UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549
                            FORM 10-K

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


For the fiscal year ended June 30, 1998

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 June 30, 1998.

Location in this filing where exhibit index is located :   31 

Total number of pages included in this filing:   39 


<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
          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 this 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 products of the Chase Candy Division and the Poe
          Candy Division of Dye Candy Company are sold to the
          same types 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
          in production.  Therefore, due to the similarity in the
          marketing and manufacturing of the products, segment
          reporting for these divisions is not required to be
          disclosed in accordance with FASB 14.

     (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:



<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)  192 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)  28 # 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, 1998, 1997, and 1996,
     this division accounted for 55%, 54%, and 52%, 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)  Coconut cubes
     (3)  Home Style Poe Fudge     (8)  Peanut clusters
     (4)  Peco Flake     (9)  Champion Creme Drops
     (5)  Peanut Squares (10) Jelly Candies

     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, 1998, 1997, and
     1996, this division accounted for 45%, 46%, and 48%,
     respectively, of the consolidated revenue of Dye Candy
     Company.

     (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.




<PAGE>





ITEM 1    BUSINESS (CONTINUED)

     (iv) The largest single revenue producing product, the
          "Cherry Mash [Registered Trademark]" 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.

     (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 year ending June 30, 1998 and 1997 and
               1996, Associated Wholesale Grocers, accounted for
               18.87%, 19.67% and 16.27% of gross  sales, respectively.
               The loss of this customer would not have an adverse
               effect on the Company as customer purchases and
               distributes to retail outlets and these outlets
               would continue to demand products offered by Dye
               Candy Company.

     (viii)    Prompt, efficient service are traits demanded in
               the confectionery industry resulting 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.



<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. 
          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 which expands to
               approximately 50 full time personnel during the
               two busy production seasons.

     (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.



<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-seven year old building which
     is in fair condition and is adequate to meet present
     requirements.  The warehouse has approximately 15,000 square
     feet.

     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, 1998, 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, 1998.



<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 June 30, 1998, 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

                             06-30-98         06-30-97            06-30-96

(i)  Net  sales or 
     operating revenue      $2,113,777       $2,317,501          $2,316,031 

(ii) Income (loss) from 
     continuing operations  $  (33,502)      $   50,174          $   63,703

(iii) Income (loss) from 
     continuing operations    
     per common share *     $     (.17)      $     (.08)         $     (.07)

(iv) Total assets           $   770,998      $    836,871        $  815,954

(v)  Long-term debt         $   185,305      $    207,659        $  242,980

(vi) Cash dividend declared
     per common share       $    -           $    -              $    -

                                               06-30-95       06-30-94

(i)  Net  sales or operating revenue         $2,235,656          $2,476,259

(ii) Income (loss) from continuing 
     operations                              $    60,146         $   25,421

(iii)     Income (loss) from continuing
     operations per common share *           $    (.07)          $    (.11)

(iv) Total assets                            $   797,909         $  784,506

(v)  Long-term debt                          $    -              $    -

(vi) Cash dividend declared
     per common share                        $    -              $    -


     (b)  No additional years 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.



<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, 1998, 1997, and 1996 in the
     amounts of $93,720, $8,940, and $104,944, 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, 1998 and 1997 the Company had $100,000
     and $90,000, respectively invested in short term
     certificates of deposit to meet the 1998 and 1997 fall
     production season.  No funds were invested in temporary
     investments at June 30, 1996.
     
     The Company continually monitors raw material pricing, and
     when a price increase/decrease is anticipated adjustments to
     inventory levels are made accordingly.  Raw material
     inventory decreased slightly when comparing 1998 to 1997. 
     In late spring 1997, predicted weather conditions dictated a
     future increase in peanut costs.  Therefore, the Company
     purchased additional peanut inventory for its 1997 fall
     production season.  With stable weather conditions being
     predicted for 1998, the additional purchase of peanut
     inventory was not necessary.  Purchase commitments for
     peanuts as of June 30, 1998 were comparable to those at June
     30, 1997.  Packaging inventory significantly decreased in
     1998 compared to 1997 due to usage of existing supplies. 
     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.  Finished goods inventory
     increased in 1997 over 1996 and decreased in 1998 to a level
     comparable to 1996 due to timing of production to prepare
     for the fall sales.  The main component which made up these
     fluctuations were the "Cherry Mash bars".  Finished goods
     are produced when it is most advantageous from a labor stand
     point and stored in the warehouse.  Goods in process
     remained comparable to prior years.    

