SECURITIES AND EXCHANGE COMMISSION
                                 Washington, DC

                                   Form 10-QSB

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

          For the quarter ended June 30, 1998 Commission File No. 0-774

                              DANIEL GREEN COMPANY
             (Exact name of registrant as specified in its charter)

     MASSACHUSETTS                                  15-0327010
(State or other jurisdiction of            (IRS Employer Identification No.)
incorporation or organization)

     DOLGEVILLE, NEW YORK                            13329
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (315) 429-3131

Former  name,  former  address and former  fiscal  year,  if changed  since last
report: None.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Section  13 or 15(d) of the  Securities  Act of 1934  during the
preceding twelve months and (2) has been subject to the filing  requirements for
at least the past 90 days. YES X NO

         CLASS                              OUTSTANDING AT JUNE 30, 1998

Common Stock $2.50 par value                         1,698,329



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                              DANIEL GREEN COMPANY

                                      INDEX
                                                                  Page Number

Index    .............................................................i


PART I - Financial Information


Balance Sheets, Assets
     June 30, 1998 & December 31, 1997................................2

Balance Sheets, Liabilities & Stockholders' Equity
     June 30, 1998 & December 31, 1997................................3

Statements of Operations for the three months and six
     month periods ended June 30, 1998 and 1997.......................4

Statements of Cash Flows for the six months ended
     June 30, 1998 and 1997...........................................5

Notes to Financial Statements.........................................6

Management Discussion & Analysis of Financial Condition
     and Results of Operations........................................7

PART II - Other Information...........................................9

                                       i

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                                                                               2
                              DANIEL GREEN COMPANY
                                 Balance Sheets

                                     ASSETS

                                                     June 30,    December 31,
                                                      1998           1997
                                                   (Unaudited)       (*)
                                                  ------------  ------------
Current Assets:
Cash                                              $     4,800   $   901,875
Accounts Receivable, trade
 less allowances for doubtful accounts
 (1998 - $164,831  1997 - $231,000)                 2,513,913     5,721,431
Deferred Income Tax Asset                             287,306       287,306
Income Tax Receivable                                 555,433             0

Inventories, at lower of cost (FIFO) or market:
         Raw Materials                              1,675,292     1,941,033
         Work In Process                              116,697       374,484
         Finished Goods                             6,892,046     6,153,858
                                                  -----------   -----------
                  Total Inventories                 8,684,035     8,469,375

Other Current Assets                                    3,605        65,656
                                                  -----------   -----------

Total Current Assets                               12,049,092    15,445,643

Property, plant & equipment:
Real Estate and Water Power, at cost                3,374,864     3,374,864
Machinery, Equipment, & Lasts, at cost              5,636,197     5,565,199
                                                  -----------   -----------
                                                    9,011,061     8,940,063

Less: Accumulated Depreciation                      7,342,715     7,232,416
Property, plant & equipment, net                    1,668,346     1,707,647

Other Assets:
Prepaid Pension Expense                               744,896       894,896
Other Assets                                          125,752       114,687
                                                  -----------   -----------

Total Other Assets                                    870,648     1,009,583
                                                  -----------   -----------

Total Assets                                      $14,588,086   $18,162,873
                                                  ===========   ===========


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                                                                               3


                              DANIEL GREEN COMPANY

                                 Balance Sheets

                       Liabilities & Stockholders' Equity

                                              June 30    December 31
                                               1998          1997
                                            (Unaudited)      (*)
                                           -----------   -----------
Current Liabilities:

Notes Payable, line of credit              $   454,756   $ 2,219,802
Notes Payable, current                         561,548       562,030
Accounts Payable, trade                        418,153       303,492
 Accrued Salaries & Commissions                111,240       240,065
Other Accrued Liabilities                       95,327       283,261
Income Tax Payable                                   0       421,389
                                           -----------   -----------
Total Current Liabilities                    1,641,024     4,030,039

Notes Payable, non-current                   1,044,931     1,325,104
Deferred Tax Liability                         611,726       611,726
                                           -----------   -----------
Total Liabilities                            3,297,681     5,966,869

Stockholders' Equity

Common Stock                                 4,245,823     4,245,823
Paid-in-excess of par value                    741,303       741,303
Retained Earnings                            6,303,279     7,208,878
                                           -----------   -----------

Total Stockholders' Equity                  11,290,405    12,196,004
                                           -----------   -----------

Total Liabilities & Stockholders' Equity   $14,588,086   $18,162,873
                                           ===========   ===========


(*)      Derived from audited financial statements.

         See notes to financial statements.

