United States

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended June 30, 20152018

☐        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

(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 ☐x      Smaller reporting company ☒x

Emerging Growth Company¨

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.¨

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 21, 201525, 2018 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, 20152018

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

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”)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:

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2015

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:

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Principal Products and Methods of Distribution (Continued)

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:

The Champion CremeCrème Drops, Frosted Pretzels, and Jelly Candies are not produced or repackaged by the Company, but repackaged for wholesale distribution.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 both the years ended June 30, 20152018 and 2014,2017, this division accounted for 61%54% and 59%, respectively, of the consolidated sales of Dye Candy Company.

The Seasonal Candy Products division is.is sold primarily on a Midwest regional basis to national syndicate accounts, repackers, and grocery accounts. For both the years ended June 30, 20152018 and 2014,2017, this division accounted for 39%46% and 40%, 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 net incomeearnings per quarter of the Company varies in direct proportion to the seasonal sales volume.

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2015

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.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Competition and Market Area (Continued)

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 (candy) 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 duringfor the fiscal years ended June 30, 20152018 and 2014.2017.

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 each of the years ended June 30, 2015 and 2014, one supplier accounted for 11% of the cost of sales. No other suppliersuppliers accounted for more than 10% of the Company’s cost of sales in fiscalfor the years 2015ended June 30, 2018 and 2014.

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152017.

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.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Employees

As of June 30, 2015,2018, the Company had 2118 full time employees. This expands to approximately 3130 full time personnel during the busy production months of August through December.

Customers

For the years ended June 30, 20152018 and 2014,2017, one customer accounted for 27%42% and 29%34%, respectively, of gross sales. As of June 30, 20152018 and 2014,2017, that same customer accounted for 8%26% and 16%21%, respectively, of trade receivables. For the years ended June 30, 20152018 and 2014,2017, another customer and its affiliates accounted for 18%12% and 21%20%, respectively, of gross sales. As of June 30, 20152018 and 2014,2017, that same customer and its affiliates accounted for 47%17% and 46%31%, respectively, of trade receivables. No other customer accounted for more than 10% of the Company’s sales in fiscalfor the years 2015ended June 30, 2018 and 2014.2017. Two other customers each accounted for more than 10% of the Company’s A/R for the year ended June 30, 2018.

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, 2018 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 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.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Item 1A     

Item 1A

RISK FACTORS

Not applicable to a smaller reporting company.

ITEM 1B     

ITEM 1B

UNRESOLVED STAFF COMMENTS

The Company has no unresolved SEC staff comments at June 30, 2015.2018.

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2015

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 that is partially owned by the Vice-President and Directorson of the Company and his spouse.Chief Executive Officer of the Company. The annual rental expense of this facility was $78,000 for each year ended June 30, 20152018 and 2014.2017.

The net book value of our premises, land and office, and production equipment totaled $360,763$235,180 and $303,045$265,138 at June 30, 20152018 and 2014,2017, respectively.

We believe both facilities are adequately covered by insurance.

Item 3        LEGAL PROCEEDINGSNone.

None.

Item 4        

Item 4

MINE SAFETY DISCLOSURES

Not applicable.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

PART II

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 21, 2015,25, 2018, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

Dividends

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

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        

Item 6

SELECTED FINANCIAL DATA

Not applicable to a smaller reporting company.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

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,” andthe 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 2015,2018, the Company’s net sales were $3,223,939,$2,680,236, as compared to net sales of $3,243,951$2,753,043 for fiscal year ended June 30, 2014.2017. This 1%2.6% decrease in volume combined with a 1% increaseand an 7.7% decrease in cost of sales and a 10% decrease12.0% increase in operating expenses resulted in increaseda slight change profitability during the year, as reflected in the incomeloss from operations of $190,390$267,973 for fiscal year 20152018 compared to $157,330the loss from operations of $277,586 for fiscal year 2014.2017. Working capital increased $110,936decreased $203,896 to $732,063$375,081 for the current year from $621,127$578,977 for the fiscal year 20142017 due primarily to a decrease in inventory, decrease in cash, decrease in prepaid expenses, decrease in income taxes receivable, and an increase in accounts payable offset by an increase in trade receivables, increase in inventories, decreases in accrued expenses, and decreases in current maturities of notes payable offset by decreases in cash, decreases in prepaid expenses, increases in accounts payable, and increases in income taxes payable. receivables.

