<PAGE>   1
                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


     For Quarter Ended:  June 30, 1997

     Commission file number:  0-11363


                             CHAD THERAPEUTICS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             California                                   95-3792700
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                    Identification No.)

             21622 Plummer Street, Chatsworth, CA              91311
         ---------------------------------------------------------------
         (Address of principal executive offices)             (Zip Code)

                                 (818) 882-0883
              -----------------------------------------------------
              (Registrant's telephone number, including area code)


               ----------------------------------------------------
                             (Former Address)



     (Former name, former address and former fiscal year, if changed since last
     report.)

     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. Yes [X]  No  [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
     of common stock, as of the latest practicable date:

                    Common Shares                      9,951,117





<PAGE>   2



                             CHAD THERAPEUTICS, INC.
                                 Balance Sheets
                        June 30, 1997 and March 31, 1997


                                     ASSETS

<TABLE>
<CAPTION>

                                                   June 30,       March 31,
                                                     1997            1997
                                                 -----------     -----------
                                                 (Unaudited)

<S>                                              <C>             <C>        
Current assets:
   Cash                                          $ 3,154,000     $ 2,289,000
   Accounts receivable, less allowance for
     doubtful accounts of $110,000 at
     June 30, 1997 and $107,000 at
     March 31, 1997                                2,782,000       2,329,000
   Inventories (Note 2)                            5,134,000       6,063,000
   Income taxes refundable                             -             527,000
   Prepaid expenses                                  508,000         172,000
   Deferred income taxes                             356,000         356,000
                                                 -----------     -----------
     Total current assets                         11,934,000      11,736,000


Property and equipment, at cost                    4,084,000       3,844,000
   Less accumulated depreciation                     840,000         717,000
                                                 -----------     -----------
     Net property and equipment                    3,244,000       3,127,000
                                                 -----------     -----------
Other assets, net                                  1,297,000         998,000
                                                 -----------     -----------
     Total assets                                $16,475,000     $15,861,000
                                                 ===========     ===========

                   LIABILITIES AND SHAREHOLDERS' EQUITY
                   ------------------------------------

Current liabilities:
   Accounts payable                              $   172,000     $   344,000
   Accrued expenses                                  575,000         407,000
   Income taxes payable                               11,000           -
                                                 -----------     -----------
     Total current liabilities                       758,000         751,000

Shareholders' equity:
 Common shares, $.01 par value, authorized
  40,000,000 shares; 9,951,000 and 9,951,000
  shares issued and outstanding                   12,820,000      12,834,000
 Retained earnings                                 3,112,000       2,308,000
                                                 -----------     -----------
                                                  15,932,000      15,142,000
 Less treasury shares at cost, 30,000 and
  3,000 shares                                      (215,000)        (32,000)
                                                 -----------     -----------
     Net shareholders' equity                     15,717,000      15,110,000
                                                 -----------     -----------
     Total liabilities and shareholders' equity  $16,475,000     $15,861,000
                                                 ===========     ===========
</TABLE>




                See accompanying notes to financial statements.
<PAGE>   3

                             CHAD THERAPEUTICS, INC.
                             Statements of Earnings
                For the three months ended June 30, 1997 and 1996
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                    Three Months Ended
                                                    1997            1996
                                                -----------     -----------
<S>                                             <C>             <C>        
Net sales                                       $ 5,428,000     $ 7,772,000
Cost of sales                                     2,443,000       3,179,000
                                                -----------     -----------
        Gross profit                              2,985,000       4,593,000

Costs and expenses:
   Selling, general and administrative            1,537,000       1,639,000
   Research and development                         133,000         275,000
                                                -----------     -----------
        Total costs and expenses                  1,670,000       1,914,000
                                                -----------     -----------
        Operating income                          1,315,000       2,679,000

   Other income - interest income                    27,000          27,000
                                                -----------     -----------
        Earnings before income taxes              1,342,000       2,706,000

Income taxes                                        538,000       1,082,000
                                                -----------     -----------
        Net earnings                            $   804,000     $ 1,624,000
                                                ===========     =========== 
        Net earnings per share                  $       .08     $       .16
                                                ===========     ===========
Weighted average number of common shares
   (Note 3)                                      10,187,000      10,364,000
                                                ===========     ===========
</TABLE>









