10-K

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x       Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 2016

¨        Transaction Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For transition period from              to

Commission File Number: 2-5916

	Chase General Corporation
(Exact name of registrant as specified in its charter)

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

	1307 South 59th, St. Joseph, Missouri		64507
(Address of Principal Executive Offices)		Zip Code

	(816) 279-1625
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:

	None
Securities Registered Pursuant to Section 12(g) of the Act:

	None
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned 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 or 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 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 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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The aggregate market value of the shares of common stock held by non-affiliates of the Issuer is not actively traded. Therefore, market value of the stock is unknown as of 60 days prior to the date of this filing.

As of September 22, 2016 there were 969,834 shares of Common Stock, $1.00 par value, outstanding.

Chase General Corporation AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

FOR THE YEAR ENDED JUNE 30, 2016

PART I
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	5
ITEM 1B.	UNRESOLVED STAFF COMMENTS	5
ITEM 2.	PROPERTIES	5
ITEM 3.	LEGAL PROCEEDINGS	5
ITEM 4.	MINE SAFETY DISCLOSURES	5
PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED stOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	6
ITEM 6.	SELECTED FINANCIAL DATA	6
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	7
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	15
ITEM 8.	CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	15
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	34
ITEM 9A.	CONTROLS AND PROCEDURES	34
ITEM 9B.	OTHER INFORMATION	34
PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	35
ITEM 11.	EXECUTIVE COMPENSATION	36
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS	38
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	39
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	39
PART IV
ITEM 15.	EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES	40
SIGNATURES		41

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

PART I

ITEM 1 BUSINESS

Chase General Corporation was incorporated November 6, 1944 for the purpose of manufacturing confectionery products. In 1970, Chase General Corporation acquired a 100% interest in its wholly-owned subsidiary, Dye Candy Company. (Chase General Corporation and Dye Candy Company are sometimes referred herein as “the Company”). This subsidiary is the main operating company for the reporting entity.

Principal Products and Methods of Distribution

The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 for inclusion in this filing.

The principal products produced are as follows:

Chase Candy Products of Dye Candy Company produces a candy bar under the trade name of “Cherry Mash”. The bar is distributed in the following six case sizes:

(1) 60 count pack

(2) 12 boxes of 24 bars per box

(3) 200 count shipper box

(4) 100 count shipper box

(5) 100 # 2 box Counter Display

(6) 4 box - 36 count Counter Display

(1)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Principal Products and Methods of Distribution (Continued)

In addition to the regular size bar, a “mini-mash” is distributed in the following seven case sizes:

(1) 24 - 12 oz. bags

(2) 6 jars - 60 bars per jar

(3) 23 # wrapped bars

(4) 22 # unwrapped bars

(5) 12 - 12 oz. bags

(6) 6 - 4 # jars

(7) 24 - 12 oz. clamshell containers

Seasonal Candy Products of Dye Candy Company produces coconut, peanut, chocolate, and fudge confectioneries. These products are distributed in bulk or packaged. Principal products include:

(1)	Coconut Bon-Bons	(6)     Peanut Brittle
(2)	Coconut Stacks	(7)     Peanut Clusters
(3)	Home Style Poe Fudge	(8)     Champion Crème Drops
(4)	Peco Flake	(9)     Jelly Candies
(5)	Peanut Squares	(10)   Frosted Pretzels

The Champion Creme Drops, Frosted Pretzels and Jelly Candies are not produced or repackaged by the Company.

All products are shipped to customers by commercial haulers.

Competition and Market Area

The Chase Candy Products division bars are sold primarily to wholesale candy and tobacco jobbing houses, grocery accounts, vendors and repackers. “Cherry Mash” bars are marketed in the Midwest region of the United States. For the years ended June 30, 2016 and 2015, this division accounted for 56% and 61%, respectively, of the consolidated sales of Dye Candy Company.

The Seasonal Candy Products division is sold primarily on a Midwest regional basis to national syndicate accounts, repackers, and grocery accounts. For the years ended June 30, 2016 and 2015, this division accounted for 44% and 39%, respectively, of the consolidated sales of Dye Candy Company.

The Company has no government contracts, foreign operations or export sales. In addition, all domestic sales are primarily in the Midwest region of the United States.

The Company is a seasonal business whereby the largest volume of sales occur in August through December of each year. The earnings per quarter of the Company varies in direct proportion to the seasonal sales volume.

(2)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Competition and Market Area (Continued)

Due to the seasonal nature of the business, there is a heavier demand on working capital in the fall and winter months of the year when the Company is building its inventories in anticipation of August through December sales. The fluctuation of demand on working capital due to the seasonal nature of the business is common to the confectionery industry. If necessary, the Company has the ability to borrow short-term funds to finance operations prior to receiving cash collections from fall sales. The Company occasionally offers extended payment terms of up to sixty days. Since this practice is infrequent, the effect on working capital is minimal.

Prompt service and efficient service are traits demanded in the confectionery industry, which results in a continual low volume of back-orders. Therefore, at no time during the year does the Company have a significant amount of back-orders.

The confectionery (candy) market for the type of product produced by the divisions of Dye Candy Company is very competitive and quality minded. The confectionery industry in which the divisions operate is highly competitive with many small companies and, within certain specialized areas, a few competitors dominate. In the United States, the dominant competitors in the coconut candy industry are Crown Candy Company, Vermico Candy Company, and the Seasonal Candy Products division of Dye Candy Company with approximately 70% of the market share among them. In the United States, Old Dominion has approximately 80% of the market share of the peanut candy business in which the Seasonal Candy Products division operates. Dye Candy Company sells approximately 95% of its products in the Midwest region with seasonal orders being shipped to the Southern and Eastern regions of the United States. Except for the coconut candy industry, Dye Candy Company is not a dominant competitor in any of the candy industries in which it competes. Dye Candy Company’s market share in the coconut industry does not vary significantly from year to year.

Principal methods of competition the Company uses include quality of product, price, reduced transportation costs due to central location, and service. The Company’s competitive position is positively influenced by labor costs being lower than industry average. Chase General Corporation is firmly established in the confectionery market and through its operating divisions has many years of experience associated with its name.

Research and Development

The Company has not developed any new products during the fiscal years ended June 30, 2016 and 2015.

Raw Materials and Principal Suppliers

Raw materials and packaging materials are produced on a national basis with products coming from locations throughout the United States. Raw materials and packaging materials are generally widely available, depending on common market influences. For the year ended June 30, 2015 one supplier accounted for 11% of the cost of sales. No other supplier accounted for more than 10% of the Company’s cost of sales in fiscal years 2016 and 2015.

(3)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Patents and Trademarks

The largest single revenue producing product, the “Cherry Mash” bar, is protected by a trademark registered with The United States Patent and Trademark Office. The Company considers this trademark significant to operations. This trademark expires in the year 2023. The Company and its legal representatives do not expect any impediment to renewing this trademark prior to its expiration.

Employees

As of June 30, 2016, the Company had 19 full time employees. This expands to approximately 30 full time personnel during the busy production months of August through December.

Customers

For the years ended June 30, 2016 and 2015, one customer accounted for 41% and 27%, respectively, of gross sales. As of June 30, 2016 and 2015, that same customer accounted for 24% and 8%, respectively, of trade receivables. For the years ended June 30, 2016 and 2015, another customer and its affiliates accounted for 17% and 18%, respectively, of gross sales. As of June 30, 2016 and 2015, that same customer and its affiliates accounted for 36% and 47%, respectively, of trade receivables. No other customer accounted for more than 10% of the Company’s sales in fiscal years 2016 and 2015.

Environmental Protection and the Effect on Probable Government Regulations on the Business

To the best of management’s knowledge, the Company is presently in compliance with all environmental laws and regulations and does not anticipate any future expenditures in this regard. The Company is evaluating the requirements of the Food Safety Modernization Act (FSMA).  The FSMA aims to ensure the U.S. food supply is safe by shifting the focus of federal regulators from responding to contamination to preventing it. The FSMA has given the Food and Drug Administration (FDA) new authorities to regulate the way foods are grown, harvested and processed.  To the best of management’s knowledge, the Company has approximately two years to become compliant with all FSMA requirements and does not anticipate any future expenditures in the next twelve months in this regard.

Need for Government Approval of Principal Products or Services

The Company is required to meet the Food and Drug Administration guidelines for proper labeling of its products and for contents of its products.

Reports to Security Holders

The Registrant is not required to send the annual audit report, annual 10-K report and quarterly 10-Q reports to security holders since the stock is not actively traded. These reports are available at the Registrant’s registered office or they are available on-line on the SEC’s EDGAR website.

(4)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 1A RISK FACTORS

Not applicable to a smaller reporting company.

ITEM 1B UNRESOLVED STAFF COMMENTS

The Company has no unresolved SEC staff comments at June 30, 2016.

Item 2 PROPERTIES

We conduct our operations from two buildings as follows:

Chase Warehouse - This building is located in St. Joseph, Missouri and is owned by Dye Candy Company, a wholly-owned subsidiary of the registrant. The facility is currently devoted entirely to the storage of supplies, and the warehousing and shipping of candy products. This warehouse is over seventy years old, is in fair condition and adequate to meet present requirements. The warehouse has approximately 15,000 square feet and is not encumbered.

Chase General Office and Dye Candy Company Operating Plant - This building is located in St. Joseph, Missouri and contains the general offices (of approximately 2,000 square feet) for Chase General Corporation, Dye Candy Company and its divisions. The production plant of Dye Candy Company occupies the remainder of the building or 18,000 square feet. The building, specifically designed for the Company, is leased from an entity owned by the Vice-President and Director of the Company. The annual rental expense of this facility was $78,000 for each year ended June 30, 2016 and 2015.

The net book value of our premises, land and office, and production equipment totaled $353,647 and $360,763 at June 30, 2016 and 2015, respectively.

We believe both facilities are adequately covered by insurance.

Item 3 LEGAL PROCEEDINGS

None.

Item 4 MINE SAFETY DISCLOSURES

Not applicable.

(5)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

PART II

Item 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

There is no established public trading market for the common stock (par value $1 per share) of the Company.

Security holders

As of September 22, 2016, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

Dividends

(1) Dividend history and restrictions

No dividends have been paid during the past two fiscal years and there are no dividend restrictions. Preferred stock dividends in arrears are accumulated.

(2) Dividend policy

There is no set policy on the payment of dividends due to the financial condition of the Company and other factors. It is not anticipated that cash dividends will be paid in the foreseeable future.

Securities authorized for issuance under equity compensation plans

The Company does not have any equity compensation plans.

Item 6 SELECTED FINANCIAL DATA

Not applicable to a smaller reporting company.

(6)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This report contains statements that plan for or anticipate the future. Forward-looking statements may include statements about the future of our products and the industry, statements about our future business plans and strategies, and other statements that are not historical in nature. In this report, forward-looking statements are generally identified by the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” and the like. Readers should carefully review these cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by, the Company at the time the statements are made. These expectations, assumptions and uncertainties include: the Company’s expectation of heavier demand on working capital in the fall and winter months in anticipation of August through December sales; our belief that the Company has stabilized its customer base; will continue its efforts to expand the existing market area and increase sales to customers; and maintain tight control of all expenditures.

Overview

During fiscal year ended 2016, the Company’s net sales were $3,304,604, as compared to net sales of $3,223,939 for fiscal year ended June 30, 2015. This 2.5% increase in volume combined with a 9.2% increase in cost of sales and a 2.9% increase in operating expenses resulted in decreased profitability during the year, as reflected in the income from operations of $38,936 for fiscal year 2016 compared to $190,390 for fiscal year 2015. Working capital increased $72,387 to $804,450 for the current year from $732,063 for the fiscal year 2015 due primarily to an increase in income taxes receivable, increase in inventories, decreases in accounts payable, and a decrease in income tax payable offset by decreases in cash, decreases in trade receivables, increases in accrued expenses, and increases in current maturities of notes payable.

