10-K

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 2009

¨ Transaction Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For transition period from              to             

Commission File Number: 2-5916

Chase General Corporation

(Exact name of registrant as specified in its charter)

Missouri	36-2667734
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

1307 South 59th, St. Joseph, Missouri	64507
(Address of Principal Executive Offices)	Zip Code

(816) 279-1625

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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  ¨

Indicate by check mark whether the registrant (1) has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The aggregate market value of the shares of common stock held by non-affiliates of the Issuer is not actively traded. Therefore, market value of the stock is unknown as of 60 days prior to the date of this filing.

As of September 15, 2009 there were 969,834 shares of Common Stock $1.00 per value, outstanding.

CHASE GENERAL CORPORATION

ANNUAL REPORT ON FORM 10-K

For the Year Ended June 30, 2009

TABLE OF CONTENTS

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	6
Item 2.	Property	6
Item 3.	Legal Proceedings	7
Item 4.	Submission of Matters to a Vote of Security Holders	7
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6.	Selected Financial Data	8
Item 7.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	9
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 8.	Consolidated Financial Statements and Supplementary Data	16
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	36
Item 9A(T)	Controls and Procedures	36
Item 9B.	Other Information	36
PART III
Item 10.	Directors, Executive Officers, and Control Persons	37
Item 11.	Executive Compensation	38
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	40
Item 13.	Certain Relationships and Related Transactions, and Director Independence	41
Item 14.	Principal Accountant Fees and Services	41
PART IV
Item 15.	Exhibits and Financial Statement Schedules	42
SIGNATURES		43

2

PART I

This report contains certain “forward-looking statements” concerning the Company’s operations, economic performance and financial condition, which are subject to inherent uncertainties and risks. Actual results could differ materially from those anticipated in this report. When used in this report, the word “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” and similar expressions are intended to identify forward-looking statements.

Item 1 BUSINESS

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

PRINCIPAL PRODUCTS AND SERVICES AND METHODS OF DISTRIBUTION

The subsidiary, Dye Candy Company, operates two divisions, Chase Candy Products and Seasonal Candy Products. Chase Candy Products involve production and sale of a candy bar marketed under the trade name “Cherry Mash”. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Division products are sold to the same type of customers in the same geographical areas. In addition, both divisions share a common labor force and utilize the same basic equipment and raw materials. Therefore, segment reporting for the two divisions is not maintained by Management and, accordingly, is not available for inclusion in this filing.

The principal products produced are as follows:

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

(1) 60 count pack

(2) 12 boxes of 24 bars per box

(3) 200 count shipper box

(4) 100 count shipper box

(5) 100 # 2 box Counter Display

(6) 4 box - 36 count Counter Display

In addition to the regular size bar, a “mini-mash” is distributed in seven case sizes:

(1) 24 - 12 oz. bags

(2) 6 jars - 60 bars per jar

(3) 23 # wrapped bars

(4) 22 # unwrapped bars

(5) 12 - 12 oz. bags

(6) 6 - 4 # jars

(7) 18 - 24 oz. tins

3

DESCRIPTION OF BUSINESS (CONTINUED)

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

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

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

All products are trucked to the customers by commercial haulers.

COMPETITION AND MARKET AREA

The Chase Candy Division bars are sold primarily to wholesale candy and tobacco jobbing houses, grocery accounts, vendors and repackers. “Cherry Mash” bars are marketed in the Midwest region of the United States. For the years ended June 30, 2009 and 2008, this division accounted for 59% and 55%, respectively, of the consolidated revenue of Dye Candy Company.

The Seasonal Candy Division is sold primarily on a Midwest regional basis to national syndicate accounts, repackers, and grocery accounts. For the years ended June 30, 2009 and 2008, the division accounted for 41% and 45%, respectively, of the consolidated revenue of Dye Candy Company.

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

The Company is a seasonal business whereby the largest volume of sales occur in the spring and fall of each year. The net income per quarter of the Company varies in direct proportion to the seasonal sales volume.

Due to the seasonal nature of the business, there is a heavier demand on working capital in the winter and summer months of the year when the Company is building its inventories in anticipation of fall and spring sales. The fluctuation of demand on working capital due to the seasonal nature of the business is common to the confectionery industry. If necessary, the Company has the ability to borrow short-term funds in early fall to finance operations prior to receiving cash collections from fall sales. The Company occasionally offers extended payment terms of up to sixty days. Since this practice is infrequent, the effect on working capital is minimal.

(Continued)

4

COMPETITION AND MARKET AREA (CONTINUED)

Prompt, efficient service are traits demanded in the confectionery industry, which results in a continual low volume of back-orders. Therefore, at no time during the year does the Company have a significant amount of back-orders.

The confectionery market for the type of product produced by the divisions of Dye Candy Company is very competitive and quality minded. The confectionery (candy) industry in which the divisions operate is highly competitive with many small companies and, within certain specialized areas, a few competitors dominate. In the United States, the dominant competitors in the coconut candy industry are Crown Candy Company, Vermico Candy Company, and the Seasonal Candy Division of Dye Candy Company with approximately 70% of the market share among them. In the United States, Sophie Mae and Old Dominion have approximately 80% of the market share of the peanut candy business in which the Seasonal Candy Division operates. Dye Candy Company sells approximately 95% of its products in the Midwest region with seasonal orders being shipped to the Southern and Eastern regions of the United States. Except for the coconut candy industry, Dye Candy Company is not a dominant competitor in any of the candy industries in which it competes. Dye Candy Company’s market share in the coconut industry does not vary significantly from year to year.

Principal methods of competition the Company uses include quality of product, price, reduced transportation costs due to central location, and service. The Company’s competitive position is positively influenced by labor costs being lower than industry average. Chase General Corporation is firmly established in the confectionery market and through its operating divisions has many years of experience associated with its name.

RESEARCH AND DEVELOPMENT

During the 2006 fiscal year, the Company developed vanilla and chocolate mini mash products which were marketed during the busy season starting September 1, 2006. The vanilla mini mash product was discontinued during the fiscal year ended June 30, 2008 due to poor sales. Currently, we anticipate no new products for distribution.

RAW MATERIALS AND PRINCIPAL SUPPLIERS

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

PATENTS AND TRADEMARKS

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

5

EMPLOYEES

As of June 30, 2009, the Company had 18 full time employees. There were 14 in manufacturing, 2 in sales and marketing and 2 in finance and administration. This expands to approximately 31 full time personnel during the two busy production seasons in spring and fall.

CUSTOMERS

For the years ending June 30, 2009 and 2008, Associated Wholesale Grocers accounted for 27% and 26% of gross sales, and 18% and 10%, respectively, of accounts receivable. For the years ending June 30, 2009 and 2008, Wal-Mart and its affiliates accounted for 17% and 14.5% of gross sales, and 31% and 29%, respectively, of accounts receivable. No other customer accounted for more than 10% of the Company’s revenues in fiscal years 2009 and 2008.

ENVIRONMENTAL PROTECTION AND THE EFFECT ON PROBABLE GOVERNMENT REGULATIONS ON THE BUSINESS

To the best of management’s knowledge, the Company is presently in compliance with all environmental laws and regulations and does not anticipate any future expenditures in this regard.

NEED FOR GOVERNMENT APPROVAL OF PRINCIPAL PRODUCTS OR SERVICES

The Company is required to meet the FDA guidelines for proper labeling of its products and for contents of its products.