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                                                                               4

                              DANIEL GREEN COMPANY


                            Statements of Operations
                                   (Unaudited)

                                 For the                       For the
                            Three Months Ended            Six Months Ended
                          June 30      June 30          June 30      June 30
                           1998          1997            1998          1997
                       --------------------------------------------------------

Net Sales              $ 2,701,872    $ 3,723,117    $ 5,201,335    $ 7,046,879

Costs and Expenses:
  Cost of Goods Sold     1,970,797      2,971,016      4,273,554      5,564,163
  Selling, General,
  & Administrative       1,012,136        897,620      2,288,125      2,191,007
  Interest Expense          46,666        108,933        100,301        249,785
                       -----------    -----------    -----------    -----------
Total Costs and
Expenses                 3,029,599      3,977,569      6,661,980      8,004,955
                       -----------    -----------    -----------    -----------
Loss before credit
  for Income Taxes        (327,727)      (254,452)    (1,460,645)      (958,076)

Credit for Income
  Taxes                    124,536         96,691        555,045        364,069
                       -----------    -----------    -----------    -----------

Net Loss               ($  203,191)   ($  157,761)   ($  905,600)   ($  594,007)
                       ===========    ===========    ===========    ===========

Net Loss per Share:
     Basis                   ($.12)         ($.10)         ($.53)         ($.39)
     Diluted                 ($.12)         ($.10)         ($.53)         ($.39)
                                                                    
Shares Outstanding:
     Basic               1,698,329      1,511,892      1,698,329      1,511,892
     Diluted             1,698,329      1,511,892      1,698,329      1,511,892


See notes to financial statements.

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                                                                               5


                              DANIEL GREEN COMPANY
                            Statements of Cash Flows
                                   (Unaudited)

                                                 For the Six Months Ended
                                                 June 30         June 30
                                                   1998            1997
                                               ------------   ------------
Operating Activities:
 Net Loss                                      $  (905,600)   $  (594,007)
 Adjustments to reconcile net loss to net
 cash provided(used)by operating activities:
   Depreciation                                    109,499        175,248
   Amortization                                          0         12,268
Changes in assets & liabilities:
 (increases) decreases in:
  Accounts Receivable, trade                     3,207,518      2,708,864
  Income Tax Receivable                           (555,433)       (66,555)
  Inventories                                     (214,660)    (2,870,169)
  Other Current Assets                              62,051        (32,437)
  Other Assets                                     138,935        (53,856)
 increases (decreases) in:
  Accounts Payable, trade                          114,661        479,168
  Accrued Salaries                                (128,825)      (137,347)
  Income Taxes Payable                            (421,389)             0
  Deferred tax liability                                 0       (258,193)
  Other Accrued Liabilities                       (187,934)       281,304
                                               -----------    -----------
Net Cash Provided(Used)by Operating
 Activities                                      1,218,823       (222,602)
Investing Activities:
 Purchase of property & equipment                  (70,198)       (54,857)
                                               -----------    -----------
Net Cash Used in Investing Activities              (70,198)       (54,857)

Financing Activities:
 Net Payments on Line of Credit                 (1,765,046)       439,807
 Repayments of Notes Payable                      (280,654)      (146,462)
 Principal payments under Capital Leases                 0        (17,186)
Net Cash(Used)Provided by Financing
 Activities                                     (2,045,700)       276,159
                                               -----------    -----------

Net Decrease in Cash                              (897,075)        (1,300)
Cash at Beginning of Period                        901,875         13,213
Cash at End of Period                          $     4,800    $    11,913
                                               ===========    ===========

See notes to financial statements.

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                                                                               6



                              DANIEL GREEN COMPANY


                          Notes to Financial Statements


Note 1.       In  the  opinion  of  the  Company,  the  accompanying  unaudited
              financial statements contain  adjustments,  all of which are of a
              normal and  recurring  nature,  necessary  to present  fairly the
              financial  position  as of  June  30,  1998  and the  results  of
              operations and cash flows for the six months then ended.   

Note 2.       The results of operations  for the six months ended June 30, 1998
              are not necessarily  indicative of the results to be expected for
              the full year.     

Note 3.       The Company's financial statements for the quarter ended June 30,
              1998 have been  restated  due to an error in  accounting  for the
              sale of certain  products.  The  Company  erroneously  recognized
              sales for product shipped to a customer on a consigned basis. The
              previous  practice  of the  Company  was to  adjust  these  sales
              numbers on an annual  basis,  for  year-end  reporting  purposes.
              Since the Company expects these types of consignment arrangements
              to  increase  in the  future,  the  Company  decided  that it was
              necessary  to account for them  properly  on an interim  basis as
              well.                                                            
                                                                               
              The effects of this  restatement on the net loss and net loss per
              share for the  quarter  and the six month  period  ended June 30,
              1997 were as follows:  

                           For the                       For the
                         Quarter Ended              Six Months Ended   
                         June 30,  1997              June 30, 1997
                                  Net Loss                   Net Loss
                     Net Loss     Per Share      Net Loss    Per Share

Previously
 Reported           ($114,653)   ($  0.07)      ($463,389)   ($  0.31)
Restatement         ($ 43,108)   ($  0.03)      ($130,618)   ($  0.08)
                                                
As Restated         ($157,761)   ($  0.10)      ($594,007)   ($  0.39)
              
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                                                                               7


                              DANIEL GREEN COMPANY

             Management Discussion & Analysis of Financial Condition
                            and Results of Operations

1.       Liquidity and Capital Resources

For the first six months of 1998, the Company generated  $1,218,823 in cash from
operating activities,  compared to using $222,601,  for the same period in 1997.
At the end of the second quarter,  accounts receivable  decreased by $736,293 or
22.7  percent  over last year and is  $3,207,518  lower  compared  to the end of
fiscal year 1997.  Inventories ended the quarter of 1998, at $8,684,035 which is
$3,082,175 lower than one year ago and has increased slightly from the beginning
of the year.  The  reduction in inventory  levels from a year ago,  reflects the
Company's efforts to control and reduce the number of shoes in stock. During the
second  quarter,  the  Company  hired  a  Merchandising  Manager  to  coordinate
production planning, inventory management and product distribution.

