FORM 10-AKSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)
(X)         AMMENDED ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended April 30, 1998
or
( )            TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE 
                SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from 
                               ------------------------------------------

Commission File Number  0 3928
                       --------

                            WELLINGTON HALL, LIMITED
                            ------------------------
                 (Name of small business issuer in its charter)

         NORTH CAROLINA                                           56-0815012
         --------------                                           ----------
(State or other jurisdiction of                              (I. R. S. Employer
 incorporation or organization)                              Identification No.)

           425 JOHN WARD ROAD                                       27295
(Address of principal executive offices)                          (Zip Code)

Issuer's telephone number, including area code:  336-249-4931

Securities registered under section 12 (b) of the Exchange Act:  NONE

Securities registered under Section 12(g) of the Exchange Act:

                           COMMON STOCK (NO PAR VALUE)
                                (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  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 ( )

     Check if there is no disclosure  of  delinquent  filers in response to item
405 of  regulation  5-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. (X)

     State issuer's revenues for its most recent fiscal year: $ 5,668,472

     State  the   aggregate   market   value  of  the   voting   stock  held  by
non-affiliates,  computed by reference to the price as which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days.  (See  definition  of  affiliate in Rule 12b-2 of the Exchange
Act): Approximately $174,586 as of July 30, 1998.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity as of the latest  practicable  dated:  2,289,887  shares of Common
Stock (No Par) as of July 30, 1998.

                       DOCUMENTS INCORPORATED BY REFERENCE
     1. Portions of the Company's  Annual Report to Shareholders  for the fiscal
year ended April 30, 1998, are incorporated by reference into Part II.

     2. Portions of the Company's Proxy Statement for the 1998 Annual Meeting of
Shareholders are incorporated by reference into Part III

     Transitional Small Business Disclosure Form (Check One)

     Yes ( )   No (X)

                                       -1-
<PAGE>

                                     PART I

Item 1. Description of Business
GENERAL

     The  Company   manufactures   high  quality  wooden  home  furniture.   The
manufacturing  operation  involves  the  machining,   sanding,   assembling  and
finishing of components  and other raw  materials.  The  Company's  products are
distributed nationally through full-service retail stores and unaffiliated trade
showrooms that service the professional designer.

     The  Company  owns a lumber  processing  mill and  furniture  manufacturing
facility  located in San Pedro Sula,  Honduras,  Central  America (the "Honduran
Facilities").  Wellington Hall Caribbean  Corporation  ("WHCC"),  a wholly-owned
subsidiary of the Company,  serves as a sales and  distribution  company for the
Honduran Facilities. WHCC is a North Carolina corporation organized in December,
1988 and is located in Lexington,  North Carolina. Muebles Wellington Hall, S.A.
("MWH"), the Honduran subsidiary of WHCC, located in San Pedro Sula, manages and
operates the Honduran Facilities.

     The Company has developed and adopted a  comprehensive  marketing plan that
includes  strategic  measures such as (i) augmenting  the Company's  traditional
product lines with more casual  designs of furniture  that  management  believes
reflect  trends in consumer  tastes,  (ii) exploring new  opportunities  for its
Honduran   Facilities  and  other  offshore  resources  with  designs  employing
materials such as leather,  marble,  metal, wicker, bamboo and rattan, and (iii)
updating  and  upgrading  catalogs  and  other  sales  aids in all  distribution
channels. See "Business--Markets."

     In addition to the foregoing,  the Company recruited an experienced  senior
executive  to lead its sales and  marketing  function.  In September  1996,  the
Company  employed  Arthur F.  Bingham for the newly  created  position of Senior
Executive  Vice  President  of Sales and  Marketing.  Mr.  Bingham  directs  and
oversees all aspects of the Company's  sales and marketing  activities  with the
goal of assuring continuing growth in profitable sales. Mr. Bingham's employment
arrangement  provides  for several  incentives  for him to assist the Company in
increasing sales revenues.

     Management  believes that the highly leveraged  position of the Company has
impeded  its  ability to pursue  strategies  designed  to improve its results of
operations.  In  response,  the Company has  pursued a number of  strategies  to
improve its financial condition by raising equity capital, reducing indebtedness
and increasing  working  capital.  Certain  elements of  management's  plan were
implemented or developed in fiscal year 1997.

     In connection with the employment of Arthur F. Bingham as Senior  Executive
Vice President of Sales and Marketing, Mr. Bingham made a loan to the Company of
$285,694.  On February 12, 1997, Mr. Bingham  purchased 600,000 shares of Common
Stock  at a  price  of  $.50  per  share,  which  purchase  price  was  paid  by
cancellation of the foregoing loan and for an additional  investment of $14,306.
The  Company  has  used  the  funds  provided  by  Mr.  Bingham  to  reduce  its
indebtedness  and provide  working  capital.  The Company also has granted stock
options to Mr.  Bingham  and to Mr.  Ralph  Eskelsen,  manager  of the  Honduran
Facilities,  that will provide  incentives to these key employees and may result
in additional contributions to capital.