REPORTS TO SECURITY HOLDERS

The Registrant is not required to send the annual audit report, annual 10-K report and quarterly 10-Q reports to security holders since the stock is not actively traded. These reports are available at the Registrant’s registered office or they are available on-line on the SEC’s EDGAR website.

Item 1A RISK FACTORS

Not applicable to smaller reporting company.

Item 2 PROPERTY

We conduct our operations from two buildings as follows:

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

6

Item 2 PROPERTY (CONTINUED)

Chase General Office and Dye Candy Company Operating Plant - The building located at 1307 South 59^th, St. Joseph, Missouri contains the general offices (of approximately 2,000 square feet) for Chase General Corporation, Dye Candy Company and its divisions. The production plant of Dye Candy Company occupies the remainder of the building or 18,000 square feet. The building, specifically designed for the Company, is leased from an entity owned by the Vice-President and Director of the Company and his spouse.

The net book value of our premises, land and office, and production equipment was $328,482 and $274,024, respectively, for fiscal years ending June 30, 2009 and 2008.

We believe both facilities are adequately covered by insurance.

Item 3 LEGAL PROCEEDINGS

None

Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company’s security holders during the fourth quarter of the fiscal year ended June 30, 2009.

7

PART II

Item 5 MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market information

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

Security holders

As of September 15, 2009, the latest practicable date, the approximate number of record holders of common stock was 1,869, including individual participants in security listings.

Dividends

(1) Dividend history and restrictions

No dividends have been paid during the past two fiscal years and there are no dividend restrictions. Preferred stock dividends in arrears are accumulated.

(2) Dividend policy

There is no set policy on the payment of dividends due to the financial condition of the Company and other factors. It is not anticipated that cash dividends will be paid in the foreseeable future.

Securities authorized for issuance under equity compensation plans

The Company does not have any equity compensation plans.

Item 6 SELECT FINANCIAL DATA

Not applicable to a small reporting company.

8

Item 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This report contains statements that plan for or anticipate the future. Forward-looking statements may include statements about the future of our products and the industry, statements about our future business plans and strategies, and other statements that are not historical in nature. In this report, forward-looking statements are generally identified by the words “anticipate,” “plan,” “believe,” “expect,” “estimate,” and the like. Readers should carefully review these cautionary statements as they identify certain important factors that could cause actual results to differ materially from those in the forward-looking statements and from historical trends. These forward-looking statements are based on the information available to, and the expectations and assumptions deemed reasonable by the Company at the time the statements are made. These expectations, assumptions and uncertainties include: the Company’s expectation of heavier demand on working capital in the summer and winter months in anticipation of fall and spring sales; our belief that the Company has stabilized its customer base; will continue our efforts to expand the existing market area and increase sales to customers; and maintain tight control of all expenditures.

OVERVIEW

During fiscal year ended 2009, the Company had a record setting year with volume exceeding $3,000,000 for the first time in the Company’s history. Net sales were $3,101,004 as compared to the previous year of $2,688,772. This 15% increase in volume resulted in improved profitability and working capital during the year, as reflected in net income before income taxes of $230,708 compared to $17,438 for the fiscal year 2008. Working capital increased $197,094 to $441,253 for the current year from $244,159 for the fiscal year 2008.

The following information should be read together with the consolidated financial statements and notes thereto included elsewhere herein.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

GENERAL

Management’s discussion and analysis of financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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

9

REVENUE RECOGNITION

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

RECEIVABLES

Accounts receivable are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Accounts receivable are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectibility of specific customer accounts and the aging of the accounts receivable. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or to require an excessive collection cost, are written off to the allowance for doubtful accounts.

INVENTORIES

Inventories are carried at the “lower of cost or market value,” with cost being determined on the “first-in, first-out” basis of accounting. Finished goods and goods in process include a provision for manufacturing overhead.

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amounts of such assets to future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

10

RESULTS OF OPERATIONS

The following table sets forth for the years indicated, the percentage of net sales of certain items in the Company’s consolidated statements of operations for each of the fiscal years ended June 30, 2009 and 2008, respectively:

	2009		2008
Net sales	100.00	%	100.00	%
Cost of sales	70.63		76.15
Gross profit	29.37		23.85
Selling expense	11.89		12.10
General and administrative expense	10.29		10.95
Income from operations	7.19		.80
Other income (expense), net	.25		(.15	)
Income before income taxes	7.44		.65
Provision for (benefit from) income taxes	1.24		(.19	)
Net income	6.20		.84
Preferred dividends	(4.13	)	(4.76	)
Income (loss) applicable to common stockholders	2.07	%	(3.92	)%

FISCAL YEAR 2009 COMPARED TO FISCAL YEAR 2008

NET SALES

During the year ended June 30, 2009, sales, net of returns and allowances, increased 15.33% as compared to the year ended June 30, 2008. Gross sales for Chase Candy products increased $323,088 or 21.11% to $1,853,545 for the year ended June 30, 2009 compared to $1,530,457 for 2008. Gross sales for seasonal candy increased $78,460 or 6.44% for the year ended June 30, 2009 to $1,296,192 compared to $1,217,732 for 2008.

The 15.33% increase in net sales of $412,232 for the year ended June 30, 2009, over the same period ended June 30, 2008, was due to several factors. Chase Candy products increase was due to a price increase put into place in November 2008. In addition, the Company received frequent national exposure on the Food Channel demonstrating their Cherry Mash bar production process along with two new major customers for the Cherry Mash line. These new customers accounted for $263,552 of the increased sales. The bulk and clamshell candy had price increases as well as improved merchandising displays at customer retail locations that helped increase sales for the year.

The Company’s returns and allowances decreased $7,583 or 10% for the year ended June 30, 2009, compared to the year ended June 30, 2008. There was no loss of significant customers.

COST OF SALES

Cost of sales for the year ended June 30, 2009, as compared to the year ended June 30, 2008, increased by 6.97%. The cost of sales increased $142,710 to $2,190,173 while decreasing to 70.63% of related revenues for the year ended June 30, 2009, compared to $2,047,463 or 76.15% of related revenues for the year ended June 30, 2008.

11

COST OF SALES (CONTINUED)

The dollar increase in cost of sales for the year ended June 30, 2009 was the result of a 9.47% or $35,353 increase in labor costs including wages, vacation pay, and payroll taxes of $408,689 for year ending June 30, 2009 as compared to $373,336 for year ending 2008. The increase in labor costs was primarily related to a 4% raise for the production labor force.

Raw material costs of $1,121,575 increased 10.53% or $106,809 for year ended June 30, 2009, as compared to $1,014,766 for year ending 2008. This increase is a direct result of material price increases for sugar - 4 cents per pound and peanuts 8 cents per pound.

GROSS PROFIT

The gross margin increased 42% or $269,522 to $910,831 increasing to 29.37% of related revenues for the year ended June 30, 2009, as compared to $641,309 or 23.85% of related revenues for the year ended June 30, 2008, as a result of the overall increase in net sales above the net increase in cost of sales.

