF EXECUTIVE 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 11, 2012	By:	/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, 2012 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 11, 2012	/s/ Barry M. Yantis
Date	Chairman of the Board, Chief Executive Officer and
	Chief Financial Officer, President and Treasurer

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INCOME TAXES

9 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 4 - INCOME TAXES

The recognition of income tax expense related to uncertain tax positions is determined under the provisions of FASB ASC – 740-10. As of March 31, 2012, the Company has not identified any uncertain tax positions requiring recognition in the condensed consolidated financial statements. The income tax positions taken for open years are appropriately stated and supported for all open years. The Company’s federal tax returns for the fiscal years ended 2009, 2010 and 2011 are subject to examination by the IRS taxing authority.

XML

NOTES PAYABLE

9 Months Ended

Mar. 31, 2012

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 3 - NOTES PAYABLE

The Company’s long-term debt consists of:

		March 31,		June 30,
Payee	Terms	2012		2011
Nodaway Valley Bank	Line-of-credit agreement expiring on January 3, 2013 with a variable interest rate at prime, which was 5% at March 31, 2012. The line-of-credit is collateralized by substantially all assets of the Company.	$	-	$	-
Ford Credit	$679 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle.		32,600		38,713
Ford Credit	$517 monthly payments including interest of 0%; final payment due March 2016, secured by a vehicle.		24,800		29,450
Honda	$508 monthly payments including interest of 1.9%; final payment was due December 15, 2011, secured by a vehicle.		-		3,030

 

Nissan	$557 monthly payments including interest of 3.9%; final payment was due April 2012, secured by a vehicle.		-		5,425
Toyota Financial Services	$502 monthly payments including interest of 4.9%; final payment due March 2015, secured by a vehicle.		16,745		-
Toyota Financial Services	$305 monthly payments including interest of 2.9%; final payment due March 2015, secured by a vehicle.		10,500		-
Nodaway Valley Bank	$3,192 monthly payments including interest of 6.25%; final payment due June 2015, secured by certain equipment.		92,149		115,036
	Total		176,794		191,654
	Less current portion		56,649		54,844
	Long-term portion	$	120,145	$	136,810
Future minimum payments for the twelve months ending March 31 are:
	2013	$	56,649
	2014		59,175
	2015		46,620
	2016		14,350
	Total	$	176,794

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2012	Jun. 30, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 167,772	$ 18,772
Trade receivables, net of allowance for doubtful accounts, of $16,283 and $15,383, respectively	151,631	161,670
Inventories:
Finished goods	86,795	263,934
Goods in process	8,097	3,275
Raw materials	125,902	88,490
Packaging materials	138,033	188,025
Prepaid expenses	16,757	5,047
Deferred income taxes	7,213	6,900
Total current assets	702,200	736,113
PROPERTY AND EQUIPMENT - NET	473,888	497,909
TOTAL ASSETS	1,176,088	1,234,022
CURRENT LIABILITIES
Accounts payable	119,122	104,796
Current maturities of notes payable	56,649	54,844
Accrued expenses	26,686	17,210
Deferred income	1,299	1,299
Total current liabilities	203,756	178,149
LONG-TERM LIABILITIES
Deferred income	15,584	16,558
Notes payable, less current maturities	120,145	136,810
Deferred income taxes	76,544	100,219
Total long-term liabilities	212,273	253,587
Total liabilities	416,029	431,736
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	(5,705,937)	(5,663,710)
Total stockholders' equity	760,059	802,286
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,176,088	1,234,022
Series A Prior Cumulative Preferred Stock
Capital stock issued and outstanding:
Preferred Stock, Value	500,000	500,000
Series B Prior Cumulative Preferred Stock
Capital stock issued and outstanding:
Preferred Stock, Value	500,000	500,000
Series A Cumulative Preferred Stock
Capital stock issued and outstanding:
Preferred Stock, Value	1,170,660	1,170,660
Series B Cumulative Preferred Stock
Capital stock issued and outstanding:
Preferred Stock, Value	$ 190,780	$ 190,780

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GENERAL

9 Months Ended

Mar. 31, 2012

Organization, Consolidation and Presentation Of Financial Statements Disclosure and Significant Accounting Policies [Abstract]

GENERAL

NOTE 1 - GENERAL

The condensed consolidated balance sheet of Chase General Corporation (hereinafter referred to as “Chase”, “we”, “our”, and “us”) at June 30, 2011 has been taken from audited consolidated financial statements at that date and condensed. The condensed consolidated financial statements as of and for the three months and nine months ended March 31, 2012 and for the three months and nine months ended March 31, 2011 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended June 30, 2011. The results of operations for the three and nine months ended March 31, 2012 and cash flows for the nine months ended March 31, 2012 are not necessarily indicative of the results for the entire fiscal year ending June 30, 2012. Where appropriate, items within the condensed consolidated financial statements have been reclassified from the previous periods’ presentation. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present financial position, results of operations and cash flows for the periods have been included.

No events have occurred subsequent to March 31, 2012, through May 11, 2012, that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of or for the nine month period ended March 31, 2012.