The following information should be read together with the consolidated financial statements and notes thereto included elsewhere herein.

Critical Accounting Policies and Estimates

General

Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

(7)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Critical Accounting Policies and Estimates (Continued)

General (Continued)

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

Except for events in Note 12 to the consolidated financial statements, there have been no other events that have occurred subsequent to June 30, 2016, through the date of filing this form, that would require disclosure in the Form 10-K or would be required to be recognized in the consolidated financial statements as of or for the year ended June 30, 2016.

Revenue Recognition

The Company recognizes revenues as product is shipped to customers. Net sales are comprised of the total sales billed during the period less the estimated returns, customer allowances, and customer discounts.

Trade Receivables

Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the trade receivables. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due to the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or to require an excessive collection cost, are written off to the allowance for doubtful accounts.

Inventories

Inventories are carried at the “lower of cost or market value,” with cost being determined on the “first-in, first-out” basis of accounting. Finished goods and goods in process include a provision for manufacturing overhead.

(8)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Critical Accounting Policies and Estimates (Continued)

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amounts of such assets to future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

New Accounting Guidance

See Note 11, RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS, to the consolidated financial statements for a discussion of new accounting standards.

(9)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Results of Operations

The following table sets forth for the years indicated, the percentage of net sales of certain items in the Company’s consolidated statements of income for each of the fiscal years ended June 30, 2016 and 2015, respectively:

	2016			2015
Net Sales		100.00	%		100.00	%
Cost of Sales		74.97			70.34
Gross Profit on Sales		25.03			29.66
Selling Expense		13.22			13.15
General and Administrative Expense		11.28			11.43
Gain on Sale of Equipment		(0.65	)		(0.82	)
Income from Operations		1.18			5.90
Other Income (Expense), Net		(0.09	)		0.35
Income before Income Taxes		1.09			6.25
Provision for Income Taxes		0.07			1.89
Net Income		1.02			4.36
Preferred Dividends		(3.88	)		(3.97	)
Income (Loss) Applicable to Common Stockholders		(2.86	)%		0.39	%

Fiscal Year 2016 Compared to Fiscal Year 2015

Net Sales

During the year ended June 30, 2016, sales, net of returns and allowances, increased $80,665 or 2.5% as compared to the year ended June 30, 2015. Gross sales for Chase Candy products decreased $103,411 or 5.2% to $1,869,444 for the year ended June 30, 2016 compared to $1,972,855 for 2015. Gross sales for Seasonal Candy products increased $202,981 or 15.8% to $1,489,324 for the year ended June 30, 2016 as compared to $1,286,343 for 2015. The Company’s returns and allowances increased $16,017 or 34.9% to $61,881 for the year ended June 30, 2016, compared to $45,864 for the year ended June 30, 2015. The Company’s other sales decreased $2,888 or 27.2% to $7,717 for the year ended June 30, 2016, compared to $10,605 for the year ended June 30, 2015.

Sales for Chase Candy consisted of the following divisions: L276 Cherry Mash Distributor Pack division, Cherry Mash Merchandisers division, L260 Changemaker Jar division, L279/L299 Bulk Mini Mash division, and L278/L212 Mini Mash division. The 5.2% decrease in gross sales of Chase Candy of $103,411 for the year ended June 30, 2016 over the same period ended June 30, 2015, is primarily due to the following: 1) decreased sales of the L276 Cherry Mash Distributor Pack division by approximately $104,000 versus the same period a year ago primarily due to three customers decreasing orders and 2) various other fluctuations netting to a increase of approximately $1,000.

(10)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Fiscal Year 2016 Compared to Fiscal Year 2015 (Continued)

Net Sales (Continued)

Sales for Seasonal Candy consisted of the following divisions: bulk seasonal division, clamshell seasonal division, and the generic seasonal division. The 15.8% increase in gross sales of Seasonal Candy of $202,981 for the year ended June 30, 2016 over the same period ended June 30, 2015, is primarily due to the net effect of the following: 1) increased sales in the generic seasonal product division by approximately $245,000 due to increased orders from two customers offset by decreased orders of another customer; 2) increased sales in the bulk seasonal division by approximately $30,000 versus the same period a year ago primarily due to increased orders from one customer; offset by 3) decreased sales in the clamshell seasonal division by approximately $72,000 versus the same period a year ago primarily due to decreased orders from four customers.

Cost of Sales

Cost of sales for the year ended June 30, 2016, as compared to the year ended June 30, 2015, increased by 9.2%. The cost of sales increased $209,696 to $2,477,479 while increasing to 75.0% of net sales for the year ended June 30, 2016, compared to $2,267,783 or 70.3% of net sales for the year ended June 30, 2015.

The 9.2% increase in cost of sales of $209,696 is primarily due to the net impact of a 2.5% increase in net sales of $80,665 and a 8.4% increase in the price of corn syrup offset by a 3.4% decrease in the price of sugar, a 2.8% decrease in the price of chocolate and a 11.0% decrease in the price of peanuts. Due to volatility in the regions where these raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand. Primarily due to the fluctuations in these raw material prices, gross margins have decreased due to unchanged sales prices during the period. Management intends to make sales price adjustments in the future to correspond with changes in raw material prices.

Labor costs, including wages, vacation pay and payroll taxes of $560,812 for the year ended June 30, 2016, increased 11.1% or $55,839 as compared to $504,973 for the period ended 2015 primarily due to increased production wages due to increased hours, bonuses, and pay rates compared to the same period ended June 30, 2015.

Freight expense, including shipping and handling costs on goods shipped of $183,456 for the year ended June 30, 2016, decreased 2.3% or $4,322 as compared to $187,778 for the period ended 2015 due primarily to a decrease in fuel costs.

(11)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Fiscal Year 2016 Compared to Fiscal Year 2015 (Continued)

Gross Profit on Sales

The gross profit decreased 13.5% or $129,031 to $827,125 decreasing to 25.0% of related net sales for the year ended June 30, 2016, as compared to $956,156 or 29.7% of related net sales for the year ended June 30, 2015, as a result of the large increase in cost of sales described above and offset by the small increase in net sales.

Finished goods inventory as of June 30, 2016 of $433,043 increased $55,190 or 14.6% from the June 30, 2015 finished goods inventory of $377,853. Raw materials inventory as of June 30, 2016 of $76,561 decreased $13,951 or 15.4% from the June 30, 2015 raw materials inventory of $90,506. Packaging materials inventory as of June 30, 2016 of $135,732 increased $5,002 or 3.8% from June 30, 2015 packaging materials inventory of $130,726. Goods in process inventory as of June 30, 2016 of $6,540 decreased $7,275 or 52.7% from the June 30, 2015 goods in process inventory of $13,815. Inventory levels vary based primarily on sales and purchases.

Selling Expenses

Selling expenses for the year ended June 30, 2016 increased $13,067 to $436,869, which is 13.2% of net sales, compared to $423,802 or 13.2% of net sales for the year June 30, 2015. This increase is primarily due to higher commissions and depreciation expense offset by lower auto expense. Commissions increased $9,318 to $117,294 for the year ended June 30, 2016, as compared to $107,976 for the year ended June 30, 2015, primarily due to an increase in sales from the brokers. Depreciation expense increased $10,721 to $50,813 for the year ended June 30, 2016, as compared to $40,542 for the year ended June 30, 2015 primarily due to purchases of property and equipment of $130,026 during the year ended June 30, 2015 combined with the purchases of property and equipment of $87,352 during the year ended June 30, 2016. Auto expense decreased $6,884 to $11,961 for the year ended June 30, 2016, as compared to $18,845 for the year ended June 30, 2015, primarily because of new vehicles taking place of the old ones in the current year and lower gasoline prices.

General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2016 increased $4,251 to $372,684, which is 11.3% of net sales, compared to $368,466 or 11.4% of net sales for the year ended June 30, 2015. The increase is primarily due to an increase in professional fees, a decrease in insurance expense, and other changes netting an increase in expenses of $5,807 over the same period for the year ended June 30, 2015. Professional fees increased $22,076 to $112,007 for the year ended June 30, 2016, as compared to $89,931 for the year ended June 30, 2015 primarily due to an increase in audit fees and low legal fees during the year ended June 30, 2015. Insurance expense decreased $23,632 to $98,632 for the year ended June 30, 2016, as compared to $122,264 for the year ended June 30, 2015 primarily due to less employees on the health coverage plan.

(12)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Fiscal Year 2016 Compared to Fiscal Year 2015 (Continued)

Income from Operations

Income from operations for the year ended June 30, 2016 was 1.2% of net sales, as compared to 5.9% of net sales for the year ended June 30, 2015 for the reasons previously described.

Other Income (Expense)

Other income (expense), net, reflects net loss of $2,867 for the year ended June 30, 2016, as compared to net income of $11,368 for the year ended June 30, 2015. This decrease of $14,235 in other income (expense) was primarily due to these unusual items that occurred during the year ended June 30, 2015: 1) freight claim of approximately $4,000, and 2) a refund of approximately $7,000 from a customer related to an underpayment written off in a previous period.

Income before Income Taxes

Income before income taxes was $36,069 for the year ended June 30, 2016, as compared to $201,758 for the year ended June 30, 2015. The reasons for the decrease of $165,689 have been previously discussed.

Provision for Income Taxes

The Company recorded income tax expense for the year ended June 30, 2016 of $2,473 as compared to an income tax expense of $60,849 for the year ended June 30, 2015. The income tax expense for the year ended June 30, 2016 is a result of operations previously discussed.

Net Income

Net income for the year ended June 30, 2016 was $33,596, compared to net income for the year ended June 30, 2015 of $140,909. This decrease of $107,313 is the result of those items previously discussed.

(13)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Fiscal Year 2016 Compared to Fiscal Year 2015 (Continued)

Liquidity and Sources of Capital

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

	2016			2015
Net Cash Provided (Used) by Operating Activities	$	(26,149	)	$	55,681
Net Cash Used by Investing Activities	$	(24,671	)	$	(108,798	)
Net Cash Used by Financing Activities	$	(14,125	)	$	(25,114	)

Operating Activities

The negative cash flow of $26,149 generated from operations is a result of small fluctuations in net sales, increases in operating expenses and the Company continuing to monitor raw material pricing, and when a price increase or decrease is anticipated, adjustments to inventory levels are made accordingly. During the year ended June 30, 2016, sales, net of returns and allowances, increased $80,665 or 2.5% as compared to the year ended June 30, 2015. Total inventory as of June 30, 2016 of $651,876 increased $38,976 or 6.3% from the June 30, 2015 total inventory of $612,900. The timing of inventory purchases and collections from customer’s impact cash flow generated from operations.

Investing Activities

Machinery and equipment cash purchases of $24,671 and $108,798 were made during the years ended June 30, 2016 and 2015, respectively.

Financing Activities

The Company borrowed $300,000 and $265,000, respectively, on its line-of-credit during the fall of 2015 (fiscal 2016) and 2014 (fiscal 2015) busy seasons. Payments of $300,000 and $265,000, respectively, were paid for years ended June 30, 2016 and 2015. The Company entered into a $350,000 line-of-credit agreement expiring on January 4, 2017, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration.

Loan principal payments were $14,125 and $25,114 for years ended June 30, 2016 and 2015, respectively.

Overall cash and cash equivalents decreased $64,945 to $19,259 at June 30, 2016 from $84,204 at June 30, 2015.

