SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10K-SB
          Annual report pursuant to section section 13 or 15(d) of the
                         Securities Exchange Act of 1934
    For the fiscal year ended April 30,2002. Commission file number 000-33285

                           DYNAMIC INTERNATIONAL, INC.
             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                                                                <C>

     Nevada                                                            11-3563216
--------------------------------------------------------------     --------------------------------
(State or other jurisdiction of incorporation or organization)     (I.R.S. Employer Identification Number)

58 Second Avenue, Brooklyn, New York                                   11215
----------------------------------------                           -----------------
(Address of Principal Executive Offices)                               (Zip Code)
</TABLE>

       Registrant's telephone number, including Area Code: (718) 369-4160
                                                      -------------------

       Securities to be registered pursuant to Section 12(b) of the Act:

                                      None

       Securities to be registered pursuant to Section 12(g) of the Act:

                    Common Stock (par value $.001 per share)
                                 Title of Class


Indicate by check mark whether the issuer (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 (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 ninety (90) days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
registrant's  best  knowledge,  in definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market  value of voting and  non-voting  common  equity  held by
non-affiliates of the Issuer: Indeterminate - No existing market

The number of shares  outstanding  of Issuer's  Common  Stock as of July 31,2002
4,418,258

Transitional Small Business Disclosure Format: Yes [ ] No [X]


Revenues for the most recent fiscal year: $ 7,601,000

                                       1
<PAGE>

                                Table of Contents
<TABLE>
<S>                                                                    <C>


Part I
Item 1.Description of Business                                          3

Item 2.Properties                                                       8

Item 3.Legal Proceedings                                                8

Item 4.Submission of Matters to a Vote of Security Holders              8

Part II
Item 5.Market Price of Company's Common Equity and
           Related Stockholder Matters                                  8

Item 6. Selected Financial Data                                         9

 Item 7.Management's Discussion and Analysis of Financial
           Condition and results of Operations                          9

Item 8. Financial Statements and Supplementary Data                     16


Item 9.Changes In and Disagreements with Accountants on
           Accounting and Financial Disclosure                          16

Part III
Item 10.Directors and Executive officers of the Company                 17
Item 11.Executive compensation                                          18
Item 12.Security ownership of certain beneficial owners and
             Management                                                 19
Item 13.Certain Relationships and Related Transactions                  20

Part IV
Item 14.Exhibits, Financial Statements and Reports on Form 10K          21

Signatures                                                              22

Index to Exhibts                                                        23
</TABLE>


                                       2
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

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.

Background of Registrant

Dynamic  International,  Inc. (the  "Company") was formed on August 31,2000 as a
wholly  owned  company of Dynamic  International  Ltd.("Ltd.").  Pursuant  to an
Equity  Transfer  and  Reorganization   Agreement  dated  August  10,2000.  (the
"Agreement") by and among Ltd., certain of its shareholders, Emergent Management
Company,  LLC  ("Emergent"),  and several  holders of  membership  interests  in
Emergent Ventures,  LLC (an affiliate of Emergent),  Ltd. transferred all of its
assets to the Company.  In addition,  the Company assumed all of the liabilities
of  Ltd.  (other  than  outstanding  bank  debt  in  the  amount  of  $250,000).
Immediately following such transfer of assets and the assumption of liabilities,
Ltd. transferred to its shareholders, on a pro-rata basis, all of the issued and
outstanding shares of common stock of the Company (4,418,258 shares).

Business of Registrant

The Company,  a Nevada  corporation,  is engaged in the design and  marketing of
sports bags and luggage,  which are marketed  primarily  under the licensed name
JEEP(TM) and under its own name,  Polaris  Expedition(TM).  In addition,  it has
been  engaged  in the  design,  marketing  and  sale of a  diverse  line of hand
exercise and light exercise  equipment,  including hand grips,  running weights,
jump ropes and aerobic steps and slides.  It marketed  these  products under the
licensed trademarks  SPALDING(TM) and KATHY IRELAND(TM) as well as under its own
trademarked  name SHAPE  SHOP(TM).  Under an agreement  dated in June 2000,  the
Company sold its  inventory of exercise  products,  excluding  the  Spalding(TM)
Rotaflex(TM),  and entered into an agreement  not to sell any product that would
compete with the items sold for a period of five years.  SEE PART I Item 3 LEGAL
PROCEEDINGS.  The  Company's  objective  is to become a designer and marketer of
goods that are associated with a free-spirited lifestyle and leisure time.

Products

Sports  Bags/Luggage  - The  Company's  line  of  sports  bags/luggage  consists
primarily of duffel bags, weekend bags, garment bags, suitcases, pilot cases and
flight  attendant  wheeled  cases.  Some of the models are equipped  with wheels
and/or retractable handles.

Exercise  Equipment - Under an agreement  dated in June 2000, the Company agreed
to  sell  its  inventory  of  exercise  products,   excluding  its  Spalding(TM)
Rotaflex(TM)  products,  a  portable  exercise  item,  sales of which  have been
discontinued,  and entered into an agreement  not to sell any product that would
compete with the items sold for a period of five years.  SEE Part I Item 3 LEGAL
PROCEEDINGS.

                                       3
<PAGE>

Design and Development
----------------------

The Company has been granted a number of design  patents with respect to certain
of its products. See "Intellectual  Property--License  Agreements".  The Company
employs  a  designer  on  a  full-time  basis  for  the  design  of  its  sports
bags/luggage  products.  During the most recent  fiscal  year the Company  spent
approximately  $129,000 on design  activities,  including  fees to designers and
patent  attorneys.  The Company may, from time to time,  utilize the services of
consultants for product and package design.

Most of the Company's  products are  manufactured  in Indonesia,  Thailand,  Sri
Lanka and China which in the most recent fiscal year accounted for approximately
50%, 20% ,20% and 10%, respectively of the Company's products. Orders for sports
bags/luggage,  which for the most part are  produced in  Indonesia  and Thailand
usually require a period of 90 to 120 days before they are shipped.  The Company
ordinarily has its products  manufactured based on purchase orders and it has no
long term  relationships  with any of its  manufacturers.  The Company  believes
that, if necessary, it will be able to obtain its products from firms located in
other  countries at little if any  additional  expense.  As a  consequence,  the
Company believes that an interruption in deliveries by a manufacturer located in
a particular  country will not have a material adverse impact on the business of
the Company.  Nevertheless,  because of political instability in a number of the
supply countries,  occasional  import quotas and other  restrictions on trade or
otherwise,  there can be no  assurance  that the Company  will at all times have
access to a sufficient supply of merchandise

Sales and Marketing
-------------------

The Company sells its products on a wholesale basis only. The Company's products
are  sold  to  discount  stores,  mass  merchants,  department  stores,  luggage
specialty stores and sporting goods stores.  For the fiscal year ended April 30,
2002, Sears Roebuck & co., Kohl's Department Stores, Mervyn's and BJ'S Wholesale
Club  accounted  for 26%,  20%,  12% and  11%,  respectively,  of the  Company's
revenue.  No  other  customer  accounted  for  more  than  10% of the  Company's
revenues.  For the fiscal  year ended  April 30,  2002,  sales of the  Company's
sports  bags/luggage  products  accounted for approximately 99% of the Company's
revenues while  approximately 1% of the Company's revenues were derived from the
sales of other  discontinued  products from the related  Freezy Bag and exercise
Line.

The Company sells its products  primarily through  independent sales agents on a
commission-only basis. The Company currently engages 4 sales agents either on an
individual basis or through independent sales organizations.  The Company has no
long-term  arrangements  with  any of  its  agents.  The  Company  usually  pays
commissions  ranging  from .5% to 5% of the net  sales  price  of its  products.

                                       4
<PAGE>

Although the Company believes that its sales agents sell products exclusively on
behalf of the Company,  there are no agreements  that prohibit them from selling
competing products.

In  addition,  on a small  scale,  the  Company  markets  existing  products  to
retailers  for resale under their own private  labels.  The Company  delivers to
Kohl's Department Stores and Sears Roebuck. Although the scope of this marketing
effort is currently limited,  the Company intends to try to expand the number of
private label  transactions.  No assurance can be given that its efforts in this
area will be successful.

Competition
-----------

The Company's sports  bags/luggage  products compete with products designed by a
number of the largest companies in the industry,  including Samsonite,  Sky Way,
American  Tourister,  Ricardo and High Sierra. The Company believes that because
of its  concentration  on the upscale  lifestyle  and more  specialized  leisure
market  that are  associated  with the  trademark  JEEP(TM),  it will be able to
continue  to  grow  its  sports  bags/luggage  business.  The  Company's  larger
competitors have access to greater financial resources.  Accordingly,  there can
be no assurance that the Company will be able to effectively  compete with these
companies as well as with other smaller entities.

Under an agreement  dated in June 2000, the Company agreed to sell its inventory
of exercise  products,  excluding the Spalding(TM)  Rotaflex(TM)  products,  and
entered  into an agreement  not to sell any product that would  compete with the
items sold for a period of five years. SEE Part I Item 3 LEGAL PROCEEDINGS.

Intellectual Property--License Agreements
-----------------------------------------

The  Company   owns  the   trademark   Polaris   Expedition(TM),U.S.   Trademark
Registration  Number  2,417,987.This  trademark is used on a  collection  of the
Company's backpacks,duffel bags and upright Pullmans.

The Company owns the U.S.  Design  Patent for a Wheeled  Backpack.  U.S.  Design
Patent  Number US  D448,161  S. This  patent is for the  ornamental  design of a
wheeled backpack.

License  Agreements - The Company sells a number of its products  under licensed
names.  The Company has entered into licensee  agreements  which provide for the
use of various trade names, as follows:

Jeep - Under an agreement dated January 8, 1993, as amended by letter  amendment
dated May 10,2002,  between the Company and the Daimler Chrysler Corporation (as
so amended, the "Jeep Agreement"), the Company was granted the exclusive license

                                       5
<PAGE>

to use the names JEEP, WRANGLER and RENEGADE in connection with the manufacture,
sale and distribution of sports  bags/luggage  products.  The current expiration
date of the Jeep  Agreement  is December  31,  2005.  Under the  agreement,  the
Company  must pay the  greater of 6% of net Jeep sales or minimum  royalties  of
$240,000, $300,000, $350,000 and $350,000,  respectively, for the calendar years
2002,2003,2004, and 2005. In addition, the Company must pay 1% of net Jeep sales
as an advertising fee.

Adolfo- Under an agreement  dated September  1,2000,  between the Company and 3L
Associates, the Company was granted the exclusive license to use the Adolfo name
in  connection  with the  manufacture,  sale and  distribution  of sports  bags/
luggage products.  The current  expiration date of the Adolfo agreement is March
31,2003 and is renewable until March 31,2007.  Under the agreement,  the Company
must pay the  greater of 6% of net Adolfo  sales or minimum  payments of $25,000
for each annual period until March 2003.

Spalding  --Under an agreement  dated  October 1, 1997,  between the Company and
Spalding & Evenflo  Companies  Inc., the Company was granted the exclusive right
to use the name Spalding in connection  with the sale and  distribution  of hand
held exercise  products.  The agreement was amended as of October  27,2000.Under
the  amendment  all  articles  were deleted  from the  agreement  except for the
"Rotaflex  System" for a test period until September 2001.  Under the agreement,
the Company  must pay the greater of 5% of net  Rotaflex(TM)  sales or a minimum
royalty of $50,000. The Company has discontinued Sales of Rotaflex(TM) products.


Under an agreement  dated in June 2000, the Company agreed to sell its inventory
of exercise products,  excluding the Spalding Rotaflex(TM),  and entered into an
agreement  not to sell any product that would  compete with the items sold for a
period  of five  years.  The  Company  has  discontinued  Sales of  Rotaflex(TM)
products. SEE Part II Item 2 LEGAL PROCEEDINGS.


Rotaflex -- Under an agreement  dated  December 17, 1997 with  Connelly  Synergy
Systems  LLC,  the Company has  obtained  the  exclusive  right to  manufacture,
distribute and sell a hand held portable total home gym product to be sold under
the trademark Spalding(TM) Rotaflex(TM). The agreement is scheduled to expire on
December 31, 2007,  and is renewable  for an  additional  five years.  Under the
agreement,  the Company must pay the greater of % of net  Rotaflex(TM)  sales of
$50,000 per year in minimum  royalties.  The Company has  discontinued  Sales of
Rotaflex(TM) products.

Management Agreement with Achim Importing Co., Inc.
---------------------------------------------------

Pursuant to a Warehousing and Service  Agreement  dated as of September  21,2000
(the "Warehousing  Agreement")  between the Company and Achim Importing Company,
Inc.("Achim"),Achim  performs certain  administrative  services on behalf of the
Company. Under the Warehousing Agreement,  Achim assists, among other things, in

                                       6
<PAGE>

the  maintenance  of  financial  and  accounting  books  and  records,   in  the
preparation of monthly financial  accounts  receivable aging schedules and other
reports and in the performance of credit checks on the Company's customers.

In consideration for these services,  Achim receives an annual fee calculated as
a percentage  of the  Company's  invoiced  sales  originating  at the  warehouse
ranging  from 4% of  invoiced  sales  under $30  million  to 3% for sales of $60
million or more. For sales not  originating  at the warehouse,  Achim receives a
service fee in the amount of 1.5% of the Company's  invoiced  sales to customers
and accounts located in the United States if payment is made by letter of credit
and 1% if such  customers  and accounts are located  outside the United  States,
irrespective of manner of payment.

In  addition,  under  the  Warehousing  Agreement,  Achim  provides  warehousing
services  consisting  of  receiving,  shipping  and  storing  of  the  Company's
merchandise.  The Company pays Achim a monthly fee of 3% of its  invoiced  sales
originating  at the  warehouse in  connection  with these  warehousing  services
performed by Achim under the  Warehousing  Agreement.  As part of this agreement
the Company applies an offset for certain shared expenses.



The Warehousing Agreement has a term of two years and is automatically renewable
for additional one-year periods unless written notice of termination is given at
least six  months  prior to the  commencement  of a renewal  period.  During the
fiscal year ended April 30, 2002, the Company charged  operations  approximately
$382,000 in fees.

Pursuant to a Security  Agreement dated as of January 2,2001 between the Company
and  Achim,   Achim  has  perfected  its  security  interest  in  the  accounts,
collateral,  documents,  general  intangibles,  instruments and inventory of the
Company.  This security agreement is intended to secure amounts due to Achim for
purchases  of  inventory  Achim has made for the  Company,  for which  Achim has
charged the Company without  markup,  and for advances of working capital to the
Company. As of April 30,2002 the balance due to Achim was $3,490,000.

Achim is  wholly  owned by  Marton  B.  Grossman,  the  Company's  Chairman  and
President.

Employees
---------

As of July 31,2002,  the Company employed 8 persons, of whom four were executive
officers,   two   were   engaged   in   sales   and   two   were   involved   in
operations-warehousing   and  shipping.  None  of  the  Company's  employees  is
represented by a union and no work stoppages have occurred.

ITEM 2. PROPERTIES
------------------

The Company  occupies  4,500 square feet of office  space,  located at 58 Second
Avenue, Brooklyn, New York. The property is owned by Sym Holding Corp., which is
owned by Isaac Grossman and two of his siblings. Isaac Grossman is the Company's
Vice Chairman, Treasurer and Secretary. Since Achim occupied the premises before
it became  affiliated  with the Company,  it remains the lessee under the lease.

                                       7
<PAGE>

Achim  makes the  property  available  to the  Company on an at-will  basis.  In
addition,  the Company occupies space in a warehouse  located at 1600 Livingston
Avenue,  North  Brunswick,  New  Jersey.  The  Company  occupies  space  in this
warehouse  on an as needed  basis and at will basis.  The  property is leased by
Achim  from  1600  Rt.1,  LLC.  See  PART  I ITEM  1.  DESCRIPTION  OF  BUSINESS
"Management  Agreement  with Achim  Importing  Co.,  Inc." and PART III ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

ITEM 3.  LEGAL PROCEEDINGS
--------------------------

On July 29,1999,Bollinger  Industries  ("Bollinger") filed a complaint in the US
District  Court for the  Northern  District  of  Texas.  The  complaint  alleged
infringement of three patents by the Company with respect to one of its exercise
steps.   Under  a  settlement   agreement  dated  June  2,2000,in  exchange  for
Bollinger's  agreement to dismiss the complaint,  the Company agreed to sell its
inventory of exercise  products,  excluding the Spalding  Rotaflex,  and entered
into an agreement not to sell any product that would compete with the items sold
for a period of five years.  The sale of the inventory  occurred on June 12,2000
and the Bollinger complaint against the Company was dismissed on June 12, 2000.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

          Not applicable.

                                     PART II

ITEM 5. MARKET  PRICE OF  REGISTRANT'S  COMMON  EQUITY AND  RELATED  STOCKHOLDER
MATTERS

The  Company's  common  shares do not trade  publicly.  As of July 31,  2002,the
Company  had  4,418,258  shares  of  Common  Stock  outstanding  held  by  1,348
shareholders of record,  all of which shares may be sold pursuant to Rule 144 of
the Securities Act of 1933, as amended. The Company does not have any options or
warrants outstanding.

The  Company  has not paid a cash  dividend  on its Common  Stock.  The  Company
intends  to  retain  all  earnings  for the  foreseeable  future  for use in the
operation and expansion of its business and,  accordingly,  the Company does not
contemplate paying any cash dividends on its Common Stock in the near future.

ITEM 6. SELECTED FINANCIAL DATA

The following  selected financial data for the fiscal years ended April 30, 2002
and 2001 is derived  from the  audited  financial  statements  included  in this
report.

                                       8
<PAGE>

Statements of Operations Data
-----------------------------
<TABLE>

                                        Fiscal Year Ended

                                April 30,2002           April 30,2001
<S>                             <C>                     <C>
Revenue                         $7,600,000               $9,526,000

Operating Loss                  $(696,000)              $(1,238,000)

Income Taxes                            0                         0

Net Loss                        $(696,000)              $(1,238,000)

Net Loss Per Share
Basic and Diluted                    (.16)                     (.28)


Balance Sheet Data

Working Capital                 $(1,451,000)

Total Assets                     $2,850,000

Total Liabilities                $4,263,000

Stockholders' Deficit           $(1,413,000)
</TABLE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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.

Dynamic  International,  Inc. (the  "Company") was formed on August 31,2000 as a
wholly  owned  company  of  Dynamic  International  Ltd.  Pursuant  to an Equity
Transfer and Reorganization Agreement dated August 10,2000. (the "Agreement") by
and among Ltd., certain of its shareholders,  Emergent Management  Company,  LLC
("Emergent"),  and several holders of membership interests in Emergent Ventures,
LLC (an  affiliate  of  Emergent),  Ltd.  transferred  all of its  assets to the
Company. In addition,  the Company assumed all of the liabilities of Ltd. (other
than outstanding bank debt in the amount of $250,000).

General
-------

The following  discussion  should be read in conjunction  with the  Consolidated
Financial Statements and related notes thereto of the Company included elsewhere
herein.

The Company's auditors have indicated, in their report dated August 6,2002, that
there is substantial  doubt regarding our ability to continue as a going concern

                                       9
<PAGE>

as a  result  of our  significant  net  losses  of  approximately  $696,000  and
$1,238,000  for the fiscal  years ended April 30,  2002 and April  30,2001.  The
Company did generate cash of approximately  $1,379,000 for the fiscal year ended
April  30,2002,  which  was  preceded  by  utilization  of  cash  for  operating
activities of approximately  $1,079,000 for the fiscal year ended April 30,2001.
In  addition,  as a result  of the  terminated  credit  arrangement  with  Chase
Manhattan  Bank in June of 2000,  the Company will need to continue and possibly
add to its borrowing facility with an affiliate unless  alternative  funding can
be arranged.  These factors raise  substantial doubt about the Company's ability
to continue as a going concern.

Results of  Operations  for the Fiscal Year Ended April 30, 2002 Compared to the
Fiscal Year Ended April 30, 2001.

Sales for the fiscal year ended April 30,  2002,decreased by $1,925,000 or 20.0%
to $7,601,000  from  $9,526,000 for the fiscal year ended April 30, 2001.  Sales
for the fiscal  year ended  April  30,2001  included  the sale of the  Company's
exercise  products,   under  an  agreement  with  Bollinger   Industries,   L.P.
(Bollinger),(See  PartI Item 3 Legal  Proceedings) for  approximately  $871,000.
After  excluding the sale to Bollinger  from the Company's  sales for the fiscal
year ended April  30,2001,  the company's  sales for the fiscal year ended April
30,2002 decreased by $1,054,000 or 12.2%. During the fiscal year ended April 30,
2002,  sales to Kohl's  Department  Stores  Sears  Roebuck and Office Depot Inc.
decreased by  approximately  $1,176,000,  $677,000 and  $241,000,  respectively.
These  decreases were offset by increased sales to Mervyn's (a new customer) and
BJ'S  Wholesale  Club of  approximately  $911,000  and  $169,000,  respectively.
Allowances granted to customers were 9.6% of net sales for the fiscal year ended
April  30,2002  compared  to 10.4% for the  fiscal  year  ended  April  30,2001.
Allowances  for the  fiscal  year ended  April  30,2001  included  approximately
$224,000  in  allowances  granted  to  Bollinger  for the sale of the  Company's
exercise  products which equaled  approximately  2.4% of the net sales. This was
offset by increases in allowances  granted to Mervyn's of approximately  1.5% of
net sales for the fiscal year ended April 30,2002.

The  Company's  gross profit of  $1,729,000  for the fiscal year ended April 30,
2002 was $301,000 less than the gross profit of  $2,029,000  for the fiscal year
ended April 30,2001.

The gross  profit  percentage  improved  from 21.3% in fiscal  2001 to 22.74% in
2002.  Sales for the fiscal year ended April 30, 2001,  included the sale of the
Company's exercise products, under an agreement with Bollinger Industries,  L.P.
(Bollinger),(See PartI Item 3 Legal Proceedings) for approximately $871,000. The
sale of the Company's hand held exercise  product line to Bollinger in June 2000
was at cost,  generating no gross margin. After excluding the sale to Bollinger,
the gross margin for the fiscal year ended April 30,2001 was 23.3%.

