FORM 10-Q

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended DecemberMarch 31, 2001
                               -----------------2002
                               --------------

Commission File Number 2-5916
                       ------

                            CHASE GENERAL CORPORATION
             (Exact name of registrant as specified in its Charter)

     Missouri                                            36-2667734
State incorporation                        I.R.S. Employer Identification Number

                  3600 Leonard Road, St. Joseph, Missouri 64503
                    (Address of principal executive offices)
                            Telephone: (816) 279-1625

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, and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

As of February 1,April 30, 2002 there were 969,834 shares outstanding of the Registrant's
($1.00 par value) common stock.



1



                            CHASE GENERAL CORPORATION

                                      Index to Form 10-Q

                                December 31, 2001

PART I - FINANCIAL INFORMATION

   Item 1.  Financial Statements

       Consolidated Condensed Balance Sheets - DecemberMarch 31, 20012002
           (Unaudited) and June 30, 2001.....................................2001 ................................   3

       Consolidated Condensed Statements of Operations -
           Three months ended DecemberMarch 31, 2002 and 2001 and 2000 (Unaudited)......... .......   5

       Consolidated Condensed Statements of Operations Six-
           Nine months ended DecemberMarch 31, 2002 and 2001 and 2000 (Unaudited)........... ........   6

       Consolidated Condensed Statements of Cash Flows Six-
           Nine months ended DecemberMarch 31, 2002 and 2001 and 2000 (Unaudited)........... ........   7

       Notes to Consolidated Condensed Financial Statements..................Statements .............   8

   Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations..............................Operations ..........................   9

PART II - OTHER INFORMATION

   Item 3.  Defaults Upon Senior Securities..................................10Securities .............................  11

   Item 4.  Submission of Mattersmatters to a Votevote of Security Holders..............10security holders .........  11

   Item 6.  Exhibits and Reports on Form 8-K.................................10

   Signatures................................................................108-K ............................  11




                                       2



                          PART I -I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                        DecemberMarch 31, 20012002 and June 30, 2001

                                   (Unaudited)