(14)

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Fiscal Year 2016 Compared to Fiscal Year 2015 (Continued)

Liquidity and Sources of Capital (Continued)

Financing Activities (Continued)

At June 30, 2016, the Company’s accumulated deficit was $5,463,806, compared to an accumulated deficit of $5,497,402 as of June 30, 2015. Working capital as of June 30, 2016 increased $72,387 to $804,450 from $732,063 as of June 30, 2015.

The Company’s lease on its office and plant facility is effective through March 31, 2025, with an option to extend for an additional time of five years, and currently requires payments of $6,500 per month. At the end of each five year period, the base rent may be increased an amount not greater than 30%, at the sole discretion of lessor. The facility is leased from an entity owned 100% by the Vice-President and Director.

In order to maintain funds to finance operations and meet debt obligations, it is the intention of management to continue its efforts to expand the present market area and increase sales to its customers. Management also intends to continue tight control on all expenditures. Due to volatility in the regions where these raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand. Primarily due to the fluctuations in these raw material prices, gross margins have decreased due to unchanged sales prices during the period. Management intends to make sales price adjustments in the future to correspond with changes in raw material prices.

Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

Item 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 18 through 33 of this Form 10-K.

(15)

Chase General Corporation AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

TABLE OF CONTENTS

FOR THE YEARS ENDED JUNE 30, 2016 AND 2015

Report of Independent Registered Public Accounting Firm	17
Consolidated Financial Statements	18
Consolidated Balance Sheets	18
Consolidated Statements of Income	20
Consolidated Statements of Stockholders’ Equity	21
Consolidated Statements of Cash Flows	22
Notes to Consolidated Financial Statements	23

(16)

Report of Independent Registered Public Accounting Firm

To the Board of Directors

CHASE GENERAL CORPORATION AND SUBSIDIARY

We have audited the accompanying consolidated balance sheets of Chase General Corporation and Subsidiary (the Company) as of June 30, 2016 and 2015, and the related consolidated statements of income, stockholders' equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Chase General Corporation and Subsidiary as of June 30, 2016 and 2015, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Mayer Hoffman McCann P.C.

MAYER HOFFMAN MCCANN P.C.

Kansas City, Missouri

September 23, 2016

(17)

Chase General Corporation AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

June 30, 2016 and 2015

	2016		2015
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	19,259	$	84,204
Trade Receivables, Net of Allowance for Doubtful Accounts of $16,549 and $16,296, Respectively		179,622		187,607
Inventories:
Finished Goods		433,043		377,853
Goods in Process		6,540		13,815
Raw Materials		76,561		90,506
Packaging Materials		135,732		130,726
Prepaid Expenses		5,689		5,689
Income Taxes Receivable		29,111		-
Deferred Income Taxes		7,533		7,288
Total Current Assets		893,090		897,688
PROPERTY AND EQUIPMENT
Land		35,000		35,000
Buildings		77,348		77,348
Machinery and Equipment		820,885		807,325
Trucks and Autos		213,116		198,845
Office Equipment		31,518		31,518
Leasehold Improvements		72,068		72,068
Total		1,249,935		1,222,104
Less Accumulated Depreciation		896,288		861,341
Total Property and Equipment, Net		353,647		360,763
Total Assets	$	1,246,737	$	1,258,451

The accompanying notes are an integral part of the consolidated financial statements.

(18)

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

June 30, 2016 and 2015

	2016			2015
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable	$	46,718		$	111,944
Current Maturities of Notes Payable		15,460			8,297
Accrued Expenses		25,163			17,966
Income Taxes Payable		-			26,119
Deferred Income		1,299			1,299
Total Current Liabilities		88,640			165,625
LONG-TERM LIABILITIES
Notes Payable, Less Current Maturities		55,397			14,004
Deferred Income Taxes		90,446			98,866
Deferred Income		10,064			11,362
Total Long-Term Liabilities		155,907			124,232
Total Liabilities		244,547			289,857
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Capital Stock Issued and Outstanding:
Prior Cumulative Preferred Stock, $5 Par Value:
Series A (Liquidation Preference $2,250,000 and $2,220,000, Respectively)		500,000			500,000
Series B (Liquidation Preference $2,205,000 and $2,175,000, Respectively)		500,000			500,000
Cumulative Preferred Stock, $20 Par Value:
Series A (Liquidation Preference $5,077,730 and $5,019,197, Respectively)		1,170,660			1,170,660
Series B (Liquidation Preference $827,516 and $817,977, 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		(5,463,806	)		(5,497,402	)
Total Stockholders' Equity		1,002,190			968,594
Total Liabilities and Stockholders' Equity	$	1,246,737		$	1,258,451

The accompanying notes are an integral part of the consolidated financial statements.

(19)

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

Years Ended June 30, 2016 and 2015

	2016			2015
NET SALES	$	3,304,604		$	3,223,939
COST OF SALES		2,477,479			2,267,783
Gross Profit on Sales		827,125			956,156
OPERATING EXPENSES
Selling		436,869			423,802
General and Administrative		372,684			368,466
Gain on Sale of Equipment		(21,364	)		(26,502	)
Total Operating Expenses		788,189			765,766
Income from Operations		38,936			190,390
OTHER INCOME (EXPENSE)
Miscellaneous Income		1,891			13,592
Interest Expense		(4,758	)		(2,224	)
Total Other Income (Expense), Net		(2,867	)		11,368
Net Income before Income Taxes		36,069			201,758
PROVISION FOR INCOME TAXES		2,473			60,849
NET INCOME	$	33,596		$	140,909
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
- BASIC	$	(0.10	)	$	0.01
- DILUTED	$	(0.10	)	$	0.01

The accompanying notes are an integral part of the consolidated financial statements.

(20)

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended June 30, 2016 and 2015

	Prior Cumulative				Cumulative
	Preferred Stock				Preferred Stock				Common		Paid-In		Accumulated
	Series A		Series B		Series A		Series B		Stock		Capital		Deficit			Total
BALANCE, JUNE 30, 2014	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,638,311	)	$	827,685
Net income		-		-		-		-		-		-		140,909			140,909
BALANCE, JUNE 30, 2015		500,000		500,000		1,170,660		190,780		969,834		3,134,722		(5,497,402	)		968,594
Net income		-		-		-		-		-		-		33,596			33,596
BALANCE, JUNE 30, 2016	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,463,806	)	$	1,002,190

The accompanying notes are an integral part of the consolidated financial statements.

(21)

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2016 and 2015

	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from Customers	$	3,312,589		$	3,215,018
Deferred Income		1,298			1,299
Cost of Sales, Selling, General and Administrative Expenses Paid		(3,269,005	)		(3,121,928	)
Interest Paid		(4,623	)		(2,224	)
Income Taxes Paid		(66,408	)		(36,484	)
Net Cash Provided (Used) by Operating Activities		(26,149	)		55,681
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Property and Equipment		(24,671	)		(108,798	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit		300,000			265,000
Principal Payments on Line-of-Credit		(300,000	)		(265,000	)
Principal Payments on Notes Payable		(14,125	)		(25,114	)
Net Cash Used by Financing Activities		(14,125	)		(25,114	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(64,945	)		(78,231	)
Cash and Cash Equivalents, Beginning of Year		84,204			162,435
CASH AND CASH EQUIVALENTS, END OF YEAR	$	19,259		$	84,204
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
Net Income	$	33,596		$	140,909
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization		115,832			98,810
Allowance for Bad Debts		253			(412	)
Deferred Income Amortization		(1,298	)		(1,299	)
Deferred Income Taxes		(8,665	)		19,449
Gain on Sale of Equipment		(21,364	)		(26,502	)
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables		7,732			(8,509	)
Inventories		(38,976	)		(117,090	)
Prepaid Expenses		-			6,544
Income Taxes Receivable		(29,111	)		-
Accounts Payable		(65,226	)		59,997
Accrued Expenses		7,197			(121,132	)
Income Taxes Payable		(26,119	)		4,916
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	$	(26,149	)	$	55,681

The accompanying notes are an integral part of the consolidated financial statements.

(22)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Chase General Corporation (the Company) was incorporated on November 6, 1944 in the state of Missouri for the purpose of manufacturing confectionery products. The Company grants credit terms to substantially all customers, consisting of repackers, grocery accounts, and national syndicate accounts, who are primarily located in the Midwest region of the United States.

Significant accounting policies are as follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting of the Business

The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 in these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Revenue Recognition

The Company recognizes revenues as product is shipped to customers. Net sales are comprised of the total sales billed during the period, including shipping and handling charges to customers, less the estimated returns, customer allowances and customer discounts.

(23)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2016 and 2015 was $183,456 and $187,778, respectively.

Trade Receivables

Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the trade receivables. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due to the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or that require an excessive collection cost, are written off to the allowance for doubtful accounts.

Inventories

Inventories are carried at the "lower of cost or market value" with cost being determined on the "first-in, first-out" basis of accounting. The cost of finished goods and goods in process inventories include an estimate for manufacturing overhead.

Property and Equipment

The Company’s property and equipment is recorded at cost and is being depreciated on straight-line and accelerated methods over the following estimated useful lives:

Buildings	39 years
Machinery and equipment	5 – 7 years
Trucks and autos	5 years
Office equipment	5 – 7 years
Leasehold improvements	Lesser of estimated
	useful life or the
	lease term

(24)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

Income Taxes

Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred income tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred income tax assets are only recognized if it is more likely than not that a tax position will be realized or sustained upon examination by the relevant taxing authority. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred income tax assets will not be realized. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of relevant information. Deferred income tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

The Company’s policy is to evaluate uncertain tax positions under the guidance as prescribed by Accounting Standards Codification (ASC) 740, Income Taxes. As of June 30, 2016 and 2015, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company had no accruals for interest or penalties as of June 30, 2016 and 2015.

Earnings Per Common Share

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, diluted earnings per share will be calculated in the same manner as basic earnings per share.

(25)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings Per Common Share (Continued)

The following table details out the contingently issuable shares as for 2016 and 2015. For 2016, the contingently issuable shares were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

	2016		2015
Shares Issuable Upon Conversion of Series A
Prior Cumulative Preferred Stock		400,000		400,000
Shares Issuable Upon Conversion of Series B
Prior Cumulative Preferred Stock		375,000		375,000
Shares Issuable Upon Conversion of Series A
Cumulative Preferred Stock		222,133		222,133
Shares Issuable Upon Conversion of Series B
Cumulative Preferred Stock		36,201		36,201
Total Dilutive Effect of Contingently Issuable Shares		1,033,334		1,033,334

Advertising Expense

Advertising is expensed when incurred. Advertising expense was $13,941 and $13,791 for the years ended June 30, 2016 and 2015, respectively.

NOTE 2 FORGIVABLE LOAN AND DEFERRED INCOME

During 2004, the Company received a $25,000 economic development incentive from Buchanan County, which is a five year forgivable loan at a rate of $5,000 per year. The Nodaway Valley Bank established an Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of January 3, 2010. The Company met the criteria of occupying a 20,000 square foot building and creating a minimum of two new full-time equivalent jobs during the first year of operation in the new facility. In addition, the Company maintained 19 existing jobs during the five year term. Notice was received February 6, 2009 from the Buchanan County Commission, that the Company had fulfilled its minimum loan requirements so that the loan was forgiven in full and has no further obligations. Since the Company was no longer legally required to return the monies, the liability was reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. Deferred revenue is recognized on a straight line basis over the lease term of 20 years. During the years ended June 30, 2016 and 2015, deferred revenue of $1,298 and $1,299, respectively, was amortized into income.