Operating expenses,  exclusive of interest expense, of $2,194,000 for the fiscal
year  ended  April  30,  2002 were  $754,000  less than  operating  expenses  of
$2,948,000  for  the  fiscal  year  ended  April  30,  2001.  This  decrease  is
represented approximately by changes in the following expenses:

                                       10
<PAGE>

<TABLE>
<S>                                     <C>
                                        Increase
                                       (Decrease)

Royalty Expense                         $200,000
Shipping Fees                          ($175,000)
Salesman Salaries                       ($43,000)
Salesman Commissions                   ($118,000)
Travel expenses                         ($33,000)
Promotional and Selling Materials      ($460,000)
Office Salaries                         ($23,000)
Legal Fees                              ($60,000)
Depreciation                            ($26,000)

Other Corporate Expenses                ($20,000)
</TABLE>

Royalty  expenses  increased  by $200,000  due  primarily  to the accrual of the
balance of minimum  royalties due to Connelly  Synergy  Systems LLC, (See PART I
"DESCRIPTION  OF  BUSINESS  -  LICENSE  AGREEMENTS).Shipping  fees and  salesman
commissions  decreased by $175,000 and $118,000  respectively,  due to the lower
sales  volume  during the fiscal year ended  April  30,2002.  Salesman  salaries
decreased by $43,000 due  primarily  to a reduction in salary for one  employee.
Travel  expenses  decreased  by  $33,000  because of  reduced  overseas  travel.
Promotional  and selling  expenses  decreased by $460,000  due  primarily to the
write off of Latin  American  marketing  expenses  associated  with the Rotaflex
System  (SEE PART I Item 1  Intellectual  Property)during  the fiscal year ended
April 30,2001.  Office salaries decreased by $23,000 due to the elimination of a
position.  Legal fees  decreased  by $60,000 due to the  Company's  formation in
August of 2000 for which legal  expenses  were  incurred in the previous  fiscal
year.(see PART II Item 2. LEGAL PROCEEDINGS).  Depreciation expense decreased by
$26,000 due to reduced capital expenditures.  Other corporate expenses decreased
by $20,000 including reductions in payroll taxes and telephone expenses.

Interest  expense for the fiscal year ended April 30, 2002  decreased by $11,000
from the fiscal year ended April 30, 2001.

Interest  expense-  related  party  for the  fiscal  year  ended  April  30,2002
decreased by $78,000 to $215,000  from  $293,000 for the fiscal year ended April
30,2001.  This  decrease is due to reduced  interest  rates and the reduction of
amount due to Achim Importing Company, Inc.("Achim").

The  Company's  pretax loss of $696,000 for the fiscal year ended April 30, 2002
represents  a $542,000  change from a pretax loss of  $1,238,000  for the fiscal
year ended April 30, 2001.

With the  sale of the  exercise  equipment  line,  management  has  focused  its
marketing  efforts toward the sale and  distribution of the sports  bags/luggage
products.  Management  has  projected  a  business  plan  which it  believes  is
realistic,  and which,  projects  revenues and gross margin to remain relatively
consistent  with the fiscal year ended April 30,2002.  This will result in a net
loss and the need for continued  financial support from Achim. No assurances can
be given that any of these anticipated results will actually be achieved.

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

                                       11
<PAGE>
<TABLE>
<S>                                 <C>                     <C>
                                    Fiscal Year             Fiscal Year
                                       Ended                   Ended
                                   April 30, 2002          April 30, 2001
Gross Sales                         $8,334,000              $10,519,000
 Allowances                           (733,000)                (993,000)
                                   ------------             -----------
Net Sales                           $7,601,000               $9,526,000
Cost of Goods
Sold                                 5,872,000                7,496,000
                                  --------------            -----------

Gross Margin                         1,729,000                2,030,000
As a Percentage of Net Sales           22.74%                   21.31%


Operating Expenses                   2,194,000                2,948,000
Interest                                16,000                   27,000
Interest- related party                215,000                  293,000
                                  --------------            -----------
                                     2,425,000                3,268,000

Pretax Loss                          $(696,000)             $(1,238,000)
</TABLE>

Results of  Operations  for the Fiscal Year Ended April 30, 2001 Compared to the
Fiscal Year Ended April 30, 2000.

Sales for the fiscal year ended April 30,  2001,increased by $840,000 or 9.7% to
$9,526,000 from $8,686,000 for the fiscal year ended April 30, 2000.  During the
fiscal year ended April 30,  2001,  sales to Sears  Roebuck,  Kohl's  Department
Stores and  Meijer  Inc.  increased  by  approximately  $571,000,  $418,000  and
$250,000, respectively. These increases were offset by the sale of the Company's
hand held  exercise  line to  Bollinger in June of 2000.  Allowances  granted to
customers  were  10.4% of net sales for the  fiscal  year  ended  April  30,2001
compared  to 6.5% for the fiscal year ended April  30,2000.  Allowances  for the
fiscal year ended April 30,2001  included  approximately  $224,000 in allowances
granted to  Bollinger  for the sale of the  Company's  exercise  products  which
equaled  approximately  2.4% of the net sales. An increase in allowances granted
to Kohl's  represented  the  balance of the  increase  for the fiscal year ended
April 30,2001.

The  Company's  gross profit of  $2,030,000  for the fiscal year ended April 30,
2001 was $282,000 higher than the gross profit of $1,748,000 for the fiscal year
ended April 30,2000.

The  improvement  in the gross  profit  percentage  from 20.1% in fiscal 2000 to
21.3% in 2001 is partially a result of less write downs taken in fiscal 2000 for
slow-moving  or excess  products,  and the write down  recorded  in fiscal  2001
related  to  the  inventory  to  be  sold  to  Bollinger   (see  Item  2,  Legal
Proceedings). In addition, the change in product mix (from exercise equipment to
luggage)  resulted in an overall  improvement  in gross  profit  margins.  Gross
profit on exercise  equipment was approximately  $10,000 in the year ended April
30, 2001 as compared to approximately  $306,000 in the year ended April 30,2000.
The sale of the Company's  hand held exercise  product line to Bollinger in June
2000 was at cost, generating no gross margin.

Operating expenses,  exclusive of interest expense, of $2,948,000 for the fiscal
year  ended  April  30,  2001 were  $201,000  less than  operating  expenses  of

                                       12
<PAGE>

$3,149,000  for  the  fiscal  year  ended  April  30,  2000.  This  decrease  is
represented approximately by changes in the following expenses:
<TABLE>
<S>                                     <C>
                                        Increase
                                       (Decrease)

Royalty Expense                        ($220,000)
Patent and Trademark Expense            ($18,000)
Shipping Fees                           $142,000
Salesman Salaries                       ($70,000)
Promotional and Selling Materials       $299,000
Travel                                  ($51,000)
Office Salaries                         ($81,000)
Legal Fees                             ($122,000)
Other Corporate Expenses                ($80,000)
</TABLE>

Royalty expenses,  patent and trademark  expenses,  salesman salaries and travel
expenses decreased by $220,000, 18,000, $70,000 and $51,000 respectively, due to
the sale of the hand held  exercise line to Bollinger in June of 2000 (SEE PartI
Item 3. LEGAL PROCEEDINGS). After the sale to Bollinger there would be no future
sales of these items.  Shipping fees  increased by $142,000 due primarily to the
increased sales of the Company's sports bags/luggage  products.  Promotional and
selling  expenses  increased by $299,000 due primarily to the write off of Latin
American marketing expenses associated with the Rotaflex System (SEE PART I Item
1  Intellectual  Property).  Office  salaries  decreased  by $81,000  due to the
elimination of a position. Legal fees decreased by $122,000 due to the Company's
defense against a complaint of patent  infringement which expenses were incurred
in the  prior  fiscal  year,  (see  PART I Item  3.  LEGAL  PROCEEDINGS).  Other
corporate   expenses   decreased  by  $80,000  including   reductions  in  other
professional fees, insurance, bank charges and fringe benefits.

Interest  expense for the fiscal year ended April 30, 2001  decreased by $83,000
from the fiscal year ended April 30, 2000. This decrease was primarily the
result of a decrease in the discounts paid on bankers acceptances.

Interest  expense-  related  party  for the  fiscal  year  ended  April  30,2001
increased by $111,000 to $293,000  from $182,000 for the fiscal year ended April
30,2000.  This  increase  is  due to an  increase  in the  amount  due to  Achim
Importing Company, Inc.("Achim").

The Company's pretax loss of $1,238,000 for the fiscal year ended April 30, 2001
represents  a $455,000  change from a pretax loss of  $1,693,000  for the fiscal
year ended April 30, 2000.

With the  sale of the  exercise  equipment  line,  management  has  focused  its
marketing  efforts toward the sale and  distribution of the sports  bags/luggage
products.  During the prior year, the product line has  demonstrated  continuing
sales  growth.  Management  has  projected a business  plan which it believes is
realistic,  and which,  could generate sales growth combined with necessary cost
containment  measures.  Management believes that this business plan could enable
the Company to restore its operations to a profitable  level.  No assurances can
be  given  that any of these  anticipated  improved  results  will  actually  be
achieved.

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

                                       13
<PAGE>
<TABLE>
<S>                                  <C>                    <C>
                                    Fiscal Year              Fiscal Year
                                       Ended                    Ended
                                   April 30, 2001          April 30, 2000
Gross Sales                         $10,519,000             $9,254,000
 Allowances                            (993,000)              (568,000)
                                    ------------             ----------
Net Sales                            $9,526,000             $8,686,000
Cost of Goods
Sold                                  7,496,000              6,938,000
                                    ------------            -----------

Gross Margin                          2,030,000              1,748,000
As a Percentage of Net Sales            21.31%                 20.00%


Operating Expenses                    2,948,000              3,149,000
Interest                                 27,000                110,000
Interest- related party                 293,000                182,000
                                   -------------            -----------
                                      3,268,000              3,441,000

Pretax Loss                         $(1,238,000)           $(1,693,000)
</TABLE>

Liquidity and Capital Resources
-------------------------------

Management Plan of Operations
-----------------------------

With the sale of a  portion  of the  exercise  equipment  line,  management  has
focused its marketing  efforts  toward the sale and  distribution  of the sports
bags/luggage products.

Management  has projected a business  plan which it believes is  realistic,  and
which,  projects revenues and gross margin to remain relatively  consistent with
the fiscal year ended April 30,2002. This will result in a net loss and the need
for continued  financial support from Achim.  Achim has purchased  inventory for
the Company and has charged the Company for the invoiced  amount without markup.
Pursuant to an unwritten understanding,  Achim arranges for the issuance, by its
financial  lender,  of  letters  of  credit in favor of the  Company's  overseas
suppliers,  thereby  enabling  the  Company  to  finance  the  purchases  of its
inventory.  Achim has also advanced working capital to the Company.  As of April
30,2002 the balance due to Achim was $3,490,000.  Achim has not entered into any
agreements,  formal or informal,  to fund the Company's  operations for the next
twelve months. However, no assurances can be given that any of these anticipated
improved results will actually be achieved.

The Company believes that the terrorist attack in the United States on September
11, 2001 has had a chilling effect on travel generally.  Consequently,  consumer
demand for luggage has been reduced.  As a result, the Company currently expects
that sales of its luggage  products  will likely be  negatively  impacted for at
least  the near  term.  It is not  practicable  to  quantify  the  extent of any
downturn at this time.

Fiscal Year ended April 30, 2002
--------------------------------

                                       14
<PAGE>

Operating Activities
--------------------

During  the  fiscal  year ended  April 30,  2002,  cash  provided  by  operating
activities amounted to $1,379,000.  This was the result of decreases in accounts
receivable  and  inventory  of $540,000  and  $1,379,000,  respectively,  and an
increase in accounts payable and accrued  expenses of $189,000.  These increases
in cash were  offset by the net loss and an  increase  in other  current  assets
$696,000 and $38,000, respectively.

Financing Activities
--------------------

The Company has received  substantial  financial  support  from Achim.  Achim is
wholly owned by Marton B.  Grossman,  the Chairman and President of the Company.
Cash of  $1,399,000  was used to pay Achim  during the fiscal  year ended  April
30,2002.  Advances from Achim are due upon demand and are non-interest  bearing.
In  order to  record  the  fair  value  of the  cost of  funds in the  Company's
financial statements,  the Company records interest on the unpaid balance due to
Achim at the  JPMorganChase  prime rate plus 1%.This unpaid interest is credited
to paid in capital. The amount of interest recorded in this manner of the fiscal
year ended April 30, 2002 was $215,000 which offset the amounts paid to Achim.

Through June, 2000,the Company was able to fund a portion of its working capital
requirements  pursuant to an agreement with the Chase  Manhattan Bank ("Chase"),
which had provided for maximum  borrowings  of $1,500,000 in the form of letters
of credit and bankers  acceptances.  This agreement also provided for a security
interest in the inventory and notes and accounts  receivable of the Company.  In
addition, the agreement provided for the personal guarantee of the President and
major  shareholder of the Company for the entire balance.  The Chase credit line
was discontinued in June 2000.

Fiscal Year ended April 30, 2001
--------------------------------
Operating Activities
--------------------

During the fiscal year ended April 30, 2001,  cash used by operating  activities
amounted to $1,079,000.  This was the result of a net loss of $1,238,000 and the
use of cash as a result of  increases in accounts  receivable  and a decrease in
accounts  payable and accrued  expenses  of $8,000 and  $447,000,  respectively.
These uses of cash were  partially  offset by  decreases in  inventory,  prepaid
expenses  and other  current  assets,  security  deposits  and other  assets of,
$223,000, $343,000 and $19,000, respectively.

Investing Activities
--------------------

Cash of $15,500 was used to purchase equipment.

Financing Activities
--------------------

The Company has received  substantial  financial  support  from Achim.  Achim is
wholly owned by Marton B. Grossman, the Chairman and President of the Company.

                                       15
<PAGE>

Achim provided $1,171,000 in cash for financing activities which was offset by a
decrease in banker's  acceptances of $350,000.  Advances from Achim are due upon
demand and are  non-interest  bearing.  In order to record the fair value of the
cost of  funds  in the  Company's  financial  statements,  the  Company  records
interest on the unpaid balance due to Achim at the JPMorganChase prime rate plus
1%.This unpaid  interest is credited to paid in capital.  The amount of interest
recorded in this  manner of the fiscal  year ended  April 30, 2002 was  $293,000
which increased cash provided by financing activities.

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 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 in 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA

The financial  statements are included herein  immediately  before the signature
page.

ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Officers and Directors

The officers and directors of the Company are as follows:

                                       16
<PAGE>

<TABLE>
<S>     <C>                         <C>      <C>

         Name                       Age      Position

         Marton B. Grossman         71       Chairman and President
         Isaac Grossman             40       Vice Chairman, Treasurer and Secretary
         William P. Dolan           49       Vice President--Finance
         John Holodnicki            49       Vice President--Sales
</TABLE>
Marton B.  Grossman  has been the Chairman  and Chief  Executive  Officer of the
Company  since  August  2000.  For the past 35 years,  he has been  President of
Achim,  a  privately-held  company  engaged  in the  import and export of window
coverings and accessories.  In addition,  he is President of MG Holding Corp., a
privately-held  financial  holding company.  Mr. Grossman is the father of Isaac
Grossman,  the Company's Vice Chairman,  Treasurer and Secretary.  Mr.  Grossman
spends approximately 20% of his time working for the Company.

Isaac  Grossman has been the Company's  Vice  Chairman,  Treasurer and Secretary
since August  2000,  and Vice  President  of Achim since 1989.  He is the son of
Marton B. Grossman,  the Company's  Chairman and President.  Mr. Grossman spends
approximately 20% of his time working for the Company.

William P. Dolan has been the  Company's  Vice  President-Finance  since  August
2000. Mr. Dolan graduated from the William Paterson College of New Jersey and is
a Certified Public Accountant.  Prior thereto,  Mr. Dolan held the same position
in the predecessor company since 1987.

John  Holodnicki  has been a Vice  President--Sales  at the Company since August
2000. From 1981 to 1994, he was a Vice  President--Sales  at HIT Industries,  an
importer of business computer cases. Mr. Holodnicki earned a degree in Marketing
from the University of Illinois in 1975.

Board of Directors

Each director is elected at the Company's  annual  meeting of  stockholders  and
holds  office  until  the next  annual  meeting  of  stockholders,  or until his
successor is elected and qualified.  At present, the Company's bylaws require no
fewer than one director.  Currently, there are two directors of the Company. The
bylaws  permit the Board of  Directors  to fill any vacancy and the new director
may serve until the next annual meeting of  stockholders  or until his successor
is elected and  qualified.  Officers are elected by the Board of  Directors  and
their  terms  of  office  are,  except  to the  extent  governed  by  employment
contracts, at the discretion of the Board.


ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the  compensation  paid or accrued by the Company
during the three  fiscal  years ended April 30, 2002 (I) to its Chief  Executive
Officer,  (ii) its  other  two  Executive  Officers  and  (iii)  one  additional
non-Executive Officers whose cash compensation exceeded $100,000 per year in any
such year:

                                       17
<PAGE>

SUMMARY COMPENSATION TABLE (1) (2)
<TABLE>
<S>                       <C>    <C>          <C>     <C>

                          Annual   Compensation
Name/Principal            Year                         All Other
Position                  Ended     Salary    Bonus   Compensation (3)

Marton B. Grossman        2002       $0                  $31,200
President & Chairman      2001       $0                  $31,200
                          2000       $0                  $31,200

Isaac Grossman            2002       $0                  $32,240
Director, Treasurer       2001       $0                  $32,240
                          2000       $0                  $32,240

William P. Dolan          2002   $110,825                    $0
Vice- President- Finance  2001   $111,673                    $0
                          2000   $111,666                    $0

John Holodnicki           2002   $170,577                    $0
Vice President            2001   $181,731                    $0
                          2000   $170,423                    $0
</TABLE>

(1) The above  compensation  does not include the use of an automobile and other
personal  benefits,  the total  value of which  does not  exceed as to any named
officer or director or group of executive  officers the lesser of $50,000 or 10%
of such person's or persons' cash compensation.

(2)  Pursuant to the  regulations  promulgated  by the  Securities  and Exchange
Commission,  the table omits  columns  reserved  for types of  compensation  not
applicable to the Company.

(3)  Consists  of  estimated  portion  of the fees  payable  to Achim  under the
Warehousing Agreement  attributable to Marton B. Grossman's and Isaac Grossman's
activities  performed  on behalf of the  Company.  Marton  Grossman  is the sole
shareholder,  and Isaac  Grossman  is an  employee of Achim See Part III Item 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

None of the  individuals  listed  in the  table  above  received  any  long-term
incentive plan awards during the fiscal year

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following  table sets forth, as of July 31,2002,  information  regarding the
beneficial  ownership of the  Company's  Common Stock based upon the most recent
information available to the Company for (i) each person known by the Company to
own beneficially more than five (5%) percent of the Company's outstanding Common
Stock, (ii) each of the Company's  officers and directors,  and (iii) all of the
                                       18
<PAGE>

officers and directors of the Company as a group. Each stockholder's address c/o
the  Company,  58 Second  Avenue,  Brooklyn,  New York 11215,  unless  otherwise
indicated.

                            Shares Owned Beneficially
                                  and of Record

<TABLE>

Name and Address                No. of Shares                % of Total
<S>                                <C>                            <C>
 Marton B. Grossman (1)             2,842,977                      64.4
 Isaac Grossman                             0                       *

 William P. Dolan                         123                       *
 John Holodnicki                           11                       *


All Officers and Directors
  As a group (4persons)             2,843,111                      64.4
</TABLE>

* Less than 1%

(1) Consists of $2,516,614  shares  registered in the name of Marton B. Grossman
and 326,363 shares held by a charitable  family  foundation (the " Foundation").
Mr. Grossman and his wife are the directors of the Foundation. Marton and Sheila
Grossman disclaim beneficial ownership in the shares held by the Foundation.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a  Warehousing  Agreement,  Achim  performs  certain  administrative
services  on  behalf of the  Company.  Under the  Warehousing  Agreement,  Achim
assists,  among other things,  in the  maintenance  of financial and  accounting
books and records,  in the preparation of monthly financial accounts  receivable
aging schedules and other reports and credit checks on the Company's  customers.
In  consideration  of these  services,  Achim  receives an annual  fee,  payable
monthly,  calculated as a percentage of the Company's invoiced sales originating
at the warehouse  ranging from 4% of invoiced sales under  $30,000,000 to 3% for
sales of $60,000,000 or more. For sales not originating at the warehouse,  Achim
receives a service fee in the amount of 1.5% of the Company's  invoiced sales to
customers and account  located in the United States if payment is made by letter
of credit and 1% if such  customers and accounts are located  outside the United
States, irrespective of manner of payment.

                                       19
<PAGE>

In  addition,  under  the  Warehousing  Agreement,  Achim  provides  warehousing
services  consisting  of  receiving,  shipping  and  storing  of  the  Company's
merchandise.  The Company pays Achim a monthly fee of 3% of its  invoiced  sales
originating  at the  warehouse in  connection  with these  warehousing  services
performed by Achim under the Warehousing  Agreement.  The Company  believes that
the terms of each transaction, under the agreement, are at least as favorable to
the Company as those it would expect to negotiate with unrelated parties.

The Warehousing Agreement has a term of two years and is automatically renewable
for additional one-year periods unless written notice of termination is given at
least six  months  prior to the  commencement  of a renewal  period.  During the
fiscal year ended April 30, 2002, the Company accrued approximately  $382,000 in
fees under the Warehousing Agreement.

Achim is  wholly  owned by  Marton  B.  Grossman,  the  Company's  Chairman  and
President.

Pursuant to a Security  Agreement dated as of January 2,2001 between the Company
and  Achim,   Achim  has  perfected  its  security  interest  in  the  accounts,
collateral,  documents,  general  intangibles,  instruments and inventory of the
Company.  This security agreement is intended to secure amounts due to Achim for
purchases  of  inventory  Achim has made for the  Company,  for which  Achim has
charged the Company without  markup,  and for advances of working capital to the
Company. As of April 30,2002 the balance due to Achim was $3,490,000.

On April 30, 1998 the Company  entered  into a credit  agreement  with The Chase
Manhattan  bank for maximum  borrowings  of $1,500,000 in the form of letters of
credit  and banker  acceptances.  The  agreement  also  provided  for a security
interest in the inventory and notes and accounts receivable of the Company.  The
agreement  also  provided  for the  personal  guarantee  of Marton B.  Grossman,
President of the Company,  and majority shareholder of the Company on the entire
balance. The agreement was discontinued in June of 2000.

The Company  occupies  4,500 square feet of office  space,  located at 58 Second
Avenue, Brooklyn, New York. The property is owned by Sym Holding Corp., which is
owned by Isaac Grossman and two of his siblings. Isaac Grossman is the Company's
Vice Chairman, Treasurer and Secretary. Since Achim occupied the premises before
it became  affiliated  with the Company,  it remains the lessee under the lease.
Achim  makes the  property  available  to the  Company on an at-will  basis.  In
addition,  the Company occupies space in a warehouse  located at 1600 Livingston
Avenue,  North  Brunswick,  New  Jersey.  The  Company  occupies  space  in this
warehouse  on an as needed  basis and at will basis.  The  property is leased by
Achim from 1600 Rt.1,  LLC. Other than the fees payable by the Company under the
Warehousing  Agreement,  the Company pays no rent for the  property.  See Part I
ITEM 1. BUSINESS "Management  Agreement with Achim Importing Co., Inc". and ITEM
2. DESCRIPTION OF PROPERTIES.

