UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 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) (Zip Code) (816) 279-1625 (Registrant's telephone number, including area code) 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 November 1, 1999 indicate the number of shares outstanding of the issuer's Common Stock, as of the latest practicable date: 969,834 shares of the Company's common stock ($1.00 par value) were outstanding. CHASE GENERAL CORPORATION INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Condensed Balance Sheets - September 30, 1999 (Unaudited) and June 30, 1999. . . . . . . . . . . . . . . 3 Consolidated Condensed Statements of Operations - First quarter ended September 30, 1999 and 1998(Unaudited). . . . . . . . . . . . . . . . . . . . . . 5 Consolidated Condensed Statements of Cash Flows - First quarter ended September 30, 1999 and 1998(Unaudited). . . . . . . . . . . . . . . . . . . . . . 6 Notes to Consolidated Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . 9 Part II - Other Information Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . .10 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .10 PART I FINANCIAL INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED BALANCE SHEETS September 30, 1999 and June 30, 1999 (UNAUDITED) ASSETS September 30, June 30, 1999 1999 CURRENT ASSETS Cash $ 66,072 $ 206,609 Trade receivables, net of allowance 257,645 138,959 Inventories: Finished goods 266,176 73,106 Goods in process 17,910 3,243 Raw materials 66,248 52,930 Packaging materials 84,703 70,878 Prepaid expense 9,232 35,469 Total current assets 767,986 581,194 PROPERTY AND EQUIPMENT - AT COST 1,044,272 1,036,457 Less accumulated depreciation 831,683 818,690 Total property and equipment 212,589 217,767 TOTAL ASSETS $ 980,575 $ 798,961 LIABILITIES AND STOCKHOLDERS' EQUITY September 30, June 30, 1998 1998 CURRENT LIABILITIES Accounts payable $ 208,746 $ 48,383 Accrued expenses 54,623 47,073 Notes payable, Series B, current maturities 6,066 6,066 Total current liabilities 269,435 101,522 LONG-TERM LIABILITIES Notes payable, Series B, less current maturities shown above 156,606 156,606 Total liabilities 426,041 258,128 STOCKHOLDERS' EQUITY Capital stock issued and outstanding: Prior cumulative preferred stock, $5 par value: Series A (liquidation preference $1,222,500 and $1,215,000 respectively) 500,000 500,000 Series B (liquidation preference $1,177,500 and $1,170,000 respectively) 500,000 500,000 Cumulative preferred stock, $20 par value: Series A (liquidation preference $2,926,650 and $2,912,017 respectively) 1,170,660 1,170,660 Series B (liquidation preference $476,950 and $474,565 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) (5,911,462) (5,925,163) Total stockholders' equity 554,534 540,833 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 980,575 $ 798,961 See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) First Quarter Ended September 30 1999 1998 NET SALES $453,521 $391,701 COST OF SALES 337,768 305,048 Gross profit 115,753 86,653 OPERATING EXPENSES Selling expense 55,981 54,759 General and administrative expense 41,088 38,194 Total operating expenses 97,069 92,953 Income (loss) from operations 18,684 (6,300) OTHER INCOME (EXPENSE) (1,571) (647) Income (loss) before income taxes 17,113 (6,947) PROVISION (CREDIT) FOR INCOME TAXES 3,412 (1,386) NET INCOME (LOSS) $ 13,701 $ (5,561) LOSS PER SHARE $ (.02) $ (.04) See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) First Quarter Ended September 30 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) for the quarter $ 13,701 $ (5,561) Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 12,994 13,467 Provision for doubtful accounts 1,605 1,605 Effects of changes in operating assets and liabilities: Trade accounts receivable (120,291) (70,929) Income tax receivable -- (1,386) Inventories (234,880) (213,016) Prepaid expenses 26,237 27,252 Accounts payable 160,363 159,460 Accrued liabilities 7,550 4,773 Net cash used in operating activities (132,721) (84,335) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (7,816) (6,390) NET DECREASE IN CASH (140,537) (90,725) CASH, BEGINNING OF QUARTER 206,609 161,093 CASH, END OF QUARTER $ 66,072 $ 70,368 See notes to consolidated condensed financial statements. CHASE GENERAL CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 full year. A summary of the Company's significant accounting policies is presented on pages 19 and 20 (not shown) of its 1999 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 quarter ended September 30, 1999. In the opinion of management, the accompanying interim consolidated condensed financial statements contain all adjustments necessary to present fairly Chase General Corporation's financial position as of September 30, 1999 and June 30, 1999 and the results of its operations and its cash flows for the first quarter ended September 30, 1999 and 1998. CHASE GENERAL CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2 - LOSS PER SHARE Loss per share was computed on the weighted average of outstanding common shares as follows: First Quarter Ended September 30 1999 1998 Net income (loss) $ 13,701 $ (5,561) Preferred dividend requirements: 6% Prior Cumulative Preferred, $5 par value 15,000 15,000 5% Convertible Cumulative Preferred, $20 par value 17,018 17,018 Total dividend requirements 32,018 32,018 Net loss - common shareholders $ (18,317) $(37,579) Weighted average of outstanding common shares 969,834 969,834 Loss per share (.02) $ (.04) No computation was made on common stock equivalents outstanding because loss per share would be anti-dilutive. 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 First Quarter ended September 30, 1999 and 1998 Sales - The Company had no unusual transactions for the first quarter ended September 30, 1999. The Company realized a gross profit percentage of 25.52% and 22.12% for the first quarter ended September 30, 1999 and 1998, respectively. Consolidated net sales for the quarter ended September 30, 1999 of $453,521, were 16% above the $391,701 in 1998's first quarter. No major customers were lost during the current quarter. The 1999 improved gross margin is due to a volume increase in sales. Expenses - Selling, general and administrative were 21.4% of sales in the quarter ended September 30 1999 compared to 23.73% in the first quarter of 1998, which is consistent with last year. Inventories at September 30, 1999 are $235,000 higher than at June 30, 1999 since the Company is presently in their fall busy season. In addition accounts payable is $160,363 higher at September 30, 1999 compared to June 30, 1999 which also reflects the entrance into the Company's fall busy season. LIQUIDITY AND CAPITAL RESOURCES As of September 30, 1999, the Company has no commitments for capitalized expenditures. Cash decreased $140,537 as a result of the increased seasonal build-up of inventories. The officers of the Company and legal counsel continue to discuss liquidity and capital resource options to resolve the $5.8 million cumulative preferred stock dividends in arrears. PART II OTHER INFORMATION CHASE GENERAL CORPORATION AND SUBSIDIARY Item 3. DEFAULTS UPON SENIOR SECURITIES a. None b. The total cumulative preferred stock dividends in arrears at September 30, 1999 are $5,803,600. Item 6. EXHIBITS AND REPORTS ON FORM 8.K. a. Exhibits - None b. Reports on Form 8-K: There were no reports on Form 8-K filed during July, August, and September, 1999. 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 11/16/99 /s/ Barry M. Yantis Date Barry M. Yantis President and Chief Financial Officer