Attached files
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EXCEL - IDEA: XBRL DOCUMENT - CHASE GENERAL CORP | Financial_Report.xls |
EX-31.1 - EXHIBIT 31.1 - CHASE GENERAL CORP | t81306_ex31-1.htm |
EX-32.1 - EXHIBIT 32.1 - CHASE GENERAL CORP | t81306_ex32-1.htm |
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Chase General Corporation
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(Exact name of small business issuer as specified in its charter)
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MISSOURI | 36-2667734 | |||
(State or other jurisdiction of |
(IRS Employer Identification No.)
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incorporation or organization) |
1307 South 59th, St. Joseph, Missouri 64507
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(Address of principal executive offices, Zip Code)
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(816) 279-1625 | ||
(Issuer’s telephone number, including area code) |
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☒ |
Quarterly Report on Form 10-Q
For the Three Months Ended December 31, 2014
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2 |
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
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December 31,
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June 30,
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2014
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2014
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(Unaudited)
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 452,930 | $ | 162,435 | ||||
Trade receivables, net of allowance for doubtful accounts of $17,858 and $16,508, respectively
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268,933 | 178,686 | ||||||
Inventories:
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Finished goods
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58,389 | 258,726 | ||||||
Goods in process
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15,108 | 11,950 | ||||||
Raw materials
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70,826 | 80,088 | ||||||
Packaging materials
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106,760 | 145,046 | ||||||
Prepaid expenses
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34,621 | 12,233 | ||||||
Deferred income taxes
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6,991 | 7,047 | ||||||
Total current assets
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1,014,558 | 856,211 | ||||||
PROPERTY AND EQUIPMENT
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Land
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35,000 | 35,000 | ||||||
Buildings
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77,348 | 77,348 | ||||||
Machinery and equipment
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753,837 | 739,962 | ||||||
Trucks and autos
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196,982 | 188,594 | ||||||
Office equipment
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31,518 | 31,518 | ||||||
Leasehold improvements
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72,068 | 72,068 | ||||||
Total
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1,166,753 | 1,144,490 | ||||||
Less accumulated depreciation
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839,352 | 841,445 | ||||||
Total property and equipment, net
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327,401 | 303,045 | ||||||
TOTAL ASSETS
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$ | 1,341,959 | $ | 1,159,256 |
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CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS’ EQUITY
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December 31,
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June 30,
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2014
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2014
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(Unaudited)
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CURRENT LIABILITIES
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Accounts payable
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$ | 104,898 | $ | 51,947 | ||||
Current maturities of notes payable
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10,832 | 21,537 | ||||||
Accrued expenses
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15,072 | 139,098 | ||||||
Income taxes payable
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99,925 | 21,203 | ||||||
Deferred income
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1,299 | 1,299 | ||||||
Total current liabilities
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232,026 | 235,084 | ||||||
LONG-TERM LIABILITIES
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Deferred income
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12,012 | 12,661 | ||||||
Notes payable, less current maturities
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18,146 | 4,650 | ||||||
Deferred income taxes
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74,850 | 79,176 | ||||||
Total long-term liabilities
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105,008 | 96,487 | ||||||
Total liabilities
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337,034 | 331,571 | ||||||
COMMITMENTS AND CONTINGENCIES
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STOCKHOLDERS’ EQUITY
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Capital stock issued and outstanding:
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Prior cumulative preferred stock, $5 par value:
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Series A (liquidation preference $2,205,000 and $2,190,000, respectively)
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500,000 | 500,000 | ||||||
Series B (liquidation preference $2,160,000 and $2,145,000, respectively)
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500,000 | 500,000 | ||||||
Cumulative preferred stock, $20 par value
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Series A (liquidation preference $4,989,931 and $4,960,664, respectively)
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1,170,660 | 1,170,660 | ||||||
Series B (liquidation preference $813,207 and $808,438, respectively)
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190,780 | 190,780 | ||||||
Common stock, $1 par value
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969,834 | 969,834 | ||||||
Paid-in capital in excess of par
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3,134,722 | 3,134,722 | ||||||
Accumulated deficit
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(5,461,071 | ) | (5,638,311 | ) | ||||
Total stockholders’ equity
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1,004,925 | 827,685 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 1,341,959 | $ | 1,159,256 |
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Three Months Ended
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December 31
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2014
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2013
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NET SALES
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$ | 1,291,273 | $ | 1,402,545 | ||||
