##### Table of Contents



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, 2002 |  | Commission File No. 0-15284

J2 COMMUNICATIONS
(Exact name of registrant as specified in its charter)

|                                                          |  |                                                
|--------------------------------------------------------- |  | -----------------------------------------------
|California
(State or other jurisdiction
of incorporation) |  | 95-4053296
(I.R.S. Employer
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 [   ]

As of March 21, 2002 the registrant had 1,382,482 shares of its common stock
outstanding.





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TABLE OF CONTENTS



|                               |                                                                                               |                                            |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION
|                               | Item 1  Financial Statements                                                                
|                               |                                                                                               | CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                               |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2  Managements Discussion and Analysis of Financial Position and Results of Operations
|PART II  OTHER INFORMATION   
|                               | Item 1  Legal Proceedings                                                                   
|                               | Item 6  Exhibits and Reports on Form 8-K                                                    
|SIGNATURES                    



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##### Table of Contents






PART I  FINANCIAL INFORMATION




Item 1  Financial Statements




J2 COMMUNICATIONS AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |           |           | 
|------------------------------------------ | --------------------------------- | ------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------ | ---------- | ------------- | --------- | ------------- | ---------- | --------- | --------- | 
|                                           |                                   |                                                                                                               |                            |                          |            | AS OF         |           | AS OF        
|                                           |                                   |                                                                                                               |                            |                          |            | JAN. 31, 2002 |           | JUL. 31, 2001
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |              
|                                           |                                   |                                                                                                               |                            |                          |            | (UNAUDITED)   |           |               |            |          
|CURRENT ASSETS                             |                                   |                                                                                                               |                            |                          |            |               |           |              
|                                           |                                   | Cash and cash equivalents                                                                                     |                            | $                        | 357,053    |               |           | $             | 324,472    |          
|                                           |                                   | Prepaid expenses and other current assets                                                                     |                            |                          | 29,871     |               |           |               | 32,685     |          
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|                                           |                                   |                                                                                                               |                            | Total current assets     |            |               | 386,924   |               |            |           | 357,157   | 
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|NON-CURRENT ASSETS                         |                                   |                                                                                                               |                            |                          |            |               |           |              
|                                           |                                   | Fixed assets, net of accumulated depreciation                                                                 |                            |                          | 1,591      |               |           |               | 8,451      |          
|                                           |                                   | Intangible assets, net of accumulated amortization                                                            |                            |                          | 2,816,154  |               |           |               | 2,936,154  |          
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|                                           |                                   |                                                                                                               |                            | Total non-current assets |            |               | 2,817,745 |               |            |           | 2,944,605 | 
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|TOTAL ASSETS                               |                                   | $                                                                                                             | 3,204,669                  |                          |            | $             | 3,301,762 |              
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|LIABILITIES AND SHAREHOLDERS EQUITY       |                                   |                                                                                                               |                            |                          |            |               |           |              
|CURRENT LIABILITIES                        |                                   |                                                                                                               |                            |                          |            |               |           |              
|                                           | Accounts payable                  |                                                                                                               | $                          | 514,376                  |            |               | $         | 242,451       |           
|                                           | Accrued expenses                  |                                                                                                               |                            | 826,661                  |            |               |           | 620,705       |           
|                                           | Settlement payable                |                                                                                                               |                            |                         |            |               |           | 203,117       |           
|                                           | Stock appreciation rights payable |                                                                                                               |                            |                         |            |               |           | 843,096       |           
|                                           | Extension payments                |                                                                                                               |                            | 450,000                  |            |               |           | 200,000       |           
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|                                           |                                   |                                                                                                               | TOTAL LIABILITIES          |                          |            | 1,791,037     |           |               |            | 2,109,369 |          
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|SHAREHOLDERS EQUITY                       |                                   |                                                                                                               |                            |                          |            |               |           |              
|                                           |                                   | Preferred Stock, no par value, 2,000,000 shares
authorized, no shares issued and outstanding                  |                            |                          | 0          |               |           |               | 0          |          
|                                           |                                   | Common Stock, no par value, 15,000,000 shares
authorized, 1,379,816 and 1,371,116 shares
issued, respectively |                            |                          | 9,825,262  |               |           |               | 9,616,767  |          
|                                           |                                   | Less: Note receivable on common stock                                                                         |                            |                          | (148,580   | )             |           |               | (145,700   | )        
|                                           |                                   | Accumulated deficit                                                                                           |                            |                          | (8,263,050 | )             |           |               | (8,278,674 | )        
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|                                           |                                   |                                                                                                               | TOTAL SHAREHOLDERS EQUITY |                          |            | 1,413,632     |           |               |            | 1,192,393 |          
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                                   | $                                                                                                             | 3,204,669                  |                          |            | $             | 3,301,762 |              
|                                           |                                   |                                                                                                               |                            |                          |            |               |           |               |            |          