                See accompanying notes to financial statements.
<PAGE>   4



                             CHAD THERAPEUTICS, INC.
                        Statement of Shareholders' Equity
                    For the three months ended June 30, 1997
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                          Common Shares          Retained      Treasury
                                                        Shares      Amount       Earnings        Shares
                                                      ---------  ------------   -----------   -----------
<S>                                                   <C>        <C>            <C>            <C>
Balance at
 March 31, 1997                                       9,951,000  $ 12,834,000   $ 2,308,000    $  (32,000)

Common shares repurchased                                 -             -             -          (253,000)

Common Shares issued for purchases under 
 employee benefit plan                                    -           (14,000)        -            70,000

Net earnings                                              -             -           804,000         -
                                                      ---------   -----------   -----------    ----------
Balance at
 June 30, 1997                                        9,951,000   $12,820,000   $ 3,112,000    $ (215,000)
                                                      =========   ===========   ===========    ==========

</TABLE>




























                See accompanying notes to financial statements.




<PAGE>   5



                             CHAD THERAPEUTICS, INC.
                            Statements of Cash Flows
                For the three months ended June 30, 1997 and 1996
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three Months Ended
                                                             ----------------------------
                                                                 1997            1996
                                                             -----------      -----------
<S>                                                          <C>              <C>        
Cash flows from operating activities:
   Net earnings                                              $   804,000      $ 1,624,000
   Adjustments to reconcile net earnings to
     net cash used in operating activities:
       Depreciation and amortization                             123,000           34,000
       Changes in assets and liabilities:
         Decrease (increase) in accounts receivable             (453,000)      (1,598,000)
         Decrease (increase) in inventories                      929,000         (353,000)
             Decrease (increase) in income taxes
                   refundable                                    527,000             -
         Decrease (increase) in prepaid expenses                (336,000)        (412,000)
         Decrease (increase) in deferred income taxes               -                -
         Decrease (increase) in other assets                    (299,000)        (173,000)
         Increase (decrease) in accounts payable                (172,000)         467,000
         Increase (decrease) in accrued expenses                 168,000          471,000
             Increase (decrease) in income taxes payable          11,000          872,000
                                                              ----------      -----------
               Net cash provided by
               operating activities                            1,302,000          932,000
                                                              ----------      -----------
Cash flows from investing activities:
   Increase in marketable securities                                -            (400,000)
   Capital expenditures                                         (240,000)         (56,000)
                                                              ----------      -----------
               Net cash used in investing
               activities                                       (240,000)        (456,000)
                                                              ----------      -----------
Cash flows from financing activities:
   Exercise of stock options                                        -              46,000
   Common Shares repurchased                                    (253,000)            -
   Common Shares issued                                           56,000           48,000
                                                              ----------      -----------
               Net cash provided by (used in)
               financing activities                             (197,000)          94,000
                                                              ----------      -----------
Net increase in cash                                             865,000          570,000

Cash beginning of period                                       2,289,000        1,809,000
                                                              ----------      -----------
Cash end of period                                            $3,154,000      $ 2,379,000
                                                              ==========      ===========
</TABLE>





                See accompanying notes to financial statements.





<PAGE>   6



                             CHAD THERAPEUTICS, INC.
                                  June 30, 1997
                                   (Unaudited)


1.   Interim Reporting

     Chad Therapeutics, Inc. (the Company) is in the business of developing,
     producing and marketing respiratory care devices designed to improve the
     efficiency of oxygen delivery systems for home health care and hospital
     treatment of patients suffering from pulmonary diseases.

     In the opinion of management, all adjustments necessary, which are of a
     normal and recurring nature, to a fair statement of the results for the
     interim periods presented have been made. The interim statements are
     condensed and do not include some of the information necessary for a more
     complete understanding of the financial data. Accordingly, your attention
     is directed to the footnote disclosures found on pages 14, 15, 16 and 17 of
     the March 31, 1997, Annual Report and particularly to Note 1 which includes
     a summary of significant accounting policies.