COST OF SALES
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846,057 | 938,247 | ||||||
Gross profit on sales
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445,216 | 464,298 | ||||||
OPERATING EXPENSES
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Selling
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149,763 | 161,115 | ||||||
General and administrative
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90,453 | 95,111 | ||||||
Loss (gain) on sale of equipment
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(15,912 | ) | 93 | |||||
Total operating expenses
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224,304 | 256,319 | ||||||
Income from operations
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220,912 | 207,979 | ||||||
OTHER INCOME (EXPENSE)
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Miscellaneous income
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422 | 1,972 | ||||||
Interest expense
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(1,069 | ) | (555 | ) | ||||
Total other income (expense), net
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(647 | ) | 1,417 | |||||
Net income before income taxes
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220,265 | 209,396 | ||||||
PROVISION FOR INCOME TAXES
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77,726 | 73,564 | ||||||
NET INCOME
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$ | 142,539 | $ | 135,832 | ||||
NET INCOME PER SHARE OF COMMON STOCK
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- BASIC
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$ | 0.11 | $ | 0.11 | ||||
- DILUTED
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$ | 0.06 | $ | 0.05 |
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Six Months Ended
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December 31
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2014
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2013
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NET SALES
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$ | 2,283,181 | $ | 2,313,805 | ||||
COST OF SALES
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1,561,127 | 1,596,601 | ||||||
Gross profit on sales
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722,054 | 717,204 | ||||||
OPERATING EXPENSES
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Selling
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264,404 | 258,037 | ||||||
General and administrative
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211,834 | 233,501 | ||||||
Loss (gain) on sale of equipment
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(15,912 | ) | 93 | |||||
Total operating expenses
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460,326 | 491,631 | ||||||
Income from operations
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261,728 | 225,573 | ||||||
OTHER INCOME (EXPENSE)
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Miscellaneous income
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12,444 | 2,336 | ||||||
Interest expense
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(1,956 | ) | (3,141 | ) | ||||
Total other income (expense), net
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10,488 | (805 | ) | |||||
Net income before income taxes
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272,216 | 224,768 | ||||||
PROVISION FOR INCOME TAXES
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94,976 | 77,799 | ||||||
NET INCOME
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$ | 177,240 | $ | 146,969 | ||||
NET INCOME PER SHARE OF COMMON STOCK
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- BASIC
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$ | 0.12 | $ | 0.09 | ||||
- DILUTED
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$ | 0.06 | $ | 0.04 |
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Six Months Ended
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December 31
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2014
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income
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$ | 177,240 | $ | 146,969 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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50,127 | 43,294 | ||||||
Allowance for bad debts
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1,350 | 600 | ||||||
Deferred income amortization
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(649 | ) | (649 | ) | ||||
Deferred income taxes
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(4,270 | ) | (10,519 | ) | ||||
Loss (gain) on sale of equipment
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(15,912 | ) | 93 | |||||
Effects of changes in operating assets and liabilities:
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Trade receivables
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(91,597 | ) | (76,808 | ) | ||||
Inventories
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244,727 | 268,049 | ||||||
Prepaid expenses
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(22,388 | ) | (21,010 | ) | ||||
Accounts payable
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49,484 | 43,068 | ||||||
Accrued expenses
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(124,026 | ) | (11,603 | ) | ||||
Income taxes payable
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78,722 | 84,135 | ||||||
Net cash provided by operating activities
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342,808 | 465,619 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
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Purchases of property and equipment
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(33,876 | ) | (21,132 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from line-of-credit
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265,000 | 290,000 | ||||||
Principal payments on line-of-credit
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(265,000 | ) | (290,000 | ) | ||||
Principal payments on notes payable
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(18,437 | ) | (34,403 | ) | ||||
Net cash used in financing activities
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(18,437 | ) | (34,403 | ) | ||||
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NET INCREASE IN CASH AND CASH EQUIVALENTS
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290,495 | 410,084 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
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162,435 | 28,564 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
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$ | 452,930 | $ | 438,648 |
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Three Months Ended
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Six Months Ended
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December 31
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December 31
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2014
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2013
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2014
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2013