     The  Company  successfully  negotiated  with its  lenders to amend its loan
agreements  therewith to provide more favorable  terms. On January 16, 1997, the
Company  obtained an  additional  $250,000 line of credit from  Lexington  State
Bank. In addition, on March 10, 1997, the Company entered into an agreement with
the Overseas Private Investment  Corporation ("OPIC") to restructure its loan to
reduce principal payments until July 1997 (with the deferred payments to be made
in a larger  balloon  payment at the end of the term of the loan in 1999) and to
lower  the  interest  rate.  The  effect  of the  restructured  loan  has been a
reduction to the Company's cash  requirements for scheduled  principal  payments
for fiscal  1997 and 1998 of $247,748  and  $123,874,  respectively,  which will
contribute  significantly  to improving the Company's  working  capital and cash
flow for these years. The restructured OPIC loan also reduced scheduled interest
expense  by $9,910 in  fiscal  1997,  $18,900  in  fiscal  1998 and will  reduce
scheduled  interest  expense by about $18,900 in fiscal 1999. See  "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

     On February  21,1997,  the Company filed a registration  statement with the
Securities and Exchange Commission for the offer and sale of 1,689,887 shares of
its common  stock.  The shares were to be offered first to the holders of record
of its  outstanding  common  stock  as of a date at or about  the time  that the
registration  statement was to becomes  effective,  who would have had the right
for thirty days to purchase one  additional  share for each share then held at a
price of $.50 per share.  Each Wellington Hall shareholder as of that date could
also have subscribe within that thirty day period for additional shares, and any
available  shares  would  have been  sold to  shareholders  who have  subscribed
therefor on a pro rata basis. Any shares still remaining after the expiration of
the offering to Wellington Hall shareholders could have been sold to persons who
were not directors, officers or shareholders of Wellington Hall.

     Primarily  because of the  operating  losses  experience in fiscal 1997 and
beyond,  the  aforementioned  stock  offering has been canceled and there are no
plans to pursued the matter further.  The legal and related costs associate with
the offering were expensed during fiscal 1998.

     The  Offerings,  had it been fully  subscribed,  would have  increased  the
Company's  equity  capital  by  about  $800,000  and  reduce  indebtedness  by a
corresponding amount. In addition to achieving a reduction in interest expenses,
management  believes  that the increase in equity and  reduction of debt service
would  have  made  working  capital  and other  funds  available  to pursue  its
marketing and sales  strategies  more  aggressively  with the goal of increasing
funds   generated  by   operations  to  fund  future  growth  and  debt  service
requirements.

                                       -2-
<PAGE>

     The Company's business was founded in 1964, and the Company is incorporated
in North Carolina.  The Company's  principal  office is located at Route 1, U.S.
Highway  29 and 70 North,  Lexington,  North  Carolina  27292,  telephone  (336)
249-4931.

Products

     The Company's products include occasional living room tables,  dining room,
and bedroom furniture, modular wall systems, entertainment cabinets (for storage
of televisions,  stereo equipment and video cassette recorders,  etc.),  console
tables, mirrors, coffee tables, commodes and other occasional and accent pieces.
The product line generally represents an eclectic collection of reproductions or
renderings of 18th century English and French styles. Most of the Company's 18th
century  English  and  French   reproductions  and  other  designs  are  offered
exclusively by the Company.

     The Company  imports certain of its designs for finishing when the domestic
production costs for such designs are prohibitive.  The Company's  imported line
is assembled in the Honduran Facilities and finished in the Company's Lexington,
North  Carolina  facility  and includes  solid  mahogany  dining  chair  frames,
occasional  items and poster beds. Sales of imported designs have increased over
time as a result of the Company's  acquisition  of the Honduran  Facilities.  As
described  herein  below,   WHCC,  the  Company's  North  American   subsidiary,
distributes  the products  manufactured at the Honduran  Facilities,  and during
fiscal 1998,  such  products  accounted for  approximately  36% of the Company's
consolidated  sales  (net  of  intercompany   sales),  while  products  produced
domestically by the Company  accounted for about 64% of its consolidated  sales.
Unfinished  furniture imported from the Honduran Facilities  accounted for about
26% of the Company's  domestically-produced sales, and the number of imports for
finishing  from  elsewhere  was  negligible.  In addition,  WHCC  furnished  the
Company's  domestic  operations with  approximately 50% of certain forms of wood
utilized in domestic  production.  The balance of the raw materials  utilized by
the Company's domestic operations, including plywood, brass decorating hardware,
finishing material and packing material, are purchased from domestic sources.

     WHCC markets to the U.S. furniture  industry  (including the Company) three
categories  of  unfinished  products  manufactured  by the Honduran  Facilities,
including:  (i) raw  materials  in the form of  wooden  dimension  stock  (rough
parts); (ii) unfinished  assembled items for furniture such as occasional tables
and dining chair frames;  and (iii) components  (turnings and carvings) utilized
in  domestic  production  (OEM  sales).  The  majority  of sales  utilize  solid
mahogany,  but the Company also uses laurel,  primarily in the production of its
French designs, pine and San Juan Areno.

     WHCC also markets  directly to the retail trade a bedroom,  dining room and
occasional  table group fully produced and finished in the Honduran  Facilities.
By  assembling  and  finishing  the  group in  Honduras,  significantly  greater
advantage of  plentiful,  less costly  labor and lower  overhead can be realized
which result in a lower retail purchase price for the Honduran - produced group.
This lower  price,  along with the  utilization  of solid  "Honduran  Mahogany,"
recognized  by the  world  trade as one of the  premier  hardwoods,  allows  the
Company to compete  within its market  niche.  All of the wood  utilized  by the
Company's  Honduran  Facilities  is  harvested  from  segments of forests  under
sustainable management programs.

Markets

     The Company utilizes several different avenues of distribution. The Company
distributes its finished  products to the designer trade,  retail stores,  trade
showrooms,  buyers'  clubs and consumer  catalogues.  The  following  discussion
describes the views of the Company regarding each avenue of distribution for its
finished products.

Designer Trade

     The Company  believes  that the  designer  trade has become one of the more
viable outlets for its primary product niche,  traditional,  high-end furniture.
From the Company's  perspective,  the advantage of this outlet is that virtually
all sales are "special order," negating the need for promotional discounts,  and
the  disadvantages  are the  relatively  low sales volume per account versus the
cost of sales aids  necessary to service the account,  the  requirement  that it
grant  credit  to  accounts  with  limited  assets  and  with a  limited  credit
histories,  and the  inadequate  means the designer  normally  has  available to
receive  delivery and service his  customer.  Since  decorators do not generally
stock or display a significant amount of products, they are largely dependent on
the availability  and quality of the Company's sales materials,  and as such, it
is  important  for the Company to create  and/or  improve and maintain its sales
aids,  including  but not  limited  to  photography  and  catalogs  for both the
Company's and WHCC's products.

