SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                    FORM 10-Q

(Mark One)
[ X ]    QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

For the quarterly period ended August 31, 1998.

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                        to              .
                                     

                          Commission file number 0-4465

                            Sirco International Corp.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


           New York                                          13-2511270
--------------------------------------------------------------------------------
 (State or Other Jurisdiction                            (I.R.S. Employer
 of Incorporation or Organization)                       Identification No.)


 24 Richmond Hill Avenue, Stamford Connecticut                      06901
--------------------------------------------------------------------------------
   (Address of Principal Executive Offices)                      (Zip Code)
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Registrant's Telephone Number, Including Area Code            203-359-4100


(Former  Name,  Former  Address and Former  Fiscal Year,  if Changed  Since Last
Report)


         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  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 [ ].

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock, as of the latest practicable date:  6,343,316 shares of
Common Stock, par value $.10 per share, as of September 30, 1998.
<PAGE>
                          PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1.  Financial Statements
                   Sirco International Corp. and Subsidiaries
                      Condensed Consolidated Balance Sheets

                                                                      Aug 31, 1998     Nov. 30, 1997
                                                                      ------------      ------------
                                                                       (Unaudited)        (See note)
<S>                                                                   <C>               <C>         
Assets
Current assets:
    Cash and cash equivalents                                         $    510,632      $    114,190
    Accounts receivable                                                  2,220,805         3,166,804
    Inventories                                                          5,056,290         7,707,631
    Prepaid expenses                                                       345,207           253,225
    Other current assets                                                    19,219            44,231
    Recoverable income taxes                                                  --             125,517
Total current assets                                                     8,152,153        11,411,598
                                                                      ------------      ------------
Property and equipment at cost                                           1,888,363         1,762,533
Less accumulated depreciation                                            1,053,759           935,220
                                                                      ------------      ------------
Net property and equipment                                                 834,604           827,313
                                                                      ------------      ------------
Other assets                                                               144,442           207,940
Investment in and advances to subsidiary                                   480,070           514,797
Investment in Access One Communications, Inc.                            1,816,832         1,080,000
Goodwill                                                                 1,291,483              --
                                                                      ------------      ------------
Total assets                                                          $ 12,719,584      $ 14,041,648
                                                                      ============      ============

Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt                                  $  3,672,418      $  1,522,060
    Due to related parties                                                 212,783           974,046
    Accounts payable                                                     1,703,332         2,489,259
    Accrued expenses and other current liabilities                       1,182,591         1,318,863
Total current liabilities                                                6,771,124         6,304,228
                                                                      ------------      ------------
Long-term debt, less current maturities                                    287,777         4,521,795
                                                                      ------------      ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Item 1.  Financial Statements
                   Sirco International Corp. and Subsidiaries
                      Condensed Consolidated Balance Sheets (continued)

                                                                      Aug 31, 1998     Nov. 30, 1997
                                                                      ------------      ------------
                                                                       (Unaudited)        (See note)
<S>                                                                   <C>               <C>         
Stockholders' equity:
    Preferred stock, $.10 par value; 1,000,000 shares authorized,
    Series A, 700 issued                                                        70              --
    Common stock, $.10 par value; 20,000,000 shares authorized,
    5,862,400 issued (1998), 4,300,400 issued (1997)                       586,240           430,040
    Capital in excess of par value                                      12,231,575         7,753,368
    Deficit                                                             (6,308,554)       (3,887,532)
    Treasury stock at cost                                                 (27,500)          (27,500)
      Treasury stock held by equity investee                               (85,000)         (420,000)
    Accumulated foreign translation adjustment                            (736,148)         (632,751)
                                                                      ------------      ------------
Total stockholders' equity                                               5,660,683         3,215,625
                                                                      ------------      ------------
Total liabilities and stockholders' equity                            $ 12,719,584      $ 14,041,648
                                                                      ============      ============
</TABLE>
See notes to the condensed consolidated financial statements.