(26)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 3 NOTES PAYABLE

The Company’s long-term debt at June 30, 2016 and 2015 consists of:

Payee	Terms	2016		2015
Nodaway Valley Bank	$350,000 line-of-credit agreement expiring on January 4, 2017, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration.	$	-	$	-
Ford Credit	$705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle.		38,674		-
Toyota Credit	$364 monthly payments, interest of 3.5%; final payment due December 2020, secured by a vehicle.		18,179		-
Ford Credit	$468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle.		14,004		19,151
Ford Credit	$517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle.		-		3,150
	Total		70,857		22,301
	Less current portion		15,460		8,297
	Long-term portion	$	55,397	$	14,004
Future minimum payments for the years ended June 30 are:
	2017	$	15,460
	2018		16,133
	2019		14,477
	2020		11,798
	2021		10,203
	Thereafter		2,786
	Total	$	70,857

(27)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 4 CAPITAL STOCK

Capital stock authorized, issued, and outstanding as of June 30, 2016 is as follows:

	Shares
			Issued and
	Authorized		Outstanding
Prior Cumulative Preferred Stock, $5 Par Value:
6% Convertible		240,000
Series A				100,000
Series B				100,000
Cumulative Preferred Stock, $20 Par Value:
5% Convertible		150,000
Series A				58,533
Series B				9,539
Common Stock, $1 Par Value:
Reserved for Conversion of
Preferred Stock - 1,030,166 shares		2,000,000		969,834

Cumulative Preferred Stock dividends in arrears at June 30, 2016 and 2015 totaled $7,948,806 and $7,820,734, respectively. Total dividends in arrears, on a per share basis, consist of the following at June 30, 2016 and 2015:

	2016		2015
6% Convertible
Series A	$	17.25	$	16.95
Series B	$	16.80	$	16.50
5% Convertible
Series A	$	66.75	$	65.75
Series B	$	66.75	$	65.75

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. Cumulative preferred stock 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.

(28)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 5 INCOME TAXes

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 2013, 2014, and 2015 are subject to examination by the IRS taxing authority.

The sources of deferred income tax assets and liability at June 30, 2016 and 2015 are as follows:

	2016			2015
Deferred Income Tax Assets:
Inventories	$	1,223		$	1,075
Trade Receivables		6,310			6,213
Deferred Income		4,332			4,828
Total Deferred Income Tax Assets		11,865			12,116
Deferred Income Tax Liability:
Property and Equipment		(94,778	)		(103,694	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

The net deferred income tax asset (liability) is presented in the accompanying June 30, 2016 and 2015 consolidated balance sheets as follows:

	2016			2015
Current Deferred Income Tax Asset	$	7,533		$	7,288
Noncurrent Deferred Income Tax Liability		(90,446	)		(98,866	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

The provision (credit) for income taxes for the years ended June 30, 2016 and 2015 consists of the following:

	2016			2015
Current Income Tax Expense	$	11,138		$	41,400
Deferred Income Tax Expense (Credit)		(8,665	)		19,449
	$	2,473		$	60,849

(29)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 5 INCOME TAXes (CONTINUED)

The income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate to pretax income for the years ended June 30, 2016 and 2015 due to the following:

	2016			2015
Computed at Federal Statutory Rate of 34%	$	12,309		$	68,623
Increase (Decrease) in Income Taxes Resulting from:
Federal Tax Adjustment Due to Actual Rate vs. Statutory Rate		(9,730	)		(10,129	)
Non-Deductible Expenses		630			640
Domestic Production Activities Deduction Credit		(1,767	)		(4,453	)
Other		(27	)		132
State Income Taxes		1,058			6,036
	$	2,473		$	60,849

NOTE 6 INCOME (LOSS) PER SHARE

The income (loss) per share for the years ended June 30, 2016 and 2015, respectively, was computed on the weighted average of outstanding common shares during the year as follows:

	2016			2015
Net Income	$	33,596		$	140,909
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value		60,000			60,000
5% Convertible Cumulative Preferred, $20 Par Value		68,072			68,072
Total Dividend Requirements		128,072			128,072
Net Income (Loss) - Common Stockholders	$	(94,476	)	$	12,837
		2016			2015
Weighted Average of Shares - Basic		969,834			969,834
Dilutive Effect of Contingently Issuable Shares		1,033,334			1,033,334
Weighted Average Shares – Diluted		2,003,168			2,003,168
Basic Earnings (Loss) per Share	$	(0.10	)	$	0.01
Diluted Earnings (Loss) per Share	$	(0.10	)	$	0.01

Contingently issuable shares were not included in the 2016 diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

(30)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 7 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	2016		2015
Cash Paid for:
Interest	$	4,623	$	2,224
Income Taxes		66,408		36,484
Non-Cash Transactions:
Financing of New Vehicles		62,681		21,228

NOTE 8 COMMITMENTS AND CONTINGENCIES

Dye Candy Company leases its office and manufacturing facility, located at 1307 South 59^th, St. Joseph, Missouri, from an entity owned by the Vice-President and Director 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, and currently requires payments of $6,500 per month. At the end of the first five years, the base rent may be increased an amount not greater than 30%, at the sole discretion of lessor and for each additional term of five years. Rental expense was $78,000 for each year ended June 30, 2016 and 2015. The amounts are included in cost of sales.

Future minimum lease payments under this lease are as follows:

Year ending June 30:
2017	$	78,000
2018		78,000
2019		78,000
2020		78,000
2021		78,000
Thereafter		292,500
	$	682,500

As of June 30, 2016, the Company had raw materials purchase commitments with six vendors totaling approximately $256,000.

NOTE 9 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 June 30, 2016, 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.

(31)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 10 CONCENTRATION OF CREDIT RISK

For the years ended June 30, 2016 and 2015, two customers accounted for 58% and 45%, respectively, of the gross sales. As of June 30, 2016 and 2015, two customers accounted for 60% and 55%, respectively, of trade receivables.

NOTE 11 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required regarding customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The guidance will initially be applied retrospectively using one of two methods. The standard will be effective for the entity for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted beginning for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of the amended revenue recognition guidance on its consolidated financial statements.

In July 2015, the FASB issued Accounting Standards Update No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," ("ASU 2015-11"). An entity using an inventory method other than last-in, first out ("LIFO") or the retail inventory method should measure inventory at the lower of cost and net realizable value. The new guidance clarifies that net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The update is effective as of January 1, 2017, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

In February 2016, the FASB issued amended guidance for the treatment of leases. The guidance requires lessees to recognize a right-of-use asset and a corresponding lease liability for all operating and finance leases with lease terms greater than one year. The guidance also requires both qualitative and quantitative disclosures regarding the nature of the entity’s leasing activities. The guidance will initially be applied using a modified retrospective approach. The amendments in the guidance are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of the amended lease guidance on the its consolidated financial statements.

(32)

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2016 and 2015

NOTE 11 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)". ASU 2014-15 provides guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

In November 2015, the FASB issued ASC Update No. 2015-17, “Balance Sheet Classification of Deferred Taxes” as part of its simplification initiatives. This update requires deferred tax liabilities and assets to be classified as non-current on the consolidated condensed balance sheet for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. An entity can elect to adopt prospectively or retrospectively to all periods presented. We do not expect the adoption of ASU 2015-17 to have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02 that amends current consolidation guidance related to the evaluation of whether certain legal entities should be consolidated. The standard modifies both the variable interest entity (“VIE”) model and the voting interest model, including analyses of whether limited partnerships are VIEs and the impact of service fees and related party interests in determining if an entity is a VIE to the reporting entity. The guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

There have been no other newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company's consolidated financial statements.

NOTE 12 SUBSEQUENT EVENTS

On July 5, 2016, the Company purchased a mixer for approximately $9,400.

The Company monitors significant events occurring after June 30, 2016 and prior to the issuance of the financial statements to determine the impact, if any, of the events on the financial statements to be issued. All subsequent events of which the Company is aware were evaluated through the filing date of this Form 10-K.

(33)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable

Item 9A CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

The Company’s principal executive officer, who is also the chief financial and accounting officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that the Company’s disclosure controls and procedures are 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) Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Management has assessed the Company’s internal control over financial reporting in relation to criteria described in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment using those criteria, management concluded that, as of June 30, 2016, the Company’s internal control over financial reporting was effective.

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

(c) Changes in Internal Controls

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

ITEM 9B OTHER INFORMATION

None

(34)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

PART III

Item 10 DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

(a) Directors

Name	Age	Periods of Service as Director	Terms
Barry M. Yantis	71	1980 to Present	One Year
Brett A. Yantis	48	January 21, 1999 to Present	One Year
Brian A. Yantis	68	July 16, 1986 to Present	One Year

		Years of
		Service as
Name	Age	an Officer	Term
Barry M. Yantis	71	37	Until Successor Elected
Brett A. Yantis	48	14	Until Successor Elected
Brian A. Yantis	68	24	Until Successor Elected

(b) Certain Significant Employees

There are no significant employees other than above.

(c) Family Relationships

Barry M. Yantis and Brian A. Yantis are brothers. Brett A. Yantis is the son of Barry M. Yantis.

Business Experience

(1) Barry M. Yantis, President and Treasurer has been an officer of the Company for thirty-seven years, twelve years as Vice-President and twenty-five years as President. He has been on the board of directors for thirty-seven years and has been associated with the candy business for forty-one years.

Brett A. Yantis was elected to the position of Director during the year ending June 30, 1999. Brett was elected Vice-President in January 2003. Brett has been associated with the Company for twenty-two years.

Brian A. Yantis, Secretary has been an officer of the Company since May 1992. Until retiring in 2011, he had been associated with the insurance business for thirty-seven years and was a Vice-President of Aon Risk Services in Chicago, Illinois for twenty-two years.

(35)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 10 DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE (CONTINUED)

(2) The directors and executive officers listed above are also the directors and executive officers of Dye Candy Company.

(d) Involvement in Certain Legal Proceedings

Not applicable

(e) Audit Committee Financial Expert

Registrant is not required to have an audit committee since the stock is not actively traded. The Board of Directors are not considered audit committee financial experts, but do effectively operate as the audit committee.

(f) Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors and employees of the Company. The Code of Business Conduct and Ethics will be provided to any person without charge upon request.

Item 11 EXECUTIVE COMPENSATION

(a) General

Executive officers are compensated for their services as set forth in the Summary Compensation Table. These salaries are approved yearly by the Board of Directors.

(b) Summary Compensation Table

								Long-Term Compensation
		Annual Compensation						Awards				Payouts
Name and						Other		Restricted
Principal	Fiscal					Annual		Stock		Option		LTIP		All Other
Position	Year End	Salary		Bonus		Compensation		Award (s)		SARs (#)		Payouts		Compensation
Barry M. Yantis	1) 06-30-16	$	138,600	$	-	$	2,980		-		-		-		-
Barry M. Yantis	1) 06-30-15	$	133,650	$	19,000	$	2,040		-		-		-		-
Barry M. Yantis	1) 06-30-14	$	132,000	$	4,000	$	2,240		-		-		-		-

1)	CEO, President and Treasurer
2)	No other compensation than that which is listed in compensation table.
3)	No other officers have compensation over $100,000 for their services besides those listed in this compensation table.

(c) Option/SAR grants table

Not applicable

(d) Aggregated option/SAR exercises and fiscal year-end option/SAR value table

Not applicable

(36)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 11 EXECUTIVE COMPENSATION (CONTINUED)

(e) Long-term incentive plan awards table

Not applicable

(f) Compensation of Directors

Directors are not compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings.

(g) Employment contracts and termination of employment and change in control arrangements

No employment contracts exist with any executive officers. In addition, there are no contracts currently in place regarding termination of employment or change in control arrangements.

(h) Report on repricing of option/SARs

Not applicable

(i) Additional information with respect to compensation committee interlocks and insider participation in compensation decisions

The registrant has no formal compensation committee. The Board of Directors, Brian A. Yantis, Barry M. Yantis, and Brett A. Yantis (all current officers of the Company) annually approve the compensation of Barry M. Yantis, CEO, President and Treasurer.