     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.  In
     June 1996, the Company purchased $69,443 of new equipment. 
     The equipment was not in operation at June 30, 1996 but was
     ready for production in early fall of 1996.  The equipment
     consisted of a wrapper machine and metal detector.
     Additional expenditures of $5,113 were made during fiscal
     year ended June 30, 1997 to make the equipment completely
     operational.  The Company spent an additional $59,783 during
     1997 to update transportation equipment, add to leasehold
     improvements, and replace outdated equipment.  The Company
     spent $23,921 during 1998 to make major improvements to
     existing equipment. In addition, $21,715 was expended on
     buildings and transportation equipment.  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. 



<PAGE>





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

     For the past seven years, the Company has not been indebted
     except for the series B notes.  Of the original $630,000
     Series B notes payable, $185,305 remain outstanding at June
     30, 1998.  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.  The entire $185,305
     outstanding at June 30, 1998, is classified as long-term. 
     Realizing 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 three fiscal years.  It is
     anticipated that acceleration of principal payments will
     continue if cash is not required 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.

     (c)  Results of Operations

          1998 is the first year in over ten years that the
          Company has realized an operating loss.  Increased cost
          of sales and general and administrative expenses were
          the primary sources for the loss.
          
          In comparing 1998 to 1997, net sales decreased 9% while
          cost of sales only decreased 5%.  Company management
          realized sales were declining during the current year
          due to broker turnover.  However, in anticipation of
          future increased sales, management decided to retain
          their current labor force during the slower productive
          times.  This decision was made due to the excellent
          quality of the current labor force as well as the tight
          job market.  Management redirected certain job
          functions to concentrate more on internal improvements
          of the plant; however, the overall production per hour
          declined for those whose job functions could not be
          redirected.  It is the intention of the Company to re-
          evaluate the quantity of the labor force as well as
          their efficiencies in the upcoming year.
          
          The 1998 general and administrative expenses increased
          $18,745 compared to 1997.  While the majority of
          general and administrative expenses remain stable
          regardless of sales volume, the Company experienced
          current year increases in legal fees regarding the
          dividend arrearage as well as an increase in the
          allowance for doubtful accounts.
          
          Under the leadership of the CEO and his sales staff,
          the Company has stabilized its customer base. 
          Certainly some customers were lost during 1998, but
          those have been replaced.  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.
          
          


<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, run on SBT
     software, involves the payroll processing accounting
     function.  Company management is aware of the Year 2000
     (Y2K) technology issue and is in the process of obtaining
     written confirmation from SBT, that their programs are Y2K
     compliant.  Should it be necessary to change software for
     non-compliance, the cost is projected to be less than
     $1,000.  In addition, management will require that any
     future investment in technology will be Y2K compliant before
     purchasing.
     


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, 1998.


ITEM 8    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Financial statements meeting the requirements of Regulation
     S-X are contained on pages 11 through 25 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-three years and no disagreements on
     accounting or financial disclosure.







<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, 1998 and
1997 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, 1998.  These consolidated
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Chase General Corporation and Subsidiary as of June
30, 1998 and 1997, and the results of their operations and their
cash flows for each of the years in the three-year period ended
June 30, 1998, in conformity with generally accepted accounting
principles.




St. Joseph, Missouri
August 14, 1998






<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
                   CONSOLIDATED BALANCE SHEETS
                      June 30, 1998 and 1997

                              ASSETS

                                          1998           1997
CURRENT ASSETS
  Cash and cash equivalents             161,093        $141,657
  Receivables:
     Trade, less allowance for 
     doubtful accounts of $11,604 
     in 1998 and $12,714 in 1997         94,514          83,579  
     Income tax                          24,710            --
  Inventories:
     Finished goods                      47,397         89,725
     Goods in process                     3,633          3,560
     Raw materials                       81,377         92,975
     Packaging materials                 79,006        115,251
  Prepaid expense                        35,549         39,791
  Prepaid income taxes                    1,000          5,996