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NET INCOME PER SHARE

9 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

NET INCOME PER SHARE

NOTE 2 - NET INCOME PER SHARE

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

	Three Months Ended						Nine Months Ended
	March 31						March 31
	2012			2011			2012			2011
Net income (loss)	$	(106,933	)	$	(68,849	)	$	(42,227	)	$	106,519
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value		15,000			15,000			45,000			45,000
5% Convertible Cumulative Preferred, $20 par value		17,018			17,018			51,054			51,054
Total dividend requirements		32,018			32,018			96,054			96,054
Net income (loss) common stockholders	$	(138,951	)	$	(100,867	)	$	(138,281	)	$	10,465
Weighted average shares - basic		969,834			969,834			969,834			969,834
Dilutive effect of contingently issuable shares		1,033,334			1,033,334			1,033,334			1,033,334
Weighted average shares - diluted		2,003,168			2,003,168			2,003,168			2,003,168
Basic earnings per share	$	(.14	)	$	(.10	)	$	(.14	)	$	.01
Diluted earnings per share							$	(.14	)	$	.01

Cumulative Preferred Stock dividends in arrears at March 31, 2012 and 2011 totaled $7,404,500 and $7,276,428, respectively. Total dividends in arrears, on a per share basis, consist of the following:

	Nine Months Ended March 31
	2012		2011
6% Convertible
Series A	$	16	$	16
Series B		16		15
5% Convertible
Series A		63		62
Series B		63		62

The 6% convertible prior cumulative preferred stock may, upon thirty days prior notice, be redeemed by the Corporation at $5.25 a share plus unpaid accrued dividends to date of redemption. In the event of voluntary liquidation, holders of this stock are entitled to receive $5.25 per share plus accrued dividends. It may be exchanged for common stock at the option of the shareholders in the ratio of 4 common shares for one share of Series A and 3.75 common shares for one share of Series B.

The Company has the privilege of redemption of 5% convertible cumulative preferred stock at $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Mar. 31, 2012	Jun. 30, 2011
Net of allowance for doubtful accounts on trade receivables (in dollars)	$ 16,283	$ 15,383
Common stock, par value (in dollars per share)	$ 1	$ 1
Series A Prior Cumulative Preferred Stock
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, liquidation preference value (in dollars)	2,122,500	2,100,000
Series B Prior Cumulative Preferred Stock
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, liquidation preference value (in dollars)	2,077,500	2,055,000
Series A Cumulative Preferred Stock
Preferred stock, par value (in dollars per share)	$ 20	$ 20
Preferred stock, liquidation preference value (in dollars)	4,828,965	4,785,065
Series B Cumulative Preferred Stock
Preferred stock, par value (in dollars per share)	$ 20	$ 20
Preferred stock, liquidation preference value (in dollars)	$ 786,975	$ 779,821

XML

Document and Entity Information	9 Months Ended
	Mar. 31, 2012	Apr. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	CHASE GENERAL CORP
Entity Central Index Key	0000015357
Trading Symbol	csgn
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		969,834
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Mar. 31, 2012	Mar. 31, 2011	Mar. 31, 2012	Mar. 31, 2011
Income Statement [Abstract]
NET SALES	$ 428,140	$ 376,491	$ 2,552,201	$ 2,572,029
COST OF SALES	393,144	329,511	1,968,646	1,831,878
Gross profit on sales	34,996	46,980	583,555	740,151
OPERATING EXPENSES
Selling	87,662	79,655	328,383	310,626
General and administrative	103,967	86,093	323,646	283,362
Gain on sale of equipment	(10,929)		(10,929)	(500)
Total operating expenses	180,700	165,748	641,100	593,488
Income (loss) from operations	(145,704)	(118,768)	(57,545)	146,663
OTHER INCOME (EXPENSE)
Miscellaneous income	550	861	1,326	1,721
Interest expense	(1,850)	(2,133)	(9,966)	(7,901)
Total other income (expense)	(1,300)	(1,272)	(8,640)	(6,180)
Net income (loss) before income taxes	(147,004)	(120,040)	(66,185)	140,483
PROVISION (CREDIT) FOR INCOME TAXES	(40,071)	(51,191)	(23,958)	33,964
NET INCOME (LOSS)	(106,933)	(68,849)	(42,227)	106,519
Preferred dividends	(32,018)	(32,018)	(96,054)	(96,054)
Net income (loss) applicable to common stockholders	$ (138,951)	$ (100,867)	$ (138,281)	$ 10,465
NET LOSS PER SHARE OF COMMON STOCK-
BASIC (in dollars per share)	$ (0.14)	$ (0.10)	$ (0.14)	$ 0.01
DILUTED (in dollars per share)			$ (0.14)	$ 0.01
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING Basic (in shares)	969,834	969,834	969,834	969,834

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	9 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (42,227)	$ 106,519
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	84,875	82,297
Allowance for bad debts	900	900
Deferred income amortization	(974)	(974)
Deferred income taxes	(23,988)	19,009
Gain on sale of equipment	(10,929)	(500)
Effects of changes in operating assets and liabilities:
Trade receivables	9,139	31,927
Inventories	184,897	(39,423)
Prepaid expenses	(11,710)	(30,514)
Accounts payable	14,326	(14,389)
Accrued expenses	9,476	1,326
Income taxes payable		14,758
Net cash provided by operating activities	213,785	170,936
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment	23,000	500
Purchases of property and equipment	(45,680)	(18,425)
Net cash used in investing activities	(22,680)	(17,925)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line-of-credit	250,000	40,000
Principal payments on line-of-credit	(250,000)	(40,000)
Principal payments on notes payable	(42,105)	(73,310)
Net cash used in financing activities	(42,105)	(73,310)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	149,000	79,701
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	18,772	106,508
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 167,772	$ 186,209

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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

9 Months Ended

Mar. 31, 2012

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

NOTE 5 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	Nine Months Ended
	March 31
	2012		2011
Cash paid for:
Income taxes	$	-	$	197
Interest		9,966		8,157
Non-cash transaction:
Financing of vehicles	$	27,245	$	-
Net book value of vehicles traded-in	$	14,962	$	-