<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-K/A

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2001

Commission File Number 2-5916

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

            Missouri                                   36-2667734
--------------------------------                 ----------------------
    (State of Incorporation)                        (I.R.S. Employer
                                                 (Identification Number)

                  3600 Leonard Road, St. Joseph, Missouri 64503
                  ---------------------------------------------
                    (Address of principal executive offices)

Registrants' telephone number, including area code:             (816) 279-1625

Securities registered pursuant to Section 12(b) of the Act:               None
                                                                          ----

Securities registered pursuant to Section 12(g) of the Act:               None
                                                                          ----

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                                 X   Yes        No
                                              -------             ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
           -

State the aggregate market value of the voting stock held by non-affiliates of
registrant: Voting stock not actively traded. Therefore, market value of stock
unknown as of 60 days prior to the date of this filing.

Indicate the number of shares outstanding of each of the registrants' classes of
common stock as of the latest practicable date: 969,834 (one class with $1 par
value) as of September 5, 2001.

Location in this filing where exhibit index is located:  30
                                                         --

Total number of pages included in this filing:   37
                                                ---

                                        1

<PAGE>

                                     PART I

ITEM 1    BUSINESS
          --------

          (a)  General development of business
               -------------------------------

               (1)  Narrative history 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. There were
                    no material acquisitions, dispositions, new developments, or
                    changes in conducting business during the past five fiscal
                    years. However, as of June 30, 1987, the working capital of
                    the Company became impaired due to the maturity of $696,000
                    of notes payable. During the fiscal year end 1991 a portion
                    of the notes were paid in full and the remaining notes were
                    extended to December 20, 1994. Negotiation of a second
                    extension of the notes began during fiscal year ended 1995.
                    An extension to December 20, 2002 was unanimously accepted
                    December 20, 1995 with the agreement that this will be the
                    final extension. Refer to "Management's Discussion and
                    Analysis of Financial Condition and Results of Operations"
                    contained in Part II of this filing for further information.

               (2)  Not applicable.
                    ---------------

          (b)  Financial information about industry segments
               ---------------------------------------------

               The subsidiary, Dye Candy Company, operates two divisions, Chase
               Candy Company and Poe Candy Company. Operations in Chase Candy
               Company involve production and sale of a candy bar marketed under
               the trade name "Cherry Mash". Operations in Poe Candy Company
               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. Due to the similarities in the
               products manufactured, segment reporting for the two divisions is
               not maintained by Management and, accordingly, is not available
               for inclusion in this filing.

          (c)  Narrative description of businesses
               -----------------------------------

               (1)  Description of business done and intended to be done by
                    -------------------------------------------------------
                    dominant single industry
                    ------------------------

                    (i)  The principal products produced and methods of
                         distribution are as follows:

                                   (Continued)

                                        2

<PAGE>

ITEM 1    BUSINESS (CONTINUED)
          --------

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

               (1)  60 count pack
               (2)  12 boxes of 24 bars per box
               (3)  200 count shipper box
               (4)  96 count shipper box

               In addition to the regular size bar, a "mini-mash" is distributed
               in four case sizes:

               (1)  24 - 12 oz. bags
               (2)  6 jars - 60 bars per jar
               (3)  23 # wrapped bars
               (4)  22 # unwrapped bars

               The bars are sold primarily to wholesale candy and tobacco
               jobbing houses, grocery accounts, and vendors. "Cherry Mash" bars
               are marketed in the Midwest region of the United States. For the
               years ended June 30, 2001, 2000, and 1999, this division
               accounted for 57%, 61%, and 56%, respectively, of the
               consolidated revenue of Dye Candy Company.

               Poe 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 Creme Drops
               (4)   Peco Flake                (9)  Jelly Candies
               (5)   Peanut Squares           (10)  Coconut Cubes

               The Poe line is sold primarily on a Midwest regional basis to
               national syndicate accounts, repackers, and grocery accounts. For
               the years ended June 30, 2001, 2000, and 1999, this division
               accounted for 43%, 39%, and 44%, respectively, of the
               consolidated revenue of Dye Candy Company. The Company
               discontinued the coconut cubes during the year ended June 30,
               2000.

               (ii)  Not applicable.

               (iii) 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.

                                   (Continued)

                                        3

<PAGE>

ITEM 1    BUSINESS (CONTINUED)
          --------

          (iv)   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. The
                 trademark was renewed during the fiscal year ended June 30,
                 1985. This trademark expires in the year 2002. Management
                 and its legal representatives do not expect any impediment
                 to renewing this trademark prior to its expiration.

          (v)    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.

          (vi)   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.

          (vii)  For the years ending June 30, 2001, 2000, and 1999, Associated
                 Wholesale Grocers, accounted for 25.64%, 20.01% and 19.64% of
                 gross sales, respectively. For the years ending June 30, 2001,
                 2000, and 1999, Wal-Mart and its affiliates accounted for
                 28.54%, 20.08% and 12.06% of gross sales, respectively. The
                 loss of Associated Wholesale Grocers would not have an adverse
                 effect on the Company as the customer purchases and distributes
                 to retail outlets and these outlets would continue to demand
                 products offered by Dye Candy Company. However, due to the
                 affiliation certain outlets have with Wal-Mart, a loss of this
                 customer would reduce gross sales. The Company continues to
                 seek additional markets for its products.

          (viii) 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.

          (ix)   Not applicable.

                                   (Continued)

                                        4

<PAGE>

ITEM 1    BUSINESS (CONTINUED)
          --------------------

          (x)    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 Bradley Candy
                 Company, Crown Candy Company, Vermico Candy Company, and the
                 Poe 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 Poe Division operates. Dye
                 Candy Company sells approximately 90% 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 Shares in the coconut industry approximates
                 15% to 20% annually. This 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.

          (xi)   Not applicable.

          (xii)  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.

          (xiii) The Company employs approximately 25 full time personnel year
                 round. This expands to approximately 50 full time personnel
                 during the two busy production seasons in spring and fall.

     (d)  Foreign and domestic operations and export sales
          ------------------------------------------------

          The Company has no foreign operations or export sales. In addition,
          all domestic sales are primarily in the Midwest region of the United
          States.

                                        5

<PAGE>

ITEM 2    PROPERTIES
          ----------

          The registrant operates out of two buildings consisting of the
          following:

          Chase and Poe Warehouse - This building located in St. Joseph,
          Missouri is owned by Dye Candy Company, a wholly-owned subsidiary of
          the registrant. The facilities are currently devoted entirely to the
          storage of supplies, and the warehousing and shipping of candy
          products. This warehouse consists of a sixty-eight year old building
          which is in fair condition and is adequate to meet present
          requirements. The warehouse has approximately 15,000 square feet and
          it is not encumbered.

          Chase General Office and Dye Candy Company Operating Plant - The
          building housing the office and plant is located in St. Joseph,
          Missouri, and was originally owned by Chase Building Corporation, a
          wholly-owned subsidiary of Dye Candy Company. In March, 1975, the
          subsidiary was liquidated by Dye Candy Company. Subsequently, the
          Company sold this facility. The property was leased from the purchaser
          in March, 1975. Refer to Note 3, "Notes to Financial Statements," for
          terms of the lease. The building contains the general offices of Chase
          General Corporation, Dye Candy Company, and its divisions. The
          production plant of Dye Candy Company occupies the remainder of the
          building. The building was acquired new in 1964 and was specifically
          designed for the type of operations conducted by the registrant. The
          facility is adequate to meet present requirements. The operating plant
          is approximately 20,000 square feet and the office is approximately
          2,000 square feet. The Company renegotiated the original lease on this
          building which expired March 31, 1995. The terms of the new lease
          began April 1, 1995 and continues for ten years.