 Note: The balance  sheet at November 30, 1997 has been derived from the audited
   financial  statements  at that date but does not include all the  information
   and footnotes required by generally accepted accounting principles.
<PAGE>
<TABLE>
<CAPTION>
                                   Sirco International Corp. and Subsidiaries
                                Condensed Consolidated Statements of Operations
                                                  (Unaudited)



                                               For The Nine Months Ended         For The Three Months Ended
                                            Aug 31, 1998      Aug 31, 1997      Aug 31, 1998      Aug 31, 1997
                                            ------------      ------------      ------------      ------------   
<S>                                         <C>               <C>               <C>               <C>         
Net sales                                   $ 13,403,557      $ 12,112,360      $  4,373,563      $  5,936,534
Cost of goods sold                            10,502,276         9,756,035         3,343,042         4,813,371
                                            ------------      ------------      ------------      ------------
Gross profit                                   2,901,281         2,356,325         1,030,521         1,123,163

Selling, warehouse, general and
     administrative expenses                   4,424,797         3,590,880         1,533,515         1,360,511
                                            ------------      ------------      ------------      ------------
Loss from operations                          (1,523,516)       (1,234,555)         (502,994)         (237,348)

Other (income) expense:
Interest expense                                 412,592           373,828           115,340           136,352
Interest income                                  (44,904)          (47,775)          (13,628)          (16,029)
Miscellaneous income, net                        (88,350)         (280,919)          (30,724)         (106,600)
Equity in loss of investee                       618,168              --             348,096              --
                                            ------------      ------------      ------------      ------------
                                                 897,506            45,134           419,084            13,723

Net loss                                    $ (2,421,022)     $ (1,279,689)     $   (922,078)     $   (251,071)
                                            ============      ============      ============      ============

Basic loss per share                        $      (0.49)     $      (0.43)     $      (0.17)     $      (0.07)
                                            ============      ============      ============      ============

Diluted loss per share                      $      (0.49)     $      (0.43)     $      (0.17)     $      (0.07)
                                            ============      ============      ============      ============

Shares used in computing loss per share

Basic and diluted                              4,942,134         2,985,061         5,553,270         3,361,107
                                            ============      ============      ============      ============

</TABLE>

See notes to the condensed consoladated financial statements
 
<PAGE>
<TABLE>
<CAPTION>
                          Sirco International Corp. and Subsidiaries
                        Condensed Consolidated Statements of Cash Flows
                                          (Unaudited)

                                                                 For the Nine Months Ended
                                                               Aug 31, 1998     Aug 31, 1997
                                                               ------------     ------------
<S>                                                             <C>              <C>         
Cash flows from operating activities:
Net loss                                                        ($2,421,022)     ($1,279,688)
Adjustments to reconcile net loss,
    to net cash provided by (used in) operating activities:
     Depreciation and amortization                                   70,649           78,522
     Provision for losses in accounts receivable                     37,458           54,033
     Loss in sale of property and equipment                            --              7,104
     Loss in equity of investee                                     618,168             --
Changes in operating assets and liabilities:
      Accounts receivable                                           894,156       (1,597,555)
      Inventories                                                 2,621,761       (2,587,150)
      Prepaid expenses                                               35,719         (319,780)
      Other current assets                                           25,012          115,969
      Other assets                                                   63,498          (84,616)
      Accounts payable and accrued expenses                        (693,722)        (648,561)
                                                                -----------      -----------
Net cash provided by (used in) operating activities:              1,251,677       (6,261,722)
                                                                -----------      -----------

Cash flows from investing activities:
Purchase of property and equipment                                 (152,263)         (36,277)
Proceeds from sale of property and equipment                           --              3,655
Cash inflow from agreement to sell subsidiary                        34,727           21,145
                                                                -----------      -----------
Net cash used in investing activities                              (117,536)         (11,477)
                                                                -----------      -----------