(j) Board compensation committee report on executive compensation

The Board bases the annual salary of the CEO on the Company's prior year performance. The criteria is based upon, but is not limited to, market area expansion, gross profit improvement, control of operating expenses, generation of positive cash flow, and hours devoted to the business during the previous fiscal year.

(37)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND STOCKHOLDER MATTERS

	Title of Class		Name and Address	Amounts and Nature of Beneficial Ownership		% of Class
(a)	Security Ownership of Certain Beneficial Owners Common; Par Value $1 per Share		Barry Yantis, CEO & Director 5605 Osage Drive St. Joseph, MO 64503	194,385	(1)	16.90%	(2)
			Brian Yantis, Officer & Director 1210 E. Clarendon Arlington Heights, IL 60004	97,192	(1)	8.40%	(2)
(b)	Security Ownership of Management Common; Par Value $1 per Share		Two Directors and CEO as a Group	110,856		11.40%
	Prior Cumulative Preferred, $5 Par Value: Series A, 6% Convertible		Two Directors and CEO as a Group	21,533		21.50%
	Prior Cumulative Preferred, $5 Par Value: Series B, 6% Convertible		Two Directors and CEO as a Group	21,533		21.50%
	Cumulative Preferred, $20 Par Value: Series A, $5 Convertible		Two Directors and CEO as a Group	3,017		5.20%
	Cumulative Preferred, $20 Par Value: Series B, $5 Convertible		Two Directors and CEO as a Group	630		6.60%
	(1)	Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock.
	(2)	Reflects the percentage assuming the preferred shares above were converted into common stock.
(c)	No Known Change of Control is Anticipated

(38)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

(a) Transactions with management and others

The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned 100% by Vice-President and Director, Brett A. Yantis. The annual rent is $78,000.

(b) Certain business relationships

Not applicable

(c) Indebtedness of management

Not applicable

(d) Transactions with promoters

Not applicable

Item 14 PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2016 and 2015:

	2016		2015
Audit Fees:
Mayer Hoffman McCann P.C. (MHM)	$	67,807	$	57,824
Audit Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-

MHM leases substantially all its personnel, who work under the control of MHM shareholders, from wholly-owned subsidiaries of CBIZ, Inc., in an alternative practice structure.

(39)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

PART IV

ITEM 15 EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report.

1.	Consolidated Financial Statements:	Page
	Index to Consolidated Financial Statements	16
	Consolidated Balance Sheets	18 - 19
	Consolidated Statements of Income	20
	Consolidated Statements of Stockholders’ Equity	21
	Consolidated Statements of Cash Flows	22
	Notes to Consolidated Financial Statements	23 - 32
2.	Consolidated Financial Statement Schedules:
	None
3.	Exhibits:

The exhibits listed below are filed with or incorporated by reference in this report.

The following have been previously filed and are incorporated by reference to prior years' Forms 10-K filed by the Registrant:

3.1           Articles of Incorporation of Chase General Corporation

3.2           Bylaws

The following are Exhibits attached or explanations included in "Notes to Consolidated Financial Statements" in Part II of this report:

4.            Instruments defining the rights of security holders including indentures - Refer to Note 4.

11.          Computation of income (loss) per share - Refer to Note 6.

21.          Subsidiaries of registrant - Refer to Note 1 of Notes to Consolidated Financial Statements.

31.1        Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a)/15d – 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1        Certification of Chairman of the Board, 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.

(40)

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2016

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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
		(Registrant)
Date: September 23, 2016	By:	/s/ Barry M. Yantis
		Barry M. Yantis
		Chairman of the Board, Chief Executive Officer,
		President and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.

Signatures	Title	Date
/s/ Barry M. Yantis		September 23, 2016
Barry M. Yantis	Chairman of the Board, Chief Executive Officer and Chief Financial Officer, President, Treasurer and Director
/s/ Brett Yantis		September 23, 2016
Brett Yantis	Vice-President and Director
/s/ Brian A. Yantis		September 23, 2016
Brian A. Yantis	Secretary and Director

(41)

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICER REQUIRED BY RULE 13a-14(a)/15d-14(a)

CERTIFICATION

I Barry Yantis, certify that:

1. I have reviewed this Annual Report on Form 10-K 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 which such statements were made, not misleading with respect to the period covered by this annual report;

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

4. I am the small business issuer’s certifying officer and am 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) and 15d-15(f) ) for Chase General Corporation and we 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 Chase General Corporation, including its consolidated subsidiary, is made known to me by others within that entity, 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 our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

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

d) Disclosed in this report any change in Chase General Corporation’s internal control over financial reporting that occurred during Chase General Corporation’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, Chase General Corporation’s internal control over financial reporting;

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to Chase General Corporation’s auditors and our Board of Directors (acting as the audit committee):

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 small business issuer’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 small business issuer’s internal control over financial reporting.

September 23, 2016	/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 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 Annual Report of Chase General Corporation (the “Company”) on Form 10-K for the year ending June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry Yantis, President, Chief Executive Officer, and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of 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 the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

September 23, 2016	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chairman of the Board, Chief Executive Officer
	and Chief Financial Officer, President and Treasurer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Jun. 30, 2016	Sep. 22, 2016	Dec. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	CHASE GENERAL CORP
Entity Central Index Key	0000015357
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Well-Known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		969,834
Entity Public Float			$ 0
Document Type	10-K
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2016	Jun. 30, 2015
CURRENT ASSETS
Cash and Cash Equivalents	$ 19,259	$ 84,204
Trade Receivables, Net of Allowance for Doubtful Accounts of $16,549 and $16,296, Respectively	179,622	187,607
Inventories:
Finished Goods	433,043	377,853
Goods in Process	6,540	13,815
Raw Materials	76,561	90,506
Packaging Materials	135,732	130,726
Prepaid Expenses	5,689	5,689
Income Taxes Receivable	29,111
Deferred Income Taxes	7,533	7,288
Total Current Assets	893,090	897,688
PROPERTY AND EQUIPMENT
Land	35,000	35,000
Buildings	77,348	77,348
Machinery and Equipment	820,885	807,325
Trucks and Autos	213,116	198,845
Office Equipment	31,518	31,518
Leasehold Improvements	72,068	72,068
Total	1,249,935	1,222,104
Less Accumulated Depreciation	896,288	861,341
Total Property and Equipment, Net	353,647	360,763
Total Assets	1,246,737	1,258,451
CURRENT LIABILITIES
Accounts Payable	46,718	111,944
Current Maturities of Notes Payable	15,460	8,297
Accrued Expenses	25,163	17,966
Income Taxes Payable		26,119
Deferred Income	1,299	1,299
Total Current Liabilities	88,640	165,625
LONG-TERM LIABILITIES
Notes Payable, Less Current Maturities	55,397	14,004
Deferred Income Taxes	90,446	98,866
Deferred Income	10,064	11,362
Total Long-Term Liabilities	155,907	124,232
Total Liabilities	244,547	289,857
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	(5,463,806)	(5,497,402)
Total Stockholders' Equity	1,002,190	968,594
Total Liabilities and Stockholders' Equity	1,246,737	1,258,451
Prior cumulative preferred stock, $5 par value: | Series A
Capital Stock Issued and Outstanding:
Preferred stock, value	500,000	500,000
Prior cumulative preferred stock, $5 par value: | Series B
Capital Stock Issued and Outstanding:
Preferred stock, value	500,000	500,000
Cumulative preferred stock, $20 par value | Series A
Capital Stock Issued and Outstanding:
Preferred stock, value	1,170,660	1,170,660
Cumulative preferred stock, $20 par value | Series B
Capital Stock Issued and Outstanding:
Preferred stock, value	$ 190,780	$ 190,780

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Allowance for doubtful accounts on trade receivables (in dollars)	$ 16,549	$ 16,296
Common stock, par value (in dollars per share)	$ 1	$ 1
Prior cumulative preferred stock, $5 par value: | Series A
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, liquidation preference (in dollars)	$ 2,250,000	$ 2,220,000
Prior cumulative preferred stock, $5 par value: | Series B
Preferred stock, par value (in dollars per share)	$ 5	$ 5
Preferred stock, liquidation preference (in dollars)	$ 2,205,000	$ 2,175,000
Cumulative preferred stock, $20 par value | Series A
Preferred stock, par value (in dollars per share)	$ 20	$ 20
Preferred stock, liquidation preference (in dollars)	$ 5,077,730	$ 5,019,197
Cumulative preferred stock, $20 par value | Series B
Preferred stock, par value (in dollars per share)	$ 20	$ 20
Preferred stock, liquidation preference (in dollars)	$ 827,516	$ 817,977

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
NET SALES	$ 3,304,604	$ 3,223,939
COST OF SALES	2,477,479	2,267,783
Gross Profit on Sales	827,125	956,156
OPERATING EXPENSES
Selling	436,869	423,802
General and Administrative	372,684	368,466
Gain on Sale of Equipment	(21,364)	(26,502)
Total Operating Expenses	788,189	765,766
Income from Operations	38,936	190,390
OTHER INCOME (EXPENSE)
Miscellaneous Income	1,891	13,592
Interest Expense	(4,758)	(2,224)
Total Other Income (Expense), Net	(2,867)	11,368
Net Income before Income Taxes	36,069	201,758
PROVISION FOR INCOME TAXES	2,473	60,849
NET INCOME	$ 33,596	$ 140,909
NET INCOME (LOSS) PER SHARE OF COMMON STOCK
- BASIC (in dollars per share)	$ (0.10)	$ 0.01
- DILUTED (in dollars per share)	$ (0.10)	$ 0.01

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)	Preferred Stock Prior Cumulative Preferred Stock - Series A	Preferred Stock Prior Cumulative Preferred Stock - Series B	Preferred Stock Cumulative Preferred Stock - Series A	Preferred Stock Cumulative Preferred Stock - Series B	Common Stock	Paid-In Capital	Accumulated Deficit	Total
BALANCE at Jun. 30, 2014	$ 500,000	$ 500,000	$ 1,170,660	$ 190,780	$ 969,834	$ 3,134,722	$ (5,638,311)	$ 827,685
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							140,909	140,909
BALANCE at Jun. 30, 2015	500,000	500,000	1,170,660	190,780	969,834	3,134,722	(5,497,402)	968,594
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income							33,596	33,596
BALANCE at Jun. 30, 2016	$ 500,000	$ 500,000	$ 1,170,660	$ 190,780	$ 969,834	$ 3,134,722	$ (5,463,806)	$ 1,002,190

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from Customers	$ 3,312,589	$ 3,215,018
Deferred Income	1,298	1,299
Cost of Sales, Selling, General and Administrative Expenses Paid	(3,269,005)	(3,121,928)
Interest Paid	(4,623)	(2,224)
Income Taxes Paid	(66,408)	(36,484)
Net Cash Provided (Used) by Operating Activities	(26,149)	55,681
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Property and Equipment	(24,671)	(108,798)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Line-of-Credit	300,000	265,000
Principal Payments on Line-of-Credit	(300,000)	(265,000)
Principal Payments on Notes Payable	(14,125)	(25,114)
Net Cash Used by Financing Activities	(14,125)	(25,114)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(64,945)	(78,231)
Cash and Cash Equivalents, Beginning of Year	84,204	162,435
CASH AND CASH EQUIVALENTS, END OF YEAR	19,259	84,204
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES
Net Income	33,596	140,909
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	115,832	98,810
Allowance for Bad Debts	253	(412)
Deferred Income Amortization	(1,298)	(1,299)
Deferred Income Taxes	(8,665)	19,449
Gain on Sale of Equipment	(21,364)	(26,502)
Effects of Changes in Operating Assets and Liabilities:
Trade Receivables	7,732	(8,509)
Inventories	(38,976)	(117,090)
Prepaid Expenses		6,544
Income Taxes Receivable	(29,111)
Accounts Payable	(65,226)	59,997
Accrued Expenses	7,197	(121,132)
Income Taxes Payable	(26,119)	4,916
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES	$ (26,149)	$ 55,681

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Jun. 30, 2016

Nature Of Business and Significant Accounting Policies [Abstract]

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Chase General Corporation (the Company) was incorporated on November 6, 1944 in the state of Missouri for the purpose of manufacturing confectionery products. The Company grants credit terms to substantially all customers, consisting of repackers, grocery accounts, and national syndicate accounts, who are primarily located in the Midwest region of the United States.

