UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   Form 10-KSB
                Annual Report Pursuant to Sec. 13 or 15(d) of the
                         Securities Exchange Act of 1934

For the Fiscal Year Ended 12/31/98               Commission File Number 0-774

                              DANIEL GREEN COMPANY
                 (Name of Small Business Issuer in Its Charter)

         MASSACHUSETTS                             15-0327010
(State or other jurisdiction of        (IRS Employer Identification Number)
 incorporationor organization)

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

                                 (315) 429-3131
                (Issuer'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:

         COMMON STOCK, $2.50 PAR VALUE PER SHARE
         (Title of Class)

Check whether the issuer:  (1) filed all reports required to be filed by section
13 or 15(d) of the  Exchange  Act during the past 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( )

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will 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-KSB or any
amendment to this Form 10-KSB ( ).

State issuer's revenues for its most recent fiscal year.
                  Net Sales of $14,610,867

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant:
                  $4,955,977 as of March 16, 1998

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date:

CLASS                                     ISSUED & OUTSTANDING AT MARCH 16, 1999
COMMON STOCK, $2.50 PAR VALUE             1,570,335 SHARES

List hereunder the following  documents,  if incorporated by reference,  and the
part of the Form 10-KSB into which the document is incorporated:

         Annual Report to Stockholders, December 31, 1998     Part II
         Definitive Proxy Statement Dated March 12, 1999      Part III

Transitional Small Business Disclosure Format (check one):  YES (  )   NO(X)
<PAGE>

                                     Part I

Item 1. Description of Business

         The  registrant  and  its   predecessors   have  been  engaged  in  the
manufacture  and sale of quality  leisure  footwear since 1882. The Daniel Green
slipper is one of the oldest and best known in the industry. Materials in Daniel
Green  slippers  include  satin,  rayon,   corduroy,   nylon,   brocade,   felt,
polyurethane and several types of leather.

         Women's slippers and leisure footwear,  which normally account for over
80% of the  Company's  annual  sales,  retail  within a price range varying from
$19.00 to $79.00 while men's slippers are sold at prices ranging  between $20.50
to $48.00 a pair.  Overall,  the registrant  produces about 120 to 140 styles of
slippers  and leisure  footwear,  many of which  change  from year to year.  The
registrant designs most of its own products,  having for many years maintained a
style research department.  Approximately 70 styles are imported and produced by
overseas  manufacturers.  The Company owns the trademarks Comfy and Daniel Green
and sells its shoes under the label "Daniel Green Leisure Footwear".

         A portion of the slippers and leisure  footwear sold by the  registrant
was manufactured in its plants in Dolgeville,  New York (more fully described in
Item 2 -  Property).  During  1997,  the  Company  started  to  consolidate  its
manufacturing  operations and in 1998, the Company  operated its entire domestic
manufacturing within one facility; excluding warehousing and importing activity.
In the fourth quarter of 1998, the Company's  Board of Directors,  President and
the new  management  team  completed  and began the  implementation  of a formal
restructuring  plan. Based on the restructuring plan, the Company will cease its
manufacturing operations completely by June 30, 1999. As a result, the Company's
primary  business  activity will be to outsource  entirely the production of its
footwear and to  distribute  the footwear to its  customers  under the Company's
label and certain private  labels.  The registrant has experienced no difficulty
in obtaining the raw materials  needed to manufacture  its products and does not
have a practice of entering into long-term purchase commitments.

         The  registrant's  products are sold directly to retailers  through its
own sales force,  which covers the entire  United  States.  Approximately  4,600
stores carry Daniel Green Company slippers and leisure footwear,  including most
of the major department stores in the country. Ten major customers represent 45%
of the Company's  business in 1998.  These same  customers  represent 40% of the
sales  in 1997  and 39% in  1996.  Due to the  uncertain  nature  of the  retail
industry,  the loss of any one or more  customer  would have a material  adverse
effect on the Company's business.

         The   registrant   advertises   its  products   through  a  cooperative
advertising  program  and for many  years has built  its  advertising  campaigns
around the trademark Comfy. It avoids granting restricted or exclusive shoe sale
arrangements,  believing that distribution of its products requires the greatest
number of outlets.  However, the Company has a contractual  arrangement with one
of its major  customers to provide  selected  footwear  products.  Private label
products are sold to a number of customers  by internal  management  and several
companies account for a majority of this business.

         The  registrant's  business is a seasonal  one. By offering a June 10th
payment date to customers buying slippers for shipments  between January 1st and
May 1st, the registrant has been able to encourage  customers to replenish their
core stock  programs on an earlier basis.  Dating  privileges are also given for
payment on May 10th for all Spring  casuals  shipped  between  Jan 1st and April
25th, and a November 10th dating for Fall casuals shipping between June 25th and
September 1st.  However,  inclusive of this dating program,  the majority of the
registrant's  sales are  generated  during  the latter  half of the year.  In an
effort to promote holiday sales,  the registrant has offered a Christmas  dating
which allows  customers to pay on December  10th for orders of slippers  shipped
between June 1st and October 1st, for orders of boots shipped by August 15th and
for orders of children's slippers shipped by June 1st.