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Net income
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$ | 142,539 | $ | 135,832 | $ | 177,240 | $ | 146,969 | ||||||||
Preferred dividend requirements:
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6% Prior Cumulative Preferred, $5 par value
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15,000 | 15,000 | 30,000 | 30,000 | ||||||||||||
5% Convertible Cumulative Preferred, $20 par value
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17,018 | 17,018 | 34,036 | 34,036 | ||||||||||||
Total dividend requirements
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32,018 | 32,018 | 64,036 | 64,036 | ||||||||||||
Net income - common stockholders
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$ | 110,521 | $ | 103,814 | $ | 113,204 | $ | 82,933 | ||||||||
Weighted average shares - basic
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969,834 | 969,834 | 969,834 | 969,834 | ||||||||||||
Dilutive effect of contingently issuable shares
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1,033,334 | 1,033,334 | 1,033,334 | 1,033,334 | ||||||||||||
Weighted average shares - diluted
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2,003,168 | 2,003,168 | 2,003,168 | 2,003,168 | ||||||||||||
Basic earnings per share
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$ | 0.11 | $ | 0.11 | $ | 0.12 | $ | 0.09 | ||||||||
Diluted earnings per share
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$ | 0.06 | $ | 0.05 | $ | 0.06 | $ | 0.04 |
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Six Months Ended
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December 31
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2014
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2013
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6% Convertible
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Series A
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$ | 17 | $ | 17 | ||||
Series B
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$ | 16 | $ | 16 | ||||
5% Convertible
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Series A
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$ | 65 | $ | 64 | ||||
Series B
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$ | 65 | $ | 64 |
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December 31,
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June 30,
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Payee
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Terms
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2014
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2014
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Nodaway Valley Bank
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$350,000 line-of-credit agreement expiring on January 3, 2016, with a variable interest rate at prime but not less than 5%. The line-of-credit is collateralized by substantially all assets of the Company.
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$ | - | $ | - | |||||
Ford Credit
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$468 monthly payments, interest of 2.9%; final payment due January 2019, secured by a vehicle.
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21,228 | - | |||||||
Ford Credit
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$517 monthly payments, interest of 0%; final payment due March 2016, secured by a vehicle.
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7,750 | 10,850 | |||||||
Nodaway Valley Bank
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$3,192, including interest of 5.75%; final payment due June 2015, secured by equipment; paid in full in December 2014.
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- | 12,547 | |||||||
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Toyota Financial Services
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$305 monthly payments including interest of 2.9% due March 2015, secured by a vehicle; paid in full in December 2014.
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- | 2,790 | |||||||
Total
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28,978 | 26,187 | ||||||||
Less current portion
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10,832 | 21,537 | ||||||||
Long-term portion
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$ | 18,146 | $ | 4,650 |
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2015
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$ | 10,832 | ||
2016
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6,772 | |||
2017
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5,375 | |||
2018
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5,533 | |||
2019
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466 | |||
Total
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$ | 28,978 |
Six Months Ended
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December 31
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2014
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2013
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Cash paid for:
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Interest
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$ | 1,956 | $ | 3,141 | ||||
Income taxes
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28,504 | 4,105 | ||||||
Non-cash transactions:
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Financing of new vehicle
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21,228 | - | ||||||
Sales tax on new vehicle in accounts payable
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3,467 | - |
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
OVERVIEW
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Chase General Corporation (Chase) is a holding company for its wholly-owned subsidiary, Dye Candy Company. This subsidiary is the main operating company that is engaged in the manufacture of confectionery products which are sold primarily to wholesale houses, grocery accounts, vendors, and repackers. The subsidiary (Company) operates two divisions, Chase Candy division and Seasonal Candy division, which share a common labor force and utilize the same basic equipment and raw materials. Therefore, segment reporting for the two divisions is not maintained by Management.
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The Company’s business, like that of many other confectionary product manufacturers, is seasonal. Historically, the Company has realized more of its revenue and earnings in the fiscal second quarter, which includes the majority of the holiday shopping season, than in any other fiscal quarter.
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RESULTS OF OPERATIONS - Three Months Ended December 31, 2014 Compared to Three Months Ended December 31, 2013, and Six Months Ended December 31, 2014 Compared to Six Months Ended December 31, 2013
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The following management comments regarding Chase’s results of operations and outlook should be read in conjunction with the condensed consolidated financial statements included pursuant to Item 1 of the quarterly report.
