FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



                   QUARTERLY REPORT UNDER SECTION 13 or 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



For the Quarter ended October 31, 1998           Commission File Number 0-21475



                           DYNAMIC INTERNATIONAL, LTD.
              -----------------------------------------------------
              (Exact Name of Registrant As Specified In Its Charter



             Nevada                                        93-1215401
-------------------------------                        -------------------
(State or other jurisdiction of                         I.R.S. employer
incorporation or organization)                         identification no.)



  58 Second Ave., Brooklyn, New York                         11215
-------------------------------                        -------------------
(Address of principal executive office)                   (Zip Code)



                                  718-369-4160
                          ----------------------------
                          (Registrant's telephone no.)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve 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 ninety days.

                            Yes   X            No



As of November 30, 1998, 4,418,798 shares of the Registrant's common stock par
value $.001 were issued and outstanding.








<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



                                       Consolidated Condensed Balance Sheets
                                                    (Unaudited)
<TABLE>
<CAPTION>
                                                                        October 31,1998          April 30, 1998
                                                                        ---------------          --------------
<S>                                                                        <C>                     <C>       
Current Assets
---------------
Cash                                                                       $  580,803              $1,575,248
Accounts Receivable - (Net of allowance for
   doubtful accounts of $122,000)                                           1,341,354                 810,447
Due from Suppliers                                                             36,142                  36,142
Inventory                                                                   3,149,180               2,359,022
Prepaid Expenses                                                            1,287,095                 669,133
Prepaid and Refundable Income Taxes                                            20,287                  26,201
                                                                           ----------              ----------
Total Current Assets                                                        6,414,861               5,476,193
Fixed Assets, at Cost, Less Accumulated
Depreciation                                                                  114,582                 124,846
Security Deposits                                                               6,800                   2,050
Reorganization value in excess of amounts
   allocable to identifiable assets, net                                      106,257                 112,328
                                                                           ----------              ----------
Total Assets                                                               $6,642,500              $5,715,417
                                                                           ==========              ==========
Liabilities and Shareholders' Equity
------------------------------------
Current Liabilities
-------------------
Notes Payable-Bank                                                         $  400,000                       0
Accounts Payable & Accrued Expenses, Non-related                              807,837              $  458,359
Accounts Payable & Accrued Expenses, Related                                  347,963                  19,186
Income Taxes Payable                                                                0                  79,422
                                                                           ----------              ----------
                                                                            1,555,800                 556,967
Shareholders' Equity
--------------------
Common Stock                                                                    4,419                   4,419
Additional Paid-In Capital                                                  4,869,796               4,869,796
Retained Earnings                                                             212,488                 284,238
                                                                           ----------              ----------

Totals                                                                      5,086,703               5,158,453
Less Treasury Stock                                                                (3)                     (3)
                                                                           -----------             -----------

Total Shareholders' Equity                                                  5,086,700               5,158,450
                                                                           ----------              ----------

Total Liabilities & Shareholders' Equity                                   $6,642,500              $5,715,417
                                                                           ==========              ==========

</TABLE>



See Accompanying Notes to Consolidated Condensed Financial Statements.



                                       -2-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


<TABLE>
<CAPTION>
                                              Consolidated Condensed Statements of Operations
                                                                (Unaudited)

                           For the Six               For the Three              For the Six               For the Three
                           Months Ended               Months Ended              Month Ended                Months Ended
                           October 31, 1998          October 31, 1998           October 31, 1997          October 31, 1997
                           ----------------          ----------------           ----------------          ----------------
<S>                          <C>                       <C>                        <C>                        <C>       
Net Sales                    $3,283,782                $1,581,773                 $3,694,425                 $1,860,262
Other Income                     31,751                    10,824                     10,858                      2,899

                           --------------            -------------              --------------            ----------------

                              3,315,533                 1,592,597                  3,705,283                  1,863,161

Cost of Goods Sold            2,406,527                 1,273,208                  2,423,955                  1,172,672

                           --------------            --------------             --------------            -----------------

Gross Profit                    909,006                   319,389                  1,281,328                    690,489
Selling, General
and Administrative Expense      944,766                   451,056                    928,182                    491,035

Interest                         35,990                    17,538                    118,927                     59,001
                           --------------            ---------------            ---------------           ------------------

                                980,756                   468,594                  1,047,109                    550,036

Net Income (Loss)
Before Taxes                    (71,750)                 (149,205)                   234,219                    140,453