ITEM 3    LEGAL PROCEEDINGS
          -----------------

          The Company is not, and has not been, a party in any material pending
          legal proceedings, other than ordinary litigation incidental to its
          business, during the fiscal year ended June 30, 2001, nor are any such
          proceedings contemplated.

ITEM 4    RESULTS OF VOTES OF SECURITY HOLDERS
          ------------------------------------

          No matters were submitted to a vote of security holders of the
          registrant during the fourth quarter of the fiscal year ended June 30,
          2001.

                                        6

<PAGE>

                                     PART II

ITEM 5  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
        ------------------------------------------------------------------------

        (a)  Market information
             ------------------

             There is no established public trading market for the common stock
             (par value $1 per share) of the Company.

        (b)  Approximate number of security holders
             --------------------------------------

             As of September 5, 2001, the latest practicable date, the
             approximate number of record holders of common stock was 1,439,
             including individual participants in security listings.

        (c)  Dividends
             ---------

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

                 No dividends have been paid during the past three fiscal years.
                 Refer to Note 1, "Notes to Financial Statements" for 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.

ITEM 6  SELECTED FINANCIAL DATA
        -----------------------

        (a)  Last five years
             ---------------
<TABLE>
<CAPTION>

                                                         06-30-2001      06-30-2000      06-30-99      06-30-98      06-30-97
                                                         ----------      ----------      --------      --------      --------
        <S>   <C>                                        <C>             <C>            <C>           <C>          <C>

        (i)   Net  sales or operating revenue            $1,981,030      $2,129,785     $2,134,920    $2,113,777   $2,317,501

        (ii)  Income (loss) from continuing
               operations                                $  (27,191)     $   42,284     $   49,262    $  (33,502)  $   50,174

        (iii) Income (loss) from continuing
               operations per common share *             $     (.16)     $     (.09)    $     (.09)   $     (.17)  $     (.08)

        (iv)  Total assets                               $  714,901      $  800,691     $  798,961    $  770,998   $  837,871

        (v)   Long-term debt                             $   77,672      $  127,672     $  162,672    $  185,305   $  207,659

        (vi)  Cash dividend declared
               per common share                          $      --       $      --      $      --     $      --    $      --
</TABLE>

        (b)  No additional years are necessary to keep the summary from being
             misleading.

* Refer to Note 6, "Notes to Financial Statements" for computation of income
  (loss) from continuing operations per common share.

                                        7

<PAGE>

ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        ------------------------------------------------------------------------
        OF OPERATIONS
        -------------

        (a & b) Liquidity and capital resources
                -------------------------------

        Positive cash flows from operating activities were generated for
        fiscal years ended June 30, 2001, 2000, and 1999 in the amounts of
        $74,261, $28,797, and $99,294, respectively.

        At various times during the years, and in anticipation of heavier
        cash demands due to seasonal production, plant improvements,
        and/or major promotional programs, it is the Company's practice
        to invest in short term U.S. Treasury obligations or financial
        institution certificates of deposit. At June 30, 2001, 2000, and
        1999 the Company had $50,000, $100,000, and $150,000,
        respectively invested in short term certificates of deposit to
        meet the 2001, 2000, and 1999 fall production season.

        The Company continually monitors raw material pricing, and when a
        price increase/decrease is anticipated adjustments to inventory
        levels are made accordingly. Raw materials increased
        approximately $27,000 from June 30, 2000 to June 30, 2001. Raw
        materials at June 30, 2000 were comparable to prior year.
        Purchase commitments at June 30, 2001 were approximately $286,000
        lower than at June 30, 2000. The decrease was due to the Company
        evaluating pricing and the market and having an adequate raw
        materials supply for current production. Purchase commitments at
        June 30, 2000 were approximately $125,000 higher than at June 30,
        1999. This increase was due to $26,000 in peanut contracts over
        prior year and approximately $102,000 additional purchase
        commitments of chocolate over prior year. The Company's contracts
        for these products has been fulfilled and new contracts
        established. The Company watches markets for these commodities
        and purchases are made accordingly.

        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
        inventory decreased approximately $59,000 from June 30, 2000 to
        June 30, 2001. The decrease was due to the higher than normal
        purchase in 2000. Packaging materials inventory increased $35,000
        from June 30, 1999 to June 30, 2000. These inventory items were
        purchased during the year ending June 30, 2000 to replenish
        inventory used in the current and prior years production. These
        items were purchased in quantities large enough to fulfill the
        Company's packaging needs for several seasons.

        Finished goods inventory did not significantly change from June
        30, 2000 to June 30, 2001. The slight decrease was due to timing
        of customer purchases of the Cherry Mash products.

        Finished goods inventory did not significantly change from
        June 30, 1999 to June 30, 2000. The slight increase as due to
        timing of customer purchases of the Cherry Mash products.
        Goods in process remained comparable to prior years.

                                   (Continued)

                                        8

<PAGE>

ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
        CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
        -----------------------------------

        The Company continues to write off equipment that is no longer
        useful to the operations of the Company. These write offs have
        been immaterial over the past three years. The Company also
        continues to replace old equipment on a yearly basis in order to
        streamline operations. However, due to cash flow needs in other
        areas, the Company has not been able to update the equipment at
        any significant level. During the year ending June 30, 1999,
        $16,041 was spent to upgrade production equipment. Also, during
        1999, $15,104 was used to add to transportation and office
        equipment. Expenditures of $13,574 were made to upgrade existing
        production equipment, in addition, $40,053 was made to update
        transportation and office equipment during the year ending June
        30, 2000. Expenditures of $53,626 were made to upgrade and
        replace transportation and office equipment during the year-end
        June 30, 2001. Depending on results of operations and cash flows,
        the Company is hoping to replace their antiquated brittle cookers
        in the next several years with no set target date.

        For the past nine years, the Company has not been indebted except
        for the series B notes. Of the original $630,000 Series B notes
        payable, $127,672 remain outstanding at June 30, 2000. On
        December 20, 1995, the Company received approval to extend the
        notes to December 20, 2002 at the current 6% rate of interest,
        with the agreement that this was the final note extension. Of the
        outstanding amount at June 30, 2001, $77,672 is classified
        long-term and $-0- is classified as current. Realizing that the
        minimum yearly principal payment required by the note indenture
        will not satisfy the notes on December 20, 2002, the Company has
        accelerated the principal payments on the notes during the past
        four fiscal years. It is anticipated that acceleration of
        principal payments will continue as cash flow has been adequate
        for operations and equipment replacement.

        The Company's lease on its manufacturing facility expired March
        31, 1995. The lease was renewed effective April 1, 1995 for a
        period of 10 years at $2,955 per month.