       Total current assets             528,279         572,534

PROPERTY AND EQUIPMENT
  Land                                   35,000          35,000
  Buildings                              85,738          76,273
  Machinery and equipment               648,360         628,844
  Trucks and autos                       94,639          91,824
  Office equipment                       31,706          32,100
  Leasehold improvements                121,356         121,356
     Total, at cost                   1,016,799         985,397
  Less accumulated depreciation         774,080         721,060

       Total property and equipment     242,719         264,337


TOTAL ASSETS                         $  770,998        $836,871







<PAGE>





LIABILITIES AND STOCKHOLDERS' EQUITY

                                        1998              1997
CURRENT LIABILITIES
  Accounts payable                  $   59,194       $ 59,162
  Series B notes payable, 
   related parties current 
   maturities                              --           2,266
  Series B notes payable, 
    unrelated parties current 
    maturities                             --           4,028
  Accrued expense:
     Interest                           11,978         13,998
     Other                              22,950         24,685

       Total current liabilities        94,122        104,139

LONG-TERM LIABILITIES
  Series B notes payable, 
   related parties less current 
   maturities above                     68,331         75,177
  Series B notes payable, 
   unrelated parties less 
   current maturities above            116,974        132,482

       Total long-term liabilities     185,305        207,659

       Total liabilities               279,427        311,798

STOCKHOLDERS' EQUITY
  Capital stock issued and outstanding:
     Prior cumulative preferred 
     stock, $5 par value:
       Series A (liquidation 
        preference $1,185,000
        and $1,155,000 respectively)     500,000     500,000
       Series B (liquidation 
        preference $ 1,140,000
        and $1,110,000 respectively)     500,000     500,000
     Cumulative preferred stock, 
     $20 par value:
       Series A (liquidation 
         preference $2,853,484
         and $2,794,951 respectively)   1,170,660    1,170,660
       Series B (liquidation 
         preference $465,026
         and $455,487 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                  (5,974,425)  (5,940,923)

       Total stockholders' equity         491,571      525,073


TOTAL LIABILITIES AND STOCKHOLDERS' 
EQUITY                                  $ 770,998    $ 836,871




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






<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF OPERATIONS
             YEARS ENDED JUNE 30, 1998, 1997 AND 1996


                            1998             1997       1996

NET SALES                $2,113,777     $2,317,501   $2,316,031

COST OF SALES             1,696,845      1,787,350    1,771,381

  Gross profit              416,932        530,151      544,650

OPERATING EXPENSES
  Selling expenses           280,764       302,871      295,561
  General and 
    administrative 
    expenses                 175,442       156,697      156,875

   Total operating 
   expenses                  456,206       459,568      452,436

     Income (loss) 
      from operations        (39,274)       70,583       92,214

OTHER INCOME (EXPENSE)
  Interest income              5,896         7,388        6,362
  Miscellaneous income           691         1,272        1,643
  Loss on disposal of 
   equipment                      --            --          (69)
  Interest expense            (12,077)     (13,998)     (16,214)

  Total other income 
     (expense)                 (5,490)      (5,338)      (8,278)

  Income (loss) before 
     income taxes             (44,764)       65,245      83,936

PROVISION (CREDIT) FOR 
INCOME TAXES                  (11,262)       15,071      20,233

NET INCOME (LOSS)          $  (33,502)   $   50,174   $  63,703

(LOSS) PER SHARE OF 
COMMON STOCK               $     (.17)   $     (.08)  $   (.07)








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









<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
             YEARS ENDED JUNE 30, 1998, 1997 AND 1996


                      PRIOR CUMULATIVE            CUMULATIVE
                       PREFERRED STOCK         PREFERRED STOCK
                    SERIES A  SERIES B       SERIES A  SERIES B