Provision for Taxes                  0                    (30,745)                    99,000                     63,043
                           --------------            ---------------            ---------------           ------------------

Net Income (Loss)              ($71,750)                ($118,460)                  $135,219                    $77,410

                           ==============            ===============            ===============           ===================


Income (Loss) Per
Common Share                      (0.02)                   (0.03)                       0.04                       0.02

Weighted Average Number of
Common Shares Outstanding     4,481,798                4,418,798                   3,198,258                  3,198,258

Cash Dividends Per
Common Share                        NONE                   NONE                       NONE                          NONE


</TABLE>



See Accompanying Notes to Consolidated Condensed Financial Statements.




                                       -3-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.




                              Consolidated Condensed Statements of Cash Flows
                                                (Unaudited)

<TABLE>
<CAPTION>

                                                                           For the Six            For the Six
                                                                           Months Ended           Months Ended
                                                                           October 31,1998      October 31,1997
                                                                           ---------------      ---------------
                                                                                                   (Restated)
                                                                                                    ---------
<S>                                                                        <C>                     <C>      
Cash Flows from Operating Activities
-------------------------------------
Net income (loss)                                                          $  (71,750)             $ 135,219

Adjustments to Reconcile Net Income
to Net Cash Provided (Used for)
     Depreciation and Amortization                                             26,485                 40,245


Changes in Assets and Liabilities:
----------------------------------
(Increase) decrease in:
     Accounts Receivable and Due From Suppliers                              (530,908)               (103,225)
     Inventory                                                               (790,158)                852,536
     Prepaid Expenses                                                        (617,962)               (132,573)
     Prepaid Taxes                                                              5,915                  39,914
     Security Deposits                                                         (4,750)                  1,600
Increase (decrease) in:
     Accounts Payable and Accrued Expenses                                    678,255                (600,376)
     Income Taxes Payable                                                     (79,422)                (69,800)
                                                                           -----------             -----------

     Net Cash - Operating Activities                                       (1,384,295)                163,540
     -------------------------------

Investing Activities:
---------------------
Purchase of Property and Equipment                                            (10,150)                      0


Financing Activities:
---------------------
Proceeds from Banker's Acceptances                                            400,000
Repayment of Capital Lease Obligations                                                               (11,934)
Payment of Deferred Offering Costs                                                                  (180,521)

     Net Cash - Financing Activities                                          400,000               (192,455)
     -------------------------------                                       -----------             ----------

Increase (decrease) in Cash and Equivalents                                  (994,445)               (28,915)

Cash and Cash Equivalents, Beginning of Period                              1,575,248                 43,543
                                                                           -----------             ----------

Cash and Cash Equivalents, End of Period                                   $  580,803              $  14,628
                                                                           ===========             ==========


</TABLE>


See Accompanying Notes to Consolidated Financial Statements.






                                       -4-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



              Notes to Consolidated Condensed Financial Statements
            for the Six-Month Periods Ended October 31, 1998 and 1997
                                   (Unaudited)

1.  Basis of Presentation

The Consolidated Condensed Balance Sheet as of October 31, 1998 and the related
Consolidated Condensed Statements of Operations and Consolidated Condensed
Statements of Cash Flows for the six-month periods ended October 31, 1998 and
1997 are unaudited. In the opinion of management, all adjustments (which include
only normally recurring adjustments) necessary for a fair presentation of such
financial statements have been made.

The April 30, 1998 Balance Sheet data was derived from audited financial
statements but does not include all disclosures required by generally accepted
accounting principles. The interim financial statements and notes thereto should
be read in conjunction with the financial statements and notes included in the
Company's latest annual report on Form 10-K. The results of operations for the
six-month period ended October 31, 1998 are not necessarily indicative of the
operating results for the entire year.

2.  Reorganization and Management Plan

On August 23, 1995, the Company filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code. A Plan or Reorganization was
filed by the Company on October 30, 1995 and subsequently amended and modified
on February 22, 1996. On April 5, 1996, the creditors voted to accept the
amended and modified Plan (the "Plan"), and on May 23, 1996, the court confirmed
the Plan. The Plan was substantially consummated in August 1996. For accounting
purposes, the Company assumed the Plan was consummated on July 31, 1996.