     As part of the  Company's  strategy to increase  its sales,  the Company is
giving a high priority to  maintaining  quality sales  materials.  During fiscal
1998,  one  new "  Accent  and  Occasional"  product  catalog  was  printed  and
distributed to the Company's  dealers.  This catalogue  included  selected items
from the domestically  produced product line including new introductions made at
the April 1997  furniture  market.  Other more  recent  activities  include  the
preparation  of new finish  samples for the Company's  wall unit dealers,  a new
catalog on the Woodward Collection, finish samples for the balance of the line ,
and finish display boards are being prepared for major dealers.

                                       -3-
<PAGE>

Retail Stores

     Retail stores are a desirable outlet for the Company's products because the
potential  volume of sales is relatively high and certain retail stores do stock
and  display  the  Company's  products.  The  Company  does not,  however,  have
contractual  relationships with such retail stores. The Company and a particular
retail  store may have an  informal  understanding  at the time that the Company
sells its  products  to such a store,  which  understanding  may  relate to such
things as amount of the Company's  products to be displayed on the store's floor
space, pricing and dating for payment purposes. The Company's use of this outlet
has declined over several years for various  reasons,  including but not limited
to the fact that many dealers within the industry have gone out of business.  In
addition,  the Company has been unable to compete  effectively  with the invoice
dating  policy (e.g.  "buy now,  pay nothing  until  later")  employed by larger
manufacturers  because such a policy increases  receivables and drains available
cash. The Company  believes that its inability to compete with such a policy has
induced many  dealers not to consider  the  Company's  products  when  assigning
available  floor  space  and  when  assigning  resources  for  warehouse  stock.
Accordingly  and in the absence of a display or stock,  a growing  percentage of
the Company's  orders received from retail stores are for items which the dealer
can only sale by utilizing the Company's  catalogs,  a circumstance that further
necessitates  the creation  and/or  improvement and maintenance of the Company's
sales aids. See--"Designer Trade."

     The Company had some initial  success in expanding its retail  distribution
or  display  with  existing  dealers  though  a  program  of  "Target  Accounts"
instituted  in early 1996.  The program  involved  the  Company  asking  certain
moderate to large retailers that normally display  products  compatible with the
Company's  price  and  design  niche to  purchase  and  maintain  a  display  of
approximately 70 of the Company's products,  including bedroom,  dining room and
occasional  items.  In exchange for doing so, the dealer received (i) a discount
on the original order for its floor samples,  normally about 10%, (ii) two sales
periods  annually,  most often during  February and August,  in which the dealer
received  a 10%  discount  on all its orders  from the  Company,  (iii)  Company
sponsored sales incentive  contests for the dealer's floor sales  personnel,  as
described below, (iv) participation in a stock reserve program to ensure quicker
delivery  from the Company,  (v) better  in-store  training and service from the
Company's sales representative,  (vi) exclusive distribution from the Company in
the dealer's  trading area and (vi) sales leads  received on the Company's  home
page on the Internet.

     By late fall of 1996 the program of "Target Accounts" stalled,  perhaps due
to its substantial administrative  requirements,  and thereafter did not produce
additional or expanded  distribution for the Company.  The modest gains that the
Company  realized from this program were limited to the Southeast  region of the
United  States.  Additional  marketing  cost  associated  with this program were
expensed as they  occurred and were not  material.  Though many  elements of the
program  remain part of the  Company's  overall  marketing  plan and the Company
continues its  relationship  with the dealers that  participated in the program,
the Company has ceased  sponsoring  sales  incentive  contests  for the dealers'
floor sales personnel.

     Early  in 1996  the  Company  added  its  own  Home  Page  to the  Internet
(furniture.com)  and has  experienced  a much higher level of hits (site visits)
and resulting  inquiries than was anticipated.  These inquiries are forwarded to
the Company's  appropriate area sales  representative and to a local dealer when
possible.

Trade Showrooms

     The Company  maintains a showroom in High Point,  North Carolina to display
its product line during the semiannual  International  Furniture  Market held in
that  city in the fall and  spring  of each year and is  affiliated  with  trade
showrooms,  that  are  accessible  only  to the  professional  designer  and not
generally open to the public, in all the major markets and design centers around
the country. Trade showrooms generally target the affluent customer, which tends
to be the Company's ultimate customer,  and as such, they have been an important
outlet for the  Company.  However,  the  Company  believes  that this outlet has
diminished  in  importance  somewhat  over the last  decade  because of "Gallery
Programs" sponsored by the larger manufacturers and retailers under which retail
stores act in large part as competing showrooms,  offering substantial discounts
to induce designers to purchase from them. It is the opinion of the Company that
trade  showrooms  sales  have  diminished  to such a low level  that they are no
longer of significant to the Company's marketing efforts.

Buyers Club

     The  Company  became  a  vendor  for  the  United  Consumers  Club  ("UCC")
approximately  three years ago. The UCC's  members are required to pay an annual
fee, and the UCC  distributes to them through its ninety catalog outlets (Clubs)
and its  quarterly  mailers.  Any UCC member who wishes to purchase an item from
the catalog so informs UCC, and UCC places the order with the Company or another
vendor.  In order to succeed in this  particular  means of  distribution,  it is
imperative  that the Company  create  and/or  improve and maintain  high-quality
photography in its mailers, as well as a large supply of catalogs at the various
clubs.  See--"Designer  Trade."  Though  the  Company  and the UCC do not have a
contractual  relationship,  the Company does have an informal agreement with UCC
that the  Company  will not change its prices  reflected  in the UCC  catalog or
mailer for the life of such catalog or mailer.