Finished goods inventory as of June 30, 2009 of $119,116 increased $46,465 or 63.96% of the June 30, 2008 finished goods inventory of $72,651. The increase reflects the Company having to build up of inventory to meet July 2009 delivery deadlines. Raw material inventory of $69,960 and packaging materials inventory of $172,764 is 7.11% higher than the June 30, 2008 inventories of $56,346 and $170,276, respectively, as a result of continuing to purchase inventory at competitive prices for the forthcoming busy season that starts September 1, 2009.

SELLING EXPENSES

Selling expenses for the year ended June 30, 2009 increased $43,351 to $368,742, which is 11.89% of sales, compared to $325,391 or 12.10% of sales for the year June 30, 2008. This increase is primarily due to higher commissions being paid as a result of increased sales along with additional sample costs and premium promotions for this period. Commissions, sample costs, and premium promotions increased 22.31% to $207,062 for year ended June 30, 2009, as compared to $169,298 for year ending June 30, 2008.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the year ended June 30, 2009 increased $24,667 to $319,038, which is 10.29% of sales, compared to $294,371 or 10.95% of sales for the year ended June 30, 2008. The increased costs are primarily because of an $18,734 increase in updating the Company’s websites.

INCOME FROM OPERATIONS

Income from operations for the year ended June 30, 2009 is 7.19% of net sales, as compared to .80% of net sales for the year ended June 30, 2008 for the reasons described above.

12

OTHER INCOME (EXPENSE)

Other income and (expense) reflects income of $7,657 for the year ended June 30, 2009, as compared to expense of (4,109) for the year ended June 30, 2008. This increase of $11,766 was primarily due to a gain from sale of automobiles of $12,014.

INCOME BEFORE INCOME TAXES

Income before income taxes was $230,708 for the year ended June 30, 2009, as compared to $17,438 for the year ended June 30, 2008. The reasons for the increase of $213,270 have been discussed above.

PROVISION FOR (BENEFIT FROM) INCOME TAXES

The Company recorded a tax expense for the year ended June 30, 2009 of $38,459, as compared to a tax (benefit) of $(5,164) for the year ended June 30, 2008. The tax expense for the year ended June 30, 2009 is a result of operations discussed above as well as the use of its net operating loss carryforward. The Company had incurred losses for the past two years, which were not available to carryback to obtain previously paid income taxes. This loss carryforward will be fully utilized against taxable income for the year ended June 30, 2009, which results in an effective tax rate of 17%. The (benefit) recorded for the 2008 year is primarily due to recognizing deferred taxes related to the carryover of these operating losses.

NET INCOME

Net income for the year ended June 30, 2009 was $192,249, compared to net income for year ended June 30, 2008 of $22,602. This increase of $169,647 has been explained above.

PREFERRED DIVIDENDS

Preferred dividends were $128,072 for the years ended June 30, 2009 and 2008, which reflect additional preferred stock dividends in arrears on the Company’s Series A and Series B $5 par value preferred stock and its Series A & B $20 par value preferred stock.

NET (LOSS) APPLICABLE TO COMMON STOCKHOLDERS

Net income (loss) applicable to common stockholders was $64,177 for the year ended June 30, 2009, which is an increase of $169,647 as compared to the loss of $(105,470) for the year ended June 30, 2008 for the reasons discussed above.

13

LIQUIDITY AND SOURCES OF CAPITAL

The table below presents the summary of cash flow for the fiscal year indicated.

	2009			2008
Net cash provided by (used in) operating activities	$	267,690		$	(131,229	)
Net cash used in investing activities	$	(52,198	)	$	(8,173	)
Net cash provided by (used in) financing activities	$	(210,829	)	$	141,998

Operating Activities

The positive cash flow of $267,690 generated from operations is a result of the Company continuing to monitor raw material pricing, and when a price increase or decrease is anticipated, adjustments to inventory levels are made accordingly. Raw materials inventory increased $13,614 from June 30, 2008 to June 30, 2009. The current year increase can be attributed to the efforts of the Company watching markets for these commodities, and making purchases at more favorable prices prior to the start of busy season.

Packaging materials are purchased in large volumes and carried for several years due to the high cost from suppliers to cut dies and print materials. Therefore, when supplier pricing remains consistent over the years and is not predicted to increase, the Company utilizes its present inventory supply without making additional purchases necessary to lock in pricing.

Packaging materials inventory increased $2,488 at June 30, 2009 from June 30, 2008.

Finished goods inventory increased $46,465 from June 30, 2008 to June 30, 2009. This increase was due to significantly higher customer orders at the end of fiscal year June 30, 2009 than at end of fiscal year June 30, 2008. Goods in process remained comparable to prior years.

Investing Activities

The $52,197 of cash used in investing activities was the result of net capital expenditures and sale of equipment for the current fiscal year. The Company continues to write off equipment that is no longer useful to the operations of the Company. Purchases of $137,473 ($96,011 of automobiles and $41,462 of machinery and other equipment) and $44,194 ($38,730 of automobiles and $5,464 of machinery and other equipment) were made during the years ended June 30, 2009 and 2008, respectively. Depending on results of operations and cash flows, the Company is hoping to replace two cookers at an anticipated cost of $40,000 in the next several years, with no set target date. The mini mash wrapper will be replaced as soon as possible, based on Fall 2009 orders, at an estimated cost of $90,000.

Financing Activities

The Company borrowed $145,000 and $300,000, respectively, on its line-of-credit during the fall of 2008 and 2007 busy seasons. Payments of $195,000 and $250,000, respectively, were paid for years ending June 30, 2009 and 2008. The Company renewed its $250,000 line-of-credit until January 3, 2010. The Company borrowed $235,000 from a shareholder during the two previous fiscal years of which $140,000 and $95,000, respectively, was paid in full for years ended 2009 and 2008.

14

LIQUIDITY AND SOURCES OF CAPITAL (CONTINUED)

The Company financed vehicle purchases for $60,556 and $36,021 for years ended June 30, 2009 and 2008, respectively. Vehicle loan payments were $20,829 and $3,002 for years ended June 30, 2009 and 2008, respectively.

Overall cash and cash equivalents increased $3,973 to $28,771 at June 30, 2009 from $24,828 at June 30, 2008.

To date, there are no material commitments by the Company for capital expenditures. At June 30, 2009, the Company’s accumulated deficit was $5,780,006, compared to accumulated deficit of $5,972,255 as of June 30, 2008. Working capital as of June 30, 2009 increased 80.72% to $441,253 from $244,159 as of June 30, 2008.

The Company’s lease on its office and plant facility is effective through March 31, 2025 with an option to extend for an additional time of five years, and currently requires payments of $6,500 per month. At the end of the first five years, the base rent shall be increased an amount not greater than 30%, at the sole discretion of lessor and for each additional term of five years. The facility is leased from an entity owned 100% by the Vice-President and Director and his spouse.

In order to maintain funds to finance operations and meet debt obligations, it is the intention of management to continue its efforts to expand the present market area and increase sales to its customers. Management also intends to continue tight control on all expenditures.

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

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2008, Chase adopted Statement of financial Accounting Standard No. 157 (“SFAS 157”), Fair Value Measurements, SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. The adoption of SFAS 157 did not have any effect on Chase’s results of operations, financial condition, and cash flows.

Effective July 1, 2008, Chase adopted Statement of Financial Accounting Standard No. 159 (“SFAS 159”), The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings cause by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. The adoption of SFAS 159 did not have any effect on Chase’s results of operations, financial condition, and cash flows.