As contemplated by the Plan, a new company, Dynamic International, Ltd. was
formed on July 29, 1996. On August 8, 1996, the Company merged into Dynamic
International, Ltd. The capital structure and the balance sheet of the combined
entity, immediately after the merger, were substantially the same as those of
the Company prior to the merger. The "new common stock" is referred to below as
the common stock of Dynamic International, Ltd.

Chapter 11 claims filed against the Company and subsequently allowed in the
bankruptcy proceeding totaled approximately $17,200,000. The Plan discharged
such claims through distributions of cash of approximately $515,000 and issuance
of shares of new common stock. The cash distributions were paid in August 1996.
A total of 3,198,798 shares of new common stock was issued on July 25, 1996, out
of which 2,976,000 shares were issued to one secured creditor; 160,000 shares
were issued to unsecured creditors; and 62,798 shares were issued to the
preconfirmation common stock equity interest holder.

The discharge of claims was reflected in the April 30, 1996 financial
statements. The stock distribution value is based on the reorganization value of
the Company determined by projecting cash flows over an eleven-year period and
discounting such cash flows at a cost of capital rate of 15% and the statutory
federal, state and local tax rates currently in effect. The discounted residual
value at the end of the forecast period is based on the capitalized cash flows
for the last year of that period. Cash distributions and the estimated stock
distribution value totaling $531,561 has been recorded as Other Liabilities as
of April 30, 1996. The gain of approximately $16,700,000 resulting from the
excess of the allowed claims over the total value of the cash and the common
stock distributed to the secured and unsecured creditors has been recorded as an
extraordinary gain for the year ended April 30, 1996.

                                                               Continued.....
                                       -5-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



                                   (Continued)
              Notes to Consolidated Condensed Financial Statements
            for the Six-Month Periods Ended October 31, 1998 and 1997
                                   (Unaudited)

The eleven-year cash flow projection was based on estimates and assumptions
about circumstances and events that have not yet taken place. Such estimates and
assumptions are inherently subject to significant economic and competitive
uncertainties and contingencies beyond the control of the Company, including,
but not limited to, those with respect to the future courses of the Company's
business activity. Accordingly, there will usually be differences between
projections and actual results because events and circumstances frequently do
not occur as expected, and those differences may be material.

As part of the reorganization, the Company will continue to sell hand and light
exercise equipment and sports bags/luggage, all of which have a proven market
acceptance. Management believes it can increase revenues by increasing its focus
on direct response marketing. Therefore, it intends to develop plans to use
infomercials to market these products. The Company adopted "fresh-start
reporting" in accordance with Statement of Position ("SOP") 90-7 issued July 31,
1996 by the American Institute of Certified Public Accountants. SOP 90-7 calls
for the adoption of fresh-start reporting if the reorganization value of the
emerging entity immediately before the date of confirmation is less than the
total of all post-Petition and allowed claims, and if holders of existing voting
shares immediately before confirmation receive less than fifty percent of the
voting shares of the emerging entity, both conditions of which were satisfied by
the Company. Although the confirmation date was May 23, 1996, fresh-start
reporting was adopted on July 31, 1996. There were no material fresh-start
related adjustments during the period May 23, 1996 to July 31, 1996.

Under fresh-start accounting, all assets and liabilities are restated to reflect
their reorganization value, which approximates book value at date of
reorganization. Therefore, no reorganization value has been allocated to the
assets and liabilities. In addition, the accumulated deficit of the predecessor
company at July 31, 1996 totaling $713,601 was eliminated, and at August 1,
1996, the reorganized company's financial statements reflected no beginning
retained earnings or deficit. The reorganization value in excess of amounts
allocable to identifiable assets is being amortized over an eleven-year period
on the straight-line method.

                                                                 Continued....

                                       -6-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



                                   (Continued)
              Notes to Consolidated Condensed Financial Statements
            for the Six-Month Periods Ended July 31, 1998 and 1997
                                   (Unaudited)


3.       Inventories

         The inventories consist of finished goods. During the three month
         period ended January 31, 1998 the Company changed its method of
         determining the cost of inventories from the LIFO method to the FIFO
         method. Under the current economic environment of low inflation, the
         Company believes that the FIFO method will result in a better
         measurement of operating results. This change has been applied by
         retroactively restating the accompanying consolidated financial
         statements. This change increases net income for the six months and
         three months ended October 31, 1997 by $33,149, or .01 per share, and
         $14,004, or .004 per share, respectively.