                                       -4-
<PAGE>

     Similarly,  consumer catalogs are a means of distribution that has not been
available  to or utilized by the Company  prior to late 1996.  Since the October
1996  Furniture  Market held in High Point  N.C.,  the Company has had a limited
portion of its product  lines  included  from time to time in the  catalogs of a
major catalog company. The Company does not have a contractual relationship with
the  aforementioned  catalog  company though the Company does expects certain of
its products to be similarly  included in future editions.  The catalog in which
the Company's  products appeared included  different types of furniture,  wooden
and  otherwise,  in  addition  to that  sold by the  Company,  as well as  those
products  that the  catalog  company  markets in  addition  to  furniture  like,
clothing  or  electronics.  Sales from  theses  catalog  represent  only a small
portion of the Company's total annual sales.

OEM Sales

     Following the acquisition and expansion of the Honduran Facilities in 1990,
the Company  aggressively  sought to sell to other  manufacturers  ("OEM sales")
dimension  stock,  wood  components  (carvings  and  turnings),  and  unfinished
assemblies  with  significant  success.  However,  in 1993 and early  1994,  the
Company's  sales  of its  proprietary  products  grew to  such a  level  that it
appeared that it would be more profitable to use the majority,  if not al of the
capacity of the Honduran Facilities for the production of the Company's products
to the exclusion of its OEM business.  During such time, the Company expected to
direct available resources to reducing  indebtedness as opposed to continuing to
expand its OEM business. However, very late in 1994 the market for the Company's
products  became soft and,  without  the OEM sales,  it became  necessary  about
mid-1995  and  through  much of  calendar  1996 to curtail  production  to avoid
additional  increases in inventory.  For all of fiscal year 1998,  the Company's
directed its efforts with some success toward  establishing  a distribution  for
its proprietary line and, at the same time,  toward rebuilding a dealer base for
OEM sales.  During fiscal year 1998,  OEM sales  increased by 7.3% and accounted
for 8.5% of the Company's  consolidated  sales. In the future,  the Company will
maintain a presence  in this area of  distribution  to assure its  presence in a
more diversified market.

Research and Development

     While  neither the  Company  nor WHCC has a full-time  employee or facility
devoted  exclusively to research and development,  the Company's  President,  in
consultation  with  design  firms,  devotes  substantial  time to the design and
development  of new  products.  Though,  because of the nature of the  Company's
designs,  many of its products may remain marketable for a significant period of
time,  the  competition in and the fashion  orientation of the home  furnishings
market  require that the Company's  product line be  continually  updated by the
introduction  of new products.  The  development  of such new products  involves
producing  samples of the new items for display and for the  production of sales
aids with respect to such new products.  The samples are  constructed  utilizing
production  labor and  facilities  and from raw materials  that are purchased in
very small quantities. The Company does not account the associated cost of these
samples  separately,  instead  absorbing the expenses as production  costs.  The
labor costs,  lost production  volume and overhead  absorption,  and the premium
prices  charged  on the small  quantities  of raw  materials  that such  samples
require can, in the aggregate,  have a significant  impact on operation results.
The  Company's  does not  otherwise  spend a  material  amount on  research  and
development.

Sales

     The  Company's  sales  function  is led by Arthur F.  Bingham,  its  Senior
Executive  Vice  President  of Sales  and  Marketing.  The  Company  employs  15
independent,  commissioned sales  representatives  who sell to retail stores and
service trade showrooms in the United States and Canada.  The Company  generally
sells its products on a net 30-day basis. The Company has advertised nationally,
to a limited extent, to improve its name recognition.

     WHCC  employs  one  independent,   commissioned  sales  representative  for
products  sold to U.S.  furniture  manufacturers  other  than the  Company,  the
Company's OEM business,  and that commissioned sales  representative  covers the
two  eastern  states in which the  majority  of the U.S.  furniture  industry is
located.  In  addition to this sales  representative,  the  Company's  president
devotes a  substantial  amount of time to marketing  certain  categories  of the
Company's   products  to  customers  not  specifically   covered  by  the  sales
representative.  WHCC utilizes the Company's 15 independent  representatives for
products finished in the Honduran Facilities and marketed directly to the retail
trade.

Backlog

     The  Company's  firm  backlog of orders on April 30, 1998 was  $2,382,421 a
16.4 % increase from its backlog of $2,047,369 on April 30, 1997.  The April 30,
1998 backlog  included  $1,327,111  of  domestically-manufactured  products,  as
opposed to  $1,289,542  included in the 1997  backlog.  The backlog for WHCC and
Honduran-produced  products,  less intercompany  orders, was $1,055,321 on April
30, 1998 versus $757,827 on April 30, 1997. The increases mostly reflects orders
from a new off shore  account  and an order from that  account of  approximately
$450,000  received and  confirmed  by a Letter of Credit  received in the fourth
quarter of fiscal 1998.

     In addition, the Company had a backlog of orders for new products developed
for a new import  program  of  $631,000  at April  30,1998.  Management  has not
included this in the total reported backlog because of uncertainties

                                       -5-
<PAGE>

about  quality and delivery from a new  off-shore  vendor.Company  management is
working directly with the vendor to resolve any prohibitive problem. The Company
has no contractual relationship with this vendor.