BALANCE (DEFICIT), 
JUNE 30, 1995       $500,000  $500,000    $1,170,660   $190,780

  Net income            --         --             --        --

BALANCE (DEFICIT), 
JUNE 30, 1996        500,000   500,000     1,170,660    190,780

  Net income            --         --             --        --

BALANCE (DEFICIT), 
JUNE 30, 1997        500,000   500,000     1,170,660    190,780

  Net loss              --        --               --        --

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


                    COMMON    PAID-IN     ACCUMULATED
                    STOCK     CAPITAL      DEFICIT            TOTAL



BALANCE (DEFICIT), 
JUNE 30, 1995       $969,834  $3,134,722  $(6,054,800)   $411,196

  Net income             --        --          63,703    63,703

BALANCE (DEFICIT), 
JUNE 30, 1996        969,834   3,134,722   (5,991,097)    474,899

  Net income             --        --          50,174    50,174

BALANCE (DEFICIT), 
JUNE 30, 1997        969,834   3,134,722   (5,940,923)    525,073

  Net loss               --        --         (33,502)    (33,502)

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




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







<PAGE>






             CHASE GENERAL CORPORATION AND SUBSIDIARY
              CONSOLIDATED STATEMENTS OF CASH FLOWS
             YEARS ENDED JUNE 30, 198, 1997 AND 1996


                                      1998      1997            1996

CASH FLOWS FROM OPERATING ACTIVITIES
 Collections from customers        $2,087,531 $2,305,349     $2,305,712
 Interest received                      5,896      7,388          6,362
 Other income                           1,926      1,272          1,643
 Income tax refunds                     2,384       --         --
 Cost of sales, selling, general and
  administrative expenses paid     (1,979,084)   (2,265,624) (2,161,733)
 Interest paid                        (14,097)      (16,214)    (17,718)
 Income tax paid                      (10,836)      (23,231)    (29,322)

  Net cash provided by operating 
    activities                         93,720          8,940    104,944

CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of U.S. Treasury obligation        --        --       (99,308)
 Purchase of certificate of deposit          --        --      (100,000)
 Purchases of property and equipment  (45,636)      (64,896)   (134,052)
 Proceeds on redemption of U.S. 
  Treasury obligation                        --        --         99,308
 Proceeds on redemption of 
  certificate of deposit                     --        --        100,000

  Net cash used in
    investing activities              (45,636)       (64,896)   (134,052)

CASH FLOWS FROM FINANCING ACTIVITIES
 Principal payments on notes payable, 
  Series B                            (28,648)       (38,703)   (35,146)
 
  Net cash used in financing
    activities                        (28,648)        (38,703)   (35,146)

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                  19,436        (94,659)    (64,254)

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR                    141,657         236,316    300,570

CASH AND CASH EQUIVALENTS,
 END OF YEAR                       $  161,093     $   141,657   $236,316





<PAGE>





                                        1998     1997       1996
RECONCILIATION OF NET INCOME TO NET
 CASH PROVIDED BY OPERATING ACTIVITIES

 Net income (loss)                 $  (33,502) $ 50,174   $63,703

 Adjustments to reconcile net income 
  (loss) to net cash provided by 
  operating activities:
  Depreciation                        66,019    62,802    41,670
  Loss on disposal of equipment        1,235       --         69
  Provision for doubtful accounts     15,311     3,327     6,416
  Effects of changes in operating 
  assets and liabilities:
    Trade accounts receivable         (26,246) (12,152)  (10,319)
    Income tax receivable             (24,710)    --          --
    Inventories                        90,098 (101,529)    10,321
    Prepaid expense                     4,242    2,868      3,596
    Prepaid income taxes                4,996   (5,996)        --
    Accounts payable                       32   12,219      1,180
    Income tax payable                     --  (2,164)     (9,089)
    Accrued liabilities               (3,755)    (609)     (2,603)

NET CASH PROVIDED BY
 OPERATING ACTIVITIES              $  93,720 $  8,940   $ 104,944



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





<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.

ACCOUNTING METHOD

The Company and its subsidiary use the accrual method of
accounting.  Under this method, revenue is recognized when earned
and expense is recognized when the obligation is incurred.

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.  Therefore, due to the
similarities in the products manufactured, segment reporting for
the two divisions 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.





<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
            SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


CASH AND CASH EQUIVALENTS

The Company considers all liquid investments with a maturity of
three months or less when purchased to be cash equivalents. 
Finished goods and goods in process include a provision for
manufacturing overhead.