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.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

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.

There have been no other events that have occurred subsequent to June 30, 2015,2018, 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, 2015. 2018.

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 marketnet realizable value,” with cost being determined on the “first-in, first-out” basis of accounting. Finished goods andThe cost of goods in process include a provisionan 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.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

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.

Chase General Corporation

ANNUAL REPORT ON FORM 10-KNew Accounting Guidance

FOR THE YEAR ENDED JUNE 30, 2015See Note 11,RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS,to the consolidated financial statements for a discussion of new accounting standards.

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 incomeoperations for each of the fiscal years ended June 30, 20152018 and 2014,2017, respectively:

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Fiscal Year 20152018 Compared to Fiscal Year 20142017

Net Sales

During the year ended June 30, 2015,2018, sales, net of returns and allowances, decreased $20,012$72,807 or .6%2.6% as compared to the year ended June 30, 2014.2017. Gross sales for Chase Candy products decreased$34,292160,760 or 1.7%9.7% to $1,972,855$1,506,633 for the year ended June 30, 20152018 compared to $2,007,147$1,666,393 for 2014.2017. Gross sales for Seasonal Candy products decreased $10,017increased $101,577 or .8%9.0% to $1,286,343$1,229,196 for the year ended June 30, 20152018 as compared to $1,296,360$1,127,619 for 2014.2017. The Company’s returns and allowances decreased $23,181increased $16,391 or 33.6%32.2% to $45,864$67,251 for the year ended June 30, 2015,2018, compared to $69,045$50,860 for the year ended June 30, 2014.2017. The Company’s other sales increased $1,116$2,767 or 11.8%28.0% to $10,605$12,658 for the year ended June 30, 2015,2018, compared to $9,489$9,891 for the year ended June 30, 2014. 2017.

The 1.7% decrease in gross sales of Chase Candy of $34,292 for the year ended June 30, 2015 over the same period ended June 30, 2014, is primarily due to the net effect of some customers decreasing orders slightly offset by other customers increasing orders. 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. WhileThe 9.7% decrease in gross sales did fluctuate slightly due to changes in volume and an average 9.5% price increase duringof Chase Candy of $160,760 for the year ended June 30, 2015 over2018over the same period ended June 30, 2014 inside those divisions, the divisions of Chase Candy remained unchanged. While there were changes in the mix of products sold, there were no major changes in the types of customers in the divisions of Chase Candy.

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2015

Fiscal Year 2015 Compared to Fiscal Year 2014 (Continued)

Net Sales (Continued)

The .8% decrease in gross sales of Seasonal Candy of $10,017 for the year ended June 30, 2015 over the same period ended June 30, 2014,2017, is primarily due to the net effectfollowing: 1) decreased sales of somethe L276 Cherry Mash Distributor Pack division by approximately $171,000 versus the same period a year ago, primarily due to a decrease in orders from existing customers, decreasing2) decreased sales of the L278/L212 Mini Mash division by approximately $21,000 versus the same period a year ago, primarily due to a decrease in orders slightlyfrom existing customers offset by 3) increased sales of the Cherry Mash Merchandisers division by approximately $9,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, 4) increased sales of the L299 Bulk Mini Mash division by approximately $8,000 versus the same period a year ago, primarily due to an increase in orders from existing customers, 5) increased sales of Cherry Mash internet sales via the Company’s website by approximately $10,000 versus the same period a year ago, and 6) various other customers increasing orders. fluctuations netting to an increase of approximately $4,000.