Sources and Availability of Raw Materials

     The  Company's  principal  raw material is wood,  and the Company  utilizes
several  different  species including  mahogany,  laurel,  pine, san juan areno,
walnut,  poplar,  cherry, oak, maple and cedar. Wood is purchased in the form of
dimension stock (rough parts),  components  (turnings and carvings) and plywood.
The  Company  uses  all of  these  forms  of  wood in the  manufacturing  of its
products.  For example, in the production of a table,  turnings and carvings may
be used  for  table  legs and  specialty  designs,  plywood  may be used for the
tabletop and  dimension  stock (large pieces of wood that the Company is able to
process into the required  dimensions) may be used for other parts of the table.
Plywood is  generally  available  in adequate  supply from  domestic  resources.
Dimension  stock and  components  are  generally  supplied to the Company by its
Honduran  Facilities.  These same raw  materials  are  available  from  domestic
sources but generally at higher prices and lower quality.  Accordingly, the loss
of the Honduran  Facilities as the Company's  primary  source of wood and as its
sole supplier of the Company's  proprietary line of assembled items of furniture
would have a significant adverse effect on the Company's  operations,  financial
condition, competitiveness and future prospects.

     Though  the  agency  of the  Honduran  government  responsible  for  forest
resources is not able to provide an accurate inventory of the supply of mahogany
or other species of wood available in Honduras and large  quantities of mahogany
have  previously  been  harvested  from  Honduras  over the years,  the  Company
believes  based  upon all  available  information  that an  adequate  supply of'
mahogany  is  available  and  will be  available  for many  years  to come.  The
Company's  belief is based on the fact that the Honduran  government  has always
made available to the Company as much mahogany as it has requested and has never
indicated that such supply may be in future  jeopardy.  In addition to mahogany,
the Company  currently  utilizes the other species of wood referenced  above and
continually   researches  whether  other  species  of  wood  are  available  for
manufacturing in commercial quantities in order to expand its resource base.

     The  Honduran  government  has  established  programs  such that all timber
harvested  is in areas of  forest  under  sustainable  management.  The  program
requires that a physical inventory be taken by representatives of the government
to  determine  the number of suitable  trees of a given  variety in a particular
portion  of the  forest.  From  the  inventory  data,  the  Honduran  government
calculates how quickly that  particular  variety of tree in that particular area
will regenerate and, then, how much can be harvested annually such the supply of
such variety can be sustained. Wood cannot be harvested or transported without a
permit  that the  Honduran  government  issues  with a  termination  date,  that
specifies the species to be harvested,  the amount of wood to be harvested,  and
the  particular  portion of forest is to be harvested and the delivery point for
the harvested wood. is to be delivered.

     With respect to the Company,  sustainable  management works as follows: the
Honduran  government  solicits the Honduran  wood-working  industry (users),  of
which the Company is a part,  to determine  the need for various  types of wood.
The Honduran  government then issues permits to various entities  (suppliers) to
harvest their assigned  areas of forest until the aggregate  amount of permitted
harvesting  satisfies the users'  requested  needs.  Once the permits are issued
specifying the Company as the exclusive recipient;  price,  delivery and payment
terms  can be  negotiated  with the  supplier.  Once  the  permits  are  issued,
harvesting can not commence  until a stumpage tax is paid by the supplier.  Most
often the  supplier  does not have the  resources to pay the tax and the Company
effectively prepays the tax.

Seasonality

     As is typical in the furniture  industry,  the Company's greatest volume of
incoming  orders is  received  in the spring and fall of each year.  This is due
primarily to the  International  Furniture Market held each April and October in
High Point,  North  Carolina.  Careful  scheduling of  production  minimizes the
effects of such  seasonality on the Company's  production and shipments.  Orders
are generally shipped within 30 to 90 days of receipt.

Competition

     The  furniture  industry  is  highly  competitive,  and no  single  company
dominates the industry.  The Company,  while  unranked in any known  comparative
study of the industry, competes with many nationally-recognized manufacturers of
quality  furniture.  Many  furniture  manufacturers  have  substantially  larger
production capabilities, and distribution networks, as well as greater financial
resources than has the Company.  The Company's  principal method of competing is
by product  design  (including  items or categories of items not available  from
other manufacturers),  product quality (including high-grade hardwoods and other
materials used in construction and quality-constructed cabinetry and finish) and
price. Most of the Company's designs are offered by the Company exclusively. The
Company believes its pricing structure, product design and product quality to be
competitive with those of its competitors.

     The furniture industry is a segmented industry in which design, quality and
price place each  manufacturer  into a  competitive  market  niche.  The Company
competes in the  medium-to-high  price market,  which normally requires a larger
number of items  comprising the product line,  smaller  production lot sizes and
higher  inventory  requirements to maintain a competitive  delivery  cycle.  The
Company estimates that there approximately 12 to 15

                                       -6-
<PAGE>

furniture   manufacturers   directly   competing   with  the   Company   in  the
medium-to-high  price market for case goods.  The  Company's  limited  financial
resources restrict its ability to compete effectively in its market niche.

Environmental Control Facilities

     The Company's domestic  operations must meet extensive  federal,  state and
local  regulatory  standards  in the areas of safety,  health and  environmental
pollution  controls.  Historically,  these  standards  have not had any material
adverse  effect on the Company's  sales or  operations.  The furniture  industry
currently  anticipates  increased  federal and state  environmental  regulation,
particularly  with respect to emissions from paint and finishing  operations and
wood dust levels in manufacturing operations. The industry and its suppliers are
attempting to develop water-based  finishing materials to replace  commonly-used
organic-based  finishes  which are a major  source of regulated  emissions.  The
Company  cannot at this time  estimate the impact of these new  standards on the
Company's operations or the cost of compliance thereof (including future capital
expenditure requirements).

Employees

     As of April 30, 1998 the Company had approximately 355 employees, including
approximately  300  people  currently  employed  at  the  Honduran   Facilities.
Approximately 225 of the Company's employees are full-time employees.