ASSETS
DecemberASSETS March 31, June 30, 2002 2001 2001 ------------- --------------------- -------- CURRENT ASSETS Cash $ 345,312238,856 $ 117,114 Trade receivables, net of allowance 130,266103,756 100,494 Income tax receivable --Other receivables 7,053 Inventories7,053 Inventories: Finished goods 21,44519,283 73,138 Goods in process 4,3366,218 1,943 Raw materials 68,97861,802 80,592 Packaging materials 65,49464,003 64,536 Prepaid expense 1,8848,587 34,606 Prepaid income taxes -- 11,220 ---------- --------------------- Total current assets 637,715509,558 490,696 ---------- --------------------- PROPERTY AND EQUIPMENT - AT COST 1,121,2761,121,853 1,117,639 Less accumulated depreciation 915,775926,358 893,434 ---------- --------------------- Total property and equipment 205,501195,495 224,205 ---------- --------------------- TOTAL ASSETS $ 843,216705,053 $ 714,901 ========== =====================
3 LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
DecemberMarch 31, June 30, 2002 2001 2001 ------------ -------------------- -------- CURRENT LIABILITIES Accounts payable $ 88,23029,284 $ 46,002 Accrued expense 20,69038,576 35,301 Income taxesNotes payable, 31,671Series B, current maturities 51,010 -- ----------- ----------- Total current liabilities 140,591118,870 81,303 LONG-TERM LIABILITIES Notes payable, Series B, 51,010less current maturities above -- 77,672 ----------- ----------- Total liabilities 191,601118,870 158,975 ----------- ----------- STOCKHOLDERS' EQUITY Capital stock issued and outstanding: Prior cumulative preferred stock, $5 par value: Series A (liquidation preference $1,290,000$1,297,500 and $1,275,000 respectively) 500,000 500,000 Series B (liquidation preference $1,245,000$1,252,500 and $1,230,000 respectively) 500,000 500,000 Cumulative preferred stock, $20 par value:value Series A (liquidation preference $3,058,351$3,072,982 and $3,029,083 respectively) 1,170,660 1,170,660 Series B (liquidation preference $498,411$500,798 and $493,643 respectively) 190,780 190,780 Common stock, $1 par value 969,834 969,834 Paid-in capital in excess of par 3,134,722 3,134,722 Retained earnings (deficit) (5,814,381)(5,879,813) (5,910,070) ----------- ----------- Total stockholders' equity 651,615586,183 555,926 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 843,216705,053 $ 714,901 =========== ===========
SeeThe accompanying notes toare an integral part of these consolidated condensed financial statements. 4 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended DecemberMarch 31 ------------------------------------------ 2002 2001 2000 -------- -------------- ---- NET SALES $979,472 $1,040,830$240,665 $ 217,524 COST OF SALES 668,385 746,855237,317 237,980 -------- ------------------- Gross profit 311,087 293,975(loss) on sales 3,348 (20,456) -------- ---------- OPERATING EXPENSES Selling expense 89,910 89,00548,401 49,119 General and administrative expense 54,682 48,06353,567 51,613 -------- ------------------- Total operating expenses 144,592 137,068101,968 100,732 -------- ---------- Income--------- Net loss from operations 166,495 156,907(98,620) (121,188) OTHER EXPENSE (706) (1,517)INCOME (EXPENSE) (501) (1,411) -------- ---------- Income--------- Net loss before income taxes 165,789 155,390 PROVISION(99,121) (122,599) CREDIT FOR INCOME TAXES 47,224 48,481(33,689) (41,943) -------- ------------------- NET INCOME $118,565 $ 106,909LOSS (65,432) (80,656) Preferred dividends 32,018 32,018 -------- --------- Net loss applicable to common shareholders $(97,450) $(112,674) ======== ========== EARNINGS========= LOSS PER SHARE OF COMMON STOCK $ .09(.10) $ .08(.12) ======== ===================
SeeThe accompanying notes toare an integral part of these consolidated condensed financial statements. 5 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
SixNine Months Ended DecemberMarch 31 ------------------------------------------- 2002 2001 2000 ---------- -------------- ---- NET SALES $1,291,449 $1,493,783$1,532,114 $1,711,307 COST OF SALES 910,023 1,095,9641,147,340 1,333,944 ---------- ---------- Gross profit 381,426 397,819on sales 384,774 377,363 ---------- ---------- OPERATING EXPENSES Selling expense 139,168 145,721187,569 194,840 General and administrative expense 104,182 96,471157,749 148,084 ---------- ---------- Total operating expenses 243,350 242,192345,318 342,924 ---------- ---------- IncomeNet income from operations 138,076 155,62739,456 34,439 OTHER EXPENSE (1,163) (2,596)INCOME (EXPENSE) (1,664) (4,007) ---------- ---------- IncomeNet income before income taxes 136,913 153,03137,792 30,432 PROVISION FOR INCOME TAXES 41,224 48,0117,535 6,068 ---------- ---------- NET INCOME 30,257 24,364 Preferred dividends 96,054 96,054 ---------- ---------- Net loss applicable to common shareholders $ 95,689(65,797) $ 105,020(71,690) ========== ========== EARNINGSLOSS PER SHARE OF COMMON STOCK $ .03(.07) $ .04 ==========(.07) ============ ==========
SeeThe accompanying notes toare an integral part of these consolidated condensed financial statements. 6 CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
SixNine Months Ended DecemberMarch 31 ---------------------------------------------- 2002 2001 2000 ----------- --------------- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income for the six months $ 95,68930,257 $ 105,02024,364 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22,341 22,56832,925 32,082 Provision for doubtful accounts 3,210 3,210bad debts 4,815 4,815 Effects of changes in operating assets and liabilities: Trade and other accounts receivable (25,929) (63,062)Accounts receivables (8,077) 25,800 Accounts payable (16,718) 1,621 Inventories 59,956 107,57668,903 90,112 Prepaid expenses 32,722 32,243expense 26,019 9,044 Prepaid income taxes 11,220 1,158 Accounts payable 42,228 (14,388)-- Accrued liabilities (14,611) (15,428) Income taxes payable 31,671 42,133expense 3,275 (5,463) ----------- ----------- Net cash provided by operating activities 258,497 221,030152,619 182,375 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (3,637) (445)(4,215) (53,925) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term debt (26,662) (50,000) ----------- ----------- NET INCREASE IN CASH 228,198 170,585121,742 78,450 CASH, BEGINNING OF PERIOD 117,114 146,779 ----------- ----------- CASH, END OF PERIOD $ 345,312238,856 $ 317,364225,229 =========== =========== SUPPLEMENTAL DISCLOSURES Interest paid $ 6,161 $ 8,710 =========== =========== Income taxes paid $ -- $ 7,525 =========== ===========