Cash flows from financing activities:
(Decrease) increase in loans payable to
    financial institutions and short-term
    and long-term loans payable- other                           (2,035,377)       4,153,675
Proceeds from exercise of stock options                              18,187          195,567
Proceeds from private placement of common stock                      75,000          609,000
Proceeds from exercise of warrants                                  488,250        1,347,592
Proceeds form private placement of preferred stock                  658,000             --
                                                                -----------      -----------
Net cash (used in) provided by financing activities                (795,940)       6,305,834
                                                                -----------      -----------

Effect of exchange rate changes on cash                              58,241          (23,249)
                                                                -----------      -----------
Increase in cash and cash equivalents                               396,442            9,386
Cash and cash equivalents at beginning of period                    114,190          390,043
                                                                -----------      -----------

Cash and cash equivalents at the end of period                  $   510,632      $   399,429
                                                                ===========      ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                          Sirco International Corp. and Subsidiaries
                        Condensed Consolidated Statements of Cash Flows
                                    (Unaudited) (continued)

                                                                 For the Nine Months Ended
                                                               Aug 31, 1998     Aug 31, 1997
                                                               ------------     ------------
<S>                                                             <C>              <C>         
Supplemental  disclosures of cash flow  information
Cash paid during the period for:
    Interest                                                    $   385,623      $   369,194
    Income taxes                                                $      --        $   300,015
</TABLE>

See notes to the condensed consolidated financial statements.


<PAGE>
                            SIRCO INTERNATIONAL CORP.

        Notes To Condensed Consolidated Financial Statements (Unaudited)


Note 1-Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included. Operating results for the nine month period ended August 31, 1998
are not necessarily  indicative of the results that may be expected for the year
ended  November 30, 1998.  For further  information,  refer to the  consolidated
financial  statements  and footnotes  thereto  included in the Company's  Annual
Report on Form 10-K, as amended, for the year ended November 30, 1997.


Note 2-Financing Arrangements

On December  17,  1996,  the  Company's  factoring  agreement  with  Rosenthal &
Rosenthal Inc. was terminated and replaced with a financing agreement with Coast
Business  Credit,  a division of Southern  Pacific  Thrift and Loan  Association
("Coast"),  that provides for revolving loans and letter of credit  financing in
the  amount  of the  lesser  of  $7,000,000  or the sum of (a)  80% of  eligible
accounts  receivable (as defined) and (b) 50% of eligible inventory (as defined)
up to a  maximum  inventory  loan of  $3,000,000  less 50% of  letter  of credit
financing outstanding. The amount of the facility available for letter of credit
financing  is limited to  $2,500,000.  The loan bears  interest  at 2% above the
prime rate,  matures on December 31, 1998,  and is  guaranteed  by the Company's
Chairman and Chief Executive  Officer.  The Company has granted Coast a security
interest in substantially all of the Company's travel division assets located in
the United  States.  The  agreement  with  Coast  contains  various  restrictive
covenants,  including among others,  a restriction on the payment or declaration
of any cash dividends, a restriction on the acquisition of any assets other than
in the ordinary course of business in excess of $100,000,  restrictions  related
to mergers,  borrowing and debt guarantees,  and a $100,000 annual limitation on
the acquisition or retirement of the Company's common and preferred stock, which
acquisitions  or  retirements  are  limited  to  transactions   with  employees,
directors and  consultants  pursuant to the terms of  employment,  consulting or
other  stock  restriction  agreements  with such  persons.  The  agreement  also
requires the Company to maintain a minimum tangible net worth of $1,400,000.  As
of August 31, 1998, the Company owed Coast  approximately  $3,665,000 and had no
outstanding letters of credit. At August 31, 1998, the prime rate was 8.50%.