        The Company realized success in 1999, and for the year ending
        June 30, 1999 net sales increased by 1% and the cost of sales
        decreased by 1% from the prior year. Operating expenses were
        closely monitored during 1999 and decreased by 13% for the year.
        This was accomplished by decreasing selling expenses by 12%, and
        general and administrative by 15%. During the year ending June
        30, 2000, net sales and the cost of sales remained comparable to
        prior year.

                                   (Continued)

                                        9

<PAGE>

ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
        CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
        -----------------------------------

        Operating expenses increased by 2.9% from June 30, 1999 through
        June 30, 2000. This increase was due to increased general and
        administration expenses. While most general and administration
        expenses remained constant, insurance expense increased by $9,981
        and bad debt expense increased by $24,615. Insurance increased as
        rates for general and liability insurance continue to go up.
        During the year ending June 30, 2000 the Company had several
        large customer accounts which had to be written off. Of the
        current year write off of $20,813, $9,240 was from one customer
        that purchased product and immediately declared bankruptcy.
        During the year ending June 30, 1999 the Company netted $4,012
        more from collections of prior write-off than were ultimately
        written off. The Company continues a very aggressive collection
        effort. The aging of accounts receivable is reviewed on a regular
        basis and accounts which become overdue are pursued for
        collection.

        Selling expenses decreased by $28,381 during the year ending June
        30, 2000. This was due to the Company change in policy on brokers
        fees or commissions to customers. The Company discontinued
        allowing these fees as a reduction of selling price.

        During the year ending June 30, 2001, net sales decreased 7% from
        June 30, 2000 through June 30, 2001. The decrease was due to
        promotions with customers in the prior year which were
        discontinued. Additionally, in the prior year receivables from
        certain customers were written off. The Company did not do
        business with these customers in the current year. Cost of sales
        decreased by 5% from June 30, 2000 through June 30, 2001 due to
        the decrease in net sales.

        Operating expenses increased by 5.8% from June 30, 2000 through
        June 30, 2001. This increase was due to increased selling
        expenses. Selling expenses increased from the prior year by
        $15,252 due to commissions and bonuses given to employees during
        the year. While most general administration expenses remained
        constant, insurance expense increased by $9,265 as rates for
        general and liability insurance continues to go up. The Company
        was aggressive in their collection efforts and write offs
        decreased by $17,865 from June 30, 2000 through June 30, 2001.
        The aging of accounts receivable is reviewed on a regular basis
        and accounts which become overdue are pursued for collection.

        Under the leadership of the CEO and his sales staff, the Company
        has stabilized its customer base. Certainly some customers were
        lost during 2001, but the Company is working to replace those
        customers. The Company continues to look for new markets but only
        when the addition of a new market is profitable.

        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.

                                 (Continued)

                                     10

<PAGE>

ITEM 7  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        -------------------------------------------------
        CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
        -----------------------------------

        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. The Company does not feel that any
        accounting changes, as proposed by the Financial Accounting Standards
        Board, with effective dates after the date of this report, will have a
        material effect on future financial statements of the Company.

        The Company's only computer application, SBT software, involves the
        payroll processing accounting function.

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        -----------------------------------------------------------

        Not applicable. Refer to Note 7, "Notes to Financial Statements" for
        fair value of financial instruments as of June 30, 2001.

ITEM 8  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
        -------------------------------------------

        Financial statements meeting the requirements of Regulation S-X are
        contained on pages 13 through 26 of the filing.

        (a) Selected quarterly financial data
            ---------------------------------

            Exempt from requirements per second major condition for smaller
            companies.

        (b) Information about oil and gas producing activities
            --------------------------------------------------

            Registrant is not engaged in any oil and gas producing activities.

ITEM 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        ---------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

        Not applicable. There has been no change in accountants for
        approximately twenty-five years and no disagreements on accounting or
        financial disclosure.

                                       11

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

Board of Directors
Chase General Corporation
St. Joseph, Missouri

We have audited the accompanying consolidated balance sheets of Chase General
Corporation and subsidiary as of June 30, 2001 and 2000 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended June 30, 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 consolidated financial position of Chase
General Corporation and subsidiary as of June 30, 2001 and 2000, and the results
of their operations and their cash flows for each of the years in the three-year
period ended June 30, 2001, in conformity with accounting principles generally
accepted in the United States of America.

                                                 /s/ Clifton Gunderson LLP

Clifton Gunderson LLP
St. Joseph, Missouri
September 5, 2001

                                       12

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                             June 30, 2001 and 2000

                                     ASSETS


<TABLE>
<CAPTION>
                                                                 2001         2000
                                                              ----------   ----------
<S>                                                           <C>          <C>
CURRENT ASSETS
     Cash and cash equivalents                                $  117,114   $  146,779
     Receivables:
         Trade, less allowance for doubtful
         accounts of $10,669 in 2001 and $11,393 in 2000         100,494      129,018
         Other receivables                                            --        3,239
         Income tax receivables                                    7,053           --
     Inventories:
         Finished goods                                           73,138       85,147
         Goods in process                                          1,943        4,872
         Raw materials                                            80,592       53,232
         Packaging materials                                      64,536      123,938
     Prepaid expense                                              34,606       34,960
     Prepaid income taxes                                         11,220        1,158
                                                              ----------   ----------

             Total current assets                                490,696      582,343
                                                              ----------   ----------

PROPERTY AND EQUIPMENT
     Land                                                         35,000       35,000
     Buildings                                                    85,738       85,738
     Machinery and equipment                                     677,358      676,914
     Trucks and autos                                            148,527      104,513
     Office equipment                                             49,660       49,123
     Leasehold improvements                                      121,356      121,356
                                                              ----------   ----------
             Total, at cost                                    1,117,639    1,072,644
     Less accumulated depreciation                               893,434      854,296
                                                              ----------   ----------

              Total property and equipment                       224,205      218,348
                                                              ----------   ----------



TOTAL ASSETS                                                  $  714,901   $  800,691
                                                              ==========   ==========
</TABLE>

                                       13

<PAGE>

                      LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                     2001              2000
                                                                 -----------       ------------
<S>                                                              <C>               <C>
CURRENT LIABILITIES
     Accounts payable                                            $    46,002       $     54,718
     Notes payable, Series B, current maturities                          --              4,321
     Accrued expense:
          Interest                                                     6,161              8,711
          Other                                                       29,140             26,473
                                                                 -----------       ------------

              Total current liabilities                               81,303             94,223

LONG-TERM LIABILITIES
     Notes payable, Series B, less current maturities above           77,672            123,351
                                                                 -----------       ------------

              Total liabilities                                      158,975            217,574
                                                                 -----------       ------------

STOCKHOLDERS' EQUITY
     Capital stock issued and outstanding:
         Prior cumulative preferred stock, $5 par value:
             Series A (liquidation preference $1,275,000 and
                 $1,245,000 respectively)                            500,000            500,000
             Series B (liquidation preference $1,230,000 and
                 $1,200,000 respectively)                            500,000            500,000
         Cumulative preferred stock, $20 par value:
             Series A (liquidation preference $3,029,083 and
                 $2,970,550 respectively)                          1,170,660          1,170,660
             Series B (liquidation preference $493,643 and
                 $484,104 respectively)                              190,780            190,780
         Common stock, $1 par value                                  969,834            969,834
     Paid-in capital in excess of par                              3,134,722          3,134,722
     Accumulated deficit                                          (5,910,070)        (5,882,879)
                                                                 -----------        -----------

              Total stockholders' equity                             555,926        $   583,117
                                                                 -----------        -----------



TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $   714,901        $   800,691
                                                                 ===========        ===========
</TABLE>

    These consolidated financial statements should be read only in connection
                  with the accompanying summary of significant
       accounting policies and notes to consolidated financial statements.