INVENTORIES

Inventories are carried at the "lower of cost or market value,"
cost being determined on the "first-in, first-out" basis of
accounting.

PROPERTY AND EQUIPMENT

Depreciation is computed by the straight-line method for
additions prior to 1981, and by the declining balance methods for
assets acquired after 1980.  

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

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





<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 fiscal 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,
1998 and 1997,      $28,648 and $38,703 principal was paid on the
Series B notes, respectively.

As of June 30, 1998 and 1997, the outstanding Series B notes
total $185,305 and $213,953, respectively. Of these amounts
$68,331and $77,443 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, 1998 and 1997, 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, 1998, 1997, and 1996.






<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" and sinking fund requirements for years ended June
30:

                              1998           1997           1996
NET INCOME (LOSS)
  Chase General Corporation $(12,410)    $(14,737)     $(18,655)
  Dye Candy Company          (21,092)      64,911        82,358

  Consolidated net income 
   (loss)                    (33,502)      50,174        63,703

NON-ALLOWANCE EXPENSE DEDUCTION
 Interest on indebtedness     12,077       13,998        16,214

  Net income (loss) basis for 
  "surplus net earnings"     (21,425)      64,172        79,917

DEDUCTIONS FROM INCOME BASIS
 Set aside as reserve for 
 accumulation of working
 capital                      25,000        25,000    25,000

  "Surplus net earnings"
    (loss)                   (46,425)       39,172    54,917

INTEREST PAYMENT REQUIRED     12,077       13,998        16,214

EXCESS "SURPLUS NET EARNINGS" 
(LOSS) OVER INTEREST PAYMENT 
REQUIRED                    $(34,348)    $25,174       $38,703

SINKING FUND REQUIREMENT    $   --       $ 6,294       $ 9,676







<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 for the years ended
June 30, 1998, 1997 and 1996 totaled $35,460, $35,460 and
$37,723, respectively, and is included in cost of sales.

Future minimum lease payments under this lease are as follows:

Year ending June 30, 1999               $     35,460
Year ending June 30, 2000                     35,460
Year ending June 30, 2001                     35,460
Year ending June 30, 2002                     35,460
Year ending June 30, 2003                     35,460
Later years                                   65,010

     Total                              $    242,310


The manufacturing facilities referred to above were owned by Dye
Candy Company prior to March 31, 1975.  When the building was
sold on March 31, 1975, the gain on the sale of the building was
included in the income of Dye Candy Company in the year of sale. 
Financial Accounting Standards Board Statement 13, Accounting for
leases, calls for the amortization of any profit or loss on a
sale-leaseback transaction to be amortized in proportion to the
amortization of the leased asset.  However, the effective date of
FASB 13 was for transactions entered into after January 1, 1977.

As of June 30, 1998, the Company had purchase commitments with
three vendors for approximately $274,938.




<PAGE>






             CHASE GENERAL CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - CAPITAL STOCK

Capital stock authorized, issued and outstanding as of June 30,
1998 and 1997 is as follows:

                                       SHARES
                                               ISSUED AND
                           AUTHORIZED          OUTSTANDING

Prior Cumulative 
Preferred Stock, $5 
par value:                   240,000
  6% Convertible
       Series A                                100,000
       Series B                                100,000

Cumulative Preferred 
Stock, $20 par value:        150,000
  5% Convertible
       Series A                                 58,533
       Series B                                  9,539

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

Cumulative Preferred Stock dividends in arrears at June 30, 1998
and 1997, totaled $5,643,510 and $5,515,438, respectively.  Total
dividends in arrears, on a per share basis, consist of the
following at June 30:


                                     1998           1997 
6% Convertible
  Series A                           $12            $12
  Series B                            11             11

5% Convertible 
  Series A                            49             48
  Series B                            49             48





<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4 - CAPITAL STOCK (CONTINUED)

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 (CREDIT) FOR INCOME TAXES

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

                       1998            1997           1996

Federal income tax    $(8,817)       $11,257        $15,420
State income tax       (2,445)         3,814          4,813

  Total provision 
  (credit) for income 
   taxes              $(11,262)      $15,071        $20,233

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







<PAGE>





             CHASE GENERAL CORPORATION AND SUBSIDIARY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - (LOSS) PER SHARE OF COMMON STOCK

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

                             1998          1997           1996

Net income (loss)          $(33,502)      $50,174        $63,703

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             $(161,574)    $(77,898)    $  (64,369)

Weighted average of 
outstanding common 
shares                       969,834      969,834        969,834

Loss per share             $   (.17)     $   (.08)     $   (.07)


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, 1998, June 30, 1997 and June 30,
1996 one customer accounted for 18.87%, 19.67%, and 16.27% of the
gross sales, respectively.  