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The following table sets forth certain items as a percentage of net sales and revenues for the periods presented:
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Three Months Ended
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Six Months Ended
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December 31
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December 31
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2014
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2013
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2014
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2013
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Net sales
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100 | % | 100 | % | 100 | % | 100 | % | |||||||||
Cost of sales
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66 | 67 | 68 | 69 | |||||||||||||
Gross profit on sales
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34 | 33 | 32 | 31 | |||||||||||||
Operating expenses
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17 | 18 | 20 | 21 | |||||||||||||
Income from operations
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17 | 15 | 12 | 10 | |||||||||||||
Other income (expense), net
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- | 1 | - | - | |||||||||||||
Income before income taxes
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17 | 16 | 12 | 10 | |||||||||||||
Provision for income taxes
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6 | 5 | 4 | 3 | |||||||||||||
Net income
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11 | % | 11 | % | 8 | % | 7 | % |
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
NET SALES | |
Net sales decreased $111,272 or 8% for the three months ended December 31, 2014 to $1,291,273 compared to $1,402,545 for the three months ended December 31, 2013. Gross sales for Chase Candy decreased $10,569 to $546,728 for the three months ended December 31, 2014, compared to $557,297 for the three months ended December 31, 2013. Gross sales for Seasonal Candy decreased $90,077 to $757,403 for the three months ended December 31, 2014, compared to $847,480 for the three months ended December 31, 2013. | |
The 11% decrease in gross sales of Seasonal Candy of $90,077 for the three months ended December 31, 2014 over the same period ended December 31, 2013, is primarily due to the net effect of the following: 1) decreased sales in the clamshell seasonal division by approximately $64,000 versus the same period a year ago primarily due to the timing of orders from three customers; 2) decreased sales in the bulk seasonal division by approximately $54,000 versus the same period a year ago primarily due to the timing of orders from three customers and decreased orders from one customer; offset by 3) increased sales in the generic seasonal product division by approximately $28,000 due to increased orders from one customer along with the introduction of new packaging. | |
The 2% decrease in gross sales of Chase Candy of $10,569 for the three months ended December 31, 2014 over the same period ended December 31, 2013, is primarily due to the net effect of the following: 1) decreased sales of the L276 Cherry Mash Distributor Pack division by approximately $34,000 versus the same period a year ago primarily due to one customer decreasing orders; 2) decreased sales of the L279/L299 Bulk Mini Mash division by approximately $16,000 versus the same period a year ago primarily due to the timing of orders from one customer and to one customer decreasing orders; 3) various other fluctuations netting to a decrease of approximately $3,000; 4) decreased sales of the L260 Changemaker Jar division by approximately $1,000 versus the same period a year ago primarily due to one customer decreasing orders; offset by 5) increased sales of the L278/L212 Mini Mash division by approximately $27,000 versus the same period a year ago primarily due to four customers increasing orders; and 6) increased sales of the Cherry Mash Merchandiser division by approximately $16,000 versus the same period a year ago primarily due to four customers increasing orders.
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Net sales decreased $30,624 or 1% for the six months ended December 31, 2014 to $2,283,181 compared to $2,313,805 for the six months ended December 31, 2013. Gross sales for Chase Candy decreased $26,586 to $1,038,808 for the six months ended December 31, 2014, compared to $1,065,394 for the three months ended December 31, 2013. Gross sales for Seasonal Candy increased $1,820 to $1,265,027 for the six months ended December 31, 2014, compared to $1,263,207 for the three months ended December 31, 2013.
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CHASE GENERAL CORPORATION AND SUBSIDIARY
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
NET SALES (CONTINUED) | |
The 3% decrease in gross sales of Chase Candy of $26,586 for the six months ended December 31, 2014 over the same period ended December 31, 2013, is primarily due to the net effect of the following: 1) decreased sales of the L276 Cherry Mash Distributor Pack division by approximately $75,000 versus the same period a year ago primarily due to one customer decreasing orders; 2) decreased sales of the L279/L299 Bulk Mini Mash division by approximately $15,000 versus the same period a year ago primarily due to two customers decreasing orders; 3) various other fluctuations netting to a decrease of approximately $2,000; 4) decreased sales of the L260 Changemaker Jar division by approximately $1,000 versus the same period a year ago primarily due to one customer decreasing orders; offset by 5) increased sales of the L278/L212 Mini Mash division by approximately $51,000 versus the same period a year ago primarily due to two customers increasing orders; and 6) increased sales of the Cherry Mash Merchandiser division by approximately $16,000 versus the same period a year ago primarily due to four customers increasing orders. | |
The slight increase in gross sales of Seasonal Candy of $1,820 for the six months ended December 31, 2014 over the same period ended December 31, 2013, is primarily due to the net effect of the following: 1) increased sales in the generic seasonal product division by approximately $17,000 due to increased orders from one customer along with the introduction of new packaging; 2) increased sales in the clamshell seasonal division by approximately $7,000 versus the same period a year ago primarily due to increased orders from one customer; offset by 3) decreased sales in the bulk seasonal division by approximately $22,000 versus the same period a year ago primarily due to decreased orders from three customers.
