Chancellor Corporation (CELR) Shareholder Letter

Released_By: GeraldsNet
Date: 6/27/98
Time: 2:09:18 AM

For_Immediate_Release

Dear Shareholder,

With the beginning of this New Year I wish to re-affirm my commitment to have our company on a revenue producing, profitable basis by this time next year. There are ongoing negotiations, agreements being prepared and preparations being made to launch a number of activities. We anticipate that all contracts, unless otherwise noted, will be completed no later than January 15th. 1998.

Your company has been working diligently to establish a "Welfare Lottery" in Beijing. To that end we have had very fruitful negotiations with an established lottery operator, who is listed on the American Stock Exchange. This operator is currently conducting diligence here and in Beijing and we expect that we will enter into a contract with them shortly.

Chancellor’s aim is to become the parent of a world class horse racing facility and the operator of a world class private club. We have acquired a 258 acre leasehold in Guong Dong Province for the development of a horse training facility and a world class horse racing track.

The private facility of the Beijing Dadu International Jockey Club development is moving forward and we expect to break ground in Beijing during the first quarter of this year. Further, we have reached a tentative agreement with CCA International, Ltd. a world renowned private club management organization to operate this facility for us. CCA International manages many of the most exclusive private club facilities in Asia.

Financing for these projects is the subject of intense negotiations. Your company and one of the largest public companies in China have agreed in principal to terms of financing that will allow Chancellor to move forward on all projects. We anticipate a closing regarding all financial transactions prior to Chinese New Year, which is January 28th.

Chancellor’s Fraternal Insurance Company

Selects Management Company and Installs Trustees

The Company held a special meeting over the holidays to install six new director/trustees selected by Chancellor, to effect permanent control of the eleven member board of U.S. Management and the Fraternal Insurance Company.

A management contract was awarded to U.S. Management Corp. (a wholly owned subsidiary of Chancellor) to provide all the business functions for the Fraternal, including administration, investments and marketing. The development of several new and innovative insurance products is projected to generate $10 million in gross premiums over the next 12-month period.

We believe this strategic acquisition will add significant profits to Chancellor’s bottom line in the long term, as well as create synergy within the Chancellor group of companies. Chancellor Corp., with our wholly owned insurance subsidiary, U.S. Management,  intends to begin marketing in Mainland China in early 1998. Our Chinese partners have indicated that there is a tremendous market in China for the type of innovative products offered through Chancellor’s U.S. Management subsidiary.

I have attached a copy of our latest certified financial report. We expect to file our form 10 this month, thus becoming a fully reporting company. Listing on the NASDAQ system is anticipated this year.

I hope this brief up-date demonstrates that your company is moving as quickly as possible in a direction that will confirm your wisdom in making the investment in our shares. As developments occur I will continue to keep you informed.

Chancellor Corporation Ronald Sparks, Chairman

For Further Information: Chancellor Corporation, Donna Silverman, Investor Relations, Email: inbeijing@aol.com http://www.celr.com Telephone: 973.398.2758 Facsimile: 973.398.9630