                                       20
<PAGE>

Marton B. Grossman,  President of the Company, and Isaac Grossman,  Treasurer of
the Company, perform operational and administrative duties as obligated by their
positions.  The executive  compensation  table(See Partiii Item 111) lists other
compensation for the fiscal year ended April 30,2002 of $31,200 and $32,240, for
Marton B. Grossman and Isaac Grossman , respectively. This compensation consists
of  estimated  portion  of the fees  payable  to  Achim  under  the  Warehousing
Agreement  attributable to Marton B. Grossman's and Isaac Grossman's  activities
performed on behalf of the Company.

Item 14. EXHIBITS,FINANCIAL STATEMENTS, AND REPORTS ON FORM 8K



3. Exhibits

     The Index to Exhibits  following the Signature  Page indicates the exhibits
     which are being filed  herewith  and the  exhibits  which are  incorporated
     herein by reference.

(b)                        Reports on Form 8-K
                           -------------------

     No  Reports on Form 8-K were  filed  during the last  quarter of the fiscal
     year ended April 30, 2002.

<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                              FINANCIAL STATEMENTS
                                       AND
                                AUDITORS' REPORT

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001
<PAGE>
                                    CONTENTS
                                                                          Page
                                                                          ----
AUDITORS' REPORTS                                                          F-1

FINANCIAL STATEMENTS

     Balance Sheet as of April 30, 2002                                    F-2

     Statements of Operations for the Years Ended April 30, 2002 and 2001  F-3

     Statements of Stockholders' Equity (Deficit) for the Years Ended
         April 30, 2002 and 2001                                           F-4

     Statements of Cash Flows for the Years Ended April 30, 2002 and 2001  F-5

     Notes to Financial Statements                                      F-6-F-13

<PAGE>

                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
Dynamic International, Inc.

We have audited the accompanying balance sheet of Dynamic International, Inc. as
of April 30,  2002,  and the related  statements  of  operations,  stockholders'
equity  (deficit),  and cash flows for each of the two years in the period ended
April  30,  2002.  These  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.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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 and  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  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Dynamic International,  Inc. as
of April 30, 2002, and the results of its operations and its cash flows for each
of the  two  years  in the  period  ended  April  30,  2002 in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has incurred losses of approximately $696,000
and  $1,238,000  during the years ended  April 30, 2002 and 2001,  respectively.
These factors raise substantial doubt about the Company's ability to continue as
a going  concern.  Management's  plans  in  regard  to  these  matters  are also
described in Note 2. The  financial  statements  do not include any  adjustments
that might result from the outcome of this uncertainty.

As  discussed in Note 13, the  accompanying  financial  statements  for the year
ended April 30, 2001 have been restated.

                                              /s/ Israeloff, Trattner & Co, P.C.
Garden City, New York                         Israeloff, Trattner & Co, P.C.
August 6, 2002                                Certified Public Accountants

                                       F1

<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                                  BALANCE SHEET

                                 APRIL 30, 2002

                                     ASSETS

<TABLE>

CURRENT ASSETS
<S>  <C>                                                     <C>

     Cash                                                     $      38,006
     Accounts receivable, less allowances of $381,000               948,619
     Inventories                                                  1,735,890
     Other current assets                                            89,947
                                                              -------------

              Total Current Assets                                2,812,462
                                                              -------------

PROPERTY AND EQUIPMENT
     Tools and Dies                                                  74,383
     Furniture and Equipment                                         94,006
                                                              -------------

              Total Cost                                            168,389

     Less:    Accumulated depreciation                             (131,569)
                                                              -------------

              Property and Equipment - Net                           36,820
                                                              -------------
OTHER ASSETS                                                          1,000
                                                                    -------

              TOTAL ASSETS                                  $     2,850,282
                                                              =============


                      LIABILITIES AND STOCKHOLDERS' DEFICIT


CURRENT LIABILITIES
     Accounts payable and accrued expenses                  $       773,280
     Amounts due affiliated company                               3,489,830
                                                              -------------

              Total Current Liabilities                           4,263,110
                                                              -------------

COMMITMENTS AND CONTINGENCIES (Note 7)

STOCKHOLDERS' DEFICIT
     Common stock - par value $.001 per share; authorized
         50,000,000 shares; issued 4,418,258 shares                  4,419
     Additional paid-in capital                                  5,119,796
     Accumulated deficit                                        (6,537,040)
                                                              -------------
                                                                (1,412,825)
     Less:    Cost of 540 shares of treasury stock                      (3)
                                                              -------------

              Total Stockholders' Deficit                       (1,412,828)
                                                              -------------

              TOTAL LIABILITIES AND STOCKHOLDERS'
                 DEFICIT                                    $     2,850,282
                                                              =============

</TABLE>

     See accompanying notes to financial statements.

                                       F2
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                            STATEMENTS OF OPERATIONS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001


<TABLE>

                                                                                   2001
                                                                               (As Restated,
                                                                2002             Note 13)
                                                          ---------------     ---------------
<S>                                                           <C>                <C>

Net Sales                                               $     7,600,790     $     9,525,888

Cost of Sales                                                 5,871,332           7,495,938
                                                              -----------         ---------

         Gross profit                                         1,729,458           2,029,950
                                                            -------------         ---------

Operating Expenses
     Royalty expense                                            675,179             474,997
     Research and development                                     1,255              12,483
     Shipping expense                                           515,538             690,867
     Selling expense                                            661,706             851,457
     Advertising and promotion                                   61,049             520,670
     General and administrative                                 275,034             367,932
     Depreciation and amortization                                4,080              30,207
     Interest and bank charges                                   16,399              26,585
     Interest - related party                                   215,132             292,996
                                                            -------------       -----------

         Total operating expenses                             2,425,372           3,268,194
                                                            -------------       -----------

         Loss before income
              taxes (benefit)                                 (695,914)         (1,238,244)

Income tax (benefit) expense                                      -                   -
                                                            -------------       -----------

         Net loss                                       $     (695,914)     $   (1,238,244)
                                                           =============      =============

Basic and Diluted Loss Per Share                        $         (.16)     $         (.28)
                                                            ============       ============

Weighted Average Number of Shares                             4,417,718           4,417,718
                                                           =============      =============

</TABLE>


     See accompanying notes to financial statements.

                                       F-3

<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001



<TABLE>

                                                          Additional                                                   Total
                                          Common            Paid-In          Accumulated        Treasury           Stockholders'
                                           Stock            Capital            Deficit            Stock               Equity
                                      ---------------  ----------------  -----------------   -----------------  ------------------
<S>                                   <C>              <C>                <C>                   <C>               <C>

Balance - May 1, 2000, as
     originally reported              $         4,419  $      4,869,796    $    (4,420,690)      $          (3)    $       453,522

Prior - period adjustment
     To record interest on
     related party debt                            -                 -            (182,192)                 -             (182,192)
                                        -------------     -------------      -------------         -----------       -------------

Balance, beginning of year
     as restated                                4,419         4,869,796         (4,602,882)                 (3)            271,330

Net loss for the year ended
     April 30, 2001, as restated                   -                 -          (1,238,244)                 -           (1,238,244)

Bank debt retained by
     predecessor in connection
     with spin-off                                 -            250,000                 -                   -              250,000
                                        -------------     -------------      -------------         -----------       -------------

Balance - April 30, 2001
     (Note 13)                                  4,419         5,119,796         (5,841,126)                 (3)           (716,914)

Net loss for the year ended
    April 30,2002                                  -                 -            (695,914)                 -             (695,914)
                                        -------------     -------------      --------------        -----------       --------------

Balance - April 30,2002               $         4,419  $      5,119,796    $    (6,537,040)      $          (3)    $    (1,412,828)
                                        =============     =============      =============         ===========       =============
</TABLE>
     See accompanying notes to financial statements.

                                       F-4
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                            STATEMENTS OF CASH FLOWS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001
<TABLE>
                                                                                                         2001
                                                                                                       (As Restated,
                                                                                      2002                Note 13)
                                                                                 ---------------     ---------------
<S>                                                                             <C>                  <C>

CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss                                                                    $      (695,914)      $   (1,238,244)
                                                                                  --------------        ------------
    Adjustments to reconcile net income
       (loss) to net cash used by operating activities:
          Depreciation and amortization                                                    4,080              30,207
          Provision for doubtful accounts                                                  -                   -
          Changes in assets and liabilities:
              Accounts receivable                                                        540,325              (8,433)
              Inventories                                                              1,379,470             223,000
              Prepaid expenses and other current assets                                  (37,687)            361,731
              Security deposits                                                            -                   -
              Accounts payable and accrued expenses                                      188,514            (446,980)
                                                                                    ------------         -----------

                 Total adjustments                                                     2,074,702             159,525
                                                                                   -------------       -------------

                 Net cash provided (used) by
                    operating activities                                               1,378,788          (1,078,719)
                                                                                   -------------       -------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment                                                       -               (15,500)
                                                                                    -------------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
    Net repayments of banker's acceptances                                                    -             (350,000)
    Amounts due affiliated company                                                     (1,399,324)         1,463,928
                                                                                    -------------         ----------

                 Net cash provided (used) by financing activities                      (1,399,324)         1,113,928
                                                                                 ----------------         ----------

NET INCREASE (DECREASE) IN CASH                                                           (20,536)            19,709

CASH - beginning                                                                           58,542             38,833
                                                                                      -----------           --------

CASH - end                                                                         $       38,006      $      58,542
                                                                                         ========           ========





                       SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid during the periods for interest                                                $ 16,399           $ 19,196
                                                                                           ======            =======


                   SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES

Assumption of bank indebtedness by predecessor
     prior to spin-off                                                             $          -        $     250,000
                                                                                    =============       ============

</TABLE>

     See accompanying notes to financial statements.

                                       F-5
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001




1.   FORMATION OF DYNAMIC INTERNATIONAL, INC.

     Dynamic  International,  Inc. ("the Company") was formed on August 31, 2000
     as a wholly owned subsidiary of Dynamic International,  Ltd. ("Ltd." and/or
     "Predecessor"). Pursuant to an Equity Transfer and Reorganization Agreement
     dated  August 10,  2000,  by and among Ltd.,  certain of its  shareholders,
     Emergent  Management  Company,  LLC  ("Emergent")  and  several  holders of
     membership  (equity)  interests in Emergent  Ventures LLC, the  Predecessor
     transferred all of its assets to the Company on August 30, 2000.  Moreover,
     all of its liabilities  (other than  outstanding bank debt in the amount of
     $250,000)  were  assumed by the Company,  on August 30,  2000.  Immediately
     following  the transfer of assets and  assumptions  of  liabilities  by the
     Company, Ltd. transferred to its shareholders,  on a pro-rata basis, all of
     the issued shares of common stock of the Company.

     Subsequently,  Ltd. issued an aggregate of 39,755,178  shares of its common
     stock,  representing a 90% equity  interest in Ltd., to the several members
     of Emergent  Ventures,  a Delaware limited  liability  company,  previously
     unrelated  to  Ltd.,  that  had  theretofore  engaged  in the  business  of
     acquiring  equity interests in technology  businesses.  In exchange for the
     issuance  of  these  shares,  Ltd.  received  all of the  then  outstanding
     membership interests in Emergent Ventures.

2.   GOING CONCERN

     The Company's  financial  statements  have been prepared on a going concern
     basis,  which  contemplates  the realization of assets and  satisfaction of
     liabilities in the normal course of business. As disclosed in the financial
     statements,  the Company has incurred net losses of approximately  $696,000
     and $1,238,000  for the years ended April 30, 2002 and 2001,  respectively.
     In addition,  as a result of the terminated  credit  arrangement with Chase
     Manhattan  Bank in June of 2000,  the  Company  will need to  continue  and
     possibly add to its borrowing facility with an affiliate unless alternative
     funding can be arranged.  These factors raise  substantial  doubt about the
     Company's ability to continue as a going concern.

     Management's plans rely, to a substantial  extent, on the continued funding
     of its cash flow needs, by its affiliate. In addition,  management plans to
     reduce  operating  expenses  and  anticipates  revenue  growth  with  large
     customers,  which management believes will result in profitable  operations
     and  positive  cash  flows.  However,   there  can  be  no  assurance  that
     management's plans will be successful.  Additionally,  the Company believes
     that the  terrorist  attacks in the United  States on September 11, 2001 is
     having a chilling  effect on travel,  generally.  Consequently,  management
     believes that  consumer  demand for luggage has been and may continue to be
     reduced and, as a result,  expects that sales of its luggage  products will
     likely be  negatively  impacted for at least the near term.  The  financial
     statements do not include any  adjustments  relating to the  recoverability
     and classification of recorded assets, or the amounts and classification of
     liabilities  that  might be  necessary  in the  event  the  Company  cannot
     continue in existence.

                                      F-6

<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001




3.   Summary of Significant Accounting Policies

     Nature of Operations

     The Company designs and markets related sports bags and luggage,  which are
     marketed  primarily  under the licensed name JEEPTM and under its own names
     Santa FeTM,  Polaris  ExpeditionTM  and SPORTS  GEARTM.  In  addition,  the
     Company was engaged in the design,  marketing and sale of hand exercise and
     light exercise equipment,  including hand grips,  running weights, and jump
     ropes.  The Company  marketed these products under the SPALDINGTM  name and
     licensed trademarks as well as under its own trademarked name SHAPE SHOPTM.
     As of April 30,  2002,  the Company has  substantially  exited this line of
     business.  The Company's  objective is to become a designer and marketer of
     goods,  domestically  and  internationally,  that  are  associated  with  a
     free-spirited lifestyle and leisure time.

     Cash and Cash Equivalents

     The Company  considers  all highly  liquid  investments  with a maturity of
     three months or less when purchased to be cash equivalents.

     Inventories

     Inventories  consist  principally  of finished  goods and are stated at the
     lower of cost; first-in, first-out method, ("FIFO") or market.

     Property, Equipment and Depreciation

     Property and equipment are stated at cost.  Depreciation  is computed using
     accelerated  methods  over the  estimated  useful  lives of the  respective
     assets.  Expenditures for maintenance and repairs,  which do not improve or
     extend the life of the respective assets are expensed currently while major
     repairs  are  capitalized.  Estimated  useful  lives  used  in  calculating
     depreciation are as follows:
<TABLE>
<S>       <C>                                               <C>

          Tools and Dies                                    5 Years

          Furniture and Equipment                           5 -Years to 7 Years
</TABLE>


     Advertising and Promotion

     Advertising  and  promotion  expenses  are charged to  operations  when the
     advertising first takes place.

                                      F-7

<PAGE>
                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001


3.   Summary of Significant Accounting Policies (CONTINUED)

     Revenue

     Revenue is  recognized  when the goods have been shipped to and accepted by
     the  customer.  The Company's  return  policy is for defective  merchandise
     only.

     Promotional Allowances

     Based on a discretionary policy,  management grants to certain major retail
     customers  promotional  allowances  to  successfully  market the  Company's
     products.  Promotional  allowances  are  primarily  targeted to the cost of
     displays,  advertising  and  other  promotional  incentives.  The  cost  of
     promotional  allowances  are accrued at the time that related  revenues are
     recognized and are estimated based upon current arrangements with customers
     as well as certain assumptions based on the Company's prior experience with
     customers. Promotional allowances are included as a reduction of net sales.

     Research and Development Costs

     Research and development  costs are expensed as part of operating  expenses
     as incurred.

     INCOME (Loss) Per Share

     Basic  earnings per share is  calculated  by dividing net income or loss by
     the weighted average number of common shares  outstanding  during the year.
     Diluted earnings per share reflects the potential dilution that could occur
     if dilutive  securities  and other  contracts  to issue  common  stock were
     exercised  or  converted  into common  stock or resulted in the issuance of
     common stock that then shared in the Company's  earnings.  Diluted loss per
     share does not consider the  potentially  dilutive  securities on an "as if
     converted"  basis, as the effect of their inclusion would be anti-dilutive.
     Securities that could  potentially  dilute earnings per share in the future
     are disclosed in Note 8.

     Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the  reported  amounts of assets and  liabilities,
     disclosure  of  contingent  assets  and  liabilities  at  the  date  of the
     financial  statements,  and the  reported  amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

     Impairment

     Certain  long-term  assets of the  Company  are  reviewed  when  changes in
     circumstances  require,  as to  whether  their  carrying  value has  become
     impaired,  pursuant to  guidance  established  in  Statement  of  Financial
     Accounting  Standards  ("SFAS") No. 121,  "Accounting for the Impairment of
     Long-Lived  Assets and for Long-Lived Assets to be Disposed Of." Management
     considers  assets to be impaired if the carrying  value  exceeds the future
     projected  cash flows from  related  operations  (undiscounted  and without
     interest  charges).  If impairment  is deemed to exist,  the assets will be
     written  down to fair value.  Management  also  reevaluates  the periods of
     amortization  to  determine  whether  subsequent  events and  circumstances
     warrant revised estimates of useful lives. As of April 30, 2002, management
     expects these assets to be fully recoverable.

                                      F-8
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001



3.   Summary of Significant Accounting Policies (CONTINUED)

     Income Taxes

     Deferred  tax  assets and  liabilities  are  recognized  for the future tax
     consequences  attributable to differences  between the financial  statement
     carrying  amounts of existing assets and  liabilities and their  respective
     tax bases.  Deferred tax assets and  liabilities are measured using enacted
     tax rates  expected to apply to taxable  income in the years in which those
     temporary  differences are expected to be recovered or settled.  The effect
     on  deferred  tax  assets  and  liabilities  of a  change  in tax  rates is
     recognized in income in the period that includes the enactment date.

     Fair Value of Financial Instruments

     SFAS No.  107,  "Disclosure  About  Fair Value of  Financial  Instruments,"
     requires  certain  disclosures   regarding  the  fair  value  of  financial
     instruments.  In assessing the fair value of these  financial  instruments,
     the Company has used a variety of methods and assumptions, which were based
     on estimates of market conditions and risks existing at that time. Cash and
     cash  equivalents,   accounts  receivable,  accounts  payable  and  accrued
     expenses, and debt are reflected at cost in the financial statements, which
     approximates  fair  value  because  of the  short-term  maturity  of  these
     instruments.  It is not  practicable  for the Company to estimate  the fair
     value of the amount due to its  affiliate  since there is no quoted  market
     price and the Company can not  estimate  its fair value  without  incurring
     excessive costs.

4.   Related Party Transactions

     Pursuant to a Warehouse  and Service  Agreement  dated as of September  21,
     2000 (the "Warehousing  Agreement") between the Company and a related party
     (the "Related  Entity")  wholly owned by a major  stockholder,  the Related
     Entity  provides  occupancy  space  and  performs  certain   administrative
     services on behalf of the Company.  Under the  Warehousing  Agreement,  the
     Related Entity, among other things, assists in the maintenance of financial
     and accounting books and records,  in the preparation of monthly  financial
     accounts   receivable   aging  schedules  and  other  reports  and  in  the
     performance of credit checks on the Company's  customers.  In consideration
     for these  services,  the Related  Entity  receives an annual fee,  payable
     monthly,  calculated  at a  percentage  of  the  Company's  invoiced  sales
     originating  at the warehouse  ranging from 4% of the invoiced  sales under
     $30 million annually to 3% of sales of $60 million or more. For sales which
     do not originate at the warehouse,  the Related  Entity  receives a service
     fee in the amount of 1.5% of the Company's  invoiced sales to customers and
     accounts  located  in the  United  States if  payment  is made by letter of
     credit and 1% if such customers and accounts are located outside the United
     States,   irrespective  of  manner  of  payment.  In  addition,  under  the
     Warehousing  Agreement,  the Related Entity provides  warehousing  services
     consisting   of   receiving,   shipping,   and  storing  of  the  Company's
     merchandise. The Company pays the Related Entity a monthly fee of 3% of its
     invoiced  sales  originating  at the  warehouse  in  connection  with these
     warehousing  services performed by the Related Entity under the Warehousing
     Agreement.  As part of the  Warehousing  Agreement,  the Company applies an
     offset for certain shared expenses.

                                      F-9
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001


4.   Related Party Transactions (CONTINUED)

     The Warehousing  Agreement,  which was renewed on September 21, 2000, has a
     term of two years and then  automatically  renews  from year to year unless
     written  notice of  termination  is given at least six months  prior to the
     commencement of a renewal  period.  Total  warehousing  and  administrative
     expenses  charged to  operations  were  $382,453 and $552,330 for the years
     ended April 30, 2002 and 2001, respectively.

     In addition, the Related Entity has purchased inventory for the Company and
     has charged the Company for the invoiced amount of the inventory.  Pursuant
     to  an  unwritten  understanding,  the  Related  Entity  arranges  for  the
     issuance,  by its  financial  lender,  of letters of credit in favor of the
     Company's overseas  suppliers,  thereby enabling the Company to finance the
     purchases of its inventory.

     Pursuant to a Security  Agreement  dated as of January 2, 2001  between the
     Company  and the  Related  Entity,  the Related  Entity has  perfected  its
     security interest in all of the Company's assets.

     Amounts due to the Related Entity totaled $3,489,830 at April 30, 2002. The
     amount is due on demand.  The advance bears  interest at the  JPMorganChase
     prime rate plus 1%.  Interest on  advances  recorded  for the fiscal  years
     ended April 30,2002 and 2001 was $215,132 and  $292,996,  respectively.(see
     Note 13 for restatement of financial statements)

5.   Debt

     On April 30, 1998,  the Company  entered into a credit  agreement  with The
     Chase  Manhattan  Bank for maximum  borrowings of $1,500,000 in the form of
     letters of credit and bankers acceptances ("Agreement"). The Agreement also
     provided for a security  interest in the inventory and accounts  receivable
     of the Company and for the personal guarantee of the president and majority
     shareholder  of the Company on the entire credit line balance.  During June
     2000, the Agreement was terminated.

6. Income Taxes

     At April 30, 2002,  the Company had  temporary tax  differences  that would
     result in a short-term deferred tax asset of approximately $265,000 arising
     primarily  from  reserve  allowances  relating to account  receivables  and
     inventory. The Company also has cumulative carryforward operating losses of
     approximately  $5,400,000 resulting in an additional long-term deferred tax
     asset of approximately $1,980,000.

     At April 30, 2002, these assets,  both short-term and long-term,  have been
     reduced to zero by a valuation  allowance due to the  uncertainty  that the
     Company will be able to generate  sufficient  taxable  income in the future
     necessary to utilize these assets.

     The Company's  available net operating losses of  approximately  $5,400,000
     will expire for tax purposes in fiscal years 2019 through 2022.

                                      F-10
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001



6. Income Taxes (CONTINUED)

     The reconciliation of the federal statutory income tax (benefit) expense to
     the Company's actual income tax (benefit) expense is as follows:
<TABLE>

                                                                                         April 30,
                                                                             -----------------------------------
<S>    <C>                                                                   <C>                 <C>

                                                                                   2002                2001
                                                                             ----------------    ---------------

       U.S. Federal  income taxes (benefit) at statutory rate                $       (192,000)   $      (321,000)
       Change in valuation allowance                                                  244,000            321,000
       State income taxes (benefit), net of federal (tax) benefit                     (52,000)                -
                                                                                -------------      -------------

           Income tax expense/benefit                                        $             -     $            -
                                                                                =============      =============
</TABLE>

7.   Commitments and Contingencies

     Royalty Obligations

     The Company has entered into various  royalty  agreements to sell products.
     Under the agreements and  amendments to the  agreements  minimum  aggregate
     royalty payments are $298,000,  $367,000,  $400,000,  $283,000, $50,000 and
     $33,000 for the fiscal years ending April 30, 2003,  2004, 2005, 2006, 2007
     and 2008 respectively.  Royalty expense charged to operations for the years
     ended  April 30,  2002 and April 30, 2001 was  approximately  $675,000  and
     $475,000 respectively.

     Royalty  expense for the year ended April 30, 2002  includes all  royalties
     due through  December 31, 2007 with respect to one  agreement for a product
     that the Company has exited.

8.   STOCKHOLDERS' EQUITY (DEFICIT)

     PUBLIC OFFERING

     On December 22, 1997, the Predecessor  completed a public sale of 1,200,000
     units,  each  consisting of one share of common stock,  one Class A Warrant
     and one Class B  Warrant.  Each  Class A  warrant  entitled  the  holder to
     purchase  one  share  of  common  stock  at $6 until  June  12,  1999  (the
     expiration  date of these  securities  was extended until June 12, 2000 and
     expired  as of that  date).  Each  Class B warrant  entitled  the holder to
     purchase one share of common stock at $10 until December 12, 2000. No Class
     B warrants  were  exercised  prior to their  expiration.  In addition,  the
     Predecesor  entered into a unit  purchase  option with the  underwriter  to
     purchase an aggregate of 120,000 units at a subscription price of $8.25 per
     unit commencing December 12, 1998 and expiring December 11, 2002. Each unit
     purchase option consists of one share of common stock,  one Class A warrant
     to  purchase  one share of common  stock at $9.90 per share and one Class B
     warrant to purchase one share of common stock at $16.50 per share.

                                      F-11
<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001


8.   STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)

     As part  of the  consideration  of its  services  in  connection  with  the
     registration statement, the Predecessor agreed to issue to the underwriter,
     for nominal  consideration,  warrants to purchase up to 120,000 units at an
     exercise  price of $8.25 per unit for a period of five  years.  The Class A
     Warrants  and  Class  B  Warrants  underlying  the  units  included  in the
     underwriter's  warrants will be  exercisable at a price of $9.90 and $16.50
     per share, respectively, or 165% of the then exercise price of the warrants
     offered  to the  public  for a period  of five  years  commencing  with the
     closing of the registration statement.  The non-cash cost of such warrants,
     representing  a cost of raising  capital,  will be recorded as a charge and
     credit to  additional  paid-in  capital when the  warrants  are issued.  As
     capital  in  nature,  they  are  not  compensatory.  The  net  proceeds  of
     approximately $4,800,000 were used for the repayment of related party debt,
     purchase of inventory, general corporate services, and working capital.

     The Company  issued 20,000 shares for legal  services  valued at $74,655 in
     connection with the Company's public offering.

9.   Major Customers/Seasonality

     During the year ended April 30, 2002,  sales to four major  customers  were
     approximately 26%, 20%, 12% and 11%, ($2,006,000,  $1,543,000, $912,000 and
     $866,000,  respectively)  of the  Company's  net sales.  At April 30, 2002,
     accounts  receivable from these customers totaled  $674,000,  or 71% of net
     accounts receivable.

     During the year ended April 30,  2001,  sales to two major  customers  were
     approximately  29%, and 25% ($2,718,000,  and $2,349,000,  respectively) of
     the Company's net sales.

     The Company's  business is highly  seasonal with higher sales  typically in
     the second and third  quarters  of the fiscal  year as a result of sales of
     merchandise related to the holiday season.

10.  Credit Risk/Financial Instruments

     Due to the nature of its  business  and the volume of sales  activity,  the
     Company's cash balance occasionally exceeds the $100,000 protection of FDIC
     insurance.  At April 30,  2002,  there were no such  excess  balances.  The
     Company has not  experienced  any credit  losses  arising  from excess cash
     balances and believes it is not exposed to any significant credit risk from
     cash and cash equivalents.

     The Company routinely assesses the financial strength of its customers and,
     based  upon  factors   surrounding   the  credit  risk  of  its  customers,
     establishes an allowance for uncollectible  accounts and, as a consequence,
     believes that it does not have an accounts  receivable credit risk exposure
     beyond the allowance  provided.  The Company does not require collateral or
     other security to support financial instruments subject to credit risk.

                                      F-12

<PAGE>

                           DYNAMIC INTERNATIONAL, INC.

                          NOTES TO FINANCIAL STATEMENTS

                   FOR THE YEARS ENDED APRIL 30, 2002 AND 2001



11.  Significant Risks And Uncertainties

     The Company's  luggage products compete with products  designed by a number
     of the largest  companies  in the  industry.  Accordingly,  there can be no
     assurance that the Company will be able to  effectively  compete with these
     companies as well as with other smaller entities.

     Most of the Company's  products are  purchased  from  Indonesia,  Thailand,
     China and Sri Lanka.  The Company  believes that, if necessary,  it will be
     able to obtain its  products  from  firms  located  in other  countries  at
     little,  if  any,  additional   expense.   The  Company  believes  that  an
     interruption  in  deliveries  by a  manufacturer  located  in a  particular
     country  will not have a material  adverse  impact on the  business  of the
     Company. Nevertheless,  because of political instability in a number of the
     supply countries,  occasional import quotas and other restrictions on trade
     or otherwise,  there can be no assurance that the Company will at all times
     have access to a sufficient supply of merchandise.

12.  SETTLEMENT WITH BOLLINGER INDUSTRIES, L.P.

     On  June 2,  2000,  the  Company  finalized  a  settlement  with  Bollinger
     Industries,  L.P.  ("Bollinger") related to patent infringement claims with
     respect to three separate patents.  As part of the settlement,  the Company
     agreed to sell its inventory of the related  products,  which represented a
     substantial  portion of its hand held exercise and light  exercise  product
     line for 80% of its cost. The loss on the sale, approximately $335,000, was
     recorded  during the year ended April 30,  2000.  The Company  also entered
     into a five year non-compete agreement with respect to the sale of products
     covered by the patents.

     Sales of the  related  products  in fiscal  year  2001  were  approximately
     $925,000 (including $875,000 related to the Bollinger transaction).


13.  PRIOR PERIOD ADJUSTMENT

     Certain  errors,  resulting in the  understatement  of interest  expense on
     advances from an affiliate and an  understatement  of the reported net loss
     in the Company's previously issued financial statements have been corrected
     in the current year. This resulted in the following  changes to accumulated
     deficit, and to the statement of operations:

<TABLE>
                                                                                For the Year Ended
                                                              May 1, 2001        April 30, 2001
                                                              -----------        --------------
<S>   <C>                                                     <C>               <C>

                                                              Accumulated
                                                                Deficit            Net (Loss)
                                                              ------------         ----------

       As previously reported                                 $ (5,365,938)     $   (945,248)

       Effect of prior period adjustment                               -            (292,996)

       Cumulative effect of prior
           period adjustments                                     (475,188)               -
                                                               ---------------  ----------------

       As restated                                           $  (5,841,126)     $ (1,238,244)
                                                             ===============    ================
</TABLE>

                                      F-13
<PAGE>

                                   SIGNATURES

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

                           DYNAMIC INTERNATIONAL, Inc.



                           By: /S/ Marton B. Grossman
                           --------------------------
                           Marton B. Grossman
                           Chairman and President

Dated: 13th day of August 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has  been  signed  below as of the 13th  day of  August,  2002 by the  following
persons on behalf of Registrant and in the capacities indicated.

Name                                           Date

/s/ Marton B. Grossman                         August 13,2002
------------------
Marton B. Grossman
Chairman and President


/s/ Isaac Grossman                             August 13,2002
--------------
Isaac Grossman
Vice Chairman, Treasurer & Secretary


/s/ William P. Dolan
--------------------                           August 13,2002
William P. Dolan
Vice President--Finance
(Chief Financial & Accounting Officer)

                                       21
<PAGE>

EXHIBITS


1.01 Asset  Transfer  Agreement  dated  August  31,2000 by and  between  Dynamic
     International Ltd.("Ltd") and the Company*

1.02 Bill of Sale dated August 31,2000  between  Ltd. and the Company*

2.01 Articles of Incorporation and Bylaws*

10.01Amendment to License  Agreement with Spalding and Evenflow  Companies dated
     October 27,2000.*

10.02 License agreement with 3L Associates dated September 1,2000*

10.03 Security Agreement dated January 2,2001 with Achim Importing Co. Inc.*

10.04Warehousing and Service  Agreement dated as of September 1, 1996 with Achim
     Importing Co.,Inc.*

10.05Equity  Tranfer And Reorganization  Agreement dated as of August 7, 2000 by
and among Ltd., Marton B. Grossman, Isaac Grossman, Emergent Management Company,
LLC and Emergent Ventures, LLC

10.06Ammendment D to the "Jeep" license agreement dated April 19, 2002

10.07Ammendment E to the "Jeep" license agreement dated April 2, 2002

-------------
*File as exhibits to Registration Statment on Form 10-SB file October 30, 2001
<PAGE>
                                 EXHIBIT 10.05


                    EQUITY TRANSFER AND  REORGANIZATION  AGREEMENT,  dated as of
                    August  7, 2000  (this  "Agreement"),  by and among  DYNAMIC
                    INTERNATIONAL,  LTD., a Nevada  corporation (the "Company"),
                    MARTON  B.  GROSSMAN  (W.  Grossman"),  ISAAC  GROSSMAN  (1.
                    Grossman and  collectively  with M. Grossman,  the "Grossman
                    Parties"),  EMERGENT  MANAGEMENT  COMPANY,  LLC,  a Delaware
                    limited liability  company (the "Managing  Member") which is
                    the managing  member of EMERGENT  VENTURES,  LLC, a Delaware
                    limited liability  company  ("Emergent  Ventures"),  and the
                    holders of membership  interests of Emergent Ventures listed
                    on the signature pages hereof (the "Emergent Members").

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

     The Emergent Members are the holders of 100% of the outstanding  membership
interests in Emergent Ventures (the "Emergent Interests").

     The Grossman  Parties  beneficially  own, in the  aggregate,  approximately
64.4% of the  outstanding  common stock,  par value $.001 (the  "Company  Common
Stock"), of the Company.

     The  Emergent  Members  desire to transfer  the  Emergent  Interests to the
Company.

     In consideration of the Emergent Interests, the Company desires to issue to
the  Emergent  Members  that  number of shares of Company  Common  Stock  which,
following  the  issuance  thereof,  will  constitute  90% of the then issued and
outstanding shares of Company Common Stock calculated on a fully diluted basis.

     As an inducement to the Emergent Members to transfer the Emergent Interests
to  the  Company,  the  Company  desires  to  transfer  all of  the  assets  and
liabilities  of the Company to a  newly-formed  wholly-owned  subsidiary  of the
Company  ("Newco") and to distributo  (the  "Distribution")  100% of the capital
stock of Newco to the holders of Company Common Stock as constituted immediately
prior to the issuance of shares of Company Common Stock to the Emergent Members.

     The Board of Directors of the Company and the Managing Member have approved
the  transactions  contemplated  hereby  upon  the  terms  and  subject  to  the
conditions set forth herein.

                                       1
<PAGE>
     It is intended that no party to this  Agreement  will recognize any gain or
loss for federal  income tax  purposes'as  a result of the issuance of shares of
Company Common Stock thereto.  It is also intended that the  Distribution  shall
qualify for federal income tax purposes as a  reorganization  within the meaning
of Section  368(a)(1)(D)  of the Internal  Revenue Code of 1986, as amended (the
"Code").

     NOW, THEREFORE,  in consideration of the premises and the  representations,
warranties,  covenants and  agreements  contained  herein,  the parties  hereto,
intending to be legally bound hereby, agree as follows:

                                    ARTICLE I

                                THE TRANSACTIONS

     SECTION  1.1 The  Equity  Transfer  Transactions.  Subject to the terms and
conditions contained herein, at the Closing (as defined below), (i) the Emergent
Members agree that they shall  transfer (the "Emergent  Interest  Transfer") the
Emergent  Interests  to the Company,  and (ii) the Company  agrees that it shall
issue (the "Company  Common Stock Issuance" and  collectively  with the Emergent
Interest Transfer,  the "Equity Transfer  Transactions") to the Emergent Members
an aggregate of 39,755,178 fully paid and nonassessable shares of Company Common
Stock (the "Share  Consideration")  such that, after the issuance  thereof,  the
Share  Consideration  shall  constitute  90% of the then issued and  outstanding
shares of Company Common Stock  calculated on a fully diluted  basis.  The Share
Consideration  shall be issued to the Emergent Members on a pro-rata basis based
on their relative percentage interest ownership of the Emergent Interests.

     SECTION 1.2 The Asset  Transfer  Transaction  As  promptly  as  practicable
following  the date  hereof,  but in no event  later than  immediately  prior to
consummation  of the Equity  Transfer  Transactions,  the Company agrees that it
shall (i) transfer to Newco all of the assets of the Company including,  without
limitation,  whatever rights the Company has to use the real property located at
58 Second Avenue,  Brooklyn,  New York, excluding only its corporate minute book
and its  franchise  as a  corporation  (the  "Transferred  Assets"),  and all of
theAssumed  Liabilities  (as  defined  below)  of  the  Company  as  constituted
immediately prior to the consummation of the Equity Transfer  Transactions,  and
(ii)  cause  Newco  to  acquire  the  Transferred  Assets,  assume  the  Assumed
Liabilities  and indemnify the Company  against any  liabilities  relating to or
arising out of the Transferred Assets and the Assumed Liabilities.  The transfer
of the  Transferred  Assets and the  assumption of the Assumed  Liabilities  are
hereinafter  collectively  referred to as the "Asset Transfer  Transaction." The
Asset  Transfer  Transaction  shall be effected  pursuant  to an Asset  Transfer
Agreement in a form reasonably  satisfactory to the Managing Member.  As used in
this Agreement,  the term "Assumed Liabilities" means all debts,  liabilities or
obligations  whatsoever  of the Company  (other than the Retained  Liability (as
defined  below))  that arise out of or relate to the  Transferred  Assets or the
business of the Company as conducted prior to the Closing Date,  whether arising

                                       2
<PAGE>

before or after the Closing and whether known or unknown,  fixed or  contingent,
including,  without limitation, any and all debts, liabilities or obligations of
the Company to MG Holding Corp. ("MG"),  Citibank,  N.A.  ("Citibank"),  and The
Chase Manhattan Bank ("Chase  Manhattan" and collectively  with MG and Citibank,
the "Lenders").  As used in this Agreement,  the term "Retained Liability" means
indebtedness  of the  Company  to Chase  Manhattan  in an  amount  not to exceed
$250,000.

     SECTION 1.3 The Newco Distribution.  Immediately following the consummation
of the Asset Transfer  Transaction  and prior to the  consummation of the Equity
Transfer  Transactions,  the Company agrees that it shall distribute (the "Newco
Distribution"  and  collectively  with the Equity Transfer  Transactions and the
Asset  Transfer   Transaction,   the  "Transactions")  to  the  Current  Company
Stockholders  (as defined  below) 100% of the issued and  outstanding  shares of
common stock of Newco. The Distribution shall be made on a pro-rata basis to the
Current  Company  Stockholders  based on their  relative  ownership of shares of
Company  Common  Stock.  For  purposes  of  this  Agreement,   "Current  Company
Stockholders"  means those  persons and entities that  beneficially  own, in the
aggregate,  100% of the issued and outstanding shares of Company Common Stock on
the date of the Asset Transfer  Transaction,  prior to and without giving effect
to the issuance of the Share Consideration.

     SECTION 1., 4 Company Common Stock. Each share of Company Common Stock that
is  issued  and  outstanding  immediately  prior to the  issuance  of the  Share
Consideration will remain issued and outstanding.

     SECTION 1.5 Disclosure Schedules. Simultaneously with the execution of this
Agreement, (a) the Company shall deliver a schedule relating to the Company (the
"Company  Disclosure  Schedule"),  and (b) the Managing  Member shall  deliver a
schedule   relating  to  Emergent  Ventures  (the  "Managing  Member  Disclosure
Schedule"  and  collectively,   with  the  Company  Disclosure   Schedule,   the
"Disclosure  Schedules")  setting forth the matters  required to be set forth in
the  Disclosure  Schedules  as  described  elsewhere  in  this  Agreement.   The
Disclosure Schedules shall be deemed to be part of this Agreement.

     SECTION 11.6 Anti-Dilution Provision. If between the date of this Agreement
and the Closing Date the  outstanding  shares of Company Common Stock shall have
been changed  into a different  number of shares or a different  class,  in both
cases  by  reason  of  any  stock   dividend,   subdivision,   reclassification,
recapitalization,  split-up,  combination  or  exchange  of  shares,  the  Share
Consideration shall be appropriately adjusted.

     SECTION 1.7 Further  Action.  If at any time after the  Closing  Date,  the
Company shall consider that any further  assignments,  conveyances,  agreements,
documents, instruments or assurances in law or any other things are necessary or
desirable to carry out the provisions of this  Agreement,  the Grossman  Parties

                                       3
<PAGE>

and the officers of the Company and Newco shall  execute and  deliver,  upon the
Company's  reasonable request,  any instruments or assurances,  and do all other
things necessary or proper to carry out the provisions of this Agreement.

                                   ARTICLE 11

                                 COMPANY MATTERS

     SECTION 2.1 Directors.

     (a) The directors of the Company  immediately prior to the Closing Date (as
hereinafter  defined) other than M. Grossman shall each resign as of the Closing
Date.

     (b) From and after the Closing  Date the Board of  Directors of the Company
shall (i) be set at not less than three (3) members and (ii)  consist  initially
of the following individuals:

                           Daniel Yun
                           Mark Waldron
                           Marton B. Grossman

     Such individuals shall serve as directors until their respective successors
have been duly elected or appointed and qualified or until death, resignation or
removal in accordance with the Certificate of  Incorporation  and By-laws of the
Company.

     SECTION 2..2 Officers.

     (a) The officers of the Company immediately prior to the Closing Date shall
each resign as of the Closing Date.

     (b) From and after the Closing  Date the  following  persons  shall be, and
hereby  are,  elected  as  the  officers  of  the  Company,  with  corresponding
positions:

                           Daniel Yun
                           Mark Waldron

     Such individuals shall serve as officers in the capacity as indicated until
their respective successors have been duly elected or appointed and qualified or
until  death,  resignation  or removal in  accordance  with the  Certificate  of
Incorporation and By-laws of the Company.

     SECTION 2.3 Officer and Director  Liability  Insurance.  The Company agrees
that, as soon as practicable  following the Closing, it shall obtain officer and
director  liability  insurance in such amount as is commercially  reasonable and
appropriate.

                                        4

<PAGE>
                                   ARTICLE III

                                   THE CLOSING

     SECTION 3.1  Closing.  Subject to the prior  satisfaction  or waiver of the
conditions  set forth in Article IX hereof,  the closing (the  "Closing") of the
Equity  Transfer  Transactions  shall take place at the offices of  Sonnenschein
Nath &  Rosenthal,  800 Third  Avenue,  New York,  New York 10022,  on the third
business day following the date on which the last of the conditions set forth in
Article V111 hereof is  fulfilled or waived,  or at such other time and place as
the Company and the  Managing  Member shall agree (the date on which the closing
occurs being the "Closing Date").

     SECTION 3.2 Closing Deliveries by the Company. At the Closing,  the Company
shall:

     (a) issue the Share Consideration to the Emergent Members; and

     (b)  deliver to the Managing Member the certificates and other documents to
          be delivered pursuant to Section 9.3 hereof.

     SECTION 3.3 Closing  Deliveries  by the Emergent  Members . At the Closing,
the  Emergent  Members  shall  deliver the  Emergent  Interests  to the Company,
together with appropriate instruments of transfer.

     SECTION 3.4 Closing Deliveries by the Managing Member. At the Closing,  the
Managing  Member  shall  deliver  to the  Company  the  certificates  and  other
documents to be delivered pursuant to Section 9.2 hereof.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES
                     OF THE COMPANY AND THE GROSSMAN PARTIES

     The Company and the Grossman Parties,  on a joint and several basis, hereby
represent and warrant to the Managing Member and the Emergent Members as follows
(subject in each case to such exceptions as are set forth or cross-referenced in
the attached  Disclosure  Schedule in the labeled section  corresponding  to the
caption of the representation or warranty to which such exceptions relate):

     SECTION 4.1  Organization and  Qualification.  The Company is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
State of Nevada.  The Company has all requisite  corporate power to carry on its
business as it is now being  conducted and is duly qualified to do business as a
foreign  corporation and is in good standing in all  jurisdictions  set forth in
Section 4.1 of the Company  Disclosure  Schedule,  and to the  knowledge  of the

                                       5
<PAGE>

Grossman Parties,  such  jurisdictions are the only ones in which the properties
owned, leased or operated by the Company or the nature of the business conducted
by the Company makes such qualification  necessary,  except where the failure to
qualify  (individually  or in the aggregate) will not have any Material  Adverse
Effect on the Company.  "Material  Adverse  Effect"  means,  with respect to the
Company or Emergent Ventures (as applicable), a liability or charge in excess of
$50,000  or an  impairment  or  preclusion  of its  ability  to  consummate  the
transactions contemplated hereby. The copies of the Certificate of Incorporation
and By-laws of the  Company,  as amended to date and  delivered  to the Managing
Member,  are true and complete copies of these  documents as now in effect.  The
minute books of the Company are accurate in all material respects.

     SECTION 4.2  Capitalization.  The  authorized  capital stock of the Company
consists of 50,000,000  shares of Company Common Stock. As of July 31, 2000, (i)
4,417,242  shares of Company  Common  Stock were  issued and  outstanding,  (ii)
1,200,000 Class B Public Warrants (the "Class B Public Warrants")  providing for
the issuance,  upon exercise, of 1,200,000 shares of Company Common Stock, which
Class B Public Warrants are  exercisable at $15.00 per warrant,  were issued and
outstanding  (iii) 120,000  Underwriter  Warrants (the  "Underwriter  Warrants")
providing  for the  issuance,  upon  exercise,  of 120,000 Units (with each Unit
consisting  of (x) one share of Company  Common Stock and (y) one Class B Public
Warrant (each an "Underwriter  Class B Public Warrant") (which Underwriter Class
B Public  Warrant  provides for the  issuance,  upon  exercise,  of one share of
Company  Common Stock at an exercise  price per warrant equal to $16.50),  which
Underwriter  Warrants  are  exercisable  at $8.25 per  warrant,  were issued and
outstanding, and (iv) 1,440,000 shares of Company Common Stock were reserved for
issuance upon the exercise of the Class B Public Warrants,  the Units underlying
the Underwriter Warrants and the Underwriter Class B Public Warrants. All of the
outstanding securities of the Company are duly authorized, validly issued, fully
paid and  non-assessable,  and were not issued in  violation  of the  preemptive
rights of -any person. Schedule 4.2 contains a complete and accurate list, as of
the date hereof, of all record holders of shares of Company Common Stock,  Class
B Public Warrants and Underwriter  Warrants and the amount of each owned by each
such  holder.   The  shares  of  Company  Common  Stock   comprising  the  Share
Consideration  to be issued on the Closing Date,  when issued in accordance with
the terms of this Agreement,  shall be duly  authorized,  validly issued,  fully
paid and non assessable. All of the outstanding securities of Company, including
the  Company  Common  Stock,  the Class B Public  Warrants  and the  Underwriter
Warrants,  were issued in compliance  with all  applicable  securities  laws. No
shares of  capital  stock are held in the  treasury  of the  Company.  Except as
stated in this Section 4.2,  there are no  outstanding  subscriptions,  options,
warrants,  calls or rights of any kind issued or granted by, or binding upon the
Company,  to purchase or otherwise acquire any shares of Company Common Stock or
other securities of the Company. Except as stated in this Section 4.2, there are
no outstanding securities convertible or exchangeable, actually or contingently,
into shares of Company Common Stock or other securities of the Company.

                                        6
<PAGE>

     SECTION  4.3  Subsidiaries.  There  are no  Company  Subsidiaries.  As used
herein, the term "Company Subsidiary" shall mean any corporation or other entity
of which the  Company,  directly  or  indirectly,  controls or which the Company
owns,  directly  or  indirectly,  50% or  more  of the  stock  or  other  voting
interests,  the holders of which are, ordinarily or generally, in the absence of
contingencies (which  contingencies have not occurred) or understandings  (which
understandings  have not yet been required to be performed) entitled to vote for
the election of a majority of the board of  directors  or any similar  governing
body. Except as set forth in the Company Disclosure  Schedule,  the Company does
not own any capital stock in any other  corporation or similar  business  entity
nor is the Company a partner in any partnership or joint venture.

     SECTION 4.4 Authority;  Non-Contravention;  Approvals.  (a) The Company has
full  corporate  power  and  authority  to  enter  into  this  Agreement  and to
consummate the transactions.  contemplated  hereby. The Company's  execution and
delivery of this  Agreement,  its  execution  and delivery at the Closing of the
Asset Transfer Agreement, and its consummation of the transactions  contemplated
hereby and thereby,  have been duly  authorized by its Board of Directors and no
other corporate proceedings on its part are necessary to authorize its execution
and  delivery  of  this  Agreement  and  its  consummation  of the  transactions
contemplated  hereby.  This  Agreement  has been duly and validly  executed  and
delivered  by the  Company,  and  constitutes  the  Company's  valid and binding
agreement, enforceable against it in accordance with its terms, except that such
enforcement  maybe  subject  to  (i)  bankruptcy,  insolvency,   reorganization,
moratorium  or other  similar  laws  affecting  or  relating to  enforcement  of
creditors'  rights  generally  and  (ii)  general   equitable   principles  (the
"Bankruptcy  Exception").  The Asset Transfer Agreement,  at the Closing,  shall
have been duly and validly  executed and  delivered  by the  Company,  and shall
constitute the Company's valid and binding agreement,  enforceable against it in
accordance  with its terms,  except that such  enforcement may be subject to the
Bankruptcy Exception.

     (b) Except as set forth on Schedule  4.4 of the  Disclosure  Schedule,  the
Company's  execution  and  delivery  of this  Agreement  and the Asset  Transfer
Agreement  does not and  will  not,  and its  consummation  of the  transactions
contemplated hereby and thereby will not, violate,  conflict with or result in a
breach of any  provision  of, or  constitute a default (or an event which,  with
notice or lapse of time or both, would constitute a default) under, or result in
the termination  of, or accelerate the  performance  required by, or result in a
right of termination  or  acceleration  under,  or result in the creation of any
lien,  security  interest,  charge or encumbrance  upon any of its properties or
assets under any of the terms,  conditions or provisions of (i) its  Certificate
of Incorporation or By-Laws, (ii) any statute, law, ordinance, rule, regulation,
judgment,  decree,  ord6 r, injunction,  writ, permit or license of any court or
governmental  authority  applicable to it or any of its properties or assets, or
(iii) any note, bond, mortgage,  indenture,  deed of trust, license,  franchise,
permit, concession, contract, lease or other instrument, obligation or agreement
of any kind to  which it is now a party or by which it or any of its  properties
or assets may be bound,  excluding  from the  foregoing  clauses (ii) and (iii),
such violations,  conflicts, breaches, defaults, terminations,  accelerations or

                                       7
<PAGE>

creations of liens, security interests,  charges or encumbrances that would not,
in the aggregate, have a Material Adverse Effect on the Company.

     (c)  No  declaration,  filing  or  registration  with,  or  notice  to,  or
authorization,  consent or approval of, any  governmental  or regulatory body or
authority  is  necessary  for  the  Company's  execution  and  delivery  of this
Agreement or its consummation of the  transactions  contemplated  hereby,  other
than  such  declarations,   filings,  registrations,   notices,  authorizations,
consents or approvals which, if not made or obtained,  as the case may be, would
not, in the aggregate, have a Material Adverse Effect on the Company.

     SECTION  4.5 The  Company's  SEC  Reports.  The  Company  Common  Stock  is
registered  under  Section 12 of the  Exchange  Act.  Except as set forth in the
Company Disclosure Schedule,  since its discharge from its Chapter 11 Bankruptcy
Proceeding in the United States  Bankruptcy  Court for the Southern  District of
New York on May 23,  1996 (the  "Discharge  Date"),  the  Company has filed on a
timely basis all reports,  registrations and other documents,  together with any
amendments  thereto,  required to be filed under the  Securities Act of 1933, as
amended (the  "Securities  Act") and the  Securities  Exchange  Act of 1934,  as
amended (the  "Exchange  Act"),  including but not limited to reports on Forms 1
O-K,  1 O-Q and  8-K,  and the  Company  will  file on a timely  basis  all such
reports,  registrations and other documents  required to be filed by it from the
date of this Agreement to the Closing Date (all such reports,  registrations and
documents,  including its Form 8-A and all reports,  registrations and documents
filed or to be filed with the SEC, including the registration statement relating
to the  Company's  outstanding  common  stock  and  warrants,  are  collectively
referred to as the "Company's SEC Reports").  As of their respective  dates, the
Company's SEC Reports complied or will comply in all material  respects with all
rules and regulations promulgated by the SEC and did not or will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances  under which they were made, not ' misleading.  The Company
has  provided  to the  Managing  Member a true and  complete  copy of all of the
Company's  SEC Reports  filed on or prior to the date hereof,  and will promptly
provide to the  Managing  Member a true and  complete  copy of any such  reports
filed after the date hereof and prior to the Closing Date.

     SECTION  4.6  Contracts  Listed;  No  Default.   All  material   contracts,
agreements,  licenses,  leases, easements,  permits, rights of way, commitments,
and understandings,  written or oral,  connected with or relating in any respect
to the present  operations of the Company (except employment or other agreements
terminable at will) are, with the exception of this Agreement,  described in the
Company's SEC Reports and listed as exhibits thereto (the "Company  Contracts").
To the knowledge of the Grossman Parties, the Company is not in material default
or breach of any provision of the Company Contracts.

     SECTION 4.7 Litigation.  Except as set forth in Schedule 4.7 of the Company
Disclosure  Schedule there is no (i) claim,  action,  suit or proceeding pending

                                       8
<PAGE>

or, to the knowledge of the Grossman  Parties',  threatened  against or directly
relating to the Company before any court or governmental or regulatory authority
or body or arbitration  tribunal,  or (ii) outstanding  judgment,  order,  writ,
injunction or decree, or application,  request or motion therefor, of any court,
governmental agency or arbitration tribunal in a proceeding to which the Company
or any of its assets was or is a party except,  in the case of clause's -(i) and
(ii) above, such as would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.

     SECTION  4.8  Taxes.  Except as  disclosed  in Section  4.8 of the  Company
Disclosure  Schedule:  (i) the Company  has  prepared  and timely  filed or will
timely file with the appropriate  governmental  agencies all material franchise,
income and all other material Tax (as hereinafter  defined)  returns and reports
(Tax  returns  and  reports  are  hereinafter  collectively  referred to as "Tax
Returns")  required  to be filed for any period on or before the  Closing  Date,
taking into  account  any  extension  of time to file  granted to or obtained on
behalf of the Company (copies of which for the three preceding fiscal years have
been delivered to the Managing  Member);  (ii) all material Taxes of the Company
(whether or not reported) in respect of the post-Discharge Date period have been
paid in full to the proper  authorities  or fully accrued appear on the books of
the  Company,  other  than such  Taxes as are being  contested  in good faith by
appropriate  proceedings  and are  adequately  reserved for in  accordance  with
generally  accepted  accounting  principles  ("GAAP");  (iii)  all  deficiencies
resulting from Tax  examinations of federal,  state and foreign income sales and
franchise  and all other  material  Tax Returns  filed by the Company  since the
Discharge  Date have either been paid or  adequately  reserved for in accordance
with GAAP;  (iv) to the  knowledge  of the  Grossman  Parties,  (a) no  material
deficiency has been asserted or assessed against the Company and is pending, and
(b) no  examination  of the Company is pending or  threatened  for any  material
amount of Tax by any taxing authority (with respect to any such action,  Section
4.8 of the Company  Disclosure  Schedule sets forth the periods at issue and the
category of Tax, and the examining  authorities' and any  corresponding  revenue
agents'  reports  relating  to the issue  provided  to the  Company  have been *
delivered to the Managing Member); (v) no extension of the period for assessment
or  collection  of any  material  Tax is currently in effect and no extension of
time within which to file any material Tax Return has been requested,  which Tax
Return has not since been filed;  (vi) to the knowledge of the Grossman Parties,
no  material  Tax liens  have been filed  with  respect to any Taxes;  (vii) the
Company  has not  agreed  to make any  adjustment  by  reason of a change in its
accounting  methods that would affect the taxable  income or  deductions  of the
Company for any period  ending  after the Closing  Date;  (viii) the Company has
made timely  payments of all Taxes required to be deducted and withheld from the
wages paid to their  employees;  (ix)  there are no Tax  sharing  agreements  or
arrangements with any par ty other than the Company under which the Company will
have any  obligation or liability on or after the Closing Date;  (x) the Company
has the net operating loss carryforwards set forth in Section 4.8 of the Company
Disclosure  Schedule,  (xi) the Company has no overall foreign losses as defined
in  Section  904(f)(2)  of the  Code;  (xii) to the  knowledge  of the  Grossman
Parties,  all payments,  other than  payments of dividends,  since the Discharge
Date  will be  deductible  or  capitalizable  for Tax  purposes  (including  any

                                       9
<PAGE>

payments made by the Company  pursuant to any  transaction  contemplated by this
Agreement),  except for any  payments the failure of which to be  deductible  or
capitalizable  would  not,  individually  or in the  aggregate,  have a Material
Adverse Effect on the Company;  (xiii) to the knowledge of the Grossman Parties,
there are no transfer  pricing  agreements made by the Company with any taxation
authority;  (xiv) the Company has not made an election  under Section 341 (f) of
the Code;  and (xv) the Company is not obligated to make any payments that would
constitute  excess parachute  payments within the meaning of Section 280G of the
Code.

     "Tax" or "Taxes" shall mean  all,federal,  state,  local and foreign taxes,
duties, levies, charges and assessments of any nature, including social security
payments and deductibles  relating to wages,  salaries and benefits and payments
to  subcontractors  (to the extent required under  applicable Tax law), and also
including  all interest,  penalties  and additions  imposed with respect to such
amounts.

     SECTION 4.9 Employee Benefit Plans;  ERISA.  Except as set forth in Section
4.9 of the Company Disclosure Schedule.-

     (a) there are: no "employee  pension  benefit  plans" as defined in Section
3(2)  of the  Employee  Retirement  Income  Security  Act of  1974,  as  amended
("ERISA"),  covering  employees  (or former  employees)  employed  in the United
States,  maintained or contributed by the Company or any of its ERISA Affiliates
(as hereinafter defined), or to which the Company or any of its ERISA Affiliates
contributes  or is obligated to make  payments  thereunder or otherwise may have
any liability ("Pension Benefit Plans"), For purposes of this Agreement,  "ERISA
Affiliate" shall mean any person (as defined in Section 3(9) of ERISA) that is a
member of any group of persons  described in Section 414(b),  (c), (m) or (o) of
the Code of which the Company is a, member.

     (b) The Company has  delivered  to the  Managing  Member true and  complete
copies of all  "welfare  benefit  plans" (as  defined in Section  3(l) of ERISA)
covering  employees  (or  former  employees)  employed  in  the  United  States,
maintained  or   contributed   to  by  the  Company   ("Welfare   Plans"),   all
multi-employer  plans (as defined in Section 3(37) of ERISA) covering  employees
(or former employees)  employed in the United States to which the Company or any
of its ERISA Affiliates is required to make  contributions or otherwise may have
any  liability,  and, to the extent  covering  employees  (or former  employees)
employed in the United States, all stock bonus, stock option,  restricted stock,
stock  appreciation   right,   stock  purchase,   bonus,   incentive,   deferred
compensation,  severance and vacation plans  maintained or contributed to by the
Company.

     (c) The Company,  and each of the Pension  Benefit Plans and Welfare Plans,
are in material  compliance  with the  applicable  provisions of ERISA and other
applicable laws.

                                       10

<PAGE>

     (d) All  contributions  to, and payments  from,  the Pension  Benefit Plans
which are  required to have been made in  accordance  with the  Pension  Benefit
Plans and, when applicable, Section*302 of ERISA or Section 412 of the Code have
been timely made.

     (e) The Pension  Benefit Plans intended to qualify under Section 401 of the
Code have been  determined  by the  Internal  Revenue  Service  ("IRS") to be so
qualified and, to the Company's knowledge,  nothing has occurred with respect to
the  operation of such Pension  Benefit Plans which would cause the loss of such
qualification or exemption or the imposition of any material liability,  penalty
or tax under  ERISA or the Code.  Such  plans  have been or will be amended on a
timely  basis to comply  with  changes to the Code made by the Tax Reform Act of
1986  and   other   applicable   legislative,   regulatory   or   administrative
requirements.

     (f) There are (i) no  investigations  pending or, to the  knowledge  of the
Grossman  Parties,  threatened by any governmental  entity involving the Pension
Benefit Plans or Welfare Plans,  (ii) no termination  proceedings  involving the
Pension  Benefit Plans and (iii) no pending or, to the knowledge of the Grossman
Parties,  threatened  claims (other than routine claims for benefits),  suits or
proceedings  against any Pension Benefit or Welfare Plan,  against the assets of
any of the trusts  under any  Pension  Benefit or  Welfare  Plan or against  any
fiduciary of any Pension  Benefit or Welfare Plan with respect to the  operation
of such plan or  asserting  any rights or claims to  benefits  under any Pension
Benefit  Plan or against  the assets of any trust  under such plan,  nor, to the
knowledge of the Grossman Parties,  are there any facts which would give rise to
any liability.

     (g) To the knowledge of the Grossman  Parties,  neither the Company nor any
of its  employees or  principal  shareholders,  nor any trustee,  administrator,
other fiduciary or any other "party in interest" or  "disqualified  person" with
respect  to the  Pension  Benefit  Plans or  Welfare  Plans,  has  engaged  in a
"prohibited transaction" (as such term is defined in Section 4975 of the Code or
Section  406 of ERISA)  which would be  reasonably  likely to result in a tax or
penalty on the  Company  under  Section  4975 of the Code or  Section  502(i) of
ERISA.

     (h) Neither any Pension  Benefit  Plan subject to Title IV of ERISA nor any
trust  created  thereunder  h ' as  been-  terminated  nor have  there  been any
"reportable  events"  (as defined in Section  4043 of ERISA and the  regulations
thereunder)  with respect to either  thereof,  except any such event which would
not,  individually  or in the aggregate,  have a Material  Adverse Effect on the
Company nor has there been any event with  respect to any Pension  Benefit  Plan
requiring disclosure under Section 4063(a) of ERISA or any event with respect to
any Pension  Benefit Plan requiring  disclosure  under Section 4041 (c)(3)(C) of
ERISA.

     (i) Neither the Company nor any ERISA  Affiliate has incurred any currently
outstanding  liability to the Pension Benefit Guaranty  Corporation (the "PBGC")
or to a trustee  appointed  under Section 4042(b) or (c) of ERISA other than for
the  payment  of  premiums,  all of which  have been paid when due.  No  Pension

                                       11
<PAGE>

Benefit  Plan has applied  for,  or  received,  a waiver of the minimum  funding
standards imposed by Section 412 of the Code.

     Neither  the  Company  nor any of the ERISA  Affiliates  has any  liability
(including any contingent liability under Section 4204 of ERISA) with respect to
any multi-employer plan, within the meaning of Section 3(37) of ERISA,  covering
employees (or former employees) employed in the United States.

     (k) With respect to each of the Pension  Benefit and Welfare  Plans,  true,
correct and complete  copies of the following  documents  have been delivered to
the  Managing  Member:  (i) the  current  plans  and  related  trust  documents,
including amendments thereto, (ii) any current summary plan descriptions,  (iii)
the most recent Forms 5500,  financial  statements  and  actuarial  reports,  if
applicable, and (iv) the most recent IRS determination letter, if applicable.

     (1)  Neither the  Company  nor any  organization  to which the Company is a
successor or parent corporation, within the meaning of Section 4069(b) of ERISA,
nor any of their ERISA  Affiliates  has engaged in any  transaction,  within the
meaning of Section 4069(a) of ERISA.

     (m) None of the Welfare Plans maintained by the Company are retiree life or
retiree health insurance plans which provide for continuing benefits or coverage
for any participant or any beneficiary of a participant following termination of
employment,  except as may be required  under the  Consolidated  Omnibus  Budget
Reconciliation  Act of 1985, as amended  ("COBRA"),  or except at the expense of
the participant or the participant's beneficiary.  The Company has complied with
the notice and  continuation  requirements of Section 4980B of the Code,  COBRA,
Part 6 of Subtitle B of Title I of ERISA and the regulations  thereunder  except
where the failure to comply would not, individually or in the aggregate,  have a
Material Adverse Effect on the Company.

     (n) No liability  under any Pension Benefit or Welfare Plan has been funded
nor has any such  obligation been satisfied with the purchase of a contract from
an  insurance  company as to which the  Company  has  received  notice that such
insurance company is in rehabilitation.

     (o) The consummation of the Transactions  will not result in an increase in
the amount of  compensation  or benefits or accelerate  the vesting or timing of
payment of any benefits or compensation payable to or in respect of any employee
of the Company.

     SECTION 4.10 No  Violation of Law.  Except as set forth in Section 4. 10 of
the Company Disclosure Schedule, the Company is not in violation of, and has not
been given  notice or been  charged with any  violation  of, any law,  'statute,
order, rule, regulation,  ordinance or judgment (including,  without limitation,
any applicable  environmental  law, ordinance or regulation) of any governmental
or regulatory body or authority,  except for violations which, in the aggregate,
do not have,  and would not  reasonably be expected to have, a Material  Adverse

                                       12
<PAGE>

Effect on the Company.  The Company has not rece ' ived any written  notice that
any investigation or review with respect to it by any governmental or regulatory
body or authority is pending or threatened,  other than, in each case, those the
outcome of which, as far as reasonably can be foreseen,  would not reasonably be
expected to have a Material  Adverse Effect on the Company.  The Company has all
permits,  licenses,   franchises,   variances,   exemptions,  orders  and  other
governmental  authorizations,  consents and  approvals  necessary to conduct its
business as presently  conducted,  except for those, the absence of which, alone
or in the  aggregate,  would not have a Material  Adverse  Effect on the Company
(collectively, "Permits"). The Company (a) has duly and timely filed all reports
and other  information  required to be filed with any governmental or regulatory
authority in  connection  with its  Permits,  and (b) is not in violation of the
terms of any of its  Permits,  except for such  omissions  or delays in filings,
reports  or  violations  which,  alone  or in the  aggregate,  would  not have a
Material Adverse Effect on the Company.  Section 4.11 of the Company  Disclosure
Schedule contains a list of Permits.

     SECTION 4.11  Environmental  Matters.  (a) To the knowledge of the Grossman
Parties,  the  Company  and the  properties  and  assets  used  in its  business
(including the Real Properties (as hereinafter defined)) occupied by the Company
are  in  material   compliance  with  all  applicable   Environmental  Laws  (as
hereinafter  defined),  which  compliance  includes,   without  limitation,  the
possession  of  all  material   licenses,   permits,   registrations  and  other
governmental  authorizations  (collectively,   "Environmental   Authorizations")
required under applicable  Environmental  Laws and material  compliance with the
terms and conditions  thereof.  To the knowledge of the Grossman Parties,  since
the Discharge Date, the Company has not received any communication, whether from
a Governmental  Authority (as hereinafter  defined),  citizen group, employee or
otherwise, that alleges that the Company or any of the properties or assets used
in its business  (including the Real  Properties) is not in full compliance with
Environmental Laws.

     (b) There is no Environmental  Notice (as hereinafter  defined) that (i) is
pending or, to the  knowledge of the Grossman  Parties,  threatened  against the
Company,  (ii)  is  pending  or,  to  the  knowledge  of the  Grossman  Parties,
threatened  against any person or entity whose liability for such  Environmental
Notice may have been  retained  or assumed  contractually  or  otherwise  by the
Company,  or (iii) to the knowledge of the Grossman  Parties,  could subject the
Managing  Member or Emergent  Ventures  to any risk of loss or damages,  in each
case  which is  reasonably  likely  to have a  Material  Adverse  Effect  on the
Company.

     (c) Except as set forth in Section 4.11 of the Company Disclosure Schedule,
and to the  knowledge  of the  Grossman  Parties,  there are no past or  present
actions, activities, circumstances,  conditions, events or incidents arising out
of, based upon, resulting from or relating to the operation, ownership or use by
the  Company  of any  properties  or  assets  (including  the  Real  Properties)
currently owned,  operated,  leased or used by the Company,  including,  without
limitation, the emission,  discharge, disposal or other release of any Hazardous
Material (as  hereinafter  defined) in or into the  Environment  (as hereinafter

                                       13
<PAGE>

defined),  that (i) could  reasonably be expected to result in the incurrence by
the  Company  of  material  liabilities  under  Environmental  Laws,  (ii) could
reasonably be expected to form the basis of any Environmental Notice relating to
a material  risk of loss or damage  against or with respect to the  Company,  or
against any persons or entity whose 'liability for any Environmental  Notice may
have been  retained  or  assumed  (contractually  or  otherwise)  by or could be
imputed or  attributed  by law to the Company or (iii) could subject the Company
to any material risk of loss or damages.

     (d) Without in any way limiting the  generality  of the  foregoing,  to the
knowledge  of the Grossman  Parties,  and except as set forth in Section 4.11 of
the Company Disclosure  Schedule,  (1) there are and have been no underground or
above ground storage tanks or other storage receptacles,  or related piping used
for  storage  or  transport  of  Hazardous  Materials,  located  on, at or under
property (including the Real Properties) owned, operated,  leased or used by the
Company, (2) there are and have been no polychlorinated biphenyls used or stored
by the Company,  (3) there are and have been no properties  (including  the Real
Properties) currently or formerly owned,  operated,  managed,  leased or used by
the  Company  (or  any of its  predecessors  in  interest)  at  which  Hazardous
Materials generated,  used, owned, managed,  stored or controlled by the Company
may  have  been  disposed  of or  otherwise  released  into the  Environment  in
violation  of the law and (4)  there  is no  friable  asbestos  contained  in or
forming  part of any  building,  building  component,  structure or office space
owned, operated, leased or used by the Company, in each case which is reasonably
likely to have a Material Adverse Effect.

     (e) To the knowledge of the Grossman  Parties,  since the Discharge Date no
lien has been  recorded  in the public  records  under  Environmental  Laws with
respect to any properties,  assets or facilities (including the Real Properties)
owned, operated, managed, leased or used by the Company.

         (f) To the knowledge of the Grossman Parties, the Company has given the
Managing. Member and its authorized representatives access to all material
records and files in its possession relating to actual or potential compliance
or liability issues of the Company under Environmental Laws, including, without
limitation, all reports, studies, analyses, tests or monitoring results
pertaining to the existence of Hazardous Materials or any other environmental
concern relating to properties, assets or facilities (including the Real
Properties) currently or formerly owned, operated, managed, leased, used or
controlled by the Company, or otherwise concerning compliance with or liability
under Environmental Laws.

     (g) To the knowledge of the Grossman  Parties,  there has been no disposal,
release,  discharge,  spillage,  uncontrolled  loss,  seepage or  filtration  of
Hazardous  Material on-site at any properties,  assets or facilities  (including
the Real  Properties)  at which  business  operations of the Company are or have
been conducted in material  violation of the law (the  "Properties") and, except
as set forth in Section 4.11 of the Company Disclosure  Schedule,  any Hazardous

                                       14
<PAGE>

Material  which  remains on the  Properties  is being  managed  in all  material
respects in accordance with applicable state and Federal law and the regulations
adopted thereunder.

          (h)  For purposes of this Agreement:

                    (i)  "Environment'  shall  mean any  surface  water,  ground
                    water, or drinking water supply,  land surface or subsurface
                    strata, or ambient air and includes, without limitation, any
                    indoor location.

                    (ii)  "Environmental  Laws" shall mean (i) the Comprehensive
                    Environmental  Response,  Compensation  and Liability Act of
                    1980, as amended, 42 U.S. C. 9601 et seq.; (ii) the Resource
                    Conservation and Recovery Act, as amended,  42 U.S.C.  ?9601
                    et seq.; (iii) the Toxic Substances Control Act, as amended,
                    15 U.S.C. ?9601 et seq.; and (iv) any other federal or state
                    law  or  regulation   relating  to  the  protection  of  the
                    Environment.

                    (iii)"Environmental Notice" shall mean any written notice or
                    claim by any  Governmental  Authority  or other  third party
                    alleging liability (including, without limitation, potential
                    liability   for   investigatory   costs,   clean-up   costs,
                    governmental  costs,  compliance costs or harm,  injuries or
                    damages to any person,  property,  natural resources, or any
                    fines or  penalties)  arising out of, based upon,  resulting
                    from or relating to any Environmental Law.

                    (iv) .  ".Governmental  Authority' shall mean any government
                    or political subdivision or any agency,  authority,  bureau,
                    central bank, commission, department or instrumentality,  or
                    any court, tribunal, grand jury or arbitrator,  in each case
                    whether foreign or domestic.

                    (v) "Hazardous  Materiaf'shall  mean any substance  included
                    within the definition of "hazardous  substance,"  "hazardous
                    waste," "toxic  substance,"  "toxic  pollutant,"  "hazardous
                    pollutant," or any similar term under any  Environmental Law
                    and  specifically  includes  polychlorinated  biphenyls  and
                    petroleum, oil, or petroleum or oil products, derivatives or
                    constituents,  including,  without limitation,  crude oil or
                    any  fraction  thereof,  excluding,   however,  a  substance
                    present  only in de  minimis  quantities  that  (i) does not
                    present  a  material  risk of harm to  public  health or the
                    Environment  and that (ii)  would not be the  subject  of an
                    enforcement   action  if   brought  to  the   attention   of
                    appropriate governmental agencies.

                    (vi) "Real Property'shall mean all right, title and interest
                    of the 'Company (including any leasehold estate) in and to a
                    parcel of real  property  owned or  operated  by the Company
                    together   with,  in  each  case,   all   improvements   and
                    appurtenant   fixtures,    equipment,   personal   property,
                    easements  and other  property and rights  incidental to the
                    ownership, lease or operation thereof.

                                       15
<PAGE>

     SECTION 4.12 Insurance.  The Company is covered by insurance  policies,  or
renewals  thereof,  as  identified  and described in Section 4.12 of the Company
Disclosure  Schedule.  To the  knowledge  of the Grossman  Parties,  there is no
material  liability  under any  insurance  policy in the nature of a retroactive
rate  adjustment or loss sharing or similar  arrangement  except as set forth on
the Company Disclosure Schedule.

     SECTION 4.13 Leases. To the knowledge of the Grossman Parties,  the Company
is not in default in the  performance of any material  provision of any lease to
which it is a party, whether as lessor or lessee.

     SECTION  4.14  Labor  Matters.  The  Company  is not a party  to any  union
contract or other collective bargaining agreement, other than those set forth in
Section 4.14 of the Company  Disclosure  Schedule,  true and complete  copies of
which  contracts have been delivered to the Managing  Member.  The Company is in
compliance  in  all  material  respects  with  all  applicable  laws  respecting
employment  and  employment  practices,  terms and  conditions of employment and
wages and hours,  and the Company is not engaged in any unfair  labor  practice.
There is no labor strike,  slowdown or stoppage pending (or, to the knowledge of
the  Grossman  Parties,  any labor  strike or  stoppage  threatened)  against or
affecting  the  Company.  No petition  for  certification  has been filed and is
pending before the National Labor  Relations Board with respect to any employees
of the Company who are not currently organized.

     SECTION 4.15 Employees. Except as set forth in the Company's SEC Reports or
in Section 4.15 of the Company Disclosure  Schedule,  the Company is not a party
to any  employment,  management  services,  consultation  or other  contract  or
agreement  with any past or present  officer,  director  or,employee  or, to the
knowledge  of the  Grossman  Parties,  any  entity  affiliated  with any past or
present officer, director or employee.

     SECTION 4.16 Financial Statements.  The financial statements of the Company
included in the  Company's  SEC Reports  (the  "Company  Financial  Statements")
present fairly, in all material respects,  the financial position of the Company
as of the  respective  dates and the results of its  operations  for the periods
covered in accordance  with GAAP and in accordance with Regulation SA of the SEC
(subject,  in the case of audited  period  financial  statements,  to  recurring
year-end  adjustments  which,  individually or collectively,  are not material).
Without limiting the generality of the foregoing, (i) except as set forth in the
Company  Disclosure  Schedule,  there is no basis for any assertion  against the
Company of any material  debt,  liability or  obligation of any nature not fully
reflected  or reserved  against in the Company  Financial  Statements  or in the
notes thereto;  and (ii) there are no assets of the Company,  the value of which
(in the  reasonable  judgment of the Company) is  materially  overstated  in the
Company  Financial  Statements.  Except as  disclosed  in the Company  Financial
Statements  or in the  Company  Disclosure  Schedule,  the  Company has no known
material contingent  liabilities  (including  liabilities for taxes).  Except as
disclosed in the Company Disclosure Schedule,  the Company is not a party to any

                                       16
<PAGE>

contract or agreement for the forward  purchase or sale of any foreign  currency
and has not invested in any "derivatives."

     SECTION 4.17 Absence of Certain  Changes or Events.  Except as set forth in
Section 4.17 of the Company Disclosure  Schedule,  since January 31, 2000, there
has not been:

     (a) any material  adverse  change in the financial  condition,  operations,
properties, assets, liabilities or business of the Company;

     (b) any material damage,  destruction or loss of any material properties of
the Company considered as one enterprise,
whether or not covered by insurance;

     (c) any material  change in the manner in which the business of the Company
considered as one enterprise has been conducted; or

     (d) any  occurrence  not  included  in  paragraphs  (a) through (c) of this
Section  which has resulted,  or which the Company has reason to believe,  could
reasonably be expected to result, in a Material Adverse Effect on the Company.

     SECTION 4.18 Books, Records and Accounts.  The Company's books, records and
accounts fairly and accurately reflect in all material respects transactions and
dispositions  of assets by the  Company,  and the system of internal  accounting
controls of the Company is  sufficient  to assure  that:  (a)  transactions  are
executed in accordance with  management's  authorization;  (b)  transactions are
recorded  as  necessary  to  permit  preparation  of  financial   statements  in
conformity with GAAP, and to maintain  accountability  for assets; (c) access to
assets is permitted only in accordance with management's authorization;  and (d)
the recorded  accountability  for assets is compared with the existing assets at
reasonable  intervals  and  appropriate  action  is taken  with  respect  to any
differences.

     SECTION 4.19 OTC Bulletin  Board.  The Company  Common  Stock,  the Class A
Warrants and the Class B Warrants are quoted on the Nasdaq Stock Market Inc. OTC
Bulletin Board under the respective symbols DYNI, DYNIW,  DYNIZ, and the Company
is in compliance in all respects with all rules and  regulations of the National
Association of Securities Dealers, Inc. applicable to the Company.

     SECTION  4.20  Brokers  and  Finders.  The  Company  has not  employed  any
investment banker, broker, finder, consultant or intermediary in connection with
the  transactions  contemplated by this Agreement which would be entitled to any
investment  banking,  brokerage,  finder's  or  similar  fee  or  commission  in
connection with this Agreement or the transactions contemplated hereby.

     SECTION  4.21 No  Omissions  or Untrue  Statements.  No  representation  or
warranty made to the Managing Member in this Agreement,  the Company  Disclosure
Schedule or in any  certificate  of the  Grossman  Parties or a Company  officer

                                       17
<PAGE>

required to be delivered to the  Managing  Member  pursuant to the terms of this
Agreement  contains or will contain any untrue  statement of a material fact, or
omits or will omit to state a material  fact  necessary  to make the  statements
contained  herein or  therein  in light of the  circumstances  in which made not
misleading as of the date hereof and as of the Closing Date.

                                    ARTICLE V

              REPRESENTATIONS AND WARRANTIES OF THE MANAGING MEMBER

     The Managing  Member hereby  represents  and warrants to the Company and to
the Grossman  Parties as follows (subject in each case to such exceptions as are
set forth or  cross-referenced in the Managing Member Disclosure Schedule in the
labeled section  corresponding to the caption of the  representation or warranty
to which such exceptions relate):

     SECTION 5.1 Organization and Qualification. Each of the Managing Member and
Emergent  Ventures  is a  limited  liability  company  duly  organized,  validly
existing and in good standing  under the laws of the State of Delaware.  Each of
the Managing Member and Emergent  Ventures has all requisite  limited  liability
company power to carry on its business as it is now being  conducted and is duly
qualified to do business as a foreign limited  liability  company and is in good
standing in all  jurisdictions  set forth in Section 5.1 of the Managing  Member
Disclosure  Schedule,  and  to  the  knowledge  of  the  Managing  Member,  such
jurisdictions  are the only  ones in  which  the  properties  owned,  leased  or
operated  by the  Managing  Member or  Emergent  Ventures  or the  nature of the
business  conducted by either makes such qualification  necessary,  except where
the  failure to qualify  (individually  or in the  aggregate)  will not have any
Material Adverse Effect on Emergent  Ventures.  The copies of the Certificate of
Formation  and  the  operating  agreement  of each of the  Managing  Member  and
Emergent  Ventures  previously  delivered  to the Company are true and  complete
copies of these documents as.. now in effect.

     SECTION 5.2  Capitalization.  Schedule  5.2 sets forth a true,  correct and
complete  list of the Emergent  Members.  The  membership  interests in Emergent
Ventures held by the Emergent Members  constitute all of the outstanding  equity
interests  in  Emergent  Ventures.  All of such  membership  interests  are duly
authorized,  validly issued and outstanding,  fully paid and nonassessable,  and
were not issued in violation of the preemptive  rights of any person.  There are
no  subscriptions,  options,  warrants,  rights or calls or other commitments or
agreements  to which  Emergent  Ventures  is a party  or by  which it is  bound,
calling for any issuance,  transfer, sale or other disposition of any membership
interests,  or any other equity interests,  in Emergent  Ventures.  There are no
outstanding securities  convertible or exchangeable,  currently or contingently,
into equity interests in Emergent Ventures.

                                       18
<PAGE>

     SECTION 5.3 Authority; Non-Contravention; Approvals.

     (a) The  Managing  Member  has full  limited  liability  company  power and
authority to enter into this  Agreement.  The Managing  Member's  execution  and
delivery of this Agreement has been duly  authorized by its members and no other
limited  liability  proceedings  on its  part are  necessary  to  authorize  its
execution  and  delivery of this  Agreement.  This  Agreement  has been duly and
validly  executed and delivered by the Managing Member and constitutes its valid
and binding  agreement,  enforceable  against it in  accordance  with its terms,
except that such enforcement may be subject to the Bankruptcy Exception.

     (b) The Managing Member's execution and delivery of this Agreement does not
violate,  conflict with or result in a breach of any provision of, or constitute
a  default  (or an event  which,  with  notice  or lapse of time or both,  would
constitute a default)  under, or result in the termination of, or accelerate the
performance  required by, or result in a right of  termination  or  acceleration
under,  or result in the  creation  of any lien,  security  interest,  charge or
encumbrance  upon any of the  properties  or  assets of the  Managing  Member or
Emergent Ventures,  under any of the terms,  conditions or provisions of (i) the
certificate  of  formation or  operating  agreement  of the  Managing  Member or
Emergent Ventures, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction,  writ, permit or license of any court or governmental
authority applicable to the Managing Member or Emergent Ventures or any of their
properties or assets,  or (iii) any note,  bond,  mortgage,  indenture,  deed of
trust,  license,  franchise,  permit,  concession,   contract,  lease  or  other
instrument,  obligation or agreement of any kind to which the Managing Member or
Emergent  Ventures is,now a party or by which they or any of their properties or
assets may be bound,  excluding from the foregoing  clauses (ii) and (iii), such
violations,  conflicts,  breaches,  defaults,  terminations,   accelerations  or
creations of liens, security interests,  charges or encumbrances that would not,
in the aggregate, have a Material Adverse Effect on Emergent Ventures,

     (c)  No  declaration,  filing  or  registration  with,  or  notice  to,  or
authorization,  consent or approval of, any  governmental  or regulatory body or
authority is necessary for the Managing Member's  execution and delivery of this
Agreement or its consummation of the  transactions  contemplated  hereby,  other
than  such  declarations,   filings,  registrations,   notices,  authorizations,
consents or approvals which, if not made or obtained,  as the case may be, would
not, in the aggregate, have a Material Adverse Effect on Emergent Ventures.

     SECTION 5.4 Litigation.  There is no (i) claim,  action, suit or proceeding
pending or, to the  knowledge  of the  Managing  Member,  threatened  against or
directly  relating  to Emergent  Ventures  before any court or  governmental  or
regulatory  authority  or  body or  arbitration  tribunal,  or (ii)  outstanding
judgment,  order, writ, injunction or decree, or application,  request or motion
therefor,  of any  court,  governmental  agency  or  arbitration  tribunal  in a
proceeding  to which  Emergent  Ventures  or any of its assets was or is a party
except,  in the  case of  clauses  (i)  and  (ii)  above,  such  as  would  not,
individually  or in the  aggregate,  either  materially  impair or preclude  the

                                       19
<PAGE>

ability of the Emergent Members to consummate the Emergent  Interest Transfer or
the other transactions  contemplated hereby or have a Material Adverse Effect on
Emergent Ventures.

     SECTION 5.5 No Violation of Law.  Emergent  Ventures is not in violation of
and has not been given notice or been charged  with any  violation  of, any law,
statute,  order, rule,  regulation,  ordinance or judgment  (including,  without
limitation,  any applicable  environmental  law, ordinance or regulation) of any
governmental  or regulatory body or authority,  except for violations  which, in
the  aggregate,  do not have,  and would not  reasonably  be expected to have, a
Material  Adverse Effect on Emergent  Ventures.  Neither the Managing Member nor
Emergent  Ventures  has received any written  notice that any  investigation  or
review with respect to Emergent  Ventures by any governmental or regulatory body
or  authority  is pending or  threatened,  other than,  in each case,  those the
outcome of which, as far as reasonably can be foreseen,  would not reasonably be
expected to have a Material Adverse Effect on Emergent Ventures.

     SECTION  5.6  Financial  Statements.  Section  5.6 of the  Managing  Member
Disclosure Schedule contains an unaudited consolidated balance sheet of Emergent
Ventures as of June 12, 2000 (the "Emergent Ventures Financial Statements"). The
Emergent Ventures Financial Statements present fairly, in all material respects,
the  financial  position  of  Emergent  Ventures  as of June 12,  2000.  Without
limiting the generality of the foregoing, (i) except as set forth in Section 5.6
of the Managing Member  Disclosure  Schedule,  as of June 12, 2000, there was no
material  debt,  liability or obligation of any nature not reflected or reserved
against  in  the  Emergent  Ventures  Financial  Statements  required  to  be so
reflected or reserved in accordance  with GAAP;  and (ii) there are no assets of
Emergent  Ventures,  the  value  of which  (in the  reasonable  judgment  of the
Managing  Member) is materially  overstated in the Emergent  Ventures  Financial
Statements. Except as disclosed therein or in Section 5.6 of the Managing Member
Disclosure Schedule or as incurred in the ordinary course of business since June
12,  2000,  Emergent  Ventures  has no  known  material  contingent  liabilities
(including  liabilities  for Taxes).  Except as disclosed in the Managing Member
Disclosure  Schedule,  Emergent  Ventures  is not a  party  to.any  contract  or
agreement for the forward  purchase or sale of any foreign  currency and has not
invested in any "derivatives."

     SECTION 5.7 Assets.  Section 5.7 of the Managing Member Disclosure Schedule
sets forth a complete  list, as of the date of this  Agreement,  of all material
assets of Emergent Ventures.

     SECTION 5.8 Taxes. Emergent Ventures has duly filed all Returns required to
be filed by it other  than  Returns  which the  failure  to file  would  have no
material adverse effect on the business of Emergent  Ventures.  All such Returns
were,  when filed,  and to the Managing  Member's  knowledge  are,  accurate and
completed  in all  material  respects  and  were  prepared  in  conformity  with
applicable laws and regulations.  Emergent Ventures has paid or will pay in full
or has  adequately  reserved  against all Taxes  otherwise  assessed  against it
through the Closing Date. Emergent Ventures is not a party to any pending action

                                       20
<PAGE>

or proceeding by any governmental  authority for the assessment of any Tax, and,
to the knowledge of the Managing  Member,  no claim for assessment or collection
of any Tax has been asserted against  Emergent  Ventures that has not been paid,
There are no Tax liens upon the assets of Emergent  Ventures.  There is no valid
basis,  to the Managing  Member's  knowledge,  for any  assessment,  deficiency,
notice,  30-day  letter or similar  intention  to assess any Tax to be issued to
Emergent Ventures by any governmental authority.

     SECTION  5.9 Absence of Certain  Changes or Events.  Except as set forth in
Section 5.9 of the Managing  Member  Disclosure  Schedule,  since June 12, 2000,
there has not been:

     (a) any material  adverse  change in the financial  condition,  operations,
properties, assets, liabilities or business of Emergent Ventures;

     (b) any material damage,  destruction or loss of any material properties of
Emergent  Ventures  considered  as one  enterprise,  whether  or not  covered by
insurance;

     (c) any  material  change in the manner in which the  business  of Emergent
Ventures considered as one enterprise has been conducted; and

     (d) any  occurrence  not  included  in  paragraphs  (a) through (c) of this
Section which has resulted,  or which the Managing Member has reason to believe,
could reasonably be expected to result, in a Material Adverse Effect on Emergent
Ventures.

     SECTION  5.10  Business  of  Emergent  Ventures.  The  business of Emergent
Ventures is as described in Emergent Ventures'  Confidential Offering Memorandum
dated March 1, 2000, a true and complete  copy of which is set forth in Schedule
5.10 of the Managing Member Disclosure Schedule.

     SECTION 5.11 Brokers and Finders.  Neither the Managing Member nor Emergent
Ventures has employed any  investment  banker,  broker,  finder,  consultant  or
intermediary in connection with the transactions  contemplated by this Agreement
which would be entitled to any investment banking, brokerage, finders or similar
fee or  commission  in  connection  with  this  Agreement  or  the  transactions
contemplated hereby.

     SECTION  5.12 No  Omissions  or Untrue  Statements.  No  representation  or
warranty  made by the  Managing  Member to the  Company in this  Agreement,  the
Managing Member Disclosure Schedule or in any certificate of the Managing Member
required to be delivered to the Company  pursuant to the terms of this Agreement
contains or will contain any untrue  statement of a material  fact,  or omits or
will omit to state a material fact  necessary to make the  statements  contained
herein or therein in light of the  circumstances in which made not misleading as
of the date hereof and as of the Closing Date.

                                       21
<PAGE>

                                   ARTICLE VI

             REPRESENTATIONS AND WARRANTIES OF THE EMERGENT MEMBERS

     The Emergent  Members  hereby  jointly,  and not  severally,  represent and
warrant to the Company as follows:

     SECTION 6.1 Authority. Each Emergent Member has full power and authority to
enter  into this  Agreement  and to  consummate  the  transactions  contemplated
hereby.  The execution and delivery of this  Agreement by each Emergent  Member,
and the  consummation by such Emergent Member of the  transactions  contemplated
hereby,  have been duly authorized by each Emergent  Member.  This Agreement has
been duly and validly  executed  and  delivered  by each  Emergent  Member,  and
constitutes a valid and binding  agreement of each Emergent  Member  enforceable
against each  Emergent  Member in  accordance  with its terms,  except that such
enforcement may be subject to the Bankruptcy Exception.

     SECTION 6.2 Approvals.  No  declaration,  filing or  registration  with, or
notice to, or  authoriza*tion,  consent or  approval  of,  any  governmental  or
regulatory body or authority is necessary for the execution and delivery of this
Agreement by the Emergent Members or the  consummation by the Emergent.  Members
of the transactions contemplated hereby.

                                   ARTICLE VII

                  CONDUCT OF BUSINESS PENDING THE CLOSING DATE

     SECTION 7.1 Conduct of the Company's Business Prior to Closing Date.

     (a) During the period from the date hereof to the Closing  Date,  except as
otherwise  expressly  contemplated  by this Agreement or as the Managing  Member
shall otherwise  specifically  consent to in writing,  the Company covenants and
agrees that it shall,  and the  Grossman  Parties  covenant  and agree that they
shall cause the Company to,  conduct the Company's  business in the ordinary and
usual  course  of  business  and  consistent  with  past  practice.  By  way  of
amplification and not limitation,  during the period from the date hereof to the
Closing Date, except as otherwise expressly contemplated by this Agreement or as
the Managing  Member shall  otherwise  specifically  consent to in writing,  the
Company  covenants  and  agrees  that it shall  (i) use  reasonable  efforts  to
preserve intact its business organization and goodwill, (ii) confer on a regular
basis  with one or more  representatives  of the  Managing  Member  to report on
material  operational matters and the general status of ongoing operations;  and
(iii) file with the SEC on a timely  basis all forms,  statements,  reports  and
documents (including all exhibits,  amendments and supplements thereto) required
to be filed by it pursuant to the Exchange Act.

                                       22
<PAGE>

     (b) During the period from the date hereof to the Closing  Date,  except as
otherwise  expressly  contemplated  by this Agreement or as the Managing  Member
shall otherwise  specifically  consent to in writing,  the Company covenants and
agrees that it shall not do or propose to do, and the Grossman  Parties covenant
and agree  that they will not cause the  Company  to do or propose to do, any of
the following-

          (1)  (i) split, combine or reclassify its outstanding capital stock or
               declare, set aside or pay any dividend or distribution payable in
               cash, stock,  property or otherwise,  (ii) spin-off,  distribute,
               sell,  transfer or otherwise dispose of any assets or businesses,
               (iii)  engage in any  transaction  for the purpose of effecting a
               recapitalization,  or (iv) engage in any transaction or series of
               related  transactions  which has a  similar  effect to any of the
               foregoing;

          (2)  issue, sell, pledge or dispose of, or agree to issue, sell pledge
               or dispose of, any additional shares of, or any options, warrants
               or rights of any kind to acquire any shares of its capital  stock
               of any class or any debt or equity securities convertible into or
               exchangeable  for such capital stock or amend or modify the terms
               and conditions of any of the foregoing,  except that it may issue
               shares upon exercise of outstanding options or warrants; or

          (3)  (i) redeem, purchase, acquire or offer to purchase or acquire any
               shares  of its  capital  stock,  other  than as  required  by the
               governing terms of such securities, (ii) take or fail to take any
               action  which  action or failure to take  action  would cause the
               Emergent Members to recognize gain or loss for federal income tax
               purposes as a result of the issuance of shares of Company  Common
               Stock thereto; (iii) take or fail to take any action which action
               or failure to take  action  would cause the  Distribution  not to
               qualify  for  federal  income tax  purposes  as a  reorganization
               within the meaning of Section 368(a)(1)(D) of the Code, (iv) make
               any  acquisition  of any material  assets (except in the ordinary
               course of business) or businesses,  (v) sell any material  assets
               (except in the ordinary  course of business)  or  businesses,  or
               (vi)  enter  into  any   contract,   agreement,   commitment   or
               arrangement to do any of the foregoing.

     SECTION 7.2 Conduct of Emergent Ventures' Business Prior to Closing Date.

     (a) During the period from the date hereof to the Closing  Date,  except as
otherwise  expressly  contemplated  by this  Agreement  or as the Company  shall
otherwise  specifically consent to in writing, the Managing Member covenants and
agrees that it shall cause Emergent Ventures to conduct the business of Emergent
Ventures in the ordinary and usual course of business and  consistent  with past
practice.

                                       23
<PAGE>

     (b) During the peri od from the date hereof to the Closing Date,  except as
otherwise  expressly  contemplated  by this  Agreement  or as the Company  shall
otherwise  specifically consent to in writing, the Managing Member covenants and
agrees  that it shall  not do or  propose  to do,  and will not  cause  Emergent
Ventures to do or propose to do, any of the following:

          (1)  (i)  split,  combine or  reclassify  its  outstanding  membership
               interests   or  declare,   set  aside  or  pay  any  dividend  or
               distribution payable in cash, stock, property or otherwise,  (ii)
               spin-off,  distribute, sell, transfer or otherwise dispose of any
               assets or businesses  owned or held by Emergent  Ventures,  (iii)
               engage  in  any  transaction  for  the  purpose  of  effecting  a
               recapitalization,  or (iv) engage in any transaction or series of
               related  transactions  which has a  similar  effect to any of the
               foregoing; or

          (2)  issue or  sell,  or  agree  to  issue  or  sell,  any  additional
               membership or other equity interests in Emergent Ventures.

     SECTION 7.3 No Solicitation by the Company or the Grossman Parties. (a) The
Company and the Grossman  Parties  agree that,  prior to the Closing Date or the
termination  or  abandonment  of this  Agreement,  the  Company  shall  not give
authorization or permission to any of its directors, officers, employees, agents
or  representatives  to, and the Company and the Grossman  Parties shall use all
reasonable  efforts to see that such  persons do not,  directly  or  indirectly,
solicit,  initiate,  facilitate or encourage  (including by way of furnishing or
disclosing  information) any merger,  consolidation,  other business combination
involving  the Company,  acquisition  of all or any  substantial  portion of the
assets or capital  stock of the Company or of the assets of any  division of the
Company,  or  inquiries  or  proposals  concerning  or which may  reasonably  be
expected to lead to, any of the foregoing (a "Company Acquisition  Transaction")
or negotiate,  explore or otherwise  knowingly  communicate  in any way with any
third party (other than Emergent Ventures,  the Managing Member or any affiliate
thereof) with respect to any Company  Acquisition  Transaction or enter into any
agreement,  arrangement or understanding  requiring it to abandon,  terminate or
fail  to  consummate  the  Transactions  or any  other  transactions,  expressly
contemplated by this  Agreement,  or contemplated to be a material part thereof;
provided,  however,  that nothing contained in this Section 7.3(a) shall prevent
the Company or the Board of Directors of the Company from furnishing  non-public
information  to, or entering into  discussions or  negotiations  with, any third
party in  connection  with an  unsolicited,  bona fide  written  proposal  for a
Company  Acquisition  Transaction by such third party, if and only to the extent
that (1) such third party has made a written  proposal  to the Company  Board of
Directors to consummate a Company Acquisition Transaction, (2) the Company Board
of Directors determines in good faith that such Company Acquisition  Transaction
is reasonably  capable of being completed on  substantially  the terms proposed,
and would,  if consummated,  result in a transaction  that would provide greater
value to the holders of the shares of Company Common Stock than the Transactions
contemplated by this Agreement (a "Superior Company  Acquisition  Transaction"),

                                       24
<PAGE>

(3)the failure to take such action would,  in the reasonable good faith judgment
of the Company Board of Directors, based upon a written opinion of outside legal
counsel,  be a violation  of its  fiduciary  duties to the Company  stockholders
under  applicable law, and (4) prior to furnishing  such non-public  information
to, or entering into  discussions or negotiations  with,  such third party,  the
Company's  Board of  Directors  receives  from  such  third  party  an  executed
confidentiality  agreement  that  provides  prior notice of its decision to take
such action to the  Company.  The Company  agrees not to release any third party
from, or waive any provision of, any standstill agreement to which it is a party
or any confidentiality  agreement between it and another person who has made, or
who may  reasonably be  considered  likely to make, a proposal with respect to a
Company Acquisition  Transaction,  unless the failure to take such action would,
in the reasonable  good faith judgment of the Company Board of Directors,  based
upon a written opinion of outside legal counsel, be a violation of its fiduciary
duties to the Company's  stockholders under applicable law. Without limiting the
foregoing,  it is understood that any violation of the restrictions set forth in
the preceding  sentence by any  representative of the Company shall be deemed to
be a breach of this Section 7.3(a) by the Company and the Grossman Parties.

     (b) The Company shall notify the Managing Member of any bona fide inquiries
or proposals relating to a Company Acquisition Transaction,  within one business
day following the Company's receipt of any such inquiry or proposal. Such notice
shall be made  orally and in writing  and shall  indicate  the  identity  of the
offeror and the terms and conditions of such proposal,  inquiry or contact.  The
Company shall keep the Managing  Member  informed of the status  (including  any
change to the  material  terms) of any such  proposal or request for  non-public
information. The Company shall also promptly advise any person seeking a Company
Acquisition  Transaction that it is bound by the provisions of this Section 7.3,
but without identifying Emergent Ventures or the Managing Member.'

     (c) The Company Board of Directors  may not withdraw or modify,  or propose
to withdraw or modify,  in a manner  adverse to the Managing  Member or Emergent
Members, the approval by the Company Board of Directors of this Agreement or the
Transactions  unless,  following the receipt of a Superior  Company  Acquisition
Transaction proposal, in the reasonable good faith judgment of the Company Board
of  Directors,  based upon the written  opinion of outside  legal  counsel,  the
failure  to do so would  be a  violation  of the  Company  Board  of  Directors'
fiduciary duties to the Company's stockholders under applicable law.

     (d) In the event the Company receives a proposal with respect to a Superior
Company Acquisition Transaction,  the Company shall offer to the Managing Member
the right to equal such  proposal  or make a proposal  that is  superior  to the
Company's  stockholders  than such  proposal.  If the Managing  Member wishes to
exercise such right,  it must give the Company written notice of its decision to
do so within five business days (or such shorter period as may be required under
the terms of the  proposal  with  respect to the  Superior  Company  Acquisition

                                       25
<PAGE>

Proposal)  after  theCompany  gives written notice to the Managing Member of the
proposal with respect to the Superior Company Acquisition Transaction.

     SECTION 7.4  No'Solicitation  by the Managing  Member.  The Managing Member
agrees that, prior to the Closing Date or the termination or abandonment of this
Agreement,  the Managing  Member  shall not,  directly or  indirectly,  solicit,
initiate,  facilitate or encourage (including by way of furnishing or disclosing
information) any merger,  consolidation,  other business  combination  involving
Emergent Ventures,  acquisition of all or any substantial  portion of the assets
or  membership  interests  of  Emergent  Ventures,  or  inquiries  or  proposals
concerning or which may  reasonably be expected to lead to, any of the foregoing
(an  "Emergent  Acquisition  Transaction")  or  negotiate,  explore or otherwise
knowingly communicate in any way with any third party (other than the Company or
its affiliates)  with respect to any Emergent  Acquisition  Transaction or enter
into any  agreement,  arrangement  or  understanding  requiring  it to  abandon,
terminate  or fail to  consummate  the  Transactions  or any other  transactions
expressly contemplated by this Agreement,  or contemplated to be a material part
thereof.  The  Managing  Member  shall advise the Company in writing of any bona
fide  inquiries or proposals  relating to an Emergent  Acquisition  Transaction,
within one business day  following  the  Managing  Member's  receipt of any such
inquiry or proposal.  The Managing  Member shall also promptly advise any person
seeking an Emergent  Acquisition  Transaction that it is bound by the provisions
of this Section, but without identifying the Company.

                                  ARTICLE Vill

                              ADDITIONAL AGREEMENTS

     SECTION 8.1 Access to Information.  (a) Each of the Managing Member and the
Company  shall  afford  to the  other  and  the  other's  accountants,  counsel,
financial advisors and other  representatives full access during normal business
hours throughout the period prior to the Closing Date to all properties,  books,
contracts,  commitments and records (including, but not limited to, Tax Returns)
of Emergent  Ventures and the Company,  respectively,  and,  during such period,
shall furnish  promptly (a) a copy of each report,  schedule and other  document
filed or  received by it during such  period  pursuant  to the  requirements  of
federal or state  securities  laws or, in the case of the  Company,  filed by it
during such period with the SEC in connection with the transactions contemplated
by  this  Agreement  or  which  may  have a  material  effect  on the  business,
properties or personnel of Emergent Ventures and the Company,  respectively, and
(b) such other information concerning the business,  properties and personnel of
Emergent  Ventures  and the  Company  as the  other  shall  reasonably  request;
provided,  however,  that, no  investigation  pursuant to this Section 8.1 shall
affect any  representation  or  warranty  made herein or the  conditions  to the
obligations   of  the  respective   parties  to  consummate   the   transactions
contemplated  by  this  Agreement.  All  non-public  documents  and  information
furnished  to the  Managing  Member  or to the  Company,  as the case may be, in
connection with the transactions  contemplated by this Agreement shall be deemed

                                       26
<PAGE>

to have been  received in  confidence.  The Company  shall  promptly  advise the
Managing Member,  and the Managing Member shall promptly advise the Company,  in
writing,  of any change or the  occurrence  of any event  after the date of this
Agreement having, or which, insofar as can reasonably be foreseen, in the future
may have, a Material Adverse Effect on the Company or Emergent Ventures,  as the
case may be.

     (b)  Immediately  prior to the  Closing,  the Company  shall cause Newco to
execute an  agreement  which shall  afford to the  Company and its  accountants,
counsel,  financial advisors and other  representatives full access from time to
time  following  the  Closing  Date (upon  reasonable  notice and during  normal
business hours), to all properties,  books,  contracts,  commitments and records
(including,  but not limited to, Tax Returns) of Newco; provided,  however, that
Newco  shall only be  obligated  to provide  access to such  properties,  books,
contracts,  commitments  and  records to the extent  such  access is  reasonably
required by the Company for legitimate business purposes.

     SECTION 8.2  Agreement to  Cooperate.  Subject to the terms and  conditions
herein  provided,  each of the  parties  hereto  shall  cooperate  and use their
respective best efforts to take, or cause to be taken,  all action and to do, or
cause to be done, all things  necessary,  proper or advisable  under  applicable
laws  and  regulations  to  consummate  and  make  effective  the   transactions
contemplated by this Agreement, including using its reasonable efforts to obtain
all necessary or  appropriate  waivers,  consents and  approvals,  to effect all
necessary  registrations,  filings and submissions and to lift any injunction or
other legal bar to any of the  Transactions  (and, in such case, to proceed with
the Transactions as expeditiously as possible),  provided,  that nothing in this
Section 8.2 shall affect any responsibility or obligation specifically allocated
to any party in this Agreement.

     SECTION 8.3 Public  Statements.  The Company and the Managing  Member agree
that the press  release  in the form  attached  hereto as  Exhibit  8.3(a)  (the
"Initial  Release") shall be released by the parties  immediately  following the
execution of this  Agreement,  and that the press  release in the form  attached
hereto as Exhibit  8.3(b)  (the  "Closing  Release"  and  collectively  with the
Initial  Release,  the  "Agreed  Releases")  shall be  released  by the  parties
immediately  following  the Closing.  With  respect to any press  release or any
written  public  statement  with respect to this  Agreement or the  transactions
contemplated hereby other than the Agreed Releases,  the parties agree that they
shall consult with each other prior to issuing any such press release or written
public  statement and shall not issue any such press  release or written  public
statement  prior to such  consultation,  except that prior  review and  approval
shall not be required  if, in the  reasonable  judgment of the party  seeking to
issue such release or public statement,  prior review and approval would prevent
the timely dissemination of such release or statement in violation of applicable
law,  rule,  regulation  or policy of the Nasdaq  Stock Market Inc. OTC Bulletin
Board.

                                       27
<PAGE>

     SECTION 8.4 Disclosure Supplements.  From time to time prior to the Closing
Date,  and in any  event  immediately  prior to the  Closing  Date,  each of the
Company  and  the  Managing  Member  shall  promptly  supplement  or  amend  its
Disclosure  Schedule  with  respect to any matter  hereafter  arising  that,  if
existing,  occurring,  or known at the date of this  Agreement,  would have been
required to be set forth or  described  in such  Disclosure  Schedule or that is
necessary to correct any information in such Disclosure  Schedule that is or has
become  inaccurate.  Notwithstanding  the foregoing,  if any such  supplement or
amendment  discloses a Material  Adverse  Effect,  the  conditions  to the other
party's  obligations  to  consummate  the  Transactions  set forth in Article IX
hereof shall be deemed not to have been satisfied.

     SECTION 8.5 Rule 14f-1.  As promptly as  practicable  following the date of
this  Agreement,  the Company agrees that it shall comply with, and the Grossman
Parties agree that they shall cause the Company to comply with, the requirements
of Rule 14f-1 under the Securities Exchange Act of 1934, as amended.

     SECTION 8.6 Net  Operating  Losses.  The  Company  agrees that it shall not
claim or deduct on any Tax Return any net  operating  loss incurred with respect
to any period ending on or prior to the Closing Date.

                                   ARTICLE IX

                                   CONDITIONS

     SECTION 9.1  Conditions  to Each Party's  Obligations  to Effect the Equity
Transfer  Transactions.  The  obligation  of the  Company  to  effect  the Share
Issuance,  on the one hand, and the obligation of the Emergent Members to effect
the  Emergent  Interest  Transfer,  on the other  hand,  shall be subject to the
fulfillment'at or prior to the Closing Date of the following conditions:

               (a) No  preliminary  or  permanent  injunction  or other order or
          decree by any federal or state court which  prevents the  consummation
          of any of the Transactions shall have been issued and remain in effect
          (each party  agreeing to use its  reasonable  efforts to have any such
          injunction, order or decree lifted); and

               (b) No action  shall have been  taken,  and no  statute,  rule or
          regulation shall have been enacted, by any state or federal government
          or  governmental  agency in the United  States which would prevent the
          consummation of any of the Transactions.

                                       28
<PAGE>

     SECTION 9.2 Conditions to the Obligation of the Company to Effect the Share
Issuance.  Unless waived by the Company, the obligation of the Company to effect
the  Share  Issuance  shall be  subject  to the  fulfillment  at or prior to the
Closing Date of the following additional conditions-

               (a) The  Managing  Member  shall have  performed  in all material
          respects its  agreements  contained in this  Agreement  required to be
          performed on or prior to the Closing Date and the  representations and
          warranties of the Managing Member and the Emergent  Members  contained
          in this Agreement  shall be true and correct in all material  respects
          on and as of (i) the date made and (ii) the  Closing  Date  (except in
          the case of representations and warranties  expressly made solely with
          reference to a particular date); and the Company shall have received a
          certificate of the Managing Member to that effect;

               (b) The  Company  shall have  received a favorable  opinion  from
          Sonnenschein  Nath & Rosenthal,  counsel to Emergent  Ventures and the
          Managing  Member,  dated the Closing  Date,  as to such matters as the
          Company shall reasonably request (including,  without limitation, such
          matters as are customary for transactions of the type  contemplated by
          this Agreement);

               (c) The Managing  Member shall have furnished to the Company such
          additional  certificates,  opinions and other documents as the Company
          may have reasonably requested as to any of the conditions set forth in
          this Section 9.2; and

               (d) 'Since the date of this  Agreement  there shall not have been
          any Material  Adverse  Effect with respect to Emergent  Ventures,  the
          likelihood of which was not previously disclosed to the Company by the
          Managing Member in the Managing Member Disclosure Schedule.

     SECTION 9.3 Conditions to the Obligation of the Emergent  Members to Effect
the  Emergent  Interest  Transfer.  Unless  waived by the Managing  Member,  the
obligations of Emergent Members to effect the Emergent  Interest  Transfer shall
be subject to the  fulfillment at or prior to the Closing Date of the additional
following conditions:

          (a)  The Company  shall have complied  with the  requirements  of Rule
               14f-1 under the Securities Exchange Act of 1934, as amended;

          (b)  The Asset Transfer  Transaction  shall have been consummated in a
               manner reasonably satisfactory to the Managing Member;

          (c)  The  Distribution   shall  have  been  consummated  in  a  manner
               reasonably satisfactory to the Managing Member;

          (d)  The Company  shall have  performed in all  material  respects its
               agreements  contained in this Agreement  required to be performed

                                       29
<PAGE>

               on or  prior to the  Closing  Date  and the  representations  and
               warranties of the Company  contained in this  Agreement  shall be
               true and correct in all  material  respects on -and as of (i) the
               date  made and  (ii)  the  Closing  Date  (except  in the case of
               representations   and  warranties   expressly  made  solely  with
               reference to a particular  date);  and the Managing  Member shall
               have received a Certificate of the President and Chief  Executive
               Officer  of the  Company  and from the  Grossman  Parties to that
               effect;

          (e)  The Managing Member shall have received a favorable  opinion from
               Heller,  Horowitz & Feit, P.C., counsel to the Company, dated the
               Closing  Date,  as to such matters as the  Managing  Member shall
               reasonably request (including,  without limitation,  such matters
               as are customary for  transactions  of the type  contemplated  by
               this Agreement);

          (f)  The Company and the Grossman  Parties shall have furnished to the
               Managing Member such additional certificates,  opinions and other
               documents as the Managing Member may have reasonably requested as
               to any of the conditions set forth in this Section 9.3;

          (g)  Since the date of this  Agreement  there  shall not have been any
               Material  Adverse  Effect  with  respect  to  the  Company,   the
               likelihood of which was not previously  disclosed to the Managing
               Member by the Company in the Company Disclosure Schedule;

          (h)  Each director of the Company  other than M.  Grossman  shall have
               resigned on or prior to the Closing Date, and the Managing Member
               shall have received copies of such resignations;

          (i)  M.  Grossman  shall  have  delivered  to the  Managing  Member  a
               12-month  lockup  agreement  in  such  form as is  customary  for
               affiliated  stockholders;  and The  Managing  Member  shall  have
               received (A) UCC-3 Termination Statements executed by each Lender
               releasing any and all liens or encumbrances existing with respect
               to the Company or any of its,  assets,  (B) written  evidence (in
               form and substance  satisfactory to the Managing Member) that all
               debts,  liabilities and obligations of the Company to the Lenders
               shall have been  discharged  in full (other than with  respect to
               the Retained  Liability),  and (C) written  evidence (in form and
               substance  satisfactory  to the  Managing  Member) that the Achim
               Warehousing and Service  Agreement  referred to in Section 4.6 of
               the Company  Disclosure,  Schedule shall have been terminated and
               that  the  Company  shall  have  been  released  from any and all
               obligations and liabilities  directly or i9qirectly related to or
               arising out of such agreement.

                                       30
<PAGE>

                                    ARTICLE X

                          NON-SURVIVAL; INDEMNIFICATION

     SECTION 10.1  Non-Survival of  Representations,  Warranties and Agreements.
The representations, warranties and agreements contained in this Agreement shall
terminate on the Closing Date or upon the termination of this Agreement pursuant
to Section 11. 1, as the case may be,  except that the  agreements  set forth in
Sections 2.3,  8.1, 8.6,  10.2,  11.2,  11.5 and 12.3 shall survive  termination
indefinitely. Notwithstanding the foregoing, the Managing Member agrees that (i)
immediately  following  the  Closing,  it shall  cause the Company to deliver to
Newco a consent to Newco's use of the corporate  name and  trademark  "Dynamic",
and (ii) as soon as reasonably practicable following the Closing, it shall cause
the  Company to (A) cease the use of the name  "Dynamic"  in the  conduct of the
Company's  business,  (B)  effect a change of the  Company's  corporate  name to
eliminate the word "Dynamic"  therefrom and (C) effect a change in the Company's
trading symbols.

     SECTION 10.2 Indemnification.  M. Grossman agrees to indemnify,  defend and
hold  harmless the  Company,  its  affiliates  and their  respective  directors,
officers,  shareholders,  agents and employees,  from, against and in respect of
any claims,  damages,  liabilities  or, losses  (collectively,  "Claims") to the
extent such Claims arise solely in connection with royalties  (whether currently
accrued and unpaid or becoming  due after the date  hereof) due from the Company
in  connection  with or arising  out of any of the Company  Contracts  listed on
Schedule 4.6 of the Company Disclosure Schedule.

                                   ARTICLE XI

                        TERMINATION, AMENDMENT AND WAIVER

     SECTION 11.1  Termination.  This  Agreement  may be  terminated at any time
prior to the Closing Date:

          (a)  by mutual consent of the Managing Member and the Company;

          (b)  unilaterally by the Managing Member if the Closing shall not have
               occurred by August 31, 20001

          (c)  unilaterally  by the  Company in the event that the  Company  has
               received  a  proposal  with  respect  to  a  Company  Acquisition
               Transaction and the provisions and conditions of subsections (a),
               (b),  (c) and (d) of  Section  7.3 have  been  complied  with and
               satisfied;

                                       31
<PAGE>

          (d)  unilaterally  by the  Managing  Member upon the  occurrence  of a
               Material  Adverse  Effect  with  respect  to  the  Company,   the
               likelihood of which was not previously  disclosed to the Managing
               Member  by the  Company  prior to the date of this  Agreement  (a
               "Company Adverse Change");

          (e)  unilaterally  by the Company  upon the  occurrence  of a Material
               Adverse Effect with respect to Emergent Ventures,  the likelihood
               of which  was not  previously  disclosed  to the  Company  by the
               Managing  Member  prior  to the  date of this  Agreement  (an "EV
               Adverse Change");

          (f)  unilaterally by the Managing Member in the event of the Company's
               material  breach  when  made of any  material  representation  or
               warranty  of the  Company  contained  in this  Agreement,  or the
               Company's  willful failure to comply with or satisfy any material
               covenant or condition of Company contained in this Agreement; and

          (g)  unilaterally by the Company in the event of the Managing Member's
               material  breach  when  made of any  material  representation  or
               warranty  contained in this Agreement,  or the Managing  Member's
               willful  failure to comply with or satisfy any material  covenant
               or condition of the Managing Member contained in this Agreement.

     SECTION 11.2 Effect of  Termination.  In the event of  termination  of this
Agreement by either the Managing  Member or the Company,  as provided in Section
11.1, this Agreement  .(other than as set forth in Section 10.1) shall forthwith
become  void and there shall be no further  obligation  on the part of any party
hereto.

     SECTION 11.3  Amendment.  This  Agreement  may not be amended  except by an
instrument  in  writing  signed on behalf of each of the  parties  hereto and in
compliance with applicable law.

     SECTION 11.4  Waiver.  At any time prior to the Closing  Date,  the parties
hereto may (i) extend the time for the  performance of any of the obligations or
other  acts of the other  parties  hereto,  (ii) waive any  inaccuracies  in the
representations  and warranties  contained  herein or in any document  delivered
pursuant  thereto  and (iii)  waive  compliance  with any of the  agreements  or
conditions  contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.

     SECTION 11.5 Ex~enses. Whether or not the Transactions are consummated, all
costs  and  bxo6nses   incurred  in  connection  with  this  Agreement  and  the
transactions contemplat6d hbreby'shall be paid by the party incurring such costs
and expenses.

                                       32
<PAGE>

                                   ARTICLE XII

                               GENERAL PROVISIONS

     SECTION 12.1 Notices. All notices and other communications  hereunder shall
be in writing and shall be deemed given if delivered personally  (effective upon
delivery),  mailed by registered or certified  mail (return  receipt  requested)
(effective  three business days after  mailing),  sent by a reputable  overnight
courier service for next business day delivery (effective the next business day)
or sent via  facsimile  (effective  upon  receipt of the  telecopy in  complete,
readable  form) to the  parties  at the  following  addresses  (or at such other
address for a party as shall be specified by like notice):

          (a)  If to the Managing Member:

               Emergent Management LLC
               c/o  Emergent Capital Investment Management,LLC
               375 Park Avenue,  36th Floor
               New York, New York 10152
               Attention: Daniel Yun
               FAX: (212) 202-4169

               with a copy to:

               Sonnenschein  Nath & Rosenthal
               1221 Avenue of the Americas
               New York, New York 10020
               Attention:  Ira L. Roxland, Esq.
               FAX: (212)768-6800

          (b)  If to the Company or Grossman, to:

               Dynamic International, Ltd.
               58 Second Avenue
               Brooklyn, New York 11215
               Attention: Marton Grossman
               FAX: (718) 369-2213

               with a copy to:

               Heller, Horowitz & Feit, P.C.
               292 Madison Avenue
               New York, New York 10017
               Attention: Richard F. Horowitz, Esq.
               FAX: (212) 696-9459

                                       33
<PAGE>

     SECTION 12.2  Interpretation.  The headings contained in this Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Agreement.

     SECTION 12.3 Miscellaneous. (a) This Agreement (including the documents and
instruments  referred  to  herein)  (i)  constitutes  the entire  agreement  and
supersedes all prior agreements and understandings, both written and oral, among
the  parties,  or  any of  them,  with  respect  to the  subject  matter  hereof
(including  without  limitation that certain  non-binding term sheet dated as of
April 11, 2000  between the Managing  Member and the Company;  (ii) shall not be
assigned by  operation  of law or  otherwise,  and any attempt to do so shall be
void;  and  (iii)  shall  be  governed  in  all  respects,  including  validity,
interpretation  and effect, by the laws of the State of New York (without giving
effect to the  provisions  thereof  relating to conflicts  of law),  and (b) the
parties  hereto agree to submit to the  exclusive  jurisdiction  of any New York
state court sitting in New York County and agree not to assert,  as a defense in
any action,  suit or proceeding for the  interpretation  or enforcement  hereof,
that  it is not  subject  to such  jurisdiction  or that  such  action,  suit or
proceeding may not be brought or is not  maintainable  in said court or that the
venue thereof may not be  appropriate or that this Agreement may not be enforced
in or by such court.

     SECTION 12.4  Counterparts.  This  Agreement may be executed in two or more
counterparts,  each of which shall be deemed to be an original, but all of which
shall  constitute  one and the same  agreement.  In  pleading  or  proving  this
Agreement,  it shall not be  necessary  to produce or account  for more than one
fully executed original.

     SECTION 12.5 Parties In Interest.  This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied,  is  intended to confer upon any other  person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.

                                       34
<PAGE>

     IN WITNESS WHEREOF,  the Managing Member, the Emergent Members, the Company
and the  Grossman  Parties  have  caused  this  Agreement  to be signed by their
respective  officers  thereunto  duly  authorized  as of the date first  written
above.

                                             EMERGENT MANAGEMENT COMPANY, LLC

                                             By:

                                             EMERGENT MEMBERS

                                             By:
                                             Attorney-in-Fact

                                             DYNAMIC INTERNATIONAL, LTD.

                                             By:

                                             Marton B. Grossman

                                             Isaac Grossman

                                       35
<PAGE>

                                 EXHIBIT 10.06
                             THE JOESTER J*L LORIA GROUP

April 19, 2002

Mr. Marton B. Grossman
DYNAMIC INTERNATIONAL, INC.
dba DYNAMIC CLASSICS, LTD.
58 Second Avenue
Brooklyn, NY 11215

     LETTER  AMENDMENT  (REF.  #111  804-D)  (AMENDMENT  I'D")  TO  THE  LICENSE
     AGREEMENT  DATED JANUARY 09,1993  BETWEEN  DAIMLERCHRYSLER  CORPORATION AND
     DYNAMIC INTERNATIONAL, INC. COVERING "JEEP" (REF. #111804) (AGREEMENT)

Dear Mr. Grossman:

The following, when signed by you and counter-executed by DaimlerChrysler
Corporation  (formerly  Chrysler  Corporation)  with an office at 1000  Chrysler
Drive, Auburn Hills, Michigan 48326-2766 (hereinafter "DC"), shall constitute an
Amendment to the above-refereneed Agreement as follows:

     SUMARY SHEET - PARAGRAPH 2.LICENSED  ARTICILES:
     -----------------------------------------------

     The  Licensed  Articles  is.  hereby  amended  and  restated to read in its
     entirety as follows:

     Trademark-identified  backpacks, tote bags, fanny packs and luggage made of
     canvas,  polyester and nylon,  trimmed or decorated with all  fabrications,
     excluding leather.

     The rights to all canvas,  polyester and nylon backpacks,  tote bags, fanny
     packs  and  luggage  shall be  exclusive  except as  specifically  modified
     hereunder.

     Specifically excluded from Licensee's exclusive right shall be the right to
     fashion bags and the right to laptops,  PDA and business cases, leather and
     leather  trimmed  Licensed  Articles and backpacks  sold to retail  fashion
     buyers and departments.

     Specifically  excluded from the Licensed  Articles are children's  products
     and all technical backpacks and any camping gear.

<PAGE>

Mr. Marton B. Grossman
DYNAMIC INTERNATIONAL, INC.
dba DYNAMIC CLASSICS, INC.
April 19, 2002

     SUMMARY SHEET - PARAGRAP14 I TERM*

     The Fifth Renewal Term of the Agreement shall begin on January 01, 2003 and
     will expire on December 31, 2005.

     FIFTH RENEWAL TERM REQUIREMENTS:

     Not later than one hundred eighty (180) days prior to the expiration of the
     Fourth  Renewal Term of the Agreement,  Licensee shall have the option,  by
     written  notice to DC, to renew this  Agreement  for the Fifth Renewal Term
     commencing on January 01, 2003 and expiring on December 31, 2005;  provided
     this  Agreement has not been  terminated in accordance  with the provisions
     hereof and Licensee has achieved the required  Eleven Million (US$1 1.0) in
     Minimum Net Sales for the Period January 0 1, 2001 - December 3 1 ~ 2002.

     FIFTH RENEWAL TERM: January 01, 2003 - December 31, 2007

     MINIMUM NET SALES: US$21,000,000.00
<TABLE>
<S>     <C>                                                           <C>

        $6,000,000.00 or seventy-five percent (75%) of the sales      January 01, 2003 - December 31, 2003
          made during the previous year, whichever is greater
        $7,000,000.00 or seventy-five percent (75%) of the sales      January 01, 2004 - December 31, 2004
          made during the previous year, whichever is greater
        $8,000,000.00 or seventy-five percent (75%) of the sales      January 01, 2005 - December 31, 2005
          made during the previous year, whichever is greater
</TABLE>

     Notwithstanding the foregoing, during the Fifth Renewal Term, should annual
     volume  decline by twenty  percent  (20%) or more due to the loss of one or
     two  key  accounts,   the  parties  shall  adjust  the  Minimum  Net  Sales
     accordingly. Licensee shall provide written notice to DC providing detailed
     information  of such loss of business.  The parties shall make best efforts
     to complete good faith  negotiations  and amend the  obligations  under the
     Agreement within thirty (30) days of such notification.

     MINIMUM ROYALTY PAYMENTS:  $1,000,000.00  ($300,000 for 2003,  $350,000 for
     2004, $350,000 for 2005)

     January 01, 2003 - December 31, 2003- $300,000 -
     Payments shall be paid in four (4) equal installments of $75,000 due on the
     first of January, April, July & October of 2003
     January 01, 2004 - December 31, 2004 - $350,000
     Payments shall be paid in four (4) equal installments of $87,500 due on the
     first of January, April, July & October of 2004
     January 01, 2005 - December 31, 2005 - $350,000
     Payments shall be paid in four (4) equal installments of $87,500 due on the
     first of January, April, July & October of 2005


                                       2
<PAGE>

Mr. Marton B. Grossman
DYNAMIC INTERNATIONAL, INC.
dba DYNAMIC CLASSICS, INC.
April 19, 2002

     SUMMARY SHEET - PARAGRAPH 9. MINIMUM ADWETISING TO BE SPENI BY LICENSEE:
     ------------------------------------------------------------------------

     The Minimum Advertising is hereby amended and restated as follows:

     o    Licensee  acknowledges  that  advertising  and promotion is key to the
          success of the program.

     o    Licensee  agrees to spend no less than three  percent (3%) of sales or
          yearly  Minimum Net Sales quota  (whichever  is greater) each calendar
          year on  advertising  and  promotion  of the  Jeep  luggage  business.
          Licensee  must  provide  a  detailed   written  recap  of  advertising
          expenditures  on a quarterly  basis as part of the  quarterly  royalty
          reporting. Approved expenses include, but are not limited to, consumer
          print   ads,   co-op   retailer   advertisements,   public   relations
          expenditures  and fees paid to  retailers  to secure  placement of the
          Products.  Additional expenditures must receive prior written approval
          by DC. Specifically  excluded are costs associated with tradeshows and
          printing of  brochures,  Notwithstanding  the  foregoing,  Licensee is
          required to spend not less than Twenty-Four Thousand Dollars ($24,000)
          per calendar year for media buys in trade or consumer publications and
          to  make  such  amount  reasonably  available  for  print  advertising
          programs or similar marketing campaigns  developed,and  coordinated by
          DC on behalf of the licensing program

     o    Should  Licensee  fail to expend any portion of the  required  Minimum
          Advertising  requirement in any contract year, Licensee may carry over
          such shortfall for use in the following contract year,  however,  such
          amount may not exceed twenty-five percent (25%) of the annual required
          Minimum  Advertising.  Should  the  shortfall  of  Licensee's  Minimum
          Advertising  expenditures exceed twenty-five  percent (25%),  Licensee
          shall pay to DC the amount in excess of twenty-five  percent (25%) not
          later than January 3 I't of the following year. Licensee may not carry
          over unspent advertising funds for two (2) consecutive years and shall
          pay to DC not later than January 3 1" of the following year, an amount
          equal to the  entire  shortfall  in Minimum  Advertising  expenditures
          during such second consecutive year.

     o    Licensee  agrees to  participate  in Jeep  consumer  product  print ad
          programs developed by DC.

     o    Effective  January 2002,  Licensee  agrees to offer a minimum of eight
          (8) different collections of luggage each contract year.

                                       3

<PAGE>

Mr. Marton B. Grossman
DYNAMIC INTERNATIONAL, INC.
dba DYNAMIC CLASSICS, INC.
April 19, 2002

     SUMMARY SHEET-PARAGRAPH 16.-DAIMLERCHRYS11FRIS NOMINEE TO RECEIVE PAYMENT:
     --------------------------------------------------------------------------

     DC's Nominee to Receive Payment is hereby amended and restated as follows:

                  The Joester Loria Group, Inc.
                  419 Park Avenue South
                  New York City, New York 100 16
                  Attn: President

     SUMMARY SHEET - PARAGRAPU 17 - ADDITIONAL TERMS:

     Summary Sheet is hereby amended to include Paragraph 17 - ADDITIONAL TERMS:
     as follows:

     All  terms  below  become  effective  immediately  upon  execution  of this
     Amendment "D":

     o Licensee  shall  develop  and submit a detailed  annual  advertising  and
     distribution  plan containing a media schedule along with in-store point of
     purchase advertising.  The distribution plan shall be submitted ninety (90)
     days prior to the beginning of each calendar year.

     o Licensee agrees to create an annual four (4) color dedicated Jeep catalog
     to be ready for the Luggage Show each contract year.

     o Licensee  agrees to dedicate no less than  seventy-five  percent (75%) of
     the Licensee's  Luggage Show booth to prominently  display the Jeep Product
     line.

     o DC shall have the right to terminate  this Agreement if there is a change
     in control of Dynamic  International.  For  purposes of this  provision,  a
     "change in control"  shall mean the  acquisition  of fifty percent (50%) or
     more of the assets or outstanding  common stock or other equity interest of
     a party by a non-affiliated third party.

     LICENSE AGREEMENT - 27- NOTICE-

     The  address of the  following  party is hereby  amended  and  restated  as
     follows:

         If to DAIMLERCHRYSLER:             DAIMLERCHRYSLER. CORPORATION
                                            Attn: Marvin Klein
                                            CIMS 485-05-19
                                            1000 Chrysler Drive
                                            Auburn Hills, MI 48326-2766


                                        4
<PAGE>

Mr. Marton B. Grossman
DYNAMIC INTERNATIONAL, INC.
dba DYNAMIC CLASSICS, INC.
April 19, 2002

     LICENSE AGREEMENT -19 (e) EFFECT OF EXPIRATION OR TERMINATION
     -------------------------------------------------------------

     The Effect of Termination is hereby amended and restated as follows:

     Upon the  termination of this  Agreement,  notwithstanding  anything to the
     contrary  herein,  all  royalties on any and all Sales of the Product shall
     become  immediately  due  and  payable.   No  minimum  royalties  shall  be
     repayable, and all balances owing on any guarantees due under the Agreement
     shall be immediately due and payable.

Except as specifically modified herein, all other terms and conditions of the
Agreement shall remain in full force and effect.

Assuming the preceding statements accurately reflect your understanding, please
sign the original and all copies of this Amendment in the space provided, and
return them to me. We will then have the Amendment executed and return a
fully-executed copy to you for your files. Of course, no binding modification
exists until one fully-executed copy of the Amendment has been returned to you.

If you have any questions, feel free to contact Roger Lippman.

Sincerely yours,

Caroline A. Coleman
Sr. Director, Contracts

Agreed to and Accepted by:

DAIMLERCHRYSLER. CORPORATION                    DYNAMIC INTERNATIONAL, INC.
                                                dba DYNAMIC CLASSICS, LTD.

By:                                             By:

Title: Donna L. Berry                           Title:    President

Date: May 10, 2002                              Date:     5/2/02


                                        5
<PAGE>


                                 EXHIBIT 10.07

                           THE JOESTER J*L LORIA GROUP

April 2, 2002

Mr. Marton B. Grossman
DYNAMIC CLASSICS, LTD.
58 Second Avenue
Brooklyn, NY 11215

                    LETTER  AMENDMENT  (REF. #11 1804*E)  (AMENDMENT "E") TO THE
                    LICENSE   AGREEMENT   EFFECTIVE   JANUARY   09,1993  BETWEEN
                    DAIMLERCHRYSLER   CORPORATION  AND  DYNAMIC  CLASSICS,  LTD.
                    COVERING "JEEP" (REF. #111804) (AGREEMENT)

Dear Mr. Grossman:

The  following,  when  signed  by you and  counter-executed  by  DaimlerChrysler
Corporation   (hereinafter   "DC"",   shall   constitute  an  Amendment  to  the
above-referenced Agreement as follows:

     SUMMARY SHFFT - PARAGRAPH 5 -- TERM,
     ------------------------------------

     The Minimum Royalty  Payment of $400,000.00  under the Fourth Renewal Term,
     for the period  January 01, 2002 to December 31, 2002, is hereby amended to
     $2140,000.00 and payable as follows:

<TABLE>
     INSTALLMENT(S)  DUE: DUEDATE            AMOUNT     REMARKS
<S>                       <C>                <C>        <C>
                          January 01, 2002  $100,000.00 Guarantee Paid 2/7/02 Ck # 8710
                          April 01, 2002     $45,000.00 Guarantee
                          July 01, 2002      $45,000.00 Guarantee
                          October 01, 2002   $50,000.00 Guarantee
</TABLE>

     Should any of the above  payments  be late,  the  Minimum  Guarantee  shall
     immediately revert to the original  Agreement,  specifically  Amendment "C"
     Fourth  Renewal Tenn:  January 0 1, 2001 -December 31, 2002 and the Minimum
     Guarantee  payment of $400,000.00,  will be due in four equal payments of $
     100,000.00 on the first of January, April, July and October 2002.

     Licensee further agrees that the royalty payment referenced herein shall be
     in addition  to any other  advances  due under the terms of the  Agreement;
     that such  payment may not be  crosscredited  against  advances  which have
     already  been paid or become due;  and that  payments  may only be credited
     against sales of the Licensed Product to which such payments apply.



419  Park Avenue South New York, New York 10016 Tel(212)6835150Fax(212)6893300

<PAGE>

Mr. Marton B. Grossman
DYNAMIC CLASSICS, LTD.
April 2, 2002

Except as specifically  modified  herein,  all other terms and conditions of the
Agreement shall remain in full force and effect.

Assuming the preceding statements accurately reflect your understanding,  please
sign the original and all copies of this  Amendment in the space  provided,  and
return  them to me.  We will  then  have the  Amendment  executed  and  return a
fully-executed  copy to you for your files, Of course,  no binding  modification
exists until one fully-executed copy of the Amendment has been returned to you.

If you have any questions, feel free to contact Roger Lippman.

Sincerely,yours,

Caroline A. Coleman
Sr. Director, Contracts

Agreed to and Accepted by:

DAIMLERCHRYSLER CORPORATION          DYNAMIC CLASSICS, LTD.

By:                                  By:

Title: Donna L. Berry                Title: President
Date: May 10, 2002                   Date: 4/5/02


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