         The  registrant  experiences  severe  competition  in the  sale  of its
slippers from other manufactures of leisure footwear  particularly  imports.  It
maintains as active research and development  staff,  which  concentrates on the
introduction  and release of new products into the market place.  The registrant
is not aware of any patent  held by  others,which  might  materially  affect its
ability to compete.

         The Registrant believes that a definite competitive  advantage attaches
to its ownership of the registered trademarks Comfy and Daniel Green, which have
been used by the Company for many years.

                                     Page 2

<PAGE>
         The  registrant  knows of no  material  effects  that  compliance  with
federal,  state and local provisions  regulating the discharge of materials into
the environment may have upon the capital expenditures, earnings and competitive
position of the registrant.

         The registrant has enjoyed a good relationship  with  approximately 225
employees,  most of who are full time. All of the registrant's  employees,  with
the exception of field sales  representatives,  are employed in Dolgeville,  New
York.

         The amount of the registrant's backlog orders believed to be firm as of
December  31, 1998 is  approximately  $1,610,000,  compared  with  approximately
$643,000  and  approximately  $1,389,000  as  of  December  31,  1997  and  1996
respectively.  All  backlog  orders are  expected  to be filled  within the next
fiscal year. The backlog orders are normal aspect of the  registrant's  business
due to its seasonal nature.


Item 2   Description of Properties.

         The registrant's  executive  offices and  manufacturing  facilities are
located in Dolgeville, New York. This site consists of approximately 15 areas of
land  on  which  there  is  a  group  of   multi-stored   buildings   containing
approximately   337,000  square  feet  of  floor  space.   These  buildings  are
constructed  principally  of wood and  limestone.  The principal  buildings were
built between 1882 and 1890.

         The  registrant's  real property,  equipment and other fixed assets are
maintained in good condition and actively utilized.

         Registrant  believes  that its  plants,  which  contain  a  variety  of
machinery  for the  manufacture  of leisure  footwear,  are adequate to maintain
present production output.

         All registrant's buildings are owned by the Company. The Company leases
production and office equipment,  which expire at various dates through the year
2002.


Item 3   Legal Proceedings.

         None


Item 4   Submission of Matters to a Vote of Security Holders.

         This  information is contained in the Definitive  Proxy Statement dated
March 12, 1999, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.


                                     Part II

Item 5 Market for the Registrant's Common Sock and Related Stockholder Matters.

         This Information is contained in the 1998 Annual Report to Stockholders
which was previously filed with the Commission, and is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.

                                     Page 3
<PAGE>

Item 6 Management's Discussion and Analysis or Plan of Operations.

         This Information is contained in the 1998 Annual Report to Stockholders
which was previously filed with the Commission, and is incorporated by reference
in this Form 10-KSB Annual Report as Exhibit 13.


Item 7   Financial Statements.

         The required financial  statements together with the Report of Deloitte
& Touche LLP dated  January 29, 1999,  is contained in the 1998 Annual Report to
the  Stockholders  which  was  previously  filed  with  the  Commission,  and is
incorporated by reference in this Form 10-KSB Annual Report as Exhibit 13.


Item 8 Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure.

         None


                                    Part III

Item 9 Directors,  Executive Officers, Promoters and Control Persons; Compliance
       with Section 16(a) of the Exchange Act.

         This  information is contained in the Definitive  Proxy Statement dated
March 12, 1999, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.


Item 10  Executive Compensation.

         This  information is contained in the Definitive  Proxy Statement dated
March 12, 1999, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.


Item 11  Security Ownership of Certain Beneficial Owners and Management.

         This  information is contained in the Definitive  Proxy Statement dated
March 12, 1999, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.


Item 12  Certain Relationships and Related Transactions.

         This  information is contained in the Definitive  Proxy Statement dated
March 12, 1999, which has been filed with the Commission, and is incorporated by
reference in this Form 10-KSB Annual Report.


                                     Part IV

Item 13  Exhibits, List and Reports on Form 8-K.

         (a).     Exhibits

                  The following exhibits are incorporated by reference:

                  Exhibit 13    1998 Annual Report to Stockholders
                                Filed with the Commission on March 12, 1999

         (b).     Reports on Form 8-K.

                  There were no reports  filed on Form 8-K for the quarter ended
                  December 31, 1998.


                                     Page 4

<PAGE>


                                   SIGNATURES


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

                                 DANIEL GREEN COMPANY
                                 (Registrant)


DATE: March 31, 1999             By: /s/ Greg A. Tunney
                                     Greg A. Tunney,
                                     President and Chief Operating Officer


                                 By: /s/ John E. Brigham
                                     John E. Brigham,
                                     Chief Financial Officer and Treasurer


                                 By: /s/ Janet S. Cool
                                     Janet S. Cool,
                                     Corporate Controller

         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 capacities and on the date indicated.

                                    DIRECTORS


/s/ Edward Bloomberg                            /s/ Steven Deperrior
 Edward Bloomberg                                Steven Deperrior


/s/ David T. Griffith                           /s/ Gregory Harden
 David T. Griffith                               Gregory Harden


/s/ Gary E. Pflugfelder                         /s/ James R. Riedman
 Gary E. Pflugfelder                             James R. Riedman


/s/ Greg A. Tunney
 Greg A. Tunney


DATE: March 31, 1999


                                     Page 5