UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
               Quarterly Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934


For the Quarterly Period Ended January 31, 2004      Commission File No. 0-15284


                             NATIONAL LAMPOON, INC.
             (Exact name of registrant as specified in its charter)


         Delaware                                                 95-4053296
(State or other jurisdiction                                  (I.R.S. Employer
     of incorporation)                                       Identification No.)


                        10850 Wilshire Blvd., Suite 1000
                          Los Angeles, California 90024
                    (Address of principal executive offices)


                  Registrant's telephone number: (310) 474-5252


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 YES [X] NO [ ]


Indicate  by check mark  whether the  registrant  is an  acceleration  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 YES [ ] NO [X ]


As of March 12, 2004 the  registrant  had  1,533,418  shares of its common stock
outstanding.


<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                     NATIONAL LAMPOON, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
ASSETS                                                               JAN 31, 2004         JULY 31, 2003
                                                                    ------------         -------------
                                                                     (UNAUDITED)
   CURRENT ASSETS
<S>                                                                 <C>                  <C>
      Cash and cash equivalents                                     $    145,997         $    140,255
       Accounts receivable                                               172,295               18,390
      Prepaid expenses and other current assets                           16,454               15,636
                                                                    ------------         ------------

          Total current assets                                           334,746              174,281

NON-CURRENT ASSETS
      Capitalized production costs                                        27,000              168,044
      Fixed assets, net of accumulated depreciation                       56,942               42,859
      Intangible assets                                                6,505,732            6,505,732
      Accumulated amortization of intangible assets                   (4,169,578)          (4,049,578)
      Other assets                                                         4,459                4,500
                                                                    ------------         ------------
          Total non-current assets                                     2,565,599            2,530,513
                                                                    ------------         ------------
 TOTAL ASSETS                                                       $  2,900,345         $  2,704,794
                                                                    ============         ============

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
      Accounts payable                                              $    388,862         $    183,485
      Accrued expenses                                                   824,607              781,023
      Notes payable                                                    3,931,612            1,443,856
      Deferred income                                                    100,000              161,000
                                                                    ------------         ------------
        TOTAL CURRENT LIABILITIES                                      5,245,081            2,569,364
                                                                    ------------         ------------

  MINORITY INTEREST                                                           --                   --

 SHAREHOLDERS' EQUITY
       Series B Preferred Stock, par value $.0001 per share,
         68,406 shares authorized, 63,607 shares issued                        6                    6
      Common Stock, par value $.0001 per share, 15,000,000
           shares authorized, 1,533,418 and 1,526,795 shares
          issued, respectively                                               153                  153
       Additional paid in capital                                     17,265,984           17,110,401
      Less: Note receivable on common stock                             (160,100)            (157,220)
                Deferred compensation                                   (838,533)          (1,001,066)
      Accumulated deficit                                            (18,612,246)         (15,816,844)
                                                                    ------------         ------------
        TOTAL SHAREHOLDERS' EQUITY                                    (2,344,736)             135,430
                                                                    ------------         ------------
 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $  2,900,345         $  2,704,794
                                                                    ============         ============
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                       2
<PAGE>

                     NATIONAL LAMPOON, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         THREE MONTHS                      SIX MONTHS
                                                                         ENDED JAN. 31,                   ENDED JAN. 31,
                                                                   ---------------------------     ---------------------------
                                                                     2004              2003            2004           2003
                                                                   -----------     -----------     -----------     -----------
<S>                                                                <C>             <C>             <C>             <C>
REVENUE
      Trademark ...............................................    $   559,270     $   115,392     $   615,443     $   187,665
      Consumer products .......................................         48,067           2,937          48,572           4,852
      Advertising .............................................        106,795          10,000         323,045          10,000
                                                                   -----------     -----------     -----------     -----------
         Total revenue ........................................        714,132         128,329         987,060         202,517

COSTS AND EXPENSES
      Costs related to trademark revenue ......................        340,893           2,280         346,607           7,712
      Costs related to consumer product revenue ...............          9,593          14,873          14,014          24,410
      Production costs ........................................        347,686         192,602         726,410         356,240
      Amortization of intangible assets .......................         60,000         150,167         120,000         210,167
      Selling, general & administrative expenses ..............      1,253,418       1,093,419       2,257 794       1,917,253
      Stock, warrants, & options issued for services ..........        147,765          76,094         318,116         706,482
                                                                   -----------     -----------     -----------     -----------
         Total costs and expenses .............................      2,159,355       1,529,435       3,782,941       3,222,264
                                                                   -----------     -----------     -----------     -----------
         OPERATING LOSS .......................................     (1,445,223)     (1,401,106)     (2,795,881)     (3,019,747)

OTHER INCOME
      Interest income .........................................          1,440           1,451           2,881           4,148
      Other income ............................................             --          32,214              --          32,214
                                                                   -----------     -----------     -----------     -----------
         Total other income ...................................          1,440          33,665           2,881          36,362
                                                                   -----------     -----------     -----------     -----------
         LOSS BEFORE MINORITY INTEREST
           AND INCOME TAXES ...................................     (1,443,783)      1,367,441)     (2,793,000)     (2,983,385)
                                                                   -----------     -----------     -----------     -----------