Sales for ChaseSeasonal Candy consisted of the following divisions: bulk seasonal division, clamshell seasonal division, and the generic seasonal division. WhileThe 9.0% increase in gross sales did fluctuate slightly due to changes in volume and an average 2.8% price increase duringof Seasonal Candy of $101,577 for the year ended June 30, 20152018 over the same period ended June 30, 2014 inside those divisions,2017, is primarily due to the divisionsnet effect of Seasonal Candy remained unchanged. While there were changesthe following: 1) increased sales in the mix of products sold, there were no major changesgeneric seasonal division by approximately $136,000 due to increased orders from existing customers; offset by 2) decreased sales in the types of customers inChase clamshell seasonal division by approximately $34,000 versus the divisions of Seasonal Candy. same period a year ago, primarily due to decreased orders from existing customers.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Fiscal Year 2018 Compared to Fiscal Year 2017 (Continued)

Cost of Sales

Cost of sales for the year ended June 30, 2015,2018, as compared to the year ended June 30, 2014, increased2017, decreased by 1.3%7.7%. The cost of sales increaseddecreased$29,945174,547to$2,267,7832,085,405 while increasingdecreasing to 70.3%77.8% of net sales for the year ended June 30, 2015,2018, compared to $2,237,838$2,259,952 or 69.0%82.1% of net sales for the year ended June 30, 2014. 2017.

The 1.3% increase7.7% decrease in cost of sales of $29,945$174,547 is primarily due increased labor costs,to the net impact of a 5%2.6% decrease in net sales of $72,807 offset by a 5.2% increase in the raw materials costprice of peanuts compared tocorn syrup and a 1.1% increase in the same period ended June 30, 2014 offset by an decreaseprice of .6% of net sales.chocolate. 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 $504,973$452,712 for the year ended June 30, 2015, increased 15.2%2018, decreased 8.5% or $66,492$41,864 as compared to $438,481$494,576 for the period ended 20142017 primarily due to increaseddecreased production wages due to increaseddecreased hours, bonuses, and pay rates compared to the same period ended June 30, 2014. 2017.

Freight expense, including shipping and handling costs on goods shipped of $187,778$155,421 for the year ended June 30, 2015, increased 6.7%2018, decreased 2.77% or $11,792$4,430 as compared to $175,986$159,851 for the period ended 20142017 due primarily to an increasea decrease in fuel costs and an increase in refrigeration costs due to weather conditions. sales.

Gross Profit on Sales

The gross profit decreased 5.0%increased 20.6% or $49,957$101,740 to $956,156 decreasing$594,831 increasing to 29.7%22.2% of related net sales for the year ended June 30, 2015,2018, as compared to $1,006,113$493,091 or 31.0%17.9% of related net sales for the year ended June 30, 2014,2017, as a net result of the overall7.6% decrease in net sales and increase in cost of sales described above.above and the 2.6% decrease in net sales.

Finished goods inventory as of June 30, 20152018 of $377,853 increased $119,127$208,254 decreased $62,098 or 46.0%23.% from the June 30, 20142017 finished goods inventory of $258,726.$270,352. Raw materials inventory as of June 30, 20152018 of $90,506$74,267 increased $10,418$13,612 or 13.0%22.4% from the June 30, 20142017 raw materials inventory of $80,088.$60,655. Packaging materials inventory as of June 30, 20152018 of $130,726 decreased $14,320$152,184 increased $16,546 or 9.9%12.2% from June 30, 20142017 packaging materials inventory of $145,046.$135,638. Goods in process inventory as of June 30, 20152018 of $13,815 increased $1,865$10,937 decreased $2,456 or 15.6%18.3% from the June 30, 20142017 goods in process inventory of $11,950.$13,393. Inventory levels vary based primarily on sales and purchases.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

Fiscal Year 20152018 Compared to Fiscal Year 20142017 (Continued)