15

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141R”) and SFAS No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements (“SFAS 160”). These statements significantly change the accounting for and reporting of business combinations on noncontrolling (minority) interests in consolidated financial statements. These statements will require noncontrolling interests to be reclassified to equity, consolidated net income to be adjusted to include net income attributed to the noncontrolling interest, and consolidated comprehensive income to be adjusted to include the comprehensive income attributed to the noncontrolling interest. SFAS 141R and SFAS 160 are required to be adopted simultaneously. SFAS 141 is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period, beginning on or after December 14, 2008. SFAS 160 is to be applied prospectively as of the beginning of the fiscal year in which it is initially adopted, except for the presentation and disclosure requirements which will be applied retrospectively for all periods. Early adoption is prohibited. The Company is currently evaluating the impact of adopting SFAS 141R and SFAS 160 on its consolidated financial statements.

Item 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to a smaller reporting company.

Item 8 CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements meeting the requirements of Regulation S-B are contained on pages 17 through 35 of this Form 10-K.

16

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED FINANCIAL REPORT

Table of Contents

	PAGE
Reports of Independent Registered Public Accounting Firm	18
Financial Statements
Consolidated Balance Sheets	19
Consolidated Statements of Operations	21
Consolidated Statements of Stockholders’ Equity	22
Consolidated Statements of Cash Flows	23
Notes to Consolidated Financial Statements	25

17

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

CHASE GENERAL CORPORATION AND SUBSIDIARY

We have audited the accompanying consolidated balance sheets of Chase General Corporation and Subsidiary as of June 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 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 financial statements referred to above present fairly, in all material respects, the financial position of Chase General Corporation and Subsidiary as of June 30, 2009 and 2008, and the results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Mayer Hoffman McCann P.C

MAYER HOFFMAN MCCANN P.C.

Leawood, Kansas

September 17, 2009

18

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

June 30, 2009 and 2008

ASSETS

	2009		2008
CURRENT ASSETS
Cash and cash equivalents	$	28,771	$	24,828
Receivables
Net of allowance for doubtful accounts of $15,736 and $13,741, respectively (Note 12)		229,909		211,932
Inventories:
Finished goods		119,116		72,651
Goods in process		4,932		3,857
Raw materials		69,960		56,346
Packaging materials		172,764		170,276
Prepaid expenses		16,858		6,146
Deferred income taxes (Note 7)		4,626		8,890
Total current assets		646,936		554,926
PROPERTY AND EQUIPMENT
Land		35,000		35,000
Buildings		85,738		85,738
Machinery and equipment		771,330		733,845
Trucks and autos		139,601		130,387
Office equipment		36,471		35,954
Leasehold improvements		71,481		68,021
Total		1,139,621		1,088,945
Less accumulated depreciation		811,139		814,921
Total property and equipment		328,482		274,024
OTHER ASSETS
Deferred income taxes—noncurrent (Note 7)		—		12,024
TOTAL ASSETS	$	975,418	$	840,974

The accompanying notes are an integral part of the consolidated financial statements.

19

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

June 30, 2009 and 2008

LIABILITIES AND STOCKHOLDERS’ EQUITY

	2009			2008
CURRENT LIABILITIES
Accounts payable	$	158,570		$	84,879
Current maturities of forgivable loan—bank (Note 2)		—			5,000
Current maturities of notes payable (Note 3 & 4)		30,142			62,007
Notes payable—stockholder (Note 5)		—			140,000
Accrued expenses		15,487			17,582
Deferred income (Note 2)		1,299			1,299
Income tax payable		185			—
Total current liabilities		205,683			310,767
LONG-TERM LIABILITIES
Deferred income (Note 2)		19,155			10,454
Forgivable loan—bank, less current maturities (Note 2)		—			5,000
Notes payable—less current maturities (Note 3)		42,604			21,012
Deferred income taxes (Note 7)		21,986			—
Total long-term liabilities		83,745			36,466
Total liabilities		289,428			347,233
COMMITMENTS AND CONTINGENCIES (NOTE 10)
STOCKHOLDERS’ EQUITY
Capital stock issued and outstanding: (Note 6)
Prior cumulative preferred stock, $5 par value:
Series A (liquidation preference $2,040,000 and $2,010,000, respectively)		500,000			500,000
Series B (liquidation preference $1,995,000 and $1,965,000, respectively)		500,000			500,000
Cumulative preferred stock, $20 par value:
Series A (liquidation preference $4,668,001 and $4,609,469, respectively)		1,170,660			1,170,660
Series B (liquidation preference $760,741 and $751,201, 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		(5,780,006	)		(5,972,255	)
Total stockholders’ equity		685,990			493,741
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	975,418		$	840,974

The accompanying notes are an integral part of the consolidated financial statements.

20

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended June 30, 2008 and 2007

	2009			2008
NET SALES (NOTE 12)	$	3,101,004		$	2,688,772
COST OF SALES		2,190,173			2,047,463
Gross Profit		910,831			641,309
OPERATING EXPENSES
Selling expenses		368,742			325,391
General and administrative expenses		319,038			294,371
Total operating expenses		687,780			619,762
Income from operations		223,051			21,547
OTHER INCOME (EXPENSE)
Miscellaneous income		14,003			2,331
Interest (expense) (Note 3, 4 & 5)		(6,346	)		(6,440	)
Total other income (expense)		7,657			(4,109	)
Income before income taxes		230,708			17,438
PROVISION FOR (BENEFIT FROM) INCOME TAXES (NOTE 7)		38,459			(5,164	)
NET INCOME		192,249			22,602
Preferred dividends		(128,072	)		(128,072	)
Net income (loss) applicable to common stockholders	$	64,177		$	(105,470	)
NET INCOME (LOSS) PER SHARE OF COMMON STOCK – (NOTE 8)
BASIC	$	.07		$	(.11	)
DILUTED	$	.03		$	N/A
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING		969,834			969,834

The accompanying notes are an integral part of the consolidated financial statements.

21

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Years Ended June 30, 2009 and 2008

	Prior Cumulative Preferred Stock				Cumulative Preferred Stock				Common Stock		Paid-in Capital		Accumulated Deficit			Total
	Series A		Series B		Series A		Series B
BALANCE , JUNE 30, 2007	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,994,857	)	$	471,139
Net income		—		—		—		—		—		—		22,602			22,602
BALANCE , JUNE 30, 2008		500,000		500,000		1,170,660		190,780		969,834		3,134,722		(5,972,255	)		493,741
Net income		—		—		—		—		—		—		192,249			192,249
BALANCE , JUNE 30, 2009	$	500,000	$	500,000	$	1,170,660	$	190,780	$	969,834	$	3,134,722	$	(5,780,006	)	$	685,990

The accompanying notes are an integral part of the consolidated financial statements.