In January 1997, the Company's Canadian subsidiary, Sirco International (Canada)
Ltd. ("Sirco Canada"), was advised by its bank, National Bank of Canada, that it
would no longer  provide  Sirco  Canada a  revolving  line of  credit  but would
continue to provide the real property mortgage loan on Sirco Canada's office and
warehouse  facility.  The mortgage  loan is payable in monthly  installments  of
approximately  $3,066,  including interest at 10.25%,  with a balloon payment of
approximately  $286,000  in the year 2000.  At August 31,  1998,  the  principal
amount of the mortgage loan was approximately $295,000.
<PAGE>
Note 3-Investment in Subsidiary

On February 27, 1998, the Company acquired all the outstanding  shares of common
stock of Essex Communications,  Inc. ("Essex") in exchange for 250,000 shares of
the Company's  common stock and warrants to purchase up to 225,000 shares of the
Company's  common stock at $2.75 per share, of which warrants to purchase 75,000
shares had vested at August 31, 1998 and  warrants to  purchase  150,000  shares
will vest if certain performance conditions are met. The purchase agreement also
provides for the issuance of up to 600,000  additional  shares of the  Company's
common stock if certain  performance  conditions  are met. As of  September  30,
1998,   100,000  of  such   shares  had  been   issued.   Essex  is  a  start-up
telecommunications provider that is certified to resell local telephone services
in the  states of  Connecticut,  New  Jersey  and New York.  Essex is  currently
seeking  certification  to resell  local  telephone  services  in the  states of
Massachusetts  and  Virginia.  The  acquisition  has  been  accounted  for  as a
purchase.

On  August  14,  1998,  the  Company  acquired  all the  outstanding  membership
interests of WebQuill  Internet  Services LLC ("WebQuill") and American Telecom,
LLC ("American  Telecom") in exchange for 375,000 shares of the Company's common
stock. The purchase  agreement also provides that 150,000  additional  shares of
the Company's  common stock be held in escrow and issued if certain  performance
objectives  are  achieved.   WebQuill  is  an  Internet  provider  and  web-site
developer. The acquisition has been accounted for as a purchase.
<PAGE>
Item 2.  Management's Analysis and Discussion of Financial Condition and Results
         of Operations

The following discussion and analysis contains  forward-looking  statements that
involve  risk  and  uncertainties.  The  Company's  actual  results  may  differ
materially from results discussed in  forward-looking  statements.  Factors that
might  cause  such  a  difference  include,   among  others,   general  economic
conditions;  industry trends; the loss of major customers; dependence on foreign
sources  of  supply;   the  loss  of  licenses;   availability   of  management;
availability,  terms and  deployment  of  capital;  the  seasonal  nature of the
Company's  business;  and  changes  in  state  and  federal  regulations  of the
telecommunications industry.

Three and Nine Months Ended August 31, 1998 vs. August 31, 1997

Net sales for the three and nine  months  ended  August 31,  1998  decreased  by
approximately   $1,563,000   and   increased   by   approximately    $1,291,000,
respectively,  to approximately $4,374,000 for the three months ended August 31,
1998 and approximately $13,404,000 for the nine months ended August 31, 1998, as
compared to approximately $5,937,000 and $12,112,000, respectively, reported for
the  comparable  periods  in 1997.  Net sales for the  Company's  United  States
operations decreased by approximately  $1,807,000 and increased by approximately
$1,311,000,  respectively,  for the three and nine months  ended August 31, 1998
over  comparable  periods in 1997. The decline in net sales for the three months
ended  August 31, 1998 was  primarily  due to decreases in the sales of licensed
product,  that were partially  offset by sales by the Company's  recently-formed
subsidiary,  Airline Ventures,  Inc. ("AVI"),  which was not in operation in the
prior fiscal period.  The increase in net sales for the nine months ended August
31,1998  was  primarily  due to sales of certain  discontinued  and  slow-moving
product and sales by AVI, which was not in operation in the prior fiscal period.
Net sales for the  Company's  Canadian  operations  increased  by  approximately
$151,000  for  the  three  months  ended  August  31,  1998  and   decreased  by
approximately $113,000 for the nine months ended August 31, 1998 over comparable
periods in 1997. The increase in net sales for the three months ended August 31,
1998 reflects an increased  penetration of the Company's Hedgren and Perry Ellis
product  lines in the Canadian  market,  while the decrease in net sales for the
nine months ended August 31, 1998  reflects the loss,  by Sirco Canada in fiscal
1996,  of the license from Airway  Industries  Inc.  ("Airway") to sell Atlantic
luggage (see below).  The sale of Airway  product  accounted  for  approximately
$472,000  in net sales for the first  three  months of fiscal  1997 prior to the
December 31, 1996 termination date.