                                       14

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    Years Ended June 30, 2001, 2000, and 1999


<TABLE>
<CAPTION>
                                                       2001          2000          1999
                                                    ----------    ----------    ----------
<S>                                                 <C>           <C>           <C>
NET SALES                                           $1,981,030    $2,129,785    $2,134,920

COST OF SALES                                        1,587,058     1,665,882     1,677,258
                                                    ----------    ----------    ----------

     Gross Profit                                      393,972       463,903       457,662
                                                    ----------    ----------    ----------

OPERATING EXPENSES
     Selling expenses                                  232,750       218,211       246,592
     General and administrative expenses               197,650       188,660       148,838
                                                    ----------    ----------    ----------

         Total operating expenses                      430,400       406,871       395,430
                                                    ----------    ----------    ----------

         Income (loss) from operations                 (36,428)       57,032        62,232
                                                    ----------    ----------    ----------

OTHER INCOME (EXPENSE)
     Interest income                                     6,922         6,323         6,498
     Miscellaneous income                                1,690           347         1,758
     Interest expense                                   (6,160)       (8,842)      (10,571)
     Other expense                                          --          (173)           --
                                                    ----------    ----------    ----------

         Total other income (expense)                    2,452        (2,345)       (2,315)
                                                    ----------    ----------    ----------

              Income (loss) before income taxes        (33,976)       54,687        59,917

PROVISION FOR INCOME TAXES                              (6,785)       12,403        10,655
                                                    ----------    ----------    ----------

NET INCOME (LOSS)                                      (27,191)       42,284        49,262

     Preferred dividends                              (128,072)     (128,072)     (128,072)
                                                    ----------    ----------    ----------

     Net loss applicable to common stockholders     $ (155,263)   $  (85,788)   $  (78,810)
                                                    ==========    ==========    ==========

(LOSS) PER SHARE OF COMMON STOCK                    $     (.16)   $     (.09)   $     (.09)
                                                    ==========    ==========    ==========
</TABLE>

    These consolidated financial statements should be read only in connection
                  with the accompanying summary of significant
       accounting policies and notes to consolidated financial statements.

                                       15

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    Years Ended June 30, 2001, 2000, and 1999


<TABLE>
<CAPTION>
                                      Prior Cumulative         Cumulative
                                      Preferred Stock        Preferred Stock
                                     ------------------    --------------------
                                     Series A  Series B     Series A   Series B
                                     --------  --------    ----------  --------
<S>                                  <C>       <C>         <C>         <C>

BALANCE (DEFICIT), JUNE 30, 1998     $500,000  $500,000    $1,170,660  $190,780

     Net income                            --        --            --        --
                                     --------  --------    ----------  --------

BALANCE (DEFICIT), JULY 1, 1999       500,000   500,000     1,170,660   190,780

     Net income                            --        --            --        --
                                     --------  --------    ----------  --------

BALANCE (DEFICIT), JUNE 30, 2000      500,000   500,000     1,170,660   190,780

     Net loss                              --        --            --        --
                                     --------  --------    ----------  --------
BALANCE (DEFICIT), JUNE 30, 2001     $500,000  $500,000    $1,170,660  $190,780
                                     ========  ========    ==========  ========
</TABLE>


<TABLE>
<CAPTION>

                                    Common      Paid-in       Accumulated
                                    Stock       Capital         Deficit       Total
                                   --------   -----------    ------------   ---------
<S>                                <C>        <C>            <C>            <C>

BALANCE (DEFICIT), JUNE 30, 1998   $969,834   $ 3,134,722      (5,974,425)   $491,571

     Net income                          --            --          49,262      49,262
                                   --------   -----------     -----------    --------

BALANCE (DEFICIT), JULY 1, 1999     969,834     3,134,722      (5,925,163)    540,833

     Net income                          --            --          42,284      42,284
                                   --------   -----------     -----------    --------

BALANCE (DEFICIT), JUNE 30, 2000    969,834     3,134,722      (5,882,879)    583,117

     Net loss                            --            --         (27,191)    (27,191)
                                   -------    -----------     -----------    --------
BALANCE (DEFICIT), JUNE 30, 2001   $969,834   $ 3,134,722     $(5,910,070)   $555,926
                                   ========   ===========     ===========    ========
</TABLE>

    These consolidated financial statements should be read only in connection
                  with the accompanying summary of significant
      accounting policies and notes to consolidated financial statements.

                                       16

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Years Ended June 30, 2001, 2001, and 1999


<TABLE>
<CAPTION>
                                                         2001          2000          1999
                                                      -----------   -----------   -----------
<S>                                                   <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     Collections from customers                       $ 2,010,278   $ 2,119,123   $ 2,094,487
     Interest received                                      6,922         6,323         6,498
     Other income                                           1,689         1,182         2,042
     Income tax refunds                                        --            --        24,710
     Cost of sales, selling, general and
         administrative expenses paid                  (1,924,698)   (2,075,152)   (2,015,534)
     Interest paid                                         (8,710)      (10,571)      (12,109)
     Income tax paid                                      (11,220)      (12,108)         (800)
                                                      -----------   -----------   -----------

         Net cash provided by operating activities         74,261        28,797        99,294
                                                      -----------   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES

     Purchases of property and equipment                  (53,626)      (53,627)      (31,145)
                                                      -----------   -----------   -----------

         Net cash used in investing activities            (53,626)      (53,627)      (31,145)
                                                      -----------   -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES

     Principal payments on notes payable, Series B        (50,000)      (35,000)      (22,633)
                                                      -----------   -----------    ----------

         Net cash used in financing activities            (50,000)      (35,000)      (22,633)
                                                      -----------   -----------   -----------

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                   (29,365)      (59,830)       45,516

CASH AND CASH EQUIVALENTS,
   BEGINNING OF YEAR                                      146,779       206,609       161,093
                                                      -----------   -----------   -----------

CASH AND CASH EQUIVALENTS, END OF YEAR                $   117,414   $   146,779   $   206,609
                                                      ===========   ===========   ===========
</TABLE>

                                       17

<PAGE>

<TABLE>
<CAPTION>


                                                                    2001         2000        1999
                                                                  --------     --------    --------
<S>                                                               <C>          <C>         <C>
RECONCILIATION OF NET INCOME TO NET
  CASH PROVIDED BY OPERATING ACTIVITIES

    Net income (loss)                                             $(27,191)    $ 42,284    $ 49,262

    Adjustments to reconcile net income (loss) to net
       cash provided by operating activities:
       Depreciation                                                 48,069       52,211      55,813
       Loss on disposal of equipment                                    --          835         284
       Provision for doubtful accounts                               2,225       20,603      (4,012)
       Effects of changes in operating assets and liabilities:
          Trade receivable                                          26,299      (10,662)    (40,433)
          Other receivable                                           3,239       (3,239)         --
          Income tax receivable                                     (7,054)          --      24,710
          Inventories                                               46,980      (67,032)     11,256
          Prepaid expense                                              354          509          80
          Prepaid income taxes                                     (10,063)      (1,158)      1,000
          Accounts payable                                          (8,716)       6,335     (10,811)
          Income taxes payable                                          --       (8,855)      8,855
          Accrued liabilities                                          119       (3,034)      3,290
                                                                  --------     --------    --------

NET CASH PROVIDED BY
   OPERATING ACTIVITIES                                           $ 74,261     $ 28,797    $ 99,294
                                                                  ========     ========    ========

</TABLE>


    These consolidated financial statements should be read only in connection
                  with the accompanying summary of significant
       accounting policies and notes to consolidated financial statements.