22

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2009 and 2008

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Collections from customers	$	3,081,032		$	2,657,268
Other income		690			1,032
Cost of sales, selling, general and administrative expenses paid		(2,806,623	)		(2,783,852	)
Interest paid		(7,409	)		(5,677	)
Net cash provided by (used in) operating activities		267,690			(131,229	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment		24,000			—
Purchases of property and equipment		(76,918	)		(8,173	)
Net cash (used in) investing activities		(52,918	)		(8,173	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line-of-credit		145,000			300,000
Principal payments on line-of-credit		(195,000	)		(250,000	)
Proceeds from stockholder notes payable		—			190,000
Principal payments on stockholder notes payable		(140,000	)		(95,000	)
Principal payments on vehicle note payable		(20,829	)		(3,002	)
Net cash provided by (used in) financing activities		(210,829	)		141,998
NET INCREASE IN CASH AND CASH EQUIVALENTS		3,943			2,596
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		24,828			22,232
CASH AND CASH EQUIVALENTS, END OF YEAR	$	28,771		$	24,828

The accompanying notes are an integral part of the consolidated financial statements.

23

CHASE GENERAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended June 30, 2009 and 2008

	2009			2008
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net income	$	192,249		$	22,602
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		71,030			60,765
Provision for bad debts		1,995			1,917
Deferred income amortization		(1,299	)		(1,299	)
Deferred income taxes		38,274			(5,164	)
(Gain) on sale of equipment		(12,014	)		—
Effects of changes in operating assets and liabilities:
Trade receivables		(19,972	)		(31,504	)
Inventories		(63,642	)		(90,035	)
Prepaid expenses		(10,712	)		354
Accounts payable		73,691			(83,683	)
Accrued expenses		(2,095	)		(5,182	)
Income tax payable		185			—
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	267,690		$	(131,229	)

The accompanying notes are an integral part of the consolidated financial statements.

24

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Chase General Corporation (the Company) was incorporated on November 6, 1944 in the State of Missouri for the purpose of manufacturing confectionery products. The Company grants credit terms to substantially all customers, consisting of repackers, grocery accounts, and national syndicate accounts, who are primarily located in the Midwest region of the United States.

Significant accounting policies are as follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Dye Candy Company. All intercompany transactions and balances have been eliminated in consolidation.

SEGMENT REPORTING OF THE BUSINESS

The subsidiary, Dye Candy Company, operates two divisions, Chase Candy Products and Seasonal Candy Products. Chase Candy Products involve production and sale of a candy bar marketed under the trade name “Cherry Mash”. The Seasonal Candy Products involve production and sale of coconut, peanut, chocolate, and fudge confectioneries. Division products are sold to the same type of customers in the same geographical areas. In addition, both divisions share a common labor force and utilize the same basic equipment and raw materials. Therefore, segment reporting for the two divisions is not maintained by Management and, accordingly, has not been disclosed in these consolidated financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers all liquid investments with a maturity of three months or less when purchased to be cash equivalents.

REVENUE RECOGNITION

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

25

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SHIPPING AND HANDLING COSTS

Shipping and handling costs for freight expense on goods shipped is included in cost of sales. Freight expense on goods shipped for the years ended June 30, 2009 and 2008 was $156,489 and $170,136, respectively.

RECEIVABLES

Accounts receivable are uncollateralized customer obligations which generally require payment within thirty days from the invoice date. Accounts receivable are stated at the invoice amount as no interest is charged to the customer for any past due amounts. Payments of accounts receivable are applied to the specific invoices identified on the customer’s remittance advice or, if unspecified, to the earliest unpaid invoices.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected. The allowance for doubtful accounts is based on management’s assessment of the collectibility of specific customer accounts and the aging of the accounts receivable. If there is a deterioration of a major customer’s credit worthiness or actual defaults are higher than the historical experience, management’s estimates of the recoverability of amounts due the Company could be adversely affected. All accounts or portions thereof deemed to be uncollectible, or to require an excessive collection cost, are written off to the allowance for doubtful accounts.

INVENTORIES

Inventories are carried at the “lower of cost or market value” with cost being determined on the “first-in, first-out” basis of accounting. Finished goods and goods in process include a provision for manufacturing overhead.

PROPERTY AND EQUIPMENT

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

Buildings	39 years
Machinery and equipment	5 - 7 years
Trucks and autos	5 years
Office Equipment	5 - 7 years
Leasehold improvements	Lesser of estimated
	useful life or the
	lease term

26

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

IMPAIRMENT OF LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets.

INCOME TAXES

Deferred income taxes are provided using the liability method for temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their tax bases. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the dates of enactment.

EARNINGS PER SHARE

Basic Earnings Per Common Share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted Earnings Per Common Share shall be computed by including contingently issuable shares with the weighted average shares outstanding during the period. When inclusion of the contingently issuable shares would have an antidilutive effect upon earnings per share, no diluted earnings per share shall be presented.

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

	2009	2008
Shares issuable upon conversion of Series A Prior Cumulative Preferred Stock	400,000	400,000
Shares issuable upon conversion of Series B Prior Cumulative Preferred Stock	375,000	375,000
Shares issuable upon conversion of Series A Cumulative Preferred Stock	222,133	222,133
Shares issuable upon conversion of Series B Cumulative Preferred Stock	36,201	36,201

27

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

ADVERTISING EXPENSE

Advertising is expensed when incurred. Advertising expense was $750 and $2,834 for the years ended June 30, 2009 and 2008, respectively.

SUBSEQUENT EVENTS

Management evaluated subsequent events through September 17, 2009, the date the consolidated financial statements were issued. Events or transactions occurring after June 30, 2009, but prior to September 17, 2009 that provided additional evidence about conditions that existed at June 30, 2009, have been recognized in the consolidated financial statements for the year ended June 30, 2009. Events or transactions that provided evidence about conditions that did not exist at June 30, 2009, but arose before the consolidated financial statements were issued, have not been recognized in the consolidated financial statements for the year ended June 30, 2009.

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2008, Chase adopted Statement of financial Accounting Standard No. 157 (“SFAS 157”), Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements, but does not require any new fair value measurements. The adoption of SFAS 157 did not have any effect on Chase’s results of operations, financial condition, and cash flows.

Effective July 1, 2008, Chase adopted Statement of Financial Accounting Standard No. 159 (“SFAS 159”), The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115. SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings, caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. The adoption of SFAS 159 did not have any effect on Chase’s results of operations, financial condition, and cash flows.

28

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141R”) and SFAS No. 160, Accounting and Reporting of Noncontrolling Interest in Consolidated Financial Statements (“SFAS 160”). These statements significantly change the accounting for and reporting of business combinations on noncontrolling (minority) interests in consolidated financial statements. These statements will require noncontrolling interests to be reclassified to equity, consolidated net income to be adjusted to include net income attributed to the noncontrolling interest, and consolidated comprehensive income to be adjusted to include the comprehensive income attributed to the noncontrolling interest. SFAS 141R and SFAS 160 are required to be adopted simultaneously. SFAS 141R is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 14, 2008. SFAS 160 is to be applied prospectively as of the beginning of the fiscal year in which it is initially adopted except for the presentation and disclosure requirements which will be applied retrospectively for all periods. Early adoption is prohibited. The Company is currently evaluating the impact of adopting SFAS 141R and SFAS 160 on its consolidated financial statements.