Total debt  consists of notes  payable,  the line of credit,  and capital  lease
obligations.  At the end of the  second  quarter of 1998,  total debt  stands at
$2,061,235  as compared with  $7,137,714 a year ago, for an overall  decrease of
$5,076,479  or 71.1  percent.  This  decrease is the result of the proceeds from
terminating  the  Company's  defined  benefit plan during the fourth  quarter of
1997, by cash generated from operating activities,  and by regular repayments of
the debt  during the first and  second  quarters  of 1998.  In  addition,  lower
spending  levels  throughout the first six months of 1998,  also  contributed to
this significant decrease.

The Company currently has in place a revolving line of credit ("revolver"), with
KeyBank National Association which contains financial covenants.  The Company is
in  compliance  with all the  covenants  of the  revolver,  and all  other  debt
agreements.

Management is not aware of any known  demands,  commitments or events that would
materially  affect  its  liquidity.   There  are  no  material  expenditures  or
commitments  which would affect  capital  resources in a  significant  way. Cash
generated by operations,  supplemented  by short-term  borrowings,  should cover
planned requirements.

2. Results of Operations

Net sales for the second quarter were  approximately  $2.7 million which is 27.4
percent  lower than last year during this  timeframe.  For the first six months,
net sales amounted to  approximately  $5.2 million,  a 26.2 percent decline from
net sales in the  first six  months of 1997.  The  decline  in sales  represents
reduced  shipments to several major customers,  and the loss of a large customer
due to competition.  This decline in sales has carried-over form the first three
months of this year, and the Company  expects this trend to continue  throughout
the next two quarters.

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                                                                               8

Gross profit during the second quarter of 1998,  amounted to  approximately  $.7
million, or 27.1 percent of net sales. This compares with a gross profit percent
of 20.2  percent in the same  quarter  of 1997.  For the six  months,  the gross
profit percentage is 17.8 percent compared to 21.0 percent in 1997. The decrease
in gross  profit  percentages  from year to year,  reflects  a higher  degree of
underabsorbed  overhead (due to lower production volumes) being reported for the
first half of 1998 compared with last year.

For the quarter  and six  months,  total  selling,  general  and  administrative
expenses were 12.8 percent and 4.4 percent higher,  respectively,  than expenses
reported during the comparable periods of 1997. The increase in selling, general
and  administrative  expenses  primarily  represents:  the costs associated with
administering  the Company's new 401(k) plan - employer  contributions and stock
allocations,  and the timing of  expenditures  related  to the new  compensation
program for the field sales force.

During  the  second   quarter  of  1998,  net  interest   expense   amounted  to
approximately $47 thousand  compared to approximately  $109 thousand a year ago.
For the six months, net interest expense has also declined to approximately $100
thousand in 1998 from  approximately $250 thousand in 1997. This decrease in net
interest  expense is principally due to lower spending levels in 1998,  compared
to last year, and a lower utilization of Company's revolving line of credit.

The Company incurred a net loss before taxes of  approximately  $328 thousand in
the second  quarter of 1998,  an increase of 28.8 percent over last year.  On an
after-tax  basis,  the loss for the quarter was  approximately  $203 thousand or
$.12 per share as opposed to approximately  $158 thousand after tax loss of $.10
per share in 1997.

The net loss for the first half of the year was  approximately  $906 thousand or
$.53  per  share.  This  compared  to  last  year's  first  six  month  loss  of
approximately $594 thousand or $.39 per share.

The Company's  efforts  throughout  the remainder of the year will be to achieve
revised sales targets.  Overall expenditures will continue to be lower than last
year and recent cost reductions  should impact the Company's  financial  results
for the last six months of 1998.

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                                                                               9


                              DANIEL GREEN COMPANY

                           Part II - Other Information


1.       Legal Proceedings - None.



2.       Changes in Securities - None.



3.       Default upon Senior Securities - None.


4.       Submission of matters to a vote of security holders - None.


5.       Other Information - None.


6.       Exhibits and Reports on Form 8K - None.





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



                                       DANIEL GREEN COMPANY
                                       Registrant



Date: August 14, 1998                  /s/ Greg Alan Tunney
                                       Greg Alan Tunney
                                       President

                                       /s/ Janet S. Cool
                                       Janet S. Cool
                                       Financial Controller