4.       Debt Financing:

         On April 30, 1998 the Company entered into a credit agreement with
         Chase Manhattan Bank ("Chase") for maximum borrowing of $1,500,000 in
         the form of letters of credit and bankers acceptances. The agreement
         also provided for a security interest in the inventory and notes and
         accounts receivables of the Company. In addition, the agreement
         provides for the personal guarantee of the President and major
         shareholder of the Company in the amount of $250,000. As of October 31,
         1998 the Company's aggregate balance of $1,069,276 consisted of
         $400,000 in bankers acceptances and $669,276 of outstanding letters of
         credit. The bankers acceptances were discounted at 6.25% per annum.






                                       -7-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.




                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                        Six Months Ended October 31, 1998
                as Compared to Six Months Ended October 31, 1997

General

Statements contained herein which are not historical facts are forward-looking
statements. Forward-looking statements involve a number of risks and
uncertainties including, but not limited to , general economic conditions, the
Company's ability to complete development and then market its products and
competitive factors and other risk factors detailed herein.

The following discussion should be read in conjunction with the Consolidated
Financial Statements and related notes thereto of the Company included elsewhere
herein. The discharge of claims under the bankruptcy proceedings described
immediately below has been reflected in the financial statements for the fiscal
year ended April 30, 1996. Effective August 8, 1996, the Company completed a
migratory merger from Delaware to Nevada by merging into a newly formed Nevada
entity, thereby changing its name from Dynamic Classics, Ltd. to Dynamic
International, Ltd. The balance sheet of the combined entity was substantially
identical to that of the Company prior to the merger. The Company and its
predecessor are herein together referred to as the "Company".

Because of the application of fresh-start reporting, the financial statements
for the periods after reorganization are not comparable in any respects to the
financial statements for the periods prior to the reorganization.

Plan of Reorganization

On August 23, 1995, the Company filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code. In May 1996, the Bankruptcy
Court approved a plan of reorganization pursuant to which creditors would
receive partial satisfaction of their claims. The amount of claims allowed under
the bankruptcy proceedings aggregated approximately $17,223,800, which exceeded
the assets as recorded immediately subsequent to the confirmation of the Plan by
approximately $12,970,400. Under the Plan, the Company made cash payments in the
amount of approximately $515,800. MG Holding Corp. ("MG"), which had purchased a
promissory note from the Company's principal financial institution, received
2,976,000 shares of Common Stock, in satisfaction of such promissory note,
representing approximately 93% of the issued and outstanding shares thereby
gaining absolute control over the Company's affairs. An additional 160,000
shares and 62,798 shares were issued to the Company's unsecured creditors and
the Company's existing security holders, respectively. The value of the cash and
securities distributed under the Plan aggregated $531,561. An amount of
$16,692,193, representing the difference between the value of the total
distribution and the amount of allowable claims under the bankruptcy was
recorded as an extraordinary gain.


                                                                 Continued.....

                                       -8-



<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


                                   (Continued)
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                        Six Months Ended October 31, 1998
                as Compared to Six Months Ended October 31, 1997


Results of Operations

Financial results for the six months and three months ended October 31, 1997,
have been restated for a change in the method of determining the cost of
inventories from the last-in, first-out (LIFO) method to the first-in, first-out
(FIFO) method.

Sales for the six months ended October 31, 1998, decreased by $411,000 or 11% to
$3,284,000 from $3,695,000 for the six months ended October 31, 1997. Sales of
sports bags/luggage products of $1,972,000 for the six months ended October 31,
1998, were $160,000 or 7.5% less than the $2,132,000 of sports bags/luggage
sales for the six months ended October 31, 1997. Sales of exercise products of
$1,282,000 for the six months ended October 31, 1998 were $279,000 or 17.8% less
than the $1,562,000 of exercise product sales for the six months ended October
31, 1997.

The Company's gross profit of $909,000 for the six months ended October 31, 1998
was $372,000 less than the gross profit of $1,281,000 for the six months ended
October 31, 1997. The reduced gross profit was primarily the result of the lower
sales for the six months ended October 31, 1998.