Significant accounting policies are as follows:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting of the Business

The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 in these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Revenue Recognition

The Company recognizes revenues as product is shipped to customers. Net sales are comprised of the total sales billed during the period, including shipping and handling charges to customers, less the estimated returns, customer allowances and customer discounts.

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2016 and 2015 was $183,456 and $187,778, respectively.

Trade Receivables

Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the trade receivables. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due to the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or that require an excessive collection cost, are written off to the allowance for doubtful accounts.

Inventories

Inventories are carried at the "lower of cost or market value" with cost being determined on the "first-in, first-out" basis of accounting. The cost of finished goods and goods in process inventories include an estimate for manufacturing overhead.

Property and Equipment

The Company’s property and equipment is recorded at cost and is being depreciated on straight-line and accelerated methods over the following estimated useful lives:

Buildings	39 years
Machinery and equipment	5 – 7 years
Trucks and autos	5 years
Office equipment	5 – 7 years
Leasehold improvements	Lesser of estimated
	useful life or the
	lease term

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

Income Taxes

Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred income tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred income tax assets are only recognized if it is more likely than not that a tax position will be realized or sustained upon examination by the relevant taxing authority. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred income tax assets will not be realized. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of relevant information. Deferred income tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

The Company’s policy is to evaluate uncertain tax positions under the guidance as prescribed by Accounting Standards Codification (ASC) 740, Income Taxes. As of June 30, 2016 and 2015, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company had no accruals for interest or penalties as of June 30, 2016 and 2015.

Earnings Per Common Share

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, diluted earnings per share will be calculated in the same manner as basic earnings per share. 

Earnings Per Common Share (Continued)

The following table details out the contingently issuable shares as for 2016 and 2015. For 2016, the contingently issuable shares were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

	2016		2015
Shares Issuable Upon Conversion of Series A
Prior Cumulative Preferred Stock		400,000		400,000
Shares Issuable Upon Conversion of Series B
Prior Cumulative Preferred Stock		375,000		375,000
Shares Issuable Upon Conversion of Series A
Cumulative Preferred Stock		222,133		222,133
Shares Issuable Upon Conversion of Series B
Cumulative Preferred Stock		36,201		36,201
Total Dilutive Effect of Contingently Issuable Shares		1,033,334		1,033,334

Advertising Expense

Advertising is expensed when incurred. Advertising expense was $13,941 and $13,791 for the years ended June 30, 2016 and 2015, respectively.

XML

FORGIVABLE LOAN AND DEFERRED INCOME

12 Months Ended

Jun. 30, 2016

Forgivable Loan and Deferred Income [Abstract]

FORGIVABLE LOAN AND DEFERRED INCOME

NOTE 2 FORGIVABLE LOAN AND DEFERRED INCOME

During 2004, the Company received a $25,000 economic development incentive from Buchanan County, which is a five year forgivable loan at a rate of $5,000 per year. The Nodaway Valley Bank established an Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of January 3, 2010. The Company met the criteria of occupying a 20,000 square foot building and creating a minimum of two new full-time equivalent jobs during the first year of operation in the new facility. In addition, the Company maintained 19 existing jobs during the five year term. Notice was received February 6, 2009 from the Buchanan County Commission, that the Company had fulfilled its minimum loan requirements so that the loan was forgiven in full and has no further obligations. Since the Company was no longer legally required to return the monies, the liability was reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. Deferred revenue is recognized on a straight line basis over the lease term of 20 years. During the years ended June 30, 2016 and 2015, deferred revenue of $1,298 and $1,299, respectively, was amortized into income.

XML

NOTES PAYABLE

12 Months Ended

Jun. 30, 2016

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 3 NOTES PAYABLE

The Company’s long-term debt at June 30, 2016 and 2015 consists of:

Payee	Terms	2016		2015
Nodaway Valley Bank	$350,000 line-of-credit agreement expiring on January 4, 2017, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration.	$	-	$	-
Ford Credit	$705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle.		38,674		-
Toyota Credit	$364 monthly payments, interest of 3.5%; final payment due December 2020, secured by a vehicle.		18,179		-
Ford Credit	$468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle.		14,004		19,151
Ford Credit	$517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle.		-		3,150
	Total		70,857		22,301
	Less current portion		15,460		8,297
	Long-term portion	$	55,397	$	14,004
Future minimum payments for the years ended June 30 are:
	2017	$	15,460
	2018		16,133
	2019		14,477
	2020		11,798
	2021		10,203
	Thereafter		2,786
	Total	$	70,857

XML

CAPITAL STOCK

12 Months Ended

Jun. 30, 2016

Equity [Abstract]

CAPITAL STOCK

NOTE 4 CAPITAL STOCK

Capital stock authorized, issued, and outstanding as of June 30, 2016 is as follows:

	Shares
			Issued and
	Authorized		Outstanding
Prior Cumulative Preferred Stock, $5 Par Value:
6% Convertible		240,000
Series A				100,000
Series B				100,000
Cumulative Preferred Stock, $20 Par Value:
5% Convertible		150,000
Series A				58,533
Series B				9,539
Common Stock, $1 Par Value:
Reserved for Conversion of
Preferred Stock - 1,030,166 shares		2,000,000		969,834

Cumulative Preferred Stock dividends in arrears at June 30, 2016 and 2015 totaled $7,948,806 and $7,820,734, respectively. Total dividends in arrears, on a per share basis, consist of the following at June 30, 2016 and 2015:

	2016		2015
6% Convertible
Series A	$	17.25	$	16.95
Series B	$	16.80	$	16.50
5% Convertible
Series A	$	66.75	$	65.75
Series B	$	66.75	$	65.75

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. Cumulative preferred stock 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.

XML

INCOME TAX

12 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 5 INCOME TAXES

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 2013, 2014, and 2015 are subject to examination by the IRS taxing authority.

The sources of deferred income tax assets and liability at June 30, 2016 and 2015 are as follows:

	2016			2015
Deferred Income Tax Assets:
Inventories	$	1,223		$	1,075
Trade Receivables		6,310			6,213
Deferred Income		4,332			4,828
Total Deferred Income Tax Assets		11,865			12,116
Deferred Income Tax Liability:
Property and Equipment		(94,778	)		(103,694	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

The net deferred income tax asset (liability) is presented in the accompanying June 30, 2016 and 2015 consolidated balance sheets as follows:

	2016			2015
Current Deferred Income Tax Asset	$	7,533		$	7,288
Noncurrent Deferred Income Tax Liability		(90,446	)		(98,866	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

The provision (credit) for income taxes for the years ended June 30, 2016 and 2015 consists of the following:

	2016			2015
Current Income Tax Expense	$	11,138		$	41,400
Deferred Income Tax Expense (Credit)		(8,665	)		19,449
	$	2,473		$	60,849

The income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate to pretax income for the years ended June 30, 2016 and 2015 due to the following:

	2016			2015
Computed at Federal Statutory Rate of 34%	$	12,309		$	68,623
Increase (Decrease) in Income Taxes Resulting from:
Federal Tax Adjustment Due to Actual Rate vs. Statutory Rate		(9,730	)		(10,129	)
Non-Deductible Expenses		630			640
Domestic Production Activities Deduction Credit		(1,767	)		(4,453	)
Other		(27	)		132
State Income Taxes		1,058			6,036
	$	2,473		$	60,849

XML

INCOME (LOSS) PER SHARE

12 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

INCOME (LOSS) PER SHARE

NOTE 6 INCOME (LOSS) PER SHARE

The income (loss) per share for the years ended June 30, 2016 and 2015, respectively, was computed on the weighted average of outstanding common shares during the year as follows:

	2016			2015
Net Income	$	33,596		$	140,909
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value		60,000			60,000
5% Convertible Cumulative Preferred, $20 Par Value		68,072			68,072
Total Dividend Requirements		128,072			128,072
Net Income (Loss) - Common Stockholders	$	(94,476	)	$	12,837
		2016			2015
Weighted Average of Shares - Basic		969,834			969,834
Dilutive Effect of Contingently Issuable Shares		1,033,334			1,033,334
Weighted Average Shares – Diluted		2,003,168			2,003,168
Basic Earnings (Loss) per Share	$	(0.10	)	$	0.01
Diluted Earnings (Loss) per Share	$	(0.10	)	$	0.01

Contingently issuable shares were not included in the 2016 diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

XML

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

12 Months Ended

Jun. 30, 2016

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

NOTE 7 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	2016		2015
Cash Paid for:
Interest	$	4,623	$	2,224
Income Taxes		66,408		36,484
Non-Cash Transactions:
Financing of New Vehicles		62,681		21,228

XML

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 8 COMMITMENTS AND CONTINGENCIES

Dye Candy Company leases its office and manufacturing facility, located at 1307 South 59^th, St. Joseph, Missouri, from an entity owned by the Vice-President and Director 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, and currently requires payments of $6,500 per month. At the end of the first five years, the base rent may be increased an amount not greater than 30%, at the sole discretion of lessor and for each additional term of five years. Rental expense was $78,000 for each year ended June 30, 2016 and 2015. The amounts are included in cost of sales.

Future minimum lease payments under this lease are as follows:

Year ending June 30:
2017	$	78,000
2018		78,000
2019		78,000
2020		78,000
2021		78,000
Thereafter		292,500
	$	682,500

As of June 30, 2016, the Company had raw materials purchase commitments with six vendors totaling approximately $256,000.

XML

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 9 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 June 30, 2016, 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.

XML

CONCENTRATION OF CREDIT RISK

12 Months Ended

Jun. 30, 2016

Risks and Uncertainties [Abstract]

CONCENTRATION OF CREDIT RISK

NOTE 10 CONCENTRATION OF CREDIT RISK

For the years ended June 30, 2016 and 2015, two customers accounted for 58% and 45%, respectively, of the gross sales. As of June 30, 2016 and 2015, two customers accounted for 60% and 55%, respectively, of trade receivables.

XML

RECENTLY ISSUED ACCOUNTING PRONOUONCEMENTS

12 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

RECENTLY ISSUED ACCOUNTING PRONOUONCEMENTS

NOTE 11 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required regarding customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The guidance will initially be applied retrospectively using one of two methods. The standard will be effective for the entity for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted beginning for annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is evaluating the impact of the amended revenue recognition guidance on its consolidated financial statements.

In July 2015, the FASB issued Accounting Standards Update No. 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," ("ASU 2015-11"). An entity using an inventory method other than last-in, first out ("LIFO") or the retail inventory method should measure inventory at the lower of cost and net realizable value. The new guidance clarifies that net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The update is effective as of January 1, 2017, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.

In February 2016, the FASB issued amended guidance for the treatment of leases. The guidance requires lessees to recognize a right-of-use asset and a corresponding lease liability for all operating and finance leases with lease terms greater than one year. The guidance also requires both qualitative and quantitative disclosures regarding the nature of the entity’s leasing activities. The guidance will initially be applied using a modified retrospective approach. The amendments in the guidance are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the impact of the amended lease guidance on the its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40)". ASU 2014-15 provides guidance related to management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosure. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and for interim and annual periods thereafter. Early application is permitted. We do not expect the adoption of ASU 2014-15 to have a material effect on our financial position, results of operations or cash flows.