Description of Property

     The  Company  owns and  operates  one plant that  houses its United  States
production  facilities and general offices and is located on 17 acres of land in
Lexington,  North Carolina.  The 82,500 square foot facility is of brick, steel,
concrete and concrete block construction and is well-maintained  and in adequate
condition. The Company's manufacturing facilities generally operate on a 40-hour
week.  Substantially  all  of  the  Company's  physical  properties  located  in
Lexington,  North Carolina,  including inventory,  machinery and equipment,  are
pledged as collateral  under the Company's loan  agreements with Lexington State
Bank of North Carolina, the Company's primary bank lender.

     The Company's  Honduran  Facilities  consist of seven and one-half acres of
land  located  in San  Pedro  Sula,  Honduras,  a 21,120  square-foot,  equipped
dimension mill, a 7,840 square-foot wood resaw operation, two dry kilns, boilers
and related  processing  equipment,  two buildings for dry lumber  storage and a
6,408 square-foot building for "green" lumber storage. In July 1990, the Company
completed  construction of a 45,000  square-foot  addition to the  manufacturing
facility and a 2,600 square-foot office building.

     The Company believes its properties are generally  suitable and adequate to
meet its intended uses and, in the opinion of  management,  they are  adequately
covered by insurance.

     The Honduran Facilities,  including both real and personal property such as
plant and equipment but not including  inventory or receivables,  are pledged to
secure a loan from the OPIC.  The loan proceeds were used to finance  completion
of capital  improvements to the Honduran Facilities.  In addition,  Banchas, the
Company's  Honduran  bank lender,  holds a second  mortgage on the assets of the
Honduran Facilities.

     The  lumber  dimension  mill,  as  well  as  the  furniture   manufacturing
operations  of the  Honduran  Facilities,  operate  on a  44-hour  work  week (a
standard  work  week in  Honduras).  The  Company  believes  that  the  mill and
furniture  manufacturing  facilities are in adequate  condition and suitable for
its intended uses.

     The  Company  leases a 8,800  square-foot  showroom  located in High Point,
North Carolina.  Approximately 4,400 square feet of space is utilized to display
the  Company's  products,  particularly  new product  introductions,  during the
semiannual  International  Furniture  Markets.  The  balance  of  the  space  is
subleased to another manufacturer.  The Company believes the showroom is in good
condition and suitable for its intended use.

Item 3. Legal Proceedings

     There is no pending material litigation involving the Company or any of its
subsidiaries.  To the best of management's  knowledge,  no legal  proceedings or
proceedings by any governmental authorities are contemplated.

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

     None

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

     The information required by Item 5 of Form 10-KSB appears under the caption
" Market  Prices,  Dividends and Related  shareholder  Matters" in the Company's
Annual Report to Shareholders for fiscal year ended April 30, 1998, reference to
which  is  hereby  made and the  information  there is  incorporated  herein  by
reference.

                                       -7-
<PAGE>

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

     The information required by Item 6 of Form 10-KSB appears under the heading
"Management's  Discussion  and  Analysis"  in the  Company's  Annual  Report  to
Shareholders for fiscal year ended April 30, 1998,  reference to which is hereby
made and the information there is incorporated herein by reference.

Item 7. Financial Statements

     The information  required by Item 7 of Form 10-KSB appears in the Company's
Annual  Report to  Shareholders  for the year ended April 30,  1998,  at page 17
through  22,  reference  to which is  hereby  made and the  information  therein
incorporated herein by reference.

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.

     The information  required by Item 9 of Form 10-KSB appears in the Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Election of Directors",  reference to which is hereby made and the  information
there is incorporated herein by reference.

Item 10. Executive Compensation

     The information required by Item 10 of Form 10-KSB appears in the Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Executive Compensation",  reference to which is hereby made and the information
there is incorporated herein by reference.

Item 11. Security Ownership of certain Beneficial Owners and Management

     The information required by Item 11 of Form 10-KSB appears in the Company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Voting  Securities  and Principal  Shareholders"  and "Election of  Directors",
reference  to which is hereby  made and the  information  there is  incorporated
herein by reference.

Item 12. Certain Relationships and Related Transactions

     The information required by Item 12 of Form 10-KSB appears in the company's
Proxy  Statement for the 1998 Annual Meeting of  Shareholders  under the caption
"Certain  Transactions",  reference to which is hereby made and the  information
there is incorporated herein by reference.  Item 13. Exhibits, Lists and Reports
on Form 8-K

     (a)  The following Financial Statements,  Financial Statement Schedules and
          Exhibits are filed as part of this report:

          (1)  Financial Statements:

     The following consolidated financial statements of the Company, included in
the  Annual  Report to  Shareholders  for the year  ended  April 30,  1998,  are
incorporated herein by reference to the pages indicated:

     Consolidated Balance Sheets - April 30, 1998, and 1997 (page 27)

     Consolidated  Stockholders'  Equity - Years  ended  April 30, 1998 and 1997
     (page 28)

     Consolidated  Statements  of Income - Years  Ended  April 30, 1998 and 1997
     (page 29)

     Consolidated Statements of Cash Flows - Years Ended April 30, 1998 and 1997
     (page 30)

     Notes to Consolidated Financial Statements (Pages 31-38)

                                       -8-
<PAGE>

     Independent Auditors' Report (page 10-11)

     (Financial Statements to be filed by Amendment Pursuant to Rule 126-25)

     All other schedule for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related  instructions,  are inapplicable or the required information is given in
the financial statements  including the notes thereto, and therefore,  have been
omitted.

          (3)  EXHIBITS FILED

               (a)  A list of exhibits is included in the accompanying  index to
                    exhibits

               (b)  Reports  on Form  8-K:  No  reports  on Form 8-K were  filed
                    during the fourth  quarter  of fiscal  year ended  April 30,
                    1998.

                                       -9-
<PAGE>

TURLINGTON AND COMPANY, L.L.P.