2.   Inventories

     Inventories at June 30, 1997, are summarized as follows:

<TABLE>
<CAPTION>
              <S>                                <C>
              Finished goods                     $  705,000
              Work-in-process                     1,408,000
              Raw materials                       3,021,000
                                                 ----------
                                                 $5,134,000
                                                 ==========
</TABLE>


3.   Net Earnings Per Common Share

     Net earnings per common share is based on the weighted average number of
     shares and common stock equivalents (stock options) outstanding.



<PAGE>   7



                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Results of Operations

     Sales for the three months ended June 30, 1997, decreased $2,344,000 or
     30.2% from the prior year's period. There were no price increases during
     the periods presented. The decrease in sales relates primarily to decreases
     in domestic sales of OXYMATIC conservers and OXYLITE complete portable
     oxygen systems which are being affected by the current marketing
     environment for home oxygen therapy discussed below.

     Sales to foreign distributors represented 8.7% and 10.0% of total sales for
     the periods ended June 30, 1997 and 1996, respectively. Currently,
     management expects a smaller increase in sales to foreign distributors
     during the upcoming fiscal year and while these sales should continue to
     increase on an annual basis, quarter to quarter sales will fluctuate
     depending on the timing of shipments. In addition, all foreign sales are
     transacted in dollars, thus quarter to quarter unit sales could be affected
     by foreign currency fluctuations.

     The current procedure for reimbursement by Medicare for home oxygen
     services provides a prospective flat fee monthly payment based solely on
     the patient's prescribed oxygen requirement. Under this system, inexpensive
     concentrators have grown in popularity because of low cost and less
     frequent servicing requirements. At the same time, interest heightened in
     oxygen conserving devices which can extend the life of oxygen supplies and
     reduce service calls by dealers. Management believes these reimbursement
     procedures have heightened interest in the cost savings and increased
     mobility afforded by oxygen conserving devices such as the Company's
     products.

     In addition, other changes in the health care delivery system - including
     the increase in the acceptance and utilization of managed care - have
     stimulated a significant consolidation among home oxygen dealers. As major
     national and regional home medical equipment chains attempt to secure
     managed care contracts and improve their market position, they have
     expanded their distribution networks through the acquisition of independent
     dealers in strategic areas. Three major national chains presently account
     for approxi mately 23% of the Company's domestic sales. Margins on these
     sales may be somewhat lower due to quantity pricing. The Company's
     products, which allow homecare dealers to provide cost efficient home
     oxygen therapy, are ideally suited for use in a managed care environment
     and as a tool for dealers to increase revenues and profits. To ensure
     continued awareness of the benefits of the Company's products by chain
     headquarters personnel, a proactive marketing and communication program is
     in effect with all of the major national chains.





<PAGE>   8

                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Results of Operations (continued)

     The Company believes that its revenues at the end of fiscal 1997 and during
     the quarter ended June 30, 1997, was affected by several factors. During
     the quarter ended June 30, 1997, sales to national chain accounts decreased
     as programs to convert patients to more acceptable ambulatory systems in
     the previous year's quarter did not recur. In addition, sales to national
     chain accounts as well as independent dealers have also been impacted by
     increased competitive factors and uncertainties regarding the size of
     potential cuts in Medicare home oxygen reimbursement which are being
     discussed as part of the Federal budget process. The effects of managed
     care and concerns over the severity of reimbursement cuts has, in many
     cases, resulted in the provision of systems to patients that do not provide
     truly ambulatory oxygen. Management believes these factors will continue to
     affect the Company's revenues for at least the first half of the year ended
     March 31, 1998.

     Cost of sales as a percent of net sales increased from 40.9% to 45.0% for
     the period ended June 30, 1997, as compared to the prior year's period. The
     current period has been affected by higher fixed overhead costs associated
     with the Company's move to new facilities in October 1996, and decreased
     sales volume. Management believes the cost per unit should remain at or
     near current levels in future periods.