In November 2015, the FASB issued ASC Update No. 2015-17, “Balance Sheet Classification of Deferred Taxes” as part of its simplification initiatives. This update requires deferred tax liabilities and assets to be classified as non-current on the consolidated condensed balance sheet for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early application is permitted. An entity can elect to adopt prospectively or retrospectively to all periods presented. We do not expect the adoption of ASU 2015-17 to have a material effect on our financial position, results of operations or cash flows.

In February 2015, the FASB issued ASU 2015-02 that amends current consolidation guidance related to the evaluation of whether certain legal entities should be consolidated. The standard modifies both the variable interest entity (“VIE”) model and the voting interest model, including analyses of whether limited partnerships are VIEs and the impact of service fees and related party interests in determining if an entity is a VIE to the reporting entity. The guidance is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial position, results of operations or cash flows.

There have been no other newly issued or newly applicable accounting pronouncements that have, or are expected to have, a significant impact on the Company's consolidated financial statements.

XML

SUBSEQUENT EVENTS

12 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 12 SUBSEQUENT EVENTS

On July 5, 2016, the Company purchased a mixer for approximately $9,400.

The Company monitors significant events occurring after June 30, 2016 and prior to the issuance of the financial statements to determine the impact, if any, of the events on the financial statements to be issued. All subsequent events of which the Company is aware were evaluated through the filing date of this Form 10-K.

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Jun. 30, 2016

Nature Of Business and Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting of the Business

Segment Reporting of the Business

The subsidiary, Dye Candy 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. The products of both divisions are sold to the same type of customers in the same geographical areas. In addition, 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 in these consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Revenue Recognition

Revenue Recognition

The Company recognizes revenues as product is shipped to customers. Net sales are comprised of the total sales billed during the period, including shipping and handling charges to customers, less the estimated returns, customer allowances and customer discounts.

Shipping and Handling Costs

Shipping and Handling Costs

Shipping and handling costs for freight expense on goods shipped are included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2016 and 2015 was $183,456 and $187,778, respectively.

Trade Receivables

Trade Receivables

Trade receivables are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Trade receivables are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of trade receivables are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of trade receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the trade receivables. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due to the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or that require an excessive collection cost, are written off to the allowance for doubtful accounts.

Inventories

Inventories

Inventories are carried at the "lower of cost or market value" with cost being determined on the "first-in, first-out" basis of accounting. The cost of finished goods and goods in process inventories include an estimate for manufacturing overhead.

Property and Equipment

Property and Equipment

The Company’s property and equipment is recorded at cost and is being depreciated on straight-line and accelerated methods over the following estimated useful lives:

Buildings	39 years
Machinery and equipment	5 – 7 years
Trucks and autos	5 years
Office equipment	5 – 7 years
Leasehold improvements	Lesser of estimated
	useful life or the
	lease term

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

Income Taxes

Income Taxes

Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred income tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred income tax assets are only recognized if it is more likely than not that a tax position will be realized or sustained upon examination by the relevant taxing authority. Deferred income tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred income tax assets will not be realized. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon settlement with a taxing authority that has full knowledge of relevant information. Deferred income tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

The Company’s policy is to evaluate uncertain tax positions under the guidance as prescribed by Accounting Standards Codification (ASC) 740, Income Taxes. As of June 30, 2016 and 2015, the Company has not identified any uncertain tax positions requiring recognition in the consolidated financial statements. The Company had no accruals for interest or penalties as of June 30, 2016 and 2015.

Earnings Per Common Share

Earnings Per Common Share

Basic earnings per common share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, diluted earnings per share will be calculated in the same manner as basic earnings per share.

The following table details out the contingently issuable shares as for 2016 and 2015. For 2016, the contingently issuable shares were not included in diluted earnings per common share as they would have an antidilutive effect upon earnings per share.

	2016		2015
Shares Issuable Upon Conversion of Series A
Prior Cumulative Preferred Stock		400,000		400,000
Shares Issuable Upon Conversion of Series B
Prior Cumulative Preferred Stock		375,000		375,000
Shares Issuable Upon Conversion of Series A
Cumulative Preferred Stock		222,133		222,133
Shares Issuable Upon Conversion of Series B
Cumulative Preferred Stock		36,201		36,201
Total Dilutive Effect of Contingently Issuable Shares		1,033,334		1,033,334

Advertising Expense

Advertising Expense

Advertising is expensed when incurred. Advertising expense was $13,941 and $13,791 for the years ended June 30, 2016 and 2015, respectively.

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Jun. 30, 2016

Nature Of Business and Significant Accounting Policies [Abstract]

Schedule of property plant and equipment depreciated over the estimated useful life

Buildings	39 years
Machinery and equipment	5 – 7 years
Trucks and autos	5 years
Office equipment	5 – 7 years
Leasehold improvements	Lesser of estimated
	useful life or the
	lease term

Schedule of antidilutive shares excluded from computation of earnings per share

	2016		2015
Shares Issuable Upon Conversion of Series A
Prior Cumulative Preferred Stock		400,000		400,000
Shares Issuable Upon Conversion of Series B
Prior Cumulative Preferred Stock		375,000		375,000
Shares Issuable Upon Conversion of Series A
Cumulative Preferred Stock		222,133		222,133
Shares Issuable Upon Conversion of Series B
Cumulative Preferred Stock		36,201		36,201
Total Dilutive Effect of Contingently Issuable Shares		1,033,334		1,033,334

XML

NOTES PAYABLE (Tables)

12 Months Ended

Jun. 30, 2016

Notes Payable [Abstract]

Schedule of long-term debt

Payee	Terms	2016		2015
Nodaway Valley Bank	$350,000 line-of-credit agreement expiring on January 4, 2017, 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. Management anticipates renewal of the line-of-credit agreement at similar terms upon expiration.	$	-	$	-
Ford Credit	$705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle.		38,674		-
Toyota Credit	$364 monthly payments, interest of 3.5%; final payment due December 2020, secured by a vehicle.		18,179		-
Ford Credit	$468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle.		14,004		19,151
Ford Credit	$517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle.		-		3,150
	Total		70,857		22,301
	Less current portion		15,460		8,297
	Long-term portion	$	55,397	$	14,004

Schedule of future minimum payments of long term debt

2017	$	15,460
2018		16,133
2019		14,477
2020		11,798
2021		10,203
Thereafter		2,786
Total	$	70,857

XML

CAPITAL STOCK (Tables)

12 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of capital stock authorized, issued, and outstanding

	Shares
			Issued and
	Authorized		Outstanding
Prior Cumulative Preferred Stock, $5 Par Value:
6% Convertible		240,000
Series A				100,000
Series B				100,000
Cumulative Preferred Stock, $20 Par Value:
5% Convertible		150,000
Series A				58,533
Series B				9,539
Common Stock, $1 Par Value:
Reserved for Conversion of
Preferred Stock - 1,030,166 shares		2,000,000		969,834

Schedule of preferred stock dividends in arrears on a per share basis

	2016		2015
6% Convertible
Series A	$	17.25	$	16.95
Series B	$	16.80	$	16.50
5% Convertible
Series A	$	66.75	$	65.75
Series B	$	66.75	$	65.75

XML

INCOME TAX (Tables)

12 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Schedule of sources of deferred tax assets and liability

	2016			2015
Deferred Income Tax Assets:
Inventories	$	1,223		$	1,075
Trade Receivables		6,310			6,213
Deferred Income		4,332			4,828
Total Deferred Income Tax Assets		11,865			12,116
Deferred Income Tax Liability:
Property and Equipment		(94,778	)		(103,694	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

Schedule of net deferred income tax asset (liability)

	2016			2015
Current Deferred Income Tax Asset	$	7,533		$	7,288
Noncurrent Deferred Income Tax Liability		(90,446	)		(98,866	)
NET DEFERRED INCOME TAX LIABILITY	$	(82,913	)	$	(91,578	)

Schedule of provision (credit) for income taxes

	2016			2015
Current Income Tax Expense	$	11,138		$	41,400
Deferred Income Tax Expense (Credit)		(8,665	)		19,449
	$	2,473		$	60,849

Schedule of effective income tax rate reconciliation

	2016			2015
Computed at Federal Statutory Rate of 34%	$	12,309		$	68,623
Increase (Decrease) in Income Taxes Resulting from:
Federal Tax Adjustment Due to Actual Rate vs. Statutory Rate		(9,730	)		(10,129	)
Non-Deductible Expenses		630			640
Domestic Production Activities Deduction Credit		(1,767	)		(4,453	)
Other		(27	)		132
State Income Taxes		1,058			6,036
	$	2,473		$	60,849

XML

INCOME (LOSS) PER SHARE (Tables)

12 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of income per share computed on the weighted average of outstanding common shares

	2016			2015
Net Income	$	33,596		$	140,909
Preferred Dividend Requirements:
6% Prior Cumulative Preferred, $5 Par Value		60,000			60,000
5% Convertible Cumulative Preferred, $20 Par Value		68,072			68,072
Total Dividend Requirements		128,072			128,072
Net Income (Loss) - Common Stockholders	$	(94,476	)	$	12,837
		2016			2015
Weighted Average of Shares - Basic		969,834			969,834
Dilutive Effect of Contingently Issuable Shares		1,033,334			1,033,334
Weighted Average Shares – Diluted		2,003,168			2,003,168
Basic Earnings (Loss) per Share	$	(0.10	)	$	0.01
Diluted Earnings (Loss) per Share	$	(0.10	)	$	0.01

XML

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Tables)

12 Months Ended

Jun. 30, 2016

Supplemental Cash Flow Elements [Abstract]

Schedule of supplemental disclosures of cash flow information

	2016		2015
Cash Paid for:
Interest	$	4,623	$	2,224
Income Taxes		66,408		36,484
Non-Cash Transactions:
Financing of New Vehicles		62,681		21,228

XML

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments

Year ending June 30:
2017	$	78,000
2018		78,000
2019		78,000
2020		78,000
2021		78,000
Thereafter		292,500
	$	682,500

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Estimated useful lives (Details)	12 Months Ended
	Jun. 30, 2016
Buildings
Property, Plant and Equipment [Line Items]
Estimated useful lives	39 years
Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 - 7 years
Trucks and autos
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 years
Office equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives	5 - 7 years
Leasehold improvements
Property, Plant and Equipment [Line Items]
Estimated useful lives	Lesser of estimated useful life or the lease term

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - Antidilutive effect of contingently issuable shares (Details 1) - shares	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares Issuable Upon Conversion of Cumulative Preferred Stock	1,033,334	1,033,334
Prior Cumulative Preferred Stock - Series A
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares Issuable Upon Conversion of Cumulative Preferred Stock	400,000	400,000
Prior Cumulative Preferred Stock - Series B
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares Issuable Upon Conversion of Cumulative Preferred Stock	375,000	375,000
Cumulative Preferred Stock - Series A
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares Issuable Upon Conversion of Cumulative Preferred Stock	222,133	222,133
Cumulative Preferred Stock - Series B
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares Issuable Upon Conversion of Cumulative Preferred Stock	36,201	36,201

XML

NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals)	12 Months Ended
	Jun. 30, 2016 USD ($) Division Segment	Jun. 30, 2015 USD ($)
Nature Of Business and Significant Accounting Policies [Abstract]
Number of product divisions | Division	2
Number of reportable segments | Segment	1
Freight expense on goods shipped	$ 183,456	$ 187,778
Advertising expense	$ 13,941	$ 13,791