Selling Expenses

Selling expenses for the year ended June 30, 20152018 increased $25,675$15,630 to $423,802,$389,373, which is 13.2%14.5% of net sales, compared to $398,127$373,743 or 12.3%13.6% of net sales for the year June 30, 2014.2017. This increase is primarily due to higher premium promotions, shipping expenses, and higher depreciation expense. Premium promotions,commissions offset by a decrease in sales salaries and truck depreciation. Promotions expense, which are paid to customers for various marketing reasons, increased $10,336$11,183 to $72,744$60,156 for the year ended June 30, 2015,2018, as compared to $62,408$48,973 for the year ended June 30, 2014. Depreciation expense2017, primarily due to an increase in sales on products to certain customers. Shipping expenses increased $7,041$9,713 to $40,542$36,692 for the year ended June 30, 2015,2018, as compared to $33,501$26,979 for the year ended June 30, 20142017, primarily due to an increase in items shipped and an increase in rates. Commissions increased $5,610 to $98,132 for the year ended June 30, 2018, as compared to $92,522 for the year ended June 30, 2017, primarily due to an increase in sales of products with commissions. Sales salaries decreased $8,437 to $106,063 for the year ended June 30, 2018, as compared to $114,500 for the year ended June 30, 2017, primarily due to a retirement of one of the salespersons. Depreciation expense decreased $2,515 to $40,108 for the year ended June 30, 2018, as compared to $42,623 for the year ended June 30, 2017 primarily due to a decrease in purchases of property and equipment of $28,767 duringin the current year opposed to the twelve months ended June 30, 2014 combined with the purchases of property and equipment of $108,798 during the year ended June 30, 2015.2017.

General and Administrative Expenses

General and administrative expenses for the year ended June 30, 2015 decreased $82,0972018 increased $73,158 to $368,466,$470,092, which is 11.4%17.5% of net sales, compared to $450,563$396,934 or 13.9%14.4% of net sales for the year ended June 30, 2014.2017. The decreaseincrease is primarily due to a decreasean increase in website expense, bad debt expense, miscellaneous general expense, professional fees, office salaries, and a decreaseinsurance expense offset by decreases in insurance expense. Professional fees decreased $56,631taxes and licenses. Website expense increased $38,287 to $89,931$53,869 for the year ended June 30, 2015,2018, as compared to $146,562$15,582 for the year ended June 30, 20142017 primarily due redesigning the website for the 100^th anniversary of the Cherry Mash. Bad debt expense increased $10,948 to a decrease in legal fees as there was very little activity in the year ended June 30, 2015 for a lawsuit settled on June 30, 2014. Insurance expense decreased $29,545 to $122,264$8,132 for the year ended June 30, 2015,2018, as compared to $151,809$(2,816) for the year ended June 30, 20142017 primarily due to writing off additional receivables.

Miscellaneous general expense increased $10,805 to $22,534 for the year ended June 30, 2018, as compared to $11,729 for the year ended June 30, 2017 primarily due to the payment of a non-recurring workplace penalty. Professional fees increased $6,832 to $111,806 for the year ended June 30, 2018, as compared to $104,974 for the year ended June 30, 2017 primarily due to higher legal fees. Office salaries increased $5,593 to $90,088 for the year ended June 30, 2018, as compared to $84,495 for the year ended June 30, 2017 primarily due to annual raises for employees. Insurance expense increased $3,589 to $127,607 for the year ended June 30, 2018, as compared to $124,018 for the year ended June 30, 2017 primarily due to a few employees decliningrate increase on the health insurance coverage. plan. Taxes and licenses decreased $1,236 to $7,709 for the year ended June 30, 2018, as compared to $8,945 for the year ended June 30, 2017 primarily due the business license and sales tax decreasing in the current year.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

IncomeFiscal Year 2018 Compared to Fiscal Year 2017 (Continued)

Loss from Operations

IncomeLoss from operations for the year ended June 30, 20152018 was 5.9%(10.0)% of net sales, as compared to 4.9%a loss from operations of (10.1)% of net sales for the year ended June 30, 20142017 for the reasons previously described.