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

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J2 COMMUNICATIONS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |           |           |             |  
|---------------------- | ------------------------------------------------------------------------ | -------------------------------------------------------- | --------------------------------- | --------- | -------------- | ------- | -------------- | --------- | -------- | --------- | ---- | --------- | -------- | ------- |  | --------- | --------- | ----------- | -
|                       |                                                                          |                                                          |                                   |           | THREE MONTHS   |         | SIX MONTHS    
|                       |                                                                          |                                                          |                                   |           | ENDED JAN. 31, |         | ENDED JAN. 31,
|                       |                                                                          |                                                          |                                   |           |                |         |               
|                       |                                                                          |                                                          |                                   |           | 2002           |         | 2001           |           | 2002     |           | 2001
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |     
|REVENUE                |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          | Trademark                                                |                                   | $         | 222,222        |         |                | $         | 15,456   |           |      | $         | 374,168  |         |  | $         | 147,929   |            
|                       |                                                                          | Video                                                    |                                   |           | 548            |         |                |           | 2,821    |           |      |           | 847      |         |  |           | 11,394    |            
|                       |                                                                          | Internet                                                 |                                   |           | 4              |         |                |           | 4,794    |           |      |           | 505      |         |  |           | 4,823     |            
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | Total revenue                     |           |                | 222,774 |                |           |          | 23,071    |      |           |          | 375,520 |  |           |           | 164,146     |  
|COSTS AND EXPENSES     |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          | Costs related to trademark revenue                       |                                   |           | 3,824          |         |                |           | 401      |           |      |           | 11,036   |         |  |           | 11,699    |            
|                       |                                                                          | Costs related to video revenue                           |                                   |           | 300            |         |                |           | 120      |           |      |           | 646      |         |  |           | 2,935     |            
|                       |                                                                          | Costs related to internet revenue                        |                                   |           | 7,092          |         |                |           | 7,883    |           |      |           | 13,743   |         |  |           | 19,373    |            
|                       |                                                                          | Amortization of intangible assets                        |                                   |           | 60,000         |         |                |           | 60,000   |           |      |           | 120,000  |         |  |           | 120,000   |            
|                       |                                                                          | Selling, general & administrative expenses               |                                   |           | 343,115        |         |                |           | 476,052  |           |      |           | 922,237  |         |  |           | 1,366,130 |            
|                       |                                                                          | Stock appreciation rights (benefit)/expense              |                                   |           | (567,570       | )       |                |           | (177,086 | )         |      |           | (843,096 | )       |  |           | 260,422   |            
|                       |                                                                          | Conversion of stock appreciation rights to
stock options |                                   |           | 140,894        |         |                |           |          |           |      |           | 140,894  |         |  |           |           |            
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | Total costs and expenses          |           |                | (12,345 | )              |           |          | 367,370   |      |           |          | 365,460 |  |           |           | 1,780,559   |  
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | OPERATING (LOSS)/INCOME           |           |                | 235,119 |                |           |          | (344,299  | )    |           |          | 10,060  |  |           |           | (1,616,413  | )
|OTHER INCOME/(EXPENSE) |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          | Interest income                                          |                                   |           | 3,366          |         |                |           | 17,712   |           |      |           | 6,364    |         |  |           | 41,895    |            
|                       |                                                                          | Minority interest in income of
consolidated subsidiary   |                                   |           | 0              |         |                |           | 0        |           |      |           | 0        |         |  |           | 0         |            
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | Total other income/(expense)      |           |                | 3,366   |                |           |          | 17,712    |      |           |          | 6,364   |  |           |           | 41,895      |  
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | (LOSS)/INCOME BEFORE INCOME TAXES |           |                | 238,485 |                |           |          | (326,587  | )    |           |          | 16,424  |  |           |           | (1,574,518  | )
|                       | Provision for state income taxes                                         |                                                          |                                   |          |                |         |                | 1,600     |          |           |      | 800       |          |         |  | 1,600     |          
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       |                                                                          |                                                          | NET (LOSS)/INCOME                 |           | $              | 238,485 |                |           |          | ($328,187 | )    |           | $        | 15,624  |  |           |           | ($1,576,118 | )
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       | Net (loss)/income per share  basic                                      |                                                          | $                                 | 0.17      |                |         |                | ($0.24    | )        |           | $    | 0.01      |          |         |  | ($1.17    | )        
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       | Weighted average number of common
shares  basic                         |                                                          |                                   | 1,379,816 |                |         |                | 1,353,102 |          |           |      | 1,378,970 |          |         |  | 1,351,346 |          
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       | Net (loss)/income per share  diluted                                    |                                                          | $                                 | 0.17      |                |         |                | ($0.24    | )        |           | $    | 0.01      |          |         |  | ($1.17    | )        
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          
|                       | Weighted average number of common and
common equivalent shares  diluted |                                                          |                                   | 1,435,969 |                |         |                | 1,353,102 |          |           |      | 1,430,859 |          |         |  | 1,351,346 |          
|                       |                                                                          |                                                          |                                   |           |                |         |                |           |          |           |      |           |          |         |  |          