                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders
Wellington Hall, Limited and Subsidiaries
Lexington, North Carolina

We have audited the accompanying consolidated balance sheets of Wellington Hall,
Limited  and  Subsidiaries  as of April  30,  1998  and  1997,  and the  related
consolidated statements of income,  stockholders' equity, and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of Wellington Hall, Limited and Subsidiaries,  management. Our responsibility is
to express an opinion on these  consolidated  financial  statements based on our
audits.  We did not audit the financial  statements of Muebles  Wellington Hall,
S.A.,  a  wholly-owned  subsidiary,  which  statements  reflect  total assets of
$1,522,535 and $1,591,286, respectively as of April 30, 1998 and 1997, and total
revenues of $1,870,046 and  $1,995,456,  respectively  for the years ended April
30, 1998 and 1997. These statements were audited by others auditors whose report
has been furnished to us, and our opinion,  insofar as it relates to the amounts
included in Muebles  Wellington Hall, S.A., is based solely on the report of the
other auditors.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those  standards  required  that we plan and  perform  the audits to
obtain reasonable assurance about whether the consolidated  financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also include  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,  based on our  audits  and the  report of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material  respects,  the  financial  position of  Wellington  Hall,  Limited and
Subsidiaries as of April 30, 1998 and 1997, and the results of their operations,
and their cash flows for the years ended in conformity  with generally  accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that Wellington Hall, Limited and Subsidiaries will continue as a going concern.
As discussed in Note 20 to the consolidated financial statements, under existing
circumstances,  there is substantial doubt about the ability of Wellington Hall,
Limited  and  Subsidiaries  to continue  as a going  concern at April 30,  1998.
Management's  plans in regard to that matter also are  described in Note 20. The
consolidated  financial  statements  do not include any  adjustments  that might
result form the outcome of this uncertainty.

July 28, 1998

                                      -10-

<PAGE>

KPMG PEAT MARWICK ASEORES, S.DE R.L.

                         Report of Independent Auditors
                         ------------------------------

Board of Directors
Muebles Wellington Hall, S.A. de C.V.:

We have audited the accompanying  balance sheet de Muebles Wellington Hall, S.A.
de C.V.,  San  Pedro  Sula,  Honduras,  as of  April  30,  1998 and the  related
statements of loss,  retained  earnings and cash flows for the year ended.  Such
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. The financial statements of Muebles Wellington Hall, S.A de C.V., as
of April 30, 1997, was audited by other auditors,  whose reported dated July 15,
1997, expressed an unqualified opinion on such financial statements.

We conducted our audit in  accordance  with  auditing  international  standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts an 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 audit provides a reasonable basis for our opinion.

In our opinion,  the above mentioned financial statements present fairly, in all
material  respects,  the financial  position of Muebles Wellington Hall, S.A. de
C.B., as of April 30, 1998, the results of its operations and its cash flows for
the year then ended, in conformity with the accounting international standards.

                                        /s/ KPMG Peat Marwick

July 28, 1998

                                      -11-
<PAGE>

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned  thereunto duly
authorized.

                                        WELLINGTON HALL, LIMITED

Date:                                   By: /s/ Hoyt M. Hackney, Jr.
                                            --------------------------
                                            Hoyt M. Hackney, Jr.
                                            President, (Principal Executive
                                            Officer, Principal Accounting
                                            Officer)

     In  accordance  with the Exchange  Act,  this report has been signed by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated:

Name and Signature            Position `                Date
------------------            ----------                ----

/s/ Hoyt M. Hackney, Jr.      President (Chief
-------------------------     Executive Officer
Hoyt M. Hackney, Jr.          and Chief Financial
                              Officer), Treasurer

/s/ Ernst B. Kemm             Executive Vice
-------------------------     President and Director
Ernst B. Kemm

/s/ Donald W.Leonard          Chairman of the Board
-------------------------
Donald W.Leonard

/s/ William W. Woodruff       Secretary and Director
-------------------------
William W. Woodruff

/s/ Arthur F. Bingham         Senior Executive Vice
-------------------------     President and Director
Arthur F. Bingham

                                      -12-
<PAGE>

                                  EXHIBIT INDEX

                                       TO

                          ANNUAL REPORT ON FORM 10-KSB

                                       OF

                            WELLINGTON HALL, LIMITED

                                       FOR
                            YEAR ENDED APRIL 30, 1998

Exhibit No.    Description

     3.1       Amended and Restated Charter of Wellington Hall Limited. *

     3.2       Bylaws of Wellington Hall, Limited, as amended. *

     10.1      Wellington Hall Executive Stock Plan. **

     10.2      Employment   Agreement   and  Executive   Deferred   Compensation
               Agreement between the Company and Hoyt M. Hackney Jr.,  effective
               January 1, 1987 and May 8, 1987, respectively. *

     10.3      Note - Security  Agreement,  dated  April 23,  1986,  between the
               Company  and  Lexington  State  Bank is  incorporated  herein  by
               reference to Exhibit 4.2 to the  Company's  Annual Report on Form
               10-K for the fiscal year ended April 30, 1987.

     10.4      Loan  Agreement,  dated April 15,  1987,  between the Company and
               Lexington  State  Bank is  incorporated  herein by  reference  to
               Exhibit 4.2 to the  Company's  Annual Report on Form 10-K for the
               fiscal year ended April 30, 1987.

     10.5      Note - Security and Note Modification Agreements, dated April 26,
               1988,   between  the  Company   and   Lexington   State  Bank  is
               incorporated  herein by reference to Exhibit 4.3 to the Company's
               Annual Report on Form 10-K for fiscal year ended April 30, 1988.