     Selling, general and administrative expenditures decreased from $1,639,000
     to $1,537,000 for the periods ended June 30, 1996 and 1997, respectively;
     however, these expenses increased as a percentage of net sales from 21.1%
     to 28.3% due to the decrease in sales volume. Research and develop ment
     expenses decreased by $142,000 for the period ended June 30, 1997, as
     compared to the prior year's period. Currently, management expects research
     and development expenditures to total approximately $950,000 in the fiscal
     year ended March 31, 1998, on projects to enhance and expand the Company's
     product line. Research and development expenditures totaled $910,000 for
     the year ended March 31, 1997.

     The Company has fully utilized its net operating loss carryforwards for
     Federal income tax purposes and other tax credit carryforwards. Future
     years will therefore be fully taxed and management estimates that the
     combined Federal and California income tax rates will be approximately 40%,
     as compared to 40.0% in 1997 and 39.1% in 1996.

     Financial Condition

     At June 30, 1997, the Company had cash totaling $3,154,000 or 19% of total
     assets, as compared to $2,289,000 (15%) at March 31, 1997. Net working
     capital increased from




<PAGE>   9
                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Financial Condition (continued)

     $10,985,000 at March 31, 1997, to $11,176,000 at June 30, 1997. Accounts
     receivable increased $453,000 during the period ended June 30, 1997, which
     related to an increase in sales from the quarter ended March 31, 1997.
     Future in creases or decreases in accounts receivable will generally
     coincide with sales volume fluctuations and the timing of shipments to
     foreign customers. During the same period, inventories decreased $929,000.
     The Company attempts to maintain sufficient inventories to meet its
     customer needs as orders are received. Thus, future inventory and related
     accounts payable levels will be impacted by the ability of the Company to
     maintain its safety stock levels. If safety stock levels drop below target
     amounts then inventories in subsequent periods will increase more rapidly
     as inventory balances are replenished.

     Management believes funds derived from operations should be adequate to
     meet the Company's present cash requirements. The Company does not have any
     established external sources of funds. The Company expects capital
     expenditures during the next twelve months to be approximately $1,250,000.
     On June 30, 1994, the Company announced that the Board of Directors had
     authorized stock repurchases of its common shares in privately negotiated
     transactions for a minimum of 10,000 shares. While the Company made no
     stock repurchases during the period ended June 30, 1997, the Company may
     make additional stock repurchases pursuant to the Board of Directors
     authorization in the future. In addition, the Board has authorized the
     Company to purchase shares of the Company's common stock in open market
     transactions. During the period ended June 30, 1997, the Company purchased
     approximately 35,000 shares at a cost of $253,000, however, the number of
     shares which may be purchased under these programs in the future can not be
     predicted at this time. The Company does not provide post employment
     retirement benefits.

     Newly Issued Accounting Standards

     The Financial Accounting Standards Board issued Statement No. 128,
     "Earnings Per Share" ("FAS 128"), in February 1997. FAS 128 is effective
     for both interim and annual periods ending after December 31, 1997. The
     Company will adopt FAS in the third quarter of 1998. FAS 128 requires the
     pre sentation of "Basic" earnings per share which represents income
     available to common shareholders divided by the weighted average number of
     common shares outstanding for the period. A dual presentation of "Diluted"
     earnings per share will also be required. The Diluted presentation is
     similar to the current presentation of all prior period earnings per share
     data presented. Management believes the adoption of FAS 128 will not have a
     material impact on the Company's financial position or results of
     operations.




<PAGE>   10
                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Outlook: Issues & Risks

     This quarterly report contains forward-looking statements which reflect the
     Company's current views with respect to future events and financial
     performance. These forward-looking statements are subject to certain risks
     and uncertainties which may cause actual operating results to differ
     materially from currently anticipated results. Among the factors that could
     cause actual results to differ materially are the following:

     Dependence Upon a Single Product Line

     Although the Company currently markets a number of products, these products
     comprise a single product line for patients requiring supplementary oxygen.
     The Company's future performance is thus dependent upon developments
     affecting this segment of the health care market and the Company's ability
     to remain competitive within this market sector.