NOTE 2 - FORGIVABLE LOAN AND DEFERRED INCOME

During 2004, the Company received a $25,000 economic development incentive from Buchanan County, which is a five year forgivable loan at a rate of $5,000 per year. The Nodaway Valley Bank has established an Irrevocable Standby Letter of Credit in the amount of $25,000 as collateral for this loan, with a maturity date of January 3, 2010. The Company met the criteria of occupying a 20,000 square foot building and creating a minimum of two new full-time equivalent jobs during the first year of operation in the new facility. In addition, the Company maintained 19 existing jobs during the five year term. Notice was received February 6, 2009 from the Buchanan County Commission, that the Company has fulfilled its minimum loan requirements so that the loan has been forgiven in full and has no further obligations. As the Company was no longer legally required to return the monies, the liability was reclassified as deferred revenue and amortized into income over the life of the lease term of the new facility. At June 30, 2009 and June 30, 2008, a total of $25,000 and $15,000, respectively, has been reclassified to deferred revenue. Deferred revenue is recognized on a straight line basis over the lease term of 20 years. During the years ended June 30, 2009 and 2008, deferred revenue of $1,299 was amortized into income for each period.

29

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - NOTES PAYABLE - VEHICLES

The Company has four vehicle loans payable as follows:

Payee	Terms	2009		2008
Ford Credit	$1001 monthly payments including interest of 0%; final payment due March 2011, secured by a vehicle.	$	21,010	$	33,019
Ford Credit	$573 monthly payments including interest of 6.99%; final payment due July 2012, secured by a vehicle.		19,039		—
Ford Credit	$508 monthly payments including interest of 1.9%; final payment due December 15, 2011, secured by a vehicle.		14,871		—
Ford Credit	$557 monthly payments including interest of 3.9%; final payment due April 2012, secured by a vehicle.		17,826		—
	Total		72,746		33,019
	Less current portion		30,142		12,007
	Long-term portion	$	42,604	$	21,012

Future minimum payments are:

2010	$	30,142
2011		26,951
2012		15,082
2013		571
Total	$	72,746

NOTE 4 - NOTE PAYABLE - BANK

Effective January 1, 2008, the Company had a $250,000 line-of-credit agreement which expired on January 1, 2009. This line-of-credit agreement was renewed on that date to extend until January 3, 2010, with a variable interest rate at prime (3.25% and 5.0% at June 30, 2009 and 2008, respectively). The line-of-credit was collateralized by certain equipment. At June 30, 2009 and 2008, the outstanding balance on the line-of-credit was $-0- and $50,000, respectively, and is included in current maturities of notes payable on the consolidated balance sheets.

30

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - NOTE PAYABLE - STOCKHOLDER

The Company borrowed $140,000 and $190,000, respectively, from a stockholder/officer during the fiscal years ending June 30, 2009 and 2008, which were repaid by December 31, 2008. These unsecured loans had no maturity date and carried a 4.5% annual interest rate. Interest expense on stockholder/officer notes was $2,534 and $2,448 for the years ending June 30, 2009 and 2008, respectively.

NOTE 6 - CAPITAL STOCK

Capital stock authorized, issued, and outstanding as of June 30, 2009 is as follows:

	Shares
	Authorized	Issued and Outstanding
Prior Cumulative Preferred Stock, $5 par value:
6% Convertible	240,000
Series A		100,000
Series B		100,000
Cumulative Preferred Stock, $20 par value:
5% Convertible	150,000
Series A		58,533
Series B		9,539
	Shares
	Authorized	Issued and Outstanding
Common Stock, $1 par value:
Reserved for conversion of Preferred Stock—1,030,166 shares	2,000,000	969,834

Cumulative Preferred Stock dividends in arrears at June 30, 2009 and 2008 totaled $7,052,302 and $6,924,230, respectively. Total dividends in arrears, on a per share basis, consist of the following at June 30, 2009 and 2008:

	2009		2008
6% Convertible
Series A	$	15.15	$	14.85
Series B		14.70		14.40
5% Convertible
Series A		59.75		58.75
Series B		59.75		58.75

31

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - CAPITAL STOCK (CONTINUED)

The 6% 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 4 common shares for one share of Series A and 3.75 common shares for one share of Series B.

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

NOTE 7 - INCOME TAX

The Company adopted the provisions of Financial Accounting Standard Board Interpretation No. 48 (“FIN 48”) Accounting for Uncertainty in Income Taxes – An Interpretation of FASB No. 109 effective July 1, 2007, which clarified the accounting for uncertainty in tax positions. The Company had no unrecognized tax benefits as of the date of adoption, the income tax provisions taken for open years are appropriately stated and supported for all open years, and the adoption of FIN 48 did not have a material effect on the Company’s consolidated financial statements.

As of June 30, 2008, the Company had a net operating loss carryforward of approximately $170,706, of which the Company’s current year profit absorbed this available net operating loss carryforward.

The sources of deferred tax assets and liability at June 30, 2009 and 2008, and the tax effect of each are as follows:

	2009			2008
Deferred tax assets:
Inventories	$	120		$	55
Trade receivables		3,357			2,082
Contribution carryover		1,149			694
Net operating loss (carryforward)		—			24,236
Deferred income		4,363			1,780
Total deferred tax assets		8,989			28,847
Deferred tax liability:
Property and equipment		(26,349	)		(7,933	)
NET DEFERRED TAX ASSETS (LIABILITY)	$	(17,360	)	$	20,914

32

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - INCOME TAX (CONTINUED)

The net deferred tax assets (liability) are presented in the accompanying June 30, 2009 and 2008 balance sheets as follows:

Current deferred tax asset	$	4,626		$	8,890
Noncurrent deferred tax asset		—			12,024
Noncurrent deferred tax liability		(21,986	)		—
NET DEFERRED TAX ASSET (LIABILITY)	$	(17,360	)	$	20,914

The provision (credit) for income taxes, for the years ended June 30, 2009 and 2008, consists of the following:

	2009		2008
Current tax expense	$	185	$	—
Deferred tax expense (benefit)		38,274		(5,164	)
	$	38,459	$	(5,164	)

The income tax provision differs from the amount of income tax determined by applying the statutory federal income tax rate to pretax income for the years ended June 30, 2008 and 2007 due to the following:

	2009			2008
Computed “expected” tax (benefit)	$	80,748		$	6,103
Increase (decrease) in income taxes (benefits) resulting from:
State income taxes, net of federal benefit		11,896			899
Nondeductible expenses		136			138
Effect of change of rates for deferred taxes		5,030			19,696
Effect of use of net operating loss carryover		(59,351	)		—
Change in valuation allowance		—			(32,000	)
	$	38,459		$	(5,164	)

The Company has unused contributions of $5,386 to carryforward that will expire for tax years ranging from 2010 through 2013.

33

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - INCOME (LOSS) PER SHARE

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

	2009		2008
Net income	$	192,249	$	22,602
Preferred dividend requirements:
6% Prior Cumulative Preferred, $5 par value		60,000		60,000
5% Convertible Cumulative Preferred, $20 par value		68,072		68,072
Total dividend requirements		128,072		128,072
Net income (loss) - common stockholders	$	64,177	$	(105,470	)
Weighted average of shares - basic		969,834		969,834
Dilutive effect of contingently issuable shares		1,033,334		1,033,334
Weighted Average Shares - Diluted		2,003,168		2,003,168
Basic earnings (loss) per share	$	.07	$	(.11	)
Diluted earnings per share	$	.03	$	N/A

NOTE 9 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

	2009		2008
Cash paid for:
Interest	$	7,409	$	5,677
Income taxes		—		—
Non-cash transaction:
Reclass of forgivable loan to deferred income		10,000		5,000
Financing of new vehicle		60,556		36,021

34

CHASE GENERAL CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - COMMITMENTS

Dye Candy Company leases its office and manufacturing facility, located at 1307 South 59^th, St. Joseph, Missouri, from an entity owned by the Vice-President and Director of the Company and his spouse. The period of the lease is from February 1, 2005 through March 31, 2025, with an option to extend for an additional term of five years, and currently requires payments of $6,500 per month. At the end of the first five years, the base rent shall be increased an amount not greater than 30%, at the sole discretion of lessor and for each additional term of five years. Rental expense was $78,000 for each year ended June 30, 2009 and 2008. The amounts are included in cost of sales.