     10.6      Loan Agreement between Wellington Hall Caribbean  Corporation and
               the Overseas Private Investment  Corporation,  dated December 22,
               1989, as amended on September 1, 1990. ***

     10.7      Subordination   Agreement,   dated  September  1,  1994,  between
               Wellington Hall, Limited,  Wellington Hall Caribbean Corporation,
               Muebles Wellington Hall, S.A. and the Overseas Private Investment
               Corporation. ***

     10.9      Amendment to Loan Agreement,  dated February 1, 1991, between the
               company  and  Lexington  State  Bank is  incorporated  herein  by
               reference to Exhibit 10.14 to the Company's Annual Report on Form
               10-K for the fiscal year ended April 30, 1991.

     10.10     Loan Agreement, dated August 20, 1991, between Muebles Wellington
               Hall, S.A. and Banco de Honduras,  S.A. is incorporated herein by
               reference to Exhibit A to the Company's Form 10-Q for the quarter
               ended July 31, 1991.

     10.11     Amendment  to Loan  Agreement,  dated April 10, 1992  between the
               Company and Lexington State Bank. ****

     10.12     Promissory  note,  dated January 23, 1992 between the Company and
               Hoyt M. Hackney, Jr. ****

     10.13     Amendment to Executive  Deferred  Compensation  Agreement , dated
               January 23,  1992,  between  the Company and Hoyt M.  Hackney Jr.
               ****

     10.14     Loan  Agreement,  dated June 28,  1993,  between  the Company and
               Lexington State Bank. *****

                                      -13-
<PAGE>

     10.15     Lease  Agreement  dated  November  1, 1993 by and  between  North
               Hamilton  Corporation and the Company,  is incorporated herein by
               reference  to the  Company's  Annual  Report on Form 10-K for the
               fiscal year ended April 30, 1994.

     10.16     Amendment to the Loan Agreement,  dated September 1, 1994 between
               Wellington Hall Caribbean  Corporation  and the Overseas  Private
               Investment Corporation.******

     10.17     Employment and Stock Purchase  Agreement  dated September 1, 1996
               between the Company and Arthur F.  Bingham,  filed as Exhibit (a)
               to  the  Company's  Quarterly  Report  on  Form  10-QSB  for  the
               quarterly period ended July 31, 1996

     10.18     Amended  Loan  Agreement  dated March 10, 1997 with the  Overseas
               Private  Investment  Corporation,  filed  as  Exhibit  (a) to the
               Company's  Quarterly  Report  on Form  10-QSB  for the  quarterly
               period ended January 31, 1997

     10.19     Promissory  Note dated  January 16, 1997  between the Company and
               Lexington  State  Bank  filed as exhibit 10 (q) in Part II to the
               Registration Statement filed February 20, 1997

     10.20     Employment  Agreement  dated December 1, 1997 between the Company
               and Ralph L.  Eskelsen  filed as exhibit 10 (t) in Part II to the
               Registration Statement filed February 20, 1997

     10.21     Addenda  to  Employment  and  Stock  Purchase   Agreement   dated
               September 1, 1996 between the Company and Arthur F. Bingham dated
               February  10,  1997  filed  as  exhibit  10 (u) in Part II to the
               Registration Statement filed February 20, 1997

     10.22     1997 Stock Option and  Restricted  Stock Plan filed as exhibit 10
               (v) in Part II to the  Registration  Statement filed February 20,
               1997

     10.23     Nonqualified Stock Option Agreement dated as of February 10, 1997
               between the Company and Arthur F. Bingham filed as exhibit 10 (w)
               in Part II to the Registration Statement filed February 20, 1997

     10.24     Incentive  Stock Option  Agreement  dated as of February 10, 1997
               between the Company and Arthur F. Bingham filed as exhibit 10 (x)
               in Part II to the Registration Statement filed February 20, 1997

     10.25     Incentive  Stock Option  Agreement  dated as of February 10, 1997
               between the Company and Ralph L. Eskelsen filed as exhibit 10 (y)
               in Part II to the Registration Statement filed February 20, 1997

     10.26     Note  Modification  Agreement  dated January 16, 1998 between the
               company  and  Lexington  State  Bank is  incorporated  herein  by
               reference to Exhibit 10.25 to the Company's  Quarterly  Report on
               Form 10-QSB for the fiscal quarter ended January 31, 1998.

     10.27     Amendment to Lease  Agreement  dated March 1, 1998 by and between
               Phillips Interest 3, Inc. and the Company, is incorporated herein
               by reference to Exhibit 10.26 to the Company's  Quarterly  Report
               on Form 10-QSB for the fiscal quarter ended January 31, 1998.

     11        Earnings Per Share Computation

     13        Annual Report to Shareholders of Wellington Hall, Limited for the
               year ended April 30, 1998,  portions of which are incorporated by
               reference into this report.

                                      -14-
<PAGE>

     22        Subsidiaries of the Company

     27        Financial Data Schedule (For SEC Use Only)

     *         Incorporated  herein  by  reference  to the  identically-numbered
               exhibits  to the  Company's  Annual  Report  on Form 10-K for the
               fiscal year ended April 30, 1987.

     **        Incorporated  herein  by  reference  to the  identically-numbered
               exhibits  to the  Company's  Annual  Report  on Form 10-K for the
               fiscal year ended April 30, 1986.

     ***       Incorporated  herein  by  reference  to the  identically-numbered
               exhibits  to the  Company's  Annual  Report  on Form 10-K for the
               fiscal year ended April 30, 1990.

     ****      Incorporated  herein  by  reference  to the  identically-numbered
               exhibits  to the  Company's  Annual  Report  on Form 10-K for the
               fiscal year ended April 30, 1992.

     *****     Incorporated  herein  by  reference  to the  identically-numbered
               exhibits to the  Company's  Annual  Report on Form 10-KSB for the
               year ended April 30, 1993.

     ******    Incorporated  herein  by  reference  to the  identically-numbered
               exhibits to the  Company's  Annual  Report on Form 10-KSB for the
               year ended April 30, 1995

                                      -15-