                                       18

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Chase General Corporation 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. The Company's fiscal year ends June 30.
Significant accounting policies followed by the Company are presented below:

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 Company
and Poe Candy Company. Operations in Chase Candy Company involve production and
sale of a candy bar marketed under the trade name "Cherry Mash". Operations in
Poe Candy Company 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. Due to the
similarities in the products manufactured, segment reporting for the two
divisions is not maintained by Management and, accordingly, has not been
disclosed in these financial statements.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

The preparation of financial statements in conformity with generally accepted
accounting principles 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.

                                       19

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

PROPERTY AND EQUIPMENT

The Company's property and equipment are being depreciated on straight-line and
accelerated methods over the following estimated useful lives:

             Buildings                                    25 years
             Machinery and equipment                  3 - 10 years
             Trucks and autos                          3 - 5 years
             Office Equipment                         5 - 10 years
             Leasehold improvements                 8 - 31.5 years


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, freight paid on these shipped goods, and
customer discounts.

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
impairement 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

The Company has no significant timing differences that would give rise to
deferred tax items.

                    This information is an integral part of
               the accompanying consolidated financial statements.

                                       20

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - NOTES PAYABLE, SERIES B

On December 1, 1967, the Company issued Collateral Sinking Fund 6% Income
Registered Notes in the amount of $680,000. These notes were issued to extend
and consolidate notes and certificates of indebtedness then held by F. S. Yantis
& Co., Inc. (Yantis & Co.), aggregating approximately $569,000 together with
unpaid accrued interest of $111,000. Interest is payable from "surplus net
earnings" on the 20th day of December following the year-end.

Pursuant to a supplemental indenture, dated April 1, 1968 and executed in
compliance with a request by Yantis & Co. in furtherance of the winding-up of
its affairs, the original notes aggregating $680,000 were reissued in two series
designated as A and B, respectively. The Series A notes aggregating $50,000 had
priority and were retired during the year ended June 30, 1984. The Series B
notes totaling $630,000 are held by the former shareholders of Yantis & Co.
During the years ended June 30, 2001 and 2000, $50,000 and $35,000 principal was
paid on the Series B notes, respectively.

As of June 30, 2001 and 2000, the outstanding Series B notes total $77,672 and
$127,672, respectively. Of these amounts $29,376 and $48,286 are owed to
officers and directors of the Company.

The Company has agreed to secure the payment of principal and interest on the
notes by the pledge of the capital stock of Dye Candy Company under an indenture
dated December 1, 1967, and supplemental indenture dated June 30, 1970.

The indenture provides for a sinking fund deposit to be made by the Company each
year of not less than one-fourth of the Company's fiscal year "surplus net
earnings," which exceeds the amount of interest required to be paid on the
outstanding notes. If at any time the sinking fund deposits aggregate $10,000 or
more, the same will be applied to prepayment of the notes outstanding. At June
30, 2001, there was no sinking fund requirement, and in 2000, all sinking fund
deposits had been disbursed to the noteholders. The "surplus net earnings" is
the amount by which the consolidated net income, after adding back the current
year's interest on the outstanding notes, exceeds a $25,000 working capital
reserve.

See Note 2 for computation of "surplus net earnings" and sinking fund
requirements for years ended June 30, 2001, 2000, and 1999.

                                       21

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--NOTES PAYABLE, SERIES B (CONTINUED)

Principal payments are made by the trustee under terms of the indenture and may
be prepaid at the option of the Company. During the year ended June 30, 1991,
the notes were extended to December 20, 1994. Effective December 20, 1995, the
notes were extended to December 20, 2002 at the same 6% interest rate and with
the agreement that this will be the final note extension. Due to the nature of
sinking fund requirements, it is not practicable to include a schedule of future
principal payments.

Dividends, other than stock dividends, may not be paid on capital stock at any
time interest on the notes is not current.

NOTE 2--"SURPLUS NET EARNINGS" AND SINKING FUND REQUIREMENTS

The following is an analysis of the computation of the "surplus net earnings
(loss)" and sinking fund requirements for years ended June 30:
<TABLE>
<CAPTION>

                                                                         2001        2000         1999
                                                                       --------    --------     --------
<S>                                                                    <C>         <C>          <C>

NET INCOME (LOSS)
     Chase General Corporation                                         $(11,446)   $(10,798)    $(11,829)
     Dye Candy Company                                                  (15,745)     53,082       61,091
                                                                       --------    --------     --------
         Consolidated net income (loss)                                 (27,191)     42,284       49,262

NON-ALLOWANCE EXPENSE DEDUCTION
     Interest on indebtedness                                             6,160       8,842       10,571
                                                                       --------    --------     --------
              Net income (loss) basis for "surplus net earnings"        (21,031)     51,126       59,833

DEDUCTIONS FROM INCOME BASIS

     Set aside as reserve for accumulation of working capital            25,000      25,000       25,000
                                                                       --------    --------     --------
                  "Surplus net earnings (loss)"                         (46,031)     26,126       34,833

INTEREST PAYMENT REQUIRED                                                 6,160       8,842       10,571
                                                                       --------    --------     --------

EXCESS "SURPLUS NET EARNINGS (LOSS)"
   OVER INTEREST PAYMENT REQUIRED                                      $(52,191)   $ 17,284     $ 24,262
                                                                       ========    ========     ========

SINKING FUND REQUIREMENT                                               $     --    $  4,321     $  6,066
                                                                       ========    ========     ========
</TABLE>

                                       22

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--COMMITMENTS

Dye Candy Company leases its manufacturing facilities located at 3600 Leonard
Road, St. Joseph, Missouri. The period of the lease is from April 1, 1995
through March 31, 2005, and requires payments of $2,955 per month. Rental
expense was $35,460 for the years ended June 30, 2001, 2000, and 1999. The
amounts are included in cost of sales.