Future minimum lease payments under this lease are as follows:

Year ending June 30:

2010	$	78,000
2011		78,000
2012		78,000
2013		78,000
2014		78,000
Thereafter		838,500
	$	1,228,500

As of June 30, 2009, the Company had raw materials purchase commitments with three vendors totaling $109,765.

NOTE 11 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NOTE 12 - CONCENTRATION OF CREDIT RISK

For the years ending June 30, 2009 and 2008, two customers accounted for 44% and 41%, respectively, of the gross sales. For the year ending June 30, 2009 and 2008, four customers accounted for 76% and 68%, respectively, of accounts receivable.

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Item 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable

Item 9A(T) CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s principal executive officer, who is also the chief financial and accounting officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report. Based on such evaluation, such officer has concluded that the Company’s disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in periodic filings under the Exchange Act is accumulated and communicated to Management, including those officers, and to members of the Board of Directors, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Management has assessed the Company’s internal control over financial reporting in relation to criteria described in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment using those criteria, management concluded that, as of June 30, 2009, the Company’s internal control over financial reporting was effective.

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

Changes in Internal Controls

There were no significant changes in the Company’s internal controls over financial reporting or in other factors that in management’s estimates are reasonably likely to materially affect the Company’s internal controls over financial reporting subsequent to the date of the evaluation.

Item 9B OTHER INFORMATION

None

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PART III

Item 10 DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS

(a) Directors

Name	Age	Periods of Service as Director	Terms
Barry M. Yantis	64	1980 to present	One year
Brett A. Yantis	41	January 21, 1999 to present	One year
Brian A. Yantis	61	July 16, 1986 to present	One year

Executive Officers

Name	Age	Position	Years of Service as an Officer	Term
Barry M. Yantis	64	President, CEO and Treasurer	30	Until successor elected
Brett A. Yantis	41	Vice-President	7	Until successor elected
Brian A. Yantis	61	Secretary	17	Until successor elected

(b) Certain Significant Employees

There are no significant employees other than above.

(c) Family Relationships

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

Business Experience

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

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

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

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

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(d) Involvement in Certain Legal Proceedings

Not applicable

(e) Audit Committee Financial Expert

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

(f) Code of Ethics

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

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

								Long Term Compensation
		Annual Compensation						Awards		Payouts
Name and Principal Position	Fiscal Year End	Salary		Bonus		Other Annual Compensation		Restricted Stock Award (s)	Option/ SARs (#)	LTIP Payouts	All other Compensation
Barry M. Yantis	1) 06-30-09	$	127,902	$	—	$	2,635	—	—	—	—
Barry M. Yantis	1) 06-30-08	$	121,900	$	—	$	1,340	—	—	—	—
Barry M. Yantis	1) 06-30-07	$	121,900	$	—	$	2,175	—	—	—	—

1) CEO, President and Treasurer

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

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

(c) Option/SAR grants table

Not applicable

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

Not applicable

(e) Long-term incentive plan awards table

Not applicable

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Item 11 EXECUTIVE COMPENSATION (CONTINUED)

(f) Compensation of Directors

Directors are not compensated for services on the board. The directors are reimbursed for travel expenses incurred in attending board meetings. During the fiscal year 2009 and 2008, $137 and $-0-, respectively, of travel expenses were reimbursed to board member Brian A. Yantis.

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

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

(h) Report on repricing of option/SARs

Not applicable

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

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

(j) Board compensation committee report on executive compensation

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

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Item 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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

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Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

(a) Transactions with management and others

The registrant’s subsidiary, Dye Candy Company entered into an operating lease agreement during the 2005 fiscal year to provide office and manufacturing facilities with a limited liability company that is owned 100% by Vice-President and Director, Brett A. Yantis and his spouse. The annual rent is $78,000.

(b) Certain business relationships

Not applicable

(c) Indebtedness of management

The Company owed a shareholder and officer $140,000 at June 30, 2008. This balance was paid in full during year ending June 30, 2009.

(d) Transactions with promoters

Not applicable

Item 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the aggregate fees billed to the Company for professional services for the years ended June 30, 2009 and 2008:

	2009		2008
Audit fees:
Mayer Hoffman McCann P.C.	$	49,332	$	42,900
Audit related fees:
McGladrey & Pullen, LLP		2,380		13,944
Mayer Hoffman McCann P.C.		—		1,340
Tax fees		—		—
All other fees		—		—

41

PART IV

Item 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report.

			Page
1.	Financial Statements:
	Index to Financial Statements		17
	Consolidated Balance Sheets		19 - 20
	Consolidated Statements of Operations		21
	Consolidated Statements of Stockholders’ Equity		22
	Consolidated Statements of Cash Flows		23 - 24
	Notes to Consolidated Financial Statements		25 - 35
2.	Financial Statements Schedules:
	None
3.	Exhibits:
	The exhibits listed below are filed with or incorporated by reference in this report.
	The following have been previously filed and are incorporated by reference to prior years’ Forms 10-K filed by the Registrant:
	3.1	Articles of Incorporation of Chase General Corporation
	3.2	Bylaws
	The following are Exhibits attached or explanations included in “Notes to Financial Statements” in Part II of this report:
	4.	Instruments defining the rights of security holders including indentures—Refer to Note 6.
	11.	Computation of per share earnings—Refer to Note 8.
	14.	Code of Ethics
	21.	Subsidiaries of registrant—Refer to Note 1 of Notes to Financial Statements.
	31.1	Certification of Chief Executive Officer and Financial Officer pursuant to Rule 13a-14(a)/15d – 14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Section 1350 Certification

42

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: September 17, 2009	By:	/s/ Barry M. Yantis
		Barry M. Yantis
		Chairman of the Board, Chief Executive Officer,
		President and Treasurer

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.

Signatures	Title	Date
/s/ Barry M. Yantis		September 17, 2009
Barry M. Yantis	President, Treasurer (Principal Executive Officer and Chief Financial and Accounting Officer) and Director
/s/ Brett Yantis		September 17, 2009
Brett Yantis	Vice-President and Director
/s/ Brian A. Yantis
Brian A. Yantis	Secretary and Director	September 11, 2009

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EX-14

Exhibit 14

CHASE GENERAL CORPORATION AND ITS SUBSIDIARIES

Code of Business Conduct and Ethics for Employees, Senior Officers and Directors

I. OVERVIEW

The mission of Chase General Corporation and its subsidiaries (together referred, as “we”, “our” or the “Company”) is to be the best manufacturer of confectionery products in the Midwest and to offer a broad selection of the quality confectionery our customers want at competitive prices. Our team is focused on listening to our customers and responding to their needs. Success requires setting high standards of customer service and continued improvement in how we serve our customers.