The  Company's  gross profit for the three and nine months ended August 31, 1998
decreased by  approximately  $93,000 and  increased by  approximately  $545,000,
respectively,  to approximately  $1,030,000 and $2,901,000,  respectively,  from
approximately  $1,123,000 and  $2,356,000,  respectively,  reported in the prior
fiscal periods.  The gross profit percentage for the three and nine months ended
August 31, 1998 increased to approximately 23.6% and 21.6%,  respectively,  from
approximately  18.9% and  19.5%,  respectively,  reported  in the  prior  fiscal
periods.  While the gross profit  percentage has shown improvement for the three
and nine months  ended August 31, 1998 as a result of the  Company's  ability to
better  manage  its  inventory  levels,  the sales of certain  discontinued  and
slow-moving  products at prices below the  Company's  normal  selling  price for
similar  items  continues  to  have  a  negative  impact  on  the  gross  profit
percentage.
<PAGE>
During  fiscal  1996,  Airway  notified  the Company that it would not renew its
license  agreement with the Company,  pursuant to which Sirco Canada was granted
an exclusive  license to sell in Canada,  luggage and luggage  related  products
under the trade names  "Atlantic" and "Oleg Cassini"  through December 31, 1996.
In November  1996,  the Company  entered into an Asset  Purchase  Agreement with
Airway,  whereby  Airway agreed,  among other things,  to purchase any remaining
Atlantic  inventory  owned by Sirco  Canada on December  31,  1996,  to purchase
certain  fixed  assets  and to enter  into a two year  lease  for a  substantial
portion of the premises owned by Sirco Canada at fair market value. Sirco Canada
sold  approximately  $472,000 of Airway  product in the first  quarter of fiscal
1997 prior to the December  31, 1996  termination  date.  The loss of the Airway
license had an adverse  effect on the Company's  results of  operations  for the
three and nine months ended  August 31, 1998 and will have an adverse  effect on
Sirco Canada's  results of operations for the remainder of the fiscal year ended
November 30, 1998.

On  February  27,  1998,  the  Company  acquired  Essex  Communications,   Inc.,
("Essex"),  a start-up  telecommunications  provider that is certified to resell
local telephone services and value-added  products in the states of Connecticut,
New Jersey and New York. Essex commenced marketing efforts in May 1998 and first
provided  service in June 1998.  For the three and nine months  ended August 31,
1998,  Essex had net sales of approximately  $93,000.  At August 31, 1998, Essex
had customers utilizing  approximately 1,000 telephone lines. Essex is currently
seeking  certification  to  resell  local  telephone  service  in the  states of
Massachusetts  and  Virginia and expects to be certified in each of these states
by the end of the Company's current fiscal year.

Selling,  warehouse and general and  administrative  expenses  increased for the
three and nine  months  ended  August 31,  1998 by  approximately  $173,000  and
$834,000,    respectively,   to   approximately   $1,534,000   and   $4,425,000,
respectively,  from  approximately  $1,361,000  and  $3,591,000,   respectively,
reported in the prior fiscal  periods.  A major portion of the increase  relates
directly to the expenses incurred by the Company's wholly-owned subsidiaries AVI
and Essex, which were not in operation in the prior fiscal periods.