Operating expenses for the six months ended October 31, 1998 were $17,000 higher
than the six months ended October 31, 1997. This increase is represented
approximately by changes in the following expenses:

                                                               Increase
                                                              (Decrease)
                                                              ----------
Patent and Trademark Expenses                                 ($17,000)
Product Development                                            $20,000
Shipping Expenses                                              $19,000
Travel and Entertainment                                      ($15,000)
Promotional and Selling Materials                              $26,000
Trade Advertising                                              $16,000
Officer Salaries                                               $ 5,000
Office Salaries                                               ($25,000)
Postage                                                        $ 9,000
Corporate Expenses                                            ($ 7,000)
Depreciation                                                  ($14,000)





                                       -9-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



                                    Continued
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                        Six Months Ended October 31, 1998
                as Compared to Six Months Ended October 31, 1997

Patent and Trademark expenses decreased by $17,000 due to reduced expenditures
for patent searches, analysis and acquisitions. Product development expenses
increased by $20,000 due to increased consulting fees. Shipping expenses
increased due to increases in shipping fees and expenditures for freight out.
Travel and entertainment expenses decreased by $15,000. Expenditures for
promotional materials increased by $26,000 due to increased expenditures related
to the Company's sports bags/luggage products. Trade advertising was $16,000 for
six months ended October 31, 1998 because the Company has started to utilize
specialty magazines to advertise the sports bags/luggage products. Officer
salaries increased due to an increase in salary for one officer. Office salaries
decreased by $25,000 due to personnel reductions. Postage expenses increased by
$9,000. Corporate expenses decreased by $7,000 due to a decrease in expenditures
related to the stock offering which was completed in December 1997. Depreciation
expense decreased by $14,000 because of a decrease in capital expenditures.

Interest expense for six months ended October 31, 1998 decreased by $83,000 from
the six months ended October, 1997. This reduction was a result of the partial
use of the proceeds of a stock offering, which was completed on December 27,
1997, to payoff current debt.

The Company's pretax loss of $72,000 for the six months ended October 31, 1998
represents a $306,000 change from a pretax profit of $234,000 for six months
ended October 31, 1997.








                                      -10-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


                                    Continued
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                        Six Months Ended October 31, 1998
                as Compared to Six Months Ended October 31, 1997


The following table sets forth the results of operations for the periods
discussed above.

                             Six Months                          Six Months
                               Ended                                Ended
                          October 31, 1998                    October 31, 1997

Net Sales                    $3,283,782                           $3,694,425
Other Income                     31,751                               10,858
                             ----------                           ----------
                              3,315,533                            3,705,283

Cost of Goods Sold            2,406,527                            2,423,955
                             ----------                          -----------

Gross margin                    909,006                            1,281,328

Operating Expenses              944,766                              928,182
Interest                         35,990                              118,927
                             ----------                           ----------
                                980,756                            1,047,109
                             ----------                           ----------

Pretax Income                   (71,750)                             234,219


Liquidity and Capital Resources

During the six months ended October 31, 1998, cash used by operating activities
amounted to $1,384,000. This was the result of a net loss and increases in
accounts receivable and due from supplier, inventory and prepaid expenses and a
decrease in income taxes payable of $72,000, $531,000, $790,000, $618,000 and
$79,000, respectively. These uses of cash were offset by an increase in accounts
payable and accrued expenses and an increase in prepaid taxes of $678,000 and
$5,915, respectively.

Investing activities used cash of $10,000 for molds related to a new product.

Financing activities provided proceeds from a banker's acceptance of $400,000.

Current Position

On December 27, 1997, the Company completed a stock offering which provided
proceeds of approximately $4,800,000, which were used to purchase inventory and
to pay for advertising and marketing in the amount of approximately $3,160,000 
and related party debt of $1,059,785.



                                      -11-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.



On April 30, 1998 the Company entered into a credit agreement with Chase
Manhattan Bank ("Chase") for maximum borrowing of $1,500,000 in the form of
letters of credit and bankers acceptances. The agreement also provided for a
security interest in the inventory and notes and accounts receivable of the
Company. In addition, the agreement provides for the personal guarantee of the
President and major shareholder of the Company in the amount of $250,000. As of
October 1, 1998 the Company's aggregate balance of $1,069,276 consisted of
$400,000 in bankers acceptances and $669,276 of outstanding letters of credit.
The bankers acceptances were discounted at 6.25% per annum.

The Company believes that the proceeds from the stock offering and the Chase
credit line will be sufficient to finance its operation for the next twelve
months.

Seasonality and Inflation

The Company's business is highly seasonal with higher sales typically in the
second and third quarter of the fiscal year as a result of shipments of exercise
equipment and sports bags/luggage related to the holiday season.

Management does not believe that the effects of inflation will have a material
impact on the Company, nor is it aware of changes on prices of material or other
operating costs or in the selling price of its products and services that will
materially affect the Company's profits.