Future minimum lease payments under this lease are as follows:

<TABLE>
<CAPTION>
<S>                                                <C>
Year ending June 30, 2002                          $ 35,460
Year ending June 30, 2003                            35,460
Year ending June 30, 2004                            35,460
Year ending June 30, 2005                            29,550
                                                   --------
       Total                                       $135,930
                                                   ========
</TABLE>


NOTE 4--CAPITAL STOCK

Capital stock authorized, issued and outstanding as of June 30, 2001 and 2000 is
as follows:

<TABLE>
<CAPTION>

                                                                                                Shares
                                                                                   ---------------------------------
                                                                                                         Issued and
                                                                                   Authorized            Outstanding
                                                                                   ----------            -----------
<S>                                                                                <C>                   <C>
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

Common Stock, $1 par value:
      Reserved for conversion of
         Preferred Stock - 1,033,333 shares                                        2,000,000               969,834
</TABLE>

                                       23

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--CAPITAL STOCK (CONTINUED)

Cumulative Preferred Stock dividends in arrears at June 30, 2001 and 2000,
totaled $6,027,726 and $5,899,654, respectively. Total dividends in arrears, on
a per share basis, consist of the following at June 30:
<TABLE>
<CAPTION>

                                            2001             2000
                                            ----             ----
<S>                                         <C>              <C>
6% Convertible
     Series A                                $12              $12
     Series B                                 12               12

5% Convertible
     Series A                                 51               50
     Series B                                 51               50
</TABLE>

Six percent convertible 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 5--PROVISION FOR INCOME TAXES

The provision for income taxes consists of the following as of June 30:

<TABLE>
<CAPTION>
                                                    2001       2000        1999
                                                  ---------  --------    --------
<S>                                               <C>        <C>         <C>
Federal income tax                                $(4,898)   $ 9,213     $ 7,551
State income tax                                   (1,887)     3,190       3,104
                                                  -------    -------     -------
     Total provision for income taxes             $(6,785)   $12,403     $10,655
                                                  =======    =======     =======
</TABLE>

The Company's provision for income taxes differs from the tax that would result
from applying statutory federal and state income tax rates primarily because of
nondeductible expenses.

                                       24

<PAGE>

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6--LOSS PER SHARE

The loss per share was computed on the weighted average of outstanding common
shares during the years as follows:
<TABLE>
<CAPTION>

                                                              2001        2000         1999
                                                           ---------    --------     --------
<S>                                                        <C>          <C>          <C>
Net income (loss)                                          $ (27,191)   $ 42,284     $ 49,262
                                                           ---------    --------     --------

Preferred dividend requirements:
  6% Prior Cumulative Preferred, $5 par value                 60,000      60,000       60,000
  5% Convertible Cumulative Preferred, $20 par value          68,072      68,072       68,072
                                                           ---------    --------     --------
      Total dividend requirements                            128,072     128,072      128,072
                                                           ---------    --------     --------
           Net loss - common stockholders                  $(155,263)   $(85,788)    $(78,810)
                                                           =========    ========     ========
      Weighted average of outstanding common shares          969,384     969,834      969,834
                                                           =========    ========     ========
           Loss per share                                  $    (.16)   $   (.09)    $   (.09)
                                                           =========    ========     ========
</TABLE>

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

NOTE 7--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 financial instruments.

NOTE 8--CONCENTRATION OF CREDIT RISK

For the years ending June 30, 2001 and 2000, two customers accounted for 54.18%
and 40.09%, respectively, of the gross sales. For the year ending June 30, 2001
one customer accounted for 38.89% of accounts receivable and for the year ending
June 30, 2000 two customers accounted for 53.01% of accounts receivable.

                     This information is an integral part of
              the accompanying consolidated financial statements.

                                       25

<PAGE>

                                    PART III

ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

         (a) Directors
<TABLE>
<CAPTION>

                Name                Age         Periods of Service as Director           Terms
          ---------------         ---------     ------------------------------     ---------------
          <S>                     <C>           <C>                                <C>
          Barry M. Yantis            56                 1980 to present                One year
          Brian A. Yantis            55                  July 16, 1986                 One year
          Brett A. Yantis            33           January 21, 1999 to present          One year
</TABLE>

          An insufficient number of proxies were returned by the shareholders
          for the January 19, 2001 annual stockholder meeting. Therefore, the
          Directors noted above are continuing for an additional one-year term.

          See Item 10(b) for offices held by Barry M. Yantis and Brian A.
          Yantis.

          (b)   Executive Officers
                ------------------
<TABLE>
<CAPTION>

                                                                   Years of
                                                                  Service as
                  Name             Age         Position           an Officer                  Term
          --------------------  -------  --------------------  ---------------   -----------------------------
          <S>                   <C>      <C>                   <C>               <C>
          Barry M. Yantis          56       President and              21          Until successor elected
                                              Treasurer

          Brian A. Yantis          55       Vice-President             10          Until successor elected
                                            and Secretary
</TABLE>

          (c)   Certain Significant Employees
                -----------------------------

                There are no significant employees other than above.

          (d)   Family Relationships
                --------------------

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

          (e)   Business Experience
                -------------------

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

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

                Brett A. Yantis was elected to the position of director
                during the year ending June 30, 1999. Brett has been
                associated with the Company for seven years.

                                   (Continued)

                                       26

<PAGE>

ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)
         --------------------------------------------------

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

          (f) Involvement in Certain Legal Proceedings
              ----------------------------------------

              Not applicable

          (g) Promoters and Control Persons
              -----------------------------

              Not applicable

ITEM 11--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)
<TABLE>
<CAPTION>
                                                   Summary Compensation Table

                                                                               Long Term Compensation
                                                                           -----------------------------
                                                Annual Compensation                Awards        Payouts
                                         --------------------------------- --------------------- -------
                                                                  Other    Restricted
              Name and        Fiscal                             Annual       Stock     Option/    LTIP    All other
         Principal Position  Year End      Salary     Bonus   Compensation  Award (s)   SARs (#) Payouts Compensation
         ------------------ -----------  ---------  --------- ------------ ----------  --------- ------- --------------
         <S>                <C>          <C>        <C>       <C>           <C>        <C>        <C>    <C>
         Barry M. Yantis    1) 06-30-01  $115,800   $10,000     $2,240        --           --       --         --
         Barry M. Yantis    1) 06-30-00  $112,800   $10,000     $2,240        --           --       --         --
         Barry M. Yantis    1) 06-30-99  $112,950   $ 8,000     $2,240        --           --       --         --
         Barry M. Yantis    1) 06-30-98  $100,000   $15,750     $2,240        --           --       --         --
</TABLE>

         1) CEO

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

         3) No other officers are compensated for their services besides those
            listed in this compensation table.

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

             Not applicable

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

             Not applicable

                                   (Continued)

                                       27

<PAGE>

ITEM 11--EXECUTIVE COMPENSATION (CONTINUED)
         ----------------------

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

             Not applicable

         (f) Defined benefit or actuarial plan disclosure
             --------------------------------------------

             Not applicable

         (g) 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 2001, $83 of travel expenses
             were reimbursed to board members, Brian A. Yantis, and Barry M.
             Yantis, respectively.

         (h) 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.

         (i) Report on repricing of option/SARs
             ----------------------------------

             Not applicable

         (j) 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
             annually approve the compensation of Barry M. Yantis, CEO.

         (k) 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.

         (l) Performance graph
             -----------------

             Not applicable as there are no dividends available to distribute
             to common stockholders after preferred dividends are met. In
             addition, there is no market value price for the common stock
             (par value $1 per share) as there is no public trading market for
             the Company's stock.