We are committed to conducting our business with honesty and integrity, and to maintaining high standards of conduct. We are committed to creating a free and open environment, in which compliance with these standards is considered the responsibility of each Employee, Senior Officer and Director (collectively, “Associate”).

II. REQUIRED STANDARD OF CONDUCT

To foster a culture of honesty and accountability, we have adopted this Code of Business Conduct and Ethics for Employees, Senior Officers and Directors of the Company (this “Code”). This Code was developed and is intended to be applied in good faith with reasonable business judgment to enable us to achieve our operating and financial goals within the framework of the law. Under this Code, we require each Associate to:

A. Act honestly and ethically;

B. Ethically handle actual or apparent conflicts of interest between the Associate’s personal and professional relationships;

C. Make full, fair, accurate, timely, and understandable disclosure in:

1. Reports and documents that we file with, or submit to, the Securities and Exchange Commission (“SEC”), and

2. Other public communications made by the Company;

D. Comply with applicable governmental laws, rules and regulations;

E. Comply with our policies and procedures; and

F. Promptly report violations of this Code as described in Section VII (Reporting) of this Code.

44

We recognize that rapid changes in business constantly pose new ethical and legal considerations. Therefore, no set of guidelines should be considered the absolute last word under all circumstances. If an Associate has any question regarding whether his or her conduct or action would be permissible under this Code, we encourage the Associate to consult with his/her supervisor or to the attention of higher management or officers of the Company. Willingness to raise ethical concerns is essential.

III. ANTI-RETALIATION

No one will suffer any adverse effects to his or her job or position as a result of raising a good faith ethical concern or questioning a Company practice. It is a violation of this Code to discriminate or retaliate against any employee for reporting a suspected violation. Supervisory personnel have a special responsibility to demonstrate high ethical standards in their behavior, and to handle reports of suspected violations properly. Each supervisor is expected to take all necessary actions to ensure compliance with this Code and to bring problems to the attention of higher management or officers of the Company in accordance with the reporting procedures set forth in Section VIII (Investigation of Reports).

IV. FAILURE TO COMPLY

Failure to comply with this Code can have severe consequences for both an Associate and the Company. Conduct that violates this Code may also violate national or state laws and can subject both an Associate and the Company to civil and criminal penalties. No Associate should be misguided by any sense of loyalty to the Company or a desire for profitability that might cause him or her to disobey any applicable law or our policies. Violation of this Code or our policies will constitute grounds for disciplinary action, including, when appropriate, termination of employment.

V. IMPROPER INFLUENCE OVER AUDITORS

We recognize the importance of preventing improper influence on the conduct of auditors. Accordingly, we prohibit any Associate from conducting any action to fraudulently influence, coerce, manipulate, or mislead any of our auditors during their review or examination of our financial statements for the purpose of rendering the financial statements materially misleading. Such conduct is prohibited even if it does not succeed in affecting our audit or review. Improper influence would include, but is not limited to, directly or indirectly:

A. Offering or paying bribes or other financial incentives, including offering future employment or contracts for non-audit services;

B. Providing an auditor with inaccurate or misleading legal analysis;

C. Threatening to cancel or canceling existing non-audit or audit engagements if the auditor objects to the proposed accounting;

D. Seeking to have a partner removed from the audit engagement because the partner objects to the proposed accounting;

E. Blackmailing; and/or

F. Making physical threats.

45

VI. ADMINISTRATION OF CODE OF BUSINESS CONDUCT

The President of the Company shall administer this Code and shall establish such procedures as he or she deems reasonably necessary or desirable in order to discharge this responsibility. The President shall report, at least quarterly, to Directors of the Company regarding (a) the general effectiveness of this Code and (b) any material violations of this Code or violations which indicate (i) significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

The Board of Directors shall periodically monitor and review this Code, and when reasonably necessary or desirable, amend this Code: (a) to ensure its continued conformance to applicable law, (b) to ensure that it meets or exceeds industry standards, and (c) to ensure that any material weaknesses revealed through monitoring, auditing, and reporting systems are eliminated or corrected.

To ensure the continued dissemination and communication of this Code, the President, under the direction of the Board of Directors, shall take, or cause to be taken, reasonable steps to communicate effectively the standards and procedures included in this Code to Associates.

VII. REPORTING

We expect each Associate to report possible violations of this Code. To report a possible violation, an Associate should first consult with the supervisor. Supervisors are responsible for maintaining an environment that encourages and solicits frank and open communication regarding the importance of operating under this Code. Associates that feel uncomfortable raising a concern with their immediate supervisor should notify any member of higher management or officers of the Company. Associates may write directly to the President at the following address:

President

Chase General Corporation

P.O. Box 698

St. Joseph, MO 64502

Associates may also make reports anonymously if the Associate deems it necessary. Associates are, however, encouraged to identify themselves, in the knowledge that there will be no retaliation where reports are made in good faith, to enable the Company to clarify details and take appropriate action.

46

VIII. INVESTIGATION OF REPORTS

Supervisors who receive notice of a potential violation of this Code shall report such violation to his/her immediate supervisor or to the attention of higher management or officers of the Company. If the report involves any financial matter complaint, the President shall forward the reported financial complaint to all members of the Board of Directors to investigate, as it deems reasonably appropriate. If the potential violation does not involve a financial matters complaint, but involves theft or issues related to operations, the President, or his or her designee shall, as he or she deems reasonably appropriate, investigate any report of alleged misbehavior or violations of this Code, take the appropriate action and respect the rights of all parties concerned. If the potential violations involve any other matter, the President or his or her designee shall, as he or she deems reasonably appropriate, investigate any report of alleged misbehavior or violations of this Code, take the appropriate action and respect the rights of all parties concerned.

In determining the type of investigation, if any, to be escalated to the Board of Directors, the President (or such person’s designee) shall:

A. Evaluate the available information as to gravity and credibility;

B. If appropriate, initiate an informal inquiry or a formal investigation with respect thereto;

C. If appropriate, prepare a report of the results of such inquiry or investigation, including recommendations as to the disposition of such matter; and

D. If appropriate, recommend discipline or changes in this Code necessary or desirable to prevent further similar violations.

The Company may disclose the results of investigations to law enforcement agencies.

47

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICER REQUIRED BY RULE 13a-14(a)/15d-14(a)

CERTIFICATION

I Barry Yantis, certify that:

1. I have reviewed this Annual Report on Form 10-K of Chase General Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this annual report;

4. I am the small business issuer’s certifying officer and am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) ) for Chase General Corporation and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to Chase General Corporation, including its consolidated subsidiary, is made known to me by others within that entity, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of Chase General Corporation’s disclosure controls and procedures and presented in this annual report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and

d) Disclosed in this report any change in Chase General Corporation’s internal control over financial reporting that occurred during Chase General Corporation’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, Chase General Corporation’s internal control over financial reporting;

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to Chase General Corporation’s auditors and our board of directors (acting as the audit committee):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

September 17, 2009	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chief Executive Officer, President and Treasurer

48

EX-32.1

Exhibit 32.1

CHASE GENERAL CORPORATION

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Chase General Corporation (the “Company”) on Form 10-K for the year ending June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry Yantis, President, Chief Executive Officer, and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

September 17, 2009	/s/ Barry M. Yantis
Date	Barry M. Yantis
	Chairman of the Board, Chief Executive Officer, President and Treasurer

49