     Consolidation of Home Care Industry

     The home health care industry is undergoing significant consolidation. As a
     result, the market for the Company's products is increasingly influenced by
     major national chains. Three major national chains presently account for
     23% of the Company's domestic sales. Future sales may be increasingly
     dependent on a limited number of customers which may have an impact on
     margins due to quantity pricing.

     Competition

     Chad's success over the past several years has drawn new competition to vie
     for a share of the home oxygen market. These new competitors include both
     small and very large companies. The Company believes the quality of its
     products and its established reputation will continue to be a competitive
     advantage; however, no assurance can be given that increased competition in
     the home oxygen market will not have an adverse affect on the Company's
     operations.

     Rapid Technological Change

     The health care industry is characterized by rapid technological change.
     The Company's products may become obsolete as a result of new developments.
     The Company's ability to remain competitive will depend to a large extent
     upon its ability to anticipate and stay abreast of new technological
     developments related to oxygen therapy. The Company has limited internal
     research and development capabilities.



<PAGE>   11



                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Rapid Technological Change (continued)

     Historically, the Company has contracted with outside parties to develop
     new products. Some of the Company's competitors have substantially greater
     funds and facilities to pursue research and development of new products and
     technologies for oxygen therapy.

     Potential Changes in Administration of Health Care

     A number of bills proposing to regulate, control or alter the method of
     financing health care costs have been discussed and certain of such bills
     have been introduced in Congress and various state legislatures. There are
     wide variations among these bills and proposals. Because of the uncertain
     state of the health care proposals, it is not meaningful at this time to
     predict the effect on the business of the Company if any of these proposals
     is enacted.

     Federal law has altered the payment rates available to providers of
     Medicare services in various ways during the last several years. Congress
     has passed legislation which would reduce Medicare spending. Some of the
     savings are to come from increases in premiums to cover part of the
     Medicare program cost. It cannot be predicted, however, what prospective
     payment system rates or rule changes will be made to determine how rates
     will be affected. There can be no assurance that a change in Medicare
     reimbursement rates will not have an adverse effect on the Company's
     business.

     Patents and Trademarks

     The Company pursues a policy of obtaining patents for appropriate
     inventions related to products marketed or manufactured by the Company. The
     Company considers the patentability of its products to be significant to
     the success of the Company. To the extent that the products marketed by the
     Company do not receive patent protection, competitors may be able to
     manufacture and market substantially similar products. Such competition
     could have an adverse impact upon the Company's business.

     Products Liability

     The nature of the Company's business subjects it to potential legal
     actions asserting that the Company is liable for damages for product
     liability claims. Although the Company maintains products liability
     insurance in an amount which it believes to be customary in the industry,
     there is no assurance that this insurance will be sufficient to cover the
     costs of defense or judgments which might be entered against the Company.
     The type and frequency of these claims could have an adverse impact on the
     Company's results of operations and financial position.



<PAGE>   12



                             CHAD THERAPEUTICS, INC.
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                                  June 30, 1997

     Availability of Third Party Component Products

     The Company tests and packages its products in its own facility. Some of
     its other manufacturing processes are conducted by other firms and the
     Company expects to continue using outside firms for certain manufacturing
     processes for the foreseeable future. The Company's agreements with its
     suppliers are terminable at will or by notice. The Company believes that
     other suppliers would be available in the event of termination of these
     arrangements. No assurance can be given, however, that the Company will not
     suffer a material disruption in the supply of its products.

     Accounting Standards

     Accounting standards promulgated by the Financial Accounting Standards
     Board change periodically. Changes in such standards may have an impact on
     the Company's future reported earnings and financial position.

     Additional Risk Factors

     Additional factors which might affect the Company's performance may be
     listed from time to time in the reports filed by the Company with the
     Securities and Exchange Commission.




<PAGE>   13
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                                 CHAD THERAPEUTICS, INC.
                                         ---------------------------------------
                                                       (Registrant)



Date    08/14/97                         /S/ Charles R. Adams
    --------------------                 ---------------------------------------
                                         Charles R. Adams
                                         Chief Executive Officer


Date   08/14/97                          /S/ Earl L. Yager
     -------------------                 ---------------------------------------
                                         Earl L. Yager
                                         Senior Vice President, Chief
                                         Financial Officer and Secretary