                                   (Continued)

                                       28

<PAGE>

ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                       Amounts
                                                                                         and
                                                                                       Nature
                                                                                         of
                                                                                     Beneficial
                         Title of Class                   Name and Address            Ownership       % of Class
               ---------------------------------     --------------------------    -------------     -------------
          <S>  <C>                                   <C>                           <C>               <C>
          (a)  Security ownership of certain beneficial owners

               Common; par value $1 per share        Barry Yantis                    194,385 (1)         16.8%(2)
                                                     5605 Osage Drive
                                                     St. Joseph, Mo.
                                                     64503

                                                     Brian Yantis                     97,192 (1)          8.4%(2)
                                                     1210 E. Clarendon
                                                     Arlington Heights, IL.
                                                     60004

          (b)  Security ownership of management

               Common; par value $1 per share        All directors and officers      110,856             11.4%
                                                     as a group

               Prior Cumulative Preferred,           All directors and officers       21,533             21.5%
               $5 par value:  Series A,              as a group
               6% convertible

               Prior Cumulative Preferred            All directors and officers       21,533             21.5%
               $5 par value:  Series B,              as a group
               6% convertible

               Cumulative Preferred, $20 par         All directors and officers        3,017              5.2%
               value:  Series A, $5 convertible      as a group
</TABLE>

<TABLE>
<CAPTION>

                                                                                       Amounts
                                                                                         and
                                                                                       Nature
                                                                                         of
                                                                                     Beneficial
                         Title of Class                   Name and Address            Ownership       % of Class
               ---------------------------------     --------------------------    -------------     -------------
               <S>                                   <C>                           <C>               <C>
               Cumulative Preferred, $20 par         All directors and officers          630           6.6%
               value: Series B, $5 convertible       as a group
</TABLE>

               (1) Includes 180,721 shares which could be received within 30
                   days upon conversion of preferred stock.

               (2) Reflects the percentage 291,577 shares would represent if the
                   180,721 shares above were converted to common stock.

          (c)  No known change of control is anticipated.

                                   (Continued)

                                       29

<PAGE>

ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

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

             No reportable transactions with management and others, to which the
             registrant or its subsidiary was a party, have occurred since the
             registrant's last fiscal year. In addition, there are no such
             currently proposed transactions.

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

             Not applicable

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

             Not applicable

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

             Not applicable


                                     PART IV

ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
         ----------------------------------------------------------------

         (a) Documents filed as part of the Form 10-K
             ----------------------------------------

             (1) The following are included in Part II of this report:
<TABLE>
<CAPTION>

                                                                                Page Number
                                                                                -----------
                 <S>                                                            <C>
                 Independent Auditor's Report                                      12
                 Consolidated Balance Sheets - June 30, 2001 and 2000              13-14
                 Consolidated Statements of Operations for the years
                   ended June 30, 2001, 2000, and 1999                             15
                 Consolidated Statements of Stockholders' Equity for
                   the years ended June 30, 2001, 2000, and 1999                   16
                 Consolidated Statements of Cash Flows for the years
                   ended June 30, 2001, 2000, and 1999                             17-18
                 Summary of Significant Accounting Policies                        19-20
                 Notes to Consolidated Financial Statements                        21-25
</TABLE>

                                   (Continued)

                                       30

<PAGE>

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
          ----------------------------------------------------
          ON FORM 8-K (CONTINUED)
          -----------

          (2)  The following are included in Part IV of this report:


<TABLE>
<CAPTION>
                                                                                Page Number
                                                                                -----------
          <S>                                                                   <C>

               Independent Auditor's Report on Supplemental Schedules             33

               Schedule I:  Condensed Financial Information of the Registrant     34 - 37

               Schedule II: Valuation and Qualifying Accounts,
                            June 30, 2001, 2000, and 1999                         38
</TABLE>

          (b)  Reports on Form 8-K
               -------------------

               No reports on Form 8-K were filed during the fourth quarter of
               the year ended June 30, 2001.

          (c)  Exhibits required by Item 601 of Regulation S-K
               -----------------------------------------------

               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 explanations are included in "Notes to Financial
               Statements" in Part II of this report:

               (4)  Rights of security holders including indentures - Refer to
                    Notes 1 and 4.

               (11) Computation of per share earnings - Refer to Note 6.

               (21) Subsidiaries of registrant - Refer to "Summary of
                    Significant Accounting Policies".

          (d)  Financial statement schedules required by Regulation S-X
               --------------------------------------------------------

               Schedules required by Regulation S-X contained on page 34 through
               38 have been excluded from the annual report to the shareholders.

               SUPPLEMENTAL INFORMATION TO BE FURNISHED, FILED PURSUANT TO
               SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, BY
               REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
               SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934.

               (1)  With this filing, the Registrant is furnishing to the
                    Commission four (4) copies of the Proxy Statement regarding
                    the January 19, 2001 annual meeting mailed to security
                    holders during the 2001 fiscal year.

               (2)  For the 2001 fiscal year, the Registrant will furnish a copy
                    of the annual report and any Proxy information to the
                    Commission at time the aforementioned are mailed to security
                    holders.

                                       31

<PAGE>

             INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULES

In connection with the audits of the consolidated financial statements of Chase
General Corporation and subsidiary, we have also audited supplemental schedules
I and II. In our opinion, these schedules present fairly, in all material
respects, in relation to the consolidated financial statements taken as a whole,
the information required to be stated therein.

                                                 /s/ Clifton Gunderson LLP
Clifton Gunderson LLP
St. Joseph, Missouri
September 5, 2001

                                       32

<PAGE>

                                                                      SCHEDULE I

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

                            CHASE GENERAL CORPORATION
                                (Registrant Only)
                            CONDENSED BALANCE SHEETS

                             June 30, 2001 and 2000

                                     ASSETS


<TABLE>
<CAPTION>
                                                                      2001           2000
                                                                   -----------    -----------
<S>                                                                <C>            <C>
Investment in subsidiary - at equity                               $   639,759    $   719,500
                                                                   -----------    -----------

TOTAL ASSETS                                                       $   639,759    $   719,500
                                                                   ===========    ===========


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Series B notes payable and accrued interest, unrelated parties     $    52,127    $    84,802
Series B notes payable and accrued interest, related parties            31,706         51,581
                                                                   -----------    -----------

     Total liabilities                                                  83,833        136,383
                                                                   -----------    -----------

Capital stock                                                        3,331,274      3,331,274
Paid in capital in excess of par                                     3,134,722      3,134,722
Accumulated (deficit)                                               (5,910,070)    (5,882,879)
                                                                   -----------    -----------

     Total stockholders' equity                                        555,926        583,117
                                                                   -----------    -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $   639,759    $   719,500
                                                                   ===========    ===========
</TABLE>

(1)  The restricted assets of 100% consolidated subsidiary, Dye Candy Company,
     are $714,901 and $800,691 as of June 30, 2001 and 2000, respectively. See
     "Notes to Financial Statements" in Part II of this report for restrictions.

(2)  No cash dividends have been paid by the registrants' wholly-owned
     subsidiary, Dye Candy Company, during the past three fiscal years.

