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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM  i 10-K

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

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For the Fiscal Year Ended  i  i June 30, 2023 / 

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

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For the transition period from ______  to _______      

Commission File Number:  i 2-5916

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 i 1307 South 59th,  i St. Joseph,  i Missouri  i 64507

(Address of principal executive offices, Zip Code)

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 i (816)  i 279-1625

(Registrant’s telephone number, including area code)

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

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Indicate by check mark if the registrant is a well-known issuer, as defined in Rule 405 of the Securities Act. Yes ☐    i No   ☒

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

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.  i Yes ☒   No   ☐

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

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

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

Indicate by check mark whether the registrant has filed a report on and attestation to it management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit.   Yes  i ☐   No   ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐   No   ☒

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

Yes ☐   No   ☒

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

Aggregate market value of the voting and non-voting common stock held by non-affiliates of the Registrant as of September 26, 2023 (based on the last closing sale price as of December 31, 2022) was NO BID.

As of September 26, 2023, there were  i 969,834 shares of common stock, $1.00 par value, outstanding.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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PART I

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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 the 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 case sizes:

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

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 1 BUSINESS (CONTINUED)

Principal Products and Methods of Distribution (Continued)

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

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

All products are shipped to customers by commercial haulers.

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Competition and Market Area

The Chase Candy Products division bars are sold primarily to wholesale candy, grocery accounts, vendors, and repackers. “Cherry Mash” bars are marketed in the Midwest region of the United States. For the years ended June 30, 2023 and 2022, this division accounted for 57% and 60%, respectively, of the sales of Dye Candy Company.

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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, 2023 and 2022, this division accounted for 43% and 40%, respectively of the consolidated sales of Dye Candy Company.

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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.

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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.

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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.

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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.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 1 BUSINESS (CONTINUED)

Competition and Market Area (Continued)

Chase Candy Company seasonal products are sold in both the grocery and produce departments with bulk, prepackaged clamshell and shippers.  Chase Candy Company offers a variety of quality products at a value price.  The competitive set of the business does not have a national brand competitor but mostly regional competition and private label.  The primary competition includes:

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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.

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Research and Development

The Company has not developed any new products for the years ended June 30, 2023 and 2022.

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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. Two suppliers accounted for more than 25% of the Company’s cost of sales for the year ended June 30, 2023 and one supplier accounted for more than 12% of the Company’s costs of sales for the year ended June 30, 2022.

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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 2029.

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Employees

As of June 30, 2023, the Company had 17 full-time employees. This expands to approximately 30 full-time personnel during the busy production months of August through December.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 1 BUSINESS (CONTINUED)

Customers

For the years ended June 30, 2023 and 2022, one customer accounted for 42% and 40%, respectively, of sales. As of June 30, 2023 and 2022, that same customer accounted for 47% and 21%, respectively, of trade receivables. For the years ended June 30, 2023 and 2022, another customer and its affiliates accounted for 6% and 3%, respectively, of sales. As of June 30, 2023 and 2022, that same customer and its affiliates accounted for 12% and 13%, respectively, of trade receivables. For the years ended June 30, 2023 and 2022, another customer and its affiliates accounted for 6% of sales each year. As of June 30, 2023 and 2022, that same customer and its affiliates accounted for 5% and 15%, respectively, of trade receivables. No other customer accounted for more than 10% of the Company’s sales for the years ended June 30, 2023 and 2022. No other customers accounted for more than 10% of the Company’s trade receivables for the years ended June 30, 2023 and 2022.

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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 has evaluated 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. As of the fiscal year ended June 30, 2023 and through the filing of this form, management believes the Company is compliant with all FSMA requirements. Another inspection for compliance will be conducted by a third party within 12 months of year-end. Management does not anticipate any future significant expenditures in the next twelve months in this regard.

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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. Management does not anticipate any future significant expenditures in the next twelve months in this regard.

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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 online on the SEC’s EDGAR website.

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ITEM 1ARISK FACTORS

Not applicable to a smaller reporting company.

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ITEM 1BUNRESOLVED STAFF COMMENTS

The Company has no unresolved SEC staff comments at June 30, 2023.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 2 PROPERTIES

We conduct our operations from two buildings as follows:

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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.

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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 that is owned by the son of the Chief Executive Officer of the Company. The annual rental expense of this facility was $78,000 for each year ended June 30, 2023 and 2022.

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The net book value of our premises, land and office, and production equipment totaled $198,130 and $112,579 at June 30, 2023 and 2022, respectively.

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We believe both facilities are adequately covered by insurance.

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ITEM 3 LEGAL PROCEEDINGS

None.

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ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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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.

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Security holders

As of September 26, 2023, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

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Dividends

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

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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.

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Securities authorized for issuance under equity compensation plans

The Company does not have any equity compensation plans.

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ITEM 6 SELECTED FINANCIAL DATA

Not applicable to a smaller reporting company.