   Minority interest in loss of consolidated subsidiary .......             --          61,718              --          99,000
                                                                   -----------     -----------     -----------     -----------

   Provision for state income taxes ...........................             --              --           2,400           1,623
                                                                   -----------     -----------     -----------     -----------

         NET LOSS .............................................    $(1,443,783)    $(1,305,723)    $(2,795,400)    $(2,886,008)
                                                                   ===========     ===========     ===========     ===========

   Net loss per share-- basic and diluted .....................    $     (0.94)    $     (0.90)    $     (1.83)    $     (2.00)
                                                                   ===========     ===========     ===========     ===========

   Weighted average number of common shares-- basic and diluted      1,533,418       1,451,593       1,530,257       1,444,533
                                                                   ===========     ===========     ===========     ===========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.

                                       3
<PAGE>

                     NATIONAL LAMPOON, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         FOR THE SIX MONTHS
                                                                          ENDED JANUARY 31,
                                                                     ---------------------------
                                                                         2004            2003
                                                                     -----------     -----------
<S>                                                                  <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss)/income ............................................    $(2,795,400)    $(2,886,007)
   Adjustments to reconcile net loss/(income)
   to net cash used in operating activities:
      Depreciation and amortization .............................        134,110         242,055
      Stock, options, and warrants issued for services ..........        318,116         706,483
      Minority interest .........................................             --          99,000)
      Other .....................................................         (2,880)         (2,880)

   Changes in assets and liabilities:
      (Increase) in accounts receivable .........................       (153,905)           (980)
      (Increase)/decrease in prepaid expenses and other  assets .           (778)         (4,698)
      (Increase) in production costs ............................       (141,044)       (127,975)
      Increase/(decrease) in accounts payable ...................        205,378         (47,063)
      Increase/(decrease) in accrued expenses ...................         43,583         (16,627)
      (Decrease)/increase in deferred revenues ..................        (61,000)         25,000
                                                                     -----------     -----------
   NET CASH AND CASH EQUIVALENTS USED IN OPERATING ACTIVITIES ...     (2,453,820)     (2,211,692)
                                                                     -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of Burly Bear networks ...........................       (200,000)             --
   Purchase of fixed assets .....................................        (28,194)        (12,855)
                                                                     -----------     -----------
   NET CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES ...        (28,194)       (212,855)
                                                                     -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Series B preferred stock issuance .............      1,495,000              --
   Exercise of stock options ....................................         35,124
   Increase in notes payable ....................................      2,487,756              --
                                                                     -----------     -----------

   NET CASH AND CASH EQUIVALENTS (USED IN)/ PROVIDED BY FINANCING
       ACTIVITIES ...............................................      2,487,756       1,530,124
                                                                     -----------     -----------
NET INCREASE/(DECREASE) IN CASH AND AND CASH EQUIVALENTS ........          5,742        (894,423)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................        140,255       1,024,207
                                                                     -----------     -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................    $   145,997     $   129.784
                                                                     ===========     ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

Supplemental disclosure of investing and financing activities:

Stock and options issued for services of $318,116


                                       4
<PAGE>

                     NATIONAL LAMPOON, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- BASIS OF PRESENTATION AND GOING CONCERN

The accompanying unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
("SEC") and in accordance with generally accepted accounting principles for
interim financial statements. Accordingly, they do not include all of the
information and disclosures required for annual financial statements. In the
opinion of the Company's management, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the Company's financial position
as of January 31, 2004, and the results of operations and cash flows for the
three and six month periods ended January 31, 2004 and 2003 have been included.
These financial statements should be read in conjunction with the financial
statements and related footnotes for the year ended July 31, 2003 included in
the National Lampoon, Inc. ("Company" or "Registrant") annual report on Form
10-K for that period.

The results of operations for the three and six month periods ended January 31,
2004 are not necessarily indicative of the results to be expected for the full
fiscal year. For further information, refer to the financial statements and
related footnotes included in the Company's annual report on Form 10-K for the
year ended July 31, 2003.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. Since the consummation of the Reorganization
Transactions disclosed in detail in the Company's annual report on Form 10-K for
the year ended July 31, 2002, we have initiated a number of new business
activities, and significantly increased our overhead by the hiring of new
employees and consultants. To date, these operations have provided limited
operating revenue, and we have been relying on funding received from a group
headed by Daniel S. Laikin, Paul Skjodt and Timothy S. Durham (the "NLAG
Group"), as more fully more set forth in disclosures on the Form 10-K for the
year ended July 31, 2003, in the form of securities purchased in connections
with the Reorganization Transactions, and subsequent investment by Messrs.
Laikin and Durham (NLAG Group) in the form of a loan, to fund operations. Since
the consummation of the Reorganization Transactions, in which we received
$2,085,318, subsequent warrant exercises have provided us with $1,305,000,
although $200,000 of this amount was allocated for the Burly Bear transaction,
and an additional $3,428,00 as of January 31, 2004 from the NLAG Group in the
form of a loan. We had negotiated a series of agreements with Avalon Equity
Partners, Golden International Group, Tim Durham and Daniel Laikin, which had
been anticipated to close by the end of December 2003 (the "December Anticipated
Financing Transaction"), and would have resulted in additional investment in the
Company of approximately $5.5 million. The December Anticipated Financing
Transaction was not consummated. The Company is pursuing other investors with
the intention of utilizing similar terms and conditions as those established in
the December Anticipated Financing Transaction, however, no assurance can be
given that the Company will be able to attract other investors. Our financial
statements for the fiscal year ended July 31, 2003 contain an explanatory
paragraph as to our ability to continue as a going concern. This explanatory
paragraph may impact our ability to obtain future financing.

NOTE B - RECENT ACCOUNTING PRONOUNCEMENTS:

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" (an interpretation of Accounting Research Bulletin
(ARB) No. 51, Consolidated Financial Statements). Interpretation 46 addresses
consolidation by business enterprises of entities to which the usual condition
of consolidation described in ARB-51 does not apply. The Interpretation changes
the criteria by which one company includes another entity in its consolidated
financial statements. The general requirement to consolidate under ARB-51 is
based on the presumption that an enterprise's financial statements should
include all of the entities in which it has a controlling financial interest
(i.e., majority voting interest). Interpretation 46 requires a variable interest
entity to be consolidated by a company that does not have a majority voting
interest, but nevertheless, is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of
the entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity.


                                       5
<PAGE>


In December 2003 the FASB concluded to revise certain elements of FIN 46,
primarily to clarify the required accounting for interests in variable interest
entities. FIN-46R replaces FIN-46 that was issued in January 2003. FIN-46R
exempts certain entities from its requirements and provides for special
effective dates for entities that have fully or partially applied FIN-46 as of
December 24, 2003. In certain situations, entities have the option of applying
or continuing to apply FIN-46 for a short period of time before applying
FIN-46R. In general, for all entities that were previously considered special
purpose entities, FIN 46 should be applied in periods ending after December 15,
2003. Otherwise, FIN 46 is to be applied for registrants who file under
Regulation SX in periods ending after March 15, 2004, and for registrants who
file under Regulation SB, in periods ending after December 15, 2004. The Company
does not expect the adoption to have a material impact on the Company's
financial position or results of operations.

In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces the
previously issued Statement. The revised Statement increases the existing
disclosures for defined benefit pension plans and other defined benefit
postretirement plans. However, it does not change the measurement or recognition
of those plans as required under SFAS No. 87, "Employers' Accounting for
Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
Specifically, the revised Statement requires companies to provide additional
disclosures about pension plan assets, benefit obligations, cash flows, and
benefit costs of defined benefit pension plans and other defined benefit
postretirement plans. Also, companies are required to provide a breakdown of
plan assets by category, such as debt, equity and real estate, and to provide
certain expected rates of return and target allocation percentages for these
asset categories. The Company has implemented this pronouncement and has
concluded that the adoption has no material impact to the financial statements.

NOTE C - EARNINGS PER SHARE

Diluted earnings per share amounts are calculated using the treasury method and
are based upon the weighted average number of common and common equivalent
shares outstanding during the period. Basic and diluted earnings per share are
the same as common equivalent shares and are excluded from the computation, as
they would have an anti-dilutive effect. Options and warrants to purchase 92,557
and 37,252 common shares during the three months ended January 31, 2004 and
January 31, 2003, and 149,084 and 37,252 for the six months ended January 31,
2004 and January 31, 2003 respectively are not included in the calculation of
diluted earnings per share respectively because their inclusion would be
anti-dilutive.

NOTE D - STOCK BASED COMPENSATION EXPENSE

The Company has adopted SFAS No. 123, Accounting for Stock Based Compensation,
issued in October 1995. In accordance with SFAS No. 123, the Company has elected
to follow Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations in accounting for its employee
stock options. Under APB Opinion No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized. There were no
employee stock options granted during the six months ended Janaury 31, 2004, nor
is there any current period compensation expense to disclose in relation to
previously issued employee stock options, as required under SFAS 148.

NOTE E - SEGMENT INFORMATION

The Company operates in three business segments: licensing and exploitation of
the "National Lampoon" trademark and related properties, operation of the
nationallampoon.com website and video distribution whose products are sold to
consumers, and television productions and distribution to college campuses.
Segment operating income/(loss) excludes the amortization of intangible assets,
interest income, and income taxes. Selling, general and administrative expenses
not specifically attributable to any segment have been allocated equally between
the trademark, consumer products, and television segments. Summarized financial
information for the three and six month periods ended January 31, 2004 and
January 31, 2003 concerning the Company's segments is as follows:

<TABLE>
<CAPTION>
                                                   TRADEMARK           CONSUMER          TELEVISION           TOTAL
                                                  -----------        -----------        -----------        -----------
<S>                                               <C>                <C>                <C>                <C>
        Three Months Ended January 31, 2004
           Segment revenue ................       $   559,000             48,000        $   107,000        $   714,000
           Segment operating income/(loss)           (127,000)          (365,000)          (893,000)        (1,385,000)

        Three Months Ended January 31, 2003
           Segment revenue ................       $   116,000        $     2,000        $    10,000        $   128,000
           Segment operating income .......          (348,000)          (519,000)          (290,000)        (1,157,000)

        Six Months Ended January 31, 2004
           Segment revenue ................       $   615,000        $    49,000        $   323,000        $   987,000
           Segment operating income/(loss)           (341,000)          (705,000)        (1,630,000)        (2,676,000)

        Six Months Ended January 31, 2003
           Segment revenue ................       $   188,000        $     4,000        $    10,000        $   202,000
           Segment operating income/(loss)           (966,000)        (1,211,000)          (501,000)        (2,678,000)
</TABLE>


                                       6
<PAGE>


A reconciliation of segment operating income/loss to net income before income
taxes for the three and six month periods ended January 31, 2004 and January 31,
2003 is as follows:

<TABLE>
<CAPTION>
                                                       FOR THE THREE MONTHS ENDED
                                                    -------------------------------
                                                    JAN. 31, 2004     JAN. 31, 2003
                                                    -------------     -------------
<S>                                                 <C>                <C>
        Total segment operating (loss)/income       $(1,385,000)       $(1,157,000)
        Amortization of intangible assets ...            60,000            150,000
        Interest income .....................            (1,000)            (1,000)
                                                    -----------        -----------
        Net loss before income taxes ........       $(1,444,000)       $(1,306,000)
                                                    ===========        ===========


                                                        FOR THE SIX MONTHS ENDED
                                                    -------------------------------
                                                    JAN. 31, 2004      JAN. 31, 2003
                                                    -------------     --------------
        Total segment operating loss ....            (2,676,000)        (2,680,000)
        Amortization of intangible assets               120,000            210,000
        Interest income .................                (3,000)            (4,000)
                                                    -----------        -----------
        Net loss before income taxes ....           $(2,793,000)       $(2,884,000)
                                                    ===========        ===========
</TABLE>


NOTE F - LITIGATION

On August 18, 2003, a lawsuit was filed against us by Duncan Murray in Los
Angeles Superior Court, case number BC300908. Mr. Murray claimed that he was
unjustly terminated and is owed severance. Mr. Murray alleged 3 causes of
action: (i) breach of his employment agreement; (ii) wrongful termination of
employment and breach of implied contract; and (iii) retaliatory termination of
employment. On September 24, 2003, we filed an answer to the lawsuit. The matter
was sent to arbitration on February 17, 2004 and was settled on that date.
According to the terms of the Settlement and General Release Agreement, the
Company is to pay to Mr. Murray and his lawyer a total of approximately $42,500.
This amount is included in accrued expenses at January 31, 2004.

ITEM 2 - MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Management believes the following critical accounting policies, among others,
affect its more significant judgments and estimates used in preparation of its
consolidated financial statements.

Revenue Recognition. The Company's trademark licensing revenues are generally
recognized when received or when earned under the terms of the associated
agreement and when the collection of such revenue is reasonably assured.
Revenues from the sale of videocassettes and DVDs, net of estimated provisions
for returns (which are not material for any period presented) are recognized
when the units are shipped. Revenues from Internet operations are recognized
when earned under the terms of the associated agreement and the collection of
such revenue is reasonably assured. Revenues from advertising and promotion are
recognized when earned under the terms of the associated agreement or when the
advertisement has been broadcast and the collection of such revenues are
reasonably assured.

Production Costs. As provided by SOP 00-2, production costs are not capitalized
unless there are advertising agreements in place from which the production will
generate revenues. As a result, since there were limited advertising agreements
in place for particular programs, the production costs incurred by National
Lampoon Networks during the six months ended January 31, 2004 were capitalized
only to the extent of the revenues generated by those agreements. The balance of
the production costs was expensed during the period.

RECENT DEVELOPMENTS

The Company had negotiated a series of agreements with Avalon Equity Partners,
Golden International Group, Tim Durham and Daniel Laikin, which had been
anticipated to close by the end of December 2003 (the "December Anticipated
Financing Transaction"), and would have resulted in additional investment in the
Company of approximately $5.5 million. The December Anticipated Financing
Transaction was not consummated. The Company is pursuing other investors with
the intension of utilizing similar terms and condition as those established in
the December Anticipated Financing Transaction.


                                       7
<PAGE>


RESULTS OF OPERATIONS

THE THREE MONTHS ENDED  JANUARY 31, 2004 VS. THE THREE MONTHS ENDED  JANUARY 31,
2003

      For the three  months  ended  January 31,  2004  trademark  revenues  were
$559,270  compared to $115,392  for the quarter  ended  January 31,  2003.  This
increase of 385% resulted  from  recognizing  approximately  $198,000 in revenue
from a television pilot produced for American Movie Classics,  $150,000 for four
comedy videos produced for Image Entertainment, $27,500 for the sponsorship of a
live event during the Sundance Film Festival,  and  approximately  $180,000 from
the annual royalty payment for "Animal House".  During the second fiscal quarter
of 2003,  virtually  the only  trademark  revenues  were from the receipt of the
annual royalty for "Animal House".  Consumer  products  revenues for the quarter
ended  January 31, 2004 was $48,067  representing  an increase of  approximately
1,537%  over  the  $2,937  recognized  for  consumer  product  revenues  in  the
corresponding period for the quarter ended January 31, 2003. In the three months
ended January 31, 2004, the Company  earned $20,000 for a National  Lampoon game
developed by Activision and $22,500 for internet advertising, in addition to the
sale of various  product via the internet.  In the  corresponding  period of the
prior fiscal year the Company  recognized only internet product sales as well as
video sales of approximately  $1,000.  During the three months ended January 31,
2004, National Lampoon Network's revenues increased to $106,795 from $10,000 for
the quarter ended January 31, 2003,  representing an increase of 968%.  National
Lampoon,  Inc. recorded  approximately $71,000 in advertising income and $45,000
in promotional and sponsorship  income during the three months ended January 31,
2004 versus just $10,000 in the corresponding period of the prior year. National
Lampoon  Networks was  acquired in  September  2002,  and  therefore  there were
limited revenues by January of 2003.

      Costs  related to trademark  revenue  during the quarter ended January 31,
2004 increased to $340,893 from $2,280 during the second fiscal quarter of 2003,
representing an increase of 14,851%.  The increase in trademark  revenues during
the quarter in 2004,  specifically  the costs  associated with the production of
the American  Movie  Classic  pilot  program and the Image  entertainment  video
production,  accounted  for the increase in trademark  costs.  Costs  related to
consumer  products  decreased  from $14,873 during the quarter ended January 31,
2003 to $9,593 in the current  quarter,  representing  a decrease of 36%.  These
costs include website  development and  maintenance,  content creation and third
party  hosting of the website.  An increase in web site  writing  costs were the
primary  reason for the higher costs during the quarter  ended January 31, 2004.
There were deminimus costs  associated with the royalty from Activision and from
the internet advertising. Television production costs of $347,686 represented an
81% increase  from the $192,602 in the  corresponding  period of the prior year.
National Lampoon  Networks has increased its programming and distribution  costs
in an effort to increase revenues.  Amortization of intangible assets, the costs
of the Company's  acquisition of the "National Lampoon"  trademark,  was $60,000
during the quarters ended January 31, 2004 and January 31, 2003. In addition the
Company  had  amortized  $90,167 of the  intangible  asset  associated  with the
purchase of the Burly Bear network in the quarter  ended  January 31, 2003.  The
intangible  asset acquired  through the acquisition of Burly Bear, Inc. has been
written  off as of July 31,  2003 based  upon the  provisions  of SFAS No.  144,
"Accounting for the Impairment for Disposal of Long Lived Assets".

      Selling, general and administrative costs increased from $1,093,419 during
the  quarter  ended  January 31,  2003 to  $1,253,418  during the same period in
fiscal 2004. This increase of approximately  $160,000 or 15% resulted  primarily
from an increase of personnel and consulting  costs of  approximately  $180,000,
and an increase in insurance  costs of  approximately  $38,000.  These increases
were  moderated  somewhat  by  a  decrease  in  legal  and  accounting  fees  of
approximately  $43,000  and a decrease in travel and  entertainment  expenses of
$25,000.  During the three months ended January 31, 2004,  the Company  recorded
$147,765 in expense  associated  with the  granting  of options and  warrants to
advisors  and  consultants  versus  $76,094  in the same  period in fiscal  2003
reflecting additional grants in the second quarter of the current fiscal year.

      Interest  income during the quarter  ended  January 31, 2004  decreased to
$1,440 versus  $1,451  during the quarter ended January 31, 2003.  This decrease
resulted  from a decrease in cash and cash  equivalents  held during the quarter
versus the same period last year.  Other income of $32,214 in the quarter  ended
January 31,  2003  resulted  from the  collection  of monies  from an  insurance
company due to loss of  equipment  that was insured.  The  minority  interest in
income of the consolidated  subsidiary of $61,717  represents 15% of the loss of
National  Lampoon Networks due to the 15% ownership of National Lampoon Networks
by a third party.  Losses from National Lampoon  Networks  allocated to minority
interest  are limited to their  investment.  Therefore  no  additional  minority
interest benefit from losses is available to the Company.


                                       8
<PAGE>


      For the three months ended January 31, 2004, the Company had a net loss of
$(1,443,783)  or $(0.94) per share versus a net loss of  $(1,305,723) or $(0.90)
per share for the three months ended January 31, 2003. This increase in net loss
resulted  primarily  from an increase in personnel  costs and an increase in the
expense  associated with the granting of stock warrants and options.  During the
quarters  ended  January  31,  2004 and 2003,  the  Company  had no  significant
provision for income taxes.

THE SIX MONTHS ENDED JANUARY 31, 2004 VS. THE SIX MONTHS ENDED JANUARY 31, 2003

      For the six  months  ended  January  31,  2004,  trademark  revenues  were
$615,443 as compared to $187,665 for the same period in 2003.  This  increase in
trademark  revenues of  approximately  228% resulted  primarily  from  increased
revenue  from  the film  "National  Lampoon's  Animal  House"  of  approximately
$50,000,  as well as  approximately  $198,000 from American  Movie  Classics for
delivery of a pilot program,  $150,000 from Image Entertainment for the delivery
of four made for video programs, and $27,500 for the sponsorship of a live event
during the Sundance  Film  Festival.  Consumer  products  revenues  increased by
$43,720 or 901% to $48,572 in the current six month from $4,852  during the same
period of the prior year.  Revenues of $20,000  from  Activision  for a National
Lampoon video game and $22,500 for internet  advertising in the six months ended
January 31, 2004 accounted for this increase. Advertising revenues from National
Lampoon  Networks  were  $323,045  during the six months ended  January 31, 2004
versus $10,000 for the same period in the prior year.  National Lampoon Networks
was acquired in September 2002, and therefore,  there were very limited revenues
during the prior fiscal year.

      Costs  related to trademark  revenues of $346,607 for the first six months
of fiscal 2004  represents a 4,394%  increase from the $7,712 in trademark costs
for the first six months of fiscal year 2003. Costs associated with the American
Movie Classics of approximately  $188,000,  Image Entertainment video production
of  $115,000  and the live  event  sponsorship  revenue  costs of  approximately
$16,000 accounted for this increase. Costs related to consumer products revenues
of  $14,014  decreased  by 43% in the six months  ended  January  31,  2004 from
$24,410 in the six months ended January 31, 2003. This reflects  increased video
and internet product sales in the six months ended January 31, 2004, which sales
are accompanied by its respective cost of sales. In the six months ended January
31, 2004, the majority of consumer  product revenues were generated by royalties
and  internet  advertising  for which there is no  corresponding  cost of sales.
Production costs of $726,410 in the six months ended January 31, 2004 represents
an increase of 104% from $356,240 in production  costs from the six months ended
January 31, 2003. This reflects increased activity in the production of National
Lampoon Network programming. Amortization of intangible assets, the costs of the
Company's  acquisition of the "National Lampoon" trademark,  was $120,000 during
each of the six months  periods  ended January 31, 2004 and January 31, 2003. In
addition the Company  amortized  $90,167 of the intangible asset associated with
the purchase of the Burly Bear network.  The Company as of the end of the second
fiscal quarter of 2003 had been amortizing the intangible  asset over a two year
period.  At year end of fiscal 2003 the intangible  asset  acquired  through the
acquisition  of Burly  Bear,  Inc.  was  completely  written  off based upon the
provisions of SFAS No. 144,  "Accounting for the Impairment for Disposal of Long
Lived Assets".

      Selling,  general  and  administrative  costs  increased  by  $340,541  to
$2,257,794  during the six months ended January 31, 2004 from $1,917,253  during
the same  period last year,  representing  an  increase  of 18%.  This  increase
resulted  primarily from personnel  costs  including  salaries and  consultants,
which  increased  by  approximately  $444,000,  travel and  entertainment  which
increased by approximately $34,000, various other overhead costs associated with
running  a New York  office  for  National  Lampoon  Networks  of  approximately
$45,000,  and interest  expense in the six months ended  January 31, 2004 due to
the loan from the NLAG of approximately $55,000. The increase in other costs was
moderated by a decrease in professional  fees and filing costs of  approximately
$228,000 in the current period. In the prior year there was additional corporate
activity  including the purchase of substantially all of the assets of the Burly
Bear Network,  which resulted in the generation of additional  professional  and
filing fees.

      During the six  months  ended  January  31,  2004,  the  Company  recorded
$318,118 in expense associated with the granting of stock,  options and warrants
to advisors and consultants  versus $706,482 in the six months ended January 31,
2003. The amount of stock, warrant, and option grants and the expense associated
with the  vesting  of those  grants  was  lesser in the first six  months of the
current fiscal year.

      Interest  income during the six months ended January 31, 2004 decreased to
$2,881 from $4,148 during the six months ended  January 31, 2003.  This decrease
of 31% resulted from a decrease in cash and cash equivalents held during the six
months ended January 31, 2004 versus the same period last year.  Other income of
$32,214 in fiscal 2003 resulted from the  collection of monies from an insurance
company due to the loss of equipment that was insured.  The minority interest in
income of  consolidated  subsidiary  of  $99,000  represents  15% of the loss of
National  Lampoon  Networks  reflecting  the 15%  ownership of National  Lampoon
Networks by a third party. No additional  minority  interest benefit from losses
is available to the Company.


                                       9
<PAGE>


      For the six months ended  January 31, 2004,  the Company had a net loss of
$2,795,400  or $1.83 per  share  versus a net loss of  $2,886,007,  or $2.00 per
share, for the six months ended January 31, 2003.  Increased  trademark revenues
in fiscal  2004 along with a reduction  of stock,  option,  and  warrant  grants
accounted  for this  reduction of loss of $90,608.  During the six month periods
ended January 31, 2004 and 2003,  the Company had no  significant  provision for
income taxes due to the utilization of deferred tax valuation allowances.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's  principal  source of working  capital during the six months
ended  January 31, 2004 was  trademark  income and funs loaned to the Company by
the NLAG Group.

      For the six months ended  January 31, 2004,  the  Company's  net cash flow
used in its operating  activities was $2,453,820  versus  $2,211,692 of net cash
flow used in operating  activities during the six months ended January 31, 2003.
The  decreased  results are  primarily  from an increase in personnel  and other
costs  that  occurred  with the  increase  in  activities  since the start up of
National  Lampoon  Networks.  The decrease in the current  period of the expense
associated  with the  granting  of stock,  warrants,  and  options is not a cash
related  expense and so is eliminated  from the calculation of cash flow used in
operating  activities.  The Company had cash and cash equivalents of $145,997 at
January 31, 2004 as compared to $140,255 at July 31, 2003.

      Since  the  consummation  of  the  Reorganization  Transactions,  we  have
initiated  a number  of new  business  activities,  including  our  August  2002
acquisition of  substantially  all the assets of Burly Bear,  and  significantly
increased our overhead by the hiring of new employees and consultants.  To date,
these  operations  have provided de minimis  operating  revenue and we have been
relying on capital  received from the NLAG Group in connection with the Series B
Units  purchased in  connections  with the  Reorganization  Transactions  and in
subsequent  purchases pursuant to the Purchase Agreement to fund operations,  as
well  as  loans  made  by  the  NLAG  Group.   Since  the  consummation  of  the
Reorganization  Transactions,  in  which  we  received  $2,085,718,   subsequent
purchases of Series B Units have provided us with  $2,615,000  through March 31,
2003,  their  expiration.  In addition,  the Company has received loans totaling
$4,213,095  through  March 12,  2004.  Unless  our  revenues  from new  business
activities  significantly  increase  in the  near  term,  we will  need to raise
additional  capital  to  continue  to fund our  planned  operations  or,  in the
alternative,  significantly  reduce or even eliminate certain operations.  There
can be no  assurance  that we will be able to raise such  capital on  reasonable
terms, or at all.

      As of March 9, 2004,  we had cash on hand of $66,500,  and no  significant
receivables.  This amount is not sufficient to fund current operations, which we
estimate  to be  approximately  $450,000  per  month.  We  anticipate  that  any
shortfall will be covered by the  additional  investments by NLAG and eventually
by the  issuance  of  Series C  Preferred  Stock as was part of the  Anticipated
December 2003 Financing  Transaction  (referred to in the Company's Form 10Q for
the quarter ended October 31, 2003); however, no assurance can be given that the
Company  will be able to  attract  other  investors.  If NLAG  declines  to make
additional  investments,  or should we be unable to secure additional financing,
we could be forced to  immediately  curtail  much,  if not all,  of our  current
plans. Our financial  statements for the fiscal year ended July 31, 2003 contain
an  explanatory  paragraph  as to our ability to continue as a "going  concern".
This qualification may impact our ability to obtain future financing.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NONE.

ITEM 4 - CONTROLS AND PROCEDURES

      The Company maintains a system of disclosure  controls and procedures that
is designed to provide reasonable assurance that information,  which is required
to be disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is accumulated and communicated
to management in a timely  manner.  The Company's  Chief  Executive  Officer and
Chief  Financial  Officer have evaluated this system of disclosure  controls and
procedures as of the end of the period  covered by this  quarterly  report,  and
believe  that  the  system  is  operating   effectively  to  ensure  appropriate
disclosure.  There have been no changes in the Company's  internal  control over
financial reporting during the fiscal quarter that have materially affected,  or
are reasonably likely to materially  affect, the Company's internal control over
financial reporting.

FORWARD-LOOKING STATEMENTS

      The foregoing discussion,  as well as the other sections of this Quarterly
Report on Form 10-Q, contains  forward-looking  statements within the meaning of
the Private Securities  Litigation Reform Act of 1995 that reflect the Company's
current   views  with   respect  to  future   events  and   financial   results.
Forward-looking  statements usually include the verbs "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "projects,"  "understands" and other
verbs   suggesting   uncertainty.   The  Company   reminds   shareholders   that
forward-looking  statements  are merely  predictions  and  therefore  inherently
subject to uncertainties  and other factors which could cause the actual results
to differ materially from the forward-looking statements. Potential factors that
could  affect  forward-looking  statements  include,  among  other  things,  the
Company's ability to identify, produce and complete projects that are successful
in the  marketplace,  to resolve  litigation  on  acceptable  terms,  to arrange
financing,  distribution  and promotion for these projects on favorable terms in
various markets and to attract and retain qualified personnel.


                                       10
<PAGE>


PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

On August 18, 2003, a lawsuit was filed against us by Duncan Murray in Los
Angeles Superior Court, case number BC300908. Mr. Murray claimed that he was
unjustly terminated and is owed severance. Mr. Murray alleged 3 causes of
action: (i) breach of his employment agreement; (ii) wrongful termination of
employment and breach of implied contract; and (iii) retaliatory termination of
employment. On September 24, 2003, we filed an answer to the lawsuit. The matter
was sent to arbitration on February 17, 2004 and was settled on that date.
According to the terms of the Settlement and General Release Agreement, the
Company is to pay to Mr. Murray and his lawyer a total of approximately $42,500.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 10-K

(A)      EXHIBITS

3.1   Company's Second Amended and Restated Articles of Incorporation (1)

3.2   Company's Amended and Restated Bylaws (1)

4.1   NLAG Registration Rights Agreement, dated May 17, 2002, among the Company,
      the members of the NLAG Group, and GTH Capital, Inc. (1)

4.2   Jimirro  Registration  Rights Agreement,  dated May 17, 2002,  between the
      Company and James P. Jimirro (1)

4.3   Amended and Restated  1999 Stock  Option,  Deferred  Stock and  Restricted
      Stock Plan (2)

4.4   Piggyback Registration Rights Agreement, dated September 3, 2002 (5)

10.1  First Amendment to Preferred Stock and Warrant Purchase  Agreement,  dated
      as of May 17, 2002 (1)

10.2  2002 Employment  Agreement Between J2 Communications and James P. Jimirro,
      dated May 17, 2002 (1)

10.3  Note Termination  Agreement,  dated May 17, 2002,  between the Company and
      James P. Jimirro (1)

10.4  Security  Agreement,  dated May 17, 2002, between the Company and James P.
      Jimirro (1)

10.5  Absolute Assignment,  dated May 17, 2002, between the Company and James P.
      Jimirro (1)

10.6  Termination of Stock  Appreciation  Rights Agreement,  dated May 17, 2002,
      between the Company and James P. Jimirro (1)

10.7  Mutual Release,  dated May 17, 2002,  among the Company,  James P. Jimirro
      and the members of the NLAG Group (1)

10.8  Restated  Indemnification  Agreement,  dated  May 17,  2002,  between  the
      Company and James P. Jimirro (1)

10.9  2002 Employment  Agreement Between J2 Communications and Daniel S. Laikin,
      dated May 17, 2002 (1)

10.10 Non-Qualified  Stock Option  Agreement,  dated May 17,  2002,  between the
      Company and Daniel S. Laikin (1)

10.11 Indemnification  Agreement,  dated May 17,  2002,  between the Company and
      Daniel S. Laikin. (2)

10.12 Letter, dated May 17, 2002, regarding  Termination of Surviving Provisions
      of Letter Agreement,  from the Company to Daniel S. Laikin and Paul Skjodt
      (1)

10.13 Warrant  Agreement,  dated  May 17,  2002,  between  the  Company  and GTH
      Capital, Inc (1)

10.14 Voting  Agreement,  dated May 17,  2002,  among each of the members of the
      NLAG Group and James P. Jimirro (1)

10.15 Promissory Notes issued May 17, 2002, by the Company to law firms (1)

10.16 Form of Common Stock  Warrant  (including  Schedule  identifying  material
      terms (1)

10.17 Agreement  between  Registrant and Harvard Lampoon,  Inc. dated October 1,
      1998 (3)

10.18 First  Amendment  to  Office  Lease  between  Registrant  and Avco  Center
      Corporation dated April 21, 2000 (4)

10.19 Letter Agreement between Registrant and Batchelder & Partners, Inc., dated
      August 16, 2000 (4)

10.20 Amendment  to  Letter  Agreement  between   Registrant  and  Batchelder  &
      Partners, Inc. dated August 16, 2000 (4)

10.21 Warrant Issued by Registrant to George Vandemann dated August 18, 2000 (4)

10.22 Asset Purchase  Agreement dated August 30, 2002 between  National  Lampoon
      Networks,  Inc., Burly Bear Network, Inc.,  Constellation Venture Capital,
      L.P. and J2 Communications (5)

10.23 Consulting Agreement with Zelnick Media and related Warrant Agreements (6)

10.24 Advisory Agreement with SBI USA and related Warrant Agreement (6)

10.25 Lease for New York Office space (7)

10.26 Employment Agreement for Doug Bennett (7)


                                       11
<PAGE>

31.1  Certification of James P. Jimirro,  Chief Executive  Officer,  pursuant to
      Rule 13a - 14(a)-15 d 14(a) (8)

31.2  Certification of James Toll, Chief Financial Officer,  pursuant to Rule 13
      a-14(a)/15d-14(a) (8)

32    Certification pursuant to 18 U.S. C. Section 1350 (8)


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

(1)   Incorporated by reference to Form 8-K filed on May 31, 2002.

(2)   Incorporated by reference to Form S-8 filed on June 26, 2002.

(3)   Incorporated  by reference  to Form 10-Q for the period ended  October 31,
      1998.

(4)   Incorporated  by reference to Form 10-K for the fiscal year ended July 31,
      1999.

(5)   Incorporated by referenced to Form 8-K filed on September 9, 2002.

(6)   Incorporated  by reference to Form 10-K for the fiscal year ended July 31,
      2002.

(7)   Incorporated  by reference to Form 10-K for the fiscal year ended July 31,
      2003.

(8)   Filed herewith.

(B)   REPORTS ON FORMS 8-K

      None



                                       12
<PAGE>


                                   SIGNATURES

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


Date:  March 14, 2004                         NATIONAL LAMPOON, INC.



                                              By: /s/James Toll
                                                  -----------------------

                                                  James Toll
                                                  Chief Financial Officer



                                       13