                                      -12-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


                                    Continued
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                       Three Months Ended October 31, 1998
               as Compared to Three Months Ended October 31, 1997

Results of Operations

Sales for the three months ended October 31, 1998, decreased by $278,000 or 15%
to $1,582,000 from $1,860,000 for the three months ended October 31, 1997. Sales
of sports bags/luggage products of $956,000 for the three months ended October
31, 1998, were $139,000 or 12.7% less than the $1,095,000 of sports bags/luggage
sales for the three months ended October 31, 1997. Sales of exercise products of
$596,000 for the three months ended October 31, 1998 were $172,000 or 22.4% less
than the $768,000 of exercise product sales for the three months ended October
31, 1997.

The Company's gross profit of $319,000 for the three months ended October 31,
1998 was $371,000 less than the gross profit of $690,000 for the three months
ended October 31, 1997. The reduced gross profit was primarily the result of the
lower sales for the three months ended October 31, 1998.

Operating expenses for the three months ended October 31, 1998 were $40,000 less
than the three months ended October 31, 1997. This decrease is represented
approximately by changes in the following expenses:

                                                      Increase
                                                     (Decrease)
                                                     ----------
Patent and Trademark Expenses                        ($ 5,000)
Product Development                                   $ 5,000
Shipping Expenses                                    ($ 3,000)
Sales Representative Commissions                     ($13,000)
Travel and Entertainment                             ($17,000)
Promotional and Selling Materials                    ($ 4,000)
Trade Advertising                                     $13,000
Officer Salaries                                      $ 2,500
Office Salaries                                      ($12,000)
Payroll Taxes                                        ($ 3,000)
Postage                                               $ 4,000
Depreciation                                         ($ 7,000)






                                      -13-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


                                    Continued
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                       Three Months Ended October 31, 1998
               as Compared to Three Months Ended October 31, 1997

Patent and trademark expenses decreased by $5,000 due to reduced expenditures
for patent searches, analysis and acquisitions. Product development expenses
increased by $5,000 due to increased consulting fees. Shipping expenses
decreased due to reduced sales. Sales representative commissions decreased by
$13,000 due to the decreased sales volume. Travel and entertainment expenses
decreased by $17,000. Expenditures for promotional materials decreased by
$4,000. Trade advertising was $13,000 for three months ended October 31, 1998
because the Company has started to utilize specialty magazines to advertise the
sports bags/luggage products. Officer salaries increased due to an increase in
salary for one officer. Office salaries decreased by $12,000 due to personnel
reductions. Postage increased by $4,000. Depreciation expense decreased by
$7,000 because of low capital expenditures.

Interest expense for the three months ended October 31, 1998 decreased by
$42,000 from the three months ended October, 1997. This reduction was the result
of the partial use of the proceeds of a stock offering, which was completed on
December 27, 1997, to payoff current debt.

The Company's pretax loss of $149,000 for the three months ended October 31,
1998 represents a $289,000 change from a pretax profit of $140,000 for three
months October 31, 1997.








                                      -14-


<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.


                                    Continued
                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                       Three Months Ended October 31, 1998
               as Compared to Three Months Ended October 31, 1997

The following table sets forth the results of operations for the periods
discussed above.

                          Three Months                       Three Months
                              Ended                              Ended
                         October 31, 1998                    October 31, 1997

Net Sales                    $1,581,773                         $1,860,262
Other Income                     10,824                              2,899
                             ----------                         ----------
                             $1,592,597                         $1,863,161

Cost of Goods
Sold                         $1,273,208                         $1,172,672
                             ----------                         ----------

Gross Margin                    319,389                            690,489

Operating Expenses              451,056                            491,035
Interest                         17,538                             59,001
                             ----------                         ----------
                                468,594                            550,036

Pretax Income                  (149,205)                           140,453



                                      -15-



<PAGE>



Form 10-Q FQE 10/31/98 dynamic international, ltd.













                           Part II. Other Information



                                 Not Applicable


















                                      -16-


<PAGE>


Form 10-Q FQE 10/31/98 dynamic international, ltd.




                                   Signatures
                                 -------------


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



                           DYNAMIC INTERNATIONAL, LTD.







Date   12/14/98                      By /s/ William P. Dolan
    --------------------                --------------------------------
                                        William P. Dolan, 
                                        Vice President, Finance








                                      -17-