Other Income (Expense)Expense

Other income (expense),expense reflects a net reflects net incomeexpense of $11,368$3,290 for the year endedJune 30, 20152018, as compared to net expense of $(100,386)$11,466 for the year endedJune 30, 20142017. This increasedecrease of $111,754$8,176 in other income (expense)expense was primarily due to decreases of $7,140 and $1,036 in miscellaneous expense and interest expense, respectively. The decrease in miscellaneous expense is primarily due to a legal settlement innonrecurring transition fee charged to the amount of $100,000 incurredCompany by a customer to offset the customer’s product relocation costs which occurred during the year ended June 30, 2014. 2017.

IncomeLoss before Income Taxes

IncomeLoss before income taxes was $201,758$(271,263) for the year ended June 30, 2015,2018, as compared to $56,944a loss before income taxes of $(289,052) for the year ended June 30, 2014.2017. The reasons for the increasedecrease of $144,814$17,789 have been previously discussed.

ProvisionBenefit for Income Taxes

The Company recorded income tax expensebenefit for the year ended June 30, 20152018 of $60,849$(26,022) ascompared to an income tax expensebenefit of $6,676$(110,111) for the year ended June 30, 2017. The income tax benefit for the year endedJune 30, 20142018. The income tax expense for the year endedJune 30, 2015isdecreased as a result of, operations previously discussed.

Chase General Corporation

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2015among other things, the reduction in income tax rates as further explained in Note 5 of the financial statements.

Fiscal Year 2015 Compared to Fiscal Year 2014 (Continued)

Net IncomeLoss

Net incomeloss for the year ended June 30, 20152018 was $140,919,$(245,241), compared to a net incomeloss for the year ended June 30, 20142017 of $50,268.$(178,941). This increase of $90,641$66,300 is the result of those items previously discussed.

Liquidity and Sources of Capital

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

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2018

Fiscal Year 2018 Compared to Fiscal Year 2017 (Continued)

Operating Activities

The positive cash flow of $55,681$13,918 generated from operations is a result of small fluctuations in net sales, decreasesincreases 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, 2015,2018, sales, net of returns and allowances, decreased $20,012$72,807, or .6%2.6% as compared to the year ended June 30, 2014.2017. Total inventory as of June 30, 20152018 of $601,896 increased $106,086$443,952 decreased $36,086 or 21.4%7.5% from the June 30, 20142017 total inventory of $495,810.$480,038. Trade receivables as of June 30, 2018 of $135,331 increased $8,124 or 6.4% from the June 30, 2017 trade receivables of $127,207. The timing of inventory purchases and collections from customerscustomer trade receivables had the most significant impact on cash flow generated from operations.

Investing Activities

The negative cash flow of $38,585 from investing is a result of equipment purchases and proceeds from sales. Machinery and equipment cash purchases of $108,798$72,585 and $28,767$17,245 were made during the years ended June 30, 20152018 and 2014,2017, respectively. Depending on resultsProceeds from the sale of operationsmachinery and cash flows,equipment were $34,000 during the Company has plans to replace two cookers at an anticipated cost of $40,000 in the next several years, with no set target date.year ended June 30, 2018.

Financing Activities

The Company borrowed $265,000$330,000 and $290,000,$325,000, respectively, on its line-of-credit during the fall of 20142017 (fiscal 2015)2018) and 20132016 (fiscal 2014)2017) busy seasons. Payments of $265,000$330,000 and $290,000,$325,000, respectively, were paid for years ended June 30, 20152018 and 2014.2017. The Company entered into a $350,000 line-of-credit agreement expiring onJanuary 3, 2016,4, 2019, 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.

LoanNotes payable principal payments were $25,114$19,386 and $67,772$15,460 for years ended June 30, 20152018 and 2014,2017, respectively.