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

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J2 COMMUNICATIONS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |         |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------------------------------- | ------- | ------------------ | -------- | ---- | ---------- | ----------- | ------- | -
|                                                         |                                                                                      |                                                                  |         | FOR THE SIX MONTHS
|                                                         |                                                                                      |                                                                  |         | ENDED JANUARY 31, 
|                                                         |                                                                                      |                                                                  |         |                   
|                                                         |                                                                                      |                                                                  |         | 2002               |          | 2001
|                                                         |                                                                                      |                                                                  |         |                    |          |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                    |                                                                                      |                                                                  |         |                    |          |      |            |            
|                                                         | Net (loss)/income                                                                    |                                                                  | $       | 15,624             |          |      |            | ($1,576,118 | )      
|                                                         | Adjustments to reconcile net loss/(income)
to net cash used in operating activities: |                                                                  |         |                    |          |      |            |             |        
|                                                         |                                                                                      | Depreciation and amortization                                    |         |                    | 126,860  |      |            |             | 126,860 |  
|                                                         |                                                                                      | Stock appreciation rights expense/(benefit)                      |         |                    | (843,096 | )    |            |             | 260,422 |  
|                                                         |                                                                                      | Conversion of stock appreciation rights to stock options         |         |                    | 140,894  |      |            |             |         |  
|                                                         |                                                                                      | Stock issued for services                                        |         |                    | 0        |      |            |             | 149,144 |  
|                                                         |                                                                                      | Other                                                            |         |                    | (2,880   | )    |            |             | (1,420  | )
|                                                         | Changes in assets and liabilities:                                                   |                                                                  |         |                    |          |      |            |             |        
|                                                         |                                                                                      | Decrease in accounts receivable                                  |         |                    | 0        |      |            |             | 6,580   |  
|                                                         |                                                                                      | (Increase)/decrease in prepaid expenses and
other current assets |         |                    | 2,814    |      |            |             | (910    | )
|                                                         |                                                                                      | Increase in other assets                                         |         |                    | 0        |      |            |             | (1,180  | )
|                                                         |                                                                                      | Increase in accounts payable                                     |         |                    | 271,925  |      |            |             | 36,200  |  
|                                                         |                                                                                      | Increase/(decrease) in accrued expenses                          |         |                    | 205,956  |      |            |             | 64,737  |  
|                                                         |                                                                                      | (Decrease) in settlement payable                                 |         |                    | (203,117 | )    |            |             |         |  
|                                                         |                                                                                      | (Decrease)/increase in extension payments                        |         |                    | 250,000  |      |            |             |         |  
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|                                                         | NET CASH AND CASH EQUIVALENTS
USED IN OPERATING ACTIVITIES                           |                                                                  |         | (35,020            | )        |      |            | (935,685    | )      
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                    |                                                                                      |                                                                  |         |                    |          |      |            |            
|                                                         | Purchase of fixed assets                                                             |                                                                  |         | 0                  |          |      |            | (2,355      | )      
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|                                                         | NET CASH AND CASH EQUIVALENTS
USED IN INVESTING ACTIVITIES                           |                                                                  |         | 0                  |          |      |            | (2,355      | )      
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|CASH FLOWS FROM FINANCING ACTIVITIES:                    |                                                                                      |                                                                  |         |                    |          |      |            |            
|                                                         | Exercise of stock options                                                            |                                                                  |         | 67,601             |          |      |            | 7,266       |        
|                                                         | Cash paid on exercise of stock appreciation rights                                   |                                                                  |         |                    |          |      |            | (105,419    | )      
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|                                                         | NET CASH AND CASH EQUIVALENTS (USED IN)/
PROVIDED BY FINANCING ACTIVITIES            |                                                                  |         | 67,601             |          |      |            | (98,153     | )      
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|NET INCREASE/(DECREASE) IN CASH AND
AND CASH EQUIVALENTS |                                                                                      |                                                                  | 32,581  |                    |          |      | (1,036,193 | )          
|CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD         |                                                                                      |                                                                  | 324,472 |                    |          |      | 1,883,750  |            
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        
|CASH AND CASH EQUIVALENTS
AT END OF PERIOD               |                                                                                      | $                                                                | 357,053 |                    |          | $    | 847,557    |            
|                                                         |                                                                                      |                                                                  |         |                    |          |      |            |             |        

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

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J2 COMMUNICATIONS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A  BASIS OF PRESENTATION AND GOING CONCERN

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial statements. Accordingly, they
do not include all of the information and disclosures required for annual
financial statements. These financial statements should be read in conjunction
with the financial statements and related footnotes for the year ended July 31,
2001 included in the J2 Communications (Company or Registrant) annual
report on Form 10-K for that period.

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, 2002, and the results of operations and cash flows
for the three and six month periods ended January 31, 2002 and 2001 have been
included.

The results of operations for the three and six month periods ended
January 31, 2002 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, 2001.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Item 2 -
Managements Discussion and Analysis of Financial Position and Results of
Operations  Liquidity and Capital Resources, the Companys management believes
that its existing cash resources will be sufficient to fund its current
operations at least through July 31, 2002. If the transactions discussed in
Item 2  Managements Discussion and Analysis of Financial Position and Results
of Operations  Recent Developmentsare not consummated the Company will need
to immediately obtain third party financing to continue its operations. There
can be no assurance that the Company will be able to obtain such financing on
reasonable terms or at all. In the event the transactions discussed in Item 2
- Managements Discussion and Analysis of Financial Position and Results of
Operations  Recent Developmentsare consummated, the Company will need to
evaluate its liquidity and capital resources. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.

The report on our financial statements for the fiscal year ended July 31,
2001 contains an explanatory paragraph indicating that the resolution of the
contingencies discussed in Item 2  Managements Discussion and Analysis of
Financial Position and Results of Operations  Recent Developmentscould
trigger substantial contingent payments due an officer of the Company which
raises substantial doubt about the ability of the Company to continue as a
going concern. This going concern qualification may adversely affect the
Companys perception by prospective customers and suppliers.

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J2 COMMUNICATIONS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B  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. Common equivalent shares are
excluded from the computation in periods in which they would have an
anti-dilutive effect. The difference between basic and diluted earnings per
share is solely attributable to stock options, which are considered
anti-dilutive when option exercise prices exceed the weighted average market
price per share of common stock during the period.

Options to purchase 114,000 and 127,667 common shares are not included in
the calculation of diluted earnings per share for the three and six month
periods ended January 31, 2001, respectively, because they are anti-dilutive.
There are an additional 566,332 options, approved by the Companys Board of
Directors on January 30, 2002 but awaiting shareholder approval, and are
therefore not included in the computation of diluted earnings per share for
either the three or six month period ended January 31, 2002.

NOTE C  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. Segment
operating income/(loss) excludes the amortization of intangible assets, stock
appreciation rights costs, interest income, certain corporate expenses related
to Recent Developments and income taxes. Selling, general and administrative
expenses not specifically attributable to any segment have been allocated
equally between the trademark and internet segments. Summarized financial
information for the three and six month periods ended January 31, 2002 and 2001
concerning the Companys segments is as follows:

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J2 COMMUNICATIONS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C  SEGMENT INFORMATION (CONTINUED)

|                                    |                                 |  |           |          |          |  |       |          |       |  |   |        |  |  |   |          |  
|----------------------------------- | ------------------------------- |  | --------- | -------- | -------- |  | ----- | -------- | ----- |  | - | ------ |  |  | - | -------- | -
|                                    |                                 |  | Trademark |          | Internet |  | Video |          | Total
|                                    |                                 |  |           |          |          |  |       |          |      
|Three Months Ended January 31, 2002 |                                 |  |           |          |          |  |       |          |       |  |   |        |  |  |   |         
|                                    | Segment revenue                 |  | $         | 222,000  |          |  |       | 0        |       |  | $ | 1,000  |  |  | $ | 223,000  |  
|                                    | Segment operating income/(loss) |  |           | 238,000  |          |  |       | (53,000  | )     |  |   | 0      |  |  |   | 185,000  |  
|Three Months Ended January 31, 2001 |                                 |  |           |          |          |  |       |          |       |  |   |        |  |  |   |         
|                                    | Segment revenue                 |  | $         | 15,000   |          |  | $     | 5,000    |       |  | $ | 3,000  |  |  | $ | 23,000   |  
|                                    | Segment operating income        |  |           | (110,000 | )        |  |       | (210,000 | )     |  |   | 3,000  |  |  |   | (317,000 | )
|Six Months Ended January 31, 2002   |                                 |  |           |          |          |  |       |          |       |  |   |        |  |  |   |         
|                                    | Segment revenue                 |  | $         | 374,000  |          |  | $     | 1,000    |       |  | $ | 1,000  |  |  | $ | 376,000  |  
|                                    | Segment operating income/(loss) |  |           | 169,000  |          |  |       | (343,000 | )     |  |   | 1,000  |  |  |   | (173,000 | )
|Six Months Ended January 31, 2001   |                                 |  |           |          |          |  |       |          |       |  |   |        |  |  |   |         
|                                    | Segment revenue                 |  | $         | 148,000  |          |  | $     | 5,000    |       |  | $ | 11,000 |  |  | $ | 164,000  |  
|                                    | Segment operating income/(loss) |  |           | (107,000 | )        |  |       | (429,000 | )     |  |   | 8,000  |  |  |   | (528,000 | )

A reconciliation of segment operating income/loss to net income before income
taxes for the three and six month periods ended January 31, 2002 and 2001 is as
follows:

|                                                                            |  |                            |          |               |  |  |           |  
|--------------------------------------------------------------------------- |  | -------------------------- | -------- | ------------- |  |  | --------- | -
|                                                                            |  | FOR THE THREE MONTHS ENDED
|                                                                            |  |                           
|                                                                            |  | JAN. 31, 2002              |          | JAN. 31, 2001
|                                                                            |  |                            |          |              
|Total segment operating loss/income                                         |  | $                          | 185,000  |               |  |  | ($317,000 | )
|Amortization of intangible assets                                           |  |                            | 60,000   |               |  |  | 60,000    |  
|Stock appreciation rights benefit                                           |  |                            | (427,000 | )             |  |  | (177,000  | )
|Interest income                                                             |  |                            | (3,000   | )             |  |  | (18,000   | )
|Corporate expenses incurred related to
the change in control of the Company |  |                            | 317,000  |               |  |  | 145,000   |  
|                                                                            |  |                            |          |               |  |  |           |  
|Net (loss)/income before income taxes                                       |  | $                          | 238,000  |               |  |  | ($327,000 | )
|                                                                            |  |                            |          |               |  |  |           |  

|                                                                            |  |                          |           |               |  |  |             |  
|--------------------------------------------------------------------------- |  | ------------------------ | --------- | ------------- |  |  | ----------- | -
|                                                                            |  | FOR THE SIX MONTHS ENDED
|                                                                            |  |                         
|                                                                            |  | JAN. 31, 2002            |           | JAN. 31, 2001
|                                                                            |  |                          |           |              
|Total segment operating loss/income                                         |  |                          | ($173,000 | )             |  |  | ($528,000   | )
|Amortization of intangible assets                                           |  |                          | 120,000   |               |  |  | 120,000     |  
|Stock appreciation rights expense/(benefit)                                 |  |                          | (702,000  | )             |  |  | 260,000     |  
|Interest income                                                             |  |                          | (6,000    | )             |  |  | (42,000     | )
|Corporate expenses incurred related to
the change in control of the Company |  |                          | 399,000   |               |  |  | 709,000     |  
|                                                                            |  |                          |           |               |  |  |             |  
|Net (loss)/income before income taxes                                       |  | $                        | 16,000    |               |  |  | ($1,575,000 | )
|                                                                            |  |                          |           |               |  |  |             |  

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J2 COMMUNICATIONS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D  SUBSEQUENT EVENTS

On February 28, 2002, the Company filed a preliminary information
statement on Schedule 14C with the Securities and Exchange Commission with
respect to the transactions contemplated by the NLAG Letter of Intent discussed
below under Item 2  Managements Discussion and Analysis of Financial Position
and Results of Operations  Recent Developments.




Item 2  Managements Discussion and Analysis of Financial Position and Results of Operations

Recent Developments

NLAG Letter of Intent

Following the termination of the Letter Agreement, dated March 5, 2001,
among the Company, Mr. James P. Jimirro, Mr. Daniel S. Laikin and Mr. Paul
Skjodt and the filing of the litigation related thereto, as disclosed in the
Companys Quarterly Report on Form 10-Q for the period ended January 31, 2002,
at the request of the Board of Directors, the Company and Mr. Jimirro made an
additional attempt to resolve the differences between the parties. On January
30, 2002, the Company, Mr. Jimirro, and Mr. Laikin, Mr. Skjodt, National
Lampoon Acquisition Group LLC, a California limited liability company, Timothy
S. Durham, Samerian LLP, an Indiana limited liability partnership, Diamond
Investments, LLC, an Indiana limited liability company, Christopher R.
Williams, Helen C. Williams, DW Leasing Company, LLC, an Indiana limited
liability company, and Judy B. Laikin (collectively, the NLAG) entered into a
non-binding Letter of Intent (the NLAG Letter of Intent).

The NLAG Letter of Intent, which is subject to the execution of definitive
documentation and shareholder approval (if required by applicable law or Nasdaq
rules), provides, without limitation, that:

1. National Lampoon Acquisition Group or its designees will purchase,
for $3 million in cash, 30,000 shares of newly authorized convertible preferred
stock of the Company;

2. The Company will pay to Mr. Jimirro the sum of $1,100,000;

3. The Restated Employment Agreement, dated as of July 1, 1999,
between the Company and Mr. Jimirro will be terminated and Mr. Jimirro will
forgive the principal of, and all interest accrued on, all outstanding
contingent notes issued under that agreement;

4. The Company and Mr. Jimirro will enter into a new employment
agreement, certain material terms of which are described below;

5. Mr. Laikin will be appointed to the new position of Chief
Operating Officer of the Company; and

6. The parties of the NLAG Letter of Intent who are shareholders of
the Company will enter into a voting agreement providing for the composition of
a new Board of Directors of the Company. Pursuant to the voting agreement, the
Board of Directors would initially consist of

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three nominees of Mr. Jimirro, three nominees of Mr. Laikin, and one independent director

The new employment agreement between the Company and Mr. Jimirro, which
would have a six year term, would provide Mr. Jimirro with an annual salary of
$500,000 and, commencing on January 31, 2003 and continuing on the last day of
each month thereafter during the period that Mr. Jimirro is employed by the
Company, for the grant by the Company to Mr. Jimirro of fully vested options to
purchase 5,000 shares of the Companys common stock. In addition, pursuant to
the new employment agreement, Mr. Jimirro would receive 50% of the Companys
gross receipts from the upcoming movie National Lampoons Van Wilder. Subject
to the approval of the Companys Board of Directors required by the new
employment agreement, the agreement will be terminable by the Company without
cause after December 31, 2002 upon written notice to Mr. Jimirro, payment to
Mr. Jimirro of cash in the amount of $1,400,000, and delivery of the Companys
promissory note providing for the payment of $1,000,000 one year after the date
of issuance. All of the Companys obligations to Mr. Jimirro will be secured by
a priority lien on the assets of the Company.

The NLAG Letter of Intent further provides that, immediately following the
closing of the transactions described above, the Board of Directors of the
Company will call an annual meeting of the shareholders of the Company. In
addition, the NLAG Letter of Intent provides that National Lampoon Acquisition
Group or its designees will have the option to purchase up to 30,000 additional
shares of the Companys convertible preferred stock on or prior to May 31,
2002.

In consideration of Mr. Jimirros execution of the NLAG Letter of Intent
and his work with respect to the upcoming movie National Lampoons Van Wilder
the Company granted Mr. Jimirro stock options to purchase 400,000 shares of the
Companys common stock. The options vest the earlier of (i) so long as
shareholder approval of the grant of the options is obtained, and so long as
the closing of the NLAG Letter of Intent transactions occurs, upon the initial
U.S. theatrical opening date of the National Lampoons VanWilder movie and
(ii) so long as shareholder approval of the grant of the options is obtained,
the date 10 years after the date of the NLAG Letter of Intent.

The parties to the NLAG Letter of Intent are currently engaged in the
process of negotiating the definitive transaction documentation contemplated by
the NLAG Letter of Intent.

Termination of Letter Agreement; Litigation

On November 19, 2001, the Company terminated the Letter Agreement, dated
March 5, 2001, among the Company, Mr. Jimirro, and Messrs. Laikin and Skjodt
(the Letter Agreement) in accordance with its terms. Pursuant to the Letter
Agreement, Messrs. Laikin and Skjodt had agreed, subject to the satisfaction of
certain conditions, to acquire shares of the Companys common stock from the
Company and Mr. Jimirro, all as set forth therein and as previously disclosed.

On November 16, 2001, Messrs. Laikin and Skjodt filed a lawsuit in Los
Angeles County Superior Court against the Company and Mr. Jimirro seeking,
among other matters, to have the Letter Agreement rescinded and for damages
based on alleged fraud. On November 28, 2001 the Company and Mr. Jimirro filed
an Answer, and a separate Cross-Complaint, in this action. In the Answer the
Company and Mr. Jimirro generally deny the allegations of Messrs. Laikin and
Skjodt, and in the Cross-Complaint the Company and Mr. Jimirro assert a number
of affirmative claims against Messrs. Laikin and Skjodt and the other named
defendants, including fraud, and breach of contract.

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On November 27, 2001, the Company was served with a Complaint filed in Los
Angeles County Superior Court on November 21, 2001 by Lawrence D. Lerner, a
purported shareholder
of the Company. The Complaint demands that the Company hold an annual meeting
of shareholders. The Company filed an answer to such complaint on December 20,
2001. At a preliminary hearing held on December 24, 2001, the court declined
to issue an order to compel the meeting of shareholders requested by Mr.
Lerner, but indicated that the plaintiff could make a new application at a
subsequent time. The Company expects to defend this action vigorously. In
particular, the Company believes that it will prove impractical to hold such a
meeting until the litigations with Messrs. Laikin and Skjodt described above
are resolved, as Messrs. Laikin and Skjodt have, as described above, requested
that the Letter Agreement, including the post-closing voting and standstill
provisions thereof, be rescinded. The enforcement of such voting and
standstill provisions will materially affect the outcome of any shareholder
meeting.

On November 30,
2001, the Company and Mr. Jimirro filed a separate lawsuit in
United States District Court in Los Angeles against Messrs. Laikin and Skjodt,
among others, alleging fraud and numerous violations of the Federal securities
law. In their Complaint the Company and Mr. Jimirro seek damages, specific
performance of specified provisions of the Letter Agreement and a range of
equitable relief.

Nasdaq Listing Issues

On November 26, 2001, the Company received notification from Nasdaq
stating that the Company no longer satisfied certain quantitative net tangible
asset and equity valuation standards required for the continuation of its
Nasdaq Small Cap listing. The Company has continued to discuss its listing
with Nasdaq officials and has discussed certain scenarios pursuant to which the
Company might achieve compliance with the applicable Nasdaq SmallCap Market
listing requirements, including, by consummation of the transactions
contemplated by the NLAG Letter of Intent. However, in light of the Companys
current economic condition, and in particular, in light of the non-consummation
of the transactions contemplated by the Letter Agreement, there can be no
assurance that any such scenario will come to fruition. Accordingly, Nasdaq
could, at any time and without further notice, de-list the Companys common
stock from trading on the Nasdaq SmallCap Market.

The Company was previously informed by Nasdaq that de-listing procedures
might be initiated in the event that the Company did not send out a proxy
solicitation for an annual meeting of shareholders by November 30, 2001 or hold
a meeting by December 30, 2001. In light of the impracticalities of holding a
shareholders meeting at this time described above, the Company has notified
Nasdaq that it will not be able to comply with such requests.

If the Companys common stock is de-listed from the Nasdaq SmallCap
Market, it may trade only on the OTC Bulletin Board (or through other vehicles
offering limited trading options), and the liquidity of the Companys common
stock may, accordingly, be materially diminished. As of the date hereof,
Nasdaq has not sent the Company a formal de-listing notice.

Status of Employment Agreement with James P. Jimirro

The Company is analyzing the legal impact on the Company of the
disclosures set forth in the Schedule 13D/A filed by the NLAG (the NLAG
Schedule 13D). Among other matters, the Company is considering the impact of
those disclosures on the Restated Employment Agreement, dated July 1, 1999 (the
1999 Agreement), with Mr. Jimirro, its Chairman, President and Chief
Executive Officer. As previously disclosed, under the 1999 Agreement, in the
event of, among other matters, a Change in Control of the Company or any one
of the specified Executive Termination Events, Mr. Jimirro, upon delivery of
a notice of termination to the Company, is generally entitled to receive a lump
sum payment of all salary due for the

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remaining term specified therein (excluding subsequent annual increases) and to continue to receive all
benefits, bonuses, stock options and stock appreciation rights for the
remaining term. Further, to the extent the aforesaid payments result in any excise tax
liability under the Internal Revenue Code of 1986, the Company is obligated to
make an additional payment to Mr. Jimirro equal to the amount of such excise
taxes plus any income or other payroll taxes resulting from such excise tax
payment. In addition, Mr. Jimirro, at his request, shall be engaged as a
consultant to the Company for a term of five years at the annual rate of 50% of
his salary at the time of termination. Under the 1999 Agreement, a Change in
Control has occurred, among other situations, if any person (as such term is
defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended
(the Exchange Act)) is or becomes the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 25% or more of the combined
voting power of the Companys then outstanding securities. It is possible,
accordingly, that the disclosures contained in the NLAG Schedule 13D indicates
that such a Change in Control has occurred. To date, the Company has not
received a notice of termination from Mr. Jimirro. If, however, such a Change
in Control has occurred and Mr. Jimirro successfully asserts his entitlement to
the payments discussed above (or ceases to voluntarily waive his entitlement to
salary and other amounts voluntarily deferred by him in the past, as also
previously disclosed), the Company could face the obligation to deliver
approximately $7,000,000 in cash to Mr. Jimirro, and other future
considerations to him. The Company does not currently have such capital, and
there can be no assurance that, if such capital is required, the Company will
be able to raise it on reasonable terms, or at all.

Results of Operations

The Three Months Ended January 31, 2002 vs. the Three Months Ended January 31,
2001

For the three months ended January 31, 2002 trademark revenues were
$222,222 compared to $15,456 for the quarter ended January 31, 2001. This
increase of 1,338% resulted primarily from revenues received from the films
National Lampoons Animal House, and National Lampoons Van Wilder during
the fiscal quarter 2002. Video revenues of $548 during the second fiscal
quarter 2002 decreased 81% from fiscal 2001 video revenues of $2,821. Fewer
sales of the Mother Goose Video Treasury accounted for the majority of that
decline. Internet revenues of approximately $5,000 during fiscal 2001
decreased to nearly zero during the second fiscal quarter 2002 due to more
success in merchandise and syndication sales in the prior fiscal year.

Costs related to trademark revenue during the quarter ended January 31,
2002 increased from $401 during fiscal 2001 to $3,824 during the second fiscal
quarter 2002, an increase of 854%, triggered primarily by the significant
increase in trademark revenues during the quarter in 2002. Costs related to
Internet operations (excluding the selling, general, and administrative portion
of those expenses) decreased to $7,092 during the quarter ended January 31,
2002 from $7,883 in the previous year, representing a decrease of 10%. These
costs include website development and maintenance, content creation and third
party hosting of the website. A decline in the cost charged by the web site
provider was the primary reason for the decline in those expenses during the
quarter ended January 31, 2002. Amortization of intangible assets, the costs
of the Companys acquisition of the National Lampoon trademark, was $60,000
during each of the quarters ended January 31, 2002 and 2001.

Selling, general and administrative costs decreased to $343,115 during the
quarter ended January 31, 2002 versus $476,052 during the same period last
year. This decrease of approximately $133,000 or 28% resulted primarily from:
(i) a decrease in expenses incurred by

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the Company relating to the various
negotiations, transactions, litigations and proceedings with the NLAG and its
members, as discussed above under Recent Developments and as previously
disclosed, (ii) the elimination of certain accrued legal and other fees related
to an 11 year old settlement agreement, and (iii) a decrease in salary expenses due to
the Company currently employing fewer full time individuals.

During the quarter ended January 31, 2002, the Company recorded a net
benefit of $426,676 related to stock appreciation rights (SARs) granted to
the Companys chief executive officer converted to common stock options. All
SARs granted to the chief executive officer of the Company were eliminated
during the quarter in fiscal 2002, and therefore their attendant liability.
All outstanding SARs were converted to common stock options granted to the
chief executive officer. During the quarter ended January 31, 2001, the
Company recorded a benefit of approximately $177,086 related to such SARs,
which resulted from a decrease in the Companys stock price during that
quarter. The decrease in stock price reduced the amount payable by the Company
to the chief executive officer upon the exercise of the outstanding SARs.

Interest income during the quarter ended January 31, 2002 decreased to
$3,366 versus $17,712 during the quarter ended January 31, 2001. This
decrease resulted from a decrease in cash and cash equivalents held during the
quarter versus the same period last year.

For the three months ended January 31, 2002, the Company had a net income
of $238,485 or $0.17 per share, versus net loss of $328,187, or $0.24 per
share, for the three months ended January 31, 2001. This increase in net
income resulted primarily from (i) the increase in revenues of approximately
$200,000, (ii) the elimination of liabilities relating to outstanding SARs,
and a legal settlement payable, creating a benefit recorded by the Company and
(iii) the decrease in expenses incurred by the Company relating to the various
negotiations, transactions, litigations and proceedings with the NLAG and its
members, as discussed above under Recent Developments and as previously
disclosed. During the quarters ended January 31, 2002 and 2001, the Company
had no significant provision for income taxes due to the utilization of
deferred tax valuation allowances.

The Six Months Ended January 31, 2002 vs. the Six Months Ended January 31, 2001

For the six months ended January 31, 2002 trademark revenues were $374,168
as compared to $147,929 for the same period in 2001. The increase in trademark
revenues of approximately 153% resulted primarily from increased revenue from
the films National Lampoons Animal House and the new full length feature
film National Lampoons Van Wilder. Video revenues during the first six
months of fiscal 2002 fell to $847 from $11,394 in the prior year, representing
a decrease of 93%, due primarily to reduce sales of the videos The Mother
Goose Video Treasury, and Stand Up Reagan. Six months Internet revenues of
$505 in fiscal 2002 represents a 90% decline from 2001 revenues of $4,823.
Greater merchandise and syndication sales were achieved in the prior year.

Costs related to trademark revenues of $11,036 for the first six months of
fiscal 2002 represents a 6% decline from the $11,699 in trademark costs in the
prior year. A higher proportion of royalty costs related to television
revenues, with higher royalty rates, were accrued in the prior year. Costs
related to video revenues decreased by 78% in fiscal 2002, from $2,935 to $646.
This reflects a decline in video sales and therefore cost of sales, for the
first six months of fiscal 2002. Costs related to Internet operations
(excluding the selling, general and administrative portion of those expenses)
decreased to $13,743 during the six months ended January 31, 2002 from $19,373
during the same period in the prior year. These costs include website
development and maintenance, content creation and third party hosting of the
website. A decline in the cost of the web server and the amount paid for
content creation accounted for

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the decrease in fiscal 2002. 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, 2002 and 2001.

Selling, general and administrative costs decreased $443,893 to $922,237
during the six months ended January 31, 2002 from $1,366,130 during the same
period last year, representing a decrease of 32%. This decrease resulted
primarily from (i) a reduction of approximately $120,000 incurred by the
Company in the current fiscal year to retain various legal and financial
advisers in connection with the various negotiations, transactions, litigations
and proceedings with the NLAG and its members, as discussed above under Recent
Developments and as previously disclosed, (ii) a write off of an 11 year old
uncollected settlement liability for approximately $203,000, and (iii) a
decrease of approximately $130,000 in personnel related costs, due to the
Company employing fewer full time people in the current fiscal year.

During the six months ended January 31, 2002, the Company recorded a net
expense benefit of $843,096 related to stock appreciation rights (SARs)
granted to the Companys chief executive officer. This benefit resulted from
the elimination of the SARs granted and therefore their corresponding liability
and expense, when they were converted to common stock options granted to the
chief executive officer during the current fiscal year. During the same period
in fiscal 2001 there was a stock appreciation rights expense of $260,422. This
cost reflected an increase in the Companys stock price during the six months
ended January 31, 2001 which increased the amount payable by the Company to the
chief executive officer upon the exercise of any of the outstanding SARs.

Interest income during the six months ended January 31, 2002 decreased to
$6,364 from $41,895 during the six months ended January 31, 2001. This
decrease of 85% resulted from a decrease in cash and cash equivalents held
during the six months ended January 31, 2002 versus the same period last year.

For the six months ended January 31, 2002, the Company had a net income of
$15,624, or $0.01 per share, versus a net loss of $1,576,118, or $1.17 per
share, for the six months ended January 31, 2001. This increase in net income
resulted primarily from (i) a increase in revenues of approximately $212,000,
(ii) the benefit recorded by the Company during the six months ended January
31, 2002 relating to the elimination of outstanding SARs versus an expense
recorded during the same period last year, a net benefit to the Company of
approximately $1,103,000 (iii) a decrease of approximately $120,000 in expenses
incurred by the Company relating to legal fees from negotiations concerning the
various negotiations, transactions, litigations and proceedings with the NLAG
and its members, as discussed above under Recent Developments and as
previously disclosed, and (iv) the write off of a liability pertaining to legal
fees from an eleven year old settlement agreement. During the six month
periods ended January 31, 2002 and 2001, 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, 2002 was trademark and extension fee income. The Companys
management believes that its existing cash resources will be sufficient to fund
its ongoing operations at least through July 31, 2002. However, unless the
Companys Internet revenues or revenues from other business activities
significantly increase during that period, the Company may need to raise
additional capital to continue to fund its current Internet operations or, in
the alternative, significantly

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reduce its Internet operations. There can be no
assurance that the Company will be able to raise such capital on reasonable
terms, or at all.

In addition,as discussed in Item 2  Managements Discussion and
Analysis of Financial Position and Results of Operations  Status of Employment
Agreement with James P. Jimirro,if a change in control of the Company were to
occur as discussed in Item 11  Executive Compensation of the Companys annual
report on Form 10-K for the year ended July 31, 2001, there could result a
net capital deficiency and the need for the Company to obtain additional
capital. There can be no assurance that the Company will be able to raise such
capital on reasonable terms, or at all.

In the event the transactions discussed in Recent Developments are
consummated, the Company will need to evaluate the Companys
liquidity and capital resources in relation to any new business plans for the
Company. The Letter of Intent allows the NLAG, at the closing, to purchase up
to an additional 30,000 of the Companys Series B Preferred Stock for a
purchase price of $100.00 per share, potentially supplying the Company with an
additional $3 million in working capital. If the NLAG does not purchase these
shares, the Company may need to immediately obtain third party financing to
continue its operations. There can be no assurance that the Company will be
able to obtain such financing on reasonable terms or at all.

For the six months ended January 31, 2002, the Companys net cash flows
used in its operating activities was $35,020 increase of approximately
$900,000 versus $935,685 of net cash flow used in operating activities during
the six months ended January 31, 2001. This increase results primarily from
increased trademark licensing income, an increase in extension payments, and a
decrease in general and administrative expenses incurred to retain various
legal and financial advisers in connection with the various negotiations,
transactions, litigations and proceedings with the NLAG and its members, as
discussed above under Recent Developments and as previously disclosed. At
January 31, 2002, the Company had cash and cash equivalents of $357,053 as
compared to $324,472 at July 31, 2001.

Future Commitments

The Company does not currently have any material future commitments for
capital expenditures. However, in the event the transactions discussed in
Recent Developments are consummated, the Company will be required to make
significant payments to Mr. Jimirro and the intended plans for the Company of
the Companys new management may include material future commitments for
capital expenditures.

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
failure to consummate the transactions contemplated by the NLAG Letter of
Intent, the results of the Companys ongoing litigation, Companys ability to
identify, produce and complete projects that are

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successful in the marketplace,
to arrange financing, distribution and promotion for these projects on
favorable terms in various markets and to attract and retain qualified
personnel.




PART II  OTHER INFORMATION




Item 1  Legal Proceedings

On November 19, 2001, the Company terminated the Letter Agreement, dated
March 5, 2001, among the Company, Mr. Jimirro, and Messrs. Laikin and Skjodt
(the Letter Agreement) in accordance with its terms. Pursuant to the Letter
Agreement, Messrs. Laikin and Skjodt had agreed, subject to the satisfaction of
certain conditions, to acquire shares of the Companys common stock from the
Company and Mr. Jimirro, all as set forth therein and as previously disclosed.

On November 16, 2001, Messrs. Laikin and Skjodt filed a lawsuit in Los
Angeles County Superior Court against the Company and Mr. Jimirro seeking,
among other matters, to have the Letter Agreement rescinded and for damages
based on alleged fraud. On November 28, 2001 the Company and Mr. Jimirro filed
an Answer, and a separate Cross-Complaint, in this action. In the Answer the
Company and Mr. Jimirro generally deny the allegations of Messrs. Laikin and
Skjodt, and in the Cross-Complaint the Company and Mr. Jimirro assert a number
of affirmative claims against Messrs. Laikin and Skjodt and the other named
defendants, including fraud, and breach of contract.

On November 27, 2001, the Company was served with a Complaint filed in Los
Angeles County Superior Court on November 21, 2001 by Lawrence D. Lerner, a
purported shareholder of the Company. The Complaint demands that the Company
hold an annual meeting of shareholders. The Company filed an answer to such
complaint on December 20, 2001. At a preliminary hearing held on December 24,
2001, the court declined to issue an order to compel the meeting of
shareholders requested by Mr. Lerner, but indicated that the plaintiff could
make a new application at a subsequent time. The Company expects to defend
this action vigorously. In particular, the Company believes that it will prove
impractical to hold such a meeting until the litigations with Messrs. Laikin
and Skjodt described above are resolved, as Messrs. Laikin and Skjodt have, as
described above, requested that the Letter Agreement, including the
post-closing voting and standstill provisions thereof, be rescinded. The
enforcement of such voting and standstill provisions will materially affect the
outcome of any shareholder meeting.

On November 28, 2001, the Company and Mr. Jimirro filed a lawsuit in
United States District Court in Los Angeles against Messrs. Laikin and Skjodt,
among others, alleging fraud and numerous violations of the Federal securities
law. In their Complaint the Company and Mr. Jimirro seek damages, specific
performance of specified provisions of the Letter Agreement and a range of
equitable relief.

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Item 6  Exhibits and Reports on Form 8-K

(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)

|     |  |                                                                                           
|---- |  | ------------------------------------------------------------------------------------------
|3.1  |  | Restated Articles of Incorporation of Registrant. (1)                                     
|3.2  |  | Certificate of Amendment of Restated Articles of Incorporation filed April 27, 1989. (2)  
|3.3  |  | Certificate of Amendment of Restated Articles of Incorporation filed July 14, 1993. (2)   
|3.4  |  | Certificate of Amendment of Restated Articles of Incorporation filed October 29, 1998. (3)
|3.5  |  | Bylaws of Registrant. (1)                                                                 
|3.6  |  | Amendment to Bylaws of Registrant dated July 15, 1999. (4)                                
|3.7  |  | Amendment to Bylaws of Registrant dated August 18, 2000. (5)                              
|10.1 |  | Letter of Intent dated January 30, 2002. (6)                                              



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(b) Forms 8-K

Registrants Current Report on Form 8-K filed on November 23, 2001.
Registrants Current Report on Form 8-K filed on November 29, 2001.
Registrants Current Report on Form 8-K filed on December 28, 2001.

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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 21, 2002 | J2 COMMUNICATIONS                  
|                    
|                     | By:                                 | /s/James Toll
|                     |                                    
|                     | James Toll,
Chief Financial Officer

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