XML

FORGIVABLE LOAN AND DEFERRED INCOME (Detail Textuals)	12 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2004 USD ($) ft²
Line of Credit Facility [Line Items]
Lease term of deferred revenue	20 years
Amortized deferred revenue into income for each period	$ 1,298	$ 1,299
Nodaway Valley Bank | Standby Letters of Credit
Line of Credit Facility [Line Items]
Economic development incentive, forgivable loan			$ 25,000
Term of forgivable loan			5 years
Loan rate per year			$ 5,000
Letter of credit, collateral amount			$ 25,000
Area of land occupying | ft²			20,000

XML

NOTES PAYABLE - Long-term debt (Details) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Total	$ 70,857	$ 22,301
Less current portion	15,460	8,297
Long-term portion	55,397	14,004
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2017, with a variable interest rate at prime but not less than 5%
Debt Instrument [Line Items]
Total
Ford Credit: $705 monthly payments, interest of 5.8%; final payment due October 2021, secured by a vehicle
Debt Instrument [Line Items]
Total	38,674
Toyota Credit: $364 monthly payments including interest of 3.5% due December 2020, secured by a vehicle
Debt Instrument [Line Items]
Total	18,179
Ford Credit: $468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle
Debt Instrument [Line Items]
Total	14,004	19,151
Ford Credit: $517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle
Debt Instrument [Line Items]
Total		$ 3,150

XML

NOTES PAYABLE - Long-term debt (Parentheticals) (Details) - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Nodaway Valley Bank: $350,000 line-of-credit agreement expiring on January 4, 2017, with a variable interest rate at prime but not less than 5%
Debt Instrument [Line Items]
Line-of-credit agreement, amount	$ 350,000	$ 350,000
Interest rate, description	Variable interest rate at prime	Variable interest rate at prime
Interest 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
Notes payable, frequency	Monthly	Monthly
Interest rate	5.80%	5.80%
Toyota Credit: $364 monthly payments including interest of 3.5% due December 2020, secured by a vehicle
Debt Instrument [Line Items]
Notes payable, periodic payment	$ 364	$ 364
Notes payable, frequency	Monthly	Monthly
Interest rate	3.50%	3.50%
Ford Credit: $468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle
Debt Instrument [Line Items]
Notes payable, periodic payment	$ 468	$ 468
Notes payable, frequency	Monthly	Monthly
Interest rate	2.90%	2.90%
Ford Credit: $517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle
Debt Instrument [Line Items]
Notes payable, periodic payment	$ 517	$ 517
Notes payable, frequency	Monthly	Monthly
Interest rate	0.00%	0.00%

XML

NOTES PAYABLE - Future minimum payments (Details 1) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Notes Payable [Abstract]
2017	$ 15,460
2018	16,133
2019	14,477
2020	11,798
2021	10,203
Thereafter	2,786
Total	$ 70,857	$ 22,301

XML

CAPITAL STOCK - Shares authorized, issued, and outstanding (Details)	Jun. 30, 2016 shares
Class of Stock [Line Items]
Common Stock- Reserved for conversion of Preferred Shares Authorized	2,000,000
Common Stock- Reserved for conversion of Preferred Shares Issued	969,834
Common Stock- Reserved for conversion of Preferred Shares Outstanding	969,834
6% Prior Convertible Cumulative Preferred Stock - Series A
Class of Stock [Line Items]
Preferred Shares Issued	100,000
Preferred Shares Outstanding	100,000
6% Prior Convertible Cumulative Preferred Stock - Series B
Class of Stock [Line Items]
Preferred Shares Issued	100,000
Preferred Shares Outstanding	100,000
5% Convertible Cumulative Preferred Stock - Series A
Class of Stock [Line Items]
Preferred Shares Issued	58,533
Preferred Shares Outstanding	58,533
5% Convertible Cumulative Preferred Stock - Series B
Class of Stock [Line Items]
Preferred Shares Issued	9,539
Preferred Shares Outstanding	9,539
6% Prior Cumulative Preferred, $5 par value
Class of Stock [Line Items]
Preferred Shares Authorized	240,000
5% Convertible Cumulative Preferred, $20 par value
Class of Stock [Line Items]
Preferred Shares Authorized	150,000

XML

CAPITAL STOCK - Shares authorized, issued, and outstanding (Parentheticals) (Details)	12 Months Ended
	Jun. 30, 2016 $ / shares
6% Prior Cumulative Preferred, $5 par value
Class of Stock [Line Items]
Preferred stock, par value (in dollars per share)	$ 5
Stated percentage of preferred stock	6.00%
5% Convertible Cumulative Preferred, $20 par value
Class of Stock [Line Items]
Preferred stock, par value (in dollars per share)	$ 20
Stated percentage of preferred stock	5.00%

XML

CAPITAL STOCK - Shares authorized, issued, and outstanding (Parentheticals 1) (Details) - $ / shares	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Equity [Abstract]
Common stock, par value (in dollars per share)	$ 1	$ 1
Reserved for conversion of preferred stock (in shares)	1,030,166

XML

CAPITAL STOCK - Preferred Stock dividends in arrears on a per share basis (Details 1) - $ / shares	Jun. 30, 2016	Jun. 30, 2015
6% Prior Convertible Cumulative Preferred Stock - Series A
Class of Stock [Line Items]
Cumulative preferred stock dividends in arrears	$ 17.25	$ 16.95
6% Prior Convertible Cumulative Preferred Stock - Series B
Class of Stock [Line Items]
Cumulative preferred stock dividends in arrears	16.80	16.50
5% Convertible Cumulative Preferred Stock - Series A
Class of Stock [Line Items]
Cumulative preferred stock dividends in arrears	66.75	65.75
5% Convertible Cumulative Preferred Stock - Series B
Class of Stock [Line Items]
Cumulative preferred stock dividends in arrears	$ 66.75	$ 65.75

XML

CAPITAL STOCK (Detail Textuals) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Equity [Abstract]
Total cumulative preferred stock dividends in arrears	$ 7,948,806	$ 7,820,734

XML

CAPITAL STOCK (Detail Textuals 1)	12 Months Ended
	Jun. 30, 2016 $ / shares shares
6% Prior Cumulative Preferred, $5 par value
Class of Stock [Line Items]
Redemption price per share (in dollars per share)	$ 5.25
Preferred stock, liquidation preference per share (in dollars per share)	$ 5.25
6% Prior Convertible Cumulative Preferred Stock - Series A
Class of Stock [Line Items]
Number of common stock exchanged for each preferred stock held | shares	4
6% Prior Convertible Cumulative Preferred Stock - Series B
Class of Stock [Line Items]
Number of common stock exchanged for each preferred stock held | shares	3.75
5% Convertible Cumulative Preferred, $20 par value
Class of Stock [Line Items]
Redemption price per share (in dollars per share)	$ 21.00
Preferred stock, liquidation preference per share (in dollars per share)	$ 20.00
Number of common stock exchanged for each preferred stock held | shares	3.795

XML

INCOME TAXES - Sources of deferred tax assets and liability (Details) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Deferred Income Tax Assets:
Inventories	$ 1,223	$ 1,075
Trade Receivables	6,310	6,213
Deferred Income	4,332	4,828
Total Deferred Income Tax Assets	11,865	12,116
Deferred Income Tax Liability:
Property and Equipment	(94,778)	(103,694)
NET DEFERRED INCOME TAX LIABILITY	$ (82,913)	$ (91,578)

XML

INCOME TAXES - Net deferred tax assets (liability) (Details 1) - USD ($)	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Current Deferred Income Tax Asset	$ 7,533	$ 7,288
Noncurrent Deferred Income Tax Liability	(90,446)	(98,866)
NET DEFERRED INCOME TAX LIABILITY	$ (82,913)	$ (91,578)

XML

INCOME TAXES - Provision for income taxes (Details 2) - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Current Income Tax Expense	$ 11,138	$ 41,400
Deferred Income Tax Expense (Credit)	(8,665)	19,449
Provision (credit) for income taxes	$ 2,473	$ 60,849

XML

INCOME TAXES - Effective income tax rate reconciliation (Details 3) - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Computed at Federal Statutory Rate of 34%	$ 12,309	$ 68,623
Increase (Decrease) in Income Taxes Resulting from:
Federal Tax Adjustment Due to Actual Rate vs. Statutory Rate	(9,730)	(10,129)
Non-Deductible Expenses	630	640
Domestic Production Activities Deduction Credit	(1,767)	(4,453)
Other	(27)	132
State Income Taxes	1,058	6,036
Provision (credit) for income taxes	$ 2,473	$ 60,849

XML

INCOME TAXES - Effective income tax rate reconciliation (Parentheticals) (Details 3)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Tax Disclosure [Abstract]
Federal statutory income tax rate, percent	34.00%	34.00%

XML

INCOME (LOSS) PER SHARE (Details) - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Class of Stock [Line Items]
Net Income	$ 33,596	$ 140,909
Preferred Dividend Requirements:
Total Dividend Requirements	128,072	128,072
Net Income (Loss) - Common Stockholders	$ (94,476)	$ 12,837
Weighted Average of Shares - Basic (in shares)	969,834	969,834
Dilutive Effect of Contingently Issuable Shares (in shares)	1,033,334	1,033,334
Weighted Average Shares - Diluted (in shares)	2,003,168	2,003,168
- BASIC (in dollars per share)	$ (0.10)	$ 0.01
- DILUTED (in dollars per share)	$ (0.10)	$ 0.01
6% Prior Cumulative Preferred, $5 par value
Preferred Dividend Requirements:
Total Dividend Requirements	$ 60,000	$ 60,000
5% Convertible Cumulative Preferred, $20 par value
Preferred Dividend Requirements:
Total Dividend Requirements	$ 68,072	$ 68,072

XML

INCOME (LOSS) PER SHARE (Parentheticals) (Details)	12 Months Ended
	Jun. 30, 2016 $ / shares
6% Prior Cumulative Preferred, $5 par value
Class of Stock [Line Items]
Stated percentage of preferred stock	6.00%
Preferred stock, par value (in dollars per share)	$ 5
5% Convertible Cumulative Preferred, $20 par value
Class of Stock [Line Items]
Stated percentage of preferred stock	5.00%
Preferred stock, par value (in dollars per share)	$ 20

XML

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION (Details) - USD ($)	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Paid for:
Interest Paid	$ (4,623)	$ (2,224)
Income Taxes	66,408	36,484
Non-Cash Transactions:
Financing of New Vehicles	$ 62,681	$ 21,228

XML

COMMITMENTS AND CONTINGENCIES - Future minimum lease payments (Details)	Jun. 30, 2016 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2017	$ 78,000
2018	78,000
2019	78,000
2020	78,000
2021	78,000
Thereafter	292,500
Future minimum payments due, Total	$ 682,500

XML

COMMITMENTS AND CONTINGENCIES (Detail Textuals)	12 Months Ended
	Jun. 30, 2016 USD ($) Vendor	Jun. 30, 2015 USD ($)
Long-term Purchase Commitment [Line Items]
Additional lease period	5 years
Lease payments per month	$ 6,500
Percentage of base rent to be increased	30.00%
Rental expense	$ 78,000	$ 78,000
Raw material
Long-term Purchase Commitment [Line Items]
Raw materials purchase commitments, number of vendors | Vendor	6
Raw materials purchase commitments	$ 256,000

XML

CONCENTRATION OF CREDIT RISK (Detail Textuals) - Customer concentration risk - Customer	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Gross sales
Concentration Risk [Line Items]
Number of customers accounted credit risk	2	2
Customer concentration risk, percentage	58.00%	45.00%
Trade receivables
Concentration Risk [Line Items]
Number of customers accounted credit risk	2	2
Customer concentration risk, percentage	60.00%	55.00%

XML

SUBSEQUENT EVENTS (Detail Textuals)	Jul. 05, 2016 USD ($)
Subsequent Event
Subsequent Event [Line Items]
Payments to purchase mixer	$ 9,400