SeeThe accompanying notes toare an integral part of these consolidated condensed financial statements. 7 CHASE GENERAL CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited interim consolidated condensed financial statements include all adjustments (consisting only of normal adjustments) necessary for a fair presentation of the financial position of Chase General Corporation as of DecemberMarch 31, 20012002 and June 30, 2001 and the results of its operations for the sixnine months and three months ended DecemberMarch 31, 20012002 and 2000,2001, and its cash flows for the sixnine months ended DecemberMarch 31, 20012002 and 2000.2001. The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Interim results are not necessarily indicative of results for a fullfully year. A summary of the Company's significant accounting policies is presented on pages 19 and 20 (not shown) of its 2001 Annual Report to Shareholders. Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the Annual Report to Shareholders when reviewing interim financial results. There has been no material change in the accounting policies followed by the Company during the sixnine months ended DecemberMarch 31, 2001.2002. NOTE 2 - EARNINGS (LOSS) PER SHARE The earnings (loss) per share was computed on the weighted average of outstanding common shares as follows:
SixNine Months Ended Three Months Ended DecemberMarch 31 DecemberMarch 31 ----------------------- ------------------------------------------------ 2002 2001 20002002 2001 2000 -------- -------- --------- ------------ ---- ---- ---- Net income (loss) $ 95,689 $105,020 $118,565 $106,90930,257 $ 24,364 $(65,432) $ (80,656) -------- -------- -------- ----------------- Preferred dividend requirements: 6% Prior Cumulative Preferred, $5 par value 30,000 30,00045,000 45,000 15,000 15,000 5% Convertible Cumulative Preferred, $20 par value 34,036 34,03651,054 51,054 17,018 17,018 -------- -------- -------- ---------------- Total dividend requirements 64,036 64,03696,054 96,054 32,018 32,018 -------- -------- -------- ---------------- Net incomeloss applicable to common shareholders $ 31,653 $ 40,984 $ 86,547 $74,891$(65,797) $(71,690) $(97,450) $(112,674) ======== ======== ======== ================ Weighted average of outstanding common shares 969,834 969,834 969,834 969,834 -------- -------- -------- ------- Earnings======== ======== ======== ========= Loss per share $ .03(.07) $ .04(.07) $ .09(.10) $ .08(.12) ======== ======== ======== ================
No computation was made on common stock equivalents outstanding because earningsloss per share would be anti-dilutive. 8 ITEM 2 CHASE GENERAL CORPORATION AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Chase General and its wholly-owned subsidiary are engaged in the manufacture of confectionery products which are sold primarily to wholesale houses, grocery accounts, vendors, and repackers. RESULTS OF OPERATIONS Three Months ended DecemberEnded March 31, 2002 and 2001 and 2000 - --------------------------------------------------------------------------------------- Sales: The Company realized a gross profit percentageCompany's net sales of 31.76% and 28.24%$240,665 for period ended March 31, 2002 increased 11% over net sales of $217,524 for the three months ended DecemberMarch 31, 2001 and 2000, respectively. Net2001. This three month period is normally the Company's slowest season. The Company gained net sales decreased 6% overdue to a major customer increasing distribution sites of the same period a year ago as a result of several customers closing retail locations.mini mash bar. Expenses: Selling expenses of $89,910 were comparabledecreased 1.46% compared to selling expenses for the three months ended DecemberMarch 31, 2000 of $89,005.2001. General and administrative expenses increased 14%3.78% compared to these expenses for the three months ended DecemberMarch 31, 2000. These2001, as a result of website maintenance costs and increased expenses were forhealth insurance and website updates. Sixpremiums. Nine Months ended DecemberMarch 31, 2002 and 2001 and 2000 - ------------------------------------------------------------------------------------ Sales: The Company had no unusual transactions for the sixnine months ended DecemberMarch 31, 2001.2002. The Company realized a gross profit percentagemargin of 29.53% and 26.63%25.11% for the sixnine months ended DecemberMarch 31, 2001 and 2000, respectively.2002 as compared to 22.05% for the same period ended a year ago. Consolidated net sales for the sixnine months ended DecemberMarch 31, 2001 of $1,291,449$1,5352,114, $1,532,114 were 14%10% below the $1,493,783 sales$1,711,307 in fiscal year 2000's2001's first sixnine months. The improved gross profit was due to lower labor costs, equipment repairs and utilities. The loss in net sales was due to less repeat sales from one customer who closed several retail outlets in Chase's territory. No major customer was lost during this first six months. Expenses: Selling, general and administrative expenses were 18.84%22.5% of sales in the six monthsnine month period ended DecemberMarch 31, 20012002 compared to 16.21%20% in the first sixnine months of 2000.2001. Additional costs for a computer consultant working onmaintaining the Company's website and health insurance premiums caused the increase in administrative costs for 2001.2002. Inventories at DecemberMarch 31, 20012002 were $60,000$68,900 lower than at June 30, 2001 sincedue to the Company is enteringbeing in its slow season of the year.slower business cycle. In addition, accounts payable and accruedprepaid expenses are $27,600 higher at December 31, 2001 compared to June 30, 2001, which is in direct relation to accounts receivable increasing $30,000.were reduced $54,000 during this period. 9 ITEM 2 CHASE GENERAL CORPORATION AND SUBSIDIARY MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As of DecemberMarch 31, 2001,2002, the Company has no commitments for capitalized expenditures. Cash increased $228,000$121,700 during the current sixnine month period as a result of completing the busy season and controlling overhead. Working capital increased approximately $87,700 for the six month period. 910 PART II. OTHER INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY Item 3. DEFAULTS UPON SENIOR SECURITIES a. None b. The total cumulative preferred stock dividenddividends contingency at DecemberMarch 31, 20012002 is $6,091,762.$6,123,780. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS a. None submittedThe annual meeting of shareholders scheduled for January 14, 2002 was not held due to the lack of receiving the required number of proxies to hold the meeting. Item 6. EXHIBITS AND REPORTS ON FORM 8-K. a. ExhibitExhibits - None required b. Reports on FromForm 8-K: There were no reports on FromForm 8-K filed during October, November,January, February, and December 2001.March, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHASE GENERAL CORPORATION ------------------------- Registrant 5-14-02 /s/ Barry M. Yantis - ---------------------------- --------------------------------------------------------- -------------------------------- Date Barry M. Yantis President and Chief Financial Officer 1011