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COST OF SALES
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The cost of sales decreased $92,190 to $846,057 or 66% of related revenues for the three months ended December 31, 2014, compared to $938,247 or 67% of related revenues for the three months ended December 31, 2013.
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The 10% decrease in cost of sales of $92,190 is primarily due to the 8% decrease in net sales of $111,272 and a 5% decrease in price of peanuts.
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The cost of sales decreased $35,474 to $1,561,127 or 68% of related revenues for the six months ended December 31, 2014, compared to $1,596,601 or 69% of related revenues for the six months ended December 31, 2013. |
16 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
COST OF SALES (CONTINUED)
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The 2% decrease in cost of sales of $35,474 is primarily due to the 1% decrease in net sales of $30,624 and a 5% 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.
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SELLING EXPENSES
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Selling expenses for the three months ended December 31, 2014 decreased $11,352 to $149,763, which is 12% of sales, compared to $161,115, or 11% of sales for the three months ended December 31, 2013.
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The decrease of $11,352 in selling expenses for the three months ended December 31, 2014 is primarily due to lower premium promotions expense and lower commissions expense offset by higher depreciation expense. Premium promotions, which are paid to customers for various marketing reasons, decreased $9,861 to $36,833 for this period from $46,694 for the three months ended December 31, 2013. Commissions expense, which are based on sales, decreased $3,842 to $42,019 for this period from $45,861 for the three months ended December 31, 2013. Depreciation expense increased $3,532 to $11,908 for this period from $8,376 primarily due to the purchases of property and equipment of $28,767 during the year ended June 30, 2014 combined with the acquisition of a vehicle in December 2014. |
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Selling expenses for the six months ended December 31, 2014 increased $6,367 to $264,404, which is 12% of sales, compared to $258,037 or 11% of sales for the six months ended December 31, 2013.
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The increase of $6,367 in selling expenses for the six months ended December 31, 2014 is primarily due to higher depreciation expense for the period. Depreciation expense increased $4,795 to $21,546 for this period from $16,751 primarily due to the purchases of property and equipment of $28,767 during the year ended June 30, 2014 combined with the acquisition of a vehicle in December 2014.
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17 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
GENERAL AND ADMINISTRATIVE EXPENSES | |
General and administrative expenses for the three months ended December 31, 2014 decreased $4,658 to $90,453 and 7% of sales, compared to $95,111 or 7% of sales for the three months ended December 31, 2013. The decreased costs are primarily because of a $3,688 decrease in insurance expense. | |
General and administrative expenses for the six months ended December 31, 2014 decreased $21,667 to $211,834 or 9% of sales, compared to $233,501 or 10% of sales for the six months ended December 31, 2013. The decreased costs are primarily because of an $18,436 decrease in professional fees and a $6,317 decrease in insurance expense.
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OTHER INCOME (EXPENSE)
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Other income (expense) decreased by $2,064 for the three months ended December 31, 2014 to $(647), compared to $1,417 for the three months ended December 31, 2013 primarily due to a increase of $514 in interest expense and an decrease of $1,550 in miscellaneous income.
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Other income (expense) increased by $11,293 for the six months ended December 31, 2014 to $10,488, compared to $(805) for the six months ended December 31, 2013 primarily due to a decrease of $1,185 in interest expense, a freight claim of approximately $4,000 and a refund of approximately $7,000 from a customer related to an underpayment written off during the year ending June 30, 2014.
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PROVISION FOR INCOME TAXES
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The Company recorded income tax expense for the three months ended December 31, 2014 of $77,726 as compared to income tax expense of $73,564 for the three months ended December 31, 2013. The Company recorded income tax expense for the six months ended December 31, 2014 of $94,976 as compared to income tax expense of $77,799 for the six months ended December 31, 2013. The net income tax expense recorded for the three and six months ended December 31, 2014 is primarily due to recognizing income taxes related to current profitable operations.
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
NET INCOME
The Company reported net income for the three months ended December 31, 2014 of $142,539, compared to net income of $135,832 for the three months ended December 31, 2013. This increase of $6,707 is explained above. The Company reported net income for the six months ended December 31, 2014 of $177,240, compared to net income of $146,969 for the six months ended December 31, 2013. This increase of $30,271 is explained above.