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





<PAGE>





                             PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   (a) Directors

   NAME          AGE       PERIODS OF SERVICE    TERMS
                               AS DIRECTOR

W.A. Yantis, III 55        1980 to present     One year
Barry M. Yantis  53        1980 to present     One year
Brian A. Yantis  50        07-16-86 to present One year

   An insufficient number of proxies were returned by the
   shareholders for the January 16, 1998 annual stockholder
   meeting.  Therefore, the Directors noted above are
   continuing for an additional one year term or until a
   successor is elected.

   See Item 10(b) for offices held by Barry M. Yantis and
   Brian A. Yantis.  W.A. Yantis, III has never held an office
   with the Company.

   (b) Executive Officers
                                     YEARS OF
                                     SERVICE AS
NAME        AGE       POSITION       AN OFFICER     TERM

Barry M. 
Yantis      53        President and       18        Until
                        Treasurer                   successor
                                                    elected 

Brian A. 
Yantis      50        Vice-President      7         Until
                      and Secretary                 successor
                                                    elected
            

   (c) Certain Significant Employees

   There are no significant employees other than above.

   (d) Family Relationships

   W. A. Yantis, III, Barry M. Yantis, and Brian A. Yantis are
brothers.

   (e) Business Experience

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

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





<PAGE>





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

   (e) Business Experience (Continued)

   W.A. Yantis III, has served as a board member of Chase
   General Corporation for eighteen years.  He has held the
   position of account manager for Prudential Insurance
   Company Asset Management Group in Newark, New Jersey during
   the past three years and in Chicago, Illinois during the
   prior seven years.

   (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)

                    SUMMARY COMPENSATION TABLE

                                       ANNUAL COMPENSATION
                                                         OTHER
    NAME AND          FISCAL                             ANNUAL
PRINCIPAL POSITION    YEAR END       SALARY    BONUS   COMPENSATION

Barry M. Yantis     1) 06-30-98    $100,000    $15,750    $2,240

Barry M. Yantis     1) 06-30-97    $103,025     $11,250   $2,240

Barry M. Yantis     1) 06-30-96    $ 90,950      $10,800  $2,100


                                 LONG TERM COMPENSATION     
                                  AWARDS        PAYOUTS
                         RESTRICTED
NAME AND                  STOCK       OPTION/     LTIP   ALL OTHER
PRINCIPAL POSITION        AWARD(S)    SARS (#)  PAYOUTS COMPENSATION

Barry M. Yantis               -         -           -          -

Barry M. Yantis               -         -           -          -

Barry M. Yantis               -         -           -          -


1)   CEO

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

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






<PAGE>





ITEM 11 - EXECUTIVE COMPENSATION (CONTINUED)

     (c)  Option/SAR grants table

          Not applicable

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

          Not applicable

     (e)  Long-term incentive 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 1998, $965, $97 and $160 of travel
          expenses were reimbursed to board members, W.A. Yantis
          III, 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, W.A. Yantis III, Brian A.
          Yantis, and Barry M. Yantis, who are brothers, 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.




<PAGE>





ITEM 11 - EXECUTIVE COMPENSATION (CONTINUED)

     (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. 