 Interest  expense for the three and nine months ended August 31, 1998 decreased
by approximately $21,000 and increased by approximately  $39,000,  respectively,
from the amounts reported in the same periods in fiscal 1997 due to the relative
changes in average borrowings for the periods.

Miscellaneous  income  for the three  and nine  months  ended  August  31,  1998
decreased by  approximately  $76,000 and  $193,000,  respectively,  from amounts
reported in the same periods in fiscal 1997. This decrease  represents a decline
in the Company's  commission income generated from sales arranged by the Company
between overseas  suppliers and certain customers that was offset by an increase
in rental income reported by Sirco Canada.

The Company is currently the largest  shareholder  of Access One  Communications
Inc. (formerly CLEC Holding Corp.) ("Access One"), owning approximately 30.6% of
Access  One's  capital  stock.  As the  Company's  investment  in Access  One is
accounted for under the equity method of accounting,  the Company is required to
include  its  portion  of Access  One's  net loss in the  Company's  results  of
operations. For the three and nine months ended August 31, 1998, the Company has
recorded a loss of approximately $348,000 and $618,000,  respectively,  relating
to its  investment  in Access  One.  The  Access  One  losses  are the result of
aggressive  customer growth and the related costs associated with gearing up for
<PAGE>
an expanded  customer base, which includes the hiring of employees to verify and
provision  lines,  to  staff a  customer  service  operation  and to  develop  a
management  information  system.  During the period from the  Company's  initial
investment in October 1997 until August 31, 1998, Access One experienced  growth
of approximately  10,000 installed access lines. The current Access One customer
base is not large enough to generate  the revenues  needed to cover the overhead
costs associated with a fully integrated  communications  service provider,  and
the Company  believes  that Access One will  continue to lose money for at least
the next twelve months.

Liquidity and Capital Resources

At August 31, 1998, the Company had cash and cash  equivalents of  approximately
$511,000 and working capital of approximately $1,381,000.

Net cash provided by (used in)  operating  activities  aggregated  approximately
$1,252,000  and  ($6,262,000)  in the nine month fiscal periods ended August 31,
1998 and August 31, 1997, respectively. The increase of approximately $7,514,000
in net cash  provided  by  operating  activities  in fiscal  1998 as compared to
fiscal 1997, primarily reflects a decrease in inventory and accounts receivable,
partially  offset by an increase in the net loss.  The  reduction  in  inventory
levels  is  primarily  due to  sales of  certain  discontinued  and  slow-moving
inventory,  the Company's ability to better manage its purchases relative to its
sales  forecasts  and the lack of import quota  constraints  in fiscal 1998 that
existed in fiscal 1997. The reduction in accounts receivable  primarily reflects
tighter credit and collection policies.

Net cash used in  investing  activities  aggregated  approximately  $118,000 and
$11,000 in the nine month  fiscal  periods  ended August 31, 1998 and August 31,
1997, respectively. The principal uses of cash in investing activities in fiscal
1998 and 1997 was for the purchase of equipment.  The  principal  source of cash
provided by  investing  activities  in 1998 and 1997 was the  proceeds of a note
receivable from a 1992 sale of a subsidiary.

Net cash (used in) provided by  financing  activities  aggregated  approximately
($796,000) and $6,306,000 in the nine month fiscal periods ended August 31, 1998
and August 31, 1997, respectively.  In the nine month fiscal period ended August
31, 1998,  net cash used in  financing  activities  resulted  from a decrease in
short-term debt of approximately  $2,035,000,  partially offset by approximately
$18,000  from the proceeds of the exercise of stock  options,  by  approximately
$488,000  from the  proceeds  of the  exercise  of  warrants,  by  approximately
$658,000  from the proceeds of a private  placement  of  preferred  stock and by
approximately  $75,000 from the proceeds of a private placement of common stock.
In the nine month fiscal period ended August 31, 1997,  approximately $4,154,000
of net cash was provided by short-term debt, approximately $196,000 was provided
from the proceeds of the exercise of stock options, approximately $1,348,000 was
provided  from the  proceeds  of the  exercise  of  warrants  and  approximately
$609,000 was provided from the proceeds of a private placement of common stock.

On December 17, 1996, the Company entered into a financing  agreement with Coast
Business  Credit,  a division  of  Southern  Pacific  Thrift & Loan  Association
("Coast").  See Note 2 to Notes to Condensed  Consolidated  Financial Statements
(Unaudited).  As of August 31,  1998,  the Company was  indebted to Coast in the
principal amount of approximately  $3,665,000 and had no outstanding  letters of
credit.  This loan  matures  on  December  31,  1998.  As a result,  the  entire
indebtedness is classified as a current liability, whereas a significant portion
of the indebtedness  was considered a long-term  liability at the Company's most
recent fiscal year-end.  The  reclassification in debt from long-term to current
<PAGE>
had a significant  impact on the Company's  working capital  position.  However,
management believes it can successfully refinance this working capital line in a
manner that will not be  disruptive  to  operations.  The  Company's  ability to
refinance the loan impacts materially on the Company's future liquidity.

In January 1997, Sirco Canada was advised by its bank,  National Bank of Canada,
that it would no longer  provide  Sirco  Canada a  revolving  line of credit but
would  continue to provide the real  property  mortgage  loan on Sirco  Canada's
office and  warehouse  facility.  See Note 2 to Notes to Condensed  Consolidated
Financial  Statements  (Unaudited).  At August 31, 1998, the principal amount of
the mortgage loan was approximately $295,000. The Company is currently using the
Coast line of credit to provide  letter of credit  financing  that was  formerly
provided by National Bank of Canada.

For the nine month period ended August 31, 1998,  the Company had  approximately
$152,000 in capital expenditures. The Company expects to make additional capital
expenditures  over  the  next  twelve  months  to  purchase  equipment  for  its
telecommunications  division,  but does not anticipate  that these  expenditures
will be significant.

The Company  currently owns  approximately  30.6% of Access One, a Florida-based
competitive local exchange carrier.  Access One is not publicly traded, there is
no  readily  ascertainable  market for the  stock,  and the  shares  held by the
Company  bear a  restrictive  legend  stating  that  the  shares  have  not been
registered  under the  Securities  Act of 1933.  The investment in Access One is
recorded on the Company's  books by the equity method of accounting.  In October
1998,  the Company  signed a  non-binding  letter of intent to acquire for stock
additional  shares of Access One to increase the  Company's  ownership in Access
One to 80%. The closing of this  proposed  transaction,  which is subject to the
negotiation  by November  30, 1998 of a  definitive  acquisition  agreement  and
typical  closing   conditions,   is  expected  to  occur  following  receipt  of
shareholder approval.  However, no assurances can be given that such transaction
will occur.

Management  believes that the Company's  present sources of financing,  combined
with its  present  working  capital  and cash  flow from  operations  may not be
sufficient to meet the cash and capital  requirements  of the  Company's  travel
division for the next twelve months.  If the depressed level in net sales of the
Company's  travel division does not increase or the Company is unable to improve
its cash position by raising capital,  the Company may experience temporary cash
shortages.  Such cash shortages may negatively  impact the Company's  ability to
purchase inventory in a timely manner,  which could impact the Company's results
of operations.

The Company  anticipates  that it will be able to raise $1,300,000 over the next
60 days to fund some of the losses of its  travel  division  and to support  the
business plan for the Company's  telecommunications division for the next twelve
months,  as it is expected  that this  division  will incur  losses  during this
period.  The Company  also  anticipates  that,  if it  completes  its  proporsed
purchase of additional  shares of Access One as discussed above, it will need to
raise  capital in excess of $2 million to support  the growth plan of Access One
into ten states that are located in the southeastern  United States. Even though
the Company has  identified  financing  sources  and has  negotiated  terms on a
preliminary  basis,  there can be no assurances that the Company will be able to
obtain such funding when needed,  or that such funding,  if  available,  will be
obtainable  on terms  acceptable  to the Company.  The failure by the Company to
raise the necessary funds to finance its telecommunications operations will have
an adverse  effect on the ability of the Company to carry out its business  plan
for its telecommunications division.
<PAGE>
                            SIRCO INTERNATIONAL CORP.

                            PART II-OTHER INFORMATION

Item 2.             Changes in Securities

                  On September 10, 1998,  the Company sold to Access One 400,000
                  shares of common stock of the Company in  consideration of the
                  issuance  to the  Company by Access  One of 400,000  shares of
                  common stock,  par value $.001 per share,  of Access One. Such
                  transaction  was  effected  pursuant  to  Section  4(2) of the
                  Securities Act of 1933, as amended.

                  On  September  4,  1998,  the  Company  issued  to the  former
                  shareholders  of Essex  50,000  shares of common  stock of the
                  Company  in  conjunction  with  the  satisfaction  of  certain
                  performance   criteria  established  in  connection  with  the
                  acquisition of Essex.  Such transaction was effected  pursuant
                  to Section 4(2) of the Securities Act of 1933, as amended.

                  On August 14, 1998,  the Company issued to the then members of
                  WebQuill  Internet  Services  LLC and American  Telecom,  LLC,
                  375,000  shares of the Company's  common stock in  conjunction
                  with the purchase of all the outstanding  membership interests
                  of  WebQuill  and  American  Telecom.   Such  transaction  was
                  effected  pursuant to Section  4(2) of the  Securities  Act of
                  1933 ,as amended.

                  On June  18,  1998,  the  Company  issued  700  shares  of the
                  Company's Series A Preferred Stock, par value $0.10 per share,
                  in  consideration  of a payment  of  $658,000.  Each  share is
                  entitled to dividends and  distributions  at the same rate and
                  in like kind as is  declared  on the  shares of the  Company's
                  common  stock;  shall  receive  preference to the common stock
                  shareholders in the event of any  liquidation,  dissolution or
                  winding-up  of the  corporation;  and  shall  have  a  minimum
                  conversion price into fully paid and non-assessable  shares of
                  common  stock at the  option  of the  holder  at a rate of 667
                  shares of common stock for each share of preferred  stock.  It
                  is  anticipated  that the  number of  shares  of common  stock
                  issuable  will be increased to 1,000 in  conjunction  with the
                  issuance of additional  shares of Series A Preferred  Stock in
                  October  1998.  Such  transaction  was  effected  pursuant  to
                  Section 4(2) of the Securities Act of 1933, as amended.

Item 6.           Exhibits and Reports on Form 8-K

 Exhibit No.                          Description
 -----------                          -----------

     3.1       Certificate  of Amendment of the  Certificate  of  Incorporation,
               June 24, 1998
     3.2       Certificate  of Amendment of the  Certificate  of  Incorporation,
               July 9, 1998
     27        Financial Data Schedule

Reports on Form 8-K

None
<PAGE>
                                   Signatures


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


                                                  Sirco International Corp.



    October 15, 1998                              By:  /s/Joel Dupre
    ----------------                                   ------------- 
    Date                                               Joel Dupre
                                                       Chairman of the Board and
                                                       Chief Executive Officer





    October 15, 1998                              By:  /s/Paul Riss
    ----------------                                   ------------ 
    Date                                               Paul Riss
                                                       Chief Financial Officer
                                                       (Principal Financial and
                                                       Accounting Officer)

<PAGE>


                                  EXHIBIT INDEX

           No.                     Description                                

           27                Financial Data Schedule.