Overall cash and cash equivalents decreased $78,231$44,053 to $84,204$2,129 at June 30, 20152018 from $162,435$46,182 at June 30, 2014.2017.

At June 30, 2018, the Company’s accumulated deficit was $5,887,988, compared to an accumulated deficit of $5,462,747 as of June 30, 2017. Working capital as of June 30, 2018 decreased $211,168 to $368,482 from $579,650 as of June 30, 2017.

Chase General Corporation and Subsidiary

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED JUNE 30, 20152018

Fiscal Year 20152018 Compared to Fiscal Year 20142017 (Continued)

Liquidity and Sources of Capital (Continued)

Financing Activities (Continued)

At June 30, 2015, the Company’s accumulated deficit was $5,497,402, compared to an accumulated deficit of $5,638,311 as of June 30, 2014. Working capital as of June 30, 2015 increased $110,936 to $732,063 from $621,127 as of June 30, 2014.

The Company’s lease on its office and plant facility is effective through March 31, 2025, with an option to extend for an additional timeterm 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 that is partially owned 100% by the Vice-President and Director and his spouse.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. 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.

There has been no other material impact from inflation and changing prices on net sales, or on income from continuing operations for the last two fiscal years. 

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 16 through 3236 of this Form 10-K.

Chase General Corporation AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

TABLE OF CONTENTS

FOR THE YEARS ENDED JUNE 30, 20152018 AND 20142017

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Chase General Corporation and Subsidiary:

CHASE GENERAL CORPORATION AND SUBSIDIARY 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Chase General Corporation and Subsidiary (the Company)(“Company”) as of June 30, 20152018 and 2014,2017, and the related consolidated statements of income,operations, stockholders’ equity, and cash flows for the years then ended. ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2018 and 2017, 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.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s consolidated 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 the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. 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.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. Our audit included considerationAs part of our audits we are required to obtain an understanding 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

Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 supportingregarding the amounts and disclosures in the consolidated financial statements. An auditOur audits also includes assessingincluded evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statement presentation.statements. 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, 2015 and 2014, 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. 

We have served as the Company's auditor since 2008.

Kansas City, Missouri

September 22, 2015 

The accompanying notes are an integral part of the consolidated financial statements.26, 2018

Chase General Corporation AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

june 30, 2018 AND 2017

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

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS (CONTINUED)

June 30, 2018 AND 2017 

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

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended june 30, 2018 AND 2017

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

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended june 30, 2018 AND 2017

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

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended june 30, 2018 and 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

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”"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 consolidated 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.

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

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, 20152018 and 20142017 was $187,778$155,421 and $175,986,$159,851, 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”net realizable 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. 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.

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:

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

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. Based on the facts, the Company has determined it necessary to reduce their deferred income tax asset with a valuation allowance due it being more likely than not that the Company will be able to realize all of the deferred income tax asset.

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, 20152018 and 2014,2017, 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, 20152018 and 2014.2017.

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.

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

Earnings Per Common Share (Continued)

The following table details out the contingently issuable shares as for 2015the years ended June 30, 2018 and 2014.2017. For 2014,2017 and 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.

Advertising Expense

Advertising is expensed when incurred. Advertising expense was $13,791$14,779 and $8,545$16,049 for the years ended June 30, 20152018 and 2014,2017, respectively.

Going Concern

The Company follows 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 for the year ended June 30, 2018. Management determined that, when considered in the aggregate, the current conditions and events do not that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date the consolidated financial statements are available for issuance.

Chase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

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, 20152018 and 2014,2017, deferred revenue of $1,299 was amortized into income for each year.

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTSincome.

The Company’s long-term debt at June 30, 20152018 and 20142017 consists of:

CHASE GENERAL CORPORATIONChase General Corporation AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended June 30, 2018 and 2017

Future minimum payments for the years ended June 30 are:

Capital stock authorized, issued, and outstanding as of June 30, 20152018 is as follows: