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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------

For the Fiscal Year Ended June 30, 2007



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------

For transition period from              to

Commission File Number 2-5916



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CHASE GENERAL CORPORATION

(Name of small issuer in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Missouri                                                       |  | 36-2667734                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1307 South 59th, St. Joseph, Missouri 64507

(Address of principal executive offices) (Zip Code)

(816) 279-1625

(Issuers telephone number)



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

None

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

None



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Check whether the issuer is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act. ̈

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ̈

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB.  x

Issuers revenues for its most recent fiscal year: $2,320,543

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b 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.

The number of shares of outstanding common stock of the issuer as of August 31, 2007 was 969,834.

Transitional Small Business Disclosure Format:    Yes ̈No  x



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##### Table of Contents

CHASE GENERAL CORPORATION

FORM 10-KSB ANNUAL REPORT

TABLE OF CONTENTS



|                                                                                                        |  |     
|------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                        |  | Page
|PART I                                                                                                  |  |     
|Item 1. Description of Business                                                                         |  | 3   
|Item 2. Description of Property                                                                         |  | 6   
|Item 3. Legal Proceedings                                                                               |  | 7   
|Item 4. Submission of Matters to a Vote of Security Holders                                             |  | 7   
|                                                                                                        | 
|PART II                                                                                                 |  |     
|Item 5. Market for Common Equity and Related Stockholder Matters                                        |  | 8   
|Item 6. Managements Discussion and Analysis or Plan of Operation                                       |  | 8   
|Item 7. Consolidated Financial Statements and Supplementary Data                                        |  | 14  
|Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure            |  | 34  
|Item 8A. Controls and Procedures                                                                        |  | 34  
|Item 8B. Other Information                                                                              |  | 34  
|                                                                                                        | 
|PART III                                                                                                |  |     
|Item 9. Directors, Executive Officers and Control Persons                                               |  | 35  
|Item 10. Executive Compensation                                                                         |  | 36  
|Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 38  
|Item 12. Certain Relationships and Related Transactions                                                 |  | 39  
|Item 13. Exhibits                                                                                       |  | 39  
|Item 14. Principal Accountant Fees and Services                                                         |  | 40  
|SIGNATURES                                                                                              |  | 41  



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##### Table of Contents

PART I



|Item 1 | DESCRIPTION OF BUSINESS
|------ | -----------------------

Chase General Corporation
was incorporated November 6, 1944 for the purpose of manufacturing confectionery products. In 1970 Chase General Corporation acquired a 100% interest in its wholly-owned subsidiary, Dye Candy Company. (Chase General Corporation and Dye Candy
Company are sometimes referred herein as the Company). This subsidiary is the main operating company for the reporting entity.

PRINCIPAL PRODUCTS AND SERVICES 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. Division products 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. Therefore,
segment reporting for the two divisions is not maintained by Management and, accordingly, is not available for inclusion in this filing.

The principal products produced are as follows:

Chase Candy Division of Dye Candy Company produces a candy bar under the
trade name of Cherry Mash. The bar is distributed in six case sizes:

(1) 60 count pack

(2) 12 boxes of 24 bars per box

(3) 200
count shipper box

(4) 100 count shipper box

(5) 100 # 2 box Counter Display

(6) 4 box - 36 count Counter Display

In addition to the regular size bar, a mini-mash is distributed in six case sizes:

(1) 24 - 12 oz. bags

(2) 6 jars - 60 bars
per jar

(3) 23 # wrapped bars

(4) 22 # unwrapped bars

(5) 12 - 12 oz. bags

(6) 6 - 4 # jars

(7) 18 - 24 oz. tins



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##### Table of Contents

DESCRIPTION OF BUSINESS(CONTINUED)



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



|                         |  |                         
|------------------------ |  | ------------------------
|(1) Coconut Bon-Bons     |  | (6) Peanut Brittle      
|(2) Coconut Stacks       |  | (7) Peanut Clusters     
|(3) Home Style Poe Fudge |  | (8) Champion Crème Drops
|(4) Peco Flake           |  | (9) Jelly Candies       
|(5) Peanut Squares       |  |                         

The Creme Drops and Jelly Candies are not produced by the Company, but repackaged for wholesale
distribution.

All products are trucked to the customers by commercial haulers.

COMPETITION AND MARKETS

The Chase
Candy 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 the years ended June 30,
2007 and 2006, this division accounted for 60% and 62%, respectively, of the consolidated revenue of Dye Candy Company.

The Seasonal Candy
Division is sold primarily on a Midwest regional basis to national syndicate accounts, repackers, and grocery accounts. For the years ended June 30, 2007 and 2006, the division accounted for 40% and 38%, respectively, of the consolidated
revenue 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
the spring and fall of each year. The net income per quarter of the Company varies in direct proportion to the seasonal sales volume.

Due
to the seasonal nature of the business, there is a heavier demand on working capital in the summer and winter months of the year when the Company is building its inventories in anticipation of fall and spring 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 in early fall 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.

(Continued)



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COMPETITION AND MARKETS(CONTINUED)



Prompt, 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 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 Division of Dye Candy Company with
approximately 70% of the market share among them. In the United States, Sophie Mae and Old Dominion have approximately 80% of the market share of the peanut candy business in which the Seasonal Candy 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 experience associated with its name.

RESEARCH AND DEVELOPMENT

During the
prior fiscal year, the Company developed vanilla and chocolate mini mash products which were marketed during the busy season starting September 1, 2006. The Company continues to test various new products for distribution.

RAW MATERIALS AND PRINCIPAL SUPPLIERS

Raw materials and packaging materials are produced on a national basis with products coming from most of the states of the United States. Raw materials and packaging materials are generally widely available, depending of course, on common
market influences.

PATENTS AND TRADEMARKS

The largest single revenue producing product, the Cherry Mash bar, is protected by a trademark registered with the United States Government Patents Office. Management considers this trademark very
important to the Company. This trademark expires in the year 2013. Management and its legal representatives do not expect any impediment to renewing this trademark prior to its expiration.



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EMPLOYEES

As of June 30, 2007, the Company had 20 full time employees. There were 16 in manufacturing, 2 in sales and marketing and 2 in finance and administration. This expands to approximately 32 full time personnel
during the two busy production seasons in spring and fall.

CUSTOMERS

For the years ending June 30, 2007 and 2006, Associated Wholesale Grocers accounted for 24% and 25% of gross sales, respectively. For the years
ending June 30, 2007 and 2006, Wal-Mart and its affiliates accounted for 19% and 26% of gross sales, respectively. No other customer accounted for more than 10% of the Companys revenues in fiscal years 2007 and 2006.

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.

NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

The Company is required to meet the FDA 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-KSB report and quarterly 10-QSB 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.



|Item 2 | DESCRIPTION OF PROPERTY
|------ | -----------------------

The registrant operates
from two buildings as follows:

Chase Warehouse - This building located in St. Joseph, Missouri 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 and is in fair condition and adequate to
meet present requirements. The warehouse has approximately 15,000 square feet and is not encumbered.



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##### Table of Contents

|Item 2 | DESCRIPTION OF PROPERTY(CONTINUED)
|------ | ----------------------------------



Chase General Office and Dye Candy Company
Operating Plant - The building located at 1307 South 59th, St. Joseph, Missouri contains the general offices for Chase General Corporation, Dye Candy
Company and its divisions (of approximately 2,000 square feet). 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,
owned by a director of the Company and his spouse. The building is adequate to meet the Companys requirements.

The Company
believes both facilities are adequately covered by insurance.



|Item 3 | LEGAL PROCEEDINGS
|------ | -----------------

None



|Item 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------ | ---------------------------------------------------

No matters were submitted to a vote of the Companys security holders during the fourth quarter of the fiscal year ended June 30, 2007



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PART II



|Item 5 | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------ | --------------------------------------------------------

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 15, 2007, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

Dividends



| | (1) | Dividend history and restrictions
| | --- | ---------------------------------

No dividends
have been paid during the past two fiscal years and there are no dividend restrictions.



| | (2) | Dividend policy
| | --- | ---------------

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 | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|------ | ---------------------------------------------------------

IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS

This form 10-KSB 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 form 10-KSB, forward-looking statements are generally identified by the words anticipate, plan, believe, expect, estimate, and the like. Readers should carefully review
these cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. These forward-looking statements are based on the
information available to, and the expectations and assumptions deemed reasonable by the Company at the time the statements are made. These expectations, assumptions and uncertainties include: the Companys expectation of heavier demand on
working capital in the summer and winter months in anticipation of fall and spring sales; managements belief that the Company has stabilized its customer base; the Companys expectation to continue its efforts to expand the existing
market area and increase sales to its customers; and managements intent to maintain tight control of all expenditures.



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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
operations.



|                                            |  |        |    |  |        |   
|------------------------------------------- |  | ------ | -- |  | ------ | --
|                                            |  | 2007   |    |  | 2006   |   
|Net sales                                   |  | 100.00 | %  |  | 100.00 | % 
|Cost of sales                               |  | 80.00  |    |  | 82.67  |   
|                                            |  |        |    |  |        |   
|Gross profit                                |  | 20.00  |    |  | 17.33  |   
|Selling expense                             |  | 11.99  |    |  | 11.68  |   
|General and administrative expense          |  | 15.42  |    |  | 11.70  |   
|                                            |  |        |    |  |        |   
|Loss from operations                        |  | (7.41  | )  |  | (6.05  | ) 
|Other income (expense), net                 |  | (.06   | )  |  | (.07   | ) 
|                                            |  |        |    |  |        |   
|Loss before income taxes                    |  | (7.47  | )  |  | (6.12  | ) 
|Benefits from (provisions for) income taxes |  | .80    |    |  | (2.17  | ) 
|                                            |  |        |    |  |        |   
|Net loss                                    |  | (6.67  | )  |  | (3.95  | ) 
|Preferred dividends                         |  | (5.52  | )  |  | (5.51  | ) 
|                                            |  |        |    |  |        |   
|Loss applicable to common stockholders      |  | (12.19 | )% |  | (9.46  | )%
|                                            |  |        |    |  |        |   

NET SALES

During the year ended June 30, 2007, net sales decreased .25% as compared to the year ended June 30, 2006. Gross sales for Chase Candy products decreased $54,871 to $1,418,040 for the year ended
June 30, 2007 compared to $1,472,911 for 2006. Gross sales for seasonal candy increased $40,868 for the year ended June 30, 2007 to $946,698 compared to $905,830 for 2006.

The .25% decrease in net sales of $5,860 for the year ended June 30, 2007, over the same period ended June 30, 2006, is primarily due to a
customer purchasing less this year that accounted for 19% of total Chase Candy product sales, where as, in the prior year this same customer accounted for 26% of the Chase Candy product sales. This customer, in the prior year, changed their standard
order from a 24 count packaging bag to a 12 count packaging bag. This year the customer reduced their orders of the 12 count packaging. In addition, the Companys returns and allowances decreased $5,168 or 8% for they year ended June 30,
2007, compared to the year ended June 30, 2006. There was no loss of significant customers.

COST OF SALES

Cost of sales for the year ended June 30, 2007, as compared to the year ended June 30, 2006, decreased by 3.47%. The cost of sales decreased
$66,790 to $1,856,378 decreasing to 80% of related revenues for the year ended June 30, 2007, compared to $1,923,168 or 82.67% of related revenues for the year ended June 30, 2006.

The dollar decrease in cost of sales for the year ended June 30, 2007 included 38% or $8,532 for freight-in costs of $13,898 as compared to $22,430
for year ended June 30, 2006 and 15% or $56,928 in labor costs including wages, vacation pay and payroll taxes of $327,031 for year ending June 30, 2007 as compared to $383,959 for year ending 2006. The decrease in labor costs was
primarily related to bonuses given in the fiscal year which were not awarded again in 2007.



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GROSS PROFIT

The gross margin increased 15.11% or $60,930 to $464,165 increasing to 20% of related revenues for the year ended June 30, 2007, as compared to $403,235 or 17.33% of related revenues for the year ended
June 30, 2006, as a result of the decreased costs above in cost of sales.

Finished goods inventory as of June 30, 2007 of $68,079
decreased $3,552 or 5% of the June 30, 2006 finished goods inventory of $71,631. The decrease reflects the Company not having to build and store inventory to meet delivery deadlines, but has the capacity to produce inventory just in time for
delivery. Raw material inventory of $23,396 and packaging materials inventory of $119,341 is 21% higher than the June 30, 2006 inventories of $37,202 and $80,675, respectively, as a result of purchasing inventory at competive prices for the
forthcoming busy season that starts September 1, 2007.

SELLING EXPENSES

Selling expenses for the year ended June 30, 2007 increased $6,344 to $278,164, which is 11.99% of sales, compared to $271,820 or 11.68% of sales for
the year June 30, 2006. No significant change in selling expenses was expected due to the fact that there have been no significant changes in the nature of operations and managements efforts to control these costs.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the year ended June 30, 2007 increased $85,910 to $357,986, and increased to 15.42% of sales, compared to $272,076 or 11.70% of sales for the year ended June 30, 2006. The increase in costs
is due to increased professional fees of $80,239, of which $60,000 is in connection with a legal proceeding which was settled in January 2007, and $20,000 to increased audit fees.

LOSS FROM OPERATIONS

Loss from
operations for the year ended June 30, 2007 was (7.41)% of net sales as compared to (6.05)% of net sales for the year ended June 30, 2006 for the reasons described above.

OTHER INCOME (EXPENSE), NET

Other
income and (expense) decreased by $309 for the year ended June 30, 2007 as compared to the year ended June 30, 2006. This was due to an increase in miscellaneous income of $1,513, a decrease in interest income of $618, and an increase in
interest expense of $586.

LOSS BEFORE INCOME TAXES

Loss before income taxes was $(173,417) for the year ended June 30, 2007 as compared to $(142,402) for the year ended June 30, 2006.

The reasons for the decrease are discussed above.



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INCOME TAXES BENEFIT

The Company recorded a tax (benefit) for the year ended June 30, 2007 of $(18,652) as compared to a tax (benefit) of $(50,377) for the year ended June 30, 2006. The (benefit) recorded for the 2007 year is
primarily due to recognizing deferred taxes related to the operating loss, while the benefit recorded for 2006 is recognizing tax refunds for a portion of the loss carryback and the balance recognizing deferred taxes.

NET LOSS

Net loss for the year ended
June 30, 2007 was $(154,765) which is an increase of $62,740 as compared to the year ended June 30, 2006 of (92,025). The reasons for the increase are discussed above.

PREFERRED DIVIDENDS

Preferred
dividends were $128,072 for the years ended June 30, 2007 and 2006.

NET (LOSS) APPLICABLE TO COMMON STOCKHOLDERS

Net (loss) applicable to common stockholders was $(282,837) for the year ended June 30, 2007 compared to $(220,097) for the year ended
June 30, 2006 for the reasons discussed above.

LIQUIDITY AND SOURCES OF CAPITAL

Negative cash flows from operating activities were generated for fiscal year ended 2007 in the amount of $(58,326), compared to positive cash flows from
operating activities generated for fiscal year ended June 30, 2006 in the amount of $1,606.

The Company continually monitors raw
material pricing, and when a price increase or decrease is anticipated, adjustments to inventory levels are made accordingly. Raw materials decreased $13,806 from June 30, 2006 to June 30, 2007. The current year decrease can be attributed
to the efforts of the Company watching markets for these commodities, and making purchases at more favorable prices.

Packaging materials
are purchased in large volumes and carried for several years due to the high cost from suppliers to cut dies and print materials. Therefore, when supplier pricing remains consistent over the years and is not predicted to increase, the Company
utilizes its present inventory supply without making additional purchases necessary to lock in pricing. Packaging materials increased $38,666 at June 30, 2007 from June 30, 2006. The increase is due to the timing of several orders of
Millprint which were received prior to year end. A six to eight week lead time is needed to obtain materials in time to use in production. Normally, the shipment is received after year end and before the start of busy season September 1.

Finished goods inventory decreased $3,552 from June 30, 2006 to June 30, 2007. This decrease was due to fewer customer orders at
the end of fiscal year June 30, 2007 than at end of fiscal year June 30, 2006. Goods in process remained comparable to prior years.



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The Company continues to write off equipment that is no longer useful to the operations of the Company.
Purchases of $-0- and $26,853 were made during the year ended June 30, 2007 and 2006, respectively. Depending on results of operations and cash flows, the Company is hoping to replace their antiquated brittle cookers and a mini mash wrapper
machine in the next several years with no set target date. The anticipated cost of the equipment is approximately $76,000. Net cash provided by (used in) investing activities was $9,000 and $(35,853) for the years ended June 30, 2007 and 2006,
respectively.

The Company did borrow $230,000 and $250,000, respectively, on a line-of-credit during the fall of 2006 and 2005 busy season
which was paid in full November 2006 and 2005. The Company borrowed $75,000 from a shareholder during fiscal year 2007 of which $30,000 was paid in full November 2006. Net cash provided by financing activities was $45,000 and $-0- for the years
ended June 30, 2007 and 2006, respectively.

The Companys lease on its office and plant facility is effective through
March 31, 2025 at $6,500 per month. The facility is owned by a director and his spouse.

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.

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

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.

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

REVENUE RECOGNITION

The Company recognizes revenues as product is shipped to the customers. Net
sales are comprised of the total sales billed during the period less the estimated returns, customer allowances, and customer discounts.



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RECEIVABLES

Accounts receivable are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Accounts receivable are stated at the invoice amount as no interest is charged to
the customer for any past due amounts. Payments of accounts receivable 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 accounts receivable 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 collectibility of specific customer accounts and the aging of the accounts receivable. 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 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 market value, with cost being determined on the first-in, first-out basis of
accounting. Finished goods and goods in process include a provision for manufacturing overhead.

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.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 123 (revised 2004) (SFAS 123R), Share-Based Payment. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods
and services or incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R requires a public entity to
measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize that cost over the period during which an employee is required to provide service in
exchange for the award. Public entities filing as small business issuers will be required to apply SFAS 123R in the first annual reporting period beginning after December 15, 2005. The Company adopted this statement on July 1, 2006, but
adoption had no material effect on financial position or results of operations.



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RECENT ACCOUNTING PRONOUNCEMENTS(CONTINUED)



In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections. This
new standard replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. Among other changes, SFAS 154 requires retrospective application for reporting a
change in accounting principle unless such application is impracticable or unless transition requirements specific to a newly adopted accounting principle require otherwise. SFAS 154 also requires the reporting of a correction of an error by
restating previously issued financial statements. The new standard is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company adopted this standard on July 1, 2006, but
adoption had no material effect on our financial position or results of operations.

In July 2006, the FASB issued Interpretation
No. 48, Accounting for Uncertainty in Income Taxes.FIN 48 was issued to clarify the accounting for uncertainty regarding a position taken in an entitys tax return. This Statement requires a 2-step evaluation of tax positions. Step
one is recognition - if it is not more likely than not that a tax position would be sustained upon examination; the benefit of the tax position should not be recognized in the financial statements. Step two is measurement - for a tax
position that meets the more likely than not criterion in Step 1 should be measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The new interpretation is effective for
fiscal years beginning after December 15, 2006. The Company will adopt this interpretation on July 1, 2007. The Company does not believe the adoption of FIN 48 will have a material effect on its consolidated financial statements.



|Item 7 | CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------ | --------------------------------------------------------

The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 15 through 33 of this Form 10-KSB.



14



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

Table of Contents



|                                                        |  |     
|------------------------------------------------------- |  | ----
|                                                        |  | PAGE
|Report of Independent Registered Public Accounting Firm |  | 16  
|                                                        | 
|Financial Statements                                    |  |     
|                                                        | 
|Consolidated Balance Sheet                              |  | 17  
|                                                        | 
|Consolidated Statements of Operations                   |  | 19  
|                                                        | 
|Consolidated Statements of Stockholders Equity         |  | 20  
|                                                        | 
|Consolidated Statements of Cash Flows                   |  | 21  
|                                                        | 
|Notes to Consolidated Financial Statements              |  | 23  



15



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##### Table of Contents

LOGO

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Chase General Corporation and Subsidiary

St. Joseph, Missouri

We have audited the accompanying consolidated balance sheet of Chase General Corporation and Subsidiary as of June 30, 2007, and the related consolidated statements
of operations, stockholders equity, and cash flows for the years ended June 30, 2007 and 2006. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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, 2007, and the results of their operations and their cash flows for the years ended June 30, 2007 and 2006, in conformity with U. S.
generally accepted accounting principles.

LOGO

Kansas City, Missouri

September 7, 2007



16

McGladrey & Pullen, LLP is a member firm of RSM International  an affiliation of separate and independent legal entities.



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

June 30, 2007

ASSETS



|                                                                 |  |   |          
|---------------------------------------------------------------- |  | - | ---------
|CURRENT ASSETS                                                   |  |   |          
|Cash and cash equivalents                                        |  | $ | 22,232   
|Receivables:                                                     |  |   |          
|Trade, less allowance for doubtful accounts of $11,824 (Note 12) |  |   | 182,345  
|Inventories:                                                     |  |   |          
|Finished goods                                                   |  |   | 68,079   
|Goods in process                                                 |  |   | 2,279    
|Raw materials                                                    |  |   | 23,396   
|Packaging materials                                              |  |   | 119,341  
|Prepaid expenses                                                 |  |   | 6,500    
|Deferred income taxes (Note 7)                                   |  |   | 3,961    
|                                                                 |  |   |          
|Total current assets                                             |  |   | 428,133  
|                                                                 |  |   |          
|PROPERTY AND EQUIPMENT                                           |  |   |          
|Land                                                             |  |   | 35,000   
|Buildings                                                        |  |   | 85,738   
|Machinery and equipment                                          |  |   | 729,257  
|Trucks and autos                                                 |  |   | 128,986  
|Office equipment                                                 |  |   | 39,743   
|Leasehold improvements                                           |  |   | 68,021   
|                                                                 |  |   |          
|Total                                                            |  |   | 1,086,745
|Less accumulated depreciation                                    |  |   | 796,150  
|                                                                 |  |   |          
|Total property and equipment                                     |  |   | 290,595  
|                                                                 |  |   |          
|OTHER ASSETS                                                     |  |   |          
|Deferred income taxes - noncurrent (Note 7)                      |  |   | 11,789   
|                                                                 |  |   |          
|TOTAL ASSETS                                                     |  | $ | 730,517  
|                                                                 |  |   |          

These consolidated financial statements should be read

only in connection with the accompanying notes

to consolidated financial statements.



17



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

June 30, 2007

LIABILITIES AND STOCKHOLDERS EQUITY



|                                                         |  |   |            |  
|-------------------------------------------------------- |  | - | ---------- | -
|CURRENT LIABILITIES                                      |  |   |            |  
|Accounts payable                                         |  | $ | 168,562    |  
|Current maturities of forgivable loan - bank (Note 3)    |  |   | 5,000      |  
|Notes payable - stockholder (Note 5)                     |  |   | 45,000     |  
|Accrued expenses                                         |  |   | 22,764     |  
|Deferred income (Note 3)                                 |  |   | 1,299      |  
|                                                         |  |   |            |  
|Total current liabilities                                |  |   | 242,625    |  
|                                                         |  |   |            |  
|LONG-TERM LIABILITIES                                    |  |   |            |  
|Deferred income (Note 3)                                 |  |   | 6,753      |  
|Forgivable loan - bank, less current maturities (Note 3) |  |   | 10,000     |  
|                                                         |  |   |            |  
|Total long-term liabilities                              |  |   | 16,753     |  
|                                                         |  |   |            |  
|Total liabilities                                        |  |   | 259,378    |  
|                                                         |  |   |            |  
|COMMITMENTS AND CONTINGENCIES (NOTE 10)                  |  |   |           |  
|                                                         | 
|STOCKHOLDERS EQUITY                                     |  |   |            |  
|Capital stock issued and outstanding: (Note 6)           |  |   |            |  
|Prior cumulative preferred stock, $5 par value:          |  |   |            |  
|Series A (liquidation preference $1,980,000)             |  |   | 500,000    |  
|Series B (liquidation preference $1,935,000)             |  |   | 500,000    |  
|Cumulative preferred stock, $20 par value:               |  |   |            |  
|Series A (liquidation preference $4,550,937)             |  |   | 1,170,660  |  
|Series B (liquidation preference $741,661)               |  |   | 190,780    |  
|Common stock, $1 par value                               |  |   | 969,834    |  
|Paid-in capital in excess of par                         |  |   | 3,134,722  |  
|Accumulated deficit                                      |  |   | (5,994,857 | )
|                                                         |  |   |            |  
|Total stockholders equity                               |  |   | 471,139    |  
|                                                         |  |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY               |  | $ | 730,517    |  
|                                                         |  |   |            |  

These consolidated financial statements should be read

only in connection with the accompanying notes

to consolidated financial statements.



18



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2007 and 2006



|                                                                |  |      |           |   |      |   |           |  
|--------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                                |  | 2007 |           |   | 2006 |  
|NET SALES (NOTE 12)                                             |  | $    | 2,320,543 |   |      | $ | 2,326,403 |  
|                                                                |  |     
|COST OF SALES                                                   |  |      | 1,856,378 |   |      |   | 1,923,168 |  
|                                                                |  |      |           |   |      |   |           |  
|Gross Profit                                                    |  |      | 464,165   |   |      |   | 403,235   |  
|                                                                |  |      |           |   |      |   |           |  
|OPERATING EXPENSES                                              |  |      |           |   |      |   |           |  
|Selling expenses                                                |  |      | 278,164   |   |      |   | 271,820   |  
|General and administrative expenses                             |  |      | 357,986   |   |      |   | 272,076   |  
|                                                                |  |      |           |   |      |   |           |  
|Total operating expenses                                        |  |      | 636,150   |   |      |   | 543,896   |  
|                                                                |  |      |           |   |      |   |           |  
|Loss from operations                                            |  |      | (171,985  | ) |      |   | (140,661  | )
|                                                                |  |      |           |   |      |   |           |  
|OTHER INCOME (EXPENSE), NET                                     |  |      |           |   |      |   |           |  
|Interest income                                                 |  |      |          |   |      |   | 618       |  
|Miscellaneous income                                            |  |      | 2,370     |   |      |   | 857       |  
|Interest (expense) (Note 5)                                     |  |      | (3,802    | ) |      |   | (3,216    | )
|                                                                |  |      |           |   |      |   |           |  
|Total other income (expense), net                               |  |      | (1,432    | ) |      |   | (1,741    | )
|                                                                |  |      |           |   |      |   |           |  
|Loss before income taxes                                        |  |      | (173,417  | ) |      |   | (142,402  | )
|                                                                |  |     
|INCOME TAXES BENEFIT (NOTE 7)                                   |  |      | (18,652   | ) |      |   | (50,377   | )
|                                                                |  |      |           |   |      |   |           |  
|NET LOSS                                                        |  |      | (154,765  | ) |      |   | (92,025   | )
|                                                                |  |     
|Preferred dividends                                             |  |      | (128,072  | ) |      |   | (128,072  | )
|                                                                |  |      |           |   |      |   |           |  
|Net loss applicable to common stockholders                      |  | $    | (282,837  | ) |      | $ | (220,097  | )
|                                                                |  |      |           |   |      |   |           |  
|NET LOSS PER SHARE OF COMMON STOCK - BASIC AND DILUTED (NOTE 8) |  | $    | (.29      | ) |      | $ | (.23      | )
|                                                                |  |      |           |   |      |   |           |  
|WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING             |  |      | 969,834   |   |      |   | 969,834   |  
|                                                                |  |      |           |   |      |   |           |  

These consolidated financial statements should be read

only in connection with the accompanying notes

to consolidated financial statements.



19



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Years Ended June 30, 2007 and 2006



|                        |  |                                 |         |                            |   |             |  |                |           |                    |   |         |       |   |         |  |   |           |  |   |            |   |  |   |          |  
|----------------------- |  | ------------------------------- | ------- | -------------------------- | - | ----------- |  | -------------- | --------- | ------------------ | - | ------- | ----- | - | ------- |  | - | --------- |  | - | ---------- | - |  | - | -------- | -
|                        |  | Prior CumulativePreferred Stock |         | Cumulative Preferred Stock |   | CommonStock |  | Paid-inCapital |           | AccumulatedDeficit |   |         | Total |  
|                        |  | Series A                        |         | Series B                   |   | Series A    |  | Series B       |           |                    |   |        
|BALANCE , JUNE 30, 2005 |  | $                               | 500,000 |                            | $ | 500,000     |  | $              | 1,170,660 |                    | $ | 190,780 |       | $ | 969,834 |  | $ | 3,134,722 |  | $ | (5,748,067 | ) |  | $ | 717,929  |  
|Net loss                |  |                                 |        |                            |   |            |  |                |          |                    |   |        |       |   |        |  |   |          |  |   | (92,025    | ) |  |   | (92,025  | )
|                        |  |                                 |         |                            |   |             |  |                |           |                    |   |         |       |   |         |  |   |           |  |   |            |   |  |   |          |  
|BALANCE , JUNE 30, 2006 |  |                                 | 500,000 |                            |   | 500,000     |  |                | 1,170,660 |                    |   | 190,780 |       |   | 969,834 |  |   | 3,134,722 |  |   | (5,840,092 | ) |  |   | 625,904  |  
|Net loss                |  |                                 |        |                            |   |            |  |                |          |                    |   |        |       |   |        |  |   |          |  |   | (154,765   | ) |  |   | (154,765 | )
|                        |  |                                 |         |                            |   |             |  |                |           |                    |   |         |       |   |         |  |   |           |  |   |            |   |  |   |          |  
|BALANCE , JUNE 30, 2007 |  | $                               | 500,000 |                            | $ | 500,000     |  | $              | 1,170,660 |                    | $ | 190,780 |       | $ | 969,834 |  | $ | 3,134,722 |  | $ | (5,994,857 | ) |  | $ | 471,139  |  
|                        |  |                                 |         |                            |   |             |  |                |           |                    |   |         |       |   |         |  |   |           |  |   |            |   |  |   |          |  

These consolidated financial statements should be read

only in connection with the accompanying notes

to consolidated financial statements.



20



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2007 and 2006



|                                                                 |  |      |            |   |      |   |            |  
|---------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                 |  | 2007 |            |   | 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                             |  |      |            |   |      |   |            |  
|                                                                 |  |     
|Collections from customers                                       |  | $    | 2,248,893  |   |      | $ | 2,400,707  |  
|Interest received                                                |  |      |           |   |      |   | 618        |  
|Other income                                                     |  |      | 1,071      |   |      |   | 208        |  
|Cost of sales, selling, general and administrative expenses paid |  |      | (2,333,985 | ) |      |   | (2,413,636 | )
|Interest paid                                                    |  |      | (3,502     | ) |      |   | (3,216     | )
|Income taxes refund received                                     |  |      | 29,197     |   |      |   | 16,925     |  
|                                                                 |  |      |            |   |      |   |            |  
|Net cash (used in) provided by operating activities              |  |      | (58,326    | ) |      |   | 1,606      |  
|                                                                 |  |      |            |   |      |   |            |  
|                                                                 |  |     
|CASH FLOWS FROM INVESTING ACTIVITIES                             |  |      |            |   |      |   |            |  
|                                                                 |  |     
|Decrease (increase) in advance to officer                        |  |      | 9,000      |   |      |   | (9,000     | )
|Purchases of property and equipment                              |  |      |           |   |      |   | (26,853    | )
|                                                                 |  |      |            |   |      |   |            |  
|Net cash provided by (used in) investing activities              |  |      | 9,000      |   |      |   | (35,853    | )
|                                                                 |  |      |            |   |      |   |            |  
|                                                                 |  |     
|CASH FLOWS FROM FINANCING ACTIVITIES                             |  |      |            |   |      |   |            |  
|                                                                 |  |     
|Proceeds from line-of-credit                                     |  |      | 230,000    |   |      |   | 250,050    |  
|Principal payments on line-of-credit                             |  |      | (230,000   | ) |      |   | (250,050   | )
|Proceeds from stockholder notes payable                          |  |      | 75,000     |   |      |   |           |  
|Principal payments on stockholder notes payable                  |  |      | (30,000    | ) |      |   |           |  
|                                                                 |  |      |            |   |      |   |            |  
|Net cash provided by financing activities                        |  |      | 45,000     |   |      |   |           |  
|                                                                 |  |      |            |   |      |   |            |  
|NET DECREASE IN CASH AND CASH EQUIVALENTS                        |  |      | (4,326     | ) |      |   | (34,247    | )
|                                                                 |  |     
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                     |  |      | 26,558     |   |      |   | 60,805     |  
|                                                                 |  |      |            |   |      |   |            |  
|CASH AND CASH EQUIVALENTS, END OF YEAR                           |  | $    | 22,232     |   |      | $ | 26,558     |  
|                                                                 |  |      |            |   |      |   |            |  

These consolidated financial statements should be read

only in connection with the accompanying

notes
to consolidated financial statements.



21



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2007 and 2006



|                                                                                            |  |      |          |   |      |   |         |  
|------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------- | -
|                                                                                            |  | 2007 |          |   | 2006 |  
|RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES                   |  |      |          |   |      |   |         |  
|                                                                                            |  |     
|Net (loss)                                                                                  |  | $    | (154,765 | ) |      | $ | (92,025 | )
|                                                                                            |  |     
|Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities: |  |      |          |   |      |   |         |  
|Depreciation and amortization                                                               |  |      | 58,706   |   |      |   | 61,648  |  
|Provision (credit) for bad debts                                                            |  |      | 522      |   |      |   | (1,284  | )
|Deferred income amortization                                                                |  |      | (1,299   | ) |      |   | (649    | )
|Deferred income taxes                                                                       |  |      | (18,652  | ) |      |   | (22,680 | )
|Effects of changes in operating assets and liabilities:                                     |  |      |          |   |      |   |         |  
|Trade receivables                                                                           |  |      | (71,650  | ) |      |   | 75,588  |  
|Income taxes refund claims receivable                                                       |  |      | 29,197   |   |      |   | (10,772 | )
|Inventories                                                                                 |  |      | (19,072  | ) |      |   | 49,853  |  
|Prepaid expenses                                                                            |  |      | 5,946    |   |      |   | (9,249  | )
|Accounts payable                                                                            |  |      | 107,047  |   |      |   | (42,865 | )
|Accrued expenses                                                                            |  |      | 5,694    |   |      |   | (5,959  | )
|                                                                                            |  |      |          |   |      |   |         |  
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                         |  | $    | (58,326  | ) |      | $ | 1,606   |  
|                                                                                            |  |      |          |   |      |   |         |  

These consolidated financial statements should be read

only in connection with the accompanying notes

to consolidated financial statements.



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

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. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Division products 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. Therefore, segment reporting for the two divisions is not maintained by Management and, accordingly, has not been
disclosed in these consolidated financial statements.

USE OF ESTIMATES

The preparation of 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 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.



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)



REVENUE RECOGNITION

The Company recognizes revenues as product is shipped to the 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.

SHIPPING AND HANDLING COSTS

Shipping and handling costs for freight expense on goods shipped is included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2007 and 2006 was $155,935 and $155,352, respectively.

RECEIVABLES

Accounts receivable are uncollateralized customer
obligations which generally require payment within thirty days from the invoice date. Accounts receivable are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of accounts receivable 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 accounts receivable 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 collectibility
of specific customer accounts and the aging of the accounts receivable. 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 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
market value, with cost being determined on the first-in, first-out basis of accounting. Finished goods and goods in process include a provision for manufacturing overhead.



24



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)



PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. The Companys property and equipment are being depreciated on straight-line and accelerated methods over the following estimated useful lives:



|                        |  |             
|----------------------- |  | ------------
|Buildings               |  | 39 years    
|Machinery and equipment |  | 5 - 7 years 
|Trucks and autos        |  | 5 years     
|Office Equipment        |  | 5 - 7 years 
|Leasehold improvements  |  | 5 - 25 years

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 by 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 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 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 tax assets will not be realized. Deferred tax liabilities are recognized for temporary
differences that will be taxable in future years tax returns. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

EARNINGS PER 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, no diluted earnings per share shall be presented.



25



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##### Table of Contents

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)



EARNINGS PER SHARE(CONTINUED)



The following contingently issuable shares were not included in diluted earnings per common share as they would have
an antidilutive effect upon earnings per share:



|                                                                             |  |         |  |        
|---------------------------------------------------------------------------- |  | ------- |  | -------
|                                                                             |  | 2007    |  | 2006   
|Shares issuable upon conversion of Series A Prior Cumulative Preferred Stock |  | 400,000 |  | 400,000
|Shares issuable upon conversion of Series B Prior Cumulative Preferred Stock |  | 375,000 |  | 375,000
|Shares issuable upon conversion of Series A Cumulative Preferred Stock       |  | 222,133 |  | 222,133
|Shares issuable upon conversion of Series B Cumulative Preferred Stock       |  | 36,200  |  | 36,200 

ADVERTISING EXPENSE

Advertising is expensed when incurred. Advertising expense was $2,887 and $1,210 for the years ended June 30, 2007 and 2006, respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 123 (revised 2004) (SFAS 123R), Share-Based Payment.SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and
services or incurs liabilities in exchange for goods or services that are based on the fair value of the entitys equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R requires a public entity to
measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize that cost over the period during which an employee is required to provide service in
exchange for the award. Public entities filing as small business issuers were required to apply SFAS 123R in the first annual reporting period beginning after December 15, 2005. The Company adopted this statement on July 1, 2006, but
adoption had no material effect on financial position or results of operations.



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)



RECENT ACCOUNTING PRONOUNCEMENTS(CONTINUED)



In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections. This new standard
replaces APB Opinion No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. Among other changes, SFAS 154 required retrospective application for reporting a change in
accounting principle unless such application is impracticable or unless transition requirements specific to a newly adopted accounting principle require otherwise. SFAS 154 also required the reporting of a correction of an error by restating
previously issued financial statements. The new standard was effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The Company adopted this standard on July 1, 2006, but adoption
had no material effect on our financial position or results of operations.

In July 2006, the FASB issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes.FIN 48 was issued to clarify the accounting for uncertainty regarding a position taken in an entitys tax return. This Statement requires a 2-step evaluation of tax positions. Step one is recognition - if it is
not more likely than not that a tax position would be sustained upon examination; the benefit of the tax position should not be recognized in the financial statements. Step two is measurement - for a tax position that meets the more
likely than not criterion in Step 1 should be measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The new interpretation is effective for fiscal years beginning after
December 15, 2006. The Company will adopt this interpretation on July 1, 2007. The Company does not believe the adoption of FIN 48 will have a material effect on its consolidated financial statements.

NOTE 2 - ADVANCE TO STOCKHOLDER

The Company recorded an advance to a
stockholder for $9,000 as of June 30, 2006. The advance, non-interest bearing with no stated maturity date, was collected during August 2006.



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 3 - FORGIVABLE LOAN AND DEFERRED INCOME

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 has established an
Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of December 31, 2009. The Company has met the criteria of occupying a 20,000 square foot building and the criteria of 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 for two years thereafter and will be required to do so until the five year term has expired.
Once the Company is no longer legally entitled to return the monies, the liability will be reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. At June 30, 2007 and 2006, $10,000 and
$5,000, respectively, has been reclassified to deferred revenue. During the fiscal years ended June 30, 2007 and 2006, $1,299 and $649, respectively, was amortized into income.

NOTE 4 - NOTE PAYABLE - BANK

The Company has a line-of-credit agreement for $250,000 that was obtained July 20,
2007 with a maturity date of January 1, 2008. The line-of-credit is collateralized by certain equipment and bears interest at an annual rate of 8.25%. At June 30, 2007, there was no balance outstanding on the line-of-credit.

NOTE 5 - NOTE PAYABLE - STOCKHOLDER

The Company borrowed $75,000
from a stockholder/officer during the fiscal year ending June 30, 2007. The unsecured loan has no maturity date and carries a 5% interest rate. The outstanding balance at June 30, 2007 was $45,000. Interest expense for years ending
June 30, 2007 and 2006 was $500 and $-0-, respectively.

NOTE 6 - CAPITAL STOCK

Capital stock authorized, issued and outstanding as of June 30, 2007 is as follows:



|                                                |  |            |  |                      
|----------------------------------------------- |  | ---------- |  | ---------------------
|                                                |  | Shares    
|                                                |  | Authorized |  | Issued andOutstanding
|Prior Cumulative Preferred Stock, $5 par value: |  |            |  |                      
|6% Convertible                                  |  | 240,000    |  |                      
|Series A                                        |  |            |  | 100,000              
|Series B                                        |  |            |  | 100,000              
|                                                |  |           
|Cumulative Preferred Stock, $20 par value:      |  |            |  |                      
|5% Convertible                                  |  | 150,000    |  |                      
|Series A                                        |  |            |  | 58,533               
|Series B                                        |  |            |  | 9,539                



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 6 - CAPITAL STOCK(CONTINUED)



|                                                              |  |            |  |                      
|------------------------------------------------------------- |  | ---------- |  | ---------------------
|                                                              |  | Shares    
|                                                              |  | Authorized |  | Issued andOutstanding
|Common Stock, $1 par value:                                   |  |            |  |                      
|Reserved for conversion of Preferred Stock - 1,030,166 shares |  | 2,000,000  |  | 969,834              

Cumulative Preferred Stock dividends in arrears at June 30, 2007 totaled $6,796,158. Total dividends in
arrears, on a per share basis, consist of the following at June 30, 2007:



|               |  |   |      
|-------------- |  | - | -----
|6% Convertible |  |   |      
|Series A       |  | $ | 14.55
|Series B       |  |   | 14.10
|               | 
|5% Convertible |  |   |      
|Series A       |  |   | 57.75
|Series B       |  |   | 57.75

Convertible six percent prior cumulative preferred stock may, upon thirty days prior notice, be redeemed by the
Corporation at $5.25 a share plus unpaid accrued dividends to date of redemption. In the event of voluntary liquidation, holders of this stock are entitled to receive $5.25 per share plus accrued dividends. It may be exchanged for common stock at
the option of the shareholders in the ratio of four common shares for one share of Series A and 3.75 common shares for one share of Series B.

The Company
has the privilege of redemption of 5% convertible cumulative preferred stock at $21.00 a share plus unpaid accrued dividends. In the event of voluntary or involuntary liquidation, holders of this stock are entitled to receive $20.00 a share plus
unpaid accrued dividends. It may be exchanged for common stock at the option of the shareholders, in the ratio of 3.795 common shares for one of preferred.

NOTE 7 - INCOME TAX MATTERS

The sources of deferred tax assets and liability and the tax effect of each are as follows:



|                                  |  |      |         |  
|--------------------------------- |  | ---- | ------- | -
|                                  |  | 2007 |        
|Deferred tax assets:              |  |      |         |  
|Inventories                       |  | $    | 120     |  
|Trade receivables                 |  |      | 3,469   |  
|Contribution carryover            |  |      | 372     |  
|Net operating loss (carryforward) |  |      | 59,928  |  
|Deferred income                   |  |      | 2,363   |  
|Valuation allowance               |  |      | (32,000 | )
|                                  |  |      |         |  
|Total deferred tax assets         |  |      | 34,252  |  
|                                  |  |      |         |  



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 7 - INCOME TAX MATTERS(CONTINUED)



|                        |  |      |         |  
|----------------------- |  | ---- | ------- | -
|                        |  | 2007 |        
|Deferred tax liability: |  |      |         |  
|Property and equipment  |  |      | (18,502 | )
|                        |  |      |         |  
|NET DEFERRED TAX ASSETS |  | $    | 15,750  |  
|                        |  |      |         |  

The net deferred tax assets are presented in the accompanying balance sheet as follows:



|                              |  |      |       
|----------------------------- |  | ---- | ------
|                              |  | 2007
|Current deferred tax asset    |  | $    | 3,961 
|Noncurrent deferred tax asset |  |      | 11,789
|                              |  |      |       
|NET DEFERRED TAX ASSETS       |  | $    | 15,750
|                              |  |      |       

The provision for income taxes for the years ended June 30, 2007 and 2006 consists of the following:



|                     |  |      |         |   |      |   |         |  
|-------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                     |  | 2007 |         |   | 2006 |  
|Current tax benefit  |  | $    |        |   |      | $ | (27,697 | )
|Deferred tax expense |  |      | (18,652 | ) |      |   | (22,680 | )
|                     |  |      |         |   |      |   |         |  
|                     |  | $    | (18,652 | ) |      | $ | (50,377 | )
|                     |  |      |         |   |      |   |         |  

The income tax provision differs from the amount of income tax determined by applying the statutory federal income
tax rate to pretax income for the years ended June 30, 2007 and 2006 due to the following:



|                                                               |  |      |         |   |      |   |         |  
|-------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                               |  | 2007 |         |   | 2006 |  
|Computed expected tax (benefit)                              |  | $    | (60,696 | ) |      | $ | (49,841 | )
|Increase (decrease) in income taxes (benefits) resulting from: |  |      |         |   |      |   |         |  
|State income taxes, net of federal benefit                     |  |      | (8,906  | ) |      |   | (5,342  | )
|Nondeductible expenses                                         |  |      | 384     |   |      |   | 469     |  
|Effect of (income) loss taxed at lower rates                   |  |      | 16,353  |   |      |   | 11,053  |  
|Change in valuation allowance                                  |  |      | 32,000  |   |      |   |        |  
|Other                                                          |  |      | 2,213   |   |      |   | (6,716  | )
|                                                               |  |      |         |   |      |   |         |  
|                                                               |  | $    | (18,652 | ) |      | $ | (50,377 | )
|                                                               |  |      |         |   |      |   |         |  



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 8 - LOSS PER SHARE

The loss per share was computed on the weighted average of outstanding common shares during the year as follows:



|                                                   |  |      |          |   |      |   |          |  
|-------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                   |  | 2007 |          |   | 2006 |  
|Net loss                                           |  | $    | (154,765 | ) |      | $ | (92,025  | )
|                                                   |  |      |          |   |      |   |          |  
|Preferred dividend requirements:                   |  |      |          |   |      |   |          |  
|6% Prior Cumulative Preferred, $5 par value        |  |      | 60,000   |   |      |   | 60,000   |  
|5% Convertible Cumulative Preferred, $20 par value |  |      | 68,072   |   |      |   | 68,072   |  
|                                                   |  |      |          |   |      |   |          |  
|Total dividend requirements                        |  |      | 128,072  |   |      |   | 128,072  |  
|                                                   |  |      |          |   |      |   |          |  
|Net loss - common stockholders                     |  | $    | (282,837 | ) |      | $ | (220,097 | )
|                                                   |  |      |          |   |      |   |          |  
|Weighted average of outstanding common shares      |  |      | 969,834  |   |      |   | 969,834  |  
|                                                   |  |      |          |   |      |   |          |  
|Loss per share                                     |  |      | (.29     | ) |      |   | (.23     | )
|                                                   |  |      |          |   |      |   |          |  

No computation was made on common stock equivalents outstanding at year-end because earnings per share would be
anti-dilutive.



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 9 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION



|                                              |  |      |       |      |   |      
|--------------------------------------------- |  | ---- | ----- | ---- | - | -----
|                                              |  | 2007 |       | 2006
|Non-cash transaction:                         |  |      |       |      |   |      
|Reclass of forgivable loan to deferred income |  | $    | 5,000 |      | $ | 5,000
|                                              |  |      |       |      |   |      

NOTE 10 - COMMITMENTS

Dye Candy Company leases its office and manufacturing facility from a Company that is owned by a director and his
spouse located at 1307 South 59th, St. Joseph, Missouri. The period of the lease is from February 1, 2005 through March 31, 2025 with an option
to extend for an additional term of five years, and requires payments of $6,500 per month. Rental expense was $78,000 for each year ended June 30, 2007 and 2006. The amounts are included in cost of sales.

Future minimum lease payments under this lease are as follows:

Year ending
June 30:



|           |  |   |          
|---------- |  | - | ---------
|2008       |  | $ | 78,000   
|2009       |  |   | 78,000   
|2010       |  |   | 78,000   
|2011       |  |   | 78,000   
|2012       |  |   | 78,000   
|Thereafter |  |   | 994,500  
|           |  |   |          
|           |  | $ | 1,384,500
|           |  |   |          

As of June 30, 2007, the Company had raw materials purchase commitments with four vendors totaling $178,467.

NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The Companys financial instruments consist principally of cash and cash equivalents, trade receivables and payables, and notes payable. There are no significant differences between the carrying value and fair
value of any of these consolidated financial instruments.



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CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 12 - CONCENTRATION OF CREDIT RISK

For the years ending June 30, 2007 and 2006, two customers accounted for 43% and 51%, respectively, of the gross sales. For the year ending June 30, 2007, two customers accounted for 53% of accounts
receivable and at June 30, 2006, three customers accounted for 55% of accounts receivable.



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##### Table of Contents

|Item 8 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------ | ------------------------------------------------------------------------------------

Not applicable



|Item 8A | CONTROLS AND PROCEDURES
|------- | -----------------------

The Company maintains
disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis. The Companys
principal executive officer who is also the chief financial and accounting officer has reviewed and evaluated the Companys disclosure controls and procedures as 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 (the Evaluation Date). Based on such evaluation, such officer has concluded that, as of the Evaluation Date, the Companys disclosure
controls and procedures are effective in bringing to their attention on a timely basis material information relating to the Company required to be included in the Companys periodic filings under the Exchange Act.

There have not been any changes in the Companys internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
that occurred during the Companys most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 8B | OTHER INFORMATION
|------- | -----------------

Not applicable



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##### Table of Contents

PART III



|Item 9 | DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
|------ | -------------------------------------------------



| | (a) | Directors
| | --- | ---------



|                |  |     |  |                                |  |         
|--------------- |  | --- |  | ------------------------------ |  | --------
|Name            |  | Age |  | Periods of Service as Director |  | Terms   
|Barry M. Yantis |  | 62  |  | 1980 to present                |  | One year
|Brett A. Yantis |  | 39  |  | January 21, 1999 to present    |  | One year
|Brian A. Yantis |  | 59  |  | July 16, 1986 to present       |  | One year

Executive Officers



|                |  |     |  |                              |  |                              |  |                        
|--------------- |  | --- |  | ---------------------------- |  | ---------------------------- |  | -----------------------
|Name            |  | Age |  | Position                     |  | Years ofService asan Officer |  | Term                   
|Barry M. Yantis |  | 62  |  | President, CEO and Treasurer |  | 28                           |  | Until successor elected
|Brett A. Yantis |  | 39  |  | Vice President               |  | 5                            |  | Until successor elected
|Brian A. Yantis |  | 59  |  | Secretary                    |  | 15                           |  | Until successor elected



| | (b) | Certain Significant Employees
| | --- | -----------------------------

There are no
significant employees other than above.



| | (c) | Family Relationships
| | --- | --------------------

Barry M. Yantis and Brian A.
Yantis are brothers. Brett A. Yantis is the son of Barry M. Yantis.

Business Experience



| | (1) | Barry M. Yantis, president and treasurer has been an officer of the Company for twenty-eight years, twelve years as vice-president and sixteen years as president. He has been on the
board of directors for twenty-eight years and has been associated with the candy business for thirty-three years.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Brett A.
Yantis was elected to the position of director during the year ending June 30, 1999. Brett was elected Vice President in January 2003. Brett has been associated with the Company for fourteen years.

Brian A. Yantis, secretary has been an officer of the Company since May 1992. He has been associated with the insurance business for thirty-two years and
has been a vice-president of Aon Risk Services in Chicago, Illinois during the past eighteen years.



| | (2) | The directors and executive officers listed above are also the directors and executive officers of Dye Candy Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | (d) | Involvement in Certain Legal Proceedings
| | --- | ----------------------------------------

On
December 16, 2005, a lawsuit was filed by 3600 S. Leonard road, LLC., (the Plantiff) against the Company in the circuit Court of Buchanan County, Missouri. The Plantiff alleges that the Company failed to honor certain sections of a lease
agreement, for its former facility, entered into between the Plantiff, as owner and landlord of the premises subject to the lease agreement and the Company, a tenant to the premises. The Company filed a response with the Circuit Court denying all
material allegations made by the Plantiff, whom as seeking damages in an amount in excess of $200,000. A trial was held in January 2007, at which time, the Judge ruled in favor of the Company. The Plantiff was awarded no damages.



| | (e) | Audit Committee Financial Expert
| | --- | --------------------------------

Registrant is not
required to have an audit committee since the stock is not actively traded. The Board of Directors are not considered audit committee financial experts, but do effectively operate as the audit committee.



| | (f) | Code of Ethics
| | --- | --------------

The Company has adopted a Code of
Business Conduct and Ethics that applies to all executive officers, directors and employees of the Company. The Code of Business Conduct and Ethics is attached as exhibit 14 to this Annual Report on Form 10-KSB.



|Item 10 | EXECUTIVE COMPENSATION
|------- | ----------------------



| | (a) | General
| | --- | -------

Executive officers are compensated for
their services as set forth in the Summary Compensation Table. These salaries are approved yearly by the Board of Directors.

(b)

Summary Compensation Table



|                            |  |                |  |                     |         |        |   |                          |  |                          |       |                 |   |             |   |                       |   |  |  
|--------------------------- |  | -------------- |  | ------------------- | ------- | ------ | - | ------------------------ |  | ------------------------ | ----- | --------------- | - | ----------- | - | --------------------- | - |  | -
|                            |  |                |  |                     |         |        |   |                          |  | Long Term Compensation   |       |                
|                            |  |                |  | Annual Compensation |         | Awards |   | Payouts                  |  |                         
|Name and Principal Position |  | FiscalYear End |  | Salary              |         | Bonus  |   | Other AnnualCompensation |  | RestrictedStockAward (s) |       | Option/SARs (#) |   | LTIPPayouts |   | All otherCompensation
|Barry M. Yantis             |  | 1) 06-30-07    |  | $                   | 121,900 |        | $ |                         |  | $                        | 2,175 |                 |  |             |  |                       |  |  | 
|Barry M. Yantis             |  | 1) 06-30-06    |  | $                   | 121,900 |        | $ |                         |  | $                        | 2,675 |                 |  |             |  |                       |  |  | 
|Barry M. Yantis             |  | 1) 06-30-05    |  | $                   | 121,900 |        | $ |                         |  | $                        | 3,960 |                 |  |             |  |                       |  |  | 



| | 1) | CEO, President and Treasurer
| | -- | ----------------------------



| | 2) | No other compensation than that which is listed in compensation table.
| | -- | ----------------------------------------------------------------------



| | 3) | No other officers have compensation over $100,000 for their services besides those listed in this compensation table.
| | -- | ---------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 10 | EXECUTIVE COMPENSATION (CONTINUED)
|------- | ----------------------------------



| | (c) | Option/SAR grants table
| | --- | -----------------------

Not applicable



| | (d) | Aggregated option/SAR exercises and fiscal year-end option/SAR value table
| | --- | --------------------------------------------------------------------------