                                   (Continued)

                                       33

<PAGE>

                                                                      SCHEDULE I
                                                                     (Continued)

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

                            CHASE GENERAL CORPORATION
                                (Registrant Only)
                       CONDENSED STATEMENTS OF OPERATIONS
                    Years Ended June 30, 2001, 2000 and 1999


<TABLE>
<CAPTION>
                                                                        2001      2000       1999
                                                                      --------   -------    -------
<S>                                                                   <C>        <C>        <C>
REVENUE

   Equity in net income (loss) of subsidiary                          $(15,745)  $53,082    $61,091
                                                                      --------   -------    -------

      Total revenue                                                    (15,745)   53,082     61,091
                                                                      --------   -------    -------

EXPENSE

   General and administrative                                            8,399     4,645      4,204
   Interest                                                              6,160     8,842     10,571
                                                                      --------   -------    -------

      Total expense                                                     14,559    13,487     14,775
                                                                      --------   -------    -------

         Income (loss) before income taxes                             (30,304)   39,595     46,316

PROVISION (CREDIT) FOR INCOME TAXES                                     (3,113)    2,689      2,946
                                                                      --------   -------    -------
NET INCOME (LOSS)                                                     $(27,191)  $42,284    $49,262
                                                                      ========   =======    =======
</TABLE>

                                   (Continued)

                                       34

<PAGE>

                                                                      SCHEDULE I
                                                                     (Continued)

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

                            CHASE GENERAL CORPORATION
                                (Registrant Only)
                       CONDENSED STATEMENTS OF CASH FLOWS
                    Years Ended June 30, 2001, 2000 and 1999
<TABLE>
<CAPTION>

                                                                               2001         2000        1999
                                                                             --------     --------    --------
<S>                                                                          <C>          <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES

     General and administrative expenses paid                                $ (8,399)    $ (4,645)   $ (4,204)
     Interest paid                                                             (8,842)     (10,571)    (12,109)
     Income tax refund received                                                 2,689        2,946       4,392
                                                                             --------     --------    --------

         Net cash used in operating activities                                (14,552)     (12,270)    (11,921)
                                                                             --------     --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES

     Advances received from wholly owned subsidiary                            64,552       47,270      34,554
                                                                             --------     --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES

     Principal payments on Series B notes payable                             (50,000)     (35,000)    (22,633)
                                                                             --------     --------    --------

NET DECREASE IN CASH AND
     CASH EQUIVALENTS                                                              --           --          --

CASH AND CASH EQUIVALENTS,
     BEGINNING OF YEAR                                                             --           --          --
                                                                             --------     --------    --------

CASH AND CASH EQUIVALENTS,
     END OF YEAR                                                             $     --     $     --    $     --
                                                                             ========     ========    ========

</TABLE>

                                   (Continued)

                                       35

<PAGE>

                                                                      SCHEDULE I
                                                                     (Continued)

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

                            CHASE GENERAL CORPORATION
                                (Registrant Only)
                       CONDENSED STATEMENTS OF CASH FLOWS
                    Years Ended June 30, 2001, 2000 and 1999

<TABLE>
<CAPTION>


                                                                               2001         2000        1999
                                                                             --------     --------    --------
<S>                                                                          <C>          <C>         <C>
RECONCILIATION OF NET INCOME TO NET
     CASH USED IN OPERATING ACTIVITIES

     Net income (loss)                                                       $(27,191)    $ 42,284    $ 49,262
     Adjustments to reconcile net income (loss) to net cash
         used in operating activities:
         Net (income) loss from wholly owned subsidiary                        15,745      (53,082)    (61,091)
         Effects of changes in operating assets and liabilities:
              Accrued interest                                                 (2,550)      (1,729)     (1,538)
              Income tax refund receivable                                       (556)         257       1,446
                                                                             --------     --------    --------

NET CASH USED IN OPERATING ACTIVITIES                                        $(14,552)    $(12,270)   $(11,921)
                                                                             ========     ========    ========
</TABLE>


           This information should be read only in connection with the
      accompanying independent auditor's report on supplemental schedules.

                                       36

<PAGE>

                                                                     SCHEDULE II

                    CHASE GENERAL CORPORATION AND SUBSIDIARY
                        VALUATION AND QUALIFYING ACCOUNTS
                          June 30, 2001, 2000, and 1999
<TABLE>
<CAPTION>

               Column A                      Column B            Column C Additions           Column D          Column E
--------------------------------------  ------------------  ----------------------------  -------------   -----------------
                                            Balance at               Charged to                                  Balance
                                             Beginning                  Costs                                    at end
              Description                    of Period              and Expenses          Deductions *          of Period
--------------------------------------  ------------------  ----------------------------  -------------   -----------------
<S>                                     <C>                 <C>                           <C>             <C>
Valuation accounts deducted from
  assets to which they apply for
  doubtful accounts receivable:
    June 30, 2001                             $11,393                  $ 2,225                   $ 2,949         $10,669
    June 30, 2000                              11,516                   20,603                    20,726          11,393
    June 30, 1999                              11,604                   (4,012)                    3,924          11,516

</TABLE>

* Represents accounts written off, net of (recoveries), for the respective
years.

               This information should be read only in connection
                   with the accompanying independent auditor's
                        report on supplemental schedules.

                                       37

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    CHASE GENERAL CORPORATION

                                    (Registrant)

Date:       4-24-02              By: /s/ Barry M. Yantis
     --------------------           --------------------------------------------
                                    Barry M. Yantis, President


Pursuant to the requirements of the Securities Exchange Act of 1934, 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.
<TABLE>
<CAPTION>
<S>                          <C>                                           <C>

                             President, Treasurer (Principal Executive
                             Officer and Chief Financial and Accounting
/s/ Barry M. Yantis          Officer) and Director                            4-24-02
----------------------------                                               -------------
Barry M. Yantis                                                                Date


/s/ Brian A. Yantis          Vice-President, Secretary and Director           4-24-02
----------------------------                                               -------------
Brian A. Yantis                                                                Date

</TABLE>

<PAGE>

Chase General Corporation
March 29, 2002
page 2

Annual Report on Form 10-K for the Fiscal Year Ended June 30, 2001
------------------------------------------------------------------

Financial Statements
--------------------

Consolidated Statements of Operations
-------------------------------------

1. Revise your statements of operations to include a presentation of income
   applicable to common stock. Refer to SAB Topic 6-B.1.

Summary of Significant Accounting Policies, page 19
---------------------------------------------------

2. Revise this section to disclose your accounting policies for the following:

   . Revenue recognition. Refer to SAB Topic 13-B, question 1.

   . Impairment of long-lived assets. Refer to SFAS 121.

Note 1, Notes Payable, Series B, page 21
----------------------------------------

3. We note that you have classified the entire remaining balance of the Series
   B notes payable as a long-term liability as of the June 30, 2001.
   Supplementally, explain to us your basis for this presentation. As part of
   your response, tell us the amount of any principal payments you were
   required to make or intended to make within the following 12 months.
   Additionally, explain how your presentation is consistent with ARB 43,
   Chapter 3, paragraphs 7 and 8. Please note that this comment also applies to
   the presentation in your reports on Form 10-Q for the periods ended
   September 30, 2001 and December 31, 2001.

Closing Comments
----------------

   As appropriate, please amend your Form 10-K and respond to these comments
within 10 business days or tell us when you will provide us with a response. You
may wish to provide us with marked copies of the amendment to expediture our
review. Please furnish a cover letter with your amendment that keys your
responses to our comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review. Please file your cover
letter on EDGAR. Please understand that we may have additional comments after
reviewing your amendment and responses to our comments.