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

                                                     AMOUNTS
                                                      AND
                                                     NATURE
                                                       OF
                                                    BENEFICIAL
     TITLE OF CLASS           NAME AND ADDRESS      OWNERSHIP    % OF CLASS

(a)  Security ownership of certain 
     beneficial owners

     Common; par value $1 
     per share                Barry Yantis           97,192(1)   8.4%(2)
                              5605 Osage Drive
                              St. Joseph, Mo.
                              64503

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

                              W.A. Yantis III        97,193(1)    8.4%(2)
                              29 Calais Rd.
                              Mendham, N.J.
                              07945

(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 
     $5 par value:  Series A,     and officers         21,533    21.5% 
     6% convertible               as a group

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

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




<PAGE>





ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          (CONTINUED)

                                              AMOUNTS
                                                 AND
                                                NATURE
                                                 OF
                                             BENEFICIAL
TITLE OF CLASS      NAME AND ADDRESS         OWNERSHIP      % OF CLASS

Cumulative Preferred,    All directors 
$20 par value:           and officers           630            6.6%
Series B, $5             as a group
convertible    

     (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.


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



<PAGE>





ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          (CONTINUED)

     (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:

                                                      Page Number

          Independent Auditor's Report                         11
          Consolidated Balance Sheets - 
            June 30, 1998 and 1997                        12 - 13
          Consolidated Statements of 
            Operations for the years
            ended June 30, 1998, 1997, and 1996                14
          Consolidated Statements of Stockholders' 
            Equity for the years ended June 30, 1998, 
            1997, and 1996                                     15
          Consolidated Statements of Cash Flows for 
            the years ended June 30, 1998, 1997, 
            and 1996                                      16 - 17
          Summary of Significant Accounting Policies      18 - 19
          Notes to Consolidated Financial Statements      20 - 25

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

                                                      Page Number

          Independent Auditor's Report on 
            Supplemental Schedules                             33

          Schedule   I:  Condensed Financial Information 
            of Registrant                                 34 - 37

          Schedule  II:  Valuation and Qualifying 
            Accounts, June 30, 1998, 1997, and 1996            38

     (b)  Reports on Form 8-K

          No reports on Form 8-K were filed during the fourth
          quarter of the year ended June 30, 1998.






<PAGE>





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

     (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
          (21) Subsidiaries of registrant

          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 16, 1998 annual
               meeting mailed to security holders during the 1998
               fiscal year.

          (2)  During 1999 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.






<PAGE>





      INDEPENDENT AUDITOR'S REPORT ON SUPPLEMENTAL SCHEDULES


In connection with the audit 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 the financial position as set
forth therein, in conformity with generally accepted accounting
principles.





St. Joseph, Missouri
August 14, 1998




<PAGE>





                                                       SCHEDULE I

             CHASE GENERAL CORPORATION AND SUBSIDIARY
        CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

                    CHASE GENERAL CORPORATION
                        (Registrant Only)
                     CONDENSED BALANCE SHEETS
                      June 30, 1998 and 1997

                              ASSETS

                                          1998           1997 

Income tax refund receivable            $  4,392     $    4,153
Investment in subsidiary - at equity       684,462      748,871

TOTAL ASSETS                            $  688,854   $  753,024

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Series B notes payable and accrued 
  interest, unrelated parties           $  124,578   $  145,441
Series B notes payable and accrued 
  interest, related parties                 72,705       82,510

     Total liabilities                     197,283      227,951

Capital stock                            3,331,274    3,331,274
Paid in capital in excess of par         3,134,722    3,134,722
Accumulated (deficit)                   (5,974,425)   (5,940,923)

     Total stockholders' equity            491,571      525,073

TOTAL LIABILITIES AND STOCKHOLDERS' 
EQUITY                                  $  688,854   $  753,024


(1)  The restricted assets of 100% consolidated subsidiary, Dye
     Candy Company, are $770,998 and $836,871 as of June 30, 1998
     and 1997, 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.





<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, 1998, 1997 and 1996

                                1998          1997        1996
REVENUE

Equity in net income (loss) 
  of subsidiary               $(21,092)      $64,911    $82,358

     Total revenue             (21,092)       64,911     82,358

EXPENSE

General and administrative       4,726         4,892      8,294
     Interest                   12,076        13,998     16,214

     Total expense              16,802        18,890     24,508

     Income (loss) before 
     income taxes              (37,894)       46,021     57,850

PROVISION (CREDIT) FOR
     INCOME TAXES               (4,392)       (4,153)    (5,853)