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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; the assumption that the Company has stabilized its customer base and will continue its efforts to expand the existing market area and increase sales to customers; and the expectation that the Company will maintain tight control of all expenditures.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Overview

During fiscal year ended June 30, 2023, the Company’s sales were $3,446,234, as compared to sales of $3,064,443 for fiscal year ended June 30, 2022. The 12.5% increase in volume coupled with various price increases, 7.4% increase in cost of sales and 3.7% increase in operating expenses resulted in a change in profitability during the year, as reflected in the income from operations of $163,363 for fiscal year 2023 compared to the loss from operations of $22,264 for fiscal year 2022. Working capital increased $120,935 to $682,537 for the fiscal year 2023 from $561,602 for the fiscal year 2022 due primarily to an increase in accounts receivable.

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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.

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

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Revenue Recognition

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

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Inventories

Raw material and packaging material inventories are carried at the “lower of cost or net realizable value,” with cost being determined on the “first-in, first-out” basis of accounting. The cost of goods in process include an estimate for manufacturing overhead. Finished goods inventory are valued using the lower of cost or market value, determined by the retail inventory method. Under the retail inventory method, the valuation of finished goods inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value of inventories.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Results of Operations

The following table sets forth for the years indicated, the percentage of sales of certain items in the Company’s consolidated statements of operations for the years ended June 30, 2023 and 2022, respectively:

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Fiscal Year 2023 Compared to Fiscal Year 2022

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Sales

During the year ended June 30, 2023, sales, net of returns and allowances, increased $381,791 or 12.5% as compared to the year ended June 30, 2022. Sales for Chase Candy products increased $107,431 or 5.8% to $1,956,658 for the year ended June 30, 2023 compared to $1,849,227 for the year ended June 30, 2022. Sales for Seasonal Candy products increased $274,360 or 22.6% to $1,489,576 for the year ended June 30, 2023 as compared to $1,215,216 for the year ended June 30, 2022.

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Sales for Chase Candy consisted of the following divisions: L276 Cherry Mash Distributor Pack division, L100/L200 Cherry Mash Merchandisers division, L260 Changemaker Jar division, L279/L299 Bulk Mini Mash division, and L278/L212 Mini Mash division. The 5.8% increase in sales of Chase Candy of $107,431 for the year ended June 30, 2023 over the same period ended June 30, 2022, is primarily due to the following: 1) price increases that took effect in December 2022 for the majority of customers 2) increased sales of the L278/L212 Mini Mash division by approximately $150,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, 3) increased sales of the L279/L299 Bulk Mini Mash division by approximately $5,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, offset by 4) decreased sales of the L276 Cherry Mash Distributor Pack division by approximately $34,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers, 5) decreased sales of the Cherry Mash internet sales via the Company’s website by approximately $4,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers and 6) decreased sales of Cherry Mash Merchandisers division by approximately $7,500 versus the same period a year ago, primarily due to a decrease in orders from existing customers.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Sales (Continued)

Sales for Seasonal Candy consisted of the following divisions: bulk seasonal division, clamshell seasonal division, and the generic seasonal division. The 22.6% increase in sales of Seasonal Candy of $274,360 for the year ended June 30, 2023 over the same period ended June 30, 2022, is primarily due to a price increase in July 2022 which resulted in strong first and second quarter sales to existing customers offset by a relatively flat period of sales in the third and fourth quarters. Specifically by division, the following changes were noted 1) increased sales in the Chase clamshell seasonal division by approximately $150,000 versus the same period a year ago, primarily due to increased orders from existing customers, 2) increased sales in the generic seasonal division by approximately $75,000 due to increased orders from existing customers and 3) increased sales in the bulk seasonal division by approximately $50,000 versus the same period a year ago, primarily due to increased orders from existing customers.

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Cost of Sales

Cost of sales for the year ended June 30, 2023, as compared to the year ended June 30, 2022, increased by 7.4%. The cost of sales increased $163,148 to $2,361,913 while decreasing to 68.5% of sales for the year ended June 30, 2023, compared to $2,198,765 or 71.8% of sales for the year ended June 30, 2022.

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The 7.4% increase in cost of sales of $163,148 is related to increases in raw materials, labor and freight costs.  Due to volatility in the regions where raw materials are grown, management anticipates the prices of these raw materials to continue to fluctuate primarily based on supply and demand.

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Labor costs, including wages, vacation pay and payroll taxes of $797,152 for the year ended June 30, 2023, increased 4.8% or $39,860 as compared to $757,292 for the year ended June 30, 2022 primarily due to increased production wages due to increased hours, bonuses, and pay rates compared to the same period ended June 30, 2022.  All employees were given a 5-10% raise at the end of January 2023.

Freight expense, including shipping and handling costs on goods shipped of $168,442 for the year ended June 30, 2023, increased 25.1% or $33,822 as compared to $134,620 for the year ended June 30, 2022 due primarily to inflationary impacts such as costs of fuel coupled with increase in quantities ordered.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Gross Profit on Sales

The gross profit increased 25.3% or $218,643 to $1,084,321 increasing to 31.5% of related sales for the year ended June 30, 2023, as compared to $865,678 or 28.3% of related sales for the year ended June 30, 2022, as a net result of the 7.4% increase in cost of sales described above, the 12.5% increase in sales and a price increase that was effective in early 2023.

Selling Expenses

Selling expenses for the year ended June 30, 2023 increased $21,742 to $343,734, which is 10% of sales, compared to $321,992 or 10.5% of sales for the year June 30, 2022. This increase is primarily due to increases in commissions as a result of increase in sales and increases in depreciation expense due to purchase of new vehicles. Commission expense increased $13,320 to $144,788 for the year ended June 30, 2023, as compared to $131,468 for the year ended June 30, 2022.  Depreciation expense increased $9,863 to $29,035 for the year ended June 30, 2023, as compared to $19,172 for the year ended June 30, 2022.  The above increase was offset by miscellaneous decreases in other costs associated with selling expenses.

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General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2023 increased $11,274 to $577,224, which is 16.7% of sales, compared to $565,950 or 18.5% of sales for the year ended June 30, 2022. The increase is primarily due to increases in insurance fees of approximately $9,000, increases in labor costs of approximately $9,000, increases in dues and subscriptions of approximately $14,500, increase of $14,000 related to the reduction in allowance for bad debt recorded in the year ended June 30, 2022 plus $10,000 miscellaneous increases in other costs associated with general and administrative expenses.  These increases were further offset by a gain on sale of property and equipment of approximately $44,000.

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Other Income (Expense)

Other income (expense) reflects expense of $(6,196) for the year ended June 30, 2023, as compared to income of $895 for the year ended June 30, 2022. This decrease of $7,091 in other income was primarily due to an increase in interest expense for the year ended June 30, 2023 due to rising interest rates and increased borrowings on the lines of credit during the year ended June 30, 2023.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Income Tax Benefit (Provision)

The Company recorded no income tax benefit for the years ended June 30, 2023 and 2022.

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Net Income (Loss)

Net income for the year ended June 30, 2023 was $157,167, compared to a net loss for the year ended June 30, 2022 of $(21,369). This increase of $178,536 is the result of those items previously discussed.

Preferred Dividends

Preferred dividends were $128,072 for the years ended June 30, 2023 and June 30, 2022, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.

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Net Income (Loss) Applicable to Common Stockholders

Net income (loss) applicable to common stockholders for the year ended June 30, 2023 was $29,095 which is an increase of $178,536 as compared to the net loss applicable to common stockholders for the year ended June 30, 2022 of $(149,441).

Liquidity and Sources of Capital

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

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Management has made no material commitments for capital expenditures for fiscal 2023.  The cash provided by or used in operating, investing and financing activities for the year ended June 30, 2023 is fully detailed in the consolidated statement of cash flows.  

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CHASE GENERAL CORPORATION AND SUBSIDIARY

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2023

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ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Fiscal Year 2023 Compared to Fiscal Year 2022 (Continued)

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Liquidity and Sources of Capital (Continued)

Overall cash and cash equivalents decreased $2,216 to $11,295 at June 30, 2023 from $13,511 at June 30, 2022.

At June 30, 2023, the Company’s accumulated deficit was $5,569,568, compared to an accumulated deficit of $5,726,735 as of June 30, 2022. Working capital as of June 30, 2023 increased $120,935 to $682,537 from $561,602 as of June 30, 2022.

The Company’s lease on its office and plant facility is effective through March 31, 2025, with an option to extend for an additional term of five years.  During the year ended June 30, 2023, the Company determined the exercise of the renewal option is reasonably assured and has therefore remeasured the right-of-use asset and lease liability to include the additional five years at the current rate so that the new term expires on March 31, 2030.  The lease currently requires payments of $6,500 per month.  The Company does not believe the payments in the renewal period will vary significantly from this current amount.  The facility is leased from an entity that is owned by the son of the Chief Executive Officer of the Company.

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. Management intends to make sales price adjustments in the future to correspond with changes in raw material prices.  Management believes that the projected cash flow from operations combined with the availability on the line of credit will be sufficient to meet its funding requirements for the foreseeable future.

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ITEM 7AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

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ITEM 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 16 through 36 of this Form 10-K.

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CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

TABLE OF CONTENTS

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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To the Shareholders and Board of Directors of

Chase General Corporation

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Opinion on the Financial Statements

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We have audited the accompanying consolidated balance sheets of Chase General Corporation and its subsidiary (the Company) as of June 30, 2023 and 2022, the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Basis for Opinion

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These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting 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.

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

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Critical Audit Matters

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Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements, and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.

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 i HoganTaylor LLP

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/s/ HoganTaylor LLP

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We have served as the Company's auditor since 2022.

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 i Oklahoma City, Oklahoma

September 26, 2023

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Table of Contents

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CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2023 AND 2022

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

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

JUNE 30, 2023 AND 2022

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

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

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

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

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

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Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

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