PREFERRED DIVIDENDS
Preferred dividends were $32,018 for the three months ended December 31, 2014 and 2013, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.
Preferred dividends were $64,036 for the six months ended December 31, 2014 and 2013, which reflects additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A and Series B $20 par value preferred stock.
NET INCOME APPLICABLE TO COMMON STOCKHOLDERS
Net income applicable to common stockholders for the three months ended December 31, 2014 was $110,521 which is an increase of $6,707 as compared to the net income for the three months ended December 31, 2013 of $103,814.
Net income applicable to common stockholders for the six months ended December 31, 2014 was $113,204 which is an increase of $30,271 as compared to the net income for the six months ended December 31, 2013 of $82,933.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents the summary of cash flow for the fiscal period indicated.
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Six Months Ended
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December 31
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2014
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2013
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Net cash provided by operating activities
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$ | 342,808 | $ | 465,619 | |||||
Net cash used in investing activities
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$ | (33,876 | ) | $ | (21,132 | ) | |||
Net cash used in financing activities
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$ | (18,437 | ) | $ | (34,403 | ) |
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ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) |
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Management has no material commitments for capital expenditures during the remainder of fiscal 2015. The $33,876 of cash used in investing activities is the purchase of equipment used during the manufacturing process and an automobile. The $342,808 of cash provided by operating activities is fully detailed in the condensed consolidated statement of cash flows on page seven. The $18,437 of cash used in financing activities is the principal payments on equipment and vehicle loans. At December 31, 2014, the Company had $350,000 remaining on the line-of-credit, which could be utilized to help fund any working capital requirements.
Management believes that the projected cash flow from operations, combined with its existing cash balances, will be sufficient to meet its funding requirements for the foreseeable future.
Management believes that inflation will have only a minimal effect on future operations since such effects will be offset by sales price increases, which are not expected to have a significant effect upon demand.
CRITICAL ACCOUNTING POLICIES
Forward-Looking Information
This report, as well as our other reports filed with the Securities and Exchange Commission (“SEC”), contains forward-looking statements made pursuant to the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast,” “may,” “will,” “should,” “continue,” “predict” and similar expressions are intended to identify forward-looking statements. This report contains forward-looking statements regarding, among other topics, our expected financial position, results of operations, cash flows, strategy, and management’s plans and objectives. Accordingly, these forward-looking statements are based on assumptions about a number of important factors. While we believe that our assumptions about such factors are reasonable, such factors involve risks and uncertainties that could cause actual results to be different from what appear here. These risk factors include: the ability to adequately pass through customers unanticipated future increases in raw material costs, decreased demand for products, expected orders that do not occur, loss of key customers, the impact of competition and price erosion as well as supply and manufacturing constraints, and other risks and uncertainties. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this report will prove accurate, and our actual results may differ materially from these forward-looking statements. We assume no obligation to update any forward-looking statements made herein.
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ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not applicable to a smaller reporting company. | |
ITEM 4. | CONTROLS AND PROCEDURES |
(a) | Evaluation of Disclosure Controls and Procedures | |
Chase’s Management, with the participation of the Chief Executive Officer, has evaluated the effectiveness of Chase’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Management has concluded that Chase’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to management, including those officers, and to members of the Board of Directors, to allow timely decisions regarding required disclosure. | ||
(b) | Changes in Internal Control over Financial Reporting | |
There were no significant changes in Chase’s internal control over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect Chase’s internal control over financial reporting subsequent to the date of the evaluation. | ||
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a.
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None
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b.
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The total cumulative preferred stock dividends contingency at December 31, 2014 is $7,756,698.
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a.
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None
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a.
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Exhibits.
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Exhibit 31.1
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Certification of Chief Executive Officer and Treasurer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
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Exhibit 32.1
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Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Exhibit 101
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The following financial statements for the quarter ended December 31, 2014, formatted in XBRL: (i) Condensed Consolidated Balance Sheets as of December 31, 2014 and June 30, 2014, (ii) Condensed Consolidated Statements of Income for the Three Months Ended December 31, 2014 and 2013, (iii) Condensed Consolidated Statements of Income for the Six Months Ended December 31, 2014 and 2013, (iv) Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2014 and 2013, and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
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Chase General Corporation and Subsidiary | ||
(Registrant) | ||
February 13, 2015 |
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/s/ Barry M. Yantis |
Date | Barry M. Yantis | |
Chairman of the Board, Chief Executive Officer and
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Chief Financial Officer, President and Treasurer
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