Not applicable



| | (e) | Long-term incentive plan awards table
| | --- | -------------------------------------

Not
applicable



| | (f) | Compensation of Directors
| | --- | -------------------------

Directors are not
compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings. During the fiscal year 2007 and 2006, $180 and $311, respectively, of travel expenses were reimbursed to board member Brian
A. Yantis.



| | (g) | Employment contracts and termination of employment and change in control arrangements
| | --- | -------------------------------------------------------------------------------------

No employment contracts exist with any executive officers. In addition, there are no contracts currently in place regarding termination of employment or
change in control arrangements.



| | (h) | Report on repricing of option/SARs
| | --- | ----------------------------------

Not applicable



| | (i) | Additional information with respect to compensation committee interlocks and insider participation in compensation decisions
| | --- | ----------------------------------------------------------------------------------------------------------------------------

The registrant has no formal compensation committee. The Board of Directors, Brian A. Yantis, Barry M. Yantis, and Brett A. Yantis (all current officers
of the Company) annually approve the compensation of Barry M. Yantis, CEO, President and Treasurer.



| | (j) | Board compensation committee report on executive compensation
| | --- | -------------------------------------------------------------

The board bases the annual salary of the CEO on the Companys prior year performance. The criteria is based upon, but is not limited to, market area expansion, gross profit improvement, control of operating
expenses, generation of positive cash flow, and hours devoted to the business during the previous fiscal year.



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##### Table of Contents

|Item 11 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|------- | ----------------------------------------------------------------------------------------------



|    |  |                                                                                                                                     |  |                                  |  |                                         |     |  |            |      |  | 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- |  | --------------------------------------- | --- |  | ---------- | ---- |  | 
|    |  | Title of Class                                                                                                                      |  | Name and Address                 |  | AmountsandNature ofBeneficial Ownership |     |  | % of Class |     
|(a) |  | Security ownership of certain beneficial owners                                                                                     |  |                                  |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  |                                 
|    |  | Common; par value $1 per share                                                                                                      |  | Barry Yantis, CEO & Director     |  | 194,385                                 | (1) |  | 16.9       | %(2)
|    |  |                                                                                                                                     |  | 5605 Osage Drive                 |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  | St. Joseph, Mo.                  |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  | 64503                            |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  |                                 
|    |  |                                                                                                                                     |  | Brian Yantis, Officer & Director |  | 97,192                                  | (1) |  | 8.4        | %(2)
|    |  |                                                                                                                                     |  | 1210 E. Clarendon                |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  | Arlington Heights, IL.           |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  | 60004                            |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  |                                 
|(b) |  | Security ownership of management                                                                                                    |  |                                  |  |                                         |     |  |            |     
|    |  |                                                                                                                                     |  |                                 
|    |  | Common; par value $1 per share                                                                                                      |  | Two directors and CEO as a group |  | 110,856                                 |     |  | 11.4       | %   
|    |  |                                                                                                                                     |  |                                 
|    |  | Prior Cumulative Preferred, $5 par value: Series A, 6% convertible                                                                  |  | Two directors and CEO as a group |  | 21,533                                  |     |  | 21.5       | %   
|    |  |                                                                                                                                     |  |                                 
|    |  | Prior Cumulative Preferred $5 par value: Series B, 6% convertible                                                                   |  | Two directors and CEO as a group |  | 21,533                                  |     |  | 21.5       | %   
|    |  |                                                                                                                                     |  |                                 
|    |  | Cumulative Preferred, $20 par value: Series A, $5 convertible                                                                       |  | Two directors and CEO as a group |  | 3,017                                   |     |  | 5.2        | %   
|    |  |                                                                                                                                     |  |                                 
|    |  | Cumulative Preferred, $20 par value: Series B, $5 convertible                                                                       |  | Two directors and CEO as a group |  | 630                                     |     |  | 6.6        | %   
|    |  | (1)    Includes 120,477 and 60,244 shares, respectively, which could be received within 30 days upon conversion of preferred stock. | 
|    |  | (2)    Reflects the percentage assuming the preferred shares above were converted into common
stock.                                | 
|    | 
|(c) |  | No known change of control is anticipated.                                                                                          | 



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##### Table of Contents

|Item 12 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|------- | ----------------------------------------------



| | (a) | Transactions with management and others
| | --- | ---------------------------------------

The
registrants subsidiary, Dye Candy Company entered into an operating lease agreement during the prior fiscal year to provide office and manufacturing facilities with a limited liability company that is owned 100% by Vice-President and Director,
Brett A. Yantis and his spouse. The annual rent is $78,000.



| | (b) | Certain business relationships
| | --- | ------------------------------

Not applicable



| | (c) | Indebtedness of management
| | --- | --------------------------

Shareholder advance of
$9,000 at June 30, 2006 was paid in full during August 2006. The Company owes a shareholder $45,000 at June 30, 2007.



| | (d) | Transactions with promoters
| | --- | ---------------------------

Not applicable



|Item 13 | EXHIBITS
|------- | --------

The exhibits listed below are filed with
or incorporated by reference in this report.

The following have been previously filed and are incorporated by reference to prior
years Forms 10-K filed by the Registrant:



| | (3) | Articles of Incorporation and By-Laws
| | --- | -------------------------------------

The following are
Exhibits attached or explanations included in Notes to Financial Statements in Part II of this report:



| | (4) | Instruments defining the rights of security holders including indentures - Refer to Note 3.
| | --- | -------------------------------------------------------------------------------------------



| | (11) | Computation of per share earnings - Refer to Note 8.
| | ---- | ----------------------------------------------------



| | (14) | Code of Ethics - attached
| | ---- | -------------------------



| | (21) | Subsidiaries of registrant - Refer to Note 1.
| | ---- | ---------------------------------------------



| | (31) | Certification Rule 13a - 14(a)/15d - 14(a) certification - attached
| | ---- | -------------------------------------------------------------------



| | (32) | Section 1350 Certification  attached
| | ---- | -------------------------------------



39



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##### Table of Contents

|Item 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|------- | --------------------------------------

The
following table shows the aggregate fees billed to the Company for professional services by McGladrey & Pullen, LLP for the years ended June 30, 2007 and 2006.



|                   |  |      |        |      |   |       
|------------------ |  | ---- | ------ | ---- | - | ------
|                   |  | 2007 |        | 2006
|Audit fees         |  | $    | 54,625 |      | $ | 51,000
|Audit related fees |  |      |       |      |   |      
|Tax fees           |  |      |       |      |   |      
|All other fees     |  |      |       |      |   |      



40



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##### Table of Contents

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                         |  |                           |  |                                                                        
|------------------------ |  | ------------------------- |  | -----------------------------------------------------------------------
|                         |  | CHASE GENERAL CORPORATION
|                         |  | (Registrant)             
|                         |  |                          
|Date: September 11, 2007 |  | By:                       |  | /s/ Barry M. Yantis                                                    
|                         |  |                           |  | Barry M. Yantis                                                        
|                         |  |                           |  | Chairman of the Board, Chief Executive Officer, President and Treasurer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated below.



|                                                                                                          
|----------------------------------------------------------------------------------------------------------
|                                                                                                          
|/s/ Barry M. Yantis                                                                                       
|Barry M. Yantis                                                                                           
|President, Treasurer (Principal Executive Officer and Chief Financial and Accounting Officer) and Director
|                                                                                                          
|September 11, 2007                                                                                        
|Date                                                                                                      
|                                                                                                          
|/s/ Brett Yantis                                                                                          
|Brett Yantis                                                                                              
|Vice-President and Director                                                                               
|                                                                                                          
|September 11, 2007                                                                                        
|Date                                                                                                      
|                                                                                                          
|/s/ Brian A. Yantis                                                                                       
|Brian A. Yantis                                                                                           
|Secretary and Director                                                                                    
|                                                                                                          
|September 10, 2007                                                                                        
|Date                                                                                                      



41