NET INCOME (LOSS)             $(33,502)      $50,174    $63,703




<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, 1998, 1997 and 1996


                                 1998        1997       1996
CASH FLOWS FROM OPERATING ACTIVITIES

General and administrative 
  expenses paid               $ (4,726)   $ (4,892)    $ (8,294)
Interest paid                  (14,097)    (16,214)     (17,718)
Income tax refund received       4,153       5,853        5,413

     Net cash used in 
     operating activities      (14,670)    (15,253)     (20,599)

CASH FLOWS FROM INVESTING ACTIVITIES

Advances received from wholly 
 owned subsidiary               43,318      53,956       55,745

CASH FLOWS FROM FINANCING ACTIVITIES

Principal payments on Series 
  B notes payable             (28,648)     (38,703)     (35,146)

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

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

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





<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, 1998, 1997 and 1996


                                1998      1997         1996

RECONCILIATION OF NET INCOME TO NET
     CASH USED IN OPERATING ACTIVITIES

Net income (loss)             $(33,502)   $50,174      $63,703
Adjustments to reconcile 
  net income (loss)to net cash
  used in operating activities:

     Net income (loss) from 
      wholly owned subsidiary   21,092    (64,911)     (82,358)
     Effects of changes in 
      operating assets and 
      liabilities:
          Accrued interest      (2,021)    (2,216)      (1,504)
          Income tax refund 
           receivable             (239)      1,700        (440)

NET CASH USED IN 
 OPERATING ACTIVITIES         $(14,670)   $(15,253)    $(20,599)


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






<PAGE>





                                                      SCHEDULE II




           CHASE GENERAL CORPORATION AND ITS SUBSIDIARY
                VALUATION AND QUALIFYING ACCOUNTS
                  June 30, 1998, 1997, and 1996


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

Valuation accounts 
deducted from assets to 
which they apply for
doubtful accounts 
receivable:

June 30, 1998       $12,714        $15,311            $16,421    $11,604
June 30, 1997        12,757          3,327              3,370     12,714
June 30, 1996        12,216          6,416              5,875     12,757


* 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.





<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: October 12, 1998            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.

               President, Treasurer (Principal Executive
               Officer and Chief Financial and Accounting
               Officer) and Director

/s/ Barry M. Yantis                              October 12, 1998
Barry M. Yantis                                        Date


               Vice-President, Secretary and Director

/s/ Brian A. Yantis                              October 12, 1998
Brian A. Yantis                                        Date

<PAGE>

                           APPENDIX I



                    CHASE GENERAL CORPORATION
                           P.O. Box 698
                   St. Joseph, Missouri  64502



                            P R O X Y


     KNOW ALL MEN BY THESE PRESENTS, that the undersigned
shareholder(s) of CHASE GENERAL CORPORATION, a Missouri
corporation, hereby constitute(s) and appoint(s) BARRY M. YANTIS,
and BRIAN A. YANTIS or either of them to the proxies, agents and
attorneys of the undersigned, with full power of substitution,
for and in the name of the undersigned to attend the annual
meeting of the shareholders of said Corporation to be held at
3600 Leonard Road, St. Joseph, Missouri, on January 16, 1998, at
the hour of 9:00 a.m. and at any adjournment or adjournments
thereof; to vote all shares now or hereafter standing in the name
of the undersigned as fully as the undersigned might or could do
were the undersigned personally present at said meeting, or at
any adjournment or adjournments thereof; on the election of
directors and all other matters that may come before the said
meeting, hereby ratifying and confirming all that said proxies or
either of them, or their duly appointed substitute or
substitutes,  may do at said meeting or at any adjournment or
adjournments thereof; hereby revoking any and all proxies
heretofore given for said meeting, and expressly waiving all
notice required by statute or otherwise, to be given for said
meeting.

     If only one of said agents, attorneys and proxies should be
present and acting at the meeting, he shall have and may exercise
all of the powers of all of said agents, attorneys and proxies
hereunder.

     Dated __________ day of __________________, 199________          

     ___________________________________ Signature of shareholder(s) (SEAL)

IMPORTANT:  The signature should correspond with name of the
shareholder as it appears hereon.  If stock is held in the name
of two or more persons, all should sign the proxy.  When signing
as attorney, executor, administrator, trustee or guardian, the
full title should be given.

PLEASE COMPLETE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE.